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

                                  FORM 10-Q/SB

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

      For the quarter ended June 30, 2005

                                          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.)


1812 Front Street, Scotch Plains, New Jersey                           07076
(Address of principal executive offices)                           (Zip code)


(908) 663-2150
(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 1, 2005.

                   Common Stock               37,339,286 shares



<PAGE>






                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                                TABLE OF CONTENTS



                                                                           Page

Part I.  Financial Information:

   Consolidated Condensed Balance Sheets--
     June 30, 2005 and December 31, 2004. . . . . . . . . . . . . . . . . . .1

   Consolidated Condensed Statements of Operations--
     Three Months and Six Months Ended June 30, 2005 and 2004 . . . . . . .2-3

   Consolidated Condensed Statement of Stockholders' Equity
    -- Six Months Ended June 30, 2005 . . . . . . . . . . . . . . . . . . . .4

   Consolidated Condensed Statements of Cash Flows--
     Six Months Ended June 30, 2005 and 2004. . . . . . . . . . . . . . . . .5

   Notes to Consolidated Condensed Financial Statements. . . . . . . . . .6-11

   Management's Discussion and Analysis of Financial
     Condition and Results of Operations . . . . . . . . . . . . . .  . .12-13

Part II. Other Information . . . . . . . . . . . . . . . . . . . . .. . . .14

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 15

Certifications . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .16-17

<PAGE>

<TABLE>
<CAPTION>




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

                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                                      June 30,        December 31,
                                                        2005               2004
                                                     (Unaudited)
ASSETS                                              ------------------------------
Current assets
<S>                                                 <C>             <C>
  Cash and cash equivalents                         $  1,311,902    $   1,888,386
  Other receivables                                       67,962              -
  Prepaid expenses and other current assets               28,586           12,531
                                                   -------------    -------------
Total current assets                                   1,408,450        1,900,917


Other assets                                               1,884           16,134
                                                   -------------    -------------
Total assets                                       $   1,410,334    $   1,917,051
                                                   =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses                    611,057          580,337
Convertible notes payable -past due                      225,000          225,000
Income tax payable                                            -            47,000
                                                   -------------    -------------
Total current liabilities                                836,057          852,337
                                                   -------------    -------------
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-37,339,286 shares                       373,393          373,393
Capital in excess of par value                       137,231,987      136,970,283
Accumulated deficit                                 (137,031,103)    (136,278,962)
                                                   -------------     ------------
Total stockholders' equity                               574,277        1,064,714
                                                   -------------     ------------
Total liabilities and stockholders' equity         $   1,410,334    $   1,917,051
                                                   =============    =============

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

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

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

                                                      Three Months Ended
                                                           June 30,
                                                  -----------------------------
                                                       2005           2004
                                                  -------------   -------------
Revenue
<S>                                                <C>            <C>
  Royalty income                                   $     14,298   $     17,068
                                                  -------------   -------------
Total revenue                                            14,298         17,068
                                                  -------------   -------------
Costs and expenses
  General and administrative                            526,453         196,469
                                                  -------------   -------------
Total costs and expenses                                526,453         196,469
                                                  -------------   -------------
Loss from operations before
  other income (expense)                               (512,155)       (179,401)

Interest income (expense), net                              156           2,479
Gain on sale of securities                                  -           270,048
                                                  -------------   -------------
Net(loss) Income                                  $    (511,999)    $    93,126
                                                  =============   =============

Basic net (loss) income per share                 $        (.01)    $       -
                                                  =============   =============

Diluted net (loss) income per share (potential
 common shares limited to authorized shares
 available)
                                                  $       (.01)    $        -
                                                  =============   =============

As adjusted, diluted net (loss) income per share
 (potential common shares not limited to
 authorized shares available)                      $       (.01)    $       -
                                                  =============   =============
Weighted average number of shares
  outstanding - basic                                37,339,286      37,339,286
                                                 =============   ==============
Weighted average number of shares outstanding -
  diluted (potential common shares limited to
  authorized shares available)                       37,339,286      55,000,000
                                                 ==============  ==============
As adjusted, weighted average number of shares outstanding - diluted (potential
  common shares not limited to authorized shares available)
                                                     37,339,286      90,139,286
                                                  =============   =============


