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

                                    FORM 10-Q

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

         For the quarter ended March 31, 2000

                                          or

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

         For the transition period from ___________ to ________________

         Commission File Number:   0-10379


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


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


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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such shorter  period) that the  registrant  was
required  to file  such  reports  and  (2)  has  been  subject  to  such  filing
requirements for the past 90 days.

                                               Yes  [X]       No   [ ]

Number of shares  outstanding of each of issuer's  classes of common stock as of
May 1, 2000:

       Common Stock                                            5,387,473  shares

<TABLE>
<CAPTION>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                                TABLE OF CONTENTS
<S>                                                                        <C>

                                                                           Page

Part I.  Financial Information:

   Consolidated Condensed Balance Sheets--March 31, 2000
     and December 31, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . .1

   Consolidated Condensed Statements of Operations--Three
     Months Ended March 31, 2000 and 1999  . . . . . . . . . . . . . . . . . .2

   Consolidated Condensed Statement of Changes in
     Stockholders' Equity--Three Months Ended
     March 31, 2000  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

   Consolidated Condensed Statements of Cash Flows--Three
     Months Ended March 31, 2000 and 1999. . . . . . . . . . . . . . . . . . .4

   Notes to Consolidated Condensed Financial Statements  . . . . . . . . . .5-9

   Management's Discussion and Analysis of Financial
     Condition and Results of Operations . . . . . . . . . . . . . . . . .10-14

Part II.  Other Information . . . . . . . . . . . . . . . . . . . . . . . . .15

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

</TABLE>

<TABLE>
<CAPTION>

                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                          PART I. FINANCIAL INFORMATION

                      CONSOLIDATED CONDENSED BALANCE SHEETS

<S>                                                 <C>               <C>
                                                March 31,          December 31,
                                                   2000               1999
                                               (Unaudited)             *
ASSETS                                        -------------------------------
Current assets
  Cash and cash equivalents                   $    867,944      $   2,273,242
  Accounts and other receivables                    52,139             35,561
  Inventories, net of reserves
    of $6,089,914 and $6,225,185                   812,000            766,000
  Prepaid expenses and other
    current assets                                  31,962             27,018
                                             -------------      -------------
Total current assets                             1,764,045          3,101,821
                                             -------------      -------------
Property, plant and equipment,
  at cost                                       12,759,273         12,759,273
Less accumulated depreciation                   (9,960,346)        (9,834,558)
                                             -------------      -------------
                                                 2,798,927          2,924,715
                                             -------------      -------------
Patent costs, net of accumulated
  amortization                                     212,304            219,822
Other assets                                        10,100             10,100
                                             -------------      -------------
Total assets                                 $   4,785,376      $   6,256,458
                                             =============      =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Accounts payable and accrued expenses      $   4,250,702      $   4,915,466
  Amount due GP Strategies                                            283,637
                                             -------------      -------------
Total current liabilities                        4,250,702          5,199,103
                                             -------------      -------------

Note payable to GP Strategies                      528,750            500,000
                                             -------------      -------------
Commitments and contingencies

Stockholders' equity
Preferred stock, par value $.01 per share;
 authorized-5,000,000 shares; none issued
 and outstanding
Common stock, par value $.01 per share;
 authorized-55,000,000 shares; issued
 and outstanding-5,387,473 and
 5,327,473 shares                                   53,875            53,275
Capital in excess of par value                 129,577,473       129,397,259
Accumulated deficit                           (129,625,424)     (128,812,179)
Settlement shares                                                    (81,000)
                                             -------------      ------------
Total stockholders' equity                           5,924           557,355
                                             -------------      ------------
Total liabilities and stockholders'
  equity                                     $   4,785,376     $   6,256,458
                                             =============     =============

*The  consolidated  condensed  balance  sheet as of  December  31, 1999 has been
summarized from the Company's audited balance sheet as of that date.

