----

----

|   | Nevada                                                              |   | 36-3207413                  |   |
|--------|---------------------------------------------------------------------|--------|-----------------------------|--------|
|   | (State      or other jurisdiction of incorporation or organization) |   | (IRS      Employer Id. No.) |   |

| Large      accelerated filer      o Non-accelerated      filer      o |   | Accelerated      filer      o Smaller      reporting company      x |   |
|----------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|--------|

----

|          |           |                                                                                                                  |                           |
|---------------|----------------|-----------------------------------------------------------------------------------------------------------------------|--------------------------------|
|          |      |                                                                                                                  |
|          |           |                                                                                                                  |                      Page |
| PART      I   |      |  FINANCIAL      INFORMATION                                                                                      |                                |
| Item 1.  |      | Financial      Statements                                                                                             |                           |
|          |      | Consolidated      Balance Sheets as of June 30, 2009 (unaudited) and December 31,      2008                           | 1                              |
|          |      | Consolidated      Statements of Operations (unaudited) for the three and six months ended      June 30, 2009 and 2008 | 2                              |
|          |      | Consolidated      Statements of Cash Flows (unaudited) for the six months ended June 30,      2009 and 2008           | 3                              |
|          |           | Notes      to Consolidated Financial Statements (unaudited)                                                           | 4                              |
| Item      2.  |      | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations                 |        12                 |
| Item      3.  |           | Quantitative      and Qualitative Disclosures About Market Risk                                                       |        18                 |
| Item      4.  |           | Controls      and Procedures                                                                                          |        18                 |
| PART II  |      |  OTHER      INFORMATION                                                                                          |                           |
| Item      1.  |      | Legal      Proceedings                                                                                                |        20                 |
| Item      1A. |      | Risk      Factors                                                                                                     |        20                 |
| Item      2.  |      | Unregistered      Sales of Equity Securities and Use of Proceeds                                                      |        20                 |
| Item 3.  |      | Defaults      Upon Senior Securities                                                                                  |        21                 |
| Item      4.  |      | Submission      of Matters to a Vote of Security Holders                                                              |        21                 |
| Item      5.  |      | Other      Information                                                                                                |        22                 |
| Item 6.  |      | Exhibits                                                                                                              |        22                 |
| Signatures    |        23 |

----

| Part      I. | Financial      Information |
|--------------|----------------------------|

| Item      1 | Financial      Statements |
|-------------|---------------------------|

