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

                                   FORM 10-Q/A

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

      For the quarter ended September 30, 2002

                                          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 8, 2003.

                   Common Stock               36,282,823 shares



<PAGE>






                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                                TABLE OF CONTENTS

     This  Amendment  on Form 10-Q/A is being filed to restate  certain  amounts
(see Note 9 to the financial  statements for discussion of significant  changes)
and  to  revise  disclosure  and  presentation  of  the  Company's  Consolidated
Financial  Statements  for the quarterly  periods  ended  September 30, 2002 and
2001. This filing should be read in conjunction with the Company's Form 10-K for
the fiscal year ended December 31, 2002.


                                                                            Page
Part I.  Financial Information:

   Consolidated Condensed Balance Sheets--
     September 30, 2002 and December 31, 2001. . .. . . . . . . . . . . . . . .1

   Consolidated Condensed Statements of Operations--
     Three Months and Nine Months Ended September 30, 2002 and 2001 . . . . .2-3

   Consolidated Condensed Statement of Capital Deficiency--
     Nine Months Ended September 30, 2002 . . . . . . . . . . . . . . . . . . .4

   Consolidated Condensed Statements of Cash Flows--
     Nine Months Ended September 30, 2002 and 2001. . . . . . . . . . . . . . .5

   Notes to Consolidated Condensed Financial Statements. . . . . . . . . . .6-12

   Independent Accountant's Review Report. . . . . . . . . . . . . . . . . . .13

   Management's Discussion and Analysis of Financial
     Condition and Results of Operations . . . . . . . . . . . . . . . . . 14-19

Part II.  Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 20

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Certifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22-23



<PAGE>

<TABLE>
<CAPTION>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY
                          PART I. FINANCIAL INFORMATION

                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                                     September 30,    December 31,
                                                         2002             2001
                                   (Unaudited)
                                                     As Restated      As Restated
                                                     See Note 9       See Note 9
ASSETS                                              ------------------------------
<S>                                                 <C>               <C>
Current assets
  Cash and cash equivalents                         $    343,894      $ 1,184,889
  Accounts and other receivables                          41,924          123,389
  Inventories, net of reserves of
   $4,807,296 and $5,538,413, respectively                40,950          109,913
  Prepaid expenses and other current assets               28,479           17,608
                                                   -------------    -------------
Total current assets                                     455,247        1,435,799
                                                   -------------    -------------
Property, plant and equipment, at cost                12,854,834       12,854,834
Less accumulated depreciation                        (11,074,034)     (10,776,342)
                                                   -------------    -------------
                                                       1,780,800        2,078,492
                                                   -------------    -------------
Patent costs, net of accumulated amortization            139,217          160,342
Other assets                                                 100           10,100
                                                   -------------    -------------
Total assets                                       $   2,375,364    $   3,684,733
                                                   =============    =============
LIABILITIES AND CAPITAL DEFICIENCY
Current liabilities
  Accounts payable and accrued expenses            $   3,033,176    $   2,653,209
  ISI stock subject to resale agreement and
   in-kind services due Metacine                       1,700,000        1,700,000
  Note payable and amount due GP Strategies              409,245          495,745
  Convertible notes payable, net of debt discount         83,333
                                                   -------------    -------------
Total current liabilities                              5,225,754        4,848,954
                                                   -------------    -------------
Convertible notes payable, net of debt discount           29,412
                                                   -------------
Commitments and contingencies

Capital deficiency
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-20,704,376 and
 20,308,031 shares, respectively                         207,044          203,080
Capital in excess of par value                       136,800,354      136,239,499
Accumulated deficit                                 (139,887,200)    (137,606,800)
                                                   -------------     ------------
Total capital deficiency                              (2,879,802)      (1,164,221)
                                                   -------------     ------------
Total liabilities and capital deficiency            $  2,375,364    $   3,684,733
                                                   =============    =============


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

</TABLE>

<PAGE>


<TABLE>
<CAPTION>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                      Three Months Ended
                                                         September 30,
                                                  -----------------------------
                                                       2002           2001
                                                  -------------   -------------
                                                   As Restated     As Restated
                                                   See Note 9      See Note 9
<S>                                                <C>             <C>
Revenues
  Alferon N Injection                              $    687,197    $    458,746
                                                  -------------   -------------
Total revenues                                          687,197         458,746
                                                  -------------   -------------
Costs and expenses
Cost of goods sold and excess/idle
  production costs                                      432,979         361,154
Research and development                                308,912         500,030
General and administrative                              441,054         559,111
                                                  -------------   -------------
Total costs and expenses                              1,182,945       1,420,295
                                                  -------------   -------------
Loss from operations                                   (495,748)       (961,549)

Interest income (expense), net                         (142,832)         (5,504)

Equity in loss of Metacine                                              (92,955)
                                                  -------------   -------------
Net loss                                           $   (638,580)    $(1,060,008)
                                                  =============   =============

Basic and diluted net loss per share               $       (.03)    $      (.05)
                                                  =============   =============
Weighted average number of shares outstanding        20,628,306      20,171,563
                                                  =============   =============



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

</TABLE>


<TABLE>
<CAPTION>





                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                        Nine Months Ended
                                                          September 30,
                                                  -----------------------------
                                                       2002           2001
                                                  -------------   -------------
<S>                                                <C>             <C>
                                                   As Restated     As Restated
                                                   See Note 9      See Note 9
Revenues
  Alferon N Injection                              $  1,647,279    $  1,173,208
                                                  -------------   -------------
Total revenues                                        1,647,279       1,173,208
                                                  -------------   -------------
Costs and expenses
Cost of goods sold and excess/idle
  production costs                                    1,173,166       1,097,428
Research and development                              1,154,289       1,677,559
General and administrative                            1,423,568       1,960,399
Acquisition of in-process technology                                  2,341,418
                                                  -------------   -------------
Total costs and expenses                              3,751,023       7,076,804
                                                  -------------   -------------
Loss from operations                                 (2,103,744)     (5,903,596)

Interest income (expense), net                         (176,656)         33,214

Equity in loss of Metacine                                             (120,400)
                                                  -------------   -------------
Net loss                                           $ (2,280,400)    $(5,990,782)
                                                  =============   =============

Basic and diluted net loss per share               $       (.11)    $      (.31)
                                                  =============   =============
Weighted average number of shares outstanding        20,475,507      19,341,419
                                                  =============   =============



The  accompanying  notes are an integral  part of these  consolidated  condensed
financial statements.
</TABLE>

<PAGE>


<TABLE>
<CAPTION>


                   INTERFERON SCIENCES, INC. AND SUBSIDIARY
                       CONSOLIDATED CONDENSED STATEMENT
                            OF CAPITAL DEFICIENCY
                     NINE MONTHS ENDED SEPTEMBER 30, 2002
                                   (Unaudited)


