SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  -------------

                                    FORM 10-Q

                                  -------------

                 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                    For the Quarter Ended September 30, 2005

              [ ] 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 0-22710

                            INTERPHARM HOLDINGS, INC.
                     --------------------------------------
             (Exact name of registrant as specified in its charter)

Delaware                                                       13-3673965
--------------------------------------------------------------------------------
State or other jurisdiction of                              (I.R.S. Employer
corporation or organization)                             Identification Number)

75 Adams Avenue, Hauppauge, New York                              11788
--------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip Code)

Issuer's telephone number, including area code (631) 952-0214

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 [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act.

                                 YES [ ] NO [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Act.)

                                 YES [ ] NO [X]


As of the close of business on November 08, 2005,  there were 32,463,607  shares
of the Registrant's $0.01 par value per share Common Stock outstanding.


<PAGE>

                            INTERPHARM HOLDINGS, INC.

TABLE OF CONTENTS


PART I     Financial Information                                            Page

Item 1.      Financial Statements & Notes ..................................1-17
Item 2.      Managements Discussion & Analysis of
             Financial Condition and Results of Operations.................18-24

Item 3.      Quantitative and Qualitative Disclosures about Market Risk.......24

Item 4.      Controls and Procedures..........................................25


PART II    Other Information Required in Report

Item 6....................................................................... 26

Forward Looking Statements and Associated Risks...............................27

Signatures Page...............................................................28

Exhibits/Certifications....................................................29-32


<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
                        (In thousands, except share data)

                                     ASSETS

                                                    September 30,   June 30,
                                                        2005         2005
                                                      -------       -------
CURRENT ASSETS                                      (Unaudited)

Cash and cash equivalents                             $ 1,396       $   537
Accounts receivable, net                                9,722         7,664
Inventories                                             8,874         8,941
Prepaid expenses and other current assets               1,072         1,156
Deferred tax assets                                        87            87
                                                      -------       -------

     Total Current Assets                              21,151        18,385

Land, building and equipment, net                      23,908        21,872
Deferred tax assets                                     4,598         4,326
Investment in APR, LLC                                  1,022         1,022
Deposits                                                1,010           785
                                                      -------       -------

         TOTAL ASSETS                                 $51,689       $46,390
                                                      =======       =======

            See Notes To Condensed Consolidated Financial Statements.


                                       1
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
                        (In thousands, except share data)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                    September 30,  June 30,
                                                                        2005        2005
                                                                      --------    --------
                                                                     (Unaudited)
<S>                                                                   <C>         <C>
CURRENT LIABILITIES
  Current maturities of bank debt                                     $ 12,540    $ 10,340
  Accounts payable, accrued expenses and other liabilities               9,712       6,233
                                                                      --------    --------

       Total Current Liabilities                                        22,252      16,573
  --------

OTHER LIABILITIES
  Bank debt, less current maturities

OTHER LIABILITIES
  Bank debt, less current maturities                                     6,598       6,691
  Other liabilities                                                         --          15
                                                                      --------    --------

       Total Other Liabilities                                           6,598       6,706
                                                                      --------    --------

       TOTAL LIABILITIES                                                28,850      23,279
                                                                      --------    --------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
  Preferred stocks, 10,000,000 shares authorized; issued and
   outstanding - 6,608,233; aggregate liquidation preference
   of $5,483,095                                                           343         343
  Common stock, $0.01 par value, 70,000,000 shares  authorized;
    shares issued - 32,463,607 at September 30, 2005 and 32,338,607
    at June 30, 2005                                                       325         324

  Additional paid-in capital                                            21,975      19,104
  Stock subscription receivable                                           (133)         --
  Unearned compensation                                                 (2,523)         --
  Retained earnings                                                      2,852       3,340
                                                                      --------    --------

       TOTAL STOCKHOLDERS' EQUITY                                       22,839      23,111
                                                                      --------    --------

       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $ 51,689    $ 46,390
                                                                      ========    ========
</TABLE>

            See Notes To Condensed Consolidated Financial Statements.


                                       2
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
                                   (UNAUDITED)
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                        Three Months Ended
                                                                           September 30,
                                                                      --------------------
                                                                        2005        2004
                                                                      --------    --------
<S>                                                                   <C>         <C>
SALES, Net                                                            $ 14,547    $  9,053

COST OF SALES (including related party rent expense of $102 for the
three months ended September 30, 2005 and 2004, respectively)           10,564       7,113
                                                                      --------    --------

       GROSS PROFIT                                                      3,983       1,940
                                                                      --------    --------

OPERATING EXPENSES
  Selling, general and administrative                                    2,437       1,087
  Related party rent                                                        18          18
  Research and development                                               2,146         175
                                                                      --------    --------

       TOTAL OPERATING EXPENSES                                          4,601       1,280
                                                                      --------    --------

       OPERATING (LOSS) INCOME                                            (618)        660
                                                                      --------    --------

OTHER EXPENSE
  Interest expense                                                         (91)         (3)
                                                                      --------    --------

        (LOSS) INCOME BEFORE INCOME TAXES                                 (709)        657

(BENEFIT FROM) PROVISION FOR INCOME TAXES                                 (262)        244
                                                                      --------    --------

NET (LOSS) INCOME                                                         (447)        413

INCOME ATTRIBUTABLE TO PREFERRED STOCKHOLDERS                               41          65
                                                                      --------    --------

NET (LOSS) INCOME ATTRIBUTABLE TO
 COMMON STOCKHOLDERS                                                  $   (488)   $    348
                                                                      ========    ========

(LOSS) EARNINGS PER SHARE ATTRIBUTABLE TO COMMON
  STOCKHOLDERS
  Basic (loss) earnings per share                                     $  (0.01)   $   0.01
                                                                      ========    ========
  Diluted (loss) earnings per share                                   $  (0.01)   $   0.01
                                                                      ========    ========

  Basic weighted average shares outstanding                             32,464      24,967
                                                                      ========    ========
  Diluted weighted average shares and
   equivalent shares outstanding                                        32,464      67,979
                                                                      ========    ========
</TABLE>

            See Notes To Condensed Consolidated Financial Statements.


                                       3
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

            CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
                                   (UNAUDITED)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                         Additional   Stock                               Total
                                 Preferred Stock      Common Stock         Paid-In  Subscription  Unearned   Retained  Stockholders'
                                Shares    Amount     Shares     Amount     Capital   Receivable Compensation Earnings    Equity
                                ------   --------   --------   --------   --------   --------    --------    --------    --------
<S>                              <C>     <C>          <C>      <C>        <C>        <C>         <C>         <C>         <C>
BALANCE -  July 1, 2005          6,608   $    343     32,339   $    324   $ 19,104   $     --    $     --    $  3,340    $ 23,111

Dividends Declared - Series A-1     --         --         --         --         --         --          --         (41)        (41)

Fair value of unvested stock
options upon adoption of
FAS 123(R)                          --         --         --         --      2,739         --      (2,739)         --          --

Amortization of unearned
compensation                        --         --         --         --         --         --         216          --         216

Common stock subscribed             --         --        125          1        132       (133)         --          --          --

Net loss                            --         --         --         --         --         --          --        (447)       (447)
                                ------   --------   --------   --------   --------   --------    --------    --------    --------

BALANCE -  September 30, 2005    6,608   $    343     32,464   $    325   $ 21,975   $   (133)   $ (2,523)   $  2,852    $ 22,839
                                ======   ========   ========   ========   ========   ========    ========    ========    ========
</TABLE>

            See Notes To Condensed Consolidated Financial Statements.


                                       4
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

        CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
--------------------------------------------------------------------------------
                                   (UNAUDITED)
                                 (In thousands)

                                                             Three Months Ended
                                                               September 30,
                                                             -----------------
                                                             2005        2004
                                                             -----       -----

NET (LOSS) INCOME                                            $(447)      $ 413


OTHER COMPREHENSIVE GAIN
  Unrealized gain on marketable securities, net                 --           3
                                                             -----       -----

TOTAL COMPREHENSIVE  (LOSS) INCOME                           $(447)      $ 416
                                                             =====       =====

            See Notes To Condensed Consolidated Financial Statements.


                                       5
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
                                   (UNAUDITED)
                                 (In thousands)


<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                 September 30,
                                                               ------------------
                                                                 2005      2004
                                                               -------    -------
<S>                                                            <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income                                              $  (447)   $   413
                                                               -------    -------
 Adjustment to reconcile net income to net
  cash provided by  operating activities
   Depreciation and amortization                                   347        262
   Vested options expense                                          216         --
   Deferred tax (benefit) expense                                 (272)       243
 Changes in operating assets and liabilities
    Accounts receivable                                         (2,058)     2,368
    Inventories                                                     67       (331)
    Prepaid expenses and other current assets                       84       (323)
    Accounts payable, accrued expenses and other liabilities     3,423       (360)
                                                               -------    -------

TOTAL ADJUSTMENTS                                                1,807      1,859
                                                               -------    -------

     NET CASH PROVIDED BY OPERATING ACTIVITIES                   1,360      2,272
                                                               -------    -------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of building and equipment                           (2,383)      (767)
  Deposits                                                        (225)      (365)
                                                               -------    -------

        NET CASH USED IN INVESTING ACTIVITIES                   (2,608)    (1,132)
                                                               -------    -------

 CASH FLOWS FROM FINANCING ACTIVITIES
  Repayment of bank line of credit                                  --       (425)
  Borrowings from new bank lines of credit                       2,200         --
  Repayments of bank mortgage and notes payable                    (93)       (62)
                                                               -------    -------

       NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES       2,107       (487)
                                                               -------    -------

  NET INCREASE IN CASH AND CASH  EQUIVALENTS                       859        653

  CASH AND CASH EQUIVALENTS - Beginning                            537      2,885
                                                               -------    -------

  CASH AND CASH EQUIVALENTS - Ending                           $ 1,396    $ 3,538
                                                               =======    =======
</TABLE>

            See Notes To Condensed Consolidated Financial Statements.


