10KSB

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

                                   FORM 10-KSB
                                 ---------------


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

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


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

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

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

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

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

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

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

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

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

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

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

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





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

                                TABLE OF CONTENTS



                                                                                          PAGE
                                                                                         
PART I.......................................................................................1
        Item 1.       Description of Business................................................1
                             General.........................................................1
        Item 2.       Description of Property................................................8
        Item 3.       Legal Proceedings......................................................8
        Item 4.       Submission of Matters to a Vote of Security Holders....................9
PART II......................................................................................9
        Item 5.       Market for Common Equity and Related Stockholder Matters...............9
                             Recent Sales of Unregistered Securities........................10
        Item 6.       Management's Discussion and Analysis or Plan of Operation.............10
                             Plan of Operation..............................................10
                             Summary of Significant Accounting Policies.....................11
                             New Accounting Pronouncements..................................13
                             Results of Operations..........................................15
                             Liquidity and Capital Resources................................15
                             Seasonality....................................................16
                             Cautionary Statements and Risk Factors.........................16
        Item 7.       Financial Statements..................................................21
        Item 8.       Changes in and Disagreements with Accountants on Accounting and
                      Financial Disclosure..................................................21
        Item 8A.      Controls and Procedures...............................................21
PART III....................................................................................22
        Item 9.       Directors, Executive Officers, Promoters and Control Persons;
                      Compliance with Section 16(a) of the Exchange Act.....................22
                             Directors, Executive Officers and Key Employees................22
                             Business Experience............................................22
                             Section 16(a) Beneficial Ownership Reporting Compliance........23
        Item 10.      Executive Compensation................................................23
                             Executive Compensation.........................................23
                             Compensation of Directors......................................25
        Item 11.      Security Ownership of Certain Beneficial Owners and Management and
                      Related Stockholder Matters...........................................26
        Item 12.      Certain Relationships and Related Transactions........................27
        Item 13.      Exhibits and Reports on Form 8-K......................................27
                             (a)    Exhibits................................................27
                             (b)    Reports on Form 8-K.....................................27
        Item 14.      Principal Accountant Fees and Services................................28



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                                     PART I

FORWARD LOOKING STATEMENTS

     This Annual Report on Form 10-KSB includes "forward-looking statements."
These include, among others, the statements about our plans and strategies under
the headings "Description of Business" and "Management's Discussion and Analysis
or Plan of Operation." When used in this document and the documents incorporated
herein by reference, the words "believe," "expect," "anticipate," "intend,"
"plan," "estimate," or similar expressions are intended to identify
forward-looking statements. Forward-looking statements are not guarantees of
future performance and are subject to risks, uncertainties, and other factors,
some of which are beyond our control, are difficult to predict, and could cause
actual results to differ materially from those we express in the forward-looking
statements. Although it is not possible to itemize all of the factors and
specific events that could affect the outlook of a technology company like ours
operating in a competitive environment, factors that could significantly impact
expected results include: the development of products in a timely and cost
effective manner; the commercial acceptance of our technology; the effect of
national and local economic conditions; our outstanding indebtedness; the loss
of key employees or collaborative partners; competition from technologies
developed by other companies; the ability to attract and retain employees; and
the ability to identify and consummate relationships with strategic partners, as
well as risks set forth in "Management's Discussion and Analysis or Plan of
Operation." Although we believe that our plans, intentions, and expectations
reflected in or suggested by these forward-looking statements are reasonable, we
cannot assure that we will achieve these plans, intentions, or expectations.
Actual results may differ materially from the forward-looking statements made in
this Annual Report.

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

     We primarily are engaged in the research and development of bio-terrorism
detection devices. After engaging in initial research and development efforts,
we determined to pursue a strategy to identify qualified strategic partners and
collaborate to develop commercially viable bio-terrorism detection devices.
Consistent with this strategy, in August 2002, we entered into a technology
affiliates agreement with NASA's Jet Propulsion Laboratory, commonly referred to
as JPL, to develop technology for our bio-terrorism detection equipment. JPL is
a federally funded research and development center sponsored by NASA and also is
an operating division of the California Institute of Technology, a private
non-profit educational institution. The agreement provides that JPL will develop
its proprietary bacterial spore detection technology for integration into our
existing aerosol monitoring system, resulting in a product which we refer to as
the Anthrax Smoke Detector. Our goal with JPL is to develop a product which
provides continuous unattended monitoring of airborne bacterial spores in large
public places, with real-time automated alert functionality.

     To a lesser extent, we also may engage in research and development relating
to our nitric oxide machine and applications in the medical diagnostics market.
We previously have participated in developing an asthma diagnostic instrument
with Logan Research of London

                                       1



England, a research institute, for these applications, but the project was
halted due to a lack of funding. From time to time, we engage in discussions
with potential research partners to pursue further research and development
efforts in this regard. Dr. Louis Ignarro, who became a member of our Scientific
Advisory Board in December 2002, is one of the leading researchers on nitric
oxide and its effects. To date, we have not entered into any collaborative
relationships with research partners in connection with the development of the
nitric oxide machine.

INDUSTRY BACKGROUND

     The attacks of September 11, 2001, and the subsequent spread of anthrax
spores have created a new sense of urgency in the public health systems across
the world, and especially in the United States. During the 2001 anthrax attacks
in the United States, emergency response personnel, clinicians, laboratories,
and public health officials were overwhelmed by requests for evaluation of
suspicious powders and by calls from patients concerned about exposures to
bio-terrorism agents. Systems designed to detect bio-terrorism agents in
clinical and environmental samples have become essential components of responses
to both hoaxes and actual bio-terrorism events. First responders and public
health officials require sensitive and specific detection systems that can
identify bio-terrorism agents early enough to take actions that limit the spread
of disease.

     The United States government has responded to this urgent need for
preparedness against bio-terrorism by establishing the Department of Homeland
Security. The Department of Homeland Security is intended to unite much of the
federal government's effort to secure the homeland, with the primary goal being
an America that is stronger, safer, and more secure. The primary mission of the
Department is to, among other things,

     o    prevent terrorist attacks within the United States,

     o    reduce the vulnerability of the United States to terrorism, and

     o    minimize the damage, and assist in the recovery, from terrorist
          attacks that do occur within the United States.

For fiscal 2004, the Department has allocated $350 million in new funding for
research, development, testing, and evaluation capabilities. According to the
Department, these funds are targeted to promote innovative, high payoff
capabilities through the Homeland Security Advanced Research Projects Agency, as
well as focused efforts to rapidly evaluate and prototype near-term technologies
available from the private sector. We may retain an outside consultant
specialized in government grants, to screen the applicable grants for us. At
this time, we have not received any portion of these grants, and cannot assure
you that we will receive any portion in the future.

     The private sector also has responded to the need for preparedness against
bio-terrorism. A number of companies have developed or are in the process of
developing various methods to detect harmful pathogens in the air through
genetic analysis, including DNA or RNA analysis. In recent years, significant
advances in molecular biology have led to the development of increasingly
efficient and sensitive techniques for detecting and measuring the presence of a
particular genetic sequence in a biological sample. Genetic testing involves a
number of

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highly technical procedures, including:

     o    SAMPLE PREPARATION - procedures that must be performed to isolate the
          target cells and to separate and purify their nucleic acids;

     o    AMPLIFICATION - a chemical process to make large quantities of DNA
          from the nucleic acids isolated from the sample; and

     o    DETECTION - the method of determining the presence or absence of the
          target DNA or RNA, typically through the use of fluorescent dyes.

     Existing technologies for determining the genetic composition of a cell or
organism generally face the following limitations:

     o    REQUIRE HIGHLY SKILLED TECHNICIANS AND SPECIAL LABORATORIES. Currently
          available methods and systems for genetic analysis require highly
          skilled scientists and technicians in a controlled laboratory setting,
          including, in many cases, separate rooms to prevent contamination of
          one sample by another. Some progress has been made to automate this
          process.

     o    LARGE AND INFLEXIBLE EQUIPMENT. Most currently available genetic
          analysis equipment is large and inflexible and requires a technically
          complex operating environment. New designs are attempting to address
          miniaturization of equipment.

     o    TIMELINESS OF RESULT. Current sample preparation, amplification and
          detection technologies rely on processes that often require hours to
          complete, rendering results that may not be timely enough to be
          medically useful. Some new instruments are attempting to reduce
          analysis times.

     o    SENSITIVITY CONSTRAINTS. Some existing technologies accept and process
          only very small sample volumes, forcing laboratory technicians to
          spend significant effort in concentrating larger samples in order to
          obtain the required level of sensitivity for detecting and measuring
          the presence of a genetic sequence.

     o    LACK OF INTEGRATION. We believe that current amplification and
          detection systems do not fully automate and integrate sample
          preparation into their processes in a manner that can be useful in a
          non-laboratory setting in a cost effective fashion.

     o    OPERATIONAL COST. The operating costs for existing technologies can be
          extremely high, making the implementation of the device
          cost-prohibitive.

     o    FALSE POSITIVES. Most existing technologies are susceptible to false
          positive results, which can have significant social and economic
          consequences.

     Currently, the two most commonly used methods for genetic testing are
microbial culture and Polymerase Chain Reaction, commonly referred to as PCR.
With microbial culture, a sample from the environment is placed into a small
laboratory dish containing a nutrient rich media. The microbial culture is
allowed to grow for a specified period of time, usually between

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24-48 hours. The sample is then examined and a determination is made as to
whether an organism is present in the sample. Although highly accurate, the
disadvantages of microbial cultures are the time required to determine the
presence of an organism and the need for a laboratory and an expertise in
culture preparation and analysis. PCR has been one of the most promising methods
for an automated anthrax detection system. PCR amplifies DNA targets of choice,
such as gene sequences encoded for the anthrax toxins to detectable levels. PCR
is very sensitive and is able to detect very small amounts of DNA. But, the PCR
process requires about three to eight hours to complete, plus an additional
three hours for sample preparation time, which must usually be performed by a
trained technician. Some developments have been made to automate the PCR process
and reduce the analysis time.

     We believe that the principal desired characteristics of an anthrax
detection system are sustained, online operation with minimal maintenance,
minimal susceptibility to false alarms, and low operating costs. These
attributes require that we address the limitations inherent in most current
technologies.

OUR SOLUTION

     Our Anthrax Smoke Detector combines a bioaerosol capture device with a
chemical test for bacterial spores that we believe will provide accurate results
in a timely fashion. Our system is designed to function fully automated and at a
low cost compared to existing technologies. We believe that the technology
developed by JPL and incorporated into our Anthrax Smoke Detector will
substantially reduce the occurrence of false positives that could arise due to
natural fluctuations in bacterial spore concentrations.

     COMPANY PRODUCTS

     We are expending all of our research and development efforts towards the
design and testing of the Anthrax Smoke Detector. This instrument consists of
four components:

     o    an air sampler for aerosol capture, which collects aerosolized
          particles on a meshed glass fiber tape,

     o    thermal lysis for releasing the dipicolinic acid from the spores,

     o    reagent delivery via syringe pump, and

     o    a lifetime gated luminescence detection of the terbium-dipicolinate
          complex.

     The device is designed to continuously monitor the air and the measure
concentration of airborne bacterial endospores every 15 minutes. Bacterial
endospores are captured on the glass fiber tape. Next, thermal lysis "pops" the
endospores, releasing a chemical from inside the endospore called dipicolinic
acid, which is unique to bacterial endospores. Then, a syringe pump adds a drop
of terbium containing solution to the tape on the location where the endospores
were lysed. Finally, a lifetime gated photometer measures the resultant terbium
dipicolinate luminescence intensity, which is proportional to the bacterial
spore concentration in the tape. A large change in endospore concentration is a
strong indication of an anthrax attack, because endospores are the means by
which anthrax travels. The collection tape becomes a permanent record of the air
environment and can be sorted and subsequently reanalyzed as desired.


                                       4



     Pursuant to our development plan, if an increase in spore concentration is
detected, an alarm will sound notifying both a building's internal security as
well as local emergency services through the device's landline or wireless
networking capability. The system is designed to ensure the maximum time it
takes to detect, and generate an alarm in response to, a release of bacterial
spores is approximately 15 minutes, which we believe will be adequate to
substantially reduce the likelihood of widespread contamination. This response
time also provides adequate time to begin antibiotic treatment prior to the
onset of symptoms which can arise within two to three days if left untreated.
The system is designed for constant and unattended monitoring of spaces such as
public facilities and commercial buildings.

