SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002      Commission File Number 0-19122


                               APHTON CORPORATION
             (Exact name of registrant as specified in its charter)


           Delaware                                     95-3640931
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
  incorporation or organization)


   80 SW Eighth Street, Suite 2160                         33130
         Miami, Florida                                  (Zip Code)
(address of principal executive offices)


     Registrant's telephone number, including area code (305) 374-7338

     Indicate by check mark whether the registrant (1) has filed all
     reports required to be filed by Section 13 or 15(d) of the
     Securities Exchange Act of 1934 during the preceding 12 months
     (or for such shorter period that the registrant was required to
     file such reports), and (2) has been subject to such filing
     requirements for the past 90 days.


                                    Yes  x               No
                                        ---                ---


     The number of shares of Common Stock outstanding as of the close of
                       business on July 24, 2002:

               Class                                      Number of
                                                      Shares outstanding

     Common Stock, $0.001 par value                       20,101,639



<PAGE>



                          APHTON CORPORATION

                                 Index


                                                                           Page

Part I - Financial Information                                               3

   Item 1.  Financial Statements:

     Balance Sheets - June 30, 2002 and December 31, 2001                    4

     Statements of Operations - Three and six months
     ended June 30, 2002 and 2001                                            5

     Statements of Cash Flows - Three and six months
     ended June 30, 2002 and 2001                                            5

   Item 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                              6

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk      10


Part II - Other Information

   Item 1.  Legal Proceedings                                               10

   Item 2.  Changes in Securities                                           10

   Item 3.  Defaults Upon Senior Securities                                 10

   Item 4.  Submission of Matters to a Vote of Security Holders             10

   Item 5.  Other Information                                               10

   Item 6.  Exhibits and Reports on Form 8-K                                10

Signature                                                                   11


                                 - 2 -


<PAGE>


                         Part I - Financial Information

                           Forward-Looking Statements

This  Form 10-Q  contains  forward-looking  statements  that  involve  risks and
uncertainties.  In some cases,  you can identify  forward-looking  statements by
terminology such as "may", "will",  "should",  "expect",  "plan",  "anticipate",
"believe", "continue", "predict",  "estimated",  "potential", or the negative of
such terms or other comparable terminology.  We have based these forward-looking
statements on our current  expectations  and  projections  about future  events.
These statements include, but are not limited to information about:

   o  Our business outlook and future financial performance;

   o  Anticipated profitability, revenues, expenses and capital expenditures;

   o  Anticipated research, development,  clinical, regulatory and reimbursement
      progress;

   o  Future funding and expectations as to any future events; and

   o  Other  statements  that are not  historical  fact and are  forward-looking
      statements within the meaning of the Private Securities  Litigation Reform
      Act of 1995 that involve risks and uncertainties.

When considering such  forward-looking  statements,  you should keep in mind the
risk factors and other cautionary  statements in our publicly  available filings
with  the  Securities  and  Exchange  Commission,   including  our  most  recent
Registration  Statement on Form S-3/A  declared  effective on July 12, 2002, our
Transition  Report on Form 10-K/A for the eleven months ended December 31, 2001,
the Form 10-Q for the quarter  ended  March 31,  2002 and this Form 10-Q.  These
risks and uncertainties could cause our actual results to differ materially from
future results expressed or implied by the forward-looking  statements.  Many of
these  factors are beyond our ability to control or predict.  You should not put
undue reliance on any forward-looking  statements. We undertake no obligation to
release  publicly any revisions to these  forward-looking  statements to reflect
events or  circumstances  after the date of this  Form  10-Q or to  reflect  the
occurrence of unanticipated  events,  except as may be required under applicable
securities laws.


