<PAGE>



                                  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, 2002

[ ] 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                (IRS Employer Identification No.)
 incorporation or organization)

                          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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

The number of outstanding shares of the registrant's common stock, par value
$.001, was 20,635,426 as of April 30, 2002.


<PAGE>


                        GENEREX BIOTECHNOLOGY CORPORATION
                                      INDEX


PART I:       FINANCIAL INFORMATION

<TABLE>
<CAPTION>
<S>           <C>                                                                                     <C>
Item 1.       Consolidated Financial Statements -- unaudited

              Consolidated Balance Sheets --
              April 30, 2002 and July 31, 2001 ......................................................   4

              Consolidated Statements of Operations -- for the three month
              periods ended April 30, 2002 and 2001, the nine-month periods
              ended April 30, 2002 and 2001, and cumulative from November 2,
              1995 to April 30, 2002.................................................................   5

              Consolidated Statements of Cash Flows -- For the nine-month
              periods ended April 30, 2002 and 2001, and cumulative from
              November 2, 1995 to April 30, 2002.....................................................   6

              Notes to Consolidated Financial Statements.............................................   7

Item 2.       Management's Discussion and Analysis of Financial
              Condition and Results of Operations....................................................  12

Item 3.       Quantitative and Qualitative Disclosures
              About Market Risk......................................................................  18


PART II:      OTHER INFORMATION

Item 1.       Legal Proceedings......................................................................  19

Item 4.       Submission of Matters to a Vote of Security Holders....................................  20

Item 5.       Other Information......................................................................  21

Item 6.       Exhibits and Reports on Form 8-K.......................................................  32

Signatures...........................................................................................  33

</TABLE>

                                                                               2
<PAGE>


Part I.    FINANCIAL INFORMATION

Item 1.    Consolidated financial statements













                                                                               3

<PAGE>


<TABLE>
<CAPTION>

                                GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
                                           (A DEVELOPMENT STAGE COMPANY)
                                            CONSOLIDATED BALANCE SHEETS
                                                    (UNAUDITED)
                                                                                April 30,           July 31,
                                                                                  2002                2001
                                                                                ---------           --------
<S>                                                                             <C>                 <C>
         ASSETS

Cash and cash equivalents                                                        $ 1,063,147        $10,109,559
Short-term investments                                                            24,491,877         26,892,729
Officers' loans receivable                                                         1,090,902          1,023,743
Miscellaneous receivables                                                             12,560             12,865
Other current assets                                                                 170,404            112,620
                                                                                 -----------        -----------
       Total Current Assets                                                       26,828,890         38,151,516

Property and Equipment, Net                                                        3,979,500          3,727,761

Patents, Net                                                                         707,697            434,307

Deposits                                                                                --               20,000

Due From Related Parties                                                             324,413            332,289
                                                                                 -----------        -----------

         TOTAL ASSETS                                                            $31,840,500        $42,665,873
                                                                                 ===========        ===========
         LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Accounts payable and accrued expenses                                         $ 1,260,577        $ 2,650,773
   Current maturities of long-term debt                                                9,867              9,634
                                                                                 -----------        -----------
         Total Current Liabilities                                                 1,270,444          2,660,407

Long-Term Debt, Less Current Maturities                                              659,426            683,026

Commitments and Contingencies

Stockholders' Equity:
   Series A, preferred stock, $.001 par value; (liquidation
     preference $12,735,900) authorized 1,000,000 shares,
     issued and outstanding 1,060 and 1,000 shares at
     April 30, 2002 and at July 31, 2001, respectively                                     1                  1
   Special Voting Rights Preferred stock, $.001 par value;
     authorized, issued and outstanding 1,000 shares at
     April 30, 2002 and at July 31, 2001                                                   1                  1
   Common stock, $.001 par value; authorized 50,000,000 shares,
     issued 20,697,326 and 20,681,526 shares
     at April 30, 2002 and July 31, 2001, respectively and
     outstanding 20,635,426 and 20,681,526 shares at
     April 30, 2002 and July 31, 2001, respectively                                   20,697             20,681
   Treasury stock, at cost; 61,900 shares of common stock                           (278,828)              --
   Additional paid-in capital                                                     89,823,743         88,776,859
   Notes receivable - common stock                                                  (331,091)          (314,300)
   Deficit accumulated during the development stage                              (59,015,923)       (48,913,935)
   Accumulated other comprehensive loss                                             (307,970)          (246,867)
                                                                                 -----------        -----------
         Total Stockholders' Equity                                               29,910,630         39,322,440
                                                                                 -----------        -----------

         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                              $31,840,500        $42,665,873
                                                                                 ===========        ===========
</TABLE>


The Notes to Consolidated Financial Statements are an integral part of these
statements.

                                                                               4

<PAGE>

<TABLE>
<CAPTION>

                                GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
                                           (A DEVELOPMENT STAGE COMPANY)
                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                                    (UNAUDITED)

                                                                                                                      Cumulative
                                                                                                                         From
                                                                                                                      November 2,
                                                        For the Three Months Ended      For the Nine Months Ended    1995 (Date of
                                                       ----------------------------    --------------------------    Inception) to
                                                           2002             2001          2002            2001       April 30, 2002
                                                       ------------     -----------    ----------      -----------   --------------
                                                                                                        (Restated)
<S>                                                      <C>             <C>           <C>              <C>            <C>
Contract Research Revenues                              $     --        $      --      $     --        $ 1,000,000    $ 1,000,000

Operating Expenses:
   Research and development                               1,612,984          718,385      4,103,731     17,586,294     30,199,627
   Research and development - related party                   --               --              --             --          220,218
   General and administrative                             1,788,072        2,369,037      5,983,414      6,263,852     33,734,883
   General and administrative - related party                 --               --             --             --           314,328
                                                        -----------      -----------   ------------   ------------   ------------
       Total Operating Expenses                           3,401,056        3,087,422     10,087,145     23,850,146     64,469,056
                                                        -----------      -----------   ------------   ------------   ------------

Operating Loss                                           (3,401,056)      (3,087,422)   (10,087,145)   (22,850,146)   (63,469,056)

Other Income (Expense):
   Miscellaneous income                                       3,970            2,759         11,881         13,417         30,451
   Interest income                                          173,802          393,223        740,269      1,099,704      2,486,114
   Interest expense                                         (15,866)         (22,657)       (47,953)       (56,584)      (329,392)
                                                        -----------      -----------   ------------   ------------   ------------

Net Loss Before Undernoted                               (3,239,150)      (2,714,097)    (9,382,948)   (21,793,609)   (61,281,883)

Minority Interest Share of Loss                               --               --             1,860      2,985,000      2,986,860
                                                        -----------      -----------   ------------   ------------   ------------

Net Loss                                                 (3,239,150)      (2,714,097)    (9,381,088)   (18,808,609)   (58,295,023)

Preferred Stock Dividend                                      --               --           720,900          --           720,900
                                                        -----------      -----------   ------------   ------------   ------------

Net Loss Available to Common Stockholders               $(3,239,150)     $(2,714,097)  $(10,101,988)  $(18,808,609)  $(59,015,923)
                                                        ===========      ===========   ============   ============   ============
Basic and Diluted Net Loss Per Common
   Share                                                $      (.16)     $      (.14)  $       (.49)  $      (1.02)
                                                        ===========      ===========   ============   ============
Weighted Average Number of Shares of
   Common Stock Outstanding                              20,656,727       19,252,231     20,673,648     18,436,491
                                                        ===========      ===========   ============   ============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.

