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

                                  FORM 10-Q/SB

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

      For the quarter ended June 30, 2003

                                          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
August 7, 2003.

                   Common Stock               36,339,286 shares



<PAGE>






                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                                TABLE OF CONTENTS




                                                                            Page

Part I.  Financial Information:

   Consolidated Condensed Balance Sheets--
     June 30, 2003 and December 31, 2002. . . . . . . . . . . . . . . . . . . .1

   Consolidated Condensed Statements of Operations--
     Three Months and Six Months Ended June 30, 2003 and 2002. . . . . . . . 2-3

   Consolidated Condensed Statement of Capital Deficiency---
     Six Months Ended June 30, 2003 . . . . . . . . . . . . . . . . . . . . . .4

   Consolidated Condensed Statements of Cash Flows--
     Six Months Ended June 30, 2003 and 2002. . . . . . . . . . . . . . . . . .5

   Notes to Consolidated Condensed Financial Statements. . . . . . . . . .  6-14

   Management's Discussion and Analysis of Financial
     Condition and Results of Operations . . . . . . . . . . . . . . . . . 15-18

Part II.  Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 19

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Certifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-22



<PAGE>

<TABLE>
<CAPTION>




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

                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                                       June 30,        December 31,
                                                        2003               2002
                                                     (Unaudited)
ASSETS                                              ------------------------------
<S>                                                   <C>               <C>
Current assets
  Cash and cash equivalents                         $    107,569      $   378,663
  Investment - available for sale                        915,613
  Accounts and other receivables                          10,258           42,739
  Notes receivable, net                                  195,500
  Inventories, net of valuation allowances
   of zero and $4,678,659, respectively                                    28,489
  Prepaid expenses and other current assets               38,602           12,179
                                                   -------------    -------------
Total current assets                                   1,267,542          462,070
                                                   -------------    -------------

Assets under contract of sale                          1,709,055

Property, plant and equipment, at cost                                 12,854,834
Less accumulated depreciation                                         (11,173,264)
                                                                    -------------
                                                                        1,681,570
                                                                    -------------
Patent costs, net of accumulated amortization                             132,187
Other assets                                               6,100              100
                                                   -------------    -------------
Total assets                                       $   2,982,697    $   2,275,927
                                                   =============    =============
LIABILITIES AND CAPITAL DEFICIENCY
Current liabilities
  Liabilities to be assumed by purchaser under
   contract of sale for assets                     $   2,452,110    $
  Accounts payable and accrued expenses                  885,062        3,204,594
  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                               413,745
  Convertible notes payable, net of debt discount        486,765          281,863
                                                   -------------    -------------
Total current liabilities                              5,523,937        5,600,202
                                                   -------------    -------------
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-36,339,286 and
 21,030,405 shares, respectively                         363,393          210,304
Capital in excess of par value                       136,830,283      136,810,618
Accumulated deficit                                 (139,887,529)    (140,345,197)
Accumulated other comprehensive income                   152,613
                                                   -------------     ------------
Total capital deficiency                              (2,541,240)      (3,324,275)
                                                   -------------     ------------
Total liabilities and capital deficiency            $  2,982,697    $   2,275,927
                                                   =============    =============

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

</TABLE>

<PAGE>




                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

               CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS(1)
                                   (Unaudited)


                                                      Three Months Ended
                                                            June 30,
                                                  -----------------------------
                                                       2003           2002
                                                  -------------   -------------
Revenue
  Alferon N Injection                              $               $    175,636
                                                  -------------   -------------
Total revenue                                                          175,636
                                                  -------------   -------------
Costs and expenses
Cost of goods sold and excess/idle
  production costs                                                      324,712
Research and development                                                377,269
General and administrative (net of
  reimbursement of $172,876 and zero,
  respectively)                                         154,752         402,951
                                                  -------------   -------------
Total costs and expenses                                154,752       1,104,932
                                                  -------------   -------------
Loss before interest expense                           (154,752)       (929,296)

Interest expense, net                                   (71,798)        (19,210)

                                                  -------------   -------------
Net loss                                           $   (226,550)    $  (948,506)
                                                  =============   =============

Basic and diluted net loss per share               $       (.01)    $      (.05)
                                                  =============   =============
Weighted average number of shares
  outstanding                                        36,292,142      20,453,748
                                                  =============   =============




(1)On March 11, 2003, the Company sold all its inventory related to its ALFERON
N Injection business. The Company also entered into an agreement, subject to
shareholder and regulatory approval, to sell all its other assets related to its
ALFERON N Injection business. See Note 10 of Notes to Consolidated Condensed
Financial Statements.







