UNITED STATES
                        SECURITIES AND EXCHANGE COMMISSIO
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[x]      Quarterly Report Pursuant to Section 13 or 15(d) of the
         Securities Exchange Act of 1934

         For the quarter ended March 31, 1998

         or

[ ]      Transition Report Pursuant to Section 13 or 15(d) of the
         Securities Exchange Act of 1934

         For the transition period from ___________ to ________________
         Commission File Number:   0-10379


                            INTERFERON SCIENCES, INC.
             (Exact Name of Registrant as Specified in its Charter)


Delaware                                                            22-2313648
State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                              Identification No.)


783 Jersey Avenue, New Brunswick, New Jersey                          08901
Address of principal executive offices)                            (Zip code)

(732) 249 - 3250
(Registrant's telephone number, including area code)

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 shorter  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 [ ]

Number of shares  outstanding of each of issuer's  classes of common stock as of
May 1, 1998:

                         Common Stock 15,244,401 shares




<PAGE>



                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                                TABLE OF CONTENTS


                                                                         Page

Part I.  Financial Information:

   Consolidated Condensed Balance Sheets--March 31, 1998
     and December 31, 1997                                                  1

   Consolidated Condensed Statements of Operations--Three
     Months Ended March 31, 1998 and 1997                                   2

   Consolidated Condensed Statement of Changes in
     Stockholders' Equity--Three Months Ended
     March 31, 1998                                                         3

   Consolidated Condensed Statements of Cash Flows--Three
     Months Ended March 31, 1998 and 1997                                   4

   Notes to Consolidated Condensed Financial Statements                   5-6

   Management's Discussion and Analysis of Financial
     Condition and Results of Operations                                  7-9

   Qualification Relating to Financial Information                         10

Part II.  Other Information                                                11

Signatures                                                                 12




<PAGE>



                                              
                    INTERFERON SCIENCES, INC. AND SUBSIDIARY
<TABLE>

                          PART I. FINANCIAL INFORMATION

                      CONSOLIDATED CONDENSED BALANCE SHEETS

<CAPTION>


                                               March 31,         December 31,
                                                1998                 1997
                                              (Unaudited)             *
<S>                                          <C>                 <C> 
ASSETS                                       -------------       -------------
Current assets
  Cash and cash equivalents                  $  7,895,647        $ 14,059,283
  Accounts and other receivables                  298,125             989,458
  Inventories, net of reserves
    of $10,344,551 and $7,254,710               2,981,761           3,332,653
  Receivables from GP Strategies 
    and affiliated companies                       35,323              21,904
  Prepaid expenses and other
    current assets                                 68,066              65,353
                                              ------------        ------------
Total current assets                           11,278,922          18,468,651
                                              ------------        ------------
Property, plant and equipment,
  at cost                                      13,586,676          13,496,755
Less accumulated depreciation                  (8,482,106)         (8,266,892)
                                              ------------        ------------
                                                5,104,570           5,229,863
                                              ------------        ------------
Patent costs, net of accumulated
  amortization                                    273,297             280,962
Other assets                                      161,400             173,900
                                              ------------        ------------
Total assets                                 $ 16,818,189        $ 24,153,376
                                             =============       =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Accounts payable and
    accrued expenses                         $  3,511,968        $  3,939,736
                                             -------------       -------------
Total current liabilities                       3,511,968           3,939,736
                                             -------------       -------------
Commitments and contingencies
Stockholders' equity
Preferred stock, par value $.01 per share;
 authorized-5,000,000 shares; none issued
 and outstanding
Common stock, par value $.01 per share;
 authorized-55,000,000 shares; issued
 and outstanding-15,234,674 and
 15,210,405 shares                                152,347            152,104
Capital in excess of par value                124,122,203        123,946,331
Accumulated deficit                          (110,968,329)      (103,884,795)
                                             -------------      -------------
Total stockholders' equity                     13,306,221         20,213,640
                                             -------------      -------------
Total liabilities and stockholders'
  equity                                     $ 16,818,189       $ 24,153,376
                                             =============       ============

</TABLE>

*The condensed  balance sheet as of December 31, 1997 has been  summarized  from
the Company's audited balance sheet as of that date. The accompanying  notes are
an integral part of these consolidated condensed financial statements.

