U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

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

                For the quarterly period ended December 31, 2001

                                       OR

[_]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

            For the transition period from _________ to _____________

                        Commission File Number 000-27353

                            SELECT THERAPEUTICS INC.
        (Exact name of small business issuer as specified in its charter)


              Delaware                                      98-0169105
  (State or other jurisdiction of                        (I.R.S. Employer
   incorporation or organization)                       Identification No.)


     52 Cummings Park, Woburn, MA                               01801
(Address of principal executive offices)                      (Zip Code)

                                 (781) 939-5650
                (Issuer's telephone number, including area code)

                                       N/A
              (Former name, former address and former fiscal year,
                         if changed since last report)

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

The aggregate  number of shares  outstanding of the Issuer's  Common Stock,  its
sole class of common equity, was 12,621,002 as of December 31, 2001.

Transitional Small Business Issuer Disclosure Format: Yes [_] No [X]


<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)

Consolidated Balance Sheet
(Unaudited)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                                                           December 31,         June 30,
                                                                                               2001               2001
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>                 <C>
Assets

Cash and cash equivalents                                                                 $    110,800        $    945,400
Receivable from Cell Science Therapeutics                                                           --             500,800
Prepaid expenses and other assets                                                                6,100              13,300
--------------------------------------------------------------------------------------------------------------------------
         Total current assets                                                                  116,900           1,459,500

Property, plant and equipment, net                                                              19,000              14,000
Investment in Cell Science Therapeutics                                                             --           1,386,400
--------------------------------------------------------------------------------------------------------------------------
         Total assets                                                                     $    135,900        $  2,859,900
==========================================================================================================================

Liabilities and Stockholders' Equity

Liabilities:
   Accounts payable                                                                       $  1,938,100        $    923,600
    Accrued expenses                                                                            77,800             109,600
    Other current liabilities                                                                    2,200             170,000
--------------------------------------------------------------------------------------------------------------------------
               Total current liabilities                                                     2,018,100           1,203,200
--------------------------------------------------------------------------------------------------------------------------

Stockholders' equity:
   Preferred stock, $0.0001 par value;
     1,000,000 shares authorized; no shares
     issued and outstanding                                                                         --                  --
   Common stock, $0.0001 par value;
     50,000,000 shares authorized; 12,621,002
     and 12,572,784 shares issued and outstanding
     at December 31, 2001 and June 30, 2001, respectively                                        1,300               1,300
   Additional paid in capital                                                               17,943,200          17,562,000
   Deferred compensation                                                                      (180,500)            (73,600)
   Deficit accumulated during the development stage                                        (19,646,200)        (15,833,000)
--------------------------------------------------------------------------------------------------------------------------
         Total stockholders' equity                                                         (1,882,200)          1,656,700
--------------------------------------------------------------------------------------------------------------------------
         Total liabilities and stockholders' equity                                       $    135,900        $  2,859,900
==========================================================================================================================

The  accompanying  notes are an integral  part of these  consolidated  financial statements.
</TABLE>


                                      F-1
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)

Consolidated Statement of Operations
(Unaudited)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                       Period from
                                                                                                                        Inception
                                                                                                                      (December 6,
                                                          Three months ended               Six months ended           1996) through
                                                              December 31,                    December 31,             December 31,
                                                         2001            2000             2001             2000            2001
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>              <C>              <C>              <C>              <C>
Revenue                                            $         --     $         --     $         --     $         --     $    317,700

Operating expenses:

Research and development                                208,800          989,200          456,400        2,185,800        7,041,100
Selling, general and administrative                     702,000          695,800        1,210,800        1,416,800        8,466,600
Write-down of intangible assets                              --               --               --               --          640,800
Depreciation and amortization                             3,600              200            7,100            6,600          485,200
-----------------------------------------------------------------------------------------------------------------------------------
        Loss from operations                           (914,400)      (1,685,200)      (1,674,300)      (3,609,200)     (16,316,000)

Interest income                                           1,800          103,100            8,500          186,800          429,800
Other income                                                 --            1,000               --            1,000            1,000
Equity in loss of Cell Science
Therapeutics                                           (296,600)              --         (963,200)              --       (2,576,800)
Loss on termination of joint venture                 (1,184,200)              --       (1,184,200)              --       (1,184,200)
-----------------------------------------------------------------------------------------------------------------------------------

Net loss                                           $ (2,393,400)    $ (1,581,100)    $ (3,813,200)    $ (3,421,400)    $(19,646,200)
===================================================================================================================================

Basic and diluted net loss per share               $      (0.19)    $      (0.13)    $      (0.30)    $      (0.29)

Weighted average number of shares
used in computing basic and diluted
net loss per share                                   12,621,002       11,991,308       12,598,589       11,945,884