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


<PAGE>




                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

               CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS(1)
                                   (Unaudited)


                                                       Six Months Ended
                                                           June 30,
                                                  -----------------------------
                                                       2003           2002
                                                  -------------   -------------
Revenue
  Alferon N Injection                              $    241,637    $    960,082
  Bulk sale of remaining Alferon inventory
   and license fee                                    1,149,112
                                                  -------------   -------------
Total revenue                                         1,390,749         960,082
                                                  -------------   -------------
Costs and expenses
Cost of goods sold and excess/idle
  production costs                                      267,054         740,187
Research and development                                176,091         845,377
General and administrative (net of
  reimbursement of $294,127 and zero,
  respectively)                                         299,473         982,514
                                                  -------------   -------------
Total costs and expenses                                742,618       2,568,078
                                                  -------------   -------------
Income (loss) before interest expense                   648,131      (1,607,996)

Interest expense, net                                  (190,463)        (33,824)

                                                  -------------   -------------
Net income (loss)                                  $    457,668     $(1,641,820)
                                                  =============   =============

Basic net income (loss) per share                  $        .02     $      (.08)
                                                  =============   =============

Diluted net income (loss) per share                $        .01     $      (.08)
                                                  =============   =============
Weighted average number of shares
  outstanding - basic                                30,407,029      20,397,842

Effect of potential common shares                    52,800,000               0
                                                  -------------   -------------

Weighted average number of shares
  outstanding - diluted                              83,207,029      20,397,842
                                                  =============   =============



(1)On March 11, 2003, the Company sold all its inventory related to its ALFERON
N Injection business. The Company also entered into an agreement, subject to
shareholder and regulatory approval, to sell all its other assets related to its
ALFERON N Injection business. See Note 10 of Notes to Consolidated Condensed
Financial Statements.




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





<PAGE>

<TABLE>
<CAPTION>



                                                   INTERFERON SCIENCES, INC. AND SUBSIDIARY
                                                        CONSOLIDATED CONDENSED STATEMENT
                                                             OF CAPITAL DEFICIENCY
                                                         SIX MONTHS ENDED JUNE 30, 2003
                                                                  (Unaudited)


                                                                              Accumulated
                                           Capital                              other                                Total
                     Common Stock         in excess       Accumulated       comprehensive       Comprehensive       capital
                    Shares      Amount    of par value      deficit             income              income        deficiency
                    ------------------    ------------    ------------      -------------       -------------     ----------

<S>                 <C>          <C>        <C>            <C>                 <C>               <C>               <C>
 Balance at
  Dec. 31, 2002    21,030,405   $210,304   $136,810,618   $(140,345,197)      $                 $                $(3,324,275)

 Net proceeds
  from sale of
  common stock
  and warrants     15,000,000    150,000          1,000                                                              151,000

 Common stock
  issued under
  Company 401(k)
  Plan                308,881      3,089         18,665                                                               21,754

 Net income                                                     457,668                            457,668           457,668

 Other
  comprehensive
  income - available
  for sale
  securities                                                                    152,613            152,613           152,613
                                                                                               --------------
 Comprehensive income                                                                          $   610,281
                                                                                               ==============

                  ----------------------------------------------------------------------------               -----------------
 Balance at
  June 30, 2003    36,339,286   $363,393   $136,830,283   $(139,887,529)    $   152,613                          $(2,541,240)
                  ============================================================================               ================




 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)

                                                              Six Months Ended
                                                                   June 30,
                                                         --------------------------
                                                           2003         2002
                                                         ------------  ------------
<S>                                                      <C>           <C>
Cash flows from operating activities:
  Net income (loss)                                      $   457,668   $(1,641,820)
  Adjustments to reconcile net income (loss)
    to net cash used for operating activities:
    Receipt of shares of Hemispherx Biopharma,
     Inc. for Alferon inventory and assumption
     of certain liabilities                               (1,149,112)
    Depreciation and amortization                            104,702       212,542
    Noncash compensation expense                              21,754        47,338
    Debt discount                                            129,902
    Amortization of interest income                           (1,500)
    Change in operating assets and liabilities:
     Accounts and other receivables                           32,481       102,534
     Inventories                                               6,564        39,893
     Prepaid expenses and other current assets               (26,423)      (17,650)
     Accounts payable and accrued expenses                   117,870       179,725
     Amount due to GP Strategies                               9,000         9,000
                                                         ------------  ------------
    Net cash used for operating activities                  (297,094)   (1,068,438)
                                                         ------------  ------------
Cash flows from investing activities:
  Additions to notes receivable                             (200,000)
  Reduction of other assets                                                 10,000
                                                         ------------  ------------
  Net cash (used for) provided by investing activities      (200,000)       10,000
                                                         ------------  ------------
Cash flows from financing activities:
  Proceeds from convertible notes payable                     75,000       225,000
  Repayment of note payable to GP Strategies                              (100,000)
  Net proceeds from sale of common stock and warrants        151,000
                                                         ------------  ------------
Net cash provided by financing activities                    226,000       125,000
                                                         ------------  ------------
Net decrease in cash and cash equivalents                   (271,094)     (933,438)

Cash and cash equivalents at beginning of period             378,663     1,184,889
                                                         ------------  ------------
Cash and cash equivalents at end of period               $   107,569   $   251,451
                                                         ============  ============



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. Plan of Operations

     On March 11, 2003, Interferon Sciences, Inc. (the "Company" or "ISI") 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 $408,000 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 (if and when
approved) $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 $2.4 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. (See Note
10.)

