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

      October  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
December 19, 2001 was 20,368,715 shares.


<PAGE>

                              ALFACELL CORPORATION
                          (A Development Stage Company)

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                                 BALANCE SHEETS
                       October 31, 2001 and July 31, 2001

<TABLE>
<CAPTION>
                                                                                        October 31,
                                                                                           2001             July 31,
                                     ASSETS                                             (Unaudited)           2001
                                     ------                                             ------------      ------------
<S>                                                                                     <C>               <C>
Current assets:
    Cash and cash equivalents                                                           $      7,985      $     44,781
    Deferred tax asset                                                                       353,730                --
    Other assets                                                                              24,085            42,933
                                                                                        ------------      ------------
         Total current assets                                                                385,800            87,714

Property and equipment, net of accumulated depreciation and amortization
   of 1,093,873 at October 31, 2001 and $1,081,423 at July 31, 2001                           55,105            67,555

Other assets                                                                                  36,340            46,340
                                                                                        ------------      ------------
         Total assets                                                                   $    477,245      $    201,609
                                                                                        ============      ============

                   LIABILITIES AND STOCKHOLDERS' (DEFICIENCY)

Current liabilities:
    Current portion of long-term debt                                                   $      7,457      $      7,057
    Notes payable - convertible debt - unrelated party, less debt discount
        of $34,511 at July 31, 2001                                                               --            35,482
    Accounts payable                                                                         629,164           409,972
    Accrued expenses                                                                         518,427           465,813
                                                                                        ------------      ------------

         Total current liabilities                                                         1,155,048           918,324

Long-term debt, less current portion                                                          22,155            23,663
                                                                                        ------------      ------------
         Total liabilities                                                                 1,177,203           941,987
                                                                                        ------------      ------------

Stockholders' (deficiency):
    Preferred stock, $.001 par value
       Authorized and unissued, 1,000,000 shares at October 31, 2001 and
          July 31, 2001                                                                           --                --
    Common stock $.001 par value
       Authorized 40,000,000 shares at October 31, 2001 and July 31, 2001;
       Issued and outstanding, 20,368,715 shares at October 31, 2001 and
       19,802,245 shares at July 31, 2001                                                     20,369            19,802
    Capital in excess of par value                                                        58,628,540        58,211,335
    Deficit accumulated during development stage                                         (59,348,867)      (58,971,515)
                                                                                        ------------      ------------
         Total stockholders' (deficiency)                                                   (699,958)         (740,378)
                                                                                        ------------      ------------

         Total liabilities and stockholders' (deficiency)                               $    477,245      $    201,609
                                                                                        ============      ============
</TABLE>

See accompanying notes to financial statements.


                                     - 2 -
<PAGE>

                              ALFACELL CORPORATION
                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS

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

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                   Three Months Ended              August 24, 1981
                                                                       October 31,                     (Date of
                                                                       -----------                   Inception) to
                                                                  2001             2000            October 31, 2001
                                                                  ----             ----            ----------------
<S>                                                           <C>              <C>                   <C>
Revenue:
     Sales                                                    $         --     $         --          $    553,489
     Investment income                                                  21            3,754             1,372,306
     Other income                                                       --               --                60,103
                                                              ------------     ------------          ------------
     Total revenue                                                      21            3,754             1,985,898
                                                              ------------     ------------          ------------

Costs and expenses:
     Cost of sales                                                      --               --               336,495
     Research and development                                      501,523          368,157            38,370,558
     General and administrative                                    195,425          145,589            21,060,818
     Interest:
         Related parties                                                --               --             1,142,860
         Others                                                     34,155            1,901             1,985,013
                                                              ------------     ------------          ------------
Total costs and expenses                                           731,103          515,647            62,895,744
                                                              ------------     ------------          ------------

Net loss before state tax benefit                                 (731,082)        (511,893)          (60,909,846)

State tax benefit                                                  353,730          451,395             1,560,979
                                                              ------------     ------------          ------------

Net loss                                                      $   (377,352)    $    (60,498)         $(59,348,867)
                                                              ============     ============          ============

Loss per basic and diluted common share                       $      (0.02)    $       0.00
                                                              ============     ============

Weighted average number of shares outstanding                   20,071,903       18,666,624
                                                              ============     ============
</TABLE>

See accompanying notes to financial statements.


