----

----

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

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

----

| PART I  FINANCIAL INFORMATION |                                                                                                                        | Page   |      |
|-----------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|--------|-----------|
|                                    |                                                                                                                        |   |      |   |
| Item 1.                                 | Financial Statements                                                                                                        |   |      |   |
|                                    |                                                                                                                        |   |      |   |   |
|                                    | Condensed Consolidated Balance Sheets as of September 30, 2010 (unaudited) and December 31, 2009                            |   |      | 1 |   |
|                                    |                                                                                                                        |   |      |   |   |
|                                    | Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2010 and 2009 |   |      | 2 |   |
|                                    |                                                                                                                        |   |      |   |   |
|                                    | Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2010 and 2009           |   |      | 3 |   |
|                                    |                                                                                                                        |   |      |   |   |
|                                    | Notes to Condensed Consolidated Financial Statements (unaudited)                                                            |   |      | 4 |   |
|                                    |                                                                                                                        |   |      |   |   |
| Item 2.                                 | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                 |   |      | 5 |   |
|                                    |                                                                                                                        |   |      |   |   |
| Item 3.                                 | Quantitative and Qualitative Disclosures About Market Risk                                                                  |   |      | 12 |   |
|                                    |                                                                                                                        |   |      |   |   |
| Item 4                                  | Controls and Procedures                                                                                                     |   |      |   18 |   |
|                                    |                                                                                                                        |
| PART II  OTHER INFORMATION    |                                                                                                                        |
|                                    |                                                                                                                        |   |      |   |   |
| Item 1.                                 | Legal Proceedings                                                                                                           |   |      |   18 |   |
|                                    |                                                                                                                        |   |      |   |   |
| Item 1A.                                | Risk Factors                                                                                                                |   |      |   19 |   |
|                                    |                                                                                                                        |   |      |   |   |
| Item 2.                                 | Unregistered Sales of Equity Securities and Use of Proceeds                                                                 |   |      |   19 |   |
|                                    |                                                                                                                        |   |      |   |   |
| Item 3.                                 | Defaults Upon Senior Securities                                                                                             |   |      |   19 |   |
|                                    |                                                                                                                        |   |      |   |   |
| Item 4.                                 | Submission of Matters to a Vote of Security Holders                                                                         |   |      |   19 |   |
|                                    |                                                                                                                        |   |      |   |   |
| Item 5.                                 | Other Information                                                                                                           |   |      |   19 |   |
|                                    |                                                                                                                        |   |      |   |   |
| Item 6.                                 | Exhibits                                                                                                                    |   |      |   20 |   |
|                                    |                                                                                                                        |   |      |   |
| SIGNATURES                              |                                                                                                                        |   |   21 |   |

