SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q\A

                          AMENDMENT NO. 1 TO FORM 10-Q


                               Pharmos Corporation
                  ---------------------------------------------
             (Exact name of registrant as specified in its charter)

          The undersigned registrant hereby amends and restates its entire
Quarterly Report on Form 10-Q, for the fiscal quarter ended September 30, 1995,
as set forth in the pages attached hereto.

          Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.



Date:     March 15, 1996                     PHARMOS CORPORATION    
                                             -----------------------
                                                  Registrant



                                             By:/s/ S. Colin Neill
                                                ---------------------
                                                    S. Colin Neill,
                                                    Acting Chief Financial
                                                    Officer



<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10 - Q

                QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

                         SECURITIES EXCHANGE ACT OF 1934


   For The Quarter Ended September 30, 1995    Commission File Number 0-11550
                         ------------------                           -------


                               Pharmos Corporation
                 -----------------------------------------------
             (Exact name of registrant as specified in its charter)


               Nevada                                       36-3207413
          ---------------                              -----------------------
     (State or other jurisdiction of                        (I.R.S. Employer
     incorporation or organization                       Identification Number)


                   2 Innovation Drive, Alachua, Florida 32615
             -------------------------------------------------------
               (Address of principal executive offices) (zip code)

                                 (904) 462-1210
                  ---------------------------------------------
               (Registrant's telephone number including area code)

              101 East 52nd Street, 36th Floor, New York, NY 10022
              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such short 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      
                        -----              -----


Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the close of the period covered by this report.

As of March 15, 1996, the issuer had outstanding 29,130,679 shares of its $0.03
par value Common Stock.




<PAGE>

PHARMOS CORPORATION
(UNAUDITED)

CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------------
<TABLE><CAPTION>

                                                                  September 30,      December 31,
                                                                      1995               1994
<S>                                                               <C>                <C>
Assets
   Cash and cash equivalents                                         $9,305,051        $1,864,065
   Accounts receivable, net                                             191,710           262,650
   Prepaid expenses and other current assets                            549,318           472,932
   Assets held for sale                                                  51,237                --
                                                                  -------------      ------------
        Total current assets                                         10,097,316         2,599,647

   Fixed assets, net                                                  1,009,060         1,258,935
   Intangible assets, net                                               395,941           430,834
   Other assets                                                         287,251                --
                                                                  -------------      ------------

        Total assets                                                $11,789,568        $4,289,416
                                                                  -------------      ------------
                                                                  -------------      ------------

Liabilities and Shareholders' Equity
   Accounts payable                                                    $952,741        $1,920,104
   Accrued wages and other compensation                                 124,154           234,688
   Accrued expenses                                                     983,560           383,452
   Loans payable                                                        464,949           480,219
                                                                  -------------      ------------
        Total current liabilities                                     2,525,404         3,018,463
                                                                  -------------      ------------

   Advances against future sales                                      1,577,141                --
   Other liabilities                                                    403,917            91,318
                                                                  -------------      ------------
        Total liabilities                                             4,506,462         3,109,781
                                                                  -------------      ------------

   Shareholders' equity
     Preferred stock, 1,250,000 shares authorized, none issued               --                --
     Common stock, $.03 par value; 50,000,000 and 20,000,000
        shares authorized, 29,149,035 and 14,631,726 shares
        issued, 29,130,679 and 14,613,370 shares outstanding,
        respectively                                                    874,471           438,952
     Paid in capital in excess of par                                58,788,240        46,669,890
     Accumulated deficit                                            (52,379,054)      (45,928,656)
                                                                  -------------      ------------
                                                                      7,283,657         1,180,186
                                                                  -------------      ------------
     Less: Common stock in treasury, at par                                (551)             (551)
        Total shareholders' equity                                    7,283,106         1,179,635

   Commitments and contingencies                                             --                --

        Total liabilities and shareholders' equity                  $11,789,568        $4,289,416
                                                                  -------------      ------------
                                                                  -------------      ------------
</TABLE>

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

<PAGE>
PHARMOS CORPORATION
(UNAUDITED)

CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------------------------------------------------

                                         Three Months Ended      September 30,
                                                1995                 1994
Revenues
   License fees, royalties                         $16,855                 --
                                             -------------       ------------

                                                    16,855                 --
                                             -------------       ------------

Expenses
   Research and development, net                 1,143,249          1,542,996
   Patents                                          64,422            257,981
   General and administrative                      430,671            938,104
   Depreciation and amortization                   189,818            109,328
                                             -------------       ------------

                                                 1,828,160          2,848,409

Loss from operations                            (1,811,305)        (2,848,409)

Interest income                                     79,708              5,498
Interest expense                                   (58,116)           (17,292)
Other expense                                       (2,785)                --
                                             -------------       ------------

Net loss                                       ($1,792,498)       ($2,860,203)
                                             -------------       ------------
                                             -------------       ------------

Loss per share                                      ($0.08)            ($0.29)
                                             -------------       ------------
                                             -------------       ------------


Weighted average shares outstanding             23,591,795          9,807,099
                                             -------------       ------------
                                             -------------       ------------

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


<PAGE>
PHARMOS CORPORATION
(UNAUDITED)

CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------------------------------------------------
                                             Nine Months Ended     September 30,
                                                   1995                 1994

Revenues
   Sales of fine chemicals, net                                          $7,841
   License fees, royalties                         $141,997                  --
                                              -------------        ------------

                                                    141,997               7,841
                                              -------------        ------------

Expenses
   Research and development, net                  4,045,717           5,485,108
   Patents                                          420,118             533,439
   General and administrative                     1,721,239           2,511,763
   Depreciation and amortization                    387,580             323,951
                                              -------------        ------------

                                                  6,574,654           8,854,261
                                              -------------        ------------

Loss from operations                             (6,432,657)         (8,846,420)

Interest income                                     115,933              95,958
Interest expense                                   (133,674)            (39,287)
Other income (expense)                                    0                 150
                                              -------------        ------------

Net loss                                        ($6,450,398)        ($8,789,599)
                                              -------------        ------------
                                              -------------        ------------


Loss per share                                       ($0.33)             ($0.91)
                                              -------------        ------------
                                              -------------        ------------


Weighted average shares outstanding              19,462,141           9,606,367
                                              -------------        ------------
                                              -------------        ------------

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

<PAGE>

PHARMOS CORPORATION
(UNAUDITED)

CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------------
<TABLE><CAPTION>
                                                         Nine Months Ended     September 30,
                                                               1995                1994

<S>                                                       <C>                  <C>
Cash flows from operating activities
  Net loss                                                  ($6,450,398)        ($8,789,599)
                                                          -------------        ------------
  Adjustments to reconcile net loss to net
    cash flows used in operating activities
       Depreciation and amortization                            387,580             323,453
       Warrant grant to Consultant                               48,333
  Changes in operating assets and liabilities, net of effects
       of Oculon acquisition
       Accounts receivable, net                                 155,111             207,251
       Prepaid expenses and other current assets                 52,167              70,557
       Other assets                                             (66,460)                 --
       Accounts payable                                        (968,051)            180,582
       Accrued expenses, wages and other compensation           134,181             379,639
       Advances against future sales                          1,577,141                  --
       Other liabilities                                                            (77,030)
       Total adjustments                                      2,312,456           1,084,452
                                                          -------------        ------------
  Net cash flows used in operating activities                (5,130,396)         (7,705,147)
                                                          -------------        ------------
Cash flows from investing activities
     Disposal (purchases) of fixed assets, net                  (36,573)           (126,066)
                                                          -------------        ------------
  Net cash flows (used in) investing activities                 (36,573)           (126,066)
                                                          -------------        ------------

Cash flows from financing activities
     Proceeds from acquisition of Oculon Corporation, net     3,305,543                  --
     Proceeds from issuance of convertible debentures         1,270,000                  --
     Proceeds from issuance of common stock, net              8,100,000           1,500,100
     Proceeds from exercise of warrants                          39,000             148,175
     Increase (decrease) in loans payable                      (106,588)            541,715
                                                          -------------        ------------
  Net cash flows provided by financing activities            12,607,955           2,189,990
                                                          -------------        ------------

Net increase (decrease) in cash and cash equivalents          7,440,986          (5,641,223)

Cash and cash equivalents at beginning of period              1,864,065           7,455,931
                                                          -------------        ------------
Cash and cash equivalents at end of period                   $9,305,051          $1,814,708
                                                          -------------        ------------
                                                          -------------        ------------
</TABLE>

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


<PAGE>
PHARMOS CORPORATION
(UNAUDITED)

NOTES TO SEPTEMBER 30, 1995 CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

1.  THE COMPANY

    Pharmos Corporation (the "Company") (formerly Pharmatec, Inc.) is a
    pharmaceutical company incorporated under the laws of the State of Nevada.
    The Company is headquartered in Alachua, Florida and operates research,
    development and pilot manufacturing facilities in Alachua, Florida and
    Rehovot, Israel.

    The Company is engaged in the development of novel pharmaceutical products
    based on innovative drug delivery technologies to treat disorders of the eye
    and central nervous system. The Company uses a variety of patented and
    proprietary technologies to improve the efficacy and/or safety of drugs. The
    Company's compounds are in various stages of development, from preclinical
    to advanced clinical trials. In March 1995, the Company completed the
    submission of its first New Drug Application ("NDA") to the U.S. Food & Drug
    Administration ("FDA"). In connection with its development efforts, the
    Company has also undertaken research and development contracts in the past
    and has sold fine chemicals to the pharmaceutical research community.

2.  OPERATIONS

    Management believes that existing cash and cash equivalents of $9,305,051 as
    of September 30, 1995, combined with the investment income those funds will
    generate, and the expected cash to be received from grants and definitive
    marketing agreements, should be sufficient to support operations through
    March 1997. The Company will seek additional funding through collaborative
    arrangements or through future public or private equity or debt financing.
    There can be no assurance that additional financing will be available on
    acceptable terms, or at all. If additional funds are raised by issuing
    equity securities, further dilution to stockholders may result. If adequate
    funds are not available, the Company may be required to delay, reduce the
    scope of or eliminate one or more of its research or development programs or
    to obtain funds through arrangements with collaborative partners or others
    that may require the Company to relinquish rights to certain of its
    technologies, product candidates or products that the Company would
    otherwise seek to develop or commercialize itself.

