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 June 30, 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
August 8, 2000:

           Common Stock                                       17,036,349  shares


<PAGE>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                                TABLE OF CONTENTS

                                                                           Page

Part I.  Financial Information:

   Consolidated Condensed Balance Sheets--June 30, 2000
     and December 31, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . .1

   Consolidated Condensed Statements of Operations--Three Months
     and Six Months Ended June 30, 2000 and 1999  . . . . . . . . . . .  . .2-3

   Consolidated Condensed Statement of Changes in

     Stockholders' Equity--Six Months Ended June 30, 2000. . . . . . . . . . .4

   Consolidated Condensed Statements of Cash Flows--Six

     Months Ended June 30, 2000 and 1999. . . . . . . . . . .. . . . . . . . .5

   Notes to Consolidated Condensed Financial Statements. . . . . . . . . . 6-10

   Management's Discussion and Analysis of Financial

     Condition and Results of Operations . . . . . . . . . . . . . . . . .11-16

Part II.  Other Information . . . . . . . . . . . . . . . . . . . . . . . . .17

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18


<PAGE>
<TABLE>
<CAPTION>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                          PART I. FINANCIAL INFORMATION

                      CONSOLIDATED CONDENSED BALANCE SHEETS

<S>                                                 <C>               <C>

                                                 June 30,          December 31,
                                                   2000              1999
                                               (Unaudited)
ASSETS                                        -------------------------------
Current assets

  Cash and cash equivalents                   $  3,391,236        $ 2,273,242
  Accounts and other receivables                   128,097             35,561
  Inventories, net of reserves
    of $5,945,842 and $6,225,185,
    respectively                                   735,203            766,000
  Prepaid expenses and other
    current assets                                  28,582             27,018
                                             -------------      -------------
Total current assets                             4,283,118          3,101,821
                                             -------------      -------------
Property, plant and equipment,
  at cost                                       12,759,273         12,759,273
Less accumulated depreciation                  (10,076,311)        (9,834,558)
                                             -------------      -------------
                                                 2,682,962          2,924,715
                                             -------------      -------------
Patent costs, net of accumulated
  amortization                                     204,788            219,822
Other assets                                        10,100             10,100
                                             -------------      -------------
Total assets                                 $   7,180,968      $   6,256,458
                                             =============      =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities

  Accounts payable and accrued expenses      $   2,867,722      $   4,915,466
  Note payable and amount due
   GP Strategies                                   536,250            283,637
                                             -------------      -------------
Total current liabilities                        3,403,972          5,199,103
                                             -------------      -------------
Note payable to GP Strategies                                         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-12,482,393 and
 5,327,473 shares, respectively                    124,824            53,275
Capital in excess of par value                 134,097,733       129,397,259
Accumulated deficit                           (130,445,561)     (128,812,179)
Settlement shares                                                    (81,000)
                                             -------------      ------------
Total stockholders' equity                       3,776,996           557,355
                                             -------------      ------------
Total liabilities and stockholders'
  equity                                     $   7,180,968     $   6,256,458
                                             =============     =============


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

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<S>                                                    <C>             <C>


                                                      Three Months Ended
                                                           June 30,
                                                  -----------------------------
                                                       2000           1999
                                                                  (as restated)
                                                  -------------   -------------
Revenues

  Alferon N Injection                              $    157,922    $    526,389
                                                  -------------   -------------
Total revenues                                          157,922         526,389
                                                  -------------   -------------
Costs and expenses
Cost of goods sold and idle
  production costs                                      425,177         765,408
Reversal of reserve for
  excess inventory                                                     (273,789)
Research and development (net of $456,998
  for settlements on various liabilities
  during the three months ended June 30, 2000)           34,000         696,497
General and administrative                              518,103         504,792
                                                  -------------   -------------
Total costs and expenses                                977,280       1,692,908
                                                  -------------   -------------
Loss from operations                                   (819,358)     (1,166,519)

 Interest expense and financing costs                       779         249,360
                                                  -------------   -------------
Net loss                                           $   (820,137)    $(1,415,879)
                                                  =============   =============

