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

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

                                    FORM 10-Q

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


       October  31, 1998                                          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  December 7, 1998:
17,253,610



<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

                                 BALANCE SHEETS
                       October 31, 1998 and July 31, 1998

<TABLE>
<CAPTION>
                                                                                    October 31,
                                                                                        1998          July 31,
                                     ASSETS                                         (Unaudited)         1998
                                                                                    ------------    ------------
<S>                                                                                 <C>             <C>         
Current assets:
        Cash and cash equivalents                                                   $  3,810,324    $  5,099,453
        Prepaid expenses                                                                 173,295         117,187
                                                                                    ------------    ------------
               Total current assets                                                    3,983,619       5,216,640
                                                                                    ------------    ------------

Property and equipment, net of accumulated depreciation and amortization
   of $868,920 at October 31, 1998 and $843,599 at July 31, 1998                         274,717         300,038
                                                                                    ------------    ------------

               Total assets                                                         $  4,258,336    $  5,516,678
                                                                                    ============    ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
        Current portion of long-term debt                                           $      9,000    $      9,175
        Accounts payable                                                                 441,374         716,040
        Accrued expenses                                                                 787,608       1,092,898
                                                                                    ------------    ------------
               Total current liabilities                                               1,237,982       1,818,113
                                                                                    ------------    ------------

Long-term debt, less current portion                                                       4,691           6,727
                                                                                    ------------    ------------
               Total liabilities                                                       1,242,673       1,824,840
                                                                                    ------------    ------------


Commitments and contingencies Stockholders' equity:
        Preferred stock, $.001 par value 
               Authorized and unissued, 1,000,000 shares at October 31, 1998
                  and July 31, 1998                                                         --              --
        Common stock $.001 par value 
               Authorized 40,000,000 shares at October 31, 1998 and July 31,
               1998; Issued and outstanding 17,253,610 shares at October 31, 1998
                  and 17,239,893 shares at July 31, 1998                                  17,254          17,240
        Capital in excess of par value                                                55,531,802      55,472,243
        Deficit accumulated during development stage                                 (52,533,393)    (51,797,645)
                                                                                    ------------    ------------
               Total stockholders' equity                                              3,015,663       3,691,838
                                                                                    ------------    ------------

               Total liabilities and stockholders' equity                           $  4,258,336    $  5,516,678
                                                                                    ============    ============
</TABLE>

See accompanying notes to financial statements.


                                      - 2 -

<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS

                  Three months ended October 31, 1998 and 1997,
                       and the Period from August 24, 1981
                     (Date of Inception) to October 31, 1998

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                August 24, 1981
                                                       Three Months Ended     (Date of Inception)
                                                           October 31,                to
                                                      1998            1997      October 31, 1998
                                                  ------------    ------------ -----------------
<S>                                               <C>               <C>            <C>         
REVENUE:
        Sales                                     $       --              --           553,489
        Investment income                               61,398          85,026       1,201,046
        Other income                                      --              --            60,103
                                                  ------------    ------------    ------------
        TOTAL REVENUE                                   61,398          85,026       1,814,638
                                                  ------------    ------------    ------------

COSTS AND EXPENSES:
        Cost of sales                                     --              --           336,495
        Research and development                       595,204       1,196,204      32,281,888
        General and administrative                     201,568         326,892      18,795,942
        Interest:
               Related parties                            --              --         1,033,960
               Others                                      374          20,348       1,899,746
                                                  ------------    ------------    ------------
       TOTAL COSTS AND EXPENSES                        797,146       1,543,444      54,348,031
                                                  ------------    ------------    ------------

       NET LOSS                                   $   (735,748)     (1,458,418)    (52,533,393)
                                                  ============    ============    ============

        Loss per basic and diluted common share   $       (.04)           (.10)          (7.09)
                                                  ============    ============    ============

Weighted average number of shares outstanding       17,252,119      14,847,793       7,402,181
                                                  ============    ============    ============
</TABLE>



See accompanying notes to financial statements.


                                      - 3 -

<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS

                  Three months ended October 31, 1998 and 1997,
                       and the Period from August 24, 1981
                     (Date of Inception) to October 31, 1998

