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


     April 30, 1999                                               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

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date:

Shares  of  Common  Stock,  $.001 par  value  outstanding  as of June 10,  1999:
17,286,594


<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

                                 BALANCE SHEETS
                        April 30, 1999 and July 31, 1998

<TABLE>
<CAPTION>
                                                                                April 30,
                                                                                  1999          July 31,
                                            ASSETS                             (Unaudited)         1998
                                                                               ------------    ------------
<S>                                                                            <C>             <C>
Current assets:
     Cash and cash equivalents                                                 $  2,019,869    $  5,099,453
     Prepaid expenses                                                               247,322         117,187
                                                                               ------------    ------------
         Total current assets                                                     2,267,191       5,216,640
                                                                               ------------    ------------

Property and equipment, net of accumulated depreciation and amortization
of $919,559 at April 30, 1999 and $843,599 at July 31, 1998                         224,078         300,038
                                                                               ------------    ------------

         Total assets                                                          $  2,491,269    $  5,516,678
                                                                               ============    ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current portion of long-term debt                                         $      8,641    $      9,175
     Accounts payable                                                               210,497         716,040
     Accrued expenses                                                               748,779       1,092,898
                                                                               ------------    ------------
         Total current liabilities                                                  967,917       1,818,113
                                                                               ------------    ------------

Long-term debt, less current portion                                                    464           6,727
                                                                               ------------    ------------
         Total liabilities                                                          968,381       1,824,840
                                                                               ------------    ------------


Commitments and contingencies Stockholders' equity:
     Preferred stock, $.001 par value
         Authorized and unissued, 1,000,000 shares at April 30, 1999
            and July 31, 1998                                                          --              --
     Common stock $.001 par value
         Authorized 40,000,000  shares  at April 30, 1999 and July 31, 1998;
         Issued and outstanding 17,286,594 shares at April 30, 1999
            and 17,239,893 shares at July 31, 1998                                   17,286          17,240
     Capital in excess of par value                                              55,630,306      55,472,243
     Deficit accumulated during development stage                               (54,124,704)    (51,797,645)
                                                                               ------------    ------------
         Total stockholders' equity                                               1,522,888       3,691,838
                                                                               ------------    ------------

         Total liabilities and stockholders' equity                            $  2,491,269    $  5,516,678
                                                                               ============    ============
</TABLE>

See accompanying notes to financial statements.


                                      - 2 -
<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)




                            STATEMENTS OF OPERATIONS

           Three months and nine months ended April 30, 1999 and 1998,
                       and the Period from August 24, 1981
                      (Date of Inception) to April 30, 1999

                                   (Unaudited)

<TABLE>
<CAPTION>


                                                   Three Months Ended         Nine Months Ended       August 24, 1981
                                                        April 30,                April 30,           (Date of Inception)
                                                                                                             to
                                             1999            1998            1999            1998      April 30, 1999
                                             ----            ----            ----            ----      --------------
<S>                                      <C>             <C>             <C>             <C>             <C>
REVENUE:
     Sales                               $       --      $       --      $       --      $       --      $    553,489
     Investment income                         32,055          81,806         140,847         226,332       1,280,495
     Other income                                --              --              --              --            60,103
                                         ------------    ------------    ------------    ------------    ------------
     TOTAL REVENUE                             32,055          81,806         140,847         226,332       1,894,087
                                         ------------    ------------    ------------    ------------    ------------

COSTS AND EXPENSES:
     Cost of sales                               --              --              --              --           336,495
     Research and development                 543,922       1,300,507       1,804,115       3,907,807      33,490,799
     General and administrative               199,796         413,146         662,359       1,129,304      19,256,733
     Interest:
         Related parties                         --              --              --              --         1,033,960
         Other                                    739             479           1,432          21,355       1,900,804
                                         ------------    ------------    ------------    ------------    ------------
       TOTAL COSTS AND EXPENSES               744,457       1,714,132       2,467,906       5,058,466      56,018,791
                                         ------------    ------------    ------------    ------------    ------------

       NET LOSS                          $   (712,402)   $ (1,632,326)   $ (2,327,059)   $ (4,832,134)   $(54,124,704)
                                         ============    ============    ============    ============    ============


     Loss per basic and diluted common
            share                        $       (.04)   $       (.10)   $       (.13)   $       (.31)   $      (7.52)
                                         ============    ============    ============    ============    ============

Weighted average number of shares
     outstanding                           17,285,987      16,727,344      17,265,936      15,484,248       7,194,447
                                         ============    ============    ============    ============    ============
</TABLE>


See accompanying notes to financial statements.