                                       1

<PAGE>

                    INTERFERON SCIENCES, INC. AND SUBSIDIARY
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)





<TABLE>

<CAPTION>
                                                       Three Months Ended
                                                            March 31,
                                                -----------------------------
                                                     1998              1997
                                                 -------------    ------------
<S>                                             <C>                <C>
Revenues
  Alferon N Injection                           $   252,523        $   628,981
  Research products and other revenues               77,025             25,218
                                                -------------      ------------
Total revenues                                      329,548            654,199
                                                -------------      ------------
Costs and expenses
Cost of goods sold                                  203,386            501,374
Provision for excess inventory                    3,089,841
Research and development
 (net of $29,375 and $58,749
  of rental income received from
  GP Strategies)                                  2,055,139          2,592,088
General and administrative
 (includes  $30,000 and $58,125 
  of payments to GP Strategies for 
  management fees and reimbursements
  of certain salaries; net of $6,250 
  received from GP Strategies for the 
  three months ended March 31, 1998 for
  reimbursements of certain salaries)             1,472,399            922,435
                                                ------------      -------------

Total costs and expenses                          6,820,765          4,015,897
                                                ------------      -------------
Loss from operations                             (6,491,217)        (3,361,698)

 Interest income                                    144,720            176,889

 Loss on repurchase of preferred stock             (737,037)
                                                -------------      ------------
Net loss                                       $ (7,083,534)      $ (3,184,809)
                                               =============      =============

Basic and diluted loss per share               $       (.47)      $       (.26)
                                               =============      =============

Weighted average number of
shares outstanding                               15,226,313         12,280,677





</TABLE>







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

                                       2

<PAGE>

                    INTERFERON SCIENCES, INC. AND SUBSIDIARY
                 CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN
                              STOCKHOLDERS' EQUITY
                        THREE MONTHS ENDED MARCH 31, 1998
                                   (Unaudited)




<TABLE>

<CAPTION>


                                       Capital                        Total
                    Common Stock      in excess    Accummulated   Stockholders'
                 Shares     Amount  of par value      Deficit        Equity
                 ------     ------  ------------    -----------   ------------

<S>           <C>         <C>       <C>           <C>             <C>   
Balance at
 Dec. 31,
 1997         15,210,405  $152,104  $123,946,331  $(103,884,795)  $20,213,640

Common stock
 issued as
 compensation     16,191       162       120,259                      120,421

Common stock
 issued under
 Company 401(k)
 Plan              8,078        81        55,613                       55,694

Net loss                                             (7,083,534)   (7,083,534)
               ---------------------------------------------------------------------
Balance at
 March 31,
 1998         15,234,674  $152,347  $124,122,203  $(110,968,329)  $13,306,221






</TABLE>










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

                                       3

<PAGE>

                    INTERFERON SCIENCES, INC. AND SUBSIDIARY
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>

<CAPTION>

                                                         Three Months Ended
                                                             March 31,
                                                    --------------------------
                                                       1998             1997
                                                   -----------------------------
<S>                                                <C>              <C> 
  Cash flows from operations:
    Net loss                                       $(6,346,497)     $(3,184,809)
    Adjustments to reconcile net loss to net
        cash used for operating activities:
        Depreciation and amortization                  222,879          186,502
        Benefits paid with common stock                176,115
        Provision for excess inventory               3,089,841
        Change in operating assets and liabilities:
        Inventories                                 (2,738,949)        (487,611)
        Receivables from GP Strategies and
          affiliated companies                         (13,419)         (15,790)
        Accounts and other receivables                 691,333         (166,738)
        Prepaid expenses and other current assets       (2,713)         (15,266)
        Accounts payable and accrued expenses         (427,768)        (381,279)
                                                    ----------------------------
        Net cash used for operations                (5,349,178)      (4,064,991)
                                                    ----------------------------

