<PAGE>
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934

FOR THE PERIOD ENDED AUGUST 31, 2001

                                       OR

[ ] TRANSITION REPORT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
    1934

FOR THE TRANSITION PERIOD FROM                 TO
                               --------------     ---------------
                         COMMISSION FILE NUMBER 0-24050

                          NORTHFIELD LABORATORIES INC.
             (Exact name of registrant as specified in its charter)

             DELAWARE                                          36-3378733
   (State or other jurisdiction                             (I.R.S. Employer
 of incorporation or organization)                        Identification Number)

1560 SHERMAN AVENUE, SUITE 1000, EVANSTON, ILLINOIS              60201-4800
     (Address of principal executive offices)                    (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:      (847) 864-3500

FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT: NOT APPLICABLE

     INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS 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
                         ---                           ---

                APPLICABLE ONLY TO ISSUER INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

     INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND
REPORTS REQUIRED TO BE FILED BY SECTION 12, 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN
CONFIRMED BY A COURT.       YES                  NO
                                 ---                 ---

AS OF AUGUST 31, 2001, REGISTRANT HAD 14,265,875 SHARES OF COMMON STOCK
                                  OUTSTANDING

================================================================================
<PAGE>
                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT


The Board of Directors
Northfield Laboratories Inc.:


We have reviewed the balance sheet of Northfield Laboratories Inc. (a company in
the development stage) as of August 31, 2001, and the related statements of
operations and cash flows for the three-month periods ended August 31, 2001 and
2000 and for the period from June 19, 1985 (inception) through August 31, 2001.
We have also reviewed the statements of shareholders' equity (deficit) for the
three-month period ended August 31, 2001 and for the period from June 19, 1985
(inception) through August 31, 2001. These financial statements are the
responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with accounting principles generally accepted in the United States of
America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the balance sheet of Northfield
Laboratories Inc. as of May 31, 2001, and the related statements of operations,
shareholders' equity (deficit), and cash flows for the year then ended and for
the period from June 19, 1985 (inception) through May 31, 2001 (not presented
herein); and in our report dated July 2, 2001, we expressed an unqualified
opinion on those financial statements. In our opinion, the information set forth
in the accompanying balance sheet as of May 31, 2001 and in the accompanying
statement of shareholders' equity (deficit) is fairly stated, in all material
respects, in relation to the statement from which it has been derived.


/s/ KPMG LLP

October 1, 2001
Chicago, Illinois
<PAGE>
                          NORTHFIELD LABORATORIES INC.
                      (a company in the development stage)

                                 Balance Sheets

                        August 31, 2001 and May 31, 2001


<TABLE>
<CAPTION>

                                                                        AUGUST 31,        MAY 31,
                                      ASSETS                               2001            2001
                                                                      -------------    -------------
                                                                       (unaudited)
<S>                                                                   <C>                <C>
Current assets:
  Cash                                                                $   4,491,306        6,435,540
  Marketable securities                                                  21,583,289       22,262,841
  Prepaid expenses                                                          269,817          378,142
  Other current assets                                                      145,896          455,860
                                                                       -------------   --------------

Total current assets                                                     26,490,308       29,532,383

Property, plant, and equipment, net                                       2,694,355        2,847,333
Other assets                                                                122,269          122,522
                                                                       -------------   --------------

                                                                      $  29,306,932       32,502,238
                                                                       =============   ==============

                       LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                    $   1,075,921        1,772,582
  Accrued expenses                                                          462,058          153,905
  Accrued compensation and benefits                                         641,233          261,213
                                                                       -------------   --------------

Total current liabilities                                                 2,179,212        2,187,700

Other liabilities                                                           170,614          166,860
                                                                       -------------   --------------

Total liabilities                                                         2,349,826        2,354,560
                                                                       -------------   --------------

Shareholders' equity:
  Preferred stock, $.01 par value. Authorized 5,000,000 shares;
    none issued and outstanding                                                  --               --
  Common stock, $.01 par value. Authorized 30,000,000 shares;
    issued and outstanding 14,265,875 at August 31, 2001 and
    May 31, 2001                                                            142,659          142,659
  Additional paid-in capital                                            117,503,271      117,503,271
  Deficit accumulated during the development stage                     (90,688,824)     (87,498,252)
                                                                       -------------   --------------

Total shareholders' equity                                               26,957,106       30,147,678
                                                                       -------------   --------------

                                                                      $  29,306,932       32,502,238
                                                                       =============   ==============
</TABLE>

See accompanying notes to financial statements.

