Edgar Filing: GENEREX BIOTECHNOLOGY CORP

Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended July 31, 2008

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 000-25169

GENEREX BIOTECHNOLOGY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		98-0178636
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

33 Harbour Square, Suite 202, Toronto, Canada		M5J 2G2
(Address of principal executive offices)		(Zip Code)

(416) 364-2551

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Common Stock, $.001 par value per share		The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed 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 þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ
Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

As of January 31, 2008, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $134,559,102 based on the closing sale price as reported on the NASDAQ Capital Market. Generex Biotechnology Corporation has no non-voting common equity. At October 6, 2008, there were 120,302,597 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Proxy Statement for the registrant’s Annual Meeting of Stockholders, or an amendment to this Annual Report on Form 10-K, to filed within 120 after the end of the fiscal year ended July 31, 2008, are incorporated by reference into Part III of this Annual Report on Form 10-K.

Generex Biotechnology Corporation

Form 10-K

July 31, 2008

Index

		Page
Forward-Looking Statements		1

Part I
Item 1.	Business.	2
Item 1A.	Risk Factors.	23
Item 1B.	Unresolved Staff Comments.	30
Item 2.	Properties.	30
Item 3.	Legal Proceedings.	30
Item 4.	Submission of Matters to a Vote of Security Holders.	31

Part II
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	32
Item 6.	Selected Financial Data.	34
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	35
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 8.	Financial Statements and Supplementary Data.	50
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	94
Item 9A.	Controls and Procedures.	94
Item 9B.	Other Information.	95

Part III
Item 10.	Directors, Executive Officers and Corporate Governance.	95
Item 11.	Executive Compensation.	95
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	96
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	96
Item 14.	Principal Accountant Fees and Services.	96

Part IV
Item 15.	Exhibits and Financial Statement Schedules.	96

Signatures		98

As used herein, the terms the “Company,” “Generex,” “we,” “us,” or “our” refer to Generex Biotechnology Corporation, a Delaware corporation.

Forward-Looking Statements

Certain matters in this Annual Report on Form 10-K, including, without limitation, certain matters discussed under Item 1 - Business, Item 1A - Risk Factors, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 7A - Quantitative and Qualitative Disclosures about Market Risk, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this Annual 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;

	·	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; and

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

Additional factors that could affect future results are set forth below under Item 1A. Risk Factors. We caution investors that the forward-looking statements contained in this Report must be interpreted and understood in light of conditions and circumstances that exist as of the date of this Report. We expressly disclaim any obligation or undertaking to update or revise forward-looking statements made in this Annual Report to reflect any changes in management's expectations resulting from future events or changes in the conditions or circumstances upon which such expectations are based.

Part I

Item 1. Business.

Corporate History and Structure

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

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

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

Subsidiaries

Following our reorganization in 1999, Generex Pharmaceuticals Inc., which is incorporated in Ontario, Canada, remained as our wholly-owned subsidiary. All of our Canadian operations are performed by Generex Pharmaceuticals.

In August 2003, we acquired Antigen Express, Inc. Antigen is engaged in the research and development of technologies and immunomedicines for the treatment of malignant, infectious, autoimmune and allergic diseases.

We formed Generex (Bermuda), Inc., which is organized in Bermuda, in January 2001 in connection with a joint venture with Elan International Services, Ltd., a wholly-owned subsidiary of Elan Corporation, plc, to pursue the application of certain of our and Elan's drug delivery technologies, including our platform technology for the buccal delivery of pharmaceutical products. In December 2004, we and Elan agreed to terminate the joint venture. Under the termination agreement, we retained all of our intellectual property rights and obtained full ownership of Generex (Bermuda). Generex (Bermuda) currently does not conduct any business activities.

We formed Generex Pharmaceuticals (USA) LLC, which is organized in North Carolina, USA, in February 2006 as a wholly-owned subsidiary. Generex Pharmaceuticals (USA) LLC has not yet commenced any business operations. We formed Generex Marketing & Distribution Inc., which is organized in Ontario, Canada, in September 2006. Generex Marketing & Distribution Inc. has not yet commenced any business operations.

Although not a separate legal entity, we have established a branch office in the exclusive Dubai Healthcare City operating as “Generex Biotechnology Corporation MENA” (Middle East and North Africa) to enable us to work closely with the regulatory and marketing personnel of Leosons General Trading Company, our licensee in the region.

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-lyn™, an insulin formulation administered as a fine spray into the oral cavity using our proprietary hand-held aerosol spray applicator known as RapidMist™. To date, we have received regulatory approval in Ecuador and India for the commercial marketing and sale of Generex Oral-lyn™. 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 200 patients have been enrolled in 74 clinical sites around the world, including sites in the United States, Canada, Bulgaria, Poland, Romania, Russia and Ukraine.

