FORM 10-Q

                       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 March 31, 2000

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 - 43,968,212 shares as of May 3, 2000.
<PAGE>
                                      INDEX

                           UNIGENE LABORATORIES, INC.




PART I.  FINANCIAL INFORMATION                                    PAGE
                                                                  ----

Item 1. Financial Statements (Unaudited)

Condensed balance sheets-
    March 31, 2000 and December 31, 1999                            3

Condensed statements of operations-
    Three months ended March 31, 2000 and 1999                      4

Condensed statements of cash flows-
    Three months ended March 31, 2000 and 1999                      5

Notes to condensed financial statements-
    March 31, 2000                                                  6

Item 2. Management's Discussion and Analysis of Financial
    Condition and Results of Operations                             8

Item 3. Quantitative and Qualitative Disclosures About

    Market Risk                                                     13

PART II. OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds                  14

Item 3.  Defaults Upon Senior Securities                            14

Item 6.  Exhibits and Reports on Form 8-K                           14


SIGNATURES                                                          15

                                       2


<PAGE>

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

                                                              March 31, 2000                     December 31, 1999
                                                              --------------                     -----------------
                                                                (Unaudited)
<S>                                                             <C>                                  <C>
ASSETS
Current assets:
    Cash and cash equivalents                                   $ 1,019,098                          $   682,629
    Contract receivables                                          3,034,121                            3,526,229
    Prepaid expenses                                                610,462                              210,195
    Inventory                                                     1,245,333                              867,566
                                                            ---------------                      ---------------
                  Total current assets                            5,909,014                            5,286,619

Property, plant and equipment - net of
    accumulated depreciation and
    amortization                                                  6,393,433                            6,740,354

Patents and other intangibles, net                                1,296,343                            1,264,268
Other assets                                                        420,364                              486,612
                                                          -----------------                     ----------------
                                                                $14,019,154                          $13,777,853
                                                                 ==========                           ==========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                             $2,177,534                         $  1,258,334
    Accrued expenses                                              1,878,288                            2,217,413
    Notes payable - stockholders                                  1,440,000                            1,140,000
    Current portion - long-term notes payable -
      stockholders                                                1,165,264                              960,606
    5% convertible debentures                                     2,400,000                            2,400,000
    Current portion - capital lease obligations                      69,708                               69,708
                                                          -----------------                     ----------------
                  Total current liabilities                       9,130,794                            8,046,061

Notes payable - stockholders, excluding
  current portion                                                   704,736                              909,394
Capital lease obligations, excluding
  current portion                                                    68,930                               93,415
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                             <C>                                  <C>
Commitments and contingencies
Stockholders' equity:
    Common Stock - par  value  $.01 per  share,
     authorized  60,000,000  shares, issued
       43,975,502 shares in 2000 and
       43,088,184 shares in 1999                                    439,755                              430,882
    Additional paid-in capital                                   68,423,730                           67,207,604
    Accumulated deficit                                         (64,747,760)                         (62,908,472)
    Less: Treasury stock, at cost,
           7,290 shares                                             (1,031)                               (1,031)
                                                          -----------------                    -----------------
                  Total stockholders' equity                      4,114,694                            4,728,983
                                                          -----------------                    -----------------
                                                                $14,019,154                          $13,777,853
                                                                 ==========                           ==========
</TABLE>


See notes to condensed financial statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>

                           UNIGENE LABORATORIES, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                               Three Months Ended
                                                                     March 31
                                                  ---------------------------------------------
                                                          2000                      1999
                                                         -------                   -------
<S>                                                     <C>                     <C>
Licensing and other revenue                             $  1,001,250           $  2,500,172
                                                        ------------           ------------
Operating expenses:
    Research and development                               1,998,668              2,373,643

    General and administrative                               599,413                476,236
                                                        ------------           ------------
                                                           2,598,081              2,849,879
                                                        ------------           ------------
Operating loss                                            (1,596,831)              (349,707)
                                                        ------------           ------------
Other income (expense):
   Interest income                                            12,075                 10,953
   Interest expense                                         (254,532)              (225,001)
                                                        ------------           ------------
                                                            (242,457)              (214,048)