    On February 7, 1995, the Company sold $1,270,000 principal amount
    convertible debentures in a private placement transaction. During the
    quarters ended June 30, and September 30, 1995 all of the convertible
    debentures were exchanged for 2,442,308 shares of the Company's common
    stock. The Company's registration of the shares with the Securities and
    Exchange Commission ("S.E.C.") was declared effective May 18, 1995.

    In March 1995, the Company completed the submission of the New Drug
    Application (NDA) for Lotemax(TM), its novel site-specific ocular anti-
    inflammatory agent. The Company has requested from the U.S. Food and Drug
    Administration approval of labeling to treat





                                        1



<PAGE>
PHARMOS CORPORATION
(UNAUDITED)

NOTES TO SEPTEMBER 30, 1995 CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

    inflammatory and allergic conditions affecting the anterior segment of the
    eye. The Company is currently working on a combination product of
    Lotemax(TM) with an antibiotic and on other products of the Lotemax(TM) line
    extension.

    In April 1995, the Company completed the acquisition of Oculon Corporation,
    a privately held ophthalmic drug development company with anti-cataract
    technologies and approximately $4.3 million in net cash and cash
    equivalents. The Company issued 6,000,000 shares of its common stock to the
    holders of Oculon's Series III Senior Preferred Stock. The shares of all
    other holders of Oculon capital stock were canceled. In addition, the
    Company issued ten year warrants to purchase 500,000 shares of the Company's
    common stock at an exercise price of $2.75 per share to certain holders of
    Oculon stock options. The registration of the 6,000,000 shares with the
    S.E.C. was declared effective on July 7, 1995.

    In June 1995, the Company announced the successful completion of a Phase I
    clinical trial on Dexanabinol (HU-211). Dexanabinol is under development for
    the treatment of stroke, head injury and cardiac arrest patients.

    On June 30, 1995, the Company signed a definitive marketing agreement (the
    "Marketing Agreement") with Bausch and Lomb Pharmaceuticals, Inc. (Bausch &
    Lomb) to market Lotemax(TM) and Lotemax(TM) extension products, currently
    under development, in the United States. Under this agreement, Bausch & Lomb
    will purchase the active drug substance from the Company and provide the
    Company with $4 million in cash advances through March 1996. An additional
    $2 million is to be advanced subject to development milestone achievements
    related to the Lotemax(TM) line extension products. Bausch & Lomb will also
    collaborate in the development of such additional products by making
    available amounts up to 50% of the Phase III clinical trial costs. The
    Company has retained certain conditional co-marketing rights to all of the
    products covered by the Marketing Agreement. (See Note 10).

   
    On September 14, 1995, the Company completed a private offering of 6,000,000
    units at an offering price of $1.50 per unit. Each unit consisted of one
    share of the Company's common stock and one warrant to purchase 0.075 of one
    share of common stock. Net proceeds to the Company were approximately
    $8,100,000. The warrants are exercisable at a price of $1.80 per share,
    commencing one year after the closing of the offering, through the fifth
    anniversary. In addition, the Company issued warrants to purchase an
    aggregate of 450,000 shares of the Company's common stock at a price of
    $1.80 per share, commencing one year after the closing of the offering
    through the fifth anniversary, to the two finders who assisted in the
    transaction.
    

    The Company has agreed to file, within 60 days of the closing, a
    registration statement on Form S-3 covering the resale of the shares of
    common stock included in the units and the shares of common stock issuable
    upon exercise of the warrants.

                                        2




<PAGE>
PHARMOS CORPORATION
(UNAUDITED)

NOTES TO SEPTEMBER 30, 1995 CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

3.  SIGNIFICANT ACCOUNTING POLICIES

    BASIS OF PRESENTATION
    The unaudited interim financial statements of the Company for the nine month
    period ended September 30, 1995 have been prepared by management and include
    all adjustments, consisting only of normal recurring adjustments, necessary
    to present fairly the unaudited interim periods, together with the
    appropriate entries to record the purchase of Oculon using the purchase
    method of accounting (see Note 8). The results of operations for the nine
    and three month periods ended September 30, 1995 are not necessarily
    indicative of the results to be expected for the full year. These interim
    financial statements should be read in conjunction with the financial
    statements and related notes contained in the Company's annual report on
    Form 10-K for the year ended December 31, 1994. Certain reclassifications
    have been made to prior period amounts in order to conform to
    classifications used in the current period.

    BASIS OF CONSOLIDATION
    The accompanying financial statements include all wholly owned subsidiaries.
    Inter-company transactions are eliminated in consolidation.

    CASH AND CASH EQUIVALENTS
    The Company invests its excess cash in U.S. Treasury securities and debt
    instruments of financial institutions and corporations with strong credit
    ratings. The Company has established guidelines relative to diversification
    and maturity that maintain safety and liquidity. These investments have
    original maturities of seven months or less and are classified as cash
    equivalents.