                                      - 3 -
<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)



                            STATEMENTS OF CASH FLOWS

                   Nine months ended April 30, 1999 and 1998,
                       and the Period from August 24, 1981
                      (Date of Inception) to April 30, 1999

                                   (Unaudited)

<TABLE>
<CAPTION>



                                                                                        Nine Months Ended          August 24, 1981
                                                                                            April 30,            (Date of Inception)
                                                                                                                         to
                                                                                     1999               1998        April 30, 1999
                                                                                    ------              -----      ---------------
<S>                                                                              <C>                <C>                <C>
Cash flows from operating activities:
  Net Loss                                                                       $ (2,327,059)      $ (4,832,134)      $(54,124,704)
  Adjustments to reconcile net loss to
      net cash used in operating activities:
    Gain on sale of marketable securities                                                --                 --              (25,963)
    Depreciation and amortization                                                      75,960             75,491          1,298,824
    Loss on disposal of property and equipment                                           --                 --               18,926
    Noncash operating expenses                                                        142,244            159,914          5,306,663
    Amortization of deferred compensation                                                --                 --           11,442,000
    Amortization of organization costs                                                   --                 --                4,590
Changes in assets and liabilities:
    Increase in prepaid expenses                                                     (130,135)           (18,624)          (247,322)
    Decrease in other assets                                                             --                 --               36,184
    Increase in interest payable, related party                                          --                 --              744,539
    Increase (decrease) in accounts payable                                          (488,912)           323,808            404,393
    Increase in accrued payroll and expenses, related parties                            --                 --            2,348,145
    Increase (decrease) in accrued expenses                                          (344,119)            12,675          1,290,292
                                                                                 ------------       ------------       ------------
  Net cash used in operating activities                                            (3,072,021)        (4,278,870)       (31,503,433)
                                                                                 ------------       ------------       ------------
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                                                   --              (75,314)        (1,369,261)
    Patent costs                                                                         --                 --              (97,841)
                                                                                 ------------       ------------       ------------

     Net cash used in investing activities                                               --              (75,314)        (1,441,139)
                                                                                 ------------       ------------       ------------
</TABLE>

See accompanying notes to financial statements.                      (continued)


                                      - 4 -
<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)



                       STATEMENTS OF CASH FLOWS, Continued

                   Nine months ended April 30, 1999 and 1998,
                       and the Period from August 24, 1981
                      (Date of Inception) to April 30, 1999

                                   (Unaudited)

