UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q/A


(Amendment
No. 1)





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


EXCHANGE
ACT OF 1934





For the
quarterly period ended October 31, 2009





 ̈ 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)





Indicate
by check mark whether the registrant: (1) has filed all reports required by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. x Yes   ̈ No




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


 ̈Yes      ̈No





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




Large
accelerated filer   ̈    Accelerated
filer   ̈


Non-accelerated
filer   ̈        Smaller
reporting company  x





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





The
number of outstanding shares of the registrant's common stock, par value $.001,
was 248,522,740 as of December 10, 2009.







GENEREX
BIOTECHNOLOGY CORPORATION


FORM
10-Q/A





EXPLANATORY
NOTE





Generex
Biotechnology Corporation (the "Company") is filing this Amendment No. 1 (this
"Amendment No. 1") to its Quarterly Report on Form 10-Q for the quarterly period
ended October 31, 2009 (the "Original Report "), which was originally filed on
December 11, 2009, to address comments from the staff of the Securities and
Exchange Commission (the “Staff”) in connection with the Staff's regular
periodic review of the Company's filings. As a result of comments received from
the Staff, the Company re-evaluated its calculation of the derivative effect of
certain warrants and determined to restate its consolidated financial statements
for the fiscal period ended October 31, 2009 included in the Original Report and
to make the following changes:





·
            Restate the Financial
      Statements;





·
            Revise the Critical Accounting
      Policies, Results of Operations, Financial Condition, Liquidity and
      Resources, and Risk Factors sections in Item 2, Management's Discussion
      and Analysis of Financial Condition and Results of
      Operations.





·
            Revise Notes 1, 2, 4, 10, 11 and
      12 to the unaudited interim condensed consolidated Financial Statements;
      and





·
            Amend the disclosure contained
      under Item 4 - Controls and
Procedures;





·
            Amend the Exhibit Index and
      re-execute the certificates required by Section 302 of the Chief Executive
      Officer and Chief Financial Officer. Sarbanes-Oxley Act of
      2002.





Specifically, the consolidated
financial statements for the fiscal period ended October 31, 2009 have
been amended to account for the effects of Issue No. 07-5, “Determining Whether
an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock” (now
codified as Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) 815, Derivatives and Hedging) effective as of August 1,
2009.  The columns in the financial statements which have been
restated have been so designated.  Disclosure in Notes 1 and 2 to the
financial statements has been amended to account for the adoption of ASC
815.  A new Note 10 to the financial statements has been added to
provide the required disclosure related to the Derivative Warrant
Liability.   In addition, a new Note 11 has been added which describes
the financial impact of the restatement on the previously reported interim
period.   The accounting entries do not impact cash and there is
no effect on the Company’s operating income or cash flows.





Except as
discussed above, the Company has not modified or updated disclosures presented
in the Original Report.  Accordingly, this Amendment No. 1 does not
reflect events occurring after the filing of the Original Report, nor does it
modify or update those disclosures affected by subsequent events or
discoveries.  It also does not affect information contained in the
Original Report which was not impacted by these restatements.  Events
occurring after the filing of the Original Report or other disclosures necessary
to reflect subsequent events have been or will be addressed in the Company's
reports filed subsequent to the Original Report.





This
Amendment No. 1 should be read in conjunction with the Company's filings made
with the Securities and Exchange Commission subsequent to the filing of the
Original Report, including any amendments to those filings.





Restatement of Other
Financial Statements





Similarly,
as a result of comments received from the Staff, the Company re-evaluated its
calculation of the derivative effect of certain warrants and determined to
restate its consolidated financial statements for the three and six months ended
January 31, 2010.  The Company is concurrently filing an amendment to
its Quarterly Report on Form 10-Q filed on March 10, 2010 to restate the
Company’s unaudited consolidated financial statements such three- and six-month
periods.


i




GENEREX
BIOTECHNOLOGY CORPORATION





INDEX




PART
      I. FINANCIAL INFORMATIONItem
      1.     Financial Statements
      (unaudited)Consolidated
      Balance Sheets -October
      31, 2009 (unaudited) and July 31, 2009
                              
                              1Consolidated
      Statements of Operations — For the three monthperiods
      ended October 31, 2009 and 2008, and cumulative fromNovember
      2, 1995 to October 31, 2009 (unaudited)
                              
                              2Consolidated
      Statements of Cash Flows — For the three monthperiods
      ended October 31, 2009 and 2008, and cumulative fromNovember
      2, 1995 to October 31, 2009 (unaudited)
                              
                              3Notes
      to Consolidated Financial Statements (unaudited)
                              
                              5Item
      2. Management's Discussion and Analysis of Financial Condition and
      Results of Operations
                              
                              14Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk
                              
                              28Item
      4T. Controls and Procedures
                              
                              28PART
      II: OTHER INFORMATIONItem
      1. Legal Proceedings
                              
                              29Item
      1A. Risk Factors
                              
                              29Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds
                              
                              31Item
      3. Defaults Upon Senior Securities
                              
                              32Item
      4. Submission of Matters to a Vote of Security
Holders
                              
                              32Item
      5. Other Information
                              
                              32Item
      6. Exhibits
                              
                              32Signatures
                              
                              32


ii




PART
I. FINANCIAL INFORMATION





Item
1. Financial Statements





GENEREX BIOTECHNOLOGY CORPORATION AND
SUBSIDIARIES


(A
DEVELOPMENT STAGE COMPANY)


CONSOLIDATED
BALANCE SHEETS





October
      31,
                      
                      
                      July
      31,2009 (restated)*
                      
                      
                      2009(Unaudited)ASSETSCurrent
      Assets:Cash
      and cash equivalents
                      
                      $
                      26,262,140
                      
                      
                      $
                      14,197,048Accounts
      receivable
                      
                      
                      76,367
                      
                      
                      
                      57,792Inventory
      (see Note 5)
                      
                      
                      1,424,782
                      
                      
                      
                      1,271,456Other
      current assets
                      
                      
                      1,015,191
                      
                      
                      
                      766,741Total
      Current Assets
                      
                      
                      28,778,480
                      
                      
                      
                      16,293,037Property
      and Equipment, Net
                      
                      
                      1,439,598
                      
                      
                      
                      1,444,770Assets
      Held for Investment, Net
                      
                      
                      3,470,728
                      
                      
                      
                      3,373,564Patents,
      Net
                      
                      
                      3,646,160
                      
                      
                      
                      3,702,386TOTAL
      ASSETS
                      
                      $
                      37,334,966
                      
                      
                      $
                      24,813,757LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      Liabilities:Accounts
      payable and accrued expenses (see Note 6)
                      
                      $
                      7,609,207
                      
                      
                      $
                      7,486,155Deferred
      revenue and rebate liability
                      
                      
                      108,197
                      
                      
                      
                      140,883Current
      maturities of long-term debt
                      
                      
                      1,247,772
                      
                      
                      
                      1,060,788Current
      maturities of obligations under capital lease
                      
                      
                      37,365
                      
                      
                      
                      43,836Total
      Current Liabilities
                      
                      
                      9,002,541
                      
                      
                      
                      8,731,662Obligations
      Under Capital Lease, Net
                      
                      
                      —
                      
                      
                      
                      3,932Long-Term
      Debt, Net
                      
                      
                      1,681,576
                      
                      
                      
                      1,854,421Derivative
      Warranty Liability (see Note 10)
                      
                      
                      10,131,138
                      
                      
                      
                      —Total
      Liabilities
                      
                      
                      20,815,255
                      
                      
                      
                      10,590,015Commitments
      and ContingenciesStockholders’
      Equity (see Note 10):Special
      Voting Rights Preferred Stock, $.001 par value; authorized 1,000 shares at
      October 31, 2009 and July 31, 2009; -0- shares issued and outstanding at
      October 31, 2009 and July 31, 2009
                      
                      
                      —
                      
                      
                      
                      —Common
      stock, $.001 par value; authorized 500,000,000 shares at October 31, 2009
      and July 31, 2009; 248,145,032 and 212,628,818 shares issued and
      outstanding at October 31, 2009 and July 31, 2009,
      respectively
                      
                      
                      248,144
                      
                      
                      
                      212,628Additional
      paid-in capital
                      
                      
                      314,765,024
                      
                      
                      
                      307,401,016Deficit
      accumulated during the development stage
                      
                      
                      (299,183,874
                      )
                      
                      
                      (294,041,489
                      )Accumulated
      other comprehensive income
                      
                      
                      690,417
                      
                      
                      
                      651,587Total
      Stockholders’ Equity
                      
                      
                      16,519,711
                      
                      
                      
                      14,223,742TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                      
                      $
                      37,334,966
                      
                      
                      $
                      24,813,757





* - See
Note 11 - Restatement of Previously Reported Interim Period.





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


1




GENEREX BIOTECHNOLOGY CORPORATION AND
SUBSIDIARIES


(A
DEVELOPMENT STAGE COMPANY)


CONSOLIDATED
STATEMENTS OF OPERATIONS





Cumulative FromNovember 2, 1995For the Three Months
                  
                  
                  (Date of Inception)Ended October 31,
                  
                  
                  to October 31,2009 (restated)*
                  
                  
                  2008
                  
                  
                  2009 (restated)*(Unaudited)
                  
                  
                  (Unaudited)
                  
                  
                  (Unaudited)Revenues,
      net
                  
                  $
                  97,542
                  
                  
                  $
                  538,346
                  
                  
                  $
                  3,715,436Cost
      of Goods Sold
                  
                  
                  79,237
                  
                  
                  
                  22,192
                  
                  
                  
                  720,618Gross
      profit
                  
                  
                  18,305
                  
                  
                  
                  516,154
                  
                  
                  
                  2,994,818Operating
      Expenses:Research
      and development
                  
                  
                  3,075,769
                  
                  
                  
                  4,355,689
                  
                  
                  
                  106,452,944Research
      and development - related party
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  220,218Selling
      and marketing
                  
                  
                  1,298,704
                  
                  
                  
                  837,198
                  
                  
                  
                  5,731,202General
      and administrative
                  
                  
                  3,825,265
                  
                  
                  
                  2,847,913
                  
                  
                  
                  120,626,083General
      and administrative - related party
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  314,328Total
      Operating Expenses
                  
                  
                  8,199,738
                  
                  
                  
                  8,040,800
                  
                  
                  
                  233,344,775Operating
      Loss
                  
                  
                  (8,181,433
                  )
                  
                  
                  (7,524,646
                  )
                  
                  
                  (230,349,957
                  )Other
      Income (Expense):Miscellaneous
      income (expense)
                  
                  
                  500
                  
                  
                  
                  5
                  
                  
                  
                  196,761Income
      from rental operations, net
                  
                  
                  84,593
                  
                  
                  
                  88,380
                  
                  
                  
                  1,656,601Interest
      income
                  
                  
                  10,085
                  
                  
                  
                  168,465
                  
                  
                  
                  7,756,959Interest
      expense
                  
                  
                  (52,401
                  )
                  
                  
                  (4,429,388
                  )
                  
                  
                  (68,049,569
                  )Change
      in fair value of derivative warrant liability
                  
                  
                  2,996,271
                  
                  
                  
                  —
                  
                  
                  
                  2,996,271Loss
      on extinguishment of debt
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (14,134,068
                  )Net
      Loss Before Undernoted
                  
                  
                  (5,142,385
                  )
                  
                  
                  (11,697,184
                  )
                  
                  
                  (299,927,002
                  )Minority
      Interest Share of Loss
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  3,038,185Net
      Loss
                  
                  
                  (5,142,385
                  )
                  
                  
                  (11,697,184
                  )
                  
                  
                  (296,888,817
                  )Preferred
      Stock Dividend
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  2,295,057Net
      Loss Available to Common Stockholders
                  
                  $
                  (5,142,385
                  )
                  
                  $
                  (11,697,184
                  )
                  
                  $
                  (299,183,874
                  )Basic
      and Diluted Net Loss Per Common Share (see Note 8)
                  
                  $
                  (.02
                  )
                  
                  $
                  (.10
                  )Weighted
      Average Number of Shares of Common Stock Outstanding
                  
                  
                  233,991,319
                  
                  
                  
                  118,109,023





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


2




GENEREX BIOTECHNOLOGY CORPORATION AND
SUBSIDIARIES


(A
DEVELOPMENT STAGE COMPANY)


CONSOLIDATED
STATEMENTS OF CASH FLOWS





Cumulative FromNovember 2, 1995For the Three Months
                                                                                                  
                                                                                                  
                                                                                                  (Date of Inception)Ended October 31,
                                                                                                  
                                                                                                  
                                                                                                  to October 31,2009 (restated)*
                                                                                                  
                                                                                                  
                                                                                                  2008
                                                                                                  
                                                                                                  
                                                                                                  2009 (restated)*(Unaudited)
                                                                                                  
                                                                                                  
                                                                                                  (Unaudited)
                                                                                                  
                                                                                                  
                                                                                                  (Unaudited)Cash
      Flows From Operating Activities:Net
      loss
                                                                                                  
                                                                                                  $
                                                                                                  (5,142,385
                                                                                                  )
                                                                                                  
                                                                                                  $
                                                                                                  (11,697,184
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (296,888,817
                                                                                                  )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
                                                                                                  
                                                                                                  
                                                                                                  199,702
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  216,172
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  7,972,373Minority
      interest share of loss
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (3,038,185
                                                                                                  )Reduction
      of notes receivable - common stock in exchange for services
      rendered
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  423,882Write-off
      of uncollectible notes receivable - common stock
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  391,103Write-off
      of deferred offering costs
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  3,406,196Write-off
      of abandoned patents
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  913,196Loss
      on disposal of property and equipment
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  911Loss
      on extinguishment of debt
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  14,134,069Common
      stock issued as employee compensation
                                                                                                  
                                                                                                  
                                                                                                  28,986
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  55,136
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  3,708,379Issuance
      of options and option modifications as employee
    compensation
                                                                                                  
