UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934.

For the quarterly period ended January 31, 1999

[ ]  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)


            IDAHO                                            82-0490211
 -------------------------------               --------------------------------
 (State of other jurisdiction of               (IRS Employer Identification No.)
 incorporation or organization)

                           33 HARBOR SQUARE, SUITE 202
                                TORONTO, ONTARIO
                                 CANADA M5J 2G2
                    (Address of principal executive offices)
                              
                                  416/364-2551
              (Registrant's telephone number, including area code)

                                 Not applicable
                --------------------------------------------------
               (Former name, former address and former fiscal year
                          if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
[ ] Yes     [X] No - subject to filing requirements since February 12, 1999

                      APPLICABLE ONLY TO CORPORATE ISSUERS

 The number of outstanding shares of the registrant's Common Stock, par value
$.001, was 13,363,586 as of March 22, 1999.

                                                                    Page 1 of 14

<PAGE>

                       GENEREX BIOTECHNOLOGY CORPORATION
                                      INDEX

PART 1: FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements - unaudited

         Consolidated Balance Sheets -
         January 31, 1999 and July 31, 1998 .................................  3

         Consolidated Statements of Operations
         for the three months ended January 31, 1999
         and 1998, the six months ended January 31, 1999
         and 1998, and cumulative from November 2, 1995, to
         January 31, 1999 ...................................................  4

         Consolidated Statements of Cash Flows
         for the six months ended January 31, 1999
         and 1998, and cumulative from November 1995, to
         January 31, 1999 ...................................................  5

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

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

PART II: OTHER INFORMATION

Item 1.  Legal Proceedings .................................................. 14

Item 5.  Other Information .................................................. 14

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

         Signatures ......................................................... 14


                                                                    Page 2 of 14
<PAGE>


Item I.  Consolidated financial statements

                        GENEREX BIOTECHNOLOGY CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                       January 31,         July 31,
                                                                          1999                1998   
                                                                       ------------       ------------
<S>                                                                    <C>                <C>         
         ASSETS

Current Assets:
   Cash                                                                $  3,094,694       $  2,090,827
   Restricted cash                                                             --              106,527
   Miscellaneous receivables                                                209,533            209,090
   Other current assets                                                     156,108            131,340
                                                                       ------------       ------------
         Total Current Assets                                             3,460,335          2,537,784

Property and Equipment, Net                                               2,379,137          1,634,447
Deposits                                                                     65,988             82,509
Due From Related Parties                                                    793,804          1,200,968
                                                                       ------------       ------------

         TOTAL ASSETS                                                  $  6,699,264       $  5,455,708
                                                                       ============       ============

         LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Accounts payable and accrued expenses                               $    674,703       $  1,253,004
   Current maturities of long-term debt                                     402,978            411,565
                                                                       ------------       ------------
         Total Current Liabilities                                        1,077,681          1,664,569

Long-Term Debt, Less Current Maturities                                     612,380            912,817
Due to Related Parties                                                      154,981            236,024
Commitments and Contingencies


Stockholders' Equity:
   Preferred stock, $.001 par value; authorized 1,000,000 shares,
     issued and outstanding 1,000 shares at January 31, 1999
     and July 31, 1998                                                            1                  1
   Common stock, $.001 par value; authorized 50,000,000 shares,
     issued and outstanding 13,341,586 and 11,971,272 shares at
     January 31, 1999 and July 31, 1998, respectively                        13,342             11,971
   Additional paid-in capital                                            14,195,435          9,162,329
   Deficit accumulated during the development stage                      (9,147,525)        (6,332,570)
   Accumulated other comprehensive income (loss)                           (207,031)          (199,433)
                                                                       ------------       ------------
         Total Stockholders' Equity                                       4,854,222          2,642,298
                                                                       ------------       ------------

         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $  6,699,264       $  5,455,708
                                                                       ============       ============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.
                                                                    Page 3 of 14