<TABLE>
<CAPTION>


                                                                                        Nine Months Ended          August 24, 1981
                                                                                             April 30,           (Date of Inception)
                                                                                                                         to
                                                                                     1999               1998        April 30, 1999
                                                                                 ------------        -----------    --------------
<S>                                                                               <C>                <C>              <C>
Cash flows from financing activities:
  Proceeds from short-term borrowings                                             $       --         $       --       $    849,500
  Payment of short-term borrowings                                                        --                 --           (623,500)
  Increase in loans payable - related party, net                                          --                 --          2,628,868
  Proceeds from bank debt and other long-term debt, net of
     deferred debt costs                                                                  --                 --          2,410,883
  Reduction of bank debt and long-term debt                                             (6,797)        (1,379,258)      (2,916,350)
  Proceeds from issuance of common stock, net                                             (766)         4,311,578       26,807,367
  Proceeds from exercise of stock options and warrants, net                               --                 --          5,460,673
  Proceeds from issuance of convertible debentures                                        --                 --            347,000
                                                                                  ------------       ------------     ------------
     Net cash provided (used) by financing activities                                   (7,563)         2,932,320       34,964,441
                                                                                  ------------       ------------     ------------
     Net increase (decrease) in cash and cash equivalents                           (3,079,584)        (1,421,864)       2,019,869
Cash and cash equivalents at beginning of period                                     5,099,453          7,542,289             --
                                                                                  ------------       ------------     ------------
Cash and cash equivalents at end of period                                        $  2,019,869       $  6,120,425     $  2,019,869
                                                                                  ============       ============     ============
Supplemental disclosure of cash flow information -
   interest paid                                                                  $      1,432       $     21,355     $  1,647,747
                                                                                  ============       ============     ============
Noncash financing activities:
   Issuance of convertible subordinated
     debenture for loan payable to officer                                        $       --         $       --       $  2,725,000
                                                                                  ============       ============     ============
   Issuance of common stock upon the conversion of
     convertible subordinated debentures, related party                           $       --         $       --       $  2,945,000
                                                                                  ============       ============     ============
   Conversion of short-term borrowings to common stock                            $       --         $       --       $    226,000
                                                                                  ============       ============     ============
   Conversion of accrued interest, payroll and expenses by
     related parties to stock options                                             $       --         $       --       $  3,194,969
                                                                                  ============       ============     ============
   Repurchase of stock options from related party                                 $       --         $       --       $   (198,417)
                                                                                  ============       ============     ============
   Conversion of accrued interest to stock options                                $       --         $       --       $    142,441
                                                                                  ============       ============     ============
   Conversion of accounts payable to common stock                                 $     16,631       $    100,000     $    193,896
                                                                                  ============       ============     ============
   Conversion of notes payable, bank and accrued interest to
     long-term debt                                                               $       --         $       --       $  1,699,072
                                                                                  ============       ============     ============
   Conversion of loans and interest payable, related party
     and accrued payroll and expenses, related parties to long-
     term accrued payroll and other, related party                                $       --         $       --       $  1,863,514
                                                                                  ============       ============     ============
   Issuance of common stock upon the conversion of
      convertible subordinated debentures, other                                  $       --         $       --       $    127,000
                                                                                  ============       ============     ============
   Issuance of common stock for services rendered                                 $      2,460       $       --       $      2,460
                                                                                  ============       ============     ============
</TABLE>


See accompanying notes to financial statements.


                                      - 5 -
<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)


                          NOTES TO FINANCIAL STATEMENTS

                                   (Unaudited)


1.   ORGANIZATION, BASIS OF PRESENTATION, AND LIQUIDITY

     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 April 30,
1999 and the results of  operations  for the three and nine month  periods ended
April 30, 1999 and 1998 and the period from August 24, 1981 (date of  inception)
to April 30, 1999. The results of operations for the nine months ended April 30,
1999 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 $2,327,000 and $4,832,000,  recorded for the
nine  months  ended  April  30,  1999 and  1998,  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.  These factors raise  substantial doubt about its
ability to continue as a going concern.  The financial statements do not include
any adjustments  relating to the  recoverability  and classification of reported
asset amounts or the amounts or classification of liabilities which might result
from the outcome of this uncertainty.

2.   EARNINGS PER COMMON SHARE

     Statement of Financial  Accounting Standards No. 128, "Earnings Per Share",
became effective for financial  statements for periods ending after December 15,
1997,  and  requires  presentation  of two  calculations  of earnings per common
share.  "Basic"  earnings per common share equals net income divided by weighted
average  common shares  outstanding  during the period.  "Diluted"  earnings per
common share equals net income divided by the sum of weighted


                                      - 6 -
<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)


                    NOTES TO FINANCIAL STATEMENTS, continued

                                   (Unaudited)


2.   EARNINGS PER COMMON SHARE, continued

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 5,927,875
and 5,921,357 at April 30, 1999 and 1998, respectively.