                                                                                                  
                                                                                                  879,000
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  9,680
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  985,996Common
      stock issued for services rendered
                                                                                                  
                                                                                                  
                                                                                                  639,224
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  46,649
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  10,701,853Amortization
      of prepaid services in conjunction with common stock
    issuance
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  138,375Non-cash
      compensation expense
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  45,390Stock
      options and warrants issued for services rendered
                                                                                                  
                                                                                                  
                                                                                                  5,653
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  7,371,376Issuance
      of warrants as additional exercise right inducement
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  21,437,909Preferred
      stock issued for services rendered
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  100Treasury
      stock redeemed for non-performance of services
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (138,000
                                                                                                  )Amortization
      of deferred debt issuance costs and loan origination fees
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  153,791
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  2,405,629Amortization
      of discount on convertible debentures
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  4,009,835
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  38,345,592Common
      stock issued as interest payment on convertible debentures
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  252,083
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  757,514Interest
      on short-term advance
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  22,190Founders’
      shares transferred for services rendered
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  353,506Fees
      in connection with refinancing of debt
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  113,274Warrant
      repricing costs
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  3,198,604Change
      in fair value of derivative warrant liability
                                                                                                  
                                                                                                  
                                                                                                  (2,996,271
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (2,996,271
                                                                                                  )Changes
      in operating assets and liabilities (excluding the effects of
      acquisition):Accounts
      receivable
                                                                                                  
                                                                                                  
                                                                                                  (26,542
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (30,674
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (99,777
                                                                                                  )Miscellaneous
      receivables
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  43,812Inventory
                                                                                                  
                                                                                                  
                                                                                                  (145,862
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (60,179
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (1,461,712
                                                                                                  )Other
      current assets
                                                                                                  
                                                                                                  
                                                                                                  (238,187
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (40,087
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (692,700
                                                                                                  )Accounts
      payable and accrued expenses
                                                                                                  
                                                                                                  
                                                                                                  1,168,647
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (574,680
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  13,721,787Deferred
      revenue
                                                                                                  
                                                                                                  
                                                                                                  (33,702
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  37,018
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  105,135Other,
      net
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  110,317Net
      Cash Used in Operating Activities
                                                                                                  
                                                                                                  
                                                                                                  (5,661,737
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (7,622,440
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (174,506,994
                                                                                                  )Cash
      Flows From Investing Activities:Purchase
      of property and equipment
                                                                                                  
                                                                                                  
                                                                                                  (132,646
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (1,385
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (4,727,578
                                                                                                  )Costs
      incurred for patents
                                                                                                  
                                                                                                  
                                                                                                  (42,237
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (30,537
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (2,244,747
                                                                                                  )Change
      in restricted cash
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  45,872Proceeds
      from maturity of short term investments
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  2,214
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  195,242,918Purchases
      of short-term investments
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (195,242,918
                                                                                                  )Cash
      received in conjunction with merger
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  82,232Advances
      to Antigen Express, Inc.
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (32,000
                                                                                                  )Increase
      in officers’ loans receivable
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (1,126,157
                                                                                                  )Change
      in deposits
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (608,279
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (652,071
                                                                                                  )Change
      in notes receivable - common stock
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (91,103
                                                                                                  )Change
      in due from related parties
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (2,222,390
                                                                                                  )Other,
      net
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  —
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  89,683Net
      Cash Used in Investing Activities
                                                                                                  
                                                                                                  
                                                                                                  (174,883
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (637,987
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (10,878,259
                                                                                                  )





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




3


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


Cumulative FromNovember 2, 1995For the Three Months
                    
                    
                    (Date of Inception)Ended October 31,
                    
                    
                    to October 31,2009 (restated)*
                    
                    
                    2008
                    
                    
                    2009 (restated)*Cash
      Flows From Financing Activities:Proceeds
      from short-term advance
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    325,179Repayment
      of short-term advance
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (347,369
                    )Proceeds
      from issuance of long-term debt
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    2,005,609Repayment
      of long-term debt
                    
                    
                    (23,492
                    )
                    
                    
                    (21,567
                    )
                    
                    
                    (2,048,018
                    )Repayment
      of obligations under capital lease
                    
                    
                    (10,403
                    )
                    
                    
                    (3,024
                    )
                    
                    
                    (45,637
                    )Change
      in due to related parties
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    154,541Proceeds
      from exercise of warrants
                    
                    
                    1,517,940
                    
                    
                    
                    —
                    
                    
                    
                    45,642,159Proceeds
      from exercise of stock options
                    
                    
                    —
                    
                    
                    
                    56,000
                    
                    
                    
                    5,001,916Proceeds
      from minority interest investment
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    3,038,185Proceeds
      from issuance of preferred stock
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    12,015,000Redemption
      of SVR preferred stock
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (100
                    )Proceeds
      from issuance of convertible debentures, net
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    40,704,930Payment
      of costs associated with convertible debentures
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (722,750
                    )Repayments
      of convertible debentures
                    
                    
                    —
                    
                    
                    
                    (376,667
                    )
                    
                    
                    (5,142,424
                    )Purchase
      of treasury stock
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (483,869
                    )Proceeds
      from issuance of common stock, net
                    
                    
                    16,400,671
                    
                    
                    
                    —
                    
                    
                    
                    112,137,624Purchase
      and retirement of common stock
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (497,522
                    )Net
      Cash Provided by Financing Activities
                    
                    
                    17,884,716
                    
                    
                    
                    (345,258
                    )
                    
                    
                    211,737,454Effect
      of Exchange Rates on Cash
                    
                    
                    16,996
                    
                    
                    
                    (14,970
                    )
                    
                    
                    (90,061
                    )Net
      Increase (Decrease) in Cash and Cash Equivalents
                    
                    
                    12,065,092
                    
                    
                    
                    (8,620,655
                    )
                    
                    
                    26,262,140Cash
      and Cash Equivalents, Beginning of Period
                    
                    
                    14,197,048
                    
                    
                    
                    17,237,510
                    
                    
                    
                    —Cash
      and Cash Equivalents, End of Period
                    
                    $
                    26,262,140
                    
                    
                    $
                    8,616,855
                    
                    
                    $
                    26,262,140Supplemental
      Disclosure of Cash Flow Information:Cash
      paid during the period for:Interest
                    
                    $
                    52,401
                    
                    
                    $
                    618,099Income
      taxes
                    
                    $
                    —
                    
                    
                    $
                    —Disclosure
      of non-cash investing and financing activities:Issuance
      of common stock as satisfaction of accounts payable and accrued
      expenses
                    
                    $
                    1,055,459
                    
                    
                    $
                    —Par
      value of common stock issued in conjunction with cashless exercise of
      warrants
                    
                    $
                    4,466
                    
                    
                    $
                    —Issuance
      of common stock as repayment of convertible debentures and advance
      payments
                    
                    $
                    —
                    
                    
                    $
                    3,753,334Issuance
      of common stock as convertible debentures advance payments
                    
                    $
                    —
                    
                    
                    $
                    759,450Purchase
      of property and equipment through the issuance of obligations under
      capital lease
                    
                    $
                    —
                    
                    
                    $
                    83,002


*See Note
11 - Restatement of Previously Reported Interim Period
 
 The Notes
to Consolidated Financial Statements are an integral part of these
statements.
  4
 GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 1.
                  Basis
      of Presentation
 The
accompanying unaudited interim consolidated financial statements have been
prepared pursuant to the rules and regulations for reporting on Form
10-Q.  Accordingly, certain information and disclosures required by
generally accepted accounting principles for complete financial statements are
not included herein.  The interim statements should be read in
conjunction with the financial statements and notes thereto included in the
Company’s latest Annual Report on Form 10-K.  The results for the
three months ended may not be indicative of the results for the entire
year.
 
 Interim
statements are subject to possible adjustments in connection with the annual
audit of the Company’s accounts for the fiscal year 2010.  In the
Company’s opinion, all adjustments necessary for a fair presentation of these
interim statements have been included and are of a normal and recurring
nature.
 
 The
Company is a development stage company, which has a limited history of
operations and limited revenue to date.  The Company currently is
recognizing revenue from the sale of three of its four commercially available
products.  Additionally, the Company has several product candidates
that are in various research or early stages of pre-clinical and clinical
development.  There can be no assurance that the Company will be
successful in obtaining regulatory clearance for the sale of existing or any
future products or that any of the Company’s products will be commercially
viable.
 
 The
Company adopted Issue No. 07-5, “Determining Whether an Instrument (or Embedded
Feature) is Indexed to an Entity’s Own Stock” (now codified as Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 815,
Derivatives and Hedging) effective as of August 1, 2009.  The Company
reassessed certain outstanding warrants under ASC 815 and due to a price
adjustment clause included in these warrants, it has determined that such
warrants were no longer deemed to be indexed to the Company’s stock and,
therefore, no longer met the scope exception of ASC 815. These warrants have
been reclassified to a liability and will be adjusted to fair value on a
quarterly basis going forward.  The adoption of this guidance resulted
in the recognition of income of $2,996,271 within the Company’s consolidated
statements of operations for the three months ended October 31, 2009 and a net
reclassification of $10,131,138 of previously reported stockholders’ equity to a
liability under the caption “Derivative Warrant Liability” as of October 31,
2009.  (See Note 11 – Restatement of Previously Reported Interim
Period.)
 
 Going
Concern
 The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. The Company has experienced
negative cash flows from operations since inception and had an accumulated
deficit at October 31, 2009 of approximately $299 million. The Company has
funded its activities to date almost exclusively from debt and equity
financings.
 
 The
Company will continue to require substantial funds to continue research and
development, including preclinical studies and clinical trials of its product
candidates, and to support sales and marketing efforts, if the FDA or other
regulatory approvals are obtained.  Management’s plans in order to meet its
operating cash flow requirements include financing activities such as private
placements of its common stock, preferred stock offerings and issuance of debt
and convertible debt instruments.  Management is also actively pursuing
industry collaboration activities including product licensing and specific
project financing.
 
 While the
Company believes that it will be successful in obtaining the necessary financing
to fund its operations, meet revenue projections and manage costs, there are no
assurances that such additional funding will be achieved and that it will
succeed in its future operations. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or amounts of liabilities that might be necessary should the Company be
unable to continue in existence.
 
 2.
                  Effects
      of Recent Accounting
Pronouncements
 
 Recently
Adopted Accounting Pronouncements
 In
November 2007, the FASB issued guidance related to accounting for collaborative
arrangements. This guidance defines a collaborativearrangement as a contractual arrangement in which the parties are
(i) active participants to the arrangement; and (ii) exposed to
significant risks and rewards that depend upon the commercial success of the
endeavor. It also addresses the appropriate statement of operations presentation
for activities and payments between the participants in acollaborativearrangement as well as for costs
incurred and revenue generated from transactions with third parties. This
guidance is effective for the Company’s fiscal year beginning August 1,
2009. The adoption of this guidance did not have a significant impact on the
Company’s consolidated financial statements.
  5
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 In
December 2007, the FASB issued an amendment to an existing accounting standard
which provides guidance related to business combinations. The amendment retains
the fundamental requirements that the acquisition method of accounting be used
for all business combinations and for an acquirer to be identified for each
business combination. This amendment also establishes principles and
requirements for how the acquirer: a) recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any
non-controlling interest in the acquiree; b) recognizes and measures the
goodwill acquired in the business combination or a gain from a bargain purchase
and c) determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination. This amendment applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. An entity may not
apply it before that date. This guidance is effective for the Company’s fiscal
year beginning August 1, 2009. The adoption of this guidance did not have a
significant impact on the Company’s consolidated financial
statements.
 
 In
December 2007, the FASB issued guidance related to non-controlling interests in
consolidated financial statements. This guidance amends previously issued
guidance to establish accounting and reporting standards for the non-controlling
(minority) interest in a subsidiary and for the deconsolidation of a subsidiary.
It clarifies that a non-controlling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. This guidance is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December
15, 2008.  This guidance is effective for the Company’s fiscal year
beginning August 1, 2009. The adoption of this guidance did not have a
significant impact on the Company’s consolidated financial
statements.
 
 In April
2008, the FASB issued guidance related to determining the useful life of
intangible assets. This guidance amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset. The objective of the guidance is to improve the
consistency between the useful life of a recognized intangible asset and the
period of expected cash flows used to measure the fair value of the asset. The
adoption of this guidance did not have a significant impact on the Company’s
consolidated financial statements.
 
 In May
2008, the FASB issued guidance related to accounting for convertible debt
instruments that may be settled in cash upon conversion (including partial cash
settlements).  This guidance requires a portion of this type of
convertible debt to be recorded as equity and to record interest expense on the
debt portion at a rate that would have been charged on nonconvertible debt with
the same terms. The adoption of this guidance did not have a significant impact
on the Company’s consolidated financial statements.
 
 In June
2008, the FASB issued guidance related to determining whether instruments
granted in share-based payment transactions are participating
securities.  Securities participating in dividends with common stock
according to a formula are participating securities. This guidance determined
that unvested shares of restricted stock and stock units with nonforfeitable
rights to dividends are participating securities. Participating securities
require the “two-class” method to be used to calculate basic earnings per share.
This method lowers basic earnings per common share. This guidance is effective
for the Company’s fiscal year beginning August 1, 2009.  The
adoption of this guidance did not have a significant impact on the Company’s
consolidated financial statements.
 
