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 November 10, 1995, the issuer had outstanding 29,130,679
          shares of its $0.03 par value Common Stock. 

<PAGE>
<TABLE>
<CAPTION>
         Pharmos Corporation
         (Unaudited)
         Consolidated Balance Sheets
         ________________________________________________________________________________________________________
                                                                                  September 30,    December  31,
         <S>                                                                        <C>     1995     <C>        1994
         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
             Excess of purchase price over fair value of assets acquired, net           497,977               --
             Other assets                                                               287,251               --
                                                                                    ___________      ___________
                  Total assets                                                      $12,287,545       $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                                      60,278,671       46,669,890
               Accumulated deficit                                                  (53,371,508)     (45,928,656)
                                                                                    ___________      ___________
                                                                                      7,781,634        1,180,186

               Less: Common stock in treasury, at par                                      (551)            (551)
                                                                                    ___________      ___________
                  Total shareholders' equity                                          7,781,083        1,179,635
                                                                                    ___________      ___________

             Commitments and contingencies                                                   --               --

                  Total liabilities and shareholders' equity                        $12,287,545       $4,289,416
                                                                                    ===========      ===========
<FN>
         The accompanying notes are an integral part of these consolidated financial statements.
</FN>
<PAGE>

<CAPTION>
         Pharmos Corporation
         (Unaudited)

         Consolidated Statements of Operations
         ____________________________________________________________________________________

                                                            Three Months Ended September 30,
                                                                 1995             1994
         <S>                                                  <C>               <C>
         Revenues
              License fees, royalties                              $16,855               --
                                                               ___________      ___________

                                                                    16,855               --
                                                               ___________      ___________

         Expenses
              Research and development, net                        899,471        1,542,996
              Patents                                               49,418          257,981
              General and administrative                           265,805          938,104
              Depreciation and amortization                        928,571          109,328
                                                               ___________      ___________

                                                                 2,143,265        2,848,409
                                                               ___________      ___________

         Loss from operations                                   (2,126,410)      (2,848,409)

         Interest income                                            56,317            5,498
         Interest expense                                          (50,638)         (17,292)
         Other expense                                               2,514               --
                                                               ___________      ___________

         Net loss                                              ($2,118,217)     ($2,860,203)
                                                               ===========      ===========

         Loss per share                                             ($0.09)          ($0.29)
                                                               ===========      ===========

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

<FN>
         The accompanying notes are an integral part of these consolidated financial statement
</FN>
<PAGE>

<CAPTION>
         Pharmos Corporation
         (Unaudited)

         Consolidated Statements of Operations
         _________________________________________________________________________________

                                                          Nine Months Ended September 30,
                                                               1995             1994
         <S>                                                 <C>              <C>
         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                    1,380,034          323,951
                                                             ___________      ___________

                                                               7,567,108        8,854,261
                                                             ___________      ___________

         Loss from operations                                 (7,425,111)      (8,846,420)

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

         Net loss                                            ($7,442,852)     ($8,789,599)
                                                             ===========      ===========

         Loss per share                                           ($0.38)          ($0.91)
                                                             ===========      ===========

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

<FN>
         The accompanying notes are an integral part of these consolidated financial stateme
</FN>
<PAGE>
     Pharmos Corporation
     (Unaudited)
     Consolidated Statements of Cash Flows
     ______________________________________________________________________________________________
                                                                   Nine Months Ended September 30,
                                                                          1995          1994
     <S>                                                             <C>             <C>
     Cash flows from operating activities
       Net loss                                                       ($7,442,852)   ($8,789,599)
                                                                     ____________    ___________
       Adjustments to reconcile net loss to net
         cash flows used in operating activities
            Depreciation and amortization                               1,380,034        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
                                                                     ============    ===========
<FN>
     The accompanying notes are an integral part of these consolidated financial statements.</FN>
</TABLE>
<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.  

<PAGE>


          Pharmos  Corporation
          (Unaudited)

          Notes to September 30, 1995 Consolidated Financial Statements    
          __________________________________________________________________


            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 , 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 inflammatory and allergic conditions affecting the
            anterior segment of the eye.   The Company is currently working
            on a combination product of Lotemax  with an antibiotic and on
            other products of the Lotemax  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  and
            Lotemax  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  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
<PAGE>


          Pharmos  Corporation
          (Unaudited)

          Notes to September 30, 1995 Consolidated Financial Statements    
          __________________________________________________________________


            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 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.


          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.  
<PAGE>


          Pharmos  Corporation
          (Unaudited)

          Notes to September 30, 1995 Consolidated Financial Statements    
          __________________________________________________________________


            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.
<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.
<PAGE>


          Pharmos  Corporation
          (Unaudited)

          Notes to September 30, 1995 Consolidated Financial Statements    
          __________________________________________________________________


            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.


            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.
<PAGE>


          Pharmos  Corporation
          (Unaudited)

          Notes to September 30, 1995 Consolidated Financial Statements    
          __________________________________________________________________


            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 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.  
<PAGE>


          Pharmos  Corporation
          (Unaudited)

          Notes to September 30, 1995 Consolidated Financial Statements    
          __________________________________________________________________


          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.  

<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.  

            The purchase price consisted of 6,000,000 shares of the
            Company's common stock, valued at $4,312,800, 500,000 warrants,
            as described above, with an estimated value of $250,000, plus
            acquisition costs of $483,386.  The acquisition has been
            accounted for under the purchase method of accounting. 
            Accordingly, the assets and liabilities of Oculon as of the
            date of acquisition have been recorded at their estimated fair
            market values.  The excess of the purchase price over the fair
            value of the net assets of Oculon of $1,490,431 is being
            amortized over a 9 month period of expected benefit. During the
            nine months ended September 30, 1995 the related amortization
            expense amounted to $992,454.  


          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.  
<PAGE>


          Pharmos  Corporation
          (Unaudited)

          Notes to September 30, 1995 Consolidated Financial Statements    
          __________________________________________________________________


          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 , the Company's lead product, in the United States. 
            The Marketing Agreement also includes Lotemax  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  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.


          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.  

            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.  
<PAGE>


          Pharmos  Corporation
          (Unaudited)

          Notes to September 30, 1995 Consolidated Financial Statements    
          __________________________________________________________________


            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  ).  Dr. Bodor claims
            that the advances against future revenues of Lotemax , 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 . 

            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.

<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
<PAGE>


          $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 periods.
          These decreases are primarily attributable to a reduced levels
          of clinical trials related to the Company s lead compound
          Lotemax , 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
<PAGE>


          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 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.  
<PAGE>

          On June 30, 1995, the Company signed a definitive marketing
          agreement with Bausch & Lomb Pharmaceuticals, Inc. to market 
          Lotemax , the Company's lead product, in the United States. 
          The Marketing Agreement also includes Lotemax  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  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 commenced an action against 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 LotemaxTM.  Dr. Bodor claims that the advances
          against future revenues of LotemaxTM 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 and in response has commenced a separate
          action seeking judicial clarification of these issues.  The Company 
          strongly disagrees with Dr. Bodor's characterization of the
          Bausch & Lomb Marketing Agreement and believes his interpretation
          is incorrect and has no merit.  To prevent Dr. Bodor from wrongfully
          terminating the License Agreement, the Company commenced the action
          to protect its rights under both the License Agreement and the
          Marketing Agreement.  

          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 October
          27, 1995, filed pursuant to Section 13 of the Exchange Act.

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

               (c)  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:   November 13, 1995               /s/ S. Colin Neill   
                 ______________________           _____________________
                                                  S. Colin Neill, 
                                                  Acting Chief Financial
                                                  Officer