Item 1.   Financial Statements

The unaudited  condensed interim financial  statements included herein have been
prepared by us in accordance with generally  accepted  accounting  principles in
the United States and pursuant to Regulation  S-X, Rule 10-01 of the  Securities
and Exchange Commission. In the opinion of management,  the financial statements
include all  adjustments  necessary to present fairly the financial  position of
the  Company as of June 30,  2002 and  December  31, 2001 and the results of its
operations  for the three and six months  ended June 30, 2002 and 2001;  and its
cash flows for the six months ended June 30, 2002 and 2001. It is suggested that
these financial  statements be read in conjunction with the financial statements
and the notes thereto included in the Company's latest transition report on Form
10-K/A.

                                     - 3 -


<PAGE>


                               APHTON CORPORATION

                          Financial Statement Overview
The  following  highlighted   information  is  also  contained  in  Management's
Discussion and Analysis of Financial Condition and Results of Operations. During
the  six  months  ended  June  30,  2002,   Aphton   received  net  proceeds  of
approximately $27.7 million from the sale of approximately 2.5 million shares of
its common stock.  Approximately  170,000  additional  unregistered  shares were
issued pursuant to anti-dilution  rights of existing  shareholders.  Total costs
and expenses were reduced from $13.1 million in the quarter ending  December 31,
2001 to $10.1  million in the quarter  ended March 31, 2002, to $9.9 million for
the  quarter  ended  June  30,  2002.  This  decrease  is  primarily  due to the
completion of recruitment for two of the Company's  clinical  trials.  We expect
our total costs to continue to  decrease in the  remaining  two  quarters of the
year 2002. The Company is planning to initiate two clinical trials in the fourth
quarter.  Most of the costs relating to these trials will be incurred during the
fiscal year ended December 31, 2003.

<TABLE>
<CAPTION>
                                               APHTON CORPORATION
                                            Condensed Balance Sheets

                                                                       June 30,        December 31,
                                 Assets                                  2002              2001
                                                                     (Unaudited)          ------
                                                                     -----------
       <S>                                                           <C>               <C>
       Current Assets:
       Cash and current investments:
        Cash and short-term cash investments                         $10,647,991        $3,176,717
        Investment securities-trading                                  1,145,525         1,147,417
        Investment securities-held-to-maturity                           990,764         1,999,006
                                                                   ---------------   --------------
           Total cash and current investments                         12,784,280         6,323,140
       Other assets (including current portion of
            unconditional supply commitment)                             461,523           595,390
                                                                   --------------    --------------
           Total current assets                                       13,245,803         6,918,530
       Equipment and improvements, net                                   168,846           188,597
       Unconditional supply commitment                                 6,625,515         6,875,515
                                                                   -------------     --------------
           Total assets                                              $20,040,164       $13,982,642
                                                                   =============     ==============

               Liabilities and Stockholders' Equity (Deficit)
       Liabilities:
       Current liabilities:
        Accounts payable and other                                    $9,042,532       $10,715,430
                                                                    ------------     --------------
           Total current liabilities                                   9,042,532        10,715,430
        Deferred revenue                                              10,000,000        10,000,000
                                                                   -------------      -------------
           Total liabilities                                          19,042,532        20,715,430
                                                                    ------------      -------------
       Commitments
       Stockholders' (Deficit) Equity:
         Preferred stock, $0.001 par value -
         Authorized:  2,000,000 shares
         Issued and outstanding:  none                                         -                 -
        Common stock, $0.001 par value -
        Authorized:  30,000,000 shares
        Issued and outstanding:  20,101,639 shares at  June 30,
          2002 and 17,386,996 shares at December 31, 2001                 20,102            17,387
        Additional paid in capital                                   121,215,753        93,566,314
        Purchase warrants                                                298,900           298,900
        Accumulated deficit                                         (120,537,123)     (100,615,389)
                                                                   -------------     --------------
           Total stockholders' equity (deficit)                          997,632        (6,732,788)
                                                                   ---------------   --------------
           Total liabilities and stockholders' equity (deficit)      $20,040,164       $13,982,642
                                                                   ===============   ==============

