-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V/GDGIFWuBGMeMo2g21i1QSmm76CMjF5WhvZw1ospN2S4anYStP/pA01AEOjw1Nf usk5J0Be+O2GeFRPRhy4Rg== /in/edgar/work/20000620/0001050502-00-000810/0001050502-00-000810.txt : 20000920 0001050502-00-000810.hdr.sgml : 20000920 ACCESSION NUMBER: 0001050502-00-000810 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20000620 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POLLUTION RESEARCH & CONTROL CORP /CA/ CENTRAL INDEX KEY: 0000763950 STANDARD INDUSTRIAL CLASSIFICATION: [3823 ] IRS NUMBER: 952746949 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: SEC FILE NUMBER: 333-87965 FILM NUMBER: 657599 BUSINESS ADDRESS: STREET 1: 506 PAULA AVE CITY: GLENDALE STATE: CA ZIP: 91201 BUSINESS PHONE: 8182477601 MAIL ADDRESS: STREET 1: 506 PAULA AVE CITY: GLENDALE STATE: CA ZIP: 91201 FORMER COMPANY: FORMER CONFORMED NAME: DASIBI ENVIRONMENTAL CORP DATE OF NAME CHANGE: 19900529 POS AM 1 0001.txt POS AM As filed with the Securities and Exchange Commission on June 20, 2000 Registration No. 333-87965 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------- POST-EFFECTIVE AMENDMENT NO. 2 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------- Pollution Research and Control Corp. ------------------------------------ (Exact name of registrant as specified in its charter) California ---------- (State or other jurisdiction of incorporation or organization) 95-2746949 ---------- (I.R.S. Employer Identification No.) 506 Paula Avenue, Glendale, California 91201 (818) 247-7601 -------------- (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Albert E. Gosselin, Jr. 506 Paula Avenue, Glendale, California 91201 (818) 247-7601 -------------- (Name, address, including zip code, and telephone number, including area code, of agent for service) Please send copies of all correspondence to: PATRICIA CUDD, ESQ. Cudd & Associates 1120 Lincoln Street, Suite #1507 Denver, Colorado 80203 Telephone: (303) 861-7273 Approximate date of commencement of proposed sale to the public: As soon as practicable after the Registration Statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] 1
CALCULATION OF REGISTRATION FEE - ----------------------------------------------------------------------------------------------- Proposed Title of Each Maximum Proposed Maximum Amount of Class of Securities Amount to Offering Price Aggregate Offering Registration To be Registered Be Registered Per Share (1) Price(1) Fee - ----------------------------------------------------------------------------------------------- Common Stock, no par value 100,000 $2.41 $241,000 $48.20 Common Stock, no par value, 64,000 $2.41 154,240 $30.85 underlying options(2) - ----------------------------------------------------------------------------------------------- TOTAL 164,000 $2.41 $395,240(2) $79.05(3) - -----------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457. Pursuant to Rule 457(c), based upon 100,000 shares of Common Stock being offered by a Selling Shareholder, 64,000 shares of Common Stock underlying options and the average of the high and low sales prices of the Common Stock on the NASDAQ SmallCap Market System on June 13, 2000, of $2.41. (2) Represents the shares of Common Stock underlying four options, one of which options is exercisable to purchase 25,000 shares of Common Stock at an exercise price of $1.00 per share on or prior to February 25, 2002, and three of which options are exercisable to purchase 14,500 shares, 14,500 shares, and 10,000 shares, of Common Stock, respectively, at an exercise price of $1.38 per share on or prior to March 22, 2002. (3) The sum of $163.44 was paid in conjunction with the filing of the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3, File Number 333-87965, filed on March 23, 2000. ------------------ The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. DOCUMENTS INCORPRATED BY REFERENCE: The contents of the Registration Statement on Form S-3, File Number 333-87965, filed on September 28, 1999, the Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 filed on March 23, 2000, and certain exhibits to this Post-Effective Amendment No. 2 to the Registration Statement on Form S-3, as set forth in the Exhibit Index located at page 24, are incorporated herein by reference. 2 SUBJECT TO COMPLETION 164,000 Shares of Common Stock, no par value POLLUTION RESEARCH AND CONTROL CORP. -------------- This Prospectus relates to an aggregate of 164,000 shares of common stock, no par value per share (the "Common Stock"), of Pollution Research and Control Corp. (the "Company" or "PRCC"), including (i) 25,000 shares of Common Stock underlying an outstanding option exercisable at an exercise price of $1.00 per share on or prior to February 25, 2002, and (ii) an aggregate of 39,000 shares of Common Stock underlying three outstanding options exercisable to purchase 14,500 shares, 14,500 shares, and 10,000 shares, of Common Stock, respectively, at an exercise price of $1.38 per share on or prior to March 22, 2002. The outstanding options are hereinafter referred to, collectively, as the "Options." The shareholder of 100,000 shares of Common Stock and the holders of Options who exercise such Options so as to acquire up to an aggregate of 64,000 underlying shares of Common Stock are hereinafter collectively referred to as the "Selling Shareholders." Information regarding the Selling Shareholders is set forth in this Prospectus under "Selling Shareholders." Information regarding the holders of the Options and the circumstances under which they may exercise their respective Options so as to acquire the underlying shares of Common Stock, is set forth herein under "Description of Securities." The shares of Common Stock were issued by the Company on February 23, 2000. The Options exercisable to purchase 25,000 shares, and an aggregate of 39,000 shares, of Common Stock were granted by the Company on February 25, 2000, and March 22, 2000, respectively. With respect to the shares of Common Stock issuable upon the exercise of the Options and otherwise, said shares of Common Stock may be offered and sold to the public from time to time by the Selling Shareholders, or by pledgees, donees, transferees or other successors to the Selling Shareholders, in each case in open market transactions, in private or negotiated transactions or in a combination of such methods of sale, at fixed prices, at prices then prevailing on the NASDAQ SmallCap Market System at the time of sale, at prices related to such prevailing market prices or at negotiated prices. To the extent required at the time of a particular offer of Common Stock by the Selling Shareholders, a supplement to this Prospectus will be distributed that will set forth the number of shares of Common Stock being offered and the terms of the offering, including the name or names of any underwriters, dealers, brokers or agents, the purchase price paid by any underwriter for shares of Common Stock purchased from the Selling Shareholders, any discounts, commissions and other items constituting compensation from the Selling Shareholders and any discounts, commissions or concessions allowed or re-allowed to dealers, including the proposed selling price to the public. The Selling Shareholders reserve the sole right to accept and, together with any agent of the Selling Shareholders, to reject in whole or in part any proposed purchase of the shares of Common Stock. The Selling Shareholders will pay any sales commissions or other seller's compensation applicable to such transactions. The Selling Shareholders and agents who execute orders on their behalf may be deemed to be underwriters as that term is defined in Section 2(11) of the Securities Act of 1933, as amended (the "Securities Act"), and a portion of any proceeds of sales and discounts, commissions or other seller's compensation may be deemed to be underwriting compensation for purposes of the Securities Act. (See "Plan of Distribution.") This Prospectus also covers such additional shares of Common Stock as may be issuable to the Selling Shareholders in the event of a stock dividend, stock split, recapitalization or other similar change in the Common Stock. 3 The Company will not receive any of the proceeds from the sale of the shares of Common Stock by the Selling Shareholders. Prior to such sale of Common Stock, however, the Company will have received up to a maximum of $78,820 ($1.00 to $1.38 per share) in cash from the exercise of the Options on or prior to their respective expiration date(s) on February 25, 2002, or March 22, 2002. The Company has agreed to pay all costs of the registration of the shares of Common Stock underlying the Options and otherwise being offered by the Selling Shareholders. Such costs, fees and disbursements are estimated to be approximately $16,073. SEE "RISK FACTORS" FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE SHARES OF COMMON STOCK. The Company's Common Stock is traded over-the-counter and is quoted on the NASDAQ National Market System under the symbol "PRCC." On June 13, 2000, the last sale price of the Common Stock on the NASDAQ National Market System was $2.31. ------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------- The date of this Prospectus is June __, 2000. 4 TABLE OF CONTENTS Page ---- Available Information..................................................... 5 Incorporation of Certain Documents by Reference........................... 5 The Company............................................................... 6 The Offering.............................................................. 7 Use of Proceeds........................................................... 8 Risk Factors.............................................................. 8 Plan of Distribution...................................................... 14 Market Information........................................................ 15 Selling Security Holders.................................................. 15 Description of Securities................................................. 16 Legal Matters............................................................. 18 Experts................................................................... 