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, 2000

                                       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.)

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

                                 (781) 939-0867
                (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 11,996,308 as of February 12, 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 Sheets

(Unaudited)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
                                                        December 31,        June 30,
                                                                2000            2000

------------------------------------------------------------------------------------
<S>                                                     <C>             <C>
Assets

Cash and cash equivalents                               $  5,329,200    $  7,901,300
Accounts receivable, net                                          --          17,100
Inventory                                                         --          29,900
Prepaid expenses and other assets                              9,000          56,500
------------------------------------------------------------------------------------
           Total current assets                            5,338,200       8,004,800
------------------------------------------------------------------------------------

Property, plant and equipment, net                             1,000         108,900

------------------------------------------------------------------------------------
                                                        $  5,339,200    $  8,113,700
------------------------------------------------------------------------------------

Liabilities and Shareholders' Equity

Liabilities:
   Accounts payable and accrued liabilities             $    658,400    $    811,100
------------------------------------------------------------------------------------
         Total current liabilities                           658,400         811,100
------------------------------------------------------------------------------------

Shareholders' equity:
   Preferred stock, $.0001 par value;
     1,000,000 shares authorized; no shares
     issued and outstanding                                       --              --
   Common stock, $.0001 par value;
     50,000,000 shares authorized; 11,991,308
     and 11,862,308 shares issued and outstanding
     at December 31 and June 30, 2000, respectively            1,200           1,200
   Additional paid in capital                             17,409,000      16,609,400
   Deficit accumulated during the development stage      (12,729,400)     (9,308,000)
------------------------------------------------------------------------------------
         Total shareholders' equity                        4,680,800       7,302,600

------------------------------------------------------------------------------------
                                                        $  5,339,200    $  8,113,700
------------------------------------------------------------------------------------
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                                       F-1
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Operations

(Unaudited)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                                                                               Period from
                                                                                                                Inception
                                                                                                              (December 6,
                                                  Three months ended                Six months ended          1996) through
                                                      December 31                      December 31              December
                                              2000             1999            2000              1999              2000
---------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>               <C>             <C>               <C>               <C>
Revenue                                  $         --      $       --      $         --      $     93,100      $    317,700
Cost of revenue                                    --              --                --            13,700                --
---------------------------------------------------------------------------------------------------------------------------
                                                   --              --                --            79,400           317,700

Operating expenses:
Research and development                      989,200         210,000         2,185,800           331,600         6,220,500
Selling, general and administration           695,800         300,300         1,416,800           716,100         6,036,300
Write-down of intangible assets                    --              --                --                --           640,800
Depreciation and amortization                     200          74,900             6,600           149,800           477,000
---------------------------------------------------------------------------------------------------------------------------
     Loss from operations                  (1,685,200)       (585,200)       (3,609,200)       (1,118,100)      (13,056,900)

Interest income                               103,100              --           186,800               500           326,500
Other income                                    1,000              --             1,000                --             1,000
---------------------------------------------------------------------------------------------------------------------------
Net loss                                 $ (1,581,100)     $ (585,200)     $ (3,421,400)     $ (1,117,600)     $(12,729,400)
---------------------------------------------------------------------------------------------------------------------------

Basic and diluted net loss per share     $      (0.13)     $    (0.10)     $      (0.29)     $      (0.18)

Weighted average number of shares
used in computing basic and diluted
net loss per share                         11,991,308       6,078,546        11,945,884         6,078,546

---------------------------------------------------------------------------------------------------------------------------
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                                       F-2
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Cash Flows
(Unaudited)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   Period from
                                                                                                                    Inception
                                                                                                                   (December 6,
                                                                                      Six months ended            1996) through
                                                                                        December 31,               December 31,
                                                                                 2000                 1999             2000
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                 <C>                <C>
Cash provided by (used in)

Operating activities:
     Net loss for the period                                                  $(3,421,400)        $(1,117,600)     $(12,729,400)
     Items not involving cash:
         Depreciation and amortization                                              6,600             149,800           477,000
         Write-down of intangible assets                                               --                  --           640,800
         Issue of common shares for services and license fees                     482,600              90,000         1,506,300
         Issue of stock options for services                                       60,700                  --           742,900
         Issue of warrants for services                                           211,300                  --           211,300
         Stock compensation expense                                                45,000                  --           644,000
         Gain on disposal of Sierra                                                (1,000)                 --            (1,000)
     Changes in working capital, net of effect of Sierra
        disposition:
         Accounts receivable                                                       17,100               7,400           100,100
         Inventory                                                                  3,100              (1,800)            7,600
         Prepaid expenses and other assets                                         45,000               3,300           (10,300)
         Accounts payable and accrued liabilities                                 (20,100)             98,500           717,600
--------------------------------------------------------------------------------------------------------------------------------
         Net cash used in operations                                           (2,571,100)           (770,400)       (7,693,100)
--------------------------------------------------------------------------------------------------------------------------------