                                             Capital                            Total
                       Common Stock         in excess       Accumulated        capital
                     Shares      Amount    of par value      deficit         deficiency
                     ------------------    ------------    -------------    --------------
<S>               <C>          <C>         <C>             <C>               <C>
Balance at
 Dec. 31, 2001,
 as restated,
 see Note 9       20,308,031   $203,080    $136,239,499    $(137,606,800)    $(1,164,221)

Common stock
 issued under
 Company 401(k)
 Plan                396,345      3,964          60,855                           64,819

Fair value of
 warrants issued
 with convertible
 notes and value
 of beneficial
 conversion feature                             500,000                          500,000

Net loss                                                      (2,280,400)     (2,280,400)
                 -------------------------------------------------------------------------
Balance at
 Sept. 30, 2002,
 as restated,
 see Note 9       20,704,376   $207,044    $136,800,354    $(139,887,200)    $(2,879,802)




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

</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                             Nine Months Ended
                                                               September 30,
                                                         --------------------------
                                                           2002         2001
                                                         ------------  ------------
<S>                                                      <C>           <C>
                                                         As Restated   As Restated
                                                         See Note 9    See Note 9
Cash flows from operating activities:
  Net loss                                               $(2,280,400)  $(5,990,782)
  Adjustments to reconcile net loss to net
   cash used for operating activities:
    Depreciation and amortization                            318,817       380,542
    Acquisition of in-process research and development                   2,341,418
    Equity in loss of Metacine                                             120,400
    Noncash compensation expense                              64,819       103,013
    Provision for notes receivable                                          87,500
    Debt discount                                            112,745
    Change in operating assets and liabilities:
     Inventories                                              68,963       (18,409)
     Accounts and other receivables                           81,465     1,447,225
     Prepaid expenses and other current assets               (10,871)        8,416
     Accounts payable and accrued expenses                   379,967       (30,352)
     Amount due to GP Strategies                              13,500        23,106
                                                         ------------  ------------
    Net cash used for operating activities                (1,250,995)   (1,527,923)
                                                         ------------  ------------
Cash flows from investing activities:
  Additions to property, plant and equipment                               (46,994)
  Reduction of (investments in) other assets                  10,000      (387,500)
                                                         ------------  ------------
  Net cash provided by (used for) investing activities        10,000      (434,494)
                                                         ------------  ------------
Cash flows from financing activities:
  Proceeds from convertible notes payable                    500,000
  Repayment of note payable to GP Strategies                (100,000)     (100,000)
  Proceeds from exercise of common stock options                               561
                                                         ------------  ------------
Net cash provided by (used for) financing activities         400,000       (99,439)
                                                         ------------  ------------
Net decrease in cash and cash equivalents                   (840,995)   (2,061,856)

Cash and cash equivalents at beginning of period           1,184,889     3,658,805
                                                         ------------  ------------
Cash and cash equivalents at end of period               $   343,894   $ 1,596,949
                                                         ============  ============
Noncash items:
 Guaranteed value of common stock issued to
   and in-kind services due Metacine                     $     0       $ 2,100,000
                                                         ============  ============
 Settlement shares sold                                  $     0       $    21,463
                                                         ============  ============


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

</TABLE>

<PAGE>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1.  Basis of Presentation

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

Note 2. Operations and Liquidity

     The  Company  has  experienced   significant  operating  losses  since  its
inception in 1980.  As of September  30,  2002,  the Company had an  accumulated
deficit of approximately $139.9 million. For the nine months ended September 30,
2002 and the years  ended  December  31,  2001,  2000 and 1999,  the Company had
losses from operations of approximately $2.1 million, $7.3 million, $4.2 million
and $5.6 million, respectively.  Also, the Company has limited liquid resources.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. The consolidated  condensed financial statements do not include
any adjustments that might result from the outcome of this uncertainty. Although
the Company  received FDA approval in 1989 to market  ALFERON N Injection in the
United States for the  treatment of certain  genital  warts,  it 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.

     At September 30, 2002, the Company had  approximately  $344,000 of cash and
cash  equivalents,  with which to support  future  operating  activities  and to
satisfy its financial obligations as they become payable.

     Based on the  Company's  estimates  of  revenues,  expenses,  the timing of
repayment of creditors,  and levels of production,  management believes that the
Company has  sufficient  resources to enable the Company to continue  operations
until the second  quarter of 2003.  However,  actual  results,  especially  with
respect to revenues,  may differ materially from such estimate, 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.

     Management plans to pursue raising additional capital by either (i) issuing
securities in a private or public equity  offering or (ii)  licensing the rights
to its injectable,  topical or oral  formulations  of natural alpha  interferon.
Management  is  seeking  to  enter  into  mergers,   joint   ventures  or  other
collaborations that could provide the additional  resources necessary to advance
the Company's most valuable programs. There can be no assurances,  however, that
the Company will be successful in obtaining an adequate  level of financing,  on
terms that are acceptable to the Company, needed to continue operations.

     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.


     On March 11,  2003,  the  Company  sold all its  inventory  related  to its
ALFERON  N  Injection  product  and  granted a license  to sell the  product  to
Hemispherx  Biopharma,  Inc. ("HEB"). In exchange for the inventory and license,
the Company  received HEB common stock with a guaranteed  value of $675,000,  an
additional  62,500 shares of HEB common stock without a guaranteed  value, and a
royalty  equal to 6% of the net sales of  ALFERON N  Injection.  The HEB  common
stock  will be  subject  to  selling  restrictions.  In  addition,  HEB  assumed
approximately  $400,000 of the Company's payables and various other commitments.
The Company and HEB also entered into  another  agreement  pursuant to which the
Company will sell to HEB,  subject to regulatory  approval,  the Company's  real
estate property,  plant, equipment,  furniture and fixtures, rights to ALFERON N
Injection and all of its patents,  trademarks  and other  intellectual  property
related to its natural alpha interferon business. In exchange,  the Company will
receive  $675,000 of HEB common stock with a  guaranteed  value,  an  additional
62,500 shares of HEB common stock without a guaranteed value and a royalty equal
to 6% of the net sales of all products sold containing natural alpha interferon.
HEB will assume  approximately  $1.5 million of the Company's  indebtedness that
currently  encumbers its assets. In addition,  HEB will fund the operating costs
of the Company's facility pending the completion of this transaction.

 Note 3.  Inventories

      Inventories consist of the following:

                                             September 30,      December 31,
                                                 2002               2001
                             As Restated As Restated
                                             See Note 9         See Note 9
                                            --------------   --------------
     Finished goods                         $   463,616         $ 1,263,696
     Work in process                          3,052,070           3,052,070
     Raw materials                            1,332,560           1,332,560
     Less reserve for excess inventory       (4,807,296)         (5,538,413)
                                            --------------   --------------
                                            $    40,950         $   109,913
                                              ===============   ==============

     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  of the  Company's  phase 3 studies  of  ALFERON N
Injection in HIV and HCV-infected  patients,  the Company has recorded a reserve
against its  inventory  of ALFERON N  Injection  to reflect  its  estimated  net
realizable  value.  The  reserve  was a result of the  Company's  assessment  of
anticipated  near-term projections of product to be sold or utilized in clinical
trials,   giving   consideration  to  historical  sales  levels.  As  a  result,
inventories  at September 30, 2002 and December 31, 2001,  reflect a reserve for
excess inventory of $4,807,296 and $5,538,413, respectively.