<PAGE>

                          NORTHFIELD LABORATORIES INC.
                      (a company in the development stage)

                            Statements of Operations

         Three months ended August 31, 2001 and 2000 and for the period
             from June 19, 1985 (inception) through August 31, 2001

<TABLE>
<CAPTION>
                                                                            Cumulative
                                                 Three months ended            from
                                                     August 31,            June 19, 1985
                                            ---------------------------       through
                                                  2001             2000   August 31, 2001
                                            -------------   ------------  ---------------
                                             (unaudited)     (unaudited)    (unaudited)
<S>                                         <C>             <C>            <C>
Revenues - license income                   $         --              --     3,000,000
                                             ------------   ------------  ---------------
Costs and expenses:
    Research and development                   2,648,674      2,237,582     81,226,079
    General and administrative                   842,960        869,876     35,099,673
                                             ------------   ------------  ---------------

                                               3,491,634      3,107,458    116,325,752
                                             ------------   ------------  ---------------

Other income and expense:
    Interest income                              301,062        589,538     22,720,162
    Interest expense                                  --             --         83,234
                                             ------------   ------------  ---------------

                                                 301,062        589,538     22,636,928
                                             ------------   ------------  ---------------

Net loss                                    $ (3,190,572)    (2,517,920)   (90,688,824)
                                             ============   ============  ===============

Net loss per share - basic and diluted      $      (0.22)         (0.18)         (9.67)
                                             ============   ============  ===============

Shares used in calculation of
    per share data - basic and diluted        14,265,875     14,242,375      9,382,806
                                             ============   ============  ===============
</TABLE>

See accompanying notes to financial statements.
<PAGE>
                          NORTHFIELD LABORATORIES INC.
                      (a company in the development stage)

                  Statements of Shareholders' Equity (Deficit)

              Three months ended August 31, 2001 and for the period
             from June 19, 1985 (inception) through August 31, 2001

<TABLE>
<CAPTION>

                                                                                                          Series A convertible
                                                                             Common stock                    preferred stock
                                                               ----------------------------------------   --------------------
                                                                 Number   Aggregate   Number  Aggregate     Number   Aggregate
                                                               of shares   amount   of shares  amount     of shares   amount
                                                               --------- ---------- --------- ---------   ---------  ---------
<S>                                                             <C>      <C>        <C>       <C>          <C>      <C>
Issuance of common stock on August 27, 1985                        --    $    --    3,500,000 $  35,000         --  $      --
Issuance of Series A convertible preferred stock at
  $4.00 per share on August 27, 1985 (net of costs of
  issuance of $79,150)                                             --         --           --        --    250,000    250,000
Net loss                                                           --         --           --        --         --         --
                                                                  ------   ------   ----------  ---------  --------   --------

Balance at May 31, 1986                                            --         --    3,500,000    35,000    250,000    250,000
Net loss                                                           --         --           --        --         --         --
Deferred compensation relating to grant of stock options           --         --           --        --         --         --
Amortization of deferred compensation                              --         --           --        --         --         --
                                                                  ------   ------   ----------  ---------  --------   --------

Balance at May 31, 1987                                            --         --    3,500,000    35,000    250,000    250,000
Issuance of Series B convertible preferred stock at $35.68
  per share on August 14, 1987 (net of costs of issuance
  of $75,450)                                                      --         --           --        --         --         --
Net loss                                                           --         --           --        --         --         --
Amortization of deferred compensation                              --         --           --        --         --         --
                                                                  ------   ------   ----------  ---------  --------   --------

Balance at May 31, 1988                                            --         --    3,500,000    35,000    250,000    250,000
Issuance of common stock at $24.21 per share on June 7, 1988
  (net of costs of issuance of $246,000)                           --         --      413,020     4,130         --         --
Conversion of Series A convertible preferred stock to common
  stock on June 7, 1988                                            --         --    1,250,000    12,500    (250,000)  (250,000)
Conversion of Series B convertible preferred stock to common
  stock on June 7, 1988                                            --         --    1,003,165    10,032         --         --
Exercise of stock options at $2.00 per share                       --         --       47,115       471         --         --
Issuance of common stock at $28.49 per share on March 6, 1989
  (net of costs of issuance of $21,395)                            --         --      175,525     1,755         --         --
Issuance of common stock at $28.49 per share on March 30, 1989
  (net of costs of issuance of $10,697)                            --         --       87,760       878         --         --
Sale of options at $28.29 per share to purchase common stock
  at $.20 per share on March 30, 1989 (net of costs of
  issuance of $4,162)                                              --         --           --        --         --         --
Net loss                                                           --         --           --        --         --         --
Deferred compensation relating to grant of stock options           --         --           --        --         --         --
Amortization of deferred compensation                              --         --           --        --         --         --
                                                                  ------   ------   ----------  ---------  --------   --------

Balance at May 31, 1989                                            --         --    6,476,585    64,766         --         --
Net loss                                                           --         --           --        --         --         --
Deferred compensation relating to grant of stock options           --         --           --        --         --         --
Amortization of deferred compensation                              --         --           --        --         --         --
                                                                  ------   ------   ----------  ---------  --------   --------

Balance at May 31, 1990                                            --         --    6,476,585    64,766         --         --
Net loss                                                           --         --           --        --         --         --
Amortization of deferred compensation                              --         --           --        --         --         --
                                                                  ------   ------   ----------  ---------  --------   --------