     The device is designed to prevent false alarms. Technologies that allow a
high percentage of false positive results are problematic not only for the
obvious reason relating to their level of accuracy, but also because of the cost
and consequences resulting from a false alarm. On one occasion, a false anthrax
alarm shut down 11 postal facilities in the Washington D.C. area. JPL's
detection technology is designed to sound an alarm only when it detects a
significant increase in spore count and discriminates against detecting aerosol
components such as dust. Thus, we anticipate that false positives will be rare,
because natural background fluctuation of airborne endospores are very low,
whereas an anthrax attack would result in a concentration swing many orders of
magnitude greater than background levels, and spores from other microorganisms,
such as fungi and molds, are not detected.

     The Anthrax Smoke Detector is designed to function as a stand-alone
product, or as a complement to an existing bio-terrorism detection device in
places such as public buildings and stadiums. For example, we believe that the
Anthrax Smoke Detector would function well as a front-end monitor to a PCR-based
device. In the case of a positive reading, the PCR-based device would be
employed to validate the Anthrax Smoke Detector reading to help further reduce
the possibility of a false positive.

     We expect to complete an automated prototype of our device by in the summer
of 2004, and to begin testing in the fall of 2004.

     GOVERNMENTAL APPROVAL

     We are not presently aware of any governmental agency approval required for
the Anthrax Smoke Detector before we can sell the bio-terrorism detection
devices in the United States. Completion of a nitric oxide instrument is
dependent upon FDA approval. We have not applied for any regulatory approvals
with respect to any of our products currently under development. We cannot
assure you that the Anthrax Smoke Detector is not subject to or will not become
subject to governmental approval. To the extent that any governmental approval
is required in the future, we intend to obtain all required approvals consistent
with applicable law. We cannot assure you that future governmental regulation
will not adversely affect our ability to successfully commercialize a viable
product.

     MARKETING AND SALES

     We primarily are focused on research and development of our bio-terrorism
product. However, we are in the process of developing our sales and marketing
plan which may include strategic partnership agreements, retention of an
in-house staff or consultants, or a combination of the foregoing.


                                       5




     MANUFACTURING

     Currently, we do not have any manufacturing or distribution capabilities.
We are considering a variety of different manufacturing strategies which may
include third party contractors or an in-house staff.

     RESEARCH AND DEVELOPMENT

     We spent $199,000 and $82,000 on research and development for the years
ended December 31, 2003 and 2002, respectively. We currently intend to focus
substantially all of our efforts and resources to the development, testing, and
commercialization of our Anthrax Smoke Detector.

     EMPLOYEES

     As of March 30, 2004, we had one full-time employee. We also employ outside
consultants from time to time to provide various services. None of our employees
are represented by a labor union. We consider our employee relations to be good.

     SCIENTIFIC ADVISORY BOARD

     We have assembled a group of scientific advisors with demonstrated
expertise in fields related to molecular, chemical and medical pharmacology and
hepatic science. Our Scientific Advisory Board meets periodically with our Chief
Executive Officer and certain of our consultants and members of JPL to discuss
our present and long-term research and development activities. Scientific
Advisory Board members include: Leonard Makowka, M.D., Ph.D. and Louis Ignarro,
Ph.D., Distinguished Professor of Pharmacology, University of California at Los
Angeles School of Medicine.

     COMPETITION

     We face intense competition from a number of companies that offer products
in our targeted application areas. Our competitors may offer or be developing
products superior to ours. From time to time, we have been required to reduce
our research efforts while we seek to raise additional funds. Our competitors
may be significantly better financed than us. There are various technological
approaches available to our competitors and us that may be applicable to the
detection of pathogens in the air, and the feasibility and effectiveness of
these techniques has yet to be fully evaluated or demonstrated.

     Several companies provide or are in the process of developing instruments
for detection of bio-terrorism agents. Centrex, Inc., a publicly traded company,
owns the exclusive worldwide license to develop, manufacture, and market a
system for detecting microbial contamination in air, food and water. Centrex is
seeking to develop and market an automated fully integrated system which enables
rapid detection of harmful pathogens in the air by recognizing the unique DNA
(or RNA) fingerprint of the organism, whether bacteria or virus. Its planned
product is designed to be a system that automatically collects samples, prepares
the DNA, performs the analysis rapidly, and communicates results to the
end-user, via specially integrated software, with a goal to produce test results
within 30 minutes after a sample is collected.


                                       6




     Similarly, Cepheid, a publicly traded company, focuses on the detection and
analysis of DNA in samples such as blood, urine, cell cultures, food and
industrial air and water. Accordingly to public disclosures of Cepheid, Northrop
Grumnan is developing a Biohazard Detection System that consists of a detection
system (GeneXpert(R)) manufactured by Cepheid. This detection system offers
rapid (about one hour) and sensitive detection of specific gene sequences
present in BACILLUS ANTHRACIS, the causative agent for anthrax. The Biohazard
Detection System currently is scheduled to be installed on a production basis in
identified U.S. Postal Service mail sorting facilities throughout the United
States beginning in 2004. Cepheid states that it is anticipating to commercially
launch a self contained version of the GeneXpert system, which is in the final
stages of development, into non-clinical markets in the second half of 2004 and
in the clinical genetic assessment market in 2005.

     Cellomics, Inc. has developed a system that utilizes living cells for the
detection, classification, and identification of chemical and biological warfare
threat agents such as anthrax and botulinum neurotoxin. Smiths Detection, a
privately held U.K. company, has developed an automated biological agent
detector that simultaneously detects up to eight different agents using
Immuno-ligand Assay chemistries. This device is an on-demand, portable system
that identifies specific biological agents and their concentration levels.

     We believe that the primary competition for the Anthrax Smoke Detector is
PCR-based methods. However, the complexity of PCR makes automated implementation
extremely expensive. We believe that the Anthrax Smoke Detector operating costs
will be substantially less than PCR-based methods. Thus, we expect to be
competitive with companies offering these PCR methods. Moreover, we believe the
two technologies are synergistic and may be employed in concert. In order to
compete against vendors of PCR-based methods, we will need to demonstrate the
advantages of our products over alternative existing technologies and products
and the potential cost advantages of our products relative to these conventional
technologies and products.

     We also expect to encounter intense competition from a number of
established and development-stage companies that continually enter the
bioterrorism detection device market. Our competitors may succeed in developing
or marketing technologies and products that are more effective or commercially
attractive than our potential products or that render our technologies and
potential products obsolete. As these companies develop their technologies, they
may develop proprietary positions that prevent us from successfully
commercializing our products.

     INTELLECTUAL PROPERTY

     We have a right to receive a non-exclusive royalty-free license to any
intellectual property developed by JPL under tasks that we have funded pursuant
to our technology affiliate agreement with them. If we believe that we need
rights greater than a non-exclusive royalty-free license to successfully develop
and market a product likely to emerge from an individual task pursuant to this
agreement, we have a right to apply for the additional intellectual property
rights before initiation of the task. The United States government will receive
a non-exclusive, non-transferable, royalty-free license to any intellectual
property developed by JPL pursuant to the technology affiliate agreement.


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     On September 30, 2003, we entered into a licensing agreement with the
California Institute of Technology, which we refer to as Caltech, whereby we
obtained an exclusive, royalty-bearing license to make, have made, import, use,
sell and offer for sale specified licensed products that incorporate patent
rights referenced in the technology affiliates agreement with JPL
as well as a nonexclusive, royalty-bearing license to make, import, use, sell,
offer for sale, reproduce, distribute, display, perform, create derivative works
of, and otherwise exploit the technology not covered by the patent rights
incorporated into the specified licensed products. The specified licensed
products include any product or device used to detect pathogens, spores, and
biological warfare agents developed under the terms of the licensing agreement.
Caltech reserves the right to make, have made, import, use, sell, and offer for
sale the licensed products for noncommercial educational and research purposes,
but not for commercial purposes. Under this licensing agreement, we also have a
right to sublicense to third parties, but the sublicensees do not have a right
to grant further sublicenses. Pursuant to this licensing agreement, we are
required to have all licensed products manufactured substantially in the United
States; this requirement may be waived upon a showing by us that domestic
manufacturing is not commercially feasible. The United States government will
receive a non-exclusive, non-transferable, paid-up license to practice or have
practiced any inventions covered by the licensing agreement.

     As part of the sale of our wholly-owned subsidiary, Dasibi Environmental
Corp. to a third party in March 2002, we obtained a perpetual nonexclusive
license to exploit all of Dasibi's intellectual property rights anywhere in the
universe outside of mainland China. Dasibi's core business had been the design,
manufacture and marketing of automated continuous monitoring instruments used to
detect and measure various types of air pollution, such as "acid rain," "ozone
depletion" and "smog episodes." Dasibi also supplied 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.

ITEM 2. DESCRIPTION OF PROPERTY

     We currently do not own or lease any property. As of January 2004, we moved
our corporate headquarters to 9595 Wilshire Blvd., Suite 700, Beverly Hills,
California, an office space leased by Astor Capital, Inc., a company partially
owned by our President and Chief Executive Officer. We believe that this space
is adequate for our current needs and plan to lease property for our
manufacturing facility as our business demands require in the future.

ITEM 3. LEGAL PROCEEDINGS

TAYLOR, TAYLOR & DREIFUS V POLLUTION RESEARCH AND CONTROL CORP.
No. 99-1100-CA01 Circuit Court Escambia, Florida

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

WALT DISNEY WORLD CO. V. POLLUTION RESEARCH AND CONTROL CORP. AND DASIBI
ENVIRONMENTAL CORP. (Case No. BC 274013 Los Angeles Superior Court)


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     On May 15, 2002, the above plaintiff filed a lawsuit alleging a single
cause of action for unlawful detainer against us and our former wholly-owned
subsidiary, Dasibi Environmental Corp. The complaint alleges that pursuant to a
lease agreement, we owe the plaintiff unpaid rent in the amount of $249,366.85,
and damages at the rate of $1,272.50 for each day Dasibi continued possession of
the premises commencing May 1, 2002. Plaintiff has obtained a default judgment
against us and a writ of execution has been obtained.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

                                    PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our common stock is traded on the OTC Bulletin Board under the symbol
"UDTT." The following table sets forth the high and low sales prices of our
common stock on the OTC Bulletin Board for the periods indicated, as reported by
the OTC Bulletin Board. These quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions.


                                               HIGH           LOW

     YEAR ENDED DECEMBER 31, 2002
     First Quarter                            $0.69         $ 0.36
     Second Quarter                            0.42           0.12
     Third Quarter                             0.27           0.14
     Fourth Quarter                            0.32           0.16

     YEAR ENDED DECEMBER 31, 2003
     First Quarter                            $0.25          $0.17
     Second Quarter                            0.31           0.18
     Third Quarter                             0.54           0.22
     Fourth Quarter                            0.80           0.45

     YEAR ENDING DECEMBER 31, 2004
     First Quarter (Through March 29, 2004    $1.01          $0.60


     As of March 25, 2004, we had 1,180 shareholders of record of our common
stock.

DIVIDENDS

     We do not currently pay any dividends on our common stock, and we currently
intend to retain any future earnings for use in our business. Any future
determination as to the payment of dividends on our common stock will be at the
discretion of the Board of Directors and will depend on our earnings, operating
and financial condition, capital requirements and other factors


                                       9



deemed relevant by the Board of Directors, including the General Corporation Law
of the State of California. The declaration of dividends on our common stock
also may be restricted by the provisions of credit agreements that we may enter
into from time to time.

RECENT SALES OF UNREGISTERED SECURITIES

     During fiscal 2003, we issued the following securities which were not
registered under the Securities Act of 1933, as amended. We did not employ any
form of general solicitation or advertising in connection with the offer and
sale of the securities described below. In addition, we believe the purchasers
of the securities are "accredited investors" for the purpose of Rule 501 of the
Securities Act. For these reasons, among others, the offer and sale of the
following securities were made in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act or Regulation D promulgated by
the SEC under the Securities Act:

     o    Commencing in January 2003 and during each month in 2003 thereafter
          (other than February and October), we were engaged in an offering of
          an aggregate of 1,719,106 shares of common stock for a total purchase
          price of $457,275. We incurred $45,581 in placement fees, and our net
          proceeds were $411,694.

     o    In January, February and August 2003, we issued an aggregate of
          3,357,000 shares of common stock to various consultants for their
          consulting services rendered to us valued at $1,181,280.

     o    On October 15, 2003, we issued warrants to purchase an aggregate of
          600,000 shares of common stock to two consultants in connection with
          consulting services rendered to us valued at $185,400. These warrants
          are immediately exercisable.

     o    On February 15, 2003, we agreed to reprice warrants to purchase
          300,000 shares of common stock, from $2.25 and $4.50 per share to
          $0.12 per share. The repriced warrants were valued at $30,000.

     o    On March 31, 2003, we agreed to reprice warrants to purchase 260,191
          shares of common stock, from $4.00 per share to $0.10 per share. The
          repriced warrants were valued at $26,019. We incurred $2,602 in
          offering costs in connection with the repricing.

     o    In February and April 2003, we issued an aggregate of 559,858 shares
          of common stock pursuant to exercises of warrants. Our net proceeds
          from these exercises were $62,018.

     o    In April, July, October and December 2003, we issued an aggregate of
          415,000 shares of common stock to an unrelated entity in connection
          with loan fees arising from bridge financing provided by that entity.
          The loan fees are valued at $188,400.