  Cash flows from investing activities:
     Additions to property, plant and equipment        (89,921)        (140,325)
     Reductions to other assets                         12,500
                                                    ----------------------------
     Net cash used for investing activities            (77,421)        (140,325)
                                                    ----------------------------
  Cash flows from financing activities:
     Net proceeds from preferred stock offering      7,179,000
     Repurchase of preferred stock                  (7,916,037)
     Proceeds from exercise of common stock
        options                                                          52,231
     Purchase of fractional shares of common
        stock                                                              (633)
                                                   ----------------------------
     Net cash (used for) provided by financing
       activities                                     (737,037)          51,598
                                                    ----------------------------

  Net decrease in cash and cash equivalents         (6,163,636)      (4,153,718)

  Cash and cash equivalents at beginning
     of period                                      14,059,283       17,491,955
                                                   -----------------------------

  Cash and cash equivalents at end of period       $ 7,895,647      $13,338,237
                                                   =============================



</TABLE>







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

                                       4

<PAGE>

                    INTERFERON SCIENCES, INC. AND SUBSIDIARY
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 1. Earnings per Share

         In the fourth  quarter of 1997,  the Company  adopted the provisions of
Statement of Financial  Accounting Standards No. 128, "Earnings per Share" (SFAS
128), as required,  and restated the previously  reported  earnings per share in
conforming with SFAS 128.

Note 2. Inventories

         Inventories, consisting of material, labor and overhead, are classified
as follows:

                              March 31,          December 31,
                                 1998                1997
                           --------------       --------------

Finished goods             $  4,533,689          $ 3,720,000
Work in process               7,483,316            5,621,714
Raw materials                 1,309,307            1,245,649
Less reserve for excess
  inventory                 (10,344,551)          (7,254,710)
                           --------------        ------------
                           $  2,981,761          $ 3,332,653
                           ==============        ============


         Finished  goods  inventory  consists  of vials of ALFERON N  Injection,
available  for  commercial  and  clinical use either  immediately  or upon final
release by Quality Assurance.

         In light of the  results  to date of the  Company's  phase 3 studies of
ALFERON  N  Injection  in  HIV  and  HCV-infected   patients,  the  Company  has
written-down  the carrying  value of its inventory of ALFERON N Injection to its
estimated net realizable  value.  The write-down was the result of the Company's
reassessment  of anticipated  near-term needs for product to be sold or utilized
in clinical  trials (within  approximately a two-year period based on historical
sales levels).  As a result,  inventories at December 31, 1997 reflect a reserve
for excess  inventory of  $7,254,710.  Also,  during the quarter ended March 31,
1998, the Company recorded an additional  write-off of $3,089,841 of inventories
that were produced during the three months ended March 31, 1998.

Note 3. Preferred Stock

         On February 5, 1998, the Company  completed the sale of 7,500 shares of
Series  A  Convertible  Preferred  Stock  to an  institutional  investor  for an
aggregate amount of $7,500,000.  The $7,179,000 of net proceeds were expected to
augment the  Company's  working  capital  while  awaiting the results of the two
Phase 3 clinical trials of ALFERON N Injection for the treatment of HIV-infected
and  hepatitis C  patients.  After  considering  the  reaction of the  Company's
stockholders to the issuance and the negative impact the issuance apparently had
on the Company's  market  capitalization,  the Board of Directors  determined on
February 13, 1998 to exercise an option to repurchase  the shares of Convertible
Preferred  Stock for $7,894,737  (plus accrued  dividends).  The net loss to the
Company on the  repurchase of the Preferred  Stock  amounted to $737,037 and was
recorded  on the income  statement  under the caption of loss on  repurchase  of
preferred stock for the quarter ended March 31, 1998.