The  accompanying  notes are an integral  part of these  consolidated  financial statements.
</TABLE>


                                      F-2
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)

Consolidated Statement of Cash Flows
(unaudited)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                                                                                    Period from
                                                                                                     Inception
                                                                                                    (December 6
                                                              Six months ended  Six months ended   1996) through
                                                                 December 31,      December 31,     December 31,
                                                                     2001             2000              2001
                                                                     ----             ----              ----
<S>                                                             <C>              <C>              <C>
Cash provided by (used in)

Operating activities:
Net loss for the period                                         $ (3,813,200)    $ (3,421,400)    $(19,646,200)
Items not involving cash:
    Depreciation and amortization                                      7,100            6,600          485,200
    Write-down of intangible assets                                       --               --          640,800
    Stock compensation expense                                        74,300          799,600        3,258,300
    Loss on disposal of fixed assets                                  18,800               --           18,800
    Gain on disposal of Sierra                                            --           (1,000)          (1,000)
    Equity in loss of Cell Science Therapeutics                      963,200               --        2,576,800
    Loss on termination of joint venture                           1,184,200               --        1,184,200
Changes in assets and liabilities, net of effect of Sierra
disposition and termination of joint venture:
    Accounts receivable                                                   --           17,100          100,100
    Inventory                                                             --            3,100            7,600
    Prepaid expenses and other assets                                  7,200           45,000           (7,400)
    Accounts payable and accrued liabilities                         577,200          (20,100)       1,669,700
    Receivable from Cell Science Therapeutics                        470,300               --          (30,500)
    Other current liabilities                                       (167,800)              --            2,200

----------------------------------------------------------------------------------------------------------------
Net cash used in operating activities                               (678,700)      (2,571,100)      (9,741,400)
----------------------------------------------------------------------------------------------------------------

Investing activities:
Additions to property, plant and equipment                           (30,900)              --         (121,700)
Cash balance related to Sierra disposition                                --           (1,000)          (1,000)
Cash paid upon termination of joint venture                         (325,000)              --         (325,000)
Investment in Cell Science Therapeutics                                   --               --       (3,000,000)

----------------------------------------------------------------------------------------------------------------
Net cash  used in investing activities                              (355,900)          (1,000)      (3,447,700)
----------------------------------------------------------------------------------------------------------------

Financing activities:
Proceeds from issuance of common stock                               200,000               --       13,585,900
Repayment of loans due to former stockholders
of Sierra Diagnostics                                                     --               --         (286,000)
----------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                            200,000               --       13,299,900
----------------------------------------------------------------------------------------------------------------

(Decrease) increase in cash and cash equivalents                    (834,600)      (2,572,100)         110,800
Cash and cash equivalents, beginning of period                       945,400        7,901,300               --
----------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                        $    110,800     $  5,329,200     $    110,800
----------------------------------------------------------------------------------------------------------------


The  accompanying  notes are an integral  part of these  consolidated  financial statements.
</TABLE>


                                      F-3
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Consolidated Financial Statements
Six months ended December 31, 2001 and 2000 (Unaudited)
--------------------------------------------------------------------------------

1.   Basis of presentation

In the opinion of management, the unaudited consolidated financial statements of
Select  Therapeutics Inc. (the "Company" or "Select")  included herein have been
prepared  on a  consistent  basis with the June 30,  2001  audited  consolidated
financial statements and include all material adjustments,  consisting of normal
recurring  adjustments,  necessary to fairly present the  information  set forth
therein.  These interim financial  statements should be read in conjunction with
the audited  consolidated  financial  statements  and notes thereto filed in the
Company's Form 10-KSB for the year ended June 30, 2001. The Company's results of
operations for the second quarter of fiscal 2002 are not necessarily  indicative
of future operating results.

On  December  3, 2001,  Select  Therapeutics,  Inc.  finalized  the terms of the
termination  of its joint venture with  Cytomatrix,  LLC,  known as Cell Science
Therapeutics  ("CST").  Given the extremely  difficult  economic  circumstances,
including September 11, 2001, each company believed that shareholder value would
be best protected by dividing CST's  development  activities  into separate cell
therapeutic and drug and vaccine  companies,  which could each seek  appropriate
financing.

Select regained the intellectual property it contributed originally to the joint
venture in exchange for assignment of its 50% equity  interest in CST to CST. In
exchange  for this  intellectual  property,  Select  also  assumed  $405,400  in
accounts  payable of CST and  contributed  $325,000 in cash to CST. In addition,
Select  and  Cytomatrix  mutually  agreed  not to pursue  the  merger of the two
companies.