Using our buccal delivery technology, we also have launched a line of over-the-counter glucose and energy sprays , including Glucose RapidSpray™, GlucoBreak™, and BaBOOM!™ Energy Spray. We believe these products will complement Generex Oral-lyn™ and may provide us with an additional revenue stream prior to the commercialization of Generex Oral-lyn™.

Our subsidiary, Antigen, 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. 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.

We face competition from other providers of alternate forms of insulin. Some of our most significant competitors, Pfizer, Eli Lilly, and Novo Nordisk, recently announced that they will discontinue development and/or sale of their inhalable forms of insulin. Generex Oral-lyn™ is not an inhaled insulin; rather, it is a bucally 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.

We are a development stage company although we have four products available for commercial sale. In fiscal 2008, we received modest revenues from sales of our commercially available products, our confectionary, Glucose RapidSpray™, a flavored glucose “energy” spray supplemented with vitamins, BaBOOM!™ Energy Spray, and a fat-free glucose spray to aid in dieting, GlucoBreak™. All three products are available in retails 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 operate in only one segment: the research, development and commercialization of drug delivery systems and technologies for metabolic and immunological diseases.

Our Business Strategy

Our goal is to develop and commercialize our buccal delivery technology to administer large molecule drugs, including insulin, and proprietary vaccine formulations based upon two Antigen platform technologies to provide innovative biopharmaceutical products that offer the potential for superior efficacy and safety over existing products. To achieve these goals, the key elements of our strategy include:

Conducting and completing Phase III clinical trials of Generex Oral-lyn™ in the United States and Canada, Europe and certain countries in Eastern Europe including Russia, Ukraine, Bulgaria and Romania;

Commercializing Generex Oral-lyn™ in Ecuador and India, the two countries where we have obtained regulatory approval for its commercial marketing and sale, by undertaking additional commercial manufacturing runs of Oral-lyn™ at PharmaBrand, S.A.’s facilities in Quito, Ecuador later in calendar year 2008 and expanding such production facilities to meet the anticipated demand for the product in India and other jurisdictions where governmental approvals are pending and pursuing post-approval clinical studies and marketing efforts in India.

Establishing strategic relationships worldwide for product development and distribution and working with our multinational licensed distributors in the Middle East and throughout Eastern Europe, Africa and Asia to obtain regulatory approval for the registration, importation, marketing, distribution and sale of Generex Oral-lyn™ in those countries.

Conducting and completing Phase II clinical trials 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, a Phase I prostate cancer trial and a Phase I trial in patients with breast or ovarian cancer; and

Conducting and completing a Phase I clinical trial of Antigen’s synthetic peptide vaccines against avian influenza.

Buccal Delivery Technology and Products

Our buccal delivery technology involves the preparation of proprietary formulations in which an active pharmaceutical agent is placed in a solution with a combination of absorption enhancers and other excipients classified “generally recognized as safe” ("GRAS") by the United States Food and Drug Administration (the "FDA") when used in accordance with specified quantities and other limitations. The resulting formulations are aerosolized with a pharmaceutical grade chemical propellant and are administered to patients using our proprietary RapidMist™ device. The device is a small, lightweight, hand-held, easy-to-use aerosol applicator comprised of a container for the formulation, a metered dose valve, an actuator and dust cap. Using the device, patients self-administer the formulations by spraying them into the mouth. The device contains multiple applications, the number being dependent, among other things, on the concentration of the formulation. Absorption of the pharmaceutical agent occurs in the buccal cavity, principally through the inner cheek walls. In clinical studies of our flagship oral insulin product Generex Oral-lyn™, insulin absorption in the buccal cavity has been shown to be very efficacious.

Buccal Insulin Product – Generex Oral-Lyn™

Insulin is a hormone that is naturally secreted by the pancreas to regulate the level of glucose, a type of sugar, in the bloodstream. The term “diabetes” refers to a group of disorders that are characterized by the inability of the body to properly regulate blood glucose levels. When glucose is abundant, it is converted into fat and stored for use when food is not available. When glucose is not available from food, these fats are broken down into free fatty acids that stimulate glucose production. Insulin acts by stimulating the use of glucose as fuel and by inhibiting the production of glucose. In a healthy individual, a balance is maintained between insulin secretion and glucose metabolism.

There are two major types of diabetes. Type 1 diabetes (juvenile onset diabetes or insulin dependent diabetes) refers to the condition where the pancreas produces little or no insulin. Type 1 diabetes accounts for 5-10 percent of diabetes cases. It often occurs in children and young adults. Type 1 diabetics must take daily insulin injections, typically three to five times per day, to regulate blood glucose levels.