Note 4. Agreement with GP Strategies Corporation

     Pursuant to an agreement  dated March 25, 1999, GP  Strategies  Corporation
("GP  Strategies")  loaned the Company $500,000 (the "GP Strategies  Debt").  In
return,  the Company granted GP Strategies (i) a first mortgage on the Company's
real  estate,  (ii) a  two-year  option  (which has  expired)  to  purchase  the
Company's  real estate,  provided that the Company has terminated its operations
and a certain  liability  to the  American  Red Cross (the "Red Cross") has been
repaid,  and (iii) a two-year  right of first refusal (which has expired) in the
event the Company  desires to sell its real  estate.  In  addition,  the Company
issued GP  Strategies  500,000  shares  (the "GP  Shares")  of common  stock and
five-year  warrant (the "GP Warrant") to purchase 500,000 shares of common stock
at a price of $1 per share. The GP Shares and GP Warrant were valued at $500,000
and recorded as a financing cost and amortized  over the original  period of the
GP Strategies Debt in 1999. Pursuant to the agreement,  the Company has issued a
note to GP  Strategies  representing  the GP  Strategies  Debt,  which  note was
originally  due on September  30, 1999 (but extended to June 30, 2001) and bears
interest, payable at maturity, at the rate of 6% per annum. In addition, at that
time,  the  Company  negotiated  a  subordination  agreement  with the Red Cross
pursuant  to which  the Red Cross  agreed  that its lien on the  Company's  real
estate is subordinate to GP Strategies' lien. On March 27, 2000, the Company and
GP Strategies  entered into an agreement pursuant to which (i) the GP Strategies
Debt was extended until June 30, 2001 and (ii) the Management  Agreement between
the Company and GP  Strategies  was  terminated  and all  intercompany  accounts
between the Company and GP Strategies (other than the GP Strategies Debt) in the
amount of approximately  $130,000 were discharged which was recorded as a credit
to capital  in excess of par  value.  On August 23,  2001,  the  Company  and GP
Strategies  entered into an agreement  pursuant to which the GP Strategies  Debt
was extended to March 15,  2002.  During  2001,  the Company paid GP  Strategies
$100,000 to reduce the GP  Strategies  Debt. In addition,  in January 2002,  the
Company paid GP Strategies  $100,000 to further  reduce the GP Strategies  Debt.
The Company and GP Strategies are currently discussing restructuring the balance
of the GP Strategies  Debt.  Under the terms of such agreement GP Strategies has
the right to sell the Company's real estate,  but has not commenced action to do
so.

Note 5.  Agreement with the Red Cross

     The Company  obtained  human white blood cells used in the  manufacture  of
ALFERON N Injection from several sources,  including the Red Cross pursuant to a
supply agreement dated April 1, 1997 (the "Supply Agreement").  The Company will
not need to purchase  more human white blood cells until such time as production
of crude alpha interferon is resumed.  Under the terms of the Supply  Agreement,
the Company  was  obligated  to  purchase a minimum  amount of human white blood
cells each month through March 1999 (the "Minimum Purchase Commitment"), with an
aggregate Minimum Purchase  Commitment during the period from April 1998 through
March 1999 in excess of  $3,000,000.  As of November 23, 1998,  the Company owed
the Red Cross  approximately  $1.46  million plus interest at the rate of 6% per
annum  accruing from April 1, 1998 (the "Red Cross  Liability")  for white blood
cells purchased pursuant to the Supply Agreement.

     Pursuant to an agreement  dated November 23, 1998, the Company  granted the
Red  Cross a  security  interest  in  certain  assets  to  secure  the Red Cross
Liability,  issued to the Red Cross 300,000 shares of common stock and agreed to
issue  additional  shares at some future date as  requested  by the Red Cross to
satisfy any remaining  amount of the Red Cross  Liability.  The Red Cross agreed
that any net  proceeds  received by it upon sale of such shares would be applied
against the Red Cross Liability and that at such time as the Red Cross Liability
was paid in full, the Minimum  Purchase  Commitment  would be deleted  effective
April 1,1998 and any then existing  breaches of the Minimum Purchase  Commitment
would be waived.  In January  1999 the Company  granted the Red Cross a security
interest (the "Security  Interest")  in, among other things,  the Company's real
estate,  equipment  inventory,  receivables,  and New Jersey net operating  loss
carryovers  to secure  repayment of the Red Cross  Liability,  and the Red Cross
agreed to  forbear  from  exercising  its  rights  under the  Supply  Agreement,
including with respect to collecting the Red Cross Liability until June 30, 1999
(which was subsequently extended until December 31, 1999). On December 29, 1999,
the Company, the Red Cross and GP Strategies entered in an agreement pursuant to
which the Red Cross agreed that until  September  30, 2000 it would forbear from
exercising its rights under (i) the Supply Agreement,  including with respect to
collecting the Red Cross Liability,  and (ii) the Security  Interest.  As of the
date  hereof,  the Red Cross has not given the  Company  notice of its intent to
exercise its rights to collect the Red Cross Liability.  Under the terms of such
agreement, the Red Cross has the right to sell the Company's real estate. In the
event the Red Cross is  successful  in selling the  Company's  real estate,  the
Company would hope to be able to enter into a lease with the new owner, although
there can be no assurance that this would occur.

     During 1999,  the Red Cross sold 27,000 of the  Settlement  Shares and sold
the balance of such shares (273,000 shares) during the first quarter of 2000. As
a result, the net proceeds from the sales of the Settlement  Shares,  $33,000 in
1999 and $368,000 in 2000,  were applied against the liability to the Red Cross.
The  remaining  liability to the Red Cross  included in accounts  payable on the
consolidated condensed balance sheet at September 30, 2002 and December 31, 2001
was approximately $1,387,000 and $1,339,000,  respectively. On October 30, 2000,
the  Company  issued an  additional  800,000  shares to the Red  Cross.  The net
proceeds  from the sale of such shares by the Red Cross will be applied  against
the remaining liability of $1,387,000 owed to the Red Cross. However,  there can
be no  assurance  that the net  proceeds  from the sale of such  shares  will be
sufficient to extinguish the remaining liability owed the Red Cross.

Note 6.  Agreement with Metacine, Inc.

     On July 28, 2000,  the Company  acquired for $100,000 an option to purchase
certain securities of Metacine, Inc. ("Metacine"), a company engaged in research
using dendritic cell technology, on the terms set forth below. The $100,000 paid
for the option was recorded as investment in Metacine and other assets in 2000.