Balance at May 31, 1991                                            --         --    6,476,585    64,766         --         --
Exercise of stock warrants at $5.60 per share                      --         --       90,000       900         --         --
Net loss                                                           --         --           --        --         --         --
Amortization of deferred compensation                              --         --           --        --         --         --
                                                                  ------   ------   ----------  ---------  --------   --------

Balance at May 31, 1992                                            --         --    6,566,585    65,666         --         --
Exercise of stock warrants at $7.14 per share                      --         --       15,000       150         --         --
Issuance of common stock at $15.19 per share on April 19, 1993
  (net of costs of issuance of $20,724)                            --         --      374,370     3,744         --         --
Net loss                                                           --         --           --        --         --         --
Amortization of deferred compensation                              --         --           --        --         --         --
                                                                  ------   ------   ----------  ---------  --------   --------

Balance at May 31, 1993                                            --    $    --    6,955,955 $  69,560         --  $      --
                                                                  ------   ------   ----------  ---------  --------   --------
</TABLE>






























<TABLE>
<CAPTION>

                                                               Series B convertible                Deficit                  Total
                                                                 preferred stock                 accumulated                share-
                                                              ---------------------  Additional  during the   Deferred     holders'
                                                                 Number   Aggregate   paid-in    development   compen-     equity
                                                               of shares   amount     capital       stage      sation     (deficit)
                                                              ----------  ---------  ----------  ----------- ----------- -----------
<S>                                                            <C>        <C>        <C>         <C>          <C>         <C>
Issuance of common stock on August 27, 1985                          --   $     --      (28,000)         --          --       7,000
Issuance of Series A convertible preferred stock at
  $4.00 per share on August 27, 1985 (net of costs of
  issuance of $79,150)                                               --         --      670,850          --          --     920,850
Net loss                                                             --         --           --    (607,688)         --    (607,688)
                                                               ---------  ---------- ----------- -----------  ---------- -----------

Balance at May 31, 1986                                              --         --      642,850    (607,688)         --     320,162
Net loss                                                             --         --           --  (2,429,953)         --  (2,429,953)
Deferred compensation relating to grant of stock options             --         --    2,340,000          --   (2,340,000)        --
Amortization of deferred compensation                                --         --           --          --     720,000     720,000
                                                               ---------  ---------- ----------- -----------  ---------- -----------

Balance at May 31, 1987                                              --         --    2,982,850  (3,037,641)  (1,620,000)(1,389,791)
Issuance of Series B convertible preferred stock at $35.68
  per share on August 14, 1987 (net of costs of issuance
  of $75,450)                                                   200,633    200,633    6,882,502          --          --   7,083,135
Net loss                                                             --         --           --  (3,057,254)         --  (3,057,254)
Amortization of deferred compensation                                --         --           --          --     566,136     566,136
                                                               ---------  ---------- ----------- -----------  ---------- -----------

Balance at May 31, 1988                                         200,633    200,633    9,865,352  (6,094,895)  (1,053,864) 3,202,226
Issuance of common stock at $24.21 per share on June 7, 1988
  (net of costs of issuance of $246,000)                             --         --    9,749,870          --          --   9,754,000
Conversion of Series A convertible preferred stock to common
  stock on June 7, 1988                                              --         --      237,500          --          --          --
Conversion of Series B convertible preferred stock to common
  stock on June 7, 1988                                        (200,633)   (200,633)    190,601          --          --          --
Exercise of stock options at $2.00 per share                         --         --       93,759          --          --      94,230
Issuance of common stock at $28.49 per share on March 6, 1989
  (net of costs of issuance of $21,395)                              --         --    4,976,855          --          --   4,978,610
Issuance of common stock at $28.49 per share on March 30, 1989
  (net of costs of issuance of $10,697)                              --         --    2,488,356          --          --   2,489,234
Sale of options at $28.29 per share to purchase common stock
  at $.20 per share on March 30, 1989 (net of costs of
  issuance of $4,162)                                                --         --    7,443,118          --          --   7,443,118
Net loss                                                             --         --           --    (791,206)         --    (791,206)
Deferred compensation relating to grant of stock options             --         --      683,040          --    (683,040)         --
Amortization of deferred compensation                                --         --           --          --     800,729     800,729
                                                               ---------  ---------- ----------- -----------  ---------- -----------

Balance at May 31, 1989                                              --         --   35,728,451  (6,886,101)   (936,175) 27,970,941
Net loss                                                             --         --           --  (3,490,394)         --  (3,490,394)
Deferred compensation relating to grant of stock options             --         --      699,163          --    (699,163)         --
Amortization of deferred compensation                                --         --           --          --     546,278     546,278
                                                               ---------  ---------- ----------- -----------  ---------- -----------

Balance at May 31, 1990                                              --         --   36,427,614  (10,376,495) (1,089,060)25,026,825
Net loss                                                             --         --           --  (5,579,872)         --  (5,579,872)
Amortization of deferred compensation                                --         --           --          --     435,296     435,296
                                                               ---------  ---------- ----------- -----------  ---------- -----------

