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

                                    FORM 10-Q

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

For the quarterly period ended October 31, 1998

[ ]  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 13

<PAGE>

                       GENEREX BIOTECHNOLOGY CORPORATION
                                      INDEX

PART 1: FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements - unaudited

         Consolidated Balance Sheets -
         October 31, 1998 and July 31, 1998 .................................  3

         Consolidated Statements of Operations
         for the three month periods ended October 31, 1998
         and 1997, and cumulative from November 2, 1995, to
         October 31, 1998 ...................................................  4

         Consolidated Statements of Cash Flows
         for the three month periods ended October 31, 1998
         and 1997, and cumulative from November 1995, to
         October 31, 1998 ...................................................  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 .................................................. 13

Item 5.  Other Information .................................................. 13

Item 6.  Exhibits and Reports on Form 8-K ................................... 13

         Signatures ......................................................... 13


                                                                    Page 2 of 13
<PAGE>

Item 1.  Consolidated financial statements

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

<TABLE>
<CAPTION>
                                                                         October 31,       July 31,
                                                                            1998             1998
                                                                         -----------      ---------
<S>                                                                      <C>              <C>  
         ASSETS
Current Assets:
   Cash                                                                   $1,970,865      $2,090,827
   Restricted cash                                                              --           106,527
   Miscellaneous receivables                                                 223,199         209,090
   Other current assets                                                      132,602         131,340
                                                                          ----------      ----------
         Total Current Assets                                              2,326,666       2,537,784

Property and Equipment, Net                                                2,117,443       1,634,447
Deposits                                                                      64,598          82,509
Due From Related Parties                                                   1,211,687       1,200,968
                                                                          ----------      ----------
         TOTAL ASSETS                                                     $5,720,394      $5,455,708
                                                                          ==========      ==========

         LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Accounts payable and accrued expenses                                  $  358,141      $1,253,004
   Current maturities of long-term debt                                      394,490         411,565
                                                                          ----------      ----------
         Total Current Liabilities                                           752,631       1,664,569

Long-Term Debt, Less Current Maturities                                      599,482         912,817
Due to Related Parties                                                       255,496         236,024
Commitments and Contingencies


Stockholders' Equity:
   Preferred stock, $.001 par value; authorized 1,000,000 shares,
     issued and outstanding 1,000 at October 31, 1998 and
     July 31, 1998                                                                 1               1
   Common stock, $.001 par value; authorized 50,000,000 shares,
     issued and outstanding 12,726,016 and 11,971,272 shares at
     October 31, 1998 and July 31, 1998, respectively                         12,726          11,971
   Additional paid-in capital                                             11,705,958       9,162,329
   Deficit accumulated during the development stage                       (7,779,797)     (6,332,570)
   Accumulated other comprehensive income (loss)                             173,897        (199,433)
                                                                          ----------      ----------
         Total Stockholders' Equity                                        4,112,785       2,642,298
                                                                          ----------      ----------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $5,720,394      $5,455,708
                                                                          ==========      ==========
</TABLE>

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

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                Cumulative
                                                                                   From
                                                                                November 2,
                                                 For the Three Months Ended    1995 (Date of
                                                         October 31,           Inception) to
                                                ----------------------------   to October 31,
                                                    1998           1997            1998
                                                ------------    ------------    ------------
<S>                                             <C>             <C>             <C>
Revenues                                        $       --      $       --      $       --

Operating Expenses:
   Research and development                          568,603          30,309       2,019,410
   Research and development - related party           17,655          21,455         237,873
   General and administrative                        363,517         275,872       4,647,443
   General and administrative - related party         65,163          71,798         379,491
                                                ------------    ------------    ------------
       Total Operating Expenses                    1,014,938         399,434       7,284,217
                                                ------------    ------------    ------------

Operating Loss                                    (1,014,938)       (399,434)     (7,284,217)
                                                ------------    ------------    ------------

Other (Income) Expense:
   Interest (income)                                     (66)           --               (66)
   Interest expense                                   15,062            --            78,353
                                                ------------    ------------    ------------
Net Loss                                        $ (1,029,934)   $   (399,434)   $ (7,362,504)
                                                ============    ============    ============
Basic and Diluted Net Loss Per Common
   Share                                        $       (.08)   $       (.04)
                                                ============    ============

