FORM 10Q
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                  For the quarterly period ended June 30, 1998
                                    


                         Commission file number 0-16005

                           Unigene Laboratories, Inc.
             -----------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                         22-2328609
-------------------------------                         -------------------
(State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                         Identification No.)

110 Little Falls Road, Fairfield, New Jersey                  07004
--------------------------------------------                ---------
(Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code: (973) 882-0860
                                                     -------------

--------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report.)

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 CORPORATE ISSUERS

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

Common Stock, $.01 Par Value--38,529,932 shares as of August 1, 1998
<PAGE>
                                      INDEX


                           UNIGENE LABORATORIES, INC.




PART I.  FINANCIAL INFORMATION                    

Item 1. Financial Statements (Unaudited)

             Condensed balance sheets- 
             June 30, 1998 and December 31, 1997    

             Condensed statements of operations-
             Three months and six months ended June 30, 1998 and 1997  

             Condensed statements of cash flows-
             Six months ended June 30, 1998 and 1997  

             Notes to condensed financial statements-
             June 30, 1998                     

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


PART II. OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds   

Item 4.  Submission of Matters to a Vote of
         Security Holders              

Item 6.  Exhibits and Reports on Form 8-K      


SIGNATURES          
<PAGE>
PART I.  FINANCIAL INFORMATION
Item 1.   Financial Statements
<TABLE>
<CAPTION>
                                 UNIGENE LABORATORIES, INC.
                                  CONDENSED BALANCE SHEETS

                                                               June 30         December 31
                                                                 1998              1997
                                                            ------------      -------------
                                                            (Unaudited)
<S>                                                         <C>               <C>         
ASSETS
Current assets:
    Cash and cash equivalents .........................     $  3,547,461      $  2,126,327
    Prepaid expenses and other current assets .........          652,943           834,245
                                                            ------------      ------------
         Total current assets .........................        4,200,404         2,960,572

Property, plant and equipment-net
    of accumulated depreciation and amortization ......        8,744,590         9,298,445
Patents and other assets ..............................        1,729,558         1,432,883
                                                            ------------      ------------
                                                            $ 14,674,552      $ 13,691,900
                                                            ============      ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable ..................................     $  1,459,839      $  1,041,529
    Accrued expenses ..................................        1,059,018           999,212
    Notes payable - stockholders ......................          610,000           610,000
                                                            ------------      ------------
  Total current liabilities ...........................        3,128,857         2,650,741

Note payable - stockholders ...........................          655,000           655,000
5% convertible debentures (Note B) ....................        4,000,000              --
9.5% convertible debentures ...........................          502,694           502,694
10% convertible debentures ............................          450,000           450,000

Stockholders' equity:
    Common stock-par value $.01 per share;
       authorized 60,000,000 shares, issued
       38,537,222 shares in 1998 and 38,517,722 in 1997          385,372           385,177
    Additional paid-in capital ........................       63,520,307        63,499,439
    Accumulated deficit ...............................      (57,966,647)      (54,450,120)
    Less: Treasury stock, at cost, 7,290 shares .......           (1,031)           (1,031)
                                                            ------------      ------------
         Total stockholders' equity ...................        5,938,001         9,433,465
                                                            ------------      ------------
                                                            $ 14,674,552      $ 13,691,900
                                                            ============      ============
</TABLE>
See notes to condensed financial statements. 
<PAGE>
<TABLE>
<CAPTION>
                                         UNIGENE LABORATORIES, INC.
                                     CONDENSED STATEMENTS OF OPERATIONS
                                                 (Unaudited)

                                              Three Months Ended                     Six Months Ended
                                                   June 30                                June 30
                                        ------------------------------      -------------------------------
                                            1998              1997              1998               1997
                                        ------------      ------------      ------------      -------------
<S>                                     <C>               <C>               <C>               <C>         
Licensing and other revenue .......     $        142      $         42      $  2,011,857      $      1,484
                                        ------------      ------------      ------------      -------------
Operating expenses:

    Research and development ......        2,256,358         2,210,570         4,406,672         4,403,531

    Settlement of contractual right             --                --                --           1,669,063

    General and administrative ....          568,342           444,581         1,057,528           994,597
                                        ------------      ------------      ------------      -------------