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)

                                                       Six Months Ended
                                                           June 30,
                                                  -----------------------------
                                                       2005           2004
                                                  -------------   -------------
Revenue
<S>                                                <C>            <C>
  Royalty income                                   $     30,298   $     31,808
                                                  -------------   -------------
Total revenue                                            30,298         31,808
                                                  -------------   -------------
Costs and expenses
  General and administrative                            783,131         469,863
                                                  -------------   -------------
Total costs and expenses                                783,131         469,863
                                                  -------------   -------------
Loss from operations before
  other income (expense)                               (752,833)       (438,055)

Interest income (expense), net                              692           9,369
Gain on sale of assets                                      -         2,875,282
Gain on sale of securities                                  -           270,048
                                                  -------------   -------------
Income (loss) before taxes                             (752,141)      2,716,644
Provision for income taxes                                  -            52,470
                                                  -------------   -------------
Net(loss) Income                                  $    (752,141)   $  2,664,174
                                                  =============   =============

Basic net (loss) income per share                 $        (.02)    $       .07
                                                  =============   =============

Diluted net (loss) income per share (potential
 common shares limited to authorized shares
 available)
                                                  $       (.02)    $        .05
                                                  =============   =============

As adjusted, diluted net (loss) income per share
 (potential common shares not limited to
 authorized shares available)                      $       (.02)    $       .03
                                                  =============   =============
Weighted average number of shares
  outstanding - basic                                37,339,286      37,339,286
                                                 =============   ==============
Weighted average number of shares outstanding -
  diluted (potential common shares limited to
  authorized shares available)                       37,339,286      55,000,000
                                                 ==============  ==============
As adjusted, weighted average number of shares
 outstanding - diluted (potential common shares
 not limited to authorized shares available)         37,339,286      90,139,286
                                                  =============   =============


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 STOCKHOLDERS' EQUITY
                         SIX MONTHS ENDED JUNE 30, 2005
                                   (Unaudited)



                                               Capital                           Total
                        Common Stock         in excess       Accumulated       Stockholders'
                      Shares      Amount    of par value      deficit            Equity
                      ------------------    ------------    -------------      -------------
 Balance at
<S>                <C>          <C>         <C>             <C>                 <C>
  Dec. 31, 2004    37,339,286   $373,393    $136,970,283    $(136,278,962)      $   1,064,714

 Common Stock issued
 by principal stockholder
 in settlement of anti-
 dilution provision of
 warrants                                        261,704                              261,704

 Net loss                                                        (752,141)           (752,141)
                ------------------------------------------------------------------------------
 Balance at
  June 30, 2005    37,339,286   $373,393    $137,231,987    $(137,031,103)      $     574,277
                  ==============================================================================




 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,
                                                         --------------------------
                                                          2005            2004
                                                          ----            ----

Cash flows from operating activities:
<S>                                                      <C>            <C>
  Net (loss) income                                      $  (752,141)   $  2,664,174
  Adjustments to reconcile net (loss) income
    to net cash used for operating activities:
    Write off of ACT warrant                                  14,250
    Antidilution settlement charge                           310,305
    Gain on sale of assets                                                (2,875,282)
    Gain on sale of securities                                              (270,048)
    Depreciation and amortization                                             87,156
    Amortization of interest income                                           (3,937)
    Change in operating assets and liabilities:
     Other receivables                                       (67,962)         (3,750)
     Prepaid expenses and other current assets               (16,055)        (23,939)
     Accounts payable and accrued expenses                   (64,881)         38,454
                                                         ------------    ------------
    Net cash used in operating activities                   (576,484)       (387,172)
                                                         ------------    ------------
Cash flows from investing activities:
    Proceeds from sale of investment                                        1,935,683
                                                         ------------    ------------
Net cash provided by investing
activities                                                        -         1,935,683
                                                         ------------    ------------
Cash flows from financing activities:
     Repayment of convertible notes payable                                   (60,000)
                                                         ------------    -------------

Net cash used for financing activities                            -           (60,000)