Weighted Average Number of Shares of
   Common Stock Outstanding                       12,348,870       9,000,118
                                                 ===========      ==========
</TABLE>


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

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                    Cumulative
                                                                                       From
                                                                                    November 2,
                                                      For the Three Months Ended   1995 (Date of
                                                              October 31,          Incepion) to
                                                      --------------------------   to October 31,
                                                          1998           1997           1998          
                                                      -----------    -----------    -----------
<S>                                                   <C>            <C>            <C>
Cash Flows From Operating Activities:
   Net loss                                           $(1,029,934)   $  (399,434)   $(7,362,504)
   Adjustments to reconcile net loss to net
      cash used in operating activities:
       Depreciation                                        16,851          3,292         60,936
       Common stock and warrants issued
         for services rendered                            127,664        234,000      1,911,917
       Preferred stock issued for services rendered          --             --              100
       Changes in operating assets and liabilities:
         Miscellaneous receivables                           --          (55,837)      (170,179)
         Other current assets                             (20,367)        46,428       (156,944)
         Accounts payable and accrued liabilities        (133,808)      (157,310)     1,192,138
         Other, net                                       (79,347)       (10,384)        30,970
                                                      -----------    -----------    -----------
         Net Cash Used in Operating Activities         (1,118,941)      (339,245)    (4,493,566)

Cash Flows From Investing Activities:
   Purchase of property and equipment                    (449,915)        (5,524)      (525,688)
   Change in restricted cash                              105,655           --           (5,595)
   Change in deposits                                      16,304           --           (1,297)
   Change in notes receivable                                --          101,953             --
   Change in due from related parties                     (33,440)      (245,070)    (3,007,826)
   Other, net                                                --             --           89,683
                                                      -----------    -----------    -----------
         Net Cash Used in Investing Activities           (361,396)      (148,641)    (3,450,723)

Cash Flows From Financing Activities:
   Proceeds from issuance of long-term debt                  --             --          993,149
   Repayment of long-term debt                           (385,299)       502,585       (448,688)
   Change in due to related parties                        48,135           --          284,159
   Proceeds from issuance of common stock, net          1,819,592           --        9,209,540
   Purchase and retirement of common stock               (140,873)          --         (140,873)
                                                      -----------    -----------    -----------
         Net Cash Provided By Financing Activities      1,341,555        502,585      9,897,287

Effect of Exchange Rates on Cash                           18,820          5,465         17,867
                                                      -----------    -----------    -----------

Net Increase (Decrease) in Cash                          (119,962)        20,164      1,970,865

Cash, Beginning of Period                               2,090,827        196,004           --  
                                                      -----------    -----------    ----------- 

Cash, End of Period                                   $ 1,970,865    $   216,168    $ 1,970,865
                                                      ===========    ===========    ===========
</TABLE>


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

<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 three months ended October 31, 1998 and 1997 was
    $(656,604) and $(63,355), respectively.

3.  Accounts Payable and Accrued Expense
    Accounts payable and accrued expenses consist of the following:
 
                                                    October 31,        July 31,
                                                       1998              1998 
                                                     --------         ----------
    Accounts Payable                                 $182,656         $  336,634
    Penalty Arising from Violation of
       Financing Agreement                             --                738,000
    Consulting Accruals                               149,060            151,945
    Building Purchase Liability                        26,425             26,425
                                                     --------         ----------
         Total                                       $358,141         $1,253,004
                                                     ========         ==========
<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 GBT
    - 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 GBT - 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.

    Generex Pharmaceuticals, Inc., 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>


                        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 three months ended October 31, 1998
    and 1997 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 Three Months Ended
                                                                                  October 31,
                                                                           -----------------------            
                                                                             1998          1997
                                                                           --------      ---------        
<S>                                                                        <C>          <C>
    Cash paid during the year for:
       Interest                                                            $ 15,062      $      --
       Income taxes                                                        $    --       $      --
    Disclosure of non-cash investing and financing activities:
    Issuance of common stock to satisfy accrued liability                  $738,000      $      --
    Long-term debt incurred in conjunction with acquisition
       of property and equipment                                           $ 81,011      $      --
</TABLE>


8.  Subsequent Events
    Subsequent events occurring after October 31, 1998 consist of the
    following:

    The Company entered into a consulting agreement with an
    individual. As part of the consultant's compensation, the Company
    granted the consultant options to purchase 50,000 shares of the
    Company's common stock at an exercise price of $8.00 per share
    under the 1998 stock option plan.