                                       6
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
--------------------------------------------------------------------------------
                                   (UNAUDITED)
                                 (In thousands)

                                                              Three Months Ended
                                                                 September 30,
                                                              ------------------
                                                               2005         2004
                                                              -----         ----

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the periods for:
  Interest                                                    $  76          $42
                                                              =====          ===
  Income taxes                                                $  --          $ 1
                                                              =====          ===

    Non-Cash Investing or Financing Transaction:

    During the quarter ended September 30, 2005, the Company issued $133 of its
       common stock in exchange for a subscription receivable.


            See Notes To Condensed Consolidated Financial Statements.


                                       7
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

NOTE 1 - Condensed Consolidated Financial Statements

      The  accompanying  interim  unaudited  condensed   consolidated  financial
      statements  include the  accounts of  Interpharm  Holdings,  Inc.  and its
      subsidiaries  that  are  hereafter  referred  to as (the  "Company").  All
      intercompany   accounts  and   transactions   have  been   eliminated   in
      consolidation.

      These   financial   statements  have  been  prepared  in  accordance  with
      accounting  principles  generally accepted in the United States of America
      for interim financial  information and with the instructions to Form 10-Q.
      Accordingly,  they do not include  all of the  information  and  footnotes
      required by accounting  principles generally accepted in the United States
      of  America  for  complete  financial   statements.   In  the  opinion  of
      management, such interim statements reflect all adjustments (consisting of
      normal  recurring  accruals)  necessary  to present  fairly the  financial
      position  and the  results of  operations  and cash flows for the  interim
      periods  presented.  The  operating  results  for the three  months  ended
      September 30, 2005 are not necessarily  indicative of the results that may
      be  expected  for the  fiscal  year  ending  June 30,  2006.  For  further
      information,  refer to the consolidated financial statements and footnotes
      thereto  included in the  Company's  Form 10-K for the year ended June 30,
      2005.

NOTE 2 - Summary of Significant Accounting Policies

      Nature of Business

      Interpharm Holdings, Inc. through its wholly-owned subsidiary, Interpharm,
      Inc. ("Interpharm, Inc.") is in the business of developing,  manufacturing
      and  marketing   generic   prescription   strength  and   over-the-counter
      pharmaceutical  products for wholesale distribution  throughout the United
      States.  The majority of the Company's  sales have been derived from sales
      of Ibuprofen tablets in both over-the-counter and prescription strength.

      Earnings Per Share

      Basic  earnings per share  ("EPS") of common stock is computed by dividing
      net (loss)  income  attributable  to common  stockholders  by the weighted
      average  number of shares of common stock  outstanding  during the period.
      Diluted  EPS  reflects  the  amount of net  (loss)  income  for the period
      available to each share of common stock  outstanding  during the reporting
      period,  giving effect to all potentially  dilutive shares of common stock
      from the potential  exercise of stock options and warrants and conversions
      of convertible  preferred  stocks. In accordance with Emerging Issues Task
      Force ("EITF") Issue No. 03-6, "Participating Securities and the Two-Class
      Method Under FASB Statement No. 128,  Earnings Per Share," in periods when
      there is a net income,  the Company uses the two-class method to calculate
      the effect of the  participating  Series K on the calculation of basic EPS
      and the  if-converted  method  is  used to  calculate  the  effect  of the
      participating  Series K on diluted  EPS.  In  periods  when there is a net
      loss, the effect of the participating Series K is excluded from both basic
      and diluted EPS.

      Use of Estimates in the Financial Statements

      The  preparation  of financial  statements in conformity  with  accounting
      principles  generally  accepted in the United  States of America  requires
      management  to make  estimates  and  assumptions  that affect the reported
      amounts of assets and liabilities and disclosure of contingent  assets and
      liabilities  at the  date of the  financial  statements  and the  reported
      amounts of  revenue  and  expenses  during the  reporting  period.  Actual
      results could differ from those estimates.  Significant  estimates include
      deferred tax asset valuations and inventory overhead costing estimates.

      Capitalization of Interest and Other Costs

      The Company  capitalizes  interest on borrowings  and certain other direct
      costs during the active  construction  period of major  capital  projects.
      Capitalized  costs are added to the cost of the underlying assets and will
      be


                                       8
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

NOTE 2 - Summary of Significant Accounting Policies, continued

      depreciated over the useful lives of the assets.  The Company  capitalized
      approximately  $145,000  during the three month period ended September 30,
      2005 in connection with its capital  improvements  to the  Brookhaven,  NY
      facility.

      Stock Based Compensation

      Effective  July 1, 2005,  the Company  adopted the fair value  recognition
      provisions  of Statement of Financial  Accounting  Standards  ("SFAS") No.
      123(Revised  2004),  "Share-Based  Payment,"  ("SFAS  123(R)"),  using the
      modified-prospective-transition  method.  As a result,  the  Company's net
      loss  before  taxes for the  three  months  ended  September  30,  2005 is
      $216,000  lower  than  if it had  continued  to  account  for  share-based
      compensation under Accounting Principles Board ("APB") opinion No. 25.

      Prior to July 1, 2005,  the Company's  stock-based  employee  compensation
      plans were accounted for under the recognition and measurement  provisions
      of Accounting  Principles Board Opinion  ("APBO") No. 25,  "Accounting for
      Stock Issued to Employees"  ("APBO 25"), and related  Interpretations,  as
      permitted by Financial  Accounting  Standards Board ("FASB") Statement No.
      123, "Accounting for Stock-Based  Compensation," ("SFAS 123"). The Company
      did  not  recognize  stock-based  compensation  cost in its  statement  of
      operations for periods prior to July 1, 2005 as all options granted had an
      exercise price equal to the market value of the underlying common stock on
      the date of grant. However, compensation expense was recognized under APBO
      25 for certain  options granted to non employees of the Company based upon
      the intrinsic value (the difference between the exercise price at the date
      of grant and the deemed fair value of the common stock).

      Three months ended September 30, 2004

      As  was  permitted  under  SFAS  No.  148,   "Accounting  for  Stock-Based
      Compensation  - Transition  and  Disclosure,"  which amended SFAS No. 123,
      "Accounting for Stock-Based Compensation," the Company elected to continue
      to follow the  intrinsic  value method in accounting  for its  stock-based
      employee  compensation  arrangements as defined by APB No. 25, "Accounting
      for Stock Issued to Employees," and related interpretations including FASB
      Interpretation  No. 44,  "Accounting  for Certain  Transactions  Involving
      Stock  Compensation,"  an  interpretation  of APB No.  25. No  stock-based
      employee  compensation  cost is  reflected in  operations,  as all options
      granted under those plans had an exercise  price equal to the market value
      of the underlying  common stock on the date of grant.  The following table
      illustrates  the  effect on net  income and net income per share as if the
      Company had applied the fair value recognition  provisions of SFAS No. 123
      to stock-based employee compensation: (in thousands).

                                                            Three Months Ended
                                                               September 30,
                                                                   2004
                                                                  -------
      Net income, as reported                                     $   413

      Less: Stock-based employee compensation expense
      determined under fair value-based method for all  awards,
      net of income tax                                               656
                                                                  -------

      Pro forma net loss                                          $  (243)
                                                                  =======

        As reported                                               $  0.01
                                                                  =======
        Pro forma                                                 $ (0.01)
                                                                  =======

      Diluted net income  (loss) per share
        As reported                                               $  0.01
                                                                  =======
        Pro forma                                                 $ (0.01)
                                                                  =======


                                       9
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

NOTE 2 - Summary of Significant Accounting Policies, continued

      The fair values of Company common stock options  granted to employees were
      estimated  on the date of grant  using  the  Black-Scholes  option-pricing
      model with the following assumptions:  (1) expected volatility of 145% (2)
      risk-free  interest  rate of 4.25%  and (3)  expected  average  life of 10
      years.

      Reclassifications

      Certain  reclassifications  have  been  made  to the  unaudited  condensed
      consolidated financial statements for the prior period in order to have it
      conform to the current period's  classifications.  These reclassifications
      have no effect on previously reported net (loss) income.

      Recently Issued Accounting Pronouncements

      New Accounting Pronouncements

      In November  2004,  the FASB issued SFAS No.  151,  "Inventory  Costs,  an
      amendment of ARB No. 43,  Chapter 4." SFAS No. 151 clarifies that abnormal
      inventory  costs  such as costs of idle  facilities,  excess  freight  and
      handling  costs,  and  wasted  materials  (spoilage)  are  required  to be
      recognized  as current  period costs.  The  provisions of SFAS No. 151 are
      effective for the Company's fiscal year 2006. The adoption of SFAS No. 151
      has  had no  material  impact  on  its  condensed  consolidated  financial
      position, results of operations, or cash flows.