In Type 2 diabetes (adult onset or non-insulin dependent diabetes mellitus), the body does not produce enough insulin, or cannot properly use the insulin produced. Type 2 diabetes is the most common form of the disease and accounts for 90-95 percent of diabetes cases. In addition to insulin therapy, Type 2 diabetics may take oral drugs that stimulate the production of insulin by the pancreas or that help the body to more effectively use insulin.

Current studies in diabetes have identified a new condition closely related to diabetes, called impaired glucose tolerance (IGT). People with IGT do not usually meet the criteria for the diagnosis of diabetes mellitus. They have normal fasting glucose levels but two hours after a meal their blood glucose level is far above normal.. With the increase use of glucose tolerance tests the number of people diagnosed with this pre-diabetic condition is expanding exponentially.

If not treated, diabetes can lead to blindness, kidney disease, nerve disease, amputations, heart disease and stroke. Each year, between 12,000 and 24,000 people suffer vision impairment or complete blindness because of diabetes. Diabetes is also the leading cause of end-stage renal disease (kidney failure), accounting for about 40 percent of new cases.

In addition, about 60-70 percent of people with diabetes have mild to severe forms of diabetic nerve damage, which, in severe forms, can lead to lower limb amputations. Diabetics are also two to four times more likely to have heart disease, which is present in 75 percent of diabetes-related deaths, and are two to four times more likely to suffer a stroke.

There is no known cure for diabetes. The World Health Organization estimates that there are currently over 180 million diabetics worldwide. It is further estimated that this number will almost double by the year 2030. There are estimated to be 18 million people suffering from diabetes in North America alone, not including approximately 5 million of whom are undiagnosed, and diabetes is the second largest cause of death by disease in North America.

A substantial number of large molecule drugs (i.e., drugs composed of molecules with a higher than specified molecular weight) have been approved for sale in the United States or are presently undergoing clinical trials as part of the process to obtain such approval, including various proteins, peptides, monoclonal antibodies, hormones and vaccines. Unlike small molecule drugs, which generally can be administered by various methods, large molecule drugs historically have been administered predominately by injection. The principal reasons for this have been the vulnerability of large molecule drugs to digestion and the relatively large size of the molecule itself, which makes absorption into the blood stream through the skin inefficient or ineffective.

We conducted the first clinical trials of our buccal insulin formulation with human subjects in Ecuador in January 1998. We ultimately conducted a total of approximately 13 studies in Ecuador and an additional 26 trials in other countries over the period from 1998 to 2007. The principal purpose of these studies was to evaluate the effectiveness of our oral insulin formulation in humans as well as to show safety and efficacy of our product compared with injected insulin and placebos. In March 2004, we entered into a Letter of Intent for the establishment of a joint venture with PharmaBrand S.A., a distributor of pharmaceutical products in Central and Latin America. In August 2004, we sought approval for the manufacturing, marketing, distribution and sale of Generex Oral-lyn™ and the RapidMist™ Diabetes Management System from the Ecuadorian Ministry of Public Health. In May 2005, we received approval from the Ecuadorian Ministry of Public Health for the commercial marketing and sale of Generex Oral-lyn™ for treatment of Type 1 and Type 2 diabetes. We have successfully completed of the delivery and installation of a turnkey Generex Oral-lyn™ filling operation at the facilities of PharmaBrand in Quito, Ecuador. The first commercial production run of Generex Oral-lyn™ in Ecuador was completed in May, 2006.

On the basis of the test results in Ecuador and other pre-clinical data, we made an Investigatory New Drug submission to the Health Protection Branch in Canada (Canada's equivalent to the FDA) in July 1998, and received permission from the Canadian regulators to proceed with clinical trials in September 1998. We filed an Investigational New Drug application with the FDA in October 1998, and received FDA approval to proceed with human trials in November 1998. Annual reports have been filed with the FDA each year since that time.

We began our clinical trial programs in Canada and the United States in January 1999. Between January 1999 and September 2000, we conducted clinical trials of our insulin formulation involving approximately 200 Type 1 and Type 2 diabetic patients and healthy volunteers. The study protocols in most trials involved administration of two different doses of our insulin formulation following either a liquid Sustacal meal or a standard meal challenge. The objective of these studies was to evaluate our insulin formulation's efficacy in controlling post-prandial (meal related) glucose levels. These trials demonstrated that our insulin formulation controlled post-prandial hyperglycemia in a manner comparable to injected insulin. In April 2003, a Phase II-B clinical trial protocol was approved in Canada. In September 2006, a Clinical Trial Application relating to our Generex Oral-lyn™ protocol for late-stage trials was approved by Health Canada. The FDA’s review period for the protocol lapsed without objection in July 2007.