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

<TABLE>
<CAPTION>

                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                      Three Months Ended
                                                           March 31,
                                                  -----------------------------
<S>                                                 <C>            <C>
                                                         2000          1999
                                                                  (as restated)
                                                  -------------   -------------
Revenues
  Alferon N Injection                              $    163,150    $    459,521
  Research products                                                         277
                                                  -------------   -------------
Total revenues                                          163,150         459,798
                                                  -------------   -------------
Costs and expenses
Cost of goods sold and idle
  production costs                                      230,153       1,458,432
Reversal of reserve for
  excess inventory                                     (135,271)       (308,861)
Research and development                                423,819       1,246,492
General and administrative                              448,074         780,231
                                                  -------------   -------------
Total costs and expenses                                966,775       3,176,294
                                                  -------------   -------------
Loss from operations                                   (803,625)     (2,716,496)

 Interest (expense) income                               (9,620)          4,737
                                                  -------------   -------------
Net loss                                           $   (813,245)    $(2,711,759)
                                                  =============   =============

Basic and diluted loss per share                   $       (.15)   $       (.58)
                                                  =============   =============
Weighted average number of
 shares outstanding                                   5,360,979       4,709,265




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

<TABLE>
<CAPTION>

                                                   INTERFERON SCIENCES, INC. AND SUBSIDIARY

                                                 CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN
                                                              STOCKHOLDERS' EQUITY
                                                       THREE MONTHS ENDED MARCH 31, 2000
                                                                  (Unaudited)

                                             Capital                                           Total
                       Common Stock         in excess       Accummulated     Settlement     stockholders'
                     Shares      Amount    of par value      deficit          shares          equity
                     ------------------    ------------    --------------    ----------     -------------
<S>                   <C>         <C>           <C>             <C>             <C>             <C>
Balance at
 Dec. 31,
 1999              5,327,473   $ 53,275    $ 129,397,259  $(128,812,179)   $  (81,000)    $   557,355

Common stock
 issued as
 compensation         20,000        200           23,550                                       23,750

Common stock
 issued under
 Company 401(k)
 Plan                 40,000        400           26,778                                       27,178

Forgiveness of
 amount due GP
 Strategies to
 stockholders'
 equity                                          129,886                                      129,886

Settlement shares
 sold                                                                         368,341         368,341

Market value
 adjustment                                                                  (287,341)       (287,341)

Net loss                                                        (813,245)                    (813,245)
                 ------------------------------------------------------------------------------------
Balance at
 March 31,
 2000              5,387,473   $ 53,875    $ 129,577,473   $(129,625,424)   $   ---        $    5,924

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 CASH FLOWS
                                   (Unaudited)

                                                             Three Months Ended
                                                                  March 31,
                                                      --------------------------
                                                          2000           1999
                                                                   (as restated)
                                                      -----------  ------------
<S>                                                     <C>          <C>

Cash flows from operations:
  Net loss                                            $  (813,245)  $(2,711,759)
  Adjustments to reconcile net loss to net
   cash used for operating activities:
    Depreciation and amortization                         133,306       186,829
    Compensation and
     benefits paid with common stock                       50,928        39,134
    Reversal of reserve for
     excess inventory                                    (135,271)     (308,861)
    Market value adjustment                              (287,341)      425,213
    Loss on sale of other assets                                         51,392
    Change in operating assets and liabilities:
    Inventories                                            89,271       270,645
    Amount due to GP Strategies                          (125,001)       44,325
    Accounts and other receivables                        (16,578)      303,095
    Prepaid expenses and other current
     assets                                                (4,944)     (101,275)
    Accounts payable and accrued expenses                (296,423)      552,393
                                                      ------------  ------------
    Net cash used for operations                       (1,405,298)   (1,248,869)
                                                      ------------  ------------
Cash flows from investing activities:
  Proceeds from sale of other assets                                     38,658
                                                      ------------  ------------
  Net cash provided by                                                   38,658
    investing activities                              ------------  ------------

Cash flows from financing activities:
  Proceeds from note payable to
  GP Strategies                                                         125,000
                                                      ------------  ------------
Net cash provided by financing activities                               125,000
                                                      ------------  ------------
Net decrease in cash and cash equivalents              (1,405,298)   (1,085,211)

Cash and cash equivalents at beginning
 of period                                              2,273,242     1,170,861
                                                      ------------  ------------
Cash and cash equivalents at end of period            $   867,944        85,650
                                                      ============  ============

Noncash items:
 Forgiveness of amount due GP Strategies              $   129,886   $
                                                      ===========   ============




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



                    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)  which are,  in the  opinion of  management,  necessary  for a fair
statement  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.

