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Pharmos Corporation Reports 2009 Second Quarter Results
Date:8/12/2009

ense category. The primary reductions include a $335,000 reduction in payroll, a $121,000 reduction in consultant and professional fees and a reduction in various other expenses of $99,000. This is offset in part, by increases of $45,000 in investor relations and $19,000 of miscellaneous expenses. The decrease in payroll costs reflect the impact of the 2008 restructuring plans which have reduced the Company's head count from 18 employees in December 2007 to 5 employees at the end of December 2008 and 4 employees at the end of June 2009. The decrease in consulting and professional fees in 2009 result from a decline in legal costs and continuing one time IRS section 382 tax analysis cost incurred in 2008. The decrease in the various costs result primarily from a reduction in facility related expenses. The increase in investor relations expenses is attributable to holding the annual meeting earlier in the year. The increase in miscellaneous expenses is the result of a gain on the disposal of fixed assets at our Rehovot facility in 2008 as this event was classified as a reduction of overall expenses.

Depreciation and amortization expenses decreased by $60,408, or 93%, from $64,661 in 2008 to $4,253 in 2009. The decrease is due to fixed assets which have become fully depreciated and the disposition of various depreciable assets in conjunction with the Company's 2008 restructuring plans.

Other expense net, increased by $727,313 from $38,764 in other expense in 2008 to $766,077 in other expense in 2009. The majority of this increase is related to the conversion of debentures into equity resulting in an expense of $596,104 and from decreased interest income of $187,719 from a decline in cash and cash equivalents. We also recorded an increase in other expenses of $23,275 which is a net of translation losses on assets held in Israel due to currency translation fluctuations and other income which relates to Amino Labs. Finally we record
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