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, 2002                                           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 20, 2002 was 20,827,785 shares.


<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)


PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

                                 BALANCE SHEETS
                       January 31, 2002 and July 31, 2001

<TABLE>
<CAPTION>
                                                                                                     January 31,
                                                                                                        2002             July 31,
                                                    ASSETS                                          (Unaudited)            2001
                                                                                                     ------------      ------------
<S>                                                                                                  <C>               <C>
Current assets:
    Cash and cash equivalents                                                                        $     14,483      $     44,781
    Other assets                                                                                           21,494            42,933
                                                                                                     ------------      ------------
         Total current assets                                                                              35,977            87,714

Property and equipment, net of accumulated depreciation and amortization
   of $1,105,503 at January 31, 2002 and $1,081,423 at July 31, 2001                                       43,475            67,555

Other assets                                                                                               64,267            46,340
                                                                                                     ------------      ------------
         Total assets                                                                                $    143,719      $    201,609
                                                                                                     ============      ============

                                  LIABILITIES AND STOCKHOLDERS' (DEFICIENCY)

Current liabilities:
    Current portion of long-term debt                                                                $      7,694      $      7,057
    Notes payable - convertible debt - unrelated party, less debt discount of $34,511
        at July 31, 2001                                                                                       --            35,482
    Accounts payable                                                                                      689,059           409,972
    Accrued expenses                                                                                      504,987           465,813
    Loan payable related party                                                                            135,465                --
                                                                                                     ------------      ------------
         Total current liabilities                                                                      1,337,205           918,324

Long-term debt, less current portion                                                                       20,141            23,663
                                                                                                     ------------      ------------
         Total liabilities                                                                              1,357,346           941,987
                                                                                                     ------------      ------------

Stockholders' (deficiency):
    Preferred stock, $.001 par value
       Authorized and unissued, 1,000,000 shares at January 31, 2002 and July 31, 2001                         --                --
    Common stock $.001 par value
       Authorized 40,000,000 shares at January 31, 2002 and July 31, 2001;
       Issued and outstanding, 20,727,785 shares at January 31, 2002 and
       19,802,245 shares at July 31, 2001                                                                  20,728            19,802
    Capital in excess of par value                                                                     58,812,386        58,211,335
    Deficit accumulated during development stage                                                      (60,046,741)      (58,971,515)
                                                                                                     ------------      ------------
         Total stockholders' (deficiency)                                                              (1,213,627)         (740,378)
                                                                                                     ------------      ------------

         Total liabilities and stockholders' (deficiency)                                            $    143,719      $    201,609
                                                                                                     ============      ============
</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, 2002 and 2001,
                       and the Period from August 24, 1981
                     (Date of Inception) to January 31, 2002

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     Three Months Ended                  Six Months Ended           August 24, 1981
                                                         January 31,                         January 31,                (Date of
                                               ------------------------------      ------------------------------    Inception) to
                                                   2002              2001              2002              2001      January 31, 2002
                                               ------------      ------------      ------------      ------------  ----------------
<S>                                            <C>               <C>               <C>               <C>             <C>
Revenue:
     Sales                                     $         --      $         --      $         --      $         --    $    553,489
     Investment income                                  136             3,015               157             6,769       1,372,442

     Other income                                        --                --                --                --          60,103
                                               ------------      ------------      ------------      ------------    ------------
     Total revenue                                      136             3,015               157             6,769       1,986,034
                                               ------------      ------------      ------------      ------------    ------------

Costs and expenses:
     Cost of sales                                       --                --                --                --         336,495
     Research and development                       506,458           509,679         1,007,981           877,836      38,877,016
     General and administrative                     188,189           179,863           383,614           325,452      21,249,007
     Interest:
         Related parties                                 --                --                --                --       1,142,860
         Others                                       3,363             1,867            37,518             3,768       1,988,376
                                               ------------      ------------      ------------      ------------    ------------
Total costs and expenses                            698,010           691,409         1,429,113         1,207,056      63,593,754
                                               ------------      ------------      ------------      ------------    ------------

Net loss before state tax benefit                  (697,874)         (688,394)       (1,428,956)       (1,200,287)    (61,607,720)


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

Net loss                                       $   (697,874)     $   (688,394)     $ (1,075,226)     $   (748,892)   $(60,046,741)
                                               ============      ============      ============      ============    ============
Loss per basic and diluted common
     share                                     $       (.03)     $       (.04)     $       (.05)     $       (.04)
                                               ============      ============      ============      ============

Weighted average number of shares
     outstanding                                 20,581,938        18,832,234        20,326,920        18,749,429
                                               ============      ============      ============      ============
</TABLE>

See accompanying notes to financial statements.



