===============================================================================

                       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, 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,
8,255,546 shares issued and outstanding as of August 16, 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 June 30, 2002......................3

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

           Consolidated Statements of Changes in Stockholers' Equity
           (Deficit) for the six months ended June 30, 2002....................5

           Condensed Consolidated Statements of Cash Flows for the
           three and six months ended June 30, 2002 and June 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

                                                              June 30,
                                                                2002
                                                            -------------
                                                             (Unaudited)
                           ASSETS
CURRENT ASSETS:
      Accounts receivable                                   $     30,000
                                                            -------------
                 Total Current Assets                       $     30,000
                                                            =============

        LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
      Bank overdraft                                        $      2,094
      Accounts payable                                           225,478
      Accounts payable, related party                             10,719
      Notes payable and convertible debt                       1,502,526
      Accrued interest expense                                   256,595
                                                            -------------
                 Total Current Liabilities                     1,997,412

LONG-TERM NOTES PAYABLE AND CONVERTIBLE DEBT                     200,000
                                                            -------------
                 Total Liabilities                             2,197,412
                                                            -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT):
      Preferred stock, no par value, 20,000,000 shares
         authorized: Series A, $.01 par value, -0- issued
         and outstanding - Series B, $.01 par value,
         -0- issued and outstanding                                    -
      Common stock, no par value, 30,000,000 shares
         authorized, 8,255,546 issued and outstanding         10,412,530
      Additional paid-in capital                               2,759,055
      Accumulated (deficit)                                  (15,338,997)
                                                            -------------
                 Total Stockholders' Equity (Deficit)         (2,167,412)
                                                            -------------
                                                            $     30,000
                                                            =============


          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                     Page 3
<PAGE>


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

                                                        Three Months     Three Months     Six Months       Six Months
                                                            Ended            Ended           Ended            Ended
                                                        June 30, 2002    June 30, 2001   June 30, 2002    June 30, 2001
                                                        -------------    -------------   -------------    -------------
<S>                                                     <C>              <C>              <C>              <C>
                                                         (Unaudited)       (Unaudited)    (Unaudited)      (Unaudited)

REVENUES                                                $          -     $          -     $     30,000     $          -
                                                        -------------    -------------    -------------    -------------
COST OF GOODS SOLD                                                 -                -            8,600                -
                                                        -------------    -------------    -------------    -------------
GROSS PROFIT                                                       -                -           21,400                -
                                                        -------------    -------------    -------------    -------------
OPERATING EXPENSES:
   Selling, general and administrative                       163,980          391,565          378,475          783,130
   Loss on write-down of inventory                         1,914,342                -        1,914,342                -
                                                        -------------    -------------    -------------    -------------
          Total Operating Expenses                         2,078,322          391,565        2,292,817          783,130
                                                        -------------    -------------    -------------    -------------
(LOSS) FROM OPERATIONS                                    (2,078,322)        (391,565)      (2,271,417)        (783,130)
                                                        -------------    -------------    -------------    -------------
OTHER (EXPENSE):
   Interest expense                                          (66,910)         (56,408)        (125,685)        (112,816)
   Beneficial conversion feature of
     convertible debt                                              -                -         (113,000)               -
   Amortization of loan fees                                       -         (125,525)               -         (312,738)
                                                        -------------    -------------    -------------    -------------
          Net Other (Expense)                                (66,910)        (181,933)        (238,685)        (425,554)
                                                        -------------    -------------    -------------    -------------
(LOSS) FROM CONTINUING OPERATIONS                         (2,145,232)        (573,498)      (2,510,102)      (1,208,684)
                                                        -------------    -------------    -------------    -------------

DISCONTINUED OPERATIONS:
   (Loss) from operations of discontinued
      subsidiaries                                                 -         (579,202)        (149,745)        (661,458)
   Gain on disposal of subsidiary                                  -                -        1,490,553                -
                                                        -------------    -------------    -------------    -------------
          Total Income (Loss) From Discontinued
             Operations                                            -         (579,202)       1,340,808         (661,458)
                                                        -------------    -------------    -------------    -------------
NET INCOME (LOSS)                                       $ (2,145,232)    $ (1,152,700)    $ (1,169,294)    $ (1,870,142)
                                                        =============    =============    =============    =============

NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED:
   Continuing operations                                     $ (0.30)         $ (0.10)         $ (0.37)         $ (0.19)
   Discontinued operations:
       Loss from operations                                        -            (0.10)           (0.02)           (0.10)
       Gain on disposal                                            -                -             0.22                -
                                                        -------------    -------------    -------------   --------------
                                                             $ (0.30)         $ (0.19)         $ (0.17)         $ (0.29)
                                                        =============    =============    =============   ==============
WEIGHTED AVERAGE COMMON  SHARES OUTSTANDING,
   BASIC  AND DILUTED                                      7,073,193        5,950,085        6,750,246        6,456,196
                                                        =============    =============    =============   ==============
</TABLE>