                                           2,824,700         2,655,151         5,464,200          7,067,191
                                        ------------      ------------      ------------      -------------

Operating loss ....................       (2,824,558)       (2,655,109)       (3,452,343)       (7,065,707)
                                        ------------      ------------      ------------      -------------

Other income (expense):

   Interest/other income ..........           13,754            39,209            44,094            87,407

   Interest expense ...............          (57,023)          (57,699)         (108,278)         (131,300)
                                        ------------      ------------      ------------      -------------

                                             (43,269)          (18,490)          (64,184)           (43,893)
                                        ------------      ------------      ------------      -------------


Net loss ..........................     $ (2,867,827)     $ (2,673,599)     $ (3,516,527)     $ (7,109,600)
                                        ============      ============      ============      =============

Net loss per share, basic .........     $       (.07)     $       (.07)     $       (.09)     $       (.19)
                                        ============      ============      ============      =============
Net loss per share, diluted .......     $       (.07)     $       (.07)     $       (.09)     $        (.19)
                                        ============      ============      ============      =============
Weighted average number of shares
 outstanding                              38,528,152        37,148,345        38,519,341         36,586,995
                                        ============      ============      ============      =============

</TABLE>
See notes to condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                  UNIGENE LABORATORIES, INC.
                              CONDENSED STATEMENTS OF CASH FLOWS
                                          (Unaudited)

                                                                       Six Months Ended
                                                                          June 30
                                                                 ---------------------------- 
                                                                     1998             1997
                                                                 -----------      -----------
<S>                                                              <C>              <C>         
Net cash used for operating activities .....................     $(2,084,404)     $(4,328,679)
                                                                 -----------      -----------
Investing activities:

    Purchase of equipment and furniture ....................        (200,661)        (147,809)
    Increase in patents and other assets ...................         (91,638)         (80,962)
    Construction of leasehold improvements .................          (2,484)         (18,298)
                                                                 -----------      -----------
                                                                    (294,783)        (247,069)
                                                                 -----------      -----------
Financing activities:

    Issuance of debt, net of related expenses ..............       3,779,258             --
    Exercise of stock options and warrants .................          21,063          874,425
                                                                 -----------      -----------
                                                                   3,800,321          874,425
                                                                 -----------      -----------

Net increase (decrease) in cash and cash equivalents .......       1,421,134       (3,701,323)

Cash and cash equivalents at beginning of year .............       2,126,327        4,491,386
                                                                 -----------      -----------
Cash and cash equivalents at end of period .................     $ 3,547,461      $   790,063
                                                                 ===========      ===========
Supplemental cash flow information:

Conversion of convertible debentures and
   accrued interest, net of related offering expenses
   into common stock .......................................            --        $ 1,181,136

Conversion of notes payable - stockholders into common stock            --        $   200,000

Interest paid ..............................................     $    30,287      $    46,669

</TABLE>


See notes to condensed financial statements.
<PAGE>
                           UNIGENE LABORATORIES, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  JUNE 30, 1998

NOTE A-BASIS OF PRESENTATION

The accompanying  unaudited condensed financial statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions to Form 10-Q and Article 10 of Regulation
S-X.  Accordingly,  they do not include  all of the  information  and  footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements.  In the opinion of management,  all adjustments considered necessary
for a fair presentation have been included.  Operating results for the six month
period ended June 30, 1998 are not  necessarily  indicative  of the results that
may be expected for the year ended December 31, 1998.  For further  information,
please  refer  to the  Company's  financial  statements  and  footnotes  thereto
included in the Company's annual report on Form 10-K for the year ended December
31, 1997.