Balance at May 31, 1991                                              --         --   36,427,614  (15,956,367)  (653,764) 19,882,249
Exercise of stock warrants at $5.60 per share                        --         --      503,100          --          --     504,000
Net loss                                                             --         --           --  (7,006,495)         --  (7,006,495)
Amortization of deferred compensation                                --         --           --          --     254,025     254,025
                                                               ---------  ---------- ----------- -----------  ---------- -----------

Balance at May 31, 1992                                              --         --   36,930,714  (22,962,862)  (399,739) 13,633,779
Exercise of stock warrants at $7.14 per share                        --         --      106,890          --          --     107,040
Issuance of common stock at $15.19 per share on April 19, 1993
  (net of costs of issuance of $20,724)                              --         --    5,663,710          --          --   5,667,454
Net loss                                                             --         --           --  (8,066,609)         --  (8,066,609)
Amortization of deferred compensation                                --         --           --          --     254,025     254,025
                                                               ---------  ---------- ----------- -----------  ---------- -----------

Balance at May 31, 1993                                              -- $       --   42,701,314  (31,029,471)  (145,714) 11,595,689
                                                               ---------  ---------- ----------- -----------  ---------- -----------
</TABLE>
<PAGE>
                          NORTHFIELD LABORATORIES INC.
                      (a company in the development stage)

                  Statements of Shareholders' Equity (Deficit)

                 Three months ended August 31, 2001 and for the
         period from June 19, 1985 (inception) through August 31, 2001

<TABLE>
<CAPTION>

                                                                                                              SERIES A CONVERTIBLE
                                                                  PREFERRED STOCK         COMMON STOCK           PREFERRED STOCK
                                                               -------------------------------------------    --------------------
                                                                 NUMBER   AGGREGATE      NUMBER  AGGREGATE      NUMBER   AGGREGATE
                                                               OF SHARES   AMOUNT      OF SHARES  AMOUNT      OF SHARES   AMOUNT
                                                               --------- ----------    --------- ---------    ---------  ---------
<S>                                                             <C>      <C>          <C>       <C>            <C>      <C>
Net loss                                                            --      $  --           --   $      --           --    $    --
Issuance of common stock at $6.50 per share on May 26, 1994
  (net of costs of issuance of $2,061,149)                          --         --     2,500,000     25,000           --         --
Cancellation of stock options                                       --         --            --         --           --         --
Amortization of deferred compensation                               --         --            --         --           --         --
                                                                   ------   ------   ----------  ---------      --------   --------

Balance at May 31, 1994                                             --         --     9,455,955     94,560           --         --
Net loss                                                            --         --            --         --           --         --
Issuance of common stock at $6.50 per share on June 20, 1994
  (net of issuance costs of $172,500)                               --         --       375,000      3,750           --         --
Exercise of stock options at $7.14 per share                        --         --        10,000        100           --         --
Exercise of stock options at $2.00 per share                        --         --       187,570      1,875           --         --
Cancellation of stock options                                       --         --            --         --           --         --
Amortization of deferred compensation                               --         --            --         --           --         --
                                                                   ------   ------   ----------  ---------      --------   --------

Balance at May 31, 1995                                             --         --    10,028,525    100,285           --         --
Net loss                                                            --         --            --         --           --         --
Issuance of common stock at $17.75 per share on August 9, 1995
  (net of issuance costs of $3,565,125)                             --         --     2,925,000     29,250           --         --
Issuance of common stock at $17.75 per share on
  September 11, 1995 (net of issuance costs of $423,238)            --         --       438,750      4,388           --         --
Exercise of stock options at $2.00 per share                        --         --       182,380      1,824           --         --
Exercise of stock options at $6.38 per share                        --         --         1,500         15           --         --
Exercise of stock options at $7.14 per share                        --         --        10,000        100           --         --
Cancellation of stock options                                       --         --            --         --           --         --
Amortization of deferred compensation                               --         --            --         --           --         --
                                                                   ------   ------   ----------  ---------      --------   --------

Balance at May 31, 1996                                             --         --    13,586,155    135,862           --         --
Net loss                                                            --         --            --         --           --         --
Exercise of stock options at $0.20 per share                        --         --       263,285      2,633           --         --
Exercise of stock options at $2.00 per share                        --         --       232,935      2,329           --         --
Exercise of stock options at $7.14 per share                        --         --        10,000        100           --         --
Amortization of deferred compensation                               --         --            --         --           --         --
                                                                   ------   ------   ----------  ---------      --------   --------

Balance at May 31, 1997                                             --         --    14,092,375    140,924           --         --
Net loss                                                            --         --            --         --           --         --
Exercise of stock options at $7.14 per share                        --         --         5,000         50           --         --
Amortization of deferred compensation                               --         --            --         --           --         --
                                                                   ------   ------   ----------  ---------      --------   --------