----

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

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

| PHARMOS CORPORATION                                                                       |   |               |         |   |              |   |
|-------------------------------------------------------------------------------------------|--------|--------------------|--------------|--------|-------------------|--------|
| Condensed Consolidated Balance Sheets                                                     |   |               |         |   |              |   |
|                                                                                      |   | September 30, 2010 |         |   | December 31, 2009 |   |
| Assets                                                                                    |   | (Unaudited)        |         |   | (Unaudited)       |   |
| Cash and cash equivalents                                                                 |   | $                  | 3,219,908    |   |              | $      | 4,629,486 |   |
| Prepaid expenses and other current assets                                                 |   |               | 56,783       |   |              |   | 25,678 |   |
| Total current assets                                                                      |   |               | 3,276,691    |   |              |   | 4,655,164 |   |
|                                                                                      |   |               |         |   |              |   |   |   |
| Fixed assets, net                                                                         |   |               | 2,985        |   |              |   | 1,379 |   |
| Other assets                                                                              |   |               | 23,712       |   |              |   | 32,479 |   |
|                                                                                      |   |               |         |   |              |   |   |   |
| Total assets                                                                              |   | $                  | 3,303,388    |   |              | $      | 4,689,022 |   |
|                                                                                      |   |               |         |   |              |   |   |   |
| Liabilities and Shareholders’ Equity                                                |   |               |         |   |              |   |   |   |
| Accounts payable                                                                          |   | $                  | 88,094       |   |              | $      | 73,717 |   |
| Accrued expenses                                                                          |   |               | 85,963       |   |              |   | 148,414 |   |
| Accrued wages and other compensation                                                      |   |               | -            |   |              |   | 195,000 |   |
| Total current liabilities                                                                 |   |               | 174,057      |   |              |   | 417,131 |   |
|                                                                                      |   |               |         |   |              |   |   |   |
| Convertible debenture                                                                     |   |               | 1,000,000    |   |              |   | 1,000,000 |   |
| Total liabilities                                                                         |   |               | 1,174,057    |   |              |   | 1,417,131 |   |
|                                                                                      |   |               |         |   |              |   |   |   |
|                                                                                      |   |               |         |   |              |   |   |   |
| Shareholders’ Equity                                                                |   |               |         |   |              |   |   |   |
| Preferred stock, $.03 par value, 1,250,000 shares authorized, none issued and outstanding |   |               | -            |   |              |   | - |   |
| Common stock, $.03 par value; 120,000,000 shares                                          |   |               |         |   |              |   |   |   |
| authorized, 59,585,273 and 59,291,154 issued and outstanding as of                        |   |               |         |   |              |   |   |   |
| September 30, 2010 and December 31, 2009, respectively                                    |   |               | 1,787,558    |   |              |   | 1,778,735 |   |
| Paid-in capital in excess of par                                                          |   |               | 211,543,949  |   |              |   | 211,301,675 |   |
| Accumulated deficit                                                                       |   |               | (211,201,750 | )      |              |   | (209,808,093 | ) |
| Treasury stock, at cost, 2,838 shares                                                     |   |               | (426         | )      |              |   | (426 | ) |
| Total shareholders' equity                                                                |   |               | 2,129,331    |   |              |   | 3,271,891 |   |
|                                                                                      |   |               |         |   |              |   |   |   |
| Total liabilities and shareholders' equity                                                |   | $                  | 3,303,388    |   |              | $      | 4,689,022 |   |

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

----

| PHARMOS CORPORATION(Unaudited)Condensed Consolidated Statements of Operations |
|-------------------------------------------------------------------------------|

|   | Three months endedSeptember 30, |   | Nine months endedSeptember 30, |
|--------|---------------------------------|--------|--------------------------------|
|   |                            |

|                                                     |   | 2010   |       |   | 2009   |   |       | 2010   |   |   | 2009       |   |
|----------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|------------|--------|
| Expenses                                                 |   |   |       |   |   |   |       |   |   |   |       |   |
| Research and development                                 |   | $      | 153,806    |   |   | $      | 1,047,260  |   |   | $      | 380,164    |   |   | $ | 4,266,337 |   |
| In–process research and development Vela milestone |   |   | -          |   |   |   | -          |   |   |   | -          |   |   |   | 1,180,000 |   |
| General and administrative                               |   |   | 295,936    |   |   |   | 342,320    |   |   |   | 935,742    |   |   |   | 1,101,865 |   |
| Depreciation and amortization                            |   |   | 363        |   |   |   | 2,030      |   |   |   | 1,013      |   |   |   | 6,283 |   |
| Total operating expenses                                 |   |   | 450,105    |   |   |   | 1,391,610  |   |   |   | 1,316,919  |   |   |   | 6,554,485 |   |
|                                                     |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Loss from operations                                     |   |   | (450,105   | )      |   |   | (1,391,610 | )      |   |   | (1,316,919 | )      |   |   | (6,554,485 | ) |
|                                                     |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Other (expense) income                                   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Debt conversion expense                                  |   |   | -          |   |   |   | -          |   |   |   | -          |   |   |   | (596,104 | ) |
| Interest income                                          |   |   | 578        |   |   |   | 776        |   |   |   | 1,207      |   |   |   | 8,149 |   |
| Interest expense                                         |   |   | (27,464    | )      |   |   | (29,607    | )      |   |   | (83,767    | )      |   |   | (196,537 | ) |
| Other income (expense)                                   |   |   | 6,690      |   |   |   | 3,134      |   |   |   | 5,822      |   |   |   | (7,282 | ) |
| Other expense, net                                       |   |   | (20,196    | )      |   |   | (25,697    | )      |   |   | (76,738    | )      |   |   | (791,774 | ) |
|                                                     |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Net loss                                                 |   | $      | (470,301   | )      |   | $      | (1,417,307 | )      |   | $      | (1,393,657 | )      |   | $ | (7,346,259 | ) |
|                                                     |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Net loss per share                                       |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| - basic and diluted                                      |   | $      | (0.01      | )      |   | $      | (0.03      | )      |   | $      | (0.02      | )      |   | $ | (0.17 | ) |
|                                                     |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Weighted average shares outstanding                      |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| - basic and diluted                                      |   |   | 58,699,219 |   |   |   | 56,064,340 |   |   |   | 58,438,554 |   |   |   | 44,100,019 |   |