The Company's financial  statements have been prepared on the basis that it will
be able to continue as a going concern. The Company is in the development stage,
has a limited  operating  history  and has  incurred  a  cumulative  net loss of
$19,646,200  through December 31, 2001. As of February 12, 2002, the Company had
cash on hand of $18,200  which is  sufficient  to fund  operations  only through
February  15,  2002.  We  are  seeking  to  enter  a  corporate  partnership  or
combination and to raise the additional  equity financing we require to continue
to fund the  development  of our  technologies  or a corporate  deal. Our recent
efforts in this area have failed and there can be no  assurance  that we will be
able  to  enter  a  corporate  relationship  or that  the  additional  financing
necessary to meet our short and long-term capital requirements will be available
on acceptable  terms, or at all. These  circumstances  raise  substantial  doubt
about the Company's ability to continue as a going concern.  If we are unable to
enter a  corporate  relationship  in the  next few  weeks  or  raise  additional
capital,  we will be required to  dissolve  the  Company.  The  Company's  lease
expires on February 28, 2002 and the Company plans to operate on a virtual basis
following  the  expiration  of the  lease.  If we are able to raise  capital  to
continue  operations,  and the amount  raised is less than that required to fund
our current plan, we may be faced with losing rights under existing  licenses or
relinquishing  greater or all rights to product  candidates at earlier stages of
development or on less favorable terms than we would otherwise choose. Moreover,
we still may not be able to continue as a going concern. If any additional funds
are  raised by  issuing  equity  securities  substantial  dilution  to  existing
stockholders  will  result.  These  financial  statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts  reported in the financial  statements.  Actual results could
differ materially from those estimates.

2.   Capital Stock

In November 2001, the Company granted options to consultants to purchase 750,000
shares of common  stock at a price of $0.40 per share.  Two hundred  thousand of
these shares vested  immediately  and their deemed fair value,  as determined by
the  Black-Scholes  model,  of $64,300 was expensed in the current  period.  The
remaining   550,000  shares  are  being  marked  to  market   through   deferred
compensation and will be expensed over their 3 year vesting period - $10,000 was
expensed in the current period.

3.   Net loss per share

The basic and diluted net loss per share has been calculated  using the weighted
average number of common shares  outstanding  during the period. The calculation
of  diluted  net loss per  share  excludes  potential  shares  of  common  stock
equivalents  relating to  outstanding  common stock  warrants of  2,860,852  and
1,797,902  and options of  2,681,000  and  1,280,000 as of December 31, 2001 and
2000, respectively, as their inclusion would be anti-dilutive.

4.   Termination of joint venture

On December 3, 2001,  Select completed the termination of its joint venture with
Cytomatrix, LLC, known as Cell Science Therapeutics,  Inc. The joint venture was
created on January 2, 2001.  Select and  Cytomatrix  had announced  their mutual
intent to unwind the joint venture in early November 2001.


                                      F-4
<PAGE>

The  termination of the joint venture is subject to the terms of the termination
agreement  between the parties  dated  December 3, 2001.  Under the terms of the
agreement, Select regained the intellectual property and other noncash assets it
contributed orginally to the joint venture in exchange for its assignment to CST
of its 50% equity  interest in CST.  Also,  in  exchange  for the return of this
intellectual  property,  Select assumed  $405,400 in accounts payable of CST and
contributed  $325,000 in cash to CST. In addition,  Select and  Cytomatrix  have
mutually  agreed not to pursue the merger of the two companies.

Select recorded the assets returned by CST at a net book value of zero, Select's
basis when it contributed  those assets to CST. Also,  none of the  intellectual
property  returned to Select related to projects that had reached  technological
feasibility or that had alternative future uses.

As of December 3, 2001, Select recorded a net loss on
the termination of the joint venture of $1,184,200, reflecting the $325,000 cash
payment to CST,  $405,400  of assumed  liabilities  of CST, a  write-off  of the
remaining  investment  in CST  of  $423,300  and a  write-off  of the  remaining
outstanding receivables from CST of $30,500.

On  November  3,  2000,  Select  sold  all of  its  shares  in its  wholly-owned
subsidiary,  Sierra  Diagnostics,  Inc., to a group of private investors and the
management  of Sierra in exchange  for a 6% royalty on future  sales of Sierra's
current products in excess of specified  thresholds and a promissory note in the
amount of $1,394,000,  the amount of Select's  intercompany  advances receivable
from  Sierra at the time of the sale.  The sale was  effective  as of October 1,
2000.  The note is secured by certain patent rights of Sierra and bears interest
at a rate of 9.5% to December 31, 2000, and thereafter to be adjusted  quarterly
based  on a  published  prime  rate.  There  is no fixed  term to  maturity  and
repayments are contingent upon certain future events. A reserve against the full
amount of the note  receivable and accrued  interest was provided  because there
are significant  uncertainties as to Sierra's ability to generate the cash flows
from sales of current Sierra  products  necessary to make  repayments  under the
promissory note.