In late March 2008, we initiated Phase III clinical trials in North America for Generex Oral-lyn™ with the first patient screening in Texas. Other clinical sites participating in the study are located in the United States (Texas, Maryland, Minnesota and California), Canada (Alberta), Europe and Eastern Europe, including Russia, Ukraine, Romania, Bulgaria, and Poland. At present, over 200 patients have been enrolled in the program in 74 clinical sites around the world. The Phase III protocol calls for a six-month trial with a six-month follow-up and is expected to include 750 patients with Type-1 diabetes mellitus. The primary objective of the study is to compare the efficacy of Generex Oral-lyn™ and the RapidMist™ Diabetes Management System with that of standard regular injectable human insulin therapy as measured by HbA1c, in patients with Type-1 diabetes mellitus. We expect to use the data collected from these trials in the New Drug Submission that will be prepared concurrently with the progression of the late-stage trials for Health Canada, European Union (EMEA) and the FDA.

We have engaged a global clinical research organization to provide many study related site services, including initiation, communication with sites and documentation; a global central lab service company that will arrange for the logistics of kits and blood samples shipment and an Internet-based clinical data management company to assist us with global project management of the Phase III clinical trial and regulatory processes. We have contracted with our third-party manufacturers for sufficient quantities of the RapidMist™ device components, the insulin, and the formulary excipients that will be required for the production of clinical trial batches of Generex Oral-lyn™.

In November 2007, we obtained approval for the importation and commercial marketing and sale in India of Generex Oral-lyn™ from the Central Drugs Standard Control Organization (CDSCO), Directorate General of Health Services, Government of India, which is responsible for authorizing marketing approval of all new pharmaceutical products in India. In March 2008, we received the first commercial purchase order for the product from our distributor in India. We are currently manufacturing the product to fulfill this order at the PharmaBrand facility in Ecuador.

We received Special Access Program (SAP) authorization from Health Canada for a patient-specific, physician-supervised treatment of Type-1 diabetes with Generex Oral-lyn™ 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 similar authorization from health authorities in Netherlands in September 2008. We will continue to expand our SAP participation in additional countries around the world.

Buccal Glucose and Energy Products - Glucose RapidSpray™, BaBOOM! ™ Energy Spray and GlucoBreak™

Using our proprietary buccal delivery technology, we have developed several formulations of glucose sprays that are available over-the-counter. In the first quarter of fiscal year 2007, we introduced, Glucose RapidSpray™. This product uses our proprietary RapidMist™ platform technology to provide an alternative for people who require or want additional glucose in their diet and delivers a fat-free, low-calorie glucose formulation directly into the mouth. Glucose RapidSpray™ is currently available in the United States and Canada through a number of leading retail chains, wholesalers and online. It is also available wholesale in the Middle East through Generex MENA. We plan to expand to South Africa, Baltic, Nordic and other markets in 2009.

Glucose RapidSpray™ offers another aid to diabetics who require or need additional glucose to their diets or daily intake.. Recent studies conducted by scientists at the University Campus Bio-Medico, Rome, Italy in conjunction with Generex have demonstrated that Glucose RapidSpray™ used early in the onset of a hypoglycemia episode can stop such an episode and prevent a further drop in blood glucose and the noxious feelings that ensue. With our easy-to-use RapidSpray™ bottle, individuals can easily add additional glucose to their diets and serves as a medium for first signs of low blood sugar levels. We also conducted a clinical trial at Department of Endocrinology, Children City Hospital in Moscow, Russia on children up to 5 years of age with Type-1 diabetes. The study concluded that because of the small dose of glucose and control over the amount, Glucose RapidSpray™ represents superior tool in very young patients to control blood sugar levels relative to existing glucose products available on the market which can also can improve the overall metabolic control.

We believe that we can market Glucose RapidSpray™ as a complementary product Generex Oral-lyn™. We believe that a combination therapy of Generex Oral-lyn™, Glucose RapidSpray™ and other oral agents, including a metformin gum which we are jointly developing with Fertin Pharma A/S, could provide a full range of products used in the treatment of Type-2 diabetes and people with impaired glucose tolerance.

In the fourth quarter of fiscal year 2007, we expanded our line of over-the-counter products using our proprietary RapidSpray™ delivery device with the introduction of two new products. GlucoBreak™ is a fat-free glucose spray that is marketed as an aid for dieters and can be used between meals as part of a daily diet routine, during exercise and before bedtime. GlucoBreak™ is the first product related to weight loss that we have launched.

A separate study also conducted by scientists at the University Campus Bio-Medico, Rome, Italy had demonstrated that delivery of small amounts of glucose during the day appeared to reduce the body mass index of subjects using GlucoBreak ™ as compared to a control group. Such a benefit may be of benefit individuals with obesity and diabetes. It is estimated that there are over 70 million dieters in the United States, the majority of whom try to lose weight by themselves.