NOTE B - DEBT FINANCING

In June 1998,  the  Company  completed a private  placement  of $4 million of 5%
Convertible Debentures (the "5% Debentures").  The Company received net proceeds
of approximately  $3.8 million as a result of this placement.  The 5% Debentures
mature  December 31, 2001.  Interest on the 5% Debentures is payable in cash or,
at the option of the Company, in Common Stock. Beginning January 1, 1999, the 5%
Debentures  are  convertible  into (i) Common Stock at a  conversion  price (the
"Conversion Price") equal to the lower of (a) 110% of the average of the closing
bid prices of the  Common  Stock on the Nasdaq  Stock  Market  during the fourth
quarter of 1998 (the "Cap Price") and (b) the average of the four lowest closing
bid prices of the Common  Stock  during the 18 trading days prior to the date of
conversion (the "Market Price") and (ii) warrants,  expiring five years from the
date of issuance,  to purchase a number of shares of Common Stock equal to 4% of
the number of shares issuable upon conversion at an exercise price equal to 125%
of the Conversion  Price. Up to 15% of the original  principal  amount of the 5%
Debentures  may be  converted  per month on a  non-cumulative  basis;  provided,
however,  that if the Market  Price is greater  than or equal to 120% of the Cap
Price on the last conversion  date in any month,  then up to 20% of the original
principal amount may be converted in such month. If a Debenture holder submits a
Debenture for  conversion and the Market Price is less than or equal to $1.1156,
the Company may redeem the Debenture in  consideration of (i) an amount equal to
the  principal  amount  thereof  plus a premium of 12% per year from the date of
issuance and (ii)  warrants,  expiring five years from the date of issuance,  to
purchase a number of shares of Common Stock equal to 25% of the number of shares
that would have been  issuable  upon  conversion of the Debenture at an exercise
price equal to 135% of the  Conversion  Price at the time of  redemption.  In no
event will the  Company  issue more than an  aggregate  of  3,852,500  shares of
Common Stock (the "Share  Limit") upon  conversion of all of the 5%  Debentures,
upon  exercise of all warrants  issued upon  conversion  or  redemption,  and as
payment of interest on the 5% Debentures.  If conversion of any 5% Debentures or
exercise of any warrants  would  require the issuance of shares in excess of the
Share Limit,  the Company will, as the case may be, redeem such  debentures at a
price  equal  to  120%  of the  principal  amount  thereof  or pay in  cash  the
difference  between the market price and exercise  price of the number of shares
that would have been  issuable  upon exercise of such warrants but for the Share
Limit.
<PAGE>
NOTE C - CONVERSION OF NOTES PAYABLE TO STOCKHOLDERS INTO COMMON STOCK

In 1995,  executive  officers of the Company,  Warren Levy,  Ronald Levy and Jay
Levy,  and another  member of the Levy family loaned to the Company an aggregate
of  $1,905,000.  A total of $440,000  of these loans was repaid in 1996.  In May
1997, an aggregate of $200,000 in principal  amount of these loans was converted
into 57,200  shares of the common stock of the Company at a conversion  price of
$3.4965 per share.  On August 6, 1998,  an  aggregate  of $225,000 in  principal
amount of these loans was  converted  into  163,635  shares of common stock at a
conversion  price of $1.375 per share.  The closing price of the common stock on
August 5, 1998, as reported by the Nasdaq Stock Market, was $1.31 per share.
<PAGE>
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS

Revenue for the first half of 1998 consisted primarily of a $2 million milestone
payment from Warner-Lambert  Company, under a July 1997 licensing agreement,  as
the result of the  achievement  of a  benchmark  in the  development  of an oral
calcitonin product for treating osteoporosis. Revenue for the first half of 1997
represents hormone and enzyme sales.

Research and  development,  the  Company's  largest  expense,  increased 2% from
$2,211,000 to $2,256,000 and less than 1% from  $4,404,000 to $4,407,000 for the
three months and six months ended June 30,  1998,  respectively,  as compared to
the same periods in 1997. The increases were  primarily  attributable  to higher
personnel and regulatory  expenses,  partially offset by decreased  expenditures
for production and laboratory supplies.

In February  1997,  the Company  issued an  aggregate  of 490,000  shares of its
Common Stock to the holders of the  Company's  9.5% Senior  Secured  Convertible
Debentures  (the  "Debentures")  in  consideration  for the  cancellation  of an
obligation  of the Company to pay to the holders a fee equal to 2% of the sum of
the market  value as of December  31, 1998 of all of the  Company's  outstanding
shares of Common Stock plus the principal  amount of all outstanding debt of the
Company,  less its cash on  deposit,  up to a  maximum  fee of  $3,000,000.  The
expense  associated with this  transaction was valued at $1,669,063,  based on a
closing price of the Common Stock of $3.40625 on February 7, 1997.

