<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 October 31, 2001

[ ]   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: 000-25169

                        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 20,682,634 as of October 31, 2001.


<PAGE>


                        GENEREX BIOTECHNOLOGY CORPORATION
                                      INDEX


PART I:       FINANCIAL INFORMATION

Item 1.       Consolidated Financial Statements - unaudited

              Consolidated Balance Sheets --
              October 31, 2001 and July 31, 2001 ..........................   3

              Consolidated Statements of Operations --
              for the three month periods ended October 31, 2001
              and 2000, and cumulative from November 2, 1995,
              to October 31, 2001..........................................   4

              Consolidated Statements of Cash Flows --
              For the three-month periods ended October 31, 2001
              and 2000, and cumulative from November 2, 1995,
              to October 31, 2001..........................................   5

              Notes to Consolidated Financial Statements...................   6

Item 2.       Management's Discussion and Analysis of Financial
              Condition and Results of Operations..........................  10

Item 3.       Quantitative and Qualitative Disclosures About
              Market Risk..................................................  16


PART II: OTHER INFORMATION

Item 1.       Legal Proceedings............................................  17

Item 6.       Exhibits and Reports on Form 8-K.............................  17

Signatures.................................................................  18



                                        2
<PAGE>

Item 1.  Consolidated Financial Statements

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

Current Assets:
   Cash and cash equivalents                                                           $      2,137,331    $    10,109,559
   Short-term investments                                                                    31,533,142         26,892,729
   Officers' loans receivable                                                                 1,046,215          1,023,743
   Miscellaneous receivables                                                                     12,473             12,865
   Other current assets                                                                          73,080            112,620
                                                                                       ----------------    ---------------
         Total Current Assets                                                                34,802,241         38,151,516

Property and Equipment, Net                                                                   3,727,097          3,727,761
Patents, Net                                                                                    487,731            434,307
Deposits                                                                                         17,159             20,000
Due From Related Parties                                                                        322,177            332,289
                                                                                       ----------------    ---------------

         TOTAL ASSETS                                                                  $     39,356,405    $    42,665,873
                                                                                       ================    ===============

         LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Accounts payable and accrued expenses                                               $      2,047,695    $     2,650,773
   Current maturities of long-term debt                                                           9,538              9,634
                                                                                       ----------------    ---------------
         Total Current Liabilities                                                            2,057,233          2,660,407

Long-Term Debt, Less Current Maturities                                                         659,797            683,026

Commitments and Contingencies

Stockholders' Equity:
   Series A, preferred stock, $.001 par value; (liquidation preference
     $12,015,000) authorized 1,000,000 shares, 1,000 shares issued and
     outstanding at October 31, 2001 and at July 31, 2001                                             1                  1
   Special Voting Rights Preferred stock, $.001 par value;
     authorized, issued and outstanding 1,000 shares at
     October 31, 2001 and at July 31, 2001                                                            1                  1
   Common stock, $.001 par value; authorized 50,000,000 shares, issued
     20,686,526 and 20,681,526 shares at October 31, 2001 and July 31, 2001,
     respectively and outstanding 20,676,526 and 20,681,526 shares at
     October 31, 2001 and July 31, 2001, respectively                                            20,686             20,681
   Treasury stock, at cost; 10,000 shares                                                       (39,150)               --
   Additional paid-in capital                                                                88,804,354         88,776,859
   Notes receivable - common stock                                                             (319,861)          (314,300)
   Deficit accumulated during the development stage                                         (51,497,170)       (48,913,935)
   Accumulated other comprehensive loss                                                        (329,486)          (246,867)
                                                                                       ----------------    ---------------
         Total Stockholders' Equity                                                          36,639,375         39,322,440
                                                                                       ----------------    ---------------

         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $     39,356,405    $    42,665,873
                                                                                       ================    ===============
</TABLE>



