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

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

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


       January 31, 2001                                  0-11088
For the quarterly period ended                    Commission file number

                              ALFACELL CORPORATION
             (Exact name of registrant as specified in its charter)


           Delaware                                       22-2369085
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                        Identification No.)


               225 Belleville Avenue, Bloomfield, New Jersey 07003
              (Address of principal executive offices)   (Zip Code)


(Registrant's telephone number, including area code) (973) 748-8082


                                 NOT APPLICABLE
              (Former name, former address, and former fiscal year,
                         if changed since last report.)


     Indicate  by check mark  whether the  registrant  has (1) 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 [_]

     The number of shares of common stock,  $.001 par value,  outstanding  as of
March 14, 2001 was 18,886,691 shares.

<PAGE>

                              ALFACELL CORPORATION
                          (A Development Stage Company)

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

                                 BALANCE SHEETS
                       January 31, 2001 and July 31, 2000

<TABLE>
<CAPTION>
                                                                                      January 31,
                                                                                          2001           July 31,
                                ASSETS                                                (Unaudited)          2000
                                ------                                                -----------          ----
<S>                                                                                  <C>              <C>
Current assets:
     Cash and cash equivalents                                                       $     96,970     $    257,445
     Other assets                                                                          96,498           28,617
                                                                                     ------------     ------------
         Total current assets                                                             193,468          286,062

Property and equipment, net of accumulated depreciation and amortization
   of $1,044,868 at January 31, 2001 and $1,006,808 at July 31, 2000                      104,110          142,170

Other assets                                                                               59,867           59,867
                                                                                     ------------     ------------

         Total assets                                                                $    357,445     $    488,099
                                                                                     ============     ============


               LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities:
     Current portion of long-term debt                                               $      7,087     $      7,074
     Accounts payable                                                                     164,518          170,788
     Accrued expenses                                                                     414,546          411,846
                                                                                     ------------     ------------
         Total current liabilities                                                        586,151          589,708

Long-term debt, less current portion                                                       27,518           30,251
                                                                                     ------------     ------------
         Total liabilities                                                                613,669          619,959
                                                                                     ------------     ------------


Commitments and contingencies Stockholders' equity (deficiency):
     Preferred stock, $.001 par value
         Authorized and unissued, 1,000,000 shares at January 31, 2001
            and July 31, 2000                                                                --               --
     Common stock $.001 par value
         Authorized 40,000,000 shares at January 31, 2001 and July 31, 2000;
         Issued and outstanding 18,886,691 shares at January 31, 2001
            and 18,431,559 shares at July 31, 2000                                         18,887           18,431
     Capital in excess of par value                                                    57,150,360       56,526,288
     Deficit accumulated during development stage                                     (57,425,471)     (56,676,579)
                                                                                     ------------     ------------
         Total stockholders' equity (deficiency)                                         (256,224)        (131,860)
                                                                                     ------------     ------------

         Total liabilities and stockholders' equity (deficiency)                     $    357,445     $    488,099
                                                                                     ============     ============
</TABLE>

See accompanying notes to financial statements.


                                      - 2 -
<PAGE>

                              ALFACELL CORPORATION
                          (A Development Stage Company)


                            STATEMENTS OF OPERATIONS

          Three months and six months ended January 31, 2001 and 2000,
                       and the Period from August 24, 1981
                    (Date of Inception) to January 31, 2001

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                  August 24, 1981
                                                 Three Months Ended                   Six Months Ended          (Date of Inception)
                                                     January 31,                          January 31,                    to
                                                2001               2000             2001              2000        January 31, 2001
                                            ------------      ------------      ------------      ------------    ---------------
<S>                                         <C>               <C>               <C>               <C>               <C>
REVENUE:
     Sales                                  $       --        $       --        $       --        $       --        $    553,489
     Investment income                             3,015            11,267             6,769            26,220         1,365,933
     Other income                                   --                --                --                --              60,103
                                            ------------      ------------      ------------      ------------      ------------
     TOTAL REVENUE                                 3,015            11,267             6,769            26,220         1,979,525
                                            ------------      ------------      ------------      ------------      ------------

