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 June 30, 2003

              [_] 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 [X]   No [ ]

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,
17,579,748 shares issued and outstanding as of August 15, 2003.

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 June 30, 2003......................3

        Consolidated Statements of Operations for the
        Three and six months ended June 30, 2003 and 2002...................4

        Consolidated Statements of Changes in Stockholders' Equity
        (Deficit) for the six months ended June 30, 2003....................5

        Consolidated Statements of Cash Flows for the
        Six months ended June 30, 2003 and 2002.............................6

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

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations ..........................................8

Item 3. Controls and Procedures ...........................................17

PART II OTHER INFORMATION..................................................17

Item 2. Legal Proceedings..................................................17

Item 6. Exhibits and Reports on Form 8-K...................................18


                                       2
<PAGE>


                                     PART I
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

              POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET


                                                              June 30, 2003
                                                              -------------
                                                               (Unaudited)
                             ASSETS

CURRENT ASSETS:
      Cash                                                      $ 28,429
      Accounts receivable, trade                                  30,000
      Inventories                                                 20,000
      Prepaid expenses                                            49,665

                 Total Current Assets                          $ 128,094
                                                              ============

          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
      Accounts payable, trade                                  $ 197,234
      Accrued liabilities                                        287,385
      Notes payable and convertible debt                       1,727,526
      Notes payable, related party                                45,000
      Accrued interest expense                                   399,338
                                                              ------------
                 Total Current Liabilities                     2,656,483
                                                              ------------

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, 17,397,361  issued and outstanding      11,705,962
      Additional paid-in capital                               2,926,186
      Accumulated (deficit)                                  (17,160,537)
                                                             ------------
                 Total Stockholders' Equity (Deficit)         (2,528,389)

                                                               $ 128,094
                                                             ============




           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




                                       3
<PAGE>


              POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                          For the three months ended June 30,    For the six months ended June 30,
                                                          -----------------------------------   ----------------------------------
                                                                 2003              2002                2003             2002
                                                           ---------------   --------------     ----------------   ---------------
                                                            (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                           579,472          163,980             679,386          378,475
   Research and development                                      169,000                -             169,000                -
   Loss on write-down of inventory                                     -        1,914,342                   -        1,914,342
                                                           ---------------   --------------     ----------------   --------------
          Total Operating Expenses                               748,472        2,078,322             848,386        2,292,817
                                                           ---------------   --------------     ----------------   --------------
(LOSS) FROM OPERATIONS                                          (748,472)      (2,078,322)           (848,386)      (2,271,417)
                                                           ---------------   --------------     ----------------   --------------
OTHER INCOME (EXPENSE):
   Interest income                                                     -                -                  48                -
   Interest expense                                              (52,844)         (66,910)           (102,627)        (125,685)
   Beneficial conversion feature of convertible debt                (651)               -                (651)        (113,000)
   Amortization of loan fees                                     (28,500)               -             (58,500)               -
                                                           ---------------  --------------     ---------------    --------------
          Net Other Income (Expense)                             (81,995)         (66,910)           (161,730)        (238,685)

(LOSS) FROM CONTINUING OPERATIONS                               (830,467)      (2,145,232)         (1,010,116)      (2,510,102)
                                                           ---------------  --------------     ---------------    --------------
DISCONTINUED OPERATIONS:
   (Loss) from operations of discontinued subsidiaries                 -                -                   -         (149,745)
   Gain on disposal of subsidiary                                      -                -                   -        1,490,553
                                                           ---------------  --------------     ---------------    --------------
          Total Income From Discontinued Operations                    -                -                   -        1,340,808

NET INCOME (LOSS)                                           $   (830,467)    $ (2,145,232)       $ (1,010,116)    $ (1,169,294)
                                                           ===============  ==============     ===============    ==============
NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED:
   Continuing operations                                    $      (0.05)    $      (0.30)       $      (0.07)    $      (0.37)
   Discontinued operations:
       Loss from operations                                            -                -                   -            (0.02)
       Gain on disposal                                                -                -                   -             0.22
                                                           ---------------  --------------     ---------------    --------------
                                                            $      (0.05)    $      (0.30)       $      (0.07)    $      (0.17)
                                                           ===============  ==============     ===============    ==============
WEIGHTED AVERAGE COMMON  SHARES OUTSTANDING,
   BASIC AND DILUTED                                          15,525,398        7,073,193          14,100,585        6,750,246
                                                           ===============  ==============     ===============    ==============

</TABLE>






           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



                                       4
<PAGE>


              POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
       CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
               FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)