                                                        ------------           ------------
Net loss                                                $ (1,839,288)          $   (563,755)
                                                        ============           ============
Net loss per share, basic                               $       (.04)          $       (.01)
                                                        ============           ============
Net loss per share, diluted                             $       (.04)          $       (.01)
                                                        ============           ============
Weighted average number of shares outstanding,            43,342,280             39,558,201
  basic and diluted                                     ============           ============
</TABLE>

See notes to condensed financial statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>
                           UNIGENE LABORATORIES, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

                                                                          Three Months Ended
                                                                               March 31
                                                                    -------------------------------
                                                                       2000                    1999
                                                                     -------                 -------
<S>                                                                  <C>                   <C>
       Net cash provided by (used for) operating activities          $(1,143,926)          $   187,880
                                                                     -----------           -----------
Investing activities:

    Purchase of equipment and furniture                                  (29,599)              (28,413)
    Increase in patents and other intangibles                            (42,509)               (3,985)
    Decrease in other assets                                              55,669                54,064
    Construction of leasehold improvements                                (3,680)                 (910)
                                                                     -----------           -----------
                                                                         (20,119)               20,756
                                                                     -----------           -----------
Financing activities:

    Issuance of stockholder notes                                        300,000                  --
    Exercise of stock options and warrants                             1,224,999                  --
    Repayment of capital lease obligations                               (24,485)              (21,768)
                                                                     -----------           -----------
                                                                       1,500,514               (21,768)
                                                                     -----------           -----------

Net increase in cash and cash equivalents                                336,469               186,868

Cash and cash equivalents at beginning of year                           682,629               402,664
                                                                     -----------           -----------
Cash and cash equivalents at end of period                           $ 1,019,098           $   589,532
                                                                     ===========           ===========

SUPPLEMENTAL CASH FLOW INFORMATION:

Non-cash investing and financing activities:

Conversion of convertible debentures and
   accrued interest into Common Stock                                      --                 $301,096
                                                                          ======              ========

Cash paid for interest                                                    $6,449              $  4,600
                                                                          ======              ========
</TABLE>

                  See notes to condensed financial statements

                                        5
<PAGE>

                           UNIGENE LABORATORIES, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                 MARCH 31, 2000
                                   (Unaudited)

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
three-month  period ending March 31, 2000 are not necessarily  indicative of the
results that may be expected for the year ended  December 31, 2000.  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, 1999.

In December  1999, the  Securities  and Exchange  Commission  staff issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101").  SAB 101  summarizes  certain of the staff's views in applying  generally
accepted accounting  principles to revenue  recognition in financial  statements
and specifically addresses revenue recognition in the biotechnology industry for
non-refundable technology access fees and other non-refundable fees. The Company
must adopt SAB 101, as amended,  in the second quarter of 2000 with an effective
date of January 1, 2000, and the recognition of a cumulative effect  adjustment,
if any,  calculated as of January 1, 2000. The Company is evaluating SAB 101 and
the  effect it may have on the  financial  statements  and its  current  revenue
recognition policy.

NOTE B - LIQUIDITY

The Company has incurred annual  operating  losses since its inception and, as a
result,  at  March  31,  2000  had  an  accumulated   deficit  of  approximately
$64,748,000 and a working capital  deficiency of approximately  $3,222,000.  The
independent  auditors'  report covering the Company's 1999 financial  statements
includes  an   explanatory   paragraph  that  states  the  above  factors  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
However,  the financial  statements  have been prepared on a going concern basis
and as such do not include any adjustments that might result from the outcome of
this uncertainty.

The Company's  operational cash requirements are approximately $10 to 11 million
per year to operate  its  research  and  peptide  manufacturing  facilities  and
develop its  products.  In addition to its  obligations  with  respect to the 5%
Debentures,  the Company has  principal and interest  obligations  over the next
several years under its outstanding notes payable to stockholders.

After  receipt of $1.5 million from  Warner-Lambert  in February and March 2000,
and an  additional  $3  million  in April 2000 in  satisfaction  of  outstanding
receivables  and for  achieving an  additional  milestone  pursuant to a license
agreement  with  Warner-Lambert,   management  believes  that  the  Company  has
sufficient  financial  resources to sustain its  operations at the current level
into the third  quarter of 2000.  The Company will require  additional  funds to
ensure continued  operations beyond that time.  Payment of the obligations under
the 5%  Debentures  may require  additional  financing.  The Company  expects to
achieve additional  milestones under the  Warner-Lambert  agreement during 2000,
which will result in further payments.  However, there can be no assurance as to
when or if the Company will achieve such milestones.

