0001000096-01-500392.txt : 20011008 0001000096-01-500392.hdr.sgml : 20011008 ACCESSION NUMBER: 0001000096-01-500392 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20010918 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POLLUTION RESEARCH & CONTROL CORP /CA/ CENTRAL INDEX KEY: 0000763950 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 952746949 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-55276 FILM NUMBER: 1739820 BUSINESS ADDRESS: STREET 1: 506 PAULA AVE CITY: GLENDALE STATE: CA ZIP: 91201 BUSINESS PHONE: 8182477601 MAIL ADDRESS: STREET 1: 506 PAULA AVE CITY: GLENDALE STATE: CA ZIP: 91201 FORMER COMPANY: FORMER CONFORMED NAME: DASIBI ENVIRONMENTAL CORP DATE OF NAME CHANGE: 19900529 S-3/A 1 pollutions3a1.txt FORM S-3 (AMENDMENT NO. 1) As filed with the Securities and Exchange Commission on September 18, 2001 Registration No. 333-55276 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------- Pollution Research and Control Corp. ---------------------------------------------------- (Exact name of registrant as specified in its charter) California ------------------------------------------------------------ (State or other jurisdiction of incorporation or organization) 95-2746949 ---------------------------------- (I.R.S. Employer Identification No.) 506 Paula Avenue, Glendale, California 91201 (818) 247-7601 ----------------------------------------------------------------- (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Albert E. Gosselin, Jr. 506 Paula Avenue, Glendale, California 91201 (818) 247-7601 ----------------------------------------------------------------------------- (Name, address, including zip code, and telephone number, including area code, of agent for service) Please send copies of all correspondence to: JOHN HOLT SMITH Kelly Lytton & Vann LLP 1900 Avenue of the Stars, Suite 1450 Los angeles, California 90067 Telephone: (310) 277-5333 Approximate date of commencement of proposed sale to the public: As soon as practicable after the Registration Statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE =============================================================================================================================== Proposed Title of Each Maximum Proposed Maximum Amount of Class of Securities Amount to Offering Price Aggregate Offering Registration To be Registered Be Registered Per Share (1) Price (1) Fee --------------------------------------- --------------------- --------------------- --------------------- --------------------- Common Stock, no par value, 924,370 $1.31 $1,210,925 $302.73 underlying debentures (2) --------------------------------------- --------------------- --------------------- --------------------- --------------------- Common Stock, no par value 750,000 $1.31 $ 902,500 $245.63 --------------------------------------- --------------------- --------------------- --------------------- --------------------- Common Stock, no par value, 618,000 $1.31 $ 809.580 $202.40 underlying warrants (3) --------------------------------------- --------------------- --------------------- --------------------- --------------------- Common Stock, no par value, 115,000 $1.31 $ 150,650 $ 37.66 underlying options (4) --------------------------------------- --------------------- --------------------- --------------------- --------------------- TOTAL 2,407,370 $1.31 $3,153,655 $788.42 --------------------------------------- --------------------- --------------------- --------------------- --------------------- (1) The amount of the registration fee is based upon the assumed issuance and sale of 924,370 shares of common stock underlying debentures, 750,000 shares of common stock being offered by selling shareholders, 618,000 shares of common stock underlying warrants and 115,000 shares of common stock underlying options, and the average of the high and low sales prices of the common stock on the NASDAQ SmallCap Market System on September 17, 2001, of $.40. (2) Represents the shares of common stock underlying the outstanding $500,000 face amount 18% Subordinated Convertible Debenture Due December 31, 2001, and the outstanding $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001. Pursuant to Rule 416, the number of shares of common stock issuable upon conversion of the debentures is subject to adjustment in accordance with the anti-dilution provisions of the debentures. (3) Represents the shares of common stock underlying warrants exercisable at exercise prices ranging from $1.50 to $5.00 per share on or prior to their various expiration dates commencing on June 1, 2002, through July 17, 2005. Pursuant to Rule 416, the number of shares of common stock issuable upon exercise of the warrants is subject to adjustment in accordance with the anti-dilution provisions of the warrants. 2
(4) Represents the shares of common stock underlying options exercisable at exercise prices of $.875 or $2.25 per share on or prior to their expiration dates on June 6 or December 21, 2003. Pursuant to Rule 416, the number of shares of common stock issuable upon exercise of the options is subject to adjustment in accordance with the anti-dilution provisions of the options. -------------- The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. DOCUMENTS INCORPORATED BY REFERENCE: Certain exhibits to this Registration Statement on Form S-3 as set forth in the Exhibit Index located at page 27. 3 SUBJECT TO COMPLETION PROSPECTUS 2,563,640 Shares of Common Stock POLLUTION RESEARCH AND CONTROL CORP. -------------- This Prospectus relates to an aggregate of 2,407,370 shares of common stock of Pollution Research and Control Corp. ("PRCC"), 1,657,370 of which shares are shares of common stock underlying outstanding debentures and warrants which may be issued upon conversion by the holders of the debentures and exercise of the warrants of PRCC. Information regarding the selling shareholders, the debenture and the warrant and option holders and the circumstances under which the warrant holders and the option holders may exercise their respective warrants or options so as to acquire the underlying shares of common stock, is set forth herein under "Description of Securities - Selling Shareholders," "- Common Stock That May Be Offered by the Warrant Holders" and "Common Stock That May Be Offered by the Option Holders." The debenture holders who convert their debentures into the underlying shares of common stock, the shareholders holding 750,000 shares of common stock and the warrant and the option holders who exercise their warrants or options so as to acquire the underlying shares of common stock (collectively, the "Selling Shareholders"), may offer and sell the shares of common stock from time to time. Such sales in each case may be in open market transactions, in private or negotiated transactions or in a combination of such methods of sale, at fixed prices, at prices then prevailing on the NASDAQ SmallCap Market System at the time of sale, at prices related to such prevailing market prices or at negotiated prices. At the time of a particular offer of common stock by the Selling Shareholders, a supplement to this Prospectus will be distributed that will set forth the number of shares of common stock being offered and the terms of the offering, including the name or names of any underwriters, dealers, brokers or agents, the purchase price paid by any underwriter for shares of common stock purchased from the Selling Shareholders, any discounts, commissions and other items constituting compensation from the Selling Shareholders and any discounts, commissions or concessions allowed or re-allowed to dealers, including the proposed selling price to the public. The Selling Shareholders reserve the sole right to accept and, together with any agent of the Selling Shareholders, to reject in whole or in part any proposed purchase of the shares of common stock. The Selling Shareholders will pay any sales commissions or other seller's compensation applicable to such transactions. The Selling Shareholders and agents who execute orders on their behalf may be deemed to be underwriters as that term is defined in Section 2(11) of the Securities Act of 1933 and a portion of any proceeds of sales and discounts, commissions or other seller's compensation may be deemed to be underwriting compensation for purposes of the Securities Act of 1933. (See "Plan of Distribution.") This prospectus also covers such additional shares of common stock as may be issuable to the Selling Shareholders in the event of a stock dividend, stock split, recapitalization or other similar change in the common stock. 4 We will not receive any of the proceeds from the sale of the shares of common stock by the Selling Shareholders. We have agreed to pay all costs of the registration of the shares of common stock underlying the debentures, the warrants and the options and otherwise being offered by the Selling Shareholders. Such costs, fees and disbursements are estimated to be approximately $65,000. SEE "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE SHARES OF COMMON STOCK. Our common stock is traded over-the-counter and is quoted on the SmallCap Market System under the symbol "PRCC." On September 17, 2001, the last sale price of the common stock on the NASDAQ National Market System was $0.40. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is September __, 2001 5 TABLE OF CONTENTS Page ---- Available Information................................................... 6 Incorporation of Certain Documents by Reference......................... 6 The Company............................................................. 7 The Offering............................................................ 8 Risk Factors............................................................ 8 Market Information...................................................... 14 Selling Security Holders................................................ 15 Plan of Distribution.................................................... 18 Description of Securities............................................... 