The  unaudited  pro forma  statement  of  operations  for the six  months  ended
December 31, 2001 and 2000 reflect  Select's results assuming the disposition of
Sierra  had  occurred  as of  July 1,  2000  and the  formation  and  subsequent
termination of the joint venture had not occurred.  Accordingly, it excludes all
revenues  and  costs of Sierra  and  includes  all  costs  for  Select as if its
operations had continued without the formation of the joint venture.

The  pro  forma  adjustments  are  based  on  estimates,   currently   available
information and certain  assumptions  that  management  deems  appropriate.  The
unaudited pro forma financial  information  presented  herein is not necessarily
indicative  of the results  Select would have  obtained had the  disposition  of
Sierra occurred as of July 1, 2000 and the formation and subsequent  termination
of the joint venture not occurred, or of the future results of Select.

     Select Therapeutics Inc.
     (A DEVELOPMENT STAGE ENTERPRISE)
     Pro Forma Statement of Operations
     (unaudited)

     --------------------------------------------------------------------------
                                                         Six months ended
                                                           December 31,
                                                       2001             2000
     --------------------------------------------------------------------------

     Operating expenses:
     Research and development                     $  1,190,300     $  2,185,800
     Selling, general and administrative             1,446,000        1,245,000
     Depreciation and amortization                       7,100              400
     --------------------------------------------------------------------------
          Loss from operations                       2,643,400        3,431,200

     Interest income                                     8,500          186,800

     --------------------------------------------------------------------------
     Net loss                                     $ (2,634,900)    $ (3,244,400)
     --------------------------------------------------------------------------

     Basic and diluted net loss per share         $      (0.21)    $      (0.27)

     Weighted average number of shares              12,598,589       11,945,884
     --------------------------------------------------------------------------


                                      F-5
<PAGE>

The summarized results of Cell Science  Therapeutics,  Inc. (CST), the Company's
previous 50% owned equity investee,  for the five month period ended December 3,
2001 and the period  from  inception  (January  2, 2001) to December 3, 2001 are
presented below.

The Company had a recordable equity interest in CST based on the carryover value
only of the net  assets  contributed  to CST;  therefore,  these  results of CST
exclude  amortization of goodwill and intangible assets recognized by CST in its
accounts as a result of its formation and the application of APB16. Furthermore,
Cytomatrix  recognized  a credit of $866,500  during the five month period ended
December 3, 2001 as a result of remeasurement of stock compensation  incurred on
behalf  of  CST  in  relation  to  employees  of  CST as  well  as  reversal  of
compensation  expense  pertaining to unvested  options  cancelled as a result of
separation of CST employees.  These credits have been  recognized by CST through
the appropriate  operating expense categories and as an adjustment to additional
paid in capital from  Cytomatrix.  The adjustment of the Company's  benefit from
Cytomatrix's  contribution  to CST  relating  to  these  costs of  $433,300  was
recorded as a decrease in its investment in CST with a corresponding increase of
its 50% share in CST's net loss for the period.

Cell Science Therapeutics, Inc.
(A DEVELOPMENT STAGE ENTERPRISE)
Statement of Operations
(unaudited)

--------------------------------------------------------------------------------
                                                                    Period from
                                                                     Inception
                                                  Five months       (January 2,
                                                     ended         2001) through
                                                  December 3,       December 3,
                                                     2001               2001
--------------------------------------------------------------------------------

Revenue                                         $   546,900         $ 1,490,700

Operating expenses:
Research and development                            892,700           4,001,500
Selling, general and administrative                 176,300           1,714,100
Depreciation and amortization                       207,900             427,100
--------------------------------------------------------------------------------

Loss from operations                               (730,000)         (4,652,000)

Interest income                                       7,000              39,900
Interest expense                                    (45,100)           (100,300)

--------------------------------------------------------------------------------
Net loss                                        $  (768,100)        $(4,712,400)
--------------------------------------------------------------------------------

5.   Recent pronouncements

In July 2001, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
141,  "Business  Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS 141 requires use of the purchase method of accounting for business
combinations    initiated    after   June   30,   2001   and    eliminated   the
pooling-of-interests  method.  The Company does not believe that the adoption of
SFAS 141 will have a significant impact on its financial position or its results
of operations.  SFAS 142 requires,  among other things,  the  discontinuance  of
goodwill  amortization.  In addition,  the standard includes  provisions for the
reclassification of certain existing recognized intangible assets into goodwill,
the reassessment of the useful lives of existing  recognized  intangible assets,
the  reclassification  of certain  intangible assets out of previously  reported
goodwill and the  identification  of  reporting  units for purposes of assessing
potential future impairments of goodwill.  SFAS 142 also requires the Company to
complete a transitional goodwill impairment test within six months from the date
of adoption. SFAS 142 must be adopted by the Company


                                      F-6
<PAGE>

by July 1, 2002. Had the Company adopted SFAS 142 in the first quarter of fiscal
2002, the equity in loss of Cell Science Therapeutics would have been reduced by
$54,700 for three  months  ended  December  31, 2001 and $120,300 for six months
ended December 31, 2001.