Balance at May 31, 1998                                             --         --    14,097,375    140,974           --         --
Net loss                                                            --         --            --         --           --         --
Non-cash compensation                                               --         --            --         --           --         --
Exercise of stock options at $7.14 per share                        --         --        17,500        175           --         --
Exercise of stock warrants at $8.00 per share                       --         --       125,000      1,250           --         --
                                                                   ------   ------   ----------  ---------      --------   --------

Balance at May 31, 1999                                             --         --    14,239,875    142,399           --         --
Net loss                                                            --         --            --         --           --         --
Non-cash compensation                                               --         --            --         --           --         --
Exercise of stock options at $13.38 per share                       --         --         2,500         25           --         --
                                                                   ------   ------   ----------  ---------      --------   --------

Balance at May 31, 2000                                             --         --    14,242,375    142,424           --         --
Net loss                                                            --         --            --         --           --         --
Non-cash compensation                                               --         --            --         --           --         --
Exercise of stock options at $6.38 per share                        --         --         6,000         60           --         --
Exercise of stock options at $10.81 per share                       --         --        17,500        175           --         --
                                                                   ------   ------   ----------  ---------      --------   --------

Balance at May 31, 2001                                             --      $  --    14,265,875  $ 142,659           --    $    --
                                                                   ------   ------   ----------  ---------      --------   --------
Net loss (unaudited)                                                --         --           --          --           --         --

Balance at August 31, 2001 (unaudited)                              --      $  --    14,265,875  $ 142,659           --    $    --
                                                                   ======   ======   ==========  =========      ========   ========

See accompanying notes to financial statements.
</Table>


























<TABLE>
<CAPTION>

                                                              SERIES B CONVERTIBLE                DEFICIT                  TOTAL
                                                                PREFERRED STOCK                 ACCUMULATED                SHARE-
                                                             ---------------------  ADDITIONAL  DURING THE   DEFERRED     HOLDERS'
                                                                NUMBER   AGGREGATE   PAID-IN    DEVELOPMENT   COMPEN-     EQUITY
                                                              OF SHARES   AMOUNT     CAPITAL       STAGE      SATION     (DEFICIT)
                                                             ----------  ---------  ----------  ----------- ----------- -----------
<S>                                                           <C>        <C>        <C>         <C>          <C>          <C>
Net loss                                                            --         --  $        --  (7,363,810)         --   (7,363,810)
Issuance of common stock at $6.50 per share on May 26, 1994
  (net of costs of issuance of $2,061,149)                          --         --   14,163,851          --          --   14,188,851
Cancellation of stock options                                       --         --      (85,400)         --      85,400           --
Amortization of deferred compensation                               --         --           --          --         267          267
                                                               --------  --------- ----------- ------------ ----------- -----------

Balance at May 31, 1994                                             --         --   56,779,765  (38,393,281)   (60,047)  18,420,997
Net loss                                                            --         --           --   (7,439,013)         --  (7,439,013)
Issuance of common stock at $6.50 per share on June 20, 1994
  (net of issuance costs of $172,500)                               --         --    2,261,250           --          --   2,265,000
Exercise of stock options at $7.14 per share                        --         --       71,300           --          --      71,400
Exercise of stock options at $2.00 per share                        --         --      373,264           --          --     375,139
Cancellation of stock options                                       --         --     (106,750)          --     106,750          --
Amortization of deferred compensation                               --         --          --            --     (67,892)    (67,892)
                                                               --------  --------- ----------- ------------ ----------- -----------

Balance at May 31, 1995                                             --         --   59,378,829   (45,832,294)   (21,189) 13,625,631
Net loss                                                            --         --          --     (4,778,875)        --  (4,778,875)
Issuance of common stock at $17.75 per share on August 9, 199
  (net of issuance costs of $3,565,125)                             --         --   48,324,374           --          --  48,353,624
Issuance of common stock at $17.75 per share on
  September 11, 1995 (net of issuance costs of $423,238)            --         --    7,360,187           --          --   7,364,575
Exercise of stock options at $2.00 per share                        --         --      362,937           --          --     364,761
Exercise of stock options at $6.38 per share                        --         --        9,555           --          --       9,570
Exercise of stock options at $7.14 per share                        --         --       71,300           --          --      71,400
Cancellation of stock options                                       --         --      (80,062)          --      80,062          --
Amortization of deferred compensation                               --         --          --            --     (62,726)    (62,726)
                                                               --------  --------- ----------- ------------ -----------  ----------

Balance at May 31, 1996                                             --         --  115,427,120  (50,611,169)    (3,853)  64,947,960
Net loss                                                            --         --          --    (4,245,693)         --  (4,245,693)
Exercise of stock options at $0.20 per share                        --         --       50,025           --          --      52,658
Exercise of stock options at $2.00 per share                        --         --      463,540           --          --     465,869
Exercise of stock options at $7.14 per share                        --         --       71,300           --          --      71,400
Amortization of deferred compensation                               --         --        --              --       2,569       2,569
                                                               --------  --------- ----------- ------------ -----------  ----------