                                                                               5
<PAGE>

<TABLE>
<CAPTION>

                                GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
                                           (A DEVELOPMENT STAGE COMPANY)
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (UNAUDITED)



                                                                          For the Nine Months Ended               Cumulative From
                                                                                    April 30,                    November 2, 1995
                                                                        -------------------------------         (Date of Inception)
                                                                             2002               2001             to April 30, 2002
                                                                        -------------       ------------        -------------------
                                                                                             (Restated)
<S>                                                                      <C>                  <C>                 <C>
Cash Flows From Operating Activities:
Net loss                                                                $ (9,381,088)       $(18,808,609)           $(58,295,023)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
       Depreciation and amortization                                         308,940              77,641                 750,217
       Minority interest share of loss                                        (1,860)         (2,985,000)             (2,986,860)
       Reduction of notes receivable - common
         stock in exchange for services rendered                               --                  --                    423,882
       Write-off of deferred offering costs                                    --                  --                  3,406,196
       Common stock issued for services rendered                              71,172             662,504               2,141,164
       Stock options and warrants issued for
         services rendered                                                   227,328             745,000               4,815,388
       Preferred stock issued for services rendered                            --                  --                        100
       Founders shares transferred for services
         rendered                                                              --                  --                    353,506
       Changes in operating assets and liabilities:
         Miscellaneous receivables                                             --                 15,703                  30,620
         Other current assets                                                (56,193)            (92,703)               (173,799)
         Accounts payable and accrued liabilities                         (1,379,608)           (396,438)              2,112,513
         Other, net                                                            --                  --                    110,317
                                                                        ------------        ------------            ------------
           Net Cash Used in Operating Activities                         (10,211,309)        (20,781,902)            (47,311,779)

Cash Flows From Investing Activities:
   Purchase of property and equipment                                       (599,780)         (1,480,492)             (2,896,751)
   Purchases of intangibles                                                 (305,274)           (174,252)               (772,207)
   Change in restricted cash                                                   --                  --                     (5,595)
   Change in short-term investments, net                                   2,400,852         (22,994,261)            (24,491,877)
   Increase in officers' loans receivable                                    (67,159)              --                 (1,090,902)
   Change in deposits                                                         20,000              27,879                  49,515
   Change in notes receivable - common stock                                 (16,791)             (4,874)                (31,091)
   Change in due from related parties                                          --                  --                 (2,255,197)
   Other, net                                                                  --                  --                     89,683
                                                                        ------------        ------------            ------------
           Net Cash Used in Investing Activities                           1,431,848         (24,626,000)            (31,404,422)

Cash Flows From Financing Activities:
   Proceeds from issuance of long-term debt                                    --                  --                    993,149
   Repayment of long-term debt                                                (6,897)             (2,943)               (972,881)
   Change in due to related parties                                            --                  --                    154,541
   Proceeds from exercise of warrants                                          --                494,250               2,256,482
   Proceeds from exercise of options                                          27,500               --                    772,500
   Proceeds from minority interest investment                                  1,860           2,985,000               2,986,860
   Proceeds from issuance of common stock, net                                 --             28,525,909              61,999,294
   Proceeds from issuance of preferred stock, net                              --             12,015,000              12,015,000
   Purchase and retirement of common stock                                     --                  --                   (119,066)
   Purchase of treasury stock                                               (278,828)              --                   (278,828)
                                                                        ------------        ------------            ------------
           Net Cash Provided By Financing Activities                        (256,365)         44,017,216              79,807,051

Effect of Exchange Rates on Cash and Cash Equivalents                        (10,586)            (18,294)                (27,703)
                                                                        ------------        ------------            ------------
Net Increase (Decrease) in Cash and Cash Equivalents                      (9,046,412)         (1,408,980)              1,063,147

Cash and Cash Equivalents, Beginning of Period                            10,109,559           3,204,905                   --
                                                                        ------------        ------------            ------------
Cash and Cash Equivalents, End of Period                                $  1,063,147        $  1,795,925            $  1,063,147
                                                                        ============        ============            ============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                                                               6
<PAGE>


               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.

     Interim statements are subject to possible adjustments in connection with
     the annual audit of the Company's accounts for the fiscal year 2002; 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. Results for the nine months ended April 30, 2002 are not
     indicative of results for the entire year.

2.   Comprehensive Income/(Loss)
     The Company has adopted the provisions of Statement No. 130, Reporting
     Comprehensive Income, which modifies the financial statement presentation
     of comprehensive income and its components.

     Comprehensive loss, which includes net loss and the change in the foreign
     currency translation account during the period, for the three months ended
     April 30, 2002 and 2001 was $3,260,552 and $2,784,203, respectively, and
     for the nine months ended April 30, 2002 and 2001, was $9,442,191 and
     $18,182,264, respectively.

3.   Accounts Payable and Accrued Expenses
     Accounts payable and accrued expenses consist of the following:

                                             April 30,       July 31,
                                               2002            2001
                                           ------------    -----------

     Accounts Payable                      $   562,942     $   896,061
     Litigation Accruals                        95,760         191,653
     Clinical                                     --           147,699
     Accrued Legal Fees                           --           420,360
     Financial Services                         50,000         995,000
     Executive Compensation                    551,875            --
                                           -----------     -----------
                 Total                     $ 1,260,577     $ 2,650,773
                                           ===========     ===========


                                                                               7

<PAGE>

               GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


4.   Pending Litigation
     On October 2, 1998, Sands Brothers & Co. Ltd., a New York City-based
     investment banking and brokerage firm, initiated an arbitration against the
     Company under New York Stock Exchange rules. Sands alleged that it had the
     right to receive, for nominal consideration, approximately 1.5 million
     shares of the Company's common stock. Sands based its claim upon an October
     1997 letter agreement that was purported by Sands to confirm an agreement
     appointing Sands as the exclusive financial advisor to Generex
     Pharmaceuticals, Inc., a subsidiary of the Company that was acquired in
     late 1997. In exchange, the letter agreement purported to grant Sands the
     right to acquire 17% of Generex Pharmaceuticals common stock for nominal
     consideration. Sands claimed that its right to receive shares of Generex
     Pharmaceuticals common stock applies to the Company's common stock since
     outstanding shares of Generex Pharmaceuticals common stock were converted
     into shares of the Company's common stock in the acquisition. Sands' claims
     also included additional shares allegedly due as a fee related to that
     acquisition, and $144,000 in monthly fees allegedly due under the terms of
     the purported agreement.

     Pursuant to an arbitration award dated September 22, 1999, the arbitration
     panel that heard this case awarded Sands $14,070 and issued a declaratory
     judgment requiring the Company to issue to Sands a warrant to purchase
     1,530,020 shares of the Company's common stock pursuant to and in
     accordance with the terms of the purported October 1997 letter agreement.
     On October 13, 1999, Sands commenced a special proceeding to confirm the
     arbitration award in the Supreme Court of the State of New York, County of
     New York (the "New York Supreme Court"). On November 10, 1999, the Company
     moved to vacate the arbitration award. On March 20, 2000, the New York
     Supreme Court granted Sands' petition to confirm the award and denied the
     Company's motion to vacate the award. The Company appealed and on January
     23, 2001, the New York State Appellate Division, First Department (the
     "Appellate Division"), modified the judgment of the New York Supreme Court
     that had confirmed the arbitration award against the Company. The Appellate
     Division affirmed the portion of the New York Supreme Court judgment that
     had confirmed the granting of monetary relief of $14,070 to Sands but
     modified the judgment to vacate the portion of the arbitration award
     directing the issuance to Sands of a warrant to purchase 1,530,020 shares
     of the Company's common stock. The Appellate Division held that the portion
     of the award directing the Company to issue warrants to Sands is too
     indefinite to be enforceable and remanded the matter to the arbitration
     panel for a final and definite award with respect to such relief or its
     equivalent (including possibly an award of monetary damages). The
     arbitration panel commenced hearings on the matters remanded by the
     Appellate Division in June 2001. On November 7, 2001, the arbitration panel
     issued an award again requiring the Company to issue to Sands a warrant to
     purchase 1,530,020 shares of the Company's common stock purportedly
     pursuant to and in accordance with the terms of the October 1997 letter
     agreement. Thereafter, Sands submitted a motion to the New York Supreme
     Court to modify and confirm the arbitration panel's award while the Company
     filed a motion with the court to vacate the arbitration award.