In addition to the  Warner-Lambert  agreement,  management  is actively  seeking
other licensing and/or supply agreements with  pharmaceutical  companies for its
injectable and nasal Calcitonin products and for other  pharmaceutical  products
that can be manufactured and/or delivered using its patented technologies. These
agreements could provide  short-term funds to the Company in upfront payments as
well as  milestone  payments.  The  Company  also is  eligible to sell state tax
benefits,  which  may  yield up to $2.5  million,  under a New  Jersey  Economic
Development  Authority  (the "NJEDA")  program,  which allows certain New Jersey
taxpayers  to sell their  state tax  benefits  to  third-parties.  However,  the

                                       6
<PAGE>

proceeds  will be  received  over the next few years and the size and  timing of
such proceeds are subject to the  continued  funding of the program by the State
of New  Jersey as well as  limitations  based on the level of  participation  by
other companies. The Company must apply to the NJEDA each year to be eligible to
receive  approval for the sale of its benefits.  There can be no assurance  that
any of these transactions will be completed or, if completed, that the terms and
timing of such transactions would provide sufficient funds to sustain operations
at the  current  level.  In  the  absence  of or  the  delay  in  achieving  the
Warner-Lambert  milestones or in signing other  agreements,  obtaining  adequate
funds from other sources, which might include a debt or equity financing,  would
be necessary to sustain the Company's operations. 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.  In  addition,  the
delisting of the Company's  Common Stock by the Nasdaq  National Market also may
have an adverse affect on the Company's ability to raise equity-based capital.

While the Company believes that the  Warner-Lambert  licensing  transaction will
satisfy the Company's liquidity requirements over the near-term,  satisfying the
Company's   long-term   liquidity   requirements  will  require  the  successful
commercialization  of the product licensed to Warner-Lambert  and/or one or more
of its other products to be licensed. In addition,  the commercialization of its
products  will  require the Company to incur  additional  capital  expenditures,
including  expenditures  to  expand  or  upgrade  the  Company's   manufacturing
operations  to  satisfy  all of its  Calcitonin  supply  obligations  under  the
Warner-Lambert  license agreement.  However,  neither the cost or timing of such
capital expenditures are determinable at this time.

NOTE C - NOTES PAYABLE - STOCKHOLDERS

During  February 2000 Jay Levy,  the chairman of the board and an officer of the
Company,  loaned the Company $300,000 evidenced by demand notes bearing interest
at the Merrill Lynch Margin Loan Rate plus .25% (9.375 at March 31,  2000).  The
Company repaid this loan in April 2000.

NOTE D - CONVERTIBLE DEBENTURES

In June  1998,  the  Company  completed  a private  placement  of $4  million in
principal amount of 5% convertible  debentures (the "5% Debentures")  from which
it realized net proceeds of approximately $3.75 million.  The 5% Debentures were
convertible into shares of Common Stock and, in addition,  provided that (i) the
interest  on the 5%  Debentures,  at the option of the  Company,  was payable in
shares of Common  Stock and (ii) upon  conversion,  the holder was  entitled  to
receive  warrants to purchase a number of shares of Common  Stock equal to 4% of
the  number  of shares  issued  pursuant  to the  conversion  (the  "Warrants").
However,  the number of shares of Common  Stock that the Company is obligated to
issue, in the aggregate,  upon conversion,  when combined with the shares issued
in payment of  interest  and upon the  exercise of the  Warrants,  is limited to
3,852,500  shares (the "Share  Limit").  After this Share Limit is reached,  the
Company is obligated to redeem all 5%  Debentures  tendered for  conversion at a
redemption price equal to 120% of the principal  amount,  plus accrued interest.
During  December  1999,  the  Company  was unable to convert  $200,000 of the 5%
Debentures  temdered for conversion as such  conversion  would have exceeded the
Share Limit. As a result, the Company accrued the 20% premium on the outstanding
$2,000,000 principal amount of the 5% Debentures in the amount of $400,000 as of
December 31,  1999.  As of March 31, 2000,  all of the  $2,000,000  in principal
amount of 5%  Debentures  have been  tendered for  conversion  and therefore are
classified as a current liability.