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

                                       3
<PAGE>

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


<TABLE>
<CAPTION>

                                                                                                                       Cumulative
                                                                                                                         From
                                                                                                                       November 2,
                                                                           For the Three Months Ended                 1995 (Date of
                                                                                     October 31,                      Inception) to
                                                                      --------------------------------------          to October 31,
                                                                            2001                  2000                   2001
                                                                      ----------------      ----------------          --------------
<S>                                                                    <C>                  <C>                       <C>
Contract Research Revenues                                            $         --          $      1,000,000          $   1,000,000

Operating Expenses:
   Research and development                                                    676,339             1,019,979             26,772,235
   Research and development - related party                                     --                     --                   220,218
   General and administrative                                                2,228,225             1,324,553             29,979,694
   General and administrative - related party                                   --                     --                   314,328
                                                                      ----------------      ----------------          -------------
       Total Operating Expenses                                              2,904,564             2,344,532             57,286,475
                                                                      ----------------      ----------------          -------------

Operating Loss                                                              (2,904,564)           (1,344,532)           (56,286,475)

Other Income (Expense):
   Miscellaneous income                                                          3,997                --                     22,567
   Interest income                                                             333,534               219,945              2,079,379
   Interest expense                                                            (16,202)              (19,620)              (297,641)
                                                                      ----------------      ----------------          -------------

Net Loss Before the Undernoted                                              (2,583,235)           (1,144,207)           (54,482,170)

Minority Interest Share of Loss                                                 --                 --                     2,985,000
                                                                      ----------------      ----------------          -------------

Net Loss                                                              $     (2,583,235)     $     (1,144,207)         $ (51,497,170)
                                                                      ================      ================          =============
Basic and Diluted Net Loss Per Common
   Share                                                              $           (.12)     $           (.07)
                                                                      ================      ================
Weighted Average Number of Shares of
   Common Stock Outstanding                                                 20,683,646            17,176,462
                                                                      ================      ================
</TABLE>

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







                                       4
<PAGE>

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

                                                                                                                        Cumulative
                                                                                                                           From
                                                                                                                        November 2,
                                                                              For the Three Months Ended               1995 (Date of
                                                                                        October 31,                    Inception) to
                                                                     ----------------------------------------         to October 31,
                                                                            2001                 2000                     2001
                                                                     ----------------     -------------------         --------------
<S>                                                                  <C>                  <C>                          <C>
Cash Flows From Operating Activities:
   Net loss                                                          $    (2,583,235)     $        (1,144,207)        $ (51,497,170)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
       Depreciation and amortization                                          91,777                   21,026               533,054
       Minority interest share of loss                                          --                     --                (2,985,000)
       Reduction of notes receivable - common
         stock in exchange for services rendered                                --                     --                   423,882
       Write-off or deferred offering costs                                     --                     --                 3,406,196
       Common stock issued for services rendered                                --                    411,250             2,069,992
       Stock options and warrants issued for
         services rendered                                                      --                     --                 4,588,060
       Preferred stock issued for services rendered                             --                     --                       100
       Founders' shares transferred for services rendered                       --                     --                   353,506
       Changes in operating assets and liabilities:
         Miscellaneous receivables                                              --                     --                    30,620
         Other current assets                                                 39,387                 (153,004)              (78,219)
         Accounts payable and accrued expenses                              (591,025)                 221,764             2,901,096
         Other, net                                                             --                     --                   110,317
                                                                     ---------------      -------------------         -------------
           Net Cash Used in Operating Activities                          (3,043,096)                (643,171)          (40,143,566)