     During fiscal 2003, we issued the following securities which were not
registered under the Securities Act of 1933, as amended. No commission or other
remuneration was paid or given in connection with the issuance of these
securities. For these reasons, among others,

                                       10



the securities issued in the following transaction were exempt from registration
by Section 3(a)(9) of the Securities Act:

     o    In January, March and October 2003, we issued 3,889,044 shares of
          common stock upon the conversion of debt and accrued and unpaid
          interest in the aggregate amount of $573,805.

     During fiscal 2003, we issued the following securities which were not
registered under the Securities Act of 1933, as amended. No offer or sale of the
securities was made to a person in the United States. We believe that each
purchaser of securities was not a U.S. person as defined in Rule 902(k) of
Regulation S and did not acquire the securities for the account or benefit of
any U.S. person. We did not engage in any directed selling efforts in the United
States. For these reasons, among others, the offer and sale of the following
securities were not subject to Section 5 of the Securities Act by virtue of
Regulation S promulgated by the SEC under the Securities Act:

     o    In fiscal 2003, we issued 14,188,797 shares of common stock to
          non-U.S. persons, as such term is defined in Regulation S, for an
          aggregate offering price of $2,861,980. We incurred $394,850 in
          placement fees, and our net proceeds were $2,467,130.

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

PLAN OF OPERATION

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

     We require immediate financing to repay our indebtedness and continue
operations. We require approximately $1.7 million to repay indebtedness in the
next twelve months and at least $1.5 million in the next six to twelve months to
complete our existing prototype, engage in testing of the device, and revise the
technology or reengineer the device as may be necessary or desirable and
otherwise execute our business plan. We actively continue to pursue additional


                                       11




equity or debt financings but at the date hereof, do not have any funding
commitments. Currently, our cash on hand, together with cash generated by
operations, cannot sufficiently fund future operating losses and capital
requirements. If we are unable to obtain financing on terms acceptable to us, or
at all, we will not be able to accomplish any or all of our initiatives and will
be forced to consider steps that would protect our assets against our creditors.

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

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

REVENUE RECOGNITION

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

INVENTORIES

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

ADVERTISING EXPENSES

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

EQUIPMENT AND DEPRECIATION

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

STOCK-BASED COMPENSATION

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


                                       12



VALUATION OF THE COMPANY'S COMMON STOCK

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

EARNINGS PER SHARE

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

CASH EQUIVALENTS

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

IMPAIRMENT OF LONG-LIVED ASSETS

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

RESEARCH AND SOFTWARE DEVELOPMENT COSTS

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

INCOME TAXES

     Deferred income taxes are recorded to reflect the tax consequences in
future years of temporary differences between the tax basis of the assets and


                                       13


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

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual results
could differ from those estimates.

RECLASSIFICATION

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

NEW ACCOUNTING PRONOUNCEMENTS

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

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


                                       14



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

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

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

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


                                       15



RESULTS OF OPERATIONS

2003 COMPARED TO 2002

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

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

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

     INCOME (LOSS) FROM OPERATIONS. Operating loss for 2003 was $4,725,153
compared to operating loss of $3,321,526 in 2002. This increase is primarily due
to the increase in our selling, general and administrative expenses, marketing
expenses, and our research and development expenses.

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

     Historically, we have financed operations through private debt and the
issuance of common stock. Since our financial position has deteriorated,
financial institutions have been


                                       16



unwilling to lend to us and the cost of obtaining working capital from investors
has been expensive.

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

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

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

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

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

SEASONALITY

     We do not believe that our business is seasonal.

CAUTIONARY STATEMENTS AND RISK FACTORS

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

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

Our independent auditors' report, dated February 4, 2004, includes an
explanatory paragraph relating to substantial doubt as to our ability to
continue as a going concern, due to our working capital deficit at December 31,
2003, and the sale of our operating subsidiary. We have experienced operating
losses since the date of the auditors' report and in prior years. We have been
unable to pay all of our creditors and certain other obligations in accordance
with their


                                       17



terms, and as a result, we are in default on certain debt obligations equaling
approximately $550,000 as of December 31, 2003. These defaults currently
restrict our ability to file registration statements in connection with
capital-raising transactions on Form S-3, which may make it more difficult for
us to raise additional capital. We have limited cash on hand and short-term
investments and we do not expect to generate material cash from operations this
year. We have attempted to raise additional capital through debt or equity
financing and to date have had limited success. If we are unable to obtain
financing on terms acceptable to us, or at all, we will not be able to
accomplish any or all of our initiatives and will be forced to consider steps
that would protect our assets against our creditors.

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

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

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

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

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

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


                                       18



product development efforts are unsuccessful or if we are unable to develop a
commercially viable product timely, we would need to consider steps to protect
our assets against our creditors.

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

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

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

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

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

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


                                       19



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

On June 11, 2002, we were notified by The Nasdaq Stock Market that we did not
meet the continued listing requirements of The Nasdaq SmallCap Market and our
common shares were delisted on the close of business on June 19, 2002. Our
common stock currently is trading on The Over the Counter Bulletin Board. It is
more difficult to raise additional debt or equity financing while trading on The
Over the Counter Bulletin Board. If we are unable to raise additional financing,
we will not be able to accomplish our business objectives and may consider steps
to protect our assets against creditors.

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

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

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

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

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

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

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

We may be exposed to future litigation by third parties based on claims that our
technology, product, or activity infringes on the intellectual property rights
of others or that we have misappropriated the trade secrets of others. This risk
is compounded by the fact that the validity and breadth of claims covered in
technology patents in general and the breadth and scope of trade secret
protection involves complex legal and factual questions for which important
legal principles are unresolved. Any litigation or claims against us, whether or
not valid, could result


                                       20



in substantial costs, could place a significant strain on our financial and
managerial resources, and could harm our reputation. Our license agreement with
Caltech requires that we pay the costs associated with initiating an
infringement claim and defending claims by third parties for infringement,
subject to certain offsets that may be allowed against amount we may owe to
Caltech under the licensing agreement. In addition, intellectual property
litigation or claims could force us to do one or more of the following:

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

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

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

OUR STOCK PRICE IS VOLATILE.

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

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

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

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

We are authorized to issue up to 20,000,000 shares of preferred stock, of which
none currently are issued and outstanding. The issuance of preferred stock does
not require approval by the shareholders of our common stock. Our Board of
Directors, in its sole discretion, has the power to issue preferred stock in one
or more series and establish the dividend rates and preferences, liquidation
preferences, voting rights, redemption and conversion terms and conditions and
any other relative rights and preferences with respect to any series of
preferred stock. Holders of


                                       21



preferred stock may have the right to receive dividends, certain preferences in
liquidation and conversion and other rights, any of which rights and preferences
may operate to the detriment of the shareholders of our common stock. Further,
the issuance of any preferred stock having rights superior to those of our
common stock may result in a decrease in the market price of the common stock
and, additionally, could be used by our Board of Directors as an anti-takeover
measure or device to prevent a change in our control.

ITEM 7. FINANCIAL STATEMENTS

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

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.

ITEM 8A. CONTROLS AND PROCEDURES

     As of the end of the period covered by our Annual Report on Form 10-KSB, we
carried out an evaluation, under the supervision and with the participation of
our chief executive officer and acting chief financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on this evaluation, our chief executive officer and acting
chief financial officer concluded that our disclosure controls and procedures
are effective in timely alerting them to material information required to be
included in our periodic SEC reports.

     In accordance with SEC requirements, our chief executive officer and acting
chief financial officer note that, since the date of the most recent evaluation
of our disclosure controls and procedures to the date of our Annual Report on
Form 10-KSB, there have been no significant changes in our internal controls
over financial reporting identified in connection with the evaluation that
occurred during the last quarter of fiscal 2003 that has materially affected, or
is likely to materially affect, our internal controls over financial reporting.

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


                                       22



with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected.


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

     Set forth below are the names, ages, positions and business experience of
our directors executive officers as of March 25, 2004.



                                          
NAME                              AGE           POSITION
- -------------                     ---           -------------------------------------------
Jacques Tizabi                    32            Chief Executive Officer, President, Acting
                                                Chief Financial Officer and Chairman of the
                                                Board of Directors

Michael Collins (1)               34            Secretary and Director

Matin Emouna (1)                  35            Director


- ------------------
(1)  Member of Audit Committee and Compensation Committee





     All directors hold office until the next annual meeting of our shareholders
and until their successors have been elected and qualify. Officers serve at the
pleasure of the board of directors.

BUSINESS EXPERIENCE

     JACQUES TIZABI has been the Chief Executive Officer, President and Chairman
of the Board of Directors of our Company since October 2001. He also serves as
our Acting Chief Financial Officer. He is the co-founder and managing partner of
Astor Capital, Inc., which was founded in 1995 and specializes in investment
banking and asset management, predominantly in the area of direct private
investment in public companies. Mr. Tizabi has substantial experience in
evaluating, structuring and negotiating direct investments in public companies
and later stage private companies. Mr. Tizabi holds a B.S. degree in Business
from New York University and an M.B.A. from Pepperdine University.

     MICHAEL COLLINS has been the Secretary and a director of our Company since
October 2001. He has been an independent business consultant since December
1998. Between 1993 and 1997, Mr. Collins worked for Twentieth Century Fox
International, PolyGram Filmed Entertainment and Savoy Pictures in the field of
media management. Mr. Collins received a B.A. in Political Science from Columbia
University and an M.B.A. from The Anderson School at UCLA.

     MATIN EMOUNA has served as a director of our Company since October 2001.
Since 1997, Mr. Emouna has maintained his own law practice in New York, where he
represents foreign and domestic clients in a broad range of real estate
transactions, with emphasis on new constructions, commercial real estate
transactions, shopping center development, financing, and


                                       23



commercial leasing. Mr. Emouna also serves as a general counsel for Omni
Abstract Title, Radio Sedayeh Iran and several non-profit religious
organizations. He holds B.S. degrees in Business Administration and Spanish from
New York State University at Albany and a J.D. from Benjamin N. Cardozo School
of Law.

AUDIT COMMITTEE

     Our Audit Committee currently consists of Michael Collins and Matin Emouna.
Each Audit Committee member is independent within the meaning of the applicable
Nasdaq listing standards and applicable rules and regulations promulgated by the
Securities and Exchange Commission. Our Audit Committee currently does not have
a financial expert within the meaning of the applicable SEC rules as management
does not believe one is necessary in light of the Company's current stage of
product development.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our executive officers and directors, and persons who own more than ten percent
of our common stock, to file with the Securities and Exchange Commission initial
reports of ownership, and reports of changes in ownership, of our common stock
and other equity securities of ours. Executive officers, directors and greater
than ten percent shareholders are required by SEC regulations to furnish us with
copies of all Section 16(a) reports that they file. To our knowledge, based
solely on a review of the copies of the reports furnished to us, and
representations from our executive officers and directors that no other reports
were required during the fiscal year ended December 31, 2003, our executive
officers, directors and greater than ten percent shareholders of our common
stock, complied with all Section 16(a) filing requirements applicable to them,
except Jacques Tizabi failed to timely file a Form 4 reporting one transaction.

CODE OF BUSINESS CONDUCT AND ETHICS

     We have adopted a Code of Business Conduct and Ethics which is designed to
set the standards of business conduct and ethics and help directors and
employees resolve ethical issues. The Code applies to all directors and
employees, including the Chief Executive Officer and Chief Financial Officer and
other persons performing similar functions. The Code covers topics including,
but not limited to, conflicts of interest, confidentiality of information, fair
dealing with customers, supplies and competitors, and compliance with applicable
laws, rules and regulations. The purpose of the Code is to ensure to the
greatest possible extent that our business is conducted in a consistently legal
and ethical manner. A copy of the Code is attached as an exhibit to this report.

ITEM 10. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

     The following table sets forth information concerning the compensation for
services in all capacities rendered to us for the three fiscal years ended
December 31, 2003, of our Chief Executive Officer and our other executive
officers whose annual compensation exceeded $100,000 in the fiscal year ended
December 31, 2003, if any. We refer to the Chief Executive Officer and these
other officers as the named executive officers.