Through  March 31, 2000,  the Company has issued a total of 3,703,362  shares of
Common  Stock  upon  conversion  of $2  million  in  principal  amount of the 5%
Debentures or in payment of interest thereon,  and an additional  103,032 shares
of Common Stock upon the cashless exercise of all of the 141,123 Warrants issued
upon  conversion  of the 5%  Debentures.

On January 5, 2000, the Company failed to make the required semi-annual interest
payment on the outstanding 5% Debentures.  As a result, the interest rate on the
outstanding 5% Debentures has increased to 20% per year. As of May 15, 2000, the
accrued and unpaid interest on the 5% Debentures totaled approximately $215,000.

In addition,  due to the delisting of the Common Stock from the Nasdaq  National
Market in October 1999, the Company became obligated under a separate  agreement
to pay the holder of the 5% Debentures an amount equal to 2% of the  outstanding
principal  amount of the debentures per month. The Company has not made any such
payments to date but has accrued the amounts as an expense.  As of May 15, 2000,
the accrued and unpaid amount of this penalty totaled approximately $317,000.


The Company is in discussions  with the holder of the 5% Debentures in an effort
to settle its payment obligations on acceptable terms. However,  there can be no
assurance that the Company will be able to reach a settlement or to obtain terms
the Company considers acceptable.

NOTE E - INVENTORY

Inventories are stated at the lower cost (using the first-in,  first-out method)
or market and consist of the following:

                                          March 31, 2000    December 31, 1999
                                          --------------    -----------------

Finished goods......................         $  952,429            $ 596,359
Raw materials.......................            292,904              271,207
                                             ----------            ---------
     Total..........................         $1,245,333            $ 867,566
                                             ==========            =========
<PAGE>

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

RESULTS OF OPERATIONS

Revenue  for  the  first  quarter  of  2000  decreased  60% to  $1,001,000  from
$2,500,000 in the first quarter of 1999.  Revenue consists  primarily of revenue
from Warner-Lambert Company, resulting from the achievement of milestones in the
development  of an oral  Calcitonin  product for treating  osteoporosis.  Yearly
revenue is affected by the timing of the completion of the various milestones.

Research and  development,  the  Company's  largest  expense,  decreased  16% to
$1,999,000  from  $2,374,000  for the three  months  ended  March 31,  2000,  as
compared to the same period in 1999. The decrease was primarily  attributable to
a reduction in the production  costs per gram of Calcitonin,  principally due to
production  efficiencies,  as a  result  of the  implementation  of an  enhanced
manufacturing process at the Company's Boonton manufacturing  facility and to an
increase  of such costs  that could be  inventoried.  In  addition,  there was a
reduction in first quarter 2000  consulting  and regulatory  filing  expenses as
compared  to  comparable  expenses  incurred  in 1999  in  connection  with  the
Company's filing of a Type II Variation in Europe for its injectable  calcitonin
product.  These were partially offset by increased  development expenses related
to the Company's nasal calcitonin product.

General and administrative  expenses increased 26% to $599,000 from $476,000 for
the three months  ended March 31, 2000,  as compared to the same period in 1999.
The increase was primarily  due to increased  personnel  costs and  professional
fees.

                                       7
<PAGE>

Interest  income  increased  $1,000 or 10% for the three  months ended March 31,
2000,  as  compared  to the same period in 1999,  due to higher  interest  rates
earned on investments in 2000.

Interest expense increased $30,000 or 13% in first quarter 2000 to $255,000 from
$225,000  in  first  quarter  1999.  Interest  expense  for  1999  includes  the
amortization  of the value of the  beneficial  conversion  feature  and  related
warrants of the Company's 5%  convertible  debentures in the amount of $151,000.
Excluding the change in the amortization  charged to interest,  interest expense
increased in first quarter 2000 as compared to first quarter 1999  primarily due
to a 2% monthly  delisting  penalty on the 5% Debentures  and an increase in the
annual  interest  rate  to 20%  due to the  failure  of the  Company  to  make a
semi-annual  interest payment on the 5% Debentures that was due in January 2000.
These were partially offset by a decrease in the balance  outstanding  under the
Company's 5% Debentures as a result of partial conversions to Common Stock.

Due to the $1.5 million decrease in milestone revenue from Warner-Lambert in the
first quarter of 2000,  partially  offset by a reduction in operating  expenses,
net loss increased $1,275,000 or 226% from the corresponding period in 1999.