Our other new product, BaBOOM!™ Energy Spray is a convenient and pleasant-tasting instant energy spray designed to enhance energy levels for sports, work, study, travel and overall fatigue. Its primary ingredients include glucose, caffeine, ginseng and Vitamins B and C. It is fat-free, has fewer than five calories per serving and is available in watermelon flavor. BaBOOM! ™ Energy Spray is our first energy product.

Currently, BaBOOM!™ Energy Spray and GlucoBreak™ are being considered for commercial sale in several of the largest national and regional retailers and drug store chains in the United States and Canada. Glucose RapidSpray™ is currently being marketed in the Middle East through the Generex MENA office in Dubai and in South Africa and six neighboring countries through the Master Distributor Agreement with Adcock Ingram Limited and Adcock Ingram Healthcare (Pty) Ltd.. We expect to expand to other markets in 2009.

The strategy to develop and launch these over-the-counter products is threefold. The first is to demonstrate the expansion of our proprietary RapidSpray ™ technology. The second is to create a brand name in the marketplace particularly in the diabetes shelf space with Glucose RapidSpray ™ and GlucoBreak ™ and on a mainstream scale with BaBOOM! ™ Energy Spray. Finally, the product pipeline is expected to provide us with an additional revenue stream while we attain registrations and approvals worldwide for our oral insulin product.

Metformin Gum Product/Strategic Alliance

In May 2006, we established a collaborative alliance with Fertin Pharma A/S, a leading Danish manufacturer of medicinal chewing gum, for the development of a metformin medicinal chewing gum for the treatment of Type-2 diabetes mellitus and obesity. Metformin is a generic drug used to regulate blood glucose levels by reducing the amount of glucose produced by the liver, reducing the amount of glucose absorbed from food in the stomach, and by making the insulin produced by the body work more effectively to reduce the amount of glucose already in the blood. It is an important staple of the standard of care for patients with Type-2 diabetes mellitus.

Through this collaborative relationship, we will seek to combine our proprietary buccal drug delivery platform technologies with Fertin's know-how related to gum base formulations, solubilization systems, and taste masking/modification to create a metformin medicinal chewing gum that will deliver metformin into the body via the buccal mucosa rather than in its current tablet form. We anticipate that this delivery method, in addition to being much more rapid and providing a much more specific and effective dosing regimen, could avoid some of the adverse side effects associated with taking metformin in tablet form, such as nausea, vomiting, abdominal pain, diarrhea, abdominal bloating, and increased gas production. In addition, metformin gum could avoid the bitter taste and large doses associated with the tablet form and thus improve therapeutic compliance, particularly among younger patients.

Fertin is in the process of producing clinical materials for a bioequivalence study of our proprietary metformin chewing gum, MetControl™ , which is expected to commence before the end of calendar year 2008. We expect to begin testing of MetControl™ on volunteer patients shortly thereafter. In the study, we will compare the single dose blood level profile of metformin to that of immediate-release metformin tablet. Once completed, we anticipate that formal Abbreviated New Drug Application with full support data will be prepared and submitted to health authorities in North America, Europe and other global regions where we will be seeking regulatory approval for the sale of the product.

If we successfully develop the metformin medicinal chewing gum, we would market it as a companion product to Generex Oral-lyn™. We believe that a combination therapy of Generex Oral-lyn™, metformin gum, and other traditional oral agents could optimize the treatment of Type-2 diabetes and, possibly, delay the onset of certain complications associated with diabetes.

Potential Buccal Morphine and Fentanyl Products

The delivery of morphine and fentanyl by oral formulation (pills) and injection for the treatment of moderate to severe breakthrough and postoperative pain often fails to provide patients with adequate relief and control because, among other reasons, breakthrough and postoperative pain are characterized as being moderate to severe in intensity and have a rapid onset of action and a short to medium duration. Not only does delivery by pills have a slow onset of action, it is often difficult for patients to adjust their doses, with the result that patients are either over or under medicated. Injections are invasive and require an attendant to administer the medication which reduces the patient's control over the pain and may cause increased anxiety. We believe that a buccal delivery formulation for morphine and fentanyl would have a critical series of attributes well suited for the treatment of breakthrough and post operative pain, would be cost-effective and would have a demonstrable improvement over current delivery methods, including fast access to the circulatory system, precise dosing control and a simple, self-administration procedure.

We made an Investigatory New Drug submission for buccal morphine to the Health Protection Branch in Canada in January 2002, and received permission from the Canadian regulators to proceed with clinical trials in March 2002. We made an Investigatory New Drug submission for fentanyl to the Health Protection Branch in Canada in August 2002, and received permission from the Canadian regulators to proceed with clinical trials in October 2002. During fiscal year ended July 31, 2008, we did not actively pursue our buccal morphine and buccal fentanyl projects. The development of these products will most likely be delayed while we focus on late stage trials of the oral insulin formulation in the United States, Canada and Europe.