 In
June 2008, the FASB reached a consensus regarding the determination of
whether an instrument (or an embedded feature) is indexed to an entity’s own
stock, which is the first part of the scope exception related to accounting for
derivative instruments and hedging activities.  This guidance is
effective for the Company’s fiscal year beginning August 1,
2009.  The Company determined that certain of its warrants with price
protection provisions are not considered to be indexed to the Company’s own
stock, therefore, they do not meet the scope exception and thus should be
accounted for as a liability.  The adoption of this guidance resulted
in the recognition of income of $2,996,271within the Company’s consolidated
statements of operations for the three month period ended October 31, 2009 and a
net reclassification of $10,131,138 of previously reported stockholders’ equity
to a liability under the caption “Derivative Warrant Liability” as of October
31, 2009.  (See Notes 10 – Derivative Warrant Liability and 11
–Restatement of Previously Reported Interim Period.)
  6
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 In June
2009, the FASB issued guidance which stipulates the FASB Accounting Standards
Codification is the source of authoritative U.S. GAAP recognized by the FASB to
be applied by nongovernmental entities. This guidance is effective for the
Company’s fiscal year beginning August 1, 2009. The adoption of this
guidance did not have a significant impact on the Company’s consolidated
financial statements.
 
 Recently
Issued Accounting Pronouncements
 In
October 2009, the FASB issued ASU No. 2009-13, Revenue Recognition (Topic
605)—Multiple Deliverable Revenue Arrangements (“ASU 2009-13”). ASU
2009-13 eliminates the residual method of allocation and requires the relative
selling price method when allocating deliverables of a multiple-deliverable
revenue arrangement. The determination of the selling price for each deliverable
requires the use of a hierarchy designed to maximize the use of available
objective evidence including, vendor specific objective evidence, third party
evidence of selling price, or estimated selling price.  ASU 2009-13 is
effective prospectively for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010, and must be
adopted in the same period using the same transition method. If adoption is
elected in a period other than the beginning of a fiscal year, the amendments in
these standards must be applied retrospectively to the beginning of the fiscal
year. Full retrospective application of these amendments to prior fiscal years
is optional. Early adoption of these standards may be elected. We are currently
evaluating the impact of these new accounting standards on our consolidated
financial statements.
 
 3.
                  Stock-Based
      Compensation
 As of
October 31, 2009, the Company had three stockholder-approved stock incentive
plans under which shares and options exercisable for shares of common stock have
been or may be granted to employees, directors, consultants and advisors. A
total of 2,000,000 shares of common stock are reserved for issuance under the
2000 Stock Option Plan (the 2000 Plan), a total of 12,000,000 shares of common
stock are reserved for issuance under the 2001 Stock Option Plan (the 2001 Plan)
and 30,000,000 shares of common stock are reserved for issuance under the 2006
Stock Plan (the 2006 Plan).  Restricted shares can only be issued
under the 2006 Plan.  At October 31, 2009, there were 2,000,000,
8,547,628 and 19,831,340 shares of common stock reserved for future awards under
the 2000 Plan, 2001 Plan and 2006 Plan, respectively.
 
 The 2000,
2001 and 2006 Plans (the Plans) are administered by the Board of Directors (the
Board). The Board is authorized to select from among eligible employees,
directors, advisors and consultants those individuals to whom options are to be
granted and to determine the number of shares to be subject to, and the terms
and conditions of the options. The Board is also authorized to prescribe, amend
and rescind terms relating to options granted under the Plans. Generally, the
interpretation and construction of any provision of the Plans or any options
granted hereunder is within the discretion of the Board.
 
 The Plans
provide that options may or may not be Incentive Stock Options (ISOs) within the
meaning of Section 422 of the Internal Revenue Code. Only employees of the
Company are eligible to receive ISOs, while employees and non-employee
directors, advisors and consultants are eligible to receive options which are
not ISOs, i.e. “Non-Qualified Options.” The options granted by the Board in
connection with its adoption of the Plans were Non-Qualified Options. In
addition, the 2006 Plan also provides for restricted stock grants.
 
 The fair
value of each option granted is estimated on the grant date using the
Black-Scholes option pricing model which takes into account as of the grant date
the exercise price and expected life of the option, the current price of the
underlying stock and its expected volatility, expected dividends on the stock
and the risk-free interest rate for the term of the option.
 
 In the
case of restricted stock grants under the 2006 Plan, fair market value of the
shares is the market price.
  7
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  The
following is a summary of the common stock options granted, forfeited or expired
and exercised under the Plan for the three months ended October 31,
2009:
 
 Weighted
                                          
                                          
                                          WeightedAverage
                                          
                                          
                                          AverageExercise
                                          
                                          
                                          Remaining
                                          
                                          
                                          AggregatePrice
                                          
                                          
                                          Contractual
                                          
                                          
                                          IntrinsicOptions
                                          
                                          
                                          Share
                                          
                                          
                                          Term (Years)
                                          
                                          
                                          ValueOutstanding,
      August 1, 2009
                                          
                                          
                                          5,067,138
                                          
                                          
                                          $
                                          0.44Granted
                                          
                                          
                                          855,000
                                          
                                          
                                          $
                                          0.64Forfeited
      or expired
                                          
                                          
                                          (270,000
                                          )
                                          
                                          $
                                          0.92Exercised
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —Outstanding,
      October 31, 2009
                                          
                                          
                                          5,652,138
                                          
                                          
                                          $
                                          0.44
                                          
                                          
                                          
                                          4.91
                                          
                                          
                                          $
                                          1,196,754Exercisable,
      October 31, 2009
                                          
                                          
                                          4,753,388
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          $
                                          1,196,754Grant
      Date Fair Value of Options Granted
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          $
                                          0.46Grant
      Date Fair Value of Options Forfeited or Expired
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          $
                                          0.70Total
      Intrinsic Value of Options Exercised
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          n/a
 
 The
following is a summary of the non-vested common stock options granted, vested
and forfeited under the Plan:
 Weighted
      AverageGrant
      DateOptions
                            
                            
                            Fair ValueOutstanding,
      August 1, 2009
                            
                            
                            43,750
                            
                            
                            $
                            0.59Granted
                            
                            
                            855,000
                            
                            
                            $
                            0.46Vested
                            
                            
                            —
                            
                            
                            
                            n/aForfeited
                            
                            
                            —
                            
                            
                            
                            n/aOutstanding,
      October 31, 2009
                            
                            
                            898,750
                            
                            
                            $
                            0.47
 
 As of
October 31, 2009, the Company had $395,176 of total unrecognized compensation
cost related to non-vested share-based compensation arrangements granted under
the Plan.  That cost is expected to be recognized over a
weighted-average period of 2.35 years.
 
 During
the three months ended October 31, 2009, the Company modified the terms of
4,535,638 outstanding options which resulted in a charge to operations in the
amount of $875,773.  The fair value of modification cost is estimated
as the difference of options’ fair value before and after modification
date.  The estimates employ Black-Scholes option pricing model, which
takes into account the exercise price ($0.001 – $0.94), expected life of the
option (5 years), the current price of the underlying stock ($0.59) and its
expected volatility (109.05%), expected dividends on the stock($0) and the
risk-free interest rate for the term of the option (0.11%).
 
 In August
2007, the Company issued 550,000 shares of common stock under the 2006 Plan in
the form of restricted stock awards to officers.  The fair value of
these shares was based on the quoted market price of the Company’s common stock
on the dates of the issuance is $830,500. These shares were issued as an
incentive to retain key employees and officers.  A portion of these
shares vested immediately while the remaining portion will vest over two years
from the date of the grant.  The following table summarizes the
Company’s non-vested restricted stock activity for the nine months ended October
31, 2009:
 WeightedAverageGrant DateNumber of
                      
                      
                      FairShares
                      
                      
                      ValueNon-vested
      stock, August 1, 2009
                      
                      
                      14,844
                      
                      
                      $
                      1.51Granted
                      
                      
                      —
                      
                      
                      
                      n/aVested
                      
                      
                      (14,844
                      )
                      
                      
                      1.51Forfeited
                      
                      
                      —
                      
                      
                      
                      n/aNon-vested
      stock, October 31, 2009
                      
                      
                      —
                      
                      
                      
                      n/a
  8
 
 GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 4.
                  Comprehensive
      Income/(Loss)
 Comprehensive
loss, which includes net loss and the change in the foreign currency translation
account, for the three months ended October 31, 2009 and 2008 was $5,103,555 and
$12,063,798, respectively.
 
 5.
                  Inventory
 A summary
of inventory at October 31 and July 31, 2009 is as follows:
 
 October
      31,
                      
                      
                      July
      31,2009
                      
                      
                      2009Raw
      materials
                      
                      $
                      756,745
                      
                      
                      $
                      728,919Finished
      goods
                      
                      
                      668,037
                      
                      
                      
                      542,537Total
                      
                      $
                      1,424,782
                      
                      
                      $
                      1,271,456
 
 6.
                  Accounts
      Payable and Accrued Expenses
 Accounts
payable and accrued expenses consist of the following:
 
 October
      31,
                      
                      
                      July
      31,2009
                      
                      
                      2009Accounts
      Payable
                      
                      $
                      3,263,478
                      
                      
                      $
                      2,983,037Research
      and Development
                      
                      
                      1,838,239
                      
                      
                      
                      1,629,293Executive
      Compensation
                      
                      
                      2,507,490
                      
                      
                      
                      2,873,825Total
                      
                      $
                      7,609,207
                      
                      
                      $
                      7,486,155
 
 7.
                  Pending
      Litigation
 In
February 2001, a former business associate of the former Vice President of
Research and Development (“VP”) of the Company and an entity known as Centrum
Technologies Inc. (“CTI”) commenced an action in the Ontario Superior Court of
Justice against the Company and the VP seeking, among other things, damages for
alleged breaches of contract and tortious acts related to a business
relationship between this former associate and the VP that ceased in July 1996.
The plaintiffs’ statement of claim also seeks to enjoin the use, if any, by the
Company of three patents allegedly owned by CTI. The three patents are entitled
Liquid Formulations for
Proteinic Pharmaceuticals, Vaccine Delivery System for
Immunization, Using Biodegradable Polymer Microspheres, and Controlled Releases of Drugs or
Hormones in Biodegradable Polymer Microspheres.  It is the
Company’s position that the buccal drug delivery technologies which are the
subject matter of the Company’s research, development, and commercialization
efforts, including Generex Oral-lynTM and the RapidMistTM Diabetes Management
System, do not make use of, are not derivative of, do not infringe upon, and are
entirely different from the intellectual property identified in the plaintiffs’
statement of claim. On July 20, 2001, the Company filed a preliminary motion to
dismiss the action of CTI as a nonexistent entity or, alternatively, to stay
such action on the grounds of want of authority of such entity to commence the
action. The plaintiffs brought a cross motion to amend the statement of claim to
substitute Centrum Biotechnologies, Inc. (“CBI”) for CTI. CBI is a corporation
of which 50 percent of the shares are owned by the former business associate and
the remaining 50 percent are owned by the Company. Consequently, the
shareholders of CBI are in a deadlock. The court granted the Company’s motion to
dismiss the action of CTI and denied the plaintiffs’ cross motion without
prejudice to the former business associate to seek leave to bring a derivative
action in the name of or on behalf of CBI. The former business associate
subsequently filed an application with the Ontario Superior Court of Justice for
an order granting him leave to file an action in the name of and on behalf of
CBI against the VP and the Company. The Company opposed the application. In
September 2003, the Ontario Superior Court of Justice granted the request and
issued an order giving the former business associate leave to file an action in
the name of and on behalf of CBI against the VP and the Company. A statement of
claim was served in July 2004. The Company is not able to predict the ultimate
outcome of this legal proceeding at the present time or to estimate an amount or
range of potential loss, if any, from this legal proceeding.
  9
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 The
Company is involved in certain other legal proceedings in addition to those
specifically described herein. Subject to the uncertainty inherent in all
litigation, the Company does not believe at the present time that the resolution
of any of these legal proceedings is likely to have a material adverse effect on
the Company’s financial position, operations or cash flows.
 
 With
respect to all litigation, as additional information concerning the estimates
used by the Company becomes known, the Company reassesses its position both with
respect to accrued liabilities and other potential exposures.
 
 8.
                  Net
      Loss Per Share
 Basic
earnings per shares (EPS) and Diluted EPS for the three months ended October 31,
2009 and 2008 have been computed by dividing the net loss available to common
stockholders for each respective period by the weighted average shares
outstanding during that period.  All outstanding options, warrants,
non-vested restricted stock and shares to be issued upon conversion of the
outstanding convertible debentures, representing approximately 49,049,654 and
76,837,722 incremental shares, have been excluded from the October 31, 2009 and
2008 computations of Diluted EPS as they are anti-dilutive, due to the losses
generated during the respective periods.
 
 9.
                  Stockholders’
      Equity
 During
the three months ended October 31, 2009, the Company issued 23,870,513 shares of
common stock and 9,595,622 warrants to acquire the shares of common stock at
exercise prices of $0.79 to $1.00 pursuant to private placements, in exchange
for net cash proceeds after expenses of $16,400,671.  The shares were
priced at $0.66 to $0.80 per share based on the quoted market price of the
Company’s common stock on the dates of the issuances.
 
 During
the three months ended October 31, 2009, the Company issued 957,835 shares of
common stock to various consultants for services rendered in the amount of
$639,224.  The shares were valued at $0.53 to $0.76 per share based on
the quoted market price of the Company’s common stock on the dates of the
issuances.
 
 During
the three months ended October 31, 2009, the Company issued 1,582,640 shares of
common stock to various vendors as satisfaction of accounts payable and accrued
expenses in the amount of $1,055,459.  The shares were valued at $0.55
to $0.77 per share based on the quoted market price of the Company’s common
stock on the dates of the issuances.
 
 During
the three months ended October 31, 2009, the Company issued 39,174 shares of
common stock valued at $25,250 as employee compensation.  The shares
were valued at $0.60 to $0.73 per share based on the quoted market price of the
Company’s common stock on the dates of the issuances.
 
 During
the three months ended October 31, 2009, the Company granted 855,000 options to
employees as compensation.  The total fair value of the options
amounted to $393,300.  These options vest over a period of 4 years
resulting in a charge to operations in the amount of $5,653 in the current
quarter.  The fair value of each option granted was estimated on the
grant date using the Black-Scholes option pricing model, taking into account the
grant date exercise price and current price of the underlying stock of $0.64, an
expected life of the option of 3.75 years, an expected volatility of 108.9%,
expected dividends on the stock of $0 and the risk-free interest rate for the
term of the option of 0.12%.
 