     On April 9, 2001, the Company exercised its option to acquire an 82% equity
interest  in  Metacine.  Pursuant  to the  agreement,  as  amended,  the Company
received  700,000  shares of Metacine  common  stock and a five-year  warrant to
purchase,  at a price of $12.48 per share,  282,794  shares of  Metacine  common
stock in exchange for  $300,000 in cash,  $250,000 of services to be rendered by
the Company by June 30, 2002 and 2,000,000 shares of the Company's common stock.
The agreement  contains certain  restrictions on the ability of Metacine to sell
the Company's shares and provides for cash payments  ("Deficiency  Payments") by
the Company to Metacine to the extent Metacine has not received from the sale of
the Company's  common stock,  cumulative net proceeds of $1,850,000 by September
30, 2002 or  $400,000 of net  proceeds  per  quarter  beginning  with the period
ending  September  30, 2001 and $250,000 for the quarter  ending  September  30,
2002. On October 4, 2001,  the Company made a Deficiency  Payment to Metacine in
the amount of $400,000 for the quarter  ending  September 30, 2001.  The Company
has not, as yet, made the remainder of the Deficiency  Payments in the aggregate
amount of  $1,450,000.  The  Company is  currently  discussing  various  options
regarding  the balance of the  Deficiency  Payments with  Metacine.  If Metacine
sells all of the 2,000,000 shares received and the cumulative  proceeds from the
sales and any  Deficiency  Payments  are less than  $1,850,000,  the Company may
issue to  Metacine  additional  shares of  common  stock at the  Company's  full
discretion.  These additional  shares would be treated in the same manner as the
original 2,000,000 shares. In the event that cumulative net proceeds to Metacine
from the sale of the Company's  common stock exceed  $1,850,000,  any Deficiency
Payments  previously  made by the Company  would be repaid to the Company to the
extent these proceeds  exceed  $1,850,000.  All additional  proceeds  beyond the
$1,850,000  and  repayment  of  Deficiency  Payments,  if any,  would be for the
benefit of Metacine.  The Company was required to put in escrow 100,000 Metacine
shares to secure its  obligations to render $250,000 of services to Metacine and
462,500  Metacine shares to secure its potential  obligations to make Deficiency
Payments.  Since the Company has not made $1,450,000 in Deficiency  Payments and
has not  rendered  $250,000 of  services to  Metacine,  Metacine  could  request
462,500  Metacine shares  currently held in escrow to satisfy the Company's past
due obligations.

     Although the Company is the majority  owner of Metacine,  the Company must,
on many matters, vote its shares of Metacine common stock in the same proportion
as votes cast by the  minority  stockholders  of  Metacine,  except for  certain
matters with respect for which the Company has protective  rights. In accordance
with EITF  Issue No.  96-16,  Investor's  Accounting  for an  Investee  When the
Investor has a Majority of the Voting  Interest but the Minority  Shareholder or
Shareholders  have Certain  Approval or Veto Rights,  the minority  holders have
substantive  participating  rights  which  include  controlling  the  selection,
termination  and  setting  of  compensation  for  Metacine  management  who  are
responsible  for  implementing  policies and  procedures,  making  operating and
capital decisions for Metacine and most other ordinary  operating  matters,  and
therefore,  the Company does not control Metacine. In addition, the Company only
has one  representative  on a board of directors  consisting of three directors.
Accordingly, the acquisition is being accounted for under the equity method.

     Of the  $2.5  million  consideration  paid  for  Metacine,  $2,341,418  was
recorded as a charge for the acquisition of in-process  research and development
("IPR&D")  in 2001.  The  charge was  recorded  as the  acquisition  of IPR&D as
Metacine's  primary  asset  is  technology  that has not  reached  technological
feasibility and has no alternative uses. The in-process research and development
expenses  relate to research  utilizing  dendritic  cells for the  treatment  of
various  diseases.  The $1,850,000  guaranteed  value of the 2,000,000 shares of
common stock issued to Metacine,  less the $400,000  Deficiency  Payment made in
October 2001, has been recorded as a current liability at September 30, 2002 and
December  31,  2001.  The  $250,000 of  services  to be  provided  has also been
recorded  as a current  liability.  Services  rendered  to Metacine to date were
immaterial and as such, the liability  remained  unchanged at September 30, 2002
and December  31,  2001.  The  investment  has been  further  reduced to zero at
December 31, 2001, by the  Company's  equity in the loss of Metacine of $158,582
for the period from April 9, 2001 through December 31, 2001.

Note 7.  Convertible Notes Payable

         In August 2002, the Company  completed a private  placement of $500,000
of convertible notes to accredited investors.  Each note is convertible into the
Company's  common stock at a price of $.05 per share  (subject to  adjustment to
70%  of  the  market  price  of  the   Company's   common  stock  under  certain
circumstances) and bears interest at the rate of 10% per annum.  $250,000 of the
convertible  notes  is due  January  31,  2003  and the  other  $250,000  of the
convertible  notes is due December 31, 2003. For each $100,000  principal amount
of notes issued,  the investors received warrants to purchase an additional 10.2
million shares of the Company's common stock  exercisable at $.01 per share. The
warrants were valued at $400,000 and are amortized as interest  expense over the
terms of the  respective  notes.  The  transaction is subject to approval by the
shareholders  of the  Company.  In the event that  shareholder  approval  is not
obtained,  the  convertible  noteholders  could exercise their rights and call a
default making the convertible notes  immediately due and payable.  In addition,
these  notes  are  convertible  into  common  stock at a  beneficial  rate.  The
beneficial  conversion  feature is valued at $100,000 and  accounted for as debt
discount and is being amortized over the term of the notes.

Note 8.           Recently Issued Accounting Standards

     In June 2001, the FASB issued SFAS No. 141, Business  Combinations,  ("SFAS
No. 141") and SFAS No. 142,  Goodwill  and Other  Intangible  Assets  ("SFAS No.
142").  SFAS No. 141 requires that the purchase method of accounting be used for
all business  combinations.  SFAS No. 141  specifies  criteria  that  intangible
assets  acquired  in a  business  combination  must  meet to be  recognized  and
reported  separately  from  goodwill.  SFAS No. 142 requires  that  goodwill and
intangible  assets with  indefinite  useful  lives no longer be  amortized,  but
instead  tested  for  impairment  at  least  annually  in  accordance  with  the
provisions of SFAS No. 142. SFAS No. 142 also  requires that  intangible  assets
with estimable useful lives be amortized over their respective  estimated useful
lives to their  estimated  residual  values,  and  reviewed  for  impairment  in
accordance with SFAS No. 121 and subsequently, SFAS No. 144 after its adoption.

     The Company  adopted the provisions of SFAS No. 141 as of July 1, 2001, and
SFAS No. 142 as of January 1, 2002.

     Upon  adoption of SFAS No. 142,  the Company was  required to reassess  the
useful lives and residual values of all intangible assets acquired, and make any
necessary amortization period adjustments by the end of the first interim period
after  adoption.  If an intangible  asset was identified as having an indefinite
useful  life,  the Company  would be required to test the  intangible  asset for
impairment  in accordance  with the  provisions of SFAS No. 142 within the first
interim period.  Impairment is measured as the excess of carrying value over the
fair value of an intangible  asset with an indefinite  life. Any impairment loss
would be measured as of the date of adoption and  recognized  as the  cumulative
effect of a change in accounting principle in the first interim period.

