UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934





For the
quarterly period ended April 30, 2009





o TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934





For
the transition period from _________________ to ________________





COMMISSION
FILE NUMBER: 0-25169





GENEREX BIOTECHNOLOGY
CORPORATION


(Exact
name of registrant as specified in its charter)




Delaware
                    
                    98-0178636(State of other jurisdiction of
                      incorporation or
                      organization)
                    
                    (IRS Employer Identification No.)




33 HARBOUR SQUARE, SUITE 202


TORONTO, ONTARIO


CANADA M5J
2G2


(Address
of principal executive offices)





416/364-2551


(Registrant's
telephone number, including area code)




Not
applicable


(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 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. x Yes   ̈ No




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


 ̈Yes      ̈No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
accelerated filer   ̈    Accelerated
filer  x




Non-accelerated
filer   ̈        Smaller
reporting company   ̈





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  o Yes x No





The
number of outstanding shares of the registrant's common stock, par value $.001,
was 183,617,800 as of June 3, 2009.









GENEREX
BIOTECHNOLOGY CORPORATION





INDEX




PART
      I. FINANCIAL INFORMATIONItem
      1.     Financial Statements.(Unaudited)Consolidated
      Balance Sheets -April
      30, 2009 and July 31, 2008
                            1Consolidated
      Statements of Operations — For the three and nine monthperiods
      ended April 30, 2009 and 2008, and cumulative fromNovember
      2, 1995 to April 30, 2009
                            2Consolidated
      Statements of Cash Flows — For the nine monthperiods
      ended April 30, 2009 and 2008, and cumulative fromNovember
      2, 1995 to April 30, 2009
                            3Notes
      to Consolidated Financial Statements
                            5Item
      2. Management's Discussion and Analysis of Financial Condition and
      Results of Operations
                            19Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk
                            34Item
      4. Controls and Procedures
                            34PART
      II: OTHER INFORMATIONItem
      1. Legal Proceedings
                            35Item
      1A. Risk Factors
                            35Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds
                            37Item
      3. Defaults Upon Senior Securities
                            38Item
      4. Submission of Matters to a Vote of Security
Holders
                            38Item
      5. Other Information
                            38Item
      6. Exhibits
                            38Signatures
                            39





PART
I. FINANCIAL INFORMATION





Item
1. Financial Statements


GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 CONSOLIDATED
BALANCE SHEETS
 
 April
      30,
                                
                                
                                July
      31,2009
                                
                                
                                2008(Unaudited)ASSETSCurrent
      Assets:Cash
      and cash equivalents
                                
                                $
                                1,061,355
                                
                                
                                $
                                17,237,510Short-term
      investments
                                
                                
                                —
                                
                                
                                
                                8,852,214Accounts
      receivable
                                
                                
                                89,620
                                
                                
                                
                                81,784Inventory
                                
                                
                                1,250,448
                                
                                
                                
                                1,465,222Other
      current assets
                                
                                
                                719,310
                                
                                
                                
                                380,927Restricted
      cash
                                
                                
                                3,466,667
                                
                                
                                
                                —Convertible
      debenture - advance payments
                                
                                
                                2,202,030
                                
                                
                                
                                —Deferred
      debt issuance costs
                                
                                
                                143,539
                                
                                
                                
                                506,608Total
      Current Assets
                                
                                
                                8,932,969
                                
                                
                                
                                28,524,265Deferred
      Debt Issuance Costs
                                
                                
                                —
                                
                                
                                
                                211,086Property
      and Equipment, Net
                                
                                
                                1,393,137
                                
                                
                                
                                1,744,974Assets
      Held for Investment, Net
                                
                                
                                3,055,766
                                
                                
                                
                                3,713,317Patents,
      Net
                                
                                
                                3,738,977
                                
                                
                                
                                3,954,241TOTAL
      ASSETS
                                
                                $
                                17,120,849
                                
                                
                                $
                                38,147,883LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      Liabilities:Accounts
      payable and accrued expenses
                                
                                $
                                8,557,524
                                
                                
                                $
                                7,469,710Deferred
      revenue and rebate liability
                                
                                
                                149,153
                                
                                
                                
                                125,598Current
      maturities of long-term debt
                                
                                
                                414,971
                                
                                
                                
                                1,832,684Current
      maturities of obligations under capital lease
                                
                                
                                42,360
                                
                                
                                
                                —Convertible
      debentures, net of debt discount of $2,327,509 and $15,931,480 at April
      30, 2009 and July 31, 2008, respectively
                                
                                
                                3,454,490
                                
                                
                                
                                4,718,520Total
      Current Liabilities
                                
                                
                                12,618,498
                                
                                
                                
                                14,146,512Obligations
      Under Capital Lease, Net
                                
                                
                                15,460
                                
                                
                                
                                —Long-Term
      Debt, Net
                                
                                
                                2,221,669
                                
                                
                                
                                1,354,564Commitments
      and ContingenciesStockholders’
      Equity:Special
      Voting Rights Preferred Stock, $.001 par value; authorized  1,000
      shares at April 30, 2009 and July 31, 2008; -0- shares  issued and
      outstanding at April 30, 2009 and July 31, 2008
                                
                                
                                —
                                
                                
                                
                                —Common
      stock, $.001 par value; authorized 500,000,000 shares at  April 30,
      2009 and July 31, 2008; 155,927,556 and 111,992,603 shares  issued
      and outstanding at April 30, 2009 and July 31, 2008,
      respectively
                                
                                
                                155,927
                                
                                
                                
                                111,992Additional
      paid-in capital
                                
                                
                                285,019,904
                                
                                
                                
                                269,849,581Deficit
      accumulated during the development stage
                                
                                
                                (283,313,900
                                )
                                
                                
                                (248,229,261
                                )Accumulated
      other comprehensive income
                                
                                
                                403,291
                                
                                
                                
                                914,495Total
      Stockholders’ Equity
                                
                                
                                2,265,222
                                
                                
                                
                                22,646,807TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                                
                                $
                                17,120,849
                                
                                
                                $
                                38,147,883
 
 The Notes
to Consolidated Financial Statements are an integral part of these
statements.
  1
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 
 For
      the Nine Months
                                                                        EndedApril
      30,
                                                                      
                                                                      
                                                                      For
      the Three Months
                                                                        EndedApril
      30,
                                                                      
                                                                      
                                                                      Cumulative
      From
                                                                        November
      2, 1995
                                                                        (Date
      of Inception)
                                                                        to
      April 30,2009
                                                                      
                                                                      
                                                                      2008
                                                                      
                                                                      
                                                                      2009
                                                                      
                                                                      
                                                                      2008
                                                                      
                                                                      
                                                                      2009(Unaudited)
                                                                      
                                                                      
                                                                      (Unaudited)
                                                                      
                                                                      
                                                                      (Unaudited)
                                                                      
                                                                      
                                                                      (Unaudited)
                                                                      
                                                                      
                                                                      (Unaudited)Revenues,
      net
                                                                      
                                                                      $
                                                                      1,018,233
                                                                      
                                                                      
                                                                      $
                                                                      64,870
                                                                      
                                                                      
                                                                      $
                                                                      45,251
                                                                      
                                                                      
                                                                      $
                                                                      1,530
                                                                      
                                                                      
                                                                      $
                                                                      3,517,618Cost
      of Goods Sold
                                                                      
                                                                      
                                                                      375,687
                                                                      
                                                                      
                                                                      
                                                                      26,224
                                                                      
                                                                      
                                                                      
                                                                      26,297
                                                                      
                                                                      
                                                                      
                                                                      639
                                                                      
                                                                      
                                                                      
                                                                      489,335Operating
      Expenses:Research
      and development
                                                                      
                                                                      
                                                                      10,597,956
                                                                      
                                                                      
                                                                      
                                                                      11,620,817
                                                                      
                                                                      
                                                                      
                                                                      3,001,826
                                                                      
                                                                      
                                                                      
                                                                      4,303,390
                                                                      
                                                                      
                                                                      
                                                                      100,413,450Research
      and development - related party
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      220,218Selling
      and marketing
                                                                      
                                                                      
                                                                      1,814,276
                                                                      
                                                                      
                                                                      
                                                                      1,070,722
                                                                      
                                                                      
                                                                      
                                                                      367,371
                                                                      
                                                                      
                                                                      
                                                                      418,804
                                                                      
                                                                      
                                                                      
                                                                      4,125,871General
      and administrative
                                                                      
                                                                      
                                                                      7,649,085
                                                                      
                                                                      
                                                                      
                                                                      11,733,562
                                                                      
                                                                      
                                                                      
                                                                      2,736,650
                                                                      
                                                                      
                                                                      
                                                                      5,130,769
                                                                      
                                                                      
                                                                      
                                                                      113,285,551General
      and administrative - related party
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      314,328Total
      Operating Expenses
                                                                      
                                                                      
                                                                      20,061,317
                                                                      
                                                                      
                                                                      
                                                                      24,425,101
                                                                      
                                                                      
                                                                      
                                                                      6,105,847
                                                                      
                                                                      
                                                                      
                                                                      9,852,963
                                                                      
                                                                      
                                                                      
                                                                      218,359,418Operating
      Loss
                                                                      
                                                                      
                                                                      (19,418,771
                                                                      )
                                                                      
                                                                      
                                                                      (24,386,455
                                                                      )
                                                                      
                                                                      
                                                                      (6,086,893
                                                                      )
                                                                      
                                                                      
                                                                      (9,852,072
                                                                      )
                                                                      
                                                                      
                                                                      (215,331,135
                                                                      )Other
      Income (Expense):Miscellaneous
      income (expense)
                                                                      
                                                                      
                                                                      3
                                                                      
                                                                      
                                                                      
                                                                      70
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      70
                                                                      
                                                                      
                                                                      
                                                                      196,261Income
      from rental operations, net
                                                                      
                                                                      
                                                                      240,120
                                                                      
                                                                      
                                                                      
                                                                      250,195
                                                                      
                                                                      
                                                                      
                                                                      72,381
                                                                      
                                                                      
                                                                      
                                                                      79,784
                                                                      
                                                                      
                                                                      
                                                                      1,491,581Interest
      income
                                                                      
                                                                      
                                                                      231,505
                                                                      
                                                                      
                                                                      
                                                                      958,457
                                                                      
                                                                      
                                                                      
                                                                      10,408
                                                                      
                                                                      
                                                                      
                                                                      206,950
                                                                      
                                                                      
                                                                      
                                                                      7,740,402Interest
      expense
                                                                      
                                                                      
                                                                      (16,137,496
                                                                      )
                                                                      
                                                                      
                                                                      (725,535
                                                                      )
                                                                      
                                                                      
                                                                      (5,344,911
                                                                      )
                                                                      
                                                                      
                                                                      (608,913
                                                                      )
                                                                      
                                                                      
                                                                      (64,020,069
                                                                      )Loss
      on extinguishment of debt
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      (14,134,068
                                                                      )Net
      Loss Before Undernoted
                                                                      
                                                                      
                                                                      (35,084,639
                                                                      )
                                                                      
                                                                      
                                                                      (23,903,268
                                                                      )
                                                                      
                                                                      
                                                                      (11,349,015
                                                                      )
                                                                      
                                                                      
                                                                      (10,174,181
                                                                      )
                                                                      
                                                                      
                                                                      (284,057,028
                                                                      )Minority
      Interest Share of Loss
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      3,038,185Net
      Loss
                                                                      
                                                                      
                                                                      (35,084,639
                                                                      )
                                                                      
                                                                      
                                                                      (23,903,268
                                                                      )
                                                                      
                                                                      
                                                                      (11,349,015
                                                                      )
                                                                      
                                                                      
                                                                      (10,174,181
                                                                      )
                                                                      
                                                                      
                                                                      (281,018,843
                                                                      )Preferred
      Stock Dividend
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      —
                                                                      
                                                                      
                                                                      
                                                                      2,295,057Net
      Loss Available to Common Shareholders
                                                                      
                                                                      $
                                                                      (35,084,639
                                                                      )
                                                                      
                                                                      $
                                                                      (23,903,268
                                                                      )
                                                                      
                                                                      $
                                                                      (11,349,015
                                                                      )
                                                                      
                                                                      $
                                                                      (10,174,181
                                                                      )
                                                                      
                                                                      $
                                                                      (283,313,900
                                                                      )Basic
      and Diluted Net Loss Per Common Share
                                                                      
                                                                      $
                                                                      (.27
                                                                      )
                                                                      
                                                                      $
                                                                      (.22
                                                                      )
                                                                      
                                                                      $
                                                                      (.08
                                                                      )
                                                                      
                                                                      $
                                                                      (.09
                                                                      )Weighted
      Average Number of Shares of Common Stock Outstanding
                                                                      
                                                                      
                                                                      128,653,235
                                                                      
                                                                      
                                                                      
                                                                      110,758,728
                                                                      
                                                                      
                                                                      
                                                                      143,536,381
                                                                      
                                                                      
                                                                      
                                                                      111,282,111
 
 The Notes
to Consolidated Financial Statements are an integral part of these
statements.
  2
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 
 Cumulative
      FromNovember
      2, 1995For
      the Nine Months
                                                  
                                                  
                                                  (Date
      of Inception)Ended April
      30,
                                                  
                                                  
                                                  to
      April 30,2009
                                                  
                                                  
                                                  2008
                                                  
                                                  
                                                  2009(Unaudited)
                                                  
                                                  
                                                  (Unaudited)
                                                  
                                                  
                                                  (Unaudited)Cash
      Flows From Operating Activities:Net
      loss
                                                  
                                                  $
                                                  (35,084,639
                                                  )
                                                  
                                                  $
                                                  (23,903,268
                                                  )
                                                  
                                                  $
                                                  (281,018,843
                                                  )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
                                                  
                                                  
                                                  609,202
                                                  
                                                  
                                                  
                                                  846,552
                                                  
                                                  
                                                  
                                                  7,576,067Minority
      interest share of loss
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  (3,038,185
                                                  )Reduction
      of notes receivable - common stock in exchange for services
      rendered
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  423,882Write-off
      of uncollectible notes receivable - common stock
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  391,103Write-off
      of deferred offering costs
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  3,406,196Write-off
      of abandoned patents
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  913,196Loss
      on disposal of property and equipment
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  911Loss
      on extinguishment of debt
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  14,134,069Common
      stock issued as employee compensation
                                                  
                                                  
                                                  150,464
                                                  
                                                  
                                                  
                                                  1,109,692
                                                  
                                                  
                                                  
                                                  3,631,729Issuance
      of options and option modifications as employee
    compensation
                                                  
                                                  
                                                  29,040
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  101,618Common
      stock issued for services rendered
                                                  
                                                  
                                                  434,121
                                                  
                                                  
                                                  
                                                  1,429,061
                                                  
                                                  
                                                  
                                                  8,960,319Amortization
      of prepaid services in conjunction with common stock
    issuance
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  138,375Non-cash
      compensation expense
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  45,390Stock
      options and warrants issued for services rendered
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  82,000
                                                  
                                                  
                                                  
                                                  7,354,723Issuance
      of warrants as additional exercise right inducement
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  21,437,909Preferred
      stock issued for services rendered
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  100Treasury
      stock redeemed for non-performance of services
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  (138,000
                                                  )Amortization
      of deferred debt issuance costs and loan origination fees
                                                  
                                                  
                                                  574,155
                                                  
                                                  
                                                  
                                                  51,264
                                                  
                                                  
                                                  
                                                  2,262,090Amortization
      of discount on convertible debentures
                                                  
                                                  
                                                  13,603,972
                                                  
                                                  
                                                  
                                                  408,851
                                                  
                                                  
                                                  
                                                  36,018,083Common
      stock issued as interest payment on convertible debentures
                                                  
                                                  
                                                  391,280
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  675,739Interest
      on short-term advance
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  22,190Founders’
      shares transferred for services rendered
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  353,506Fees
      in connection with refinancing of debt
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  113,274Warrant
      repricing costs
                                                  
                                                  
                                                  1,589,988
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  1,589,988Changes
      in operating assets and liabilities (excluding the effects of
      acquisition):Accounts
      receivable
                                                  
                                                  
                                                  (18,868
                                                  )
                                                  
                                                  
                                                  (39,392
                                                  )
                                                  
                                                  
                                                  (106,249
                                                  )Miscellaneous
      receivables
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  43,812Inventory
                                                  
                                                  
                                                  110,520
                                                  
                                                  
                                                  
                                                  (728,681
                                                  )
                                                  
                                                  
                                                  (1,352,921
                                                  )Other
      current assets
                                                  
                                                  
                                                  (348,162
                                                  )
                                                  
                                                  
                                                  79,714
                                                  
                                                  
                                                  
                                                  (423,188
                                                  )Accounts
      payable and accrued expenses
                                                  
                                                  
                                                  1,174,737
                                                  
                                                  
                                                  
                                                  2,662,777
                                                  
                                                  
                                                  
                                                  13,265,357Deferred
      revenue
                                                  
                                                  
                                                  29,372
                                                  
                                                  
                                                  
                                                  70,897
                                                  
                                                  
                                                  
                                                  154,884Other,
      net
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  110,317Net
      Cash Used in Operating Activities
                                                  
                                                  
                                                  (16,754,818
                                                  )
                                                  
                                                  
                                                  (17,930,533
                                                  )
                                                  
                                                  
                                                  (162,952,559
                                                  )Cash
      Flows From Investing Activities:Purchase
      of property and equipment
                                                  
                                                  
                                                  (1,385
                                                  )
                                                  
                                                  
                                                  (55,461
                                                  )
                                                  
                                                  
                                                  (4,594,932
                                                  )Costs
      incurred for patents
                                                  
                                                  
                                                  (107,638
                                                  )
                                                  
                                                  
                                                  (185,555
                                                  )
                                                  
                                                  
                                                  (2,158,000
                                                  )Change
      in restricted cash
                                                  
                                                  
                                                  (3,466,667
                                                  )
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  (3,420,795
                                                  )Proceeds
      from maturity of short term investments
                                                  
                                                  
                                                  8,852,214
                                                  
                                                  
                                                  
                                                  16,984,782
                                                  
                                                  
                                                  
                                                  195,242,918Purchases
      of short-term investments
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  (24,018,211
                                                  )
                                                  
                                                  
                                                  (195,242,918
                                                  )Cash
      received in conjunction with merger
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  82,232Advances
      to Antigen Express, Inc.
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  (32,000
                                                  )Increase
      in officers’ loans receivable
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  (1,126,157
                                                  )Change
      in deposits
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  (95,102
                                                  )
                                                  
                                                  
                                                  (652,071
                                                  )Change
      in notes receivable - common stock
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  (91,103
                                                  )Change
      in due from related parties
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  (2,222,390
                                                  )Other,
      net
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  89,683Net
      Cash Provided by (Used in) Investing Activities
                                                  
                                                  
                                                  5,276,524
                                                  
                                                  
                                                  
                                                  (7,369,547
                                                  )
                                                  
                                                  
                                                  (14,125,533
                                                  )
 
 The Notes
to Consolidated Financial Statements are an integral part of these
statements.
  3
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
  For
      the Nine Months
                              EndedApril
      30,
                            
                            
                            Cumulative
      From
                              November
      2, 1995
                              (Date
      of Inception)
                              to
      April 30,2009
                            
                            
                            2008
                            
                            
                            2009Cash
      Flows From Financing Activities:Proceeds
      from short-term advance
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            325,179Repayment
      of short-term advance
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (347,369
                            )Proceeds
      from issuance of long-term debt
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            2,005,609Repayment
      of long-term debt
                            
                            
                            (60,751
                            )
                            
                            
                            (66,596
                            )
                            
                            
                            (2,002,595
                            )Repayment
      of obligations under capital lease
                            
                            
                            (25,182
                            )
                            
                            
                            —
                            
                            
                            
                            (25,182
                            )Change
      in due to related parties
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            154,541Proceeds
      from exercise of warrants
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            44,015,049Proceeds
      from exercise of stock options
                            
                            
                            56,000
                            
                            
                            
                            391,790
                            
                            
                            
                            5,001,916Proceeds
      from minority interest investment
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            3,038,185Proceeds
      from issuance of preferred stock
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            12,015,000Redemption
      of SVR preferred stock
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (100
                            )Proceeds
      from issuance of convertible debentures, net
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            40,704,930Payment
      of costs associated with convertible debentures
                            
                            
                            —
                            
                            
                            
                            20,450,000
                            
                            
                            
                            (722,750
                            )Repayments
      of convertible debentures
                            
                            
                            (4,506,667
                            )
                            
                            
                            (722,750
                            )
                            
                            
                            (5,142,424
                            )Purchase
      of treasury stock
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (483,869
                            )Proceeds
      from issuance of common stock, net
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            80,283,719Purchase
      and retirement of common stock
                            
                            
                            —
                            
                            
                            
                            (378,456
                            )
                            
                            
                            (497,522
                            )Net
      Cash Provided by Financing Activities
                            
                            
                            (4,536,600
                            )
                            
                            
                            19,673,988
                            
                            
                            
                            178,322,317Effect
      of Exchange Rates on Cash
                            
                            
                            (161,261
                            )
                            
                            
                            (58,151
                            )
                            
                            
                            (182,870
                            )Net
      Increase (Decrease) in Cash and Cash Equivalents
                            
                            
                            (16,176,155
                            )
                            
                            
                            (5,684,243
                            )
                            
                            
                            1,061,355Cash
      and Cash Equivalents, Beginning of Period
                            
                            
                            17,237,510
                            
                            
                            
                            21,026,067
                            
                            
                            
                            —Cash
      and Cash Equivalents, End of Period
                            
                            $
                            1,061,355
                            
                            
                            $
                            15,341,824
                            
                            
                            $
                            1,061,355
  The Notes
to Consolidated Financial Statements are an integral part of these
statements.