<TABLE>
<CAPTION>
                                                                              Additional
                                                         Common Stock           Paid-in     Accumulated       Stockholders'
                                                    Shares          Amount      Capital      (Deficit)      Equity (Deficit)
                                               --------------- -------------- ------------ --------------  -------------------
<S>                                            <C>            <C>             <C>          <C>               <C>
Balances, December 31, 2002                      10,873,392    $10,813,330     $2,870,167  $ (16,150,421)     $ (2,466,924)

Common stock issued for services                     57,000         11,280              -              -            11,280

Common stock issued for loan fees                    75,000         16,500              -              -            16,500

Conversion of convertible debt and
 accrued interest                                   587,122         78,500              -              -            78,500

Stock issued in private placement, net of
 offering costs of $115,613                       5,244,659        724,334              -              -           724,334

Fair market value of repriced warrants                    -              -         56,019              -            56,019

Exercise of warrants                                560,188         62,018              -              -            62,018

Net (loss) for the period                                 -              -              -     (1,010,116)       (1,010,116)
                                               --------------  --------------  ----------- --------------   ------------------
Balances, June 30, 2003                          17,397,361    $11,705,962     $2,926,186  $ (17,160,537)     $ (2,528,389)
                                               ==============  ==============  =========== ==============   ==================
</TABLE>



           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



                                       5
<PAGE>


              POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                 For the six months ended June 30,
                                                                 ----------------------------------
                                                                        2003              2002
                                                                 ----------------   ---------------
<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                     $ (1,010,116)     $ (2,510,102)
        Beneficial conversion feature of convertible debt                    -           113,000
        Stock issued for services                                       11,280            37,550
        Stock issued for loan fees                                      16,500                 -
        Fair market value of repriced warrants                          56,019                 -
   Changes in assets and liabilities
        Accounts receivable                                                  -           (30,000)
        Inventories                                                          -         1,914,342
        Prepaid expenses                                                (3,727)                -
        Bank overdraft                                                       -             2,094
        Accounts payable and accrued expenses                           42,803           217,117
        Accounts payable, related party                                      -            10,719
                                                                 ----------------   ---------------
            Net Cash (Used in) Operating Activities                   (887,241)         (245,280)
                                                                 ----------------   ---------------
CASH FLOWS FROM (TO) INVESTING ACTIVITIES:

            Net Cash (Used in) Investing Activities                          -                 -
                                                                 ----------------   ---------------
CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
   Proceeds from issuance of common stock                              839,947            50,000
   Payment of offering costs                                          (115,613)           (5,000)
   Advances on notes payable                                           145,000            57,526
   Payments of notes payable                                           (25,000)                -
   Proceeds from exercise of warrants                                   62,018                 -
                                                                 ----------------   ---------------
            Net Cash Provided by Financing Activities                  906,352           102,526
                                                                 ----------------   ---------------
INCREASE (DECREASE) IN CASH                                             19,111          (142,754)

CASH, beginning of period                                                9,318           142,754
                                                                 ----------------   ---------------
CASH, end of period                                                   $ 28,429               $ -
                                                                 ================   ===============
</TABLE>



                 SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



                                       6
<PAGE>


              POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2002.

2.   STOCKHOLDERS' EQUITY

During the six months ended June 30, 2003, the Company sold 5,244,659 shares of
common stock for $839,947, $50,000 of which had been received prior to December
31, 2002, and had been recorded as a liability. The Company paid a $43,347
placement fee to a company controlled by its President and CEO. The Company also
paid a $72,266 placement fee to an unrelated company. Certain investors received
warrants to purchase 214,300 shares of common stock at prices ranging from $0.27
to $0.65 per share. In addition, the Company issued 57,000 shares of its common
stock for services and 75,000 shares of its common stock for loan fees, valued
at $11,800 and $16,500, respectively, the fair market value of the common stock
on the dates issuable.

During the three months ended March 31, 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 three months ended June 30, 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 260,191 shares of common stock were exercised for proceeds of $26,019.

Subsequent to period end, the stockholders approved an increase in the number of
shares of common stock authorized to 480,000,000 from 30,000,000.

3.   CONVERTIBLE DEBT

During the six months ended June 30, 2003, certain convertible debt holders
converted debt of $35,000 to 258,997 shares of the Company's common stock. In
addition, certain convertible debt holders converted $43,500 of accrued interest
on the convertible debt to 328,125 shares of the Company's common stock.

4.   BRIDGE NOTES

During April 2003, the Company borrowed $20,000 from a related party entity,
controlled by its Chairman and CEO. The note was due the earlier of July 10,
2003, or upon the Company raising additional funds of more than $100,000 and
bears interest at 5% per year. The loan has been verbally extended by mutual
consent.