19 Legal Matters........................................................... 23 Experts................................................................. 23 AVAILABLE INFORMATION We are subject to the informational and reporting requirements of the Securities Exchange Act of 1934 and, in accordance therewith, file reports, proxy statements and other information with the Securities and Exchange Commission. Such reports, proxy statements and other information that we file with the Commission may be inspected and copied at the public reference facilities maintained by the Commission at its principal offices at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, Suite 1300, New York, New York 10048, and on the Commission's web site at www.sec.gov. Copies of these materials can also be obtained at prescribed rates from the Public Reference Section of the Commission at its principal offices in Washington, D.C., set forth above. Additional information with respect to this offering may be provided in the future by means of supplements or "stickers" to the prospectus. We have filed a Registration Statement on Form S-3 (including all amendments and supplements thereto, the "Registration Statement") with the Commission under the Securities Act of 1933 with respect to the shares of common stock underlying the debentures, the warrants and the options, and otherwise offered hereby. This prospectus, which forms a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and the Exhibits filed therewith, certain parts of which have been omitted in accordance with the rules and regulations of the Commission. Statements contained herein concerning the provisions of such documents are not necessarily complete and, in each instance, reference is made to the Registration Statement or to the copy of such document filed as an Exhibit to the Registration Statement or otherwise filed with the Commission. Each such statement is qualified in its entirety by such reference. Copies of the Registration Statement and the Exhibits thereto can be obtained upon payment of a fee prescribed by the Commission or may be inspected free of charge at the public reference facilities and regional offices referred to above. 6 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE Our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000, and our Quarterly Report on Form 10-QSB for the quarter ended March 31, 2001, which were previously filed with the Commission (File No. 0-14266), are incorporated by reference in this prospectus and the registration statement of which it is a part. All documents that we filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus and prior to the termination of the offering of the shares of common stock, shall be deemed to be incorporated by reference herein and to be part hereof from the respective dates of the filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this prospectus and the registration statement of which it is a part to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus or the registration statement of which it is a part. We will furnish without charge to each person, including any beneficial owner, to whom this prospectus is delivered, upon the written or verbal request of such person, a copy of any or all of the documents incorporated herein by reference, other than exhibits to such documents. Requests should be addressed to: Secretary, Pollution Research and Control Corp., 506 Paula Avenue, Glendale, California 91201; telephone number (818) 247-7601. SUMMARY THE COMPANY For the past approximately twenty-eight years we have been engaged in the business primarily of designing, manufacturing and marketing electronic analytical instruments used to detect and measure various types of air pollution, such as "acid rain," "ozone depletion" and "smog episodes" through our wholly-owned subsidiary, Dasibi Environmental Corp. ("Dasibi"). Although we are the smallest competitor in the marketplace, management believes that we have one of the most complete "in-house" lines of instrumentation. Our products are generally used to measure air pollution levels in geographic areas that range in size from small industrial sites to entire states or countries. We also supply computer-controlled calibration systems that verify the accuracy of our instruments, data loggers to collect and manage pollutant information and final reporting software for remote centralized applications. At the core of this instrumentation are three software systems, including a data logger system that permits the analysis of air samples at remote locations, a central station system that allows the compilation of data at a central site and a predictive pollutant monitoring model, which is currently being sold and which management believes is useful for predicting future levels of pollutants across a geographic area. Our instruments have been sold to over 300 customers worldwide, including industrial manufacturers; federal, state, city, local and foreign governmental agencies; major industrial companies; and educational and research institutions in over thirty countries. These customers use our products principally for environmental protection compliance programs. Dasibi has an installed base of equipment in over thirty countries. Increasingly, we are engaged in sales and installations of our products in The People's Republic of China and we anticipate that growth in sales will continue there. 7 On April 17, 2000, we finalized a contract for Phase II of SEPA's Nationwide Urban Air Quality Network involving an additional thirty-three cities in the People's Republic of China. The contract, valued at approximately $13.5 million, will also be performed by Dasibi. It is anticipated, without assurance, that shipments under the Phase II contract will commence in 2001 and that all payments to Dasibi will be made by letter of credit drawn on China Construction Bank. Financing for Phase II is expected to be available from two of the banks that financed the successfully completed Phase I contract. Dasibi is expected to assist the People's Republic of China in obtaining ten-year financing at a 3.9% interest rate from the U.S. Export-Import Bank, N.A. (the "Ex-Im Bank"). The Ex-Im Bank, in accordance with its customary practice, is expected to guarantee, and Imperial Bank in Los Angeles, Californiais expected to provide, 100% of the financing. Our principal executive offices are located at 506 Paula Avenue, Glendale, California 91201, and its telephone number is (818) 247-7601. Our common stock is traded in the over-the-counter market and reported on the NASDAQ Small Cap Market System under the symbol "PRCC." THE OFFERING Shares of Common Stock Underlying Debentures................................. 924,370 shares of common stock(1) Shares of Common Stock..................... 750,000 shares of common stock Shares of Common Stock Underlying Warrants. 618,000 shares of common stock(2) Shares of Common Stock Underlying Options.. 115,000 shares of common stock(3) ------------------ (1) Includes shares of common stock underlying the $500,000 face amount 18% Subordinated Convertible Debenture Due December 31, 2001, and the $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001. (2) Includes shares of common stock underlying nine warrants exercisable at exercise prices ranging from $1.50 to $5.00 per share on or prior to their various expiration dates commencing on June 1, 2002, through July 17, 2005. (3) Includes shares of common stock underlying two options exercisable at exercise prices of $.875 or $2.25 per share on or prior to their expiration dates on June 6 or December 21, 2003. RISK FACTORS Prospective investors should consider carefully, in addition to the other information contained in and incorporated into this prospectus and the registration statement of which it is a part, the following risk factors in evaluating an investment in us before purchasing the shares of common stock offered hereby. 8 1. PRCC Is Upon Present and Future China Business for Revenues and Success. Since January 1998, we have focused our business primarily on the air pollution market of the People's Republic of China. The approximate $13.5 million price of the Phase II contract with SEPA for the installation of air pollution monitoring systems in an additional thirty-three cities in the People's Republic of China is our most significant present sale, although our performance and receipt of payments on the Phase II Contract have been delayed. In addition, in May 2000, our Board of Directors approved letters of intent with SEPA proposing the organization of a joint venture to manufacture our products in the People's Republic of China. We are increasingly dependent on sales and installations in China which require continued successful performance of our Phase I and Phase II contracts with one customer in China. Revenues from contracts in China represented approximately 74% of our entire foreign revenues. Failure to complete the Phase II contract to the satisfaction of SEPA or failure to attract significant future other business in China for any reasons whatsoever would have a material adverse effect on PRCC and its revenues. Delays in the commencement of performance on the Phase I contract continue to have been caused by the requirement for financial approval of each of the 33 cities by the bank lending the funds for the Phase II. To date 27 of the 33 cities have been approved and performance will commence only upon approvaly of the remaining cities which is in process. Further, continued delays in the performance by China of the Phase II contract will cause us to continue to experience delays in receiving revenue and will restrict cash flow accordingly. There can be no assurance that we will be able to successfully complete the contract for Phase II once performance commences or that it will result in a profit if completed. 