</TABLE>

                                     - 4 -


<PAGE>

<TABLE>
<CAPTION>


                                                        APHTON CORPORATION
                                          Unaudited Condensed Statements of Operations
                                   For the three and six months ended June 30, 2002 and 2001

                                                    Three months ended June 30,          Six months ended June 30,
                                                       2002             2001              2002              2001
                                                       ----             ----              ----              ----
<S>                                               <C>              <C>              <C>               <C>
Revenue:                                          $            -   $           -    $            -    $            -
                                                  --------------   -------------    --------------   ---------------
Costs and expenses:
  General and administrative                             564,495         519,069           953,927           891,759
  Research and development                             9,311,658       5,648,381        19,001,905        10,575,900
                                                  --------------   -------------    --------------   ---------------
     Total costs and expenses                          9,876,153       6,167,450        19,955,832        11,467,659
                                                  --------------   -------------    --------------   ---------------
     Loss from operations                              9,876,153       6,167,450        19,955,832        11,467,659
                                                  --------------   -------------    --------------   ---------------
Other income (expense):
  Dividend and interest income                            49,325         123,611            71,613           353,576
  Unrealized losses from investments                      (7,870)       (409,220)          (37,515)       (1,378,184)
                                                  ---------------  --------------   ---------------  ----------------
     Net loss                                        $(9,834,698)    $(6,453,059)     $(19,921,734)     $(12,492,267)
                                                  ===============  ==============   ===============  ================
  Per share data:  Basic and fully diluted loss
         per common share                                 $(0.49)         $(0.40)           $(1.03)           $(0.77)
                                                          =======         =======           =======           =======
  Weighted average number of common
         shares outstanding                           20,101,639      16,199,493        19,420,924        16,199,493
                                                  ===============  ==============   ===============  ================

</TABLE>

The net loss for the three and six months  ended June 30,  2002 and 2001 was the
comprehensive loss for those periods. For all periods presented potential common
shares, consisting of approximately 2.7 million purchase warrants, were excluded
from  the   computation   of  net  loss  per  share  because  their  effect  was
anti-dilutive.

<TABLE>
<CAPTION>
                                               APHTON CORPORATION
                                    Unaudited Condensed Statements of Cash Flows
                                  For the six months ended June 30, 2002 and 2001

                                                                                    2002              2001
                                                                                    ----              ----
<S>                                                                             <C>                <C>
Cash flows from operating activities:
     Cash paid to suppliers and employees                                       $(21,176,416)     $(11,300,431)
                                                                             ----------------    --------------
       Net cash used in operating activities                                     (21,176,416)      (11,300,431)
Cash flows from investing activities:
     Purchase of held to maturity securities                                      (1,311,203)      (6,672,714)
     Proceeds from maturity of held to maturity securities                         2,323,229       18,057,000
     Capital expenditures                                                            (16,490)         (65,867)
                                                                             ----------------    --------------
       Net cash provided by investing activities                                     995,536       11,318,419
                                                                             -----------------   --------------
Cash flows from financing activities:
  Sales of stock                                                                  27,652,154                -
                                                                             -----------------   --------------

    Cash provided by financing activities                                         27,652,154                -
                                                                             -----------------   --------------

       Net increase (decrease) in cash and short-term cash investments             7,471,274           17,988

Cash and short-term cash investments:
     Beginning of period                                                           3,176,717        4,998,650
                                                                             -----------------   --------------
     End of period                                                               $10,647,991       $5,016,638
                                                                             =================   ==============
    Reconciliation of net loss to net cash used in operating activities
Net loss                                                                        $(19,921,734)    $(12,492,267)
Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization                                                    36,241           35,460

     Unrealized losses from investments                                               37,515        1,378,184
     Decrease in accrued employee benefits                                           (37,515)      (1,378,184)
     Changes in -
       Investment securities-trading                                                  (1,892)       1,258,555
       Other assets - including current portion of supply commitment                  133,867        (125,327)