18 AVAILABLE INFORMATION The Company is subject to the informational and reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information filed with the Commission by the Company may be inspected and copied at the public reference facilities maintained by the Commission at its principal offices at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, Suite 1300, New York, New York 10048, and on the Commission's website at www.sec.gov. Copies of these materials can also be obtained at prescribed rates from the Public Reference Section of the Commission at its principal offices in Washington, D.C., set forth above. Additional information with respect to this offering may be provided in the future by means of supplements or "stickers" to the Prospectus. The Company has filed a Registration Statement on Form S-3 (including all amendments and supplements thereto, the "Registration Statement") with the Commission under the Securities Act with respect to the shares of Common Stock underlying the Options and otherwise offered hereby. This Prospectus, which forms a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and the Exhibits filed therewith, certain parts of which have been omitted in accordance with the rules and regulations of the Commission. Statements contained herein concerning the provisions of such documents are not necessarily complete and, in each instance, reference is made to the Registration Statement or to the copy of such document filed as an Exhibit to the Registration Statement or otherwise filed with the Commission. Each such statement is qualified in its entirety by such reference. Copies of the Registration Statement and the Exhibits thereto can be obtained upon payment of a fee prescribed by the Commission or may be inspected free of charge at the public reference facilities and regional offices referred to above. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999, and the Company's Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000, which were previously filed with the Commission 5 (File No. 0-14266), are incorporated by reference in this Prospectus and the Registration Statement of which it is a part. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the shares of Common Stock, shall be deemed to be incorporated by reference herein and to be part hereof from the respective dates of the filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus and the Registration Statement of which it is a part to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus or the Registration Statement of which it is a part. The Company will furnish without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, upon the written or verbal request of such person, a copy of any or all of the documents incorporated herein by reference, other than exhibits to such documents. Requests should be addressed to: Secretary, Pollution Research and Control Corp., 506 Paula Avenue, Glendale, California 91201; telephone number (818) 247-7601. THE COMPANY The Company has been engaged in the business of, primarily, designing, manufacturing and marketing electronic analytical instruments used to detect and measure various types of air pollution, such as "acid rain," "ozone depletion" and "smog episodes" through its wholly-owned subsidiary, Dasibi Environmental Corp. ("Dasibi"), for the past approximately twenty-eight years. Although it is the smallest competitor in the marketplace, management believes that the Company has the most complete "in-house" line of instrumentation. The Company's products are generally used to measure air pollution levels in geographic areas that range in size from small industrial sites to entire states or countries. The Company also supplies computer-controlled calibration systems that verify the accuracy of its instruments, data loggers to collect and manage pollutant information and final reporting software for remote centralized applications. At the core of this instrumentation are three software systems, including a data logger system that permits the analysis of air samples at remote locations, a central station system that allows the compilation of data at a central site and a predictive pollutant monitoring model, which is currently under development and which management believes is useful for predicting future levels of pollutants across a geographic area. The Company's instruments have been sold to over 300 customers worldwide, including industrial manufacturers; Federal, state, city, local and foreign governmental agencies; major industrial companies; and educational and research institutions in over thirty countries. These customers use the Company's products principally for environmental protection compliance programs. Dasibi has an installed base of equipment in over thirty countries. Since 1993, the Company has experienced intense price competition in its core business of air pollutant monitoring systems that has reduced both sales and operating margins. In response to these factors, the Company acquired two companies outside its core business, each of which businesses has been discontinued. Since January 1998, the Company has explored additional markets outside the United States in which to sell its pollution monitoring and control devices, concentrating, primarily, on the People's Republic of China. On June 10, 1998, Dasibi was awarded, on a designated vendor basis, an approximate $5.2 million contract to install air pollution monitoring systems in eleven cities in the People's Republic of China. Essential completion of the contract and 6 shipment of the products by Dasibi during the five-month period ended November 30, 1999, implemented Phase I of the Nationwide Urban Air Quality Network conceived by China's State Environmental Protection Agency ("SEPA") to address air quality in the People's Republic of China through its ultimate goal of a nationwide network of air pollution monitoring stations in over 600 Chinese cities. On April 17, 2000, the Company finalized a contract for Phase II of SEPA's Nationwide Urban Air Quality Network involving an additional thirty-three cities in the People's Republic of China. The contract, valued at approximately $13.5 million, will also be performed by Dasibi. It is anticipated, without assurance, that shipments under the Phase II contract will commence in July 2000 and that all payments to Dasibi will be made by letter of credit drawn on China Construction Bank. Financing for Phase II is expected to be available from two of the banks that financed the successfully completed Phase I contract. Again, Dasibi is expected to assist the People's Republic of China in obtaining ten-year financing at a 3.9% interest rate from the U.S. Export-Import Bank, N.A. (the "Ex-Im Bank"). The Ex-Im Bank, in accordance with its customary practice, is expected to guarantee, and Imperial Bank is expected to provide, 100% of the financing. The 161% increase in the Company's revenue for the year ended December 31, 1999, is attributable to the Company's successful completion of the Phase I contract for the installation of air pollution monitoring systems in eleven Chinese cities. Management believes, but cannot assure, that the Company is well-positioned for substantial additional business in China, and that future awards and shipments to China may result in further employment opportunities for U.S. citizens. In this regard, the Company doubled its workforce in the performance of the Phase I contract and is again expected to double its workforce from forty-five to approximately one hundred employees during the performance of the Phase II contract finalized in April 2000. It is anticipated that its designated vendor status will give the Company a competitive advantage in the award of future contracts with the Chinese government. In May 2000, the Company's Board of Directors approved letters of intent with SEPA proposing the organization of a joint venture to manufacture the Company's products in the People's Republic of China. In addition to the proposed joint venture to manufacture Company products on-site in China, the Company is engaged in ongoing discussions with the eleven cities subject to the Phase I contract regarding the installation of monitoring stations in addition to those required by the Phase I contract. A wholly-owned subsidiary of the Company, formerly known as "Logan Medical Devices, Inc.," changed its name to "Aeron Systems, Inc.," and "Dasibi China, Inc.," on June 25, 1999, and March 17, 2000, respectively. Dasibi China, Inc., commenced start-up business in April 2000 after the discontinuance of its prior business activities in February 1998. (See "RISK FACTORS - 4. Losses on Discontinuance of Operations and Disposition of Nutek and LRL" below.) The Company's principal executive offices are located at 506 Paula Avenue, Glendale, California 91201, and its telephone number is (818) 247-7601. The Company's Common Stock is traded in the over-the-counter market and reported on the NASDAQ National Market System under the symbol "PRCC." THE OFFERING Shares of Common Stock......................... 100,000 shares of Common Stock Shares of Common Stock Underlying Options...... 64,000 shares of Common Stock* - -------------------- 7 *Includes (i) 25,000 shares of Common Stock underlying an option exercisable at an exercise price of $1.00 per share on or prior to February 25, 2002, and (ii) an aggregate of 39,000 shares of Common Stock underlying three options exercisable to purchase 14,500 shares, 14,500 shares, and 10,000 shares, of Common Stock, respectively, at an exercise price of $1.38 per share on or prior to March 22, 2002. USE OF PROCEEDS The Company will receive no proceeds from the sale of the shares of Common Stock underlying the Options, but will receive proceeds upon the exercise of the Options. If all of the outstanding Options are exercised at exercise prices of $1.00 or $1.38 per share of Common Stock, the proceeds to the Company will be approximately $78,820. The Company will use the proceeds from the exercise of the Options for working capital. RISK FACTORS Prospective investors should consider carefully, in addition to the other information contained in and incorporated into this Prospectus and the Registration Statement of which it is a part, the following factors before purchasing the shares of Common Stock offered hereby. 1. Dependence Upon Phase II Contract with SEPA and Future China Business. Since January 1998, the Company has focused its business primarily on the air pollution market of the People's Republic of China. The approximate $5.2 million in revenue realized by the Company from the successful completion of the contract for Phase I of SEPA's Nationwide Urban Air Quality Network awarded, on a designated vendor basis, to Dasibi on June 10, 1998, resulted in an approximate 161% increase in the Company's net revenue for the year ended December 31, 1999 ($7,314,975), as compared to net revenue for the year ended December 31, 1998 ($2,807,511). The approximate $13.5 million price of the Phase II contract finalized with SEPA on April 17, 2000, for the installation of air pollution monitoring systems in an additional thirty-three cities in the People's Republic of China, is approximately 2.6 times greater than the price of the Phase I contract. In addition, in May 2000, the Company's Board of Directors approved letters of intent with SEPA proposing the organization of a joint venture to manufacture the Company's products in the People's Republic of China. Further, the Company is conducting ongoing discussions with the eleven cities subject to the Phase I contract regarding the installation of monitoring stations in addition to those required by the Phase I contract. Management believes, but cannot assure, that the Company's designated vendor status will give it a competitive advantage in the award of future contracts with the Chinese government and that it is well-positioned for substantial additional business in China. However, failure to complete the Phase II contract to the satisfaction of SEPA or failure to achieve significant future business in China for any reason whatsoever would have a material adverse effect on the Company and its prospects. 