                                     - 3 -
<PAGE>

                              ALFACELL CORPORATION
                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS

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

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     Three Months Ended              August 24, 1981
                                                                         October 31,                    (Date of
                                                                         -----------                  Inception) to
                                                                    2001             2000            October 31, 2001
                                                                    ----             ----            ----------------
<S>                                                             <C>              <C>                   <C>
Cash flows from operating activities:
  Net loss                                                      $ (377,352)      $    (60,498)         $(59,348,867)
  Adjustments to reconcile net loss to
      net cash used in operating activities:
    Gain on sale of marketable securities                               --                 --               (25,963)
    Depreciation and amortization                                   12,450             19,030             1,504,908
    Loss on disposal of property and equipment                          --                 --                18,926
    Noncash operating expenses                                      85,174             32,202             5,909,280
    Amortization of deferred compensation                               --                 --            11,442,000
    Amortization of organization costs                                  --                 --                 4,590
Changes in assets and liabilities:
    Increase in deferred tax assets                               (353,730)          (451,395)             (353,730)
    Decrease (increase) other current assets                        18,848           (109,711)              (83,952)
    Decrease in other assets                                        10,000                 --                59,711
    Increase in interest payable-related party                          --                 --               744,539
    Increase (decrease) in accounts payable                        269,192             (3,820)              975,274
    Increase in accrued payroll and
       expenses, related parties                                        --                 --             2,348,145
    Increase (decrease) in accrued expenses                         52,614            (51,165)            1,059,940
                                                                ----------       ------------          ------------
    Net cash used in operating activities                         (282,804)          (625,357)          (35,745,199)
                                                                ----------       ------------          ------------
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>

                                                                     (continued)

See accompanying notes to financial statements.


                                     - 4 -
<PAGE>

                              ALFACELL CORPORATION
                          (A Development Stage Company)


                       STATEMENTS OF CASH FLOWS, Continued

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

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                Three Months Ended              August 24, 1981
                                                                                    October 31,                    (Date of
                                                                                    -----------                  Inception) to
                                                                               2001             2000            October 31, 2001
                                                                               ----             ----            ----------------
<S>                                                                        <C>              <C>                   <C>
Cash flows from financing activities:
  Proceeds from short-term borrowings                                      $       --       $         --          $    849,500
  Payment of short-term borrowings                                             (5,000)                --              (628,500)
  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                                    (1,108)            (1,164)           (2,936,956)
  Proceeds from issuance of common stock, net                                 252,116            499,692            28,562,279
  Proceeds from exercise of stock options and warrants, net                        --             16,100             5,590,254
   Proceeds from issuance of convertible debentures, related party                 --                 --               297,000
  Proceeds from issuance of convertible debentures, unrelated party                                                    416,993
                                                                           ----------       ------------          ------------
         Net cash (used in) provided by financing activities                  246,008            514,628            37,231,898
                                                                           ----------       ------------          ------------
Net (decrease) increase in cash and cash equivalents                          (36,796)          (110,729)                7,985
Cash and cash equivalents at beginning of period                               44,781            257,445                    --
                                                                           ----------       ------------          ------------
Cash and cash equivalents at end of period                                 $    7,985       $    146,716          $      7,985
                                                                           ==========       ============          ============
Supplemental disclosure of cash flow information - interest
   paid                                                                    $    1,915       $      1,901          $  1,664,361
                                                                           ==========       ============          ============
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                                $       --       $         --          $  3,242,000
                                                                           ==========       ============          ============
   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                          $   50,000       $     10,030          $    346,200
                                                                           ==========       ============          ============
   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                                        $   64,993       $         --          $    191,993
                                                                           ==========       ============          ============

   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 October 31,
2001 and the results of operations for the three month periods ended October 31,
2001 and 2000 and the period from August 24, 1981 (date of inception) to October
31, 2001.  The results of operations for the three months ended October 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 ("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 $377,000 and $60,000, recorded for the three
months  ended  October  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
accountants  on the Company's  July 31, 2001  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, 2001 or October 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 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.  After taking into account the net proceeds received from
the sale of its tax benefits in December  2001,  the Company  believes  that its
cash and cash  equivalents as of October 31, 2001 will be sufficient to meet its
anticipated cash needs through January 2002.