<TABLE>
<CAPTION>

 Note 2.  Inventories

   Inventories are classified as follows:

                              March 31,        December 31,
                                 2000              1999
                           --------------     --------------
<S>                             <C>                <C>
   Finished goods          $     272,538      $     361,809
   Work in process             5,296,816          5,296,816
   Raw materials               1,332,560          1,332,560
   Less reserve for
    excess inventory          (6,089,914)        (6,225,185)
                           --------------     --------------
                           $     812,000      $     766,000
                           ==============     ==============

</TABLE>

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

     In light of the results to date of the Company's phase 3 studies of ALFERON
N Injection in HIV and HCV-infected  patients,  the Company has written-down the
carrying  value of its  inventory  of ALFERON N Injection to its  estimated  net
realizable  value.  The  write-down is 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 March 31,  2000 and  December  31,  1999,  reflect a reserve for
excess inventory of $6,089,914 and $6,225,185, respectively.

     During the three  months  ended March 31,  2000 and 1999,  a portion of the
reserve  for  excess  inventory  was  reversed  in the  amount of  $135,271  and
$308,861, respectively.

Note 3. Agreement with GP Strategies Corporation

     In an  agreement  dated March 25,  1999,  GP  Strategies  Corporation  ("GP
Strategies") agreed to lend the Company $500,000 at the rate of $250,000 a month
(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 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 in the event the
Company  desires to sell its real  estate.  In addition,  the Company  agreed to
allow a  designee  of GP  Strategies  to attend  any  meeting  with the FDA with
respect to approval of ALFERON N Injection  for the treatment of hepatitis C and
to issue 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. The Company also agreed not to increase its payroll
during  the term of the GP  Strategies  Debt  without  the prior  consent  of GP
Strategies.  Pursuant  to the  agreement,  the  Company  has 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  accordingly  classified  as  long-term  on the  accompanying  consolidated
condensed  balance  sheets at March 31, 2000 and  December 31,  1999),  (ii) the
Company agreed to file a registration  statement prior to July 31, 2000 covering
the shares issuable upon exercise of the GP Warrant and any of the GP Shares for
which Rule 144 under the Securities Act of 1933 was not available, and (iii) the
Management  Agreement  between the Company and GP  Strategies  (whereby  certain
legal,  financial and administrative  services were provided by GP Strategies to
the Company) was terminated and all  intercompany  accounts  between the Company
and GP  Strategies  (other than the GP  Strategies  Debt) were  discharged.  The
amount of intercompany accounts that were discharged was approximately $130,000,
which was  recorded in the quarter  ended  March 31, 2000 as a  contribution  to
capital.  The agreement  also  provides  that (i)  commencing on May 1, 2001 and
ending on June 30, 2001,  on any day ISI may require GP  Strategies  to exercise
the GP Warrant and sell the underlying shares, if the market price of ISI Common
Stock  exceeds  $1.00 per share on each of the 10 trading days prior to any such
day, and (ii) any proceeds from the sale of the shares issuable upon exercise of
the GP  Warrant  in excess of the  aggregate  amount  paid by GP  Strategies  to
purchase such shares,  would be deemed to reduce the then outstanding  amount of
principal and interest of the GP Strategies Debt until such amount is reduced to
zero.

Note 4.  Agreement with the Red Cross

     In an agreement  dated  November 23, 1998,  the Company agreed to grant the
Red  Cross a  security  interest  in  certain  assets  to  secure  the Red Cross
Liability and to issue to the Red Cross  300,000  shares of Common Stock (with a
market value of  $1,171,875 at December 4, 1998) and  additional  shares at some
future date as  requested  by the Red Cross.  The Red Cross  agreed that any net
proceeds  received by it upon sale of such shares  would be applied  against the
Red Cross Liability.