     As of the date of adoption of SFAS No. 142,  the Company  does not have any
goodwill and has unamortized  identifiable  intangible  assets of  approximately
$160,000, all of which is subject to the transition provisions of SFAS No. 142.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or  Disposal of  Long-Lived  Assets  ("SFAS No.  144").  SFAS No. 144  addresses
financial  accounting and reporting for the impairment or disposal of long-lived
assets.   This  Statement  requires  that  long-lived  assets  be  reviewed  for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable.  Recoverability of assets to
be held and used is measured by a comparison of the carrying  amount of an asset
to future net cash flows expected to be generated by the asset.  If the carrying
amount of an asset exceeds its estimated future cash flows, an impairment charge
is  recognized  by the amount by which the carrying  amount of the asset exceeds
the fair  value of the asset.  SFAS No. 144  requires  companies  to  separately
report  discontinued  operations and extends that reporting to a component of an
entity  that  either  has  been  disposed  of  (by  sale,  abandonment,  or in a
distribution to owners) or is classified as held for sale. Assets to be disposed
of are reported at the lower of the carrying  amount or fair value less costs to
sell. The Company  adopted SFAS No. 144 on January 1, 2002. The adoption of SFAS
No. 144 did not have a material impact on the Company's  operations or financial
position.

 Note 9.  Restatement

     The Company has restated its Consolidated  Condensed  Financial  Statements
for the three  months and nine months  ended  September  30, 2002 and 2001.  The
Consolidated  Condensed Financial Statements required restatement to correct the
reporting for  inventories,  convertible  notes  payable,  cost of sales,  other
expenses, interest expense and equity in loss of Metacine. The net loss and loss
per share for the three months and nine months ended September 30, 2002 and 2001
have been revised as follows:

                            Three Months Ended           Nine Months Ended
                              September 30,                September 30,
                           2002           2001          2002          2001
                           ----           ----          ----          ----

Net loss as
 previously reported    $(655,461)    $(1,664,640)  $(3,373,968)  $(6,898,925)

Effect of correcting
 cost of sales(1)          (9,042)        364,632       491,467       668,143

Effect of correcting
 other expenses(2)         100,000         240,000       440,000       240,000

Effect of correcting
 interest expense(3)      (112,745)          --         (112,745)        --

Effect of correcting
 equity in loss
 of Metacine(4)             38,668           --          274,846        --
                       -----------    -----------   -----------   -----------
Net loss as restated   $ (638,580)    $(1,060,008)  $(2,280,400)  $(5,990,782)
                       ===========    ============  ============  ===========
Basic and diluted net
 loss per share as
 previously stated     $     (.03)    $      (.08)   $     (.16)  $     (.36)
                       ===========    ============  ============  ===========
Basic and diluted net
loss per share
 as restated           $     (.03)   $     (.05)   $      (.11)  $      (.31)
                       ===========   ===========   ============  ============

(1)  To adjust for reversal of inventory  write-down and to adjust cost of sales
     for the change in value of common stock held by the American Red Cross.

(2) To adjust the change in market value of common stock held by Metacine.

(3) To record interest expense on the convertible notes payable.

(4) To adjust for the equity in the loss of Metacine in excess of the carrying
    basis.



<PAGE>



                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT



To the Board of Directors and Stockholders of
Interferon Sciences, Inc.

We have  reviewed  the  accompanying  condensed  consolidated  balance  sheet of
Interferon  Sciences,  Inc. and  subsidiary  as of September  30, 2002,  and the
related condensed consolidated  statements of operations for the three-month and
nine-month  periods  ended  September  30,  2002  and  2001  and  the  condensed
consolidated  statements of capital deficiency and cash flows for the nine-month
periods  ended  September  30,  2002  and  2001.  These  condensed  consolidated
financial statements are the responsibility of the Company's management.

We  conducted  our  reviews in  accordance  with  standards  established  by the
American  Institute  of  Certified  Public  Accountants.  A  review  of  interim
financial  information consists principally of applying analytical procedures to
financial  data and making  inquiries of persons  responsible  for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing  standards  generally  accepted in the United States of
America,  the objective of which is the  expression of an opinion  regarding the
financial  statements taken as a whole.  Accordingly,  we do not express such an
opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the  accompanying  financial  statements for them to be in conformity
with accounting principles generally accepted in the United States of America.

As  discussed  in Note 2, certain  conditions  indicate  that the Company may be
unable to continue as a going concern. The accompanying  financial statements do
not include any adjustments to the financial  statements that might be necessary
should the Company be unable to continue as a going concern.



Eisner LLP


New York, New York
June 10, 2003


<PAGE>



                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

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


     Since 1981,  the Company has been  primarily  engaged in the  research  and
development of pharmaceutical products containing Natural Alpha Interferon.  The
Company has experienced  significant  operating losses since its inception.  The
Company  received  FDA  approval in 1989 to market  ALFERON N  Injection  in the
United States for the treatment of certain types of genital warts.  However, 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.  The future revenues and  profitability
of, and availability of capital for, biotechnology  companies may be affected by
the continuing  efforts of  governmental  and  third-party  payors to contain or
reduce the costs of health care through various means. The Company has primarily
financed its operations to date through private placements,  public offerings of
the  Company's  securities,  and the sale of the  Company's  New Jersey tax loss
carryovers.

     Management is continuing to pursue raising additional capital by either (i)
issuing  securities in a private or public equity offering or (ii) licensing the
rights to its injectable  Natural Alpha Interferon for one or more  indications.
This may be more difficult in the future in light of the FDA's  requirement  for
the Company to conduct  additional Phase 3 studies of ALFERON N Injection in the
treatment  of  patients  infected  with the  human  immunodeficiency  virus  and
hepatitis  C virus.  Management  also is seeking to enter  into  mergers,  joint
ventures or other collaborations in the areas of cancer, infectious diseases and
immunology that could provide the additional  resources necessary to advance the
Company's  most  valuable  programs.  The  Company's  strategy is to utilize its
expertise in regulatory affairs,  clinical trials,  manufacturing,  and research
and development to acquire equity participations in early stage companies. There
can be no assurances,  however, that the Company will be successful in obtaining
an adequate  level of  financing,  on terms that are  acceptable to the Company,
needed to continue operations.