4


GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 1.
              Basis
      of Presentation
 The
accompanying unaudited interim consolidated financial statements have been
prepared pursuant to the rules and regulations for reporting on Form
10-Q.  Accordingly, certain information and disclosures required by
generally accepted accounting principles for complete financial statements are
not included herein.  The interim statements should be read in
conjunction with the financial statements and notes thereto included in the
Company’s latest Annual Report on Form 10-K.  The results for the nine
and three months ended may not be indicative of the results for the entire
year.
 
 Interim
statements are subject to possible adjustments in connection with the annual
audit of the Company’s accounts for the fiscal year 2009.  In the
Company’s opinion, all adjustments necessary for a fair presentation of these
interim statements have been included and are of a normal and recurring
nature.
 
 The
Company is a development stage company, which has a limited history of
operations.  The Company’s revenue includes $1 million received in
conjunction with the execution of a development agreement, grant revenue from
government agencies related to Antigen’s operations, $550,000 in conjunction
with the execution of a licensing agreements and revenue recognized from the
sale of four commercially available products.  Additionally, the
Company has several product candidates that are in various research or early
stages of pre-clinical and clinical development.  There can be no
assurance that the Company will be successful in obtaining regulatory clearance
for the sale of existing or any future products or that any of the Company’s
products will be commercially viable.
 
 Going
Concern
 The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. The Company has experienced
negative cash flows from operations since inception and had an accumulated
deficit at April 30, 2009 of approximately $284 million. The Company has funded
its activities to date almost exclusively from debt and equity
financings.
  The
Company will continue to require substantial funds to continue research and
development, including preclinical studies and clinical trials of its product
candidates, and to commence sales and marketing efforts, if the FDA or other
regulatory approvals are obtained.  Management’s plans in order to meet its
operating cash flow requirements include financing activities such as private
placements of its common stock, preferred stock offerings, issuances of debt and
convertible debt instruments.  Management is also actively pursuing
industry collaboration activities including product licensing and specific
project financing.
 
 While the
Company believes that it will be successful in obtaining the necessary financing
to fund its operations, meet revenue projections and manage costs, there are no
assurances that such additional funding will be achieved and that it will
succeed in its future operations. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or amounts of liabilities that might be necessary should the Company be
unable to continue in existence.
  5
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 2.
              Effects
      of Recent Accounting Pronouncements
 In
September 2006, the FASB issued SFAS No. 157, ”Fair Value Measurements”
(“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring
fair value in accordance with accounting principles generally accepted in the
United States, and expands disclosures about fair value measurements. SFAS 157
was effective for financial statements issued for fiscal years beginning after
November 15, 2007, with earlier application encouraged, but the issuance of
FASB Staff Position SFAS No. 157-2 has delayed the effective date to fiscal
years beginning after November 15, 2008 as it relates to non-financial
assets and non-financial liabilities. Any amounts recognized upon adoption as a
cumulative-effect adjustment will be recorded to the opening balance of retained
earnings in the year of adoption. The adoption of SFAS 157 did not have a
material effect on the Company’s financial condition or results of
operations.
 
 In
February 2007, the FASB issued SFAS No. 159, “Establishing the Fair Value
Option for Financial Assets and Liabilities” (“SFAS 159”) to permit all entities
to choose to elect to measure eligible financial instruments and certain other
items at fair value. The decision whether to elect the fair value option
may occur for each eligible item either on a specified election date or
according to a preexisting policy for specified types of eligible items.
However, that decision must also take place on a date on which criteria under
SFAS 159 occurs. Finally, the decision to elect the fair value option shall
be made on an instrument-by-instrument basis, except in certain circumstances.
An entity shall report unrealized gains and losses on items for which the fair
value option has been elected in earnings at each subsequent reporting date.
SFAS 159 applies to fiscal years beginning after November 15, 2007, with
early adoption permitted for an entity that has also elected to apply the
provisions of SFAS 157. The adoption of SFAS 159 did not have a material effect
on the Company’s financial condition or results of operations.
 
 In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”
(“SFAS 141(R)”). This Statement replaces SFAS No. 141, “Business
Combinations” (“SFAS 141”). This Statement retains the fundamental requirements
in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the
purchase method) be used for all business combinations and for an acquirer to be
identified for each business combination. This Statement also establishes
principles and requirements for how the acquirer: a) recognizes and measures in
its financial statements the identifiable assets acquired, the liabilities
assumed, and any non-controlling interest in the acquiree; b) recognizes and
measures the goodwill acquired in the business combination or a gain from a
bargain purchase and c) determines what information to disclose to enable users
of the financial statements to evaluate the nature and financial effects of the
business combination. SFAS 141(R) will apply prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008. An entity
may not apply it before that date. The Company is currently evaluating the
impact of this statement on its results of operations and financial
position.
 
 In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements” (“SFAS 160”). This Statement amends ARB 51 to
establish accounting and reporting standards for the non-controlling (minority)
interest in a subsidiary and for the deconsolidation of a subsidiary. It
clarifies that a non-controlling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. SFAS 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008.  Earlier adoption is prohibited.  The Company is currently
evaluating the impact of this statement on its results of operations and
financial position.
  6
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities,” and Amendment of FASB Statement No.
133.  SFAS 161 amends SFAS 133, “Accounting for Derivative Instruments
and Hedging Activities,” to amend and expand the disclosure requirements of SFAS
133 to provide greater transparency about (i) how and why an entity uses
derivative instruments, (ii) how derivative instruments and related hedge items
are accounted for under SFAS 133 and its related interpretations, and (iii) how
derivative instruments and related hedged items affect an entity’s financial
position, results of operations and cash flows. To meet those objectives, SFAS
161 requires qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of gains and
losses on derivative instruments and disclosures about credit-risk-related
contingent features in derivative agreements. SFAS 161 is effective for fiscal
years and interim periods beginning after November 15, 2008.  Earlier
adoption is encouraged.  The Company does not expect SFAS 161 to have
a material effect on its consolidated financial statements.
 
 In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS 162"). SFAS 162 is intended to improve financial
reporting by identifying a consistent framework, or hierarchy, for selecting
accounting principles to be used in preparing financial statements that are
presented in conformity with U.S. GAAP for nongovernmental entities. SFAS 162
became effective November 15, 2008. The Company does not expect SFAS 162 to have
a material effect on its consolidated financial statements.
 
 In May
2008, the FASB issued Staff Position (“FSP”) APB 14-1, “Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlements).”  This FSP requires a portion of
this type of convertible debt to be recorded as equity and to record interest
expense on the debt portion at a rate that would have been charged on
nonconvertible debt with the same terms. This FSP takes effect in the first
quarter of fiscal years beginning after December 15, 2008 and will be applied
retrospectively for all periods presented. It will be effective for the Company
on August 1, 2009.  This FSP will apply to the Company’s convertible
debentures.  The Company is currently evaluating how it may affect the
consolidated financial statements.
 
 In June
2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted
in Share-Based Payment Transactions Are Participating
Securities.”  Securities participating in dividends with common stock
according to a formula are participating securities. This FSP determined that
unvested shares of restricted stock and stock units with nonforfeitable rights
to dividends are participating securities. Participating securities require the
“two-class” method to be used to calculate basic earnings per share. This method
lowers basic earnings per common share. This FSP takes effect in the first
quarter of fiscal years beginning after December 15, 2008 and will be applied
retrospectively for all periods presented.  It will be effective for
the Company on August 1, 2009.  The Company does not expect
FSP EITF 03-6-1 to have a material effect on its consolidated financial
statements.
 
 In
June 2008, the EITF reached a consensus in Issue No. 07-5,
“Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
Entity’s Own Stock” (“EITF 07-5”). This Issue addresses the determination of
whether an instrument (or an embedded feature) is indexed to an entity’s own
stock, which is the first part of the scope exception in paragraph 11(a) of SFAS
133. EITF 07-5 is effective for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. Early application is not
permitted. The Company does not expect EITF 07-5 to have a material effect on
its consolidated financial statements.
  7
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A DEVELOPMENT STAGE
COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 3.
              Stock-Based
      Compensation
 As of
April 30, 2009, the Company had three stockholder-approved stock incentive plans
under which shares and options exercisable for shares of common stock have been
or may be granted to employees, directors, consultants and advisors. A total of
2,000,000 shares of common stock are reserved for issuance under the 2000 Stock
Option Plan (the 2000 Plan), a total of 12,000,000 shares of common stock are
reserved for issuance under the 2001 Stock Option Plan (the 2001 Plan) and
10,000,000 shares of common stock are reserved for issuance under the 2006 Stock
Plan (the 2006 Plan). Restricted shares can only be issued under the 2006 Plan.
At April 30, 2009, there were 2,000,000, 3,741,990 and 7,837,000 shares of
common stock reserved for future awards under the 2000 Plan, 2001 Plan and 2006
Plan, respectively.
 
 The 2000,
2001 and 2006 Plans (the Plans) are administered by the Board of Directors (the
Board). The Board is authorized to select from among eligible employees,
directors, advisors and consultants those individuals to whom options are to be
granted and to determine the number of shares to be subject to, and the terms
and conditions of the options. The Board is also authorized to prescribe, amend
and rescind terms relating to options granted under the Plans. Generally, the
interpretation and construction of any provision of the Plans or any options
granted hereunder is within the discretion of the Board.
 
 The Plans
provide that options may or may not be Incentive Stock Options (ISOs) within the
meaning of Section 422 of the Internal Revenue Code. Only employees of the
Company are eligible to receive ISOs, while employees and non-employee
directors, advisors and consultants are eligible to receive options which are
not ISOs, i.e. “Non-Qualified Options.” The options granted by the Board in
connection with its adoption of the Plans were Non-Qualified Options. In
addition, the 2006 Plan also provides for restricted stock grants.
 
 The fair
value of each option granted is estimated on the grant date using the
Black-Scholes option pricing model which takes into account as of the grant date
the exercise price and expected life of the option, the current price of the
underlying stock and its expected volatility, expected dividends on the stock
and the risk-free interest rate for the term of the option.
 
 The fair
value of each option award is estimated on the date of grant using the
Black-Scholes option pricing model.  In the case of restricted stock
grants under the 2006 Plan, fair market value of the shares is the market
price.
 
 The
following is a summary of the common stock options granted, forfeited or expired
and exercised under the Plan for the nine months ended April 30,
2009:
 
 Weighted
                            
                            
                            WeightedAverage
                            
                            
                            AverageExercise
                            
                            
                            Remaining
                            
                            
                            AggregatePrice
                            
                            
                            Contractual
                            
                            
                            IntrinsicShares
                            
                            
                            Share
                            
                            
                            Term (Years)
                            
                            
                            ValueOutstanding,
      August 1, 2008
                            
                            
                            6,246,638
                            
                            
                            $
                            0.66Granted
                            
                            
                            —
                            
                            
                            $
                            —Forfeited
      or expired
                            
                            
                            (1,129,500
                            )
                            
                            $
                            1.68Exercised
                            
                            
                            (100,000
                            )
                            
                            $
                            0.56Outstanding,
      April 30, 2009
                            
                            
                            5,017,138
                            
                            
                            $
                            0.44
                            
                            
                            
                            0.89
                            
                            
                            $
                            871,208Exercisable,
      April 30, 2009
                            
                            
                            4,929,638
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            $
                            871,208Grant
      Date Fair Value of Forfeited or Expired Options
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            $
                            1.28Total
      Intrinsic Value of Options Exercised
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            $
                            15,111
  8
 
 GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 The
following is a summary of the non-vested common stock options granted, vested
and forfeited under the Plan:
  Weighted
                        AverageGrant DateOptions
                      
                      
                      Fair ValueOutstanding,
      August 1, 2008
                      
                      
                      87,500
                      
                      
                      $
                      0.59Granted
                      
                      
                      —
                      
                      
                      $
                      —Vested
                      
                      
                      —
                      
                      
                      $
                      —Forfeited
                      
                      
                      —
                      
                      
                      $
                      —Outstanding,
      April 30, 2009
                      
                      
                      87,500
                      
                      
                      $
                      0.59
 
 As of
April 30, 2009, the Company had $16,133 of total unrecognized compensation cost
related to non-vested share-based compensation arrangements granted under the
Plan.  That cost is expected to be recognized over a weighted-average
period of 1.1 years.
 
 In August
2007, the Company issued 550,000 shares of common stock under the 2006 Plan in
the form of restricted stock awards to officers.  The fair value of
these shares was based on the quoted market price of the Company’s common stock
on the dates of the issuance is $830,500. These shares were issued as an
incentive to retain key employees and officers.  A portion of these
shares vested immediately while the remaining portion will vest over two years
from the date of the grant.  The following table summarizes the
Company’s non-vested restricted stock activity for the nine months ended April
30, 2009:
  WeightedAverageGrant DateNumber of
                    
                    
                    FairShares
                    
                    
                    ValueNon-vested
      stock, August 1, 2008
                    
                    
                    103,906
                    
                    
                    $
                    1.51Granted
                    
                    
                    —
                    
                    
                    
                    —Vested
                    
                    
                    (74,218
                    )
                    
                    
                    1.51Forfeited
                    
                    
                    —
                    
                    
                    
                    —Non-vested
      stock, April 30, 2009
                    
                    
                    29,688
                    
                    
                    $
                    1.51
 
 As of
April 30, 2009, $26,150 of total unrecognized compensation costs related to
unvested shares is expected to be recognized over the remaining service period
of 0.3 years.
 
 4.
              Comprehensive
      Income/(Loss)
 
 Comprehensive
loss, which includes net loss and the change in the foreign currency translation
account, for the nine months ended April 30, 2009 and 2008 was $35,595,843 and
$23,851,381, respectively, and for the three months ended April 30, 2009 and
2008 was $11,451,389 and $10,224,202, respectively.
  9
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 5.
              Accounts
      Payable and Accrued Expenses
 Accounts
payable and accrued expenses consist of the following:
 
 April 30,
                    
                    
                    July 31,2009
                    
                    
                    2008Accounts
      Payable
                    
                    $
                    1,740,173
                    
                    
                    $
                    2,613,789Research
      and Development
                    
                    
                    3,701,430
                    
                    
                    
                    2,048,101Executive
      Compensation
                    
                    
                    2,744,645
                    
                    
                    
                    2,469,026Financial
      Services
                    
                    
                    371,276
                    
                    
                    
                    338,794Total
                    
                    $
                    8,557,524
                    
                    
                    $
                    7,469,710
 
 6.
              Secured
      Convertible Debentures
 The
Company is contractually obligated under various convertible promissory notes
(“convertible debentures”) with accredited investors.  The convertible
debentures are convertible into shares of the Company's common stock at a price
as stipulated in each debenture as amended.
 
 The
convertible debentures are accounted for in accordance with EITF 98-5 and
00-27.  The following summarizes the significant terms and accounting
for each convertible debenture entered into by the Company.
  Notes/Debenture$20,650,000Date
      Issued
                      
                      
                      3/2008Promissory
      Note Amount
                      
                      $
                      (A
                      )#
      of Promissory Notes
                      
                      
                      6Terms
                      
                      (B
                      )Conversion
      Price
                      
                      $
                      1.21Gross
      Proceeds
                      
                      $
                      20,650,000Net
      Cash Proceeds
                      
                      $
                      20,450,000Warrants
      (“Series”) Issued to Investors (C)
                      
                      
                      42,665,274Warrant
      (“Series”) Exercise Price (C)
                      
                      $
                      0.50Existing
      Warrants (“Pre-Extant”) Re-priced (D)
                      
                      
                      12,697,024Re-priced
      Warrant (“Pre-Extant”) Exercise Price (D)
                      
                      
                      0.50Warrant
      Fair Value (WFV) (includes value of re-priced warrants
      (“Pre-Extant”))
                      
                      $
                      21,976,130Warrant
      Relative Fair Value (WRFV)
                      
                      $
                      10,646,218Black-Scholes
      Model Assumptions
                      
                      (E
                      )Beneficial
      Conversion Feature (BCF)
                      
                      $
                      8,768,946Costs
      associated with issuance classified as deferred debt issuance
      costs
                      
                      $
                      722,750Amortization
      of WFV and BCF as Non-cash Interest Expense
                      
                      $
                      17,087,656Principal
      and Interest Converted
                      
                      $
                      —Shares
      Issued Upon Conversion
                      
                      
                      —Principal
      and Interest Repayments in Shares of Common Stock
                      
                      $
                      12,954,643Shares
      Issued for Principal and Interest Repayments
                      
                      
                      42,007,335Principal
      and Interest Repayments in Cash
                      
                      $
                      5,380,697
  10
 
 GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 (A)
              $7,000,000;
      $5,000,000; $3,650,000; (2) $2,000,000;
  $1,000,000
 
 (B)
              The
      debentures carry an 8% coupon and the initial maturity date was September
      30, 2009, and was accelerated to July 1, 2009, provided, however, the
      maturity date may be extended at the option of the
      holder.  Initially, the debentures carried an 18-month term and
      amortized in 15 installments commencing in the fifth month of the
      term.  The principal and interest payments are payable in cash
      or, at the Company's option, the lower of (i) the then applicable
      conversion price and (ii) the price which initially was computed as 90% of
      the arithmetic average of the VWAP of the common stock on each of the
      twenty (20) consecutive trading days immediately preceding the applicable
      installment date, subject to certain conditions. Each installment payment
      elected by the Company to be repaid in shares requires the Company to
      deliver the number of shares estimated to satisfy the installment payment
      20 trading days preceding the installment due date. The difference in the
      value of these shares and the installment payment on the installment date
      is required to be delivered to the holders by issuing additional shares.
      In addition, each debenture lists certain “Events of Default”, which
      include, without limitation, any default in the payment of principal or
      interest in respect of the debentures as when they become due and payable,
      the Company’s failure to observe or perform any other covenant, agreement
      or warranty contained in the agreements relating to the
      debentures.  Upon the occurrence of the “Event of Default”, the
      holder may require us to redeem all or any portion of the debentures upon
      written notice.  Other conditions in the debentures impede the
      Company’s ability to make its monthly installment payments in shares of
      its common stock.  Two of such conditions – the effectiveness of
      the registration statement for at least 30 days prior to installment
      notice and listing maintenance minimum bid price requirement of The NASDAQ
      Stock Market, were not met requiring the Company to procure waivers from
      the debenture holders in respect to these
      conditions.  Additional conditions that would trigger an “Event
      of Default” have been disclosed below under the heading “Forbearance and
      Amendment.”
 