         Upon completion of the transaction with HEB, ISI will not be involved
in the natural alpha interferon business and will not have a manufacturing and
research facility. In addition, on August 29, 2003, ISI and Metacine, Inc.
agreed to terminate their agreements (See Note 15). Therefore, ISI's remaining
assets will consist of cash, 974,056 shares of HEB common stock (consisting of
487,028 shares currently held by ISI and an additional 487,028 shares to be
received upon completion of the transaction with HEB), a royalty from HEB equal
to 6% of sales of products containing natural alpha interferon, a note
receivable and a warrant to purchase shares of Amphioxus Cell Technologies, Inc.
(See Note 11). The Company does not intend to distribute the HEB common stock to
its shareholders and is in discussions with a potential acquisition candidate.

     At June 30, 2003, the Company had approximately $108,000 of cash and cash
equivalents, with which to support future operating activities and to satisfy
its financial obligations as they become payable.

     The  Company  has  experienced   significant  operating  losses  since  its
inception in 1980. As of June 30, 2003, the Company had an  accumulated  deficit
of  approximately  $139.9  million.  For the six months ended June 30, 2003, the
Company earned net income of $458,000 and for the years ended December 31, 2002,
2001 and 2000, the Company incurred losses of approximately  $2.7 million,  $6.4
million,  and $2.7 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. Based on the Company's sale to HEB, estimates of revenue, expenses,
and the timing of repayment of creditors,  management  believes that the Company
has sufficient  resources to enable the Company to continue operations until the
end of December 2003.  However,  actual results 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 from other  sources,  will be available  when needed or on
terms acceptable to the Company.  Insufficient funds will require the Company to
terminate operations.

Note 3.  Earnings (Loss) Per Share

     Basic earnings (loss) per share have been computed using the weighted
average number of shares of common stock of the Company outstanding for each
period presented. For the six months ended June 30, 2003, the dilutive effect of
stock options and other common stock equivalents is included in the calculation
of diluted earnings per share using the treasury stock method. For the three
months ended June 30, 2003 and the three months and six months ended June 30,
2002, common stock equivalents are not included in the calculation of loss per
share as the effect would be anti-dilutive.

Note 4.  Investments

     In accordance with the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (SFAS 115), securities are classified either as trading, held to
maturity or available for sale. The Company intends to dispose of its
investments within one year and accordingly has classified its investments in
marketable securities as available for sale. Such investments are carried at
market value with unrealized gains and losses included as a separate component
in capital deficiency. At June 30, 2003, such investments consisted of 487,028
shares of common stock of Hemispherx Biopharma, Inc., a publicly traded company
(see Note 10).

     The values of marketable securities owned by the Company can change
substantially because of volatility in the price of each security, changes in
the business prospects of the issuer of the securities, specific events
influencing the operations of the issuer of the securities, and various other
circumstances outside the security issuer's control. Accordingly, the value of
the securities could decline so that a loss would be required to be recognized
for the total carrying amount of such securities.

 Note 5.  Inventories

      Inventories consist of the following:

                                               June 30,         December 31,
                                                 2003               2002
                                            --------------     -------------
     Finished goods                         $     0             $   322,518
     Work in process                              0               3,052,070
     Raw materials                                0               1,332,560
     Less reserve for excess inventory            0              (4,678,659)
                                           ---------------     -------------
                                            $     0             $    28,489
                                             ================     =============

     As discussed in Note 2, on March 11, 2003, the Company sold all its
inventory related to its ALFERON N Injection product to HEB.

     Finished goods inventory consisted 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 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 December 31, 2002, reflect a reserve for excess inventory of
$4,678,659.

Note 6. 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. In
connection with the Asset Sale Transactions, the Company, HEB and GP Strategies
entered into an agreement pursuant to which GP Strategies agreed to forbear from
exercising its rights until May 31, 2003 and GP Strategies agreed to accept HEB
common stock with a guaranteed value of $425,000 in full settlement of all the
Company's obligations to GP Strategies. The Company has been advised by HEB that
they have issued and delivered the HEB common stock to GP Strategies in full
settlement of the Company's obligation to GP Strategies.

Note 7.  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. In
connection with the Asset Sale Transactions, the Company, HEB and the Red Cross
entered into a similar agreement pursuant to which the Red Cross agreed to
forbear from exercising its rights until May 31, 2003 and the Red Cross agreed
to accept HEB common stock with a guaranteed value of $500,000 in full
settlement of all of the Company's obligations to the Red Cross. The Company has
been advised by HEB that they have issued and delivered the HEB common stock to
the Red Cross in full settlement of the Company's obligation to the Red Cross.

Note 8.  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.