     As the liability to the Red Cross remains  unsettled until such time as the
Red Cross sells the shares they have already  received and could  receive in the
future,  the Company  recorded any shares issued to the Red Cross as "Settlement
Shares" within  stockholders'  equity.  Any decreases in the market value of the
Company's common stock below $1.2 million, until such time as the Red Cross were
to sell its shares,  would  impact the value of the shares held by the Red Cross
and accordingly require an adjustment to "Settlement Shares". Due to the decline
in the  Company's  stock price during the three months ended March 31, 1999,  an
adjustment for $425,213 was recorded with a corresponding  charge to operations.
Due to the increase in the  Company's  stock price during the three months ended
March  31,  2000  up to the  date of sale  by the  Red  Cross  of all  remaining
Settlement  Shares, an adjustment for $287,341 was recorded with a corresponding
credit to  operations.  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 at March 31, 2000 and
December 31, 1999 was approximately $1,228,000 and $1,579,000, respectively.

Note 5. Operations and Liquidity

     The  Company  has  experienced   significant  operating  losses  since  its
inception in 1980. As of March 31, 2000, the Company had an accumulated  deficit
of approximately  $129.6 million.  For the three months ended March 31, 2000 and
the years ended  December 31, 1999,  1998 and 1997,  the Company had losses from
operations of approximately $0.8 million, $5.4 million,  $20.8 million and $22.4
million,  respectively.  Although  the Company  received FDA approval in 1989 to
market  ALFERON N Injection  in the United  States for the  treatment of certain
genital  warts and ALFERON N  Injection  currently  is marketed  and sold in the
United  States by the Company,  in Mexico by Industria  Farmaceutica  Andromaco,
S.A. De C.V. and in Germany by Cell Pharm GmbH ("Cell  Pharm"),  the Company has
had  limited  revenues  from the sale of ALFERON N  Injection  to date.  For the
Company to operate profitably,  the Company must sell significantly more ALFERON
N  Injection.  Increased  sales will  depend  primarily  upon the  expansion  of
existing markets and/or successful  attainment of FDA approval to market ALFERON
N Injection  for  additional  indications,  of which there can be no  assurance.
There can be no assurance that sufficient quantities of ALFERON N Injection will
be sold to allow the Company to operate profitably.

     During the second  quarter of 2000,  the Company  raised gross  proceeds of
$3,512,000  from the sale in a private  placement of 5,321,212  shares of common
stock and warrants, exercisable until April 2005 to purchase 5,321,212 shares of
common  stock at a price of $1.50 per share.  At May 19,  2000,  the Company has
$2,800,000 of cash and cash equivalents,  with which to support future operating
activities  and to satisfy its  financial  obligations  as they become  payable.
Management is continuing to actively pursue raising additional capital by either
(i) issuing  securities in a private equity offering,  (ii) licensing the rights
to its injectable,  topical or oral formulations of alpha  interferon,  or (iii)
selling  the  Company.  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.

     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 through  approximately  December 31, 2000.  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.




Note 6.  Restatement of the March 31, 1999 Financial Statements (unaudited)

     The Company has restated its Consolidated  Condensed  Financial  Statements
for the three months ended March 31, 1999,  June 30, 1999 and September 30, 1999
because of errors  discovered  subsequent  to the issuance of such  Consolidated
Condensed Financial Statements.  The Consolidated Condensed Financial Statements
required  restatement  to correct  the  reporting  for  inventories,  Settlement
Shares, deferred compensation, cost of sales and certain other expenses.

     The  impact of the  restatement  on the  Company's  Consolidated  Condensed
Statements  of  Operations  and Cash Flows for the three  months ended March 31,
1999 is summarized as follows:


<TABLE>
<CAPTION>
   Operations:                                     As Reported        Restated
<S>                                                    <C>              <C>
   Revenues
    Alferon N Injection                           $    459,521    $    459,521
    Research products                                      277             277
                                                  -------------   -------------
   Total revenues                                      459,798         459,798
                                                  -------------   -------------
   Costs and expenses
   Cost of goods sold and idle production costs      1,033,219       1,458,432
   Reversal of reserve for excess inventory                           (308,861)
   Research and development                          1,246,492       1,246,492
   General and administrative                          802,695         780,231
                                                   -------------   -------------
   Total costs and expenses                          3,082,406       3,176,294
                                                  -------------   -------------
   Loss from operations                             (2,622,608)     (2,716,496)

    Interest income                                      4,737           4,737
                                                  -------------   -------------
   Net loss                                       $ (2,617,871)   $ (2,711,759)
                                                  =============   =============