Cash Flows From Investing Activities:
   Purchase of property and equipment                                       (168,794)                (473,034)           (2,465,765)
   Costs incurred for patents                                                (68,094)                 (57,347)             (535,027)
   Change in restricted cash                                                    --                     --                    (5,595)
   Purchase of short-term investments                                     (4,640,413)             (13,735,738)          (31,533,142)
   Increase in officers' loans receivable                                    (22,472)                  --                (1,046,215)
   Change in deposits                                                          2,840                   27,842                32,355
   Change in notes receivable - common stock                                  (5,561)                  --                   (19,861)
   Change in due from related parties                                           --                     --                (2,255,197)
   Other, net                                                                   --                     --                    89,683
                                                                     ---------------      -------------------         --------------
           Net Cash Used in Investing Activities                          (4,902,494)             (14,238,277)          (37,738,764)

Cash Flows From Financing Activities:
   Proceeds from issuance of long-term debt                                     --                     --                   993,149
   Repayment of long-term debt                                                (2,274)                  (2,245)             (968,258)
   Change in due to related parties                                             --                     --                   154,541
   Proceeds from exercise of warrants                                           --                     --                 2,256,482
   Proceeds from exercise of stock options                                    27,500                   --                   772,500
   Proceeds from minority interest investment                                   --                     --                 2,985,000
   Proceeds from issuance of preferred stock                                    --                     --                12,015,000
   Purchase of treasury stock                                                (39,150)                  --                   (39,150)
   Proceeds from issuance of common stock, net                                  --                 23,605,925            61,999,294
   Purchase and retirement of common stock                                      --                     --                  (119,066)
                                                                     ---------------      -------------------         --------------
           Net Cash Provided By (Used In) Financing
            Activities                                                       (13,924)              23,603,680            80,049,492

Effect of Exchange Rates on Cash                                             (12,714)                 (11,564)              (29,831)
                                                                     ---------------      -------------------         --------------
Net Increase (Decrease) in Cash and Cash Equivalents                      (7,972,228)               8,710,668             2,137,331
Cash and Cash Equivalents, Beginning of Period                            10,109,559                3,204,905                  --
                                                                     ---------------      -------------------         --------------
 Cash and Cash Equivalents, End of Period                            $     2,137,331      $        11,915,573         $   2,137,331
                                                                     ===============      ===================         ==============
</TABLE>

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

                                       5
<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 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.

2.  Revenue Recognition
    Contract revenue from collaborative research agreements is recorded when
    earned and as the related costs are incurred. Payments received, which are
    related to future performance, are deferred and recognized as revenue when
    earned over future performance periods. In accordance with contract terms,
    upfront and milestone payments from collaborative research agreements are
    considered reimbursements for costs incurred under the agreements, and
    accordingly, are generally recognized based on actual efforts expended over
    the remaining terms of the agreements.

3.  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. Adoption of this statement had no
    effect on the Company's financial position or operating results.

    Comprehensive loss, which includes net loss and the change in the foreign
    currency translation account during the period, for the three months ended
    October 31, 2001 and 2000, was $2,665,854 and $1,233,416, respectively.

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

                                                     October 31,    July 31,
                                                        2001          2001
                                                     ----------    ----------
    Accounts Payable                                 $  536,003    $  896,061
    Litigation Accruals                                 185,820       191,653
    Clinical                                               --         147,699
    Accrued Legal Fees                                     --         420,360
    Financial Services                                  750,000       995,000
    Executive Compensation                              575,872         --
                                                     ----------    ----------
                 Total                               $2,047,695    $2,650,773
                                                     ==========    ==========








                                       6
<PAGE>

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


5.  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. Sands has submitted a motion to the New York Supreme Court
    to modify and confirm the arbitration panel's award. The Company is opposing
    Sands' motion and also has filed a motion with the court to vacate the
    arbitration award. The Company believes that the arbitration panel's award
    does not accord with the direction of the Appellate Division, as set forth
    in its order remanding the proceeding to the arbitration panel for further
    consideration. The Company is not able to estimate an amount or range of
    possible loss from this legal proceeding at the present time. Therefore, no
    provision has been recorded in the accompanying financial statements.














                                       7
<PAGE>

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


5.  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
    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. The parties have completed
    discovery and are awaiting a trial date. 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.