2. Liquidity and Capital Resources. The Company has experienced cash shortages from time to time preventing it from paying its operating expenses on a timely basis and forcing management to raise funds from private and public equity and debt financing and bank loans. However, the Company's access to capital has been severely restricted since it has no access to bank lines of credit presently and because of the low market value of the Company's Common Stock combined with its unstable operating performance. When capital has been obtained, it has been necessarily costly. Financing in the form of Federal- or state-guaranteed loans, which has generally been unavailable, involves extremely high management fees; non-guaranteed loans demand extremely high interest rates and related loan fees; and equity and debt placements require significant discounts and incentives. The Company's working capital declined from $1,346,211 8 at December 31, 1999, to $915,709 at March 31, 2000. During the year ended December 31, 1999, the Company raised an aggregate of $731,375 in capital from private placements resulting in the issuance of a total of 848,331 shares of Common Stock and the grant of warrants exercisable to purchase an aggregate of 438,331 shares of Common Stock. Also, during 1999, the Company borrowed a total of $1,100,000; $300,000 of which amount represents loans from three unaffiliated individuals at interest rates of 11% or 12% per annum whose maturation dates have been re-negotiated to June 24, 2001, and $575,000 of which is the balance of two convertible debt instruments ($225,000 of the $300,000 face amount of one of which has been converted to 119,108 shares of Common Stock at prices in a range from $1.20 to $2.25 per share), as follows: (i) 18%-$500,000 face amount debenture due December 31, 2000, convertible into shares of Common Stock at the lesser of $2.25 or 80% of the market price of the Common Stock on the date of conversion; and (ii) 12%-$75,000 face amount convertible debenture due December 31, 2000, convertible into the Company's Common Stock at the lesser of $2.25 or 80% of the market price of the Common Stock on the conversion date. Management believes, but cannot assure, that these loans can be restructured if necessary. For the three months ended March 31, 2000, the Company's "net cash used in operating activities" was $283,817, primarily, because of a net operating loss of $739,841. Cash increased by $445,589 (208%), from $214,206 as of December 31, 1999, to $659,795 as of March 31, 2000, as a result of additional sales of Common Stock and borrowings by the Company totaling $779,000 ($283,817 of which amount was applied to operating activities). Of the sum of $779,000, $500,000 represents the face amount of a 12% convertible debenture due February 23, 2001, convertible into the Company's Common Stock at the lesser of $2.00 or 85% of the market price of the Common Stock on the conversion date. While the Company believes that cash flow from the contract for Phase II of SEPA's Nationwide Urban Air Quality Network anticipated to extend into 2001, together with additional funding from private sources for equity and/or debt financing, will be sufficient to permit the Company to continue in operation for the foreseeable future, there can be no assurance that such funding will be sufficient to satisfy the Company's cash requirements and, if additional financing is required, that it will be available on acceptable terms, if at all. 3. Depressive Effect of High Operating and Financing Costs upon Operational Performance. The contracts awarded to the Company for Phase I and Phase II of SEPA's Nationwide Urban Air Quality Network have required a departure from the self-sustaining, break-even level of operation demonstrated to sustain the Company's "base" core business of approximately $2,600,000 in revenue with a minimum total staff of approximately twenty-five. The Company doubled its staff to approximately forty-five employees and otherwise increased operating expenses in order to perform the Phase I contract. The Company is again increasing staffing (by again doubling its workforce from forty-five to approximately one hundred employees), training and other operating expenses in anticipation of the commencement in July 2000 of shipments under the Phase II contract, and in order to maintain a consistent quality control and manufacturing schedule. This is necessary with respect to staffing, in particular, because the highly competitive market for technical personnel, as it has existed in the United States for the past approximately twenty-one months, prevents the Company from "ramping-up" in periods of peak activity and scaling down afterwards. Each of seven of the twelve months in 1999 and each month to date in 2000 has been characterized by high fixed expenses and resultant operating losses; which staggered monthly profit-loss performance is expected to continue for the foreseeable future until such time, if ever, as the Company realizes a steady flow of revenue from business in China. Accordingly, the Company can be expected to incur operating losses during the last three quarters of 2000 and in any quarter thereafter in which it fails to make product shipments to the People's Republic of China under the Phase II contract or otherwise. In addition to high fixed operating expenses, the high financing costs being experienced by the Company have the effect of further depressing its operational performance. 9 4. Decline in Net Revenues/Substantial Losses Prior to 1999. During each of the last four years commencing with the year ended December 31, 1996, with the exception of the Company's last year ended December 31, 1999, in which it realized net income of $1,125,637, the Company has recognized a net loss. During the 1996, 1997 and 1998 years, revenue decreased from approximately $8.8 million to less than $3 million as a result of the discontinued operations of two subsidiaries and significant competitive price pressure for the Company's instruments, thus forcing PRCC to lower its domestic and foreign bids, reducing the number of the Company's bid awards and reducing the profit margin on the bids awarded to the Company. The Company's gross profit also steadily decreased from 46% and 41% of net revenue in fiscal 1996 and 1997, respectively, to approximately 35% of net revenue in fiscal 1998. As a result, the Company suspended major new product development efforts and scaled back its efforts to improve or modify existing technologies in response to the competitive price pressures. The substantial improvement in the results of operations for 1999 is attributable to the Company's award and successful completion of the contract for Phase I of SEPA's Nationwide Urban Air Quality Network. Comparable, or possibly more favorable, operating results for 2000 and future years are expected to be substantially dependent upon the successful performance by the Company of the Phase II China contract and the generation of additional future business in China and/or other countries that do not have substantial air pollution monitoring systems. While the Company's net revenues increased approximately 161% to $7,314,975 during the year ended December 31, 1999, as compared to $2,807,511 for the year ended December 31, 1998, because of the product shipments under the Phase I contract, income from continuing operations increased to $1,125,637 for 1999, in comparison to a loss of $(527,197) for 1998, because of the recognition of benefit from income taxes. There can be no assurance that the Company will successfully complete the contract for Phase II of SEPA's Nationwide Urban Air Quality Network awarded to it in April 2000; obtain other business in China and/or other countries; or be capable of sustaining its return to profitability. 5. Losses on Discontinuance of Operations and Disposition of Nutek and LRL. Nutek Corp. ("Nutek"), a wholly-owned subsidiary of the Company that filed for protection under Chapter 11 of the U.S. Bankruptcy Act in April 1998, ceased operations in July 1998 following a ruling that it was insolvent. The revenues generated by Nutek accounted for approximately 48% of the Company's consolidated net revenues for the fiscal year ended December 31, 1997. The assets of Nutek were auctioned in July 1998 to satisfy amounts owed to a secured lender. The Company realized losses from the discontinuance ($115,301) and the disposition ($1,072,986) of Nutek during the fiscal year ended December 31, 1998. Further, a default judgment in the amount of approximately $766,709, which was subsequently reduced to $449,810, was entered against PRCC in an action by the secured lender in the U.S. District Court for the Northern District of Texas, Dallas Division, to recover the deficiency from the auction of Nutek's assets. The parties entered into that Compromise, Settlement and Release Agreement on August 12, 1999, pursuant to which the Company paid the secured lender $9,000 and an additional $450,000, together with interest at the rate of twelve per cent, before February 1, 2000. Additionally, the Company issued the secured lender 100,000 restricted shares of Common Stock which are covered by the Registration Statement of which this Prospectus forms a part and granted the lender a warrant exercisable to purchase 20,000 shares of Common Stock at an exercise price of $.75 per share during the three-year terminating on August 11, 2002. On May 17, 2000, the secured lender acknowledged full satisfaction of and released the judgment and the judgment lien(s). 