   Basic and diluted loss per share               $       (.57)   $       (.58)
                                                  =============   =============
   Weighted average number of
    shares outstanding                               4,584,265       4,709,265



   Cash flows:                                     As Reported        Restated

   Cash flows from operations:
       Net loss                                    $ (2,617,871)   $ (2,711,759)
      Adjustments to reconcile net loss to net
       cash used for operating activities:
        Depreciation and amortization                   186,829         186,829
        Accounts payable and benefits paid with
         common stock                                   573,509          39,134
        Reversal of reserve for excess inventory                       (308,861)
        Market value adjustment                                         425,213
        Loss on sale of other assets                                     51,392
        Change in operating assets and liabilities:
        Inventories                                     270,645         270,645
        Amount due to GP Strategies                     169,325          44,325
        Accounts and other receivables                  303,095         303,095
        Prepaid expenses and other current assets      (101,275)       (101,275)
        Accounts payable and accrued expenses            40,482         552,393
                                                    ------------    ------------
        Net cash used for operations                 (1,175,261)     (1,248,869)
                                                    ------------    ------------
       Cash flows from investing activities:
        Proceeds from sale of other assets               90,050          38,658
                                                    ------------    ------------
        Net cash provided by investing activities        90,050          38,658
                                                    ------------    ------------
       Cash flows from financing activities:
        Proceeds from note payable to GP Strategies                     125,000
                                                    ------------    ------------
       Net cash provided by financing activities                        125,000
                                                    ------------    ------------
       Net decrease in cash and cash equivalents     (1,085,211)     (1,085,211)

       Cash and cash equivalents at beginning of
        period                                        1,170,861       1,170,861
                                                    ------------    ------------
       Cash and cash equivalents at end of period  $     85,650     $    85,650
                                                    ============    ============

</TABLE>




                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

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


Financial Condition and Liquidity

     During the second  quarter of 2000,  the Company  raised gross  proceeds of
$3,512,000 from the sale, in a private placement,  of 5,321,212 shares of common
stock and warrants, exercisable until April 2005 to purchase 5,321,212 shares of
common stock at a price of $1.50 per share.  As of May 19, 2000, the Company had
an aggregate of $2,800,000 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 through  approximately  December 31, 2000.  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  auditors' report, dated
April 10, 2000, on the Company's consolidated financial statements as of and for
the year ended December 31, 1999 included an  explanatory  paragraph that states
that the Company  has  suffered  recurring  losses  from  operations  and has an
accumulated  deficit that raise  substantial doubt about its ability to continue
as a going concern.

     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 1999, the Company  completed the sale of approximately  $32
million of its New Jersey tax loss  carryovers and received  $2.35  million.  In
June 2000,  the Company will submit an  application  to sell an additional  $4.8
million of tax benefits  (calculated  by  multiplying  the Company's  unused New
Jersey net operating loss  carryovers of  approximately  $53 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 future years is $40 million per year.

     The Company has 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 more human white blood cells until such time as production of ALFERON N
Injection is resumed,  and has not purchased any since April 1, 1998.  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% annum  accruing  from  April 1, 1998 (the "Red
Cross  Liability")  for white  blood  cells  purchased  pursuant  to the  Supply
Agreement.

     In an agreement  dated  November 23, 1998,  the Company agreed to grant the
Red  Cross a  security  interest  in  certain  assets  to  secure  the Red Cross
Liability and to issue to the Red Cross  300,000  shares of Common Stock (with a
market value of  $1,171,875 at December 4,  1998)and  additional  shares at some
future date as  requested  by the Red Cross.  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.  Under the
terms of such  agreement,  the  Company  is  allowing  the Red Cross 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.

     As the liability to the Red Cross remains  unsettled until such time as the
Red Cross sells the shares they have already  received and could  receive in the
future,  the Company  recorded any shares issued to the Red Cross as "Settlement
Shares" within  stockholders'  equity.  Any decreases in the market value of the
Company's common stock below $1.2 million, until such time as the Red Cross were
to sell its shares,  would  impact the value of the shares held by the Red Cross
and accordingly require an adjustment to "Settlement Shares". Due to the decline
in the  Company's  stock price during the three months ended March 31, 1999,  an
adjustment for $425,213 was recorded with a corresponding  charge to operations.
Due to the increase in the  Company's  stock price during the three months ended
March  31,  2000  up to the  date of sale  by the  Red  Cross  of all  remaining
Settlement  Shares, an adjustment for $287,341 was recorded with a corresponding
credit to  operations.  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 at March 31, 2000 and
December 31, 1999 was approximately $1,228,000 and $1,579,000, respectively.