Investing activities:
     Additions to property, plant and equipment                                        --             (34,000)          (76,600)
     Deposit of restricted cash                                                        --            (232,200)               --
     Cash balance related to Sierra disposition                                    (1,000)                 --            (1,000)
--------------------------------------------------------------------------------------------------------------------------------
          Net cash provided by (used in) investing activities                      (1,000)           (266,200)          (77,600)
--------------------------------------------------------------------------------------------------------------------------------

Financing activities:
     Proceeds from issuance of common shares                                           --             982,600        13,385,900
     Repayment of loans due to the former shareholders
         of Sierra Diagnostics Inc.                                                    --                  --          (286,000)
--------------------------------------------------------------------------------------------------------------------------------
     Net cash provided by financing activities                                         --             982,600        13,099,900
--------------------------------------------------------------------------------------------------------------------------------

Decrease in cash                                                               (2,572,100)            (54,000)        5,329,200

Cash and cash equivalents, beginning of period                                  7,901,300             120,900                --

--------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                                      $ 5,329,200         $    66,900      $  5,329,200
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                                       F-3
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Consolidated Financial Statements
Six months ended December 31, 2000 and 1999
(Unaudited)

--------------------------------------------------------------------------------

1. Basis of presentation:

In the opinion of management, the unaudited consolidated financial statements of
Select Therapeutics Inc. (the "Company") included herein have been prepared on a
consistent  basis  with  the  June  30,  2000  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 10KSB for the year ended June 30, 2000. The Company's  results of
operations  for the  first  two  quarters  of  fiscal  2001 are not  necessarily
indicative of future operating results.

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. Cash and cash equivalents

Cash and cash  equivalents  includes cash and  investments  in US Treasury bills
with maturity dates of less than 90 days.

3. Capital Stock

     (a)  During the six months  ended  December 31,  2000,  the Company  issued
          129,000  shares  of  common  stock  as  consideration  for  consulting
          services and license fees.

     (b)  In September  2000,  as part of a termination  agreement,  the Company
          granted an option to a former  consultant to purchase 15,000 shares of
          common stock at an exercise  price of $4.00 per share,  which is equal
          to  fair  market  value  at the  date  of  grant.  The  option  vested
          immediately  and expires on September 10, 2002.  The fair value of the
          option as determined by the Black Scholes Model, amounting to $45,000,
          has been expensed in the current period.

          In October  2000,  the Company  granted an option to a  consultant  to
          purchase  15,000 shares of common stock at an exercise  price of $4.25
          per share.  The option vested  immediately  and expires on October 25,
          2007.  The fair value of the option as determined by the Black Scholes
          Model, amounting to $60,700, has been expensed in the current period.

     (c)  In October  2000,  the  Company  granted  Class C warrants to purchase
          62,000  shares  of  common  stock  at  a  price  of  $2.00  per  share
          exercisable  until December 31, 2002 as  consideration  for consulting
          services.  The fair value of the warrants as  determined  by the Black
          Scholes Model, amounting to $211,300, has been expensed in the current
          period.


                                       F-4
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Consolidated Financial Statements (continued)
Six months ended December 31, 2000 and 1999
(Unaudited)

--------------------------------------------------------------------------------

4. Disposition

On  November  3, 2000 the  Company  sold all of its  shares in its  wholly-owned
subsidiary,  Sierra Diagnostics,  to a group of private investors and 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 million, 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 net book  value of Sierra at this time was  ($1,000)  comprised  of:  $1,000
cash, $26,800 inventory,  $2,500 prepaid expenses,  $101,300 property, plant and
equipment and $132,600  accounts  payable and accrued  liabilities.  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  has been  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.  This  results in a net gain of $1,000 on the  disposition  of
Sierra.