     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, an obligation to pay Metacine $
1,850,000 and $250,000 of services to be rendered by the Company by June 30,
2002. In addition, the Company issued Metacine 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 the Company to make cash
payments ("Deficiency Payments") 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 made the remainder of the Deficiency Payments in
the aggregate amount of $1,450,000. 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 ($400,000 through December 31, 2002) 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 Metcine, 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 (including establishing budgets) 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 a patent portfolio consisting of six issued patents, eight
pending patents and four invention disclosures related to the use of dendritic
cells for the treatment of various diseases. While the patent portfolio, when
viewed as a whole, represented a new approach to the treatment of various
diseases utilizing cell therapy, the six issued patents had no independent
commercial value. While the Company did not engage the services of an
independent appraiser to assess the fair value of the purchased in process
research and development, it considered the following factors: (i) any product
or process utilizing dendritic cells as a treatment for any disease would
regulated by the FDA and therefore would require extensive clinical testing
prior to the time any revenue would be generate from the sale of a product or
process, (ii) the cost of such clinical trials would be in excess of $
50,000,000, (iii) it would take between seven to ten years to complete such
clinical trials, (iv) there could be no assurance that even if Metacine could
obtain the funding required to complete the clinical trials (which was well
beyond Metacine's capability at the time Metacine acquired rights to the patent
portfolio), that the clinical trials would have shown the product or process
tested to be safe and effective. The Company's $1,850,000 obligation to
Metacine, less the $400,000 Deficiency Payment made in October 2001, has been
recorded as a current liability at December 31, 2002 and 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 December 31, 2002 and 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.

     On April 1, 2003, the license granted by the University of Pittsburgh to
Metacine covering Metacine's technology was terminated due to non-payment by
Metacine.

     Accordingly, the Company's has not reflected its share of its equity in the
losses in Metacine for the years ended December 31, 2002 and 2001 in the amounts
of $274,846 and $290,994, respectively.

     On August 29,  2003,  the Company and  Metacine  entered  into a Settlement
Agreement. (See Note 15.)

Note 9.           Recently Issued Accounting Standards

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FAS Statements
4, 44 and 64, Amendment of FAS Statement 13 and Technical Corrections." SFAS No.
145 eliminates Statement 4 (and Statement 64, as it amends Statement 4), which
required gains and losses from extinguishment of debt to be aggregated and, if
material, classified as an extraordinary item, and thus, also the exception to
applying Opinion 30 is eliminated as well. This statement is effective for
fiscal years beginning after May 2002 for the provisions related to the
rescission of Statements 4 and 64 and for all transactions entered into
beginning May 2002 for the provision related to the amendment of Statement 13.
The Company does not expect that the adoption of SFAS No. 145 will have a
material impact on its results of operations or financial position.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
associated with Exit or Disposal Activities." SFAS No. 146 requires recording
costs associated with exit or disposal activities at their fair values when a
liability has been incurred. Under previous guidance, certain exit costs were
accrued upon management's commitment to an exit plan. The Company is required to
adopt SFAS No. 146 on January 1, 2003. The Company does not expect the adoption
of SFAS No. 146 will have a material impact on its results of operations or
financial position.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure," an amendment to SFAS No. 123,
"Accounting for Stock-Based Compensation." Provisions of this statement provide
two additional alternative transition methods: modified prospective method and
retroactive restatement method, for an entity that voluntary changes to the fair
value based method of accounting for stock-based employee compensation. The
statement eliminates the use of the original SFAS No. 123 prospective method of
transition alternative for those entities that change to the fair value based
method in fiscal years beginning after December 15, 2003. It also amends the
disclosure provisions of SFAS No. 123 to require prominent annual disclosure
about the effects on reported net income in the Summary of Significant
Accounting Policies and also requires disclosure about these effects in interim
financial statements. These provisions are effective for financial statements
for fiscal years ending after December 15, 2002. Accordingly, the Company
adopted the applicable disclosure requirements of this statement for year-end
reporting. The transition provisions of this statement apply upon the adoption
of the SFAS No. 123 fair value based method. The Company did not change its
method of accounting for employee stock-based compensation from the intrinsic
method to the fair value based alternative.

     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement No.
133 on Derivative Instruments and Hedging Activities." Among other things, this
Statement requires that contracts with comparable characteristics be accounted
for similarly and clarifies under what circumstances a contract with an initial
net investment meets the characteristics of a derivative. SFAS No. 149 is
effective July 1, 2003. The Company does not expect this pronouncement to have a
material impact on its results of operations or financial condition.

     In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity." SFAS
No. 150 establishes standards for classifying and measuring certain financial
instruments with characteristics of both liabilities and equity. SFAS No. 150 is
effective for financial instruments entered into or modified after May 31, 2003.
The Company does not expect this pronouncement to have a material impact on its
results of operations or financial condition.