     On February 25, 2002, the New York Supreme Court vacated the arbitration
     panel's November 7, 2001 award to Sands of a warrant to purchase 1,530,000
     shares of the Company's common stock. Sands has appealed the February 25,
     2002 order of the New York Supreme Court to the Appellate Division and the
     Company has filed a cross-appeal. At the present time, the Company is not
     able to predict the ultimate outcome of this legal proceeding or to
     estimate a range of possible loss from this legal proceeding. Therefore, no
     provision has been recorded in the accompanying financial statements.


                                                                               8

<PAGE>

               GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


4.   Pending Litigation (continued)

     In February 2001, a former business associate of the Vice President of
     Research and Development (VP), and an entity called Centrum Technologies
     Inc. 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 the company called Centrum
     Technologies Inc. On July 20, 2001, the Company filed a preliminary motion
     to dismiss the action of Centrum Technologies Inc. as a nonexistent entity
     or, alternatively, to stay such action on the grounds of want of authority
     of such entity to commence the action and, in the further alternative, to
     dismiss such action for failure to produce documents referred to in the
     statement of claim. On December 6, 2001, the Company's preliminary motion
     to dismiss the action of Centrum Technologies Inc. was heard and granted.
     The action of the former business associate of the VP is still pending. The
     Company intends to continue its vigorous defense of this legal proceeding.
     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.

     In February 1997, a former employee of Generex Pharmaceuticals, Inc.,
     commenced an action in the Ontario Superior Court of Justice for wrongful
     dismissal. The Ontario Superior Court of Justice rendered judgment in favor
     of the plaintiff for approximately $127,000 plus interest in November 1999
     and further awarded costs to the plaintiff in March 2000. An appeal of the
     judgment was filed with the Court of Appeal for Ontario in April 2000. The
     Company intends to continue its vigorous defense of this action. The
     Company does not believe that the ultimate resolution of this legal
     proceeding will have a material effect on the consolidated financial
     position of the Company. The Company has established a reserve for
     potential loss contingencies related to the resolution of this legal
     proceeding, the amount of which of is not material to the consolidated
     financial position of the Company.

     In March 1999, a former consultant to the Company commenced an action in
     the Ontario Superior Court of Justice against the Company seeking
     approximately $94,000 and 1,465 shares of the Company's Common Stock for
     alleged breach of contract damages and additional amounts in punitive
     damages. In April 1999, the Company filed a counterclaim for monies the
     Company believes are due to the Company from this former consultant. In
     March 2002, this action was settled for an amount that is not material to
     the consolidated financial position of the Company.

     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 consolidated financial position.


                                                                               9

<PAGE>


               GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



5.   Supplemental Disclosure of Cash Flow Information

<TABLE>
<CAPTION>
                                                                                            For the Nine months Ended
                                                                                                      April 30,
                                                                                            ---------------------------
                                                                                               2002             2001
                                                                                            ---------         ---------
     <S>                                                                                    <C>               <C>
     Cash paid during the period for:
        Interest                                                                            $  47,953         $   56,584
        Income taxes                                                                        $    --           $     --

     Disclosure of non-cash investing and financing activities:
        The fair value of warrants issued as consideration for an equity
          financing agreement was initially capitalized as deferred offering
          costs and subsequently expensed                                                   $    --           $3,406,196
        Common stock issued in exchange for note receivable -
          common stock                                                                      $    --           $  250,000
        Issuance of Series A Preferred Stock as preferred stock
          dividend                                                                          $ 720,900         $     --
</TABLE>

6.   Transactions With Related Parties
     The Company's change in "Due from Related Parties" for the nine months
     ended April 30, 2002 represents only the effects of changes in April 30,
     2002 exchange rates versus those in effect at July 31, 2001.

7.   Restatement of Prior Quarter
     To account for the effect of restatements disclosed in the Company's Form
     10-K for the year ended July 31 2001, the Company's financial information
     for the nine month period ended April 30, 2001 has been restated to
     recognize additional compensation expense related to stock options issued
     to a consultant during the three month period ended January 31, 2001.

     The following schedule sets forth the financial information for the nine
     month period ended April 30, 2001 as previously reported and as restated
     for the effect of the above-mentioned adjustment:

                                            Previously
                                             Reported              Restated
                                           -------------         ------------
     Contract Research Revenue             $     --              $    --
     Operating Loss                        $(22,105,146)         $(22,850,146)
     Net Loss                              $(18,063,609)         $(18,808,609)
     Net Loss Per Share                    $      (0.98)         $      (1.02)

8.   Stockholders Equity

     Preferred Stock Dividend
     On January 15, 2002, the Company paid a 6 percent stock dividend on the
     Company's Series A Preferred Stock. The dividend was paid in shares of
     Series A Preferred stock, and resulted in a charge to accumulated deficit
     of $720,900, which was based upon the original issue price of the preferred
     shares.

     Treasury stock
     The Company purchased 61,900 shares of common stock to be held in treasury
     for $278,828 during the nine months ended April 30, 2002.


                                                                              10

<PAGE>

               GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


8.   Stockholders Equity (Continued)

     Warrants
     In March 2002, the Company issued 74,000 warrants to purchase shares of
     Common Stock, in exchange for certain consulting and financial services. As
     a result of this issuance, a charge to general and administrative expenses
     of $227,328 was recorded in the statement of operations.

9.   Subsequent Events

     Subsequent events occurring after April 30, 2002 consist of the following:

     In May 2002, the Company purchased 7,500 shares of common stock to be held
     in treasury for $28,360.

     In May 2002, the Company extended the due date of the officers' loans
     receivable to October 1, 2002 at terms comparable to the original loans.

     In June 2002, the Company granted 40,000 options to outside consultants at
     an exercise price of $7.50 per share under the 2000 Stock Option Plan.

     In June 2002, the Company granted 300,000 options to employees at an
     exercise price $5.19 per share under the 2001 Stock Option Plan. These
     options qualified as Incentive Stock Options (ISOs) within the meaning of
     Section 422 of the Internal Revenue Code.






                                                                              11

<PAGE>


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

Forward Looking Statements

         We have made statements in the Management's Discussion and Analysis of
Financial Condition and Results of Operations, in the Notes to Consolidated
Financial Statements and elsewhere in this Report that may be forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements can be identified by introductory words such as
"expects", "plans", "intends", "believes", "will", "estimates", "forecasts",
"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:

         o    the status of activities under our development and license
              agreement with Eli Lilly and Company;

         o    the status of activities under our joint venture with Elan;

         o    our other clinical and product development programs and other
              aspects of our business plans;

         o    the development of additional products using our buccal delivery
              technology;

         o    our financing goals, plans and future needs; and

         o    our expectations of when regulatory approvals will be received or
              other actions will be taken by parties other than us.

         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:

         o    the inherent uncertainties of product development based on a new
              and as yet not fully proven drug delivery technology;

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

         o    the inherent uncertainties associated with identification and
              initial development of product candidates;

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


                                                                              12

<PAGE>

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

         o    adverse developments in our collaborations with Lilly and Elan.

         Additional factors that could affect future results are set forth in
Item 5 to this Report. We caution investors that the forward-looking statements
contained in this Report must be interpreted and understood in light of
conditions and circumstances that exist as of the date of this Report. We
expressly disclaim any obligation or undertaking to update or revise
forward-looking statements made in this Report 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.

General

         Corporate History. We were incorporated in Delaware in September 1997
for the purpose of acquiring Generex Pharmaceuticals, Inc., a Canadian
corporation formed in November 1995 to engage in pharmaceutical and
biotechnological research and other activities. Our acquisition of Generex
Pharmaceuticals was completed in October 1997 in a transaction in which the
holders of all outstanding shares of Generex Pharmaceuticals exchanged their
shares for shares of our common stock.