General and administrative  expenses increased 28% from $445,000 to $568,000 and
6% from  $995,000 to  $1,058,000  for the three months and six months ended June
30, 1998,  respectively,  as compared to the same periods in 1997. The increases
were  primarily due to higher public  relations and travel  expenses,  partially
offset by reduced legal fees.

Interest and other income decreased $25,000 and $43,000 for the three months and
six months ended June 30, 1998, respectively, as compared to the same periods in
1997, due to reduced funds available for investment in 1998.

Interest  expense  decreased  $1,000 and  $23,000  for the three  months and six
months  ended June 30,  1998,  respectively,  as compared to the same periods in
1997, due to a reduction in outstanding  debt from the prior year as a result of
conversions in 1997 of the Company's convertible debentures into Common Stock.

As a result of increased operating  expenses,  net loss increased $194,000 or 7%
for the three  months  ended June 30,  1998,  as compared  to the  corresponding
period in 1997.

As a result of increased revenue, as well as decreased  operating expenses,  net
loss  decreased  $3,593,000  or 51% for the six months ended June 30,  1998,  as
compared to the corresponding period in 1997.

As of December  31, 1997,  the Company had  available  for income tax  reporting
purposes  net  operating  loss   carryforwards  in  the  approximate  amount  of
$53,400,000,  expiring  from 1998 through  2012,  which are  available to reduce
future earnings that would otherwise be subject to federal income taxes. For the
six months ending June 30, 1998, the Company  accumulated  additional  losses of
approximately  $3,500,000.  In addition,  the Company has investment tax credits
and research and  development  credits in the amounts of $50,000 and $1,984,000,
respectively,  which are available to reduce the amount of future federal income
taxes. These credits expire from 1998 through 2012.
<PAGE>
The Company follows  Statement of Financial  Accounting  Standards No. 109 (FASB
109),  "Accounting  for  Income  Taxes".  Given the  Company's  past  history of
incurring  operating losses, any deferred tax assets that are recognizable under
FASB 109 have been fully  reserved.  As of January 1, 1998,  under FASB 109, the
Company  had  deferred  tax assets of  approximately  $23,400,000,  subject to a
valuation  allowance of  $23,400,000.  The  deferred  tax assets were  generated
primarily as a result of the Company's  net  operating  losses and available tax
credits.  For the six-month  period ended June 30, 1998, the Company's  deferred
tax assets and valuation allowances each increased by approximately $1,400,000.

The Company  adopted the  provisions  of SFAS No. 128,  "Earnings  Per Share" on
December 31, 1997. SFAS 128  establishes  standards for computing and presenting
earnings per share  ("EPS") and  supersedes  APB Opinion No. 15,  "Earnings  Per
Share".  It also  requires  presentation  of both basic and  diluted EPS for net
income on the face of the income statement and a separate reconciliation of both
EPS amounts.  Basic EPS is computed using the weighted  average number of common
shares outstanding during the period being reported on. Diluted EPS reflects the
potential  dilution that could occur if  securities or other  contracts to issue
common stock were  exercised or converted  into common stock at the beginning of
the period being  reported on. The adoption of SFAS 128 has had no effect on the
Company's reported per share results.


LIQUIDITY AND CAPITAL RESOURCES

The Company has constructed a cGMP peptide production  facility in Boonton,  New
Jersey in a shell building that is being leased under a ten-year net lease which
began in February 1994. The Company has two ten-year  renewal options as well as
an option to purchase the facility. The total cost of leasehold improvements and
process equipment for this facility,  including  current  validation costs, have
totaled approximately $12 million. The improvements and equipment were primarily
financed from the remainder of the $17 million of proceeds  received as a result
of the exercise by the warrant holders of the Company's Class A Warrants in 1991
and the  proceeds  of $2.2  million  from the sale of stock in 1994.  There  are
currently no material commitments  outstanding for capital expenditures relating
to either the Boonton  facility or the  Company's  facility  in  Fairfield,  New
Jersey.

The Company,  at June 30, 1998, had cash and cash equivalents of $3,547,000,  an
increase of $1,421,000 from December 31, 1997.