                                       5
<PAGE>

Note 4. Operations and Liquidity

         The Company has  experienced  significant  operating  losses  since its
inception in 1980. As of March 31, 1998, the Company had an accumulated  deficit
of approximately  $111.0 million.  For the three months ended March 31, 1998 and
the years ended  December 31, 1997,  1996 and 1995,  the Company had losses from
operations of approximately $6.5 million,  $22.4 million, $12.4 million and $7.4
million,  respectively.  Although  the Company  received FDA approval in October
1989 to market  ALFERON N Injection  in the United  States for the  treatment of
certain genital warts and ALFERON N Injection  currently is marketed and sold in
the United States by the Company, in Mexico by Industria Farmaceutica Andromaco,
S.A. De C.V. and in Germany by Cell Pharm GmbH ("Cell  Pharm"),  the Company has
had  limited  revenues  from the sale of ALFERON N  Injection  to date.  For the
Company to operate profitably,  the Company must sell significantly more ALFERON
N  Injection.  Increased  sales will  depend  primarily  upon the  expansion  of
existing markets and/or successful  attainment of FDA approval to market ALFERON
N Injection  for  additional  indications,  of which there can be no  assurance.
There can be no assurance that sufficient quantities of ALFERON N Injection will
be sold to allow the Company to operate profitably.

         The Company has limited  financial  resources as of March 31, 1998 with
which to  support  future  operating  activities  and to satisfy  its  financial
obligations as they become  payable.  Consequently,  management is continuing to
actively pursue raising additional capital by either (i) issuing securities in a
public or private equity offering,  (ii) licensing the rights to its injectable,
topical  or oral  formulations  of  alpha  interferon,  or (iii)  entering  into
collaborative or other arrangements with corporate partners.  Insufficient funds
will require the Company to further delay,  scale back, or eliminate  certain or
all of its activities or to license third parties to  commercialize  products or
technologies  that the  Company  would  otherwise  seek to  develop  itself.  In
addition,  the Company  hopes to  renegotiate  the minimum  purchase  commitment
for white blood cells discussed in  Management's  Discussion  and Analysis of 
Financial  Condition and Liquidity,  but if it is unable  to do so such  
obligation  may have a  material adverse effect on the financial condition of 
the Company.

         Based on the  Company's  estimates of revenues,  expenses and levels of
production,  management  believes that the cash  available will be sufficient to
enable the Company to continue operations through approximately  September 1998.
However,  actual  results,  especially  with  respect  to  revenues,  may differ
materially  from such  estimates,  and no assurance can be given that additional
funding will not be required  sooner than  anticipated  or that such  additional
funding,  whether from financial markets or collaborative or other  arrangements
with corporate partners or from other sources,  will be available when needed or
on terms acceptable to the Company.


                                       6
<PAGE>

                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

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

Financial Condition and Liquidity

         As of May 1, 1998, the Company had an aggregate of $5.9 million in cash
and cash equivalents.  Until utilized,  such cash and cash equivalents are being
invested principally in short-term interest-bearing investments.