Basic and diluted loss per share                   $       (.09)   $       (.27)
                                                  =============   =============
Weighted average number of
 shares outstanding                                   9,227,925       5,179,034
                                                  =============   =============



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

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                        Six Months Ended
                                                             June 30,
                                                  -----------------------------
                                                       2000           1999
                                                                  (as restated)
                                                  -------------   -------------
<S>                                                     <C>             <C>

Revenues

  Alferon N Injection                              $    321,072    $    985,910
  Research products                                                         277
                                                  -------------   -------------
Total revenues                                          321,072         986,187
                                                  -------------   -------------
Costs and expenses
Cost of goods sold and idle
  production costs                                      655,330       2,223,840
Reversal of reserve for
  excess inventory                                     (135,271)       (582,650)
Research and development (net of $456,998
  for settlements on various liabilities
  during the six months ended June 30, 2000)            457,819       1,942,989
General and administrative                              966,177       1,285,023
                                                  -------------   -------------
Total costs and expenses                              1,944,055       4,869,202
                                                  -------------   -------------
Loss from operations                                 (1,622,983)     (3,883,015)

 Interest expense and financing costs                    10,399         244,623
                                                  -------------   -------------
Net loss                                           $ (1,633,382)    $(4,127,638)
                                                  =============   =============

Basic and diluted loss per share                   $       (.22)   $       (.84)
                                                  =============   =============
Weighted average number of
 shares outstanding                                   7,566,877       4,922,447
                                                  =============   =============



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

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                                      CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN
                                                   STOCKHOLDERS' EQUITY

                                              SIX MONTHS ENDED June 30, 2000
                                                        (Unaudited)
<S>                     <C>            <C>    <C>               <C>             <C>             <C>

                                             Capital                                           Total
                       Common Stock         in excess       Accummulated     Settlement     stockholders'
                     Shares      Amount    of par value      deficit          shares          equity
                     ------------------    ------------    --------------    ----------     -------------
Balance at
 Dec. 31,

 1999              5,327,473   $ 53,275     $129,397,259      $(128,812,179)   $ (81,000)   $ 557,355

Net proceeds
 from sale of

 common stock      7,088,648     70,886        4,507,614                                    4,578,500

Common stock
 issued as

 compensation         20,000        200           23,550                                       23,750

Common stock
 issued under
 Company 401(k)
 Plan                 46,272        463           39,424                                       39,887

Forgiveness of
 amount due GP

 Strategies                                      129,886                                      129,886

Settlement shares

 sold                                                                           368,341        368,341

Market value

 adjustment                                                                    (287,341)      (287,341)

Net loss                                                      (1,633,382)                  (1,633,382)
                 --------------------------------------------------------------------------------------
Balance at
 June 30,

 2000             12,482,393   $124,824     $134,097,733   $(130,445,561)   $   ---        $3,776,996




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,
                                                         --------------------------
                                                           2000           1999
                                                                      (as restated)
                                                         ------------  ------------
<S>                                                        <C>            <C>

Cash flows from operations:

  Net loss                                               $(1,633,382)  $(4,127,638)
  Adjustments to reconcile net loss to net
   cash used for operating activities:
    Depreciation and amortization                            256,787       373,654
    Amortization of deferred financing costs                               250,000
    Gain on settlements of research-related liabilities     (456,998)
    Compensation and

     benefits paid with common stock                          63,637        68,979
    Reversal of reserve for
     excess inventory                                       (135,271)     (582,650)
    Market value adjustment                                 (287,341)      587,261
    Loss on sale of other assets                                            51,392
    Change in operating assets and liabilities:
     Inventories                                             166,068       520,434
     Amount due to GP Strategies                            (117,501)       74,264
     Accounts and other receivables                          (92,536)      480,810
     Prepaid expenses and other current
      assets                                                  (1,564)      (78,319)
     Accounts payable and accrued expenses                (1,222,405)      878,161
                                                         ------------  ------------
    Net cash used for operations                          (3,460,506)   (1,503,652)
                                                         ------------  ------------
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:

  Net proceeds from sale of common stock                   4,578,500
  Proceeds from note payable to
  GP Strategies                                                            500,000
                                                         ------------  ------------
Net cash provided by financing activities                  4,578,500       500,000
                                                         ------------  ------------
Net increase (decrease) in cash and cash equivalents       1,117,994      (964,994)

Cash and cash equivalents at beginning
 of period                                                 2,273,242     1,170,861
                                                         ------------  ------------
Cash and cash equivalents at end of period               $ 3,391,236   $   205,867
                                                         ============  ============

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

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)  which 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.  Inventories

       Inventories are classified as follows:

                               June 30,        December 31,
                                 2000              1999
                           --------------     --------------

   Finished goods          $     570,070      $     361,809
   Work in process             4,778,415          5,296,816
   Raw materials               1,332,560          1,332,560
   Less reserve for
    excess inventory          (5,945,842)        (6,225,185)
                           ---------------     --------------
                           $     735,203      $     766,000
                             ===============      ==============


       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.

       During the three  months  ended June 30,  2000,  the Company  converted a
portion  of its  interferon  intermediates  (work  in  process  inventory)  into
finished goods inventory.

       In light of the  results  to date of the  Company's  phase 3  studies  of
ALFERON N Injection in HIV and HCV-infected patients, the Company has 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 June 30, 2000 and December 31, 1999, reflect a reserve for excess
inventory of $5,945,842 and $6,225,185, respectively.

       During the six  months  ended  June 30,  2000 and 1999,  a portion of the
reserve  for  excess  inventory  was  reversed  in the  amount of  $135,271  and
$582,650,  respectively,  to reflect  inventory at its estimated net  realizable
value. In addition,  during the six months ended June 30, 2000, a portion of the
reserve for excess inventory was used in the amount of $144,072.

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 (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 is classified as a current  liability and a long-term
liability on the accompanying  consolidated condensed balance sheets at June 30,
2000 and  December 31, 1999,  respectively),  (ii) the Company  agreed to file a
registration statement prior to July 31, 2000 (which the Company is currently in
the process of filing)  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 remained  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 six months ended June 30,
1999, an adjustment  for $587,261 was recorded  with a  corresponding  charge to
cost of goods sold. 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 cost of goods  sold.  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 June 30, 2000 and  December 31, 1999 was  approximately  $1,244,000
and $1,579,000, respectively.

Note 5. Operations and Liquidity

       The  Company  has  experienced  significant  operating  losses  since its
inception in 1980. As of June 30, 2000, the Company had an  accumulated  deficit
of approximately  $130.4 million. For the six months ended June 30, 2000 and the
years  ended  December  31,  1999,  1998 and 1997,  the  Company had losses from
operations of approximately $1.6 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 and through August 3, 2000, the Company
raised  gross  proceeds of  $7,679,380  from the sale in a private  placement of
11,635,451  shares of common  stock at a price of $0.66 per share and  warrants,
exercisable until April 2005 to purchase  11,635,451 shares of common stock at a
price of $1.50 per share. The proceeds from this private  placement will be used
to fund new  initiatives,  in addition to funding  certain  projects  within the
Company's  existing  interferon-related  operations.  At August  10,  2000,  the
Company  has  $5,700,000  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.

       During the second quarter of 2000, the Company was able to settle certain
amounts owed on various research-related liabilities at a savings to the Company
of  approximately  $457,000.  Such  amount was  credited  against  research  and
development expenses.

       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  for at least  the  next  twelve  months.  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 June 30, 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, financing costs and certain other
expenses.

       The impact of the  restatement  on the Company's  consolidated  condensed
statements of operations for the three months and six months ended June 30, 1999
and cash flows for the six months ended June 30, 1999 is summarized as follows:
<TABLE>
<CAPTION>

                                                       Three Months Ended

                                                          June 30, 1999

   Operations:                                     As Reported        Restated
   ----------                                      -----------        --------
<S>                                                     <C>             <C>
   Revenues

    Alferon N Injection                           $    526,389    $    526,389
                                                  -------------   -------------
   Total revenues                                      526,389         526,389
                                                  -------------   -------------
   Costs and expenses