3.   CAPITAL STOCK

     In August  1998,  the Company  issued  5,000  three-year  stock  options as
payment for  services  rendered.  The  options  vested  immediately  and have an
exercise  price  of  $1.43  per  share.   The  Company   recorded   general  and
administrative  expense  of $4,200  which was based  upon the fair value of such
options on the date of issuance.

     In September  1998,  the Company  issued  13,717 shares of common stock for
payment of legal  services.  The fair value of the common stock in the amount of
$10,425 was charged to operations.

     On October 1, 1998 (the  "Effective  Date"),  the Company  entered  into an
agreement  with a  consultant  (the  "Agreement"),  resulting in the issuance of
200,000  five-year  stock  options with an exercise  price of $1.00 per share as
payment for services to be  rendered.  These  options  will vest as follows:  an
aggregate  of 20,000  shall vest on October 1, 1999 or upon signing of the first
corporate partnering deal, whichever shall occur first; an aggregate of 2,500 of
such  options  shall vest on the last day of each  month  over the first  twelve
months after the Effective Date of the Agreement;  the remaining 150,000 options
will  vest on the  third  anniversary  of the  Effective  Date of the  Agreement
provided  that the  consultant  is still  providing  consulting  services to the
Company under the Agreement at that time. The vesting of such remaining  options
shall be accelerated as follows:  50,000 of such options or the remainder of the
unvested  options,  whichever  is less,  shall  vest  upon the  signing  of each
corporate  partnering  deal in which the  total  consideration  provided  in the
Agreement is less than  $5,000,000;  100,000 of such options or the remainder of
the unvested  options,  whichever  is less,  shall vest upon the signing of each
corporate  partnering  deal in which the  total  consideration  provided  in the
Agreement is greater than $5,000,000 but less than


                                     - 7 -
<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)


                    NOTES TO FINANCIAL STATEMENTS, continued

                                   (Unaudited)


3.   CAPITAL STOCK, continued

$10,000,000;  200,000 of such options or the remainder of the unvested  options,
whichever is less, shall vest upon the signing of each corporate partnering deal
in which the total  consideration  provided  in the  Agreement  is greater  than
$10,000,000. Should the Company sell a controlling interest in its assets and/or
equity at any time after the signature of the Agreement,  all options will vest.
The Company has  recorded  approximately  $29,500 of general and  administrative
expense based upon the fair value of the vested options  through April 30, 1999.
Additional  expense will be recorded in subsequent  periods  through  October 1,
2001 as the remainder of the options vest.

     In January  1999,  the Company  issued  26,984  shares of common  stock for
payment of legal  services.  The fair value of the common stock in the amount of
$6,206 was charged to operations.

     In February  1999,  the Company  issued  6,000  shares of common  stock for
payment of services  rendered.  The fair value of the common stock in the amount
of $2,460 was charged to operations.

     The Company's  common stock, par value $.001 per share (the "Common Stock")
was delisted from The Nasdaq SmallCap Market  ("Nasdaq")  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, the
Company's  Common  Stock was traded on the OTC  Bulletin  Board under the symbol
"ACEL".  Delisting  of the  Company's  Common  Stock from  Nasdaq,  could have a
material adverse effect on the Company including its ability to raise additional
capital, stockholder liquidity and price of the Company's Common Stock.


                                      - 8 -
<PAGE>


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

     Information  contained herein contains  "forward-looking  statements" which
can be identified by the use of forward-looking  terminology such as "believes",
"expects",  "may", "will", "should", or "anticipates" or the negative thereof or
other  variations  thereon  or  comparable  terminology,  or by  discussions  of
strategy.  No  assurance  can be given  that the future  results  covered by the
forward-looking  statements  will be achieved.  The matters set forth in Exhibit
99.1 hereto constitute cautionary statements  identifying important factors with
respect  to  such  forward-looking  statements,   including  certain  risks  and
uncertainties,  that could  cause  actual  results to vary  materially  from the
future results indicated in such forward-looking statements. Other factors could
also cause actual results to vary materially  from the future results  indicated
in such forward- looking statements.