       Unconditional supply commitment - long term portion                            250,000         150,000
       Accounts payable and other                                                  (1,672,898)       (126,852)
                                                                             -----------------   --------------
Net cash used in operating activities:                                           $(21,176,416)   $(11,300,431)
                                                                             =================   ==============

</TABLE>


                                     - 5 -


<PAGE>


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

                    Three and six months ended June 30, 2002

                                     General
Aphton  Corporation  is a  biopharmaceutical  company in one phase III and three
phase II clinical trials. We apply our innovative technology-platform to develop
products for  neutralizing,  and removing from  circulation,  hormones and other
molecules that participate in  gastrointestinal  system and reproductive  system
cancer and non-cancer diseases. We have strategic alliances with Aventis Pasteur
(NYSE: AVE), GlaxoSmithKline (NYSE: GSK) and others.

We are  conducting a phase III  clinical  trial with our  anti-gastrin  targeted
immunotherapy, called G17DT, which induces antibodies in the patient in order to
neutralize gastrin 17 (a hormone normally secreted in the stomach that regulates
stomach acid and is also secreted by, and linked in certain cases to, the growth
of cancers),  for patients  with advanced  pancreatic  cancer in the U.S. and in
Europe.  We are  conducting  a phase II  trial  with  G17DT  for  patients  with
histologically  confirmed,  locally advanced and metastatic  stomach cancer.  We
have concluded a phase II trial with G17DT which showed, among other things, the
reduction of post  prandial  (post-meal)  levels of gastrin to pre-meal  levels,
including the  reduction of  hypergastrinemia  levels of gastrin  induced by the
proton-pump inhibitor drug omeprazole to pre-meal levels of gastrin for patients
treated with omeprazole. We plan to initiate a clinical trial at the end of 2002
to show,  among other  endpoints,  that G17DT may be  efficacious  in  providing
symptomatic  relief to patients suffering from  gastroesophageal  reflux disease
(or GERD).

A phase II trial is also  underway in the U.S.  and Europe  using our  immunogen
called GnRH pharmaccine,  which is a targeted immunotherapy that neutralizes the
hormone  GnRH,  for the  treatment  of chronic  diseases  and cancer in prostate
cancer patients who are not responding to hormone therapy.

                                Clinical Results
On May 17, 2002, at the Annual American Society of Clinical Oncology meeting, in
Orlando, Florida, at a special symposium held by Aventis (AVE), Dr. Ajani of the
MD Anderson Cancer Center in Houston,  Texas,  presented  interim results from a
phase II clinical  trial with gastric  (stomach)  cancer  patients  treated with
Aphton's  G17DT and  chemotherapy,  with an overall  tumor  response rate (tumor
shrinkage of 50% or more) of 53% for the 36 reported and evaluable patients.

On May 20, 2002, at the same ASCO conference,  Aphton's collaborating scientists
presented results from a phase II study with patients with histologically proven
stage IV  gastric  cancer  who were  treated  with  Aphton's  G17DT  but with no
chemotherapy administered.  Of the 10 evaluable patients, there was a 48% median
survival  benefit  compared to previous studies for such stage IV gastric cancer
patients.

On May 23,  2002,  at the  Annual  Meeting of the  American  Gastroenterological
Association  (AGA) held in San Francisco,  CA, Aphton  collaborators  received a
Blue Ribbon Poster Award for one of four scientific posters relating to Aphton's
G17DT product.

On June 12, 2002, Aphton reported further interim results from Aphton's phase II
clinical trial with patients with  metastatic  gastric cancer referred to above.
Of the 58  evaluable  patients  reported  on at that  time,  the  overall  tumor
response rate was 48.3%.