                                                         ------------    -------------
Net (decrease) increase in cash and cash equivalents        (576,484)       1,488,511

Cash and cash equivalents at beginning of period           1,888,386          848,573
                                                         ------------   --------------
Cash and cash equivalents at end of period               $ 1,311,902    $   2,337,084
                                                         ============   ==============

Supplemental disclosure:
Income taxes paid                                        $    94,750            -

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


<PAGE>


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

Note 1.  Basis of Presentation

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

Note 2. Plan of Operations

       On March 11, 2003, the Company sold all its inventory related to ALFERON
N Injection and granted a license to sell the product to Hemispherx Biopharma,
Inc. ("HEB"). In exchange for the inventory and license, the Company received
424,528 shares of HEB common stock with a guaranteed value of $675,000, an
additional 62,500 shares of HEB common stock without a guaranteed value, and
future royalties equal to 6% of the net sales of ALFERON N Injection. During
2003, the Company sold all 487,028 shares of HEB common stock and realized net
proceeds of $ 1,207,000. In addition, HEB assumed approximately $408,000 of the
Company's payables and various other commitments. On March 11, 2003, the Company
and HEB entered into another agreement, which was consummated on March 17, 2004,
pursuant to which the Company sold to HEB, the Company's real estate property,
plant, equipment, furniture and fixtures, rights to ALFERON N Injection and all
of its patents, trademarks and other intellectual property related to its
natural alpha interferon business. In exchange, the Company received 424,528
shares of HEB common stock with a guaranteed value of $675,000, an additional
62,500 shares of HEB common stock without a guaranteed value and future
royalties equal to 6% of the net sales of all products sold containing natural
alpha interferon. During 2004, the Company sold all 487,028 shares of HEB common
stock and realized net proceeds of $1,936,000. In addition, approximately $2.5
million of the Company's indebtedness which encumbered its assets was repaid by
HEB. Prior to the completion of this transaction, HEB funded certain operating
costs of the Company's facility such as insurance, heat, light, air conditioning
and equipment maintenance (See Note 7).

       Currently, ISI's sole activity is completing the acquisition of Amphioxus
Cell Technologies ("ACT"). ACT and ISI have entered into a non-binding Letter of
Intent, which is described in Note 8.


     At June 30, 2005, the Company had approximately $ 1,312,000 of cash and
cash equivalents, with which to support future operating activities and to
satisfy its financial obligations as they become payable.

     The Company has experienced significant operating losses since its
inception. As of June 30, 2005, the Company had an accumulated deficit of
approximately $137 million. For the six months ended June 30, 2005, the Company
incurred a net loss of approximately $0.8 million. For the years ended December
31, 2004 and 2003, the Company had net income of approximately $ 1.7 million and
$2.3 million, respectively, from the sale of its assets. Based on the Company's
current cash position, estimates of revenues, expenses, and the timing of
repayment of creditors, management believes that the Company has sufficient
resources to enable it to continue activities through June 30, 2006. However,
actual results may differ materially from such estimate, and no assurance can be
given that additional funding will not be required sooner than anticipated or
that such additional funding, whether from financial markets or from other
sources, will be available when needed or on terms acceptable to the Company.
Insufficient funds will require the Company to curtail or terminate its
activities.




Note 3.  Earnings (Loss) Per Share

     Basic earnings (loss) per share have been computed using the weighted
average number of shares of common stock of the Company outstanding for each
period presented. For the three months and six months ended June 30, 2004, the
dilutive effect of stock options and other common stock equivalents is included
in the calculation of diluted earnings per share using the treasury stock
method. For the three months and six months ended June 30, 2005, common stock
equivalents are not included in the calculation of loss per share as the effect
would be antidilutive.