Note 10.   Agreement with Hemispherx Biopharma, Inc. ("HEB")

     On March 11, 2003, the Company executed two agreements with HEB to sell
certain assets of ISI (the two asset sale transactions are hereinafter jointly
referred to as the "Asset Sale Transactions" and individually referred to as the
"First Asset Sale" and the "Second Asset Sale") and consummated the First Asset
Sale.

     In the first agreement with HEB (the "First Asset Sale Agreement"), ISI
sold all of its inventory related to ALFERON N Injection(R), ISI's natural alpha
interferon product approved for the treatment of certain types of genital warts
(the "Product"), and granted a three-year license for the production,
manufacture, use, marketing and sale of the Product in the United States.

For these assets, ISI:

(i)  received  424,528  shares of HEB common stock (the "Common  Stock")  (these
     shares,  along with other  shares  described  below as having a  guaranteed
     value,  are sometimes  referred to as the "Guaranteed  Shares") which had a
     Market Value (as defined in the First Asset Sale Agreement) of $675,000 and
     a guaranteed value of $675,000;

(ii) received an  additional  62,500 shares of Common Stock without a guaranteed
     value; and

(iii) will receive a royalty equal to 6% of the net sales of the Product.

     ISI will receive a service fee for providing certain transitional services.
Such service fee has been treated as reimbursement of expenses and netted
against expenses. For the three months and six months ended June 30, 2003, such
service fee amounted to $172,876 and $294,127, respectively. In addition, HEB
assumed ISI payables aggregating approximately $408,000 and certain other
obligations related to the Product. This Agreement obligates HEB to register the
Common Stock issued to ISI, sets periodic limits on the number of shares ISI may
sell and requires HEB to pay ISI an amount equal to the product received by
multiplying (i) the number of Guaranteed Shares remaining unsold on March 11,
2005 and (ii) $1.59. The remaining Guaranteed Shares will then be returned to
HEB.

     In the second agreement with ISI (the "Second Asset Sale Agreement"), ISI
has agreed to sell, subject to certain approvals, to HEB all of its rights to
the Product and other assets related to the Product including, but not limited
to, real estate and machinery.

     At June 30, 2003, such assets have been classified as "assets under
contract of sale" in the accompanying balance sheet. At June 30, 2003, the
carrying value of these assets were:

                       Property, Plant and Equipment      $1,583,403
                       Patent Costs                          125,652
                                                             -------
                                                          $1,709,055

     For these assets, ISI will:

(i)  receive  424,528  shares of HEB Common  Stock which has a Market  Value (as
     defined in the Second  Asset Sale  Agreement)  of $675,000 and a guaranteed
     value of $675,000;

(ii) receive  an  additional  62,500  shares  of  HEB  Common  Stock  without  a
     guaranteed value; and

(iii)receive a royalty  equal to 6% of the net sales of any products  containing
     natural alpha interferon sold by HEB (or a Marketing Partner, as defined in
     the Second Asset Sale Agreement).

     In addition, in connection with the second agreement, HEB will be required
to satisfy three obligations of ISI which aggregate approximately $2,400,000.
HEB will be obligated to pay certain ongoing expenses related to ISI's
operations prior to the closing of the Second Asset Sale Agreement.

     The Second Asset Sale Agreement obligates HEB to register the Common Stock
to be issued, sets periodic limits on the number of these shares that may be
sold and requires HEB to pay ISI an amount equal to the product received by
multiplying (i) the number of Guaranteed Shares remaining unsold on the date
which is two years after the closing date of the Second Asset Sale Agreement and
(ii) $ 1.59. The remaining Guaranteed Shares will then be returned to HEB.

     The purchase price for the assets was determined by negotiation between HEB
and ISI.

     The foregoing descriptions of the Asset Sale Transactions, the First Asset
Sale Agreement and the Second Asset Sale Agreement are qualified in their
entirety by reference to the full text of the First Asset Sale Agreement, the
Second Asset Sale Agreement, which are filed as Exhibits 2.1 and 2.2 to the
Current Report on Form 8-K, dated March 18, 2003, and incorporated herein by
reference.




Note 11. Note  Receivable - Agreement  with Amphioxus  Cell  Technologies,  Inc.
     ("Amphioxus")

     On March 20, 2003, the Company entered into a collaterialized note
agreement (the "Note") with Amphioxus to advance up to $250,000. Amphioxus is a
biotechnology company that applies liver biology solutions to problems in drug
discovery and human therapeutics. Pursuant to the Note, the Company advanced
$200,000 prior to June 30, 2003 and an additional $25,000 subsequent to such
date. The Note is due on March 19, 2004, bears interest at the rate of 10% per
annum and is collaterialized by all of the assets of Amphioxus. In addition, the
Company received a warrant, exercisable until March 2008, to purchase for $
50,000, an aggregate of 10% of the common stock of Amphioxus on a fully diluted
basis. The warrant is valued at $7,500, is prorated based on the amount of
monies advanced and is amortized as interest income over the term of the Note.