 During
the three months ended October 31, 2009, the Company modified the terms of
4,535,638 outstanding options resulting in a charge to operations in the amount
of $875,773.
 
 During
the three months ended October 31, 2009, the Company issued 4,466,239 shares of
common stock in conjunction with a cashless exercise of 7,576,565
warrants.
 
 During
the three months ended October 31, 2009, the Company received aggregate cash
proceeds of $1,517,940 from exercises of warrants.  The Company issued
4,599,817 shares of common stock as a result of these exercises.
 
 During
the three months ended October 31, 2009, the Company recorded a charge to
operations in the amount of $6,963 as amortization of stock-based
compensation.
 
 The
following is a summary of the warrants issued, forfeited or expired and
exercised for the three months ended October 31, 2009:
  10
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 WarrantsOutstanding,
      August 1, 2009
                        
                        
                        46,478,276Issued
      (see Note 9)
                        
                        
                        9,595,622Forfeited
      or expired
                        
                        
                        (500,000
                        )Exercised
                        
                        
                        (12,176,382
                        )Outstanding,
      October 31, 2009
                        
                        
                        43,397,516
 
 The
outstanding warrants at October 31, 2009 have a weighted average exercise price
of $0.57 per share.
 
 The
stockholders’ equity transactions as described above are summarized
below:
 
 Additional
                        
                        
                        TotalCommon Stock
                        
                        
                        Paid-In
                        
                        
                        Stockholders’Shares
                        
                        
                        Amount
                        
                        
                        Capital
                        
                        
                        EquityIssuance
      of common stock in private placement
                        
                        
                        23,870,513
                        
                        
                        $
                        23,871
                        
                        
                        $
                        16,376,802
                        
                        
                        $
                        16,400,673Issuance
      of common stock for services
                        
                        
                        957,835
                        
                        
                        $
                        958
                        
                        
                        $
                        638,266
                        
                        
                        $
                        639,224Issuance
      of common stock as employee compensation
                        
                        
                        39,174
                        
                        
                        
                        39
                        
                        
                        
                        25,211
                        
                        
                        
                        25,250Stock-based
      executive compensation
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        6,963
                        
                        
                        
                        6,963Warrants
      exercised for cash
                        
                        
                        4,599,817
                        
                        
                        
                        4,600
                        
                        
                        
                        1,513,340
                        
                        
                        
                        1,517,940Issuance
      of common stock as satisfaction of accounts payable and accrued
      expenses
                        
                        
                        1,582,640
                        
                        
                        
                        1,583
                        
                        
                        
                        1,053,877
                        
                        
                        
                        1,055,459Issuance
      of common stock in conjunction with cashless exercise of
      warrants
                        
                        
                        4,466,239
                        
                        
                        
                        4,466
                        
                        
                        
                        (4,466
                        )
                        
                        
                        —Grant
      of stock options as employee compensation
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        5,653
                        
                        
                        
                        5,653Option
      re-pricing costs
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        875,773
                        
                        
                        
                        875,773Total
                        
                        
                        35,516,218
                        
                        
                        $
                        35,517
                        
                        
                        $
                        20,491,419
                        
                        
                        $
                        20,526,935
 
 10.
                  Derivative
      Warrant Liability
 
 The
Company has warrants outstanding with price protection provisions that allow for
the reduction in the exercise price of the warrants in the event the Company
subsequently issues stock at a price lower than the exercise price of the
warrants.  The Company has historically issued warrants with price
protection provisions in connection with financing to support its ongoing
operational and development activities.  The Company accounts for its
warrants with price protection in accordance with FASB ASC 815.
 
 Accounting
for Derivative Warrant Liability
 The
Company’s derivative warrant instruments are measured at fair value using the
Black-Scholes option pricing model which takes into account, as of the grant
date, the exercise price and expected life of the warrant, the current price of
the underlying stock and its expected volatility, expected dividends on the
stock and the risk-free interest rate for the term of the
warrant.  The Company recognizes all of its warrants with price
protection in its consolidated balance sheet as liabilities depending on the
rights or obligations under the contracts.  The liability is revalued
at each reporting period and changes in fair value are recognized currently in
the consolidated statements of operations under the caption “Change in fair
value of derivative warrant liability.”  The initial recognition and
change in fair value of the derivative warrant liability have no effect on the
Company’s cash flows.
 
 The
derivative warrants outstanding at October 31, 2009 are all currently
exercisable with a weighted-average remaining life of 6.1 years.
 
 The
various financial statement line items and totals affected by the adoption of
FASB ASC 815 for the previously reported interim periods ended October 31, 2009
are disclosed in Note 12 - Restatement of Previously Reported Interim
Period.
  11
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 Fair
Value Assumptions Used in Accounting for Derivative Warrant
Liability
 Fair
value is defined under FASB ASC 820 as the exchange price that would be received
for an asset or paid to transfer a liability (an exit price) in the principal or
the most advantageous market for an asset or liability in an orderly transaction
between participants on the measurement date. Valuation techniques used to
measure fair value must maximize the use of observable inputs and minimize the
use of unobservable inputs. The standard describes a fair value hierarchy based
on the levels of inputs, of which the first two are considered observable and
the last unobservable, that may be used to measure fair value which are the
following:
 
 · Level 1 -
Quoted prices in active markets for identical assets or
liabilities
 · Level 2 -
Inputs other than Level 1 that are observable, either directly or indirectly,
such as quoted prices for similar assets or liabilities; quoted prices in
markets that are not active; or other inputs that are observable or corroborated
by observable market data or substantially the full term of the assets or
liabilities
 · Level 3 -
Unobservable inputs that are supported by little or no market activity and that
are significant to the value of the assets or liabilities
 
 The
Company has determined its derivative warrant liability to be a Level 2 fair
value measurement and has used the Black-Scholes pricing model to calculate the
fair value.  This model was used because of its wide acceptance by the
investment community, relative simplicity and its emphasis on observable
inputs.   Key assumptions used in the fair value calculation are
as follows:
 
 October
      31,
                      
                      
                      August
      1,2009
                      
                      
                      2009Expected
      term
                      
                      
                      6.42
                      
                      
                      
                      6.67Volatility
                      
                      
                      98.0
                      %
                      
                      
                      96.9
                      %Risk-free
      interest rate
                      
                      
                      0.16
                      %
                      
                      
                      0.16
                      %Dividend
      yield
                      
                      
                      0
                      
                      
                      
                      0
 
 11.
                  Restatement
      of Previously Reported Interim
Period
 
 The
Company adopted Issue No. 07-5, “Determining Whether an Instrument (or Embedded
Feature) is Indexed to an Entity’s Own Stock” (now codified as FASB ASC 815)
effective as of August 1, 2009.  The Company reassessed certain
outstanding warrants under FASB ASC 815 and, due to a price adjustment clause
included in these warrants, determined that such warrants are no longer deemed
to be indexed to the Company’s stock and, therefore, no longer meet the scope
exception of FASB ASC 815. These warrants should have been reclassified to a
liability in the quarter ended October 31, 2009 and will be adjusted to fair
value on a quarterly basis going forward.
 
 The
Company’s adoption of FASB ASC 815 on August 1, 2009 relating to the warrants
carried as a derivative liability had the following effect on the consolidated
statement of operations for the previously reported interim period ended October
31, 2009:
 Three Months EndedOctober
      31, 2009Net
      loss as previously reported
                        
                        $
                        (8,138,656
                        )Change
      in fair value of derivative warrant liability
                        
                        
                        2,996,271Net
      loss as restated
                        
                        $
                        (5,142,385
                        )Previously
      reported loss per share – basic & diluted
                        
                        $
                        (0.03
                        )Restated
      loss per share – basic & diluted
                        
                        $
                        (0.02
                        )
 
 The
Company’s adoption of FASB ASC 815 relating to the warrants carried as a
derivative liability had the following effect on the consolidated balance sheets
as of the previously reported interim period October 31, 2009:
  12
  GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 PreviouslyReported
                        
                        
                        Correction
                        
                        
                        RestatedDerivative
      Warrant Liability
                        
                        $
                        —
                        
                        
                        $
                        10,131,138
                        
                        
                        $
                        10,131,138Total
      Liabilities
                        
                        $
                        10,684,117
                        
                        
                        $
                        10,131,138
                        
                        
                        $
                        20,815,255Additional
      paid in capital
                        
                        
                        327,892,433
                        
                        
                        
                        (13,127,409
                        )
                        
                        
                        314,765,024Deficit
      accumulated during the development stage
                        
                        
                        (302,180,145
                        )
                        
                        
                        2,996,271
                        
                        
                        
                        (299,183,874
                        )Total
      Stockholders’ Equity
                        
                        $
                        26,650,849
                        
                        
                        $
                        (10,131,138
                        )
                        
                        $
                        16,519,711
 
 12.
                Subsequent
      Events
 
 On
December 7, 2009, the Company entered into a long-term agreement with
Sanofi-Aventis Deutschland GmbH (“Sanofi-Aventis”).  Under this
agreement, sanofi-aventis will manufacture and supply recombinant human insulin
to the Company in the territories specified in the agreement.  Through
this agreement, the Company will procure recombinant human insulin crystals for
use in the production of Generex Oral-lynTM.  The terms of the supply
agreement require the Company to make certain minimum purchases of insulin from
sanofi-aventis through the period ended December 31,
2011.  Sanofi-Aventis will be the Company’s exclusive supplier in
certain countries and a non-exclusive supplier in other
countries.  Sanofi-Aventis may delete any territory from the agreement
in which Generex Oral-lynTM has not been approved for commercial sale by December
31, 2011.  The prices under the supply agreement are subject to
adjustment beginning after December 31, 2012.
 
 On
December 9, 2009, the Company entered into an agreement with a consultant for
financial services which extends until May 31, 2010.  In accordance with
the agreement, the Company issued a common stock purchase warrant for an
aggregate 1,000,000 shares of common stock.  The warrant is immediately
exercisable and the Company recorded a charge of approximately $505,000 at the
time of issuance.  A warrant for an additional 1,000,000 shares of common
stock will be issuable if certain milestones are met prior to the expiration of
the agreement on May 31, 2010.
 
 The
Company has evaluated subsequent events occurring after the balance sheet
through the date the consolidated financial statements were
issued.
  13


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





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





Forward-Looking
Statements





We have
made statements in this Item
2. Management's Discussion and Analysis of Financial Condition and Results of
Operations and elsewhere in this Quarterly Report on Form 10-Q of Generex
Biotechnology Corporation for the fiscal quarter ended October 31, 2009 that may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Act"). The Act limits our
liability in any lawsuit based on forward-looking statements that we have made.
All statements, other than statements of historical facts, included in this
Quarterly Report that address activities, events or developments that we expect
or anticipate will or may occur in the future, including such matters as our
projections, future capital expenditures, business strategy, competitive
strengths, goals, expansion, market and industry developments and the growth of
our businesses and operations, are forward-looking statements. These statements
can be identified by introductory words such as "expects," “anticipates,”
"plans," "intends," "believes," "will," "estimates," "projects" or words of
similar meaning, and by the fact that they do not relate strictly to historical
or current facts. Our forward-looking statements address, among other
things:





·
            our expectations concerning
      product candidates for our
technologies;





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





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





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





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





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





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





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





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




14




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





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





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





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





Additional
factors that could affect future results are set forth in Part I, Item 1A Risk Factors
of our Annual Report on Form 10-K for the year ended July 31, 2009 and in Part II, Item 1A. Risk
Factors of this Quarterly Report on Form 10-Q. We caution investors that
the forward-looking statements contained in this Quarterly Report must be
interpreted and understood in light of conditions and circumstances that exist
as of the date of this Quarterly Report. We expressly disclaim any obligation or
undertaking to update or revise forward-looking statements to reflect any
changes in management's expectations resulting from future events or changes in
the conditions or circumstances upon which such expectations are
based.




Compliance
with Smaller Reporting Company Disclosure Requirements




Generex
has determined that it qualifies as a “smaller reporting company” as defined in
Rule 12-b2 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and that it will take advantage of the Securities and Exchange
Commission’s recently adopted rules permitting a smaller reporting company to
comply with scaled disclosure requirements for smaller reporting companies on an
item-by-item basis. The Company has elected to comply with the scaled disclosure
requirements for smaller reporting companies with respect to Part I, Item 3 – Quantitative
and Qualitative Disclosures About Market Risk, which is not applicable to
smaller reporting companies.




Executive
Summary





Overview
of Business





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





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





Generex
Oral-lynTM





Regulatory
Approvals and Clinical Trials





To date,
we have received regulatory approval in Ecuador, India, Lebanon and Algeria for
the commercial marketing and sale of Generex Oral-lynTM.


15





In March
2008, we initiated Phase III clinical trials for this product in the U.S. with
the first patient screening for such trials at a clinical study site in Texas.
The patient screening at other participating clinical sites in the U.S. and
Canada is ongoing. Currently over 350 patients have been enrolled in 70 clinical
sites around the world, including sites in the United States, Canada, Bulgaria,
Poland, Romania, Russia and Ukraine.





In
November 2008, we submitted our product dossier to the Ministry of Health in
Damascus, Syria through Generex MENA, our branch office in Dubai. The dossier
includes Generex Oral-lynTM. We also submitted a file to register our proprietary
over-the-counter products, including Glucose RapidSprayTM, 7-Day Diet Aid SprayTM
(marketed as Crave-NxTM in the United States and Canada) and BaBOOM!TM Energy
Spray. The Syrian Ministry of Health will review the dossier and inform us of
any additional requests for information that it may have. There have been no
immediate queries, and we anticipate registration in early 2010.





In
December 2008, we submitted Generex Oral-lynTM dossier to the Ministry of Health
in Iraq (North) through Generex MENA, our branch office in Dubai and expect to
receive an approval to market the product early in 2010.