----

Condensed 

|                                                                        |   | Nine months ended September 30, |       |
|-----------------------------------------------------------------------------|--------|---------------------------------|------------|
|                                                                        |   | 2010                            |       | 2009 |   |
| Cash flows from operating activities                                        |   |                            |       |   |   |
| Net loss                                                                    |   | $                               | (1,393,657 | ) | $ | (7,346,259 | )  |
|                                                                        |   |                            |       |   |   |   |   |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                            |       |   |   |   |   |
| Depreciation and amortization                                               |   |                            | 1,013      |   |   | 6,283 |   |
| Non cash debt conversion expense                                            |   |                            | -          |   |   | 596,104 |   |
| Amortization of deferred financing fees                                     |   |                            | 8,768      |   |   | 28,633 |   |
| Debenture interest paid in common stock                                     |   |                            | 70,833     |   |   | 130,403 |   |
| Milestone stock subscription                                                |   |                            | -          |   |   | 180,000 |   |
| Stock based compensation                                                    |   |                            | 151,097    |   |   | 128,021 |   |
| Changes in operating assets and liabilities:                                |   |                            |       |   |   |   |   |
| Prepaid expenses and other current assets                                   |   |                            | (31,106    | ) |   | 619,544 |   |
| Accounts payable                                                            |   |                            | 14,377     |   |   | (683,497 | ) |
| Accrued expenses                                                            |   |                            | (33,284    | ) |   | (194,279 | ) |
| Accrued wages and other compensation                                        |   |                            | (195,000   | ) |   | (33,000 | ) |
| Milestone payable                                                           |   |                            | -          |   |   | 1,000,000 |   |
| Other liabilities                                                           |   |                            | -          |   |   | (33,213 | ) |
|                                                                        |   |                            |       |   |   |   |   |
| Net cash used in operating activities                                       |   |                            | (1,406,959 | ) |   | (5,601,260 | ) |
|                                                                        |   |                            |       |   |   |   |   |
| Cash flows from investing activities                                        |   |                            |       |   |   |   |   |
| Purchases of fixed assets                                                   |   |                            | (2,619     | ) |   | - |   |
| Proceeds from disposition of fixed assets                                   |   |                            | -          |   |   | 367,994 |   |
|                                                                        |   |                            |       |   |   |   |   |
| Net cash (used in) provided by investing activities                         |   |                            | (2,619     | ) |   | 367,994 |   |
|                                                                        |   |                            |       |   |   |   |   |
| Cash flows from financing activities                                        |   |                            |       |   |   |   |   |
| Proceeds from issuance of common stock and warrants, net                    | -      |                            |       | 1,779,777 |   |
|                                                                        |   |                            |       |   |   |
| Net cash provided by financing activities                                   |   |                            | -          |   |   | 1,779,777 |   |
|                                                                        |   |                            |       |   |   |   |   |
| Net decrease in cash and cash equivalents                                   |   |                            | (1,409,578 | ) |   | (3,453,489 | ) |
|                                                                        |   |                            |       |   |   |   |   |
| Cash and cash equivalents at beginning of year                              |   |                            | 4,629,486  |   |   | 4,730,282 |   |
|                                                                        |   |                            |       |   |   |   |   |
| Cash and cash equivalents at end of period                                  |   | $                               | 3,219,908  |   | $ | 1,276,793 |   |
|                                                                        |   |                            |       |   |   |   |   |
| Supplemental disclosure of non-cash investing and financing activities:     |   |                            |       |   |   |   |   |
| Common shares issued for accrued interest                                   |   |                            | $100,000   |   |   | $201,667 |   |
| Write off of deferred financing fees with conversion of debentures          |   |                            | -          |   |   | $78,382 |   |
| Conversion of debentures to common stock                                    |   |                            | -          |   |   | $3,000,000 |   |

----

Notes 

----

----

----

| Period Ended       |   | Grants Issued |      |   | Weighted Average Exercise Price |   |   | Weighted AverageFair Value |   |
|--------------------|--------|---------------|-----------|--------|---------------------------------|--------|--------|----------------------------|--------|
|               |   |          |      |   |                            |   |   |                       |   |
| September 30, 2010 |   |          | 490,000   |   |                            | $      | 0.11   |                       |   | $ | 0.09 |   |
| September 30, 2009 |   |          | 1,050,000 |   |                            | $      | 0.22   |                       |   | $ | 0.17 |   |