10 Effective February 28, 1998, Logan Medical Devices, Inc. ("LMD"), a wholly-owned subsidiary of the Company, returned all of the shares of common stock of Logan Research, Ltd. ("LRL"), a United Kingdom corporation engaged in the design, manufacture and marketing of medical instrumentation, owned by LMD and received in exchange all shares of LMD owned by LRL. In addition, the Company was released from liability on a promissory note payable to LRL in the principal amount of $300,000 that had accrued interest of $47,250. The Company had previously advanced funds in the amount of $160,000 to LRL that it is making no effort to recoup. The Company realized a gain in the amount of $154,575 on the disposition. The revenue generated by LRL accounted for 7% of the Company's consolidated net revenues for the 1997 fiscal year. 6. Governmental Approval. The Company is required to obtain approval by the U.S. Environmental Protection Agency of new air pollution monitoring instruments it produces before such instruments can be sold in the United States. Currently, all air pollution monitoring instruments that the Company sells in the United States have received EPA approval. If the EPA were to change its regulations or requirements, there could be no assurance that the Company's products would comply with such standards or that the Company would be able to comply with such modified requirements. With the exception of Germany, no foreign country requires governmental approval of air pollution monitoring instruments. There can be no assurance that additional regulations will not be adopted by other foreign governments. Failure to meet any future regulation could have a material adverse effect on the Company and render certain of the Company's products obsolete. 7. Dependence On Legislation and Regulation. The products developed and manufactured by the Company monitor air pollutants in accordance with standards established generally by Federal, state, local and foreign governmental agencies. Changes in legislation or regulations or a relaxation of standards determined by such agencies could adversely affect the market for the Company's products or render certain of the Company's products obsolete. 8. Competition. The Company is the smallest competitor in the ambient air pollution instrumentation market. There are other established firms in the same field, both in the United States and in foreign countries, which have substantially greater experience and financial and personnel resources than the Company. Therefore, the Company is subject to the effects of better-financed competitors and their research and development efforts and price competition. Although the Company is not aware of any other company that competes with it in all of its product lines, all of its competitors have resources substantially greater than those of the Company. There are also smaller companies that specialize in a limited number of the types of products manufactured by the Company. The Company's primary competitors in the domestic market are Thermo Instrument Systems, Inc. and Monitor Labs, Inc. In the foreign market, the Company's primary competitors are Thermo Instrument Systems, Monitor Labs, Environment S.A. of France and Horiba Instruments. All of the Company's competitors also offer a wider range of equipment, monitoring additional pollutants, than does PRCC. 9. Technological Obsolescence; Limited Research and Development. The Company's future success will depend on its ability to enhance its current products, reduce product costs and develop and introduce new products that keep pace with technological developments in response to evolving customer requirements and governmental regulations. Failure of the Company to anticipate or respond adequately to technological development or introduction could result in a loss of future revenue and impair the Company's competitiveness. The Company, since early 1994, has sharply limited its product development efforts. For the foreseeable future, management expects to limit research and development to software development and efforts to refine and improve its present products. 11 10. Risks of Foreign Sales. During the last three fiscal years, foreign sales have represented approximately 55% to 70% of the Company's total revenue and are expected to represent at least such amounts of the Company's future sales. Foreign sales are subject to numerous risks, including political and economic instability in foreign markets, restrictive trade policies of foreign governments, inconsistent product regulation by foreign agencies or governments, the imposition of product tariffs and other trade barriers and the burdens of complying with a wide variety of international and U.S. export laws and differing regulatory requirements. To the extent that foreign sales are transacted in a foreign currency, PRCC would be subject to the risk of losses due to foreign currency fluctuations and difficulties associated with accounts receivable collection. Because the Company is required to provide financing in connection with the contract for Phase II of SEPA's Nationwide Urban Air Quality Network, it bears the risk of realizing reduced margins from the Phase II contract if the financing is below market at closing. Further, PRCC may experience difficulties in managing or overseeing the technical and training operations required to be conducted in China. 11. Reliance on Certain Suppliers. While PRCC manufactures many components and subsystems used in its products, other components, including packaging materials, integrated circuits, microprocessors and minicomputers, are purchased on a non-contractual basis from unaffiliated suppliers. The Company is not dependent upon any one supplier for any raw material or component that it purchases, and the Company believes there are available alternative sources for such raw materials and components. The Company is currently dependent, however, on a limited number of vendors with respect to the availability and quality of certain key instrument components, such as printed circuit board designs and lamps. A vendor's inability to supply these components to PRCC in a timely fashion, or to the Company's satisfaction, would affect the Company's ability to deliver its instruments on time and could damage the Company's reputation. 12. Limited Marketing Capability and other Resources. The Company's success depends in large part upon its ability to identify and adequately penetrate the markets for its products. Most of the Company's competitors have much larger budgets for marketing, advertising and promotion. The Company has historically lacked the financial, personnel and other resources required in order to compete with its larger, better-financed competitors in marketing products. Through the year ended December 31, 1998, the Company's revenue had shrunk and the Company had reduced its staff to approximately twenty and operated without a bank line of credit. There can be no assurance that the Company's return to profitability, with the award in 1998, and the successful completion in 1999, of the Phase I China contract, can be sustained as a result of the award to the Company in April 2000 of the contract for Phase II of SEPA's Nationwide Urban Air Quality Network, the generation of other business in China and/or other foreign countries lacking substantial air pollution monitoring systems and/or otherwise. 13. Dependence on Key Personnel. The Company's success depends in part upon its ability to attract and/or retain highly skilled management, technical and marketing personnel. Loss of the services of Mr. Albert E. Gosselin, Jr., President and Chairman of the Board of Directors of PRCC, could adversely affect the development of the Company's business and its ability to realize or sustain profitable operations. The Company does not maintain key-man life insurance on any of its personnel and has no present plans to obtain such insurance. 14. Limited Protection of Intellectual Property and Proprietary Rights. The Company regards all or portions of the designs and technologies incorporated into its products as proprietary and attempts to protect them with a combination of trademark and trade secret laws. It has generally been the Company's policy to proceed without patent protection. It may be possible for unauthorized third parties to copy certain portions of the Company's products or to "reverse engineer" or otherwise obtain and use to the Company's detriment information 12 which the Company regards as proprietary. Moreover, the laws of some foreign countries do not afford the same protection to the Company's proprietary rights as do U.S. laws. There can be no assurance that any of the Company's efforts to protect its proprietary technology will be adequate or that the Company's competitors will not independently develop technologies that are substantially equivalent or superior to the Company's technologies. 15. Absence of Products Liability Insurance. The Company does not maintain products liability insurance. In the event that PRCC experiences a material liability as a result of a products liability claim, such a liability could have a material adverse effect on the Company. 16. No Dividends. The Company has never paid dividends on the shares of its Common Stock and does not intend to pay any dividends in the foreseeable future. 17. Possible Volatility of Stock Price. The trading price of the Company's Common Stock has from time to time fluctuated widely and in the future may be subject to similar fluctuations in response to quarter-to-quarter variations in the Company's operating results, announcements of technological innovations or new products by the Company or its competitors, general conditions in the air pollution monitoring industry in which the Company competes and other events or factors. In addition, in recent years broad stock market indices, in general, and the securities of technology companies, in particular, have experienced substantial price fluctuations. Such broad market fluctuations also may adversely affect the future trading price of the Common Stock. In addition, sales of substantial amounts of shares of Common Stock in the public market following this offering could adversely affect the future trading price of the Common Stock. (See "MARKET INFORMATION.") 18. Possible Dilutive Effect and Other Disadvantages of Outstanding Warrants, Options and Debentures. As of the date hereof, there are an aggregate of 1,547,831 shares of Common Stock reserved for issuance upon the exercise of outstanding options and warrants currently exercisable at prices in a range from $1.20 to $6.51. Additionally, the outstanding Debentures are convertible, based upon the conversion price per share of $1.93 or $2.00 applicable as of the date hereof, into 548,237 shares of Common Stock. To the extent that the trading price of the Common Stock at the time of the exercise of any such options or warrants or the conversion of the Debentures exceeds the exercise or conversion price, such exercise or conversion will have a dilutive effect on the Company's shareholders. 