Special
Access Programs





In
October 2009, we received approval from the U.S. Food and Drug Administration
(the “FDA”) to charge to recover costs for the treatment use of Generex
Oral-lynTM in patients with Type 1 or Type 2 diabetes mellitus in the FDA’s
Treatment Investigational New Drug program that provides for early access to
investigational treatments for life-threatening or otherwise serious
conditions.





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





Marketing





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





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





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


16





Over-The-Counter
Glucose Product Line





Using our
buccal delivery technology, we have also launched a line of over-the-counter
glucose and energy sprays , including Glucose RapidSprayTM, Crave-NXTM 7-day Diet
Aid Spray, and BaBOOM!TM Energy Spray. We believe these products will complement
Generex Oral-lynTM and may provide us with an additional revenue stream prior to
the commercialization of Generex Oral-lynTM in other major jurisdictions. In
fiscal 2009, we received modest revenues from sales of our commercially
available products, our confectionary, Glucose RapidSprayTM, a flavored glucose
“energy” spray supplemented with vitamins, BaBOOM!TM Energy Spray, and a fat-free
glucose spray to aid in dieting, Crave-NXTM.  All three products are
available in retail stores and independent pharmacies in the United States and
Canada.  In addition, the products are being distributed in the Middle
East through our Generex MENA office in Dubai. We expect other distribution
territories for these products to include South Africa, India, South America and
other jurisdictions worldwide. We are currently pursuing European registrations
for these products.





Other
Product Candidates





In
October 2008, we announced the enrollment of subjects in our bioequivalence
clinical trial of MetControlTM, our proprietary Metformin medicinal chewing gum
product. The protocol for the study is an open-label, two-treatment, two-period,
randomized, crossover study comparing MetControlTM and immediate release
MetforminTM tablets in healthy volunteers. The study results, that we received
and analyzed in December 2008 demonstrated bioequivalence and will allow us to
proceed with additional research and development initiatives and consider
regulatory agency registration applications.  We are compiling the
data from this study and expect to file with the regulatory agency in early
2010.





Our
subsidiary, Antigen Express, concentrates on developing proprietary vaccine
formulations that work by stimulating the immune system to either attack
offending agents (i.e., cancer cells, bacteria, and viruses) or to stop
attacking benign elements (i.e., self proteins and allergens). Our
immunomedicine products are based on two platform technologies and are in the
early stages of development. We continue clinical development of Antigen’s
synthetic peptide vaccines designed to stimulate a potent and specific immune
response against tumors expressing the HER-2/neu oncogene for patients with
HER-2/neu positive breast cancer in a Phase II clinical trial and patients with
prostate cancer and against avian influenza in two Phase I trials. An additional
Phase I trial has been initiated recently in patients with either breast or
ovarian cancer.  The synthetic vaccine technology has particularly
advantages for pandemic or potentially pandemic viruses, such as the H5N1 avian
and H1N1 swine flu.  In addition to pandemic influenza viruses,
development efforts also are underway for seasonal influenza virus, HIV, HPV,
melanoma, ovarian cancer, allergy and Type I diabetes mellitus. We have
established collaborations with clinical investigators at academic centers to
advance these technologies.





Competition





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





Brief
Company Background





We are a
development stage company. From inception through the end of the fiscal quarter
ended October 31, 2009, we have received only limited revenues from operations.
In the fiscal years ended July 31, 2009 and 2008, we received approximately
$1,118,509 and $124,891 in revenue. The revenue in fiscal 2009 included $550,000
relating to an upfront license fee for the signing of a license and distribution
agreement for Generex Oral-lynTM, while the remainder of the revenue in both
fiscal periods pertained to the sale of our confectionary products. These
numbers do not reflect deferred sales to customers during the respective periods
with the right of return.





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


17





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





Accounting
for Research and Development Projects





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





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





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





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





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





Generex
Oral-lynTM was approved for importation and commercial sale in Algeria in May
2009. We have entered into a subdistribution agreement with Continental Pharm
Laboratoire and officially launched the product in October 2009.





We have
not yet recognized any revenue from the sale of our oral insulin product in any
of the four countries where it is currently approved for commercial
sale.





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





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





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


18




Most of
our buccal delivery research and development activities to date have involved
developing our platform technology for use with insulin. Insubstantial amounts
have been expended on projects with other drugs, including morphine and
fentanyl, and those projects involved a substantial amount of platform
technology development. As a result, we have not made significant distinctions
in the accounting for research and development expenses among products, as a
significant portion of all research has involved improvements to the platform
technology in connection with insulin, which may benefit all of our potential
buccal products. During the three months ended October 31, 2009, approximately
85% of our $3,075,769 in research expenses was attributable to insulin and
platform technology development, and we did not have any research expenses
related to morphine, fentanyl or other buccal projects.  During the
three months ended October 31, 2008, approximately 88% of our $4,355,689 in
research expenses was attributable to insulin and platform technology
development, and we did not have any research expenses related to morphine,
fentanyl or other buccal projects.





Approximately
15%, or $446,346, of our research and development expenses for the three months
ended October 31, 2009 was related to Antigen's immunomedicine products
compared to approximately 12%, or $510,660, of our research and development
expenses for the three months ended October 31, 2008.  Because
these products are in initial phases of clinical trials or early, pre-clinical
stage of development (with the exception of the Phase II clinical trials of
Antigen HER-2/neu positive breast cancer vaccine that are underway), all of the
expenses were accounted for as basic research and no distinctions were made as
to particular products. Due to the early stage of development, we cannot predict
the timing of completion of any products arising from this technology, or when
products from this technology might begin producing revenues.





Critical
Accounting Policies





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





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





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





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





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


19


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





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





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





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





Derivative warrant
liability.  FASB ASC 815, Derivatives and Hedging, requires all
derivatives to be recorded on the balance sheet at fair value for fiscal years
beginning after December 15, 2008.  As a result, certain derivative
warrant liabilities are now separately valued as of August 1, 2009 and accounted
for on the Company’s balance sheet, with any changes in fair value recorded in
earnings.  The Company uses the Black-Scholes option-pricing model to
estimate fair value because of its relative simplicity and because it embodies
all of the requisite assumptions necessary to fair value these
instruments.  Key assumptions of the Black-Scholes option-pricing
model include the market price of the Company’s stock, applicable volatility
rates, risk-free interest rates and the instrument’s remaining
term.  These assumptions require significant management
judgment.  In addition, changes in any of these variables during a
period can result in material changes in the fair value (and resultant gains or
losses) of this derivative instrument.





Results
of Operations


Three
Months Ended October 31, 2009 Compared to Three Months Ended October 31,
2008





As
described in Note 11 to the financial statements, we reassessed certain
outstanding warrants under Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 815, Derivatives and Hedging for the
quarter ended October 31, 2009.  Due to a price adjustment clause
included in these warrants, such warrants were no longer deemed to be indexed to
our stock and therefore, no longer met the scope exception of ASC 815. These
warrants should have been reclassified to a liability and adjusted to fair value
at the end of the reporting period.  The impact to the consolidated
statement of operations for the three months ended October 31, 2009 was a gain
of $2,996,271.





Our net
loss for the quarter ended October 31, 2009 was $5,142,385 versus $11,697,184 in
the corresponding quarter of the prior fiscal year. The decrease in net loss in
this fiscal quarter versus the corresponding quarter of the prior fiscal year is
primarily due to the prior year’s quarter interest expense of $4,429,388, as
well as a gain in the current year’s quarter due to the revaluation of the
derivative warrant liability of $2,996,271.  The prior year quarter’s
interest charge consisted mainly of non-cash interest charges recorded in
connection with our secured convertible debentures.  Interest expense
for the current year quarter was $52,401.  The decrease in net loss
was partially offset by the increase in our general and administrative expenses
and selling and marketing expenses and the decrease in research and development
expenses.  Our operating loss for the quarter ended October 31, 2009
increased to $8,181,433 compared to $7,524,646 in the first fiscal quarter of
2008.  The increase in operating loss resulted from an increase in
general and administrative expenses (to $3,825,265 from $2,847,913) and an
increase in selling expense (to $1,298,704 from $837,198), offset by a decrease
in research and development expenses (to $3,075,769 from $4,355,689). Our
revenues in the first quarter ended October 31, 2009 decreased to $97,542 from
$538,346 for the quarter ended October 31, 2008 reflecting only the sales
of our over-the-counter products in the current fiscal year quarter, while the
comparative prior year quarter included an upfront, non-refundable $500,000
license fee related to our Oral-lynTM product.


20





The
decrease in research and development expenses in the last fiscal quarter versus
the comparative quarter in the previous fiscal year, is primarily due to timing
differences related to the clinical costs associated with the global Phase III
clinical trials of our oral insulin product and platform technology, as well as
the timing of earlier stage (pre-clinical, Phase I and Phase II) clinical trials
related to the Antigen immunotherapy products versus the previous fiscal year’s
quarter.  The increase in general and administrative expenses is
primarily related to the non-cash, one time stock option modification charge of
$875,773 in the quarter ended October 31, 2009.  The increase in
selling expenses for the quarter ended October 31, 2009 versus the prior year
comparative quarter is associated with increased advertising and promotion of
our over-the-counter products, as well as the costs associated with our MENA
sales office in Dubai.





Our
interest expense in the first quarter of fiscal 2009 decreased to $52,401,
compared to interest expense of $4,429,388 in the first quarter of fiscal 2008,
due to interest expense and costs of the repriced warrant recognized on the
secured convertible notes issued in March 2008 in connection with a private
placement recognized in the prior year quarter, but not in the current
year.   Our interest income decreased to $10,085 in the first quarter
of fiscal 2009, compared to $168,465 in the same quarter for the last year,
primarily due to lower market interest rates and lower average cash
balances.  We received a slightly lower income from rental operations
(net of expense) of $84,593 in the first quarter of fiscal 2009 compared to
$88,380 in the same quarter for the last year.  The change in fair
value of the warrants carried as a derivative liability contributed a gain of
$2,996,271 in the current quarter.  As the related accounting policy
was adopted at the beginning of the current fiscal year, there was no similar
adjustment in the comparative previous fiscal year quarter.




Financial
Condition, Liquidity and Resources





Sources
of Liquidity





To date
we have financed our development stage activities primarily through private
placements of our common stock and securities convertible into our common
stock.





As of
October 31, 2009, we believed that our anticipated cash position was sufficient
to meet our working capital needs for the next twelve months based on the pace
of our planned activities.  Beyond that, we anticipate that we will
require additional funds to support our working capital requirements or for
other purposes.





While we
have generally been able to raise equity capital as required, our cash balances
were very low during portions of fiscal 2009, although we successfully raised
over $31 million (net of issuance costs and expenses) during the period from May
2009 to September 2009.  Unforeseen problems with our clinical
program, manufacturing and commercialization plans in Ecuador and India or
further negative developments in general economic conditions could interfere
with our ability to raise additional equity capital as needed, or materially
adversely affect the terms upon which such capital is available.  Our
inability to obtain required funding will have a material adverse effect on one
or more of our research or development programs and curtail some of our
commercialization efforts.





Management
may seek to meet all or some of our operating cash flow requirements through
financing activities, such as private placement of our common stock, at-market
stock issuance programs, preferred stock offerings and offerings of debt and
convertible debt instruments, as well as through merger or acquisition
opportunities.  We have filed a shelf registration statement with the
Securities and Exchange Commission (“SEC”) to register an indeterminate number
of shares of common stock and preferred stock and an indeterminate number of
warrants and units, the aggregate initial offering price of which is not to
exceed $150,000,000.


21





We
conducted offerings in August and September of 2009, pursuant to this
registration statement as described below and raised an aggregate of $16.4
million in net proceeds.  On October 14, 2009, we entered into an At
Market Issuance Sales Agreement with Wm Smith& Co. under which we may sell
an aggregate of $20,000,000 in gross proceeds of our common stock from time to
time through Wm Smith, as the agent for the offer and sale of the common stock;
however, we determined in late October 2009, that in light of general market
conditions, we would not exercise our right to issue and sell shares of our
common stock under the At Market Issuance Sales Agreement until further
notice.





Management
is actively pursuing industry collaboration activities, including product
licensing and specific project financing.  To secure a reliable
long-term insulin supply for our future commercial needs, we entered into a
long-term agreement with Sanofi-Aventis Deutschland GmbH (“Sanofi-Aventis”), on
December 7, 2009.  Under this agreement, sanofi-aventis will
manufacture and supply recombinant human insulin to us in the territories
specified in the agreement.  Through this agreement, we will procure
recombinant human insulin crystals for use in the production of Generex
Oral-lynTM.  The terms of the supply agreement require us to make
certain minimum purchases of insulin from sanofi-aventis through the period
ended December 31, 2011.  Sanofi-Aventis will be our exclusive
supplier in certain countries and a non-exclusive supplier some other
countries.  Sanofi-Aventis may delete any territory from the agreement
in which Generex Oral-lynTM has not been approved for commercial sale by December
31, 2011.  The prices under the supply agreement are subject to
adjustment beginning after December 31, 2012.





We
believe that the commencement of Phase III clinical trial trials for Oral-lynTM
in the United States and Canada represents a significant milestone event. We
also anticipate that the commercial launch of Oral-lynTM in India, Lebanon and
Algeria, may provide us with revenue in 2010.  We believe that the
successful commercial launch of Oral-lynTM in India and other countries where we
have approval would enhance our ability to access additional sources of
funding.  We will continue to require substantial funds to continue
research and development, including preclinical studies and clinical trials of
our product candidates, and to commence sales and marketing efforts if the FDA
or other regulatory approvals are obtained.