Note 4. Agreement with GP Strategies Corporation

             Pursuant to an agreement dated March 25, 1999, GP Strategies
Corporation ("GP Strategies") loaned the Company $500,000 (the "GP Strategies
Debt"). In return, the Company granted GP Strategies (i) a first mortgage on the
Company's real estate, (ii) a two-year option (which has expired) to purchase
the Company's real estate, provided that the Company has terminated its
operations and a certain liability to the American Red Cross (the "Red Cross")
has been repaid, and (iii) a two-year right of first refusal (which has expired)
in the event the Company desires to sell its real estate. In addition, the
Company issued GP Strategies 500,000 shares (the "GP Shares") of common stock
and five-year warrant (the "GP Warrant") to purchase 500,000 shares of common
stock at a price of $1 per share. Pursuant to the agreement, the Company has
issued a note to GP Strategies representing the GP Strategies Debt, which note
was originally due on September 30, 1999 (but extended to June 30, 2001) and
bore interest, payable at maturity, at the rate of 6% per annum. In addition, at
that time, the Company negotiated a subordination agreement with the Red Cross
pursuant to which the Red Cross agreed that its lien on the Company's real
estate is subordinate to GP Strategies' lien. On March 27, 2000, the Company and
GP Strategies entered into an agreement pursuant to which (i) the GP Strategies
Debt was extended until June 30, 2001 and (ii) the Management Agreement between
the Company and GP Strategies was terminated and all intercompany accounts
between the Company and GP Strategies (other than the GP Strategies Debt) in the
amount of approximately $130,000 were discharged which was recorded as a credit
to capital in excess of par value. On August 23, 2001, the Company and GP
Strategies entered into an agreement pursuant to which the GP Strategies Debt
was extended to March 15, 2002. During 2001, the Company paid GP Strategies
$100,000 to reduce the GP Strategies Debt. In addition, in January 2002, the
Company paid GP Strategies $100,000 to further reduce the GP Strategies Debt. In
connection with the Asset Sale Transactions (as hereafter defined, see Note 7),
the Company, HEB and GP Strategies entered into an agreement pursuant to which
GP Strategies agreed to forbear from exercising its rights until May 31, 2003
and GP Strategies agreed to accept HEB common stock with a guaranteed value of
$425,000 in full settlement of all the Company's obligations to GP Strategies.
On June 2, 2003, HEB delivered the HEB common stock to GP Strategies in
accordance with HEB's obligation under the terms of the forbearance agreement.
However the forbearance agreement provided that in addition to the issuance by
HEB of the HEB common stock to GP Strategies, HEB was obligated to register the
HEB common stock for resale and any shares of HEB shares received by GP
Strategies which remain unsold after November 30, 2004 may be put to HEB at a
price of $ 1.59 per share.

         The GP Strategies obligations were legally extinguished by HEB on June
2, 2003. The Asset Sale Transaction with HEB closed on March 17, 2004. If the
transaction had not closed, HEB would have had a claim against ISI for the
satisfaction of the GP Strategies obligations. For accounting purposes, these
transactions were treated as integral parts of the Asset Sale Transactions and
accordingly, the obligations remained on the balance sheet until the closing of
the transaction on March 17, 2004, at which time the amount of such obligations
were recognized as extinguished for accounting purposes.

Note 5.  Agreement with the Red Cross

         The Company obtained human white blood cells used in the manufacture of
ALFERON N Injection from several sources, including the Red Cross pursuant to a
supply agreement dated April 1, 1997 (the "Supply Agreement"). As of November
23, 1998, the Company owed the Red Cross approximately $1.46 million plus
interest at the rate of 6% per annum accruing from April 1, 1998 (the "Red Cross
Liability") for white blood cells purchased pursuant to the Supply Agreement.