          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



                                     Page 4
<PAGE>


<TABLE>
<CAPTION>
              POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
       CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
               FOR THE SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED)


                                                                            ADDITIONAL                            TOTAL
                                                  COMMON STOCK               PAID-IN      ACCUMULATED          STOCKHOLDERS'
                                             SHARES         AMOUNT           CAPITAL        DEFICIT          EQUITY (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           90,000         37,550                -               -              37,550

Conversion of convertible debt              1,965,930        490,238                -               -             490,238

Stock issued in Private Placement             250,000         95,000                -               -              95,000

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 income for the period                           -              -                -      (1,169,294)         (1,169,294)
                                           ----------------------------------------------------------------------------------
Balances, June 30, 2002                     8,255,546    $10,412,530       $2,759,055   $ (15,338,997)       $ (2,167,412)
                                           ==================================================================================
</TABLE>



          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                     Page 5
<PAGE>


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

                                                                        For the six months ended June 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                          $ (2,510,102)      $ (1,208,684)
         Depreciation and amortization                                             -             12,450
         Amortization of loan fees                                                 -            334,565
         Amortization of consulting fee                                            -            339,932
         Loss from unconsolidated joint venture                                    -            114,579
         Deferred rent                                                             -             (7,267)
         Beneficial conversion feature of convertible debt                   113,000                  -
         Stock issued for services                                            37,550                  -
    Changes in assets and liabilities
         Accounts receivable                                                 (30,000)          (169,855)
         Inventories                                                       1,914,342           (288,872)
         Inventory held by joint venture                                           -           (500,000)
         Other current assets                                                      -             38,404
         Bank overdraft                                                        2,094                  -
         Accounts payable and accrued expenses                               217,117            723,696
         Accounts payable, related party                                      10,719                  -
         Deferred revenue                                                          -            550,000
                                                                        -------------      -------------
           Net cash flows (to) continuing operations                        (245,280)           (61,052)
           Net cash flows (to) discontinued operations                             -           (661,458)
                                                                        -------------      -------------
               Net Cash (Used in) Operating Activities                      (245,280)          (722,510)
                                                                        -------------      -------------
CASH FLOWS FROM (TO) INVESTING ACTIVITIES:

               Net Cash (Used in) Investing Activities                             -                  -
                                                                        -------------      -------------
CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
    Proceeds from issuance of common stock                                    50,000            350,000
    Payment of offering costs                                                 (5,000)                 -
    Advances on notes payable                                                 57,526            150,000
    Employee stock plan receivable                                                 -            (12,600)
    Advances on letter of credit                                                   -            350,000
                                                                        -------------      -------------
               Net Cash Provided by Financing Activities                     102,526            837,400
                                                                        -------------      -------------
INCREASE (DECREASE) IN CASH                                                 (142,754)           114,890

CASH, beginning of period                                                    142,754            172,306
                                                                        -------------      -------------
CASH, end of period                                                     $          -       $    287,196
                                                                        =============      =============
</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 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 six months ended June 30, 2002, we sold 250,000 shares of common
stock for $100,000, $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.


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 owing 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.


                                     Page 7
<PAGE>


4.   CONVERTIBLE DEBT

     During the six months ended June 30, 2002, certain convertible debt holders
converted $420,000 to 1,694,718 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 for as an expense for the beneficial
conversion feature of the new conversion rate.

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 loan bears
interest at 10% per annum. If the loan is not repaid within 30 days after the
due date, the loan will bear interest at 14% per annum. The Company did not
raise these funds and the holder has agreed to extend the term of the note.

     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
loan bears interest at 10% per annum. If the loan is not repaid within 30 days
after the due date, the holder will receive 50,000 shares of the Company's
common stock.

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.

     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. We paid $2,000 for the option, which will be
credited 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 8
<PAGE>


7.   INVENTORIES

     Inventories are stated at the lower of cost (first-in first-out) basis or
market. At June 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 three months ended June 30, 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.


                                     Page 9
<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 August 15, 2002, and we undertake no duty to update this
information. If events occur subsequent to August 15, 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


                                    Page 10
<PAGE>


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.

     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.

     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


                                    Page 11
<PAGE>


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.


                                    Page 12
<PAGE>


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.

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 has 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 December 31, 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.


                                    Page 13
<PAGE>


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 June 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 June 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. Management has determined that the adoption of the provisions
of SFAS 142 will have no material impact on our results of operations and
financial position.