19. Potential Anti-Takeover and Other Effects of Issuance of Preferred Stock Rights May Be Detrimental to Common Shareholders. The Company is authorized to issue up to 20,000,000 shares of preferred stock, $.01 par value per share (the "Preferred Stock"); of which none are currently issued and outstanding. The issuance of Preferred Stock does not require approval by the shareholders of the Company's Common Stock. The Board of Directors, in its sole discretion, has the power to issue Preferred Stock in one or more series and establish the dividend rates and preferences, liquidation preferences, voting rights, redemption and conversion terms and conditions and any other relative rights and preferences with respect to any series of Preferred Stock. Holders of Preferred Stock may have the right to receive dividends, certain preferences in liquidation and conversion and other rights, any of which rights and preferences may operate to the detriment of the shareholders of the Company's Common Stock. Further, the issuance of any Preferred Stock having rights superior to those of the Company's Common Stock may result in a decrease in the value or market price of the Common Stock and, additionally, could be used by the Board of Directors as an anti-takeover measure or device to prevent a change in control of the Company. (See "DESCRIPTION OF SECURITIES - Preferred Stock.") 13 PLAN OF DISTRIBUTION The shares of Common Stock may be offered and sold from time to time by the Selling Shareholders or by pledgees, donees, transferees or other successors in interest. The Selling Shareholders will act independently of the Company in making determinations with respect to the timing, manner and size of each offer or sale. Such sales may be made on the over-the-counter market or otherwise at prices and at terms then prevailing or at prices related to the then current market prices, or in negotiated transactions. The Selling Shareholders may sell shares of Common Stock in any of the following ways: (i) through dealers; (ii) through agents; or (iii) directly to one or more purchasers. The distribution of the shares of Common Stock may be effected from time to time in one or more transactions (which may involve crosses or block transactions) in the over-the-counter market. Any such transaction may be effected at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices. The Selling Shareholders may effect such transactions by selling shares of Common Stock to or through broker-dealers, and such broker-dealers may receive compensation in the form of discounts, concessions or commissions from Selling Shareholders and/or commissions from purchasers of shares of Common Stock for whom they may act as agent. The Selling Shareholders and any broker-dealers or agents which participate in the distribution of Common Stock by them might be deemed to be underwriters and any discounts, commissions or concessions received by any such broker-dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act. In offering the shares of Common Stock, the Selling Shareholders and any broker-dealers and any other participating broker-dealers which execute sales for the Selling Shareholders may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales, and any profits realized by the Selling Shareholders and the compensation of such broker-dealers may be deemed to be underwriting discounts and commissions. In addition, any shares of Common Stock covered by this Prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this Prospectus. Rule 10b-2 under the Exchange Act prohibits persons who are participating in or financially interested in a distribution of securities from making payments to another person for the solicitation of a third party to purchase the securities that are the subject of the distribution, except that Rule 10b-2 does not apply, among other exceptions, to brokerage transactions not involving the solicitation of customer orders. Rule 10b-6 under the Exchange Act prohibits participants in a distribution from bidding for or purchasing, for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Rule 10b-7 governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. The public offering of the Common Stock by the Selling Shareholders will terminate on the date on which all shares of Common Stock offered hereby have been sold by the Selling Shareholders, or on such earlier date on which the Company files a post-effective amendment which de-registers all shares of Common Stock then remaining unsold. The Company will pay certain expenses incidental to the offering and sale of the shares of Common Stock to the public estimated to be approximately $16,073. The Company will not pay for, among other expenses, selling expenses, underwriting discounts or fees and expenses of counsel for the Selling Shareholders. To the extent required at the time a particular offer of Common Stock by the Selling Shareholders is made, a supplement to this Prospectus will be distributed which will set forth the number of shares of Common Stock being 14 offered and the terms of the offering, including the name or names of any underwriters, dealers, brokers or agents, the purchase price paid by any underwriter for shares of Common Stock purchased from the Selling Shareholders, any discounts, commissions and other items constituting compensation from the Selling Shareholders and any discounts, commissions or concessions allowed or re-allowed to dealers, including the proposed selling price to the public. The Company will not receive any of the proceeds from the sale of shares of Common Stock by the Selling Shareholders. MARKET INFORMATION The Company's Common Stock is traded over-the-counter and reported on the NASDAQ National Market System under the symbol "PRCC." Set forth below are the high and low closing bid quotations in the over-the-counter market for the Common Stock as reported by the relevant market makers for fiscal years l999 and 1998 and the quarter ended March 31, 2000. The high and low closing bid quotations for the Common Stock in the over-the-counter market reported by the relevant market makers on June 13, 2000, were $2.31 and $2.50, respectively. Quotations represent inter-dealer quotations, without adjustment for retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions. Fiscal 2000 Fiscal 1999 Fiscal 1998 Quarter Ended High Bid Low Bid High Bid Low Bid High Bid Low Bid - ------------- ------------------- ------------------- ------------------- Common Stock: March 31 $4.22 $1.41 $2.00 $.88 $4.52 $2.52 June 30 2.38 1.06 3.13 2.48 September 30 3.87 1.81 2.25 .26 December 31 2.91 1.56 1.25 .56 As of June 13, 2000, the approximate number of shareholders of record of the Company's Common Stock was 1,100. The Company has never paid or declared any dividends on its Common Stock and does not anticipate paying dividends in the foreseeable future. The Company cannot predict the market price for the Common Stock upon the commencement or the completion of this offering. Since the market for the Company's Common Stock is thinly traded, sales of the shares of Common Stock could cause the Common Stock to trade at levels lower than would otherwise be anticipated. SELLING SHAREHOLDERS Of the 164,000 shares of Common Stock being offered hereby, 100,000 shares of Common Stock are being offered by Brittanica Associates Limited, a British Virgin Islands corporation; 25,000 shares of Common Stock may be offered by Mr. Anthony Reneau upon the exercise of an option at an exercise price of $1.00 per share on or prior to February 25, 2002; and 64,000 shares of Common Stock may be offered, collectively, by three individuals, including Mr. Mike Hamdan, Ms. Paz Laroya and Mr. Robert Klein, upon the exercise of options exercisable to purchase 14,500 shares, 14,500 shares, and 10,000 shares, of Common Stock, respectively, at an exercise price of $1.38 per share on or prior to March 22, 2002. The table below indicates the name of the Selling Shareholder, any material relationship it, he or she has had to the Company within the last three years, the number and percentage of shares of Common Stock owned by the Selling 15 Shareholder prior to this offering, the number of shares being offered for sale by the shareholder and the number of shares of Common Stock and the percentage of the total shares of Common Stock outstanding that will be held if all shares offered are sold. (See " Description of Securities - Common Stock Offered by the Selling Shareholder" and "- Common Stock That May Be Offered by the Optionholders.")
Shares Shares Shares Owned Owned Owned Selling Relationship Prior to Being After Shareholders to Company Offering Per Cent Offered Offering Per Cent ------------ ---------- -------- -------- ------- -------- -------- Brittanica Associates 13.56% 650,000(1) 13.56 100,000(1) 550,000(2) 11.48 Limited shareholder Anthony Reneau N/A 25,000 0.00 25,000(3) -0- 0.00 Mike Hamdan N/A 14,500 0.00 14,500(4) -0- 0.00 Paz Laroya N/A 14,500 0.00 14,500(4) -0- 0.00 Robert Klein N/A 10,000 0.00 10,000(4) -0- 0.00 - ----------
(1) Includes 100,000 shares of Common Stock issued on February 23, 2000 in consideration and as incentive for lending the sum of $500,000 to the Company; an aggregate of 300,000 shares of Common Stock underlying two warrants exercisable on or prior to February 23, 2003, one of which is exercisable to purchase 100,000 shares of Common Stock at an exercise price of $2.25 per share and the other of which is exercisable to purchase 200,000 shares at an exercise price of $4.50 per share; and 250,000 shares of Common Stock underlying the 12% Subordinated Convertible Debenture Due February 23, 2001, assuming the conversion thereof on June 13, 2000, at the conversion price of $2.00 per share. (2) Includes an aggregate of 300,000 shares of Common Stock underlying two warrants exercisable on or prior to February 23, 2003, one of which is exercisable to purchase 100,000 shares of Common Stock at an exercise price of $2.25 per share and the other of which is exercisable to purchase 200,000 shares at an exercise price of $4.50 per share; and 250,000 shares of Common Stock underlying the 12% Subordinated Convertible Debenture Due February 23, 2001, assuming the conversion thereof on June 5, 2000, at the conversion price of $2.00 per share. (3) Represents shares of Common Stock underlying an option exercisable at an exercise price of $1.00 per share on or prior to February 25, 2002. (4) Represents shares of Common Stock underlying an option exercisable on or prior to March 22, 2002, at an exercise price of $1.38 per share. DESCRIPTION OF SECURITIES Capital Stock - ------------- The Company's authorized capital stock consists of 30,000,000 shares of Common Stock, no par value per share (the "Common Stock") and 20,000,000 shares of preferred stock, $.01 par value per share (the "Preferred Stock"). 