COSTS AND EXPENSES:
     Cost of sales                                  --                --                --                --             336,495
     Research and development                    509,679           592,413           877,836         1,164,321        36,846,193
     General and administrative                  179,863           149,590           325,452           305,982        20,485,100
     Interest:
         Related parties                            --                --                --                --           1,033,960
         Others                                    1,867               839             3,768             1,728         1,910,497
                                            ------------      ------------      ------------      ------------      ------------
TOTAL COSTS AND EXPENSES                         691,409           742,842         1,207,056         1,472,031        60,612,245
                                            ------------      ------------      ------------      ------------      ------------

NET LOSS BEFORE
     STATE TAX BENEFIT                      $   (688,394)     $   (731,575)     $ (1,200,287)     $ (1,445,811)     $(58,632,720)

STATE TAX BENEFIT                                   --             755,854           451,395           755,854         1,207,249
                                            ------------      ------------      ------------      ------------      ------------

NET INCOME (LOSS)                           $   (688,394)     $     24,279      $   (748,892)     $   (689,957)     $(57,425,471)
                                            ============      ============      ============      ============      ============

     Loss per basic and diluted
         common share                       $       (.04)     $        .00      $       (.04)     $       (.04)     $      (6.82)
                                            ============      ============      ============      ============      ============

Weighted average number of shares
     outstanding                              18,832,234        17,374,655        18,749,429        17,352,397         8,423,980
                                            ============      ============      ============      ============      ============
</TABLE>

See accompanying notes to financial statements.


                                      - 3 -
<PAGE>

                              ALFACELL CORPORATION
                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS

                        Six months ended January 31, 2001
                          and 2000, and the Period from
                                 August 24, 1981
                     (Date of Inception) to January 31, 2001

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                               August 24, 1981
                                                                              Six Months Ended               (Date of Inception)
                                                                                 January 31,                          to
                                                                           2001                 2000           January 31, 2001
                                                                       -----------          -----------        ----------------
<S>                                                                    <C>                     <C>               <C>
Cash flows from operating activities:
  Net loss                                                             $  (748,892)            (689,957)         (57,425,471)
  Adjustments to reconcile net loss to
      net cash used in operating activities:
    Gain on sale of marketable securities                                     --                   --                (25,963)
    Depreciation and amortization                                           38,060               49,433            1,455,903
    Loss on disposal of property and equipment                                --                   --                 18,926
    Noncash operating expenses                                              64,405               78,008            5,583,789
    Amortization of deferred compensation                                     --                   --             11,442,000
    Amortization of organization costs                                        --                   --                  4,590
Changes in assets and liabilities:
    (Increase) decrease in other current assets                            (67,881)              58,655             (156,365)
    Decrease in other assets                                                  --                   --                 36,184
    Increase in interest payable, related party                               --                   --                744,539
    Increase (decrease) in accounts payable                                  3,760              (15,062)             460,628
    Increase in accrued payroll and expenses, related
      parties                                                                 --                   --              2,348,145
    Increase (decrease) in accrued expenses                                  2,700               (4,637)             956,059
                                                                       -----------          -----------          -----------
Net cash used in operating activities                                     (707,848)            (523,560)         (34,557,036)
                                                                       -----------          -----------          -----------

Cash flows from investing activities: -
    Purchase of marketable equity securities                                  --                   --               (290,420)
    Proceeds from sale of marketable equity
       securities                                                             --                   --                316,383
    Purchase of property and equipment                                        --                   --             (1,406,836)
    Patent costs                                                              --                   --                (97,841)
                                                                       -----------          -----------          -----------

Net cash used in investing activities                                         --                   --             (1,478,714)
                                                                       -----------          -----------          -----------
</TABLE>

See accompanying notes to financial statements.                     (continued)


                                      - 4 -
<PAGE>

                              ALFACELL CORPORATION
                          (A Development Stage Company)

                       STATEMENTS OF CASH FLOWS, Continued

                   Six months ended January 31, 2001 and 2000,
                      and the Period from August 24, 1981
                     (Date of Inception) to January 31, 2001