Balance at May 31, 1997                                             --         --  116,011,985  (54,856,862)    (1,284)  61,294,763
Net loss                                                            --         --        --      (5,883,378         --   (5,883,378)
Exercise of stock options at $7.14 per share                        --         --       35,650          --          --       35,700
Amortization of deferred compensation                               --         --        --             --       1,284        1,284
                                                               --------  --------- ----------- ------------ -----------  ----------

Balance at May 31, 1998                                             --         --  116,047,635  (60,740,240)        --   55,448,369
Net loss                                                            --         --        --      (7,416,333)        --   (7,416,333)
Non-cash compensation                                               --         --       14,354           --                  14,354
Exercise of stock options at $7.14 per share                        --         --      124,775           --         --      124,950
Exercise of stock warrants at $8.00 per share                       --         --      998,750           --         --    1,000,000
                                                               --------  --------- ----------- ------------ -----------  ----------

Balance at May 31, 1999                                             --         --  117,185,514 (68,156,573)         --   49,171,340
Net loss                                                            --         --         --    (9,167,070)         --   (9,167,070)
Non-cash compensation                                               --         --       57,112          --          --       57,112
Exercise of stock options at $13.38 per share                       --         --       33,425          --          --       33,450
                                                               --------  --------- ----------- ------------ -----------  ----------

Balance at May 31, 2000                                             --         --  117,276,051 (77,323,643)         --   40,094,832
Net loss                                                            --         --         --   (10,174,609)         --  (10,174,609)
Non-cash compensation                                               --         --         --            --          --           --
Exercise of stock options at $6.38 per share                        --         --       38,220          --          --       38,280
Exercise of stock options at $10.81 per share                       --         --      189,000          --          --      189,175
                                                               --------  --------- ----------- ------------ -----------  ----------

Balance at May 31, 2001                                             --   $     --  117,503,271 (87,498,252)         --   30,147,678
                                                               --------  --------- ----------- ------------ -----------  ----------
Net loss (unaudited)                                                --         --           --  (3,190,572)         --   (3,190,572)

Balance at August 31, 2001 (unaudited)                              --   $     --  117,503,271 (90,688,824)         --   26,957,106
                                                               ========  ========= =========== ============ ===========  ==========

</TABLE>



<PAGE>
                          NORTHFIELD LABORATORIES INC.
                      (a company in the development stage)

                            Statements of Cash Flows

                   Three months ended August 31, 2001 and 2000
                  and the cumulative period from June 19, 1985
                       (inception) through August 31, 2001

<TABLE>
<CAPTION>

                                                                                                       Cumulative
                                                                                                          from
                                                                  Three months ended August 31,       June 19, 1985
                                                                ---------------------------------        through
                                                                     2001             2000            August 31, 2001
                                                                ---------------- ----------------    ----------------
                                                                   (unaudited)      (unaudited)         (unaudited)
<S>                                                           <C>                 <C>                 <C>
Cash flows from operating activities:
   Net loss                                                   $   (3,190,572)      (2,517,920)        (90,688,824)
   Adjustments to reconcile net loss to net
     cash used in operating activities:
       Depreciation and amortization                                 215,953          125,253          15,684,410
       Non-cash compensation                                              --               --           3,552,723
       Loss on sale of equipment                                          --               --              66,359
       Changes in assets and liabilities:
         Prepaid expenses                                            108,325           73,085            (479,028)
         Other current assets                                        309,964         (157,802)         (2,042,147)
         Other assets                                                     --          (49,200)            (42,248)
         Accounts payable                                           (696,661)         (93,690)          1,075,919
         Accrued expenses                                            308,153           35,712             462,060
         Accrued compensation and benefits                           380,020            1,470             641,233
         Other liabilities                                             3,754            6,504             170,614
                                                               -------------- ----------------       --------------

Net cash used in operating activities                             (2,561,064)      (2,576,588)        (71,598,929)
                                                               -------------- ----------------       --------------

Cash flows from investing activities:
   Purchase of property, plant, equipment, and
     capitalized engineering costs                                   (62,722)        (183,946)         (18,313,972)
   Proceeds from sale of land and equipment                               --               --            1,863,023
   Proceeds from matured marketable securities                     5,679,200        5,049,200          385,217,352
   Proceeds from sale of marketable securities                            --               --            7,141,656
   Purchase of marketable securities                              (4,999,648)      (5,684,996)        (413,942,298)
                                                               -------------- ----------------       --------------

Net cash provided by (used in) investing activities                  616,830         (819,742)         (38,034,239)
                                                               -------------- ----------------       --------------

Cash flows from financing activities:
   Proceeds from issuance of common stock                                 --               --          103,749,383
   Payment of common stock issuance costs                                 --               --           (5,072,012)
   Proceeds from issuance of preferred stock                              --               --            6,644,953
   Proceeds from sale of stock options to
     purchase common shares                                               --               --            7,443,118
   Proceeds from issuance of notes payable                                --               --            1,500,000
   Repayment of notes payable                                             --               --             (140,968)
                                                               -------------- ----------------       --------------