                                     - 6 -
<PAGE>

                              ALFACELL CORPORATION
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   (Unaudited)

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 5,697,103
and 6,537,712 at October 31, 2001 and 2000, respectively.

3.   CAPITAL STOCK

     In August  2001,  the  Company  issued  55,556  shares  of common  stock in
settlement of accounts  payable.  In addition,  the vendor was granted five-year
warrants to purchase 55,556 shares of common stock at an exercise price of $1.50
per share.  The settled  accounts  payable  totaled  $50,000 and therefore  that
amount has been charged to equity as the value of the stock and warrants.

     In August  2001,  the Company  issued  70,000  five-year  stock  options as
payment for services to be rendered.  The options vested immediately and have an
exercise price of $0.75 per share. The total general and administrative  expense
recorded for these options was $35,770, based upon the fair value of such option
on the date of issuance.

     During the quarter ended October 31, 2001, the Company sold an aggregate of
440,000 shares of common stock to private investors at a price of $0.50 to $0.90
per share resulting in net proceeds of $252,000 to the Company. In addition, the
private  investors were granted  five-year  warrants to purchase an aggregate of
440,000 shares of common stock at an exercise price of $1.50 per share.

     In October 2001,  the Company issued 72,214 shares of common stock upon the
exercise of convertible  debentures by an unrelated parties.  In addition,  upon
conversion,  the unrelated parties were granted  five-year  warrants to purchase
72,214 shares of common stock at $1.50 per share.

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 2002 (July 1,
2001 to June 30, 2002),  our company has $1,477,000 total available tax benefits
of which  $426,000  was  allocated  to be sold between July 1, 2001 and June 30,
2002. In December 2001, we received  $354,000 from the sale of the allocated tax
benefits which was recognized as a tax benefit for the quarter ended October 31,
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  $1,051,000  between  July 1,  2002 and June 30,  2003,
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.


                                     - 7 -
<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,  2001 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 month periods ended October 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 three  months  ended  October 31, 2001 and
2000.  For the three months  ended  October 31,  2001,  there was no  investment
income  compared to $4,000 for the same period last year,  a decrease of $4,000.
This decrease was due to lower balances of cash and cash equivalents.

     Research and  Development.  Research and development  expense for the three
months  ended  October 31, 2001 was  $502,000  compared to $368,000 for the same
period last year,  an increase of $134,000,  or 36%. This increase was primarily
due to an increase in costs in support of the on-going Phase III clinical trials
for  ONCONASE(R).  The increased  costs resulted from the expansion of our Phase
III  clinical  trials for  malignant  mesothelioma  in Europe and an increase in
expenses in preparation  for marketing  approval  filings of ONCONASE(R) for the
treatment of malignant mesothelioma with the Food and Drug Administration in the
U.S. and with the European  Agency for the  Evaluation of Medicinal  Products in
Europe.

     General  and  Administrative.  General and  administrative  expense for the
three  months ended  October 31, 2001 was $195,000  compared to $146,000 for the
same  period  last year,  an increase of  $49,000,  or 34%.  This  increase  was
primarily  due to a  non-cash  expense  relating  to stock  options  issued  for
investor relations activities.

     Interest.  Interest expense for the three months ended October 31, 2001 was
$34,000  compared  to $2,000 for the same  period  last  year,  an  increase  of
$32,000.  The increase was primarily due to the interest  expense on the renewal
of the convertible  notes and related  warrants  issued to unrelated  parties in
April 2001.  The interest  expense was based on the value of the warrants  using
the Black-Scholes options-pricing model, amortized on a straight-line basis over
the life of the notes.