On July  17,  2002  and then on July 23,  2002,  Aphton  announced  that the FDA
granted  Orphan  Drug  status for  Aphton's  anti-gastrin  G17DT  immunogen  for
treatment of adenocarcinoma of the pancreas and for treatment of gastric cancer,
respectively.  The term  "orphan-drug"  refers to a product  that  treats a rare
disease  affecting fewer than 200,000  Americans.  Orphan-Drug  Status confers a
7-year  period of  exclusive  marketing  rights  for G17DT for this  indication,
thereby  protecting  it from similar  drugs of the same class.  In addition,  it
qualifies the Company to apply for grant amounts  totaling up to $900,000 over a
3-year period, with a maximum of $300,000 per year. Furthermore, the requirement
for a  $300,000  user fee that is  payable  with  the  submission  of a New Drug
Application is waived for an Orphan Drug.

                                      -6-
<PAGE>


On July 29, 2002 Aphton filed an SEC  Regulation  FD Disclosure  describing  its
phase II clinical trial results with patients treated with G17DT,  both with and
without treatment with the proton pump inhibitor omeprazole, a discussion of the
disease  called  Gastroesophageal  Reflux  Disease  (GERD) and  Aphton's  recent
efforts,  preparations and plans for filing an IND for GERD in the United States
and Europe in the coming weeks.

On July 31, 2002,  Aphton reported further  impressive  interim results from its
phase II clinical  trial with patients with  metastatic  stomach cancer who were
treated with Aphton's G17DT and chemotherapy consisting of cisplatin and 5FU. Of
the 72 evaluable  patients reported upon that time, 37 had either a partial or a
complete tumor response for an overall tumor response rate of 51.4%. One patient
had a complete  response  (no  detectable  residual  tumor) and 36 had a partial
response  (tumor  shrinkage  by 50% or  more).  Furthermore,  an  additional  20
patients  had stable  disease.  There is only one large,  randomized,  phase III
clinical trial that has been reported in the medical  literature  with cisplatin
plus 5 FU for patients with advanced  gastric cancer.  Of the 399 total patients
enrolled  in the  trial,  245 were  evaluable.  For the  patients  treated  with
cisplatin plus 5FU, the tumor response rate was 20%, as reported by the European
Organization  for Research and Treatment of Cancer  (EORTC) which  conducted the
trial.  The results  reported by Aphton on July 31, 2002 compare  favorably with
those  results.  They represent a 157%  improvement  relative to the 20% results
reported in the EORTC clinical trial.  Aphton has completed  recruitment for its
phase II clinical  trial for  patients  with  metastatic  stomach  cancer and is
following the patients while awaiting  additional  interim results which will be
followed by final analysis of the data. Aphton's  anti-gastrin  targeted therapy
adds a  biological  dimension  to the  treatment  of  gastrointestinal  cancers,
without adding toxicity.

                              Results of Operations
During the six months  ended June 30,  2002,  Aphton  received  net  proceeds of
approximately $27.7 million from the sale of approximately 2.5 million shares of
its common stock.  Approximately  170,000  unregistered  additional  shares were
issued pursuant to anti-dilution rights of existing  shareholders.  Net loss was
reduced from  $13,197,503 in the quarter ending December 31, 2001 to $10,087,036
in the quarter  ended March 31, 2002 and were further  reduced to  $9,834,698 in
the  quarter  ended  June  30,  2002.  This  decrease  is  primarily  due to the
completion of recruitment for two of the Company's  clinical  trials.  We expect
our total costs and  expenses to  continue  to  decrease  in the  remaining  two
quarters of the year 2002.  The Company is  planning  to initiate  two  clinical
trials in the fourth quarter. Most of the costs relating to these trials will be
incurred during the fiscal year ended December 31, 2003.