2. PRCC has Experienced Significant Delays in payments under Phase II Contract and Has Been Required to Raise Capital. We have experienced cash shortages from time to time; especially for the last 18 months, primarily from delays in the performance by China of the Phase II contract. As a result, management has been required to raise funds from private and public equity and debt financing on terms less favorable in the years 2000 and 2001 than previously. Since we have no access to bank lines of credit presently and because of the low market value of our common stock, raising funds from equity placements has been relatively costly and has made it necessary in order to attract such capital, to grant warrants and options in addition to issuing common stock. Equity and debt placement have required us to give significant discounts and incentives. During the year ended December 31, 2000, we granted warrants and options exercisable to purchase an aggregate of 1,143,607 shares of common stock. Also, during 2000, we borrowed a total of $1,790,000; $925,000 of which amount represents loans in the amounts of $650,000, $200,000 and $75,000 from three unaffiliated persons at interest rates of 12%, 18% and 10% per annum, respectively. Additionally, we have issued debentures and borrowed $865,000 under terms which allow the debenture holders conversion rights at discounts to the market. These favorable conversion rates are sometimes referred to as "toxic securities". See "Risk Factors - Toxic Securities" and Risk Factors - Dilution". Continued capital raising through private placements of debt and equity securities may continue to be necessary to satisfy cash requirements of PRCC. No assurance can be given that capital will continue to be available to PRCC or that the terms of any capital raising transaction will be acceptable to PRCC. 3. High Operating and Financing Costs Have Had a Negative Impact on Cash flow and Profits From Operations. The contracts awarded to us for Phase I and Phase II of SEPA's Nationwide Urban Air Quality Network have required a departure from the self-sustaining, break-even level of operation. In prior years, we have sustained satisfactory cash flow and operations with "base" core business of approximately $2,600,000 in revenue and a minimum total staff of approximately twenty-five. In year 2000, we doubled our staff to approximately forty-five employees and otherwise increased operating expenses in order to perform the Phase I contract. We are again increasing staffing (by again doubling our workforce from forty-five to approximately one hundred employees), training and other operating expenses in anticipation of the commencement in 2001 of shipments under the Phase II contract which has not in fact commenced. Losses are expected to continue for the foreseeable future until such time, if ever, as we realize a steady flow of revenue from business in China, presently the Phase II contract. Accordingly, we can be expected to incur operating losses during the first, second and third quarters of 2001 and in any quarter thereafter in which we fail to make product shipments to the People's Republic of China under the Phase II contract. In addition to high fixed operating expenses, the high financing costs we are experiencing have the effect of further depressing our operational performance. 9 4. Our Substantial Losses Prior to 1999 Have Had a Negative Effect on Product Development and On Attracting New Business. During each of the four years commencing with the year ended December 31, 1996, with the exception of the year ended December 31, 1999, in which we realized net income of $1,125,637, we have recognized a net loss. We recognized a net loss for the year ended December 31, 2000 of $1,856,000. During the 1996, 1997 and 1998 years, revenue decreased from approximately $8.8 million to less than $3 million as a result of the discontinued operations of two subsidiaries and significant competitive price pressure for PRCC's instruments, thus forcing us to lower our domestic and foreign bids, reducing the number of our bid awards and reducing the profit margin on the bids awarded to us. Our gross profit also steadily decreased from 46% and 41% of net revenue in fiscal 1996 and 1997, respectively, to approximately 35% of net revenue in fiscal 1998. As a result, in 1998 we suspended major new product development efforts and scaled back our efforts to improve or modify existing technologies in response to the competitive price pressures. There can be no assurance that we can obtain other business in China which is performed on schedule; or be capable of returning to profitability once the Phase II contract commences or new business in China is obtained. 5. Some of Our Securities are Toxic Securities / Debentures Convertible at Discount to Market. The debentures which are held by the Selling Securities Holders are convertible into the common stock of the Company at 80% of the market price ("closing bid price") on the date of conversion and not at the full market price of the common stock. Should the holders of the debentures convert their debentures at the discounted price of 20% below the market price and thereafter sell their shares such persons would have the advantage of an assured profit. Large numbers of shares purchased at discount could have the effects of: o depressing the market value of the shares trading on the NASDAQ SmallCap Market; o causing potential buyers of the shares on the market to seek to purchase not at the market price but at the discounted price, thus depressing the price of the shares trading on the market; o causing short sales to occur which would lower the bid price of the common stock; o causing the market price of the common stock to decline because of an indeterminable overhang or potential conversion of shares at bargain prices; or o allocating the debenture holders to purchase a greater number of shares than if the discount to market were not in effect. All of these factors could depress the market price of the common stock and generally are referred to as "toxic securities." The existence of toxic securities increases the likelihood of our stock price remaining low and being a "penny stock". See "Risk Factors / Effects of Shares of PRCC Becoming Penny Stock." 6. Effects of Our Shares of PRCC Becoming Penny Stock. PRCC's shares of common stock are quoted on the Nasdaq SmallCap System. Should the shares of common stock of PRCC be delisted and trade on the over-the-counter-bulletin-board or "pink sheets", then in such event an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of, the securities offered. SEC Rule 15g-9 establishes the definition of a "penny stock," for purposes relevant to PRCC, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions. For any transaction involving a penny stock, unless exempt, the penny stock rules require that: o a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased; o In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks; o The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth the basis on which the broker or dealer made the suitability determination and that the broker or dealer received a signed, written agreement from the investor prior to the transaction; 10 o Disclosure also has to be made about the risks of investing in penny stock in both public offering and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions; and o Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. 7. Possible Dilutive Effect and Other Disadvantages of Our Outstanding Debentures, Warrants and Options. As of the date hereof, our outstanding debentures are convertible, based upon a conversion price per share of $l.05 or $.32 applicable as of September 17, 2001, into approximately 1,562,500 shares of common stock. The conversion price of these debentures may be calculated based upon the market price of our common stock, which has been as low as $.26 from time-to-time. Accordingly, if the debentures are converted at a time when our common stock is trading at a low price, the number of shares issuable upon conversion of the debentures may be extremely large. Further, to the extent that the market price of the common stock at the time of conversion of any of the debentures or exercise of any of the warrants or options exceeds the conversion or exercise price, the conversion or exercise would have a dilutive effect on our shareholders. As of the date hereof, there are an aggregate of 1,957,231 shares of common stock reserved for issuance upon the exercise of outstanding options and warrants currently exercisable at prices in a range from $.75 to $5.00. 8. We are the Smallest competitor in Our Market Place. We believe we are the smallest competitor in the ambient air pollution instrumentation market. There are other established firms in the same field, both in the United States and in foreign countries, which have substantially greater experience and financial and personnel resources than we do. Therefore, we compete with better-financed competitors who have greater resources for their research and development efforts and ability to sell at a lower price. Although we are not aware of any other company that competes with us in all of our product lines, all of our competitors have capital and personnal resources substantially greater than our resources. There are also smaller companies that specialize in a limited number of the types of products that we manufacture. Our primary competitors in the domestic market are Thermo Instrument Systems, Inc. and Monitor Labs, Inc. In the foreign market, our primary competitors are Thermo Instrument Systems, Monitor Labs, Environment S.A. of France and Horiba Instruments. All of our competitors also offer a wider range of equipment monitoring additional pollutants, than we do. 11 9. Uncertainties Regarding International Sales/Instability of Currency and Exchange Rates, Tariffs and other Barriers. During the last three fiscal years, foreign sales have represented approximately 55% to 70% of our total revenue and are expected to represent such amounts or more of our future sales for the next few years. Foreign sales are subject to numerous risks, including: o political and economic instability in foreign markets, o restrictive trade policies of foreign governments, or the U.S. government's sanctions against sales to selected countries, o inconsistent