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                             August 24, 1981
                                                      Three Months Ended    (Date of Inception)
                                                          October 31,               to
                                                     1998           1997     October 31, 1998
                                                 -----------    -----------  ----------------
<S>                                              <C>             <C>           <C>         
Cash flows from operating activities:
  Net loss                                       $  (735,748)    (1,458,418)   (52,533,393)
  Adjustments to reconcile net loss to
      net cash used in operating activities:
    Gain on sale of marketable securities               --             --          (25,963)
    Depreciation and amortization                     25,321         24,069      1,248,185
    Loss on disposal of property and equipment          --             --           18,926
    Noncash operating expenses                        49,769         52,473      5,214,188
    Amortization of deferred compensation               --             --       11,442,000
    Amortization of organization costs                  --             --            4,590
Changes in assets and liabilities:
    Increase in prepaid expenses                     (56,108)       (28,448)      (173,295)
    Decrease in other assets                            --             --           36,184
    Increase in interest payable-related party          --             --          744,539
    (Decrease) increase in accounts payable         (264,241)       106,212        629,066
    Increase in accrued payroll and
       expenses, related parties                        --             --        2,348,145
    (Decrease) increase in accrued expenses         (305,290)       102,041      1,329,119
                                                 -----------    -----------    -----------
    Net cash used in operating activities         (1,286,297)    (1,202,071)   (29,717,710)
                                                 -----------    -----------    -----------

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                  --          (38,110)    (1,369,261)
    Patent costs                                        --             --          (97,841)
                                                 -----------    -----------    -----------

        Net cash used in investing activities           --          (38,110)    (1,441,139)
                                                 -----------    -----------    -----------
</TABLE>


See accompanying notes to financial statements.                      (continued)


                                      - 4 -

<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)

                       STATEMENTS OF CASH FLOWS, Continued

                  Three months ended October 31, 1998 and 1997,
                       and the Period from August 24, 1981
                     (Date of Inception) to October 31, 1998

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                                 August 24, 1981
                                                                                    Three Months Ended         (Date of Inception)
                                                                                        October 31,                     to
                                                                                 1998                1997        October 31, 1998
                                                                             -------------        ----------   ------------------
<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                                         (2,211)       (1,375,096)        (2,911,764)
  Proceeds from common stock to be issued                                             --                --              433,358
  Proceeds from issuance of common stock, net                                         (621)             --           26,374,154
  Proceeds from exercise of stock options and warrants, net                           --                --            5,460,673
  Proceeds from issuance of convertible debentures                                    --                --              347,000
                                                                             -------------        ----------        -----------
        Net cash (used in) provided by financing activities                         (2,832)       (1,375,096)        34,969,172
                                                                             -------------        ----------        -----------
        Net (decrease) increase in cash and cash equivalents                    (1,289,129)       (2,615,277)         3,810,324
Cash and cash equivalents at beginning of period                                 5,099,453         7,542,289               --
                                                                             -------------        ----------        -----------
Cash and cash equivalents at end of period                                   $   3,810,324         4,927,012          3,810,324
                                                                             =============        ==========        ===========
Supplemental disclosure of cash flow information -
   interest paid                                                             $         374            20,348          1,646,729
                                                                             =============        ==========        ===========
Noncash financing activities:
   Issuance of convertible subordinated
     debenture for loan payable to officer                                   $        --                --            2,725,000
                                                                             =============        ==========        ===========
   Issuance of common stock upon the conversion of
     convertible subordinated debentures, related party                      $        --                --            2,945,000
                                                                             =============        ==========        ===========
   Conversion of short-term borrowings to common stock                       $        --                --              226,000
                                                                             =============        ==========        ===========
   Conversion of accrued interest, payroll and expenses by
     related parties to stock options                                        $        --                --            3,194,969
                                                                             =============        ==========        ===========
   Repurchase of stock options from related party                            $        --                --             (198,417)
                                                                             =============        ==========        ===========
   Conversion of accrued interest to stock options                           $        --                --              142,441
                                                                             =============        ==========        ===========
   Conversion of accounts payable to common stock                            $      10,425              --              187,690
                                                                             =============        ==========        ===========
   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
                                                                             =============        ==========        ===========
</TABLE>

See accompanying notes to financial statements.


                                     - 5 -
<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

                                   (Unaudited)


1.   ORGANIZATION AND BASIS OF PRESENTATION

     In  the  opinion  of  management,   the  accompanying  unaudited  financial
statements  contain all adjustments  (consisting of normal  recurring  accruals)
necessary to present fairly the Company's  financial  position as of October 31,
1998 and the results of operations for the three month periods ended October 31,
1998 and 1997 and the period from August 24, 1981 (date of inception) to October
31, 1998.  The results of operations for the three months ended October 31, 1998
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 $736,000 and  $1,458,000,  recorded for the
three  months  ended  October 31, 1998 and 1997,  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


                                     - 6 -
<PAGE>


                              ALFACELL CORPORATION
                          (A Development Stage Company)


                    NOTES TO FINANCIAL STATEMENTS, continued

                                   (Unaudited)


2.   EARNINGS PER COMMON SHARE (continued)

period. "Diluted" earnings per common share equals net income divided by the sum
of weighted  average  common  shares  outstanding  during the period plus common
stock  equivalents.  The  Company's  Basic and Diluted per share amounts are the
same  since  the  assumed  exercise  of  stock  options  and  warrants  are  all
anti-dilutive.  The amount of options and warrants excluded from the calculation
was  5,970,944  and  4,690,464 at October 31, 1998 and 1997,  respectively.  The
Company restated all prior period amounts to reflect these calculations.