The Company's  ability to generate cash from  operations  will depend  primarily
upon signing research or licensing  agreements,  achieving defined benchmarks in
such agreements,  receiving  regulatory approval for its licensed products,  and
the commercial sale of these products.

In  1996,   the  Company   entered  into  a  joint  venture   agreement  with  a
pharmaceutical company in China. This joint venture contributed $300,000 to 1996
revenues.  It is uncertain whether any additional revenues will be recognized or
received in connection with this joint venture.

In July 1997,  the Company  entered into an agreement  under which it granted to
the Parke-Davis  division of  Warner-Lambert  Company a worldwide license to use
the Company's oral calcitonin technology.  Upon execution of the agreement,  the
Company received $6 million in payments from Warner-Lambert,  consisting of a $3
million  licensing  fee and a $3 million  equity  investment  by  Warner-Lambert
(695,066 shares of Common Stock were purchased at a price of approximately $4.32
per share). In addition,  the Company is eligible to receive up to an additional
<PAGE>
$48.5 million in milestone payments during the course of the development program
if specified milestones are achieved. The first of these milestones was achieved
in February 1998,  resulting in a payment to the Company of $2 million.  Another
$13.5 million would be received  prior to the  commencement  of Phase I clinical
studies in the U.S.  Early-stage  milestones  primarily  relate to the product's
performance  characteristics,  while the  latter-stage  milestones are primarily
related to  regulatory  filings and  approvals.  If the product is  successfully
commercialized, the Company also would receive revenue from royalties on product
sales by Warner-Lambert  and its affiliates and from the sale of raw material to
Warner-Lambert.  The  Company has  retained  the right to license the use of its
technologies for injectable and nasal  formulations of calcitonin on a worldwide
basis.  Management is actively seeking other licensing and/or supply  agreements
with  pharmaceutical  companies for  injectable  and nasal forms of  calcitonin.
However, there is no assurance that any additional revenue-generating agreements
will be signed.

In June 1998,  the  Company  completed a private  placement  of $4 million of 5%
Convertible Debentures.  The Company received net proceeds of approximately $3.8
million as a result of this  placement.  These  debentures  mature  December 31,
2001.  Interest on the 5% Debentures is payable in cash or, at the option of the
Company,  in Common Stock.  Beginning  January 1, 1999,  the 5%  Debentures  are
convertible into (i) Common Stock at a conversion price (the "Conversion Price")
equal to the lower of (a) 110% of the  average of the  closing bid prices of the
Common Stock on the Nasdaq Stock Market  during the fourth  quarter of 1998 (the
"Cap  Price") and (b) the  average of the four lowest  closing bid prices of the
Common  Stock during the 18 trading  days prior to the date of  conversion  (the
"Market  Price")  and  (ii)  warrants,  expiring  five  years  from  the date of
issuance,  to  purchase  a number of shares of Common  Stock  equal to 4% of the
number of shares  issuable upon conversion at an exercise price equal to 125% of
the  Conversion  Price.  Up to 15% of the  original  principal  amount of the 5%
Debentures  may be  converted  per month on a  non-cumulative  basis;  provided,
however,  that if the Market  Price is greater  than or equal to 120% of the Cap
Price on the last conversion  date in any month,  then up to 20% of the original
principal amount may be converted in such month. If a Debenture holder submits a
Debenture for  conversion and the Market Price is less than or equal to $1.1156,
the Company may redeem the Debenture in  consideration of (i) an amount equal to
the  principal  amount  thereof  plus a premium of 12% per year from the date of
issuance and (ii)  warrants,  expiring five years from the date of issuance,  to
purchase a number of shares of Common Stock equal to 25% of the number of shares
that would have been  issuable  upon  conversion of the Debenture at an exercise
price equal to 135% of the  Conversion  Price at the time of  redemption.  In no
event will the  Company  issue more than an  aggregate  of  3,852,500  shares of
Common Stock (the "Share  Limit") upon  conversion of all of the 5%  Debentures,
upon exercise of all warrants issued upon conversion or remption, and as payment
of interest on the 5% Debentures. If conversion of any 5% Debentures or exercise
of any  warrants  would  require  the  issuance of shares in excess of the Share
Limit,  the Company will, as the case may be, redeem such  debentures at a price
equal to 120% of the  principal  amount  thereof  or pay in cash the  difference
between the market price and  exercise  price of the number of shares that would
have been issuable upon exercise of such warrants but for the Share Limit.