16 Common Stock. All shares of Common Stock have equal voting rights and, when validly issued and outstanding, are entitled to one vote per share in all matters to be voted upon by shareholders. The shares of Common Stock have no preemptive, subscription, conversion or redemption rights and may be issued only as fully-paid and nonassessable shares of Common Stock. Cumulative voting in the election of directors is permitted; however, cumulative voting may occur only if a shareholder announces his intention to cumulate his votes prior to the voting, in which case all shareholders may cumulate their votes. In the event of liquidation of the Company, each shareholder is entitled to receive a proportionate share of the Company's assets available for distribution to shareholders after the payment of liabilities. All shares of the Company's Common Stock issued and outstanding are fully-paid and nonassessable. Holders of the shares of Common Stock are entitled to share pro rata in dividends and distributions with respect to the Common Stock, as may be declared by the Board of Directors out of funds legally available therefor. As of June 13, 2000, there were 4,242,802 shares of Common Stock issued and outstanding held of record by approximately 1,100 shareholders. The Common Stock is traded over-the-counter and reported on the NASDAQ National Market System under the symbol "PRCC." Holders of shares of Common Stock are entitled to share pro rata in dividends and distributions with respect to the Common Stock when, as and if declared by the Board of Directors out of funds legally available therefor. The Company has not paid any dividends on its Common Stock and currently intends to retain earnings, if any, to finance the development and expansion of its business. Future dividend policy is subject to the discretion of the Board of Directors and will depend upon a number of factors, including future earnings, capital requirements and the financial condition of the Company. Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series as may be determined by the Board of Directors. The voting powers and preferences, the relative rights of each such series and the qualifications, limitations and restrictions thereof shall be established by the Board of Directors, except that no holder of Preferred Stock shall have preemptive rights. The Company has no outstanding Preferred Stock, and the Board of Directors does not plan to issue any for the foreseeable future unless the issuance thereof shall be in the best interests of the Company. Common Stock Offered by the Selling Shareholder - ----------------------------------------------- On February 23, 2000, the Company issued an aggregate of 100,000 shares of Common Stock to Britannica Associates Limited ("Brittanica"), a British Virgin Islands corporation, in consideration and as incentive for lending the sum of $500,000 to the Company in accordance with the terms and conditions of the 12% Subordinated Convertible Debenture Due February 23, 2001, dated February 16, 2000, in the face amount of $500,000. The terms of the transaction are more fully described in the Agreement for Sale of Shares of Common Stock dated February 23, 2000, with Brittanica, a copy of which is incorporated herein by reference to Exhibit 4.2 to the Post-Effective Amendment No. 1 filed March 23, 2000, to the Registration Statement on Form S-3 (Registration No. 333-87965) filed September 28, 1999. Common Stock That May Be Offered by the Optionholders - ----------------------------------------------------- On February 25, 2000, the Company granted an option to Mr. Anthony Reneau exercisable to purchase 25,000 shares of Common Stock at an exercise price of $1.00 per share on or prior to February 25, 2002. The terms and conditions of the option are more fully described in the Option to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. from February 25, 2000 Void after 5:00 P.M., Los Angeles Time, on February 25, 2002, of Mr. Reneau, a copy of which is attached as Exhibit 4.0 to this Post-Effective Amendment No. 2 to the Registration Statement on Form S-3 (Registration No. 333-87965) filed 17 September 28, 1999, and is incorporated herein by this reference. The foregoing brief description of certain provisions of the option is qualified in its entirety by the more detailed provisions of the Option to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. from February 25, 2000 Void after 5:00 P.M., Los Angeles Time, on March 22, 2002. On March 22, 2000, the Company granted options exercisable on or prior to March 22, 2002, to purchase an aggregate of 39,000 shares of Common Stock at an exercise price of $1.38 per share to the following individuals, as follows: (i) Mr. Mike Hamdan - 14,500 shares; (ii) Ms. Paz Laroya - 14,500 shares; and (iii) Mr. Robert Klein - 10,000 shares. All of the foregoing are employees of the Company. The terms and conditions of Mr. Hamdan's option are more fully described in the Option to Purchase 14,500 Shares of Common Stock of Pollution Research and Control Corp. from March 22, 2,000 Void after 5:00 P.M., Los Angeles Time, on March 22, 2002 (the "Hamdan Option"), a copy of which is incorporated herein by reference to Exhibit 4.3 to the Post-Effective Amendment No. 1 filed March 23, 2000 (the "Post-Effective Amendment No. 1"), to the Registration Statement on Form S-3 (Registration No. 333-87965) filed September 28, 1999 (the "Registration Statement"). The terms and conditions of Ms. Laroya's option are more fully described in the Option to Purchase 14,500 Shares of Common Stock of Pollution Research and Control Corp. from March 22, 2000 Void after 5:00 P.M., Los Angeles Time, on March 22, 2002 (the "Laroya Option"), a copy of which is incorporated herein by reference to Exhibit 4.4 to the Post-Effective Amendment No. 1 to the Registration Statement. The terms and conditions of Mr. Klein's option are more fully described in the Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. from March 22, 2000 Void after 5:00 P.M., Los Angeles Time, on March 22, 2002 (the "Klein Option"), a copy of which is incorporated herein by reference to Exhibit 4.5 to the Post-Effective Amendment No. 1 to the Registration Statement. The foregoing brief description of certain provisions of the options is qualified in its entirety by the more detailed provisions of the Hamdan Option, the Laroya Option and the Klein Option. Transfer Agent and Registrar - ---------------------------- OTR, Inc., 1130 Southwest Morrison, Suite #250, Portland, Oregon 97205, is the Transfer Agent and Registrar for the Common Stock. LEGAL MATTERS Certain legal matters in connection with the validity of the issuance of the shares of Common Stock being offered hereby will be passed upon for the Company by Cudd & Associates, 1120 Lincoln Street, Suite #1507, Denver, Colorado 80203. Patricia Cudd, Esq., the sole proprietor of Cudd & Associates, owns 10,000 shares of Common Stock of the Company and an option exercisable to purchase 10,000 shares of the Company's Common Stock at an exercise price of $4.00 per share on or prior to March 31, 2003. These shares of Common Stock, including the shares underlying Ms. Cudd's option, are not included in the shares of Common Stock covered by the Registration Statement of which this Prospectus forms a part. EXPERTS The financial statements of the Company are incorporated herein by reference to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999. Such financial statements have been audited by AJ. Robbins, P.C., Certified Public Accountants and Consultants, independent auditors, as stated in their report that is incorporated herein by reference. 18 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. -------------------------------------------- The following is an itemized statement of the expenses incurred in connection with this Registration Statement and the issuance and distribution of the shares of Common Stock being registered hereby. All such expenses will be paid by the Company. Securities and Exchange Commission registration fee............. $ 73 Legal fees and expenses......................................... 10,000 Accounting fees and expenses.................................... 1,500 Blue sky fees and expenses...................................... 500 Transfer agent fees and expenses................................ 500 Printing, electronic filing and engraving expenses.............. 1,500 Miscellaneous expenses.......................................... 2,000 ------- TOTAL........................................................... $16,073 All of the above items except the Securities and Exchange Commission registration and fee are estimates. Item 15. Indemnification of Directors and Officers. ------------------------------------------ The Company's Articles of Incorporation, as amended, provide for (i) the elimination of directors' liability for monetary damages for certain breaches of their fiduciary duties to the Company and its shareholders as permitted by California law; and (ii) permit the indemnification by the Company to the fullest extent under California law. At present, there is no pending litigation or proceeding involving a director or officer of the Company as to which indemnification is being sought. Section 317 of the California Corporations Code, as amended, provides for the indemnification of the officers, directors and controlling persons of a corporation as follows: "(a) For the purposes of this section, "agent" means any person who is or was a director, officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation; "proceeding" means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative; and "expenses" includes without limitation attorneys' fees and any expenses of establishing a right to indemnification under subdivision (d) or paragraph (3) of subdivision (e). (b) A corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the corporation to procure a judgment in its favor, an action brought under Section 9243, or an action brought by the Attorney General pursuant to Section 9230) by reason of the fact that such person is or was an agent of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding if such person acted in good faith and in a manner such person believed to be in the best interests of the corporation and, in the case of a 19 criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person believed to be in the best interests of the corporation or that the person had reasonable cause to believe that the person's conduct was unlawful. (c) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the corporation, or brought under Section 9243, or brought by the Attorney General pursuant to Section 9230, to procure a judgment in its favor by reason of the fact that such person is or was an agent of the corporation, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action if the person acted in good faith, in a manner in which such person believed to be in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinary prudent person in a like position would use under similar circumstances. No indemnification shall be made under this subdivision: (1) In respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation in the performance of such person's duty to the corporation, unless and only to the extent that the court in which such proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for the expenses which such court shall determine; (2) Of amounts paid in settling or otherwise disposing of a threatened or pending action, with or without court approval; or (3) Of expenses incurred in defending a threatened or pending action which is settled or otherwise disposed of without court approval unless it is settled with the approval of the Attorney General. (d) To the extent that an agent of a corporation has been successful on the merits in defense or any proceeding referred to in subdivision (b) or (c) or in defense of any claim, issue or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith. (e) Except as provided in subdivision (d), any indemnification under this section shall be made by the corporation only if authorized in the specific case, upon a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in either subdivision (b) or (c) by: (l) A majority vote of a quorum consisting of directors who are not parties to such proceedings; (2) Approval of the members (Section 5034), with the persons to be indemnified not being entitled to vote thereon; or (3) The court in which such proceeding is or was pending upon application made by the corporation or the agent or the attorney or other person rendering services in connection with the defense, whether or not such application by the agent, attorney or other person is approved by the corporation. 