----

----

----

|                                                               |   | September 30, |
|--------------------------------------------------------------------|--------|---------------|
|                                                               |   | 2010          |   | 2009 |
|                                                               |   |          |   |   |
| Stock options                                                      |   |          | 3,460,499 |   | 3,647,155 |
| Convertible debenture                                              |   |          | 1,428,571 |   | 1,428,571 |
| Vela milestone                                                     |   |          | - |   | 2,000,000 |
| Restricted stock                                                   |   |          | 825,000 |   | 1,200,000 |
| Warrants                                                           |   |          | 18,000,000 |   | 18,000,000 |
|                                                               |   |          |   |   |   |
| Total potential dilutive securities not included in loss per share |   |          | 23,714,070 |   | 26,275,726 |

----

|                      |   | Three months ended September 30, |     |   | Nine months ended September 30, |   |
|---------------------------|--------|----------------------------------|----------|--------|---------------------------------|--------|
|                      |   | 2010                             |     |   | 2009                            |   |   | 2010 |   |   | 2009 |   |
| Net (loss) income         |   |                             |     |   |                            |   |   |   |   |   |   |   |
|   United States |   | $                                | (470,301 | )      |                            | $      | (1,382,937 | ) |   | $ | (1,392,788 | ) |   | $ | (7,253,924 | ) |
|   Israel        |   |                             | -        |   |                            |   | (34,370 | ) |   |   | (869 | ) |   |   | (92,335 | ) |
|                      |   | $                                | (470,301 | )      |                            | $      | (1,417,307 | ) |   | $ | (1,393,657 | ) |   | $ | (7,346,259 | ) |
|                      |   |                             |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Capital Expenditures      |   |                             |     |   |                            |   |   |   |   |   |   |   |   |   |   |   |
|   United States |   | $                                | 1,153    |   |                            | $      | - |   |   | $ | 2,619 |   |   | $ | - |   |
|   Israel        |   |                             | -        |   |                            |   | - |   |   |   | - |   |   |   | - |   |
|                      |   | $                                | 1,153    |   |                            | $      | - |   |   | $ | 2,619 |   |   | $ | - |   |

| Total Assets              |   | September 30, 2010 |      |   | December 31, 2009 |   |
|---------------------------|--------|--------------------|-----------|--------|-------------------|--------|
|   United States |   | $                  | 3,303,388 |   |              | $      | 4,669,681 |   |
|   Israel        |   |               | -         |   |              |   | 19,341 |   |
|                      |   | $                  | 3,303,388 |   |              | $      | 4,689,022 |   |
|                      |   |               |      |   |              |   |   |   |
| Long Lived Assets, net    |   |               |      |   |              |   |   |   |
|   United States |   | $                  | 2,985     |   |              | $      | 1,379 |   |
|   Israel        |   |               | -         |   |              | -      |   |
|                      |   | $                  | 2,985     |   |              | $      | 1,379 |   |

----

Item 

----

----

----

|                                   |   | September 30, 2010 |      |   | December 31, 2009 |   |
|----------------------------------------|--------|--------------------|-----------|--------|-------------------|--------|
|                                   |   |               |      |   |              |   |
| Working capital                        |   | $                  | 3,102,634 |   |              | $      | 4,238,033 |   |
|                                   |   |               |      |   |              |   |   |   |
| Cash and cash equivalents              |   | $                  | 3,219,908 |   |              | $      | 4,629,486 |   |
|                                   |   |               |      |   |              |   |   |   |
| Convertible Debenture – due 2012 |   | $                  | 1,000,000 |   |              | $      | 1,000,000 |   |
|                                   |   |               |      |   |              |   |   |   |