         Pursuant to an agreement dated November 23, 1998, the Company granted
the Red Cross a security interest in certain assets to secure the Red Cross
Liability, issued to the Red Cross 300,000 shares of common stock and agreed to
issue additional shares at some future date as requested by the Red Cross to
satisfy any remaining amount of the Red Cross Liability. The Red Cross agreed
that any net proceeds received by it upon sale of such shares would be applied
against the Red Cross Liability. In January 1999, the Company granted the Red
Cross a security interest (the "Security Interest") in, among other things, the
Company's real estate, equipment inventory, receivables, and New Jersey net
operating loss carryovers to secure repayment of the Red Cross Liability, and
the Red Cross agreed to forbear from exercising its rights under the Supply
Agreement, including with respect to collecting the Red Cross Liability until
June 30, 1999 (which was subsequently extended until December 31, 1999). On
December 29, 1999, the Company, the Red Cross and GP Strategies entered in an
agreement pursuant to which the Red Cross agreed that until September 30, 2000
it would forbear from exercising its rights under (i) the Supply Agreement,
including with respect to collecting the Red Cross Liability, and (ii) the
Security Interest. In connection with the Asset Sale Transactions (see Note 7),
the Company, HEB and the Red Cross entered into an agreement pursuant to which
the Red Cross agreed to forbear from exercising its rights until May 31, 2003
and the Red Cross agreed to accept HEB common stock with a guaranteed value of
$500,000 in full settlement of all of the Company's obligations to the Red
Cross. On June 2, 2003, HEB delivered the HEB common stock to the Red Cross in
accordance with HEB's obligation under the terms of the forbearance agreement.
However the forbearance agreement provided that in addition to the issuance by
HEB of the HEB common stock to the Red Cross, HEB was obligated to register the
HEB common stock for resale and any shares of HEB shares received by the Red
Cross which remain unsold after May 31, 2004 may be put to HEB at a price of
$1.59 per share.

         The Red Cross Liability was legally extinguished by HEB on June 2,
2003. The Asset Sale Transaction with HEB closed on March 17, 2004. If the
transaction had not closed, HEB would have had a claim against ISI for the
satisfaction of the Red Cross Liability. For accounting purposes, these
transactions were treated as integral parts of the Asset Sale Transactions and
accordingly, the obligations remained on the balance sheet until the closing of
the transaction on March 17, 2004, at which time the amount of such obligations
were recognized as extinguished for accounting purposes.


Note 6.           Recently Issued Accounting Standards


         In December 2004, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 123 (revised
2004), "Share-Based Payment" (SFAS 123R), which replaces SFAS No. 123,
"Accounting for Stock-Based Compensation," (SFAS 123) and supercedes APB Opinion
No. 25, "Accounting for Stock Issued to Employees." SFAS 123R requires all
share-based payments to employees, including grants of employee stock options,
to be recognized in the financial statements based on their fair values
beginning January 1, 2006, with early adoption encouraged. The pro forma
disclosures previously permitted under SFAS 123 no longer will be an alternative
to financial statement recognition. Under SFAS 123R, the Company must determine
the appropriate fair value model to be used for valuing share-based payments,
the amortization method for compensation cost and the transition method to be
used at date of adoption. The transition methods include prospective and
retroactive adoption options. The Company has begun, but has not completed,
evaluating the impact of the adoption of SFAS 123R on its results of operations.
In connection with evaluating the impact of SFAS 123R, the Company is
considering the potential implementation of different valuation methods to
determine the fair value of share-based compensation. The Company believes the
adoption of SFAS 123R will have a material impact on its results of operations,
regardless of the valuation method used. Currently, the Company does not have
any employee stock options outstanding.


Note 7.    Agreement with Hemispherx Biopharma, Inc. ("HEB")

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

         In the first agreement with HEB (the "First Asset Sale Agreement"), the
Company sold all of its inventory related to ALFERON N Injection(R) (the
"Product") and granted a three-year license for the production, manufacture,
use, marketing and sale of the Product in the United States.

         For these assets, the Company:

          (i)  received  424,528  shares of HEB common  stock  (the "HEB  Common
               Stock")  which had a  Guaranteed  Value (as  defined in the First
               Asset Sale Agreement) of $675,000;

          (ii) received an additional  62,500 shares of HEB Common Stock without
               a Guaranteed Value; and

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

          In addition, HEB assumed $408,000 of ISI payables and certain other
obligations related to the Product. The consummation of the First Asset Sale
Agreement resulted in a gain of $1,149,112, which is included in the
consolidated statement of operations for the year ended December 31, 2003.

         ISI received a service fee until October 31, 2003 for providing certain
transitional services. Such service fee was $560,101 for the year ended December
31, 2003. As of December 31, 2003, the Company sold all 487,028 shares of HEB
Common Stock and realized net proceeds of $1,207,000, resulting in a gain of
$447,337, which is included in the consolidated statement of operations for the
year ended December 31, 2003.