The unaudited  proforma  consolidated  statements of operations  presented below
reflect the Company's  financial  results assuming the disposition of Sierra had
occurred at the beginning of each period.  Accordingly, it excludes all revenues
and costs of Sierra for the six months ended  December 31, 2000 and December 31,
1999.

-------------------------------------------------------------------
                                              Six months ended
                                                December 31,
                                            2000           1999
-------------------------------------------------------------------

Revenue                                $         --    $        --
Cost of revenue                                  --             --
-------------------------------------------------------------------
                                                 --             --

Operating expenses:
Research and development                  2,185,800        331,600
Selling, general and administration       1,245,000        405,500
Depreciation and amortization                   400            300
-------------------------------------------------------------------
Loss from operations                      3,431,200        737,400

Interest income                             186,800            500

-------------------------------------------------------------------
Net loss                               $ (3,244,400)   $  (737,900)
-------------------------------------------------------------------

Basic and diluted net loss per share   $     (0.27)    $     (0.12)

Weighted average number of shares        11,945,884      6,078,546

-------------------------------------------------------------------


                                       F-5
<PAGE>

SELECT THERAPEUTICS INC.
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Consolidated Financial Statements (continued)
Six months ended December 31, 2000 and 1999
(Unaudited)

--------------------------------------------------------------------------------

5. 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  for the six and three months  ended  December 31, 2000 of 1,797,902
common stock  warrants and 1,280,000  options and for six and three months ended
December 31, 1999 of 1,161,950  common stock  warrants and zero options as their
inclusion would be anti-dilutive.

6. Subsequent events

Effective  January 2,  2001,  the  Company  and  Cytomatrix,  LLC formed a joint
venture organized as a Delaware corporation and named Cell Science Therapeutics,
Inc ("CST").  The Company and Cytomatrix each own 50% of the equity of CST which
operates out of Cytomatrix' premises located in Woburn, Massachusetts.

The purpose of CST is to develop and  commercialize  biopharmaceutical  products
based on  proprietary  technologies  in cell  culture,  tissue  engineering  and
immunotherapy.  Cytomatrix  contributed to CST all its intellectual property and
other assets relating to tissue engineering and design of regenerative  T-cells.
The Company contributed all its intellectual  property and other assets relating
to  its  verotoxin-based   vaccine  program   incorporating  its  Activate  (TM)
technology for presenting  antigens to dendritic  cells and its  verotoxin-based
Veropulse  (TM) tumor cell purging  technology.  These assets  contributed  were
carried on the Company's  balance sheet at a net book value of nearly zero since
all  related  costs have been  expensed as research  and  development.  CST also
includes the development facilities and personnel infrastructure of Cytomatrix.

Funding  for CST will be  provided as  follows:  Upon  effectiveness  of CST the
Company contributed $3,000,000 in cash and Cytomatrix contributed  approximately
$500,000 in cash; also Cytomatrix will contribute an aggregate of  approximately
$2,500,000 in approved  grant funding which is to be paid to it over the next 30
months;  finally,  the Company will make loans to CST to provide any  additional
monies needed to fund its annual  operating  plans. The Company will account for
its interest in CST under the equity method.


                                       F-6

<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operation.

     THIS  ITEM  CONTAINS  STATEMENTS  WHICH  ARE NOT  HISTORICAL  FACTS AND ARE
FORWARD-LOOKING  STATEMENTS WHICH REFLECT MANAGEMENT'S  EXPECTATIONS,  ESTIMATES
AND ASSUMPTIONS.  SUCH STATEMENTS ARE BASED ON INFORMATION AVAILABLE AT THE TIME
THIS FORM 10Q-SB WAS PREPARED  AND INVOLVE  RISKS AND  UNCERTAINTIES  THAT COULD
CAUSE  FUTURE  RESULTS,  PERFORMANCE  OR  ACHIEVEMENTS  OF THE COMPANY TO DIFFER
SIGNIFICANTLY FROM PROJECTED RESULTS. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY INCLUDE, WITHOUT LIMITATION,  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 COMPANY'S NEED FOR AND ABILITY TO OBTAIN ADDITIONAL
CAPITAL,  THE  POSSIBLE  IMPAIRMENT  OF, OR  INABILITY  TO OBTAIN,  INTELLECTUAL
PROPERTY RIGHTS AND THE COST OF OBTAINING SUCH RIGHTS FROM THIRD PARTIES AND THE
COMPANY'S DEPENDENCE ON THIRD PARTIES TO RESEARCH, DEVELOP, MANUFACTURE AND SELL
ITS PRODUCTS, IF ANY.