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                                       Cumulative
                                                                                                                           From
                                                                                                                        November 2,
                                                                                                                      1995 (Date of
                                                      For the Three Months Ended        For the Six Months Ended        Inception)
                                                             January 31,                       January 31,            to January 31,
                                                       1999             1998              1999             1998            1999  
                                                   ------------     ------------     ------------     ------------    --------------
<S>                                                 <C>              <C>             <C>               <C>            <C>      
Revenues                                           $       --       $       --       $       --       $       --      $       --

Operating Expenses:
   Research and development                             585,857          148,978        1,154,460          179,287       2,605,267
   Research and development - related party              26,362          129,331           44,017          150,786         264,235
   General and administrative                         1,087,957          595,016        1,451,474          870,888       5,735,400
   General and administrative - related party            66,267           70,157          131,430          141,955         445,758
                                                   ------------     ------------     ------------     ------------    ------------
       Total Operating Expenses                       1,766,443          943,482        2,781,381        1,342,916       9,050,660
                                                   ------------     ------------     ------------     ------------    ------------

Operating Loss                                       (1,766,443)        (943,482)      (2,781,381)      (1,342,916)     (9,050,660)

Other (Income) Expense:
   Interest income                                         --               --                (66)            --               (66)
   Interest expense                                      18,578             --             33,640             --            96,931
                                                   ------------     ------------     ------------     ------------    ------------

Net Loss                                           $ (1,785,021)    $   (943,482)    $ (2,814,955)    $ (1,342,916)   $ (9,147,525)
                                                   ============     ============     ============     ============    ============

Basic and Diluted Net Loss Per Common
   Share                                           $       (.14)    $       (.10)    $       (.22)    $       (.15) 
                                                   ============     ============     ============     ============
Weighted Average Number of Shares of
   Common Stock Outstanding                          13,029,867        9,379,825       12,637,233        9,192,040  
                                                   ============     ============     ============     ============
</TABLE>

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

                                                                    Page 4 of 14
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                               Cumulative   
                                                                                                   From     
                                                                                                November 2, 
                                                                                              1995 (Date of 
                                                             For the Six Months Ended           Inception)
                                                                    January 31,                to January 31,
                                                              1999               1998               1999 
                                                          ------------       ------------       ------------
<S>                                                      <C>                <C>                <C>          
Cash Flows From Operating Activities:
Net loss                                                 $ (2,814,955)      $ (1,342,916)      $ (9,147,525)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
       Depreciation                                            19,277               --               63,362
       Common stock issued for services rendered              245,408             10,932            807,661
       Stock options and warrants issued for
         services rendered                                    200,000            234,000            684,000
       Preferred stock issued for services rendered              --                 --                  100
       Changes in operating assets and liabilities:
         Miscellaneous receivables                               --                 --             (170,179)
         Other current assets                                 (24,387)            29,268           (160,964)
         Accounts payable and accrued liabilities             158,984            (34,957)         1,484,930
         Other, net                                            (9,215)            69,545            101,102
                                                         ------------       ------------       ------------
         Net Cash Used in Operating Activities             (2,224,888)        (1,034,128)        (6,337,513)

Cash Flows From Investing Activities:
   Purchase of property and equipment                        (676,994)           (15,765)          (752,767)
   Change in restricted cash                                  105,655               --               (5,595)
   Change in deposits                                          16,442               --               (1,159)
   Change in notes receivable                                    --               64,645               --
   Change in due from related parties                        403,459              8,232         (2,570,927)
   Other, net                                                    --                 --               89,683
                                                         ------------       ------------       ------------
         Net Cash Provided By (Used in)
           Investing Activities                              (151,438)            57,112         (3,240,765)

Cash Flows From Financing Activities:
   Proceeds from issuance of long-term debt                      --              792,687            993,149
   Repayment of long-term debt                               (388,565)              --             (451,954)
   Change in due to related parties                           (80,299)            36,621            155,725
   Proceeds from issuance of common stock, net              3,991,942               --           12,119,890
   Purchase and retirement of common stock                   (140,873)              --             (140,873)
                                                         ------------       ------------       ------------
         Net Cash Provided By Financing Activities          3,382,205            829,308         12,675,937