    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.

    With respect to all litigation, as additional information concerning the
    estimates used by the Company become known, the Company reassesses its
    position both with respect to accrued liabilities and other potential
    exposures. Estimates that are particularly sensitive to future change relate
    to legal matters, which are subject to change as events evolve and as
    additional information becomes available during the administration and
    litigation process.


                                       8
<PAGE>


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


6.  Net Loss Per Share
    Basic EPS and Diluted EPS for the three months ended October 31, 2001 and
    2000 have been computed by dividing the net loss for each respective period
    by the weighted average shares outstanding during that period. All
    outstanding warrants and options have been excluded from the computation of
    Diluted EPS as they are antidilutive.

7.  Supplemental Disclosure of Cash Flow Information
<TABLE>
<CAPTION>
                                                                                          For the Three Months Ended
                                                                                                 October 31,
                                                                                          --------------------------
                                                                                            2001             2000
                                                                                          -------         ----------
   <S>                                                                                    <C>             <C>
    Cash paid during the period for:
       Interest                                                                           $16,202         $   19,620
       Income taxes                                                                       $  --           $     --

    Disclosure of non-cash investing and financing activities:

    Issuance of warrants as consideration for an equity financing
       agreement were capitalized as deferred offering costs                              $  --           $3,406,196
</TABLE>

8.  Transactions With Related Parties
    The Company's change in "Due from Related Parties" for the quarter
    ended October 31, 2001 represents only the effects of changes in
    quarter end exchange rates versus those in effect at July 31, 2001.































                                       9
<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 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
           products candidates;

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


                                       10
<PAGE>

         o adverse developments in our collaboration with Lilly regarding buccal
           insulin, which is currently our only product candidate that has moved
           beyond preliminary research and development.

         Additional factors that could affect future results are set forth in
our Annual Report on Form 10-K for the fiscal year ended July 31, 2001. 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.



                                       11
<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 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 is responsible for conducting clinical
trials of the product, securing regulatory approvals and marketing on a
worldwide basis. We received $1,000,000 in connection with our entry into the
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"). The joint
venture will 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. The parties intend to
select at least one pharmaceutical product for research and development by first
anniversary of the formation of the joint venture. The parties will conduct the
joint venture through Generex (Bermuda), Ltd., a Bermuda limited liability
company.

         In connection with the joint venture, 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 initially 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. was granted non-exclusive licenses to utilize
our buccal delivery technology and certain Elan drug delivery technologies.
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. In the future, we expect to undertake development of additional
products based on this technology that are not covered by the Lilly Agreement or
the joint venture with Elan.

Results of Operations - Three months ended October 31, 2001 and 2000

         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 Lilly Agreement in the quarter ended October 30,
2000.


                                       12
<PAGE>

         Our net loss for the quarter ended October 31, 2001 was $2,583,235
versus $1,144,207 in the corresponding quarter of the prior fiscal year. The net
loss increased in this fiscal quarter versus the corresponding quarter of the
prior fiscal year due to an increase in general and administrative expenses and
due the absence of revenues in this fiscal quarter (versus $1,000,000 of Lilly
Agreement signing fees recognized in the quarter ended October 31, 2000). These
negative items were partially offset by lower research and development expenses
and increased interest income.

         The decrease in research and development expenses in the quarter ended
October 31, 2001, compared to the quarter ended October 31, 2000, reflects the
absence in this fiscal quarter of expenditures related to the completion of our
pilot manufacturing facility (which was still under construction and set up
during the quarter ended October 31, 2000) and the focus of research and
development activities during this fiscal quarter on in vitro and in vivo work
in preparation for eventual clinical trials under the Lilly Agreement rather
than on completion of clinical trial programs for the purpose of demonstrating
the potential applicability of our buccal delivery technology to insulin (which
was the case in the quarter ended October 31, 2000).