Liquidity and Capital Resources

     In August 2002,  the Company  completed a private  placement of $500,000 of
convertible  notes to accredited  investors.  Each note is convertible  into the
Company's  common stock at a price of $.05 per share  (subject to  adjustment to
70%  of  the  market  price  of  the   Company's   common  stock  under  certain
circumstances) and bears interest at the rate of 10% per annum.  $250,000 of the
convertible  notes  are due  January  31,  2003 and the  other  $250,000  of the
convertible notes are due December 31, 2003. For each $100,000  principal amount
of notes issued,  the investors received warrants to purchase an additional 10.2
million shares of the Company's common stock  exercisable at $.01 per share. The
transaction  is subject to approval by the  shareholders  of the Company.  As of
September  30,  2002,  the Company had  approximately  $344,000 in cash and cash
equivalents.  Until utilized,  such cash and cash equivalents are being invested
principally in short-term interest-bearing investments.

     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.

     Based on the  Company's  estimates  of  revenues,  expenses,  the timing of
repayment of creditors,  and levels of production,  management believes that the
cash  presently  available  will be sufficient to enable the Company to continue
operations until the second quarter of 2003. However, actual results, especially
with respect to  revenues,  may differ  materially  from such  estimate,  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  Accountants'  review report,
dated June 10, 2003, on the Company's  consolidated  financial  statements as of
and for the nine month period ended  September 30, 2002 includes an  explanatory
paragraph that states that the Company has  substantial  doubt about its ability
to continue as a going concern.

     On April 9, 2001, the Company exercised its option to acquire a substantial
equity interest in Metacine,  Inc.  Pursuant to the agreement,  as amended,  the
Company received 700,000 shares of Metacine common stock and a five-year warrant
to purchase,  at a price of $12.48 per share,  282,794 shares of Metacine common
stock in exchange for  $300,000 in cash,  $250,000 of services to be rendered by
the Company by June 30, 2002 and 2,000,000 shares of the Company's common stock.
The agreement  contains certain  restrictions on the ability of Metacine to sell
the Company's shares and provides for cash payments  ("Deficiency  Payments") by
the Company to Metacine to the extent  Metacine has not received,  from the sale
of the  Company's  common  stock,  cumulative  net  proceeds  of  $1,850,000  by
September  30, 2002 or $400,000 of net proceeds per quarter  beginning  with the
period ending  September 30, 2001 and $250,000 for the quarter ending  September
30, 2002. In October 2001, the Company made a Deficiency  Payment to Metacine in
the amount of $400,000 for the quarter  ending  September 30, 2001.  The Company
has not, as yet, made the remainder of the Deficiency  Payments in the aggregate
amount of  $1,450,000.  The  Company is  currently  discussing  various  options
regarding the balance of the Deficiency Payments with Metacine.

     The Company  participates in the State of New Jersey's corporation business
tax benefit certificate  transfer program (the "Program"),  which allows certain
high  technology and  biotechnology  companies to transfer unused New Jersey net
operating loss carryovers to other New Jersey  corporation  business  taxpayers.
During 1999, the Company  submitted an  application  to the New Jersey  Economic
Development  Authority  (the  "EDA")  to  participate  in the  Program  and  the
application  was  approved.  The EDA then issued a  certificate  certifying  the
Company's eligibility to participate in the Program and the amount of New Jersey
net operating loss  carryovers the Company has available to transfer.  Since New
Jersey law  provides  that net  operating  losses can be carried  over for up to
seven years,  the Company may be able to transfer  its New Jersey net  operating
losses from the last seven years.  The Company  estimated that, as of January 1,
1999, it had  approximately  $85 million of unused New Jersey net operating loss
carryovers available for transfer under the Program. The Program requires that a
purchaser pay at least 75% of the amount of the surrendered tax benefit.

     During  December  2001,  2000 and 1999,  the Company  completed the sale of
approximately  $12  million,  $19  million and $32 million of its New Jersey tax
loss  carryovers and received  $0.97  million,  $1.48 million and $2.35 million,
which was recorded as a gain on sale of state net operating  loss  carryovers on
the  Company's  Consolidated  Statement of  Operations  in 2001,  2000 and 1999,
respectively.  In June 2002,  the Company  submitted an  application  to sell an
additional approximately $2.6 million of tax benefits (calculated by multiplying
the Company's  unused New Jersey net operating loss carryovers  through December
31,  2000 of  approximately  $29 million by 9%).  The actual  amount of such tax
benefits the Company may sell will depend upon the allocation  among  qualifying
companies  of an  annual  pool  established  by the  State  of New  Jersey.  The
allocated pool for fiscal year 2002 and future years is $40 million per year.

     The Company  obtained  human white blood cells used in the  manufacture  of
ALFERON N Injection from several sources,  including the Red Cross pursuant to a
supply agreement dated April 1, 1997 (the "Supply Agreement").  The Company will
not need to purchase  more human white blood cells until such time as production
of crude alpha interferon is resumed.  Under the terms of the Supply  Agreement,
the Company  was  obligated  to  purchase a minimum  amount of human white blood
cells each month through March 1999 (the "Minimum Purchase Commitment"), with an
aggregate Minimum Purchase  Commitment during the period from April 1998 through
March 1999 in excess of  $3,000,000.  As of November 23, 1998,  the Company owed
the Red Cross  approximately  $1.46  million plus interest at the rate of 6% per
annum  accruing from April 1, 1998 (the "Red Cross  Liability")  for white blood
cells purchased pursuant to the Supply Agreement.

     Pursuant to an agreement  dated November 23, 1998, the Company  granted the
Red  Cross a  security  interest  in  certain  assets  to  secure  the Red Cross
Liability,  issued to the Red Cross 300,000 shares of common stock and agreed to
issue  additional  shares at some future date as  requested  by the Red Cross to
satisfy any remaining  amount of the Red Cross  Liability.  The Red Cross agreed
that any net  proceeds  received by it upon sale of such shares would be applied
against the Red Cross Liability and that at such time as the Red Cross Liability
was paid in full, the Minimum  Purchase  Commitment  would be deleted  effective
April 1,1998 and any then existing  breaches of the Minimum Purchase  Commitment
would be waived.  In January  1999 the Company  granted the Red Cross a security
interest (the "Security  Interest")  in, among other things,  the Company's real
estate,  equipment  inventory,  receivables,  and New Jersey net operating  loss
carryovers  to secure  repayment of the Red Cross  Liability,  and the Red Cross
agreed to  forbear  from  exercising  its  rights  under the  Supply  Agreement,
including with respect to collecting the Red Cross Liability until June 30, 1999
(which was subsequently extended until December 31, 1999). On December 29, 1999,
the Company, the Red Cross and GP Strategies entered in an agreement pursuant to
which the Red Cross agreed that until  September  30, 2000 it would forbear from
exercising its rights under (i) the Supply Agreement,  including with respect to
collecting the Red Cross Liability,  and (ii) the Security  Interest.  As of the
date  hereof,  the Red Cross has not given the  Company  notice of its intent to
exercise its rights to collect the Red Cross Liability.  Under the terms of such
agreement, the Red Cross has the right to sell the Company's real estate. In the
event the Red Cross is  successful  in selling the  Company's  real estate,  the
Company would hope to be able to enter into a lease with the new owner, although
there can be no assurance that this would occur.