     In December 1999 the Securities and Exchange Commission issued Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB
101") which provides guidance related to revenue recognition based on
interpretations and practices followed by the SEC. SAB 101A was released on
March 24, 2000 and deferred the effective date to no later than the second
fiscal quarter beginning after December 15, 1999. In June 2000, the SEC issued
SAB 101B which delays the implementation date of SAB 101 until no later than the
fourth fiscal quarter of fiscal years beginning after December 15, 1999. We have
adopted this SAB and do not believe that adoption of this SAB will have a
material impact on our financial statements.

     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 financial statements.

     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 financial statements.


                                    Page 14
<PAGE>


RESULTS OF OPERATIONS

THREE AND SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO THE THREE AND SIX MONTHS
ENDED JUNE 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 June 30, 2002 and
2001 and were $30,000 for the six months ended June 30, 2002 compared to $0 for
the six months ended June 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 June 30,
2002 and 2001 and were $8,600 or 29% of sales for the six months ended June 30,
2002 compared to $0 for the six months ended June 30, 2001.

     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 decreased $227,585, or 58.1%, to $163,980 for the three
months ended June 30, 2002 from $391,565 for the three months ended June 30,
2001 and decreased $404,655, or 51.7%, to $378,475 for the six months ended June
30, 2002 from $783,130 in the six months ended June 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 increased
$1,571,734, or 274% and $1,301,418, or 108% to $2,145,232 and $2,510,102 for the
three and six months ended June 30, 2002 compared to operating loss of $573,498
and $1,208,684, for the three and six months ended June 30, 2001. The increase
primarily is due to the loss on write-down of inventory of $1,914,342 in 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 approximate $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, 2002 was ($245,280), primarily attributable to a net loss
from continuing operations. Net


                                    Page 15
<PAGE>


cash provided by financing activities during the six months ended June 30, 2002
was $102,526, primarily due to the issuance of the Company's common stock and
advances on notes payable.

     Our total cash and cash equivalent balance at June 30, 2002, was $0, 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 June 30, 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 bank borrowings and the
issuance 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 June 30, 2002, was $1,867,412. 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 no cash on hand, and sold only
one product in the six months ended June 30, 2002. We cannot fund future
operating losses and capital requirements. Since January 1, 2002, we have raised
net proceeds of $102,526 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.

     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.

          (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


                                    Page 16
<PAGE>


report, the outstanding balance is $300,000. The holder has agreed to extend the
term of the debenture.

          (C) One convertible debenture with a face amount of $300,000, due June
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
June 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 June 30, 2002, with interest at the rate of 10% per annum.
Dasibi China has agreed to extend the term of the note.

          (F) One loan to 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. Delta Capital has agreed to extend the
term of the note.

          (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 balalnce is
$320,000. The holders have agreed to extend the term of the debentures.

          (H) One loan payable for $22,526 due the earlier of June 29, 2002 or
the date upon which we raise funds in excess of $30,000. The loan bears interest
at 10% per annum. If the loan is not repaid within 30 days after the due date,
the loan will bear interest at 14% per annum. We have not raised the funds in
excess of $30,000. The holder has agreed to extend the term of the loan.

          (I) One loan payable for $35,000, due the earlier of September 10,
2002 or upon which we raise funds in excess of $50,000. The loan bears interest
at 10% per annum. If the loan is not repaid within 30 days after the due date,
the holder will receive 50,000 shares of our common stock, and the loan will
bear interest at 14%.

          (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 six months ended June 30, 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.


                                    Page 17
<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 AUDITOR'S 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
$0. We have been unable to pay all of our creditors and certain other
obligations in accordance with their terms. We do not have any cash on hand or
short-term investments and 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 th
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.


                                    Page 18
<PAGE>


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 $15.3 million. During fiscal 2001 and the six months ended June 30,
2002, we incurred net losses of $7.4 million and $2.3 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.

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


                                    Page 19
<PAGE>


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 June 30, 2002, we have outstanding an aggregate of $820,000 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:

<TABLE>
<CAPTION>
                                                   ASSUMED CONVERSION PRICE
                                       -----------------------------------------------
                                           $.20              $.40              $.60
                                           ----              ----              ----
<S>                                     <C>               <C>                <C>
NO. OF SHARES ISSUABLE UPON
CONVERSION                              4,100,000         2,050,000          1,366,667

PERCENT OF OUTSTANDING
COMMON STOCK PRIOR TO ISSUANCE             49.7%             24.8%              16.6%
</TABLE>


     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 which the seller does not
own or any sale which 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 June 30, 2002, we have granted options and warrants to purchase a
total of 1,946,427 shares of common stock that have not been exercised and an
aggregate of $820,000 outstanding debentures that are convertible based upon a
conversion price of 70-85% of the


                                    Page 20
<PAGE>


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.

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 21
<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
                      August 19, 2002.

               99.2   Certification of Chief Financial Officer pursuant to
                      Section 906 of the Sarbanes-Oxley Act of 2002 dated
                      August 19, 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.


                                    Page 22
<PAGE>


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


                                    Page 23