     In an agreement  dated March 25,  1999,  GP  Strategies  agreed to lend the
Company $500,000 at the rate of $250,000 a month. In return,  the Company agreed
to grant GP Strategies (i) a first mortgage on the Company's real estate, (ii) a
two-year option 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 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 and a five-year  warrant to purchase  500,000  shares of
Common Stock at a price of $1 per share. The Company also agreed not to increase
its payroll during the term of the GP Strategies  debt without the prior consent
of GP Strategies. Pursuant to the agreement, the Company has 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, (ii) the Company agreed
to file a  registration  statement  prior to July 31, 2000  covering  the shares
issuable upon exercise of the GP Warrant and any of the GP Shares for which Rule
144 under the Securities Act of 1933 was not available, and (iii) 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.  The
agreement  also provides  that (i)  commencing on May 1, 2001 and ending on June
30, 2001,  on any day ISI may require GP  Strategies  to exercise the GP Warrant
and sell the underlying  shares, if the market price of ISI Common Stock exceeds
$1.00 per share on each of the 10 trading  days prior to any such day,  and (ii)
any  proceeds  from the sale of the  shares  issuable  upon  exercise  of the GP
Warrant in excess of the aggregate amount paid by GP Strategies to purchase such
shares,  would be deemed to reduce the then outstanding  amount of principal and
interest of the GP Strategies Debt until such amount is reduced to zero.

Results of Operations

     Three  Months  Ended  March 31, 2000 Versus  Three  Months  Ended March 31,
1999(as restated)

     For the three  months  ended  March  31,  2000 and 1999,  the  Company  had
revenues  from the  sale of  ALFERON  N  Injection  of  $163,150  and  $459,521,
respectively.  In the third and fourth  quarters of 1999,  the  Company  offered
price  concessions to its largest customers in an attempt to raise cash from the
sale of ALFERON N Injection,  which resulted in substantially higher than normal
sales in the  second  half of 1999 and in lower than  normal  sales in the three
months ended March 31, 2000 due to the fact that such customers were selling out
their  inventory  of  Alferon N  Injection  (rather  than  purchasing  Alferon N
Injection directly from the Company).

     In the three  months ended March 31, 2000,  the Company  sold,  through its
distributor, to wholesalers and other customers in the United States 1,417 vials
of ALFERON N Injection,  compared to 3,708 vials sold by the Company  during the
three  months  ended March 31, 1999.  In  addition,  foreign  sales of ALFERON N
Injection  were 162 vials for the three months ended March 31, 1999.  There were
no foreign sales in the three months ended March 31, 2000.

     Cost  of  goods  sold  and  idle  production  costs  totaled  $230,153  and
$1,458,432  for the three  months  ended March 31, 2000 and 1999,  respectively.
Idle  production  costs  in the  three  months  ended  March  31,  2000 and 1999
represented  fixed  production  costs,  which were incurred after  production of
ALFERON N Injection was  discontinued  in April 1998. Such costs were greater in
the 1999 period due to higher  levels of payroll  costs.  In addition,  based on
changes in the value of the Settlement  Shares, for the three months ended March
31,  2000,  cost of goods sold was credited for $287,341 as compared to a charge
of $425,213 to cost of goods sold for the three months ended March 31, 1999.

     During the three  months  ended March 31,  2000 and 1999,  a portion of the
reserve  for  excess  inventory  was  reversed  in the  amount of  $135,271  and
$308,861,  respectively,  in order to reflect the inventory at its estimated net
realizable value.

     Research and  development  expenses during the three months ended March 31,
2000 of $423,819  decreased by $822,673 from  $1,246,492  for the same period in
1999,  principally because the Company has had a reduction in research personnel
which has reduced its payroll and research costs.