                                     - 3 -
<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS

                   Six months ended January 31, 2002 and 2001,
                       and the Period from August 24, 1981
                     (Date of Inception) to January 31, 2002

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                   Six Months Ended                August 24, 1981
                                                                                      January 31,                (Date of Inception)
                                                                           ---------------------------------              to
                                                                               2002                  2001         January 31, 2002
                                                                           ------------          ------------    -------------------
<S>                                                                        <C>                   <C>               <C>
Cash flows from operating activities:
  Net loss                                                                 $ (1,075,226)         $   (748,892)     $(60,046,741)
  Adjustments to reconcile net loss to
      net cash used in operating activities:
    Gain on sale of marketable securities                                            --                    --           (25,963)
    Depreciation and amortization                                                24,080                38,060         1,516,538
    Loss on disposal of property and equipment                                       --                    --            18,926
    Noncash operating expenses                                                  107,315                64,405         5,931,421
    Amortization of deferred compensation                                            --                    --        11,442,000
    Amortization of organization costs                                               --                    --             4,590
Changes in assets and liabilities:
    Decrease (increase) other current assets                                     21,439               (67,881)          (81,361)
    (Increase) Decrease in other assets                                         (17,927)                   --            31,784
    Increase in interest payable-related party                                       --                    --           744,539
    Increase in accounts payable                                                329,087                 3,760         1,035,169
    Increase in accrued payroll and expenses,
        related parties                                                              --                    --         2,348,145
    Increase in accrued expenses                                                 39,174                 2,700         1,046,500
                                                                           ------------          ------------      ------------
    Net cash used in operating activities                                      (572,058)             (707,848)      (36,034,453)
                                                                           ------------          ------------      ------------

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

                   Six months ended January 31, 2002 and 2001,
                       and the Period from August 24, 1981
                     (Date of Inception) to January 31, 2002

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                           Six Months Ended          August 24, 1981
                                                                                               January 31,             (Date of
                                                                                         -----------------------     Inception) to
                                                                                           2002           2001      January 31, 2002
                                                                                         --------       --------    ----------------
<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                                          135,465             --         2,764,333
  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                                                (2,885)        (2,720)       (2,938,733)
  Proceeds from issuance of common stock, net                                             414,180        503,493        28,724,343
  Proceeds from exercise of stock options and warrants, net                                    --         46,600         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 provided by financing activities                                        541,760        547,373        37,527,650
                                                                                         --------       --------      ------------
Net (decrease) increase in cash and cash equivalents                                      (30,298)      (160,475)           14,483
Cash and cash equivalents at beginning of period                                           44,781        257,445                --
                                                                                         --------       --------      ------------
Cash and cash equivalents at end of period                                               $ 14,483       $ 96,970      $     14,483
                                                                                         ========       ========      ============
Supplemental disclosure of cash flow information - interest
   paid                                                                                  $  5,278       $  3,768      $  1,669,639
                                                                                         ========       ========      ============
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 January 31,
2002 and the results of  operations  for the three and six month  periods  ended
January  31,  2002  and  2001 and the  period  from  August  24,  1981  (date of
inception)  to January 31, 2002.  The results of  operations  for the six months
ended  January  31,  2002 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 $1,075,000 and $749,000 recorded for the six
months  ended  January  31,  2002  and  2001,  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 and January  31,  2002 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. Until the Company's
operations generate significant  revenues,  the Company will need to continue to
fund  operations  through  the  sources of capital  previously  described.  From
August,  2001 through March 21, 2002,  the Company  received  gross  proceeds of
approximately  $600,000 from private  placements of equity to various individual
investors and exercise of warrants by an unrelated  party.  The Company also has
received from time to time loans payable on demand from a related  party.  As of
January  31,  2002  the   aggregate   balance  of  these  loans  was   $135,500.
Additionally,  in  December  2001 the Company has raised  capital  amounting  to
$354,000 through the sale of its tax


                                     - 6 -
<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   (Unaudited)

1.   ORGANIZATION AND BASIS OF PRESENTATION, Continued

benefits. As the Company has no liquid resources and significant liabilities, it
needs to raise additional  capital in order to remain in operation.  The Company
believes its current  operating  levels require  $160,000 of cash per month. The
Company  does  not  presently  maintain  the  cash  balance  needed  to fund its
operations;  however,  to date it has  been  able to meet the  cash  needed  for
continued operations.  In the near term, management continues to seek additional
capital financing through sales of equity in private  placements and exercise of
warrants.  In addition,  the Company expects some funds to be available  through
loans from its Chief Executive  Officer,  although no such loans are required to
be made.  Once any of these sources if received are exhausted,  the Company will
need additional  financing  through the sources described above, to continue its
operations.  There is no assurance these funds will be received, however, if the
funds will be received  it will  assist in  allowing  the Company to satisfy its
liquidity needs.