                                       24





                           SUMMARY COMPENSATION TABLE

                                             ANNUAL                              LONG-TERM
                                          COMPENSATION                      COMPENSATION AWARDS
                                          ------------                     ---------------------
                                                                           SECURITIES UNDERLYING
 NAME AND PRINCIPAL POSITION     YEAR        SALARY           BONUS               OPTIONS
- ----------------------------     ----     -----------      -----------     ---------------------
                                                                     
Jacques Tizabi                   2003     $145,833 (1)     $416,667 (1)          6,800,000
  President, Chief Executive     2002        -- (1)                                  --
  Officer, Acting CFO and        2001        -- (1)                              1,150,000
  Chairman of the Board


- ------------
(1)  To enable us to meet a portion of our obligations as they became due, our
     Chairman and Chief Executive Officer had agreed to allow us to waive cash
     compensation pursuant to his employment agreement until June 1, 2003. In
     August 2003, our Board of Directors approved a bonus of $416,667.




                          OPTION GRANTS IN FISCAL 2003

     The following table sets forth certain information regarding the grant of
stock options in fiscal 2003 to the named executive officers.



                                     PERCENT OF
                                       TOTAL
                    NUMBER OF         OPTIONS                                   POTENTIAL REALIZABLE
                   SECURITIES        GRANTED TO                                VALUE AT ASSUMED RATE
                   UNDERLYING        EMPLOYEES      EXERCISE                       OF STOCK PRICE
                     OPTIONS         IN FISCAL      OR BASE      EXPIRATION       APPRECIATION FOR
NAME                 GRANTED            YEAR         PRICE         DATE            OPTION TERM(1)
- --------------    --------------    -------------   ---------    ----------    ---------- -- ----------
                                                                                  5%           10%
                                                                               ----------    ----------
                                                                           
Jacques Tizabi    6,800,000 (2)         100%         $0.33        8/18/13      $1,411,237    $3,576,357

- -------------
(1)   The potential realizable value is based on the assumption that our common
      stock appreciates at the annual rate shown (compounded annually) from the
      date of grant until the expiration of the option term. These amounts are
      calculated pursuant to applicable requirements of the Securities and
      Exchange Commission and do not represent a forecast of the future
      appreciation of our common stock.

(2)   These options were exercisable immediately upon grant.





                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES

     The following table sets forth, for each of the named executive officers,
certain information regarding the exercise of stock options during fiscal 2003,
the number of shares of common stock underlying stock options held at fiscal
year-end and the value of options held at fiscal year-end based upon the last
reported sales price of the common stock on the OTC Bulletin Board on December
31, 2003 ($0.70 per share).


                                       25





                 SHARES                    NUMBER OF SECURITIES
                 ACQUIRED                 UNDERLYING UNEXERCISED         VALUE OF UNEXERCISED
                    ON        VALUE             OPTIONS AT             IN-THE-MONEY OPTIONS AT
     NAME        EXERCISE    REALIZED        DECEMBER 31, 2003            DECEMBER 31, 2003
     -----       ---------   ---------   ----------- - ------------   ------------ - ------------
                                         EXERCISABLE   UNEXERCISABLE  EXERCISABLE    UNEXERCISABLE
                                         -----------   ------------   ------------   -------------
                                                                   
Jacques Tizabi      --          --       7,950,000         --         $2,976,000         --



COMPENSATION OF DIRECTORS

     During fiscal 2003, our directors did not receive compensation pursuant to
any standard arrangement for their services as directors. When requested by us
to attend Board meetings in person, it is our policy to reimburse directors for
reasonable travel and lodging expenses incurred in attending these Board
meetings.

EMPLOYMENT AGREEMENTS

     We have an employment agreement with Jacques Tizabi. Mr. Tizabi's
employment agreement, dated as of September 24, 2001, provides for Mr. Tizabi to
serve as our Chairman of the Board, Chief Executive Officer and President for a
term of five years from any given date, such that there shall always be a
minimum of five years remaining under his employment agreement. The employment
agreement provides for Mr. Tizabi to receive an annual base salary of $250,000,
subject to annual increase based on comparable compensation packages provided to
executives of similarly situated companies, and to participate in a bonus plan
based on annual performance standards to be established by the compensation
committee of our Board of Directors. Mr. Tizabi also is entitled to specified
perquisites.

     If Mr. Tizabi's employment is terminated due to his death, the employment
agreement provides that we will pay Mr. Tizabi's estate his remaining base
salary during the remaining scheduled term of the employment agreement,
accelerate the vesting of his options and continue to provide family medical
benefits. If Mr. Tizabi's employment is terminated due to his disability, the
employment agreement provides that we will pay Mr. Tizabi his remaining base
salary during the remaining scheduled term of the employment agreement (reduced
by any amounts paid under long-term disability insurance policy maintained by us
for the benefit of Mr. Tizabi).

     If Mr. Tizabi terminates the employment agreement for cause, if we
terminate the employment agreement without cause or in the event of a change of
control, in which event the employment of Mr. Tizabi terminates automatically,
we will pay Mr. Tizabi his remaining base salary during the remaining scheduled
term of the employment agreement and an amount based on his past bonuses and
continue to provide specified benefits and perquisites.

     If Mr. Tizabi terminates the employment agreement without cause or we
terminate the employment agreement for cause, Mr. Tizabi is entitled to receive
all accrued and unpaid salary and other compensation and all accrued and unused
vacation and sick pay.

     If any of the payments due Mr. Tizabi upon termination qualifies as "excess
parachute payments" under the Internal Revenue Code, Mr. Tizabi also is entitled
to an additional payment to cover the tax consequences associated with excess
parachute payments.


                                       26




ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

     The following table sets forth information as of May 25, 2004, relating to
the ownership of our common stock, by (i) each person known by us to be the
beneficial owner of more than five percent of the outstanding shares of our
common stock, (ii) each of our directors and nominees, (iii) each of our named
executive officers and (iv) all of our executive officers and directors as a
group. Except as may be indicated in the footnotes to the table and subject to
applicable community property laws, each person has the sole voting and
investment power with respect to the shares owned. The address of each person
listed is in care of Universal Detection Technology, 9595 Wilshire Boulevard,
Suite 700, Beverly Hills, California 90212, unless otherwise set forth below.




                                                Number of Shares of
                                                    Common Stock         Percent of
NAME AND ADDRESS                               Beneficially Owned (1)    Class (1)
- ----------------                               ----------------------    ------------

                                                                   
   Jacques Tizabi (2).........................              8,157,223       17.1%
   Michael Collins............................                     --          *
   Matin Emouna...............................                     --          *
   Daniel Greenspun (3).......................              2,044,455        5.2%
   Directors and executive officers as a
        group (3 persons) (2).................              8,157,223       17.1%

   * Indicates less than 1% beneficial ownership.


- -------------------
(1)  Under Rule 13d-3 under the Exchange Act, certain shares may be deemed to be
     beneficially owned by more than one person (if, for example, persons share
     the power to vote or the power to dispose of the shares). In addition,
     shares are deemed to be beneficially owned by a person if the person has
     the right to acquire the shares (for example, upon exercise of an option)
     within 60 days of the date as of which the information is provided. In
     computing the percentage ownership of any person, the amount of shares
     outstanding is deemed to include the amount of shares beneficially owned by
     that person (and only that person) by reason of these acquisition rights.
     As a result, the percentage of outstanding shares of any person as shown in
     this table does not necessarily reflect the person's actual ownership with
     respect to the number of shares of our common stock actually outstanding at
     March 24, 2004.

(2)  Includes (a) 7,950,000 shares that may be acquired upon the exercise of
     options, which are or will become exercisable on or prior to May 24, 2004,
     (b) 189,900 shares that may be acquired upon the exercise of warrants owned
     by Astor Capital, Inc., (c) 6,000 shares that may be acquired upon the
     exercise of warrants owned by JRT Holdings, Inc., and (d) 9,523 shares that
     may be acquired upon the conversion of a convertible debenture owned by JRT
     Holdings, Inc. Mr. Tizabi and Mr. Ali Moussavi, each a fifty-percent owner
     of Astor Capital, Inc., share voting and dispositive power. Mr. Tizabi and
     Mr. Raymond Tizabi, each a fifty-percent owner of JRT Holdings, Inc., share
     voting and dispositive power.


                                       27



(3)  Includes 909,091 shares that may be acquired upon the exercise of warrants,
     which are or will become exercisable on or prior to May 24, 2004.





EQUITY COMPENSATION PLANS

     The following table summarizes information about the equity securities
authorized for issuance under our compensation plans as of December 31, 2003.



                                                                                   NUMBER OF
                                            NUMBER OF                             SECURITIES
                                         SECURITIES TO BE   WEIGHTED-AVERAGE       REMAINING
                                           ISSUED UPON       EXERCISE PRICE      AVAILABLE FOR
                                           EXERCISE OF       OF OUTSTANDING     FUTURE ISSUANCE
                                           OUTSTANDING          OPTIONS,         UNDER EQUITY
                                        OPTIONS, WARRANTS    WARRANTS AND        COMPENSATION
            PLAN CATEGORY                   AND RIGHTS           RIGHTS              PLANS
            -------------                   ----------           ------         ---------------
                                                                     
Equity compensation plans approved by          -0-                 --             4,500,000
   security holders (1)
Equity compensation plans not               9,000,000            $0.37               -0-
   approved by security holders
Total                                       9,000,000            $0.37            4,500,000


- -------------
(1)  These compensation plans are discussed further in Note 8 to the financial
     statements included in the Annual Report of Form 10-KSB.




ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During fiscal 2003 and 2002, Astor Capital, Inc., a company in which our
Chief Executive Officer owns a 50% interest and is the President of, received
placement fees in the aggregate amounts of $157,633 and $34,900, respectively,
in connection with private placements and equity financings for us.

     Effective June 1, 2003, we entered into an agreement with Astor Capital,
Inc., pursuant to which we are required to pay $25,000 per month for investment
banking and strategic advisory services as well as a 10% fee for all debt and
equity financing raised for us.

     During the year ended December 31, 2003, we paid Astor Capital, Inc.
$28,654 in connection with the use of the office space leased by them.

     See "Employment Agreements" for a summary of our employment agreement with
our President and Chief Executive Officer.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (A) EXHIBITS

     The exhibits listed in the Exhibit Index located at Page E-1 are filed
pursuant to Item 13(a) of this Report.

     (B) REPORTS ON FORM 8-K

     None.


                                       28



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The Audit Committee approved the engagement of AJ. Robbins, PC as our
independent auditors for the year ended December 31, 2003. The Committee also
has approved the engagement of AJ. Robbins as our independent auditors through
the quarter year ending September 30, 2004.

AUDIT FEES

     The aggregate fees billed by AJ. Robbins for the audit and review of our
annual financial statements and services that are normally provided by an
accountant in connection with statutory and regulatory filings or engagements
for the fiscal years ended December 31, 2003 and 2002, were approximately
$59,138 and $59,345, respectively.

AUDIT-RELATED FEES

     The aggregate fees billed by AJ. Robbins, PC for assurance and related
services rendered by AJ. Robbins that are reasonably related to the performance
of the audit or review of our financial statements for the fiscal years ended
December 31, 2003 and 2002, were approximately $0 and $25,707, respectively.

TAX FEES

     The aggregate fees billed by AJ. Robbins, PC for professional services
rendered for tax compliance, tax advice and tax planning for the fiscal years
ended December 31, 2003 and 2002, were approximately $18,843 and $10,996,
respectively.

ALL OTHER FEES

     No other fees were billed by AJ. Robbins, PC for the fiscal years ended
December 31, 2003 and 2002.

     Prior to engagement, the Audit Committee pre-approved all non-audit
services performed by the independent auditor.


                                       29




                                   SIGNATURES


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

Date:  March 30, 2004           UNIVERSAL DETECTION TECHNOLOGY


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


                                POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Jacques Tizabi, his attorney-in-fact,
each with the power of substitution, for him and in his name, place and stead,
in any and all capacities, to sign any and all amendments to this Annual Report
on Form 10-KSB, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming said attorney-in-fact and
agents or any of them, or his or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

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

Date:  March 30, 2004      /s/ Jacques Tizabi
                           -----------------------------------------------------
                           Jacques Tizabi, President, Chief Executive
                           Officer, Acting Chief Financial Officer and Chairman
                           of the Board of Directors (Principal Executive,
                           Financial and Accounting Officer)


Date:  March 30, 2004          /s/ Michael Collins
                               -------------------------------------------------
                               Michael Collins, Secretary and Director



Date:  March 30, 2004          /s/ Matin Emouna
                               -------------------------------------------------
                               Matin Emouna, Director



                                       30




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

                          INDEX TO FINANCIAL STATEMENTS


PAGE

Independent Auditors' Report                                                 F-2

Consolidated Balance Sheet                                                   F-3

Consolidated Statements of Operations                                        F-4

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

Consolidated Statements of Cash Flows                                        F-6

Notes to Consolidated Financial Statements                                   F-7




                                      F-1




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



                          INDEPENDENT AUDITORS' REPORT

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

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

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

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

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



DENVER, COLORADO
FEBRUARY 4, 2004


                                      F-2






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

                                     ASSETS


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

        Total Current Assets                                                1,259,386

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

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

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
    Accounts payable, trade                                             $     112,759
    Accrued liabilities                                                       701,500
    Notes payable, related party                                               40,000
    Notes payable                                                           1,517,526
    Accrued interest expense                                                  454,736
                                                                          --------------

        Total current liabilities                                           2,826,521
                                                                          --------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT):
    Preferred stock, $.01 par value, 20,000,000 shares                            ---
      Authorized, -0- issued and outstanding
    Common stock, no par value, 480,000,000 shares
      Authorized, 35,002,197 issued and outstanding                        15,705,055
    Additional paid-in-capital                                              3,606,891
    Accumulated (deficit)                                                 (20,875,574)
                                                                          --------------

        Total stockholders' equity (deficit)                               (1,563,628)
                                                                          --------------

        Total liabilities and stockholders' equity (deficit)            $   1,262,893
                                                                          ==============


          See accompanying notes to consolidated financial statements.