      In December  2004,  the FASB issued SFAS No. 123R  amending  SFAS No. 123,
      which, for the Company,  became  effective  beginning the first quarter of
      fiscal 2006.  SFAS No. 123R  requires the Company to expense stock options
      based on grant date fair value in its financial  statements.  Further, the
      adoption of SFAS No. 123R requires  additional  accounting  related to the
      income tax  effects  and  additional  disclosure  regarding  the cash flow
      effects resulting from share-based payment  arrangements.  The adoption of
      SFAS No. 123R has had no effect on the  Company's  condensed  consolidated
      cash flows, but impacts its results of operations.

      In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for
      Conditional Asset Retirement  Obligations"  ("FIN 47"), which is effective
      for no later than the end of fiscal years ending after  December 15, 2005,
      with  early  adoption  encouraged.   FIN  47  clarifies  that  the  phrase
      "conditional  asset retirement  obligation," as used in FASB Statement No.
      143, "Accounting for Asset Retirement  Obligations" (SFAS No. 143), refers
      to a legal  obligation to perform an asset  retirement  activity for which
      the timing and/or method of settlement  are  conditional on a future event
      that may or may not be within the control of the Company.  The  obligation
      to perform  the asset  retirement  activity is  unconditional  even though
      uncertainty   exists  about  the  timing  and/or  method  of   settlement.
      Uncertainty  about the timing and/or method of settlement of a conditional
      asset retirement obligation should be factored into the measurement of the
      liability when sufficient  information  exists.  SFAS No. 143 acknowledges
      that  in some  cases,  sufficient  information  may  not be  available  to
      reasonably estimate the fair value of an asset retirement obligation.  FIN
      47 also  clarifies  when an entity would have  sufficient  information  to
      reasonably estimate the fair value of an asset retirement obligation.  The
      Company  does not expect that  adoption of FIN 47 will have a  significant
      effect on its  condensed  consolidated  financial  position  or results of
      operations.

      In May 2005, the FASB issued SFAS No. 154,  "Accounting  Changes and Error
      Corrections" ("SFAS 154"). SFAS 154 requires retrospective  application to
      prior periods' financial statements of changes in accounting


                                       10
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

NOTE 2 - Summary of Significant Accounting Policies, continued

      principle.  It also requires that the new accounting  principle be applied
      to the  balances  of assets and  liabilities  as of the  beginning  of the
      earliest  period for which  retrospective  application is practicable  and
      that a corresponding adjustment be made to the opening balance of retained
      earnings  for  that  period  rather  than  being  reported  in  an  income
      statement.  The  statement  will be effective for  accounting  changes and
      corrections  of errors made in fiscal years  beginning  after December 15,
      2005. The Company does not expect the adoption of SFAS No. 154 will have a
      material  effect  on its  condensed  consolidated  financial  position  or
      results of operations.

      In June 2005, the EITF reached  consensus on Issue No. 05-6,  "Determining
      the Amortization  Period for Leasehold  Improvements"  ("EITF 05-6"). EITF
      05-6  provides  guidance  on  determining  the  amortization   period  for
      leasehold  improvements  acquired  in a business  combination  or acquired
      subsequent to lease  inception.  The guidance in EITF 05-6 will be applied
      prospectively  and is effective for reporting periods beginning after June
      29,  2005.  The  adoption of EITF 05-6 is not  expected to have a material
      impact on the  Company's  condensed  consolidated  financial  position  or
      results of operations.

      In  September   2005,  the  FASB  ratified  the  EITF's  Issue  No.  05-7,
      "Accounting  for  Modifications  to  Conversion  Options  Embedded in Debt
      Instruments and Related Issues" ("EITF 05-7"),  which addresses  whether a
      modification  to a conversion  option that changes its fair value  effects
      the  recognition of interest  expense for the associated  debt  instrument
      after  the  modification,  and  whether  a  borrower  should  recognize  a
      beneficial  conversion  feature,  not a  debt  extinguishment,  if a  debt
      modification  increases the intrinsic value of the debt (for example,  the
      modification  reduces the conversion  price of the debt).  The adoption of
      EITF 05-7 is not  expected  to have a  material  impact  on the  Company's
      condensed consolidated financial position or results of operations.

      In  September  2005,  the FASB also  ratified  the EITF's  Issue No. 05-8,
      "Income Tax  Consequences  of Issuing  Convertible  Debt with a Beneficial
      Conversion Feature" ("EITF 05-8"), which discusses whether the issuance of
      convertible debt with a beneficial  conversion  feature results in a basis
      difference  arising from the intrinsic value of the beneficial  conversion
      feature on the  commitment  date (which is  recorded in the  stockholder's
      equity for book purposes, but as a liability for income tax purposes) and,
      if so, whether that basis difference is a temporary  difference under FASB
      Statement No. 109,  Accounting for Income Taxes. The adoption of EITF 05-8
      is not  expected  to have a  material  impact on the  Company's  condensed
      consolidated financial position or results of operations.

NOTE 3 - Inventories

      Inventories consist of the following: (in thousands)

                                                  September 30,    June 30,
                                                      2005           2005
                                                  (Unaudited)
                                                     ------         ------
      Finished goods                                 $1,324         $  721
      Work in process                                 5,414          5,539
      Raw materials                                   1,697          2,117
      Packaging materials                               439            564
                                                     ------         ------

            Total                                    $8,874         $8,941
                                                     ======         ======


                                       11
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

NOTE 4 - Land, Building and Equipment

      Land, building and equipment consist of the following: (in thousands)

<TABLE>
<CAPTION>
                                                                                      Estimated
                                                           September 30,  June 30,     Useful
                                                               2005         2005        Lives
                                                             -------      --------    -----------
                                                           (Unaudited)
<S>                                                           <C>           <C>        <C>
      Land                                                   $ 4,924      $ 4,924
      Building, equipment and construction in progress (a)    10,915        9,314      7-20 Years
      Machinery and equipment                                  8,961        8,289       5-7 Years
      Furniture and fixtures                                     527          435         5 Years
      Leasehold improvements                                   2,968        2,950      5-15 Years
                                                             -------      -------
                                                              28,295       25,912
      Less:  accumulated  depreciation and amortization        4,387        4,040
                                                             -------      -------
      Land, Building and Equipment, net                      $23,908      $21,872
                                                             =======      =======
</TABLE>

(a)   Not yet been placed into service and no depreciation  expense has yet been
      recorded

NOTE 5 - Bank Debt

      A summary of the outstanding long-term debt is as follows: (in thousands)

                                             September 30,    June 30,
                                                  2005          2005
                                                -------       -------
                                              (Unaudited)
      Advised credit facility                   $12,170       $ 9,970
      Mortgage note payable                       6,968         7,061
                                                -------       -------
      Total Bank Debt                            19,138        17,031

      Less:  Current Maturities                  12,540        10,340
                                                -------       -------

      Long-Term Debt, Less Current Maturities   $ 6,598       $ 6,691
                                                =======       =======

      On March 29, 2004, the Company  obtained a new $21 million credit facility
      from the same Bank that provided the old credit  facility.  The new credit
      facility  consists of (i) a $7.4 million mortgage loan for the purchase of
      the Company's  second  manufacturing  plant in  Brookhaven,  NY; (ii) $8.6
      million  of credit  lines  primarily  to  acquire  new  equipment  and for
      renovations, and (iii) a $5 million general line of credit. Details of the
      new facility are as follows:

      o     The $7.4  million  mortgage  loan is to be repaid  with 119  monthly
            principal  installments of $31,000 commencing on August 1, 2004 with
            the balance due June 1, 2014.

      o     Two advised secured credit lines  aggregating $6.6 million primarily
            for  acquisitions  of equipment and for renovations of the Company's
            new Brookhaven,  NY plant. The balance of the funds accessed through
            these credit lines will convert into fully  amortizing 60 month term
            loans.

      o     A $2.0 million advised  non-revolving secured facility for equipment
            purchases.  Each advance  cannot exceed 90% of the invoice amount of
            the new equipment and is convertible  into fully amortizing 60 month
            term loans.


                                       12
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

NOTE 5 - Bank Debt, continued

      o     The $5.0 million  advised  secured  line of credit is primarily  for
            working capital and general corporate purposes.

      During  fiscal  2005,  the  Company  and the  Bank  informally  agreed  to
      consolidate  the four credit lines into one advised  credit line  totaling
      $13.6  million.  As a result,  the $12.1 million of advances have not been
      allocated to each individual  credit line.  Since the Company and the Bank
      have not determined the amount of loans that are available to be converted
      into 60 month term loans, the entire advised credit facility is classified
      as current.