Overview

     We are a development stage biopharmaceutical  company. Since our inception,
we have  focused  our  resources  primarily  on the  development  of  cell-based
therapeutics.  To date,  none of  these  proprietary  programs  have  reached  a
commercial  stage, and hence we do not have, nor do we anticipate to have in the
next several years,  revenues from our  biopharmaceutical  therapeutic products.
Since inception we have incurred an accumulated  deficit of $12,729,400 and have
funded our operations through a series of private placements.

     A company  website  (www.selecttherapeutics.com)  has been  established  to
provide  shareholders and interested parties with information on the Company and
its  activities.  We have a portfolio  of product  opportunities  in relation to
cancer,  infectious  diseases and tissue  engineering  based on an  intellectual
property  position  which,  we  believe,  is both  broad  and  protectable.  Our
principal  development  programs involve ex-vivo technologies in which patients'
tissues are  manipulated  outside the body,  and as such they may be less costly
and quicker to investigate and develop than in-vivo agents.  As discussed below,
we  have  applied  for  and  received  regulatory  approval  to  use  two of our
technologies  to treat patients in clinical  trials  expected to commence in the
near future.

     During the second quarter of fiscal 2001, which ended December 31, 2000, we
concentrated  our efforts on initiating a  relationship  with  Cytomatrix LLC of
Woburn,  Massachusetts,  a development stage company with which we believe there
are substantial strategic  congruencies and technical synergies.  Originally the
relationship  was conceived as an acquisition but for a number of reasons it has
been restructured as a 50/50 joint operating venture under the name Cell Science
Therapeutics  Inc., a Delaware  corporation (the "Joint  Venture").  Although we
will maintain our corporate existence and separately from the Joint Venture will
carry some programs forward,  our primary operations and development  activities
will be  conducted  within  the Joint  Venture  which also will  receive  all of
Cytomatrix'  programs,  intellectual  property,  technology and scientific team.
This  arrangement  gives us the benefits of Cytomatrix'  established and staffed
facility for product  development as well as technology synergy. We believe that
through  the Joint  Venture  we will be  creating  a  significant  entity in the
emerging field of cell-based therapy for cancer and other diseases.

     The Joint Venture  became  effective  January 2, 2001. In the Joint Venture
the parties have integrated their respective  operating programs - our stem cell
purging technology and

                                        2

<PAGE>

our technology for antigen  delivery to dendritic  cells,  and Cytomatrix'  stem
cell  expansion, 3-dimensional  cell  culture  systems and T-cell  programs - to
deliver a set of related product development programs, some of which are already
entering  clinical  development.  Our Current  Report on Form 8-K filed with the
Securities and Exchange Commission on January 11, 2001,  summarizes the material
provisions of the joint venture  agreement,  including without  limitation,  our
option to  purchase  Cytomatrix  and thus the balance of the equity in the Joint
Venture, and contains the text of such agreement.

     For the past several years, we have purposely managed Select 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.
Certain of those programs had reached a stage where  Management felt it was time
to transfer the technology to a more traditional (and company dedicated) product
development process.  The launch of the Joint Venture has gone smoothly,  and we
are  seeing the  anticipated  benefits.  In  particular,  Cytomatrix  brought an
in-place  management and operating  group, and they are advancing their programs
as well as those we contributed to the Joint Venture.  Steve Peltzman,  formerly
CEO of  Cytomatrix,  has  become our CEO and a  director  of Select.  He also is
Chairman of the Joint Venture. Michael McCall, a Cytomatrix director, has joined
our Board of Directors. In addition, between Select and the Joint Venture we now
employ 30 people,  including 13 with doctoral level degrees,  and operate out of
an  approximately  9,000 square feet of office and  laboratory  space in Woburn,
Massachusetts.

     It has been said, the key currency in the biotechnology and  pharmaceutical
market is patents and strong  intellectual  property.  A key activity for us has
been,  and continues to be, the  acquisition,  development  and  maintenance  of
specific niche  intellectual  property  positions in support of defined  product
development  opportunities.  We continue to expend significant funds and efforts
on licenses and patent protection. In addition, we are continually examining our
intellectual  property  positions in relation to competitive  activities and our
ability to operate and defend our positions in relation to products.  We believe
that this is a key value element for our development.