   Cost of goods sold and idle production costs        603,360         765,408
   Reversal of reserve for excess inventory                           (273,789)
   Research and development                            696,497         696,497
   General and administrative                          458,381         504,792
                                                   -------------   -------------
   Total costs and expenses                          1,758,238       1,692,908
                                                  -------------   -------------
   Loss from operations                             (1,231,849)     (1,166,519)

    Interest income (expense and
      financing costs)                                     640        (249,360)
                                                  -------------   -------------
   Net loss                                       $ (1,231,209)   $ (1,415,879)
                                                  =============   =============

   Basic and diluted loss per share               $       (.26)   $       (.27)
                                                  =============   =============
   Weighted average number of
    shares outstanding                               4,697,034       5,179,034
                                                  =============   =============


                                                        Six Months Ended

                                                          June 30, 1999

   Operations:                                     As Reported        Restated
   ----------                                      -----------        --------

   Revenues

    Alferon N Injection                           $    985,910    $    985,910
    Research products                                      277             277
                                                  -------------   -------------
   Total revenues                                      986,187         986,187
                                                  -------------   -------------
   Costs and expenses

   Cost of goods sold and idle production costs      1,636,579       2,223,840
   Reversal of reserve for excess inventory                           (582,650)
   Research and development                          1,942,989       1,942,989
   General and administrative                        1,261,076       1,285,023
                                                   -------------   -------------
   Total costs and expenses                          4,840,644       4,869,202
                                                  -------------   -------------
   Loss from operations                             (3,854,457)     (3,883,015)

    Interest income (expense and
      financing costs)                                   5,377        (244,623)
                                                  -------------   -------------
   Net loss                                       $ (3,849,080)   $ (4,127,638)
                                                  =============   =============

   Basic and diluted loss per share               $       (.83)   $       (.84)
                                                  =============   =============
   Weighted average number of
    shares outstanding                               4,636,733       4,922,447
                                                  =============   =============


                                                        Six Months Ended

                                                          June 30, 1999

   Cash flows:                                     As Reported        Restated
   ----------                                      -----------        --------

   Cash flows from operations:

       Net loss                                      $ (3,849,080)   $ (4,127,638)
      Adjustments to reconcile net loss to net
       cash used for operating activities:
        Depreciation and amortization                     373,654         373,654
        Amortization of deferred financing costs                          250,000
        Accounts payable and benefits paid with
         common stock                                     603,354          68,979
        Reversal of reserve for excess inventory                         (582,650)
        Market value adjustment                                           587,261
        Loss on sale of other assets                                       51,392
        Change in operating assets and liabilities:
        Inventories                                       520,434         520,434
        Amount due to GP Strategies                       574,264          74,264
        Accounts and other receivables                    480,810         480,810
        Prepaid expenses and other current assets         (78,319)        (78,319)
        Accounts payable and accrued expenses             319,839         878,161
                                                      ------------    ------------
        Net cash used for operations                   (1,055,044)     (1,503,652)
                                                      ------------    ------------

       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                       500,000
                                                      ------------    ------------
       Net cash provided by financing activities                          500,000
                                                      ------------    ------------
       Net decrease in cash and cash equivalents         (964,994)       (964,994)

       Cash and cash equivalents at beginning of
        period                                          1,170,861       1,170,861
                                                      ------------    ------------
       Cash and cash equivalents at end of period    $    205,867     $   205,867
                                                      ============    ============


</TABLE>




<PAGE>


                    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 and through August 3, 2000, the Company
raised gross proceeds of $7,679,380  from the sale, in a private  placement,  of
11,635,451  shares of common  stock at a price of $0.66 per share and  warrants,
exercisable until April 2005 to purchase  11,635,451 shares of common stock at a
price of $1.50 per share. The proceeds from this private  placement will be used
to fund new  initiatives,  in addition to funding  certain  projects  within the
Company's  existing  interferon-related  operations.  The  Company is seeking to
enter into  collaborations  with  companies  in the areas of cancer,  infectious
diseases,  and  immunology.  Their  strategy is to utilize  their  expertise  in
regulatory affairs, clinical trials, manufacturing, and research and development
to acquire  equity  participations  in early stage  companies.  As of August 10,
2000,  the Company had an aggregate of $5,700,000 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  for at least  the  next  twelve  months.  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  submitted 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 to  purchase  more  human  white  blood  cells  until such time as
production of crude alpha interferon 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 six months ended June 30,
1999, an adjustment  for $587,261 was recorded  with a  corresponding  charge to
cost of goods sold. 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 cost of goods  sold.  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 June 30, 2000 and  December 31, 1999 was  approximately  $1,244,000
and $1,579,000,  respectively.  The Company is currently discussing with the Red
Cross the repayment of the remaining liability.