Results of Operations

Three and nine month periods ended April 30, 1999 and 1998

     Revenues.  The  Company is a  development  stage  company as defined in the
Financial   Accounting  Standards  Board's  Statement  of  Financial  Accounting
Standards  No. 7. As such,  the  Company is  devoting  substantially  all of its
present efforts to establishing a new business and developing new drug products.
The Company's planned principal  operations of marketing and/or licensing of new
drugs have not  commenced  and,  accordingly,  no  significant  revenue has been
derived  therefrom.  The Company  focuses most of its  productive  and financial
resources  on the  development  of ONCONASE and as such has not had any sales in
the nine months ended April 30, 1999 and 1998.  Investment  income for the three
months ended April 30, 1999 was $32,000  compared to $82,000 for the same period
last year,  a decrease of $50,000.  Investment  income for the nine months ended
April 30, 1999 was $141,000  compared to $226,000 for the same period last year,
a decrease of $85,000.  These  decreases  were due to lower balances of cash and
cash equivalents.

     Research and  Development.  Research and development  expense for the three
months ended April 30, 1999 was  $544,000  compared to  $1,301,000  for the same
period last year, a decrease of $757,000 or 58%. This decrease was primarily due
to a 64%  decrease  in costs in  support  of  on-going  clinical  trials,  a 97%
decrease  in costs  associated  with the  manufacture  of  clinical  supplies of
ONCONASE, and a 95% decrease in expenses for preparation of an NDA for ONCONASE.
These  decreases  were  primarily  due to the closing of the Phase III  clinical
trials for pancreatic cancer.

     Research and  development  expense for the nine months ended April 30, 1999
was $1,804,000  compared to $3,908,000 for the same period last year, a decrease
of $2,104,000 or 54%. This decrease was primarily due to a 95% decrease in costs
related  to the  purchase  of raw  materials  and the  manufacture  of  clinical
supplies of ONCONASE, and a 52% decrease in costs


                                      - 9 -
<PAGE>


in support of  on-going  clinical  trials and a 79%  decrease  in  expenses  for
preparation  of an NDA for  ONCONASE,  both  primarily due to the closing of the
Phase III clinical trials for pancreatic cancer.

     General  and  Administrative.  General and  administrative  expense for the
three months ended April 30, 1999 was $200,000 compared to $413,000 for the same
period last year, a decrease of $213,000 or 52%. This decrease was primarily due
to a 97% decrease in legal fees, a 27%  reduction  in  administrative  personnel
costs and a 77%  decrease  in  public  relations  expenses,  offset by a $15,000
increase in consulting fees.

     General and administrative expense for the nine months ended April 30, 1999
was $662,000 compared to $1,129,000 for the same period last year, a decrease of
$467,000 or 41%.  This  decrease  was  primarily  due to a 95% decrease in legal
fees, a 30% reduction in  administrative  personnel  costs and a 49% decrease in
public relations expenses, offset by a $58,000 increase in consulting fees.

     Interest.  Interest  expense for the three  months ended April 30, 1999 was
$700 compared to $500 for the same period last year, an increase of $200 or 40%.
Interest expense for the nine months ended April 30, 1999 was $1,000 compared to
$21,000  for the same  period  last  year,  a decrease  of  $20,000 or 95%.  The
decrease was primarily due to the payment of the entire  principal amount of the
Company's $1.4 million term loan during the fiscal year ended July 31, 1998.

     Net Loss.  The Company has incurred  net losses  during each year since its
inception.  The net loss for the three  months ended April 30, 1999 was $712,000
as compared to $1,632,000  for the same period last year, a decrease of $920,000
or 56%. The net loss for the nine months ended April 30, 1999 was  $2,327,000 as
compared to  $4,832,000  for the same period last year, a decrease of $2,505,000
or 52%. The cumulative loss from the date of inception, August 24, 1981 to April
30, 1999, amounted to $54,125,000. Such losses are attributable to the fact that
the Company is still in the  development  stage and  accordingly has not derived
sufficient revenues from operations to offset the development stage expenses.