         The  Company  requires   substantial  funds  to  conduct  research  and
development and  pre-clinical  and clinical  testing and to market its products.
For the three months ended March 31, 1998,  the cash  utilized by the  Company's
operations  was  approximately  $5.3 million of which  increases in  inventories
accounted for approximately $2.7 million.  The Company had continued to increase
its  investment  in  inventories  of  ALFERON N  Injection  to meet  anticipated
increases in market demand, for use in the Company-sponsored Phase 3 and Phase 2
clinical trials, and so that inventory would be available in the event ALFERON N
Injection was  subsequently  approved for the treatment of HIV or hepatitis C or
both by the U.S. Food and Drug  Administration.  In light of the results to date
of the Company's Phase 3 studies of ALFERON N Injection in HIV- and HCV-infected
patients,  the Company has  determined  that it has enough  inventory on hand to
satisfy  its  clinical  and  commercial  needs for the  foreseeable  future  and
therefore  discontinued  production  of ALFERON N Injection  in April 1998.  The
Company  currently  obtains human white blood cells used in the  manufacture  of
ALFERON N Injection  from  several  sources,  including  the  American Red Cross
pursuant to a supply  agreement  dated April 1, 1997.  The Company will not need
more  human  white  blood  cells  until  such time as  production  of  ALFERON N
Injection  is resumed.  Under the terms of the  agreement  with the American Red
Cross,  the Company is  obligated  to  purchase a minimum  number of human white
blood  cells  each  month  through  March  1999.  The  aggregate  commitment  is
approximately  $260,000 per month.  The Company hopes to renegotiate the minimum
purchase  commitment,  but if it is unable to do so such  obligation  may have a
material adverse effect on the financial condition of the Company. The Company's
future capital  requirements will depend on many factors,  including:  continued
scientific  progress in its drug  development  programs;  the magnitude of these
programs;  progress with pre-clinical  testing and clinical trials; the time and
costs involved in obtaining regulatory approvals;  the costs involved in filing,
prosecuting,  and enforcing  patent claims;  competing  technologies  and market
developments; changes in its existing research relationships; and the ability of
the   Company   to   establish   collaborative    arrangements   and   effective
commercialization activities and arrangements.

         The  Company  anticipates  that the cash that will be  utilized  by the
Company's operations in 1998 will be significantly less than in 1997 as a result
of the discontinuance in April 1998 of manufacturing,  the conclusion in 1998 of
the  Company's  Phase 3 studies of ALFERON N Injection in HIV- and  HCV-infected
patients,  and certain other cost reductions  instituted in 1998 by the Company,
offset  in  part by the  expenses  associated  with  the  HIV  and  hepatitis  C
co-infection  study that  commenced  in December  1997.  Based on the  Company's
estimates of revenues,  expenses, and levels of production,  management believes
that the cash  presently  available  will be sufficient to enable the Company to
continue  operations  through  approximately  September  1998.  However,  actual
results,  especially with respect to revenues,  may differ  materially from such
estimates,  and no assurance  can be given that  additional  funding will not be
required sooner than anticipated or that such additional  funding,  whether from
financial markets or collaborative or other arrangements with corporate partners
or from other sources,  will be available when needed or on terms  acceptable to
the Company. Insufficient funds will require the Company to further delay, scale
back, or eliminate certain or all of its research and development programs or to
license third parties to commercialize products or technologies that the Company
would otherwise seek to develop itself.  The Independent  Auditors' Report dated
April 2, 1998 on the Company's  consolidated financial statements ended December
31, 1997 notes that the Company has suffered  recurring  losses from  operations
and has an accumulated deficit that raise substantial doubt about its ability to
continue as a going concern.

                                       7
<PAGE>
Results of Operations

         For the three months ended March 31, 1998,  the  Company's  revenues of
$329,548  included $252,523 from the sale of ALFERON N Injection and the balance
from sales of research products and other revenues. Revenues of $654,199 for the
three months ended March 31, 1997  included  $628,981 from the sale of ALFERON N
Injection  and the balance from sales of research  products.  Cost of goods sold
totaled  $203,386  and  $501,374  for the three  months ended March 31, 1998 and
1997, respectively.

         In May 1997, the Company appointed  Alternate Site  Distributors,  Inc.
("ASD"),  a wholly owned  subsidiary of Bergen  Brunswig  Corporation,  the sole
United  States  distributor  of ALFERON N  Injection.  According to ASD, it sold
4,372 vials of ALFERON N Injection  in the three  months  ended March 31,  1998,
compared  to 3,083 sold by the  Company in the  United  States  during the three
months ended March 31, 1997. Despite this increase,  the Company's revenues from
the sale of ALFERON N Injection  decreased by $376,458 in the three months ended
March 31, 1998 compared to the three months ended March 31, 1997.  This decrease
resulted in  approximately  equal parts from a decline in foreign  sales and the
fact that ASD's sales in the 1998 quarter were primarily from ASD's inventory.