         In January 1998, we participated in a "reverse acquisition" with Green
Mt. P. S., Inc., a previously inactive Idaho corporation formed in 1983. As a
result of this transaction, our shareholders (the former shareholders of Generex
Pharmaceuticals) acquired a majority (approximately 90%) of the outstanding
capital stock of Green Mt., we became a wholly-owned subsidiary of Green Mt.,
Green Mt. changed its corporate name to Generex Biotechnology Corporation
("Generex Idaho"), and we changed our corporate name to GBC Delaware, Inc.
Because the reverse acquisition resulted in our shareholders becoming the
majority holders of Generex Idaho, we were treated as the acquiring corporation
in the transaction for accounting purposes. Thus, our historical financial
statements, which essentially represented the historical financial statements of
Generex Pharmaceuticals, were deemed to be the historical financial statements
of Generex Idaho.

         In April 1999, we completed a reorganization in which we merged with
Generex Idaho. In this transaction, all outstanding shares of Generex Idaho were
converted into our shares, Generex Idaho ceased to exist as a separate entity,
and we changed our corporate name back to "Generex Biotechnology Corporation".
This reorganization did not result in any material change in our historical
financial statements or current financial reporting.

         Business History. We are engaged in the development of proprietary drug
delivery technology. Our principal business focus has been to develop a
technology for buccal delivery (absorption through the inner cheek walls) of
large molecule drugs, i.e., drugs composed of molecules with molecular weights
above a specified level. Large molecule drugs historically have been
administered only by injection because their size inhibits or precludes
absorption if administered by oral, transdermal, transnasal or other means.


                                                                              13

<PAGE>


         Our first product is an insulin formulation that is administered as a
fine spray into the oral cavity using a hand-held aerosol spray applicator.
Between January 1999 and September 2000, we conducted limited clinical trials on
this product in the United States, Canada and Europe. In September 2000, we
entered into an agreement to develop this product with Eli Lilly and Company.
Under this agreement (the "Lilly Agreement"), Lilly will be responsible
generally for clinical trials of the product, securing regulatory approvals and
marketing on a worldwide basis. To date, Lilly has not yet authorized the
commencement of clinical trials under the Lilly Agreement.

         We received $1,000,000 in connection with our entry into the Lilly
Agreement and will receive certain other initial fees and milestone payments
subject to the attainment of certain product development milestones, as well as
royalty payments based on product sales should any products be approved for
commercial sale. Lilly also has the option to develop certain additional
products using our buccal delivery technology depending on the success of the
initial product.

         In January 2001, we established a joint venture with Elan International
Services, Ltd. ("EIS"), a wholly-owned subsidiary of Elan Corporation, plc (EIS
and Elan Corporation, plc being collectively referred to as "Elan"), to pursue
the application of certain of our and Elan's drug delivery technologies,
including our platform technology for the buccal delivery of pharmaceutical
products, for the treatment of prostate cancer, endometriosis and/or the
suppression of testosterone and estrogen. In January 2002, we and Elan agreed to
expand the joint venture to encompass the buccal delivery of morphine for the
treatment of pain and agreed to pursue buccal morphine as the initial
pharmaceutical product for development under the joint venture. In March 2002,
Health Canada approved an Investigational New Drug (IND) application to commence
clinical trials of buccal morphine for the treatment of pain, and in May 2002,
the U.S. Food and Drug Administration (FDA) approved an IND application for
human clinical trials of buccal morphine for the treatment of pain.

         The joint venture is being conducted through Generex (Bermuda), Ltd., a
Bermuda limited liability company. In connection with the formation of the joint
venture in January 2001, EIS purchased 1,000 shares of a new series of our
preferred stock, designated as Series A Preferred Stock, for $12,015,000. We
applied the proceeds from the sale of the Series A Preferred Stock to subscribe
for an 80.1% equity ownership interest in Generex (Bermuda), Ltd. EIS paid in
capital of $2,985,000 to subscribe for a 19.9% equity ownership interest in the
joint venture entity. While we presently own 80.1% of the joint venture entity,
EIS has the right, subject to certain conditions, to increase its ownership up
to 50% by exchanging the Series A Preferred Stock for 30.1% of our equity
ownership of the joint venture entity.

         Generex (Bermuda), Ltd. has been granted non-exclusive licenses to
utilize our buccal delivery technology and certain Elan drug delivery
technologies. In January 2001, using the funds from its initial capitalization,
Generex (Bermuda), Ltd. paid a non-refundable license fee of $15,000,000 to Elan
in consideration for being granted the rights to utilize the Elan drug delivery
technologies.

         Our buccal delivery technology is a platform technology that we believe
has application to a significant number of large molecule drugs in addition to
insulin and morphine. In the future, we expect to undertake development of


                                                                              14

<PAGE>

additional products based on this technology that are not covered by the Lilly
Agreement or the joint venture with Elan. In April 2002, we successfully
completed a proof of concept clinical study of fentanyl citrate (a drug used for
the treatment of acute pain) using our proprietary platform technology, and in
May 2002, we successfully completed a proof of concept clinical study of low
molecular weight heparin (a cardiovascular drug used in the treatment of deep
vein thrombosis and for the prevention of blood clots) using our proprietary
platform technology.

Results of Operations

         We have been in the development stage since inception and have not
generated any operating revenues to date, other than $1,000,000 in revenues
received in connection with the signing of the Lilly Agreement.

         To account for the effect of restatements disclosed in our Form 10-K
for the year ended July 31, 2001, our financial information for the nine month
period ended April 30, 2001 has been restated to recognize additional
compensation expense related to stock options issued to a consultant.

         Our net loss for the quarter ended April 30, 2002, was $3,239,150,
versus $2,714,097 for the corresponding quarter of the prior fiscal year. Our
net loss quarter to quarter increased by approximately $.5 million, reflecting
an increase in research and development expenses. The increase is primarily due
to expansion of our ongoing research and development activities under our
collaborations with Lilly and Elan. Also, we incurred additional expenses
associated with proof of concept activities for two new pharmaceutical compounds
- fentanyl citrate and buccal heparin. In addition, we expanded the patent
coverage to include technology related to these new compounds and as a result,
our net patent balance sheet item was increased to $707,697 compared with
$434,307 on July 31, 2001. During the quarter we also experienced a decrease in
interest income due to lower short-term interest rates.

         Our net loss for the nine months ended April 30, 2002, was $9,381,088,
versus $18,808,609 for the corresponding period of the prior fiscal year. The
prior fiscal year period included the negative effect of the accounting
treatment for our joint venture with Elan, which resulted in a $15,000,000
research and development expense for the license fee paid by Generex (Bermuda),
Ltd. to Elan for technology rights that was partially offset by $2,985,000 of
minority interest (reflecting Elan's 19.9% ownership of the joint venture
entity). The net loss was also partially offset by the $1,000,000 Lilly
Agreement signing fee received during the prior fiscal year period. Excluding
these items, our net loss for the current period versus the prior fiscal year
period increased by approximately $1.6 million, primarily reflecting
significantly increased operating expenses and decreased interest income (due to
lower short-term interest rates). The increase in operating expenses was
primarily attributable to increased research and development expenses
(reflecting an increased level of research and development activities, including
activities under our collaborations with Lilly and Elan as well as our proof of
concept studies).

Financial Condition, Liquidity and Resources

         To date we have financed our development stage activities primarily
through private placements of common stock and contract research and milestone
payments. At April 30, 2002, we had cash and short term investments (primarily


                                                                              15

<PAGE>


notes of United States corporations) of approximately $25.6 million. At July 31,
2001, our cash and short term investments were approximately $37 million. The
decrease was attributable to the use of cash for ongoing operations.