Year 2000

     The Company is in the process of reviewing its business systems,  including
its computer systems and computer controlled equipment, and is in the process of
querying  its  suppliers  and vendors as to their  progress in  identifying  and
addressing  problems that their systems may face in correctly  interpreting  and
processing date information as the Year 2000 approaches and is reached. Based on
this review, the Company has implemented a plan to achieve Year 2000 compliance.
While there may be other  areas that may affect the  Company's  operations  upon
commercialization  of the Company's products under development,  the Company has
identified  three  major areas where Year 2000  compliance  is critical  for the
normal functioning of the Company's  business:  Business and Accounting Computer
Systems, Clinical Data Management Systems and Product Manufacturing Systems.


                                     - 10 -
<PAGE>


Business and Accounting Computer Systems

     The  Company  utilizes  standard,  widely-available  software  packages  to
perform its word processing,  spreadsheet and accounting duties.  Inquiries have
revealed  that  software  upgrades  are or will be available to ensure Year 2000
compliance.  The Company expects to upgrade its Business and Accounting Computer
Systems by the third  calendar  quarter of 1999.  While there is no assurance at
this time that such upgrades will be Year 2000  compliant,  the Company does not
believe  that  non-compliance  would  have a  material  effect on the  Company's
business.  Since the risks of non-compliance  are minimal,  the Company does not
plan to create a contingency plan for these systems at this time.

Clinical Data Management Systems

     The Company utilizes the services of an outside vendor to handle all of its
data  management  needs with regard to collection  and reporting of its clinical
trial data. Two major software  systems are utilized to process the data, one of
which has been  validated and is Year 2000  compliant.  The other system,  which
handles  collection of the Company's ongoing clinical trial data, is expected to
be Year 2000 compliant with some minor  modifications.  The vendor believes that
these  modifications  deal only with display and not storage of the dates. While
it appears that the computer systems utilized to process the Company's  clinical
trial  data is or  will be Year  2000  compliant,  non-compliance  could  have a
material adverse impact on the Company's ability to process the data in a timely
manner  for  submission  to the FDA,  if  necessary.  Since  the  likelihood  of
non-compliance  is minimal,  the Company  does not plan to create a  contingency
plan for these systems at this time.

Product Manufacturing Systems

     The Company  utilizes  the  services of outside  suppliers  to  manufacture
ONCONASE and perform many of the  FDA-required  related testing of such product.
The  Company  has  received  preliminary  responses  from such  suppliers.  Each
supplier  reported  that they are in the process of  completing  their Year 2000
programs  and  expect  to be ready by the year  2000.  However,  there can be no
assurance that these suppliers' remediation efforts will effectively address all
of their Year 2000 problems.  Due to regulatory  restrictions,  the Company does
not believe it would be feasible to locate and retain the  services of alternate
suppliers  at this time.  However,  if during the first half of 2000,  it became
apparent  that a  supplier  would not be able to  support  commercialization  of
ONCONASE,  if approved by the FDA,  the Company will then undergo the expense of
transferring  its  manufacturing  processes  to alternate  suppliers.  While the
Company  believes that alternate  suppliers are available for the manufacture of
ONCONASE, there can be no assurance that the Company can complete the transition
to a new supplier in a timely manner.


                                     - 11 -
<PAGE>


Year 2000 Summary

     The  Company has  determined  that Year 2000  compliance  should not have a
material  adverse  effect on the  Company,  including  the  Company's  financial
condition, results of operations or cash flow. The Company estimates the cost of
its Year 2000 efforts to be  approximately  $50,000.  The total cost estimate is
based on management's current assessment and is subject to change.

     The Company may encounter  problems with vendors and suppliers  which could
adversely  affect the Company's  financial  condition,  results of operations or
cash flow. The Company cannot  accurately  predict the occurrence and or outcome
of any  such  problems,  nor can the  cost of such  problems  be  estimated.  In
addition,  there  can be no  assurance  that the  failure  to  ensure  Year 2000
compliance by a third party would not have a material effect on the Company.