During April 2003, the Company borrowed $75,000, due the earlier of May 10,
2003, or upon the Company raising additional funds in excess of $75,000. The
loan bears interest at 18% per year and has been extended by mutual consent. As
additional consideration, the Company paid the lender a closing fee of $5,000
and issued 75,000 shares of the Company's common stock to the lender, valued at
$16,500, the fair market value of the common stock on the date of funding of the
bridge note. The Company paid a $7,500 loan fee to a company owned by its
President and Chief Executive Officer. The terms of the note specify that this
note must be paid before any other creditor.

During June 2003, the Company borrowed $50,000 from a related party entity in
which a company controlled by our Chairman and CEO has an equity interest. The
note was due the earlier of July 10, 2003, or upon the Company raising
additional funds of more than $100,000. As of June 30, 2003, $25,000 had been
repaid and the remaining balance on the note was $25,000. The note was verbally
extended by mutual consent and bears interest at 10% per year.

5.   SUBSEQUENT EVENTS

In August 2003, the Company agreed to accept the return of the Model 7001, sold
during 2002, for a full credit to the customer. The Company


                                       7
<PAGE>


will utilize the 7001 in its research and development activities.

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-QSB is as of August 19, 2003, and we undertake no duty to update this
information. If events occur subsequent to August 19, 2003, 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

Historically, our core business had 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. 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 $1.5 million of indebtedness, 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.

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.

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
anticipate this project will be completed by the end of our third quarter 2003.
We are entitled to receive a non-exclusive, royalty-free license to any
technology developed under the terms of the agreement. The cost of the project
to us was $249,000. As of the date of this report, the project has been fully
funded.

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. 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.


                                       8
<PAGE>


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

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 three-month periods ended
June 30, 2003 and 2002, we did not have significant advertising costs.

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.

EARNINGS PER SHARE

The Company computes earnings per common share in accordance with Statement of
Financial Accounting Standards No. 128, Earnings Per Share (SFAS No. 128). Basic
earnings (loss) per common share is computed based upon the weighted average
number of common shares outstanding during the period. Diluted earnings per
share consists of the weighted average number of common shares outstanding plus
the dilutive effects of options and warrants calculated using the treasury stock
method. In loss periods, dilutive common equivalent shares are excluded since
the effect would be anti-dilutive.

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. During the year ended December 31, 2002, the
Company recognized a $1,914,342 loss on the write-down of inventory.



                                       9
<PAGE>


RESEARCH AND SOFTWARE DEVELOPMENT COSTS

In 2002, we entered into a technology affiliates agreement with NASA's Jet
Propulsion Laboratory to develop technology for our planned bio-terrorism
detection equipment. These costs are charged to expense as incurred. Research
and development expense was $169,000 during the six months ended June 30, 2003
and 2002.

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 June 30, 2003, 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 our financial statements for the six months ended
June 30, 2002, have been reclassified to conform to the current year
presentation.

NEW ACCOUNTING PRONOUNCEMENTS

In December 2002, the FASB issued 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 from the
intrinsic value based method of accounting. 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. We are currently evaluating
SFAS No. 148 to determine if we will adopt SFAS No. 123 to account for employee
stock options using the fair value method.

In July 2002, the FASB issued SFAS No. 146, Accounting for Exit or Disposal
Activities ("SFAS No. 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 our adoption is not expected to have a material
effect on our consolidated financial statements.

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 our
adoption is not expected to have a material effect on our consolidated financial
statements.


                                       10
<PAGE>


SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets,
was effective for us 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 do not believe that the new standard will
have a material impact on our financial statements.

RESULTS OF OPERATIONS

THREE AND SIX MONTHS ENDED JUNE 30, 2003 COMPARED TO THE THREE AND SIX MONTHS
ENDED JUNE 30, 2002

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 June 30, 2003 and 2002.
Revenues were $-0- for the six months ended June 30, 2003 compared to $30,000
for the six months ended June 30, 2002. This decrease during the six-month
period was due to no sales during the six months ended June 30, 2003, as
compared to the sale of one Model 7001 during the six months ended June 30,
2002.

COST OF SALES. Cost of sales were $-0- for the three months ended June 30, 2003
and 2002. Cost of sales was $-0-during the six months ended June 30, 2003
compared to $8,600 or 29% of sales for the six months ended June 30, 2002.