         In light of the  results  to date of the  Company's  Phase 3 studies of
ALFERON  N  Injection  in  HIV-  and  HCV-infected  patients,  the  Company  has
written-down  the carrying  value of its inventory of ALFERON N Injection to its
estimated net realizable  value.  The write-down was the result of the Company's
reassessment  of anticipated  near-term needs for product to be sold or utilized
in clinical  trials (within  approximately a two-year period based on historical
sales  levels).  As a result,  during the three months ended March 31, 1998, the
Company  recorded  an  inventory  write-off  of  $3,089,841  in  addition to the
$7,254,710 inventory write-down which was recorded at December 31, 1997.

         Research and  development  expenses during the three months ended March
31, 1998 of $2,055,139 decreased by $536,949 from $2,592,088 for the same period
in 1997,  principally  because  the  Company  has nearly  concluded  its Phase 3
clinical studies of ALFERON N Injection in HIV- and HCV-infected  patients.  The
Company  received  $29,375 and $58,749,  respectively,  as rental income from GP
Strategies  Corporation  ("GP  Strategies")  for  the  use of a  portion  of the
Company's facilities, which offset research and development expenses.

         General and  administrative  expenses  for the three months ended March
31, 1998 were  $1,472,399  as compared to $922,435  for the same period in 1997.
The increase of $549,964 was  principally  due to increases in payroll and other
operating expenses. GP Strategies provides certain  administrative  services for
which the Company paid GP Strategies $30,000 for each of the three-month periods
ended March 31,  1998 and 1997.  For the three  months  ended March 31, 1998 and
1997,  payments to GP Strategies for the services  provided to the Company by GP
Strategies personnel amounted to zero and $28,125,  respectively.  For the three
months  ended  March 31,  1998 and 1997,  receipts  from GP  Strategies  for the
services provided to GP Strategies by Company  personnel  amounted to $6,250 and
zero, respectively.

                                       8
<PAGE>
         On February 5, 1998, the Company  completed the sale of 7,500 shares of
Series  A  Convertible  Preferred  Stock  to an  institutional  investor  for an
aggregate amount of $7,500,000.  The $7,179,000 of net proceeds were expected to
augment the  Company's  working  capital  while  awaiting the results of the two
Phase 3 clinical trials of ALFERON N Injection for the treatment of HIV-infected
and  hepatitis C  patients.  After  considering  the  reaction of the  Company's
stockholders to the issuance and the negative impact the issuance apparently had
on the Company's  market  capitalization,  the Board of Directors  determined on
February 13, 1998 to exercise an option to repurchase  the shares of Convertible
Preferred  Stock for $7,894,737  (plus accrued  dividends).  The net loss to the
Company on the  repurchase of the Preferred  Stock  amounted to $737,037 and was
recorded  on the income  statement  under the caption of loss on  repurchase  of
preferred stock for the quarter ended March 31, 1998.

         Interest  income for the three months ended March 31, 1998 was $144,720
as compared to $176,889 for the same period in 1997. The decrease of $32,169 was
due to less funds available for investment in the current period.

     As a result of the foregoing, the Company incurred net losses of $7,083,534
and $3,184,809 for the three months ended March 31, 1998 and 1997, respectively.
Recent Tax and Accounting Developments

         The Financial  Accounting  Standards Board issued Accounting  Standards
(SFAS 130),  "Reporting  Comprehensive  Income",  in June 1997 which  requires a
statement of comprehensive income to be included in the financial statements for
fiscal years  beginning  after  December 15, 1997.  The Company has adopted this
Statement  and  has no  other  comprehensive  income,  other  than  net  income,
therefore comprehensive income is the same as net income (loss).

         In addition,  in June of 1997,  the FASB issued SFAS 131,  "Disclosures
about  Segments of an  Enterprise  and Related  Information".  SFAS 131 requires
disclosure of certain  information  about operating  segments and about products
and  services,  geographic  areas in which a company  operates,  and their major
customers. The Company is presently in the process of evaluating the effect that
this  new  standard  will  have  on  disclosures  in  the  Company's   financial
statements.