| PHARMOS      CORPORATION                                                                                                    |   |              |         |   |                   |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------------|--------|------------------------|--------|
| Consolidated Balance Sheets                                                                                                 |   |              |         |   |                   |   |
|                                                                                                                        |   | June      30,2009 |         |   | December      31, 2008 |   |
| Assets                                                                                                                      |   | (Unaudited)       |         |   |                   |   |
| Cash      and cash equivalents                                                                                              |   | $                 | 2,859,172    |   |                   | $      | 4,730,282 |   |
| Restricted      cash                                                                                                        |   |              | 38,998       |   |                   |   | 38,998 |   |
| Prepaid      expenses and other current assets                                                                              |   |              | 420,347      |   |                   |   | 1,049,898 |   |
| Total      current assets                                                                                                   |   |              | 3,318,517    |   |                   |   | 5,819,178 |   |
|                                                                                                                        |   |              |         |   |                   |   |   |   |
| Fixed      assets, net                                                                                                      |   |              | 5,439        |   |                   |   | 9,692 |   |
| Other      assets                                                                                                           |   |              | 40,482       |   |                   |   | 143,294 |   |
|                                                                                                                        |   |              |         |   |                   |   |   |   |
| Total      assets                                                                                                           |   | $                 | 3,364,438    |   |                   | $      | 5,972,164 |   |
|                                                                                                                        |   |              |         |   |                   |   |   |   |
| Liabilities      and Shareholders’ Equity                                                                             |   |              |         |   |                   |   |   |   |
| Accounts      payable                                                                                                       |   | $                 | 392,505      |   |                   | $      | 883,966 |   |
| Accrued      expenses                                                                                                       |   |              | 856,337      |   |                   |   | 615,663 |   |
| Accrued      wages and other compensation                                                                                   |   |              | 36,000       |   |                   |   | 87,000 |   |
| Total      current liabilities                                                                                              |   |              | 1,284,842    |   |                   |   | 1,586,629 |   |
|                                                                                                                        |   |              |         |   |                   |   |   |   |
| Other      liabilities                                                                                                      |   |              | 22,174       |   |                   |   | 44,316 |   |
| Milestone      payable                                                                                                      |   |              | 1,000,000    |   |                   |   | - |   |
| Convertible      debentures                                                                                                 |   |              | 1,000,000    |   |                   |   | 4,000,000 |   |
| Total      liabilities                                                                                                      |   |              | 3,307,016    |   |                   |   | 5,630,945 |   |
|                                                                                                                        |   |              |         |   |                   |   |   |   |
|                                                                                                                        |   |              |         |   |                   |   |   |   |
| Shareholders’      Equity                                                                                             |   |              |         |   |                   |   |   |   |
| Preferred      stock, $.03 par value, 1,250,000 shares authorized, none issued and      outstanding                         |   |              | -            |   |                   |   | - |   |
|     Common      stock, $.03 par value; 60,000,000 shares authorized, 57,144,096 and      26,210,290     |   |              |         |   |                   |   |   |   |
|     Issued      and outstanding as of  June 30, 2009 and December 31, 2008,      respectively |   |              | 1,714,323    |   |                   |   | 786,307 |   |
| Paid-in      capital in excess of par                                                                                       |   |              | 211,026,235  |   |                   |   | 206,309,096 |   |
| Accumulated      deficit                                                                                                    |   |              | (212,682,710 | )      |                   |   | (206,753,758 | ) |
| Treasury      stock, at cost, 2,838 shares                                                                                  |   |              | (426         | )      |                   |   | (426 | ) |
| Total      shareholders' equity                                                                                             |   |              | 57,422       |   |                   |   | 341,219 |   |
|                                                                                                                        |   |              |         |   |                   |   |   |   |
| Total      liabilities and shareholders' equity                                                                             |   | $                 | 3,364,438    |   |                   | $      | 5,972,164 |   |

| The      accompanying notes are an integral part of these unaudited interim      consolidated financial statements. |
|---------------------------------------------------------------------------------------------------------------------|

----

Consolidated Statements of Operations

|                                                          |   | Three      months ended June 30, |       |   | Six      months ended June 30, |   |
|---------------------------------------------------------------|--------|----------------------------------|------------|--------|--------------------------------|--------|
|                                                          |   | 2009                             |       |   | 2008                           |   |   | 2009 |   |   | 2008 |   |
| Expenses                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |
| Research      and development                                 |   | $                                | 1,204,657  |   |                           | $      | 2,129,793 |   |   | $ | 3,219,077 |   |   | $ | 4,908,027 |   |
| In–process      research and development Vela milestone |   |                             | -          |   |                           |   | - |   |   |   | 1,180,000 |   |   |   | - |   |
| General      and administrative                               |   |                             | 424,796    |   |                           |   | 454,065 |   |   |   | 759,545 |   |   |   | 1,250,989 |   |
| Depreciation      and amortization                            |   |                             | 2,127      |   |                           |   | 30,109 |   |   |   | 4,253 |   |   |   | 64,661 |   |
|                                                          |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Total      operating expenses                                 |   |                             | 1,631,580  |   |                           |   | 2,613,967 |   |   |   | 5,162,875 |   |   |   | 6,223,677 |   |
|                                                          |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from operations                                     |   |                             | (1,631,580 | )      |                           |   | (2,613,967 | ) |   |   | (5,162,875 | ) |   |   | (6,223,677 | ) |
|                                                          |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Other      (expense) income                                   |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Debt      conversion expense                                  |   |                             | (596,104   | )      |                           |   | - |   |   |   | (596,104 | ) |   |   | - |   |
| Interest      income                                          |   |                             | 2,087      |   |                           |   | 64,392 |   |   |   | 7,373 |   |   |   | 195,092 |   |
| Interest      expense                                         |   |                             | (47,092    | )      |                           |   | (123,852 | ) |   |   | (166,930 | ) |   |   | (246,714 | ) |
| Other      income (expense)                                   |   |                             | 22,189     |   |                           |   | 5,869 |   |   |   | (10,416 | ) |   |   | 12,858 |   |
| Other      expense, net                                       |   |                             | (618,920   | )      |                           |   | (53,591 | ) |   |   | (766,077 | ) |   |   | (38,764 | ) |
|                                                          |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                 |   | $                                | (2,250,500 | )      |                           | $      | (2,667,558 | ) |   | $ | (5,928,952 | ) |   | $ | (6,262,441 | ) |
|                                                          |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss per share                                       |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| -      basic and diluted                                      |   | $                                | (0.05      | )      |                           | $      | (0.10 | ) |   | $ | (0.15 | ) |   | $ | (0.24 | ) |
|                                                          |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| -      basic and diluted                                      |   |                             | 49,874,697 |   |                           |   | 25,761,637 |   |   |   | 38,350,198 |   |   |   | 25,750,746 |   |