    REVENUE RECOGNITION
    Revenue for contracted research and development services is recognized as
    performed. Revenue from these contracts is recognized as costs are incurred
    (as defined in the contract), generally direct labor and supplies plus
    agreed overhead rates. Any advance payments on contracts are deferred until
    the related services are performed. License fees and royalties are
    recognized when earned in accordance with the underlying agreements. Sales
    revenue is recognized upon shipment of goods.

    PREPAID EXPENSES AND OTHER CURRENT ASSETS
    Prepaid expenses and other current assets at September 30, 1995 includes
    cash deposits of $300,000 which are being used as security for both short
    term loans and a letter of guarantee related to the lease of the research
    facilities in Israel.





                                        3




<PAGE>
PHARMOS CORPORATION
(UNAUDITED)

NOTES TO SEPTEMBER 30, 1995 CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

    FIXED ASSETS
    Fixed assets are recorded at cost. Maintenance and repairs are expensed as
    incurred. Property, furniture and equipment are depreciated on a straight-
    line basis over their estimated useful lives which range from three to
    fourteen years. Leasehold improvements are amortized on a straight-line
    basis over the shorter of the lease term or the estimated lives of the
    related assets.

    INTANGIBLE ASSETS
    Intangible assets represent the Company's rights to develop and
    commercialize certain products derived from certain licensed technologies.
    The assets are being amortized over eighteen months to fifteen years. As of
    September 30, 1995 and December 31,1994, accumulated amortization was
    $643,839 and $608,946, respectively.

    RESEARCH AND DEVELOPMENT COSTS
    All research and development costs are expensed as incurred. The Company has
    accounted for reimbursements of research and development expenses received
    with respect to the royalty participation agreements described in Note 5 as
    a reduction of research and development expense in accordance with the terms
    of Statement of Financial Accounting Standards No. 68, "Research and
    Development Agreements."

    INCOME TAXES
    Effective January 1, 1993, the Company adopted, on a prospective basis,
    Statement of Financial Accounting Standards No. 109, "Accounting for Income
    Taxes" ("SFAS 109"), which requires recognition of deferred income taxes
    under the liability method. The implementation of SFAS 109 did not have a
    significant impact on the Company's financial position or results of
    operations and, accordingly, there was no effect on the recorded amounts of
    assets and liabilities as of January 1, 1993.

    POSTEMPLOYMENT BENEFITS
    Effective January 1, 1994, the Company adopted Statement of Financial
    Accounting Standards No. 112, "Employers' Accounting for Postemployment
    Benefits" ("SFAS 112"). The implementation of SFAS 112 did not have a
    significant impact on the Company's financial position or results of
    operations.

    FOREIGN EXCHANGE
    The Company's foreign operations are principally conducted in U.S. dollars.
    Any transactions or balances in currencies other than U.S. dollars are
    remeasured and any resultant gains and losses are included in the
    determination of current period income and loss.


                                        4



<PAGE>
PHARMOS CORPORATION
(UNAUDITED)

NOTES TO SEPTEMBER 30, 1995 CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

    TREASURY STOCK
    Shares of common stock held in treasury are accounted for at par value with
    any difference between cost and par included in paid-in capital in excess of
    par value.

    LOSS PER SHARE
    Loss per share is calculated based on the weighted average number of common
    shares outstanding during the period. Options and warrants outstanding are
    excluded from the calculations because their impact would be antidilutive.

4.  GOVERNMENT GRANTS FOR RESEARCH AND DEVELOPMENT

    The Company has entered into agreements with U.S. federal agencies and the
    State of Israel which provide for grants for research and development
    relating to certain projects. Amounts received under these agreements have
    been reflected as a reduction of research and development expense and
    amounted to $24,177 during the nine months ended September 30, 1995 and
    $900,298 during 1994.

    The grant agreements generally provide for reimbursement of a percentage of
    allowable research and development costs, to a specified maximum, undertaken
    in the Company's research facilities. The grants are to be repaid on the
    basis of royalties from the sale of products developed as a result of the
    research activities carried out with the grant funds. Agreements with
    certain agencies of the State of Israel place certain legal restrictions on
    the transfer of technology and manufacture of resulting products outside
    Israel.

5.  LICENSING ARRANGEMENTS

    The Company is both a licensor and licensee of certain research
    technologies.

    As a licensor, the Company has entered into various agreements under which
    the rights to certain of its technologies are licensed to others. The
    Company is to be compensated by receipt of its share of defined future
    product sales or royalties paid by the licensee. These agreements have
    provided for funding of research, either in whole or in part by the
    licensee.

    As a licensee, the Company has various license agreements with certain U.S.
    federal agencies and the State of Israel, certain universities, and a former
    director who had been a vice president of the Company, wherein the Company
    has acquired exclusive or coexclusive rights to develop and commercialize
    certain research technologies. The agreements generally require the Company
    to pay royalties on sale of products developed from the licensed
    technologies and fees on revenues from sublicenses, where applicable. The
    royalty rates defined in the licenses are customary and usual in the
    pharmaceutical industry. The royalties will be payable for periods up to
    fifteen years from the date of certain specified events, including the date
    of the 




                                        5




<PAGE>
PHARMOS CORPORATION
(UNAUDITED)

NOTES TO SEPTEMBER 30, 1995 CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

    first sale of such products, or the date from which the first registered
    patent from the developed technologies is in force, or the year following
    the date in which U.S. Food and Drug Administration approval has been
    received for a developed product. No amounts have been recorded as a
    liability with respect to these contingent royalties as of September 30,
    1995 or December 31, 1994 as in the opinion of management none of the
    specified events have yet occurred. In addition, certain of the license
    agreements require annual payments for periods extending through 1998.
    Aggregate minimum annual payments through 1998 range from $26,000 to
    $229,500. 