Net cash provided by financing activities                                 --               --          114,124,474
                                                               -------------- ----------------       --------------

Net (decrease) increase in cash                                   (1,944,234)      (3,396,330)           4,491,306

Cash at beginning of period                                        6,435,540       15,154,295                   --
                                                               -------------- ----------------       --------------

Cash at end of period                                         $    4,491,306       11,757,965            4,491,306
                                                               ============== ================       ==============
</TABLE>


See accompanying notes to financial statements.
<PAGE>

                          NORTHFIELD LABORATORIES INC.
                      (a company in the development stage)

                          Notes to Financial Statements

                                 August 31, 2001




(1)  BASIS OF PRESENTATION

     The interim financial statements presented are unaudited but, in the
     opinion of management, have been prepared in conformity with accounting
     principles generally accepted in the United States of America applied on a
     basis consistent with those of the annual financial statements. Such
     interim financial statements reflect all adjustments (consisting of normal
     recurring accruals) necessary for a fair presentation of the financial
     position and the results of operations for the interim periods presented.
     The results of operations for the interim period presented are not
     necessarily indicative of the results to be expected for the year ending
     May 31, 2002. The interim financial statements should be read in connection
     with the audited financial statements for the year ended May 31, 2001.

(2)  COMPUTATION OF NET LOSS PER SHARE

     Basic earnings per share is based on the weighted average number of shares
     outstanding and excludes the dilutive effect of unexercised common stock
     equivalents. Diluted earnings per share is based on the weighted average
     number of shares outstanding and includes the dilutive effect of
     unexercised common stock equivalents. Because the Company reported a net
     loss for all periods presented, basic and diluted per share amounts are the
     same.

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

         Since Northfield's incorporation in 1985, we have devoted substantially
all of our efforts and resources to the research, development and clinical
testing of our potential product, PolyHemeTM. We have incurred operating losses
during each year of our operations since inception and expect to incur
substantial additional operating losses for the next several years. From
Northfield's inception through August 31, 2001, we have incurred operating
losses totaling $90,689,000.

         Our success will depend on several factors, including our ability to
obtain Food and Drug Administration ("FDA") regulatory approval of PolyHeme and
our manufacturing facilities, obtain sufficient quantities of blood to
manufacture PolyHeme in commercial quantities, manufacture and distribute
PolyHeme in a cost-effective manner, and enforce our patent positions. We have
experienced significant delays in the development and clinical testing of
PolyHeme. We cannot ensure that we will be able to achieve these goals or that
we will be able to realize product revenues or profitability on a sustained
basis or at all.

         We anticipate that research and development expenses will increase
during the foreseeable future. These expected increases are attributable to
additional clinical trials to expand the indications for which PolyHeme may be
marketed, monitoring and reporting the results of these trials and continuing
process development associated with improving our manufacturing capacity to
permit commercial-scale production of PolyHeme. We expect that general and
administrative expenses will increase over the foreseeable future as a result of
increased costs relating to the expansion of our organization in support of
anticipated commercial operations.


<PAGE>
RESULTS OF OPERATIONS

         We reported no revenues for either of the three-month periods ended
August 31, 2001 or 2000. From Northfield's inception through August 31, 2001, we
have reported total revenues of $3,000,000, all of which were derived from
licensing fees.

OPERATING EXPENSES

         Operating expenses for our first fiscal quarter ended August 31, 2001
totaled $3,492,000, an increase of $384,000 from the $3,108,000 reported in the
first quarter of the fiscal 2001. Measured on a percentage basis, operating
expenses in the first quarter of fiscal 2002 increased by 12.4%.

         Bonus payments in recognition of the Company filing a Biologics License
Application ("BLA") with the FDA for PolyHeme increased payroll expense by
$560,000 in the first quarter of fiscal 2002 as compared to the first quarter of
fiscal 2001.

         We incurred expenses in resolving a shareholder lawsuit relating to our
2001 annual shareholder meeting totaling $136,000 during the first quarter of
fiscal 2002. This expense was $212,000 less than the expense incurred in
connection with a proxy contest threatened by the same shareholder in connection
with our 2000 annual shareholder meeting in the first quarter of fiscal 2001.


<PAGE>
         Research and development expenses for the first quarter of fiscal 2002
totaled $2,649,000, an increase of $411,000, or 18.4%, from the $2,238,000
reported in the first quarter of fiscal 2001. First quarter fiscal 2002 payroll
expense included $289,000 of incremental bonus expenses relating to research and
development employees compared to the first quarter of fiscal 2001. Higher costs
were also recognized during the first quarter of fiscal 2002 for expenses
related to data analysis and the close down of several clinical sites. These
costs were partially offset by a reduction in the expense of clinical
monitoring.

         We anticipate that research and development expenses will increase
significantly in the foreseeable future. Additional costs are being planned for
multi-center clinical trials in support of expanded product indications, third
party clinical monitoring, biostatistical analysis, report preparation and
continued expansion of our manufacturing organization.