----

Consolidated Statements of Cash Flows

|                                                                                  |   | Six      months ended June 30, |          |
|---------------------------------------------------------------------------------------|--------|--------------------------------|---------------|
|                                                                                  |   | 2009                           |          |   | 2008 |   |
| Cash      flows from operating activities                                             |   |                           |          |   |   |   |
| Net      loss                                                                         |   | $                              | (5,928,952    | ) |   | $ | (6,262,441 | ) |
|                                                                                  |   |                           |          |   |   |   |   |   |
| Adjustments      to reconcile net loss to net cash used in operating      activities: |   |                           |          |   |   |   |   |   |
| Depreciation      and amortization                                                    |   |                           | 4,253         |   |   |   | 64,661 |   |
| Provision      for severance pay                                                      |   |                           | -             |   |   |   | (157,367 | ) |
| Stock      based compensation                                                         |   |                           | 65,585        |   |   |   | 206,610 |   |
| Debenture      interest paid in common stock                                          |   |                           | 282,071       |   |   |   | - |   |
| Debt      conversion expense                                                          |   |                           |  596,104 |   |   |   | - |   |
| Gain      on disposition of fixed assets                                              |   |                           | -             |   |   |   | (8,044 | ) |
| Changes      in operating assets and liabilities:                                     |   |                           |          |   |   |   |   |   |
| Research      and development grants receivable                                       |   |                           | -             |   |   |   | 3,859 |   |
| Prepaid      expenses and other current assets                                        |   |                           | 629,551       |   |   |   | (292,530 | ) |
| Other      assets                                                                     |   |                           | 24,430        |   |   |   | (50,629 | ) |
| Accounts      payable                                                                 |   |                           | (491,461      | ) |   |   | 350,360 |   |
| Accrued      expenses                                                                 |   |                           | 240,674       |   |   |   | 309,231 |   |
| Accrued      wages and other compensation                                             |   |                           | (51,000       | ) |   |   | (529,279 | ) |
| Milestone      payable                                                                |   |                           | 1,000,000     |   |   |   | - |   |
| Other      liabilities                                                                |   |                           | (22,142       | ) |   |   | (22,144 | ) |
|                                                                                  |   |                           |          |   |   |   |   |   |
| Net      cash used in operating activities                                            |   |                           | (3,650,887    | ) |   |   | (6,387,713 | ) |
|                                                                                  |   |                           |          |   |   |   |   |   |
| Cash      flows from investing activities                                             |   |                           |          |   |   |   |   |   |
| Purchases      of fixed assets                                                        |   |                           | -             |   |   |   | (445 | ) |
| Proceeds      from disposition of fixed assets                                        |   |                           | -             |   |   |   | 115,683 |   |
| Proceeds      from sale of short-term investments                                     |   |                           | -             |   |   |   | 3,686,568 |   |
| Severance      pay funding                                                            |   |                           | -             |   |   |   | 93,187 |   |
| Decrease      in restricted cash                                                      |   |                           | -             |   |   |   | 47,631 |   |
|                                                                                  |   |                           |          |   |   |   |   |   |
| Net      cash provided by investing activities                                        |   |                           | -             |   |   |   | 3,942,624 |   |
|                                                                                  |   |                           |          |   |   |   |   |   |
| Cash      flows from financing activities                                             |   |                           |          |   |   |   |   |   |
| Proceeds      from issuance of convertible debentures                                 |   |                           | -             |   |   |   | 4,000,000 |   |
| Proceeds      from issuance of common stock and warrants, net of issuance      costs  |   |                           | 1,779,777     |   |   |   | - |   |
|                                                                                  |   |                           |          |   |   |   |   |   |
| Net      cash provided by financing activities                                        |   |                           | 1,779,777     |   |   |   | 4,000,000 |   |
|                                                                                  |   |                           |          |   |   |   |   |   |
| Net      (decrease) increase in cash and cash equivalents                             |   |                           | (1,871,110    | ) |   |   | 1,554,911 |   |
|                                                                                  |   |                           |          |   |   |   |   |   |
| Cash      and cash equivalents at beginning of year                                   |   |                           | 4,730,282     |   |   |   | 7,481,741 |   |
|                                                                                  |   |                           |          |   |   |   |   |   |
| Cash      and cash equivalents at end of period                                       |   | $                              | 2,859,172     |   |   | $ | 9,036,652 |   |
|                                                                                  |   |                           |          |   |   |   |   |   |
| Supplementary      information on financing activity not involving cash      flows:   |   |                           |          |   |   |   |   |   |
| Conversion      of debentures to common stock                                         |   |                           | 3,000,000     |   |   |   | - |   |
| Deferred      financing costs charged to paid-in capital in excess ofpar              |   |                           |  78,382  |   |   |   |  - |   |