         In the second agreement with the Company (the "Second Asset Sale
Agreement"), which was consummated on March 17, 2004, the Company sold to HEB
all of its rights to the Product and other assets related to the natural alpha
interferon business including, but not limited to, real estate, machinery and
equipment. For these assets, the Company:

          (i)  received   424,528  shares  of  HEB  Common  Stock  which  has  a
               Guaranteed  Value (as defined in the Second Asset Sale Agreement)
               of $675,000;

          (ii) received an additional  62,500 shares of HEB Common Stock without
               a Guaranteed Value; and

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


         In addition, HEB satisfied the Company's obligations to (i) the
American Red Cross in the amount of $1,435,000, (ii) GP Strategies Corp. in the
amount of $423,000, and (iii) MD Sass in the amount of $644,000 (for unpaid
local property taxes and water and sewer charges). The consummation of the
Second Asset Sale Agreement resulted in a gain of $2,875,282, which is included
in the consolidated condensed statement of operations for the quarter ended
March 31, 2004. Through March 31, 2004, no shares received from the Second Asset
Sale Agreement were sold. As of December 31, 2004, the Company sold all of the
shares of HEB common stock and realized net proceeds of $1,935,683, resulting in
a gain on the sale of the HEB common stock of $270,048.

Note 8. Note Receivable - Agreement with Amphioxus Cell
                          Technologies, Inc.  ("Amphioxus")

         On March 20, 2003, the Company entered into a collaterialized note
agreement, as amended (the "Note") with Amphioxus to advance up to $500,000.
Pursuant to the Note, through June 30, 2005, the Company advanced $475,000. The
Note is due on September 30, 2005, bears interest at the rate of 10% per annum
and is collaterialized by all of the assets of Amphioxus. In addition, the
Company received a warrant, exercisable until March 2008, to purchase for
$100,000, an aggregate of 20% of the common stock of Amphioxus on a fully
diluted basis. The warrant is valued at $15,000, and such value is prorated
based on the amount of monies advanced and was amortized as interest income over
the original term of the Note.

       On October 17, 2003, ISI and ACT entered into a non-binding letter of
intent pursuant to which ISI (or a wholly owned subsidiary of ISI) will acquire
ACT.

       The Letter of Intent is subject to the execution of definitive documents
and final due diligence. There can be no assurance that a definitive agreement
will be consummated.

                  At December 31, 2004, the Company set up a provision against
the collectibility of the note and related interest due from ACT, due to the
uncertainty of the collectibility of such note and interest and to reflect its
estimated fair value. In addition, at March 31, 2005, the Company wrote off the
carrying value of the ACT warrant.


Note 9.  Notes Payable

         In August 2002, the Company completed a private placement of $500,000
of convertible notes to accredited investors. Each note is convertible into the
Company's common stock at a price of $.05 per share (subject to adjustment to
70% of the market price of the Company's common stock under certain
circumstances) and bears interest at the rate of 10% per annum. A $250,000
convertible note was due January 31, 2003 and the other $250,000 of the
convertible notes were due December 31, 2003. For each $100,000 principal amount
of notes issued, the investors received warrants to purchase an additional 10.2
million shares of the Company's common stock exercisable at $.01 per share. The
warrants were valued at $400,000 and are amortized as interest expense over the
terms of the respective notes. The conversion of the convertible notes and the
exercise of the warrants are subject to approval by the shareholders of the
Company of the availability of a sufficient number of authorized common shares.
The terms of the notes, as amended, include the Company obtaining stockholder
approval by December 31, 2005 to increase its authorized shares so that the
number of authorized but unissued common shares is at least 200% of the number
of common shares issuable on conversion of the notes and exercise of the
warrants. Failure to obtain stockholder approval for the increase in the
authorized number of shares and to file with the Delaware Secretary of State an
amendment to the Company's Certificate of Incorporation, on or before December
31, 2005 to increase its authorized shares, would require the Company to make
cash payments to each warrant holder, for each 30-day period such approval has
not been obtained, equal to the difference between the exercise price and volume
weighted average market price (for that 30-day period) for all warrants not
exercisable because of the failure to obtain the approval. Further the note
holders have registration rights whereby, for the period commencing April 30,
2004 but no later than December 31, 2005, upon written request from at least 50%
of the holders of the shares issuable upon the exercise of the warrants, the
Company is to file a registration statement within 30 days and have such
registration statement declared effective 90 days thereafter, to register the
common shares underlying the convertible notes and warrants. The Company's
failure to file a registration statement or have one declared effective by the
required dates would result in the Company paying liquidated damages to each of
the above note-holders in an amount equal to 2% of the outstanding principal
amount of the convertible notes per month for each 30 day period or part
thereof, a registration statement was not filed. In addition, these notes are
convertible into common stock at a beneficial rate. The beneficial conversion
feature was valued at $100,000 and accounted for as debt discount and was
amortized over the term of the notes. The $250,000 note due on January 31, 2003
was repaid in full (including accrued interest) in November 2003. Of the
$250,000 notes which were due December 31, 2003, $ 25,000 was repaid (including
accrued interest) in May, 2004 and the remaining $ 225,000 are still unpaid.