 (C)
              The
      warrants issued to the holders of the debentures are comprised of the
      following: Series A warrants 5,257,729; Series A-1 warrants 7,541,857;
      Series B warrants 17,066,108 and Series C warrants
      12,799,580.  During the nine months ended April 30, 2009, the
      Company revised the terms of these warrants to reduce the exercise price.
      Additionally, the expiration date of the Series A, A-1 and C warrants were
      extended.
 
 a.
                The
      Series C warrants are issuable contingent upon exercise of Series B
      warrants.  The relative fair value associated with the Series C
      warrants at the commitment date amounted to $1,234,836.  At such
      time the contingency is met, the Company would include the relative fair
      value as a charge to interest expense.  The Company has
      accounted for this contingency in accordance with EITF 98-5 and
      00-27.  At April 30, 2009, Series B warrants have not been
      exercised and therefore the contingency has not been
  met.
 
 (D)
              The
      Company re-priced 12,697,024 existing warrants held by the convertible
      debenture holders (“Pre-Extant”).  The value associated with the
      “Pre-Extant” warrants amounted to $5,399,160 and was valued using the
      Black-Scholes pricing model.  The value of the “Pre-Extant”
      warrants has been added to the value of the new warrants issued (see (B)
      above) and accounted for in accordance with EITF 98-5 and
      00-27.  During the nine months ended April 30, 2009, the Company
      revised the terms of the “Pre-Extant” warrants to reduce the exercise
      price and extend the expiration
date.
  11
 
 GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 (E)
              Black-Scholes
      pricing model assumptions used in valuing the “Pre-Extant” warrants were:
      risk free interest (2.70 percent); expected volatility (.8611); life of 1
      1⁄2 years, 7 years and 7 1⁄2 years.
 
 As of
April 30, 2009, the $3,454,490 net outstanding balance of convertible debentures
is comprised of $5,781,999 of debt net of unamortized debt discount of
$2,327,509.  As of July 31, 2008, the $4,718,520 net outstanding
balance of convertible debentures was comprised of $20,650,000 of debt net of
unamortized debt discount of $15,931,480.
 
 Event
of Default
 During
the nine months ended April 30, 2009, one of the Equity Conditions within the
debentures was not satisfied in that the Company received notice from The NASDAQ
Stock Market of the Company’s failure to comply with the minimum bid price
requirement of Marketplace Rule 4310(c)(4) (the “Listing Maintenance Equity
Condition”), which constitutes a “Breach of Condition” under each of the
debentures.
 
 In
addition, during the nine months ended April 30, 2009 the Company was not in
compliance with the Net Cash Balance Test, which constitutes an “Event of
Default” under each of the debentures (the “Net Cash Balance Test
Default”).
 
 The
Company and each of the holders of the debentures entered into each of the
separate agreements to address the defaults caused by non-compliance with the
Listing Maintenance Equity Condition and the Net Cash Balance Test
Default.  Significant provisions of these agreements include the
following:
 
 ·
              Each
      holder agreed to waive (a) the Event of Default under Section 4(a)(xv) of
      the debentures with respect to the Company’s failure to meet Net Cash
      Balance Test in respect of any and all periods prior to December 22, 2008
      (the “Effective Date”), and (b) compliance by the Company with the Net
      Cash Balance Test  for the period commencing on the Effective
      Date and ending on January 30,
2009.
 
 ·
              The
      exercise price of each of the Series Warrants was reduced from $1.21 to
      $0.50.
 
 ·
              The
      exercise price of each of the Pre-Extant Warrants was reduced from $1.10
      to $0.50.
 
 ·
              The
      Company was granted a one-time right to require each of the holders to
      exercise all of their then outstanding Series Warrants and Pre-Extant
      Warrants if the arithmetic average of the volume weighted average price of
      the Common Stock on the Principal Market for a twenty-one (21) consecutive
      Trading Day period is equal to or greater than $1.00.  The
      Company agreed to issue each holder a seven-year warrant to acquire up to
      that number of shares of Common Stock that is equal to the number of
      shares of Common Stock acquired by such holder in connection with such
      holder’s exercise of its Series Warrants and its Pre-Extant Warrants
      pursuant to the exercise of such call option by the Company, at an
      exercise price of $1.00 per share.
 
 ·
              The
      expiration date of each Series A Warrant and each Series A-1 Warrant was
      extended to March 31, 2016.
 
 ·
              The
      expiration date of each Series C Warrant was extended to September
      30, 2016.
 
 ·
              The
      expiration date of each Pre-Extant Warrant was extended to March 31,
      2016.
  12
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 ·
              The
      Company honored the notices it delivered to each of the holders on
      December 1, 2008 in respect of the January 1, 2009 Installment Date
      pursuant to which the Company confirmed its intention to redeem 100% of
      the January 1, 2009 Installment Amounts pursuant to a Company Redemption,
      and the Company paid the applicable Company Redemption Amount when
      due.
 
 As a
result of the event of default, the Company evaluated the debt modification
under the guidance of EITF 96-19 and EITF 06-6. Based on conclusions drawn
during the evaluation, the Company recorded a non-cash charge to the statement
of operations of approximately $1,590,000 which represents the incremental fair
value resulting from the modification of the warrants utilizing the
Black-Scholes pricing model.
 
 Forbearance
and Amendment Agreement
 On
February 27, 2009 (“Effective Date”), the Company and each of the holders of the
Company’s 8% convertible debentures entered into a separate Forbearance and
Amendment Agreement (the “Forbearance Agreement”) pursuant to which the holders
agreed for a 21-day period ending March 20, 2009 (the “Standstill Period”) to
temporarily forbear from exercising certain rights and remedies under the
convertible debentures.   The Standstill Period was extended to
April 3, 2009 by mutual agreement of the parties.  Significant
provisions of these agreements include:
 
 The
Company acknowledged the existence of certain Events of Default (see disclosure
above), including, among others, the Company’s failure to procure the Control
Agreements required by the Company’s December 22, 2008 agreements with the
holders, to satisfy the Net Cash Balance Test under Section 13(f) of the
debentures, and to deliver Event of Default Notices to each holder with respect
to the foregoing Events of Default (“Existing Events of Default”).
 
 During
the Standstill Period, each holder agreed not to exercise any of its rights or
remedies solely with respect to any of the Existing Events of Default. Upon the
expiration of the Standstill Period or upon the occurrence of any Event of
Default occurring after the Effective Date (each such event a “Standstill
Termination”), each holder will have the right to immediately exercise all of
its rights and remedies under the debentures and the related Security
Agreement.
 
 Pursuant
to the Forbearance Agreement, the Company and each holder agreed to amend the
terms of each debenture as follows:
 
 ·
              The
      Maturity Date was accelerated from August 30, 2009 to July 1, 2009,
      subject to extension by the holder.
 
 ·
              The
      term “Installment Date” was amended to mean each of the following dates:
      (i) August 1, 2008, (ii) September 1, 2008, (iii) October 1, 2008, (iv)
      November 1, 2008, (v) December 1, 2008, (vi) January 1, 2009, (vii)
      February 1, 2009, (viii) March 1, 2009, (ix) April 1, 2009, (x) May 1,
      2009, (xi) June 1, 2009 and (xii) the Maturity
  Date.
 
 ·
              The
      term “Installment Amount” was amended to mean, with respect to any
      Installment Date occurring on or after March 1, 2009, the lesser of (A)
      the product of (i) $1,927,333.32, multiplied by (ii) Holder Pro Rata
      Amount and (B) the Principal amount under the debenture as of such
      Installment Date, together with any accrued and unpaid Interest as of such
      Installment Date and accrued and unpaid Late Charges, if any, as of such
      Installment Date.
 
 ·
              Section
      4(a)(iii) of the debenture was amended to permit the Common Stock to be
      quoted on the OTC Bulletin Board if it is suspended from trading or
      delisted from the NASDAQ Capital
Market.
  13
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 ·
              The
      monthly expenditure of cash by the Company together with its subsidiaries
      in excess of $900,000 in the aggregate in March, April or May 2009 would
      constitute an “Event of Default,” provided that all cash used to effect
      Company Redemptions under the debentures as permitted thereunder will not
      be deemed to be cash expended solely for purposes of this
      determination.
 
 ·
              An
      “Event of Default” was defined to include any breach by the Company of
      Section 8 of the Registration Rights Agreement (including, without
      limitation, any failure by the Company to (i) file with the SEC any
      required reports under Section 13 or 15(d) of the 1934 Act such that it is
      not in compliance with Rule 144(c)(1), or (ii) meet any of the
      requirements under rule 144(i)(2)).
 
 ·
              As
      of the Effective Date, the Company could only effect a Company Redemption
      with respect to the payment of an Installment Amount by using net proceeds
      received by the Company from any subsequent private placements, revenues
      from sales of products by the Company or licensing fees received by the
      Company.
 
 ·
              The
      Company had to provide a monthly certification executed by the Company’s
      Chief Financial Officer stating whether an Event of Default occurred with
      respect to the Company’s and its subsidiaries’ cash expenditures in excess
      of $900,000 in the calendar month immediately preceding the date of such
      certification, and the Company must publicly disclose any such Event of
      Default on the date of such
certification.
 
 The
Company was required to enter into a Control Agreement with each holder and a
financial institution to act as depositary with respect to a non-operating
deposit account and deposit $3,000,000 into such account, which account and
Control Agreement will be subject to the terms of the Security
Agreement.  In addition, the Company was obligated to use commercially
reasonable efforts to obtain, by the expiration of the Standstill Period, a
clean, unconditional and irrevocable letter of credit that will remain
“evergreen” until each debenture is repaid in full in the aggregate amount of
$3,000,000 for the ratable benefit of each holder, which letter of credit would
be subject to the terms of the Forbearance Agreement.
 
 Prior to
the expiration of the Standstill Period, the Company had to issue and deliver
irrevocable instructions to the Company’s transfer agent to issue certificates
to each holder for shares of the Common Stock, or credit shares to the holder’s
balance account at DTC, at the holder’s written request to provide each holder’s
pro rata portion of Pre-Installment Conversion Shares for the payment of
Installment Amounts under the debenture or upon the occurrence of an Event of
Default after the Effective Date.
 
 With
respect to the April 1, 2009 Installment Date, the following terms
applied:
 
 ·
              March
      9, 2009 was the Installment Notice Due
Date.
 
 ·
              The
      Pre-Installment Conversion Price was equal to the price which was computed
      as 90% of the arithmetic average of the VWAP of the Common Stock on each
      of the 14 consecutive Trading Days immediately preceding March 9, 2009 (to
      be appropriately adjusted for any stock split, stock dividend, stock
      combination or other similar transaction during such measuring
      period).
  14
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 ·
              The
      Company Conversion Price was equal to the price which was computed as 90%
      of the arithmetic average of the VWAP of the Common Stock on each of the
      17 consecutive Trading Days immediately preceding such Installment Date
      (to be appropriately adjusted for any stock split, stock dividend, stock
      combination or other similar transaction during such measuring
      period).
 
 ·
              The
      Company was obligated to deliver the Pre-Installment Conversion Shares
      (which will be equal the number of shares of Common Stock equal to the
      quotient of (i) the Installment Amount due on such Installment Date
      divided by (ii) the Pre-Installment Conversion Price) to the holder no
      later than two Trading Days after March 9,
2009.
 
 ·
              The
      number of shares of Common Stock to be delivered pursuant to a Company
      Conversion on April 1, 2009 with respect to the Installment Amount due on
      that date was reduced by the above-mentioned number of the Pre-Installment
      Conversion Shares previously
delivered.
 
 Each
holder agreed to waive satisfaction of the following:
 
 ·
              the
      Listing Maintenance Equity Condition solely with respect to the
      Installment Dates of  March 1, 2009, April 1, 2009, May 1, 2009,
      June 1, 2009 and the Maturity Date, if, (i) other Equity Conditions and
      all other conditions relating to a Company Conversion are satisfied and
      (ii) the shares of Common Stock continue to be listed or designated for
      quotation on, and trade on, the NASDAQ Capital Market, another national
      stock exchange or are quoted on the OTC Bulletin
  Board;
 
 ·
              the
      Net Cash Balance Test, but only until a Standstill Termination occurs;
      and
 
 ·
              all
      Existing Events of Default, the Net Cash Balance Test and accrual of
      interest at the default interest rate, but only to the extent that the
      Company complies with all terms of the Forbearance Agreement and no other
      Event of Default occurs after the Effective
  Date.
 
 The
Company agreed to reimburse each holder for the transactions costs relating to
the Forbearance Agreement and defaults that occurred before the Effective Date,
which amounts were paid in the form of shares of Common Stock determined
pursuant to the formula specified in the Forbearance Agreement.
 
 The
Company complied with all of its covenants under the Forbearance and Amendment
Agreements and there were no additional Events of Default during the Standstill
Period.
  15
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 7.
              Pending
      Litigation
 In
February 2001, a former business associate of the former Vice President of
Research and Development (“VP”) of the Company and an entity known as Centrum
Technologies Inc. (“CTI”) commenced an action in the Ontario Superior Court of
Justice against the Company and the VP seeking, among other things, damages for
alleged breaches of contract and tortious acts related to a business
relationship between this former associate and the VP that ceased in July 1996.
The plaintiffs’ statement of claim also seeks to enjoin the use, if any, by the
Company of three patents allegedly owned by CTI. The three patents are entitled
Liquid Formulations for
Proteinic Pharmaceuticals, Vaccine Delivery System for
Immunization, Using Biodegradable Polymer Microspheres, and Controlled Releases of Drugs or
Hormones in Biodegradable Polymer Microspheres.  It is the
Company’s position that the buccal drug delivery technologies which are the
subject matter of the Company’s research, development, and commercialization
efforts, including Generex Oral-lynTM and the RapidMistTM Diabetes Management
System, do not make use of, are not derivative of, do not infringe upon, and are
entirely different from the intellectual property identified in the plaintiffs’
statement of claim. On July 20, 2001, the Company filed a preliminary motion to
dismiss the action of CTI as a nonexistent entity or, alternatively, to stay
such action on the grounds of want of authority of such entity to commence the
action. The plaintiffs brought a cross motion to amend the statement of claim to
substitute Centrum Biotechnologies, Inc. (“CBI”) for CTI. CBI is a corporation
of which 50 percent of the shares are owned by the former business associate and
the remaining 50 percent are owned by the Company. Consequently, the
shareholders of CBI are in a deadlock. The court granted the Company’s motion to
dismiss the action of CTI and denied the plaintiffs’ cross motion without
prejudice to the former business associate to seek leave to bring a derivative
action in the name of or on behalf of CBI. The former business associate
subsequently filed an application with the Ontario Superior Court of Justice for
an order granting him leave to file an action in the name of and on behalf of
CBI against the VP and the Company. The Company opposed the application. In
September 2003, the Ontario Superior Court of Justice granted the request and
issued an order giving the former business associate leave to file an action in
the name of and on behalf of CBI against the VP and the Company. A statement of
claim was served in July 2004. The Company is not able to predict the ultimate
outcome of this legal proceeding at the present time or to estimate an amount or
range of potential loss, if any, from this legal proceeding.
 
 The
Company is involved in certain other legal proceedings in addition to those
specifically described herein. Subject to the uncertainty inherent in all
litigation, the Company does not believe at the present time that the resolution
of any of these legal proceedings is likely to have a material adverse effect on
the Company’s financial position, operations or cash flows.
 
 With
respect to all litigation, as additional information concerning the estimates
used by the Company becomes known, the Company reassesses its position both with
respect to accrued liabilities and other potential exposures.
 
 8.
              Net
      Loss Per Share
 Basic
earnings per shares (EPS) and Diluted EPS for the nine and three months ended
April 30, 2009 and 2008 have been computed by dividing the net loss available to
common stockholders for each respective period by the weighted average shares
outstanding during that period.  All outstanding options, warrants,
non-vested restricted stock and shares to be issued upon conversion of the
outstanding convertible debentures, representing approximately 64,513,877 and
80,294,695 incremental shares, have been excluded from the April 30, 2009 and
2008 computations of Diluted EPS as they are anti-dilutive due to the losses
generated.
  16
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 9.
              Supplemental
      Disclosure of Cash Flow Information
 
 For
      the Nine Months EndedApril 30,2009
                    
                    
                    2008Cash
      paid during the period for:Interest
                    
                    $
                    1,025,034
                    
                    
                    $
                    174,428Income
      taxes
                    
                    $
                    —
                    
                    
                    $
                    —Disclosure
      of non-cash investing and financing activities:Issuance
      of common stock as satisfaction of accrued executive
      compensation
                    
                    $
                    —
                    
                    
                    $
                    471,875Deferred
      debt issuance costs paid from the proceeds of convertible
      notes
                    
                    $
                    —
                    
                    
                    $
                    200,000Value
      of warrants issued in conjunction with issuance of convertible debentures
      and related beneficial conversion feature
                    
                    $
                    —
                    
                    
                    $
                    19,415,164Issuance
      of common stock as repayment of convertible debentures and advance
      payments
                    
                    $
                    12,563,365
                    
                    
                    $
                    —Par
      value of common stock issued in conjunction with cashless exercise of
      warrants
                    
                    $
                    341
                    
                    
                    $
                    —Purchase
      of property and equipment through the issuance of obligations under
      capital lease
                    
                    $
                    83,002
                    
                    
                    $
                    —
 
 10.
              Stockholders’
      Equity
 During
the nine months ended April 30, 2009, the Company issued 1,275,302 shares of
common stock to various consultants for services rendered in the amount of
$434,122.  The shares were valued at $0.27 to $0.80 per share based on
the quoted market price of the Company’s common stock on the dates of the
issuances.
 
 During
the nine months ended April 30, 2009, the Company issued 211,316 shares of
common stock valued at $75,751 as employee compensation.  The shares
were valued at $0.23 to $0.72 per share based on the quoted market price of the
Company’s common stock on the dates of the issuances.
 
 During
the nine months ended April 30, 2009, the Company received aggregate cash
proceeds of $56,000 from exercises of stock options.  The Company
issued 100,000 shares of common stock as a result of these
transactions.
 
 During
the nine months ended April 30, 2009, the Company issued 42,007,335 shares of
common stock valued at $12,954,642 as repayment of convertible debentures and
accrued interest (see Note 6).  The shares were valued at $0.18 to
$0.65 per share based on the quoted market price of the Company’s common stock
on the dates of the issuances.
 
 During
the nine months April 30, 2009, the Company modified the terms of outstanding
warrants associated with convertible debentures and resulted in a charge to
operations in the amount of $1,589,988 (see Note 6).
 