Forward-Looking Statements

                  This  report  contains  certain   forward-looking   statements
reflecting  management's  current  views  with  respect  to  future  events  and
financial performance.  These forward-looking  statements are subject to certain
risks and  uncertainties  that could cause actual  results to differ  materially
from those in the  forward-looking  statements,  including,  but not limited to,
uncertainty  of obtaining  additional  funding for the Company;  uncertainty  of
obtaining United States  regulatory  approvals for the Company's  products under
development  and foreign  regulatory  approvals for the  Company's  FDA-approved
product and products  under  development  and, if such  approvals  are obtained,
uncertainty  of  the  successful   commercial   development  of  such  products;
substantial competition from companies with substantially greater resources than
the Company in the  Company's  present and potential  businesses;  no guaranteed
source of required materials for the Company's  products;  dependence on certain
distributors to market the Company's  products;  potential  adverse side effects
from the use of the Company's  products;  potential patent  infringement  claims
against  the  Company;   possible  inability  of  the  Company  to  protect  its
technology;   uncertainty  of  pharmaceutical   pricing;   substantial   royalty
obligations  payable  by  the  Company;  limited  production  experience  of the
Company;  risk  of  product  liability;  and  risk  of  loss  of key  management
personnel,  all of which are  difficult  to predict and many of which are beyond
control of the Company.

                                       9

<PAGE>

                    INTERFERON SCIENCES, INC. AND SUBSIDIARY


                 QUALIFICATION RELATING TO FINANCIAL INFORMATION

                                 MARCH 31, 1998


                  The financial  information included herein is unaudited.  Such
information,  however,  reflects all  adjustments  (consisting  solely of normal
recurring  adjustments) which are, in the opinion of management,  necessary to a
fair statement of the results for the interim  periods.  The results for interim
periods are not necessarily indicative of results to be expected for the year.




                                       10

<PAGE>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY


                           PART II. OTHER INFORMATION



Item 2.      Changes in Securities.

             On February 5, 1998, the Company completed the sale of 7,500 shares
of Series A  Convertible  Preferred  Stock to an  institutional  investor for an
aggregate  amount  of  $7,500,000.  The  Company  paid a total  of  $284,250  in
commissions in connection with the sale. The Preferred Stock  (including  unpaid
dividends) was convertible  into the Company's  Common Stock at a price equal to
the lesser of $12.50 and a discount of 5-15% from the weighted  average  trading
price of the Common Stock over the 10 trading days prior to conversion,  subject
to  certain  adjustments.  After  considering  the  reaction  of  the  Company's
stockholders  to the issuance of the Preferred Stock and the negative impact the
issuance  apparently had on the Company's  market  capitalization,  the Board of
Directors of the Company  determined  on February 13, 1998 to exercise an option
to repurchase the shares of  Convertible  Preferred  Stock for $7,894,737  (plus
accrued dividends). The sale of Convertible Preferred Stock was made in reliance
upon the exemption  provided by Section 4(2) of the  Securities Act of 1933 (the
"Securities  Act") for a  transaction  by an issuer  not  involving  any  public
offering and/or Rule 506 of Regulation D promulgated under the Securities Act.

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

             (b)  Reports on Form 8-K.

             There were no reports on Form 8-K filed for the period  ended March
31, 1998.



                                       11

<PAGE>


                            INTERFERON SCIENCES, INC.

                                 MARCH 31, 1998




                                   SIGNATURES

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



                                                 INTERFRON SCIENCES, INC.




DATE:    May 14, 1998                       By:  /s/ Lawrence M. Gordon
                                                 -----------------------
                                                 Lawrence M. Gordon
                                                 Chief Executive Officer




DATE:    May 14, 1998                       By:  /s/ Donald W. Anderson
                                                 ----------------------
                                                 Donald W. Anderson
                                                 Controller


                                       12