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                         August 24, 1981
                                                                               Six Months Ended        (Date of Inception)
                                                                                  January 31,                    to
                                                                             2001             2000       January 31, 2001
                                                                        -------------    -------------   ----------------
<S>                                                                     <C>                  <C>             <C>
Cash flows from financing activities:
  Proceeds from short-term borrowings                                   $        --               --            849,500
  Payment of short-term borrowings                                               --               --           (623,500)
  Increase in loans payable - related party, net                                 --               --          2,628,868
  Proceeds from bank debt and other long-
   term debt, net of deferred debt costs                                         --               --          2,452,460
  Reduction of bank debt and long-term debt                                    (2,720)          (4,123)      (2,931,963)
  Proceeds from issuance of common stock, net                                 503,493             --         27,857,232
  Proceeds from exercise of stock options and warrants, net                    46,600            4,087        5,553,123
  Proceeds from issuance of convertible debentures                               --               --            347,000
                                                                        -------------    -------------    -------------
      Net cash (used in) provided by financing activities                     547,373              (36)      36,132,720
                                                                        -------------    -------------    -------------
      Net (decrease) increase in cash and cash equivalents                   (160,475)        (523,596)          96,970
Cash and cash equivalents at beginning of period                              257,445        1,383,133             --
                                                                        -------------    -------------    -------------
Cash and cash equivalents at end of period                              $      96,970          859,537           96,970
                                                                        =============    =============    =============
Supplemental disclosure of cash flow information -
   interest paid                                                        $       3,768            1,728        1,657,481
                                                                        =============    =============    =============
Noncash financing activities:
   Issuance of convertible subordinated debenture for loan
      payable to officer                                                $        --               --          2,725,000
                                                                        =============    =============    =============
   Issuance of common stock upon the conversion of
     convertible subordinated debentures, related party                 $        --               --          2,945,000
                                                                        =============    =============    =============
   Conversion of short-term borrowings to common stock                  $        --               --            226,000
                                                                        =============    =============    =============
   Conversion of accrued interest, payroll and expenses by
     related parties to stock options                                   $        --               --          3,194,969
                                                                        =============    =============    =============
   Repurchase of stock options from related party                       $        --               --           (198,417)
                                                                        =============    =============    =============
   Conversion of accrued interest to stock options                      $        --               --            142,441
                                                                        =============    =============    =============
   Conversion of accounts payable to common stock                       $      10,030           92,184          296,200
                                                                        =============    =============    =============
   Conversion of notes payable, bank and accrued interest
      to long-term debt                                                 $        --               --          1,699,072
                                                                        =============    =============    =============
   Conversion of loans and interest payable, related party
      and accrued payroll and expenses, related parties to
      long-term accrued payroll and other, related party                $        --               --          1,863,514
                                                                        =============    =============    =============
   Issuance of common stock upon the conversion of
      convertible subordinated debentures, other                        $        --               --            127,000
                                                                        =============    =============    =============
   Issuance of common stock for services rendered                       $        --               --              2,460
                                                                        =============    =============    =============
</TABLE>

See accompanying notes to financial statements.


                                      - 5 -
<PAGE>

                              ALFACELL CORPORATION
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                                   (Unaudited)


1.   ORGANIZATION AND BASIS OF PRESENTATION

     In  the  opinion  of  management,   the  accompanying  unaudited  financial
statements  contain all adjustments  (consisting of normal  recurring  accruals)
necessary to present fairly the Company's  financial  position as of January 31,
2001 and the results of  operations  for the three and six month  periods  ended
January  31,  2001  and  2000 and the  period  from  August  24,  1981  (date of
inception)  to January 31, 2001.  The results of  operations  for the six months
ended  January  31,  2001 are not  necessarily  indicative  of the results to be
expected for the full year.

     The  Company is a  development  stage  company as defined in the  Financial
Accounting  Standards Board's Statement of Financial Accounting Standards No. 7.
The Company is devoting substantially all of its present efforts to establishing
a new  business.  Its  planned  principal  operations  have not  commenced  and,
accordingly, no significant revenue has been derived therefrom.

     Effective  August 1, 1998,  the  Company  adopted  Statement  of  Financial
Accounting Standards No. 130, or SFAS 130, Reporting  Comprehensive Income. SFAS
130 establishes new rules for the reporting and display of comprehensive  income
and its components. The net loss of $749,000 and $690,000,  recorded for the six
months  ended  January  31,  2001  and  2000,  respectively,  is  equal  to  the
comprehensive loss for those periods.