Note 10.  Antidilution Obligation

During the quarter and six months ended, June 30, 2005, the Company took a
charge of $310,305 for a potential antidilution obligation related to certain
warrants. A principal stockholder of the Company agreed to contribute shares of
common stock in settlement of the potential antidilution obligation, on the
basis of one share for each two warrants, pursuant to which 4,361,738 shares
were issued by the principal stockholder. The Company determined the amount of
the charge based on the closing price of the common stock on the date the
stockholder agreed to issue the shares. This amount was included in general and
administrative expenses for the quarter and six months ended, June 30, 2005.




<PAGE>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

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


         ISI was incorporated in 1980 and until March 11, 2003, ISI was a
biopharmaceutical company which studied, manufactured, and sold ALFERON N
Injection(R), a highly purified, multi-species, natural-source alpha interferon
product (the "Product"). ALFERON N Injection is approved by the FDA for the
treatment of certain types of genital warts and has been studied for its
potential use in the treatment of human immunodeficiency virus ("HIV"),
hepatitis C virus ("HCV"), and certain other indications. ISI has experienced
significant operating losses since its inception.

         On March 11, 2003, ISI executed two agreements with HEB to sell certain
assets of ISI. In the First Asset Sale Agreement, ISI sold all of its inventory
related to ALFERON N Injection(R), ISI's natural alpha interferon product
approved for the treatment of certain types of genital warts (the "Product"),
and granted a limited license for the production, manufacture, use, marketing
and sale of the Product in the United States. In the Second Asset Sale
Agreement, which was consummated on March 17, 2004, ISI sold to HEB all of its
rights to the Product and other assets related to the Product including, but not
limited to, real estate, machinery and equipment.

         On October 17, 2003, ISI and Amphioxus Cell Technologies, Inc. ("ACT")
entered into a non-binding letter of intent pursuant to which ISI (or a wholly
owned subsidiary of ISI) will acquire ACT. ACT is a biotechnology company that
applies liver biology solutions to problems in drug discovery and human
therapeutics. The letter of intent is subject to the execution of definitive
documents and final due diligence. (See Note 8).

Liquidity and Capital Resources

         For the assets transferred to HEB pursuant to the First Asset Sale
Agreement, ISI received 487,028 shares of HEB common stock and a royalty equal
to 6% of the net sales of the Product. As of December 31, 2003, ISI sold all
487,028 shares of HEB common stock and realized net proceeds of $1,207,000. In
addition, until October 31, 2003, ISI received a service fee for providing
certain transitional services to HEB and HEB assumed $408,000 of ISI payables
and certain other obligations related to the Product.

     For the  assets  transferred  to HEB  pursuant  to the  Second  Asset  Sale
Agreement,  which was  consummated on March 17, 2004, ISI received an additional
487,028 shares of HEB Common Stock. As of December 31, 2004, ISI sold all of the
487,028 shares of HEB common stock and realized net proceeds of  approximately $
1,936,000.  In addition,  HEB satisfied certain obligations relating to the real
estate,   machinery  and  equipment  of  ISI  which   aggregated   approximately
$2,500,000.