         The increase in general and administrative expenses in the quarter
ended October 31, 2001, compared to the quarter ended October 31, 2000, was
primarily the result of additional expenses associated with the bonus
compensation awarded during the quarter ended October 31, 2001 to management
personnel by the Compensation Committee of the Board of Directors in respect of
their fiscal 2001 performance and higher legal expenses associated with material
legal proceedings.

         The increase in net interest income was the result of higher cash and
short-term investment balances during the quarter, compared to the same quarter
of the last fiscal year.

Liquidity and Capital Resources

         To date we have financed our development stage activities primarily
through private placements of Common Stock and contract research and milestone
payments. At October 31, 2001, we had cash and short term investments (primarily
notes of United States corporations) of approximately $33.67 million. At October
31, 2000, our cash and short term investments were approximately $29.62 million.
The increase in our cash and short term investments in the quarter ended October
31, 2001, compared with the quarter ended October 31, 2000, was primarily the
result of additional equity capital of $10.8 million (net of financing costs of
approximately $.75 million) from two private placements in July 2001 of units of
securities consisting of 1.0 shares of common stock and warrants to purchase an
additional .25 shares of common stock at a price of $9.25 per unit. The
additional equity capital was partially offset by the use of cash for ongoing
operations throughout the year.



                                       13
<PAGE>

         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 the Lilly
Agreement and under our joint venture with Elan). Beyond that, we may require
additional funds to support our working capital requirements or for other
purposes and 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
shareholders of the Company, were advanced $334,300 each, in exchange for
promissory notes. These notes bear interest at 8.5 percent per annum and are
payable in full on May 1, 2002. 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 October
31, 2001, the balance outstanding on these notes, including accrued interest,
was $1,046,215.

         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.

New Accounting Pronouncements

         In June 1998, 1999, and 2000, the FASB issued SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities, SFAS No. 137, Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133, and SFAS No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities, respectively. These statements
require companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on the use of
the derivative and whether it qualifies for hedge accounting. The adoption on
August 1, 2000 of these statements did not have a significant impact on our
financial position or results of operations.


                                       14

<PAGE>

         In December 1999, the SEC issued Staff Accounting Bulletin No. 101 (SAB
101), Revenue Recognition in Financial Statements. SAB 101 provides guidance on
the recognition, presentation, and disclosure of revenues in financial
statements of all public registrants. In October 2000, the SEC issued a
Frequently Asked Questions document related to SAB 101 which provides
interpretive guidance. We adopted SAB 101 in fiscal year 2001, and the adoption
of SAB 101 did not have a significant impact on our financial position or
results of operations.

         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. Goodwill and intangible assets previously recorded, in
our financial statements, will be affected by the provisions of SFAS No. 142.
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.


























                                       15
<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 U.S. 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.




























                                       16

<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 has
submitted a motion to the Supreme Court of New York, County of New York to
modify and to confirm the arbitration panel's award. We are opposing Sands'
motion and we also have filed a motion with the court to vacate the arbitration
award. We believe that the arbitration panel's award does not accord with the
direction of the New York State Appellate Division, First Department, as set
forth in its order remanding the proceeding to the arbitration panel for further
consideration. 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, which is incorporated herein by reference.

Item 6.           Exhibits and Reports on Form 8-K

         (a)      Exhibits.

                  none

         (b)      Reports on Form 8-K.

         The following report was filed in the quarter ended October 31, 2001:

         o    On November 8, 2001, we filed a Current Report on Form 8-K to
              update our description of the Sands legal proceeding under Item 5
              of Form 8-K - "Other Events".

























                                       17
<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:  December 13, 2001

                                    GENEREX BIOTECHNOLOGY CORPORATION


                                By: /s/ E. Mark Perri
                                    --------------------------------------------
                                    E. Mark Perri
                                    Chairman and Chief Financial Officer
                                    (principal financial and accounting officer)























                                       18