As of December  31, 1999,  the Company had  available  for income tax  reporting
purposes  net  operating  loss   carryforwards  in  the  approximate  amount  of
$58,200,000,  expiring  from 2000 through  2019,  which are  available to reduce
future  earnings which would  otherwise be subject to federal income taxes.  For
the three  months  ending  March 31, 2000,  the Company  accumulated  additional
losses of approximately  $1,839,000. In addition, the Company has investment tax
credits  and  research  and  development  credits in the  amounts of $14,000 and
$2,300,000,  respectively,  which are  available  to reduce the amount of future
federal  income  taxes.  These  credits  expire from 2000  through  2019.  As of
December 31, 1999, the Company had New Jersey  operating loss  carryforwards  in
the approximate  amount of $26,500,000,  expiring from 2003 through 2006,  which
are available to reduce  future  earnings,  which would  otherwise be subject to
state income tax. To date,  approximately  $25,000,000  of these New Jersey loss
carryforwards  have been  approved for future sale  pursuant to a program of the
NJEDA.  However,  the  Company  must  apply to the NJEDA each year and must meet
various requirements for continuing eligibility and the program must continue to
be funded by the State of New Jersey.

The Company follows Statement of Financial  Accounting Standards (SFAS) No. 109,
"Accounting  for Income  Taxes".  Given the Company's  past history of incurring
operating losses,  any deferred tax assets that are recognizable  under SFAS 109
have been fully reserved.  As of December 31, 1999,  under SFAS 109, the Company
had deferred  tax assets of  approximately  $26,000,000,  subject to a valuation
allowance of $26,000,000.  The deferred tax assets are primarily a result of the
Company's net operating  losses and tax credits  generated.  For the three-month
period ended March 31, 2000,  the  Company's  deferred tax assets and  valuation
allowances each increased by approximately $800,000.

LIQUIDITY AND CAPITAL RESOURCES

During 1994, the Company  constructed its peptide production  facility at leased
premises in Boonton,  New Jersey.  The facility began  production  under current
Good Manufacturing  Practice ("cGMP")  guidelines in 1996. The Company's current
lease  expires in 2004 and it has two ten-year  renewal  options on the lease as
well as an option to purchase  the  facility.  There  currently  are no material
commitments  outstanding for capital expenditures relating to either the Boonton
facility or the  Company's  office and  laboratory  facility in  Fairfield,  New
Jersey.  However,  the  Company  must apply to the NJEDA each year and must meet
various requirements for continuing eligibility and the program must continue to
be funded by the State of New Jersey.

The Company, at March 31, 2000, had cash and cash equivalents of $1,019,000,  an
increase of $336,000 from December 31, 1999.

                                       8
<PAGE>
The Company has incurred annual  operating  losses since its inception and, as a
result,  at  March  31,  2000  had  an  accumulated   deficit  of  approximately
$64,748,000 and a working capital  deficiency of approximately  $3,222,000.  The
independent  auditors'  report covering the Company's 1999 financial  statements
includes  an  explanatory   paragraph  stating  that  the  above  factors  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
However,  the financial  statements  have been prepared on a going concern basis
and as such do not include any adjustments that might result from the outcome of
this  uncertainty.  In October 1999, the Company's  Common Stock was delisted by
the Nasdaq Stock  Market.  The delisting of the Common Stock may have an adverse
effect on the Company's ability to raise capital.