 During
the nine months ended April 30, 2009, the Company issued 341,000 shares of
common stock in conjunction with a cashless exercise of 1,891,000
warrants.
  17
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 The
stockholders’ equity transactions as described above are summarized as
follow:
 
 Additional
                    
                    
                    TotalCommon Stock
                    
                    
                    Paid-In
                    
                    
                    Stockholders’Shares
                    
                    
                    Amount
                    
                    
                    Capital
                    
                    
                    EquityIssuance
      of common stock for services
                    
                    
                    1,275,302
                    
                    
                    $
                    1,275
                    
                    
                    $
                    432,847
                    
                    
                    $
                    434,122Issuance
      of common stock as employee compensation
                    
                    
                    211,316
                    
                    
                    
                    211
                    
                    
                    
                    75,540
                    
                    
                    
                    75,751Stock-based
      executive compensation
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    103,752
                    
                    
                    
                    103,752Stocks
      options exercised for cash
                    
                    
                    100,000
                    
                    
                    
                    100
                    
                    
                    
                    55,900
                    
                    
                    
                    56,000Issuance
      of common stock as repayment of convertible debentures, accrued interest
      and prepayment
                    
                    
                    42,007,335
                    
                    
                    
                    42,007
                    
                    
                    
                    12,912,635
                    
                    
                    
                    12,954,642Issuance
      of common stock in conjunction with cashless exercise of
      warrants
                    
                    
                    341,000
                    
                    
                    
                    341
                    
                    
                    
                    (341
                    )
                    
                    
                    —Warrant
      re-pricing costs
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    1,589,988
                    
                    
                    
                    1,589,988Total
                    
                    
                    43,934,953
                    
                    
                    $
                    43,935
                    
                    
                    $
                    15,170,321
                    
                    
                    $
                    15,214,256
 
 11.
              Subsequent
      Events
 On May
15, 2009 the Company completed a private placement of its common stock by
registered direct offering of 15,151,517 shares of its common stock to a select
group of accredited investors at $0.33 per share.  The offering resulted in
net proceeds of approximately $4.8 million, after deducting the placement
agent’s fees and estimated offering expenses.   As a result of
this transaction, the conversion price of the convertible debentures and the
exercise price of the related warrants were reduced to $0.33 (from $0.50) per
share resulting in the warrant re-pricing cost of $1,211,494..
 
 Following
the decrease in the conversion price of the Notes and the exercise of the
related warrants to $0.33 per share pursuant to the May 15, 2009 private
placement, the convertible debenture holders converted outstanding principal
amount due under the convertible debentures and accrued interest thereon. As of
June 1, 2009, the convertible debenture holders had converted an aggregate
amount of $22,028,016 in convertible debenture principal and accrued interest,
which represented satisfaction in full of the remaining outstanding principal
balance and accrued interest on the convertible debentures as of such
date.  Subsequent to the quarter end on April 30, 2009, the Company
issued 12,680,027 shares to convertible debenture holders in satisfaction of the
repayment of principal amount of debentures, conversion amounts and accrued
interest.
  18




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





As used
herein, the terms the “Company,” “Generex,” “we,” “us,” or “our” refer to
Generex Biotechnology Corporation, a Delaware corporation. The following
discussion and analysis by management provides information with respect to our
financial condition and results of operations for the three- and nine-month
periods ended April 30, 2009 and 2008. This discussion should be read in
conjunction with the information contained in Part I, Item 1A - Risk
Factors and Part II,
Item 8 - Financial Statements and Supplementary Data in our Annual Report
on Form 10-K, as amended, for the year ended July 31, 2008 and the information
contained in Part I, Item 1 -
Financial Statements and Part II, Item 1A- Risk Factorsin this Quarterly Report on Form 10-Q for the fiscal quarter ended April
30, 2009.





Forward-Looking
Statements





We have
made statements in this Item
2. Management's Discussion and Analysis of Financial Condition and Results of
Operations and elsewhere in this Quarterly Report on Form 10-Q of Generex
Biotechnology Corporation for the fiscal quarter ended April 30, 2009 that may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Act"). The Act limits our
liability in any lawsuit based on forward-looking statements that we have made.
All statements, other than statements of historical facts, included in this
Quarterly Report that address activities, events or developments that we expect
or anticipate will or may occur in the future, including such matters as our
projections, future capital expenditures, business strategy, competitive
strengths, goals, expansion, market and industry developments and the growth of
our businesses and operations, are forward-looking statements. These statements
can be identified by introductory words such as "expects," “anticipates,”
"plans," "intends," "believes," "will," "estimates," "projects" or words of
similar meaning, and by the fact that they do not relate strictly to historical
or current facts. Our forward-looking statements address, among other
things:





·
              our
      expectations concerning product candidates for our
      technologies;


·
              our expectations concerning
      existing or potential development and license agreements for third-party
      collaborations and joint ventures;


·
              our expectations of when
      different phases of clinical activity may commence and
      conclude;


·
              our expectations of when
      regulatory submissions may be filed or when regulatory approvals may be
      received; and


·
            our expectations of when
      commercial sales of our products may commence and when actual revenue from
      the product sales may be
received.





Any or
all of our forward-looking statements may turn out to be wrong. They may be
affected by inaccurate assumptions that we might make or by known or unknown
risks and uncertainties. Actual outcomes and results may differ materially from
what is expressed or implied in our forward-looking statements. Among the
factors that could affect future results are:





·
              the inherent uncertainties of
      product development based on our new and as yet not fully proven
      technologies;


·
              the risks and uncertainties
      regarding the actual effect on humans of seemingly safe and efficacious
      formulations and treatments when tested
  clinically;


·
              the inherent uncertainties
      associated with clinical trials of product
    candidates;


·
              the inherent uncertainties
      associated with the process of obtaining regulatory approval to market
      product candidates;


·
              the inherent uncertainties
      associated with commercialization of products that have received
      regulatory approval;


·
              the volatility of, and recent
      decline in, our stock price and the impact on our ability to pay
      installments due on our outstanding senior secured notes in stock rather
      than cash; and


·
            our ability to obtain the
      necessary financing to fund our
  operations.


19


Additional
factors that could affect future results are set forth in Part I, Item 1A Risk Factors
of our Annual Report on Form 10-K, as amended, for the year ended July 31, 2008
and in Part II, Item 1A. Risk
Factors of this Quarterly Report on Form 10-Q. We caution investors that
the forward-looking statements contained in this Quarterly Report must be
interpreted and understood in light of conditions and circumstances that exist
as of the date of this Quarterly Report. We expressly disclaim any obligation or
undertaking to update or revise forward-looking statements to reflect any
changes in management's expectations resulting from future events or changes in
the conditions or circumstances upon which such expectations are
based.




Executive
Summary





Overview
of Business





We are
engaged primarily in the research, development and commercialization of drug
delivery systems and technologies. Our primary focus at the present time is our
proprietary technology for the administration of formulations of large molecule
drugs to the oral (buccal) cavity using a hand-held aerosol applicator. Through
our wholly-owned subsidiary, Antigen, we have expanded our focus to include
immunomedicines incorporating proprietary vaccine formulations.





We
believe that our buccal delivery technology is a platform technology that has
application to many large molecule drugs and provides a convenient,
non-invasive, accurate and cost-effective way to administer such drugs. We have
identified several large molecule drugs as possible candidates for development,
including estrogen, heparin, monoclonal antibodies, human growth hormone and
fertility hormone, but to date have focused our development efforts primarily on
one pharmaceutical product, Generex Oral-lynTM, an insulin formulation
administered as a fine spray into the oral cavity using our proprietary
hand-held aerosol spray applicator known as RapidMistTM.





To date,
we have received regulatory approval in Ecuador, India, Lebanon and Algeria for
the commercial marketing and sale of Generex Oral-lynTM. In March 2008, we
initiated Phase III clinical trials for this product in the U.S. with the first
patient screening for such trials at a clinical study site in Texas. The patient
screening at other participating clinical sites in the U.S. and Canada is
ongoing. Currently over 347 patients have been enrolled in 74 clinical sites
around the world, including sites in the United States, Canada, Bulgaria,
Poland, Romania, Russia and Ukraine.





We
received a Special Access Program (SAP) authorization from Health Canada for a
patient-specific, physician-supervised treatment of Type-1 diabetes with Generex
Oral-lynTM in April 2008. SAP provides access to non-marketed drugs for
practitioners treating patients with serious or life-threatening conditions when
conventional therapies have failed, are not available or unsuitable. We received
a similar authorization from health authorities in Netherlands in September
2008. We will continue to expand our SAP participation in additional countries
around the world.





In
November 2008 we, together with our marketing partner Shreya Life Sciences Pvt.
Ltd. officially launched Generex Oral-lynTM in India under marketing name of Oral
Recosulin.  Each package of Oral Recosulin contains two canisters of
our product along with one actuator.  Product was available for sale
since January 2009, and an estimated 50 dialectologists are currently
prescribing Oral Recosulin in India.





In
November 2008, we submitted our product dossier to the Ministry of Health in
Damascus, Syria through Generex MENA, our branch office in Dubai.  The
dossier includes Generex Oral-lynTM.  We also submitted a file to
register our proprietary over-the-counter products, including Glucose
RapidSprayTM, 7-Day Diet Aid SprayTM (marketed as Crave-NxTM in the United States
and Canada) and BaBOOM!TM Energy Spray.  The Syrian Ministry of Health
will review the dossier and inform us of any additional requests for information
that it may have. There have been no immediate queries, and we anticipate
registration before the end of calendar year 2009. It is estimated that among
Syria's population of 20 million, between 3 million and 3.5 million people have
diabetes.





In
December 2008, we submitted Generex Oral-lynTM dossier to the Ministry of Health
in Iraq (North) through Generex MENA, our branch office in Dubai and expect to
receive an approval to market the product in spring of 2009.





In
December 2008 we, together with our marketing partner Benta SA., received an
approval to market Generex Oral-lynTM in Lebanon.  Benta is currently
working on reimbursement policy for Generex Oral-lynTM.  The official
product launch in Lebanon took place in May 2009.





In May
2009, the Algerian health authorities granted us permission to import and sell
Generex Oral-lynTM for the treatment of diabetes in Algeria. We expect commercial
launch of the product by the end of calendar year 2009.  Through the
efforts of our business development team, in association with the Generex MENA,
we have entered into a marketing sub-distribution relationship with Algerian
company Continental Pharm Laboratoire.





Using our
buccal delivery technology, we also have launched a line of over-the-counter
glucose and energy sprays , including Glucose RapidSprayTM, GlucoBreakTM ,
Crave-NX 7-day Diet Aid Spray, and BaBOOM!TM Energy Spray. We believe these
products will complement Generex Oral-lynTM and may provide us with an additional
revenue stream prior to the commercialization of Generex Oral-lynTM in other
major jurisdictions.


20





In
October 2008, we announced the enrollment of subjects in our bioequivalence
clinical trial of MetControlTM, our proprietary Metformin medicinal chewing gum
product.  The protocol for the study is an open-label, two-treatment,
two-period, randomized, crossover study comparing MetControlTM and immediate
release MetforminTM tablets in healthy volunteers. The study results, that we
received and analyzed in December 2008, will allow us to proceed with additional
research and development initiatives and consider regulatory agency registration
applications.





Our
subsidiary, Antigen Express, concentrates on developing proprietary vaccine
formulations that work by stimulating the immune system to either attack
offending agents (i.e., cancer cells, bacteria, and viruses) or to stop
attacking benign elements (i.e., self proteins and allergens). Our
immunomedicine products are based on two platform technologies and are in the
early stages of development. We continue clinical development of Antigen’s
synthetic peptide vaccines designed to stimulate a potent and specific immune
response against tumors expressing the HER-2/neu oncogene for patients with
HER-2/neu positive breast cancer in a Phase II clinical trial and patients with
prostate cancer and against avian influenza in two Phase I trials. Development
efforts also are underway for seasonal influenza virus, H5N1, HIV, HPV,
melanoma, ovarian cancer, allergy and Type I diabetes mellitus. We have
established collaborations with clinical investigators at academic centers to
advance these technologies.





We face
competition from other providers of alternate forms of insulin. Some of our most
significant competitors, Pfizer, Eli Lilly, and Novo Nordisk, have announced
that they will discontinue development and/or sale of their inhalable forms of
insulin. Generex Oral-lynTM is not an inhaled insulin; rather, it is a buccally
absorbed formulation with no residual pulmonary deposition. We believe that our
buccal delivery technology offers several advantages over inhaled insulin,
including the avoidance of pulmonary inhalation, which requires frequent
physician monitoring, ease of use and portability.





We are a
development stage company. From inception through the end of the year ended July
31, 2008, we have received only limited revenues from operations. In the fiscal
year ended July 31, 2008, we received approximately $128,039 in revenues from
sales of Glucose RapidSprayTM.  In the fiscal quarter ended April 30,
2009, we received approximately $45,251 in revenues from sales of Glucose
RapidSprayTM.  These numbers do not reflect deferred sales to the
customers during the respective period with the right of
return.





We
operate in only one segment: the research, development and commercialization of
drug delivery systems and technologies for metabolic and immunological
diseases.





We were
incorporated in the State of Delaware in 1997. Our principal executive offices
are located at 33 Harbour Square, Suite 202, Toronto, Canada, and our telephone
number at that address is (416) 364-2551. We maintain an Internet website at
www.generex.com.  We
make available free of charge on or through our website our filings with the
SEC.





Accounting
for Research and Development Projects





Our major
research and development projects are the refinement of our platform buccal
delivery technology, our buccal insulin project (Generex Oral-lynTM), our buccal
morphine product and Antigen’s peptide immunotherapeutic vaccines.





During
the last fiscal quarter, we expended resources on the clinical testing and
commercialization, of our buccal insulin product, Generex Oral-lynTM. In July
2007, we received no objection from the FDA to proceed with our long-term
multi-center Phase III study protocol for Generex Oral-lynTM. Late-stage trials
involve testing our product with a large number of patients over a significant
period of time. The completion of late-stage trials in Canada and eventually the
United States may require significantly greater funds than we currently have on
hand.





Generex
Oral-lynTM was approved for commercial sale by drug regulatory authorities in
Ecuador in May 2005. PharmaBrand handled the commercial launch of Generex
Oral-lynTM in Ecuador in June 2006. While we anticipate generating revenue from
sales of Generex Oral-lynTM in Ecuador, we do not expect that such revenues will
be sufficient to sustain our research and development and regulatory
activities.





Generex
Oral-lynTM was approved for importation and commercial sale in India in November
2007. We have entered into a licensing and distribution agreement with Shreya
Life Sciences Pvt. Ltd. and since January 2009 Generex Oral-lynTM is available in
India under marketing name of Oral Recosulin.





Generex
Oral-lynTM was approved for importation and commercial sale in Lebanon in
December 2008. We have entered into a subdistribution agreement with Benta SA.
and officially launched the product in May of 2009.


21





Generex
Oral-lynTM was approved for importation and commercial sale in Algeria in May
2009. We have entered into a subdistribution agreement with Continental Pharm
Laboratoire and anticipate a commercial launch by the end of calendar year
2009.





Although
we initiated regulatory approval process for our morphine and fentanyl buccal
products, we did not expend resources to further this product during our last
fiscal year.





During
the last fiscal quarter, we expended resources on research and development
relating to Antigen’s peptide immunotherapeutic vaccines and related
technologies. One Antigen vaccine is currently in Phase II clinical trials in
the United States involving patients with HER-2/neu positive breast cancer, and
an Antigen vaccine for H5N1 avian influenza is in Phase I clinical trials
conducted at the Lebanese-Canadian Hospital in Beirut. Antigen’s prostate cancer
vaccine based on AE37 is currently in Phase I clinical trials in Greece.
Preliminary pre-clinical work has commenced with respect to the experimental
vaccine for patients with acute myeloid leukemia at Beijing Daopei Hospital in
China.





Because
of various uncertainties, we cannot predict the timing of completion and
commercialization of our buccal insulin in all jurisdictions or buccal morphine
products or Antigen’s peptide immunotherapeutic vaccines or related
technologies. These uncertainties include the success of current studies, our
ability to obtain the required financing and the time required to obtain
regulatory approval even if our research and development efforts are completed
and successful, our ability to enter into collaborative marketing and
distribution agreements with third-parties, and the success of such marketing
and distribution arrangements. For the same reasons, we cannot predict when any
products may begin to produce net cash inflows.




Most of
our buccal delivery research and development activities to date have involved
developing our platform technology for use with insulin. Insubstantial amounts
have been expended on projects with other drugs, including morphine and
fentanyl, and those projects involved a substantial amount of platform
technology development. As a result, we have not made significant distinctions
in the accounting for research and development expenses among products, as a
significant portion of all research has involved improvements to the platform
technology in connection with insulin, which may benefit all of our potential
buccal products. During the nine months ended April 30, 2009, approximately 85%
of our $10,597,956 in research expenses was attributable to insulin and platform
technology development, and we did not have any research expenses related to
morphine, fentanyl or other buccal projects.  During the nine months
ended April 30, 2008, approximately 82% of our $11,620,817 in research expenses
was attributable to insulin and platform technology development, and we did not
have any research expenses related to morphine, fentanyl or other buccal
projects.





Approximately
15%, or $1,627,308, of our research and development expenses for the nine months
ended April 30, 2009 was related to Antigen's immunomedicine products
compared to approximately 18%, or $2,037,417, of our research and development
expenses for the nine months ended April 30, 2008.  Because these
products are in initial phases of clinical trials or early, pre-clinical stage
of development (with the exception of the Phase II clinical trials of Antigen
HER-2/neu positive breast cancer vaccine that are underway), all of the expenses
were accounted for as basic research and no distinctions were made as to
particular products. Due to the early stage of development, we cannot predict
the timing of completion of any products arising from this technology, or when
products from this technology might begin producing revenues.





Critical
Accounting Policies





Our
discussion and analysis of our financial condition and results of operations is
based on our consolidated financial statements which have been prepared in
conformity with accounting principles generally accepted in the United States of
America. It requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.





We
consider certain accounting policies related to impairment of long-lived assets,
intangible assets and accrued liabilities to be critical to our business
operations and the understanding of our results of operations:





Going
Concern.  As shown in the accompanying financial statements, we
have not been profitable and have reported recurring losses from
operations.  These factors raise substantial doubt about our ability
to continue to operate in the normal course of business.  The
accompanying financial statements do not include any adjustments that might be
necessary should we be unable to continue as a going concern.





Revenue Recognition.
Net sales of Glucose RapidSprayTM, BaBOOM!TM Energy Spray and GlucoBreakTM are
generally recognized in the period in which the products are delivered. Delivery
of the products generally completes the criteria for revenue recognition for the
Company. In the event where the customers have the right of return, sales are
deferred until the right of return lapses or the product is
resold.


22





Inventory.Inventories are stated at the lower of cost or market with cost
determined using the first-in first-out method. Management considers such
factors as the amount of inventory on hand and in the distribution channel,
estimated time to sell such inventory, inventories shelf life and current market
conditions when determining whether the lower cost or market is used. As
appropriate, a provision is recorded to reduce inventories to their net
realizable value.  Inventory also includes the cost of products sold
to the customers with the rights of return.




Impairment of Long-Lived
Assets. Management reviews for impairment whenever events or changes in
circumstances indicate that the carrying amount of property and equipment may
not be recoverable under the provisions of Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." If it is determined that an impairment loss has occurred based upon
expected future cash flows, the loss is recognized in the Statement of
Operations.





Intangible Assets. We
have intangible assets related to patents. The determination of the related
estimated useful lives and whether or not these assets are impaired involves
significant judgments. In assessing the recoverability of these intangible
assets, we use an estimate of undiscounted operating income and related cash
flows over the remaining useful life, market conditions and other factors to
determine the recoverability of the asset. If these estimates or their related
assumptions change in the future, we may be required to record impairment
charges against these assets.





Estimating accrued
liabilities, specifically litigation accruals. Management's current
estimated range of liabilities related to pending litigation is based on
management's best estimate of future costs. While the final resolution of the
litigation could result in amounts different than current accruals, and
therefore have an impact on our consolidated financial results in a future
reporting period, management believes the ultimate outcome will not have a
significant effect on our consolidated results of operations, financial position
or cash flows.





Share-based
compensation. Management determines value of stock-based compensation in
accordance with Statement of Financial Accounting Standards No. 123(R)
“Share-Based Payment” which revises SFAS No. 123 “Accounting for Stock-Based
Compensation” for stock and options grants to employees.  We also
follow the guidance of Emerging Issues Task Force 96-18 “Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services” for equity instruments issued to
consultants.