         We believe that our current cash position is sufficient to meet all of
our working capital needs for at least the next 12 months based on the pace of
our current development activities (including our activities under our
collaborations with Lilly and Elan). Beyond that, we may require additional
funds to support our working capital requirements or for other purposes. From
time to time as deemed appropriate by management, we may seek to raise funds
through private or public equity financing or from other sources. If we were
unable to raise additional capital as needed, we could be required to "scale
back" or otherwise revise our business plan. Any significant scale back of
operations or modification of our business plan due to a lack of funding could
be expected to materially and adversely affect our prospects.

         In the past we have funded most of our development and other costs with
equity financing. While we have been able to raise equity capital as required,
unforeseen problems with our clinical program or materially 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.

Transactions with Affiliates

         On May 3, 2001, the Company's three senior officers, who are also
directors of the Company, were advanced $334,300 each, in exchange for
promissory notes. These notes bear interest at 8.5 percent per annum and were
originally payable in full on May 1, 2002. The Board of Directors has approved
an extension of the payment date for these notes until October 1, 2002. The
principal will continue to accrue interest through the extension period. These
notes are guaranteed by a related company owned by these officers and secured by
a pledge of 2,500,000 shares of the Company's common stock currently owned by
this related company. As of April 30, 2002, the balance outstanding on these
notes, including accrued interest, was $1,090,902.

         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" 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. We do not foresee a need for, and therefore do not
anticipate, any related party transactions in the current fiscal year.


                                                                              16

<PAGE>


New Accounting Pronouncements

         In June 2001, the FASB issued SFAS No. 141, Business Combinations. SFAS
No. 141 addresses the initial recognition and measurement of goodwill and other
intangible assets acquired in a business combination. SFAS No. 141 is applicable
to business combinations beginning July 1, 2001. The adoption of this statement
did not have a significant impact on our financial position or results of
operations.

         In June 2001, the FASB issued SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142 addresses the recognition and measurement of
goodwill and other intangible assets subsequent to their acquisition. SFAS No.
142 also addresses the initial recognition and measurement of intangible assets
acquired outside of a business combination whether acquired individually or with
a group of other assets. This statement provides that intangible assets with
finite useful lives be amortized and that intangible assets with indefinite
lives and goodwill will not be amortized, but will rather be tested at least
annually for impairment. SFAS No. 142 will be effective for our fiscal year
2002, however management is assessing the impact that SFAS No. 142 will have on
our financial position and results of operations.



                                                                              17

<PAGE>


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         We are not presently subject to any material market risk exposures. We
are exposed to market risk associated with interest rate changes and changes in
the exchange rate between US and Canadian currencies.

         We have neither issued nor own any long term debt instruments, or any
other financial instruments as to which we would be subject to material risks.
At the present time, we maintain our cash in short term government or government
guaranteed instruments, short term commercial paper, 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. 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.





                                                                              18


<PAGE>


Part II. OTHER INFORMATION

Item 1.  Legal Proceedings

This is an update to the description of our pending legal proceeding with Sands
Brothers & Co., Ltd.

On November 7, 2001, the arbitration panel issued an award again requiring us to
issue to Sands a warrant to purchase 1,530,020 shares of the registrant's common
stock purportedly pursuant to and in accordance with the terms of the October
1997 letter agreement. Sands submitted a motion to the Supreme Court of New
York, County of New York (the "Supreme Court") to modify and to confirm the
arbitration panel's award. We opposed Sands' motion and we also filed a motion
with the court to vacate the arbitration award.

On February 25, 2002, the Supreme Court vacated the arbitration panel's November
7, 2001 award to Sands of a warrant to purchase 1,530,000 shares of the
registrant's common stock. The Supreme Court concluded that that the arbitration
panel had "disregarded the plain meaning" of the directive given by the New York
State Appellate Division, First Department (the "Appellate Division"), in the
Appellate Division's January 23, 2001 decision that remanded the matter of the
warrant for reconsideration by the panel. The Supreme Court found that the
arbitration panel's award "lacks a rational basis." The Supreme Court also
remanded the matter to the New York Stock Exchange on the issue of whether the
arbitration panel should be disqualified.

Sands has appealed the February 25, 2002 order of the Supreme Court to the
Appellate Division. We have filed a cross-appeal on issues relating to the
disqualification of the arbitration panel. We are not able to estimate an amount
or range of potential loss from this legal proceeding at the present time.

For a full description of the foregoing legal proceeding, and all other legal
proceedings against the Company, see the Company's Report on Form 10-K for the
year ended July 31, 2001 and subsequent Reports on Form 10-Q, which is
incorporated herein by reference.



                                                                              19
<PAGE>


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

         The Annual Meeting of Stockholders of Generex Biotechnology Corporation
was held on March 18, 2002. At the meeting, 14,882,250 shares of Common Stock
were represented and entitled to vote. Generex stockholders elected nominees to
the Board of Directors, ratified the appointment of Deloitte & Touche LLP as
independent public accountants for the fiscal year ending July 31, 2002 and
ratified the Generex Biotechnology 2001 Stock Option Plan.




Election of nominees to Board of
Directors for terms expiring April 2003         Votes For       Abstentions
---------------------------------------         ---------       -----------

Anna E. Gluskin                                 14,474,007         408,243

Michael Hawke, M.D.                             14,779,768         102,482

Ivan M. Lieberburg, Ph.D., M.D.                 14,780,968         101,282

Pankaj Modi, Ph.D.                              14,750,373         131,877

E. Mark Perri                                   14,471,659         410,591

Rose C. Perri                                   14,510,703         371,547

Jan Michael Rosen                               14,778,268         103,982



Ratification of Deloitte & Touche LLP
as Independent Public Accountants       Votes For    Votes Against   Abstentions
-------------------------------------   ---------    -------------   -----------

                                        14,723,352       135,190        23,708

<TABLE>
<CAPTION>

Approval of Generex Biotechnology                                                         Broker
Corporation 2001 Stock Option Plan      Votes For      Votes Against     Abstentions     Non-Votes
----------------------------------      ---------      -------------     -----------     ---------
<S>                                     <C>              <C>                <C>            <C>
                                        7,549,380         724,796           52,352       6,555,722

</TABLE>



                                                                              20


<PAGE>


Item 5.  Other Information

         This is an update to the subsection entitled "Certain Additional Risk
Factors" in our Annual Report on Form 10-K for the fiscal year ended July 31,
2001.

         An investment in our stock is very speculative and involves a high
degree of risk. You should consider the following important factors, as well as
the other information in this Report and the other reports that we have filed
heretofore (and will file hereafter) with the Securities and Exchange
Commission, carefully before purchasing our stock. The following discussion
outlines certain factors that we think could cause our actual outcomes and
results to differ materially from our forward-looking statements.

Our technologies and products are at an early stage of development.

         We are a development stage company. We have a very limited history of
operations, and we do not expect ongoing revenues from operations in the
immediately foreseeable future. We have no products approved for commercial sale
at the present time. To be profitable, we must successfully research, develop,
obtain regulatory approval for, manufacture, introduce, market and distribute
our products under development. We may not be successful in one or more of these
stages of the development of our products, or any of the products we develop may
not be commercially viable.

         In September 2000, as noted above, we entered into a development and
license agreement to work with Eli Lilly and Company on the development of our
oral insulin product. Under the terms of the agreement with Lilly, we will
receive milestone payments only if the project reaches specified development
milestones and we will be entitled to license royalties based on product sales
only if the product is successfully brought to market.

         Prior to entering into the agreement with Lilly, we had conducted some
preliminary clinical trials of our oral insulin product in the United States,
Canada and Europe. Our clinical program, however, had not reached a point where
we were prepared to apply for regulatory approvals to market the product in any
country. Going forward under the agreement, Lilly will be responsible generally
for clinical trials and regulatory approvals on a worldwide basis. Lilly also
will have the exclusive right to market the product worldwide. Our principal
responsibilities will be to continue development, as required, on our oral
insulin formulation and on the RapidMist(TM) device.