     The Company has reported net losses since its inception.  Also, the Company
has limited liquid resources.  The report of the Company's  independent auditors
on the Company's  July 31, 2000  financial  statements  included an  explanatory
paragraph  which states that the Company's  recurring  losses,  working  capital
deficit and limited liquid resources raise substantial doubt about the Company's
ability to continue as a going  concern.  The  financial  statements at July 31,
2000 or January 31, 2001 do not include any  adjustments  that might result from
the outcome of this uncertainty.

     The  Company's  continued  operations  will  depend on its ability to raise
additional  funds  through  various  potential  sources  such as equity and debt
financing,  collaborative agreements, strategic alliances, sale of tax benefits,
revenues from the commercial sale of ONCONASE(R) and


                                      - 6 -
<PAGE>

                              ALFACELL CORPORATION
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS, continued

                                   (Unaudited)

1.   ORGANIZATION AND BASIS OF PRESENTATION, continued

its  ability  to  realize  the full  potential  of its  technology  and its drug
candidates.  Such  additional  funds may not  become  available  as needed or be
available on acceptable  terms. To date, a significant  portion of the Company's
financing has been through private placements of common stock and warrants,  the
issuance  of common  stock for stock  options  and  warrants  exercised  and for
services rendered,  debt financing and financing provided by the Company's Chief
Executive Officer. Additionally, the Company has raised capital through the sale
of its  tax  benefits.  Until  the  Company's  operations  generate  significant
revenues, the Company will continue to fund its operations from cash on hand and
through the sources of capital previously  described.  The Company believes that
its cash and cash  equivalents as of January 31, 2001 will be sufficient to meet
its anticipated cash needs through April 2001.

2.   EARNINGS (LOSS) PER COMMON SHARE

     "Basic"  earnings  (loss) per common share equals net income (loss) divided
by weighted  average  common  shares  outstanding  during the period.  "Diluted"
earnings  (loss)  per  common  share  equals  net  income  divided by the sum of
weighted average common shares  outstanding  during the period plus common stock
equivalents.  The  Company's  Basic and Diluted  per share  amounts are the same
since the assumed exercise of stock options and warrants are all anti- dilutive.
The amount of options and warrants  excluded from the  calculation was 6,060,363
and 5,862,965 at January 31, 2001 and 2000, respectively.

3.   CAPITAL STOCK

     In August  2000,  the  Company  issued  11,800  shares of common  stock for
payment of services  rendered.  The fair value of the common stock in the amount
of $10,030 was charged to operations.

     In August and  September  2000,  the Company  sold an  aggregate of 333,332
shares  of  common  stock to  private  investors  at a price of $1.50  per share
resulting in net proceeds of $503,493 to the Company.  In addition,  the private
investors  were granted  five-year  warrants to purchase an aggregate of 166,666
shares of common stock at per share exercise price of $3.00.


                                      - 7 -
<PAGE>

                              ALFACELL CORPORATION
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS, continued

                                   (Unaudited)

3.   CAPITAL STOCK, continued

     In September  2000,  the Company  issued 40,000 shares of common stock upon
the exercise of stock options by a related party  resulting in gross proceeds of
$16,100 to the Company.

     In January 2001,  the Company issued 70,000 shares of common stock upon the
exercise of stock  options by related  parties  resulting  in gross  proceeds of
$30,500 to the Company.

4.   SALE OF NET OPERATING LOSSES

     New Jersey has enacted legislation  permitting certain corporations located
in New  Jersey to sell  state tax loss  carryforwards  and  state  research  and
development  credits or tax  benefits.  For the state  fiscal year 2001 (July 1,
2000 to June 30, 2001),  the Company has $1,774,000 total available tax benefits
of which  $602,000  was  allocated  to be sold between July 1, 2000 and June 30,
2001.  In December  2000,  the Company  received  $451,000  from the sale of its
allocated  tax benefits  which was  recognized  as a tax benefit for the quarter
ended October 31, 2000.  The Company will attempt to sell the remaining  balance
of its tax benefits in the amount of  approximately  $1,172,000  between July 1,
2001 and June 30, 2002, subject to all existing laws of the State of New Jersey.
However, there is no assurance that the Company will be able to find a buyer for
its tax benefits or that such funds will be available in a timely manner.