                                      F-3




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



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

REVENUE                                                    $       ---     $       30,000
COST OF GOODS SOLD                                                 ---              8,600
                                                           ---------------    --------------

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

OPERATING EXPENSES:
     Selling, general and administrative                     1,655,863            721,487
     Marketing                                               1,932,512             45,000
     Research and development                                  199,000             82,000
     Loss on write-down of inventory                               ---          1,894,342
     Loss on legal judgment                                        ---            249,000
                                                           ---------------    --------------

     Total expenses                                          3,787,375          2,991,829
                                                           ---------------    --------------

(LOSS) FROM OPERATIONS                                      (3,787,375)        (2,970,429)

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

(LOSS) FROM OPERATIONS BEFORE INCOME TAXES                  (4,725,153)        (3,321,526)

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

LOSS FROM CONTINUING OPERATIONS                             (4,725,153)        (3,321,526)

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

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

  NET (LOSS)                                             $  (4,725,153)    $   (1,980,718)
                                                           ===============    ==============
NET (LOSS) PER SHARE - BASIC AND DILUTED:
   Continuing operations                                 $       (0.23)    $        (0.40)
   Discontinued operations:
     (Loss) from operations                                       ---               (0.02)
     Gain on disposal                                             ---                0.18
                                                           ---------------    --------------

                                                         $       (0.23)    $        (0.24)
                                                           ===============    ==============

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



          See accompanying notes to consolidated financial statements.


                                      F-4





                                     UNIVERSAL DETECTION TECHNOLOGY AND SUBSIDIARIES
                                     (FORMERLY POLLUTION RESEARCH AND CONTROL CORP.)
                          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                                     FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2003

                                                                                                           Total
                                                                                                        Stockholders'
                                            Common Stock             Additional       Accumulated          Equity
                                      Shares          Amount       Paid-in-Capital      Deficit          (Deficit)
                                    ------------    -----------    ---------------    -------------    --------------

                                                                                      
BALANCE, DECEMBER 31, 2001            5,949,616  $   9,789,742     $    2,485,062    $ (14,169,703)     $ (1,894,899)
Conversion of convertible
  debt and accrued interest           2,072,464        505,238                ---              ---           505,238
Stock based compensation for
  consulting services                       ---            ---            111,112              ---           111,112
Common stock issued for
  services                              730,000        154,250                ---              ---           154,250
Stock issued in private
  placements, net of offering
  costs of $34,900                    2,121,312        364,100                ---              ---           364,100
Value of stock based
  compensation issued for
  sale of Dasibi                            ---            ---            160,993              ---           160,993
Value of beneficial
  conversion feature of
  convertible debt                          ---            ---            113,000              ---           113,000
Net (loss) for the year                     ---            ---                ---       (1,980,718)       (1,980,718)
                                    ------------    -----------    ---------------    -------------    --------------

BALANCE, DECEMBER 31, 2002          10,873,392      10,813,330          2,870,167       (16,150,421)      (2,466,924)
Common stock issued for services     3,357,000       1,181,280                ---               ---        1,181,280
Common stock issued for loan fees      415,000         198,400                ---               ---          198,400
Conversion of convertible debt
     and accrued interest            3,889,044         573,805                ---               ---          573,805
Stock issued in private
  placements net of offering costs
  of $443,033                       15,907,903       2,876,222                ---               ---        2,876,222
Fair market value of repriced
  warrants                                 ---             ---             56,019               ---           56,019
Warrants issued for services               ---             ---            185,400               ---          185,400
Value of beneficial conversion feature
  of convertible debt                      ---             ---            495,305               ---          495,305
Exercise of warrants                   559,858          62,018                ---               ---           62,018
Net (loss) for the year                    ---             ---                ---         (4,725,153)     (4,725,153)
                                    ------------    -----------    ---------------    --------------   --------------

BALANCE, DECEMBER 31, 2003          35,002,197   $  15,705,055     $    3,606,891    $   (20,875,574)   $ (1,563,628)
                                    ============    ===========    ===============    ==============   ==============



          See accompanying notes to consolidated financial statements.



                                      F-5



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



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

CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
                                                                          
Net loss                                                       $ (4,725,153)    $ (3,321,526)
Adjustments to reconcile net loss to net cash (used in)
 operations:
   Beneficial conversion feature of convertible debt                495,305          113,000
   Stock issued for services                                      1,181,280          265,362
   Stock issued for loan fees                                       198,400              ---
   Warrants issued for services                                     185,400              ---
   Fair market value of repriced warrants                            56,019              ---
   Depreciation                                                         152              ---
   Changes in operating assets and liabilities:
          Accounts receivable                                        30,000          (30,000)
          Due from related parties                                  (29,099)             ---
          Inventories                                                   ---        1,894,342
          Prepaid expenses                                         (999,217)         (45,938)
          Accounts payable                                         (126,701)         222,950
          Accrued expenses                                          599,847          346,748
                                                               ---------------  ---------------

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

CASH FLOWS FROM INVESTING ACTIVITIES:

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

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

CASH FLOWS FROM (TO) FINANCING ACTIVITIES:

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

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

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

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

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



          See accompanying notes to consolidated financial statements.



                                      F-6



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

NOTE 1 - BUSINESS ACTIVITY

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

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

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

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

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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



                                      F-7



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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

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

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

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

STOCK-BASED COMPENSATION
The Company accounts for stock based compensation in accordance with Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). This standard requires the Company to adopt the
"fair value" method with respect to stock-based compensation of consultants and
other non-employees. The Company did not change its method of accounting with
respect to employee stock options; the Company continues to account for these
under the "intrinsic value" method, and to furnish the proforma disclosures
required by SFAS 123.

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

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

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



                                      F-8


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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

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

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

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

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

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


                                      F-9



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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

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

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

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



                                      F-10



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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

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

NOTE 3 - INVENTORIES

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


                                      F-11



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

NOTE 4 - ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK

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

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


NOTE 5 - NOTES PAYABLE, RELATED PARTY

During the year ended December 31, 2003, the company borrowed cash for operating
expenses on a short-term basis from certain related entities. The entities are
related by common ownership and management. The Company borrowed a total of
$85,000 during the year ended December 31, 2003 and repaid a total of $45,000.
Notes payable, related party consists of the following at December 31, 2003:



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

  Note payable, interest at 6% per annum, principal and interest
  due February 2004, unsecured, effective rate of interest, which
  includes loan fees is 45.7%                                              20,000
                                                                        -----------
                  Total notes payable, related party                 $     40,000
                                                                        ===========




                                      F-12



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




NOTE 6 - NOTES PAYABLE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                  Total notes payable                                $  1,517,526
                                                                        ===========

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

Certain notes are past due and in default.




                                      F-13



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

NOTE 6 - NOTES PAYABLE (CONTINUED)

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

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

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

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

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

NOTE 7 - INCOME TAXES

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




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

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

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






                                      F-14



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

NOTE 7 - INCOME TAXES (CONTINUED)

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

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

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


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



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

                                                     $       ---   $        ---
                                                       ===========    ===========



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

NOTE 8- STOCKHOLDERS' EQUITY

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

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

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



                                      F-15



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

NOTE 8- STOCKHOLDERS' EQUITY (CONTINUED)

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

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

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

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

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

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

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



                                      F-16


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

NOTE 8- STOCKHOLDERS' EQUITY (CONTINUED)

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

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

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

During the second quarter of 2003, the Company agreed to reprice warrants to
purchase 260,191 shares of common stock, as incentive to exercise those
warrants, from $4.00 per share to $0.10 per share. The repriced warrants were
valued at $26,019, the fair market value using the Modified Black-Scholes
European pricing model. The average risk-free interest rate used was 1.12%,
volatility was estimated at 91% and the expected life was one day. The value of
the repriced warrants was expensed as stock based compensation. The warrants to
purchase 260,198 shares of common stock were exercised for proceeds of $26,018.

STOCK COMPENSATION PLAN

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

STOCK OPTION PLAN

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

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



                                      F-17



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

NOTE 8- STOCKHOLDERS' EQUITY (CONTINUED)

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



                                        Weighted Average Number of      Weighted Average Exercise
                                        ---------------------------     -------------------------
                                           Options      Warrants        Price           Amount
                                        ------------    -----------     --------     -----------

                                                                      
Outstanding, December 31, 2001           1,894,821      1,606,938      $  1.75   $   6,121,004

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

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

Granted                                  6,800,000        949,300          .35       2,740,320
Exercised                                      ---       (559,858)        3.87      (2,164,432)
Expired/cancelled                         (163,000)      (289,349)        3.06      (1,382,879)
                                        ------------    -----------     --------     -----------

Outstanding, December 31, 2003           9,339,017      2,495,543      $   .50   $   5,909,999
                                        ============    ===========     ========     ===========




NOTE 9- STOCK-BASED COMPENSATION

The Company accounts for stock based compensation in accordance with Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." The standard requires the Company to adopt the "fair value"
method with respect to stock-based compensation of consultants and other
non-employees, which resulted in charges to operations of $49,194 and $111,112
during the years ended December 31, 2003 and 2002 respectively.

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

Had the Company adopted the fair value method with respect to the option issued
to the President and CEO described above, an additional $1,995,000 would have
been charged to income in 2003, proforma net loss would have been $6,720,153 and
net loss per share would have been $0.32 on a basic and diluted basis. There
would have been no additional changes to the net loss for 2002 had the Company
adopted the fair value method with respect to options issued to employees.




                                      F-18



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

NOTE 10 - COMMITMENTS AND CONTINGENCIES

LEGAL JUDGMENT
The Company leased its facilities under a long-term non-cancelable operating
leases. The Company assigned the lease to Dasibi in March 2002. The Company was
named in a lawsuit to collect past due rent. In February 2003, a judgment was
entered against the Company for $249,000, which has been accrued.

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

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

NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION

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

NOTE 12 - SALE OF SUBSIDIARY AND DISCONTINUED OPERATIONS

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

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



                                      F-19



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

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

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

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

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

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

   Operating expenses                                                 (149,745)
                                                                 --------------

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

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

NOTE 13 - RELATED PARTY TRANSACTIONS

Effective June 1, 2003, the Company entered into an agreement with a company in
which its President and CEO has an equity interest. The agreement requires the
Company to pay $25,000 per month for investment banking and strategic advisory
services as well as a 10% fee for all debt and equity financing raised by the
Company. During 2003, the Company paid the related party entity approximately
$378,000 in related expenses.

In September 2003, the Company loaned $20,000 to a related party entity in which
a company controlled by our President and CEO has an equity interest. The bridge
note is due upon the sooner of October 15, 2003, or upon the Company raising
additional funds of more than $50,000, and bears interest at the rate of 6%. The
note has been extended by mutual consent and must be repaid from financing
before any other creditor. In December 2003, the Company advanced another
$10,000 and $20,000 under agreements which provide for interest at 6% per annum
and are due upon the sooner of February 24 and 29, 2004, respectively, or upon
the Company raising additional funds of more than $50,000. There is accrued
interest of $445 due on these notes as of December 31, 2003.

Restricted cash consists of a certificate of deposit, which guarantees an
irrevocable letter of credit. The letter of credit has been provided for the
benefit of a related party company in which the Company's president and CEO has
an equity interest.




                                      F-20




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

NOTE 13 - RELATED PARTY TRANSACTIONS (CONTINUED)

During the year ended December 31, 2003, the Company advanced $28,654 to a
related entity in which its President and CEO has an equity interest.

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

NOTE 14 - SUBSEQUENT EVENTS

Subsequent to year end, the Company sold 2,219,187 shares of its common stock
for proceeds of $884,927. The Company paid placement fees totaling $91,783,
which includes $26,504 paid to a related party company in which its President
and CEO has an equity interest and $65,279 paid to an unrelated company.