Effect of Exchange Rates on Cash                               (2,012)             8,667             (2,965)
                                                         ------------       ------------       ------------

Net Increase (Decrease) in Cash                             1,003,867           (139,041)         3,094,694

Cash, Beginning of Period                                   2,090,827            196,004               --   
                                                         ------------       ------------       ------------
Cash, End of Period                                      $  3,094,694       $     56,963       $  3,094,694
                                                         ============       ============       ============
</TABLE>

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

                                                                    Page 5 of 14

<PAGE>



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


1.   Basis of Presentation

     The accompanying unaudited interim consolidated financial statements have
     been prepared pursuant to the rules and regulations for reporting Form
     10-Q. Accordingly, certain information and disclosures required by
     generally accepted accounting principles for complete financial statements
     are not included herein. The interim statements should be read in
     conjunction with the financial statements and notes thereto included in the
     Company's latest Annual Report on Form 10.

     Interim statements are subject to possible adjustments in connection with
     the annual audit of the Company's accounts for the fiscal year 1999; in the
     Company's opinion, all adjustments necessary for a fair presentation of
     these interim statements have been included and are of a normal and
     recurring nature.

2.   Comprehensive Income/(Loss)

     Effective August 1, 1998, the Company adopted the provisions of Statement
     No. 130, Reporting Comprehensive Income, which modifies the financial
     statement presentation of comprehensive income and its components. Adoption
     of this statement had no effect on the Company's financial position or
     operating results.

     Comprehensive loss for the six months ended January 31, 1999 and 1998 was
     $(2,822,553) and $(1,483,145), respectively.

3.   Accounts Payable and Accrued Expense

     Accounts payable and accrued expenses consist of the following:

                                              January 31,        July 31,
                                                 1999              1998 
                                              ---------        ----------
     Accounts Payable                         $ 548,282        $  336,634
     Penalty Arising from Violation of
        Financing Agreement                         --            738,000
     Consulting Accruals                        113,438           151,945
     Building Purchase Liability                 26,425            26,425
                                              ---------        ----------
          Total                               $ 688,145        $1,253,004
                                              =========        ==========

                                                                    Page 6 of 14
<PAGE>


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


4.   Pending Litigation

     Sands Brothers & Co., Ltd. (Sands), a New York City-based investment
     banking and brokerage firm, initiated arbitration against the Company under
     New York Stock Exchange rules in September 1998. This claim is based upon a
     claim that Sands has the right to purchase, for nominal consideration,
     approximately 1.5 million shares of the Company's common stock. This claim
     is based upon an October 1997 letter agreement which purportedly confirmed
     the terms of an agreement appointing Sands as the exclusive financial
     advisor to Generex Pharmaceuticals, Inc. (GPI) and granting Sands the right
     to receive shares representing 17 percent of the outstanding capital stock
     of GPI on a fully diluted basis. Following the acquisition of GPI by GBC -
     Delaware, Inc., Sands' claimed a right to receive shares of GPI common
     stock that would, allegedly, now apply to the Company's common stock. Sands
     also claims that it is entitled to additional shares of the Company as a
     result of the GBC - Delaware, Inc.'s acquisition of GPI (approximately
     460,000 shares), and $144,000 in fees under the terms of the purported
     Agreement. Sands has never performed any services for the Company, and the
     Company and GPI have denied that the individual who is alleged to have
     entered into the purported agreement between Sands and GPI, had the
     authority to act on GPI's behalf, and accordingly, is defending against
     Sands' claim primarily on the basis that no agreement has ever existed
     between GPI and Sands. The arbitration is scheduled to begin in June 1999
     and the Company is unable to predict the outcome at this time. However, the
     Company intends to vigorously defend itself in this matter and does not
     expect that the ultimate resolution of this matter will have a material
     effect on its results of operations and financial condition.

     GPI is also contesting a claim for wrongful dismissal in the amount of
     approximately $300,000 plus special damages, interest and costs. The
     Company believes that the plaintiff was never employed by the Company or
     any of its subsidiaries and that the case is without merit.