product regulation by foreign agencies or governments, o the imposition of product tariffs and other trade barriers and o the burdens of complying with a wide variety of international and U.S. export laws and differing regulatory requirements. To the extent that foreign sales are transacted in a foreign currency, we would be subject to the risk of losses because of foreign currency fluctuations and difficulties associated with accounts receivable collection. Because we are required to assist in obtaining financing in connection with the contract for Phase II of SEPA's Nationwide Urban Air Quality Network, we bear the risk of realizing reduced margins from the Phase II contract if the financing is delayed and no revenue in the event financing is not obtained at all. 10. Technological Obsolescence of Our Products and Effects of Limited Research and Development. We are engaged in a field characterized by product performance. Our future success will depend on our ability to continue to develop innovations and enhance our current products, reduce product costs and develop and introduce new products that keep pace with technological developments in response to evolving customer requirements and governmental regulations. Our inability to conduct research because of inadequate cash flow or inability to attract additional capital, or our failure to respond adequately to technological developments of competitors could result in a loss of future revenue and impair our competitiveness. Since early 1994, we have sharply limited our product development efforts. Research and development expenditures were $53,465 and $70,830 for the years ended December 31, 2000 and 1999, respectively. For the foreseeable future, management expects to conserve its capital by limiting research and development to software development related to its products and efforts to refine and improve our present products. 11. Our Reliance on Certain Suppliers Could Casue Delays. While we manufacture many components and subsystems used in our products, other components, including packaging materials, integrated circuits, microprocessors and minicomputers, are purchased on a non-contractual basis from unaffiliated suppliers. We are not dependent upon any one supplier for any raw material or component that we purchase, and we believe there are available alternative sources for those raw materials and components. We are currently dependent, however, on a limited number of vendors with respect to the availability and quality of certain key instrument components, such as printed circuit board designs and lamps. A vendor's inability to supply these components to us in a timely fashion, or to our satisfaction, would affect our ability to deliver our instruments on time and could damage our reputation for efficiency and promptness in contract performance. 12. Our Limited Marketing Capability and lack of Financial Resources. Our success depends in large part upon our ability to identify and adequately penetrate the markets for our products. Most of our competitors have much larger budgets for marketing, advertising and promotion. We have historically lacked the financial, personnel and other resources required in order to compete with our larger, better-financed competitors in marketing products. While we returned to profitability with the award in 1998, and the successful completion in 1999, of the Phase I China contract, we incurred a sizable net loss for the year ended December 31, 2000, $1,856,018. We cannot be certain that that we will again return to profitable operation with the award in April 2000 of the contract for Phase II of SEPA's Nationwide Urban Air Quality Network or that with other limited marketing capability we will be able to attract signicicant other business in China and/or other foreign countries. 13. Dependence on Key Personnel. Our success depends in substantial part upon the services of Mr. Albert E. Gosselin, Jr., President and Chairman of the Board of Directors of PRCC. Failure to retain the services of Mr. Gosselin 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 any of our personnel and have no present plans to obtain such insurance. 12 14. 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 trademark and trade secret laws. It has generally been our policy to proceed without patent protection. As managaement is of the opinion that protection is better obtained through the proprietary software required to properly operate the products of PRCC than by a patent application. 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. Moreover, the laws of China and the other foreign countries in which we sell our products do not afford the same protection of our proprietary rights as do the laws of the United States. There can be no assurance 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. 15. Absence of Products Liability Insurance. 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 PRCC products in China 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 a major customer. 16. Volatility of Our Stock Price. 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 air pollution monitoring 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 the common stock. In addition, sales of substantial amounts of shares of common stock in the public market following this offering could adversely affect the future trading price of the common stock. 17. We Have Paid No Dividends. We have never paid dividends on the shares of our common stock and do not intend to pay any dividends in the foreseeable future. 18. 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. The 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 the Board of Directors as an anti-takeover measure or device to prevent a change in our control. 13 19. Governmental Approvals Including the EPA. We are required to obtain approval by the U.S. Environmental Protection Agency of new air pollution monitoring instruments we produce before the instruments can be sold in the United States. Currently, all air pollution monitoring instruments that we sell in the United States have received EPA approval. Our sales in the United States in the year 2000 were $1,700,000 out of a total of $3,636,622. If the EPA were to change its regulations or requirements, we could not be certain that our products would comply with these standards or that we would be able to comply with the modified requirements. With the exception of Germany, no foreign country requires governmental approval of air pollution monitoring instruments. We cannot be certain that additional regulations will not be adopted by other foreign governments. Failure to meet any future regulation could have a material adverse effect on us and render certain of our products obsolete. 20. Dependence On Legislation and Regulation of Air Quality Standards. The products that we developed and manufacture monitor air pollutants in accordance with standards established generally by federal, state, local and foreign governmental agencies. Changes in legislation or regulations or a relaxation of standards determined by such agencies could adversely affect the market for our products or render certain of our products obsolete. USE OF PROCEEDS The Company is registering the common stock described in this prospectus pursuant to the request of Selling Shareholders. This offering does not include the exercise of warrants or options or the conversion of debentures into shares of common stock. While the Company will not receive any of the proceeds from the sale of the common stock being registered by the Selling Shareholders, we will receive payment upon exercise of the warrants and options, a maximum of $2,182,750 approximately. Because the closing price of our common stock on September 17, 2001 was $.40 per share and the exercise price of the warrants and options is higher, it is not likely that the warrants or options will be exercised in the near future. Any such payments will be used for working capital. MARKET INFORMATION Our common stock is traded over-the-counter and reported on the Nasdaq SmallCap System under the symbol "PRCC." Set forth below are the high and low closing bid quotations in the over-the-counter market for the common stock as reported by the relevant market makers for fiscal years 2000, 1999 and 1998. The high and low closing bid quotations in the over-the-counter market reported by the relevant market makers on September 17, 2001, were $.40 and $.40, respectively, for the common stock. Quotations represent inter-dealer quotations, without adjustment for retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions.
Fiscal 2001 Fiscal 2000 Fiscal 1999 Quarter Ended High Bid Low Bid High Bid Low Bid High Bid Low Bid ------------- ------------------- ------------------- ------------------- Common Stock: March 31 $.87 $.87 $4.22 $1.41 $2.00 $ .88 June 30 .80 .41 3.68 1.88 2.38 1.06 September 30 * 2.96 1.66 3.87 1.81 December 31 * 2.31 .91 2.91 1.56
As of September, 2001, the approximate number of shareholders of record of our common stock was 1,100. We have never paid or declared any dividends on our common stock and do not anticipate paying dividends in the foreseeable future. We cannot predict the market price for the common stock upon the commencement or the completion of this offering. Since the market for our common stock is thinly traded, sales of the shares of common stock could cause the common stock to trade at levels lower than would otherwise be anticipated. 14 SELLING SECURITY HOLDERS The table below indicates the name of each Selling Security Holder, any material relationship that he or it has had to PRCC within the last three years, the number and percentage of shares of common stock owned by the Selling Security Holder prior to this offering, the number of shares being offered for sale by the Selling Security Holder and the number of shares of common stock and the percentage of the total shares of common stock outstanding that will be held after the offering. (See "Description of Securities - Capital Stock - Common Stock," "- Common Stock That May Be Offered By the Debenture Holders," "- Common Stock Offered By the Selling Shareholders," "- Common Stock That May Be Offered By the Warrant Holders" and "- Common Stock That May Be Offered By the Option Holders.")
