*File No. 33-83072
(also relating to
file nos. 33-76950
and 33-63341)
*File Pursuant to
Rule 424(b)(3)
ALFACELL CORPORATION
SUPPLEMENT NO. 1
TO PROSPECTUS DATED SEPTEMBER 13, 1996
RELATING TO 3,767,787 SHARES OF COMMON STOCK, $.001 PAR VALUE
The Prospectus is hereby supplemented by amending "Executive
Compensation - Summary Compensation Table" to reflect the extension of the
exercise period of the options discussed in footnote 3, below, so that the
Summary Compensation Table reads in its entirety as follows:
SUMMARY COMPENSATION TABLE
The following table provides a summary of cash and non-cash
compensation for each of the last three fiscal years ended July 31, 1996, 1995
and 1994 with respect to Alfacell's Chief Executive Officer and the only two
other executive officers of the Company during the last three fiscal years (the
"Named Executive Officers").
<TABLE>
<CAPTION>
Long Term
Compensation
---------------
Annual Compensation
--------------------------------------------------------------
Securities
Other Underlying
Annual Options/ All Other
Name and Compensation SARs(#) Compensation
Principal Position Year Salary($) Bonus($) ($)(1) --------------- ($)
- ---------------------------- ----- ---------- --------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Kuslima Shogen 1996 $150,000 - 0 - - 0 - 500,000(3) - 0 -
Chief Executive Officer and 1995 150,000 - 0 - - 0 - - 0 - (4) - 0 -
Chairman of the Board of 1994 150,000 - 0 - - 0 - 1,306,529(2) - 0 -
Directors(2)
Gail E. Fraser(5) 1996 $130,000 - 0 - - 0 - - 0 - - 0 -
Vice President, 1995 121,163 - 0 - - 0 - - 0 - (4) - 0 -
Finance and Chief 1994 8,333 - 0 - - 0 - 475,000(6) - 0 -
Financial Officer
Stanislaw M. Mikulski(7) 1996 $130,000 - 0 - - 0 - 250,000(3) - 0 -
Executive Vice President 1995 130,000 - 0 - - 0 - - 0 - (4) - 0 -
and Medical Director 1994 130,000 - 0 - - 0 - 431,409(7) - 0 -
(1) Excludes perquisites and other personal benefits that in the
aggregate do not exceed 10% of the Named Executive Officers' total
annual salary and bonus.
</TABLE>
- 1 -
<PAGE>
(2) Ms. Shogen resigned from her position as the Company's President in
August 1996 and Chief Financial Officer in July 1994. No salary was
paid to Ms. Shogen in fiscal 1995 and 1994 and these salary amounts
were accrued on the Company's financial statements as obligations owed
to Ms. Shogen. During fiscal 1996, Ms. Shogen was paid $225,978
representing payment in full of accrued back salary. Ms. Shogen was
paid her salary in full for fiscal 1996. In consideration for her
services to the Company through January 31, 1994 and Ms. Shogen's
agreement to release the Company from its obligation to pay her
$1,624,151 in accrued salary on the Company's balance sheet as of
January 31, 1994, in March 1994 the Company granted Ms. Shogen options
to purchase 841,529 shares of the Company's Common Stock at an exercise
price of $3.20 per share.
(3) These options were originally granted during the fiscal year ended July
31, 1992, and were due to expire by their terms in September 1995. In
September 1995, the exercise period for these options was extended
until September 1996 and the per share exercise price was increased to
the fair market value of the Common Stock on the date of such
extension.
(4) No options were granted to the Named Executive Officers during the
fiscal year ended July 31, 1995.
(5) Ms. Fraser became an employee of the Company on July 15, 1994. $96,163
of Ms. Fraser's salary in fiscal 1995 was paid to Ms. Fraser. That
portion of Ms. Fraser's salary which was not paid to her was accrued on
the Company's financial statements as obligations owed to Ms. Fraser.
During fiscal 1996, Ms. Fraser was paid $25,000 representing payment in
full of accrued back salary. Ms. Fraser was paid her salary in full
for fiscal 1996.