Note 12.  Stock-Based Compensation

     The Company  applies APB  Opinion  No. 25 and  related  Interpretations  in
accounting  for all the  plans.  Accordingly,  no  compensation  cost  has  been
recognized  under these  plans.  The  Company  has  adopted the  disclosure-only
provisions of SFAS No. 123,  "Accounting for Stock-Based  Compensation" and SFAS
No. 148,  "Accounting for Stock-Based  Compensation-Transition  and Disclosure,"
which was  released  in  December  2002 as an  amendment  to SFAS No.  123.  The
following table  illustrates the effect on net income (loss) and earnings (loss)
per share if the fair value based method had been applied to all awards:


                                       Three Months            Six Months
                                      Ended June 30,         Ended June 30,
                                      --------------         --------------
                                    2003         2002       2003       2002
                                    ---------------------------------------

Reported net income (loss)      $(226,550)  $(948,506)  $ 457,668  $(1,641,820)
  Stock-based employee
    compensation expense
    in reported net income
    (loss), net of
    related tax effects
  Stock-based employee
    compensation expense
    determined under the fair
    value based method, net of
    related tax effects             --        (23,542)       --        (47,083)
                                 ----------------------------------------------
Pro forma net income (loss)     $(226,550)  $(972,048)  $ 457,668  $(1,688,903)
                                 ==============================================

Income (loss) per share basic
  As reported                   $    (.01)  $    (.05)  $     .02  $      (.08)
  Pro forma                     $    (.01)  $    (.05)  $     .02  $      (.08)

Income (loss) per share diluted
  As reported                   $    (.01)  $    (.05)  $     .01  $      (.08)
  Pro forma                     $    (.01)  $    (.05)  $     .01  $      (.08)


Note 13.  Stockholders Equity

     In March 2003, the Company sold 15,000,000 shares of its common stock in a
private placement transaction to an investor for $150,000. In connection with
this private placement, the Company also sold, for $1,000, 15,000,000 warrants
exercisable at $0.01 per share and expiring in March 2008.


Note 14.  Convertible Notes Payable

         In June 2003, the Company received $75,000 and issued convertible notes
payable to private investors. The notes are due June 30, 2004 and bear interest
at the rate of 6% per annum. Each note is convertible into the Company's common
stock at a price of $.06 per share.

Note 15.          Subsequent Event

         Metacine

     On August 29, 2003, the Company and Metacine entered into an agreement
pursuant to which the Company relinquished all rights to the shares and warrants
of Metacine held by the Company and issued Metacine 1,000,000 shares of the
Company's common stock and Metacine relieved the Company of its $1,700,000
obligation to Metacine. In addition, Metacine retains the 2,000,000 shares of
the Company's common stock issued on April 9, 2001 (see Note 8). The effects of
the settlement will be reflected in the period the settlement transaction is
consummated.

      Tax Litigation

      In September 2003, the Company was sued in action seeking foreclosure of
the Company's property due to non-payment of approximately $225,000 in taxes.
The Company has until October 17, 2003 to answer the complaint. After such time,
the plaintiff has the right to seek an order giving the Company 30 days to pay
the unpaid taxes. If the taxes remain unpaid, the court may make the plaintiff
the owner of the property. The property is subject to the sale of the Company's
assets to HEB. See Note 10.

     HEB Litigation

     On September 16, 2003, HEB filed and subsequently served and moved for
expedited proceedings on, a complaint filed in the Court Of Chancery of the
State of Delaware, New Castle County, against ISI. The Complaint seeks specific
performance, and declaratory and injunctive relief related to the Inventory and
Asset Purchase Agreements with ISI. Specifically, HEB alleges that ISI has
delayed its performance pursuant to the Inventory and Asset Purchase Agreement
and, as a result, the Asset Purchase Agreement did not close within 180 days of
the date of the execution of the agreements. Paragraph 7.7 of the Asset Purchase
Agreement states that either party to the agreement may terminate the agreement
if there is no closing within 180 days of the date of the agreement. HEB
requested that the Court require ISI to specifically perform its obligations
under the agreement or, in the alternative, that paragraph 7.7 of the agreement
be eliminated or reformed to eliminate ISI's ability to terminate pursuant to
that paragraph. HEB also requested that ISI, as a result of its conduct, not be
permitted to terminate the Asset Purchase Agreement pursuant to paragraph 7.7 or
due to the passage of time. At a hearing held on September 29, 2003, the Court
set a trial of the case for January 6-7, 2004 and the parties have agreed that
neither party shall have the right to terminate the Asset Purchase Agreement
pursuant to paragraph 7.7 until the date which is at least two weeks following
trial, and only then, unless the Court has ruled, upon five days written notice
to the other party.