                                      - 8 -
<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

     Information   contained   herein   contains,   in  addition  to  historical
information,  forward-looking  statements that involve risks and  uncertainties.
All  statements,  other  than  statements  of  historical  fact,  regarding  our
financial  position,  potential,  business  strategy,  plans and  objectives for
future  operations  are  "forward-looking   statements."  These  statements  are
commonly  identified  by  the  use  of  forward-looking  terms  and  phrases  as
"anticipates,"  "believes,"  "estimates,"  "expects," "intends," "may," "seeks,"
"should,"  or "will' or the  negative  thereof  or other  variations  thereon or
comparable terminology, or by discussions of strategy. We cannot assure that the
future results covered by these forward-looking statements will be achieved. The
matters  set forth in  Exhibit  99.1 to our  annual  report on Form 10-K for the
fiscal  year ended  July 31,  2000 which is  incorporated  herein by  reference,
constitute cautionary  statements  identifying important factors with respect to
these  forward-looking  statements,  including certain risks and  uncertainties,
that could cause actual  results to vary  significantly  from the future results
indicated in these  forward-looking  statements.  Other factors could also cause
actual  results to differ  significantly  from the future  results  indicated in
these forward-looking statements.

Results of Operations

Three and six month periods ended January 31, 2001 and 2000

     Revenues.  We are a  development  stage company as defined in the Financial
Accounting  Standards Board's Statement of Financial Accounting Standards No. 7.
We are devoting  substantially  all of our present efforts to establishing a new
business and developing new drug products.  Our planned principal  operations of
marketing and/or licensing of new drugs have not commenced and, accordingly,  we
have not derived any significant revenue from these opeations.  We focus most of
our productive and financial  resources on the development of ONCONASE(R) and as
such we have not had any sales in the six  months  ended  January  31,  2001 and
2000.  Investment  income for the six months  ended  January 31, 2001 was $7,000
compared to $26,000 for the same period last year,  a decrease of $19,000.  This
decrease was due to lower balances of cash and cash equivalents.

     Research and  Development.  Research and development  expense for the three
months  ended  January 31, 2001 was  $510,000  compared to $592,000 for the same
period last year, a decrease of $82,000 or 14%.  This decrease was primarily due
to a 42% decrease in costs in support of on-going Phase III clinical  trials for
ONCONASE(R)  for  malignant   mesothelioma,   a  19%  decrease  in  expenses  in
preparation of an NDA filing for ONCONASE(R) with the FDA and an 89% decrease in
expenses  associated  with  the  new  patent  and  trademark   applications  for
ONCONASE(R).

     Research and development  expense for the six months ended January 31, 2001
was $878,000 compared to $1,164,000 for the same period last year, a decrease of
$286,000 or 25%.  This  decrease was primarily due to a 46% decrease in costs in
support of on-going Phase III


                                      - 9 -
<PAGE>

clinical trials for ONCONASE(R)  for malignant  mesothelioma,  a 51% decrease in
expenses in preparation of an NDA filing for ONCONASE(R)  with the FDA and a 48%
decrease in expenses  associated with the new patent and trademark  applications
for ONCONASE(R).

     General  and  Administrative.  General and  administrative  expense for the
three  months ended  January 31, 2001 was $180,000  compared to $150,000 for the
same  period  last  year,  an  increase  of $30,000 or 20%.  This  increase  was
primarily  due to a $25,000  increase  in public  relations  expenses  and a 32%
increase in insurance expense.

     General and  administrative  expense for the six months  ended  January 31,
2001 was  $325,000  compared  to  $306,000  for the same  period  last year,  an
increase of $19,000 or 7%. This  increase was primarily due to a 61% increase in
public relations expenses and a 17% increase in insurance  expense,  offset by a
22%  reduction  in  non-cash  expense  relating  to  stock  options  issued  for
consulting services.

     Income  Taxes.  New  Jersey  has  enacted  legislation  permitting  certain
corporations  located  in New Jersey to sell  state tax loss  carryforwards  and
state  research and  development  credits or tax benefits.  For the state fiscal
year 2001 (July 1, 2000 to June 30,  2001),  our  company has  $1,774,000  total
available  tax benefits of which  $602,000 was allocated to be sold between July
1, 2000 and June 30, 2001. In December 2000, we received  $451,000 from the sale
of the  allocated  tax benefits  which was  recognized  as a tax benefit for the
quarter ended October 31, 2000. We will attempt to sell the remaining balance of
our tax benefits in the amount of approximately  $1,172,000 between July 1, 2001
and June 30,  2002,  subject to all  existing  laws of the State of New  Jersey.
However,  we cannot  assure you that we will be able to find a buyer for our tax
benefits or that such funds will be available in a timely manner.