The Company's  operating cash  requirements  have increased to approximately $10
million  per year with the  opening of its peptide  manufacturing  facility.  In
addition,  the Company has scheduled principal and interest obligations over the
next several years on its  outstanding  5%  convertible  debentures due December
2001,  on its  9.5%  convertible  debentures  due  November  1998,  on  its  10%
convertible  debentures  due  March  1999  and on other  indebtedness.  However,
because  of the  current  below-market  conversion  prices  of the  9.5% and 10%
debentures,  a substantial  portion of such debentures has been, and the Company
expects that a substantial  portion of the  remaining  debentures of each series
will be,  converted  into Common Stock,  thereby  decreasing  the amount of cash
required for principal and interest payments  thereon.  Interest payments on the
5% Debentures may, at the Company's discretion, be made in cash or stock.
<PAGE>
After  receipt  of net  proceeds  of $3.8  million  from the  aforementioned  5%
Debenture financing in June 1998, management believes that the Company currently
has  sufficient  financial  resources to sustain its  operations  at the current
level into the  fourth  quarter of 1998.  While the  Company  expects to achieve
additional milestones under the Warner-Lambert  agreement,  which will result in
further  payments,  the timing of such payments is uncertain and the Company may
have  to rely  on  outside  sources  for  financing  to  sustain  the  Company's
operations over the near term. However, there is no assurance as to the terms on
which such  additional  funds would be available  or that in such  circumstances
sufficient funds could be obtained.

Satisfying  the  Company's  long-term  liquidity  requirements  will require the
successful commercialization of the product licensed to Warner-Lambert or one of
its  other  calcitonin  products.  In  addition,   the  commercialization  of  a
calcitonin  product  will  require  the  Company  to  incur  additional  capital
expenditures,   including  expenditures  to  expand  or  upgrade  the  Company's
manufacturing   operations   to  satisfy  its  supply   obligations   under  the
Warner-Lambert  license agreement.  However,  neither the cost or timing of such
capital expenditures are determinable at this time.

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain  statements in this Form 10-Q  constitute  "forward-looking  statements"
within the meaning of the Private Securities  Litigation Reform Act of 1995 (the
"Reform Act"). Such forward-looking  statements involve known and unknown risks,
uncertainties  and other factors that may cause the actual results,  performance
or activities of the Company,  or industry results,  to be materially  different
from any future results,  performance or activities expressed or implied by such
forward-looking  statements. Such factors include: general economic and business
conditions, the financial condition of the Company,  competition,  the Company's
dependence on other  companies to  commercialize,  manufacture and sell products
using the Company's technologies,  the uncertainty of results of preclinical and
clinical testing, the risk of product liability and liability for human clinical
trials,  the  Company's  dependence  on patents  and other  proprietary  rights,
dependence on key management  officials,  the  availability and cost of capital,
the  availability of qualified  personnel,  changes in, or the failure to comply
with,  governmental  regulations,  the failure to obtain regulatory approvals of
the  Company's  products and other factors  discussed in the  Company's  various
filings with the Securities and Exchange Commission.


PART II. OTHER INFORMATION

ITEM 2.  Changes in Securities and Use of Proceeds

         (a)       Not applicable.

         (b)       Not applicable.

         (c)       Recent Sales of Unregistered Securities.