The  Company's  future  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 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.  Through March 31, 2000, the Company
had received $3 million for an equity investment, $3 million for a licensing fee
and  recognized  an  aggregate  of  $15.5  million  in  milestone  revenue  from
Warner-Lambert.  Under  the  terms of the  license  agreement,  the  Company  is
eligible to receive up to an additional $33 million in milestone  revenue during
the course of the development program.  Early-stage  milestones primarily relate
to the product's performance characteristics,  while the latter-stage milestones
are primarily related to regulatory activities 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.  The Company has licensed  distributors in the
United  Kingdom and Ireland and in Israel for its  injectable  formulation.  The
Company is actively  seeking  other  licensing  and/or  supply  agreements  with
pharmaceutical  companies for its injectable and nasal  Calcitonin  products and
for other  pharmaceutical  products that can be  manufactured  and/or  delivered
using  its  patented  technologies.  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 in
principal amount of 5% convertible  debentures (the "5% Debentures")  from which
it realized net proceeds of approximately $3.75 million.  The 5% Debentures were
convertible into shares of Common Stock and, in addition,  provided that (i) the
interest  on the 5%  Debentures,  at the option of the  Company,  was payable in
shares of Common  Stock and (ii) upon  conversion,  the holder was  entitled  to
receive  warrants to purchase a number of shares of Common  Stock equal to 4% of
the  number  of shares  issued  pursuant  to the  conversion  (the  "Warrants").
However,  the number of shares of Common  Stock that the Company is obligated to
issue, in the aggregate,  upon conversion,  when combined with the shares issued
in payment of  interest  and upon the  exercise of the  Warrants,  is limited to
3,852,500  shares (the "Share  Limit").  After this Share Limit is reached,  the
Company is obligated to redeem all 5%  Debentures  tendered for  conversion at a
redemption price equal to 120% of the principal  amount,  plus accrued interest.
During  December  1999,  the  Company  was unable to convert  $200,000 of the 5%
Debentures  temdered for conversion as such  conversion  would have exceeded the
Share Limit. As a result, the Company accrued the 20% premium on the outstanding
$2,000,000 principal amount of the 5% Debentures in the amount of $400,000 as of
December 31,  1999.  As of March 31, 2000,  all of the  $2,000,000  in principal
amount of 5%  Debentures  have been  tendered for  conversion  and therefore are
classified as a current liability.

Through  March 31, 2000,  the Company has issued a total of 3,703,362  shares of
Common  Stock  upon  conversion  of $2  million  in  principal  amount of the 5%
Debentures or in payment of interest thereon,  and an additional  103,032 shares
of Common Stock upon the cashless exercise of all of the 141,123 Warrants issued
upon  conversion  of the 5%  Debentures.

                                       9
<PAGE>

On January 5, 2000, the Company failed to make the required semi-annual interest
payment on the outstanding 5% Debentures.  As a result, the interest rate on the
outstanding 5% Debentures has increased to 20% per year. As of May 15, 2000, the
accrued and unpaid interest on the 5% Debentures totaled approximately $215,000.

In addition,  due to the delisting of the Common Stock from the Nasdaq  National
Market in October 1999, the Company became obligated under a separate  agreement
to pay the holder of the 5% Debentures an amount equal to 2% of the  outstanding
principal  amount of the debentures per month. The Company has not made any such
payments to date but has accrued the amounts as an expense.  As of May 15, 2000,
the accrued and unpaid amount of this penalty  totaled  approximately  $317,000.

The Company is in discussions  with the holder of the 5% Debentures in an effort
to settle its payment obligations on acceptable terms. However,  there can be no
assurance that the Company will be able to reach a settlement or to obtain terms
the Company considers acceptable.

From time to time,  Jay Levy,  the  chairman  of the board and an officer of the
Company, and Warren Levy and Ronald Levy, directors and officers of the Company,
have made  loans to the  Company.  During  February  2000,  Jay Levy  loaned the
Company $300,000.  This loan was repaid in April 2000. As of March 31, 2000, the
outstanding  loans by these  individuals to the Company  consisted of: (i) joint
loans from the three individuals in the aggregate principal amount of $1,440,000
evidenced by demand notes bearing a floating  interest rate equal to the Merrill
Lynch  Margin  Loan  Rate  plus  .25%  (9.375%  at March  31,  2000),  which are
classified  as  short-term  debt,  and (ii) loans from Jay Levy in the aggregate
principal amount of $1,870,000 evidenced by term notes maturing January 2002 and
bearing  interest  at the fixed rate of 6% per year (the "Jay Levy  Notes")  and
which are secured by a security interest in all of the Company's equipment and a
mortgage on the Company's real property. The terms of the Jay Levy Notes require
the Company to make installment payments of principal and interest commencing in
October 1999 and ending in January  2002 in an  aggregate  amount of $72,426 per
month.  No  installment  payments have been made to date. Jay Levy has agreed to
temporarily  postpone  current  payments  and has also  agreed that he will not,
prior to January 1, 2001,  declare  all or any portion of the  principal  or the
accrued  interest  on the notes  immediately  due and  payable  by reason of the
failure of the Company to make, when due, any scheduled  payment of principal or
interest on any of the notes as permitted by the loan agreements.