6.  LOANS PAYABLE

    The Company's Israeli subsidiary, Pharmos Limited, obtained short term
    financing in 1994 in the form of loans and a line of credit facility from
    one of its banks. As of September 30, 1995, Pharmos Limited had an
    outstanding loan of $406,250, which is due in November 1995. Interest is
    payable monthly at an annualized rate of LIBOR plus 1.5%. In addition,
    Pharmos Limited has a line of credit of $100,000 denominated in New Israeli
    Shekels. As of September 30, 1995, Pharmos Limited has not drawn against
    this line of credit. The Company has guaranteed these two obligations of
    Pharmos Limited.

    The Company has a note payable outstanding of $58,699 relating to the
    refurbishment of the Florida facility. Interest is payable monthly at an
    annual rate of 8%. The entire balance of the note payable is recorded as a
    current liability in the accompanying balance sheet as of September 30, 1995

7.  CONVERTIBLE DEBENTURES

    On February 7, 1995, the Company sold $1,270,000 principal amount
    convertible debentures in a private placement transaction to several
    accredited investors, including a large institutional shareholder and a
    member of the Company's Board of Directors. The Company's registration of
    the shares with the S.E.C. was declared effective May 18, 1995.

    During the quarter ended June 30, 1995, $200,000 of convertible debentures
    were exchanged for 384,616 shares of the Company's common stock. During July
    1995, all the remaining debentures were exchanged into 2,057,692 shares of
    the Company's common stock at the rate of $0.52 per share. Interest at 10%
    per annum accrued daily from the issuance date and was paid quarterly in
    arrears commencing May 7, 1995. In connection with this offering, the
    Company issued 150,000 warrants to purchase the Company's common stock at
    $0.52 per share. As of September 30, 1995, the holder of such warrant
    exercised the right to purchase 75,000 shares of the Company's common stock.
    In accordance with the terms of the warrant the remaining unexercised
    warrants expire on April 10, 2005.




                                        6




<PAGE>
PHARMOS CORPORATION
(UNAUDITED)

NOTES TO SEPTEMBER 30, 1995 CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

8.  ACQUISITION OF OCULON CORPORATION

    On April 11, 1995, the Company acquired Oculon Corporation ("Oculon").
    Oculon was a privately-held development stage company undertaking research
    and development of ophthalmic drugs using anti-cataract technologies. The
    Company is utilizing the assets of Oculon for its own operations and for its
    own purpose and is not continuing to operate Oculon as a business.

    Under the terms of a merger agreement (the "Merger Agreement"), the Company
    issued 6,000,000 shares of its common stock to the holders of Oculon's
    Series III Senior Preferred Stock. The shares of all other holders of Oculon
    capital stock were canceled. In addition, the Company issued ten year
    warrants to purchase 500,000 shares of the Company's common stock at an
    exercise price of $2.75 per share to certain holders of Oculon stock
    options. The Company's registration of the shares with the S.E.C. became
    effective on July 7, 1995. 

   
    As of the acquisition date, and as reflected in the Company's filings on
    Form 10-Q for the quarters ended June 30, 1995 and September 30, 1995, the
    Company accounted for the transaction as the purchase of a business. As
    such, the Company recognized as an asset the excess of purchase price over
    the fair market value of net assets acquired. Such asset was to be amortized
    over a period of nine months. 

    In the accompanying unaudited financial statements the Company has revised
    its accounting treatment of this transaction to reflect the Oculon
    acquisition as an acquisition of net assets. Accordingly, the shares of
    stock and warrants issued have been recorded at the fair value of the
    adjusted net assets received of $3,555,755, less transaction costs of
    $483,386 and the originaly recorded asset excess of purchase price over
    assets acquired and related amortization expense amounting to $992,454
    through the period ending September 30, 1995 have been eliminated.

    Subsequent to the acquisition the Company identified additional costs of
    approximately $722,000 principally related to severance obligations to
    Oculon's former employees, a provision for losses on Oculon's lease
    obligations and costs associated with terminating Oculon's technology
    license agreements, such obligations existed as of the acquisition date and
    accordingly have been reflected as adjustments to the net assets acquired.
    The following adjustments to the previously filed reports on Form 10-Q for
    the quarters ended June 30, 1995 and September 30, 1995 reflect the impact
    of eliminating amortization related to the intangible asset purchase price
    in excess net assets acquired and adjusting operating expenses by the amount
    of additional costs described above which in the accompanying financial
    statements have been reflected as reductions in net assets acquired.
    