     General and  administrative  expenses  for the three months ended March 31,
2000 were  $448,074 as compared  to  $780,231  for the same period in 1999.  The
decrease of  $332,157  was  principally  due to  decreases  in payroll and other
operating expenses.

     Interest expense, net, for the three months ended March 31, 2000 was $9,620
of expense and primarily represented interest accrued on the Red Cross Liability
partially  offset by interest  income  compared to interest income for the three
months ended March 31, 1999 of $4,737.

     As a result of the foregoing,  the Company  incurred net losses of $813,245
and $2,711,759 for the three months ended March 31, 2000 and 1999, respectively.

 Recent Accounting Developments

     In June 1998, the FASB issued  Statement of Financial  Accounting  Standard
No.  133  (SFAS  133),   "Accounting  for  Derivative  Instruments  and  Hedging
Activities".  This Statement establishes  accounting and reporting standards for
derivatives as either assets or liabilities in the activities.  It requires that
an entity  recognize  all  derivatives  as either assets or  liabilities  in the
statement of financial  position and measure  those  instruments  at fair value.
This  Statement as amended by SFAS 137 is effective  for all fiscal  quarters of
fiscal years beginning after June 15, 2000. The Company is still  evaluating its
position with respect to the use of derivative instruments.

     On December 3, 1999, the Securities  and Exchange  Commission  issued Staff
Accounting  Bulletin No. 101 - "Revenue  Recognition  in  Financial  Statements"
("SAB No. 101").  SAB No. 101 provides the SEC staff's views on the  recognition
of  revenue   including   nonrefundable   technology  access  fees  received  by
biotechnology  companies in connection with research  collaborations  with third
parties. SAB No. 101 states that in certain circumstances the SEC staff believes
that up-front  fees,  even if  nonrefundable,  should be deferred and recognized
systematically over the term of the research  arrangement.  SAB No. 101, amended
by SAB  101A  issued  on March  24,  2000,  requires  registrants  to adopt  the
accounting guidance contained therein by no later than the second fiscal quarter
of the fiscal year  beginning  after December 15, 1999. The Company is currently
assessing  the  financial  impact of complying  with SAB No. 101 and has not yet
determined  whether applying the accounting  guidance of SAB No. 101 will have a
material effect on its financial position or results of operations.

     FASB  Interpretation  No. 44 provides guidance for applying APB Opinion No.
25,   "Accounting  for  Stock  Issued  to  Employees"  ("FIN  44").  It  applies
prospectively  to new  awards,  exchanges  of awards in a business  combination,
modifications to outstanding  awards,  and changes in grantee status on or after
July 1, 2000, except for provisions  related to repricings and the definition of
an employee which apply to awards issued after December 15, 1998. The provisions
related to  modifications  to fixed stock option awards to add a reload  feature
are  effective  for awards  modified  after  January  12,  2000.  The Company is
evaluating  the financial  impact of FIN 44 and has not yet  determined  whether
applying the  accounting  guidance of FIN 44 will have a material  effect on its
financial position and results of operations.

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
Company's  products under development and foreign  regulatory  approvals for the
Company's  FDA-approved  product and  products  under  development  and, if such
approvals are obtained,  uncertainty of the successful commercial development of
such products; substantial competition from companies with substantially greater
resources than the Company in the Company's present and potential businesses; no
guaranteed source of required materials for the Company's  products;  dependence
on certain distributors to market the Company's products; potential adverse side
effects from the use of the Company's  products;  potential patent  infringement
claims  against the  Company;  possible  inability of the Company to protect its
technology;   uncertainty  of  pharmaceutical   pricing;   substantial   royalty
obligations  payable  by  the  Company;  limited  production  experience  of the
Company;  risk  of  product  liability;  and  risk  of  loss  of key  management
personnel,  all of which are  difficult  to predict and many of which are beyond
the control of the Company.



                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                           PART II. OTHER INFORMATION


None


                            INTERFERON SCIENCES, INC.

                                 MARCH 31, 2000




                                   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:       May 22, 2000                           By:   /s/ Lawrence M. Gordon
                                                         Lawrence M. Gordon
                                                         Chief Executive Officer




DATE:       May 22, 2000                           By:   /s/ Donald W. Anderson
                                                         Donald W. Anderson
                                                         Controller