Liquidity and Capital Resources

     Alfacell has financed its  operations  since  inception  primarily  through
equity and debt financing,  research product sales and interest  income.  During
the nine months ended April 30, 1999, the Company had a net decrease in cash and
cash equivalents of $3,080,000,  which resulted  primarily from net cash used in
operating  activities of  $3,072,000.  Total cash resources as of April 30, 1999
were $2,020,000 compared to $5,099,000 at July 31, 1998, a decrease of 60%.

     The  Company's  current  liabilities  as of April 30,  1999  were  $968,000
compared to  $1,818,000  at July 31,  1998,  a decrease of $850,000 or 47%.  The
decrease was primarily due to decreases in costs associated with the purchase of
raw materials and the manufacture of ONCONASE, a decrease in costs in support of
on-going clinical trials, primarily due to the closing of the Phase III clinical
trials for pancreatic cancer, and decreased legal fees.

     The  Company  has  recurring  losses and limited  liquid  resources.  These
factors  raise  substantial  doubt  about its  ability  to  continue  as a going
concern. The financial statements do not include any adjustments relating to the
recoverability  and  classification  of reported asset amounts or the amounts or
classification  of  liabilities  which  might  result  from the  outcome of this
uncertainty.

     Until the Company's operations generate significant revenues, cash reserves
will  continue  to fund  operations.  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 exercised and services
rendered, debt financing and financing provided by the Company's Chief Executive
Officer.  Based upon reduced  spending  levels as described  below,  the Company
believes  that its cash and cash  equivalents  as of April 30, 1999 will only be
sufficient to meet its anticipated cash needs through October 31, 1999. However,
there can be no assurance  that the Company will be able to maintain the current
reduced spending levels or that future cash requirements will not increase.


                                     - 12 -
<PAGE>


     The Company has taken steps, and is currently taking  additional  steps, to
significantly  reduce the amount of cash used to fund ongoing operations.  These
steps include  postponement of certain  clinical and regulatory costs associated
with  preparation  of an NDA for  ONCONASE,  closing  its Phase III  program for
advanced pancreatic cancer and postponement of company-sponsored clinical trials
for ONCONASE in indications other than unresectable malignant mesothelioma.  The
Company's  continued  operations will depend on its ability to raise  additional
funds through various sources,  including collaborative  agreements or strategic
alliances.  However,  there can be no assurance that such additional  funds will
become  available.  The  Company  does not  anticipate  it will be able to raise
additional  capital in the  equity  markets  in the near  future  because of the
termination  of its Phase III clinical  trials for pancreatic  cancer.  Over the
longer term, the ability of the Company to raise additional  capital through the
sale of its  securities  will  primarily  depend on the outcome of the Phase III
clinical trial for ONCONASE for treating  unresectable  malignant  mesothelioma.
However,  the ability to raise funding at that time may be dependent  upon other
factors including without  limitation,  market  conditions,  and there can be no
assurance that such funds will be available. Preliminary survival results of the
Phase III trial are expected in the third calendar  quarter of 1999. The Company
is  currently  exploring  various  strategic  alternatives  for its business and
research and development operations.

     New  Jersey  has  enacted   legislation   permitting   certain  New  Jersey
corporations  to sell tax losses  and  research  and  development  credits.  The
Company has been advised that the state is  developing  procedures  to implement
the program,  including potential changes to the legislation in order to clarify
the intent of the legislation.  The Company has state tax loss carryforwards and
research and development tax credits available for sale however, there can be no
assurance  that the program will be  implemented  in a timely  manner,  that the
Company will qualify for  inclusion in the program,  or that the Company will be
able to find a buyer for its tax losses and research and development credits.

     The  Company's  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, the Company's  Common Stock was traded on the OTC Bulletin Board
under the symbol  "ACEL".  Delisting of the Company's  Common Stock from Nasdaq,
could have a material  adverse  effect on the Company  including  its ability to
raise  additional  capital,  stockholder  liquidity  and price of the  Company's
Common Stock.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

          Not applicable.