(6) Prior to Ms. Fraser joining the Company, Ms. Fraser received under a
consulting agreement an option to purchase 50,000 and 75,000 shares of
the Company's Common Stock at exercise prices of $3.22 and $5.00,
respectively. On July 15, 1994, Ms. Fraser was granted options to
purchase 350,000 shares of Common Stock under the Plan at an exercise
price of $4.11 per share.
(7) No salary was paid to Dr. Mikulski in fiscal 1994. $5,000 of Dr.
Mikulski's salary in fiscal 1995 was paid to Dr. Mikulski. During
fiscal 1996, Dr. Mikulski was paid $194,996 representing payment in
full of accrued back salary. Dr. Mikulski was paid his salary in full
for fiscal 1996. Those portions of Dr. Mikulski's salaries which were
not paid to him were accrued on the Company's financial statements as
obligations owed to Dr. Mikulski. In consideration for his services to
the Company and Dr. Mikulski's agreement to release the Company from
its obligation to pay him $639,619 in accrued salary on the Company's
balance sheet as of January 31, 1994, in March 1994 the Company granted
Dr. Mikulski options to purchase 331,409 shares of the Company's Common
Stock at an exercise price of $3.20 per share.
The Prospectus is further supplemented by amending "Executive
Compensation" to add the following table in its entirety:
- 2 -
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options to the Named Executive Officers during the fiscal year ended July 31,
1996.
<TABLE>
<CAPTION>
====================================================================================================================================
Individual Grants
- ---------------------------------------------------------------------------------------------
Potential Realizable Value at Assumed
% of Total Options Exercise or Annual Rates of Stock Price
Options Granted to Employees Base Price Expiration Appreciation for Option Term (2)
Name Granted (#) in Fiscal Year ($/Share) Date
0%($) 5%($) 10%($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kuslima Shogen 500,000(1) -- $3.87 9/16/96 0 $96,750 $193,500
Gail E. Fraser 0 -- -- -- - - -
Stanislaw M. Mikulski 250,000(1) -- 3.87 9/16/96 0 $48,375 $96,750
====================================================================================================================================
</TABLE>
(1) These options were originally granted during the fiscal year ended July
31, 1992 and were due to expire by their terms in September 1995. In
September 1995, the exercise period for these options was extended and
the per share exercise price was increased to the fair market value of
the Common Stock on the date of such extension. The Board of Directors
approved extension of the exercise period and adjustment of the
exercise price for these options along with certain other options due
to expire in 1995 as an inducement for the exercise of such options.
(2) The amounts set forth in the three columns represent hypothetical gains
that might be achieved by the optionees if the respective options are
exercised at the end of their terms. These gains are based on assumed
rates of stock price appreciation of 0%, 5% and 10%. The 0%
appreciation column is included because the exercise price of the
options equals the market price of the underlying Common Stock on the
date the exercise period of the options was extended, and thus will
have no value unless the Company's stock price increases above the
exercise price.
- 3 -
<PAGE>
The Prospectus is further supplemented by amending the Selling
Stockholders' Table to delete "Maronde, John and Gretchen JT TEN" as a Selling
Stockholder, and include as a Selling Stockholder their transferee, as follows:
<TABLE>
<CAPTION>
Number of
Shares
Offered
Number of and Number of Percentage
Shares Acquired Shares of
Number of Offered in Offered Outstanding
Shares and October Underlying Number of Shares to be
Offered Acquired 1994 Options, Shares to be Owned
and in and the Bank Owned Beneficially
Number of Acquired in September September Warrant and Beneficially After
Shares March 1994 1994 1995 Issued Upon After Completion
Selling Beneficially Private Private Private Exercise Completion of
Stockholders Owned Placement Placement Placement of Options of Offering Offering
- ------------ ------------ --------- --------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
JAM Trust 67,100 40,000 0 0 0 27,100 *
</TABLE>
All initially capitalized terms used herein shall have the same meaning
as specified in the Prospectus.
The date of this Supplement is October 31, 1996
- 4 -