     We and the  Joint  Venture  have  on hand  sufficient  cash  to  cover  our
respective current levels of operating expenses for the next 12 months. However,
as we will be  entering  clinical  investigations  and also,  through  the Joint
Venture,  have acquired an increased portfolio of opportunities,  we are seeking
additional  equity funding in consultation with our investment  bankers,  Gerard
Klauer  Mattison.  The Joint  Venture  will also  continue  to seek  additional,
non-dilutive  funding from federal  grants and other similar  sources.  To date,
Cytomatrix  has been granted  more than $7.0  million  dollars from such funding
sources, and the Joint Venture now is the beneficiary thereof.

     The  process  of  developing   therapeutic  products  requires  significant
additional  research as well as preclinical  and clinical  testing  required for
regulatory approvals. 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,  as to none of which can any success be assured.
Risks extend beyond technical development and in particular involve intellectual
property rights, the need for substantial  additional  capital,  competitive and
medical economic factors which are continually  changing and issues of insurance
reimbursement, all of which apply also to the biotechnology industry in general.
There can be no assurance that  additional  funding will be available to us when
needed or on  commercially  reasonable  terms if at all, or that we or the Joint
Venture will be able to develop any viable product.

Program Review - The Joint Venture

     Through  the Joint  Venture we are  focused  on two major  areas of medical
application: hematopoietic (blood) and immunology (dendritic cells and T-cells).
The  growth  of cells ex vivo  (outside  the  body)  is a  common  and  integral
requirement  for many of our  programs,  and it is  mediated  and to some extent
enabled by cell growing technology based upon a patented

                                        3

<PAGE>

biomatrix product called  Cytomatrix(TM),  the use of which has been exclusively
licensed  to  Cytomatrix  LLC,  our  Joint  Venture  partner,  for cell  culture
applications.  This material,  which is produced in a proprietary process by the
inventor and one independent supplier, constituted the basis for the founding of
Cytomatrix LLC.

Hematopoietic (blood) applications:

1-   Autologous Stem Cell Purging with VeroPulse(TM)progressed towards its first
     clinical  tests in patients with multiple  myeloma,  a terminal bone marrow
     cancer with an annual incidence of approximately  15,000 new cases in North
     America alone. The  Therapeutics  Products Branch of Health Canada recently
     approved our IND application. Our technology represents a potential ex-vivo
     method to "kill"  residual tumor cells present in the stem cells  harvested
     from a patient prior to their reinfusion ("stem cell transplant") back into
     that  patient.  Transplantation  is  essential  to assist  the  patient  in
     reestablishing  his immune system after the damage wrought by  chemotherapy
     and/or radiation treatments.  VeroPulse(TM),  a formation of verotoxin, has
     been shown to be effective in in-vitro  experiments in selectively  killing
     certain tumor cells and, in particular,  malignant  cells  associated  with
     multiple myeloma,  while sparing normal  hematopoietic (blood cell forming)
     stem cells.  Verotoxin's selective toxicity is being examined as a means to
     neutralize  malignant  cells from  autologous (the patient's own) stem cell
     transplant   preparations  before  reinfusion.   Sufficient  quantities  of
     VeroPulse(TM)  qualified for patient  administration have been produced and
     final  preparations  have been  undertaken  at the clinical site located in
     Edmonton, Alberta, Canada.

2-   Autologous Stem Cell Expansion with  TransStem(TM)has  several  significant
     clinical  applications  since,  with conventional  approaches,  it is often
     difficult  or  impossible  to  obtain  an  adequate  dose  of   pluripotent
     hematopoietic  stem cells for successful  transplantation.  Our cell growth
     system is based on our proprietary Cytomatrix(TM) and is expected to expand
     the number of stem  cells  several-fold  during a seven to ten day  culture
     period. The technology  does not require  cytokines  and is done in a serum
     free  environment--both  of which we believe to be critical  to  regulatory
     approval and clinical utility. We further believe we are currently the only
     company capable of expanding stem cells in this manner.  This is felt to be
     critical as the emphasis  historically has been placed only on cell number,
     neglecting the fact that the quality of cells is equally  important because
     of the  patient's  need for such  cells to  survive  and be able to produce
     daughter cells for the patient's entire lifetime.  Our cell transplantation
     system has been shown, in a preclinical animal model, to yield high quality
     stem cells that provide superior expansion and transplantation  without the
     use  of  cytokines   (hormone-like  growth  factors)  or  serum  (which  if
     contaminated poses  post-transplant  risks). Our IND for TransStem(TM)as an
     adjunct treatment for  hematopoietic  malignancies has been approved by the
     U.S.  Food  and  Drug  Administration  ("FDA")  and a Phase  I/II  trial is
     scheduled  to  begin in the  second  calendar  quarter  of 2001 at the Dana
     Farber Cancer Institute using adult stem cells in five patients  undergoing
     bone marrow transplantation.