20 (f) Expenses incurred in defending any proceeding may be advanced by the corporation prior to the final disposition of such proceeding upon receipt of an undertaking by or on behalf of the agent to repay such amount unless it shall be determined ultimately that the agent is entitled to be indemnified as authorized in this section. (g) No provision made by a corporation to indemnify its or its subsidiary's directors or officers for the defense of any proceeding, whether contained in the articles, bylaws, a resolution of members or directors, an agreement or otherwise, shall be valid unless consistent with this section. Nothing contained in this section shall affect any right to indemnification to which persons other than such directors and officers may be entitled by contract or otherwise. (h) No indemnification or advance shall be made under this section, except as provided in subdivision (d) or paragraph (3) of subdivision (e), in any circumstances where it appears that:: (1) It would be inconsistent with a provision of the articles, bylaws, a resolution or the members or an agreement in effect at the time of the accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or (2) It would be inconsistent with any condition expressly imposed by a court in approving a settlement. (i) A corporation shall have power to purchase and maintain insurance on behalf of any agent of the corporation against any liability asserted against or incurred by the agent in such capacity or arising out of the agent's status as such whether or not the corporation would have the power to indemnify the agent against such liability under the provisions of this section; provided, however, that a corporation shall have no power to purchase and maintain such insurance to indemnify any agent of the corporation for a violation of Section 9243. (j) This section does not apply to any proceeding against any trustee, investment manager or other fiduciary of an employee benefit plan in such person's capacity as such, even though such person may also be an agent as defined in subdivision (a) of the employer corporation. A corporation shall have power to indemnify such trustee, investment manager or other fiduciary to the extent permitted by subdivision (f) or Section 207." Item 16. Exhibits. --------- The Exhibit Index appears on page 24. Item 17. Undertakings. ------------- (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; 21 (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that the undertakings set forth in paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. 22 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Post-Effective Amendment No. 2 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Glendale, State of California, on June 13, 2000. Date: June 13, 2000 POLLUTION RESEARCH AND CONTROL CORP. (Registrant) By: /s/ Albert E. Gosselin, Jr. ------------------------------- Albert E. Gosselin, Jr., President, Chief Executive Officer and Chairman of the Board Directors Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following person in the capacities and on the date indicated. Date: June 13, 2000 /s/ Albert E. Gosselin, Jr. --------------------------- Albert E. Gosselin, Jr., President, Chief Executive Officer, Chairman of the Board Directors (Principal Executive Officer) and Attorney-in-Fact for Gary L. Dudley, Marcia A. Smith, Craig E. Gosselin and Barry Soltani, Directors 23 EXHIBIT INDEX The following Exhibits are filed as part of this Post-Effective Amendment No. 2 to the Registration Statement on Form S-3 or are incorporated herein by reference. Item Number Description - ------ ----------- 4.1 Agreement for Sale of Shares of Common Stock dated February 23, 2000, between Pollution Research and Control Corp. and Britannica Associates Limited. (Incorporated by reference to Exhibit 4.2 to the Post-Effective Amendment No. 1 to the Form S-3 Registration Statement, File Number 333-87965, filed on March 23, 2000.) 4.2* Option to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. from February 25, 2000 Void After 5:00 P.M., Los Angeles Time, on February 25, 2002, of Anthony Reneau. 4.3 Option to Purchase 14,500 Shares of Common Stock of Pollution Research and Control Corp. from March 22, 2000 Void After 5:00 P.M., Los Angeles Time, on March 22, 2002, of Mike Hamdan. (Incorporated by reference to Exhibit 4.3 to the Post-Effective Amendment No. 1 to the Form S-3 Registration Statement, File Number 333-87965, filed on March 23, 2000.) 4.4 Option to Purchase 14,500 Shares of Common Stock of Pollution Research and Control Corp. from March 22, 2000 Void After 5:00 P.M., Los Angeles Time, on March 22, 2002, of Paz Laroya. (Incorporated by reference to Exhibit 4.4 to the Post-Effective Amendment No. 1 to the Form S-3 Registration Statement, File Number 333-87965, filed on March 23, 2000.) 4.5 Option to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. from March 22, 2000 Void After 5:00 P.M., Los Angeles Time, on March 22, 2002, of Robert Klein. (Incorporated by reference to Exhibit 4.5 to the Post-Effective Amendment No. 1 to the Form S-3 Registration Statement, File Number 333-87965, filed on March 23, 2000.) 5.0* Opinion and Consent of Cudd & Associates. 23.1 Consent of Cudd & Associates (included in Exhibit 5.0 hereto). 23.2* Consent of A.J. Robbins, P.C., Certified Public Accountants and Consultants, independent auditors. - ------------------ * Filed herewith. 24 EX-4.2 2 0002.txt OPTION TO PURCHASE THE OPTION REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE AND THUS MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THAT ACT AND REGISTERED OR QUALIFIED UNDER APPLICABLE SECURITIES LAW OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS AVAILABLE. OPTION TO PURCHASE 25,000 SHARES OF COMMON STOCK OF POLLUTION RESEARCH AND CONTROL CORP. FROM November 1, 1999 VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON February 25, 2002 This certifies that Anthony Reneau or registered assigns, is entitled, subject to the terms set forth below, to purchase from Pollution Research and Control Corp., a California corporation (the "Company"), the above number of fully paid and nonassessable shares of Common Stock of the Company ("Common Stock") at a purchase price of $1.00 per share ("Purchase Price"). This Option is exercisable from November 1, 1999 to and including 5:00 p.m., Los Angeles time, on February 25, 2002. Registered Owner: Anthony Reneau Purchase Price: $1.00 per share OPTION AGREEMENT This Option Agreement (the "Agreement") is made and entered into effective as of February 26, 1999 by and between Pollution Research and Control Corp., a California corporation ("PRCC") and Anthony Reneau ("Optionee"). WHEREAS, Optionee has been providing valuable services as recognized by the Company's Board of Directors to PRCC and PRCC is desirous of having Optionee continue to provide such services to it; and WHEREAS, PRCC is willing to grant Optionee an option to purchase up to an aggregate of 25,000 shares of the no par value common stock of PRCC (the "Common Stock") under the terms and conditions set forth below. NOW, THEREFORE, the parties agree as follows: 1. Grant of Option. PRCC hereby grants to Optionee, as a matter of separate agreement and not in lieu of other compensation for services, the right and option (the "Option") to purchase on the terms and conditions set forth in this Agreement all or any part of up to an aggregate of 25,000 shares of Common Stock (the "Option Shares"), for continuous, uninterrupted, employment service to PRCC or by specific acknowledgement of exception by the Company's Board of Directors. 2. Option Price. At any time when shares of Common Stock are to be purchased pursuant to the Option, the purchase price for each Option share shall be $1.00 (the ""Option Price"), and for purposes of record, the bid price of the Company's stock on this date was $1.38. 3. Option Period. The option period shall commence on November 1, 1999 (the "Date of Grant") and shall terminate February 25, 2002. 4. Exercise of Option. The Option may be exercised in whole or in part at any time after the date hereof by delivering to the Chief Financial Officer of PRCC (a) a Notice and Agreement of Exercise of Option, substantially in the form attached hereto as Exhibit "A," specifying the number of Option Shares with respect to which the Option is exercised, and (b) full payment of the Option Price for such Shares. 