PART II.  OTHER INFORMATION

Item 2.   (c) Recent Sales of Unregistered Securities


                                     - 13 -
<PAGE>


     In September  1998, the Company  converted a $10,425  account  payable into
13,717  shares of Common Stock in a private  transaction  effected in accordance
with the exemption from the  registration  requirements of the Securities Act of
1933,  as amended  (the  "Securities  Act")  contained  in  Section  4(2) of the
Securities Act.

     In January 1999, the Company converted a $6,206 account payable into 26,984
shares of Common Stock in a private transaction  effected in accordance with the
exemption from the registration  requirements of the Securities Act contained in
Section 4(2) of the Securities Act.

     In February  1999,  the Company  issued  6,000  shares of Common  Stock for
services  rendered  in a private  transaction  effected in  accordance  with the
exemption from the registration  requirements of the Securities Act contained in
Section 4(2) of the Securities Act.

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
      No.                      Item Title                                             by 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                                                        ****

</TABLE>


                                     - 14 -
<PAGE>

<TABLE>
<CAPTION>
                                                                                     Exhibit No. or
    Exhibit                                                                           Incorporation
      No.                      Item Title                                             by Reference
    -------                    ----------                                            --------------
     <S>      <C>                                                                        <C>
     10.8     Accrued Salary Conversion Agreement dated March 30, 1994
              with Stanislaw Mikulski                                                     ****
     10.9     Debt Conversion Agreement dated March 30, 1994 with John
              Schierloh                                                                   ****
     10.10    Option Agreement dated March 30, 1994 with Kuslima Shogen                   ****
     10.11    Option Agreement dated March 30, 1994 with Kuslima Shogen                   ****
     10.12    Amendment No. 1 dated June 20, 1994 to Option Agreement
              dated March 30, 1994 with Kuslima Shogen                                    ****
     10.13    Form of Amendment No. 1 dated June 20, 1994 to Option
              Agreement dated March 30, 1994 with Kuslima Shogen                         *****
     10.14    Form of Amendment No. 1 dated June 20, 1994 to Option
              Agreement  dated  March 30,  1994 with  Stanislaw  Mikulski                *****
     10.15    Form of Stock and Warrant Purchase Agreement and Warrant
              Agreement used in Private Placement completed on September 13, 1994          +
     10.16    Form of Subscription Agreements and Warrant Agreement used
              in Private Placements closed in October 1994 and September 1995              #
     10.17    1997 Stock Option Plan                                                      ###
     10.18    Separation Agreement with Michael C. Lowe dated as of
              October 9, 1997                                                             ++
     10.19    Form of Subscription Agreement and Warrant Agreement used
              in Private Placement completed on February 20, 1998                         +++
     10.20    Form of Warrant Agreement issued to the Placement Agent in
              connection with the Private Placement completed on February 20, 1998        +++
     10.21    Placement Agent Agreement dated December 15, 1997                           +++
     27.1     Financial Data Schedule                                                    ####
     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.


                                     - 15 -
<PAGE>



***       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-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.

####      Filed herewith.

(b)       Reports on Form 8-K.

     On  April  29,  1999,  the  Company  filed a  report  on Form  8-K that the
Company's 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.  Effective April 28, 1999,
the Company's Common Stock was listed on the OTC Bulletin Board under the symbol
"ACEL".  The OTC Bulletin Board is a regulated  quotation  service that displays
real-time quotes and last-sale price and volume information in  over-the-counter
("OTC") equity  securities.  An OTC equity security generally is any equity that
is not listed or traded on The Nasdaq Stock Market or other national  securities
exchange.  Information about the OTC Bulletin Board is available on the internet
at http://www.otcbb.com.


                                     - 16 -
<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)


June 14, 1999                                 /s/ GAIL E. FRASER
                                              --------------------------
                                              Gail E. Fraser
                                              Vice President, Finance and
                                              Chief Financial Officer (Principal
                                              Accounting Officer and Principal
                                              Financial Officer)


                                     - 17 -