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 7,802,895
and 6,060,363 at January 31, 2002 and 2001, respectively.

3.   LOAN PAYABLE, RELATED PARTY

     From  August  2001 to January  2002,  Kuslima  Shogen the  Company's  Chief
Executive  Officer,  loaned the Company some amounts payable upon demand bearing
an  interest  at 8% per annum.  As of January  31,  2002,  the loan  balance was
$135,500.

4.   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.




                                     - 7 -
<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)

                    NOTES TO FINANCIAL STATEMENTS, Continued

                                   (Unaudited)


4.   CAPITAL STOCK, Continued

     In October 2001,  the Company issued 72,214 shares of common stock upon the
exercise of  convertible  debentures  by 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.

     During the quarter ended January 31, 2002, the Company sold an aggregate of
359,070  shares of common  stock to  private  investors  at a price of $0.50 per
share  resulting in net proceeds of $162,200 to the  Company.  In addition,  the
private  investors were granted  five-year  warrants to purchase an aggregate of
409,070 shares of common stock at an exercise price of $1.50 per share.

5.   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),  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,  the Company  received  $354,000  from the sale of the
allocated tax benefits  which was recognized as a tax benefit for the six months
ended January 31, 2002. In December 2000, the Company received $451,000 from the
sale of the allocated tax benefits which was recognized as a tax benefit for the
six  months  ended  January  31,  2001.  The  Company  will  attempt to sell the
remaining balance of its 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 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 be sure 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 and six month periods ended January 31, 2002 and 2001

     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 operations. 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 and six month  periods ended January
31, 2001 and 2000. Investment income for the three months ended January 31, 2002
was $100  compared to $3,000 for the same period last year a decrease of $2,900.
Investment  income for the six months ended January 31, 2002,  was $200 compared
to $6,800 for the same period last year, a decrease of $6,600.  These  decreases
were due to lower balances of cash and cash equivalents.

     Research and  Development.  Research and development  expense for the three
months  ended  January 31, 2002 was  $506,000  compared to $510,000 for the same
period last year, a decrease of $4,000,  or 1%. This  decrease was primarily due
to a decrease 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 and a reduction  of non-cash  expense  relating to
stock options issued for consulting services. This decrease was partially offset
by an increase in costs in support of the on-going Phase III clinical trials for
ONCONASE(R) and an increase in cost of clinical supplies related to the clinical
trials,  both resulting from the expansion of our Phase III clinical  trials for
malignant  mesothelioma  in Europe,  as well as an increase in costs relating to
patent and trademark applications for ONCONASE(R).

     Research and development  expense for the six months ended January 31, 2002
was  $1,008,000  compared to $878,000 for the same period last year, an increase
of $130,000,  or 15%. This increase was primarily due to an increase in costs in
support of on-going  Phase III clinical  trials for  ONCONASE(R)  for  malignant
mesothelioma  and an  increase  in  cost of  clinical  supplies  related  to the
clinical  trials,  both  resulting  from the expansion of our Phase III clinical
trials  for  malignant  mesothelioma  in Europe  and an  increase  in patent and
trademark applications for ONCONASE(R).  This increase was partially offset by a
reduction of a non-cash  expense relating to stock options issued for consulting
services.

     General  and  Administrative.  General and  administrative  expense for the
three  months ended  January 31, 2002 was $188,000  compared to $180,000 for the
same period last year, an increase of



                                     - 9 -
<PAGE>


$8,000,  or 4%. This increase was primarily due to an increase in legal expenses
due to business development activities, offset by a decrease in public relations
activities  and a reduction  of a non-cash  expense  relating  to stock  options
issued for consulting services.

     General and  administrative  expense for the six months  ended  January 31,
2002 was  $383,000  compared  to  $325,000  for the same  period  last year,  an
increase of $58,000 or 18%.  This  increase was  primarily due to an increase in
public  relations  expenses  and an increase in legal  expenses  due to business
development activities,  offset by a reduction in a non-cash expense relating to
stock options issued for consulting services.

     Interest.  Interest expense for the three months ended January 31, 2002 was
$3,000  compared to $2,000 for the same period last year, an increase of $1,000.
Interest  expense for the six months ended January 31, 2002 was $38,000 compared
to $4,000 for the same period last year, an increase of $34,000. These increases
were  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.