<PAGE>




                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

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


     Since 1981, the Company was 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. Upon
completion of the transactions described below with HEB, ISI will not be
involved in the natural alpha interferon business and will not have a
manufacturing and research facility. In addition, on August 29, 2003, ISI and
Metacine, Inc. agreed to terminate their agreements (See Note 15). Therefore,
ISI's remaining assets will consist of cash, 974,056 shares of HEB common stock
(consisting of 487,028 shares currently held by ISI and an additional 487,028
shares to be received upon completion of the transaction with HEB), a royalty
from HEB equal to 6% of sales of products containing natural alpha interferon, a
note receivable and a warrant to purchase shares of Amphioxus Cell Technologies,
Inc. (See Note 11). The Company does not intend to distribute the HEB common
stock to its shareholders and is in discussions with a potential acquisition
candidate.

Liquidity and Capital Resources

     Agreement with Hemispherx Biopharma, Inc. ("HEB")

     On March 11, 2003, Interferon Sciences, Inc. ("ISI" or the "Company")
executed two agreements with HEB to sell certain assets of ISI (the two asset
sale transactions are hereinafter jointly referred to as the "Asset Sale
Transactions" and individually referred to as the "First Asset Sale" and the
"Second Asset Sale") and consummated the First Asset Sale.

     In the first agreement with HEB (the "First Asset Sale Agreement"), ISI
sold all of its inventory related to ALFERON N Injection(R), ISI's natural alpha
interferon product approved for the treatment of certain types of genital warts
(the "Product"), and granted a three-year license for the production,
manufacture, use, marketing and sale of the Product in the United States.

For these assets, ISI:

(i)  received  424,528  shares of HEB common stock (the "Common  Stock")  (these
     shares,  along with other  shares  described  below as having a  guaranteed
     value,  are sometimes  referred to as the "Guaranteed  Shares") which had a
     Market Value (as defined in the First Asset Sale Agreement) of $675,000 and
     a guaranteed value of $675,000;

(ii) received an  additional  62,500 shares of Common Stock without a guaranteed
     value; and

(iii) will receive a royalty equal to 6% of the net sales of the Product.

     ISI will receive a service fee for providing certain transitional services.
In addition, HEB will assume ISI payables and certain other obligations related
to the Product. This Agreement obligates HEB to register the Common Stock issued
to ISI, sets periodic limits on the number of shares ISI may sell and requires
HEB to pay ISI an amount equal to the product received by multiplying (i) the
number of Guaranteed Shares remaining unsold on March 11, 2005 and (ii) $1.59.
The remaining Guaranteed Shares will then be returned to HEB.

     In the second agreement with ISI (the "Second Asset Sale Agreement"), ISI
has agreed to sell, subject to certain approvals, to HEB all of its rights to
the Product and other assets related to the Product including, but not limited
to, real estate and machinery. For these assets, ISI will:

(i)  receive  424,528  shares of HEB Common  Stock which has a Market  Value (as
     defined in the Second  Asset Sale  Agreement)  of $675,000 and a guaranteed
     value of $675,000;

(ii) receive  an  additional  62,500  shares  of  HEB  Common  Stock  without  a
     guaranteed value; and

(iii)receive a royalty  equal to 6% of the net sales of any products  containing
     natural alpha interferon sold by HEB (or a Marketing Partner, as defined in
     the Second Asset Sale Agreement).

     In addition, HEB will be required to satisfy three obligations of ISI which
aggregate approximately $2,400,000. HEB will be obligated to pay certain ongoing
expenses related to ISI's operations prior to the closing of the Second Asset
Sale Agreement.

     The Second Asset Sale Agreement obligates HEB to register the Common Stock
to be issued, sets periodic limits on the number of these shares that may be
sold and requires HEB to pay ISI an amount equal to the product received by
multiplying (i) the number of Guaranteed Shares remaining unsold on the date
which is two years after the closing date of the Second Asset Sale Agreement and
(ii) $ 1.59. The remaining Guaranteed Shares will then be returned to HEB.

     The purchase price for the assets was determined by negotiation between HEB
and ISI.

     The foregoing descriptions of the Asset Sale Transactions, the First Asset
Sale Agreement and the Second Asset Sale Agreement are qualified in their
entirety by reference to the full text of the First Asset Sale Agreement, the
Second Asset Sale Agreement, which are filed as Exhibits 2.1 and 2.2 to the
Current Report on Form 8-K, dated March 18, 2003, and incorporated herein by
reference.

     In March 2003, the Company sold 15,000,000 shares of its common stock in a
private placement transaction to an investor for $150,000. In connection with
this private placement, the Company also issued 15,000,000 warrants exercisable
at $.01 per share and expiring in March 2008.

     In June 2003, the Company received $75,000 and issued convertible notes
payable to private investors. The notes are due June 30, 2004 and bear interest
at the rate of 6% per annum. Each note is convertible into the Company's common
stock at a price of $.06 per share.

     As of June 30, 2003, the Company had approximately $108,000 in cash and
cash equivalents. Until utilized, such cash and cash equivalents are being
invested principally in short-term interest-bearing investments.