     During 1999,  the Red Cross sold 27,000 of the  Settlement  Shares and sold
the balance of such shares (273,000 shares) during the first quarter of 2000. As
a result, the net proceeds from the sales of the Settlement  Shares,  $33,000 in
1999 and $368,000 in 2000,  were applied against the liability to the Red Cross.
The  remaining  liability to the Red Cross  included in accounts  payable on the
consolidated condensed balance sheet at September 30, 2002 and December 31, 2001
was approximately $1,387,000 and $1,339,000,  respectively. On October 30, 2000,
the  Company  issued an  additional  800,000  shares to the Red  Cross.  The net
proceeds  from the sale of such shares by the Red Cross will be applied  against
the remaining liability of $1,387,000 owed to the Red Cross. However,  there can
be no  assurance  that the net  proceeds  from the sale of such  shares  will be
sufficient to extinguish the remaining liability owed the Red Cross.

     Pursuant to an agreement  dated March 25, 1999,  GP  Strategies  loaned the
Company $500,000 (the "GP Strategies  Debt").  In return,  the Company agreed to
grant GP Strategies (i) a first  mortgage on the Company's  real estate,  (ii) a
two-year  option  (which has  expired) to purchase  the  Company's  real estate,
provided  that the  Company  has  terminated  its  operations  and the Red Cross
Liability has been repaid,  and (iii) a two-year  right of first refusal  (which
has  expired)  in the event the  Company  desires  to sell its real  estate.  In
addition,  the Company  agreed to issue GP Strategies  500,000  shares of Common
Stock (the "GP Shares") and a five-year  warrant (the "GP  Warrant") to purchase
500,000 shares of Common Stock at a price of $1 per share.  The common stock and
warrants  issued to GP  Strategies  were  valued at $500,000  and  recorded as a
financing cost and amortized over the original  period of the GP Strategies Debt
in 1999.  Pursuant to the agreement,  the Company issued a note to GP Strategies
representing  the GP Strategies  Debt,  which note was due on September 30, 1999
and  bears  interest,  payable  at  maturity,  at the rate of 6% per  annum.  In
addition, at that time the Company negotiated a subordination agreement with the
Red Cross  pursuant to which the Red Cross agreed that its lien on the Company's
real estate is  subordinate  to GP  Strategies'  lien.  On March 27,  2000,  the
Company and GP Strategies entered into an agreement pursuant to which (i) the GP
Strategies  Debt was  extended  until  June 30,  2001,  and (ii) the  Management
Agreement  between  the  Company  and  GP  Strategies  was  terminated  and  all
intercompany  accounts between the Company and GP Strategies  (other than the GP
Strategies Debt) in the amount of  approximately  $130,000 were discharged which
was recorded as a credit to capital in excess of par value.  On August 23, 2001,
the Company and GP Strategies entered into an agreement pursuant to which the GP
Strategies Debt was extended to March 15, 2002. During 2001, the Company paid GP
Strategies  $100,000 to reduce the GP Strategies  Debt. In addition,  in January
2002,  the  Company  paid  GP  Strategies  $100,000  to  further  reduce  the GP
Strategies  Debt.  The  Company  and  GP  Strategies  are  currently  discussing
restructuring  the balance of the GP Strategies Debt. As of the date hereof,  GP
Strategies has not given the Company notice of its intent to exercise its rights
to  collect  the GP  Strategies  Debt.  Under  the terms of such  agreement,  GP
Strategies  has the right to sell the  Company's  real  estate.  In the event GP
Strategies is successful in selling the Company's real estate, the Company would
hope to be able to enter into a lease with the new owner,  although there can be
no assurance that this would occur.

     In January 2002,  the Company was notified that if past due property  taxes
on its facility  were not paid within 30 days,  that a complaint may be filed to
foreclose on the property.  In July 2002, the Company was sued in action seeking
foreclosure  of the  Company's  property  due to  non-payment  of  approximately
$200,000 in taxes.  Although the tax lienholder attempted to exercise its rights
to foreclose on the Company's real estate, the past due property taxes were paid
prior to foreclosure in May 2003.

     The Company's Common Stock now trades on the OTC Bulletin Board,  which may
have a material  adverse  effect on the  ability of the  Company to finance  its
operations and on the liquidity of the Common Stock.

     On March 11,  2003,  the  Company  sold all its  inventory  related  to its
ALFERON  N  Injection  product  and  granted a license  to sell the  product  to
Hemispherx  Biopharma,  Inc. ("HEB"). In exchange for the inventory and license,
the Company  received HEB common stock with a guaranteed  value of $675,000,  an
additional  62,500 shares of HEB common stock without a guaranteed  value, and a
royalty  equal to 6% of the net sales of  ALFERON N  Injection.  The HEB  common
stock  will be  subject  to  selling  restrictions.  In  addition,  HEB  assumed
approximately  $400,000 of the Company's payables and various other commitments.
The Company and HEB also entered into  another  agreement  pursuant to which the
Company will sell to HEB,  subject to regulatory  approval,  the Company's  real
estate property,  plant, equipment,  furniture and fixtures, rights to ALFERON N
Injection and all of its patents,  trademarks  and other  intellectual  property
related to its natural alpha interferon business. In exchange,  the Company will
receive  $675,000 of HEB common stock with a  guaranteed  value,  an  additional
62,500 shares of HEB common stock without a guaranteed value and a royalty equal
to 6% of the net sales of all products sold containing natural alpha interferon.
HEB will assume  approximately  $1.5 million of the Company's  indebtedness that
currently  encumbers its assets. In addition,  HEB will fund the operating costs
of the Company's facility pending the completion of this transaction.

Results of Operations

Nine Months Ended September 30, 2002 Versus Nine Months Ended September 30, 2001

     For the nine months  ended  September  30,  2002 and 2001,  the Company had
revenues  from the sale of ALFERON N Injection  of  $1,647,279  and  $1,173,208,
respectively.

     In the nine months ended September 30, 2002, the Company sold,  through its
distributor,  to  wholesalers  and other  customers in the United  States 12,679
vials of ALFERON N Injection, compared to 8,819 vials sold by the Company during
the nine months ended September 30, 2001. In addition,  foreign sales of ALFERON
N Injection were zero and 61 vials for the nine months ended  September 30, 2002
and 2001, respectively.

     Cost of goods sold and excess/idle  production costs totaled $1,173,166 and
$1,097,428 for the nine months ended September 30, 2002 and 2001,  respectively.
Excess/idle  production  costs in the nine months ended  September  30, 2002 and
2001 represented fixed production costs, which were incurred after production of
ALFERON N Injection was discontinued in April 1998. Excess/idle production costs
were slightly lower during the nine months ended  September 30, 2002 as compared
to the nine months ended September 30, 2001.

     Research and  development  expenses  during the nine months ended September
30, 2002 of $1,154,289 decreased by $523,270 from $1,677,559 for the same period
in 2001,  due to  decreases  in both  external  research  payments  and internal
research costs.