      This credit facility is  collateralized by substantially all assets of the
      Company.  At the  option  of  the  Company,  interest  will  generally  be
      calculated  at (i) LIBOR plus 1.5% for 3 to 36 month  periods,  or at (ii)
      the Bank's then fixed prime rate.  As of September  30,  2005,  the annual
      interest  rates on the  working  capital  lines range from 5.01% to 5.47%.
      Interest  on  the  mortgage  loan  was  5.19%  per  annum,   and  will  be
      recalculated  at  December  1, 2005.  The Bank will  review the new credit
      facility  annually;  the next review is  scheduled  to occur no later than
      November 30, 2005. The credit lines are terminable by the Bank at any time
      as to undrawn amounts. In addition, the Company is required to comply with
      certain financial covenants,  and as of September 30, 2005, was in default
      of these financial  covenants.  The Company has received a waiver from the
      Bank of the financial default covenants related to the four advised lines.
      With  respect to the  mortgage  loan,  the Bank has  waived the  financial
      covenant  defaults  incorporated in the mortgage note as well as the cross
      default provisions within the four advised lines through October 1, 2006.

NOTE 6- Income Taxes

      At September 30, 2005 the Company has remaining Federal net operating loss
      carryforwards  ("NOLs") of  approximately  $13.5 million and State NOLs of
      approximately  $12.9  million both expiring at various times through 2025.
      Pursuant to Section 382 of the Internal Revenue Code regarding substantial
      changes  in  Company  ownership,  utilization  of these NOLs is limited to
      approximately $7.25 million of these NOL's in fiscal 2006, and utilization
      of $6.25  million of these NOL's is limited and  becomes  available  after
      fiscal 2006. The  limitations  lapse at the rate of $2.7 million per year,
      through  fiscal 2009. As of September 30, 2005, the Company has determined
      that it is more likely than not,  that the Company will utilize all of the
      Federal NOLs in the future. The Company recorded a valuation allowance for
      approximately  30% of the State NOLs which the Company does not anticipate
      utilizing due to State limitations.

      In  calculating  its  tax  provision  for the  three  month  period  ended
      September 30, 2005, the Company applied an aggregate effective tax rate of
      approximately  37%  thereby  creating  a deferred  income  tax  benefit of
      $272,000 and adjusted its deferred tax asset by a like amount.


                                       13
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

NOTE 7- Earning Per Share

      The  calculations of basic and diluted EPS are as follows:  (in thousands,
      except per share amounts)

<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                         September 30,
                                                                     -----------------------
                                                                       2005           2004
                                                                     --------       --------
<S>                                                                  <C>            <C>
        Numerator:
            Net (loss) income                                        $   (447)      $    413
            Less: Preferred stock  dividends                               41             41
            Less: Net income attributable to Series K
            preferred stockholders                                         --             24
                                                                     --------       --------

        Numerator for basic EPS                                          (488)           348

         Effect of dilutive securities:
           Net income attributable to Series K
             preferred stockholders                                        --             24
                                                                     --------       --------
         Numerator for diluted EPS                                   $   (488)      $    372
                                                                     ========       ========
        Denominator:
         Denominator for basic EPS weighted average
           shares outstanding                                          32,464         24,967

        Effect of dilutive securities:
           Convertible Series K  preferred  stock                          --         37,649
           Convertible Series A, B, C and J preferred stocks               --              7
           Stock options                                                   --          5,356
                                                                     --------       --------

         Denominator for diluted EPS                                   32,464         67,979
                                                                     ========       ========

          Basic EPS                                                  $  (0.01)      $   0.01
                                                                     ========       ========
          Diluted EPS                                                $  (0.01)      $   0.01
                                                                     ========       ========
</TABLE>

      The shares  issuance  upon the  exercise of stock  options,  warrants  and
      conversions  of preferred  stock are excluded from the  calculation of net
      loss per share as their effect would be anti-dilutive.

      As of September 30, 2005,  the total number of common  shares  outstanding
      and the number of common shares potentially  issuable upon exercise of all
      outstanding  stock options and conversion of preferred  stocks  (including
      contingent conversions) is as follows:

      Common stock outstanding - September 30, 2005                   32,463,607

      Stock options and Warrants outstanding                          12,581,870
      Common stock issuable upon conversion of preferred stocks:
        Series A                                                           1,522
        Series A-1 (maximum contingent conversion) - (a)               4,855,389
        Series B                                                             292
        Series C                                                           5,584
        Series K - (b)                                                31,373,875
                                                                      ----------

                    Total - (c)                                       81,282,139
                                                                      ==========


                                       14
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

NOTE 7- Earning Per Share, continued

      (a)   The Series A-1 shares are  convertible  only if the Company  reaches
            $150 million in annual sales or upon a merger,  consolidation,  sale
            of assets or similar transaction.

      (b)   On June 4, 2006 and on each anniversary  date thereof,  through June
            4, 2010,  292,913  Series K shares will  automatically  convert into
            6,274,775 shares of the Company's common stock.

      (c)   Assuming no further  issuance of equity  instruments,  or changes to
            the equity  structure  of the  Company,  this total  represents  the
            maximum  number of shares of common stock that could be  outstanding
            through  December  31,  2011  (the end of the  current  vesting  and
            conversion periods).

NOTE 8 - Equity Securities

      Common Stock and Stock Options

      On July 1, 2005,  the Company  entered  into a common  stock  subscription
      agreement to sell  125,000  shares of the  Company's  common stock with an
      employee at a purchase price of $1.07 per share of common stock.

      Preferred Stock

      In August 2005, the Board of Directors, declared a dividend of $41,381, in
      accordance  with  the  terms  set  forth  in  the  Series  A-1  Cumulative
      Convertible  Preferred  Stock  ("A-1  shares").  The  A-1  shares  have  a
      cumulative annual dividend of $0.0341 per share. The declared dividend was
      cumulative  through June 30, 2005.  As of September 30, 2005 the Company's
      Board of Directors had not yet declared any dividend on the A-1 shares for
      the period  July 1, 2005  through  September  30,  2005.  Such  undeclared
      dividends amounted to approximately $41,000.

NOTE 9 - Economic Dependency

      Major Customers

      The Company had the following customer  concentrations for the three month
      periods ended September 30, 2005 and 2004:

                           Sales - Percent of Revenue

                                              Three Months Ended September 30,
                                              --------------------------------
                                                    2005            2004
                                              ---------------  ---------------
      Customer "A"                                    15%              16%
      Customer "B"                                    12               32
      Customer "C"                                    14                *
      Customer "D"                                    13               --
      Customer "E"                                    12               --

      *     Sales to customer were less than 10%


                                       15
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

NOTE 9 - Economic Dependency, continued

                               Accounts Receivable

                                                      September 30, 2005
                                                      ------------------

      Customer "A"                                          $ 881,000
      Customer "B"                                          1,473,000
      Customer "C"                                          1,218,000
      Customer "D"                                          1,113,000
      Customer "E"                                          1,478,000

      The Company complies with its supply  agreement to sell various  strengths
      of Ibuprofen to the Department of Veteran Affairs through two intermediary
      wholesale  prime vendors whose data are combined and reflected in Customer
      "C" above.

      Major Suppliers

      For the three  months  ended  September  30,  2005 and 2004,  the  Company
      purchased  materials from two and three suppliers  totaling  approximately
      71% and 69% of  purchases,  respectively.  At September 30, 2005 and 2004,
      aggregate  amounts due to these  suppliers  included in accounts  payable,
      were approximately $3.19 million and $2.03 million, respectively.

NOTE 10 - Related Party Transactions

      Rents

      The Company leases its business  premises located in Hauppauge,  New York,
      ("Premises")  from an entity owned  directly by one officer and indirectly
      by another officer of the Company under a noncancelable  lease expiring in
      October  2019,  and is obligated  to pay minimum  annual rent of $480,000,
      plus property taxes, insurance,  maintenance and other expenses related to
      the Premises.  The Company believes that the aggregate lease costs for the
      premises are less than those for comparable facilities in the area.

      Upon a change in control,  as  defined,  of the  Company,  and every three
      years  thereafter,  the annual rent will be adjusted to fair market value,
      as determined by an independent third party.

      Investment in APR, LLC.

      In February  and April 2005,  the Company  purchased 5 Class A  membership
      interests  ("Interests") from each of Cameron Reid ("Reid"), the Company's
      Chief  Executive  Officer,   and  John  Lomans  ("Lomans"),   who  has  no
      affiliation  with  the  Company,   for  an  aggregate  purchase  price  of
      $1,022,500  (including  costs of $22,500) of APR, LLC, a Delaware  limited
      liability  company  primarily  engaged in the  development of complex bulk
      pharmaceutical  products  ("APR").  The  purchases  were made  pursuant to
      separate Class A Membership  Interest  Purchase  Agreements dated February
      16,  2005  between  the  Company  and  Reid  and  Lomans  (the   "Purchase
      Agreements").  At the time of the purchases,  Reid and Lomans owned all of
      the  outstanding   Class  A  membership   interests  of  APR,  which  had,
      outstanding,  100 Class A membership  interests and 100 Class B membership
      interests.  As a result, the Company owns 10 of the 100 Class A membership
      Interests  outstanding.  The two  classes  of  membership  interests  have
      different  economic  and voting  rights,  and the Class A members have the
      right to make most operational  decisions.  The Class B interests are held
      by one of the Company's major customers and suppliers.