The Company's  operational cash requirements are approximately $10 to 11 million
per year to operate  its  research  and  peptide  manufacturing  facilities  and
develop its  products.  In addition to its  obligations  with  respect to the 5%
Debentures,  the Company has  principal and interest  obligations  over the next
several years under its outstanding notes payable to stockholders.

After  receipt of $1.5 million from  Warner-Lambert  in February and March 2000,
and  an  additional  $3  million  in  April,   in  satisfaction  of  outstanding
receivables  and for  achieving an  additional  milestone  pursuant to a license
agreement  with  Warner-Lambert,   management  believes  that  the  Company  has
sufficient  financial  resources to sustain its  operations at the current level
into the third  quarter of 2000.  The Company will require  additional  funds to
ensure continued  operations beyond that time.  Payment of the obligations under
the 5%  Debentures  may require  additional  financing. The  Company  expects to
achieve additional  milestones under the  Warner-Lambert  agreement during 2000,
which will result in further payments.  However, there can be no assurance as to
when or if the Company will achieve such milestones.

The  proprietary  rights  licensed  to  Warner-Lambert  involve  only  the  oral
formulation of Calcitonin. The Company has retained the right to license the use
of its  technologies  for other  Calcitonin and peptide  products on a worldwide
basis.  The Company  currently is seeking to enter into licensing  and/or supply
agreements  with  other  pharmaceutical  companies  for  these  products.  These
agreements could provide  short-term funds to the Company in upfront payments as
well as  milestone  payments.  The  Company  also is  eligible to sell state tax
benefits,  which  may yield up to $2.5  million,  under a NJEDA  program,  which
allows  certain New Jersey  taxpayers  to sell their state tax benefits to third
parties.  However, the proceeds will be received over the next few years and the
size and timing of such  proceeds  are subject to the  continued  funding of the
program by the State of New Jersey as well as limitations  based on the level of
participation  by other  companies.  In addition,  the Company must apply to the
NJEDA each year and must meet various  requirements for continuing  eligibility.
However, there can be no assurance that any of these

                                       10
<PAGE>

transactions  will be completed or, if  completed,  that the terms and timing of
such transactions  would provide  sufficient funds to sustain  operations at the
current level.

In the absence of, or the delay in, achieving the  Warner-Lambert  milestones or
in signing other agreements,  obtaining adequate funds from other sources, which
might  include a debt or equity  financing,  would be  necessary  to sustain the
Company's  operations.  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.  Equity financing of the Company also may be
adversely  affected by the delisting of the Company's Common Stock by the Nasdaq
Stock Market.

While the Company believes that the  Warner-Lambert  licensing  transaction will
satisfy the Company's liquidity requirements over the near-term,  satisfying the
Company's   long-term   liquidity   requirements  will  require  the  successful
commercialization  of the product licensed to Warner-Lambert  and/or one or more
of its other products to be licensed. In addition,  the commercialization of its
Calcitonin  products  will  require  the  Company  to incur  additional  capital
expenditures,   including  expenditures  to  expand  or  upgrade  the  Company's
manufacturing  operations to satisfy all of its  Calcitonin  supply  obligations
under the Warner-Lambert license agreement.  However, neither the cost or timing
of such capital expenditures are determinable at this time.

OTHER

The Company's  Common Stock has been delisted  from the Nasdaq  National  Market
System  effective  October 5, 1999 and is now trading on the OTC Bulletin Board.
The Company has filed an appeal  with Nasdaq to review the  delisting  decision.
The outcome of the appeal is pending.

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting For Derivative  Instruments and Hedging  Activities." This statement
establishes  accounting  and  reporting  standards for  derivative  instruments,
including certain derivative  instruments  embedded in other contracts,  and for
hedging  activities.  SFAS  No.  133,  as  amended,  will be  effective  for the
Company's fiscal year beginning January 1, 2001. The adoption of SFAS No. 133 is
not expected to have a material  effect on the Company's  financial  position or
results of operations.

In December  1999, the  Securities  and Exchange  Commission  staff issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101").  SAB 101  summarizes  certain of the staff's views in applying  generally
accepted accounting  principles to revenue  recognition in financial  statements
and specifically addresses revenue recognition in the biotechnology industry for
non-refundable technology access fees and other non-refundable fees. The Company
must adopt SAB 101, as amended,  in the second quarter of 2000 with an effective
date of January 1, 2000, and the recognition of a cumulative effect  adjustment,
if any,  calculated as of January 1, 2000. The Company is evaluating SAB 101 and
the  effect it may have on the  financial  statements  and its  current  revenue
recognition policy.