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

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $415,492, or 253%, to $579,472 for the three
months ended June 30, 2003, from $163,980 for the three months ended June 30,
2002 and increased $300,911 or 80% to $679,386 for the six months ended June 30,
2003 from $378,475 in the six months ended June 30, 2002. The increase in
selling, general and administrative expense primarily is a result of increased
marketing expenses and consulting fees. Selling, general and administrative
costs consisted primarily of accounting fees, legal fees, bio-detection product
consulting and marketing expenses.

(LOSS) FROM CONTINUING OPERATIONS. Operating loss decreased $1,314,765, or 61%,
to ($830,467) for the three months ended June 30, 2003, as compared to
($2,145,232) for the three months ended June 30, 2002. Operating loss decreased
$1,499,986, or 60%, to ($1,010,116) for the six months ended June 30, 2003, as
compared to ($2,510,102) for the six months ended June 30, 2002. The decrease is
primarily due to a loss on write-down of inventory recorded during 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 provided by (used in) our operating activities during the six months
ended June 30, 2003, was ($887,241), and during the six months ended June 30,
2002, was ($245,280). Net cash provided by (used in) our investing activities
was $-0- during the six months ended June 30, 2003 and 2002. Net cash provided
by financing activities during the six months ended June 30, 2003, was $906,352,
and during the six months ended June 30, 2002 was $102,526.

Our total cash and cash equivalent balance at June 30, 2003, was $28,429, as
compared to June 30, 2002, which was $-0-. Because of our limited cash balances,
we may not be able to continue operations at our current levels. 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.


                                       11
<PAGE>


During the six months ended June 30, 2003, and through the date of this report,
we have debt financing under various terms, as follows:

     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 rates of 11% and 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 and verbally extended to a date to be mutually agreed upon by the
parties, 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 $200,000 had been converted to common
stock and the outstanding balance is $300,000.

     C. One convertible debenture with a face amount of $500,000 and interest at
a rate of 12% per annum, originally due February 23, 2001, and convertible at a
conversion price of the lesser of $2.00 or 80% of the market price on the date
of conversion. During 2002 the maturity date of the debenture was extended to
February 23, 2004, in exchange for a reduction in the conversion price to 70% of
the market price on the date of conversion. As of the date of this report,
$320,000 had been converted to common stock and the outstanding balance is
$180,000.

     D. 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 June 30, 2002, and further verbally extended to a date to
be mutually agreed upon by the parties, with interest at the rate of 10% per
annum.

     E. 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 30, 2002, and
further verbally extended to a date to be mutually agreed upon by the parties,
with interest at the rate of 18% per annum.

     F. Eight convertible debentures with a total face amount of $365,000, due
July 17, 2002, and verbally extended to a date to be mutually agreed upon by the
parties, 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 $290,000.

     G. 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.

     H. 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.

     I. Demand note for $250,000 under Ex-Im Bank authorization at Wall Street
Journal Prime +3% per annum, maturing on an extended due date of June 30, 2002,
and currently in default.

     J. During April 2003, we borrowed $75,000, due the earlier of May 10, 2003,
or upon us raising additional funds in excess of $75,000. The loan bears
interest at 18% per year and has been extended by mutual consent. As additional
consideration, we paid the lender a closing fee of $5,000 and issued 75,000
shares of our common stock to the lender, valued at $16,500 the fair market
value of the stock on the date of funding of the bridge note. We paid a $7,500
loan fee to a company owned by our President and Chief Executive Officer. The
terms of the note specify that this note must be paid before any other creditor.

     K. During April 2003, we borrowed $20,000 from a related party entity,
controlled by our Chairman and CEO. The note was due the earlier of July 10,
2003, or upon us raising additional funds of more than $100,000 and bears
interest at 5% per year. The loan has been verbally extended by mutual consent.

     L. During June 2003, we borrowed $50,000 from a related party entity, in
which a company controlled by our Chairman and CEO has an equity interest. The
note was due the earlier of July 10, 2003 or upon us raising additional funds of
more than $100,000. As of June 30, 2003, $25,000 had been repaid and the
remaining balance on the note was $25,000. The note was verbally extended by
mutual consent and bears interest at 10% per year.

Our working capital deficit at June 30, 2003, was $2,528,389. 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 complete the
re-engineering of our existing product, continue development of future products
and continue to execute our business plan, which includes increasing our
presence in the bio-terrorism detection and medical diagnostic equipment
markets. 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.



                                       12
<PAGE>


RELATED PARTY TRANSACTIONS

During the six months ended June 30, 2003, we sold 5,244,659 shares of our
common stock for $839,947, $50,000 of which had been received prior to December
31, 2002, and had been recorded as a liability. We paid a $43,347 placement fee
to a company controlled by our President and CEO.