         Clinical trials under the agreement have not yet commenced. At this
time, we cannot predict when or if we will reach any of the development
milestones under the agreement and when or if any clinical trials might commence
under the agreement.

         We believe that we can use our buccal delivery successfully with other
large molecule drugs in addition to insulin. In January 2001, as noted earlier,
we entered into a joint venture with a subsidiary of Elan Corporation, plc. The
purpose of the joint venture is to pursue the application of certain of our and
Elan's drug delivery technologies -- including our large molecule drug delivery
technology -- to pharmaceutical products for the treatment of prostate cancer
and endometriosis and/or the suppression of testosterone and estrogen. In
January 2002, we and Elan agreed to expand the joint venture to encompass the
buccal delivery of morphine for the treatment of pain and agreed to pursue
buccal morphine as the initial pharmaceutical product under the joint venture.
We cannot be certain that we can successfully research, develop, obtain


                                                                              21

<PAGE>


regulatory approval for, manufacture, introduce, market or distribute the buccal
morphine product to be developed under the joint venture with Elan, nor can we
be certain that any buccal morphine product we may develop will be commercially
viable.

         Similarly, we cannot be certain that we can successfully research,
develop, obtain regulatory approval for and eventually commercialize any product
for which we have completed proof of concept studies. Proof of concept studies
are the very first step in the long process of product development. It can be
years before we will know whether a product for which we might have completed a
successful proof of concept will be commercially viable.

We have not, and may not, receive regulatory approval to sell our products.

         We have engaged primarily in research and development activities since
our inception. We have no products approved for commercial sale by drug
regulatory authorities. We have begun the regulatory approval process for oral
insulin formulation and buccal morphine product.

         Pre-clinical and clinical trials of our products, and the manufacturing
and marketing of our technology, are subject to extensive, costly and rigorous
regulation by governmental authorities in the United States, Canada and other
countries. The process of obtaining required regulatory approvals from the FDA
and other regulatory authorities often takes many years, is expensive and can
vary significantly based on the type, complexity and novelty of the product
candidates. We cannot assure you that any technologies or products developed by
us, either independently or in collaboration with others, will meet the
applicable regulatory criteria in order to receive the required approvals for
manufacturing and marketing. Delays in obtaining United States or foreign
approvals for our products could result in substantial additional costs to us,
and, therefore, could adversely affect our ability to compete with other
companies. If regulatory approval is ultimately granted, the approval may place
limitations on the intended use of the product we wish to commercialize, and may
restrict the way in which we are permitted to market the product.

       Notwithstanding our development and license agreement with Lilly and the
participation of Lilly in the research and development process, we may not be
able to develop our insulin product successfully. In order to obtain regulatory
approvals for our insulin product, it will be necessary to demonstrate, among
other things, that:

         o   the product is physically and chemically stable under a range of
             storage, shipping and usage conditions;
         o   the results of administering the product to patients are
             reproducible in terms of the amounts of insulin delivered to the
             oral cavity and absorbed in the bloodstream; and
         o   there are no serious adverse safety issues associated with use of
             the product.

Under our agreement, Lilly also has the option of developing a number of
additional products using our platform buccal delivery technology. There is even
greater uncertainty and risk related to the regulatory approval process for
other products besides our insulin product that may be developed, whether with
Lilly or independently of Lilly. This is because we have not developed any other
product candidate to the extent that we have developed the insulin product.


                                                                              22

<PAGE>


         For similar reasons, we also cannot be certain that we will be able to
successfully secure regulatory approval or develop a buccal morphine product or
any other product chosen for development under the joint venture with Elan.

We may not become, or stay, profitable even if our products are approved for
sale.

       Even if regulatory approval to market our oral insulin product or any
other product candidate is obtained, many factors may prevent the product from
ever being sold in commercial quantities. Some of these factors are beyond our
control, such as:

         o   acceptance of the formulation by health care professionals and
             diabetic patients;
         o   the availability, effectiveness and relative cost of alternative
             diabetes treatments that may be developed by competitors; and
         o   the availability of third-party (i.e., insurer and governmental
             agency) reimbursements.


We are in a highly competitive market and our competitors may develop
alternative therapies.

         We are in competition with pharmaceutical, biotechnology and drug
delivery companies, hospitals, research organizations, individual scientists and
nonprofit organizations engaged in the development of alternative drug delivery
systems or new drug research and testing, as well as with entities producing and
developing injectable drugs. We are aware of a number of companies that are
currently seeking to develop new products and non-invasive alternatives to
injectable drug delivery, including oral delivery systems, intranasal delivery
systems, transdermal systems, and colonic absorption systems. Many of these
companies may have greater research and development capabilities, experience,
manufacturing, marketing, financial and managerial resources than we do.
Accordingly, our competitors may succeed in developing competing technologies,
obtaining FDA approval for products or gaining market acceptance more rapidly
than we can.

We may not be able to compete with diabetes treatments now being marketed and
developed by other companies.

         Our oral insulin product will compete with existing and new therapies
for treating diabetes, including administration of insulin by injection. We are
aware of a number of companies currently seeking to develop alternative means of
delivering insulin, as well as new drugs intended to replace insulin therapy at
least in part. In the longer term, we also face competition from companies that
seek to develop cures for diabetes through techniques for correcting the genetic
deficiencies that underlie diseases such as diabetes.

         We will have to depend upon others for marketing and distribution of
our products, and we may be forced to enter into contracts limiting the benefits
we may receive and the control we have over our products. We intend to rely on
collaborative arrangements with one or more other companies that possess strong
marketing and distribution resources to perform these functions for us. Except


                                                                              23

<PAGE>

for the agreement with Lilly relating to our oral insulin product, we do not
have any agreements with other companies for marketing or distributing our
products. We may be forced to enter into contracts for the marketing and
distribution of our products that substantially limit the potential benefits to
us from commercializing these products. In addition, we will not have the same
control over marketing and distribution that we would have if we conducted these
functions ourselves.

We will need additional capital, which may not be available to us when we need
it.

         We have incurred substantial losses from operations since our
inception, and we expect to continue to incur substantial losses for the
immediately foreseeable future. Under our agreement with Lilly, we expect Lilly
to fund a substantial portion of the costs relating to the clinical program and
regulatory approvals for our insulin product, and for any other products that
may be developed under the agreement should we reach that stage of activity. We
may, however, incur significant costs to fulfill our responsibilities under the
agreement with Lilly. We also may require funds in excess of our existing cash
resources:

         o   to proceed under our joint venture with Elan, which requires us to
             fund 80% of initial product development costs;
         o   to develop new products based on our oral delivery technology,
             including clinical testing relating to new products;
         o   to develop or acquire other delivery technologies or other lines of
             business;
         o   to establish and expand our manufacturing capabilities; and
         o   to finance general and administrative and research activities that
             are not related to specific products under development.

       Our agreement with Lilly provides for us to receive milestone payments if
the project reaches specified development milestones and for us to receive
license royalties based on product sales if the product is successfully brought
to market. Given that these payments are contingent on events that we cannot be
sure will occur, we cannot be certain of when or if we will receive any further
payments from Lilly. In any event, we do not expect to receive revenues under
the agreement with Lilly or under any future development agreements that are
sufficient to satisfy all of our cash requirements.

       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, and we may need additional funding
sooner than anticipated. To the extent operating and capital resources are
insufficient to meet future requirements, we will have to raise additional funds
to continue the development and commercialization of our products. Unforeseen
problems, including materially negative developments in our relationship with
Lilly, 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.


                                                                              24

<PAGE>

       Even if we raise funds through equity financing, it will have a dilutive
effect on existing holders of our shares by reducing their percentage ownership.
The shares may be sold at a time when the market price is low because we need
the funds. This will dilute existing holders more than if our stock price was
higher. In addition, equity financings normally involve shares sold at a
discount to the current market price.

       It is also 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.