Other Potential Buccal Products

We have had discussions of possible research collaborations with various pharmaceutical companies concerning use of our large molecule drug delivery technology with other compounds, including monoclonal antibodies, human growth hormone, fertility hormone, estrogen and heparin, and a number of vaccines. We have not aggressively pursued development opportunities apart from insulin because we believe it is more advantageous to concentrate our resources, particularly our financial resources, on commercializing the insulin product.

Immunomedicine Technology and Products

Our wholly-owned subsidiary Antigen is developing proprietary vaccine formulations based upon two platform technologies that were discovered by its founder, the Ii-Key hybrid peptides and Ii-Suppression. These technologies are applicable for either antigen-specific immune stimulation or suppression, depending upon the dosing and formulation of its products. Using active stimulation, we are focusing on major diseases such as breast and prostate cancer, H5N1 avian influenza and HIV. Autoimmune disease such as diabetes, multiple sclerosis and allergic asthma are the focus of our antigen-specific immune suppression work.

Antigen’s immunotherapeutic vaccine AE37 is currently in Phase II clinical trials for patients with HER-2/neu positive breast cancer. The trial is being conducted with the United States Military Cancer Institute's (USMCI) Clinical Trials Group and will examine the rate of relapse in patients with node-positive or high-risk node-negative breast cancer after two years. The study is randomized and will compare patients treated with AE37 plus the adjuvant GM-CSF versus GM-CSF alone. The Phase II trial follows a Phase I trial that demonstrated safety, tolerability, and immune stimulation of the AE37 vaccine in breast cancer patients.

Based on positive results in trials of the AE37 vaccine in breast cancer patients, we entered into an agreement in August 2006 with the Euroclinic, a private center in Athens, Greece, to commence clinical trials with the same compound as an immunotherapeutic vaccine for prostate cancer. We expect that the new prostate cancer studies will involve 30 patients and will evaluate primarily immunological responsiveness to a dose of the vaccine previously shown to be well tolerated in breast cancer patients. These studies are currently underway and patient enrolment has been completed.

The same technology used to enhance immunogenicity is being applied in the development of a synthetic peptide vaccine for H5N1 avian influenza. In April 2007, a Phase I clinical trial of Antigen’s proprietary peptides derived from the hemagglutinin protein of the H5N1 avian influenza virus was initiated in healthy volunteers in the Lebanese-Canadian Hospital in Beirut, Lebanon. We anticipate that the trial will be completed in early 2009. Modified peptide vaccines for avian influenza offer several advantages over traditional egg-based or cell-culture based vaccines. Modified peptide vaccines can be manufactured by an entirely synthetic process which reduces cost and increases both the speed and quantity of production egg- or cell-culture based vaccines. Another advantage is that the peptides are derived from regions of the virus that are similar enough in all H5N1 virus strains such that they would not have to be newly designed for the specific strain to emerge in a pandemic.

In March 2007, Antigen entered into an agreement with Beijing Daopei Hospital in Beijing, China to conduct clinical trials using Antigen’s pioneering technology for RNA interference (RNAi) stimulation of the immune response against patients’ immune cells. The strategy developed by Antigen involves modifying the patient's cancer cells to increase their immunogenicity and thereby enable the immune system to fight off the cancer anywhere in the patient's body. Antigen has developed proprietary methods using RNAi to specifically inhibit expression of the Ii protein in cancer cells already expressing MHC class II molecules that are amenable to clinical use. Cancer cells from patients with acute myelogenous leukemia will be transfected with a vector expressing RNAi to silence Ii expression. After lethal irradiation, the cells are re-introduced as a subcutaneous immunization to the patient. Preliminary work under the agreement has commenced. Due to regulatory changes in China’s approval process relating to these types of studies, it is unclear when the trial might commence.

We have filed a Physician’s Investigational New Drug application for the Phase I and Phase II trials in patients with stage II HER-2/neu positive breast cancer. A Physician’s Investigational New Drug application for Phase I trial in patients with breast or ovarian cancer also has been filed. Applications were filed and approvals obtained for Phase I prostate cancer using AE37 in Athens, Greece from the Hellenic Organization of Drugs. The Ministry of Health in Lebanon gave approval for Phase I trial of our experimental H5N1 prophylactic vaccine in Beirut, Lebanon following submission of an application. All other immunomedicine products are in the pre-clinical stage of development.