Results
of Operations


Three
Months Ended April 30, 2009 Compared to Three Months Ended April 30,
2008





Our net
loss for the quarter ended April 30, 2009 was $11,349,015 versus $10,174,181 in
the corresponding quarter of the prior fiscal year. The increase in net loss in
this fiscal quarter versus the corresponding quarter of the prior fiscal year is
primarily due to the interest expense recorded in connection with our secured
convertible notes and the repricing costs of warrants also issued in connection
with our convertible notes.  The increase in net loss was partially
offset by the decrease in our general and administrative expenses, research and
development expenses and the decrease in selling and marketing
expenses.  Our operating loss for the quarter ended April 30, 2009
decreased to $6,086,893 compared to $9,852,072 in the third fiscal quarter of
2008.  The decrease in operating loss resulted from a decrease in
general and administrative expenses (to $2,736,650 from $5,130,769), a decrease
in research and development expenses (to $3,001,826 from $4,303,390) and a
slight in selling expense (to $367,371 from $418,804). Our revenues in the third
quarter ended April 30, 2009 increased to $45,251 from $1,530 for the quarter
ended April 30, 2008 reflecting the sales of our over-the-counter
products.





The
decrease in research and development expenses in the last fiscal quarter
reflects timing differences of the overall increased levels of research and
development of our oral insulin product and platform technology in connection
with global Phase III clinical trials.  The decrease in general and
administrative expenses reflects the decrease in expenses for consulting and
accounting services in the current fiscal quarter compared to last year, as well
as a reduction in travel expenses and executive compensation and bonuses,
despite a small increase in the expense for legal and financial
services.  The selling expenses are associated with the commercial
sales of our over-the-counter products that began in fiscal 2007.





Our
interest expense in the third quarter of fiscal 2009 increased to $5,344,911
compared to interest expense of $608,913 in the third quarter of fiscal 2008 due
to interest expense and costs of the repriced warrant recognized on the secured
convertible notes issued in March 2008 in connection with a private
placement.   Our interest income decreased to $10,408 in the third
quarter of fiscal 2009 compared to $206,950 in the same quarter for the last
year primarily due to lower market interest rates and lower cash
balances.  We received a slightly lower income from rental operations
(net of expense) of $72,381 in the third quarter of fiscal 2009 compared to
$79,714 in the same quarter for the last year.


23


Results
of Operations


Nine
Months Ended April 30, 2009 Compared to Nine Months Ended April 30,
2008





Our net
loss for the nine months ended April 30, 2009 was $35,084,639 versus $23,903,268
in the corresponding nine-month period of the prior fiscal year.  The
increase in net loss in this nine-month period versus the corresponding
nine-month period of the prior fiscal year is primarily due to the increase in
interest expense recorded in connection with our secured convertible notes,
costs of repricing warrants issued in connection with our convertible notes and
an increase in selling expenses.  Our operating loss for the nine
months ended April 30, 2009 decreased to $19,418,771 compared to $24,386,455 in
the corresponding nine-month period ended April 30, 2008.  The
decrease resulted from a decrease in general and administrative expenses (to
$7,649,085from $11,733,562), a decrease in research and development expenses (to
$10,597,956 from $11,620,817), and an increase in net revenues to $1,018,233 in
the nine months ended April 30, 2009 from $64,870 in the nine months ended April
30, 2008.  The increase in net revenue is attributable to a licensing
fee received from South Korea and large order of our over-the-counter drugs from
the Middle East.  The decrease in operating loss was partially offset
by increase in selling expenses (to $1,814,276 from $1,070,722).




The
decrease in general and administrative expenses reflects the decrease in
consulting, accounting, advertising and travel expenses and a decrease in
executive compensation and directors fees. The decrease was offset by the slight
increase in the expenses for financial services and legal fees.  The
decrease in research and development expenses for the nine-month period ended
April 30, 2009 reflects timing differences for our overall increased level of
research and development of our oral insulin product and platform technology and
additional clinical trials. The selling expenses are associated with the
commercial sales of Glucose RapidSprayTM and other over-the-counter products that
began in fiscal 2007.





Our
interest expense in the nine-month period ended April 30, 2009 increased to
$16,137,496 compared to interest expense of $725,535 in the nine-month period
ended April 30, 2008 to interest expense and costs of the repriced warrant
recognized on the secured convertible notes issued in March 2008 in connection
with a private placement.  Our interest income decreased to $231,505
in the nine-month period ended April 30, 2009 compared to $958,457 in the
nine-month period ended April 30, 2008 primarily due to lower market interest
rates and lower cash balances.  We received a slightly lower income
from rental operations (net of expense) of $240,117 in the nine months ended
April 30, 2009 compared to $250,125 in the nine months ended April 30, 2008 that
is due primary to exchange rate differences between the periods.




Financial
Condition, Liquidity and Resources





Sources
of Liquidity





To date
we have financed our development stage activities primarily through private
placements of our common stock and securities convertible into our common
stock.  In the past, we made significant short –term investments in
high-grade auction rate securities all of which we liquidated as of December
2008.  In March 2008, we issued secured convertible notes and related
warrants for gross proceeds of approximately $20,650,000.  Currently,
we are in default with respect to certain conditions and covenants under the
secured convertible notes and are in negotiations with the noteholders to modify
the terms of the notes.





As of
April 30, 2009, we believed that our anticipated cash position was sufficient to
meet our working capital needs for the next twelve months based on the pace of
our planned.  Beyond that, we anticipate that we will require
additional funds to support our working capital requirements or for other
purposes.




While we
have generally been able to raise equity capital as required, our cash balances
were very low during portions of fiscal 2005 and have decreased in the first
half of fiscal 2009.  Unforeseen problems with our clinical program,
manufacturing and commercialization plans in Ecuador and India or further
negative developments in general economic conditions could interfere with our
ability to raise additional equity capital as needed, or materially adversely
affect the terms upon which such capital is available.  Our inability
to obtain required funding will have a material adverse effect on one or more of
our research or development programs, curtail some of our commercialization
efforts or prevent our satisfaction of obligations under the secured convertible
notes.





Management
may seek to meet all or some of our operating cash flow requirements through
financing activities, such as private placement of our common stock, preferred
stock offerings and offerings of debt and convertible debt instruments as well
as through merger or acquisition opportunities.  We filed a shelf
registration statement with the Securities and Exchange Commission (“SEC”) to
register an indeterminate number of shares of common stock and preferred stock
and an indeterminate number of warrants and units, the aggregate initial
offering price of which is not to exceed $150,000,000.  In May 2009,
we conducted an offering pursuant to this registration statement as described in
Note 11 in the Notes to
Consolidated Financial Statements included in Part I, Item 1 – Financial
Statements in this Quarterly Report on Form 10-Q. Management is actively
pursuing industry collaboration activities, including product licensing and
specific project financing. We are also examining options for the procurement of
a reliable long-term insulin supply for our future commercial
needs.





We
believe that the commencement of Phase III clinical trial trials for Oral-lynTM
in the United States and Canada represents a significant milestone event. We
also anticipate that the commercial launch of Oral-lynTM in India, may provide us
with revenue in 2009.  We believe that the successful commercial launch of
Oral-lynTM in India would enhance our ability to access additional sources of
funding.  We will continue to require substantial funds to continue
research and development, including preclinical studies and clinical trials of
our product candidates, and to commence sales and marketing efforts if the FDA
or other regulatory approvals are obtained.


24





Auction
Rate Securities





In
December 2008, we had short-term investments of approximately $8.1
million.    All of our short-term investments represented
investment in high-grade auction rate securities.  As of December 23,
2008, 100% of our auction rate securities were redeemed at par in Phase II of
the Citi Auction Security Settlement.





Financing
– 8% Secured Convertible Notes and Warrants





On March
31, 2008, we entered into a Securities Purchase Agreement and related documents
with existing institutional investors relating to a private placement of 8%
secured convertible notes (the “Notes”) and warrants (the “Series Warrants”) for
aggregate gross proceeds to us of $20,650,000.





The Notes
have an 18-month maturity and amortize over fifteen months in fifteen equal
monthly installments beginning on August 1, 2008. Interest on the principal
amount outstanding under the Notes will accrue at a rate of eight percent (8%)
per
annum.  We may pay installments of principal and accrued
interest in cash or, at our option, in shares of our common stock subject to the
satisfaction of certain conditions. If we elect to pay principal and interest in
shares of our common stock, the value of each share of common stock will be
equal to the lower of (a) the conversion price, and (b) 90% of the average of
the volume weighted average prices of the common stock on each of the twenty
(20) consecutive trading days immediately preceding the applicable payment
date.





At the
option of each Noteholder, the principal amount outstanding under each Note is
convertible at any time into shares of our common stock at the initial
conversion price of $1.21, which represents 110% of the closing bid price of our
common stock on the NASDAQ Capital Market on the closing date,
March 31, 2008.





We are
prohibited from issuing any variable priced equity or variable priced
equity-linked securities as long as any Note is outstanding. We also are
prohibited from issuing any equity or equity-linked securities until 90 days
after the effective date of a registration statement covering the resale of the
shares of our common stock issuable pursuant to the Notes and Warrants, with
limited exceptions.  In addition, until the later of (i) 12 months
after the effective date of such a registration statement and (ii) the date the
Notes have been repaid or converted in full, the Noteholders will have the right
to participate in any capital raising transactions that we
undertake.





The
Series Warrants issued in connection with the March 2008 Securities Purchase
Agreement include:





(i)
            Series A and A-1 Warrants, which
      are exercisable for a period of 7 years into an aggregate of 75% of the
      number of shares of our common stock initially issuable upon conversion of
      the Notes, with the Series A Warrants being exercisable into 5,257,729
      shares immediately upon issuance and the Series A-1 warrants being
      exercisable into 7,541,857 shares beginning October 1,
      2008;




(ii)
            Series B Warrants, which became
      exercisable on October 1, 2008 into 100% of the shares of our common stock
      initially issuable upon conversion of the Notes (initially 17,066,166
      shares) and remain exercisable for a period of 18 months after the
      registration statement covering the shares of common stock issuable upon
      conversion or exercise of the Notes and Warrants was declared effective by
      the SEC; and




(iii)
            Series C Warrants, which are
      exercisable for a period of 7 years beginning October 1, 2008, but only to
      the extent that the Series B Warrant are exercised and only in the same
      percentage that the Series B Warrants are exercised, up to a maximum
      percentage of 75% of the number of shares of our common stock initially
      issuable upon conversion of the Notes (initially a maximum of 12,799,580
      shares).





The
initial exercise price of each Series Warrant was $1.21. As described below, the
exercise price of the Series Warrants has been reduced to $0.50.





In
connection with the issuance of the Notes and Series Warrants, we also (a)
reduced the strike price of our outstanding common stock purchase warrants that
are held by the investors in the March 2008 private placement and certain other
warrant holders and that have strike prices ranging from $1.25 to $3.00 (the
“Pre-Extant Warrants”), to $1.10, which equals the closing bid price of the
common stock on the NASDAQ Capital Market on the closing date, March 31, 2008,
and (b) extended the expiration date of the Pre-Extant Warrants to
March 31, 2015. The holders of the Pre-Extant Warrants will waive all
anti-dilution entitlements they have in respect of any of our previously issued
securities with respect to the issuance or conversion of the Notes, the payment
of the installments or interest in shares of the common stock, or the issuance
or exercise of the Series Warrants.


25





Subsequent
Agreements with Noteholders





As
disclosed in our Quarterly Report on Form 10-Q for the quarter ended October 31,
2008, we entered into waiver and consent agreements with the Noteholders to
allow us to convert some or all of the installment amounts due on the Notes on
the August 1st,
September 1st and
October 1st
installment dates into shares of our common stock, subject to certain
conditions.  We sought waivers from the Noteholders due to our failure
to meet certain conditions precedent to the conversion of installment amounts
under the Notes as of the August 1st
installment notice date, including:





·
            the registration statement for
      the resale of all of the shares of common stock underlying the Notes and
      the Warrants was not effective at least thirty days prior to the
      installment notice date of August 1, 2008;
  and





·
            we failed to comply with the
      minimum bid price requirement of Marketplace Rule 4310(c)(4) (now known as
      Listing Rule 5550(a)(2))of The NASDAQ Stock
  Market.





We
subsequently obtained similar waivers from all investors in respect to our
November 1, 2008 installment amount.  Based on the decline in our
stock price, we paid the principal and interest amounts due on December 1,
2008 in cash.





In
December 2008, we failed to comply with the covenant to maintain Net Cash
Balance in excess of an amount equal to 75% of the aggregate principal amount
outstanding under all of the Notes.  Under the Notes, “Net Cash
Balance” means, at any date, (i) an amount equal to the aggregate amount of
cash, cash equivalents (but not including any restricted cash) and marketable
securities, consisting of corporate bonds, commercial paper and medium-term
notes, as shown or reflected in the notes to our consolidated balance sheet as
at such date minus (ii) all indebtedness of the company and our subsidiaries,
including, trade payables but excluding, indebtedness under the
Notes.





On
December 22, 2008, we entered into separate agreements with each of the
Noteholders to address the default caused by non-compliance with the Net Cash
Balance covenant and our failure to comply with the minimum bid price
requirement of The NASDAQ Stock Market, LLC.  Pursuant to each
agreements, we and each Noteholder agreed to the following:





•           Each
Noteholder agreed to waive (a) the event of default with respect to our failure
to meet Net Cash Balance test in respect of any and all periods prior to
December 22, 2008, and (b) compliance by us with the Net Cash Balance test for
the period commencing on December 22, 2008 and ending on January 30,
2009.





•           The
exercise price of each of the Warrants was reduced from $1.21 to
$0.50.





•           The
exercise price of each of the Pre-Extant Warrants was reduced from $1.10 to
$0.50.





•           We
had a one time right to require each of the Noteholders to exercise all of their
then outstanding Series Warrants and Pre-Extant Warrants if the arithmetic
average of the volume weighted average price of our common stock on the
principal trading market for a twenty-one (21) consecutive trading day period is
equal to or greater than $1.00.  We agreed to issue each Noteholder a
seven-year warrant to acquire up to the number of shares of our common stock
acquired by such Noteholder in connection with the Noteholder’s exercise of its
Series Warrants and its Pre-Extant Warrants pursuant to the exercise of our call
option, at an exercise price of $1.00 per share.





•           The
expiration date of each Series A Warrant and each Series A-1 Warrant was
extended to March 31, 2016.





•           The
expiration date of each Series C Warrant was extended to September 30,
2016.





•           The
expiration date of each Pre-Extant Warrant was extended to March 31,
2016.





•           We
agreed to honor the notices we delivered to each of the Noteholders on
December 1, 2008 in respect of the January 1, 2009 installment date in
which we confirmed our intention to redeem 100% of the January 1, 2009
installment amounts in cash pursuant to a “Company Redemption” under the
Notes.





•           We
agreed to repay the Noteholders on January 12, 2009 an additional portion of the
outstanding principal amount of the Notes equal to an aggregate
of  $1,376,666.66, which amount was converted in whole into shares of
our common stock.





•           Each
Noteholder agreed to waive satisfaction of only the condition that our common
stock remain listed on The NASDAQ Capital Market or other eligible market solely
with respect to (a) our additional repayment due on January 12, 2009, and (b)
the February 1, 2009 installment date.  Therefore, we are entitled to
deliver an installment notice in respect of the February 1st installment date
confirming that the applicable installment amount due in respect of the February
1st installment date will be converted in whole into shares of our common stock
if all other Equity Conditions (as defined in the Notes) are satisfied in
accordance with the terms of the Notes.


26





•           We
also agreed to procure and deliver to the Noteholders an authenticated Control
Agreement in respect of each deposit account of each grantor, and we agreed that
such failure to procure the Control Agreements as required would be deemed a
breach under the Notes which is not curable.





On
February 27, 2009, we and each of the Noteholders entered into a separate
Forbearance and Amendment Agreement (the “Forbearance Agreement”) pursuant to
which the Noteholders agreed for a 21-day period ending March 20, 2009 (the
“Standstill Period”) to temporarily forbear from exercising certain rights and
remedies under the Notes.  A copy of the form of the Forbearance
Agreement was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with
the SEC on March 2, 2009.  Pursuant to the Forbearance Agreement, we
and each Noteholder agreed as follows.




During
the Standstill Period, each Noteholder agreed not to exercise any of its rights
or remedies solely with respect to any of the existing Events of Default. Upon
the expiration of the Standstill Period or upon the occurrence of any Event of
Default occurring after February 27, 2009 (each such event a “Standstill
Termination”), each Noteholder will have the right to immediately exercise all
of its rights and remedies under the Notes and the related Security
Agreement.





We agreed
to amend the terms of each Note as follows:





(a)
            The Maturity Date is accelerated
      from August 30, 2009 to July 1, 2009, subject to extension by the
      Noteholder.





(b)
            The term “Installment Date” in
      the Note is amended to mean each of the following dates: (i) August 1,
      2008, (ii) September 1, 2008, (iii) October 1, 2008, (iv) November 1,
      2008, (v) December 1, 2008, (vi) January 1, 2009, (vii) February 1, 2009,
      (viii) March 1, 2009, (ix) April 1, 2009, (x) May 1, 2009, (xi) June 1,
      2009 and (xii) the Maturity
Date.





(c)
            The term “Installment Amount” is
      amended to mean, with respect to any Installment Date occurring on or
      after March 1, 2009, the lesser of (A) the product of (i) $1,927,333.32,
      multiplied by (ii) Holder Pro Rata Amount and (B) the Principal amount
      under the Note as of such Installment Date, together with any accrued and
      unpaid Interest as of such Installment Date and accrued and unpaid Late
      Charges, if any, as of such Installment
  Date.





(d)
            Section 4(a)(iii) of the Note is
      amended to permit our common stock to be quoted on the OTC Bulletin Board
      if it is suspended from trading or delisted from the NASDAQ Capital
      Market.





(e)
            The monthly expenditure of cash
      by Generex together with its subsidiaries in excess of $900,000 in the
      aggregate in March, April or May 2009 will constitute an “Event of
      Default,” provided that all cash used to effect Company Redemptions under
      the Notes as permitted thereunder will not be deemed to be cash expended
      solely for purposes of this
  determination.





(f)
            An “Event of Default” includes
      any breach by Generex of Section 8 of the Registration Rights Agreement
      (including, without limitation, any failure by Generex to (i) file with
      the SEC any required reports under Section 13 or 15(d) of the 1934 Act
      such that it is not in compliance with Rule 144(c)(1), or (ii) meet any of
      the requirements under rule
144(i)(2)).





(g)
            As of February 27, 2009, we may
      only effect a Company Redemption with respect to the payment of an
      Installment Amount in cash by using net proceeds received by us from any
      subsequent private placements, revenues from sales of our products or
      licensing fees received by
us.





(h)
            We must provide a monthly
      certification executed by our Chief Financial Officer stating whether an
      Event of Default occurred with respect to our cash expenditures in excess
      of $900,000 in the calendar month immediately preceding the date of such
      certification, and we must publicly disclose any such Event of Default on
      the date of such
certification.





We agreed
to enter into a Control Agreement with each Noteholder and a financial
institution to act as depositary with respect to a non-operating deposit account
and deposit $3,000,000 into such account, which account and Control Agreement
will be subject to the terms of the Security Agreement.  In addition,
we agreed to use commercially reasonable efforts to obtain, by the expiration of
the Standstill Period, a clean, unconditional and irrevocable letter of credit
that will remain “evergreen” until each Note is repaid in full in the aggregate
amount of $3,000,000 for the ratable benefit of each Noteholder, which letter of
credit will be subject to the terms of the Forbearance
Agreement.


27




Prior to
the expiration of the Standstill Period, we agreed to issue and deliver
irrevocable instructions to our transfer agent to issue certificates to each
Noteholder for shares of our common stock, or credit shares to the Noteholder’s
balance account at DTC, at the Noteholder’s written request to provide each
Noteholder’s pro rata
portion of Pre-Installment Conversion Shares  for the payment of
Installment Amounts under the Note or upon the occurrence of an Event of Default
after February 27, 2009.