----

Notes 

----

----

----

----

| Period      Ended  | Grants      Issued |   |    | Weighted      Average Exercise Price |   |   | Weighted      AverageFair      Value |   |
|--------------------|--------------------|--------|---------|--------------------------------------|--------|--------|--------------------------------------|--------|
|               |               |   |    |                                 |   |   |                                 |   |
| June      30, 2009 |               |   | 975,000 |                                 |   | $      | 0.21                                 |   |   | $ | 0.17 |   |
| June      30, 2008 |               |   | 744,000 |                                 |   | $      | 0.35                                 |   |   | $ | 0.24 |   |

----

-  $2  million cash + 2.25 million shares: Successful completion of Phase 2b(1) 
-  $2  million + 2 million shares: NDA submission 
-  $2  million cash +2.25 million shares: FDA approval 
-  1  million shares: Approval to market in Europe or Japan 
-  4  million shares: $100 million sales of dextofisopam, when and if approved, in  any 12-month period 

----

|                                                                       |   | June      30, |
|----------------------------------------------------------------------------|--------|---------------|
|                                                                       |   | 2009          |   | 2008 |
|                                                                       |   |          |   |   |
| Stock      options                                                         |   | 3,572,155     |   | 2,839,554 |
| Vela      milestone                                                        |   | 2,000,000     |   | - |
| Warrants                                                                   |   | 18,000,000    |   | - |
|                                                                       |   |          |   |   |
| Total      potential dilutive securities not included in loss per    share |   | 23,572,155    |   | 2,839,554 |

----

Geographic information for the three and six months ending June 30,2009 and 2008 are as follows:

|                           |   | Three months ended June 30, |       |   | Six months ended June 30, |   |
|--------------------------------|--------|-----------------------------|------------|--------|---------------------------|--------|
|                           |   | 2009                        |       |   | 2008                      |   |   | 2009 |   |   | 2008 |   |
| Net      (loss) income         |   |                        |       |   |                      |   |   |   |   |   |   |   |
|   United      States |   | $                           | (2,258,294 | )      |                      | $      | (2,699,053 | ) |   | $ | (5,870,987 | ) |   | $ | (6,257,162 | ) |
|   Israel             |   |                        | 7,794      |   |                      |   | 31,495 |   |   |   | (57,965 | ) |   |   | (5,279 | ) |
|                           |   | $                           | (2,250,500 | )      |                      | $      | (2,667,558 | ) |   | $ | (5,928,952 | ) |   | $ | (6,262,441 | ) |
|                           |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Capital      Expenditures      |   |                        |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|   United      States |   | $                           | -          |   |                      | $      | - |   |   | $ | - |   |   | $ | - |   |
|   Israel             |   |                        | -          |   |                      |   | - |   |   |   | - |   |   |   | 445 |   |
|                           |   | $                           | -          |   |                      | $      | - |   |   | $ | - |   |   | $ | 445 |   |

| Total      Assets              |   | June 30, 2009 |      |   | December 31, 2008 |   |
|--------------------------------|--------|---------------|-----------|--------|-------------------|--------|
|   United      States |   | $             | 3,140,942 |   |              | $      | 5,417,338 |   |
|   Israel             |   |          | 223,496   |   |              |   | 554,826 |   |
|                           |   | $             | 3,364,438 |   |              | $      | 5,972,164 |   |
|                           |   |          |      |   |              |   |   |   |
| Long      Lived Assets, net    |   |          |      |   |              |   |   |   |
|   United      States |   | $             | 5,439     |   |              | $      | 9,692 |   |
|   Israel             |   |          | -         |   |              |   | - |   |
|                           |   | $             | 5,439     |   |              | $      | 9,692 |   |