In October  2001,  the FASB issued SFAS 144,  Accounting  for the  Impairment or
Disposal  of  Long-Lived  Assets.  The  objectives  of SFAS  144 are to  address
significant  issues relating to the  implementation of SFAS 121,  Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
and to develop a single accounting model, based on the framework  established in
SFAS 121, for long-lived assets to be disposed by sale,  whether previously held
and used or newly  acquired.  SFAS 144 is  effective  for  financial  statements
issued for fiscal years  beginning after December 15, 2001 and,  generally,  its
provisions are to be applied prospectively.  Management is currently determining
what effect, if any, SFAS 144 will have on its financial position and results of
operations.



                                      F-7
<PAGE>

Item 2.  Plan of Operation

     This  item  contains  statements  that  are not  historical  facts  and are
forward-looking statements.  These statements reflect management's expectations,
estimates and assumptions. Such statements are based on information available at
the time this Form 10-QSB was prepared and involve risks and uncertainties  that
could  cause  actual  future  results,  performance  or  achievements  to differ
materially.  You can  identify  these  statements  by the fact  that they do not
relate  strictly  to  historic  or  current  facts.   They  use  words  such  as
"anticipate,"  "estimate," "expect," "project," "intend," "plan," "believe," and
other  words and terms of  similar  meaning.  These  include  statements,  among
others,  setting forth our beliefs with respect to the  sufficiency  of cash and
cash  equivalents,  our planned future actions  following the dissolution of our
joint venture, CST, our research and development plans,  prospective products or
product approvals, our plans with respect to funding operations, expense levels,
and the outcome of contingencies.

     Factors that could cause actual results to differ materially from those set
forth in such statements include without limitation,  our immediate need for and
ability to obtain additional capital,  including from the sale of equity and /or
from  federal  or other  grant  sources;  our  ability  to  retain  our  current
employees;  our  expected  future  losses;  our  ability to  continue as a going
concern;  the sufficiency of cash and cash equivalents;  our ability to generate
revenues; our ability to develop commercially successful products, including our
ability to obtain FDA  approval to  initiate  further  studies of our  potential
products and  technologies;  the high cost and  uncertainty  of the research and
development of pharmaceutical products; the unpredictability of the duration and
results  of  the  U.S.  Food  and  Drug  Administration's  review  of  new  drug
applications;  the possible  impairment  of our  existing,  and the inability to
obtain new,  intellectual property rights and the cost of protecting such rights
from third  parties when needed on acceptable  terms;  our ability to enter into
successful  partnering  relationships  with  respect to the  development  and/or
commercialization of our product candidates;  our dependence on third parties to
research,   develop,   manufacture  and  commercialize  and  sell  any  products
developed;  our ability to improve  awareness and  understanding of our company,
our technology and our business objectives; whether our predictions about market
size  and  market  acceptability  of our  products  will  prove  true;  and  our
understandings  and predictions  regarding the utility of our potential products
and our technology.

     We will not update forward-looking  statements,  whether as a result of new
information, future events or otherwise, unless required by law. You are advised
to consult our annual report to the Securities  and Exchange  Commission on Form
10-KSB and all  Amendments to the Form 10-KSB.  These  filings  describe in more
detail  the  important  factors  that  could  cause  actual  results  to  differ
materially  from  expected  and  historic  results.  We note these  factors  for
investors as permitted by the Private Securities  Litigation Reform Act of 1995.
You should  understand  that it is not  possible to predict or identify all such
factors.  Consequently,  you should not  consider any such list to be a complete
set of all potential risks or uncertainties.


                                       2
<PAGE>

Overview

     Select  is  a  development   stage   biopharmaceutical   company  that  was
incorporated  in  Delaware  in  January  1997,   initially  under  the  name  VT
Development,  Inc. In July 1997, we changed our name to Select Therapeutics Inc.
Our  principal  place of  business is 52 Cummings  Park,  Woburn,  Massachusetts
01801,  where our telephone  number is (781)  939-5650.  As from February  13th,
2001,  our common stock has been listed on The American Stock Exchange under the
symbol `XZL'.