Financing
– August 2009





On August
6, 2009, we and certain investors entered into a securities purchase agreement
pursuant to which we sold an aggregate of 8,558,013 shares of our common stock
and warrants exercisable for up to 2,995,305 shares of our common stock to the
investors. The purchase price of each unit (comprised of one share and one
warrant to purchase thirty-five percent (35%) of one share of common stock) was
$0.6602, and the exercise price per share of the warrants is
$0.79.  The warrants are exercisable for a period of 5 years beginning
183 days after the closing date.  The net proceeds to us from the
registered direct public offering, after deducting placement agent fees and our
offering expenses, were approximately $5,200,000.




The
shares and the warrants were issued pursuant to a prospectus supplement filed
with the Securities and Exchange Commission on August 6, 2009, in connection
with a takedown from our shelf registration statement on Form S-3 (File
No. 333-139637), as amended, which became effective on February 23, 2007
(the “Shelf Registration Statement”).




Midtown
Partners & Co., LLC (“Midtown”) acted as our exclusive placement agent
pursuant to the Placement Agency Agreement that we entered into with Midtown on
June 8, 2009.  Pursuant to the Placement Agency Agreement, we
paid Midtown a cash fee in the aggregate amount of $213,000.  This fee
represents 4% of the gross purchase price paid for the shares and warrants at
the closing by certain specified investors and 2% of the gross purchase price
paid for the shares and warrants at the closing by the other
investors.  In addition, we issued Midtown, or its permitted assigns,
a five-year warrant to purchase up to 577,666 shares of our common stock
representing 5% of the sum of the number of shares of common stock issued at the
closing, and (ii) the number of shares of common stock issuable upon exercise of
all warrants issued at the closing. The shares underlying Midtown’s warrant will
be issued pursuant to the prospectus supplement. The warrant provides for
cashless exercise in the event there is no registration statement covering the
underlying warrant shares.  The exercise price per share is $0.79. We
also reimbursed the placement agent for certain fees and legal expenses
reasonably incurred in connection with this offering.


22





Financing
– September 2009





On
September 14, 2009, we and certain investors entered into a securities purchase
agreement pursuant to which we sold an aggregate of 15,312,500 shares of our
common stock and warrants exercisable for up to 5,053,125 shares of our common
stock to the investors. The purchase price of each unit (comprised of one share
and one warrant to purchase thirty-three percent (33%) of one share of common
stock) was $0.80, and the exercise price per share of the warrants is
$1.00.  The warrants are exercisable for a period of 5 years beginning
183 days after the closing date.  The net proceeds to us from the
registered direct public offering, after deducting placement agent fees and our
offering expenses, were approximately $11,660,000.




The
shares and the warrants were issued pursuant to a prospectus supplement filed
with the Securities and Exchange Commission on September 14, 2009, in connection
with a takedown from the Shelf Registration Statement.





Pursuant
to an amendment to the Placement Agency Agreement entered into with Midtown on
June 8, 2009 and a Placement Agency Agreement entered in to with Maxim
Group LLC (“Maxim”) on September 11, 2009, we paid each of Midtown and
Maxim cash fees in the aggregate amount of $245,000.  This fee
represented 4% of the gross purchase price paid for the shares and warrants at
the closing by certain specified investors brought to the investment by each
respective placement agent and 2% of the gross purchase price paid for the
shares and warrants at the closing by the other investors.  In
addition, we issued to each of Midtown and Maxim, or their permitted assigns, a
five-year warrant to purchase up to 253,571 shares of common stock of the
company representing (A) 2.5% of the sum of (i) the number of shares issued at
the closing to investors introduced to the transaction by Midtown or Maxim, as
the case may be, and (ii) the number of shares issuable upon exercise of all
warrants issued at the closing to investors introduced to the transaction by
Midtown or Maxim, as the case may be, and (B) 1.25% of the sum of (i) the number
of shares issued at the closing to investors which were not introduced to the
transaction by a registered broker-dealer, and (ii) the number of shares
issuable upon exercise of all warrants issued at the closing to investors which
were not introduced to the transaction by a registered broker-dealer. The shares
underlying Midtown and Maxim’s warrant were issued pursuant to the prospectus
supplement. The warrants provide for cashless exercise in the event there is no
registration statement covering the underlying warrant shares.  The
exercise price per share is $1.00. We also reimbursed the placement agents for
certain fees and legal expenses reasonably incurred in connection with this
offering.





Proceeds
from Warrant Exercises





We may
receive additional proceeds from the exercise of warrants issued in the private
placements conducted in June, August and September 2009, although some of the
warrants include a cashless exercise feature.  In the June 2009
private placement, we sold an aggregate of 17,200,000 shares of our common stock
and warrants exercisable for up to 8,600,000 shares of our common stock to
investors and issued Midtown, our exclusive placement agent for the transaction,
a five-year warrant to purchase up to 244,926 shares of our common stock . 
As of March 16, 2010, all of the warrants issued in the June, August and
September 2009 private placements will be exercisable.  At December
10, 2009, outstanding warrants issued in connection with the June, August and
September 2009 private placements were as follows:




Date Issued
                        
                        Aggregate No. of
                          Shares Unexercised
                        
                        
                        Exercise
                          Price
                        
                        Expiration DateJune
      15, 2009
                        
                        8,844,926
                        
                        
                        0.76
                        
                        December
      15, 2014August
      6, 2009
                        
                        3,572,971
                        
                        
                        0.79
                        
                        February
      4, 2015September
      14, 2009
                        
                        6,022,651
                        
                        
                        1.00
                        
                        March
      15,
2015


23





In
addition, we may receive additional proceeds from the exercise of warrants
issued in connection with the securities purchase agreement and related
documents that we entered into on March 31, 2008 with existing institutional
investors relating to a private placement of 8% secured convertible notes (the
“Notes”) and warrants (the “Series Warrants”) for aggregate gross proceeds to us
of $20,650,000.  As of June 1, 2009, the outstanding principal balance
and accrued interest on the Notes were satisfied in full.





The
Series Warrants issued in connection with the March 2008 securities purchase
agreement included:





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





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





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





The
initial exercise price of each Series Warrant was $1.21.  The exercise
price of the Series Warrants was subsequently reduced initially to $0.50 and
then to $0.33 as a result of an anti-dilution provision triggered by the May
2009 private placement.  The Series Warrants include a cashless
exercise feature.  At October 31, 2009, outstanding Series
Warrants were as follows:





Date Issued
                        
                        Aggregate No. of
                          Shares Unexercised
                        
                        
                        Exercise
                          Price*
                        
                        Expiration DateMarch
      31, 2008
                        
                        
                        1,768,231
                        
                        
                        $
                        0.33
                        
                        January
      29, 2010March
      31, 2008
                        
                        
                        14,330,603
                        
                        
                        $
                        0.33
                        
                        March
      31, 2016March
      31, 2008
                        
                        
                        7,690,902
                        
                        
                        $
                        0.33
                        
                        September
      30,
2016


*Subject
to anti-dilution adjustments upon issuance of securities at a price per share of
common stock less than the then applicable exercise price or the market price of
our common stock at that time, whichever is lower.  Due to the
anti-dilution adjustment provision of these warrants, they have been
reclassified on the Company’s balance sheet as a liability under the caption
“Derivative Warrant Liability” with any changes in fair value at each reporting
period recorded in earnings in accordance with ASC 815.





At
Market Issuance Agreement





On
October 14, 2009, we entered into an At Market Issuance Sales Agreement
(the “Agreement”), with Wm Smith & Co. (“Wm Smith”), under which we may sell
an aggregate of $20,000,000 in gross proceeds of our common stock from time to
time through Wm Smith, as the agent for the offer and sale of the common stock.
Wm Smith may sell the common stock by any method permitted by law, including
sales deemed to be an “at the market” offering as defined in Rule 415 of
the Securities Act, including without limitation sales made directly on NASDAQ
Capital Market, on any other existing trading market for the common stock or to
or through a market maker. Wm Smith may also sell the common stock in privately
negotiated transactions, subject to Generex’s prior approval.  We will
pay Wm Smith a commission not to exceed 3% of the gross proceeds of the sales
price of all common stock sold through it as sales agent under the
agreement.


24





The sales
agreement will terminate on the earliest of (1) the sale of all of the
common stock subject to the agreement, or (2) termination of the agreement
by Generex or Wm Smith. Wm Smith may terminate the sales agreement at any time
in certain circumstances, including the occurrence of a material adverse change
that, in Wm Smith’s reasonable judgment, may impair its ability to sell the
common stock, Generex’s failure to satisfy any condition under of the agreement
or a suspension or limitation of trading of our common stock on NASDAQ. We may
terminate the sales agreement at any time upon 10 days prior notice, and Wm
Smith may terminate the Agreement at any time upon 10 days prior
notice.





We
announced on October 29, 2009, that, in light of general market conditions, we
will not exercise our right to issue and sell shares of our common stock under
the sales agreement until further notice.





Cash
Flows for the Three Months Ended October 31, 2009





For the
three months ended October 31, 2009, we used $5,661,737 in cash to fund our
operating activities. The use for operating activities included a net loss of
$5,142,385, a net increase in accounts receivable of $26,542, an increase of
$145,682 in inventory, an increase of $238,187 in other current assets and a
decrease in deferred revenue of $33,702, offset by an increase of $1,168,647 in
accounts payable and accrued expenses.





The use
of cash was offset by non-cash increases of approximately $199,702 related to
depreciation and amortization, $907,986 in stock-based compensation to employees
and $644,877 in stock-based compensation issued in exchange for services
rendered by consultants. There was also a non-cash gain of $2,996,271 related to
the change of fair valuation of the derivative warrant liability at October 31,
2009.





We had
net cash outflows from investing activities of $174,883 in the three months
ended October 31, 2009, representing payments for property and equipment of
$132,646 and costs incurred for patents of $42,237.





We had
net cash flows provided by financing activities of $17,884,716 in the three
months ended October 31, 2009.  We received $16,400,671 from
issuances of common stock in our August and September registered direct
offerings.  We received $1,517,940 in cash proceeds from exercises of
warrants.  We made payments related to our capital leases in the
amount of $10,403 and long-term debt in the amount of $23,492.





Our net
working capital at October 31, 2009 increased to $19,775,939 from $7,561,375 at
July 31, 2009, which was attributed largely to the net proceeds raised from the
issuance of common stock and exercises of warrants, offset by our net loss for
the first quarter of fiscal 2010.





Funding
Requirements





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





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





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





·
            the advancement of our products
      in development;




25




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





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





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





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





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





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





·
            the receptivity of the financial
      market to biopharmaceutical
companies.





Off-Balance
Sheet Arrangements





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





Certain
Related Party Transactions




We
utilize a management company to manage all of our real properties. The property
management company is owned by Ms. Perri, Ms. Gluskin and the estate of Mark
Perri, our former Chairman of the Board. In the three month period ended October
31, 2009 and the fiscal year ended July 31, 2009, we paid the management company
approximately $13,375 and $47,981, respectively, in management fees. We believe
that the amounts paid to the management company approximate the rates that would
be charged by a non-affiliated property management company.





Consulting Fees. Peter
Amanatides, a former director, is the Senior Vice-President and Chief Operating
Officer of PharmaLogika, Inc., a private consulting firm in the pharmaceuticals
regulatory field. At October 31, 2009, we accrued a balance of $50,000
in fees to PharmaLogika. We do not expect to pay any further fees to
PharmaLogika going forward. Mr. Amanatides is neither a director nor a
shareholder of PharmaLogika.





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




See Part III, Item 13 – Certain
Relationships and Related Transactions, and Directors Independence in our
Annual Report on Form 10-K for the year ended July 31, 2009 for further
descriptions of our transactions with related parties during
2009.


26





New
Accounting Pronouncements





In
November 2007, the FASB issued guidance related to accounting for collaborative
arrangements. This guidance defines a collaborative arrangement as a contractual
arrangement in which the parties are (i) active participants to the
arrangement; and (ii) exposed to significant risks and rewards that depend
upon the commercial success of the endeavor. It also addresses the appropriate
statement of operations presentation for activities and payments between the
participants in a collaborative arrangement as well as for costs incurred and
revenue generated from transactions with third parties. This guidance is
effective for our fiscal year beginning August 1, 2009. The adoption of
this guidance did not have a significant impact on our consolidated financial
statements.





In
December 2007, the FASB issued an amendment to an existing accounting standard
which provides guidance related to business combinations. The amendment retains
the fundamental requirements that the acquisition method of accounting be used
for all business combinations and for an acquirer to be identified for each
business combination. This amendment also establishes principles and
requirements for how the acquirer: a) recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any
non-controlling interest in the acquiree; b) recognizes and measures the
goodwill acquired in the business combination or a gain from a bargain purchase
and c) determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination. This amendment applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. An entity may not
apply it before that date. This guidance is effective for our fiscal year
beginning August 1, 2009. The adoption of this guidance did not have a
significant impact on our consolidated financial statements.





In
December 2007, the FASB issued guidance related to non-controlling interests in
consolidated financial statements. This guidance amends previously issued
guidance to establish accounting and reporting standards for the non-controlling
(minority) interest in a subsidiary and for the deconsolidation of a subsidiary.
It clarifies that a non-controlling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. This guidance is effective for our fiscal
year beginning August 1, 2009. The adoption of this guidance did not have a
significant impact on our consolidated financial statements.





In April
2008, the FASB issued guidance related to determining the useful life of
intangible assets. This guidance amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset. The objective of the guidance is to improve the
consistency between the useful life of a recognized intangible asset and the
period of expected cash flows used to measure the fair value of the asset. The
adoption of this guidance did not have a significant impact on our consolidated
financial statements.





In May
2008, the FASB issued guidance related to accounting for convertible debt
instruments that may be settled in cash upon conversion (including partial cash
settlements).”  This guidance requires a portion of this type of
convertible debt to be recorded as equity and to record interest expense on the
debt portion at a rate that would have been charged on nonconvertible debt with
the same terms. The adoption of this guidance did not have a significant impact
on our consolidated financial statements.