     Net Income  (Loss).  We have incurred net losses during each year since our
inception. The net loss for the three months ended January 31, 2001 was $688,000
as  compared  to a net  income of $24,000  for the same  period  last  year,  an
increase  of  $712,000,  primarily  due to the  sale  of our tax  benefits.  The
cumulative loss from the date of inception, August 24, 1981 to January 31, 2001,
amounted to  $57,425,000.  Such losses are  attributable to the fact that we are
still in the  development  stage and  accordingly  have not  derived  sufficient
revenues from operations to offset the development stage expenses.

Liquidity and Capital Resources

     We have financed our operations  since inception  primarily  through equity
and debt financing, research product sales and interest income. During the three
months  ended  January  31,  2001,  we  had a net  decrease  in  cash  and  cash
equivalents  of  $160,000,  which  resulted  primarily  from  net  cash  used in
operating  activities  of  $707,000,  offset by net cash  provided by  financing
activities of $547,000, primarily from the private placement of common stock and
warrants and proceeds from the exercise of stock  options.  Total cash resources
as of January 31, 2001 were $97,000 compared to $257,000 at July 31, 2000.


                                     - 10 -
<PAGE>

     Our current  liabilities  as of January 31, 2001 were $586,000  compared to
$590,000 at July 31, 2000, a decrease of $4,000.  The decrease was primarily due
to the payment of outstanding payables.

     Our  continued  operations  will depend on our ability to raise  additional
funds  through  various  potential  sources  such as equity and debt  financing,
collaborative agreements,  strategic alliances,  sale of tax benefits,  revenues
from the  commercial  sale of  ONCONASE(R)  and our  ability to realize the full
potential of our technology and our drug  candidates.  Such additional funds may
not become  available as we need them or be available on  acceptable  terms.  To
date, a significant portion of our financing has been through private placements
of common stock and warrants, the issuance of common stock for stock options and
warrants  exercised  and for services  rendered,  debt  financing  and financing
provided by our Chief Executive  Officer.  Additionally,  we have raised capital
through the sale of our tax benefits.  Until our operations generate significant
revenues,  we will continue to fund operations from cash on hand and through the
sources  of capital  previously  described.  We  believe  that our cash and cash
equivalents  as of January 31, 2001 will be sufficient  to meet our  anticipated
cash needs through  April 2001.  The report of our  independent  auditors on our
July 31, 2000  financial  statements  included an  explanatory  paragraph  which
states that our recurring  losses,  working  capital  deficit and limited liquid
resources  raise  substantial  doubt  about our  ability to  continue as a going
concern.  Our financial  statements at July 31, 2000 and January 31, 2001 do not
include any adjustments that might result from the outcome of this uncertainty.

     We will  continue to incur costs in  conjunction  with our U.S. and foreign
registrations  for  marketing  approval  of  ONCONASE(R).  We are  currently  in
discussions with several potential strategic alliance partners,  including major
international  biopharmaceutical  companies,  to  further  the  development  and
marketing of ONCONASE(R) and other related products in our pipeline. However, we
cannot assure you that any such  alliances will  materialize.  We intend to seek
marketing approvals for ONCONASE(R) for the treatment of malignant  mesothelioma
in foreign  territories.  In October  2000, we filed an  application  for Orphan
Medicinal  Product  Designation for ONCONASE(R) with the European Agency for the
Evaluation of Medicinal  Products,  or EMEA. In February 2001, the Committee for
Orphan  Medicinal  Products,  or  COMP,  issued a  positive  opinion  on  orphan
medicinal product designation of ONCONASE(R).  A confirmation of this opinion by
the COMP is  expected by April  2001.  Simultaneously,  we are in the process of
expanding our clinical program in Germany and Italy.  However,  we cannot assure
you that  marketing  approval  for  ONCONASE(R)  as a  treatment  for  malignant
mesothelioma will be granted.