----

----

|                           |   |   Total |      |   | Less than1 Year |   |    | 1 - 3Years |   |   | 3 - 5Years |   |   | Undetermined |   |
|--------------------------------|--------|--------------|-----------|--------|-----------------|--------|---------|------------|--------|--------|------------|--------|--------|--------------|--------|
| Operating leases               |   | $            | 64,800    |   |            | $      | 64,800  |       |   | $      | -          |   |   | $            | -      |   |   | $ | - |   |
| Convertible debenture          |   |         | 1,000,000 |   |            |   | -       |       |   |   | 1,000,000  |   |   |         | -      |   |   |   | - |   |
| Convertible debenture interest |   |         | 208,333   |   |            |   | 100,000 |       |   |   | 108,333    |   |   |         | -      |   |   |   | - |   |
| Total                          |   | $            | 1,273,133 |   |            | $      | 164,800 |       |   | $      | 1,108,333  |   |   | $            | -      |   |   | $ | - |   |

----

Item 

Item 

----

| Item 1  | Legal Proceedings | NONE   |
|---------|-------------------|--------|
|    |              |   |
| Item 1A | Risk Factors      |   |

| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | NONE   |
|--------|-------------------------------------------------------------|--------|
|   |                                                        |   |
| Item 3 | Defaults upon Senior Securities                             | NONE   |
|   |                                                        |   |
| Item 4 | Submission of Matters to Vote of Security Holders           | NONE   |
|   |                                                        |   |
| Item 5 | Other Information                                           |   |

----

Item 

| Number |   | Exhibit                                                                                                                                                                                                                           |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                              |
| 3.1    |   | Restated Articles of Incorporation (Incorporated by reference to Appendix E to the Joint Proxy Statement/Prospectus included in the Form S-4 Registration Statement of the Company dated September 28, 1992 (No. 33-52398)        |
|   |   |                                                                                                                                                                                                                              |
| 3.2    |   | Certificate of Amendment of Restated Articles of Incorporation dated January 30, 1995 (Incorporated by reference to Annual Report on Form 10-K for the year ended December 31, 1994).                                             |
|   |   |                                                                                                                                                                                                                              |
| 3.3    |   | Certificate of Amendment of Restated Articles of Incorporation dated January 16, 1998 (Incorporated by reference to the Company’s Current Report on Form 8-K, dated February 6, 1998).                                      |
|   |   |                                                                                                                                                                                                                              |
| 3.4    |   | Certificate of Amendment of Restated Articles of Incorporation dated October 21, 1999 (Incorporated by reference to exhibit 4(e) to the Form S-3 Registration Statement of the Company filed September 28, 2000 (No. 333-46818)). |
|   |   |                                                                                                                                                                                                                              |
| 3.5    |   | Certificate of Amendment of Restated Articles of Incorporation dated July 19, 2002 (Incorporated by reference to Exhibit 3 to the Company’s Report on Form 10-Q for the quarter ended June 30, 2002).                       |
|   |   |                                                                                                                                                                                                                              |
| 3.6    |   | Certificate of Amendment of Restated Articles of Incorporation dated July 7, 2004 (Incorporated by reference to Exhibit 3.1 to the Company’s Report on Form 10-Q for the quarter ended June 30, 2004).                      |
|   |   |                                                                                                                                                                                                                              |
| 3.7    |   | Certificate of Amendment to Articles of Incorporation dated September 23, 2005 (Incorporated by reference to exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005).          |
|   |   |                                                                                                                                                                                                                              |
| 3.8    |   | Certificate of Amendment to Articles of Incorporation dated August 5, 2009 (Incorporated by reference to exhibit 3.8 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009).                   |
|   |   |                                                                                                                                                                                                                              |
| 3.9    |   | Amended and Restated By-Laws (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007).                                                            |
|   |   |                                                                                                                                                                                                                              |
| 31.1   |   | Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15(d)-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                         |
|   |   |                                                                                                                                                                                                                              |
| 31.2   |   | Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15(d)-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                             |
|   |   |                                                                                                                                                                                                                              |
| 32.1   |   | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                               |
|   |   |                                                                                                                                                                                                                              |
| 32.2   |   | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                   |
|   |   |                                                                                                                                                                                                                              |

----

SIGNATURE

|                   |   | PHARMOS CORPORATION                                           |               |
|------------------------|--------|---------------------------------------------------------------|--------------------|
|                   |   |                                                          |               |   |
|                   |   |                                                          |               |   |
| Date: October 27, 2010 |   |                                                          |               |   |
|                   |   | by:                                                           | /s/ S. Colin Neill |   |
|                   |   |                                                          |               |   |
|                   |   | S. Colin Neill                                                |               |
|                   |   | President, Chief Financial Officer, Secretary & Treasurer |               |
|                   |   | (Principal Accounting and Financial Officer)                  |               |