     An action was also commenced against GPI and other companies and
     individuals seeking approximately $3,965,000 for allegedly causing certain
     adverse consequences of a plaintiff's particular investment in a company.
     GPI's only involvement was that at one time there was interest on its part
     in buying certain assets from this company. GPI failed to file a Statement
     of Defense to the Statement of Claim and GPI was noted in default on
     October 1, 1996. An application has been filed to set aside that default
     notice, however that application has been adjourned indefinitely.

5.   Stock Redemption

     Under the terms of a settlement, determined in an Ontario, Canada Court,
     the Company agreed to purchased 15,357 shares from a shareholder for a
     total purchase price of $140,873. The settlement was concluded in September
     1998.


                                                                    Page 7 of 14
<PAGE>

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


6.   Net Loss Per Share

     Basic EPS and Diluted EPS for the six months ended January 31, 1999 and
     1998 have been computed by dividing the net loss for each respective period
     by the weighted average shares outstanding during that period. All
     outstanding warrants have been excluded from the computation of Diluted EPS
     as they are antidilutive.

7.   Supplemental Disclosure of Cash Flow Information

<TABLE>
<CAPTION>
                                                                         For the Six Months Ended
                                                                                 January 31, 
                                                                         ------------------------
                                                                            1998         1997 
                                                                            ----         ---- 
<S>                                                                      <C>            <C>  
     Cash paid during the year for:
        Interest                                                         $ 33,640       $  --
        Income taxes                                                     $   --         $  --

     Disclosure of non-cash investing and financing activities:

     Acquisition of property and equipment with collection of
        related party receivables                                        $   --         $620,725
     Issuance of common stock to satisfy accrued liability               $738,000       $  --
     Long-term debt incurred in conjunction with acquisition
        of property and equipment                                        $ 81,492       $  --
</TABLE>

8.   Subsequent Events

     Subsequent events occurring after January 31, 1999 consist of the
     following:

     The stock option plan adopted in January 1998 was not submitted for
     shareholder approval and terminated on February 1, 1999. A new plan,
     substantially identical to the terminated plan, has been adopted. All
     options granted under the previous plan are not affected by the
     termination.

     The Company received a total of $96,000 from the sale of 17,000 shares of
     common stock at prices ranging from $5.00 to $6.00.

     For consideration of legal services provided, the Company issued 5,000
     shares of common stock at $6.00 per share.


                                                                    Page 8 of 14

<PAGE>


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


8.   Subsequent Events (Unaudited)

     In February 1999, MQS, Inc., a former consultant to the Company, commenced
     a civil action against the Company in the United States District Court for
     the District of New Jersey claiming that 242,168 shares of the Company's
     Common Stock, and $243,066 are due to it for services which it rendered
     through December 22, 1998. MQS also claims compensation on a quantum merit
     basis for the value of its services, and for punitive damages. The Company
     has not yet responded to the Complaint in this action.

     In February 1999, the Company entered into an agreement with an investment
     banker. Under the terms of the agreement, the investment banker will act as
     the Company's exclusive investment advisor, exclusive private placement
     agent and exclusive investment banker for a period of two months. If the
     investment banker is successful in securing capital for the Company for an
     agreed upon and stated amount during this period, the term of the agreement
     will automatically be extended for a period of four months. The Company
     also has the option to extend the term of the agreement for an additional
     four months, if it is expressed in writing that it is satisfied with the
     investment banker's services. In conjunction with the agreement, the
     investment banker received an option to purchase 100,000 shares of the
     Company's common stock at an exercise price of $6.00 per share during a
     five-year period. The investment banker will also receive an additional
     option to purchase 50,000 shares of the Company's common stock at an
     exercise price of $7.50 per share during a five-year period for assisting
     in obtaining financing in an agreed upon and stated amount. In the event of
     a private placement of the Company's securities, the investment banker is
     entitled to (i) a transaction fee in the amount of 10 percent of the amount
     raised, (ii) a 3 percent non-accountable expense allowance and (iii)
     placement agent warrants equal to 10 percent of the ownership given to any
     equity raised. Finally in the event that the Company enters into a merger,
     acquisition, or sale transaction with a party introduced by the investment
     banker, cash compensation will be paid based on an agreed upon formula.