                                     - 8 -
<PAGE>

     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 2002 (July 1, 2001 to June 30,  2002),  our  company has  $1,477,000  total
available  tax benefits of which  $426,000 was allocated to be sold between July
1, 2001 and June 30, 2002. In December 2001, we received  $354,000 from the sale
of the  allocated  tax benefits  which was  recognized  as a tax benefit for the
quarter ended October 31, 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  $1,051,000 between July 1, 2002
and June 30,  2003,  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 Loss. We have incurred net losses during each year since our inception.
The net loss for the  three  months  ended  October  31,  2001 was  $377,000  as
compared to $60,000 for the same period last year, an increase of $317,000.  The
cumulative loss from the date of inception, August 24, 1981 to October 31, 2001,
amounted to  $59,349,000.  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  October  31,  2001,  we  had a net  decrease  in  cash  and  cash
equivalents of $37,000, which resulted primarily from net cash used in operating
activities  of  $283,000,  partially  offset by net cash  provided by  financing
activities of $246,000, primarily from the private placement of common stock and
warrants and proceeds from  short-term  borrowings.  Total cash  resources as of
October 31, 2001 were $8,000 compared to $45,000 at July 31, 2001.

     Our current  liabilities as of October 31, 2001 were $1,155,000 compared to
$918,000 at July 31, 2001,  an increase of $237,000.  The increase was primarily
due to an  increase  in  expenses  related  to the  expansion  of our  Phase III
clinical trials for malignant mesothelioma in Europe. As of October 31, 2001 our
current  liabilities  exceeded our current  assets and we had a working  capital
deficit of $769,000.

     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.  After  taking  into  account the net
proceeds we received  from the sale of our tax  benefits  in December  2001,  we
believe  that our cash and cash  equivalents  as of  October  31,  2001  will be
sufficient to meet our  anticipated  cash needs through January 2002. The report
of our independent  auditors on our July 31, 2001 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, 2001 and
October  31,  2001 do not include  any  adjustments  that might  result from the
outcome of this uncertainty.


                                     - 9 -
<PAGE>

     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 be sure that any such alliances will materialize.

     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 2002 (July 1,
2001 to June 30, 2002),  the Company has $1,477,000 total available tax benefits
of which  $426,000  was  allocated  to be sold between July 1, 2001 and June 30,
2002. In December 2001, we received  $354,000 from the sale of the allocated tax
benefits which was recognized as a tax benefit for the quarter ended October 31,
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  $1,051,000  between  July 1,  2002 and June 30,  2003,
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 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.OB".
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 April 2001,  we issued  convertible  notes to certain  related and  unrelated
parties in the  aggregate  amount of $366,993.  The notes were due within ninety
days unless the lenders  elect to exercise an option to convert  their note into
common stock at the  conversion  price of $0.90 per share.  The related  parties
elected to convert an aggregate $297,000 notes payable into an aggregate 330,000
shares of common stock. In addition, upon conversion,  they received warrants to
purchase an aggregate  330,000  shares of common  stock at an exercise  price of
$2.50  per share  and with an  expiration  date of July 7,  2004.  An  aggregate
balance of the notes to  unrelated  parties in the amount of $69,993 was renewed
for 120 days for the same conversion  price of $0.90 per share. In October 2001,
the remaining  noteholders elected to convert an aggregate $64,993 notes payable
into an aggregate  72,214 shares of common stock. In addition,  upon conversion,
they  received  five-year  warrants to purchase an  aggregate  72,214  shares of
common stock at an exercise  price of $1.50 per share.  On October 31, 2001, the
Board of  Directors  approved  a change  in the  exercise  price of the  330,000
warrants  issued to related  parties upon conversion of the notes from $2.50 per
share to $1.50 per share and changed  the  expiration  date to July 7, 2006.


                                     - 10 -
<PAGE>

In August 2001,  we completed a private  placement  resulting in the issuance of
115,000  shares of  restricted  common stock and 115,000  five-year  warrants to
purchase an  aggregate of 115,000  shares of common stock at per share  exercise
price of $1.50 per share.  We received an aggregate  $103,500  from such private
placement.

In August  2001,  we  converted  $50,000  of our  accounts  payable  owed to DZS
Computer  Solutions,  Inc.,  into 55,556 shares of common stock.  In addition we
issued to DZS Computer  Solutions,  Inc. 55,556  five-year  warrants to purchase
55,556 shares of common stock at an exercise price of $1.50 per share.