                                      F-21





                                  EXHIBIT INDEX

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

- ------------------------
* Management contract or compensatory plan or arrangement.




                                       E-1

EX-10

                                                                    EXHIBIT 10.5



             AGREEMENT FOR INVESTMENT BANKING AND ADVISORY SERVICES


                                  June 1, 2003



PRIVATE AND CONFIDENTIAL

To:
JACQUES TIZABI
UNIVERSAL DETECTION TECHNOLOGY
(POLLUTION RESEARCH AND CONTROL CORP.)
"UDET"


RE:     Investment Banking and Advisory Services


DEAR MR. TIZABI,

     This letter agreement will confirm and set forth the terms of the
engagement of Astor Capital, Inc. ("Astor"), by UDET (the "Company"), with
respect to a range of consulting and investment banking services to be provided
by Astor.


     NATURE OF ENGAGEMENT
     The services to be provided by Astor include:

     Screening the investment universe in order to identify specific
     institutional investors who may be interested in investing, or financing in
     UDET.

     Identifying and arranging meetings with industry professionals from time to
     time.

     Seeking and providing advice on corporate deals, mergers, and acquisitions.

     Providing general advice and guidance on Corporate Development.

     Providing logistical assistance of whatever nature is necessary.

     At the company's request, Astor will make available physical space within
     their own offices and will allow use of some personnel when necessary.

     REMUNERATION
     As compensation for the activities undertaken, Astor will receive the
     following forms of compensation from UDET:


                                       1



     US $25,000,000 paid each month to be paid by the thirtieth day of each
     month.

     10% fee on any financing in the company, except in the case where a
     specific financing is done by another NASD Member. Financing includes any
     debt, equity, hybrid or combination. In the case of UDET entering into a
     line of credit with a party introduced by Astor, if the line of credit
     replaces an existing one, then Astor will only be due a 10% fee on the
     amount over and above the existing line. All other financings will incur a
     fee of 10% on the full amount.

     In the case of any mergers, acquisitions, or divestitures made by UDET, the
     following standard will be used to calculate Astor's compensation: Of the
     value of any one transaction, 7% of the first $5 Million, 5% of the next $5
     Million, and 3% of any amount above $10 Million.

     Reimbursement of specific out of pocket expenses incurred by Astor pursuant
     to its engagement.

     For any other corporate deals and things of such nature, Astor will be
     compensated according to terms negotiated in accordance with normal
     business practices.

     TERM
     The term of this agreement is through June 31, 2004 unless extended by both
     parties. It will automatically renew unless otherwise specified by either
     party.

     OTHER
     As Astor is working on behalf of UDET, UDET agrees to indemnify and hold
     harmless, and defend Astor Capital in any action arising out of a false
     statement or omission of a material fact made by UDET.

     After reviewing this agreement, please confirm the foregoing is in
     accordance with UDET's understanding by signing and returning to us.

     Respectfully,


     ASTOR CAPITAL, INC.



     By: /s/ Ali Moussavi
     ----------------------------------
     Name: Ali Moussavi
     Title: Managing Partner



                                       2




     Accepted and Agreed Upon, this 6/15/03

     Universal Detection Technology


     By: /s/ Jacques Tizabi
     ------------------------------------
     Name: Jacques Tizabi
     Title: Chairman, CEO

EX-14

                         UNIVERSAL DETECTION TECHNOLOGY









                       CODE OF BUSINESS CONDUCT AND ETHICS










                                TABLE OF CONTENTS


FORWARD .....................................................................ii

INTRODUCTION..................................................................1

COMPLIANCE WITH LAWS..........................................................3

        ANTITRUST LAWS........................................................3

        ANTICORRUPTION LAWS...................................................3

        IMPORT-EXPORT LAWS AND ANTIBOYCOTT LAWS...............................4

CONFLICTS OF INTEREST.........................................................4

        DOING BUSINESS WITH FAMILY MEMBERS....................................5

        OWNERSHIP IN OTHER BUSINESSES.........................................5

        SERVICE ON BOARDS.....................................................6

        BUSINESS OPPORTUNITIES................................................6

GIFTS AND ENTERTAINMENT.......................................................7

        ACCEPTING GIFTS AND ENTERTAINMENT.....................................7

        GIVING GIFTS AND ENTERTAINING.........................................8

FAIR DEALING..................................................................8

SECURITIES LAWS AND INSIDER TRADING...........................................8

RESPONDING TO INQUIRIES FROM THE PRESS AND OTHERS............................10

POLITICAL ACTIVITY...........................................................10

SAFEGUARDING CORPORATE ASSETS................................................10

EQUAL EMPLOYMENT OPPORTUNITY AND ANTI-HARASSMENT.............................11

HEALTH, SAFETY AND THE ENVIRONMENT...........................................12

ACCURACY OF COMPANY RECORDS..................................................12

RECORD RETENTION.............................................................13

ADMINISTRATION OF THE CODE...................................................13

ASKING FOR HELP AND REPORTING CONCERNS.......................................15


NOTE: THIS CODE AND RELATED POLICIES ARE CURRENT AS OF MARCH 29, 2004. IN
ADOPTING AND PUBLISHING THESE GUIDELINES, YOU SHOULD NOTE THAT (1) IN SOME
RESPECTS OUR POLICIES MAY EXCEED MINIMUM LEGAL REQUIREMENTS OR INDUSTRY
PRACTICE, AND (2) NOTHING CONTAINED IN THIS CODE SHOULD BE CONSTRUED AS A
BINDING DEFINITION OR INTERPRETATION OF A LEGAL REQUIREMENT OR INDUSTRY
PRACTICE.

To obtain additional copies of this code, you may contact (310) 248-3655.


                                       i




                                     FORWARD

To all employees:

     Our company is founded on our commitment to the highest ethical principles
and standards. We value honesty and integrity above all else. Upholding these
commitments is essential to our continued success.

     The law and the ethical principles and standards that comprise this code of
conduct must guide our actions. The code is, of course, broadly stated. Its
guidelines are not intended to be a complete listing of detailed instructions
for every conceivable situation. Instead, it is intended to help you develop a
working knowledge of the laws and regulations that affect your job.

     Adhering to this code is essential. I have personally taken the time to
study it carefully and I encourage you to do the same. I have also signed a
statement confirming that I have read this code carefully, and I expect you to
do the same by signing the confirmation form that appears on the final page.

     Ultimately, our most valuable asset is our reputation. Complying with the
principles and standards contained in this code is the starting point for
protecting and enhancing that reputation. Thank you for your commitment!



                                            JACQUES TIZABI
                                            CHIEF EXECUTIVE OFFICER



                                       ii



INTRODUCTION

     All of our employees, officers and directors must read and use this code of
conduct to ensure that each business decision follows our commitment to the
highest ethical standards and the law. Adherence to this code and to our other
official policies is essential to maintaining and furthering our reputation for
fair and ethical practices among our customers, shareholders, employees and
communities.

     It is the responsibility of every one of us to comply with all applicable
laws and regulations and all provisions of this code and the related policies
and procedures. Each of us must report any violations of the law or this code.
Failure to report violations and failure to follow the provisions of this code
may have serious legal consequences and will be disciplined by the company.
Discipline may include termination of your employment.

     This code summarizes certain laws and the ethical policies that apply to
all of our employees, officers, and directors. Several provisions in this code
refer to more detailed policies that either (1) concern more complex company
policies or legal provisions or (2) apply to select groups of individuals within
our company. If these detailed policies are applicable to you, it is important
that you read, understand, and be able to comply with them. If you have
questions as to whether any detailed policies apply to you, contact your
immediate supervisor.

     Situations that involve ethics, values, and violations of certain laws are
often very complex. No single code of conduct can cover every business situation
that you will encounter. Consequently, we have implemented the compliance
procedures outlined in the sections of this code entitled "Administration of the
Code" and "Asking for Help and Reporting Concerns." The thrust of our procedures
is WHEN IN DOUBT, ASK. If you do not understand a provision of this code, are
confused as to what actions you should take in a given situation, or wish to
report a violation of the law or this code, you should follow those compliance
procedures. Those procedures will generally direct you to talk to either your
immediate supervisor. There are few situations that cannot be resolved if you
discuss them with your immediate supervisor in an open and honest manner.

     After reading this code, you should:

     o    Have a thorough knowledge of the code's terms and provisions.

     o    Be able to recognize situations that present legal or ethical
          dilemmas.

     o    Be able to deal effectively with questionable situations in conformity
          with this code.

     In order to be able to accomplish these goals, we recommend that you take
the following steps:

     o    Read the entire code of conduct thoroughly.

     o    If there are references to more detailed policies that are not
          contained in this code, obtain and read those policies if they apply
          to you.



                                       1



     o    Think about how the provisions of this code apply to your job, and
          consider how you might handle situations to avoid illegal, improper,
          or unethical actions.

     o    If you have questions, ask your immediate supervisor.

     When you are faced with a situation and you are not clear as to what action
you should take, ask yourself the following questions:

     o    Is the action legal?

     o    Does the action comply with this code?

     o    How will your decision affect others, including our customers,
          shareholders, employees and the community?

     o    How will your decision look to others? If your action is legal but can
          result in the appearance of wrongdoing, consider taking alternative
          steps.

     o    How would you feel if your decision were made public? Could the
          decision be honestly explained and defended?

     o    Have you contacted your immediate supervisor regarding the action?

     PLEASE NOTE THAT THIS CODE IS NOT AN EMPLOYMENT CONTRACT AND DOES NOT
MODIFY THE EMPLOYMENT RELATIONSHIP BETWEEN US AND YOU. WE DO NOT CREATE ANY
CONTRACTUAL OR LEGAL RIGHTS OR GUARANTEES BY ISSUING THESE POLICIES, AND WE
RESERVE THE RIGHT TO AMEND, ALTER AND TERMINATE POLICIES AT ANY TIME AND FOR ANY
REASON.


                                       2



COMPLIANCE WITH LAWS
- --------------------------------------------------------------------------------

     Our policy is to behave in an ethical manner and comply with all laws,
rules, and government regulations that apply to our business. Although we
address several important legal topics in this code, we cannot anticipate every
possible situation or cover every topic in detail. It is your responsibility to
know and follow the law and conduct yourself in an ethical manner. It is also
your responsibility to report any violations of the law or this code. You may
report such violations by following the compliance procedures contained in the
section of the code entitled "Asking for Help and Reporting Concerns."

ANTITRUST LAWS

     Antitrust laws are designed to ensure a fair and competitive marketplace by
prohibiting various types of anticompetitive behavior. Some of the most serious
antitrust offenses occur between competitors, such as agreements to fix prices
or to divide customers, territories, or markets. Accordingly, it is important to
avoid discussions with our competitors regarding pricing, terms and conditions,
costs, marketing plans, customers, and any other proprietary or confidential
information. Foreign countries often have their own body of antitrust laws, so
our international operations may also be subject to antitrust laws of other
foreign countries.

     Unlawful agreements need not be written. They can be based on informal
discussions or the mere exchange of information with a competitor. If you
believe that a conversation with a competitor enters an inappropriate area, end
the conversation at once.

     Whenever any question arises as to application of antitrust laws, you
should consult with legal counsel, and any agreements with possible antitrust
implications should be made only with the prior approval of legal counsel.

ANTICORRUPTION LAWS

     Conducting business with governments is not the same as conducting business
with private parties. What may be considered an acceptable practice in the
private business sector may be improper or illegal when dealing with government
officials. Improper or illegal payments to government officials are prohibited.
"Government officials" includes employees of any government anywhere in the
world, even low-ranking employees or employees of government-controlled
entities, as well as political parties and candidates for political office. If
you deal with such persons or entities, you should consult with our Chief
Executive Officer to be sure that you understand these laws before providing
anything of value to a government official.

     If you are involved in transactions with foreign government officials, you
must comply not only with the laws of the country with which you are involved
but also with the U.S. Foreign Corrupt Practices Act. This act makes it illegal
to pay, or promise to pay money or anything of value to any non-U.S. government
official for the purpose of directly or indirectly obtaining or retaining
business. This ban on illegal payments and bribes also applies to agents or
intermediaries who use funds for purposes prohibited by the statute.


                                       3



     In some countries it is permissible to pay government employees for
performing certain required duties. These facilitating payments, as they are
known, are small sums paid to facilitate or expedite routine, non-discretionary
government actions, such as obtaining phone service or an ordinary license. In
contrast, a bribe, which is never permissible, is giving or offering to give
anything of value to a government official to influence a discretionary
decision. Understanding the difference between a bribe and a facilitating
payment is very important. You must have approval from our Chief Executive
Officer before making any payment or gift to a foreign government official.