                                        7




<PAGE>
PHARMOS CORPORATION
(UNAUDITED)

NOTES TO SEPTEMBER 30, 1995 CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

   
                        Three Months Ended          Six Months Ended
                        June 30, 1995               June 30, 1995

                        As Reported   As Adjusted   As Reported    As Adjusted

Net Loss                ($ 2,583,075) ($ 1,916,340) ($ 5,324,635)  ($ 4,657,900)

Net Loss per Share      ($ 0.13)      ($ 0.08)      ($ 0.31)       ($ 0.20)



                        Three Months Ended          Nine Months Ended
                        September 30, 1995          September 30, 1995

                        As Reported   As Adjusted   As reported    As Adjusted

Net Loss                ($ 2,118,217) ($ 1,792,498) ($ 7,442,852)  ($ 6,450,398)

Net Loss per Share      ($ 0.09)      ($ 0.08)      ($ 0.38)       ($ 0.33)



                        June 30, 1995               September 30, 1995

                        As Reported   As Adjusted   As Reported    As Adjusted

Total Assets            $ 5,857,072   $ 5,342,322   $ 12,287,545   $ 11,789,568

Total Equity (deficit)  $ 617,800     ($ 144,694)   $ 7,781,083    $ 7,283,106
    




                                        8




<PAGE>
PHARMOS CORPORATION
(UNAUDITED)

NOTES TO SEPTEMBER 30, 1995 CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

9.  INCOME TAXES

    Net operating loss carry forwards for U.S. tax purposes of approximately
    $46,500,000 as of December 31, 1994 expire from 2000 through 2009. The
    Company's gross deferred tax assets at December 31, 1994 represent primarily
    the tax effect of net operating loss carry-forwards and differences in the
    valuation of depreciation, payables and accruals. As a result of previous
    business combinations and changes in stock ownership, as well as potential
    future changes in stock ownership, substantially all of these net operating
    loss carry forwards will be subject to substantial restriction with regard
    to annual utilization. A full valuation allowance has been established with
    regard to the gross deferred tax assets.

10. MARKETING AGREEMENT WITH BAUSCH & LOMB

    On June 30, 1995, the Company signed a definitive marketing agreement with
    Bausch & Lomb Pharmaceuticals, Inc. to market Lotemax(TM), the Company's
    lead product, in the United States. The Marketing Agreement also includes
    Lotemax(TM) line extension products currently being developed by the
    Company. Under the Marketing Agreement, Bausch & Lomb will purchase the
    active drug substance from the Company and provide the Company with $4
    million in cash advances through March 1996. An additional $2 million is
    subject to reaching certain development milestones in the Lotemax(TM) line
    extension products. Bausch & Lomb will also collaborate in the development
    of such additional products by making available amounts up to 50% of the
    Phase III clinical trial costs. The Company has retained certain conditional
    co-marketing rights to all of the products covered by the Marketing
    Agreement.

   
    In accordance with the terms of the Marketing Agreement, the Company has
    received $1,577,141 in advances against future sales to Bausch & Lomb of the
    active drug substance (needed to manufacture the drug). Bausch & Lomb will
    be entitled to credits against such future purchases of the drug substance
    based on the advances and future advances until the advances have been
    recouped. The Company may be obligated to repay such advances if it is
    unable to supply Bausch & Lomb with certain specified quantities of the
    active drug substance loteprednol etabonate.
    

11. LEGAL PROCEEDINGS AND DISPUTES

    The Company currently is involved in separate disputes with two of its
    licensors regarding the applicability of the Company's license to a new
    technology being developed by the licensor and the priority of a licensed
    patent. While the Company believes that its position is correct in both of
    these disputes and that it will prevail, an adverse determination or
    resolution of both or either of them could have a material adverse effect on
    the Company and its operations.



                                        9




<PAGE>
PHARMOS CORPORATION
(UNAUDITED)

NOTES TO SEPTEMBER 30, 1995 CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

    In March 1995, the Company was named as an additional co-defendant in an
    amended complaint filed in a pending purported class action suit against
    David Blech, D. Blech & Co. and a number of other defendants, including
    eleven publicly traded biotechnology companies. The complaint seeks damages
    for alleged unlawful manipulation of the stock market prices of the named
    biotechnology companies. The Company believes that the claims against it
    have no factual or legal basis and are without merit and has filed a motion
    to dismiss the claims asserted against it. 

    On October 27, 1995, the Company commenced an action Dr. Nicholas Bodor, a
    former director of the Company, seeking to enjoin Dr. Bodor from taking any
    steps to terminate or interfere with the Company's rights under its license
    agreement with Dr. Bodor relating to its ophthalmic anti-inflammatory drug,
    Loteprednol Etabonate ("Lotemax(TM)"). Dr. Bodor claims that the advances
    against future revenues of Lotemax(TM), recently received by the Company
    under its Marketing Agreement with Bausch & Lomb Pharmaceuticals, Inc., are
    an up-front licensing fee of which Dr. Bodor is entitled to receive a
    portion and that the failure to pay would constitute grounds for his
    terminating the license agreement. Dr. Bodor also claims that the Marketing
    Agreement is actually a sublicense entitling Dr. Bodor to additional
    royalties under his license agreement. In such event Dr. Bodor would be
    entitled to receive a portion of the Company's advances from Bausch & Lomb
    as well as a higher royalty percentage from the Company on future sales of
    Lotemax(TM). Dr. Bodor has commenced a separate action seeking judicial
    clarification of these issues. The Company strongly disagrees with Dr.
    Bodor's characterization of the Marketing Agreement with Bausch & Lomb and
    believes his interpretation is incorrect and has no merit. To prevent Dr.
    Bodor from wrongfully terminating the license agreement, the Company
    commenced this action to protect its rights under both the license agreement
    and the Marketing Agreement.