     New Jersey has enacted legislation  permitting certain corporations located
in New  Jersey to sell  state tax loss  carryforwards  and  state  research  and
development  credits or tax  benefits.  For the state  fiscal year 2001 (July 1,
2000 to June 30, 2001),  our company has $1,774,000 total available tax benefits
of which  $602,000  was  allocated  to be sold between July 1, 2000 and June 30,
2001. In December 2000, we received  $451,000 from the sale of the allocated tax
benefits which was recognized as a tax benefit for the quarter ended October 31,
2000. We will attempt


                                     - 11 -
<PAGE>

to sell the remaining balance of our tax benefits in the amount of approximately
$1,172,000  between July 1, 2001 and June 30, 2002, subject to all existing laws
of the State of New Jersey.  However,  we cannot assure you that we will be able
to find a buyer for our tax  benefits or that such funds will be  available in a
timely manner.

     Our common stock was delisted from The Nasdaq SmallCap Market  effective at
the close of  business  April 27, 1999 for failing to meet the minimum bid price
requirements set forth in the NASD Marketplace  Rules. As of April 28, 1999, our
common stock trades on the OTC Bulletin Board under the symbol "ACEL". Delisting
of our common  stock from  Nasdaq  could have a material  adverse  effect on our
ability to raise additional capital,  our stockholders'  liquidity and the price
of our common stock.

     The market  price of our  common  stock is  volatile,  and the price of the
stock could be  dramatically  affected one way or another  depending on numerous
factors.  The market price of our common stock could also be materially affected
by the marketing approval or lack of approval of ONCONASE(R).

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

PART II. OTHER INFORMATION

Item 2.  (c) Recent Sales of Unregistered Securities

     In January  2001, we issued 70,000 shares of common stock upon the exercise
of stock options by related parties resulting in gross proceeds of $30,500, in a
transaction  consummated  as a private  sale  pursuant  to  Section  4(2) of the
Securities Act of 1933, as amended.

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K).

                                                                  Exhibit No. or
     Exhibit                                                       Incorporation
       No.              Item Title                                 by Reference
      -----             ----------                                 ------------
       3.1     Certificate of Incorporation                             *
       3.2     By-Laws                                                  *
       3.3     Amendment to Certificate of Incorporation                #
       3.4     Amendment to Certificate of Incorporation                +++
       4.1     Form of Convertible Debenture                            **


                                     - 12 -
<PAGE>

                                                                  Exhibit No. or
     Exhibit                                                       Incorporation
       No.              Item Title                                 by Reference
      -----             ----------                                 ------------

      10.1     Form of Stock and Warrant Purchase Agreements
               used in private placements completed April 1996
               and June 1996                                             ##
      10.2     Lease Agreement - 225 Belleville Avenue,
               Bloomfield, New Jersey                                    ###
      10.3     Form of Stock Purchase Agreement and Certificate
               used in connection with various private placements        ***
      10.4     Form of Stock and Warrant Purchase Agreement and
               Warrant Agreement used in Private Placement
               completed on March 21, 1994                               ***
      10.5     The Company's 1993 Stock Option Plan and Form of
               Option Agreement                                         *****
      10.6     Debt Conversion Agreement dated March 30, 1994
               with Kuslima Shogen                                      ****
      10.7     Accrued Salary Conversion Agreement dated
               March 30, 1994 with Kuslima Shogen                       ****
      10.8     Accrued Salary Conversion Agreement dated
               March 30, 1994 with Stanislaw Mikulski                   ****
      10.9     Debt Conversion Agreement dated March 30, 1994
               with John Schierloh                                      ****
      10.1O    Option Agreement dated March 30, 1994 with
               Kuslima Shogen                                           ****
      10.11    Option Agreement dated March 30, 1994 with
               Kuslima Shogen                                           ****
      10.12    Amendment No. 1 dated June 20, 1994 to Option
               Agreement dated March 30, 1994 with Kuslima Shogen       ****
      10.13    Form of Amendment No. 1 dated June 20, 1994 to Option
               Agreement dated March 30, 1994 with Kuslima Shogen       *****
      10.14    Form of Amendment No. 1 dated June 20, 1994 to Option
               Agreement dated March 30, 1994 with Stanislaw  Mikulski  *****
      10.15    Form of Stock and Warrant Purchase Agreement and
               Warrant Agreement used in Private Placement completed
               on September 13, 1994                                      +
      10.16    Form of Subscription Agreements and Warrant Agreement
               used in Private Placements closed in October 1994 and
               September 1995                                             #
      10.17    Common Stock Purchase Agreement by and between the
               Company and Digital Creations, Inc. dated
               March 3, 1997                                             ###
      10.18    1997 Stock Option Plan                                    ###
      10.19    Separation Agreement with Michael C. Lowe dated as
               of October 9, 1997                                        ++