     General and administrative expenses for the nine months ended September 30,
2002 were  $1,423,568 as compared to $1,960,399 for the same period in 2001. The
decrease of $536,831 was principally due to decreases in payroll, consulting and
public relations expenses.

     The Company recorded  $2,341,418 as acquisition of in-process  research and
development  expense  related to its  investment in Metacine for the nine months
ended September 30, 2001 as Metacine's  primary asset is technology that has not
reached technological feasibility and has no alternative uses.

     Interest  expense,  net, for the nine months ended  September  30, 2002 was
$176,656 and primarily  represented interest accrued on the Red Cross Liability,
GP  Strategies  Debt and the  convertible  notes  payable  partially  offset  by
interest income.  Interest income,  net, for the nine months ended September 30,
2001 was  $33,214 and  primarily  represented  interest  income on cash and cash
equivalents  partially  offset  by  interest  expense  accrued  on the Red Cross
Liability and GP Strategies Debt.

     Equity in loss of Metacine for the nine months ended September 30, 2001 was
$120,400 and represents the Company's  equity in loss of Metacine for the period
from April 9, 2001 to September 30, 2001.

     As a result of the foregoing, the Company incurred net losses of $2,280,400
and  $5,990,782  for  the  nine  months  ended  September  30,  2002  and  2001,
respectively.

Three Months Ended  September  30, 2002 Versus Three Months Ended  September 30,
2001

     For the three months  ended  September  30, 2002 and 2001,  the Company had
revenues  from the  sale of  ALFERON  N  Injection  of  $687,197  and  $458,746,
respectively.

     In the three months ended September 30, 2002, the Company sold, through its
distributor, to wholesalers and other customers in the United States 5,408 vials
of ALFERON N Injection,  compared to 3,394 vials sold by the Company  during the
three months ended  September 30, 2001. In addition,  foreign sales of ALFERON N
Injection  were zero and 36 vials for the three months ended  September 30, 2002
and 2001, respectively.

     Cost of goods sold and excess/idle  production  costs totaled  $432,979 and
$361,154 for the three months ended  September 30, 2002 and 2001,  respectively.
Excess/idle  production  costs in the three months ended  September 30, 2002 and
2001 represented fixed production costs, which were incurred after production of
ALFERON N Injection was discontinued in April 1998. Excess/idle production costs
were  slightly  higher  during the three  months  ended  September  30,  2002 as
compared to the three months ended September 30, 2001.

     Research and  development  expenses during the three months ended September
30, 2002 of $308,912  decreased by $191,118 from $500,030 for the same period in
2001, due to decreases in internal research costs.

     General and  administrative  expenses for the three months ended  September
30, 2002 were $441,054 as compared to $559,111 for the same period in 2001.  The
decrease of $118,057 was principally due to decreases in payroll expense.

     Interest  expense,  net, for the three months ended  September 30, 2002 was
$142,832 and primarily  represented interest accrued on the Red Cross Liability,
GP  Strategies  Debt and the  convertible  notes  payable  partially  offset  by
interest income. Interest expense, net, for the three months ended September 30,
2001 was  $5,504 and  primarily  represented  interest  accrued on the Red Cross
Liability and GP Strategies Debt partially offset by interest income on cash and
cash equivalents.

     Equity in loss of Metacine for the three months  ended  September  30, 2001
was $92,955,  and represents  the Company's  equity in loss of Metacine for such
period.

     As a result of the foregoing,  the Company  incurred net losses of $638,580
and  $1,060,008  for the  three  months  ended  September  30,  2002  and  2001,
respectively.

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, the risk that the
Company will run out of cash;  uncertainty of obtaining  additional  funding for
the Company; uncertainty of obtaining United States regulatory approvals for the
additional  uses under  development for the Company's  FDA-approved  product and
foreign  regulatory  approvals,  if sought,  and if such approvals are obtained,
uncertainty   of  the  successful   commercial   development  of  such  product;
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  product;  dependence on certain
contractors  to  manufacture  or  distribute  the Company's  product;  potential
adverse side effects from the use of the  Company's  product;  potential  patent
infringement  claims against the Company;  possible  inability of the Company to
protect its technology;  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  the  control  of the
Company.



<PAGE>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                           PART II. OTHER INFORMATION



Item 6.    Exhibits and Reports on Form 8-K

                (b) Reports on Form 8-K

               There were no reports on Form 8-K filed  during the three  months
               ended September 30, 2002.



<PAGE>


                            INTERFERON SCIENCES, INC.

                               September 30, 2002




                                   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.



                                               INTERFERON SCIENCES, INC.




DATE:  August 5, 2003                          By:  /s/ Lawrence M. Gordon
                                                        Lawrence M. Gordon
                                                        Chief Executive Officer




DATE:  August 5, 2003                          By:  /s/ Donald W. Anderson
                                                        Donald W. Anderson
                                   Controller


<PAGE>


CERTIFICATIONS

I, Lawrence M. Gordon, certify that:

1. I have reviewed this  quarterly  report on Form 10-Q of Interferon  Sciences,
Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed  such  disclosure  controls and  procedures  to ensure that
         material  information   relating  to  the  registrant,   including  its
         consolidated  subsidiaries,  is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's  disclosure controls
         and  procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c)  presented  in this  quarterly  report  our  conclusions  about  the
         effectiveness  of the disclosure  controls and procedures  based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a) all significant  deficiencies in the design or operation of internal
         controls  which  could  adversely  affect the  registrant's  ability to
         record,   process,   summarize  and  report  financial  data  and  have
         identified  for the  registrant's  auditors any material  weaknesses in
         internal controls; and

         b) any fraud,  whether or not  material,  that  involves  management or
         other  employees  who  have a  significant  role  in  the  registrant's
         internal controls; and

6. The  registrant's  other  certifying  officer  and I have  indicated  in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: August 5, 2003

/s/ Lawrence M. Gordon
----------------------
    Lawrence M. Gordon
    Chief Executive Officer



<PAGE>



CERTIFICATIONS

I, Donald W. Anderson, certify that:

1. I have reviewed this  quarterly  report on Form 10-Q of Interferon  Sciences,
Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed  such  disclosure  controls and  procedures  to ensure that
         material  information   relating  to  the  registrant,   including  its
         consolidated  subsidiaries,  is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's  disclosure controls
         and  procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c)  presented  in this  quarterly  report  our  conclusions  about  the
         effectiveness  of the disclosure  controls and procedures  based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a) all significant  deficiencies in the design or operation of internal
         controls  which  could  adversely  affect the  registrant's  ability to
         record,   process,   summarize  and  report  financial  data  and  have
         identified  for the  registrant's  auditors any material  weaknesses in
         internal controls; and

         b) any fraud,  whether or not  material,  that  involves  management or
         other  employees  who  have a  significant  role  in  the  registrant's
         internal controls; and

6. The  registrant's  other  certifying  officer  and I have  indicated  in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: August 5, 2003

/s/ Donald W. Anderson
----------------------
    Donald W. Anderson
    Controller