In September 2001, we completed a private placement resulting in the issuance of
200,000  shares of  restricted  common stock and 200,000  five-year  warrants to
purchase 200,000 shares of common stock at an exercise price of $1.50 per share.
We received an aggregate $100,000 from such private placement.

In October 2001, we completed a private  placement  resulting in the issuance of
125,000  shares of  restricted  common stock and 125,000  five-year  warrants to
purchase an aggregate  125,000  shares of common  stock at an exercise  price of
$1.50 per share. We received an aggregate $62,500 from such private placement.

Item 6. Exhibits and Reports on Form 8-K

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

<TABLE>
<CAPTION>
                                                                                                   Exhibit No. or
Exhibit                                                                                           Incorporation by
  No.                                          Item Title                                             Reference
-------                                        ----------                                             ---------
<S>          <C>                                                                                        <C>
  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                                                               **
 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        Option Agreement dated March 30, 1994 with Kuslima Shogen                                  ****
10.10        Amendment No. 1 dated June 20, 1994 to Option Agreement dated March 30, 1994 with
             Kuslima Shogen                                                                             ****
10.11        Form of Amendment No. 1 dated June 20, 1994 to Option Agreement dated March 30,
             1994 with Kuslima Shogen                                                                   *****
10.12        Form of Amendment No. 1 dated June 20, 1994 to Option Agreement dated March 30,
             1994 with Stanislaw Mikulski                                                               *****
</TABLE>


                                     - 11 -
<PAGE>

<TABLE>
<CAPTION>
                                                                                                   Exhibit No. or
Exhibit                                                                                           Incorporation by
  No.                                          Item Title                                             Reference
-------                                        ----------                                             ---------
<S>          <C>                                                                                        <C>
10.13        Form of Stock and Warrant Purchase Agreement and Warrant Agreement used in
             Private Placement completed on September 13, 1994                                            +
10.14        Form of Subscription Agreements and Warrant Agreement used in Private Placements
             closed in October 1994 and September 1995                                                    #
10.15        1997 Stock Option Plan                                                                      ###
10.16        Separation Agreement with Michael C. Lowe dated as of October 9, 1997                       ++
10.17        Form of Subscription Agreement and Warrant Agreement used in Private Placement
             completed on February 20, 1998                                                              +++
10.18        Form of Warrant Agreement issued to the Placement Agent in connection with the
             Private Placement completed on February 20, 1998                                            +++
10.19        Placement Agent Agreement dated December 15, 1997                                           +++
10.20        Separation Agreement with Gail Fraser dated August 31, 1999                                ####
10.21        Form of Subscription Agreement and Warrant Agreement used in the February 2000
             Private Placement                                                                          ++++
10.22        Form of Subscription Agreement and Warrant Agreement used in the August and
             September 2000 Private Placement                                                           +++++
10.23        Form of Subscription Agreement and Warrant Agreement used in the April 2001
             Private Placements                                                                           ^
10.24        Form of Convertible Note entered into in April 2001                                          ^
10.25        Form of Subscription Agreement and Warrant Agreement used in the July 2001
             Private Placements                                                                           ^
10.26        Form of Subscription Agreement and Warrant Agreement used in the August and
             October 2001 Private Placements                                                              ^
10.27        Form of Subscription Agreement and Warrant Agreement used in the September 2001
             Private Placement                                                                          #####
 99.1        Factors to Consider in Connection with Forward-Looking Statements                           ^^
</TABLE>

*            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.


                                     - 12 -
<PAGE>

+++          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.

++++         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.

+++++        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   Registration
             Statement on Form S-1 (File No. 333-38236) 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,  2001 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,  1999 and  incorporated  herein by
             reference thereto.

#####        Filed herewith.

(b)          Reports on Form 8-K.

             None


                                     - 13 -
<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)


December 21, 2001                            /s/ KUSLIMA SHOGEN
                                             ------------------
                                             Kuslima Shogen,  Chief Executive
                                             Officer,  Acting Chief Financial
                                             Officer (Principal  Executive
                                             Officer,  Principal  Accounting
                                             Officer) and Chairman of the Board

                                     - 14 -