     On February 11, 1999, the shareholders of the Company approved the merger
     of the Company into its wholly-owned subsidiary, GBC-Delaware, Inc. The
     purpose of the merger is to change the Company's state of incorporation
     from Idaho to Delaware. The merger is expected to be effected in the
     Company's third fiscal quarter and will not materially affect the Company's
     historical financial statements or future financial reporting.

                                                                    Page 9 of 14

<PAGE>

Item 2. Management's Discussion And Analysis Of Financial
        Condition And Results Of Operations

     When used in this discussion, the words "expect(s)", "feels", "believe(s)",
"will", "may", "anticipate(s)" and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from the
possible results described in such statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, and are urged to
carefully review and consider the various disclosures elsewhere in this
Prospectus which discuss factors which affect the Company's business, including
the discussion under the caption "Risk Factors".

General

     The Company was incorporated in 1983 as Green Mt. P.S., Inc. In January
1998, the Company acquired all of the outstanding capital stock of Generex
Pharmaceuticals, Inc. ("Generex Pharmaceuticals"), a Canadian corporation formed
in November 1995 to engage in pharmaceutical and biotechnological research and
other activities, and changed its corporate name to Generex Biotechnology
Corporation. The acquisition of Generex Pharmaceuticals was effected by the
merger of a recently formed Delaware corporation ("Generex Delaware"), which had
acquired all of the outstanding capital stock of Generex Pharmaceuticals in
October 1997, with a wholly-owned subsidiary of the Company formed for this
transaction (the "Reverse Acquisition"). As a result of the Reverse Acquisition,
the former shareholders of Generex Delaware acquired a majority of the Company's
outstanding capital stock and, for accounting purposes, Generex Delaware was
treated as the acquiring corporation. Thus, the historical financial statements
of Generex Delaware, which essentially represent the historical financial
statements of Generex Pharmaceuticals, are deemed to be the historical financial
statements of the Company.

     In February 1999, the shareholders of the Company approved a reorganization
in which the Company will merge into Generex Delaware for the purpose of
changing the Company's state of Incorporation from Idaho to Delaware (see Part
II, Item 5 below). This reorganization, which is expected to be consummated in
the Company's third fiscal quarter, will not result in any material change in
the Company's historical financial statements or current financial reporting.

     The Company is engaged in the development of drug delivery systems. Its
principal business focus has been to develop a technology for the administration
of large molecule (i.e., molecules above a specified molecular weight) drugs.
Historically, large molecule drugs have been administered only by injection
because their size inhibits or precludes absorption if administered only or
oral, transdermal, transnasal or other means. The principal application to date
of the Company's large molecule drug delivery technology is a liquid insulin
formulation that is administered with a metered dose applicator developed by the
Company. The formulation, which includes insulin and various excipients (i.e.,
non-active pharmaceutical ingredients) to facilitate the absorption of insulin
molecules through the mucous membranes in the mouth and upper gastro-intestinal
tract, is sprayed into the mouth and back of the throat, where absorption
occurs. The Company intends to market this formulation in the United States
under the name Oralgen(TM), and in Canada and elsewhere under the name
Oralin(TM).

     The Company completed pre-clinical studies and proof of concept trials of
its oral insulin formulation in early 1998. Phase II clinical trials were
commenced in Canada in November

                                                                   Page 10 of 14


<PAGE>

1998. The Company's Phase 2 clinical program in the United States commenced
in March 1999. The Company also has received regulatory approval in Ecuador for
limited, non-commercial distribution of its oral insulin formulation to diabetic
patients. This clinical program, which is expected to involve approximately 200
patients, is scheduled to begin later this year.