With
respect to the April 1, 2009 Installment Date, the following terms shall
apply:





•
            March 9, 2009 will constitute the
      Installment Notice Due Date.





•
            The Pre-Installment Conversion
      Price will be equal to the price which shall be computed as 90% of the
      arithmetic average of the VWAP of our common stock on each of the 14
      consecutive trading days immediately preceding March 9, 2009 (to be
      appropriately adjusted for any stock split, stock dividend, stock
      combination or other similar transaction during such measuring
      period).





•
            The Company Conversion Price will
      be equal to the price which shall be computed as 90% of the arithmetic
      average of the VWAP of our common stock on each of the 17 consecutive
      trading days immediately preceding such Installment Date (to be
      appropriately adjusted for any stock split, stock dividend, stock
      combination or other similar transaction during such measuring
      period).





•
            We will deliver the
      Pre-Installment Conversion Shares (which will be equal the number of
      shares of common stock equal to the quotient of (i) the Installment Amount
      due on such Installment Date divided by (ii) the Pre-Installment
      Conversion Price) to the Noteholder no later than two trading days after
      March 9, 2009.





·
            The number of shares of common
      stock to be delivered pursuant to a Company Conversion on April 1, 2009
      with respect to the Installment Amount due on that date will be reduced by
      the above-mentioned number of the Pre-Installment Conversion Shares
      previously delivered.





Each
Noteholder agreed to waive satisfaction of the following:





•
            the Listing Maintenance Equity
      Condition solely with respect to the Installment Dates of  March
      1, 2009, April 1, 2009, May 1, 2009, June 1, 2009 and the Maturity Date,
      if, (i) other Equity Conditions and all other conditions relating to a
      Company Conversion are satisfied and (ii) the shares of our common stock
      continue to be listed or designated for quotation on, and trade on, the
      NASDAQ Capital Market, another national stock exchange or are quoted on
      the OTC Bulletin Board;





•
            the Net Cash Balance Test, but
      only until a Standstill Termination occurs;
  and





•
            all Existing Events of Default,
      the Net Cash Balance Test and accrual of Interest at the default Interest
      Rate, but only to the extent that we comply with all terms of the
      Forbearance Agreement and no other Event of Default occurs after February
      27, 2009.





Under the
Forbearance Agreement, each Noteholder further agreed not to exercise its
anti-dilution rights under the warrants issued in connection with the Securities
Purchase Agreement and other warrants owned by the Noteholder as result of a
subsequent private placement if we consummates a subsequent private placement on
or before July 1, 2009 and the terms satisfy the following
conditions:





·
            We issue only shares of our
      common stock;





·
            The purchase price for each share
      is equal or greater than
$0.25;





·
            The aggregate gross proceeds to
      us are no more $5,000,000;
and





·
            Rodman & Renshaw, LLC acts as
      the sole placement agent.





We agreed
to reimburse each Noteholder for the transactions costs relating to the
Forbearance Agreement and defaults that occurred before February 27, 2009, which
amounts were paid in the form of shares of our common stock determined pursuant
to the formula specified in the Forbearance Agreement.





The
Noteholders subsequently consented to extend the Standstill Period under the
Forbearance Agreements through April 3, 2009.


28





On April
3, 2009, we delivered to each of the Noteholders: (i) agreements executed by
Generex pertaining to the letter of credit for $3,000,000 that we procured from
a financing institution and delivered to the Noteholders on March 20, 2009; and
(ii) the irrevocable instructions to our transfer agent, executed by Generex and
our transfer agent, authorizing the transfer agent to issue certificates to each
Noteholder for shares of common stock (or credit shares to such Noteholder’s
balance account at DTC) at such Noteholder’s request for the Noteholder’s pro
rata portion of the Conversion Shares in payment of Installment Amounts where we
have not elected a Company Redemption in accordance with the terms of the Note
and the Forbearance Agreement or upon the occurrence of an Event of Default
after February 27, 2009.





Accordingly,
we satisfied the delivery requirements within the Standstill Period pursuant to
the terms of each of the Forbearance Agreements.





As a
result of the May 2009 private placement described below under the heading
“Financing-May 2009 Private Placement,” that we entered in compliance with the
Forbearance and Amendment Agreements with the Noteholders,, the conversion price
of the Notes and the exercise price of the warrants related to the Notes was
reduced to $0.33 (from $0.50).





Satisfaction
of the Notes





During
third fiscal quarter ending April 30, 2009, we incurred interest expense of
$5,296,582 related to the Notes that includes non cash accounting expense of
$5,144,965 relating to debt discount.





As of
June 1, 2009, we had issued 45,848,982 shares of common stock and paid
$5,380,697 in cash to repay Note principal and accrued interest in the aggregate
amount of $22,028,016.  In addition, following the decrease in the
conversion/exercise price of the Notes and related warrants resulting from the
May 2009 private placement described below under the heading “Financing-May 2009
Private Placement,” the Noteholders converted outstanding principal amount due
under the Notes and the accrued interest thereon. As of June 1, 2009, the
Noteholders had converted an aggregate amount of $2,394,000 in Note principal
and accrued interest, which represented satisfaction i n full of the remaining
outstanding principal balance and accrued interest on the Notes.





As a
result of the satisfaction of the Notes, we anticipate securing the release of
the $3,000,000 in cash collateral provided as security for our obligations under
the Notes in the form of the letter of credit required by the Forbearance
Agreements.





Proceeds
from Warrant Exercises





We may
receive additional proceeds from the exercise of Series Warrants, although the
Series Warrants include a cashless exercise feature.  As of October 1,
2008, all of the Series Warrants issued in March 2008 became
exercisable.  At April 30, 2009, outstanding Series Warrants issued in
connection with the March 2008 Securities Purchase Agreement and the Pre-Extant
Warrants described above were as follows:




Date Issued
                    
                    Aggregate No. of
                      SharesUnexercised
                    
                    
                    Exercise
                      Price*
                    
                    Expiration DateMarch
      31, 2008
                    
                    
                    15,175,117
                    
                    
                    $
                    0.33
                    
                    October
      1, 2009March
      31, 2008
                    
                    
                    25,496,610
                    
                    
                    $
                    0.33
                    
                    March
      31, 2016March
      31, 2008
                    
                    
                    12,799,580
                    
                    
                    $
                    0.33
                    
                    September
      30, 2016


*Subject
to anti-dilution adjustments upon issuance of securities at a price per share of
common stock less than the then applicable exercise price or the market price of
our common stock at that time, whichever is lower.





Financing
- May 2009 Private Placement





In
accordance with the Forbearance Agreements, on May 15, 2009, we and certain
accredited investors entered into a securities purchase agreement, pursuant to
which we sold an aggregate of 15,151,517 shares of our to such investors. The
purchase price per share of common stock is $0.33.  Our net proceeds
from the registered direct public offering, after deducting placement agent fees
and our estimated offering expenses, are approximately $4,800,000.





The
common stock was issued pursuant to a prospectus supplement filed with the SEC
on May 15, 2009, in connection with a takedown from our shelf registration
statement on Form S-3 (File No. 333-139637), as amended, which became effective
on February 23, 2007.


29





On May 5,
2009, we entered into a placement agency agreement with Rodman & Renshaw,
LLC, pursuant to which Rodman & Renshaw agreed to act as our exclusive
placement agent in respect of the forgoing transaction.  We will pay
Rodman & Renshaw a cash fee of $100,000 (2.0% of the gross proceeds from the
sale of the securities) and reimburse Rodman & Renshaw for legal fees and
expenses incurred by it in the aggregate amount of $25,000.  Under the
placement agency agreement, Rodman & Renshaw is not purchasing or selling
any of the shares we are offering and is not required to arrange the purchase or
sale of any specific number of shares or dollar amount.  Rodman &
Renshaw has agreed only to use commercially reasonable efforts to arrange for
the sale of our stock.  The placement agency agreement expires in
August 2009.





We filed
the placement agency agreement and the securities purchase agreement as Exhibits
1.1 and 1.2, respectively, to our Current Report on Form 8-K filed on May 18,
2009.





Cash
Flows for the Nine Months Ended April 30, 2009





For the
nine months ended April 30, 2009, we used $16,754,818 in cash to fund our
operating activities. The use for operating activities included a net loss of
$35,084,639, a net increase in accounts receivable of $18,868, a decrease of
$348,162 in other current assets an increase of $1,174,737 in accounts payable
and accrued expenses, , offset by an increase of $29,372 in deferred revenue and
a net decrease in inventory and inventory deposits of $110,520.





The use
of cash was offset by non-cash increases of approximately $609,202 related to
depreciation and amortization, $179,504 in stock-based compensation to
employees, $434,121 in stock-based compensation for services to consultants,
$574,155 in amortization of the loan origination fee and deferred debt issuance
cost and $13,603,972 of amortization of debt discount, $1,589,988 warrant
repricing costs and $391,280 stock issued for interest related to the March 2008
convertible note transaction.





We had
net cash flows provided by investing activities of $5,276,524 in the nine months
ended April 30, 2009, primarily representing the proceeds from
maturity of short-term investments of $8,852,214.  The proceeds were
partially offset by $3,466,667 in changes to restricted cash, payments for
property and equipment of $1,385 and cost incurred for patents of
$107,638.





We had
net cash flows used in financing activities of $4,536,600 in the nine months
ended April 30, 2009.  Proceeds from the exercise of stock
options were $56,000.  We made payments on our notes payable and
long-term debt of $4,592,600.





Our net
working capital at April 30, 2009 decreased from July 31, 2008 by $18,063,282 to
$(3,685,529, which was attributed largely to our net loss for the last nine
months.





Funding
Requirements





In
addition to meeting our obligations under the Notes, we expect to devote
substantial resources to obtaining regulatory approval of Generex Oral-lynTM in
the U.S., Canada and Europe and to commercializing Generex Oral-lynTM in India,
Lebanon, Ecuador and Algeria.  We also will devote resources to
obtaining approval for the importation, marketing and commercialization of
Generex Oral-lynTM in other countries where we have licensed
distributors.  In addition, we will expend resources on further
clinical development of our immunotherapeutic vaccines. Our future funding
requirements and our ability to raise additional capital will depend on factors
that include:





·
            The timing and amount of expense
      incurred to complete our clinical
trials;





·
            the costs and timing of the
      regulatory process as we seek approval of our products in
      development;





·
            The advancement of our products
      in development;





·
            our ability to generate new
      relationships with industry partners throughout the world that will
      provide us with regulatory assistance and long-term commercialization
      opportunities;





·
            the timing, receipt and amount of
      sales, if any, from Generex Oral-lynTM in India and
      Ecuador;





·
            The timing, receipt and amount of
      sales, if any, from our over-the-counter
  products;





·
            the cost of manufacturing (paid
      to third parties) of our licensed products, and the cost of marketing and
      sales activities of those
products;





·
            the costs of prosecuting,
      maintaining, and enforcing patent claims, if any claims are
      made;


30





·
            our ability to maintain existing
      collaborative relationships and establish new relationships as we advance
      our products in development;
and





·
            The receptivity of the financial
      market to biopharmaceutical
companies.





Off-Balance
Sheet Arrangements





We have
no off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on the Company’s financial condition, changes in
financial condition, revenue or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors, and we
do not have any non-consolidated special purpose entities.





Contractual
Obligations





The
following table of contractual obligations as of April 30, 2009 includes
interest obligations.





Payments Due by PeriodContractual Obligations
                                              
                                              Total
                                              
                                              
                                              Less than 1
                                                Year
                                              
                                              
                                              1-3 years
                                              
                                              
                                              3-5 years
                                              
                                              
                                              
                                              More than
                                                5 yearsLong-Term
      Debt Obligations
                                              
                                              
                                              3,444,847
                                              
                                              
                                              
                                              577,591
                                              
                                              
                                              
                                              1,397,553
                                              
                                              
                                              
                                              234,110
                                              
                                              
                                              
                                              1,235,593Convertible
      Debt Obligations
                                              
                                              
                                              5,913,058
                                              
                                              
                                              
                                              5,913,058Capital
      Lease Obligations
                                              
                                              
                                              63,625
                                              
                                              
                                              
                                              47,719
                                              
                                              
                                              
                                              15,906Operating
      Lease Obligations
                                              
                                              
                                              342,732
                                              
                                              
                                              
                                              120,627
                                              
                                              
                                              
                                              195,090
                                              
                                              
                                              
                                              27,015Purchase
      ObligationsOther
      Long-Term Liabilities Reflected on the Registrant's Balance Sheet under
      GAAPTotal
                                              
                                              $
                                              9,764,262
                                              
                                              
                                              $
                                              6,658,995
                                              
                                              
                                              $
                                              1,608,549
                                              
                                              
                                              $
                                              261,125
                                              
                                              
                                              $
                                              1,235,593





Convertible
debt obligations represent scheduled principal and interest payments on our 8%
secured convertible notes. In the table above, we calculated remaining principal
of $5,782,000 as payable in monthly installments, through July.  The
above table reflects that principal under the notes may be paid, at our option,
in cash or shares of our common stock, subject to the satisfaction of certain
equity conditions delineated in the notes.  Because the noteholders
converted the entire outstanding principal amount into common stock as of June
1, 2009,  the actual timing of principal and interest payments has
accelerated relative to this schedule.





Certain
Relationships and Related Transactions




Related
Transactions





Prior to
January 1, 1999, a portion of our general and administrative expenses resulted
from transactions with affiliated persons, and a number of capital transactions
also involved affiliated persons. Although these transactions were not the
result of "arms-length" negotiations, we do not believe that this fact had a
material impact on our results of operations or financial position. Prior to
December 31, 1998, we classified certain payments to executive officers for
compensation and expense reimbursements as "Research and Development - related
party" and "General and Administrative - related party" because the executive
officers received such payments through personal services corporations rather
than directly. After December 31, 1998, these payments have been and will
continue to be accounted for as though the payments were made directly to the
officers, and not as a related party transaction. With the exception of our
arrangement with our management company described below, we do not foresee a
need for, and therefore do not anticipate, any related party transactions in the
current fiscal year.





On May 3,
2001, we advanced $334,300 to each of three senior officers, who are also our
stockholders, in exchange for promissory notes. These notes bore interest at
8.5% per annum and were payable in full on May 1, 2002. These notes were
guaranteed by a related company owned by these officers and secured by a pledge
of 2,500,000 shares of our common stock owned by this related company. On June
3, 2002, our Board of Directors extended the maturity date of the loans to
October 1, 2002. The other terms and conditions of the loans and guaranty
remained unchanged and in full force and effect. As of July 31, 2002, the
balance outstanding on these notes, including accrued interest, was $1,114,084.
Pursuant to a decision made by the Compensation Committee as of August 30, 2002,
these loans were satisfied through the application of 592,716 shares of pledged
stock, at a value of $1.90 per share, which represented the lowest closing price
during the sixty days prior to August 30, 2002.


31





On
December 9, 2005, our Board of Directors approved a one-time recompense payment
in the aggregate amount of $1,000,000 for each of Ms. Gluskin, our Chairwoman,
Chief Executive Officer and President, and Ms. Rose Perri, our Chief Operating
Officer, Chief Financial Officer, Treasurer and Secretary, in recognition of the
company’s failure to remunerate each of Ms. Gluskin and Ms. Perri in each of the
fiscal years ended July 31, 1998, 1999, 2000 and 2001 in a fair and reasonable
manner commensurate with comparable industry standards and Ms. Gluskin’s and Ms.
Perri’s duties, responsibilities and performance during such years. The payment
of such amount to each of Ms. Gluskin and Ms. Perri will be made (a) in cash at
such time or times and in such amounts as determined solely by Ms. Gluskin or
Ms. Perri, as applicable, and/or (b) in shares of our common stock at such time
or times as determined by Ms. Gluskin or Ms. Perri, as applicable, provided that
the conversion price for any such shares shall be equal to the average closing
price of our common stock on the NASDAQ Capital Market for the 20 successive
trading days immediately preceding, but not including, December 9, 2005. The
amounts were not paid as of April 30, 2009 with the exception of $415,828
that was used by Ms. Perri to repay Note Receivable, Due from Related Party. The
amount was due from EBI, Inc., a shareholder of the Company that is controlled
by the estate of the Company’s former Chairman of the Board, Mark Perri. The
note was not interest bearing, unsecured and did not have any fixed terms of
repayment. The note was extended to EBI, Inc. in May 1997.





Real Estate Transactions: On
August 7, 2002, we purchased real estate with an aggregate purchase price of
approximately $1.6 million from an unaffiliated party. In connection with that
transaction, Angara Enterprises, Inc., a licensed real estate broker that is an
affiliate of Ms. Gluskin received a commission from the proceeds of the sale to
the seller in the amount of 3% of the purchase price, or $45,714. We believe
that this is less than the aggregate commission which would have been payable if
a commission had been negotiated with an unaffiliated broker on an arm's length
basis.




On
December 9, 2005, our Board of Directors approved the grant to Ms. Perri of a
right of first refusal in respect of any sale, transfer, assignment or other
disposition of either or both real properties municipally known as 1740 Sismet
Road, Mississauga, Ontario and 98 Stafford Drive, Brampton, Ontario
(collectively, the “Properties”). We granted Ms. Perri this right in recognition
of the fair market value transfer to us during the fiscal year ended July 31,
1998 by Ms. Perri (or parties related to her) of the Properties.





We
utilize a management company to manage all of our real properties. The property
management company is owned by Ms. Perri, Ms. Gluskin and the estate of Mark
Perri, our former Chairman of the Board. In the fiscal quarter ended April 30,
2009 and 2008, we paid the management company approximately $11,288.66 and
$13,505, respectively, in management fees. We believe that the amounts paid to
the management company approximate the rates that would be charged by a
non-affiliated property management company.





Legal Fees. David Wires, a
former director, is a partner of the firm Wires Jolley LLP. Wires Jolley
represents us in various matters. During fiscal 2008, we paid approximately
$44,000 in fees to Wires Jolley. We continue to use Wires Jolley and expect to
pay legal fees in similar amounts to the firm in fiscal 2009.





Private Placement of Notes and
Warrants. One of the institutional investors in the March 2008 private
placement of the Notes and Warrants was Cranshire Capital,
L.P.  Cranshire purchased Notes in the aggregate principal amount of
$5,000,000 and received Series A Warrants initially exercisable for 1,273,058
shares of common stock, Series A-1 Warrants initially exercisable for 1,826,115
shares, Series B Warrants initially exercisable for 4,132,231 and Series C
Warrants initially exercisable for 3,099,173. On February 11, 2009, Cranshire
jointly filed an amendment to Schedule 13G with Downsview Capital, Inc. and
Mitchell P. Kopin reporting beneficial ownership of more 9.99% of our
outstanding shares of common stock.  .  The beneficial
ownership of Cranshire as of May 29, 2009 was 5.6% based on the number of ours
shares of common stock outstanding as of that date.





New
Accounting Pronouncements





In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS
157"). SFAS 157 defines fair value, establishes a framework for measuring fair
value in accordance with accounting principles generally accepted in the United
States, and expands disclosures about fair value measurements. SFAS No. 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, with earlier application encouraged. Any amounts recognized
upon adoption as a cumulative effect adjustment will be recorded to the opening
balance of retained earnings in the year of adoption. On November 15, 2007, the
FASB granted a one year deferral for non-financial assets and liabilities to
comply with SFAS No. 157, however, the effective date for financial assets
remains intact. We are currently evaluating the impact of this statement on our
results of operations or financial position.