                                       16
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

NOTE 10 - Related Party Transactions, continued

      Investment in APR, LLC., continued

      In accordance with the terms of the Purchase  Agreements,  the Company has
      granted to Reid and Lomans each a proxy to vote 5 of the  Interests  owned
      by the Company on all matters on which the holders of Interests  may vote.
      The Board of Directors  approved  the  purchases of Interests at a meeting
      held on  February  15,  2005,  based on an  analysis  and  advice  from an
      independent  investment  banking firm. Reid did not participate during the
      Company's  deliberations on this matter. The Company is accounting for its
      investment in APR pursuant to the cost method of accounting.

NOTE 11 - Contingencies

      From time to time,  the  Company is a party to  litigation  arising in the
      normal course of its business operations. In the opinion of management, it
      is not  anticipated  that the settlement or resolution of any such matters
      will have a material adverse impact on the Company's financial  condition,
      liquidity or results of operations.

      Significant Contracts

      Tris Pharmaceuticals, Inc

      The Company entered into two agreements with Tris Pharma,  Inc.  ("Tris").
      One of the agreements is for the  development and licensing of twenty-five
      liquid generic  products.  According to the terms of the agreement for the
      liquid   products,   Tris  is  to  develop  and  deliver  the  properties,
      specifications  and  formulations   ("Technical  Packages")  necessary  to
      effectuate  a  technology  transfer  to the  Company  for the  twenty-five
      generic liquid pharmaceutical products. The Company will then utilize this
      information to obtain all necessary  approvals and  manufacture and market
      the  products.  Further,  this  agreement  provides  the  Company  with  a
      perpetual  license  of all  technology  and  components  of the  Technical
      Packages  necessary to produce the liquid products that are the subject of
      the  agreement.  It also allows the Company the use of the  technology for
      other  products in exchange for an additional  fee. In the event that Tris
      delivers twenty-five  successful Technical Packages, of which there can be
      no  assurance,  the Company  will pay Tris  approximately  $3,000,000.  In
      accordance  with the  terms  of this  agreement,  the  Company  will  make
      payments as various  milestones  are  achieved.  In  addition,  Tris is to
      receive a royalty of between 10% and 12% of net profits resulting from the
      sales of each product.

      According to the terms of the second agreement,  as amended, for the solid
      dosage products ("solids"),  the Company will collaborate with Tris on the
      development,  manufacture and marketing of eight solid oral dosage generic
      products.  The  amendment  to this  agreement  requires  Tris  to  deliver
      Technical  Packages for two softgel products.  Further,  the terms of this
      amendment  will  require the Company to pay to Tris  $750,000,  based upon
      various Tris  milestone  achievements.  Some of products  included in this
      agreement,  as amended,  may require the Company to challenge  the patents
      for the equivalent branded products. This agreement, as amended,  provides
      for  payments  of an  aggregate  of  $4,500,000  to Tris,  whether  or not
      regulatory  approval  is  obtained  for any of the  solids  products.  The
      agreement for solids also provides for an equal sharing of net profits for
      each product that is successfully  sold and marketed,  after the deduction
      and  reimbursement  of all  litigation-related  and certain  other  costs.
      Further, this agreement provides the Company with a perpetual royalty-free
      license to use all  technology  necessary  for the solid  products  in the
      United States, its territories and possessions.  So long as Tris continues
      to  provide  evidence  of its effort to develop  the eight  solid  generic
      pharmaceutical  products  the  Company  is  obligated  to  remit  payments
      aggregating $3,750,000.

      For the three months ended  September 30, 2005, the Company  recorded as a
      research and  development  expense $0.66 million in connection  with these
      agreements.


                                       17
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Overview

Interpharm  Holdings,  Inc.,  (the  "Company"  or  "Interpharm"),   through  its
operating wholly-owned subsidiary,  Interpharm,  Inc.,  ("Interpharm,  Inc." and
collectively  with  Interpharm,  "we" or "us") is  engaged  in the  business  of
developing,  manufacturing  and  marketing  generic  prescription  strength  and
over-the-counter pharmaceutical products.

We  currently  make  sales  both  under  our  own  label  and  to   wholesalers,
distributors, repackagers, and other manufacturers which sell our products under
their  labels.  We currently  manufacture  and market 23 generic drug  products,
which represent various oral dosage strengths for 13 unique products.  Of these,
we hold seven Abbreviated New Drug  Applications  ("ANDA") for fourteen of these
products.  The remaining  products are  manufactured  under an  over-the-counter
monogram or are drugs which do not otherwise  require ANDAs. We also manufacture
fourteen  generic  products  which are various  dosage  strengths of four unique
products  for United  Research  Laboratories,  Inc.  and  Mutual  Pharmaceutical
Company, Inc.

Our focus in the past has been primarily on  cost-effective  manufacturing  of a
limited  number of products.  As part of our ongoing  expansion  plan, we are in
continuing the process of  transforming  the Company into a full service generic
products provider. As previously disclosed in our Annual Report on Form 10-K, we
have focused on improving the infrastructure throughout our organization through
the  addition  of key  personnel,  capital  expenditures  on new  equipment  and
upgrading our current  manufacturing  facility. We have also continued increased
research and  development  expenditures  in order to accelerate  our new product
development.

Our  marketing  strategy has  undergone  significant  changes as a result of the
implementation of our expansion plan. Our current marketing  strategy focuses on
obtaining a broader  customer base and making more direct sales.  With a broader
customer  base,  we  believe  that we will be able to have a  stable  sales  and
production cycle for our products,  as well as an easily  accessible  market for
our new products.  By making more direct sales,  we believe that we can maximize
value and profits by eliminating intermediaries as well as offer better customer
service and improve and strengthen our customer relationships.  We have begun to
realize the benefits of this marketing  strategy through the two recent launches
of our female hormone  product,  as well as  Sulfamethoxazole  and  Trimethoprim
("SMT") where, in each case, we will realize  significantly higher gross margins
than we have historically achieved. In addition, with our launch of SMT, we have
been able to make sales to  national  accounts  as well as expand  our  customer
base.  This strategy has also provided us with benefits to our existing  product
line in that we have been able to sell both  Ibuprofen  and  Naproxen to some of
these new accounts.

As we began to  implement  our  business  plan during the last six months of our
fiscal year which ended June 30, 2005,  we spent  approximately  $3.5 million on
research and development. During the three-month period ended September 30, 2005
we spent approximately $2.1 million on research and development.  Subject to the
availability  of sufficient  capital,  we will continue to spend on research and
development at an even more  accelerated pace over the two years for new product
development  in the  following six areas:  female  hormone  products,  scheduled
narcotics, products requiring special release characteristics,  liquid products,
softgel  products and products  coming off patent.  We have chosen some of these
product  areas  because we  possess  existing  core  competencies,  and  because
management  believes  that  competition  in these areas should be limited due to
barriers to entry that we have overcome.  For example,  female hormone  products
require a dedicated and segregated facility with separate air handling and other
equipment to avoid cross  contamination.  We have already built such a facility,
have the necessary equipment and are producing female hormone products under our
agreement  with  Centrix  Pharmaceuticals,   Inc.  Scheduled  narcotics  require
compliance with  regulations  governing their  handling,  storage,  segregation,
filing and record  keeping  which create a  significant  barrier to entry to the
market for these products.  We are already in compliance with these  regulations
and therefore,  our product development strategy includes expanding this line of
products to a full line of scheduled narcotics.  In order for us to maximize our
market share and gross margins for these  products,  it will be necessary for us
to be in a position to launch such products on the date of patent expiration and
any  applicable  exclusivity  periods.  We believe  that  between  our  internal
developments and those that we have outsourced to third parties,  we can be in a
good position to launch most of these products on the critical dates.


                                       18
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

We intend to move a majority of our research and development  efforts to our new
facility in Yaphank,  New York before the end of this calendar  year.  This move
will increase nearly five fold our physical  facilities  devoted to research and
development  in the United  States.  In addition,  we have entered in a purchase
agreement  for land in  Ahmedabad,  India on which we plan to build a  facility,
which will be used primarily for research and development. This facility is also
expected to be used for the processing of bulk active pharmaceutical ingredients
("API") in preparation  for finished goods  manufacturing  in the United States.
However,  there can be no assurance  that we will be successful in  constructing
this planned facility.

We believe  that once our facility in India is  operational,  we will be able to
capitalize on the availability of highly qualified scientific and other research
and development personnel at significant cost savings, thereby supplementing our
continuing research and development activities in the United States.  Regulatory
compliance,  manufacturing  of product for use in bio equivalency  studies,  and
filing of ANDAs will all  continue to be done at our  research  and  development
facility in the United States. We believe our planned India facility will reduce
our reliance on third parties for the  development of our product line,  thereby
reducing the risk that we will either not be able to develop certain products or
that we will not be able to develop such products in a timely  manner.  We will,
however,  continue to evaluate  opportunities  with outside companies on certain
products such as those requiring specialized technologies.