We depend upon proprietary technology and the status of patents and proprietary
technology is uncertain.

         Our long-term success will substantially depend upon our ability to
protect our proprietary technology from infringement, misappropriation,
discovery and duplication and avoid infringing the proprietary rights of others.
We currently have twelve issued U.S. patents and three allowed U.S. applications
pertaining to aspects of buccal delivery technology and covering our oral
insulin formulation, and we have two U.S. patent applications and one Canadian
patent application pending, also related to aspects of our bucal delivery
technology and our oral insulin formulation. In addition, we hold one U.S.
patent and two Canadian patents and have one U.S. application pending that
pertains to delivery technologies other than our buccal delivery technology.

         We also have an indirect interest in three drug delivery patents held
by another company, Centrum Biotechnologies, Inc., which is 50% owned by us. A
legal proceeding relating to these patents is described in our Annual Report on
Form 10-K for the fiscal year ended July 31, 2001 and subsequent Reports on Form
10-Q.

         Our patent rights, and the patent rights of biotechnology and
pharmaceutical companies in general, are highly uncertain and include complex
legal and factual issues. We cannot be sure that any of our pending patent
applications will be granted, or that any patents that we own or will obtain in
the future will be valid and enforceable and provide us with meaningful
protection from competition. There can be no assurance that we will possess the
financial resources necessary to enforce any of our patents. Patents already
issued to us or our pending applications may become subject to dispute, and any
dispute could be resolved against us. There can also be no assurance that any
products that we (or a licensee) may develop will not infringe upon any patent
or other intellectual property right of a third party.

         Furthermore, patent applications are maintained in secrecy in the
United States until the patents are approved, and in most foreign countries for
a period of time following the date from which priority is claimed. A third
party's pending patent applications may cover technology that we currently are
developing.

         We have conducted original research on a number of aspects relating to
buccal drug delivery. While we cannot assure you that any of our products will
provide significant commercial advantage, these patents are intended to provide


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<PAGE>

protection for important aspects of our technology, including our insulin
formulation and the delivery of our insulin formulation as a spray. Because a
substantial number of patents have been issued in the field of alternative drug
delivery and because patent positions can be highly uncertain and frequently
involve complex legal and factual questions, the breadth of claims obtained in
any application or the enforceability of our patents cannot be predicted. The
coverage claimed in a patent can be significantly reduced before a patent is
issued, either in the United States or abroad. Consequently, we do not know
whether any of our pending or future patent applications will result in the
issuance of patents or, to the extent patents have been issued or will be
issued, whether these patents will be subject to further proceedings limiting
their scope, will provide significant proprietary protection or competitive
advantage, or will be circumvented or invalidated.

         There can be no assurance that any products that we (or a licensee) may
develop will not infringe upon any patent or other intellectual property right
of a third party. For example, we are aware of certain patents owned by third
parties that such parties could attempt to use in the future in efforts to
affect our freedom to practice some of the patents that we own or have applied
for. Based upon the science and scope of these third party patents, we believe
that the patents that we own or have applied for do not infringe any such third
party patents, however, there can be no assurance that we could successfully
defend our position, if challenged. We may incur substantial costs if we are
required to defend ourselves in patent suits brought by third parties. These
legal actions could seek damages and seek to enjoin testing, manufacturing and
marketing of the accused product or process. In addition to potential liability
for significant damages, we could be required to obtain a license to continue to
manufacture or market the accused product or process and we cannot assure you
that any license required under any such patent would be made available to us on
acceptable terms, if at all. Litigation may also be necessary to enforce our
patents against others or to protect our trade secrets. Such litigation could
result in substantial expense, and we cannot assure you that any litigation
would be resolved in our favor.

         In addition, intellectual property for our technologies and products
will be a crucial factor in our ability to develop and commercialize our
products. Large pharmaceutical companies consider a strong patent estate
critical when they evaluate whether to enter into a collaborative arrangement to
support the research, development and commercialization of a technology. Without
the prospect of reasonable intellectual property protection, it would be
difficult for a corporate partner to justify the time and money that is
necessary to complete the development of a product.

         We also hold some of our technology as trade secrets. We seek to
protect this information, in part, by confidentiality agreements with our
employees, consultants, advisors and collaborators.

Enforcement of an arbitration award may result in adverse effects upon Generex.

         On October 2, 1998, Sands Brothers & Co. Ltd., a New York City-based
investment banking and brokerage firm, initiated an arbitration against us under
New York Stock Exchange rules. Sands alleged that it had the right to receive,
for nominal consideration, approximately 1.5 million shares of our common stock.


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<PAGE>


Sands based its claim upon an October 1997 letter agreement that was purported
by Sands to confirm an agreement appointing Sands as the exclusive financial
advisor to Generex Pharmaceuticals, Inc., a subsidiary that we acquired in late
1997. In exchange therefor, the letter agreement purported to grant Sands the
right to acquire 17% of Generex Pharmaceuticals common stock for nominal
consideration. Sands claimed that its right to receive shares of Generex
Pharmaceuticals common stock applies to our common stock since outstanding
shares of Generex Pharmaceuticals common stock were converted into shares of our
common stock in the acquisition. Sands' claims also included additional shares
allegedly due as a fee related to that acquisition, and $144,000 in monthly fees
allegedly due under the terms of the purported agreement.

         Pursuant to an arbitration award dated September 22, 1999, the
arbitration panel that heard this case awarded Sands $14,070 and issued a
declaratory judgment requiring us to issue to Sands a warrant to purchase
1,530,020 shares of our common stock pursuant to and in accordance with the
terms of the purported October 1997 letter agreement. On October 13, 1999, Sands
commenced a special proceeding to confirm the arbitration award in the Supreme
Court of the State of New York, County of New York (the "Supreme Court"). On
November 10, 1999, we moved to vacate the arbitration award. On March 20, 2000,
the Supreme Court granted Sands' petition to confirm the award and denied our
motion to vacate the award. We appealed and on January 23, 2001, the New York
State Appellate Division, First Department (the "Appellate Division"), modified
the judgment of the Supreme Court that had confirmed the arbitration award
against us. The Appellate Division affirmed the portion of the Supreme Court
judgment that had confirmed the granting of monetary relief of $14,070 to Sands
but modified the judgment to vacate the portion of the arbitration award
directing the issuance to Sands of a warrant to purchase 1,530,020 shares of the
our common stock. The Appellate Division held that the portion of the award
directing us to issue warrants to Sands is too indefinite to be enforceable and
remanded the matter to the arbitration panel for a final and definite award with
respect to such relief or its equivalent (including possibly an award of
monetary damages).

         The arbitration panel commenced hearings on the matters remanded by the
Appellate Division in June 2001. On November 7, 2001, the arbitration panel
issued an award again requiring us to issue to Sands a warrant to purchase
1,530,020 shares of our common stock purportedly pursuant to and in accordance
with the terms of the October 1997 letter agreement. Thereafter, Sands submitted
a motion to the Supreme Court to modify the judgment and to confirm the
arbitration panel's award while we filed a motion with the court to vacate the
arbitration award. On February 25, 2002, the Supreme Court vacated the
arbitration panel's November 7, 2001 award to Sands of a warrant to purchase
1,530,000 shares of our common stock. The Supreme Court concluded that the
arbitration panel had "disregarded the plain meaning" of the directive given by
the Appellate Division in the Appellate Division's January 23, 2001 decision
that remanded the matter of the warrant for reconsideration by the panel. The
Supreme Court found that the arbitration panel's award "lacks a rational basis".
The Supreme Court also remanded the matter to the New York Stock Exchange on the
issue of whether the arbitration panel should be disqualified. Sands has
appealed the February 25, 2002 order of the Supreme Court to the Appellate
Division. We filed a cross-appeal on issues relating to the disqualification of
the arbitration panel. We are not able to estimate an amount or range of
potential loss from this legal proceeding at the present time.