----

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

----

----

----

|                           |   | June      30, 2009 |      |   | December      31, 2008 |   |
|--------------------------------|--------|--------------------|-----------|--------|------------------------|--------|
|                           |   |               |      |   |                   |   |
| Working      capital           |   | $                  | 2,033,674 |   |                   | $      | 4,232,549 |   |
|                           |   |               |      |   |                   |   |   |   |
| Cash      and cash equivalents |   | $                  | 2,859,172 |   |                   | $      | 4,730,282 |   |
|                           |   |               |      |   |                   |   |   |   |

----

----

|                                |   | Total  |      |   | Less      than1      Year |   |    | 1 -      3Years |   |   | 3 -      5Years |   |   | Undetermined |      |
|-------------------------------------|--------|--------|-----------|--------|---------------------------|--------|---------|-----------------|--------|--------|-----------------|--------|--------|--------------|-----------|
| Operating      leases               |   | $      | 116,468   |   |                      | $      | 116,468 |            |   | $      | -               |   |   | $            | -         |   |   | $ | - |   |
| ICON      CRO Vendor                |   |   | 532,000   |   |                      |   | 532,000 |            |   |   | -               |   |   |         | -         |   |   |   | - |   |
| Essential      CRO Vendor           |   |   | 10,000    |   |                      |   | 10,000  |            |   |   | -               |   |   |         | -         |   |   |   | - |   |
| Vela      Milestone                 |   |   | 1,000,000 |   |                      |   | -       |            |   |   | 1,000,000       |   |   |         | -         |   |   |   | - |   |
| Convertible      debenture          |   |   | 1,000,000 |   |                      |   | -       |            |   |   | -               |   |   |         | 1,000,000 |   |   |   | - |   |
| Convertible      debenture interest |   |   | 333,333   |   |                      |   | 100,000 |            |   |   | 200,000         |   |   |         | 33,333    |   |   |   | - |   |
| Total                               |   | $      | 2,991,801 |   |                      | $      | 758,468 |            |   | $      | 1,200,000       |   |   | $            | 1,033,333 |   |   | $ | - |   |

-  $2  million cash + 2.25 million shares: Successful completion of Phase 2b(1) 
-  $2  million + 2 million shares: NDA submission 
-  $2  million cash +2.25 million shares: FDA approval 
-  1  million shares: Approval to market in Europe or Japan 
-  4  million shares: $100 million sales of dextofisopam, when and if approved, in  any 12-month period 

----

| Item      3. | Quantitative and Qualitative Disclosures About Market      Risk  |
|--------------|-----------------------------------------------------------------------|

| Item      4. | Controls and Procedures  |
|--------------|-------------------------------|

----

----

PartII   Other Information

| Item      1 | Legal Proceedings                                       NONE |
|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Item      1A | Risk Factors |
|--------------|--------------|

| Item      2 | Unregistered Sales of Equity Securities and Use of      Proceeds |
|-------------|------------------------------------------------------------------|

----

Defaults 

Submission 

----

Other 

Exhibits

| Number   Exhibit |   |   |
|---------------------------------|--------|--------|

----

SIGNATURE

|                       |   | PHARMOS      CORPORATION                                           |                    |
|----------------------------|--------|--------------------------------------------------------------------|-------------------------|
|                       |   |                                                               |                    |   |
|                       |   |                                                               |                    |   |
| Date:      August 12, 2009 |   |                                                               |                    |   |
|                       |   | by:                                                                | /s/      S. Colin Neill |   |
|                       |   |                                                               |                    |   |
|                       |   | S.      Colin Neill                                                |                    |
|                       |   | President,      Chief Financial Officer, Secretary & Treasurer |                    |
|                       |   | (Principal      Accounting and Financial Officer)                  |                    |

----