         At June 30, 2005, the Company had approximately $ 1,312,000 in cash and
cash equivalents. Until utilized, such cash and cash equivalents are being
invested principally in short-term interest-bearing investments.

         Based on the Company's estimates of revenues, expenses, and the timing
of repayment of creditors, management believes that the cash presently available
will be sufficient to enable the Company to continue its activities through June
30, 2006. However, actual results may differ materially from such estimate, and
no assurance can be given that additional funding will not be required sooner
than anticipated or that such additional funding will be available when needed
or on terms acceptable to the Company. Insufficient funds will require the
Company to curtail or terminate its activities.

         The Company's Common Stock is traded in the over-the-counter market and
quoted on the Pink Sheets, which may have a material adverse effect on the
liquidity of its Common Stock and on its ability to obtain additional financing.

Results of Operations

Six Months Ended June 30, 2005 Versus Six Months Ended June 30, 2004

     For the six months ended June 30, 2005 and 2004, the Company recorded
royalty income from HEB of $30,298 and $31,808, respectively.

     General and administrative expenses for the six months ended June 30, 2005
were $783,131 as compared to $469,863 for the same period in 2004. Of the
$313,268 increase, $310,305 resulted from a charge taken for potential
antidilution obligations relating to certain warrants and the remaining increase
of $2,963 was due to increases in certain operating expenses offset by decreases
in depreciation expense and property taxes.

     Interest income (expense), net, for the six months ended June 30, 2005 was
income of $692 as compared to $9,369 for the six months ended June 30, 2004.

     For the six months ended June 30, 2004, the Company recorded a gain on the
sale of assets to HEB of $2,875,282.

     For the six months ended June 30, 2004, the Company recorded a gain on the
sale of HEB common stock of $270,048.

     For the six months ended June 30, 2004, the Company recorded $ 52,470 of
income tax expense based upon the alternative minimum tax for federal tax
purposes.

     As a result of the foregoing, the Company incurred a net loss of $752,141
and earned net income of $2,664,174 for the six months ended June 30, 2005 and
2004, respectively.

Three Months Ended June 30, 2005 Versus Three Months Ended June 30, 2004

     For the three months ended June 30, 2005 and 2004, the Company recorded
royalty income from HEB of $14,298 and $17,068, respectively.

     General and administrative expenses for the three months ended June 30,
2005 were $526,453 as compared to $196,469 for the same period in 2004. Of the
$329,984 increase, $310,305 resulted from a charge taken for potential
antidilution obligations relating to certain warrants and the remaining increase
of $19,679 was due to increases in certain operating expenses.

     Interest income (expense), net, for the three months ended June 30, 2005
was income of $156 as compared to $2,479 for the three months ended June 30,
2004.

     For the three months ended June 30, 2004, the Company recorded a gain on
the sale of HEB common stock of $270,048.

     As a result of the foregoing, the Company incurred a net loss of $511,999
and earned net income of $93,126 for the three months ended June 30, 2005 and
2004, respectively.

Forward-Looking Statements

     This report contains certain forward-looking statements reflecting
management's current views with respect to future events and financial
performance. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those in
the forward-looking statements, including, but not limited to, the risk that the
Company will run out of cash and the uncertainty of obtaining additional funding
for the Company, all of which are difficult to predict and many of which are
beyond the control of the Company.


<PAGE>


                    INTERFERON SCIENCES, INC. AND SUBSIDIARY

                           PART II. OTHER INFORMATION



Item 6.    Exhibits and Reports on Form 8-K

          (b)  Reports on Form 8-K

          There were no reports of Form 8-K filed  during the three  months
          ended June 30, 2005.


                            INTERFERON SCIENCES, INC.

                                  June 30, 2005




                                   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 14, 2005                          By:  /s/ Lawrence M. Gordon
                                                      Lawrence M. Gordon
                             Chief Executive Officer




DATE:  August 14, 2005                          By:  /s/ Donald W. Anderson
                                                      Donald W. Anderson
                                                      Controller


<PAGE>


CERTIFICATIONS

I, Lawrence M. Gordon, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: August 14, 2005

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


<PAGE>


CERTIFICATIONS

I, Donald W. Anderson, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: August 14, 2005

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