During June 2003, we entered into a consulting agreement with a company
controlled by our President and Chief Executive Officer. Pursuant to the terms
of the agreement, we will pay that company $25,000 per month for investment
banking and strategic advisory services and will pay a 10% placement fee for all
debt and equity financing.

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.

At December 31, 2002, our independent auditors' report, dated March 11, 2003,
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, 2002, 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. We have limited cash on hand and short-term
investments and we do not expect to generate material cash from operations. We
have attempted to raise additional capital through debt or equity financing and
to date have had 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 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 2003.

We have not been profitable in the past years and had an accumulated deficit of
approximately $17.2 million as of June 30, 2003. During the six months ended
June 30, 2003, we incurred a net loss of approximately $1.0 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 2003.

WE CANNOT GUARANTEE THAT OUR BIOTERRORISM 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. Our product development efforts may be unsuccessful and
the failure of our research and development activities to result in a
commercially viable product would materially adversely affect our future
prospects.


                                       13
<PAGE>


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

We do not maintain our own laboratory and we do not employ our own researchers.
We have contracted with third parties in the past 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 depend 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.

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 the 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.

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 June 30, 2003, we have outstanding an aggregate of $770,000 in convertible
debentures which are convertible into our common stock at 70-80% 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 20-30% 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                          7,770,000       5,133,333       3,850,000

PERCENT OF OUTSTANDING
COMMON STOCK PRIOR TO ISSUANCE       44.2%            29.5%           22.1%

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.


                                       14
<PAGE>


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 OTC Bulletin Board. It may be more
difficult to raise additional debt or equity financing while trading on the OTC
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 June 30, 2003, we have granted options and warrants to purchase a total of
4,309,560 shares of common stock that have not been exercised and an aggregate
of $770,000 outstanding debentures that are convertible based upon a conversion
price of 70-80% 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 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 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.

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.

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 are currently 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 value or 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.

                                       15
<PAGE>


ITEM 3. CONTROLS AND PROCEDURES.

DISCLOSURE CONTROLS AND PROCEDURES. Under the supervision and with the
participation of our chief executive officer and chief financial officer, we
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as of the end of the period covered by
this report. Based on this evaluation, our chief executive officer and chief
financial officer concluded that, as of the end of the period covered by this
report, our disclosure controls and procedures are effective in timely alerting
them to material information required to be included in our periodic SEC
reports.

Our management, including our chief executive officer and chief financial
officer, does not expect that our disclosure controls or our internal controls
will prevent all error and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of
the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty and that
breakdowns can occur because of simple errors or mistakes. Additionally,
controls can be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of the control. The
design of any system of controls also is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions; over time, controls may become inadequate because of changes in
conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.

CHANGES IN INTERNAL CONTROL. In accordance with SEC requirements, our chief
executive officer and chief financial officer note that, since the date of the
most recent evaluation of our disclosure controls and procedures to the filing
date of our Quarterly Report on Form 10-QSB, there have been no significant
changes in our internal controls or in other factors that could significantly
affect internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.


                                     PART II

                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

TAYLOR, TAYLOR & DREIFUS V POLLUTION RESEARCH AND CONTROL CORP. NO. 99-1100-CA01
CIRCUIT COURT ESCAMBIA, FLORIDA

In June, 1999, a lawsuit was filed against us by Taylor, Taylor, & Dreifus, a
Florida general partnership alleging default by our company under a promissory
note and failure to make lease payments, all relating to a former subsidiary
bankruptcy in 1998. The amount of claim is estimated at $300,000. We have filed
a counterclaim against the partnership alleging that the note and lease payments
are not due because of fraudulent representations made at the time of
acquisition of the former subsidiary business. Plaintiff has failed to pursue
this action.

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 continued possession of the
premises commencing May 1, 2002. Plaintiff has obtained a default judgment
against us and a writ of execution has been obtained.



                                       16
<PAGE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits.

99.1 Certifications of our Chief Executive Officer and Chief Financial Officer
     pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated August 19,
     2003.

99.2 Certifications of our Chief Executive Officer and Chief Financial Officer
     pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated August 19,
     2003.

(b)  Reports on Form 8 K

None.
                                   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 AUGUST 19, 2003            /s/  JACQUES TIZABI
                               -------------------------------------------
                               BY:   JACQUES TIZABI
                               ITS:  PRESIDENT, CHIEF EXECUTIVE OFFICER
                                     AND CHAIRMAN OF THE BOARD





                                       17
<PAGE>