Government Regulation

Our research and development activities and the manufacturing and marketing of our pharmaceutical products are subject to extensive regulation by the FDA in the United States, Health Protection Branch in Canada and comparable regulatory authorities in other countries. Among other things, extensive regulation puts a burden on our ability to bring products to market. While these regulations apply to all competitors in our industry, many of our competitors have more experience in dealing with the FDA and other regulators. Also, other companies in our industry are not limited primarily to products which still need to be approved by government regulators, as we are now.

If requisite regulatory approvals are not obtained and maintained, our business will be substantially harmed. In many cases, we expect that extant and prospective development partners will participate in the regulatory approval process. The following discussion summarizes the principal features of food and drug regulation in the United States and other countries as they affect our business.

United States

All aspects of our research, development and foreseeable commercial activities relating to pharmaceutical products are subject to extensive regulation by the FDA and other regulatory authorities in the United States. United States federal and state statutes and regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, storage, record keeping, approval, advertising and promotion of pharmaceutical products. The regulatory approval process, including clinical trials, usually takes several years and requires the expenditure of substantial resources. If regulatory approval of a product is granted, the approval may include significant limitations on the uses for which the product may be marketed.

The steps required before a pharmaceutical product may be marketed in the United States include:

·	quality test/studies;

·	pre-clinical tests /studies;

·	submission to the FDA of Investigational New Drug Applications (“INDs”) and/or Amendments for each planned human clinical trial;

·	FDA acceptance of INDs, which permit human clinical trials to commence;

·	commencement and completion of numerous human clinical trials to establish the safety and efficacy of the subject drug;

·	submission of a New Drug Application to the FDA; and

·	FDA approval of the New Drug Application, including approval of all product labeling

Quality and pre-clinical tests and studies include: laboratory evaluation of Drug Substance and Drug Product chemistry, formulation/manufacturing, and stability profiling, as well as a large number of animal studies to assess the potential safety and efficacy of each product. Typically, the pre-clinical studies consist of the following:

Pharmacology

Primary and Secondary Pharmacodynamics

Safety Pharmacology

Other Pharmacodynamics

Pharmacokinetics (“PK”)

Single and Multiple Dose Kinetics

Tissue Distribution

Metabolism

PK Drug Interactions

Other PK studies

Toxicology

Single and Multiple Dose Toxicity

Genotoxicity

Carcinogenicity

Reproduction Toxicity

Other Toxicity

The results of the quality and pre-clinical tests/studies, in addition to any non-clinical pharmacology, are submitted to the FDA along with the initial clinical study protocol (see descriptive of process below) as part of the initial IND and are reviewed by the FDA before the commencement of human clinical trials. Unless the FDA objects to it, the IND becomes effective 30 days following its receipt by the FDA. Subsequent clinical studies may begin as soon as the protocols are submitted. FDA reviews all protocols, protocol amendments, adverse event reports, study reports, and annual reports in connection with a new pharmacological product.

The IND for our oral insulin formulation became effective in November 1998. Amendments are also subsequently filed as new Clinical Studies and their corresponding Study Protocols are proposed. In July 2007, we received a no objection clearance to initiate our Phase III study protocol for our oral insulin product. We filed an Investigational New Drug Application for buccal morphine in January 2002. The Physician’s Investigational New Drug Application for the Phase 1 and Phase II trial of AE37, Antigen’s synthetic peptide vaccine designed to stimulate a potent and specific immune response against tumors expressing the HER-2/neu oncogene, in patients with stage II HER-2/neu positive breast cancer became effective in March 2006.

Clinical trials involve the administration of a new drug to humans under the supervision of qualified investigators. The protocols for the trials must be submitted to the FDA as part of the IND. Also, each clinical trial must be approved and conducted under the auspices of an Institutional Review Board (IRB), which considers, among other things, ethical factors, the safety of human subjects, and the possible liability of the institution conducting the clinical trials.

Clinical trials are typically conducted in three sequential phases (Phase I, Phase II, and Phase III), but the phases may overlap. Phase I clinical trials test the drug on healthy human subjects for safety and other aspects, but not effectiveness. Phase II clinical trials are conducted in a limited patient population to gather evidence about the efficacy of the drug for specific purposes, to determine dosage tolerance and optimal dosages, and to identify possible adverse effects and safety risks. When a compound has shown evidence of efficacy and acceptable safety in Phase II evaluations, Phase III clinical trials are undertaken to evaluate clinical efficacy and to test for safety in an expanded patient population at clinical trial sites in different geographical locations. The FDA and other regulatory authorities require that the safety and efficacy of therapeutic product candidates be supported through at least two adequate and well-controlled Phase III clinical trials (known as “Pivotal Trials”). The successful completion of Phase III clinical trials is a mandatory step in the approval process for the manufacturing, marketing, and sale of products.