Selling Debenture- Owned Owned Owned Holder and Relationship Prior to Being After Warrantholder to Company Offering Per Cent Offered Offering Per Cent ---------------------- ---------- -------- -------- ------- -------- -------- Brittanica Associates 12.80% 748,179(1) 12.80% 748,179(1) -0- 0.00 Ltd. shareholder Manoucher EsfanZadeh Shares Shares Shares Owned Owned Owned Selling Relationship Prior to Being After Shareholder to Company Offering Per Cent Offered Offering Per Cent ---------------------- ---------- -------- -------- ------- -------- -------- Silverline Partners, 12.07% 700,000(2) 12.07% 700,000(2) -0- 0.00 Ltd. shareholder Margareta Hedstrom Owned Owned Owned Selling Relationship Prior to Being After Debentureholder to Company Offering Per Cent Offered Offering Per Cent ---------------------- ---------- -------- -------- ------- -------- -------- Target Growth Fund, 8.54% 476,191(3) 8.54% 476,191(3) -0- 0.00 Ltd. shareholder George Sandhu 15
Owned Owned Owned Selling Relationship Prior to Being After Warrantholders to Company Offering Per Cent Offered Offering Per Cent ---------------------- ---------- -------- -------- ------- -------- -------- IIG Equities Opportu- N/A 157,500(4) 3.00 157,500(4) -0- 0.00 nities Fund Ltd. Martin Silver Astor Capital, Inc. N/A 138,000(5) 2.64 138,000(5) -0- 0.00 Jacques Tizabi Spiga Limited N/A 22,500(6) .44 22,500(6) -0- 0.00 Clive Dakin Selling Shareholder Owned Owned Owned and Relationship Prior to Being After Optionholder to Company Offering Per Cent Offered Offering Per Cent ---------------------- ---------- -------- -------- ------- -------- -------- Steven Sion 5.29% 277,500(7) 5.29 150,000(7) 127,500 2.43 shareholder Owned Owned Selling Relationship Prior to Being After Optionholder to Company Offering Per Cent Offered Offering Per Cent ---------------------- ---------- -------- -------- ------- -------- -------- Delta Capital N/A 15,000(8) .29 15,000(8) -0- 0.00 Partners Pasha Torabi ------------------
*The number of shares of Common Stock underlying, and the exercise price of, each option described in the table above is shown after giving effect to the reverse split in our common stock effective on May 15, 1998, on the basis of one share for each four shares of Common Stock then outstanding. Percentages are based upon a total outstanding amount of 5,917,002 shares of common stock as of September 1, 2001. Percentage of shares after the offering assumes the sale of all shares offered. (1) Includes 448,179 shares of common stock underlying the $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001, 200,000 shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable on or prior to February 23, 2003, at an exercise price of $4.50 and 100,000 shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable at an exercise price of $2.25 on or prior to February 23, 2003. A copy of the debenture is included as Exhibit 4.5 hereof and copies of the warrants are included at Exhibit 4.24 and 4.25 hereof. (2) Represents 700,000 shares of common stock issued pursuant to the Consulting Agreement dated January 4, 2001, between PRCC and Silverline Partners, Ltd. A copy of the Consulting Agreement is attached as Exhibit 4.37 hereof. (3) Includes 476,191 shares of common stock underlying the $500,000 face amount 18% Subordinated Convertible Debenture Due December 31, 2000. (4) Includes 75,000 shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable on or prior to June 1, 2002, at an exercise price of $1.50, 60,000 shares of common stock underlying the Stock Purchase Warrant exercisable at an exercise price of $2.2875 on or prior to July 17, 2005, and 22,500 shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable at an exercise price of $2.25 on or prior to September 1, 2002. Copies of the warrants are included as Exhibits 4.16, Exhibit 4.18, Exhibit 4.22 and Exhibit 4.35 hereof. 16 (5) Includes 100,000 shares of common stock underlying the Warrant to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. exercisable on or prior to June 6, 2003, at an exercise price of $5.00, 20,000 shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable on or prior to February 23, 2003, at an exercise price of $2.25 and 18,000 shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable at an exercise price of $2.25 on or prior to September 1, 2002. Copies of the warrants are included as Exhibit 4.17, Exhibit 4.20, Exhibit 4.26 and Exhibit 4.31 hereof. (6) Represents shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable at an exercise price of $2.25 on or prior to September 1, 2002. A copy of the warrant is attached hereto as Exhibit 4.19 hereof. (7) Includes 100,000 shares of common stock underlying the Option to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. from December 22, 2000 Void after 5:00P.M., Los Angeles Time, on December 21, 2003 exercisable at an exercise price of $.875 and 50,000 shares of common stock issued in accordance with the Promissory Noted dated December 22, 2000, payable by PRCC, as the maker, to Steven Sion, as the holder. A copy of the warrant is attached as Exhibit 4.36 hereof. (8) Represents shares of common stock underlying the Option to Purchase 15,000 Shares of Common Stock of Pollution Research and Control Corp. exercisable at an exercise price of $2.25 on or prior to June 6, 2003. A copy of the option is attached as Exhibit 4.32 hereof. 17 PLAN OF DISTRIBUTION The shares of common stock may be offered and sold from time to time by the Selling Shareholders or by pledgees, donees, transferees or other successors in interest. The Selling Shareholders will act independently of PRCC in making determinations with respect to the timing, manner and size of each offer or sale. These sales may be made on the over-the-counter market or otherwise at prices and at terms then prevailing or at prices related to the then current market prices, or in negotiated transactions. The Selling Shareholders may sell shares of common stock in any of the following ways: (i) through dealers; (ii) through agents; or (iii) directly to one or more purchasers. The distribution of the shares of common stock may be effected from time to time in one or more transactions (which may involve crosses or block transactions) in the over-the-counter market. The Selling Shareholders may effect these transactions by selling shares of common stock to or through broker-dealers, and the broker-dealers may receive compensation in the form of discounts, concessions or commissions from Selling Shareholders and/or commissions from purchasers of shares of common stock for whom they may act as agent. The Selling Shareholders and any broker-dealers or agents that participate in the distribution of common stock by them might be deemed to be underwriters and any discounts, commissions or concessions received by any of the broker-dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act of 1933. In offering the shares of common stock, the Selling Shareholders and any broker-dealers and any other participating broker-dealers that execute sales for the Selling Shareholders may be deemed to be "underwriters" within the meaning of the Securities Act of 1933 in connection with the sales, and any profits realized by the Selling Shareholders and the compensation of the broker-dealers may be deemed to be underwriting discounts and commissions. In addition, any shares of common stock covered by this prospectus that qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this prospectus. The public offering of the common stock by the Selling Shareholders will terminate on the date on which all shares of common stock offered hereby have been sold by the Selling Shareholders, or on the earlier date on which we file a post-effective amendment that de-registers all shares of common stock then remaining unsold. We will pay certain expenses incidental to the offering and sale of the shares of common stock to the public estimated to be approximately $30,100. We will not pay for, among other expenses, selling expenses, underwriting discounts or fees and expenses of counsel for the Selling Shareholders. 18 At the time a particular offer of common stock by the Selling Shareholders is made, a supplement to this prospectus will be distributed that will set forth the number of shares of common stock being offered and the terms of the offering, including the name or names of any underwriters, dealers, brokers or agents, the purchase price paid by any underwriter for shares of common stock purchased from the Selling Shareholders, any discounts, commissions and other items constituting compensation from the Selling Shareholders and any discounts, commissions or concessions allowed or re-allowed to dealers, including the proposed selling price to the public. We will not receive any of the proceeds from the sale of shares of common stock by the Selling Shareholders. DESCRIPTION OF SECURITIES Capital Stock ------------- Our authorized capital stock consists of 30,000,000 shares of common stock, no par value per share, and 20,000,000 shares of preferred stock, $.01 par value per share. Common Stock. All shares of common stock have equal voting rights and, when validly issued and outstanding, are entitled to one vote per share in all matters to be voted upon by shareholders. The shares of common stock have no preemptive, subscription, conversion or redemption rights and may be issued only as fully-paid and nonassessable shares of common stock. Cumulative voting in the election of directors is permitted; however, cumulative voting may occur only if a shareholder announces his intention to cumulate his votes prior to the voting, in which case all shareholders may cumulate their votes. In the event of liquidation of PRCC, each shareholder is entitled to receive a proportionate share of our assets available for distribution to shareholders after the payment of liabilities. All shares of our common stock issued and