We will have to spend a significant  amount of money on research and development
to continue our business  plan. We have been  utilizing our $21 million  advised
line of credit  obtained from HSBC Bank.  We are  currently in  discussion  with
several  financial  institutions;  including  HSBC in an effort to secure a new,
increased  line of credit which would enable us to pay-down the current  advised
line of  credit as well as  enable  us to  borrow  additional  funds if and when
required.  While we will continue to utilize our existing  advised  credit line,
the  timing of our  expansion  plan will be  dependent  on our  ability to raise
additional  capital  through either new / additional  debt  financing  discussed
above, or through an equity  investment.  As such, we have engaged an investment
banking firm to assist us. There are  currently no  commitments  for capital and
there can be no assurance that capital will be available,  and if available,  on
terms and conditions  that would be acceptable to us. If we are unable to obtain
sufficient  funds,  we will have to either delay or scale back on our  expansion
plan.  However,  we do not believe our  existing  business  would be  materially
adversely affected by such delay or scaling back of our expansion plan.

Results of Operations

Summary

Our net sales of $14.5  million for the three month period ended  September  30,
2005 were our  highest  net sales for any  quarter in our  history.  During this
period we began  shipments of our female hormone therapy product which accounted
for  approximately  $1.8  million of net sales  yielding  nearly  four times our
historical  average in gross profit percentage.  Further,  our remaining product
line revenue  increased $3.7 million over the three month period ended September
30, 2005.  However,  as a result of our planned  expansion,  our overall expense
structure  increased due to: (i) additional  staffing and other costs associated
with our second  facility,  (ii) increased  research and  development  and (iii)
increased selling,  general and administrative expense,  resulting in a net loss
before taxes of $0.7 million.

Net sales by product: (in thousands)

                                        Three Months Ended September 30,
                                  ----------------------------------------------
                                    2005        % of         2004         % of
                                   Sales        Sales        Sales        Sales
                                  -------      -------      -------      -------

Ibuprofen                         $ 7,770           54      $ 6,171           68
Allopurinol & Atenolol              1,702           12        1,317           15
Naproxen                            1,809           12          496            5
Female hormone                      1,783           12          -0-          -0-
All Other Products                  1,483           10        1,069           12
                                  -------      -------      -------      -------
      Total                       $14,547                   $ 9,053
                                  =======                   =======

As  indicated  in the table  above,  our net sales  increased  $5.5 million when
comparing the three month periods ended September 30, 2005 and 2004. Significant
components include:

o     Net sales of Ibuprofen increased $1.6 million or 25.9%, due, in part to an
      expanded  customer  base,  as  well  as  improvements  in  production  and
      packaging  which  enabled us to ship nearly all  backorders.  We currently
      believe sales of Ibuprofen should remain at  approximately  this level for
      the balance of this fiscal year,  however,  there can be no assurance that
      this will occur.

o     Both  Allopurinol  and  Atenolol are  manufactured  for and shipped to one
      customer based on quantities ordered by that customer. Net sales increased
      approximately  $0.4  million.  However,  as  part of our  plan  to  reduce
      dependency  on  sales  from  contract   manufacturing   arrangements,   we
      anticipate  revenue  from  those  two  products  to  diminish  during  the
      remainder of the current fiscal year.

o     As discussed in previous  filings,  we have been  successful,  through our
      marketing  efforts,  in obtaining new  customers  for our  products.  As a
      result,  our  sales for  Naproxen  increased  by more  than $1.3  million.
      Although a portion of these  sales were  initial  orders  which tend to be
      larger than normal,  we believe  that future net sales of Naproxen  should
      remain at this level for the balance of the fiscal year, however there can
      be no assurance that this will occur.

o     In accordance with the terms of a recently announced multi-year agreement,
      we made our initial  shipments of our female hormone therapy product.  Our
      customer has committed to purchase a minimum of $11.5  million  during the
      first twelve months. This product generates a higher gross margin compared
      to our other products.

o     Included in "all other  products"  in the table  above is $0.6  million of
      Hydrocodone-7.5 mg/Ibuprofen-200 mg, our generic version of Vicoprofen. As
      this product, and Reprexain, Hydrocodone - 5.0 mg/Ibuprofen-200,  are sold
      to, and  marketed by,  Watson  Pharmaceuticals,  Inc.,  it is difficult to
      project  future  sales.  The  results  for  the  period  reported  include
      additional  revenue  derived from a profit sharing  arrangement  for these
      products.


                                       19
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

Cost of Sales / Gross Profit

During the three month period ended September 30, 2005, prices for raw materials
have remained  relatively  constant  when  compared to the prior year.  While no
assurance can be given,  we believe that our raw material costs should  continue
at the present rates for the next several months.  However,  costs associated to
packaging  components have increased and are likely to continue at their present
level for the foreseeable future. The remaining components of our cost of sales,
primarily  direct  labor  and  overhead  have,  as a  percentage  of net  sales,
increased  during the three months  ended  September  30,  2005,  primarily as a
result of costs  associated to increased  production and  supervisory  salaries,
hiring  and  training  production  staff  for  our  second  facility,  which  we
anticipate  will  be  operational  sometime  in  early  2006.  Additionally,  we
experienced  increases  in general  overhead  costs  such as  product  liability
insurance and utilities.  We believe these higher costs will likely continue for
the near future.

Our total gross profit  percentage for the three months ended September 30, 2005
was 27.4%, an increase of 6.0 percentage  points compared to 21.4% for the three
months ended  September  30, 2004.  This increase is primarily the result of our
two new products  which we began  shipping  during this  quarter,  both of which
generate  higher  gross  profits  than our  traditional  product  line which has
historically  been  in the 18% to 20%  range.  As  volume  increases  for  these
products throughout the year, we anticipate that our overall gross margin should
increase.

Research and Development Expenses

As  described  above,  as part of our plan,  during the three month period ended
September 30, 2005, we continued to take significant steps to expand our product
line.  During this  period we  incurred  research  and  development  expenses of
approximately  $2.1  million as compared to  approximately  $0.2 million for the
same three month period in the prior year.

We incurred costs of  approximately  $4.0 million during the year ended June 30,
2005, for our research and  development  efforts.  During the three month period
ended September 30, 2005, we incurred approximately $2.1 million in research and
development  expenses.  Research and  development  expenses  were  primarily for
materials,   wages  and  bioequivalence  studies  for  new  drugs  currently  in
development.  We believe that research and development expenses, as a percentage
of our net  sales,  will be  substantially  higher  in the  future as we seek to
expand our product line.

In February 2005, we entered into two agreements with Tris Pharma, Inc. ("Tris")
for the development and licensing of up to twenty-five  immediate release liquid
generic  products (the "Liquids  Agreement") and eight solid oral dosage generic
pharmaceutical  products  (the  "Solids  Agreement").  In the  event  that  Tris
delivers twenty-five products under the Liquids Agreement, of which there can be
no assurance,  Tris is to receive approximately $3.0 million in development fees
from us and, in addition, Tris is to receive a royalty of between 10% and 12% of
net profits resulting from the sales of each product.  We are entitled to offset
the royalty  payable to Tris each year,  at an agreed  upon rate,  to recoup the
development fees paid to Tris under the Liquids Agreement.

Pursuant to the terms of the Solids  Agreement,  as amended,  we and Tris are to
collaborate on the  development,  manufacture  and marketing of eight solid oral
dosage generic products and two soft gel products,  some of which may require us
to  challenge  the  patents  for the  equivalent  branded  products.  The Solids
Agreement,  as amended provides for payments of an aggregate of $ 4.5 million to
Tris. The Solids  Agreement,  as amended,  also provides for an equal sharing of
net profits  for all but one product  that is  successfully  sold and  marketed,
after the deduction and  reimbursement  to us of all costs incurred by us in the
development and marketing of the solid  products,  including the amounts paid to
Tris under the contract.  The other  product  provides for a profit split of 60%
for us and 40% for Tris.


                                       20
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

As we develop our research and  development  capabilities,  the Tris  agreements
have allowed us to bring in-house several  specialized  technologies which would
otherwise not be available to us, and which can allow us to manufacture and sell
more higher-margin and profitable products.

During the three  month  period  ended  September  30,  2005,  we  recorded as a
research  and  development  expense  $0.66  million  in  connection  with  these
agreements.

We currently  anticipate  filing over 25 ANDAs  through June 30, 2007. If we are
successful in our efforts we believe we could see sales from new products to our
line during fiscal 2006, however,  there can be no assurance that these products
or our second  facility  will obtain  timely U.S.  Food and Drug  Administration
("FDA") approval.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include salaries and related costs,
commissions,   travel,  administrative  facilities,   communications  costs  and
promotional  expenses for our direct sales and marketing  staff,  administrative
and  executive  salaries  and  related  benefits,  legal,  accounting  and other
professional fees as well as general corporate overhead.

Selling,  general  and  administrative  expenses  increased  approximately  $1.4
million to  approximately  $2.4 million,  or 16.8% of net sales during the three
months ended September 30, 2005, from approximately $1.1 million or 12.0% of net
sales,  during  the same  period in 2004.  The  significant  components  of this
increase are:  salaries,  including payroll taxes and benefits of $0.47 million,
(primarily as a result of recently hired executive staffing and management, wage
adjustments  and related  payroll  taxes);  legal and accounting  costs of $0.12
million;  commissions  and freight  costs of $0.18  million  and $0.06  million,
respectively,  primarily  due  to  increased  sales;  and  outside  professional
services  increased  $0.13  million.  We  reported a  non-cash  expense of $0.22
million as a result of adoption  of SFAS 123 (R) during the three  month  period
ended  September  30,  2005.  Adoption  of SFAS  123(R)  requires us to report a
non-cash  expense  for the ratable  portion of the fair value of employee  stock
option  awards of unvested  stock  options over the  remaining  vesting  period.
Previously we elected to follow the intrinsic value method in accounting for our
stock-based  employee   compensation   arrangements  as  defined  by  Accounting
Principles  Board  Opinion  ("APB")  No.  25,  "Accounting  for Stock  Issued to
Employees,"  and related  interpretations  including  Financial  Accounting.  We
believe this level of selling,  general and administrative  expenses will remain
throughout the fiscal year.