In June
2008, the FASB issued guidance related to determining whether instruments
granted in share-based payment transactions are participating
securities.  Securities participating in dividends with common stock
according to a formula are participating securities. This guidance determined
that unvested shares of restricted stock and stock units with nonforfeitable
rights to dividends are participating securities. Participating securities
require the “two-class” method to be used to calculate basic earnings per share.
This method lowers basic earnings per common share. This guidance is effective
for our fiscal year beginning August 1, 2009. The adoption of this guidance
did not have a significant impact on our consolidated financial
statements.


27





In
June 2008, the FASB reached a consensus regarding the determination of
whether an instrument (or an embedded feature) is indexed to an entity’s own
stock, which is the first part of the scope exception related to accounting for
derivative instruments and hedging activities.   This guidance is
effective for our fiscal year beginning August 1, 2009. The Company
determined that certain of its warrants with price protection provisions are not
considered to be indexed to the Company’s own stock, do not meet the scope
exception and, thus, should be accounted for as a liability.  The
adoption of this guidance resulted in the recognition of income of $2,996,271
within the Company’s consolidated statements of operations for the three months
ended October 31, 2009 and a net reclassification of $10,131,138 of previously
reported stockholders’ equity to a liability under the caption “Derivative
Warrant Liability” as of October 31, 2009.





In June
2009, the FASB issued guidance which stipulates the FASB Accounting Standards
Codification is the source of authoritative U.S. GAAP recognized by the FASB to
be applied by nongovernmental entities. This guidance is effective for our
fiscal year beginning August 1, 2009. The adoption of this guidance did not
have a significant impact on our consolidated financial statements.





In
October 2009, the FASB issued ASU No. 2009-13, Revenue Recognition (Topic
605)—Multiple Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13
eliminates the residual method of allocation and requires the relative selling
price method when allocating deliverables of a multiple-deliverable revenue
arrangement. The determination of the selling price for each deliverable
requires the use of a hierarchy designed to maximize the use of available
objective evidence including, vendor specific objective evidence, third party
evidence of selling price, or estimated selling price.  ASU 2009-13 is
effective prospectively for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010, and must be
adopted in the same period using the same transition method. If adoption is
elected in a period other than the beginning of a fiscal year, the amendments in
these standards must be applied retrospectively to the beginning of the fiscal
year. Full retrospective application of these amendments to prior fiscal years
is optional. Early adoption of these standards may be elected. We are currently
evaluating the impact of these new accounting standards on our consolidated
financial statements.





Item
3. Quantitative and Qualitative Disclosures About Market Risk.




As a
smaller reporting company, we have elected scaled disclosure reporting
obligations and therefore is not required to provide the information in this
Item 3.




Item 4T.
Controls and Procedures




Evaluation
of Disclosure Controls and Procedures




Prior to
the filing of this Quarterly Report on Form 10-Q, an evaluation was performed
under the supervision of and with the participation of Generex’s management,
including the Chief Executive Officer (“CEO”) and Chief Financial Officer
(“CFO”), of the effectiveness of Generex’s disclosure controls and procedures.
Based on the evaluation, the CEO and CFO have concluded that, as of October 31,
2009, Generex’s disclosure controls and procedures are effective to ensure that
information required to be disclosed by Generex in reports that it files or
submits under the Exchange Act, is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms, and is accumulated and
communicated to Generex’s management, as appropriate, to allow timely decisions
regarding required disclosure.





Subsequent
to the date of that evaluation, management, including Generex’s CEO and our CFO,
have re-evaluated the effectiveness of the design and operation of the
disclosure controls and procedures as of the end of the period covered by this
report and have concluded that Generex’s disclosure controls and procedures were
effective to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements.  As reflected
in the foregoing conclusion, management does not consider the incorrect
application of accounting standards that resulted in the reclassification of
certain warrants to a liability in the three month period ended October 31, 2009
and adjustments to fair value at the end of such period as a failure in
Generex’s disclosure controls and procedures; however, management is addressing
the issue to ensure that it does not recur.


28





Changes
in Internal Control over Financial Reporting





During
the fiscal quarter ended October 31, 2009, there were no changes in Generex’s
internal controls over financial reporting that have materially affected, or are
reasonably likely to materially affect, Generex’s internal control over
financial reporting.





PART
II - OTHER INFORMATION





Item
1. Legal Proceedings.





None.




Item
1A. Risk Factors.





In
addition to the other information included in this Quarterly Report on Form
10-Q, you should carefully review and consider the factors discussed in Part I, Item 1A - Risk
Factors of our Annual Report on Form 10-K for the year ended July 31,
2009, certain of which have been updated below. These factors materially affect
our business, financial condition or future results of operations. The risks,
uncertainties and other factors described in our Annual Report on Form 10-K and
below are not the only ones facing our company. Additional risks, uncertainties
and other factors not presently known to us or that we currently deem immaterial
may also impair our business operations, financial condition or operating
results. Any of the risks, uncertainties and other factors could cause the
trading price of our common stock to decline substantially.





Risks
Related to Our Financial Condition





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





We are a
development stage company with a limited history of operations, and do not
expect sufficient revenues to support our operation in the immediately
foreseeable future.  In the three months ended October 31, 2009,
we received revenues of $97,542 from sales of our over-the-counter confectionary
products.  In the fiscal year ended July 31, 2009, we received modest
revenues of approximately $618,509 from sales of these products.  We
did not recognize any revenue from the sale of our oral insulin product in
Ecuador or India in fiscal 2009, although we did recognize $500,000 in licensing
fee revenue relating to the signing of a licensing and distribution agreement
for the sale of Generex Oral-lynTM in Korea. We do not expect to receive any
revenues in Ecuador until we enter into a definitive manufacturing and
distribution agreement with our business partner there. While we have entered
into a licensing and distribution agreement with a leading Indian-based
pharmaceutical company and insulin distributor, we do not anticipate significant
revenue from the initial commercial launch of Generex Oral-lynTM in India
sometime this fiscal year.  We also have entered in subdistribution
agreements in Lebanon and Algeria but do not expect any signification revenue
from the launch of the product in those countries in calendar year
2009.





To date,
we have not been profitable and our accumulated net loss available to
shareholders was $299,183,874 at October 31, 2009. Our losses have resulted
principally from costs incurred in research and development, including clinical
trials, and from general and administrative costs associated with our
operations. While we seek to attain profitability, we cannot be sure that we
will ever achieve product and other revenue sufficient for us to attain this
objective.




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


29




Risks
Related to the Market for Our Common Stock





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





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





Our
initial compliance period of 180 calendar days ending on January 20, 2009 was
subsequently extended until November 9, 2009 due to NASDAQ’s temporary
suspension of the minimum bid price requirement from October 16, 2008 until
August 3, 2009.





On
November 9, 2009, we received a letter from NASDAQ indicating that we had not
regained compliance with the $1.00 minimum bid price required for continued
listing under Listing Rule 5550(a)(2) within the grace period previously allowed
by NASDAQ following the initial notice of noncompliance on
July 23, 2008.




Pursuant
to Listing Rule 5810(c)(3)(A), NASDAQ has given us an additional 180 calendar
day compliance period because we met all other initial inclusion criteria (other
than the minimum bid price requirement) as of January 6,
2009.  Therefore, we have 180 calendar days, or until
May 5, 2010, to regain compliance with the rule. To regain compliance
with the minimum bid price requirement, the closing bid price of our common
stock must close at $1.00 per share or more for a minimum of ten consecutive
business days.





If, by
May 5, 2010, we do not regain compliance with Listing Rule 5550(a)(2), we will
receive written notification that our stock will be delisted.  At that
time, we may appeal the delisting determination to a NASDAQ Hearings
Panel.  An appeal to the Hearings Panel would stay the
delisting.  If we are not successful in such an appeal, our stock
would be delisted from the NASDAQ Capital Market and likely trade on NASDAQ’s
over-the-counter bulletin board, assuming we meet the requisite
criteria.





Our
recent equity financing will dilute current stockholders and could prevent the
acquisition or sale of our business.





The
equity financing transactions into which we have recently entered have and will
dilute current stockholders. Currently approximately 42,680,284 shares of common
stock are issuable upon exercise of the warrants that we issued on March 31,
2008, May 15, 2009, June 15, 2009, August 6, 2009 and September 14, 2009
(without regard to additional shares which may become issuable due to
anti-dilution adjustments or in connection with payments of interest), which
represents approximately 17% of the shares of common stock currently
outstanding.  Assuming the holders of the warrants convert and
exercise all of the warrants into shares of common stock, the number of shares
of issued and outstanding common stock will increase significantly, and current
stockholders will own a smaller percentage of the outstanding common stock of
Generex. The issuance of shares of common stock pursuant to the warrants will
also have a dilutive effect on earnings per share and may adversely affect the
market price of the common stock.





In
addition, the issuance of shares of common stock upon exercise of the warrants
sold in the offerings that closed on June 15, 2009, August 6, 2009 and September
14, 2009 and sold in our March 31, 2008 private placement could have an
anti-takeover effect because such issuance will make it more difficult for, or
discourage an attempt by, a party to obtain control of Generex by tender offer
or other means. The issuance of common stock upon the exercise of the warrants
will increase the number of shares entitled to vote, increase the number of
votes required to approve a change of control of the company, and dilute the
interest of a party attempting to obtain control of the
company.


30




If we
raise funds through one or more additional equity financings in the future,
including if we exercise our right to issue and sell shares under the sales
agreement with Wm Smith, it will have a further 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.





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





In the
fiscal quarter ended October 31, 2009, we sold common stock and other securities
in transactions in reliance upon exemptions from the registration requirements
of the Securities Act.





During
the three months ended October 31, 2009, we issued 12,000 shares of common stock
to American Capital Ventures, Inc. pursuant to an agreement with us for
financial services. The sale of such shares was exempt from registration under
the Securities Act in reliance upon Section 4(2) thereof.  We believe
that American Capital Ventures, Inc. is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D under the Securities Act. The
certificates issued for the shares of common stock will include a legend to
indicate that they are restricted. The sales of such securities did not involve
the use of underwriters, and no commissions were paid in connection
therewith.





During
the three months ended October 31, 2009, we issued 37,500 shares of our
restricted common stock as partial consideration for the provision of services
by The Abajian Group, LLC under a consulting agreement with us. William Abajian,
a Business Development Consultant to Generex, is a principal of The Abajian
Group, LLC. The sale of such shares was exempt from registration under the
Securities Act in reliance upon Section 4(2) thereof. We believe that The
Abajian Group, LLC. is an “accredited investor” as that term is defined in Rule
501(a) of Regulation D under the Securities Act. The certificates issued for the
shares of common stock will include a legend to indicate that they are
restricted. The sales of such securities did not involve the use of
underwriters, and no commissions were paid in connection therewith.





We have
issued shares of our common stock to The Investor Relations Group, Inc., a
consultant, pursuant to an agreement to provide us with investor
relation.  During the three months ended October 31, 2009, we issued
83,335 shares of common stock to The Investor Relations Group, Inc. The sale of
such shares was exempt from registration under the Securities Act in reliance
upon Section 4(2) thereof. We believe that The Investor Relations Group, Inc. is
an “accredited investor” as that term is defined in Rule 501(a) of Regulation D
under the Securities Act. The certificates issued for the shares of common stock
will include a legend to indicate that they are restricted. The sales of such
securities did not involve the use of underwriters, and no commissions were paid
in connection therewith.





We have
issued shares of our common stock to Ventures and Projects Management, Inc, a
consultant, pursuant to an agreement to provide us with investor relation
services through September 4, 2009.  During the three months ended
October 31, 2009, we issued 500,000 shares of common stock to Ventures and
Projects Management, Inc, pursuant to this agreement. The sale of such shares
was exempt from registration under the Securities Act in reliance upon Section
4(2) thereof. We believe that Ventures and Projects Management, Inc, is an
“accredited investor” as that term is defined in Rule 501(a) of Regulation D
under the Securities Act. The certificates issued for the shares of common stock
will include a legend to indicate that they are restricted. The sales of such
securities did not involve the use of underwriters, and no commissions were paid
in connection therewith.





We have
issued shares of our common stock to Seahawk Capital Partners, Inc, a
consultant, pursuant to an agreement to provide us with investor relation
services until October 11, 2010.  During the three months ended
October 31, 2009, we issued 60,000 shares of common stock to Seahawk Capital
Partners pursuant to this agreement. The sale of such shares was exempt from
registration under the Securities Act in reliance upon Section 4(2) thereof. We
believe that Seahawk Capital Partners is an “accredited investor” as that term
is defined in Rule 501(a) of Regulation D under the Securities Act. The
certificates issued for the shares of common stock included a legend to indicate
that they are restricted. The sales of such securities did not involve the use
of underwriters, and no commissions were paid in connection
therewith.


31





We have
issued shares of our common stock to Oceanus Capital LLC, a consultant, pursuant
to an agreement to provide us with investor relation.  During the
three months ended October 31, 2009, we issued 250,000 shares of common stock to
Oceanus Capital LLC. The sale of such shares was exempt from registration under
the Securities Act in reliance upon Section 4(2) thereof. We believe that
Oceanus Capital LLC is an “accredited investor” as that term is defined in Rule
501(a) of Regulation D under the Securities Act. The certificates issued for the
shares of common stock will include a legend to indicate that they are
restricted. The sales of such securities did not involve the use of
underwriters, and no commissions were paid in connection therewith.





Issuer
Purchases of Equity Securities





Neither
Generex nor any affiliated purchaser (as defined in Section 240.10 b-18(a)(3) of
the Exchange Act) purchased any of its equity securities during the fiscal
quarter ended October 31, 2009.





Item
3. Defaults Upon Senior Securities.





None.





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





None.





Item
5. Other Information.





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





Item
6. Exhibits.





Exhibits
are incorporated herein by reference or are filed with this quarterly report as
set forth in the Exhibit Index beginning on page 33 hereof.





SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





GENEREX BIOTECHNOLOGY CORPORATION(Registrant)Date: June
      11, 2010
              By:
              /s/ Anna E. GluskinAnna E. GluskinPresident and Chief Executive OfficerDate: June
      11, 2010
              By:
              /s/ Rose C. PerriRose C. PerriChief Financial Officer


32





EXHIBIT
INDEX




Exhibit
                Number
              
              Description of Exhibit(1)2
              
              Agreement
      and Plan of Merger among Generex Biotechnology Corporation, Antigen
      Express, Inc. and AGEXP Acquisition Inc. (incorporated by reference to
      Exhibit 2.1 to Generex Biotechnology Corporation’s Current Report on Form
      8-K filed on August 15, 2003)3(i)
              
              Restated
      Certificate of Incorporation of Generex Biotechnology Corporation
      (incorporated by reference to Exhibit 4.1 to Generex Biotechnology
      Corporation’s Post-Effective Amendment No. 1 to the Registration Statement
      on Form S-8 filed on October 26, 2009)3(ii)
              
              Amended
      and Restated By-Laws of Generex Biotechnology Corporation (incorporated by
      reference to Exhibit 3.2(ii) to Generex Biotechnology Corporation’s Report
      on Form 8-K filed December 5, 2007)4.1
              
              Form
      of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to
      Generex Biotechnology Corporation’s Registration Statement on Form S-1
      (File No. 333-82667) filed on July 12, 1999)4.2.1
              
              Form
      of Securities Purchase Agreement entered into with Cranshire Capital,
      L.P.; Gryphon Partners, L.P.; Langley Partners, L.P.; Lakeshore Capital,
      Ltd.; LH Financial; Omicron Capital; Photon Fund, Ltd.; Howard Todd
      Horberg and Vertical Ventures, LLC dated May 29, 2003 (incorporated by
      reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
      Form 10-Q/A for the quarter ended October 31, 2003 filed on August 13,
      2003)4.2.2
              
              Form
      of Registration Rights Agreement entered into with Cranshire Capital,
      L.P.; Gryphon Partners, L.P.; Langley Partners, L.P.; Lakeshore Capital,
      Ltd.; LH Financial; Omicron Capital; Photon Fund, Ltd.; Howard Todd
      Horberg and Vertical Ventures, LLC dated May 29, 2003 (incorporated by
      reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on
      Form 10-Q/A for the quarter ended October 31, 2003 filed on August 13,
      2003)4.2.3
              
              Form
      of Warrant granted to Cranshire Capital, L.P.; Gryphon Partners, L.P.;
      Langley Partners, L.P.; Lakeshore Capital, Ltd.; LH Financial; Omicron
      Capital; Photon Fund, Ltd.; Howard Todd Horberg and Vertical Ventures, LLC
      dated May 29, 2003 (incorporated by reference to Exhibit 4.3 to Generex
      Biotechnology Corporation’s Report on Form 10-Q/A for the quarter ended
      October 31, 2003 filed on August 13, 2003)4.3
              
              Form
      of replacement Warrant issued to warrant holders exercising at reduced
      exercise price in May and June 2003 (incorporated by reference to Exhibit
      4.13.7 to Generex Biotechnology Corporation’s Report on Form 10-K for the
      period ended July 31, 2003 filed on October 29, 2003)4.4.1
              
              Securities
      Purchase Agreement, dated December 19, 2003, by and among Generex
      Biotechnology Corporation and the investors named therein (incorporated by
      reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
      Form 8-K/A filed on March 24, 2004)4.4.2
              
              Registration
      Rights Agreement, dated December 19, 2003, by and among Generex
      Biotechnology Corporation and the investors named therein (incorporated by
      reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on
      Form 8-K/A filed on March 24, 2004)
  33





4.4.3
              
              Form
      of Warrant issued in connection with Exhibit 4.4.1 (incorporated by
      reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on
      Form 8-K/A filed on March 24, 2004)4.4.4
              
              Form
      of Additional Investment Right issued in connection with Exhibit 4.4.1
      (incorporated by reference to Exhibit 4.4 to Generex Biotechnology
      Corporation’s Report on Form 8-K/A filed on March 24,
  2004)4.5.1
              
              Securities
      Purchase Agreement, dated January 7, 2004, by and between Generex
      Biotechnology Corporation and ICN Capital Limited (incorporated by
      reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.5.2
              
              Registration
      Rights Agreement, dated January 7, 2004, by and between Generex
      Biotechnology Corporation and ICN Capital Limited (incorporated by
      reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.5.3
              
              Warrant
      issued in connection with Exhibit 4.5.1 (incorporated by reference to
      Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on March 1, 2004)4.5.4
              
              Additional
      Investment Right issued in connection with Exhibit 4.5.1 (incorporated by
      reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.6.1
              
              Securities
      Purchase Agreement, dated January 9, 2004, by and between Generex
      Biotechnology Corporation and Vertical Ventures, LLC (incorporated by
      reference to Exhibit 4.5 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.6.2
              
              Registration
      Rights Agreement, dated January 9, 2004, by and between Generex
      Biotechnology Corporation and Vertical Ventures, LLC (incorporated by
      reference to Exhibit 4.6 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.6.3
              
              Warrant
      issued in connection with Exhibit 4.6.1 (incorporated by reference to
      Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on March 1, 2004)4.6.4
              
              Additional
      Investment Right issued in connection with Exhibit 4.6.1 (incorporated by
      reference to Exhibit 4.8 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.7.1
              
              Securities
      Purchase Agreement, dated February 6, 2004, by and between Generex
      Biotechnology Corporation and Alexandra Global Master Fund, Ltd.
      (incorporated by reference to Exhibit 4.9 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on March 1,
2004)4.7.2
              
              Registration
      Rights Agreement, dated February 6, 2004, by and between Generex
      Biotechnology Corporation and Alexandra Global Master Fund, Ltd.
      (incorporated by reference to Exhibit 4.10 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on March 1,
2004)4.7.3
              
              Warrant
      issued in connection with Exhibit 4.7.1 (incorporated by reference to
      Exhibit 4.11 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on March 1, 2004)4.7.4
              
              Additional
      Investment Right issued in connection with Exhibit 4.7.1 (incorporated by
      reference to Exhibit 4.12 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1,
2004)




34





4.7.5
                
                Escrow
      Agreement, dated February 26, 2004, by and among Generex Biotechnology
      Corporation, Eckert Seamans Cherin & Mellott, LLC and Alexandra Global
      Master Fund, Ltd. (incorporated by reference to Exhibit 4.13 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on March 1,
      2004)4.8.1
                
                Securities
      Purchase Agreement, dated February 11, 2004, by and between Generex
      Biotechnology Corporation and Michael Sourlis (incorporated by reference
      to Exhibit 4.14 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on March 1, 2004)4.8.2
                
                Registration
      Rights Agreement, dated February 11, 2004, by and between Generex
      Biotechnology Corporation and Michael Sourlis (incorporated by reference
      to Exhibit 4.15 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on March 1, 2004)4.8.3
                
                Additional
      Investment Right issued in connection with Exhibit 4.8.1 (incorporated by
      reference to Exhibit 4.17 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.9.1
                
                Securities
      Purchase Agreement, dated February 13, 2004, by and between Generex
      Biotechnology Corporation and Zapfe Holdings, Inc. (incorporated by
      reference to Exhibit 4.18 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.9.2
                
                Registration
      Rights Agreement, dated February 13, 2004, by and between Generex
      Biotechnology Corporation and Zapfe Holdings, Inc. (incorporated by
      reference to Exhibit 4.19 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.9.3
                
                Warrant
      issued in connection with Exhibit 4.9.1 (incorporated by reference to
      Exhibit 4.20 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on March 1, 2004)4.9.4
                
                Additional
      Investment Right issued in connection with Exhibit 4.9.1 (incorporated by
      reference to Exhibit 4.21 Generex Biotechnology Corporation’s Report on
      Form 8-K filed on March 1, 2004)4.10.1
                
                Securities
      Purchase Agreement, dated June 23, 2004, by and among Generex
      Biotechnology Corporation and the investors named therein (incorporated by
      reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on July 14, 2004)4.10.2
                
                Registration
      Rights Agreement, dated June 23, 2004, by and among Generex Biotechnology
      Corporation and the investors (incorporated by reference to Exhibit 4.2 to
      Generex Biotechnology Corporation’s Report on Form 8-K filed on July 14,
      2004)4.10.3
                
                Form
      of Warrant issued in connection with Exhibit 4.10.1 (incorporated by
      reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on July 14, 2004)4.10.4
                
                Form
      of Additional Investment Right issued in connection Exhibit 4.10.1
      (incorporated by reference to Exhibit 4.4 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on July 14,
2004)4.11.1
                
                Securities
      Purchase Agreement, dated November 10, 2004, by and among Generex
      Biotechnology Corporation and the investors named therein (incorporated by
      reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on November 12,
2004)


35





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





4.16.1
              
              Agreement
      to Amend Additional Investment Right between Generex Biotechnology
      Corporation and Cranshire Capital, L.P. dated February 28, 2006
      (incorporated by reference to Exhibit 4.1 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on March 1,
  2006).


36





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


37





4.22.1
              
              Securities
      Purchase Agreement, dated as of March 31, 2008 among the Registrant and
      each of the purchasers named therein (incorporated by reference to Exhibit
      4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on
      April 2, 2008)4.22.2
              
              Form
      of 8% Secured Convertible Note, as amended (incorporated by reference to
      Exhibit 4.2 to Generex Biotechnology Corporation’s Registration Statement
      (333-150562) on Form S-3 filed on October 31, 2008)4.22.3
              
              Form
      of Series A Warrant, as amended (incorporated by reference to Exhibit 4.3
      to Generex Biotechnology Corporation’s Registration Statement on Form S-3
      (333-150562) filed on October 31, 2008)4.22.4
              
              Form
      of Series A-1 Warrant, as amended (incorporated by reference to Exhibit
      4.4 to Generex Biotechnology Corporation’s Registration Statement on Form
      S-3 (333-150562) filed on October 31, 2008)4.22.5
              
              Form
      of Series B Warrant, as amended (incorporated by reference to Exhibit 4.5
      to Generex Biotechnology Corporation’s Registration Statement on Form S-3
      (333-150562) filed on October 31, 2008)4.22.6
              
              Form
      of Series C Warrant, as amended (incorporated by reference to Exhibit 4.6
      to Generex Biotechnology Corporation’s Registration Statement on Form S-3
      (333-150562) filed on October 31, 2008)4.22.7
              
              Registration
      Rights Agreement, dated March 31, 2008, among Registrant and each of the
      purchasers under Securities Purchase Agreement (incorporated by reference
      to Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K
      filed on April 2, 2008)4.22.8
              
              Security
      Agreement (incorporated by reference to Exhibit 4.8 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on April 2,
      2008)4.22.9
              
              Form
      of Guaranty (incorporated by reference to Exhibit 4.9 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on April 2,
      2008)4.23.1
              
              Form
      of Securities Purchase Agreement, dated May 15, 2009, entered into between
      Generex Biotechnology Corporation and each investor in the offering
      (incorporated by reference to Exhibit 1.2 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on May 18, 2009)4.24.1
              
              Form
      of Securities Purchase Agreement, dated June 15, 2009, entered into
      between Generex Biotechnology Corporation and each investor in the
      offering (incorporated by reference to Exhibit 10.1 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on June 16,
      2009)4.24.2
              
              Form
      of Warrant issued in connection with Exhibit 4.24.1 (incorporated by
      reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on June 16, 2009)4.24.3
              
              Form
      of Warrant issued to Midtown Partners & Co., LLC in connection with
      Exhibit 4.24.1 (incorporated by reference to Exhibit 4.2 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on June 16,
      2009)4.25.1
              
              Form
      of Securities Purchase Agreement, dated August 6, 2009, entered into
      between Generex Biotechnology Corporation and each investor in the
      offering (incorporated by reference to Exhibit 10.1 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on August 6,
      2009)


38





4.25.2
              
              Form
      of Warrant issued in connection with Exhibit 4.25.1 (incorporated by
      reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on August 6, 2009)4.25.3
              
              Form
      of Warrant issued to Midtown Partners & Co., LLC in connection with
      Exhibit 4.25.1 (incorporated by reference to Exhibit 4.28 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on August 6,
      2009)4.26.1
              
              Form
      of Securities Purchase Agreement, dated September 11, 2009, entered into
      between Generex Biotechnology Corporation and each investor in the
      offering (incorporated by reference to Exhibit 10.1 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on September 15,
      2009)4.26.2
              
              Form
      of Warrant issued in connection with Exhibit 4.26.1 (incorporated by
      reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
      Form 8-K filed on September 15, 2009)4.26.3
              
              Form
      of Warrant issued to Midtown Partners & Co., LLC in connection with
      Exhibit 4.26.1 (incorporated by reference to Exhibit 4.2 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on September 15,
      2009)9
              
              Form
      of Voting Agreement entered into in connection with Exhibit 4.11.1
      (incorporated by reference to Exhibit 4.7 to Generex Biotechnology
      Corporation’s Report on Form 8-K filed on November 12,
    2004)10.1
              
              At
      Market Offering Issuance Agreement  dated October 14, 2009
      entered into between Generex Biotechnology Corporation and Wm Smith &
      Co, LLC (incorporated by reference to Exhibit 10.1 to Generex
      Biotechnology Corporation’s Report on Form 8-K filed on  October
      15, 2009)10.2
              
              Recombinant
      Human Insulin Active Ingredient Manufacturing and Supply Agreement entered
      into on December 7, 2009 by and  between Generex Biotechnology
      Corporation and Sanofi-Aventis Deutschland GmbH (incorporated by reference
      to Exhibit 10.2 to Generex Biotechnology Corporation’s Report on Form 10-Q
      filed on December 11, 2009) (subject to confidential
      treatment)31.1
              
              Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
              
              Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200232
              
              Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002





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


39