     Since  our  inception,  we have  focused  our  resources  primarily  on the
development  of  cell-based  therapeutics.  To date,  none of these  proprietary
programs has reached a commercial stage and we do not have, nor do we anticipate
in  the  next  several  years  to  have,  revenues  from  our  biopharmaceutical
therapeutic  products. We have incurred an accumulated deficit of $19,646,200 as
of December 31, 2001.  Thus far, we have funded our operations  through a series
of private placements.  The process of developing  therapeutic products requires
significant  discovery research and product  development as well as pre-clinical
and clinical  testing of those  products in order to gain  regulatory  approval.
These  activities  are  expected  to  result in  continuing  cash  outflows  and
operating losses.  We do not expect to generate any meaningful  product revenues
from our  biopharmaceutical  programs until a clinical  candidate  completes its
clinical  trials,  obtains  regulatory  approval  for  commercialization  and is
successfully  marketed.  Our  efforts  may not be  successful  and we may  never
develop or  commercialize  any drug products.  Risks that may impact our efforts
extend beyond  technical and clinical  development  risks, but also our need for
substantial  additional capital involves our ability to protect our intellectual
property rights,  and our need to manage  continually  changing  competitive and
medical economic factors.

     Prior to January  2001,  we  purposely  managed the Company  primarily as a
"virtual"  company.  As such,  we  minimized  the  costs of  infrastructure  and
leveraged  the research we sponsored  in several  medical and academic  centers.
Effective  January 2, 2001,  our "virtual"  mode of operation  ceased when,  for
reasons of product development as well as technology synergy, we and Cytomatrix,
a California  limited  liability company in the development  stage,  formed Cell
Science Therapeutics  ("CST"), a Delaware corporation of which we and Cytomatrix
each owned 50% of the outstanding common stock.  Although we have maintained our
independent  corporate  existence and advanced certain programs  separately from
those conducted by CST, our primary operations and development  activities after
January 2, 2001 resided in the Joint  Venture.  All of  Cytomatrix  programs and
technology  were   transferred  to  CST  as  were  their  scientific  staff  and
intellectual property.

     On October 31, 2001, after extensive management efforts to raise additional
funding, the Company concluded that these efforts would not be successful within
an  acceptable  time  period and that the  Company  had  insufficient  remaining
funding to continue as a going concern with CST in its present form.  Therefore,
on November 1, 2001 the Company's Board of Directors  decided to seek an orderly
dissolution  of CST. The decision to dissolve  the joint  venture was  primarily
based on the belief,  shared by us and Cytomatrix,  that respective  shareholder
value  would be best  protected  by dividing  CST  development  activities  into
separate cell therapeutic and drug and vaccine companies,  which could then each
seek appropriate financing. Therefore, on December 3, 2001, Select completed the
termination  of its joint  venture with  Cytomatrix.  Pursuant to the terms of a
Termination  Agreement,  dated as of December 3, 2001, among Select,  Cytomatrix
and CST, Select regained the intellectual property it contributed  originally to
the joint venture in exchange for its  assignment of its 50% equity  interest in
CST back to CST. None of the intellectual property returned to Select related to
projects  that had reached  technological  feasibility  or that had  alternative
future uses.  Also,  in exchange for the return of this  intellectual  property,
Select assumed $405,400 in accounts  payable of CST and contributed  $325,000 in
cash to CST. The $325,000 was paid out of Select's working capital.  The parties
to the Termination  Agreement determined the amount of the consideration through
arms length  negotiations.  In addition,  Select and  Cytomatrix  have  mutually
agreed not to pursue the merger of the two  companies.  Further,  in  connection
with the  termination of the joint venture,  Mr. Robert Bender,  Dr. Allan Green
and Dr.  Andrew  Muir,  each a Director  of Select,  resigned  from the Board of
Directors of CST. In this report,  unless the context indicates  otherwise,  all
references to Select's  business and affairs include the business and affairs of
CST for the period from January 2, 2001 through December 3, 2001.

     Our recent efforts to seek  additional  financing on reasonable  terms have
failed.  We  believe  the  current  economic  recession  and  continuing  market
uncertainties,  all  made  worse by the  events  of  September  11,  2001,  have
adversely impacted our efforts to identify and secure additional  financing.  We
believe the severe economic conditions and market uncertainties will continue in
the  near  future,   and  may  worsen  before  there  is  meaningful   recovery.
Accordingly, we can offer no assurance that we will be able to obtain sufficient
additional funding in a timely fashion on


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<PAGE>

commercially  reasonable terms, or at all. During October 2001, we implemented a
program to reduce our operating  expenses.  As a result, we have sufficient cash
and cash  equivalents to fund operations only through  February 15, 2002.  These
circumstances  raise  substantial doubt about our ability to continue as a going
concern. If we are unable to find a corporate relationship  immediately or raise
additional capital,  we will be required to dissolve the Company.  The Company's
lease expires on February 28, 2002 and the Company plans to operate on a virtual
basis  following the expiration of the lease. If we are able to raise capital to
continue  operations,  and the amount  raised is less than that required to fund
our current plan, we may be faced with losing rights under existing  licenses or
relinquishing  greater or all rights to product  candidates at earlier stages of
development or on less favorable terms than we would otherwise choose. Moreover,
we still may not be able to continue as a going concern. If any additional funds
are  raised by issuing  equity  securities,  substantial  dilution  to  existing
stockholders will result.