         On June 29, 1998,  the Company  sold $4 million in aggregate  principal
amount  of  its 5%  convertible  debentures  due  December  31,  2001  (the  "5%
Debentures")  to The Tail Wind  Fund,  Ltd.  The sale of the 5%  Debentures  was
effected in reliance on an exemption from registration  pursuant to Section 4(2)
of the Securities Act of 1933, as amended.
<PAGE>
Interest  on the 5%  Debentures  is  payable  in cash or,  at the  option of the
Company,  in Common Stock.  Beginning  January 1, 1999,  the 5%  Debentures  are
convertible into (i) Common Stock at a conversion price (the "Conversion Price")
equal to the lower of (a) 110% of the  average of the  closing bid prices of the
Common Stock on the Nasdaq Stock Market  during the fourth  quarter of 1998 (the
"Cap  Price") and (b) the  average of the four lowest  closing bid prices of the
Common  Stock during the 18 trading  days prior to the date of  conversion  (the
"Market  Price")  and  (ii)  warrants,  expiring  five  years  from  the date of
issuance,  to  purchase  a number of shares of Common  Stock  equal to 4% of the
number of shares  issuable upon conversion at an exercise price equal to 125% of
the  Conversion  Price.  Up to 15% of the  original  principal  amount of the 5%
Debentures  may be  converted  per month on a  non-cumulative  basis;  provided,
however,  that if the Market  Price is greater  than or equal to 120% of the Cap
Price on the last conversion  date in any month,  then up to 20% of the original
principal amount may be converted in such month. If a Debenture holder submits a
Debenture for  conversion and the Market Price is less than or equal to $1.1156,
the Company may redeem the Debenture in  consideration of (i) an amount equal to
the  principal  amount  thereof  plus a premium of 12% per year from the date of
issuance and (ii)  warrants,  expiring five years from the date of issuance,  to
purchase a number of shares of Common Stock equal to 25% of the number of shares
that would have been  issuable  upon  conversion of the Debenture at an exercise
price equal to 135% of the  Conversion  Price at the time of  redemption.  In no
event will the  Company  issue more than an  aggregate  of  3,852,500  shares of
Common Stock (the "Share  Limit") upon  conversion of all of the 5%  Debentures,
upon  exercise of all warrants  issued upon  conversion  or  redemption,  and as
payment of interest on the 5% Debentures.  If conversion of any 5% Debentures or
exercise of any warrants  would  require the issuance of shares in excess of the
Share Limit,  the Company will, as the case may be, redeem such  debentures at a
price  equal  to  120%  of the  principal  amount  thereof  or pay in  cash  the
difference  between the market price and exercise  price of the number of shares
that would have been  issuable  upon exercise of such warrants but for the Share
Limit.

         (d)      Not applicable.

ITEM 4.  Submission of Matters to a Vote of Security-Holders

                  (a) The matters described under item 4(c) below were submitted
                  to a vote  of  security  holders  at  the  Annual  Meeting  of
                  Stockholders  held on June 30, 1998 (the "Annual  Meeting") in
                  connection  with which  proxies  were  solicited  pursuant  to
                  Regulation 14A under the Securities Exchange Act.

                  (b)      Not applicable

                  (c) The  following  describes  the  matters  voted upon at the
                  Annual  Meeting  and sets  forth the number of votes cast for,
                  against or withheld and the number of  abstentions  as to each
                  such matter (there were no broker non-votes):

                           (i)       Election of directors:

                  Nominee                    For                    Withheld
                  -------                    ---                    --------

                  Jay Levy                   30,205,557             528,849
                  Ronald S. Levy             30,210,207             524,199
                  Warren P. Levy             30,210,207             524,199
                  Robert G. Ruark            30,215,307             519,099
                  Robert F. Hendrickson      30,202,457             531,949
                  Allen Bloom                30,213,507             520,899

                           (ii) Proposal to ratify the  appointment of KPMG Peat
                  Marwick LLP as auditors of the Company for 1998:

                  For                        Against                  Abstain
                  ---                        -------                  -------
                  30,418,859                 234,200                   81,347

                  (d)       Not applicable.


ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K

                  (a)       Exhibits:

                            10.1  Purchase  Agreement,   dated  June  29,  1998,
                                  between  the  Company  and The Tail Wind Fund,
                                  Ltd.

                            10.2  Registration Rights Agreement,  dated June 29,
                                  1998,  between  the  Company and The Tail Wind
                                  Fund, Ltd.

                  (b)      Reports on Form 8-K:

         The  Company  did not file any  reports  on Form 8-K  during  the three
months ended June 30, 1998.


<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.


                                              UNIGENE LABORATORIES, INC.
                                              -----------------------
                                                      (Registrant)


                                              /s/ Warren P. Levy
August 14, 1998                               -----------------------
                                              Warren P. Levy, President
                                              (Chief Executive Officer)


                                              /s/ Jay Levy
August 14, 1998                               -----------------------
                                              Jay Levy, Treasurer
                                              (Chief Financial Officer and
                                               Chief Accounting Officer)