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<PAGE>

         Our consolidated financial condition would be materially adversely
affected to the extent that Sands receives shares of our common stock for little
or no consideration or substantial monetary damages as a result of this legal
proceeding.

We face significant product liability risks, which may have a negative effect on
our financial performance.

         The administration of drugs to humans, whether in clinical trials or
commercially, can result in product liability claims whether or not the drugs
are actually at fault for causing an injury. Furthermore, our products may
cause, or may appear to have caused, serious adverse side effects (including
death) or potentially dangerous drug interactions that we may not learn about or
understand fully until the drug has been administered to patients for some time.
Product liability claims can be expensive to defend and may result in large
judgments or settlements against us, which could have a negative effect on our
financial performance. We maintain product liability insurance in amounts we
believe to be commercially reasonable for our current level of activity and
exposure, but claims could exceed our coverage limits. Furthermore, we cannot be
certain that we will always be able to purchase sufficient insurance at an
affordable price. Even if a product liability claim is not successful, the
adverse publicity and time and expense of defending such a claim may interfere
with our business.

The results and timing of our research and development activities, including
future clinical trials, are difficult to predict, subject to future setbacks
and, ultimately, may not result in any additional pharmaceutical products, which
may adversely affect our business.

         In developing our products, we may undertake a range of activities,
which include engaging in discovery research and process development, conducting
pre-clinical and clinical studies, and seeking regulatory approval in the United
States and abroad. In all of these areas, we have relatively limited resources
and compete against larger multinational pharmaceutical companies. Moreover,
even if we undertake these activities in an effective and efficient manner,
regulatory approval for the sale of new pharmaceutical products remains highly
uncertain since, in our industry, the majority of compounds discovered do not
enter clinical studies and the majority of therapeutic candidates fail to show
the human safety and efficacy necessary for regulatory approval and successful
commercialization.

         Pre-clinical testing and clinical trials must demonstrate that a
product candidate is safe and efficacious. The results from pre-clinical testing
and early clinical trials may not be predictive of results obtained in
subsequent clinical trials, and we cannot be sure that these clinical trials
would demonstrate the safety and efficacy necessary to obtain regulatory
approval for any product candidates. A number of companies in the biotechnology
and pharmaceutical industries have suffered significant setbacks in advanced
clinical trials, even after obtaining promising results in earlier trials. In
addition, certain clinical trials are conducted with patients having the most
advanced stages of disease. During the course of treatment, these patients may
die or suffer other adverse medical effects for reasons that may not be related
to the pharmaceutical agent being tested. Such events can have a negative impact
on the statistical analysis of clinical trial results.


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<PAGE>

         The completion of clinical trials of product candidates may be delayed
by many factors. One such factor is the rate of enrollment of patients. We
cannot control the rate at which patients would present themselves for
enrollment, and we cannot be sure that the rate of patient enrollment would be
consistent with our expectations or be sufficient to enable clinical trials of
product candidates to be completed in a timely manner or at all. Any significant
delays in, or termination of, clinical trials of product candidates can have a
material adverse effect on our business.

         We cannot be sure that we will be permitted by regulatory authorities
to undertake additional clinical trials for any product candidates, or that if
such trials are conducted, any product candidates will prove to be safe and
efficacious or will receive regulatory approvals. Any delays in or termination
of these clinical trial efforts can have a material adverse effect on product
development.

Our research and development and marketing efforts are highly dependent at
present on corporate collaborators and other third parties who may not devote
sufficient time, resources and attention to our programs, which may limit our
efforts to successfully develop and market potential products.

         Because we have limited resources, we have sought to enter into
collaboration agreements with other pharmaceutical companies that will assist us
in developing, testing, obtaining governmental approval for and commercializing
products using our platform technology. Our primary collaboration agreement at
present is our development and license agreement with Eli Lilly and Company. As
is often the case in such collaboration agreements, Lilly has substantial
control over the supply of bulk drugs for commercial use or for use in clinical
trials; the design and execution of clinical studies; the process of obtaining
regulatory approval to market the product; and/or the eventual marketing and
selling of any approved product. In each of these areas, Lilly, or any other
collaborator with whom we may enter into such collaboration agreements, may not
support fully our research and commercial interests since our program may
compete for time, attention and resources with such collaborator's internal
programs. As such, we cannot be sure that either Lilly or any other corporate
collaborators will share our perspectives on the relative importance of our
program, that they will commit sufficient resources to our program to move it
forward effectively, or that the program will advance as rapidly as it might if
we had retained complete control of all research, development, regulatory and
commercialization decisions. Additionally, we may find it necessary from time to
time to seek new or additional partners to assist us in commercializing our
products. It is uncertain whether we would be successful in establishing any
such new or additional relationships.

Third party reimbursement for our products is uncertain.

         In both domestic and foreign markets, sales of our potential products
depends in part on the availability of reimbursement for third-party payors such
as government health administration authorities, private health insurers and
other organizations. Third-party payors often challenge the price and
cost-effectiveness of medical products and services. Significant uncertainty


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<PAGE>


exists as to the reimbursement status of newly approved health care products. We
cannot assure you that any of our products will be reimburseable by third-party
payors. In addition, we cannot assure you that our products will be considered
cost effective or that adequate third-party reimbursement will be available to
enable us to maintain price levels sufficient to realize a profit. Legislation
and regulations affecting the pricing of pharmaceuticals may change before our
products are approved for marketing and any such changes could further limit
reimbursement.

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

         To date, we have not been profitable and our accumulated net loss was
approximately $59 million at April 30, 2002. 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.

         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 cannot be sure that we will
obtain required regulatory approvals, or successfully 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 forseeable future.

The price of our shares may be volatile.

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

         o   announcements of research activities and technology innovations or
             new products by us or our competitors;
         o   changes in market valuation of companies in our industry generally;
         o   variations in operating results;
         o   changes in governmental regulations;
         o   developments in patent and other proprietary rights;
         o   public concern as to the safety of drugs developed by us or others;
         o   results of clinical trials of our products or our competitors'
             products; and
         o   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 shares.
Such activities may result, among other things, in causing the price of our
shares 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


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<PAGE>



significant price and volume fluctuations that are unrelated to the operating
performance of a particular company.

Our outstanding Special Voting Rights Preferred Stock and provisions of our
Certificate of Incorporation could delay or prevent the acquisition or sale of
Generex.

         Holders of our Special Voting Rights Preferred Stock have the ability
to prevent any change of control of Generex. Our Vice President of Research and
Development, Dr. Pankaj Modi, owns all of our Special Voting Rights Preferred
Stock. In addition, our Certificate of Incorporation permits our Board of
Directors to designate new series of preferred stock and issue those shares
without any vote or action by the shareholders. Such newly authorized and issued
shares of preferred stock could contain terms that grant special voting rights
to the holders of such shares that make it more difficult to obtain shareholder
approval for an acquisition of Generex or increase the cost of any such
acquisition.






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<PAGE>


Item 6.   Exhibits and Reports on Form 8-K

    (a)   Reports on Form 8-K.

    The following Reports on Form 8-K were filed in the quarter ended April
30, 2002:

     o   On March 1, 2002, the Company filed a Current Report on Form 8-K to
         update our description of the Sands legal proceeding (Item 5 of Form
         8-K - "Other Events").

     o   On May 3, 2002, the Company filed an amendment to a Current Report on
         Form 8-K to file certain amended versions of agreements entered into
         between the Company, Elan Corporation, plc, Elan International
         Services, Ltd. and Generex (Bermuda) Ltd. (Item 5 of Form 8-K - "Other
         Events").










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<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, we
have duly caused this report to be signed on our behalf by the undersigned.

DATE:  June 13, 2002

                                    GENEREX BIOTECHNOLOGY CORPORATION


                                    By: /s/ E. Mark Perri
                                        ------------------------------------
                                        E. Mark Perri
                                        Chairman and Chief Financial Officer









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