Results of Operations

Three and six months ended December 31, 2001 and 2000.

     For the  quarter  ended  December  31,  2001,  we  incurred  a net  loss of
$2,393,400 compared with a net loss of $1,581,100 for the corresponding  quarter
ended  December 31, 2000.  For the six months ended  December 31, 2001,  the net
loss was $3,813,200 compared to $3,421,400 in the corresponding 2000 period. The
increase in net loss is  attributable  to the $1,184,200  loss on termination of
the  joint  venture  and  $963,200  for the  equity  in  loss  of  Cell  Science
Therapeutics  partially  offset by reduced research and development and selling,
general  and  administrative   expenses.   We  had  an  accumulated  deficit  of
$19,646,200  at December 31, 2001.  We are a  development  stage company and our
significant  losses  and  accumulated  deficit  result  from  our  research  and
development efforts. Assuming that we can enter into a corporate relationship or
obtain funding to continue as a going concern,  we would expect operating losses
to  continue  for at least  the next  several  years as we  continue  to  pursue
development  and  commercialization  of  our  intellectual  property  resources.
Personnel  costs,  including those related to retained  consultants and external
contractors,  have  historically been our largest ongoing cost of operations and
we expect this will continue to be the case for the foreseeable future.

     The lower research and  development  costs we incurred in the quarter ended
December  31,  2001 versus the  comparable  prior year  quarter  were due to the
transfer  of many of our  programs  to CST.  Our 50%  share  of the  cost of the
continuing research and development for these programs is included in our equity
in CST's loss through  December 3, 2001.  Following the termination of the joint
venture,  our research and development cost may increase as we once again assume
directly the full costs.  Select will not be assuming all of CST's  research and
development  costs but only those costs associated with programs Select regains.
Selling,  general and  administrative  costs for the quarter ended  December 31,
2001  include  accounting  and  legal  fees  for  the  company's  public  filing
requirements,  while the comparable prior year quarter included costs related to
the formation of CST. The reduction in selling, general and administrative costs
in the current quarter versus the comparable quarter in the prior year is due to
costs  incurred  by our former  subsidiary  Sierra  Diagnostics  included in the
quarter ended December 31, 2000,  which subsidiary we disposed of on November 3,
2000.  During the quarter  ended  December  31, 2001 we had  interest  income of
$1,800.  During the corresponding period in 2000, there was $103,100 in interest
income.  For the six months ended  December 31,  2001,  the interest  income was
$8,500 compared with $186,800 in the corresponding  2000 period. The decrease in
interest  income  results  from lower  cash and cash  equivalents  available  to
invest.  Depreciation  and  amortization  expense  for the  three  months  ended
December  31,  2001 and 2000 was $3,600 and $200,  respectively  and for the six
months  ended  December  31,  2001 and 2000 was $7,100 and $6,600  respectively.
Equity in loss of CST for the two months ended December 3, 2001 was $296,600 and
$963,200  for the six months  ended  December  31,  2001.  Select  will cease to
recognize a loss from its equity in CST as of December  3, 2001,  the  effective
date of the termination of the joint venture.  As a result of the termination of
its joint venture, Select wrote off its remaining investment in CST ($423,300 as
of December 3, 2001) and the remaining accounts receivable due from CST ($30,500
as of December 3, 2001).  Select also  incurred  charges of $405,400 for the CST
accounts  payable  assumed by Select and $325,000 for the amount paid in cash to
CST pursuant to the termination agreement.

     All our  research  and  development  activities  are  expensed as incurred.
Patent costs are expensed due to the  uncertainties  involved in realizing value
from specific patents.

     For the two months ended November 30, 2001 the Company's equity in the loss
of CST  includes  $215,700  for the  Company's  50%  share of CST's  results  of
operations (accounted for on a predecessor cost basis);  $58,300 in amortization
of  implied  goodwill  and other  intangible  assets;  and a charge  of  $22,600
relating  to  an  adjustment  of  stock  compensation  expense  as a  result  of
remeasurement  for equity  interests in  Cytomatrix  granted to CST employees by
Cytomatrix.

LIQUIDITY AND CAPITAL RESOURCES

     At  December  31,  2001,  we had a cash  position  of  $110,800  which  was
principally  comprised of the remaining net proceeds from a $9.5 million private
placement that we closed in March 2000, reduced by cash used in operations since
such time, our investment of $3,000,000 in CST in January 2001 and $325,000 paid
upon  termination  of the joint  venture.  Our cash was  invested in US Treasury
Bills or similar securities.