     Expansion  of  Umbilical  Cord  Blood Stem  Cells  with  TransStem(TM).  To
     successfully transplant stem cells for adult therapeutic applications, cord
     blood stem cell  expansion is required.  The major hurdle in utilizing cord
     blood units in this therapeutic application has been the quantity

                                        4

<PAGE>

     of stem cells available in a cord sample. The volume of cord blood is small
     and the  number of stem  cells  available  is not  sufficient  for an adult
     patient,  and a  several-fold  increase  in quality  stem cells in the cord
     blood unit may allow cord blood  units to become an  alternative  source of
     stem cells for the tens of  thousands  of stem cell  transplants  performed
     globally  each  year.  We  believe  our  technology,  which is based on our
     proprietary  Cytomatrix(TM),  would sufficiently  expand the number of stem
     cells and make cord blood-based stem transplants clinically effective. This
     indication  will  require a  separate  IND and  clinical  trials  which are
     comparable  in scale to those  required for  expansion of  autologous  stem
     cells.

Immunology:

     There is strong synergy between our  Activate(TM)  and T-cell  technologies
described below.  Integration of these two development programs raises some very
exciting  possibilities  for control of two  critically  important  parts of the
immune  response.  The markets that could be  addressed  by products  using this
technology include cancer, autoimmune, and infectious diseases.

     Therapeutic   Vaccines  for  Cancer  and   Infectious   Diseases  based  on
     Activate(TM) System for Antigen Presentation to Dendritic Cells:  Dendritic
     cells are the sentinels of the immune system.  Our platform  technology has
     been  shown,  in vitro  and in  animal  experiments,  to  present  antigens
     specifically  to  dendritic  cells  and to  cause  them  to  stimulate  the
     production  of  cytotoxic   (killer)   T-cells.   This  has  potential  for
     development  of therapeutic  vaccines for cancers and infectious  diseases.
     Preclinical  investigations continue via our collaborations at the Institut
     Curie and the Arizona Cancer Center.  Subject to  availability of funds, we
     are planning to have clinically qualified materials produced in 2001 with a
     view to  starting  clinical  investigations  on  therapeutic  vaccines  for
     certain cancers late in calendar 2001.

     T cell  Production and Design is an emerging  therapeutic  class within the
     area of cellular immune therapy.  Our goal is to use the  Cytomatrix(TM) as
     the basis for a system which establishes a platform  technology that can be
     used to develop a series of T-cell-based  cellular therapies with potential
     utility in a number of diseases.  In a recent  publication,  Cytomatrix and
     its   collaborators   at  Massachusetts   General  Hospital   described  an
     "artificial  thymus" that allowed for the  production  of T-cells from stem
     cells.  That is, this  animal  model  demonstrated  the ability to generate
     human T-cell populations from stem cells and ultimately create  populations
     of those  cells  primed to  specific  infectious  agents.  We believe  this
     technology is unique and represents a significant advance in the capability
     to manipulate an important component of the immune system. We have a strong
     proprietary  base in the field and are in the process of  defining  product
     opportunities  in  relation  to  infectious  disease  and  cancer  targets.
     Preclinical  research  is  continuing,  and we expect to  finalize  product
     definition  within the next six months and prepare a clinical  program that
     could start late in 2001 or ealry 2002.

Research Products:

     Cytomatrix(TM)  Bioreactors.  The unique  cell  culture  attributes  of the
     Cytomatrix(TM) may provide a significant  marketing opportunity in research
     products and production applications.  A line of several models of benchtop
     Cytomatrix(TM)  bioreactors is being readied for launch later this calendar
     year to the cell-biology  research community;  since these products will be
     for research use only, they do not require

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     FDA pre-marketing clearance. We anticipate that this opportunity will build
     valuable bridges into the academic and the industrial communities,  thereby
     also giving us a window into leading  edge  laboratories  and  technologies
     that pertain to our cell-based therapeutic programs. Discussions have begun
     towards collaborative development of large-scale uses of the Cytomatrix(TM)
     in   systems   which   use   mammalian   cells   for  the   production   of
     biopharmaceuticals.