In
February 2007, the FASB issued SFAS No. 159, “Establishing the Fair Value Option
for Financial Assets and Liabilities” (“SFAS 159”) to permit all entities to
choose to elect to measure eligible financial instruments at fair value. The
decision whether to elect the fair value option may occur for each eligible item
either on a specified election date or according to a preexisting policy for
specified types of eligible items. However, that decision must also take place
on a date on which criteria under SFAS 159 occurs. Finally, the decision to
elect the fair value option shall be made on an instrument-by-instrument basis,
except in certain circumstances. An entity shall report unrealized gains and
losses on items for which the fair value option has been elected in earnings at
each subsequent reporting date. SFAS 159 applies to fiscal years beginning after
November 15, 2007, with early adoption permitted for an entity that has also
elected to apply the provisions of SFAS 157. We are currently evaluating the
impact of this statement on our results of operations or financial
position.


32





In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”
(“SFAS 141(R)”). This Statement replaces SFAS No. 141, “Business
Combinations” (“SFAS 141”). This Statement retains the fundamental requirements
in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the
purchase method) be used for all business combinations and for an acquirer to be
identified for each business combination. This Statement also establishes
principles and requirements for how the acquirer: a) recognizes and measures in
its financial statements the identifiable assets acquired, the liabilities
assumed, and any non-controlling interest in the acquiree; b) recognizes and
measures the goodwill acquired in the business combination or a gain from a
bargain purchase and c) determines what information to disclose to enable users
of the financial statements to evaluate the nature and financial effects of the
business combination. SFAS 141(R) will apply prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008. An entity
may not apply it before that date. We are currently evaluating the impact of
this statement on our results of operations or financial position.





In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements” (“SFAS 160”). This Statement amends ARB 51 to
establish accounting and reporting standards for the non-controlling (minority)
interest in a subsidiary and for the deconsolidation of a subsidiary. It
clarifies that a non-controlling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. SFAS 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008.  Earlier adoption is prohibited. We are currently evaluating the
impact of this statement on our results of operations or financial
position.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities,” and Amendment of FASB Statement No. 133. SFAS 161
amends SFAS 133, “Accounting for Derivative Instruments and Hedging Activities,”
to amend and expand the disclosure requirements of SFAS 133 to provide greater
transparency about (i) how and why an entity uses derivative instruments, (ii)
how derivative instruments and related hedge items are accounted for under SFAS
133 and its related interpretations, and (iii) how derivative instruments and
related hedged items affect an entity’s financial position, results of
operations and cash flows. To meet those objectives, SFAS 161 requires
qualitative disclosures about objectives and strategies for using derivatives,
quantitative disclosures about fair value amounts of gains and losses on
derivative instruments and disclosures about credit-risk-related contingent
features in derivative agreements. SFAS 161 is effective for fiscal years and
interim periods beginning after November 15, 2008.  Earlier adoption is
encouraged. We are currently evaluating the impact of this statement on our
results of operations or financial position.





In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS 162"). SFAS 162 is intended to improve financial
reporting by identifying a consistent framework, or hierarchy, for selecting
accounting principles to be used in preparing financial statements that are
presented in conformity with U.S. GAAP for nongovernmental entities. SFAS 162 is
effective 60 days following the Securities and Exchange Commission's approval of
the Public Company Accounting Oversight Board auditing amendments to AU Section
411, "The Meaning of Present Fairly in Conformity with Generally Accepted
Accounting Principles." We do not expect SFAS 162 to have a material effect on
our consolidated financial statements.





The FASB
issued Staff Position (“FSP”) EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,” in
June 2008. Securities participating in dividends with common stock according to
a formula are participating securities. This FSP determined unvested shares of
restricted stock and stock units with nonforfeitable rights to dividends are
participating securities. Participating securities require the “two-class”
method to be used to calculate basic earnings per share. This method lowers
basic earnings per common share. This FSP takes effect in the first quarter of
fiscal years beginning after December 15, 2008 and will be applied
retrospectively for all periods presented and will be effective for Generex on
August 1, 2009. We do not expect FSP EITF 03-6-1 to have a material effect on
our consolidated financial statements.





The FASB
issued FSP APB 14-1, “Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash Settlements),” in May
2008. This FSP requires a portion of this type of convertible debt to be
recorded as equity and to record interest expense on the debt portion at a rate
that would have been charged on nonconvertible debt with the same terms. This
FSP takes effect in the first quarter of fiscal years beginning after December
15, 2008 and will be applied retrospectively for all periods presented. It will
be effective for the Generex on August 1, 2009. This FSP will apply to our
convertible debentures.  We are currently evaluating how it may affect
our consolidated financial statements.


33





In
June 2008, the EITF reached a consensus in Issue No. 07-5,
“Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
Entity’s Own Stock” (“EITF 07-5”). This Issue addresses the determination of
whether an instrument (or an embedded feature) is indexed to an entity’s own
stock, which is the first part of the scope exception in paragraph 11(a) of SFAS
133. EITF 07-5 is effective for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. Early application is not
permitted. The Company does not expect EITF 07-5 to have a material effect on
its consolidated financial statements.





Item
3. Quantitative and Qualitative Disclosures About Market Risk.





We are
exposed to market risks associated with changes in the exchange rates between
U.S. and Canadian currencies and with changes in the interest rates related to
our fixed rate debt. We do not believe that any of these risks will have a
material impact on our financial condition, results of operations and cash
flows.





In
December 2008, we had short-term investments of approximately $8.1
million.    All of our short-term investments represented
investment in high-grade auction rate securities.  As of December 23,
2008, 100% of our auction rate securities were redeemed at par in Phase II of
the Citi Auction Security Settlement.





At the
present time, we maintain our cash in short-term government or government
guaranteed instruments, short-term commercial paper, and interest bearing bank
deposits or demand bank deposits which do not earn interest. A substantial
majority of these instruments and deposits are denominated in U.S. dollars, with
the exception of funds denominated in Canadian dollars on deposit in Canadian
banks to meet short-term operating needs in Canada. At the present time, with
the exception of professional fees and costs associated with the conduct of
clinical trials in the United States and Europe, substantially all of our
operating expense obligations are denominated in Canadian dollars. We do not
presently employ any hedging or similar strategy intended to mitigate against
losses that could be incurred as a result of fluctuations in the exchange rates
between U.S. and Canadian currencies.





As of
April 30, 2009, we had fixed rate debt totaling $2,636,640. This amount consists
of the following:





Loan Amount
                                              
                                              
                                              Interest Rate
                                                per Annum596,368
                                              
                                              
                                              6.82
                                              %559,087
                                              
                                              
                                              7.60
                                              %330,560
                                              
                                              
                                              8.50
                                              %170,576
                                              
                                              
                                              10
                                              %980,049
                                              
                                              
                                              5.91
                                              %2,636,640
                                              
                                              Total





These
debt instruments mature from August 2009 through October 2013. As our fixed rate
debt instruments mature, we will likely refinance such debt at the existing
market interest rates which may be more or less than interest rates on the
maturing debt. Since this debt is fixed rate debt, if interest rates were to
increase 100 basis points prior to maturity, there would be no impact on
earnings or cash flows.





We have
neither issued nor own any long-term debt instruments, or any other financial
instruments, for trading purposes and as to which we would be subject to
material market risks.





Item
4. Controls and Procedures.





Evaluation
of disclosure controls and procedures





Prior to
the filing of this Quarterly Report on Form 10-Q, an evaluation was performed
under the supervision of and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
our disclosure controls and procedures. Based on the evaluation our Chief
Executive Officer and Chief Financial Officer have concluded that, as of the end
of the period covered by this Quarterly Report of Form 10-Q, the Company’s
disclosure controls and procedures were effective to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the SEC and is accumulated and communicated to the
Company’s management, as appropriate, to allow timely decisions regarding
required disclosures.


34


Changes
in internal control over financial reporting





There was
no change in our internal control over financial reporting (as defined in Rules
13a-15(f) and 15(d)-15(f) under the Exchange Act) during the period covered by
this Quarterly Report on Form 10-Q that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.





PART
II - OTHER INFORMATION





Item
1. Legal Proceedings.





None.




Item
1A. Risk Factors.





In
addition to the other information included in this Quarterly Report on Form
10-Q, you should carefully review and consider the factors discussed in Part I, Item 1A - Risk
Factors of our Annual Report on Form 10-K, as amended, for the year ended
July 31, 2008, certain of which have been updated below. These factors
materially affect our business, financial condition or future results of
operations. The risks, uncertainties and other factors described in our Annual
Report on Form 10-K and below are not the only ones facing our company.
Additional risks, uncertainties and other factors not presently known to us or
that we currently deem immaterial may also impair our business operations,
financial condition or operating results. Any of the risks, uncertainties and
other factors could cause the trading price of our common stock to decline
substantially.





Risks
Related to Our Financial Condition





We
have a history of losses and will incur additional losses.





We are a
development stage company with a limited history of operations, and do not
expect sufficient revenues to support our operation in the immediately
foreseeable future. In the nine months ended April 30, 2009, we
received modest revenues from sales of Glucose RapidSprayTM . We did not recognize any
revenue from the sale of our oral insulin product in Ecuador or India in fiscal
2008.  We do not expect to receive any revenues in Ecuador until we
enter into a definitive manufacturing and distribution agreement with our
business partner there. While we have entered into a licensing and distribution
agreement with a leading Indian-based pharmaceutical company and insulin
distributor, we do not anticipate significant revenue from the initial
commercial launch of Generex Oral-lynTM in India this fiscal year. We also have
entered in subdistribution agreements in Lebanon and Algeria but do not expect
any signification revenue from the launch of the product in those countries in
calendar year 2009.





To date,
we have not been profitable and our accumulated net loss available to
shareholders was $283,313,900 at April 30, 2009. Our losses have resulted
principally from costs incurred in research and development, including clinical
trials, and from general and administrative costs associated with our
operations. While we seek to attain profitability, we cannot be sure that we
will ever achieve product and other revenue sufficient for us to attain this
objective.





With the
exception of Generex Oral-lynTM which is currently available for sale in Ecuador
and has been approved for sale in India, Lebanon and Algeria and our
over-the-counter glucose and energy spray products, Glucose RapidSprayTM,
BaBOOM!TM Energy Spray and GlucoBreakTM, our product candidates are in research or
early stages of pre-clinical and clinical development. We will need to conduct
substantial additional research, development and clinical trials. We will also
need to receive necessary regulatory clearances both in the United States and
foreign countries and obtain meaningful patent protection for and establish
freedom to commercialize each of our product candidates. We must also complete
further clinical trials and seek regulatory approvals for Generex Oral-lynTM in
countries outside of Ecuador, India, Lebanon and Algeria. We cannot be sure that
we will obtain required regulatory approvals, or successfully research, develop,
commercialize, manufacture and market any other product candidates. We expect
that these activities, together with future general and administrative
activities, will result in significant expenses for the foreseeable
future.




We
will need additional capital.





To
progress in product development or marketing, we will need additional capital
which may not be available to us. This may delay our progress in product
development or market.





We will
require funds in excess of our existing cash resources:





·
              to proceed with the development
      of our buccal insulin product;


·
            to finance the research and
      development of new products based on our buccal delivery and
      immunomedicine technologies, including clinical testing relating to new
      products;


35


·
              to finance the research and
      development activities of our subsidiary Antigen with respect to other
      potential technologies;


·
              to commercially launch and market
      developed products;


·
              to develop or acquire other
      technologies or other lines of business;


·
              to establish and expand our
      manufacturing capabilities;


·
              to finance general and
      administrative activities that are not related to specific products under
      development; and


·
            to otherwise carry on
      business.





In the
past, we have funded most of our development and other costs through equity
financing. We anticipate that our existing capital resources will enable us to
maintain currently planned operations through the next twelve months. However,
this expectation is based on our current operating plan, which could change as a
result of many factors, including a further decline in the price of our stock,
and we may need additional funding sooner than anticipated.  Because
our operating and capital resources are insufficient to meet future
requirements, we will have to raise additional funds in the near future to
continue the development and commercialization of our products. Unforeseen
problems, including materially negative developments in our clinical trials or
in general economic conditions, could interfere with our ability to raise
additional equity capital or materially adversely affect the terms upon which
such funding is available.





It is
possible that we will be unable to obtain additional funding as and when we need
it. If we were unable to obtain additional funding as and when needed, we could
be forced to delay the progress of certain development efforts. Such a scenario
poses risks. For example, our ability to bring a product to market and obtain
revenues could be delayed, our competitors could develop products ahead of us,
and/or we could be forced to relinquish rights to technologies, products or
potential products.





Risks
Related to the Market for Our Common Stock





Our
common stock could be delisted from The NASDAQ Capital Market.





On July
23, 2008, we received notice from The NASDAQ Stock Market that we were not
compliance with Marketplace Rule 4310(c)(4) (now known as Listing Rule
5550(a)(2)), which requires us to have a minimum bid price per share of at least
$1.00 for thirty (30) consecutive business days.  In accordance with
this Rule, we had 180 calendar days, or until January 20, 2009, subject to
extension, to regain compliance with this Rule.





On
October 16, 2008, NASDAQ temporarily suspended enforcement of the minimum bid
price requirement until January 19, 2009.  On December 16, 2008,
NASDAQ extended the temporary suspension of enforcement until April 20, 2009,
and, on March 9, 2009, NASDAQ further extended the temporary suspension until
July 20, 2009.  With the extended suspension, we now have until
October 26, 2009 to comply with the minimum bid price
requirement.  Therefore, if, at anytime prior to
October 26, 2009, the bid price of our common stock closes at $1.00
per share or more for a minimum period of ten (10) consecutive business days, we
will regain compliance with the Rule.





In the
event that we cannot demonstrate compliance with the minimum bid price
requirement by the specified deadline and are not eligible for an additional
compliance period, the staff will notify us that our stock would be delisted, at
which time we can appeal the staff’s determination to a Listing Qualifications
Panel. Pending the decision of the Listing Qualification Panel, our common stock
will continue to trade on the NASDAQ Capital Market. If we are not successful in
such an appeal, our stock would likely trade on NASDAQ’s over-the-counter
bulletin board, assuming we meet the requisite criteria.





The
price of our common stock may be volatile.





There may
be wide fluctuations in the price of our common stock. These fluctuations may be
caused by several factors including:





·
              announcements of research
      activities and technology innovations or new products by us or our
      competitors;


·
              changes in market valuation of
      companies in our industry generally;


·
              variations in operating
      results;


·
            changes in governmental
      regulations;


36


·
              developments in patent and other
      proprietary rights;


·
              public concern as to the safety
      of drugs or treatments developed by us or
others;


·
              results of clinical trials of our
      products or our competitors' products; and


·
            regulatory action or inaction on
      our products or our competitors'
  products.





From time
to time, we may hire companies to assist us in pursuing investor relations
strategies to generate increased volumes of investment in our common stock. Such
activities may result, among other things, in causing the price of our common
stock to increase on a short-term basis.





Furthermore,
the stock market generally and the market for stocks of companies with lower
market capitalizations and small biopharmaceutical companies, like us, have from
time to time experienced, and likely will again experience significant price and
volume fluctuations that are unrelated to the operating performance of a
particular company.  During the third calendar quarter of 2008 and
continuing to date, we, like many other publicly traded companies, have
experienced a sharp decline in the price of our stock attributable to concerns
about the current global recession.  The widespread decline in stock
prices led The NASDAQ Stock Market to further extend its temporary suspension of
enforcement of the minimum bid price requirement until
July 20, 2009.





Item.
2. Unregistered Sales of Equity Securities and Use of Proceeds.





In the
fiscal quarter ended April 30, 2009, we sold common stock and other securities
in transactions in reliance upon exemptions from the registration requirements
of the Securities Act.





During
the three months ended April 30, 2009, we issued 12,000 shares of common stock
to American Capital Ventures, Inc. pursuant to an agreement with us for
financial services. The sale of such shares was exempt from registration under
the Securities Act in reliance upon Section 4(2) thereof.  We believe
that American Capital Ventures, Inc. is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D under the Securities Act. The
certificates issued for the shares of common stock will include a legend to
indicate that they are restricted. The sales of such securities did not involve
the use of underwriters, and no commissions were paid in connection
therewith.





During
the three months ended April 30, 2009, we issued 37,500 shares of our restricted
common stock as partial consideration for the provision of services by The
Abajian Group, LLC under a consulting agreement with us. William Abajian, a
Business Development Consultant to Generex, is a principal of The Abajian Group,
LLC. The sale of such shares was exempt from registration under the Securities
Act in reliance upon Section 4(2) thereof. We believe that The Abajian Group,
LLC. is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D under the Securities Act. The certificates issued for the shares of
common stock will include a legend to indicate that they are restricted. The
sales of such securities did not involve the use of underwriters, and no
commissions were paid in connection therewith.





We have
issued shares of our common stock to Corporate Profile, LLC, a consultant,
pursuant to an agreement to provide us with investor relation services until
August 31, 2009.  During the three months ended April 30, 2009, we
issued 25,000 shares of common stock to Corporate Profile pursuant to this
agreement. The sale of such shares was exempt from registration under the
Securities Act in reliance upon Section 4(2) thereof. We believe that Corporate
Profile, LLC is an “accredited investor” as that term is defined in Rule 501(a)
of Regulation D under the Securities Act. The certificates issued for the shares
of common stock will include a legend to indicate that they are restricted. The
sales of such securities did not involve the use of underwriters, and no
commissions were paid in connection therewith.





We have
issued shares of our common stock to Avalanche Strategic Communications, a
consultant, pursuant to an agreement to provide us with investor relation
services until August 31, 2009.  During the three months ended April
30, 2009, we issued 61,183 shares of common stock to Avalanche pursuant to this
agreement. The sale of such shares was exempt from registration under the
Securities Act in reliance upon Section 4(2) thereof. We believe that Avalanche
Strategic Communications is an “accredited investor” as that term is defined in
Rule 501(a) of Regulation D under the Securities Act. The certificates issued
for the shares of common stock will include a legend to indicate that they are
restricted. The sales of such securities did not involve the use of
underwriters, and no commissions were paid in connection therewith.





We have
issued shares of our common stock to Seahawk Capital Partners, Inc, a
consultant, pursuant to an agreement to provide us with investor relation
services until June 20, 2009.  During the three months ended April 30,
2009, we issued 150,000 shares of common stock to Seahawk Capital Partners
pursuant to this agreement. The sale of such shares was exempt from registration
under the Securities Act in reliance upon Section 4(2) thereof. We believe that
Seahawk Capital Partners is an “accredited investor” as that term is defined in
Rule 501(a) of Regulation D under the Securities Act. The certificates issued
for the shares of common stock included a legend to indicate that they are
restricted. The sales of such securities did not involve the use of
underwriters, and no commissions were paid in connection
therewith.


37





During
the three months ended April 30, 2009, we have issued shares of our common stock
to the following consultants for investor relation services: Oceanus Capital LLC
(250,000 shares), Sound Capital Inc (300,000 shares), Seahawk Capital
Partners, Inc (150,000 shares).  The sale of such shares was exempt
from registration under the Securities Act in reliance upon Section 4(2)
thereof. We believe that Oceanus Capital LLC, Sound Capital  Inc. and
Seahawk Capital Partners, Inc are a “accredited investor(s)” as that term is
defined in Rule 501(a) of Regulation D under the Securities Act. The
certificates issued for the shares of common stock included a legend to indicate
that they are restricted. The sales of such securities did not involve the use
of underwriters, and no commissions were paid in connection
therewith.





Issuer
Purchases of Equity Securities





Neither
we nor any affiliated purchaser (as defined in Section 240.10 b-18(a)(3) of the
Exchange Act) purchased any of our equity securities during the fiscal quarter
ended April 30, 2009.





Item
3. Defaults Upon Senior Securities.





As of
April 30, 2009, we were in technical default under the Notes due to our
non-compliance with the Net Cash Balance covenant.  As of April 30,
2009, our Net Cash Balance was ($8,380,153), which was $12,716,653 less than the
required reserve amount equal 75% of the aggregate principal amount outstanding
under all of the Notes ($5,782,000).  Under the Forbearance
Agreements, the Noteholders agreed to waive satisfaction of this covenant as
long as no other events of defaults occurred and we fully complied with the
terms of the Forbearance Agreements.