outstanding are fully-paid and nonassessable. Holders of the shares of common stock are entitled to share pro rata in dividends and distributions with respect to the common stock, as may be declared by the Board of Directors out of funds legally available therefor. As of September 1, 2001, there were 5,917,002 shares of common stock issued and outstanding held of record by approximately 1,100 shareholders. PRCC is traded over-the-counter and reported on the NASDAQ National Market System under the symbol "PRCC." 19 Holders of shares of common stock are entitled to share pro rata in dividends and distributions with respect to the common stock when, as and if declared by the Board of Directors out of funds legally available therefor. We have not paid any dividends on our common stock and currently intend to retain earnings, if any, to finance the development and expansion of our business. Future dividend policy is subject to the discretion of the Board of Directors and will depend upon a number of factors, including future earnings, capital requirements and our financial condition. Preferred Stock. Shares of preferred stock may be issued from time to time in one or more series as may be determined by the Board of Directors. The voting powers and preferences, the relative rights of each such series and the qualifications, limitations and restrictions thereof shall be established by the Board of Directors, except that no holder of preferred stock shall have preemptive rights. We have no outstanding preferred stock, and the Board of Directors does not plan to issue any for the foreseeable future unless the issuance thereof shall be in our best interests. Common Stock That May Be Offered by the Debenture Holders --------------------------------------------------------- On May 19, 1999, the Company issued the $500,000 face amount 18% Subordinated Convertible Debenture Due December 31, 2001, bearing interest commencing June 1, 1999, to The Venezuela Recovery Fund N.V. The debenture was subsequently assigned and transferred to Target Growth Fund. The debenture is convertible in denominations of $50,000 at the conversion price per each share of common stock of the lesser of $2.25 (115% of the market price of the common stock on May 28, 1999) or 80% of the market price of the common stock on the conversion date. The provisions of the debenture are set forth in their entirety in the $500,000 face amount 18% Subordinated Convertible Debenture Due December 1, 1999, dated May 19, 1999, a copy of which is incorporated in the registration statement by reference to Exhibit 4.18 to our Form S-3 Registration Statement (SEC File Number 333-87965) filed September 28, 1999. The more detailed provisions of the debenture qualify this brief description of the debenture in its entirety. The number of shares of our common stock underlying, and the conversion price of, the debenture is shown after giving effect to the reverse split in the common stock effective on June 8, 1999, on the basis of one share for each four shares of common stock then outstanding. We issued, on February 16, 2000, the $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001, to Brittanica Associates Limited. The debenture is convertible in denominations of $50,000 at the conversion price per each share of common stock of the lesser of $2.00 or 85% of the market price of the common stock on the date of conversion. The provisions of the debenture are set forth in their entirety in the $500,000 face amount 12% Subordinated 20 Convertible Debenture Due February 23, 2001, a copy of which is attached as Exhibit 4.5 to the registration statement of which this prospectus is a part and is incorporated in this prospectus by this reference. The foregoing brief description of certain provisions of the debenture is qualified in its entirety by the more detailed provisions of the debenture. Common Stock Offered by the Selling Shareholders ------------------------------------------------ On January 4, 2001, we issued 700,000 shares of common stock to Silverline Partners, Ltd. ("Silverline Partners"), pursuant to the Consulting Agreement dated January 4, 2001, between PRCC and Silverline Partners. The shares were issued as a non-refundable due diligence fee for services previously performed by Silverline Partners in the discovery process in preparation of the Consulting Agreement and the services to be provided in accordance with, prior to entering into, the agreement. The Consulting Agreement provides for Silverline Partners to assist us for a period of one year through January 3, 2002, in exploring and obtaining business opportunities in the countries of the United Kingdom, France, Germany, Italy and Spain. These business opportunities include, but are not limited to, locating strategic partners having industrial companies capable of assisting in the distribution of products as well as forming alliances with technology companies having the capacity to improve upon our existing product line. The terms and conditions of the Consulting Agreement are more fully described in the Consulting Agreement, a copy of which is attached as Exhibit 4.49 to the registration statement of which this prospectus is a part, and is incorporated in this prospectus by this reference. On December 22, 2000, we issued Mr. Steven Sion 700,000 shares of common stock as an incentive to lend us the sum of $650,000 in cash. The loan is evidenced by the Promissory Note dated December 22, 2000, in the principal amount of $650,000, bearing interest at the rate of 12% per annum, that matures on the first to occur of February 23, 2001, or the date on which we receive the funds from forfaiting a letter of credit in the amount of $2,000,000 drawn on China Construction Bank. Common Stock That May Be Offered by the Warrant Holders ------------------------------------------------------- The number of shares of our common stock underlying, and the exercise price of, each warrant described herein is shown after giving effect to the reverse split in the common stock effective on June 8, 1999, on the basis of one share for each four shares of common stock then outstanding. On June 1, 1999, we granted a Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. to IIG Equities Opportunities Fund Ltd. exercisable at an exercise price of $1.50 per share on or prior to June 1, 2002, to purchase an aggregate of 75,000 shares of common stock. The terms and conditions of the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp., a copy of which is incorporated in the registration statement of which this prospectus is a part by reference to Exhibit 10.196 to the Annual Report on Form 10-KSB for the year ended December 31, 1999, qualify in its entirety the brief description of the warrant set forth above. On September 1, 1999, we granted a Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. to each of IIG Equities Opportunities Fund Ltd., Astor Capital, Inc., and Spiga Limited exercisable to purchase an aggregate of 22,500 shares, 22,500 shares, and 18,000 shares, of common stock, respectively, exercisable at an exercise price of $2.25 per share 21 on or prior to September 1, 2002. The brief description of certain provisions of the Warrants to Purchase Shares of Common Stock of Pollution Research and Control Corp. set forth above is qualified in its entirety by the more detailed provisions of the warrants, copies of which are incorporated herein by reference to Exhibits 10.198, 10.199, 10.200 to our Annual Report on Form 10-KSB for the year ended December 31, 1999. On February 23, 2000, we granted two Warrants to Purchase Shares of Common Stock of Pollution Research and Control Corp. to Brittanica Associates Limited exercisable on or prior to February 23, 2003, to purchase 200,000 shares, and 100,000 shares, of common stock at exercise prices of $4.50 and $2.25, respectively, and a Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. to Astor Capital, Inc., exercisable on or prior to February 23, 2003, to purchase 20,000 shares of common stock at an exercise price of $2.25 per share. The brief description of certain provisions of the Warrants to Purchase Shares of Common Stock of Pollution Research and Control Corp. set forth above is qualified in its entirety by the more detailed provisions of the warrants, copies of which are incorporated herein by reference to Exhibits 10.211, 10.212, 10.213 to our Annual Report on Form 10-KSB for the year ended December 31, 1999. On June 6, 2000, we granted a Warrant to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. to Astor Capital, Inc., exercisable at an exercise price of $5.00 per share on or prior to June 6, 2003. The terms and conditions of the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp., a copy of which is incorporated in the registration statement of which this prospectus is a part by reference to Exhibit 4.42 to our Registration Statement on Form S-3 (SEC File Number 333-48554) filed October 25, 2000, qualify in its entirety the brief description of the warrant set forth above. On July 18, 2000, we granted IIG Equities Opportunities Fund Ltd. a Stock Purchase Warrant exercisable on or prior to July 17, 2005, at an exercise price of $2.2875 per share to purchase 60,000 shares of common stock. The foregoing description of the Stock Purchase Warrant is a brief summary of certain provisions thereof and is qualified in its entirety by the more detailed provisions of the warrant, a copy of which is attached to the registration statement of which this prospectus forms a part as Exhibit 4.47, and is incorporated in this prospectus by this reference. Transfer Agent, Registrar and Warrant Agent ------------------------------------------- Oxford Transfer & Registrar, Inc., 1130 Southwest Morrison, Suite #250, Portland, Oregon 97205, is the Transfer Agent and Registrar for the common stock and the Warrant Agent for the warrants. Common Stock That May Be Offered by the Optionholders ----------------------------------------------------- The number of shares of our common stock underlying, and the exercise price of, each option described herein is shown after giving effect to the reverse split in the common stock effective on June 8, 1999, on the basis of one share for each four shares of common stock then outstanding. 