During this period the Company had no contract revenues. The investment earnings
on cash and  current  investments  for the six months  ended  June 30,  2002 was
$71,613,  compared  to $353,576  for the six months  ended June 30,  2001.  This
decrease was due to lower  average  cash  balances  and  interest  rates.  Total
research and development expenditures decreased from $9,690,247 to $9,311,658 in
the three months ended June 30, 2002 over the three months ended March 31, 2002.
Total research and  development  costs  increased from  $10,575,900  for the six
months  ended June 30,  2001 to  $19,001,905  for the six months  ended June 30,
2002.  This 80%  increase  was a result of the  increased  clinical  trial costs
associated with the development of the Company's  products,  including the costs
of  establishing  centers  where  patients  are treated and  monitored,  and the
reduction of research and development  expenses by approximately  $38,000 in the
six months ended June 30, 2002, as compared to the  $1,378,184  reduction in the
six months ended June 30, 2001. These reductions  correspond with adjustments of
the same amount for  unrealized  losses on  investment  securities.  The Company
allows  certain  employees to defer a portion of  compensation,  and the Company
transfers this amount into an investment  account such that the employee is able
to direct the  investment of the funds.  The related  investment  securities are
held by the  Company,  and are subject to the general  creditors of the Company.
These employees  direct the investment of the funds, and the changes in value in
these investments are recognized as unrealized gains and losses in the statement
of operations with a corresponding increase or decrease to the carrying value of
the  investment  account.  The  same  amount  is used  to  adjust  research  and
development  expense and the  corresponding  liability for employees'  wages and
benefits  payable.  Unrealized  holding  losses on  trading  securities  and the
corresponding decrease in research and development expense totaled approximately
$38,000  in the  six  month  period  ending  June  30,  2002  and  approximately
$1,378,000 for the six months ended June 30, 2001.

                                      -7-
<PAGE>

The Company does not accumulate cost information by major  development  product.
Many costs are  applicable to more than one product.  We receive  reimbursements
from our strategic  partners for some of our research and  development  expenses
and these  expenses are not included in our costs.  We estimate  that 93% of our
research and development  costs are spent on  gastrointestinal  and reproductive
system cancers.  There are no payment or penalty milestones  associated with any
of the  projects,  all of  which  are in Phase II or III  clinical  trials.  The
Company does not speculate on the timing of approvals by regulatory authorities.

                          Critical Accounting Policies
The  Company's  significant  accounting  policies are described in Note 2 to the
consolidated  financial  statements  included in our  Transition  Report on Form
10-K/A for the eleven months ended December 31, 2001. There have been no changes
to our accounting policies during the three and six months ended June 30, 2002.

                                      Other
In June 2001,  the Financial  Accounting  Standards  Board issued  Statements of
Financial  Accounting  Standards  No. 141,  "Business  Combinations,"  which the
Company  adopted  in July  2001 and No.  142,  "Goodwill  and  Other  Intangible
Assets," which was adopted in January 2002, effective for fiscal years beginning
after  December 15,  2001.  Under these rules,  goodwill and  intangible  assets
deemed to have indefinite  lives will no longer be amortized but will be subject
to annual  impairment tests in accordance with the Statements.  Other intangible
assets will continue to be amortized  over their useful  lives.  The adoption of
these statements did not have an impact on the Company's  financial  position or
results from operations.

In August 2001, the Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No. 144,  "Accounting  for the  Impairment  or
Disposal of Long-Lived  Assets" (SFAS No. 144) which the Company adopted January
1, 2002.  SFAS 144 superseded  Statement of Financial  Accounting  Standards No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be  Disposed  Of," and the  accounting  and  reporting  provisions  of
Accounting   Principles  Board  Opinion  No.  30,   "Reporting  the  Results  of
Operations-Reporting  the Effects of  Disposal  of a Segment of a Business,  and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions," for
the disposal of a segment of a business.  SFAS No. 144 also  amended  Accounting
Research Bulletin No. 51, "Consolidated  Financial Statements," to eliminate the
exception to  consolidation  for a subsidiary  for which control is likely to be
temporary.  The  adoption  of this  statement  did not  have  an  impact  on the
Company's financial position or results from operations.