     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),  we have  $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 allocated
tax  benefits  which was  recognized  as a tax benefit for the six months  ended
January 31, 2002. In December  2000,  we received  $451,000 from the sale of the
allocated tax benefits  which was recognized as a tax benefit for the six months
ended January 31, 2001. 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  January  31,  2002 was  $698,000  as
compared to $688,000 for the same period last year, an increase of $10,000.  The
net loss for the six months ended January 31, 2002 was $1,075,000 as compared to
$749,000 for the same period last year, an increase of $326,000.  The cumulative
loss from the date of inception,  August 24, 1981 to January 31, 2002,  amounted
to  $60,046,000.  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 six
months  ended  January  31,  2002,  we  had a net  decrease  in  cash  and  cash
equivalents of $30,000, which resulted primarily from net cash used in operating
activities of $572,000,  offset by net cash provided by financing  activities of
$542,000,  primarily from the private placement of common stock and warrants and
proceeds from short-term borrowings. Total cash resources as of January 31, 2002
were $14,000 compared to $45,000 at July 31, 2001.

     Our current  liabilities as of January 31, 2002 were $1,337,000 compared to
$918,000 at July 31, 2001,  an increase of $419,000.  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 January 31, 2002 our
current  liabilities  exceeded our current  assets and we had a working  capital
deficit of $1,301,000.


                                     - 10 -
<PAGE>


     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.   Until  our  operations  generate
significant  revenues,  we will need to continue to fund operations  through the
sources of capital  previously  described.  From August,  2001 through March 21,
2002,  we  received  gross  proceeds  of  approximately  $600,000  from  private
placements of equity to various individual investors and exercise of warrants by
an unrelated  party.  We have also  received  from time to time loans payable on
demand from a related  party.  As of January 31, 2002 the  aggregate  balance of
these loans was $135,500.  Additionally, in December 2001 we have raised capital
amounting to $354,000 through the sale of our tax benefits. As we have no liquid
resources and significant  liabilities,  we need to raise additional  capital in
order to remain in operation.  We believe our current  operating  levels require
$160,000 of cash per month. We do not presently maintain the cash balance needed
to fund our  operations;  however,  to date we have  been  able to meet the cash
needed for continued operations.

     In the near term we continue to seek additional  capital  financing through
the sale of equity in private placements and exercise of warrants.  In addition,
we expect  some funds to be  available  through  loans from our Chief  Executive
Officer,  although  no such  loans are  required  to be made.  Once any of these
sources if received are exhausted we will need additional  financing through the
sources  described  above, to continue our  operations.  We cannot be sure these
funds will be received, however, if the funds will be received it will assist us
in satisfying our liquidity needs. 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 January 31, 2002 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 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), we had $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



                                     - 11 -
<PAGE>


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 November 2001, we completed a private placement  resulting in the issuance of
209,070  shares of  restricted  common stock and 259,070  five-year  warrants to
purchase an aggregate  259,070  shares of common  stock at an exercise  price of
$1.50 per share. We received an aggregate $104,535 from such private placement.

In January 2002, we completed a private  placement  resulting in the issuance of
150,000  shares of  restricted  common stock and 150,000  five-year  warrants to
purchase an aggregate  150,000  shares of common  stock at an exercise  price of
$1.50 per share. We received an aggregate $75,000 from such private placement.

In February 2002, we completed a private placement  resulting in the issuance of
1,500,000  five-year  warrants to purchase  1,500,000 shares of common stock. Of
such  warrants,  250,000  are  exercisable  at  $0.50  per  share,  650,000  are
exercisable  at $1.00 per share and 600,000 are  exercisable at $1.50 per share.
We received $1,500 from such private placement.

In March 2002,  we issued  100,000  shares of common  stock upon the exercise of
warrants by an  unrelated  party  resulting in gross  proceeds of $50,000,  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).

<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                                                                          ***
</TABLE>


                                     - 12 -
<PAGE>


<TABLE>
<CAPTION>
                                                                                                    Exhibit No. or
Exhibit                                                                                            Incorporation by
  No.                                                 Item Title                                      Reference
  ---                                                 ----------                                      ---------
<S>          <C>                                                                                        <C>
 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                                                               *****

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

10.19        Private Placement completed on February 20, 1998                                            +++

10.20        Placement Agent Agreement dated December 15, 1997                                           +++
             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                                                                           ^^

10.28        Form of Subscription Agreement and Warrant Agreement used in the November 2001
             and January 2002 Private Placements                                                          ^

10.29        Warrant issued in the February 2002 Private Placement                                        ^

 99.1        Factors to Consider in Connection with Forward-Looking Statements                           ^^^
</TABLE>


                                     - 13 -
<PAGE>



*            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.

++++         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. 333-38136) 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, 2001 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.


                                     - 14 -
<PAGE>


(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 25, 2002                           /s/ KUSLIMA SHOGEN
                                         ---------------------------------------
                                         Kuslima  Shogen, Chief Executive
                                         Officer, Acting Chief Financial Officer
                                         (Principal Executive Officer, Principal
                                         Accounting Officer) and Chairman of
                                         the Board


                                     - 16 -