22 On June 7, 2000, we granted the Option to Purchase 15,000 Shares of Common Stock of Pollution Research and Control Corp. exercisable at an exercise price of $2.25 on or prior to June 6, 2003, to Delta Capital Partners. The foregoing description of the option is a brief summary of certain of its provisions and is qualified in its entirety by the more detailed provisions of the option, a copy of which is incorporated herein by reference to Exhibit 4.42 to our Registration Statement on Form S-3 (SEC File Number 333-48554) filed October 25, 2000. On December 22, 2000, we granted to Mr. Steven Sion the Option to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. from December 22, 2000 Void after 5:00P.M., Los Angeles Time, on December 21, 2003, exercisable at an exercise price of $.875. The terms and conditions of the option are more fully described in the option, a copy of which is attached as Exhibit 4.48 to the registration statement of which this prospectus is a part, and is incorporated in this prospectus by this reference. LEGAL MATTERS Certain legal matters in connection with the validity of the issuance of the shares of common stock being offered by this prospectus will be passed upon for us by Cudd & Associates, 1120 Lincoln Street, Suite #1507, Denver, Colorado 80203. Patricia Cudd, Esq., the sole proprietor of Cudd & Associates, owns of record and beneficially warrants exercisable to purchase 10,000 shares of our common stock at an exercise price of $4.00 per share on or prior to March 31, 2003. EXPERTS Our financial statements are incorporated herein by reference to our Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999. Such financial statements have been audited by AJ. Robbins, P.C., Certified Public Accountants and Consultants, independent auditors, as stated in their report that is incorporated herein by reference. 23 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. ------------------------------------------- The following is an itemized statement of the expenses incurred in connection with this registration statement and the issuance and distribution of the shares of common stock being registered by this registration statement. All such expenses will be paid by us. Securities and Exchange Commission registration fee.................. $ 789 Legal fees and expenses.............................................. 20,000 Accounting fees and expenses......................................... 3,000 Blue sky fees and expenses........................................... 4,000 Transfer agent fees and expenses..................................... 3,000 Printing, electronic filing and engraving expenses................... 3,000 Miscellaneous expenses............................................... 2,000 ----- TOTAL .......................................................... $35,789 All of the above items except the Securities and Exchange Commission registration fee are estimates. Item 15. Indemnification of Directors and Officers. ----------------------------------------- Our Articles of Incorporation, as amended, provide for (i) the elimination of directors' liability for monetary damages for certain breaches of their fiduciary duties to PRCC and our shareholders as permitted by California law; and (ii) permit the indemnification by PRCC to the fullest extent under California law. At present, there is no pending litigation or proceeding involving a director or officer of PRCC as to which indemnification is being sought. Section 317 of the California Corporations Code, as amended, provides for the indemnification of the officers, directors and controlling persons of a corporation as follows: "(a) For the purposes of this section, "agent" means any person who is or was a director officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation; "proceeding" means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative; and "expenses" includes without limitation attorneys' fees and any expenses of establishing a right to indemnification under subdivision (d) or paragraph (3) of subdivision (e). (b) A corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the corporation to procure a judgment in its favor, II-1 an action brought under Section 9243, or an action brought by the Attorney General pursuant to Section 9230) by reason of the fact that such person is or was an agent of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding if such person acted in good faith and in a manner such person believed to be in the best interests of the corporation and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person believed to be in the best interests of the corporation or that the person had reasonable cause to believe that the person's conduct was unlawful. (c) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the corporation, or brought under Section 9243, or brought by the Attorney General pursuant to Section 9230, to procure a judgment in its favor by reason of the fact that such person is or was an agent of the corporation, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action if the person acted in good faith, in a manner in which such person believed to be in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinary prudent person in a like position would use under similar circumstances. No indemnification shall be made under this subdivision: (1) In respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation in the performance of such person's duty to the corporation, unless and only to the extent that the court in which such proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for the expenses which such court shall determine; (2) Of amounts paid in settling or otherwise disposing of a threatened or pending action, with or without court approval; or (3) Of expenses incurred in defending a threatened or pending action which is settled or otherwise disposed of without court approval unless it is settled with the approval of the Attorney General. (d) To the extent that an agent of a corporation has been successful on the merits in defense or any proceeding referred to in subdivision (b) or (c) or in defense of any claim, issue or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith. (e) Except as provided in subdivision (d), any indemnification under this section shall be made by the corporation only if authorized in the specific case, upon a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in either subdivision (b) or (c) by: II-2 (l) A majority vote of a quorum consisting of directors who are not parties to such proceedings; (2) Approval of the members (Section 5034), with the persons to be indemnified not being entitled to vote thereon; or (3) The court in which such proceeding is or was pending upon application made by the corporation or the agent or the attorney or other person rendering services in connection with the defense, whether or not such application by the agent, attorney or other person is approved by the corporation. (f) Expenses incurred in defending any proceeding may be advanced by the corporation prior to the final disposition of such proceeding upon receipt of an undertaking by or on behalf of the agent to repay such amount unless it shall be determined ultimately that the agent is entitled to be indemnified as authorized in this section. (g) No provision made by a corporation to indemnify its or its subsidiary's directors or officers for the defense of any proceeding, whether contained in the articles, bylaws, a resolution of members or directors, an agreement or otherwise, shall be valid unless consistent with this section. Nothing contained in this section shall affect any right to indemnification to which persons other than such directors and officers may be entitled by contract or otherwise. (h) No indemnification or advance shall be made under this section, except as provided in subdivision (d) or paragraph (3) of subdivision (e), in any circumstances where it appears that:: (1) It would be inconsistent with a provision of the articles, bylaws, a resolution or the members or an agreement in effect at the time of the accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or (2) It would be inconsistent with any condition expressly imposed by a court in approving a settlement. (i) A corporation shall have power to purchase and maintain insurance on behalf of any agent of the corporation against any liability asserted against or incurred by the agent in such capacity or arising out of the agent's status as such whether or not the corporation would have the power to indemnify the agent against such liability under the provisions of this section; provided, however, that a corporation shall have no power to purchase and maintain such insurance to indemnify any agent of the corporation for a violation of Section 9243. (j) This section does not apply to any proceeding against any trustee, investment manager or other fiduciary of an employee benefit plan in such person's capacity as such, even though such person may also be an agent as defined in subdivision (a) of the employer corporation. A corporation shall have power to indemnify such trustee, investment manager or other fiduciary to the extent permitted by subdivision (f) or Section 207." II-3 Item 16. Exhibits. -------- The Exhibit Index commences on page 34. Item 17. Undertakings. ------------ The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material changes to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-33 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 10 of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. 