         General and administrative expenses in the first quarter of fiscal 2002
totaled $843,000 compared to expenses of $870,000 in the first quarter of 2001,
representing a decrease of $27,000, or 3.1%. During the first quarter of fiscal
2002, Northfield filed a BLA for PolyHeme. Bonus payments in recognition of this
event totaling $271,000 were recorded as a general and administrative expense
during the period. No general and administrative bonuses were paid during the
first quarter of fiscal 2001. Partially offsetting these bonuses was a reduction
in professional service fees compared to the prior year. Professional service
expenses totaling $136,000 related to our 2001 annual shareholder meeting were
recorded in the first quarter of fiscal 2002 and professional service expenses
totaling $348,000 related to our 2000 annual shareholder meeting were recorded
in the first quarter of fiscal 2001.
<PAGE>


         Northfield is planning to expand its organization in the areas of
marketing, selling and information technology to support the commercial
development of PolyHeme. The staff and capability expansions will likely
increase general and administrative expenses for the balance of the fiscal year.

INTEREST INCOME

         Interest income in the first quarter of fiscal 2002 totaled $301,000,
or a $289,000 decrease from the $590,000 in interest income reported in the
first quarter of fiscal 2001. Significantly lower interest rates in fiscal 2002
along with lower available investment balances accounted for the decrease.
Maturing investments which were yielding in excess of 6% are now being
reinvested at 3 to 4%. In the absence of a major cash infusion, interest income
will continue to be significantly below prior year levels.

NET LOSS

         The net loss for the first quarter ended August 31, 2001 was
$3,191,000, or $.22 per basic share, compared to a net loss of $2,518,000, or
$.18 per basic share, for the first quarter ended August 31, 2000. The increase
in the loss per basic share is primarily the result of increased payroll costs
and lower interest income.


<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

         From Northfield's inception through August 31, 2001, we have used cash
for operating activities and for the purchase of property, plant, equipment and
engineering services in the amount of $89,913,000. For the three-month periods
ended August 31, 2001 and 2000, these cash expenditures totaled $2,624,000 and
$2,761,000, respectively. The decreased cash outlay for the first quarter of
fiscal 2002 compared to the comparable prior year period in spite of increased
losses is the result of the timing of payments as evidenced by higher accrued
expense balances. These increased liabilities represent only a temporary
deferral of cash expenditures.

         We have financed our research and development and other activities to
date primarily through the public and private sale of equity securities and, to
a more limited extent, through the licensing of product rights. As of August 31,
2001, we had cash and marketable securities totaling $26,075,000.

         We believe our existing capital resources will be adequate to satisfy
our operating capital requirements and maintain our existing pilot manufacturing
plant and office facilities for approximately the next 24 to 30 months.
Thereafter, we are likely to require substantial additional capital to continue
our operations. We are currently unable to fund the construction of a
large-scale greenfield manufacturing facility, which is estimated to cost
approximately $45 million, without raising substantial additional capital.
Currently, we have manufacturing capacity of approximately 10,000 units. Initial
engineering on the leased space adjacent to our existing manufacturing facility
is completed. This


<PAGE>

engineering indicates an additional capacity of 75,000 units could be developed
in approximately 16 to 20 months at a cost of $26 to $30 million. Like a
large-scale greenfield manufacturing facility, significant additional funding
will be required before the smaller scale expansion facility could be completed.
Northfield has not yet committed to the build-out. We view the smaller facility
as financially prudent yet large enough for commercial viability.

         Northfield, having filed for product approval with the FDA, will focus
on raising additional capital. We estimate that we will require at least $40
million in additional funding to build a smaller scale expansion facility
(75,000 unit), fund the subsequent working capital needs and support an expanded
manufacturing and marketing organization.

         We may issue additional equity or debt securities to the public or
enter into collaborative arrangements with strategic partners, which could
provide us with additional funding or absorb expenses we would otherwise be
required to pay. Any one or a combination of these sources may be utilized to
raise the required funding. Business or market conditions may not be favorable,
which would cause a delay in the commercialization of our product.



         Our capital requirements may vary materially from those now anticipated
because of the results of our clinical testing of PolyHeme, the establishment of
relationships with strategic partners, changes in the scale, timing or cost of
our commercial manufacturing facility, competitive and technological advances,
the FDA regulatory process, changes in our marketing and distribution strategy
and other factors.


<PAGE>
                           PART II. OTHER INFORMATION

Item 6. Exhibits

  a) Exhibit 15    - Acknowledgement of Independent Certified Public
                      Accountants

  b) None.
<PAGE>
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on this October 12,
2001.

                                   NORTHFIELD LABORATORIES INC.

                                   By: /s/ RICHARD E. DEWOSKIN
                                       -----------------------------------------
                                   Richard E. DeWoskin
                                   Chairman of the Board and
                                   Chief Executive Officer

                                   By: /s/ JACK J. KOGUT
                                       -----------------------------------------
                                   Jack J. Kogut
                                   Secretary and Treasurer
                                   (principal financial officer and
                                   principal accounting officer)