       In an agreement  dated March 25, 1999, GP  Strategies  agreed to lend the
Company  $500,000.  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 (which the Company is
currently in the process of filing)  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

Six Months Ended June 30, 2000 Versus Six Months Ended June 30,1999(as restated)

       For the six months ended June 30, 2000 and 1999, the Company had revenues
from the sale of ALFERON N Injection of $321,072 and $985,910,  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 six months ended June
30, 2000. This was due to the fact that such customers were selling out of their
inventory  of Alferon N Injection  (rather than  purchasing  Alferon N Injection
from the Company).

         In the six months ended June 30, 2000,  the Company  sold,  through its
distributor, to wholesalers and other customers in the United States 2,636 vials
of ALFERON N Injection,  compared to 7,897 vials sold by the Company  during the
six  months  ended  June 30,  1999.  In  addition,  foreign  sales of  ALFERON N
Injection  were 354 vials for the six months ended June 30, 1999.  There were no
foreign sales in the six months ended June 30, 2000.

         Cost of goods  sold and idle  production  costs  totaled  $655,330  and
$2,223,840  for six months  ended  June 30,  2000 and 1999,  respectively.  Idle
production  costs in the six  months  ended June 30,  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,  lower unit sales in
the six months  ended June 30, 2000 as compared to the six months ended June 30,
1999  contributed to lower cost of goods sold. In addition,  based on changes in
the value of the Settlement Shares, for the six months ended June 30, 2000, cost
of goods sold was  credited  for $287,341 as compared to a charge of $587,261 to
cost of goods sold for the six months ended June 30, 1999.

       During the six  months  ended  June 30,  2000 and 1999,  a portion of the
reserve  for  excess  inventory  was  reversed  in the  amount of  $135,271  and
$582,650,  respectively,  in order to reflect the inventory at its estimated net
realizable value.

       Research and  development  expenses  during the six months ended June 30,
2000 of $457,819  decreased by $1,485,170 from $1,942,989 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. In addition, during the second
quarter of 2000, the Company  settled amounts owed on various  research  related
liabilities at a savings to the Company of approximately  $457,000.  Such amount
was credited against research and development expenses.

       General and  administrative  expenses  for the six months  ended June 30,
2000 were  $966,177 as compared to $1,285,023  for the same period in 1999.  The
decrease of  $318,846  was  principally  due to  decreases  in payroll and other
operating expenses.

       Interest expense, net, for the six months ended June 30, 2000 was $10,399
of expense and primarily represented interest accrued on the Red Cross Liability
and GP Strategies Debt partially  offset by interest income.  Interest  expense,
net,  for the six  months  ended  June 30,  1999 was  $244,623  of  expense  and
primarily represented financing costs partially offset by interest income.

       As a  result  of the  foregoing,  the  Company  incurred  net  losses  of
$1,633,382  and  $4,127,638  for the six months  ended  June 30,  2000 and 1999,
respectively.

Three Months Ended June 30, 2000 Versus Three Months Ended June 30, 1999
(as restated)

       For the three  months  ended  June 30,  2000 and 1999,  the  Company  had
revenues  from the  sale of  ALFERON  N  Injection  of  $157,922  and  $526,389,
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 June 30, 2000.  This was due to the fact that such  customers  were
selling out of their  inventory of Alferon N Injection  (rather than  purchasing
Alferon N Injection from the Company).