Program Review - Select Therapeutics:

     Tissue  Repair.  As part  of our  overall  corporate  strategy,  we  remain
     proactive  in the  pursuit of  exceptional  technology  that adds depth and
     breadth to our cell-based  therapeutic  programs. As such, we have acquired
     certain  technologies  involving  certain uses of basic,  pluripotent  stem
     cells which are derived  from  adults.  These cells have been shown to have
     great  potential  in tissue  repair and gene therapy and are not subject to
     the reservations on use which apply to  embryo-derived  stem cells.  Within
     the next  year we will  discuss  the  details  of this  technology  and its
     potential impact on us.

     Mucolytic. We have maintained a research program on a proprietary mucolytic
     (thinning agent for mucous  secretions) with potential  applications in the
     management  of cystic  fibrosis and other lung  diseases.  This program has
     made good progress with the collaborative  efforts of Beth Israel Deaconess
     Medical Center in Boston,  and several key claims in a United States patent
     application  have been allowed.  We are  proceeding  with this program and,
     when  appropriate,  will seek a  commercial  partner.  Since  this is not a
     cell-based  product  opportunity,  we expect to partner this earler than we
     would partner our core proprietary clinical products.

Results of Operations

Three months and six months ended December 31, 2000 and 1999

     For the  quarter  ended  December  31,  2000,  we  incurred  a net  loss of
$1,581,100  compared with a net loss of $585,200 for the  corresponding  quarter
ended  December 31, 1999.  For the six months ended  December 31, 2000,  the net
loss was $3,421,400,  compared to $1,117,600 in the  corresponding  1999 period.
The large increases reflect our improved  operating  position and our ability to
incur expenses to move  development  programs  forward as well as unusually high
legal,  accounting and  investment  banking fees in relation to the formation of
the Joint Venture.  We had an accumulated deficit of $12,729,400 at December 31,
2000. The significant  losses and deficit are the result of our routine research
and  development  efforts in our  development  stage,  and we expect  losses and
deficits  to  continue  and  increase  for the next  several  years as we pursue
development  and  commercialization  of  our  intellectual  property  resources.
Personnel  costs,   including  retained  consultants  and  external  contractors
historically  have been the largest ongoing cost of operations and in the future
should be satisfied in large part through the operations of the Joint Venture.

     During the  quarter  ended  December  31,  2000 we had  interest  income of
$103,100.  During the corresponding period in 1999, there was no interest income
and we generated limited revenues from sales of products of Sierra  Diagnostics,
a 100%  owned  subsidiary  which  was sold on  November  3,  2000.  The sale was
effective as of October 1, 2000.  We had no other  product or license  revenues.
The significant  reduction in our depreciation  and amortization  expense in the
current three and six month periods results from disposition of the Sierra fixed
assets.  A minor gain of $1,000 was recorded on the disposition of Sierra in the
three months ended December 31, 2000.

     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.


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Liquidity and Capital Resources

     At December 31, 2000, we had no substantial liabilities and a cash position
of $5,329,200  principally as a result of the remaining net proceeds from a $9.5
million private  placement  closed in March 2000.  Funds are kept in US Treasury
Bills or equivalent  securities.  Management  notes that  significantly  greater
resources will be required in order to bring its current  candidate  therapeutic
products into clinical investigations and to market.

     There were no significant capital  expenditures during the six months ended
December 31, 2000.

     We have financed our operations since inception  primarily  through private
placements  of common  stock.  Our cash on hand at  December  31, 2000 should be
sufficient to meet our needs for the next 12 months. Nonetheless, we are seeking
to  raise  the  additional  equity  financing  required  to fund  the  continued
development of our technologies,  including those of the Joint Venture. While we
are  optimistic  that such funds  will be  obtained,  especially  in view of the
February 13, 2001 listing of our common  stock on the American  Stock  Exchange,
which we  believe  over time will  significantly  improve  our access to capital
markets,  there  can  be  no  assurance  that  our  financing  efforts  will  be
successful.