Income Taxes

We applied  an  effective  tax rate of 37.0% for the three  month  period  ended
September  30, 2005 which  resulted  in an income tax  benefit of  approximately
$0.26  million,  compared to an  effective  aggregate  tax rate of 37.0% for the
three month period ended  September 30, 2004,  which resulted in a provision for
income taxes of approximately $0.24 million.

Liquidity and Capital Resources

We currently finance our operations and capital  expenditures through cash flows
from  operations  and bank loans.  As a result of our research  and  development
efforts,  we incurred a net loss for the three month period ended  September 30,
2005, of approximately $0.45 million.  Net cash provided by operating activities
for the same three  months was $1.4  million,  compared to $2.3  million for the
three months ended September 30, 2004.  Significant  factors comprising the cash
provided in operating  activities  include:  increases  in accounts  payable and
accrued  expenses  payable of $3.4  million,  offset by  increases  in  accounts
receivable  of $2.1  million.  The  increase  in  accounts  payable  and accrued
expenses payable is primarily attributable to significant purchases and research
and  development  costs  occurring  at the end of the  quarter.  The increase in
accounts  receivable  is  the  result  of  higher  sales  during  this  quarter.
Additionally, we reported depreciation and amortization of $0.3 million. We also
recognized a non cash charge of $0.2 million as a result of adoption of SFAS 123
(R).  Other  items  affecting  our net cash  provided  by  operating  activities
aggregated $0.1 million.


                                       21
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

It should be noted that during the three month period ended  September 30, 2005,
we disbursed  approximately  $2.1 for research and development.  We believe this
level of spending is likely to increase for the forseeable future.

Net cash  provided by financing  activities of $2.1 million for the three months
ended  September 30, 2005,  was a result of drawing from the available  lines of
credit offset by the pay down of a mortgage note of $0.1 million. A component of
our current plan is the completion of  renovations to our second  facility along
with the installation of additional  equipment for manufacturing,  packaging and
research  and  development.  Accordingly,  during the three month  period  ended
September  30, 2005,  our net cash used in investing  activities of $2.6 million
was for new  equipment  and  improvements  and for  deposits  toward  additional
assets.

Bank lines of credit

In March,  2004, we obtained a $21 million credit facility from HSBC. The credit
facility  consists of (i) a $7.4 million  mortgage  loan for the purchase of our
second  manufacturing plant in Yaphank, New York (see Note 5); (ii) $8.6 million
of credit lines  primarily to acquire new  equipment  and for  renovations,  and
(iii) a $5.0 million general line of credit.  Details of the new facility are as
follows:

o     The $7.4 million mortgage loan is to be repaid with 119 monthly  principal
      installments of $30,833 commencing on August 1, 2004, with the balance due
      June 1, 2014.

o     Two advised secured credit lines  aggregating  $6.6 million  primarily for
      acquisitions of equipment and for renovations of our plant. The balance of
      the funds  accessed  through  these  credit  lines will convert into fully
      amortizing 60 month term loans.

o     A $2.0  million  advised  non-revolving  secured  facility  for  equipment
      purchases. Each advance cannot exceed 90% of the invoice amount of the new
      equipment and is convertible into fully amortizing 60 month term loans.

o     The $5.0 million  advised  secured line of credit is primarily for working
      capital and general corporate purposes.

During fiscal 2005,  the Company and the Bank  informally  agreed to consolidate
the four credit lines into one advised credit line totaling $13.6 million.  As a
result, the $12.1 million of advances have not been allocated to each individual
credit line.  Since the Company and the Bank have not  determined  the amount of
loans that are  available to be converted  into 60 month term loans,  the entire
advised credit facility is classified as current.

This  credit  facility  is  collateralized  by  substantially  all assets of the
Company. At the option of the Company,  interest will generally be calculated at
(i) LIBOR plus 1.5% for 3 to 36 month periods,  or at (ii) the Bank's then fixed
prime rate. As of September 30, 2005,  the annual  interest rates on the working
capital lines range from 5.01% to 5.47%. Interest on the mortgage loan was 5.19%
per annum,  and will be  recalculated  at December 1, 2005. The Bank will review
the new credit facility annually; the next review is scheduled to occur no later
than November 30, 2005.  The credit lines are terminable by the Bank at any time
as to undrawn  amounts.  In  addition,  the  Company is  required to comply with
certain  financial  covenants,  and as of September 30, 2005,  was in default of
these  financial  covenants.  The Company has received a waiver from the Bank of
the financial  default covenants related to the four advised lines. With respect
to the  mortgage  loan,  the Bank has waived  the  financial  covenant  defaults
incorporated in the mortgage note as well as the cross default provisions within
the four advised lines through October 1, 2006.

As  previously  disclosed,   we  entered  into  agreements  with  Tris  for  the
development  and delivery of over thirty new  Technical  Packages.  The combined
costs of these two agreements  will  approximate  $6.75 million of which we have
paid $1.75  million as of September  30, 2005.  The balance on one  agreement of
$2.75  million  could be paid within three  years.  The second  agreement  has a
balance of $2.2 million and is scheduled to be paid within two years.

We will have to spend a significant  amount of money on research and development
to continue our business  plan. We have been  utilizing our $21 million  advised
line of credit  obtained from HSBC Bank.  We are  currently in  discussion  with
several  financial  institutions;  including  HSBC in an effort to secure a new,
increased  line of credit which would enable us to pay-down the current  advised
line of  credit as well as  enable  us to  borrow  additional  funds if and when
required.  While we will continue to utilize our existing  advised  credit line,
the  timing of our  expansion  plan will be  dependent  on our  ability to raise
additional  capital  through either new or additional  debt financing  discussed
above, or through an equity  investment.  As such, we have engaged an investment
banking firm to assist us. If we are unable to obtain  sufficient funds, we will
have to either delay or scale back on our  expansion  plan.  However,  we do not
believe our existing  business  would be materially  adversely  affected by such
delay or scaling back of our expansion plan.


                                       22
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

Accounts Receivable

Our accounts receivable at September 30, 2005, was $9.7 million compared to $7.7
million at June 30, 2005.  This increase is primarily  attributable to net sales
in the current  quarter  being  greater by nearly $3.1  million than that of the
three month period ended June 30, 2005. Our accounts  receivable  turnover ratio
decreased  slightly  from 5.5 turns at June 30, 2005,  to 5.2 turns at September
30, 2005.  The quality of our accounts  receivable is good,  and as such we have
encountered little or no bad debt exposure.

Inventory

At September 30, 2005,  our inventory was $8.87  million,  a slight  decrease of
$0.07  million from $8.94 million at June 30, 2005.  Our inventory  days on hand
was 93 days at September 30, 2005,  compared to 84 days as at June 30, 2005. Our
inventory  turnover  ratio was 3.8 turns at September 30, 2005,  compared to 4.3
turns at June 30,  2005.  The  decrease  in our  turnover  ratio of 0.5 turns is
primarily  the result of a  deliberate  build-up  of  inventory  in certain  key
products.  As such, we believe the reduction to be within  acceptable  limits of
our current operating plan.

Accounts Payable

The  accounts  payable,  accrued  expenses  and other  liabilities  increased by
approximately  $3.5 million during the three months ended September 30, 2005, as
compared to June 30, 2005.  This increase is primarily a result of equipment and
renovation  costs being higher during the three months ended September 30, 2005,
as well as an effort to control  overall cash  outflows.  We do not believe this
course of action will have any material affect on our vendor relationships.

Cash and Cash Equivalents

Cash and cash equivalents  increased during the three months ended September 30,
2005,  by  approximately  $0.86  million from $0.54 million at June 30, 2005, to
$1.40 million at September  30, 2005.  Thus far this year we funded our business
from bank  borrowings and operations:  bank borrowings - net $2.11 million;  net
cash provided by operations - $1.36 million. These were offset primarily through
the use of cash to acquire new property  and  equipment  and other  additions of
$2.61 million.

Critical Accounting Policies

Management's  discussion  and  analysis of  financial  condition  and results of
operations  discusses  our  financial  statements,  which have been  prepared in
accordance with accounting principles generally accepted in the United States of
America.  The preparation of these financial statements requires that Interpharm
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities,  the disclosure of contingent assets and liabilities at the date of
the  financial  statements,  and the  reported  amounts of revenues and expenses
during  the  reporting  period.  On  an  on-going  basis,  Interpharm  evaluates
judgments and estimates made,  including  those related to revenue  recognition,
inventories,  income taxes and contingencies  including  litigation.  Interpharm
bases its judgments and estimates on historical  experience and on various other
factors that it believes to be reasonable under the  circumstances,  the results
of which form the basis for making  judgments about the carrying value of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.