                                       10

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
--------------------------------------------------------------------------
OPERATIONS
----------

Pharmos Corporation is a bio-pharmaceutical company in the business of
developing novel drug delivery technologies targeted to the eye and brain. No
products have yet been commercialized, but occasional revenues have been derived
from product sales and royalties. The Company is dependent upon external
financings, interest income, and research and development contracts to pursue
its intended business activities. The Company has not been profitable since
inception and has incurred cumulative losses of $53,371,508 through September
30, 1995. Losses have resulted principally from costs incurred in research
activities aimed at identifying and developing the Company's product candidates,
clinical research studies, merger and acquisition costs, the write-off of
purchased research and development, and general and administrative expenses. 
The Company expects to incur additional operating losses over the next several
years as the Company's research and development and clinical trials programs
continue. The Company's ability to achieve profitability is dependent on its
ability to develop and obtain regulatory approvals for its products, to enter
into agreements for product development and commercialization with strategic
corporate partners, and to develop the capacity to manufacture and sell its
products.

RESULTS OF OPERATIONS

THREE MONTH AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND 1994
--------------------------------------------------------------------

In 1995 the Company entered into sub-licensing agreements which have provided
license fees revenues of $70,142 for the quarter ended September 30, and
$125,142 for the six month period ended September 30, 1995. Revenues of $7,841
for the nine month period ended September 30, 1994 resulted from fine chemical
sales. During 1994 the Company phased out the selling of speciality chemicals
and no such revenues have been recognized in 1995.

Total operating expenses for the quarter decreased by $705,144 (25%) to
$2,143,265. This decrease resulted from decreases in net research & development
expenses, patent expenses and general and administrative expenses amounting to
$1,524,387 (56%) and an increase in depreciation and amortization expenses of
$819,243. For the comparable nine month periods ended September 30, 1995 and
1994, total operating expenses decreased by $1,287,153 (15%) from $8,854,261 in
1994 to $7,567,108 in 1995. Decreases in net research & development expenses,
patent expenses and general and administrative expenses amounting to $2,343,236
(27%) were partially offset by an increase of $1,056,083 in depreciation and
amortization expense.

The decrease in operating expenses in both the three and nine month periods
ending September 30, 1995 compared to 1994 generally resulted from a strategy of
downsizing and focusing on bringing leading products to commercialization.
The increase in depreciation and amortization expense relates to amortization of
the excess of purchase price over fair value of assets acquired resulting from
the acquisition of Oculon Corporation in April 1995.

Net research & development expenses decreased by $643,525 (42%) between the
three month periods ended September 30, 1995 and 1994 and $1,439,391 (26%) 
between the nine month 



<PAGE>

periods. These decreases are primarily attributable to a reduced levels of
clinical trials related to the Company's lead compound Lotemax(TM), reduced
staffing levels and decreases in licencing fees resulting from the Company
returning certain licensing rights which would not be utilized as a result of
the strategy outlined above. 

Patent expenses for the quarter and nine month periods of 1995 decreased by
$208,563 (81%) and $113,321 (21%) respectively compared to the 1994 periods. 
Such decreases resulted primarily from the Company returning certain patents
which were not being utilized to the University of Florida. 

General and administrative expenses decreased by $672,299 (72%) for the quarter
ending September 30, 1995 compared to 1994, primarily as a result of decreases
in staffing, as well as reductions in legal and professional fees. For the nine
month period general and administrative expenses decreased by $790,524 (31%). 
For the nine month period reductions in staffing levels and other expenses
implemented in late 1994 and in the first and second quarters of 1995 and which
became apparent in the third quarter of 1995 were offset by costs incurred in
association with the downsizing activities as well as increased professional
fees related to the financing activities of  the Company. 

Interest income increased by $50,819 in the third quarter and $19,975 for the
nine month period, due primarily to higher levels of investible funds related to
cash received as a result of the Oculon acquisition. Interest expense increased
by $33,346 in the third quarter and  $94,387 for the nine month period. These
increases are primarily due to interest on the convertible debentures issued in
February 1995 and as a result of borrowings on the loan and a line of credit
obtained by the Company's Israeli subsidiary, Pharmos Limited. The debentures
were converted into common stock in the late second quarter and early third
quarter of 1995, and some of proceeds from the private placement may be used to
reduce borrowings on the loan and a line of credit.