                                     - 13 -
<PAGE>

                                                                  Exhibit No. or
     Exhibit                                                       Incorporation
       No.              Item Title                                 by Reference
      -----             ----------                                 ------------

      10.20    Form of Subscription Agreement and Warrant Agreement
               used in Private Placement completed on
               February 20, 1998                                          +++
      10.21    Form of Warrant Agreement issued to the Placement Agent
               in connection with the Private Placement completed on
               February 20, 1998                                          +++
      10.22    Placement Agent Agreement dated December 15, 1997          +++
      10.23    Separation Agreement with Gail Fraser dated
               August 31, 1999                                            ++++
      10.24    Form of Subscription Agreement and Warrant Agreement
               used in the August and September 2000 Private Placement   +++++
      99.1     Factors to Consider in Connection with Forward-Looking
               Statements                                                 ####

*        Previously filed as exhibit to the Company's  Registration Statement on
         Form S-18 (File No.  2-79975-NY) and  incorporated  herein by reference
         thereto.

**       Previously  filed as exhibits to the  Company's  Annual  Report on Form
         10-K for the year  ended  July 31,  1993  and  incorporated  herein  by
         reference thereto.

***      Previously filed as exhibits to the Company's  Quarterly Report on Form
         10-QSB for the quarter ended January 31, 1994 and  incorporated  herein
         by reference thereto.

****     Previously filed as exhibits to the Company's  Quarterly Report on Form
         10-QSB for the quarter ended April 30, 1994 and incorporated  herein by
         reference thereto.

*****    Previously  filed as exhibits to the Company's  Registration  Statement
         Form SB-2 (File No.  33-76950)  and  incorporated  herein by  reference
         thereto.

+        Previously filed as exhibits to the Company's Registration Statement on
         Form SB-2 (File No.  33-83072)  and  incorporated  herein by  reference
         thereto.

++       Previously filed as exhibits to the Company's  Quarterly Report on Form
         10-Q for the quarter ended October 31, 1997 and incorporated  herein by
         reference thereto.

+++      Previously filed as exhibits to the Company's  Quarterly Report on Form
         10-Q for the quarter ended January 31, 1998 and incorporated  herein by
         reference thereto.


                                     - 14 -
<PAGE>

++++     Previously  filed as exhibits to the  Company's  Annual  Report on Form
         10-K for the year  ended  July 31,  1999  and  incorporated  herein  by
         reference thereto.

+++++    Previously filed as exhibits to the Company's  Quarterly Report on Form
         10-Q for the quarter ended October 31, 2000 and incorporated  herein by
         reference thereto.

#        Previously  filed as exhibits to the  Company's  Annual  Report on Form
         10-KSB  for the year  ended July 31,  1995 and  incorporated  herein by
         reference thereto.

##       Previously filed as exhibits to the Company's Registration Statement on
         Form SB-2 (File No.  333-11575)  and  incorporated  herein by reference
         thereto.

###      Previously filed as exhibits to the Company's  Quarterly Report on Form
         10-QSB for the quarter ended April 30, 1997 and incorporated  herein by
         reference thereto.

####     Previously  filed as exhibits to the  Company's  Annual  Report on Form
         10-K for the year  ended  July 31,  2000  and  incorporated  herein  by
         reference thereto.

(b)      Reports on Form 8-K.

None


                                     - 15 -
<PAGE>

                                   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.


                                          ALFACELL CORPORATION
                                          ------------------------------------
                                                   (Registrant)


March 19, 2001                            /s/ KUSLIMA SHOGEN
                                          ------------------------------------
                                          Kuslima Shogen, Chief Executive
                                          Officer, Acting  Chief Financial
                                          Officer (Principal Executive Officer,
                                          Principal Accounting Officer) and
                                          Chairman of the Board


                                     - 16 -