2 5. Securities Laws Requirements. The Option Shares have not been registered under the Securities Act of 1933, as amended (the "Act"), and no Shares may be sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed of except in compliance with the Act and any other applicable federal and state securities laws. Additionally, the Option and the Option Shares have not been qualified under the California Securities Law of 1968, as amended (the "California Law"). PRCC has no obligation to register the Option shares under the Act or qualify the Option Shares under the California Law. Optionee acknowledges that he is aware that Rule 144 of the General Rules and Regulations under the Act ("Rule 144") affords a limited exemption from registration for the public resale of registered securities and under the terms of Rule 144 as currently in effect, the Shares received by Optionee may be sold to the public without registration only after a period of two (2) years has elapsed from the exercise date of the Option and then only in compliance with all other requirements of Rule 144 and the Act. Optionee hereby acknowledges, represents, warrants and agrees as follows: (a) That the Option and the Option Shares are not registered under the Act or qualified under the California Law, and the Option Shares shall be, acquired solely for the account of Optionee for investment purposes only and with no view to their resale or other distribution of any kind; (b) Neither the Option nor any Option Share shall be sold or otherwise distributed in violation of the Act, the California Law or any other applicable federal or state securities law; (c) His overall commitment to investments that are not readily marketable is not disproportionate to his net worth, and his investment in PRCC will not cause such overall commitment to become excessive; (d) He has the financial ability to bear the economic risk of his investment, has adequate means of providing for his current needs and personal contingencies, and has no need for liquidity in his investment in PRCC; (e) He either: (i) has a preexisting personal or business relationship with PRCC or its officers, directors or controlling persons, or (ii) has evaluated the business of PRCC and the high risks of investing in PRCC, the competitive nature of the business in which PRCC is engaged, and has the business or financial experience or has business or financial advisors who are unaffiliated with, and not compensated by, PRCC and protect his interests in connection with the transaction; 3 (f) He has been given the opportunity to review all books, records and documents of PRCC and to ask questions and receive answers from PRCC concerning PRCC's business, to obtain additional information necessary to verify the accuracy of the information he has desired in order to evaluate his investment, and to consult with such attorneys, accountants and other advisors as he has desired; (g) His residence set forth below is his true and correct residence, and he has no present intention of becoming a resident or domiciliary of any other state of jurisdiction; (h) In making the decision to accept the Option and/or purchase the Option Shares, he has relied solely upon independent investigations made by or on behalf of him; (i) No federal or state agency has made any finding or determination as to the fairness of an investment in PRCC; and (j) He understands that all the representations and warranties made by him herein, and all information furnished by him to PRCC, is true, correct and complete in all respects. 6. Optionee hereby acknowledges that he understands the meaning and legal consequences of the representations, warranties and covenants contained herein and that PRCC has relied on the representations made by Optionee in paragraph 5 hereof in granting this Option, and Optionee agrees to indemnify and hold harmless PRCC and its officers, directors, controlling persons, attorneys, agents and employees from and against any and all loss, damage or liability, together with all costs and expenses (including attorneys' fees and disbursements) which any of them may incur by reason of any breach and any representation, warranty, covenant or agreement contained herein. All representations, warranties, covenants and agreements, and the indemnification contained herein shall survive the grant of the Option and the issuance of the Option Shares by PRCC. 7. Legend of Certificates. All Option Shares issued pursuant to this Agreement shall be subject to the provisions of this Agreement and the certificates representing such Option Shares shall bear the following legend or language substantially equivalent thereto: 4 "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS SO REGISTERED OR QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY." 8. Transferability of Option. The Option shall not be transferable except by the laws of descent and distribution and any attempt to do so shall void the Option. 9. Adjustment. The Option Price and the number and kind of Option Shares shall be subject to corresponding adjustment in the event of any change in the Common stock by reason of any reclassification, recapitalization, split-up, combination, exchange of shares, readjustment or stock dividend, in like manner as if such Option Shares had been issued and outstanding, fully paid and non-assessable at the time of such occurrence. 10. Privilege of Ownership. Optionee shall not have any of the rights of a shareholder with respect to the shares covered by the Option except to the extent that one or more certificates for such Shares shall be delivered to his upon one (1) or more exercises of the Option. 11. Notices. Any notices required or permitted to be given under this Agreement shall be in writing and they shall be deemed to have been given upon personal delivery or two (2) business days after mailing the notice by postage, registered or certified mail. Such notice shall be addressed to the party to be notified as shown below: PRCC: POLLUTION RESEARCH AND CONTROL CORP. 506 Paula Avenue Glendale, CA 91201 Attn: President OPTIONEE: Anthony Reneau 506 Paula Avenue Glendale, CA 91201 Any party may change its address for purposes of this Section by giving the other party written notice of the new address in the manner set forth above. 5 12. General Provisions. This Agreement: (a) Contains the entire agreement between PRCC and Optionee regarding options of PRCC to Optionee and supersedes all prior communications, oral or written; (b) Shall not be construed to give Optionee any rights as to PRCC or the Common Stock, except as specifically provided herein; (c) May not be amended nor may any rights hereunder be waived except by an instrument in writing signed by the party sought to be charged with such amendment or waiver; (d) Shall be construed in accordance with, and governed by, the laws of the State of California; and (e) Shall be binding upon and shall inure to the benefit of PRCC and Optionee, and their respective successors and assigns, except that Optionee shall not have the right to assign or otherwise transfer his rights hereunder to any person. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. PRCC: POLLUTION RESEARCH AND CONTROL CORP., a California corporation By:/S/ Albert E. Gosselin, Jr. ------------------------------ Albert E. Gosselin, Jr., President and Chief Executive Officer OPTIONEE: /s/ Anthony Reneau ------------------ Anthony Reneau 6 EXHIBIT A To Pollution Research and Control Corp. NOTICE AND AGREEMENT OF EXERCISE OF OPTION I hereby exercise the Option granted to me by POLLUTION RESEARCH AND CONTROL CORP., a California corporation ("PRCC"), dated as of _____________ as to ______________ shares of PRCC's no par value Common Stock. Enclosed are the documents and payment specified in Paragraph 4 of my Agreement regarding the Option. - -------------------------------- ------------------------------- (Print Your Name) Signature EX-5.0 3 0003.txt OPINION AND CONSENT CUDD & ASSOCIATES ATTORNEYS AT LAW June 16, 2000 Board of Directors Pollution Research and Control Corp. 506 Paula Avenue Glendale, California 91201 Gentlemen: We have acted as counsel to Pollution Research and Control Corp., a California corporation (the "Company"), in connection with the Post-Effective Amendment No. 2 to the Registration Statement on Form S-3, File Number 333-87965 (the "Post-Effective Amendment No. 2"), filed with the U.S. Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended, on or about the date hereof. The Post-Effective Amendment No. 2 relates to an aggregate of 164,000 shares (the "Shares") of the Company's common stock, no par value per share (the "Common Stock"), including 100,000 shares of Common Stock being offered by Britannica Associates Limited (the "Selling Shareholder") and 64,000 shares of Common Stock underlying four options, one of which options is exercisable to purchase 25,000 shares of Common Stock at an exercise price of $1.00 per share on or prior to February 25, 2002, and three of which options are exercisable to purchase 14,500 shares, 14,500 shares, and 10,000 shares, of Common Stock, respectively, at an exercise price of $1.38 per share on or prior to March 22, 2002 (collectively, the "Options"). In connection with this opinion, we have examined the Company's Articles of Incorporation, as amended; the Company's By-Laws; minutes of the Company's corporate proceedings, as made available to us by officers of the Company; an executed copy of such Post-Effective Amendment No. 2, and all exhibits thereto in the form filed with the Commission; and such matters of law deemed necessary by us in order to deliver the within opinion. In the course of our examination, we have assumed the genuineness of all signatures, the authority of all signatories to sign on behalf of their principals, if any, the authenticity of all documents submitted to us as original documents, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the due execution and delivery of all documents where due execution and delivery are a prerequisite to the effectiveness thereof. As to certain factual matters, we have relied upon information furnished to us by officers of the Company. Board of Directors Pollution Research and Control Corp. June 16, 2000 Page 2 On the basis of the foregoing, and solely in reliance thereon, we are of the opinion that the Shares of Common Stock have been duly authorized and, when issued for consideration received by the Company (i) from the Selling Shareholder and (ii) upon exercise by the holders of the Options and payment of the exercise price as provided in the Options in accordance with the terms thereof, the Shares of Common Stock have been or will be validly issued, fully-paid and nonassessable. We hereby consent to the filing of this letter as an exhibit to the Post-Effective Amendment No. 2. Very truly yours, CUDD & ASSOCIATES /S/ Patricia Cudd ----------------- Patricia Cudd EX-23.2 4 0004.txt CONSENT AJ. ROBBINS, PC Certified Public Accountants and Consultants CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We hereby consent to the use in the Prospectus constituting part of this Registration Statement on Form S-3 Amendment #2 of Pollution Research and Control Corp. of our report dated February 22, 2000 relating to the consolidated financial statements of Pollution Research and Control Corp. and to the reference made to our firm under the caption "Experts" which appear in such documents. /s/ A.J.Robbins, P.C. --------------------- A.J. ROBBINS, P.C. CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS Denver, Colorado June 15, 2000 3033 East 1st Avenue * Suite 201 * Denver, CO 80206 303 321-1281 * Fax 303 321-1288 -----END PRIVACY-ENHANCED MESSAGE-----