Results of Operations - Three months ended January  31, 1999 and 1998

     The Company has been in the development stage since its inception and has
not generated any operating revenues to date. Through January 31, 1999, the
Company accumulated an operating deficit of $9,147,525 as a result of research
and development and general and administrative expenses incurred during the
development stage.

     The Company's accumulated operating deficit at January 31, 1999, includes a
net loss of $1,785,021 for the quarter then ended. In the corresponding quarter
of the prior year the Company's net loss was $943,482. The principal reason for
the increase in the Company's net loss in the quarter ended January 31, 1999,
versus the quarter ended January 31, 1998, was an increase in research and
development expenses (to $612,219 from $278,309), and in general and
administrative expenses (to $1,154,224 from $665,173).

     The increase in research and development expense in the current period
reflects the initiation and conduct of Phase II clinical trials of the Company's
oral insulin formulation in Canada, continued development of the Company's
metered dose applicator, preparation for the commencement of clinical trials in
the United States, continuation and support of the Company's clinical program in
Ecuador, and professional services relating to patents.

     The increase in general and administrative expenses in the quarter ended
January 31, 1999, compared the prior year was primarily a result of the addition
of new administrative personnel in the current fiscal year, increased legal and
accounting expenses which were related in part to the Company's registration of
its Common Stock under Section 12(g) of the Securities and Exchange Act,
participation in industry seminars and exhibitions, a one-time expense
associated with the severance of a former executive, and increases in executive
compensation.

Results of Operations - Six months ended January  31, 1999 and 1998

     The Company's net loss for the six months ended January 31, 1999, was
$2,814,995, compared to a loss of $1,342,916 in the first half of the preceding
fiscal year. The principal reasons for the increase in the Company's net loss in
six month period ended January 31, 1999, was an increase in research and
development expenses to $1,198,477 in the six month period ended January 31,
1999, from $330,073 for the six month period ended January 31, 1998, and an
increase in general and administrative expenses to $1,582,904 in the six months
ended January 31, 1999 versus $1,012,843 in the year earlier period.

     The increase in research and development expense in the six months ended
January 31, 1999, reflects the increase in expenses in the second quarter,
discussed above, and a substantial increase (to $586,258 from $51,764) in
research and development expenditures in the first quarter, i.e., the quarter
ended October 31, 1998, versus the quarter ended October 31, 1997. The first
quarter increase in research and development expense increase reflected costs
incurred in preparation for the Canadian clinical trial program, development
work associated with the Company's metered dose applicator, preparation and the
Company's IND to FDA, support of the

                                                                   Page 11 of 14

<PAGE>

clinical program in Ecuador, and personnel costs associated with starting
up the Company's pilot manufacturing facility in Toronto which supports the
clinical programs. As noted above, research and development expenses in the
first half of 1997 essentially were limited to laboratory personnel costs and
professional expenses relating to patents.

     The increase in general and administrative expenses the first six months of
their current year are primarily the result of the increase in such expenses
during the second quarter as discussed above. The Company's general and
administrative expenses increased by $81,010 in the first quarter, i.e., the
quarter ended October 31, 1998, compared to the first quarter of the prior year,
primarily as a result of the addition of new administrative personnel and
participation in industry seminars and exhibitions.

Liquidity and Capital Resources

     The Company has financed its development stage activity primarily through
private placements of equity securities. During the six months ended January 31,
1999, the Company has received approximately $5 million in additional equity
capital, including $200,000 of additional capital attributed to the issuance of
warrants for services which resulted in a corresponding expense item, and net of
a stock redemption and expenses associated with acquiring the capital. As a
result, at January 31, 1999, the Company's stockholders' equity had increased to
approximately $4.85 million versus approximately $2.64 million at July 31, 1998,
notwithstanding its net loss during the six months ended January 31, 1999. A
substantial portion of the increase in stockholders' equity from July 31, 1998,
to January 31, 1999, is reflected in a decrease of $968,368 in short and long
term indebtedness, and increases of $897,340 in cash and $744,690 in property
and equipment, net of depreciation. The increase in property and equipment
reflects primarily the acquisition and equipping of the Company's pilot
manufacturing facility in Toronto, and preliminary architectural and engineering
work relating to the Company's Brampton and Missaugua, Ontario facilities
acquired in July 1998.