                                       23
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

We  consider  the  following   accounting   policies  to  be  most  critical  in
understanding  the more complex  judgments  that are  involved in preparing  our
financial  statements  and  the  uncertainties  that  could  impact  results  of
operations, financial condition and cash flows.

Revenue Recognition

Revenue  from the sale of our  products  are  recognized  upon  shipment  of the
product.  Revenue is  recorded  net of  provisions  for  rebates,  charge-backs,
discounts and returns,  which are established at the time of sale. Estimates for
rebates,  charge-backs,  and discounts are calculated based on actual experience
and also cover chargebacks on sales to intermediary  wholesale prime vendors for
the supply of Ibuprofen to the Department of Veterans Affairs.

With respect to certain  products,  we purchase raw  materials  from  suppliers,
which is then used in the  manufacturing of completed goods and sold back to the
suppliers  or by direct drop  shipment  to the  supplier's  customers.  Some raw
materials may be used in the  manufacturing of products for other customers.  We
also (i) have  the  general  inventory  risk by  taking  title to all of the raw
material  purchased,  (ii) establish the selling price for the finished  product
and,  (iii)  significantly  change the raw materials  into the finished  product
under our specifications and formulas. These factors among others, qualify us as
the principal  under the indicators set forth in EITF 99-19,  Reporting  Revenue
Gross as a  Principal  vs. Net as an Agent.  If the terms and  substance  of the
arrangement  change, such that we no longer qualify to report these transactions
on a gross reporting basis, our net income and cash flows would not be affected.
However, our sales and cost of sales would both be reduced by a similar amount.

Inventory

Our  inventories  are  valued  at the lower of cost or  market  determined  on a
first-in,  first-out  basis,  and includes the cost of raw materials,  labor and
manufacturing  overhead.  We  continually  evaluate  the  carrying  value of our
inventories and when factors such as expiration dates and spoilage indicate that
impairment  has  occurred,   either  a  reserve  is   established   against  the
inventories'  carrying value or the  inventories  are disposed of and completely
written off in the period incurred.

Issues And Uncertainties

Risk of Product Liability Claims

The testing,  manufacturing and marketing of pharmaceutical  products subject us
to the risk of product liability claims. We believe that we maintain an adequate
amount of product liability  insurance,  but no assurance can be given that such
insurance  will cover all existing and future  claims or that we will be able to
maintain existing coverage or obtain additional coverage at reasonable rates.

ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk

Our principal financial instrument currently is a $21.0 million credit facility.
At September 30, 2005, an approximately  $6.97 million mortgage note payable and
borrowings  of $12.17  million  under the line of credit  was  outstanding.  Any
obligations  created under this credit facility incur interest calculated at our
option at (i) LIBOR  plus 1.5% per annum  ("PA") for  periods  ranging in length
from 3 to 36 months,  or (ii) at the Bank's then fixed prime rate.  At September
30, 2005, the interest rates on the borrowings  ranged from 5.01% PA to 5.47% PA
and the interest rate on the mortgage note payable was 5.19% PA.


                                       24
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

If our combined borrowings remained at the same amount as of September 30, 2005,
for the remainder of our fiscal year,  for every one percent  change,  upward or
downward in our borrowing rate, we would incur or save approximately $48,000 per
quarter. We are currently seeking to increase our borrowing  facilities and will
likely draw down  additional  funds  primarily  to purchase  equipment  for both
facilities,  as well as implement our business plan. This likely increase in our
borrowings  will  increase  our exposure to interest  rate market  risk.  We are
required to comply with certain financial  covenants.  At September 30, 2005, we
were in default on certain  covenants,  for which we have received  waivers from
the bank.  Further,  the Bank reviews the credit facility  annually.  The credit
lines are terminable by the Bank at any time as to undrawn amounts.

We do not use any  derivative  financial  instruments  to hedge our  exposure to
adverse  fluctuations  in interest rates,  fluctuations  in commodity  prices or
other market risks, nor do we invest in speculative financial instruments.

ITEM 4 - CONTROLS AND PROCEDURES

Evaluation of Controls and Procedures

We maintain  disclosure controls and procedures that are designed to ensure that
information  required to be  disclosed  in our Exchange Act reports is recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Securities  and Exchange  Commission's  ("SEC")  rules and forms,  and that such
information is accumulated  and  communicated  to our management to allow timely
decisions  regarding required  disclosure.  Management  necessarily  applied its
judgment in assessing  the costs and benefits of such  controls and  procedures,
which,  by  their  nature,  can  provide  only  reasonable  assurance  regarding
management's control objectives.

At the conclusion of the three month period ended September 30, 2005, we carried
out an  evaluation,  under the  supervision  and with the  participation  of our
management,  including our Chief Executive Officer,  Chief Financial Officer and
General  Counsel,  of the  effectiveness  of the  design  and  operation  of our
disclosure  controls  and  procedures.  Based  upon that  evaluation,  the Chief
Executive  Officer,  Chief Financial  Officer and General Counsel concluded that
our  disclosure  controls and  procedures  were  effective in alerting them in a
timely manner to information relating to the Company required to be disclosed in
this report.

Our  independent  registered  accounting  firm  Marcum &  Kliegman,  LLP ("MK"),
informed us and our Audit Committee of the Board of Directors that in connection
with their  audit of our  financial  results  for the fiscal year ended June 30,
2005,  MK  had  discovered  conditions  which  they  deemed  to  be  significant
deficiencies,  (as  defined  by  standards  established  by the  Public  Company
Accounting  Oversight Board) in our financial  statement  closing  process.  The
significant  deficiencies related to the performance of processes and procedures
for the  period  end  closing  process  and its  review by  internal  accounting
personnel.  Management  has informed MK and the Audit  Committee of the Board of
Directors that it will add additional personnel and modify its controls over the
financial statement closing process to prevent  reoccurrences of this deficiency
and will  continue to monitor the  effectiveness  of these actions and will make
any other changes or take such additional actions as management determines to be
appropriate.

Management does not believe that the above significant deficiencies affected the
results of the fiscal quarter ended June 30, 2005, or any prior period,  nor the
current fiscal quarter ended September 30, 2005.


                                       25
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

                           PART II - OTHER INFORMATION

Item 6. Exhibits

        Exhibits

21.1  List of Subsidiaries.

31.1  Certification  of Chief Executive  Officer  pursuant to Rules 13a-14(a) as
      adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2  Certification  of the Chief Financial  Officer pursuant to Rules 13a-14(a)
      as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1  Certifications  of the Chief  Executive  Officer  and the Chief  Financial
      Officer pursuant to 18 U.S.C. Section 1350 as adopted, pursuant to Section
      906 of the Sabanes-Oxley Act of 2002.


                                       26
<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK

Certain statements in this Report,  and the documents  incorporated by reference
herein,  constitute  "forward-looking  statements" within the meaning of Section
27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of
1934  and  the  Private   Securities   Litigation   Reform  Act  of  1995.  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other  factors  which may cause  deviations in actual  results,  performance  or
achievements to be materially different from any future results,  performance or
achievements  expressed or implied. Such factors include but are not limited to:
the  difficulty in predicting the timing and outcome of legal  proceedings,  the
difficulty of predicting the timing of FDA approvals; court and FDA decisions on
exclusivity  periods;  competitor's  ability to extend exclusivity  periods past
initial  patent  terms;  market  and  customer  acceptance  and  demand  for our
pharmaceutical  products;  our ability to market our  products;  the  successful
integration of acquired businesses and products into our operations;  the use of
estimates  in the  preparation  of  our  financial  statements;  the  impact  of
competitive products and pricing; the ability to develop and launch new products
on a  timely  basis;  the  regulatory  environment;  fluctuations  in  operating
results, including spending for research and development and sales and marketing
activities;  and, other risks detailed from time-to-time in our filings with the
SEC.

The words "believe, expect, anticipate, intend and plan" and similar expressions
identify forward-looking  statements.  These statements are subject to risks and
uncertainties that cannot be predicted or quantified and,  consequently,  actual
results  may  differ   materially  from  those  expressed  or  implied  by  such
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements,  which speak only as of the date the statement
was made.


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<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

                                   Signatures

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                          INTERPHARM HOLDINGS, INC.
                                          (Registrant)


Date:  November 14, 2005
                                          By:  /s/ George Aronson
                                               ------------------
                                               George Aronson,
                                               Chief Financial Officer
                                               (Duly authorized to sign on
                                               behalf of registrant)


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<PAGE>

                   INTERPHARM HOLDINGS, INC. AND SUBSIDIARIES

Exhibits

Number              Description

21.1  List of subsidiaries

31.1  Certification  of Cameron Reid pursuant to Exchange Act Rules  13(a)-14(a)
      and 15d-14(a),  as adopted  pursuant to Section 302 of the  Sarbanes-Oxley
      Act of 2002;

31.2  Certification of George Aronson pursuant to Exchange Act Rules 13(a)-14(a)
      and 15d-14(a),  as adopted  pursuant to Section 302 of the  Sarbanes-Oxley
      Act of 2002;

32.1  Certification  pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002;


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