IMPORT-EXPORT LAWS AND ANTIBOYCOTT LAWS

     Our company is committed to complying fully with all applicable U.S. laws
governing imports, exports, and the conduct of business with non-U.S. entities.
These laws contain limitations on the types of products that may be imported
into the United States and the manner of importation. They also prohibit exports
to, and most other transactions with, certain countries as well as cooperation
with or participation in foreign boycotts of countries that are not boycotted by
the United States.

     THIS DISCUSSION IS NOT COMPREHENSIVE AND YOU ARE EXPECTED TO FAMILIARIZE
YOURSELF WITH ALL LAWS AND REGULATIONS RELEVANT TO YOUR POSITION WITH US, AS
WELL AS ALL OUR RELATED WRITTEN POLICIES ON THESE LAWS AND REGULATIONS. To this
end, our Chief Executive Officer is available to answer your calls and
questions. If you have any questions concerning any possible reporting or
compliance obligations, or with respect to your own duties under the law, you
should not hesitate to call and seek guidance from our Chief Executive Officer.


CONFLICTS OF INTEREST
- --------------------------------------------------------------------------------

     All of us must be able to perform our duties and exercise judgment on
behalf of our company without influence or impairment, or the appearance of
influence or impairment, due to any activity, interest or relationship that
arises outside of work. Put more simply, when our loyalty to our company is
affected by actual or potential benefit or influence from an outside source, a
conflict of interest exists. We should all be aware of any potential influences
that impact or appear to impact our loyalty to our company. In general, you
should avoid situations where your personal interests conflict, or appear to
conflict, with those of our company.

     Any time you believe a conflict of interest may exist, you must disclose
the potential conflict of interest to your immediate supervisor. Any activity
that is approved, despite the actual or apparent conflict, must be documented. A
potential conflict of interest that involves an executive officer must be
approved by our Board of Directors. A potential conflict of interest involving
an officer with the title of Vice President and above must be approved by our
Chief Executive Officer.

     It is not possible to describe every conflict of interest, but some
situations that could cause a conflict of interest include:


                                       4



     o    Doing business with family members.

     o    Having a financial interest in another company with whom we do
          business.

     o    Taking a second job.

     o    Managing your own business.

     o    Serving as a director of another business.

     o    Being a leader in some organizations.

     o    Diverting a business opportunity from our company to another company.

DOING BUSINESS WITH FAMILY MEMBERS

     A conflict of interest may arise if family members work for a supplier,
customer, or other third party with whom we do business. It also may be a
conflict if a family member has a significant financial interest in a supplier,
customer, or other third party with whom we do business. A "significant
financial interest" is defined below. Before doing business on our behalf with
an organization in which a family member works or has a significant financial
interest, an employee must disclose the situation to his or her immediate
supervisor and discuss it with them. Document the approval if it is granted. If
the only interest you have in a customer or supplier is because a family member
works there, then you do not need to disclose the relationship or obtain prior
approval unless you deal with the customer or supplier.

"Family members" include your:

          o    Spouse    o Brothers or sisters

          o    Parents   o In-laws

          o    Children  o Life partner

     Employing relatives or close friends who report directly to you may also be
a conflict of interest. Although our company encourages employees to refer
candidates for job openings, employees who may influence a hiring decision must
avoid giving an unfair advantage to anyone with whom they have a personal
relationship.

OWNERSHIP IN OTHER BUSINESSES

     Our investments can cause a conflict of interest. In general, you should
not own, directly or indirectly, a significant financial interest in any company
that does business with us or seeks to do business with us. You also should not
own a significant financial interest in any of our competitors.

     Two tests determine if a "significant financial interest" exists:


                                       5



     o    You or a family member owns more than 1% of the outstanding stock of a
          business or you or a family member has or shares discretionary
          authority with respect to the decisions made by that business, or

     o    The investment represents more than 5% of your total assets or of your
          family member's total assets.

If you or a family member has a significant financial interest in a company with
whom we do business or propose to do business, that interest must be approved by
your immediate supervisor prior to the transaction.

     Notwithstanding the foregoing, non-employee directors of our company and
their family members may have significant financial interests in or be
affiliates of suppliers, customers, competitors, and third parties with whom we
do business or propose to do business. However, a director must:

     o    disclose any such relationship promptly after the director becomes
          aware of it,

     o    remove himself or herself from any Board activity that directly
          impacts the relationship between our company and any such company with
          respect to which the director has a significant financial interest or
          is an affiliate, and

     o    obtain prior approval of our Board of Directors for any transaction of
          which the director is aware between our company and any such company.

SERVICE ON BOARDS

     Serving as a director of another corporation may create a conflict of
interest. Being a director or serving on a standing committee of some
organizations, including government agencies, also may create a conflict.

     Before accepting an appointment to the board or a committee of any
organization whose interests may conflict with our company's interests, you must
discuss it with our Board of Directors and obtain their approval. This rule does
not apply to non-employee directors of our company.

BUSINESS OPPORTUNITIES

     Business opportunities relating to the kinds of products and services we
usually sell or the activities we typically pursue that arise during the course
of your employment or through the use of our property or information belong to
us. Similarly, other business opportunities that fit into our strategic plans or
satisfy our commercial objectives that arise under similar conditions also
belong to us. You may not direct these kinds of business opportunities to our
competitors, to other third parties or to other businesses that you own or are
affiliated with.


                                       6



LOANS

     Unlawful extensions of credit by our company in the form of personal loans
to our executive officers and directors are prohibited. All other loans by our
company to, or guarantees by our company of obligations of, officers with the
title of Vice President or above must be made in accordance with established
company policies approved by our Board of Directors or its designated committee.


GIFTS AND ENTERTAINMENT
- --------------------------------------------------------------------------------

     We are dedicated to treating fairly and impartially all persons and firms
with whom we do business. Therefore, our employees must not give or receive
gifts, entertainment, or gratuities that could influence or be perceived to
influence business decisions. Misunderstandings can usually be avoided by
conduct that makes clear that our company conducts business on an ethical basis
and will not seek or grant special considerations.

ACCEPTING GIFTS AND ENTERTAINMENT

     You should never solicit a gift or favor from those with whom we do
business. You may not accept gifts of cash or cash equivalents.

     You may accept novelty or promotional items or modest gifts related to
commonly recognized occasions, such as a promotion, holiday, wedding or
retirement, if:

     o    this happens only occasionally,

     o    the gift was not solicited,

     o    disclosure of the gift would not embarrass our company or the people
          involved, and

     o    the value of the gift is under $100.

     You may accept an occasional invitation to a sporting activity,
entertainment, or meal if:

     o    there is a valid business purpose involved,

     o    this happens only occasionally, and

     o    the activity is of reasonable value and not lavish.

     If you are asked to attend an overnight event, you must obtain prior
approval from our Chief Executive Officer.


                                       7



GIVING GIFTS AND ENTERTAINING

     Gifts of nominal value (under $100) and reasonable entertainment for
customers, potential customers and other third parties with whom we do business
are permitted. However, any gift or entertainment must:

     o    support our company's legitimate business interests,

     o    be reasonable and customary, not lavish or extravagant, and

     o    not embarrass our company or the recipient if publicly disclosed.

     Under no circumstances can any bribe, kickback, or illegal payment or gift
of cash or cash equivalents be made. Also, special rules apply when dealing with
government employees. These are discussed in this code under "Compliance with
Laws - Anticorruption Laws." If you are not sure whether a specific gift or
entertainment is permissible, contact your immediate supervisor.


FAIR DEALING
- --------------------------------------------------------------------------------

     We have built a reputation as a trustworthy and ethical member of our
community and our industry. We are committed to maintaining the highest levels
of integrity and fairness within our company. When we fail to negotiate,
perform, or market in good faith, we may seriously damage our reputation and
lose the loyalty of our customers. You must conduct business honestly and fairly
and not take unfair advantage of anyone through any misrepresentation of
material facts, manipulation, concealment, abuse of privileged information,
fraud, or other unfair business practice.


SECURITIES LAWS AND INSIDER TRADING
- --------------------------------------------------------------------------------

     Because we are a public company, we are subject to a number of laws
concerning the purchase and sale of our stock and other publicly traded
securities. Regardless of your position with us, if you are aware of what is
known as "material inside information" regarding our company, business, affairs
or prospects, you may not disclose that information to anyone outside our
company, and you are not allowed to buy or sell our stock or other
publicly-traded securities until the material inside information is known not
only by individuals within our company, but also by the general public. The
improper use of material inside information is known as insider trading. Insider
trading is a criminal offense and is strictly prohibited.

     "Material inside information" is any information concerning us that is not
available to the general public and which an investor would likely consider to
be important in making a decision whether to buy, sell, or hold our stock or
other securities. A good rule of thumb to determine whether information about us
is material inside information is whether or not the release of that


                                       8



information to the public would have an effect on the price of our stock.
Examples of material inside information include information concerning earnings
estimates, changes in previously released earnings estimates, a pending stock
split, dividend changes, significant merger, acquisition or disposition
proposals, major litigation, the loss or acquisition of a major contract, and
major changes in our management. Material inside information is no longer deemed
"inside" information once it is publicly disclosed and the market has had
sufficient time to absorb the information. Examples of effective public
disclosure are the filing of such inside information with the Securities and
Exchange Commission, or the printing of such information in THE WALL STREET
JOURNAL or other publications of general circulation, in each case giving the
investing public a fair amount of time to absorb and understand our disclosures.

     In addition to being prohibited from buying or selling our stock or other
publicly-traded securities when you are in possession of material inside
information, you are also prohibited from disclosing such information to anyone
else (including friends and family members) in order to enable them to trade on
the information. In addition, if you acquire material inside information about
another company due to your relationship with us, you may not buy or sell that
other company's stock or other securities until such information is publicly
disclosed and sufficiently disseminated into the marketplace.

     The following are general guidelines to help you comply with our insider
trading policy:

     o    Do not share material inside information with people within our
          company whose jobs do not require them to have the information.

     o    Do not disclose any non-public information, material or otherwise,
          concerning our company to anyone outside our company unless required
          as part of your duties and the person receiving the information has a
          reason to know the information for company business purposes.

     o    If you have material inside information regarding us, or regarding any
          other publicly traded company that you obtained from your employment
          or relationship with us, you must not buy or sell, or advise anyone
          else to buy or sell, our securities or that other company's
          securities, until such information is publicly disclosed and
          sufficiently disseminated into the marketplace.

     Penalties for trading on or communicating material inside information are
severe. If you are found guilty of an insider trading violation, you can be
subject to civil and even criminal liability. In addition to being illegal, we
believe that insider trading is unethical and will be dealt with firmly, which
may include terminating your employment with us and reporting violations to
appropriate authorities.


                                       9



RESPONDING TO INQUIRIES FROM THE PRESS AND OTHERS
- --------------------------------------------------------------------------------

     Our company is subject to laws that govern the timing of our disclosures of
material information to the public and others. Only certain designated employees
may discuss our company with the news media, securities analysts and investors.
All inquiries from outsiders regarding financial or other information about our
company should be referred to our Chief Executive Officer.


POLITICAL ACTIVITY
- --------------------------------------------------------------------------------

     We will fully comply with all political contribution laws. Our funds may
not be used for contributions of any kind to any political party or committee or
to any candidate or holder of any government position (national, state or local)
unless such contribution is permitted by law and complies with our company
policy. Please contact our Chief Executive Officer to determine whether a
specific company contribution is permitted.

     It is against our policy for you to lobby our other employees on behalf of
a political candidate during the work day. It is also against our policy to
reimburse an employee for any political contributions or expenditures. Outside
normal office hours, you are free to participate in political campaigns on
behalf of candidates or issues of your choosing, as well as make personal
political contributions.


SAFEGUARDING CORPORATE ASSETS
- --------------------------------------------------------------------------------

     We have a responsibility to protect company assets entrusted to us from
loss, theft, misuse, and waste. Company assets and funds may be used only for
business purposes and may never be used for illegal purposes. If you become
aware of theft, waste, or misuse of our assets or funds or have any questions
about your proper use of them, you should speak immediately with your immediate
supervisor.

     It is also important that you protect the confidentiality of Company
information. Confidential or proprietary information includes all information
that is not generally known to the public and is helpful to the company, or
would be helpful to competitors. Proprietary information should be marked
accordingly, kept secure and access limited to those who have a need to know in
order to do their jobs.

     Our business relations are built on trust, and our customers and suppliers
count on that trust. If you learn information from them that is not otherwise
public, you should keep that information confidential also.


                                       10



     We must all be sensitive to the impact of comments made over the Internet
through public forums such as chat rooms and bulletin boards. In such forums,
you may not post any information about the company including comments about our
products, stock performance, operational strategies, financial results,
customers or competitors, even in response to a false statement or question.
This applies whether you are at work or away from the office. Our company owns
all e-mail messages that are sent from or received through the company's
systems. We may monitor your messages and may be required to disclose them in
the case of litigation or governmental inquiry.