In April 2002, the FASB issued Statement of Financial  Accounting  Standards No.
145,  Rescission  of FASB  Statements  No.  4,  44,  and 64,  Amendment  of FASB
Statement No. 13, and Technical  Corrections  (SFAS 145).  SFAS 145 will require
gains and losses on  extinguishments  of debt to be classified as income or loss
from  continuing  operations  rather than as  extraordinary  items as previously
required  under SFAS 4.  Extraordinary  treatment  will be required  for certain
extinguishments  as provided in APB Opinion No. 30. SFAS 145 also amends SFAS 13
to  require   certain   modifications   to  capital   leases  be  treated  as  a
sale-leaseback  and modifies the  accounting  for  sub-leases  when the original
lessee  remains a  secondary  obligor  (or  guarantor).  In  addition,  the FASB
rescinded SFAS 44, which addressed the accounting for intangible assets of motor
carriers and made numerous  technical  corrections.  The  provisions of SFAS 145
related to the  rescission of SFAS 4 shall be applied in fiscal years  beginning
after May 15, 2002. The provisions of paragraphs 8 and 9(c) of SFAS 145, related
to SFAS 13, shall be effective for  transactions  occurring  after May 15, 2002.
All other  provisions of SFAS 146 shall be effective  for  financial  statements
issued on or after May 15,  2002.  We do not expect the  adoption of SFAS 145 to
have a material effect on our financial position or results of operations.

In June 2002, the FASB issued  Statement of Financial  Accounting  Standards No.
146,  Accounting for Costs  Associated  with Exit or Disposal  Activities  (SFAS
146). SFAS 146 addresses financial accounting and reporting for costs associated
with exit or disposal  activities and nullifies  EITF Issue No. 94-3,  Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity  (including

                                      -8-
<PAGE>

Certain Costs Incurred in a  Restructuring).  The principal  difference  between
SFAS 146 and Issue 94-3 relates to SFAS 146's  requirements for recognition of a
liability  for a cost  associated  with an exit or disposal  activity.  SFAS 146
requires  that a  liability  for a cost  associated  with an  exit  or  disposal
activity be  recognized  when the  liability  is  incurred.  Under Issue 94-3, a
liability for an exit cost as generally  defined in Issue 94-3 was recognized at
the date of an entity's  commitment to an exit plan.  The provisions of SFAS 146
are effective for exit or disposal  activities that are initiated after December
31, 2002. We do not expect the adoption of SFAS 146 to have a material effect on
our financial position or results of operations.

Inflation and changing  prices have not had a  significant  effect on continuing
operations and are not expected to have any material  effect in the  foreseeable
future.  Interest and other  income were  primarily  derived  from  money-market
accounts.

                         Liquidity and Capital Resources

The Company has financed its operations since inception  through the sale of its
equity  securities and, to a lesser extent,  using  operating  revenues from R&D
limited  partnerships to conduct research and development.  These funds provided
the  Company  with the  resources  to hire staff,  construct  its  research  and
development  facilities,  acquire capital  equipment and finance  technology and
product development, manufacturing of its products and clinical trials.

On March 21, 2002, the Company sold 1,200,000 shares of registered  common stock
at $10.50 per share and received net proceeds of $11.8  million.  On February 7,
2002, the Company sold 1,345,000 shares of registered common stock at $12.70 per
share and  received  net  proceeds  of $16.1  million.  There was  approximately
$300,000 in offering expenses that were netted against these proceeds.

During the eleven months ended December 31, 2001, the Company received  proceeds
of approximately  $13.3 million net of approximately $1.0 million offering costs
from the closing of a private  financing with several funds.  The Company issued
1,187,503  shares of common stock and there were no warrants or options included
with this  private  placement.  Approximately  170,000  additional  unregistered
shares  were issued  subsequent  to  December  31, 2001 due to an  anti-dilution
provision  for the sale of  securities  at less than  $12.00 per share  prior to
October 2002.