     At January 31, 1999, the Company had cash on hand of approximately $3.1
million. Based on the Company's projections of its cash needs at that time, its
cash on hand was sufficient to fund development activities over the remainder of
the current fiscal year at the levels then planned. The Company's business plan
contemplates raising additional equity capital to satisfy its cash requirements
at least through the current calendar year. Beyond that point, the Company
expects that a substantial portion of its cash needs for development activities
will be met through licensing income, and future marketing partners'
contributions to clinical program costs and/or equity investments.

     Implementation of the Company's business plan will require the availability
of sufficient funds from the sources described above. While the Company has been
successful in acquiring capital for its development activities as required, it
does not have a substantial "cash cushion", nor does it have any commitments for
future financing. Thus, the Company faces the risk that unforeseen problems with
its clinical program or materially negative developments in general economic
conditions could interfere with its ability to raise additional capital or
materially adversely affect the terms upon which such capital is available. If
funds are not available as needed from these sources, or from alternative
sources, the Company will be required to "scale back" or otherwise revise its
business plan. Any significant scale back of operations or modification of the
Company's business plan required due to a lack of funding could be expected to
materially and adversely affect the Company's prospects.

                                                                   Page 12 of 14

<PAGE>

Transactions with Affiliates

     A portion of the Company's administrative expenses have resulted from
transactions with affiliated persons. A number of the Company's capital
transactions also have involved affiliated persons. Although these transactions
were not the result of "arms-length" negotiations, the Company does not believe
that this fact had a material impact on the Company's results of operations or
financial position.

Year 2000

     Many computer systems experience problems handling dates beyond the year
1999. Therefore, some computer hardware and software will need to be modified
prior to the year 2000 in order to remain functional. Management of the Company
has completed its assessment of year 2000 issues and believes that the
consequences of such issues will not have a material effect on the Company's
business, results of operations or financial condition, without taking into
account any efforts by the Company to avoid such consequences.

New Accounting Pronouncements

     In 1998, the FASB issued Statement of Financial Accounting Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"). SFAS No. 133 modifies the accounting for derivative and hedging
activities and is effective for fiscal years beginning after December 15, 1999.
The Company believes that the adoption of SFAS No. 133 will not have a material
impact on the Company's financial reporting.



                                                                   Page 13 of 14


<PAGE>

                           PART II: OTHER INFORMATION

Item 1. Legal Proceedings

     The Company has filed a Form 10 Registration Statement which became
effective on February 12, 1999. A post-effective amendment (Amendment No. 1) to
the Form 10 was filed on February 24, 1999. Information set forth in Amendment
No. 1 in response to Item 8 of Form 10 under the caption "Legal Proceedings" is
incorporated hereby by reference.

Item 5. Other Information

     On February 11, 1999, the shareholders of the Company approved the merger
of the Company into its wholly-owned subsidiary, GBC-Delaware, Inc. The purpose
of the merger is to change the Company's state of incorporation from Idaho to
Delaware. The transaction was approved by a vote of 7,854,956 shares to zero.
The merger had not been effected as of the date of this Report, but is expected
to be effected in the Company's third fiscal quarter, i.e., the quarter ending
April 30, 1999. The merger will not materially affect the Company's historical
financial statements or future financial reporting.

Item 6. Exhibits and Reports on Form 8-K


      (a) Exhibits

          Exhibit            Exhibit Title
          -------            -------------
            27               Financial Data Schedule
    
      (b) Reports on Form 8-K

          None


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.



                                             GENEREX BIOTECHNOLOGY CORPORATION

 DATE: March 29,1999                         By: /s/ E. Mark Perri
                                                 -------------------------------
                                                 E. Mark Perri
                                                 Chairman and Chief 
                                                 Financial Officer

                                                                   Page 14 of 14