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  $8,400 of general and  administrative
expense  based upon the fair value of the vested  options  through  October  31,
1998.  Additional expense will be recorded in subsequent periods through October
1, 2001 as the remainder of the options vest.




                                     - 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 to the Company's  Annual Report on Form 10-K for the fiscal year ended July
31, 1998,  which is  incorporated  herein by  reference,  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 month periods ended October 31, 1998 and 1997

     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 three  months  ended  October 31, 1998 and 1997.  Investment  income for the
three months ended October 31, 1998 was $61,000 compared to $85,000 for the same
period last year, a decrease of $24,000. This decrease was due to lower balances
of cash and cash equivalents.

     Research and  Development.  Research and development  expense for the three
months ended October 31, 1998 was $595,000  compared to $1,196,000  for the same
period last year, a decrease of $601,000 or 50%. This decrease was primarily due
to a decrease in costs  associated  with the purchase of raw  materials  and the
closing of the Phase III clinical trials for pancreatic cancer.

     General  and  Administrative.  General and  administrative  expense for the
three  months ended  October 31, 1998 was $202,000  compared to $327,000 for the
same  period  last year,  a decrease  of  $125,000  or 38%.  This  decrease  was
primarily due to reduction of  administrative  personnel costs and a decrease in
legal fees and public relations expenses.



                                     - 9 -
<PAGE>

     Interest.  Interest expense for the three months ended October 31, 1998 was
$400 compared to $20,300 for the same period last year, a decrease of $19,900 or
98%. This  decrease was  primarily due to the repayment of the entire  principal
amount of the Company's long-term loan in October 1997.

     Net Loss.  The Company has incurred  net losses  during each year since its
inception. The net loss for the three months ended October 31, 1998 was $736,000
as compared to $1,458,000  for the same period last year.  The  cumulative  loss
from the date of  inception,  August 24, 1981 to October 31,  1998,  amounted to
$52,533,000.  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.

Business and Accounting Computer Systems 

     The  Company  utilizes  standard,  widely-available  software  packages  to
perform its word  processing,  spreadsheet  and accounting  duties.  Preliminary
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  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


                                     - 10 -
<PAGE>

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  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 sent  written  requests  to such  suppliers  in an  effort  to
determine the status of Year 2000 compliance. Responses are expected through the
first quarter of 1999. The Company will develop contingency plans, if necessary,
during  the  first  half of 1999 in  response  to  assessments  of the Year 2000
readiness of these suppliers.

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 three months ended October 31, 1998,  the Company had a net decrease in cash
and cash equivalents of $1,289,000,  which resulted primarily from net cash used
in operating  activities of  $1,286,000.  Total cash resources as of October 31,
1998 were $3,810,000 compared to $5,099,000 at July 31, 1998.

     The Company's  current  liabilities as of October 31, 1998 were  $1,238,000
compared to  $1,818,000  at July 31, 1998, a decrease of $580,000.  The decrease
was primarily due to decreased legal costs,  decreases in costs  associated with
the purchase of raw materials and the manufacture of ONCONASE and the closing of
the Phase III clinical trials for pancreatic cancer.



                                     - 11 -
<PAGE>

     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  October  31,  1998 will be
sufficient  to meet its  anticipated  cash needs  through the fiscal year ending
July 31, 1999. However,  there can be no assurance that the Company will be able
to successfully implement the reduced spending measures.

     The Company is currently taking 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 planned  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  be
dependent  on the  outcome  of the Phase  III  clinical  trial for  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
results of the Phase III trial are  expected in the second  calendar  quarter of
1999. The Company is currently exploring various strategic  alternatives for its
business and research and development operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Not applicable.

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K.

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



                                     - 12 -
<PAGE>

<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                                                                 ****
      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
               Warran tAgreement 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                                                              ###
</TABLE>


                                     - 13 -
<PAGE>

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

     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.

***     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.


                                     - 14 -
<PAGE>


##      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, 1998 and  incorporated  herein by  reference
        thereto.

#####   Filed herewith.

(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)


December 14, 1998                             /s/ GAIL E. FRASER       
                                             --------------------------
                                              Gail E. Fraser
                                              Vice President, Finance and
                                              Chief Financial Officer (Principal
                                              Accounting Officer and Principal
                                              Financial Officer)








                                     - 16 -