The Company  anticipates that its existing capital  resources which are composed
primarily of cash and short-term cash  investments,  including the proceeds from
its equity  offerings  and  interest  thereon,  will enable it to  maintain  its
currently  planned  operations  into the quarter  ending  December 31, 2002. The
Company's  working  capital and capital  requirements  will depend upon numerous
factors,  including the  following:  the progress of the Company's  research and
development  program,  preclinical  testing and clinical trials;  the timing and
cost of obtaining regulatory approvals; the levels of resources that the Company
devotes  to  product  development,  manufacturing  and  marketing  capabilities;
technological advances; competition; and collaborative arrangements or strategic
alliances  with  other  drug  companies,   including  the  further  development,
manufacturing and marketing of certain of the Company's products and the ability
of the  Company to obtain  funds  from such  strategic  alliances  or from other
sources.

The Company may seek additional financing through collaborative  arrangements or
through public or private equity or debt  financings.  Additional  financing may
not be  available to the Company on  acceptable  terms or at all. If the Company
raises additional funds by issuing equity securities,  dilution to the interests
of existing stockholders may result. If adequate funds are not available, we may
not be able to implement  our business  strategy in whole or in part. In such an
event,  we could be required to delay,  reduce the scope of or eliminate  one or
more  of  our  research  or   development   programs  or  obtain  funds  through
arrangements  with  collaborative  partners  or others  that may  require  us to
relinquish rights to certain of our technologies, potential products or products
that we would otherwise seek to develop or commercialize ourselves.

                                      -9-
<PAGE>


Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company has no material  changes to the disclosure on this matter made under
Item 7A of its  Transition  Report on Form  10-K/A for the eleven  month  period
ended December 31, 2001.



                           Part II - Other Information

Item 1. Legal Proceedings. Not applicable.

Item 2. Changes in Securities. Not applicable.

Item 3. Defaults Upon Senior Securities. Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders.

        On  May  22,  2002,   the  Company  held  its  2002  Annual  Meeting  of
        Shareholders  in Miami,  Florida,  to elect one  director to hold office
        until the 2005 Annual Meeting of Shareholders  and thereafter  until his
        successor is duly elected and qualified.  Robert S. Basso was elected to
        the Board of Directors for another term with 99.7% of the vote cast (84%
        of the total shares outstanding).


Item 5. Other Information. Not applicable.

Item 6. Exhibits and Report on Form 8-K.

        (a)     Exhibits.

                99.1    Certification by Philip C. Gevas, Chairman of the Board,
                        Chief  Executive  Officer and President,  pursuant to 18
                        U.S.C.  Section 1350, as adopted pursuant to Section 906
                        of the Sarbanes-Oxley Act of 2002.

                99.2    Certification  by Frederick W. Jacobs,  Vice  President,
                        Chief Financial Officer,  Treasurer and Chief Accounting
                        Officer,  pursuant to 18 U.S.C. Section 1350, as adopted
                        pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
                        2002.

        (b)     Reports on Form 8-K.

                During the three months ended June 30, 2002,  the Company  filed
                the following current reports on Form 8-K:

                o       On May 20, 2002, the Company  announced that the interim
                        results  from several  clinical  trials and studies with
                        the  Company's  anti-gastrin  17 immunogen  (G17DT) were
                        presented at the annual meeting of the American  Society
                        of Oncology (ASCO) held in Orlando, Florida; and

                o       On  June  12,  2002,  the  Company  reported   continued
                        impressive  interim results from its clinical trial with
                        patients with metastatic stomach cancer who were treated
                        with the Company's G17DT and chemotherapy  consisting of
                        cisplatin and 5FU. This report updated results  reported
                        at the American  Society of Clinical  Oncology (ASCO) on
                        May 17, 2002 on 36 patients.


                                     -10-


<PAGE>


                                    Signature

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.

                                        Aphton Corporation

Date:  August 13, 2002            By:  /s/ Frederick W. Jacobs
                                       -----------------------------------------
                                       Frederick W. Jacobs
                                       Vice President, Chief Financial Officer,
                                         Treasurer and Chief Accounting Officer




                                     -11-