    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.

    For consideration of financial consulting services provided, the
    Company issued warrants to purchase 150,000 shares of common stock
    at $10 per share.

    The Company received a total of $1,775,600 from the sale of 423,852
    shares of common stock at prices ranging from $4.00 to $6.00.

    For consideration of legal services provided, the Company issued 5,000
    shares of common stock at $6 per share.
 
<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>

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
11, 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 11 clinical trials were
commenced in Canada in November

                                                                   Page 10 of 13

<PAGE>

1998. The Company's Phase 11 clinical program in the United States commenced in
March 1999. The Company also has received regulatory approval in Ecuador for
limited, noncommercial 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 October 31, 1998

     The Company has been in the development stage since its inception and has
not generated any operating revenues to date. Through October 31, 1998, the
Company has accumulated an operating deficit of $7,779,797, as a result of
research and development and general and administrative expenses incurred during
the development stage.

     The Company's accumulated operating deficit at October 31, 1998, includes a
net loss of $1,029,934 for the quarter then ended. In the quarter ended October
31, 1997, the Company's net loss was $399,434. The principal reason for the
increase in the Company's net loss in the quarter ended October 31, 1998, versus
the corresponding period in 1997, was an increase in research and development
expenses (to $586,258 from $51,764). The increase in research and development
expense in the 1998 period reflects the Company's preparation for Phase II
clinical trials of the Company's oral insulin formulation in Canada, development
work associated with the Company's metered dose applicator, preparation and
submission of an Investigational New Drug application to the U.S. Food and Drug
Administration, continuation and support of the Company's clinical program in
Ecuador, and personnel costs associated with starting up the Company's pilot
manufacturing facility in Toronto which supports the Company's clinical
programs. Research and development expenses in the first quarter of 1997
essentially were limited to laboratory personnel costs. The remainder of the
increased loss in the first quarter of 1998 versus the corresponding 1997
quarter was the result of an increase in general and administrative expenses
($81,010) and interest expense ($14,966, net of interest income). The increase
in general and administrative expenses in the 1998 quarter was primarily a
result of the addition of new administrative personnel and participation in a
number of industry seminars and exhibitions during the quarter.

Liquidity and Capital Resources

     The Company has financed its development stage activity primarily through
private placements of equity securities. During the quarter ended October 31,
1998, the Company received approximately $2.5 million in additional equity
capital, net of a stock redemption and expenses associated with acquiring the
capital. As a result, at October 31, 1998, the Company's stockholders' equity
had increased to approximately $4.1 million versus approximately $2.6 million at
July 31, 1998, notwithstanding its net loss during the quarter. A substantial
portion of the increase in stockholders' equity was reflected in a decrease of
approximately $1.2 million in short and long term indebtedness, and an increase
of approximately $483,000 in property and equipment. 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 October 31, 1998, the Company had cash on hand of approximately $1.97
million, a slight decrease from approximately $2.2 million on hand at July 31,
1998. Based on the

                                                                   Page 11 of 13

<PAGE>

Company's projections of its cash needs at that time, its cash on hand was
insufficient to fund development activities over the next twelve months at the
levels then planned. The Company's business plan contemplated raising additional
equity capital to satisfy its short term cash requirements, and the Company
intends to rely on its ability to raise additional equity capital as required to
continue its development activities at least through the current calendar year.
Beyond that point, the Company expects that a substantial portion of its cash
needs 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.

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 12 of 13

<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. I 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.

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.

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




                                             GENEREX BIOTECHNOLOGY CORPORATION

 DATE: March 26,1999                         By: /s/ Anna E. Gluskin
                                                 -------------------------------
                                                 Anna E. Gluskin
                                                 President and Chief
                                                 Executive Officer

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

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