                                       11
<PAGE>
Item 3.        Quantitative and Qualitative Disclosures About Market Risk

MARKET RISK

In the normal  course of  business,  the Company is exposed to  fluctuations  in
interest rates due to the use of debt financing to fund part of its  operations.
The Company does not employ specific  strategies,  such as the use of derivative
instruments or hedging, to manage its interest rate exposure. Since December 31,
1999,  the  Company's  interest  rate  exposure  on the 5%  Debentures  has been
affected by the Company's  delisting from the Nasdaq National Market and failure
to make the semi-annual interest payment in January 2000.

The information below summarizes the Company's market risks associated with debt
obligations  as of March  31,  2000.  Fair  values  included  herein  have  been
estimated taking into  consideration the nature and terms of each instrument and
the prevailing economic and market conditions at March 31, 2000. The table below
presents  principal  cash flows and related  interest  rates by year of maturity
based on the  terms of the  debt.  Under  the  terms  of the 5%  Debentures,  no
additional  shares may be issued to convert  the  remaining  principal  balance.
Therefore,   the  information  presented  as  to  these  debentures  is  without
consideration  as to conversion  features.  Variable  interest  rates  disclosed
represent the rates at March 31, 2000.
<TABLE>
<CAPTION>

                                    Estimated                                                Year of Maturity
                                      Fair               Carrying                            -------------------
                                      Value               Amount           2000         2001        2002       2003     2004
                                   ----------            --------          ----         ----        ----       ----     ----
<S>                                <C>                 <C>              <C>             <C>         <C>        <C>      <C>
Notes payable - stockholders       $1,440,000          1,440,000        1,440,000         --         --         --       --
Variable interest rate                                                    9.375%          --         --         --       --

Notes payable - stockholders       $1,506,000          1,870,000          960,606       837,328     72,066      --       --
Fixed interest rate                                                          6%           6%          6%        --       --

5% convertible debentures          $2,400,000          2,400,000        2,400,000         --          --        --       --
Fixed interest rate (1)                                                      20%
</TABLE>

(1)    As a result of the  Company's  failure to make the  semi-annual  interest
       payment  that  was due  January  5,  2000,  the  interest  rate on the 5%
       Debentures  increased  from 7% at  December  31,  1999  to 20%  beginning
       January 5, 2000.

                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, including the Company's need
for and success in securing  additional  financing,  competition,  the Company's
dependence on other  companies to  commercialize,  manufacture and sell products

<PAGE>

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,  including the Company's
Annual Report or Form 10-K for the year ended December 31, 1999.

                                       12
<PAGE>


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.


In the first quarter of 2000,  the Company issued 626,036 shares of Common Stock
upon the  exercise of an equal  number of warrants  exercisable  to purchase one
share of Common Stock at exercise  prices ranging from $1.38 to $2.43 per share.
An  additional  103,032  shares of Common  Stock were issued  upon the  cashless
exercise of a total of 141,123  warrants at exercise prices ranging from $.46 to
$1.52  per  share.  All of  such  shares  were  issued  by the  Company  without
registration  in reliance on an exemption  under Section 4 (2) of the Securities
Act.

(d)      Not applicable.


Item 3. Defaults Upon Senior Securities

See description of 5% Debentures in Part 1, Item 2: "Management's Discussion and
Analysis of  Financial  Condition  and  Results of  Operations  - Liquidity  and
Capital Resources."

Item 6.          Exhibits and Reports on Form 8-K

         (a)     Exhibits:  Exhibit 27  Financial  Data  Schedule - period ended
                 March 31, 2000.

         (b)     Reports on Form 8-K:

The Company did not file any reports on Form 8-K during the three  months  ended
March 31, 2000.

                                       13
<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
                                       -------------------
May 15, 2000                           Warren P. Levy, President
                                       (Chief Executive Officer)



                                       /s/ Jay Levy
                                       ------------
May 15, 2000                           Jay Levy, Treasurer
                                       (Chief Financial Officer and
                                       Chief Accounting Officer)


                                       14