24 Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Glendale, State of California, on September 18, 2001. Date: September 18, 2001 POLLUTION RESEARCH AND CONTROL CORP. (Registrant) By: /s/ Albert E. Gosselin, Jr. ------------------------------------- Albert E. Gosselin, Jr., President, Chief Executive Officer and Chairman of the Board Directors 25 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Albert E. Gosselin, Jr., and Marcia A. Smith, or either one of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all pre- or post-effective amendments to this Registration Statement, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their or his or her substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Date: September 18, 2001 By: /s/ Albert E. Gosselin, Jr. ------------------------------------- Albert E. Gosselin, Jr., President, Chief Executive Officer and Chairman of the Board Directors (Principal Executive Officer) Date: September 18, 2001 By: /s/ Donald R. Ford ------------------------------------- Donald R. Ford, Chief Financial Officer (Principal Financial and Accounting Officer) Date: September 18, 2001 By: /s/ Gary L. Dudley ------------------------------------- Gary L. Dudley, Director Date: September 18, 2001 By: /s/ Marcia A. Smith ------------------------------------- Marcia A. Smith, Director Date: September 18, 2001 By: /s/ Craig E. Gosselin ------------------------------------- Craig E. Gosselin, Director 26 EXHIBIT INDEX The following Exhibits are filed as part of this Registration Statement on Form S-3 or are incorporated herein by reference. Item Number Description ------ ----------- 4.16 Warrant to Purchase 75,000 Shares of Common Stock of Pollution Research and Control Corp. issued to IIG Capital LLC; Warrant Agreement dated as of June 1, 1999, between Pollution Research and Control Corp. and IIG Capital LLC. (Incorporated herein by reference to Exhibit 10.196 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.17 Warrant to Purchase 30,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Astor Capital; Warrant Agreement dated as of June 1, 1999, between Pollution Research and Control Corp. and Astor Capital, Inc. (Incorporated herein by reference to Exhibit 10.197 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.18 Warrant to Purchase 22,500 Shares of Common Stock of Pollution Research and Control Corp. issued to IIG Equities Opportunities Fund Ltd.; Warrant Agreement dated as of September 1, 1999, between Pollution Research and Control Corp. and IIG Equities Opportunities Fund Ltd. (Incorporated herein by reference to Exhibit 10.198 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.19 Warrant to Purchase 22,500 Shares of Common Stock of Pollution Research and Control Corp. issued to Spiga Limited; Warrant Agreement dated as of September 1, 1999, between Pollution Research and Control Corp. and Spiga Limited. (Incorporated herein by reference to Exhibit 10.200 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.20 Warrant to Purchase 18,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Astor Capital, Inc.; Warrant Agreement dated as of September 1, 1999, between Pollution Research and Control Corp. and Astor Capital, Inc. (Incorporated herein by reference to Exhibit 10.199 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.21 Warrant to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Maria Molinsky; Warrant Agreement dated as of September 13, 1999, between Pollution Research and Control Corp. and Maria Molinsky. (Incorporated herein by reference to Exhibit 10.205 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.22 Warrant to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to IIG Capital LLC; Warrant Agreement dated as of December 1, 1999, between Pollution Research and Control Corp. and IIG Capital LLC. (Incorporated herein by reference to Exhibit 10.201 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 27 4.23 Agreement for Sale of Shares of Common Stock dated February 23, 2000, between Pollution Research and Control Corp. and Britannica Associates Limited. 4.24 Warrant to Purchase 200,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Brittanica Associates Limited; Warrant Agreement dated as of February 23, 2000, between Pollution Research and Control Corp. and Brittanica Associates Limited. (Incorporated herein by reference to Exhibit 10.211 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.25 Warrant to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Brittanica Associates Limited; Warrant Agreement dated as of February 23, 2000, between Pollution Research and Control Corp. and Brittanica Associates Limited. (Incorporated herein by reference to Exhibit 10.212 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.26 Warrant to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Astor Capital, Inc.; Warrant Agreement dated as of February 23, 2000, between Pollution Research and Control Corp. and Astor Capital, Inc. (Incorporated herein by reference to Exhibit 10.213 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.27 Warrant to Purchase 187,858 Shares of Common Stock of Pollution Research and Control Corp. issued to Ronald E. Patterson; Warrant Agreement dated as of March 31, 2000, between Pollution Research and Control Corp. and Ronald E. Patterson. (Incorporated herein by reference to Exhibit 10.218 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.28 Warrant to Purchase 87,141 Shares of Common Stock of Pollution Research and Control Corp. issued to Phillip T. Huss; Warrant Agreement dated as of March 31, 2000, between Pollution Research and Control Corp. and Phillip T. Huss. (Incorporated herein by reference to Exhibit 10.217 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.29 Warrant to Purchase 46,875 Shares of Common Stock of Pollution Research and Control Corp. issued to Lee Sion; Warrant Agreement dated as of March 31, 2000, between Pollution Research and Control Corp. and Lee Sion (Incorporated herein by reference to Exhibit 10.219 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.30 Warrant to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Steven Sion; Warrant Agreement dated as of March 31, 2000, between Pollution Research and Control Corp. and Steven Sion. (Incorporated herein by reference to Exhibit 10.220 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 28 4.31 Warrant to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Astor Capital, Inc.; Warrant Agreement dated as of June 6, 2000, between Pollution Research and Control Corp. and Astor Capital, Inc. 4.32 Option to Purchase 15,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Delta Capital Partners; Option Agreement, dated as of June 7, 2000, between Pollution Research and Control Corp. and Delta Capital Partners. 4.33 Warrant to Purchase 250,000 Shares of Common Stock of Pollution Research and Control Corp. from October 20, 2000 Void after 5:00 P.M., Los Angeles Time, on October 20, 2003, issued to East West Network Group Co. 4.34 Investor Relations Agreement Made by and between Pollution Research and Control Corp. and East West Network Group dated October 20, 2000. 4.35 Stock Purchase Warrant to Purchase 60,000 Shares of Common Stock of Pollution Research and Control Corp., issued to IIG Equities Opportunities Fund Ltd. 4.36 Option to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. from December 22, 2000 Void after 5:00 P.M., Los Angeles Time, on December 21, 2003, issued to Steven Sion. 4.37 Consulting Agreement dated January 4, 2001, between Pollution Research and Control Corp. and Silverline Partners, Inc. 4.5 $500,000 Face Amoount 12% Subordinated Convertible Debenture due February 22, 2001, granted to Brittanica Associates Limited. 5.0* Opinion and Consent of John Holt Smith of Kelly Lytton and Vann. 23.1* Consent of John Holt Smith (included in Exhibit 5.0 hereto). 23.2* Consent of A.J. Robbins, P.C., Certified Public Accountants and Consultants, independent auditors. ------------------ *Filed herewith. 29 EX-5.0 3 prs3a1exh50.txt OPINION EXHIBIT 5.0 and 23.1 OPINION OF COUNSEL AND CONSENT KELLY LYTTON & VANN LLP 1900 Avenue of the Stars Suite 1450 Los Angeles, California 90067 September 18, 2001 Board of Directors Pollution Research and Control Corp. 506 Paula Ave. Glendale, CA 91201 Re: Pollution Research and Control Corp. ("PRCC") Gentlemen: The undersigned is counsel for Pollution Research and Control Corp. I have been requested to render an opinion on the validity of the 2,407,370 shares of PRCC proposed to be sold pursuant the PRCC's Registration Statement on Form S-3. In rendering this opinion, I have reviewed PRCC's Registration on Form S-3, the Articles of Incorporation and By-Laws and other corporate documents. All representations made to me in PRCC documents and by company officers and directors are deemed to be accurate. It is my opinion that: 1. PRCC is a corporation duly organized, validly existing and in good standing and is qualified to do business in each jurisdiction in which such qualification is required. 2. That the shares of common stock to be issuable by PRCC upon conversion, exercise of warrants and options have been reserved and, when issued, will be duly and properly approved by PRCC's board of directors. 3. That the shares of stock, when and as issued, will be fully paid and non-assessable,will be legally issued and will be a valid and binding obligation of the corporation. 4. That the shares of common stock have not been but will be registered on form S-3 under the Securities Act of 1933, as amended (the "Act"), and will be registered by coordination with or exempt from the securities laws of the state jurisdictions in which they will be sold. I hereby consent to the use of this opinion in PRCC's Registration Statement on Form S-3. Please feel free to contact the undersigned should you have any further questions regarding this matter. Very truly yours, /s/John Holt Smith EX-23.2 4 prs3a1exh232.txt CONSENT Exhibit 23.2 AJ. ROBBINS, PC Certified Public Accountants and Consultants CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We hereby consent to the use in thie Registration Statement on Form S-3 Amendment #1 of Pollution Research and Control Corporation of our report dated February 9, 2001 relating to the consolidated financial statements of Pollution Research and Control Cororation. /s/ AJ Robbins, PC Denver, Colorado September 17, 2001 3033 East 1st Avenue - Suite 201 - Denver, CO 80206 - 303-321-1281- Fax 303-321-1288