The net loss for the third quarter ended September 30, 1995 of $2,118,217
reflected a decrease of $741,986 (26%), from the net loss for the third quarter
of 1994. The net losses for the nine month periods ended September 30 decreased
by $1,346,747 (15%), from a loss of $8,789,599 in 1994 to a loss of $7,442,852
in 1995.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Company has not been profitable since its inception and has financed its
operations with public and private offerings of securities; a marketing
agreement with Bauch & Lomb, research contracts, license fees, royalties and
sales and interest income.

During September 1995 the Company completed a private offering of 6,000,000
units at $1.50 per unit. Each unit consisted of one share of common stock and a
warrant to purchase 0.075 of one share of common stock. The net proceeds to the
Company were approximately $8,100,000 and will be used to fund ongoing research
and development and general operating

<PAGE>
expenses of the Company. Additionally, some of the proceeds may be used to
repay short term borrowings.

The Company had cash and cash equivalents of $9,305,051 and an additional
deposit of $300,000  which is a security for both short term loans and a letter
of guarantee related to the lease of the research facilities in Israel. The
Company's working capital was $7,571,912 as of September 30, 1995. Management
believes that existing cash and cash equivalents combined with the investment
income those funds will generate and the expected cash to be received from
grants and definitive marketing agreements, should be sufficient to support
operations through March 1997. The Company will seek additional funding through
collaborative arrangements or through future public or private equity or debt
financing. There can be no assurance that additional financing will be
available on acceptable terms, or at all. If additional funds are raised by
issuing equity securities, further dilution to stockholders may result. If
adequate funds are not available, the Company may be required to delay, reduce
the scope of or eliminate one or more of its research or development programs or
to obtain funds through arrangements with collaborative partners or others that
may require the Company to relinquish rights to certain of its technologies,
product candidates or products that the Company would otherwise seek to develop
or commercialize itself.

On June 30, 1995, the Company signed a definitive marketing agreement with
Bausch & Lomb Pharmaceuticals, Inc. to market Lotemax(TM), the Company's lead
product, in the United States. The Marketing Agreement also includes Lotemax(TM)
line extension products currently being developed by the Company. Under the
Marketing Agreement, Bausch & Lomb will purchase the active drug substance from
the Company and provide the Company with $4 million in cash advances through
March 1996. An additional $2 million is subject to reaching certain development
milestones in the Lotemax(TM) line extension products. Bausch & Lomb will also
collaborate in the development of such additional products by making available
amounts up to 50% of their Phase III clinical trial costs. The Company has
retained certain conditional co-marketing rights to all of the products covered
by the Marketing Agreement.

As of September 30, 1995 the Company has received $1,577,141 in cash advances
under the terms of this agreement. In accordance with the terms of the Marketing
Agreement Bausch & Lomb will recoup such advances by receiving credits from the
Company against future purchases of the active drug substance until the advances
have been recouped.


<PAGE>





                                     PART II
                                OTHER INFORMATION
                                -----------------


Item 1         Legal Proceedings
------


     The Company recently received a favorable ruling from the New York Supreme
Court granting the Company's motion for a preliminary injunction enjoining Dr.
Nicholas Bodor from taking any steps to terminate or interfere with the
Company's rights under its License Agreement with Dr. Bodor relating to its
ophthalmic anti-inflammatory drug, Loteprednol Etabonate ("LotemaxTM").  In
addition, the Court denied Dr. Bodor's motion to dismiss the action for lack of
personal jurisdiction.  The Court's ruling was in an action commenced by the
Company in Supreme court, New York County, on October 27, 1995.

     In its Memorandum Decision, the Court found that "Pharmos has demonstrated
a likelihood of success on the merits," and held that Dr. Bodor "has not
demonstrated that the License Agreement prohibits the co-marketing of a product
that contains a licensed product, as opposed to the marketing of the licensed
product itself."  The Court also instructed the parties to submit a proposed
order implementing the terms of the Court's Memorandum Decision and affidavits
regarding an appropriate undertaking (bond) by the Company pending a final
determination of the action.

Item 2         Changes in Securities                                  NONE
------

Item 3         Defaults upon Senior Securities                        NONE
------

Item 4         Submission of Matters to Vote of Security Holders      NONE
------

Item 5         Other Information                                      NONE
------

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

          Reports on Form 8-K
          -------------------

          (a)  The Company's Current Report on Form 8-K, dated February 15,
1996, filed pursuant to Section 13 of the Exchange Act.

          (b)  The Company's Current Report on Form 8-K, dated October 27, 1995,
as amended, filed pursuant to Section 13 of the Exchange Act.

          (c)  The Company's Current Report on Form 8-K, dated September 14,
1995, as amended, filed pursuant to Section 13 of the Exchange Act.

          (d)  The Company's Current Report on Form 8-K, dated July 5, 1995, as
amended, filed pursuant to Section 13 of the Exchange Act.

          Exhibits                                                    NONE
          --------




<PAGE>


                                 SIGNATURE PAGE
                                 --------------


          Pursuant to the requirements of the Securities Exchange Act of 1934,

the Registrant has duly caused this report to be signed on its behalf by the

undersigned thereunto duly authorized.


                                                  PHARMOS CORPORATION



Date:   March 15, 1996                            /s/ S. Colin Neill
        --------------
                                                  ---------------------
                                                        S. Colin Neill
                                                        Acting Chief Financial
                                                        Officer