     Based on the Company's sale to HEB, estimates of revenue, expenses, and the
timing of repayment of creditors,  management  believes that the cash  presently
available will be sufficient to enable the Company to continue  operations until
the end of December 2003.  However,  actual results 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  will be
available when needed or on terms acceptable to the Company.  Insufficient funds
will require the Company to terminate operations.

     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 2002, 2001 and 2000, the Company completed the sale of
approximately $6.5 million, $12 million and $19 million of its New Jersey tax
loss carryovers and received $0.53 million, $0.97 million and $1.48 million,
which was recorded as a gain on sale of state net operating loss carryovers on
the Company's Consolidated Statement of Operations in 2002, 2001 and 2000,
respectively. In June 2003, the Company submitted an application to sell an
additional approximately $2 million of tax benefits (calculated by multiplying
the Company's unused New Jersey net operating loss carryovers through December
31, 2000 of approximately $22.6 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 2003 and future years is $40 million per year.

       The Company's Common Stock now trades on the OTC Pink Sheets, 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.

Results of Operations

Six Months Ended June 30, 2003 Versus Six Months Ended June 30, 2002

     For the six months ended June 30, 2003 and 2002, the Company had revenues
from the sale of ALFERON N Injection of $241,637 and $960,082, respectively. In
addition, the Company recorded revenues of $1,149,112 from the bulk sale of the
remaining Alferon inventory.

     Through March 10, 2003, the Company sold, through its distributor, to
wholesalers and other customers in the United States 1,980 vials of ALFERON N
Injection, compared to 7,271 vials sold by the Company during the six months
ended June 30, 2002.

     Cost of goods sold and excess/idle production costs totaled $267,054 and
$740,187 for the six months ended June 30, 2003 and 2002, respectively.
Excess/idle production costs in the six months ended June 30, 2003 and 2002
represented fixed production costs, which were incurred after production of
ALFERON N Injection was discontinued in April 1998. Excess/idle production costs
were lower during the six months ended June 30, 2003 as compared to the six
months ended June 30, 2002, due principally to Hemispherx taking over certain
operating costs beginning March 11, 2003.

     Research and development expenses during the six months ended June 30, 2003
of $176,091 decreased by $669,286 from $845,377 for the same period in 2002, due
principally to Hemispherx taking over certain operating costs beginning March
11, 2003.

     General and administrative expenses for the six months ended June 30, 2003
were $299,473 (net of $294,127 reimbursed by Hemispherx) as compared to $982,514
for the same period in 2002. The decrease of $683,041 was due principally to
Hemispherx taking over certain operating costs beginning March 11, 2003.

     Interest expense, net, for the six months ended June 2003 was $190,463 as
compared to $33,824 for the six months ended June 30, 2002. The increase of
$156,639 was primarily due to the interest, including amortization of debt
discount, on the convertible notes payable.

     As a result of the foregoing, the Company incurred net income of $457,668
and net loss of $1,641,820 for the six months ended June 30, 2003 and 2002,
respectively.

Three Months Ended June 30, 2003 Versus Three Months Ended June 30, 2002

     For the three months ended June 30, 2003 and 2002, the Company had revenues
from the sale of ALFERON N Injection of zero and $175,636, respectively. 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.

     The Company sold, through its distributor, to wholesalers and other
customers in the United States 1,400 vials of ALFERON N Injection during the
three months ended June 30, 2002.

     Cost of goods sold and excess/idle production costs totaled zero and
$324,712 for the three months ended June 30, 2003 and 2002, respectively.
Excess/idle production costs in the three months ended June 30, 2002 represented
fixed production costs, which were incurred after production of ALFERON N
Injection was discontinued in April 1998. Excess/idle production costs were zero
during the three months ended June 30, 2003 due to Hemispherx taking over
certain operating costs beginning March 11, 2003.

     Research and development expenses during the three months ended June 30,
2003 were zero as compared to $377,269 for the same period in 2002, due to
Hemispherx taking over certain operating costs beginning March 11, 2003.

     General and administrative expenses for the three months ended June 30,
2003 were $154,752 (net of $172,876 reimbursed by Hemispherx) as compared to
$402,951 for the same period in 2002. The decrease of $248,199 was due
principally to Hemispherx taking over certain operating costs beginning March
11, 2003.

     Interest expense, net, for the three months ended June 30, 2003 was $71,798
as compared to $19,210 for the three months ended June 30, 2002. The increase of
$52,588 was primarily due to the interest, including amortization of debt
discount, on the convertible notes payable.

     As a result of the foregoing, the Company incurred net losses of $226,550
and $948,506 for the three months ended June 30, 2003 and 2002, 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 and the uncertainty of obtaining additional funding
for the Company, 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 June 30, 2003.


<PAGE>


                            INTERFERON SCIENCES, INC.

                                  June 30, 2003




                                   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:  October 15, 2003                      By:  /s/ Lawrence M. Gordon
                                                      Lawrence M. Gordon
                             Chief Executive Officer




DATE:  October 15, 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/SB  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: October 15, 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/SB  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: October 15, 2003

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