     We made no significant  capital  expenditures during the three months ended
December 31, 2001 and have no plans for any significant capital expenditures. We
have  financed  our  operations  since  inception   primarily   through  private
placements  of common stock and warrants for our common  stock.  During  October
2001, we implemented a


                                       4
<PAGE>

program to reduce our  operating  expenses.  As  reported in our  previous  Form
10-QSB for the  quarter  ended  September  30,  2001,  we had,  as of such date,
sufficient  cash and cash  equivalents to fund our operations  through  November
2001.  Since that time,  we have managed to sustain our  operations on a limited
basis by reducing staff and related overhead,  as well as by delaying payment on
our accounts  payable.  As of February 12, 2002, we had cash on hand of $18,200,
which should be  sufficient  to fund our  operations  only through  February 15,
2002.  We are seeking to enter a corporate  partnership  or  combination  and to
raise the  additional  equity  financing  we  require  to  continue  to fund the
development of our  technologies or a corporate deal. Our recent efforts in this
area have failed and there can be no  assurance  that we will be able to enter a
corporate  relationship or that the additional  financing  necessary to meet our
short and long-term capital  requirements will be available on acceptable terms,
or at all.  These  circumstances  raise  substantial  doubt about the  Company's
ability to continue as a going concern.

     The  allocation of limited  resources is an ongoing issue for us as we work
to move from research activities to more costly clinical investigations required
to bring products to market. We will require  substantial  additional funding to
advance our  research  and  development  activities  and  position  ourselves to
sublicense  any  potential  products that may arise from these  activities.  The
magnitude  of our  future  capital  requirements  will  depend on many  factors,
including the timing and nature of our  scientific  progress in our research and
development  programs,  the size and  complexity of our programs,  the scope and
results of preclinical studies and clinical trials, our ability to establish and
maintain  corporate  partnerships,  the time and  costs  involved  in  obtaining
regulatory  approvals,  the costs involved in filing,  prosecuting and enforcing
patent claims,  the impact of competing  technological and market  developments,
and the cost of manufacturing  preclinical and clinical  material.  For the most
part, these factors are not within our control.

     If we are unable to find a corporate  relationship in the next few weeks or
raise  additional  capital,  we will be required to dissolve  the  Company.  The
Company's lease expires on February 28, 2002 and the Company plans to operate on
a virtual basis  following the expiration of the lease.  If we are able to raise
capital to continue operations, and the amount raised is less than that required
to fund our current  plan,  we may be faced with losing  rights  under  existing
licenses or relinquishing greater or all rights to product candidates at earlier
stages of development or on less favorable terms than we would otherwise choose.
Moreover,  we  still  may not be able to  continue  as a going  concern.  If any
additional funds are raised by issuing equity securities,  substantial  dilution
to existing stockholders will result.


                           PART II - OTHER INFORMATION

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

     (a)  Exhibits.

     10.1 Termination  Agreement,  dated as of  December 3, 2001,  among  Select
          Therapeutics,  Inc.,  Cytomatrix,  LLC and Cell Science  Therapeutics,
          Inc.  Incorporated by reference to the Registrant's  current report on
          Form 8-K/A  filed  with the  Securities  and  Exchange  Commission  on
          December 18, 2001.

     (b)  Reports on Form 8-K.

     On December 5, 2001, the  Registrant  filed a report on Form 8-K under Item
9, as amended by a current  report on Form 8-K/A  filed on  December  18,  2001,
stating that the  registrant  had finalized the terms of the  termination of its
joint venture with Cytomatrix, LLC, known as Cell Science Therapeutics, Inc. The
Current  Report,  as  amended,  also  disclosed  unaudited  pro forma  financial
information  of the  registrant  giving  effect to the termination  of the joint
venture with Cytomatrix, and to the disposition of Sierra Diagnostics, Inc.

     On November 13, 2001, the Registrant  filed a report on Form 8-K under item
5 stating that the registrant and Cytomatrix, LLC have agreed to terminate their
joint venture, Cell Science Therapeutics, Inc.

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<PAGE>

                                   SIGNATURES

     In accordance  with the  requirements  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                             SELECT THERAPEUTICS INC.

Dated:  February 14, 2002                    By: /s/Dr. Andrew R. Muir
                                             -------------------------

                                             Name:  Dr. Andrew R. Muir
                                             Title:  Chief Executive Officer

Dated:  February 14, 2002                    By: /s/ Michelle C. Guertin
                                             ---------------------------

                                             Name:  Michelle C. Guertin
                                             Title:  Chief Accounting Officer


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