       In the three months ended June 30, 2000,  the Company  sold,  through its
distributor, to wholesalers and other customers in the United States 1,219 vials
of ALFERON N Injection,  compared to 4,189 vials sold by the Company  during the
three  months  ended June 30,  1999.  In  addition,  foreign  sales of ALFERON N
Injection were 192 vials for the three months ended June 30, 1999. There were no
foreign sales in the three months ended June 30, 2000.

       Cost of  goods  sold and  idle  production  costs  totaled  $425,177  and
$765,408 for the three months ended June 30, 2000 and 1999,  respectively.  Idle
production  costs in the three months  ended June 30, 2000 and 1999  represented
fixed  production  costs,  which were  incurred  after  production  of ALFERON N
Injection was  discontinued in April 1998. In addition,  lower unit sales in the
three  months ended June 30, 2000 as compared to the three months ended June 30,
1999 contributed to lower cost of goods sold. During the three months ended June
30,  2000,  the Company  incurred  expenses to  convert,  formulate  and package
interferon  intermediates  (work  in  process  inventory)  into  finished  goods
inventory. In addition,  based on changes in the value of the Settlement Shares,
for the three  months  ended June 30,  1999,  cost of goods sold was charged for
$162,048.

       During the three months ended June 30, 1999, a portion of the reserve for
excess  inventory was reversed in the amount of $273,789 in order to reflect the
inventory at its estimated net realizable value.

       Research and development  expenses during the three months ended June 30,
2000 of $34,000 decreased by $662,497 from $696,497 for the same period in 1999,
principally because the Company settled amounts owed on various research related
liabilities at a savings to the Company of approximately  $457,000.  Such amount
was credited against research and development expenses. In addition, 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 June 30,
2000 were  $518,103 as compared to $504,792  for the same period in 1999,  which
reflects only a minor change in administrative costs during the 2000 period.

       Interest expense,  net, for the three months ended June 30, 2000 was $779
of expense and primarily represented interest accrued on the Red Cross Liability
and GP Strategies Debt partially  offset by interest income.  Interest  expense,
net,  for the three  months  ended June 30,  1999 was  $249,360  of expense  and
primarily represented financing costs partially offset by interest income.

       As a result of the foregoing, the Company incurred net losses of $820,137
and $1,415,879 for the three months ended June 30, 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 and 138,  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.  On June 26, 2000, the
SEC issued SAB No. 101B which postponed the  implementation of SAB No. 101 until
the quarter  beginning  October 1, 2000. 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 Company is
evaluating the financial  impact of FIN 44 and has determined that the repricing
of employee  stock  options on October 27, 1999 falls within the guidance of FIN
44. On October 27, 1999, the Company  repriced 429,475 stock options to $.25 per
share. On July 1, 2000, the implementation date of FIN 44, 352,823 shares of the
429,475  shares were fully  vested  (exercisable)  and the closing  price of the
Company's common stock on such date was $1.63 per share.  Beginning on and after
July 1, 2000,  the  Company is required  to record  compensation  expense on the
repriced  vested or exercised  stock  options only when the market price exceeds
$1.63  per share and only on the  amount in excess of $1.63 per  share.  For the
repriced  unvested  stock options,  the intrinsic  value measured at the July 1,
2000 effective date that is attributable to the remaining vesting period will be
recognized  over that future period.  The unvested stock options at July 1, 2000
(76,652)  will fully vest on January 1, 2001.  On August 10,  2000,  the closing
price of the Company's  common stock was $1.50 per share.  The Company  believes
that this will be the only impact for FIN 44.

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.


<PAGE>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                           PART II. OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K

(a) Exhibits

                       27.0 Financial Data Schedule - June 30, 2000.

(b) Reports on Form 8-K

                       There were no reports on Form 8-K filed  during the three
                       months ended June 30, 2000.


<PAGE>


                            INTERFERON SCIENCES, INC.

                                  June 30, 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:       August 11, 2000                        By:    /s/ Lawrence M. Gordon
                                                              Lawrence M. Gordon
                                                         Chief Executive Officer


DATE:       August 11, 2000                        By:    /s/ Donald W. Anderson
                                                              Donald W. Anderson
                                                           Controller