Until the
default redemption price (together with any interest thereon) is paid in full,
the amount of any Note submitted for redemption (together with any interest
thereon) may be converted, in whole or in part, by the Noteholder into shares of
our common stock.  As of the date hereof, all requisite payments of
principal and interest on the Notes have been paid.





In
addition, as of April 30, 2009, except as provided under the Forbearance
Agreements, without the consent of the Noteholders, we could not issue shares of
our common stock in payment of installment amounts due under the Notes because
we were not in compliance with the minimum bid price requirement of Listing Rule
5550(a)(2) (formerly Marketplace Rule 4310(c)(4)) of The NASDAQ Stock Market,
LLC.





As of the
filing date of this Quarterly Report on Form 10-Q, the Notes have been satisfied
in full as described above under Part I, Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations
under the heading Financial
Condition, Liquidity and Resources – Satisfaction of the Notesin this
Quarterly Report on Form 10-Q.





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





None.





Item
5. Other Information.





Reference
is made to the disclosure set forth under Part II, Item 2 - Unregistered Sales
of Equity Securities and Use of Proceeds under the caption Unregistered Sales of Equity
Securities in this Quarterly Report on Form 10-Q, which is incorporated
by reference herein.





Item
6. Exhibits.





Exhibits
are incorporated herein by reference or are filed with this quarterly report as
set forth in the Exhibit Index beginning on page 39
hereof.


38





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.





GENEREX BIOTECHNOLOGY CORPORATION(Registrant)Date: June
      9, 2009
                  By:
                  /s/ Anna E. GluskinAnna E. GluskinPresident and Chief Executive OfficerDate: June
      9, 2009
                  By:
                  /s/ Rose C. PerriRose C. PerriChief Financial Officer


39




EXHIBIT
INDEX




Exhibit
                      Number
                    
                    Description of Exhibit(1)2
                    
                    Agreement
      and Plan of Merger among Generex Biotechnology Corporation, Antigen
      Express, Inc. and AGEXP Acquisition Inc. (incorporated by reference to
      Exhibit 2.1 to Generex Biotechnology Corporation’s Current Report on Form
      8-K filed on August 15, 2003)3(i)
                    
                    Restated
      Certificate of Incorporation of Generex Biotechnology Corporation
      (incorporated by reference to Exhibit 3(II) to Generex Biotechnology
      Corporation’s Report on Form 10-Q filed on June 19,
  2006)3(ii)
                    
                    Amended
      and Restated By-Laws of Generex Biotechnology Corporation (incorporated by
      reference to Exhibit 3.2(ii) to Generex Biotechnology Corporation’s Report
      on Form 8-K filed December 5, 2007)4.1
                    
                    Form
      of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to
      Generex Biotechnology Corporation’s Registration Statement on Form S-1
      (File No. 333-82667) filed on July 12, 1999)4.2.1
                    
                    Form
      of Securities Purchase Agreement entered into with Cranshire Capital,
      L.P.; Gryphon Partners, L.P.; Langley Partners, L.P.; Lakeshore Capital,
      Ltd.; LH Financial; Omicron Capital; Photon Fund, Ltd.; Howard Todd
      Horberg and Vertical Ventures, LLC dated May 29, 2003 (incorporated by
      reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
      Form 10-Q/A for the quarter ended April 30, 2003 filed on August 13,
      2003)4.2.2
                    
                    Form
      of Registration Rights Agreement entered into with Cranshire Capital,
      L.P.; Gryphon Partners, L.P.; Langley Partners, L.P.; Lakeshore Capital,
      Ltd.; LH Financial; Omicron Capital; Photon Fund, Ltd.; Howard Todd
      Horberg and Vertical Ventures, LLC dated May 29, 2003 (incorporated by
      reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on
      Form 10-Q/A for the quarter ended April 30, 2003 filed on August 13,
      2003)4.2.3
                    
                    Form
      of Warrant granted to Cranshire Capital, L.P.; Gryphon Partners, L.P.;
      Langley Partners, L.P.; Lakeshore Capital, Ltd.; LH Financial; Omicron
      Capital; Photon Fund, Ltd.; Howard Todd Horberg and Vertical Ventures, LLC
      dated May 29, 2003 (incorporated by reference to Exhibit 4.3 to Generex
      Biotechnology Corporation’s Report on Form 10-Q/A for the quarter ended
      April 30, 2003 filed on August 13, 2003)4.3
                    
                    Form
      of replacement Warrant issued to warrant holders exercising at reduced
      exercise price in May and June 2003 (incorporated by reference to Exhibit
      4.13.7 to Generex Biotechnology Corporation’s Report on Form 10-K for the
      period ended July 31, 2003 filed on October 29, 2003)4.4.1
                    
                    Securities
      Purchase Agreement, dated December 19, 2003, by and among Generex
      Biotechnology Corporation and the investors named therein (incorporated by
      reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
      Form 8-K/A filed on March 24, 2004)4.4.2
                    
                    Registration
      Rights Agreement, dated December 19, 2003, by and among Generex
      Biotechnology Corporation and the investors named therein (incorporated by
      reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on
      Form 8-K/A filed on March 24, 2004)


4.4.3
                  
                  Form
      of Warrant issued in connection with Exhibit 4.4.1 (incorporated by
      reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on
      Form 8-K/A filed on March 24, 2004)4.4.4
                  
                  Form
      of Additional Investment Right issued in connection with Exhibit 4.4.1
      (incorporated by reference to Exhibit 4.4 to Generex Biotechnology
      Corporation’s Report on Form 8-K/A filed on March 24,
  2004)4.5.1
                  
                  Securities
      Purchase Agreement, dated January 7, 2004, by and between Generex
      Biotechnology Corporation and ICN Capital Limited (incorporated by
      reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.5.2
                  
                  Registration
      Rights Agreement, dated January 7, 2004, by and between Generex
      Biotechnology Corporation and ICN Capital Limited (incorporated by
      reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)


40





4.5.3
                              
                              Warrant
      issued in connection with Exhibit 4.5.1 (incorporated by reference to
      Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on March 1, 2004)4.5.4
                              
                              Additional
      Investment Right issued in connection with Exhibit 4.5.1 (incorporated by
      reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.6.1
                              
                              Securities
      Purchase Agreement, dated January 9, 2004, by and between Generex
      Biotechnology Corporation and Vertical Ventures, LLC (incorporated by
      reference to Exhibit 4.5 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.6.2
                              
                              Registration
      Rights Agreement, dated January 9, 2004, by and between Generex
      Biotechnology Corporation and Vertical Ventures, LLC (incorporated by
      reference to Exhibit 4.6 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.6.3
                              
                              Warrant
      issued in connection with Exhibit 4.6.1 (incorporated by reference to
      Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on March 1, 2004)4.6.4
                              
                              Additional
      Investment Right issued in connection with Exhibit 4.6.1 (incorporated by
      reference to Exhibit 4.8 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.7.1
                              
                              Securities
      Purchase Agreement, dated February 6, 2004, by and between Generex
      Biotechnology Corporation and Alexandra Global Master Fund, Ltd.
      (incorporated by reference to Exhibit 4.9 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on March 1,
2004)4.7.2
                              
                              Registration
      Rights Agreement, dated February 6, 2004, by and between Generex
      Biotechnology Corporation and Alexandra Global Master Fund, Ltd.
      (incorporated by reference to Exhibit 4.10 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on March 1,
2004)4.7.3
                              
                              Warrant
      issued in connection with Exhibit 4.7.1 (incorporated by reference to
      Exhibit 4.11 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on March 1, 2004)4.7.4
                              
                              Additional
      Investment Right issued in connection with Exhibit 4.7.1 (incorporated by
      reference to Exhibit 4.12 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.7.5
                              
                              Escrow
      Agreement, dated February 26, 2004, by and among Generex Biotechnology
      Corporation, Eckert Seamans Cherin & Mellott, LLC and Alexandra Global
      Master Fund, Ltd. (incorporated by reference to Exhibit 4.13 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on March 1,
      2004)4.8.1
                              
                              Securities
      Purchase Agreement, dated February 11, 2004, by and between Generex
      Biotechnology Corporation and Michael Sourlis (incorporated by reference
      to Exhibit 4.14 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on March 1, 2004)4.8.2
                              
                              Registration
      Rights Agreement, dated February 11, 2004, by and between Generex
      Biotechnology Corporation and Michael Sourlis (incorporated by reference
      to Exhibit 4.15 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on March 1, 2004)4.8.3
                              
                              Additional
      Investment Right issued in connection with Exhibit 4.8.1 (incorporated by
      reference to Exhibit 4.17 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.9.1
                              
                              Securities
      Purchase Agreement, dated February 13, 2004, by and between Generex
      Biotechnology Corporation and Zapfe Holdings, Inc. (incorporated by
      reference to Exhibit 4.18 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.9.2
                              
                              Registration
      Rights Agreement, dated February 13, 2004, by and between Generex
      Biotechnology Corporation and Zapfe Holdings, Inc. (incorporated by
      reference to Exhibit 4.19 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.9.3
                              
                              Warrant
      issued in connection with Exhibit 4.9.1 (incorporated by reference to
      Exhibit 4.20 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on March 1, 2004)4.9.4
                              
                              Additional
      Investment Right issued in connection with Exhibit 4.9.1 (incorporated by
      reference to Exhibit 4.21 Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1,
2004)


41





4.10.1
              
              Securities
      Purchase Agreement, dated June 23, 2004, by and among Generex
      Biotechnology Corporation and the investors named therein (incorporated by
      reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on July 14, 2004)4.10.2
              
              Registration
      Rights Agreement, dated June 23, 2004, by and among Generex Biotechnology
      Corporation and the investors (incorporated by reference to Exhibit 4.2 to
      Generex Biotechnology Corporation’s Report on Form 8-K filed on July 14,
      2004)4.10.3
              
              Form
      of Warrant issued in connection with Exhibit 4.10.1 (incorporated by
      reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on July 14, 2004)4.10.4
              
              Form
      of Additional Investment Right issued in connection Exhibit 4.10.1
      (incorporated by reference to Exhibit 4.4 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on July 14,
2004)4.11.1
              
              Securities
      Purchase Agreement, dated November 10, 2004, by and among Generex
      Biotechnology Corporation and the investors named therein (incorporated by
      reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on November 12, 2004)4.11.2
              
              Form
      of 6% Secured Convertible Debenture issued in connection with Exhibit
      4.11.1 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on November 12,
    2004)4.11.3
              
              Registration
      Rights Agreement, dated November 10, 2004, by and among Generex
      Biotechnology Corporation and the investors named therein (incorporated by
      reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on November 12, 2004)4.11.4
              
              Form
      of Voting Agreement entered into in connection with Exhibit 4.11.1
      (incorporated by reference to Exhibit 4.7 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on November 12,
    2004)4.12
              
              Warrant
      issued to The Aethena Group, LLC on April 28, 2005 (incorporated by
      reference to Exhibit 4.20 to Generex Biotechnology Corporation’s Quarterly
      Report on Form 10-Q filed on June 14, 2005)4.13.1
              
              Amendment
      No. 4 to Securities Purchase Agreement and Registration Rights Agreement
      entered into by and between Generex Biotechnology Corporation and the
      Purchasers listed on the signature pages thereto on January 19, 2006
      (incorporated by reference herein to Exhibit 4.1 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on January 20,
  2006)4.13.2
              
              Form
      of Additional AIRs issued in connection with Exhibit 4.13.1 (incorporated
      by reference herein to Exhibit 4.4 to Generex Biotechnology Corporation’s
      Report on Form 8-K filed on January 20, 2006)4.14
              
              Form
      of Warrant issued by Generex Biotechnology Corporation on January 23, 2006
      (incorporated by reference to Exhibit 4.2 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on January 24,
  2006)4.15.1
              
              Agreement
      to Amend Warrants between Generex Biotechnology Corporation and Cranshire
      Capital L.P. dated February 27, 2006 (incorporated by reference to Exhibit
      4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on
      February 28, 2006).4.15.2
              
              Agreement
      to Amend Warrants between Generex Biotechnology Corporation and Omicron
      Master Trust dated February 27, 2006 (incorporated by reference to Exhibit
      4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on
      February 28, 2006).4.15.3
              
              Agreement
      to Amend Warrants between Generex Biotechnology Corporation and Iroquois
      Capital L.P. dated February 27, 2006 (incorporated by reference to Exhibit
      4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on
      February 28, 2006).4.15.4
              
              Agreement
      to Amend Warrants between Generex Biotechnology Corporation and Smithfield
      Fiduciary LLC dated February 27, 2006 (incorporated by reference to
      Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on February 28, 2006).4.15.5
              
              Form
      of Warrant issued by Generex Biotechnology Corporation on February 27,
      2006 (incorporated by reference to Exhibit 4.26 to Generex Biotechnology
      Corporation’s Report on Form 10-K filed on October 16,
    2006)


42





4.16.1
              
              Agreement
      to Amend Additional Investment Right between Generex Biotechnology
      Corporation and Cranshire Capital, L.P. dated February 28, 2006
      (incorporated by reference to Exhibit 4.1 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on March 1,
  2006).4.16.2
              
              Agreement
      to Amend Additional Investment Right between Generex Biotechnology
      Corporation and Omicron Master Trust dated February 28, 2006 (incorporated
      by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report
      on Form 8-K filed on March 1, 2006).4.16.3
              
              Agreement
      to Amend Additional Investment Right between Generex Biotechnology
      Corporation and Iroquois Capital LP dated February 28, 2006 (incorporated
      by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report
      on Form 8-K filed on March 1, 2006).4.16.4
              
              Agreement
      to Amend Additional Investment Right between Generex Biotechnology
      Corporation and Smithfield Fiduciary LLC dated February 28, 2006
      (incorporated by reference to Exhibit 4.4 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on March 1,
  2006).4.16.5
              
              Form
      of Additional AIR Debenture issued by Generex Biotechnology Corporation on
      February 28, 2006 (incorporated by reference to Exhibit 4.31 to Generex
      Biotechnology Corporation’s Report on Form 10-K filed on October 16,
      2006)4.16.6
              
              Form
      of Additional AIR Warrant issued by Generex Biotechnology Corporation on
      February 28, 2006 (incorporated by reference to Exhibit 4.32 to Generex
      Biotechnology Corporation’s Report on Form 10-K filed on October 16,
      2006)4.17.1
              
              Form
      of Agreement to Amend Warrants between Generex Biotechnology Corporation
      and the Investors dated March 6, 2006 (incorporated by reference to
      Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on March 7, 2006).4.17.2
              
              Form
      of Warrant issued by Generex Biotechnology Corporation on March 6, 2006
      (incorporated by reference to Exhibit 4.2 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on March 7,
2006)4.18
              
              Warrant
      issued by Generex Biotechnology Corporation on April 17, 2006 to Zapfe
      Holdings, Inc. (incorporated by reference to Exhibit 4.33 to Generex
      Biotechnology Corporation’s Report on Form 10-Q filed on June 14,
      2006)4.19
              
              Form
      of Warrant issued by Generex Biotechnology Corporation on April 17, 2006
      to certain employees (incorporated by reference to Exhibit 4.34 to Generex
      Biotechnology Corporation’s Report on Form 10-Q filed on June 14,
      2006).4.20.1
              
              Securities
      Purchase Agreement entered into by and between Generex Biotechnology
      Corporation and four Investors on June 1, 2006 (incorporated by reference
      to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on June 2, 2006)4.20.2
              
              Form
      of Warrant issued by Generex Biotechnology Corporation on June 1, 2006
      (incorporated by reference to Exhibit 4.2 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on June 2, 2006)4.21.1
              
              Form
      of Amendment to Outstanding Warrants (incorporated by reference to Exhibit
      4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on
      June 2, 2006)4.21.2
              
              Form
      of Warrant issued by Generex Biotechnology Corporation on June 1, 2006 in
      connection with Exhibit 4.39 (incorporated by reference to Exhibit 4.4 to
      Generex Biotechnology Corporation’s Report on Form 8-K filed on June 2,
      2006)4.22.1
              
              Securities
      Purchase Agreement, dated as of March 31, 2008 among the Registrant and
      each of the purchasers named therein (incorporated by reference to Exhibit
      4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on
      April 2, 2008)


43





4.22.2
              
              Form
      of 8% Secured Convertible Note, as amended (incorporated by reference to
      Exhibit 4.2 to Generex Biotechnology Corporation’s Registration Statement
      (333-150562) on Form S-3 filed on April 30, 2008)4.22.3
              
              Form
      of Series A Warrant, as amended (incorporated by reference to Exhibit 4.3
      to Generex Biotechnology Corporation’s Registration Statement on Form S-3
      (333-150562) filed on April 30, 2008)4.22.4
              
              Form
      of Series A-1 Warrant, as amended (incorporated by reference to Exhibit
      4.4 to Generex Biotechnology Corporation’s Registration Statement on Form
      S-3 (333-150562) filed on April 30, 2008)4.22.5
              
              Form
      of Series B Warrant, as amended (incorporated by reference to Exhibit 4.5
      to Generex Biotechnology Corporation’s Registration Statement on Form S-3
      (333-150562) filed on April 30, 2008)4.22.6
              
              Form
      of Series C Warrant, as amended (incorporated by reference to Exhibit 4.6
      to Generex Biotechnology Corporation’s Registration Statement on Form S-3
      (333-150562) filed on April 30, 2008)4.22.7
              
              Registration
      Rights Agreement, dated March 31, 2008, among Registrant and each of the
      purchasers under Securities Purchase Agreement (incorporated by reference
      to Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on April 2, 2008)4.22.8
              
              Security
      Agreement (incorporated by reference to Exhibit 4.8 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on April 2,
      2008)4.22.9
              
              Form
      of Guaranty (incorporated by reference to Exhibit 4.9 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on April 2,
      2008)9
              
              Form
      of Voting Agreement entered into in connection with Exhibit 4.11.1
      (incorporated by reference to Exhibit 4.7 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on November 12,
    2004)10.1
              
              Form
      of separate Agreements entered into with each of Cranshire Capital, L.P.,
      Portside Growth and Opportunity Fund, Rockmore Investment Master Fund
      Ltd., Smithfield Fiduciary LLC and Iroquois Capital Opportunity Fund, LP
      on December 22, 2008 (incorporated by reference to Exhibit 10.1 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on December 23,
      2008)10.2
              
              Form
      of Agreement entered into with Iroquois Master Fund Ltd. on December 22,
      2008 (incorporated by reference to Exhibit 10.2 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on December 23,
    2008)10.3
              
              Form
      of separate Letter Agreements dated as of February 13, 2009 and entered
      into by and between Generex Biotechnology Corporation and each of
      Cranshire Capital, L.P., Portside Growth and Opportunity Fund, Rockmore
      Investment Master Fund Ltd., Smithfield Fiduciary LLC, Iroquois Master
      Fund Ltd. and Iroquois Capital Opportunity Fund, LP. (incorporated by
      reference to Exhibit 10.1 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on February 17, 2009).10.4
              
              Form
      of Forbearance and Amendment Agreement dated as of February 27, 2009 and
      entered into by and between Generex Biotechnology Corporation and each of
      Cranshire Capital, L.P., Portside Growth and Opportunity Fund, Rockmore
      Investment Master Fund Ltd., Smithfield Fiduciary LLC, Iroquois Master
      Fund Ltd. and Iroquois Capital Opportunity Fund, LP. (incorporated by
      reference to Exhibit 10.1 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 2, 2009).31.1
              
              Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
              
              Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200232
              
              Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002





(1)
            In the case of incorporation by
      reference to documents filed by the Registrant under the Exchange Act, the
      Registrant’s file number under the Exchange Act is
      000-25169.


44