     The  allocation of limited  resources is an ongoing issue for us as we move
from research activities into the more costly clinical  investigations  required
to bring products to market. We will require  substantial  additional funding in
order to complete research and development  activities and sublicense  potential
products. Our future capital requirements will depend on many factors, including
scientific  progress  in  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,   competing
technological and market developments, the cost of manufacturing preclinical and
clinical  material  and other  factors not within our  control.  There can be no
assurance  that  the  additional  financing  necessary  to meet  our  short  and
long-term capital requirements will be available on acceptable terms or at all.

     In fiscal 1999 our limited  financial  resources  forced us to curtail some
planned  operations.  Insufficient  funds in the future may require us to delay,
scale back or eliminate some or all of our research or development  programs, to
lose rights under  existing  licenses or to relinquish  greater or all rights to
product candidates at an earlier stage of development or on less favorable terms
than we would otherwise choose or may adversely affect our ability to operate as
a going concern.  If additional  funds are raised by issuing equity  securities,
substantial dilution to existing stockholders may result.

                           PART II - OTHER INFORMATION

Item 2. Changes in Securities.

     In October 2000,  the Company  issued to three  individuals  for consulting
services  rendered  options to purchase  an  aggregate  of 15,000  shares of the
Company's  Common Stock  exercisable  until October 25, 2007 at a price of $4.25
per share and  redeemable  warrants to purchase an aggregate of 62,000 shares of
the  Company's  Common  Stock at a price of $2.00  per share  exercisable  until
December 31, 2002.

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Item 5. Other Information.

     The Company has obtained from two universities  licenses to exploit certain
patented and other  technologies  developed by Dr. Darwin Prockop  involving the
isolation  and use of marrow  stromal cells for the treatment of diseases of the
central   nervous   system.   These   cells  are  adult   stem-like   cells  for
nonhematopoietic   tissue  and  are  found  in  bone   marrow.   They  are  also
multipotential  and therefore can differentiate into a variety of phenotypes and
appear to be able to  trigger  laboratory  animals to repair  their own  tissue,
although their full potential to do so is not well understood.  The Company also
entered  into  related  one-year  research  agreements  for  the  study  of  the
application of these cells for treatment of neurological  diseases and brain and
spinal cord  injuries.  The Company has the first  option to negotiate a license
for discoveries resulting from such sponsored research.

     In February  2001 the Company  will issue (a) 0.1 share of its common stock
and (b) a redeemable two-year warrant to purchase 0.2 shares of its common stock
at a price of $2.00 per whole share, for each share of common stock purchased by
investors in its October 1999,  November 1999 and March 2000 private placements.
Accordingly, the Company will issue an aggregate of 566,475 additional shares of
common stock and reserve an  aggregate  of 1,132,950  shares of common stock for
the exercise of these warrants. Although the Company was not obligated to do so,
it decided  to issue  these  securities  effectively  to reduce  the  investors'
purchase  price because their holding  period became  substantially  longer than
anticipated  due to the occurrence of certain  material  corporate  transactions
which  prevented,   and  continues  to  prevent,   the  Company  from  filing  a
registration statement under the Securities Act of 1933 meeting the requirements
of such Act and the applicable rules and regulations  promulgated thereunder for
their  resale of the  common  stock,  and the  common  stock  issuable  upon the
exercise of the warrants,  they purchased in such placements.  The effectiveness
of such  registration  statement  would  allow  the  investors  to  resell  such
securities without the need to comply with the restrictions imposed by Rule 144.

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

          (a)  Exhibits.

          None.

          (b)  Reports on Form 8-K.

     On November 20, 2000, the Company  reported its sale on November 3, 2000 of
100%  of  the  outstanding  stock  of  Sierra  Diagnostics,  Inc.  No  financial
statements  were filed  therewith.  On December 18, 2000,  the Company  filed an
amendment  enclosing the Company's  Condensed Pro Forma  Consolidated  Financial
Statements for the three months ended September 30, 2000 and the year ended June
30, 2000.

     On December 19, 2000, the Company reported a change on December 14, 2000 of
its  certifying  accountants  from KPMG, LLP to  PriceWaterhouseCoopers  LLC. On
December 27, 2000,  the Company filed an amendment  enclosing the letter,  dated
December  15,  2000,  from  KPMG,  LLP  to  the  SEC  notifying  the  SEC of its
termination.


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                                   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.


Dated: February 14, 2001                      SELECT THERAPEUTICS INC.



                                                 By: /s/ Robert Bender
                                                     ------------------------
                                                 Name: Robert Bender
                                                 Title: Chairman of the Board


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