EQUAL EMPLOYMENT OPPORTUNITY AND ANTI-HARASSMENT
- --------------------------------------------------------------------------------

     We are committed to providing equal employment opportunities for all our
employees and will not tolerate any speech or conduct that is intended to, or
has the effect of, discriminating against or harassing any qualified applicant
or employee because of his or her race, color, religion, sex (including
pregnancy, childbirth or related medical conditions), national origin, age,
physical or mental disability, veteran status, or any characteristic protected
by law. We will not tolerate discrimination or harassment by anyone - managers,
supervisors, co-workers, vendors, or our customers. This policy extends to every
phase of the employment process, including: recruiting, hiring, training,
promotion, compensation, benefits, transfers, discipline and termination,
layoffs, recalls, and company-sponsored educational, social and recreational
programs, as applicable. If you observe conduct that you believe is
discriminatory or harassing, or if you feel you have been the victim of
discrimination or harassment, you should notify our Chief Executive Officer
immediately.

     Not only do we forbid unlawful discrimination, we take affirmative action
to ensure that applicants are employed, and employees are treated during
employment, without regard to their race, color, religion, sex (including
pregnancy, childbirth or related medical conditions), national origin, age,
physical or mental disability, veteran status, or any characteristic protected
by law.

     One of the tenants of this code, however, is that all employees are
accountable for promoting equal opportunity practices within our company. We
must do this not just because it is the law, but because it is the right thing
to do.

     We will not retaliate against any employee for filing a good faith
complaint under our anti-discrimination and anti-harassment policies or for
cooperating in an investigation and will not tolerate or permit retaliation by
management, employees, or co-workers. To the fullest extent possible, the
company will keep complaints and the terms of their resolution confidential. If
an investigation confirms harassment or discrimination has occurred, the company
will take corrective action against the offending individual, including such
discipline up to and including immediate termination of employment, as
appropriate.


                                       11



HEALTH, SAFETY AND THE ENVIRONMENT
- --------------------------------------------------------------------------------

     We are committed to providing safe and healthy working conditions by
following all occupational health and safety laws governing our activities.

     We believe that management and each and every employee have a shared
responsibility in the promotion of health and safety in the workplace. You
should follow all safety laws and regulations, as well as company safety
policies and procedures. You should immediately report any accident, injury or
unsafe equipment, practices, or conditions.

     You also have an obligation to carry out company activities in ways that
preserve and promote a clean, safe, and healthy environment. You must strictly
comply with the letter and spirit of applicable environmental laws and the
public policies they represent.

     The consequences of failing to adhere to environmental laws and policies
can be serious. Our company, as well as individuals, may be liable not only for
the costs of cleaning up pollution, but also for significant civil and criminal
penalties. You should make every effort to prevent violations from occurring and
report any violations to your immediate supervisor.


ACCURACY OF COMPANY RECORDS
- --------------------------------------------------------------------------------

     All information you record or report on our behalf, whether for our
purposes or for third parties, must be done accurately and honestly. All of our
records (including accounts and financial statements) must be maintained in
reasonable and appropriate detail, must be kept in a timely fashion, and must
appropriately reflect our transactions. Falsifying records or keeping unrecorded
funds and assets is a severe offense and may result in prosecution or loss of
employment. When a payment is made, it can only be used for the purpose spelled
out in the supporting document.

     Information derived from our records is provided to our shareholders and
investors as well as government agencies. Thus, our accounting records must
conform not only to our internal control and disclosure procedures but also to
generally accepted accounting principles and other laws and regulations, such as
those of the Internal Revenue Service and the Securities and Exchange
Commission. Our public communications and the reports we file with the
Securities and Exchange Commission and other government agencies should contain
information that is full, fair, accurate, timely, and understandable in light of
the circumstances surrounding disclosure.

     Our internal and external auditing functions help ensure that our financial
books, records, and accounts are accurate. Therefore, you should provide our
accounting department, internal auditing staff, audit committee and independent
public accountants with all pertinent information that they may request. We
encourage open lines of communication with our audit committee, accountants and
auditors and require that all our personnel cooperate with them to the maximum


                                       12



extent possible. It is unlawful for you to fraudulently influence, induce,
coerce, manipulate or mislead our independent public accountants for the purpose
of making our financial statements misleading.

     If you are unsure about the accounting treatment of a transaction or
believe that a transaction has been improperly recorded or you otherwise have a
concern or complaint regarding an accounting matter, our internal accounting
controls, or an audit matter, you should confer with your immediate supervisor
or our chief financial officer, or you may submit your concern, on an anonymous
basis, to the Audit Committee of our Board of Directors.


RECORD RETENTION
- --------------------------------------------------------------------------------

     Our records should be retained or discarded in accordance with our record
retention policies and all applicable laws and regulations. From time to time we
are involved in legal proceedings that may require us to make some of our
records available to third parties. Our legal counsel will assist us in
releasing appropriate information to third parties and provide you (or your
immediate supervisor) with specific instructions. It is a crime to alter,
destroy, modify, or conceal documentation or other objects that are relevant to
a government investigation or otherwise obstruct, influence or impede an
official proceeding. The law applies equally to all of our records, including
formal reports as well as informal data such as e-mail, expense reports, and
internal memos. If the existence of a subpoena or a pending government
investigation is known or reported to you, you should immediately contact our
Chief Executive Officer and you must retain all records that may pertain to the
investigation or be responsive to the subpoena.


ADMINISTRATION OF THE CODE
- --------------------------------------------------------------------------------

DISTRIBUTION

     All of our directors, officers, and employees will receive a copy of this
code when they join our company. Updates of the code will be distributed to all
directors, officers, and employees.

ROLE OF SUPERVISORS AND OFFICERS

     Supervisors and officers have important roles under this code and are
expected to demonstrate their personal commitment to this code by fostering a
workplace environment that promotes compliance with the code and by ensuring
that employees under their supervision participate in our company's compliance
training programs.


                                       13



REPORTING VIOLATIONS

     All employees are obliged to report violations of this code or the law and
to cooperate in any investigations into such violations. We prefer that you give
your identity when reporting violations, to allow the company to contact you in
the event further information is needed to pursue an investigation, and your
identity will be maintained in confidence to the extent practicable under the
circumstances and consistent with enforcing this code. However, you may
anonymously report violations.

INVESTIGATIONS

     We will initiate a prompt investigation following any credible indication
that a breach of law or this code may have occurred. We will also initiate
appropriate corrective action as we deem necessary, which may include notifying
appropriate authorities.

DISCIPLINARY ACTION

     If you violate any provision of this code, you may be subject to
disciplinary action, up to and including discharge. Please be aware that we may
seek civil remedies from you and if your violation results in monetary loss to
us, you may be required to reimburse us for that loss. If you are involved in a
violation, the fact that you reported the violation, together with the degree of
cooperation displayed by you and whether the violation is intentional or
unintentional, will be given consideration in our investigation and any
resulting disciplinary action.

NO RETALIATION

     We will not retaliate against anyone who, in good faith, notifies us of a
possible violation of law or this code, nor will we tolerate any harassment or
intimidation of any employee who reports a suspected violation. In addition,
there are federal "whistleblower" laws that are designed to protect employees
from discrimination or harassment for providing information to us or
governmental authorities, under certain circumstances, with respect to certain
laws such as those governing workplace safety, the environment, securities
fraud, and federal law relating to fraud against shareholders.

APPROVALS

     Approvals required under this code should be documented.

WAIVERS

     Any request for a waiver of this code must be submitted in writing to our
compliance officer who has authority to decide whether to grant a waiver.
However, a waiver of any provision of this code for a director or an executive
officer must be approved by our Board of Directors or its designated committee
and will be promptly disclosed to the extent required by law or regulation.

CERTIFICATIONS

     All new employees must sign a certificate confirming that they have read
and understand this code. We will also require an annual certification of
compliance with the code by all


                                       14



officers with the title of Vice President or above. However, failure to read the
code or sign a confirmation certificate does not excuse you from complying with
this code.


ASKING FOR HELP AND REPORTING CONCERNS
- --------------------------------------------------------------------------------

     We take this code seriously and consider its enforcement to be among our
highest priorities, but we also acknowledge that it is sometimes difficult to
know right from wrong. That's why we encourage open communication. WHEN IN
DOUBT, ASK. Whenever you have a question or concern, are unsure about what the
appropriate course of action is, or if you believe that a violation of the law
or this code has occurred:

     o    You should talk with your immediate supervisor. He or she may have the
          information you need, or may be able to refer the matter to an
          appropriate source, including legal counsel as circumstances warrant.

     o    If you are uncomfortable talking with your immediate supervisor, you
          may also contact any manager in our company with whom you feel
          comfortable, or our Chief Executive Officer.

     o    In addition, if you have concerns or complaints about accounting or
          audit matters or our internal accounting controls, you may confer with
          your immediate supervisor or our Chief Financial Officer, or you may
          submit your concern or complaint, on an anonymous basis, to the Audit
          Committee of our Board of Directors.



                                       15



                            CONFIRMATION CERTIFICATE

     I have been provided with a copy of the Code of Business Conduct and Ethics
of Universal Detection Technology. I acknowledge that I have read the code and
understand my responsibilities under it. I further acknowledge that I should
follow the compliance procedures described in the code if I have any questions
or concerns.



                              --------------------------------------------------
                              Employee Name:
                                            ------------------------------------
                              Date:
                                   ---------------------------------------------



                                       1

EX-21

                                                                   EXHIBIT 21.1

                              LIST OF SUBSIDIARIES

Dasibi China, Inc., a Colorado corporation (inactive)
Nutek, Inc., a Florida corporation (inactive)


                                       31

EX-31

                                                                    EXHIBIT 31.1

                                CERTIFICATION OF
           CHIEF EXECUTIVE OFFICER AND ACTING CHIEF FINANCIAL OFFICER
                        OF UNIVERSAL DETECTION TECHNOLOGY

I, Jacques Tizabi, certify that:

1.   I have reviewed this annual report on Form 10-KSB of Universal Detection
     Technology;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the small business issuer as of, and for, the periods presented in this
     annual report;

4.   The small business issuer's other certifying officer(s) and I are
     responsible for establishing and maintaining disclosure controls and
     procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
     the small business issuer and we have:

     a)   Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the small
          business issuer, including its consolidated subsidiaries, is made
          known to us by others within those entities, particularly during the
          period in which this annual report is being prepared;

     b)   Evaluated the effectiveness of the small business issuer's disclosure
          controls and procedures and presented in this annual report our
          conclusions about the effectiveness of the disclosure controls and
          procedures, as of the end of the period covered by this annual report
          based on such evaluation; and

     c)   Disclosed in this annual report any change in the small business
          issuer's internal control over financial reporting that occurred
          during the small business issuer's most recent fiscal quarter (the
          small business issuer's fourth quarter in the case of an annual
          report) that has materially affected, or is likely to materially
          affect, the small business issuer's internal control over financial
          reporting; and

5.   The small business issuer's other certifying officer(s) and I have
     disclosed, based on our most recent evaluation of internal control over
     financial reporting, to the small business issuer's auditors and the audit
     committee of small business issuer's board of directors (or persons
     performing the equivalent function):

     a)   All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the small business issuer's
          ability to record, process, summarize and report financial data and
          have identified for the small business issuer's ability to record,
          process, summarize and report financial information; and

     b)   Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the small business issuer's
          internal control over financial reporting.

Date:  March 30, 2004



      /s/ Jacques Tizabi
By: ------------------------------------
      Jacques Tizabi
      Principal Executive Officer and
      Acting Chief Financial Officer



                                       32

EX-32

                                                                    EXHIBIT 32.1


                                CERTIFICATION OF
           CHIEF EXECUTIVE OFFICER AND ACTING CHIEF FINANCIAL OFFICER
                        OF UNIVERSAL DETECTION TECHNOLOGY


     This certification is provided pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and accompanies the Annual Report on Form 10-KSB (the
"Form 10-KSB") for the year ended December 31, 2003, of Universal Detection
Technology (the "Issuer").

     I, Jacques Tizabi, the Chief Executive Officer and Acting Chief Financial
Officer of the Issuer, certify that to the best of my knowledge:

          (i)  the Form 10-KSB fully complies with the requirements of Section
               13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15
               U.S.C. 78m(a) or 78o(d)); and

          (ii) the information contained in the Form 10-KSB fairly presents, in
               all material respects, the financial condition and results of
               operations of the Issuer.

      Dated:  March 30, 2004.



                                             /s/ Jacques Tizabi
                                           ------------------------------
                                           Name: Jacques Tizabi