In the United States, the results of quality, pre-clinical studies and clinical trials, if successful, are submitted to the FDA in a New Drug Application (“NDA”) to seek approval to market and commercialize the drug product for a specified use. The NDA is far more specific than the IND and must also include proposed labeling and detailed technical sections based on the data collected. The FDA has 10 months to take an action for a standard application (and shorter for a priority application). It may deny a NDA if it believes that applicable regulatory criteria are not satisfied. The FDA also may require additional testing for safety and efficacy of the drug. We cannot be sure that any of our proposed products will receive FDA approval. The multi-tiered approval process means that our products could fail to advance to subsequent steps without the requisite data, studies, and FDA approval along the way. Even if approved by the FDA, our products and the facilities used to manufacture our products will remain subject to review and periodic inspection by the FDA.

To supply drug products for use in the United States, foreign and domestic manufacturing facilities must be registered with, and approved by, the FDA. Manufacturing facilities must also comply with the FDA's current Good Manufacturing Practices (cGMPs), and such facilities are subject to periodic inspection by the FDA. Products manufactured outside the United States are inspected by regulatory authorities in those countries under agreements with the FDA. To comply with cGMPs, manufacturers must expend substantial funds, time and effort in the area of production and quality control. The FDA stringently applies its regulatory standards for manufacturing. Discovery of previously unknown problems with respect to a product, manufacturer or facility may result in consequences with commercial significance. These include restrictions on the product, manufacturer or facility, suspensions of regulatory approvals, operating restrictions, delays in obtaining new product approvals, withdrawals of the product from the market, product recalls, fines, injunctions and criminal prosecution.

One final hurdle that is closely associated with the cGMP inspections is the Pre Approval Inspection that FDA carries out prior to the issuance of a marketing license. FDA inspectors combine cGMP compliance with a review of research and development documents that were used in the formal New Drug Application. A close inspection of historic data is reviewed to confirm data and to demonstrate that a company has carried out the activities as presented in the New Drug Application. This is generally a long inspection and requires a team of individuals from the company to “host” the FDA inspector(s).

Foreign Countries

Before we are permitted to market any of our products outside of the United States, those products will be subject to regulatory approval by foreign government agencies similar to the FDA. These requirements vary widely from country to country. Generally, however, no action can be taken to market any drug product in a country until an appropriate application has been submitted by a sponsor and approved by the regulatory authorities in that country. Again, similar to the FDA, each country will mandate a specific financial consideration for the Marketing Application dossiers being submitted. Although an important consideration, FDA approval does not assure approval by other regulatory authorities. The current approval process varies from country to country, and the time spent in gaining approval varies from that required for FDA approval. The Canadian regulatory process is substantially similar to that of the United States. To date, we have receive the following foreign regulatory approval for our product candidates:

We obtained regulatory approval to begin clinical trials of our oral insulin formulation in Canada in November 1998. In April 2003, we received approval of an Oral-lyn™ Phase II-B clinical trial protocol in Canada. In September 2006 Health Canada approved our Clinical Trial Application in respect of our proposed Generex Oral-lyn™ protocol for late-stage trials; we expect to use the data collected from these trials in the New Drug Submission that will be prepared concurrently with the progression of the late-stage trials.

In May 2005, we received approval from the Ecuadorian Ministry of Public Health for the commercial marketing and sale of Generex Oral- lyn™ for treatment of Type 1 and Type 2 diabetes.

We obtained regulatory approval in Canada to begin clinical trials of our buccal morphine product in March 2002 and our fentanyl product in October 2002.

Applications were filed and approvals obtained for Phase I prostate cancer using AE37 in Athens, Greece from the Hellenic Organization of Drugs. The Ministry of Health in Lebanon gave approval for Phase I trial of our experimental H5N1 prophylactic vaccine in Beirut, Lebanon following submission of an application.

Marketing and Distribution

We market our products through collaborative arrangements with companies that have well-established pharmaceutical marketing and distribution capabilities, including expertise in the regulatory approval processes in their respective jurisdictions.

Generex Oral-Lyn™

Our business partner in Ecuador, PharmaBrand, has generated some commercial sales of Generex Oral-lyn™ in that country since the product received regulatory approval in May 2005. Currently, our relationship with PharmaBrand is governed by a letter of intent, and we are in the process of refining our relationship with PharmaBrand to transition its role to primarily that of a manufacturer for the commercial orders placed worldwide with distribution rights in Ecuador. We do not expect that such sales will be reflected in our financial statements until we have entered into a definitive agreement with PharmaBrand.

We have entered into licensing and distribution agreement with numerous multinational distributors to assist us with the process of gaining regulatory approval for the registration, marketing, distribution, and sale of Generex Oral-lyn™ in countries throughout the world, including:

Leosons General Trading Company/Generex MENA Office - 15 Middle Eastern countries;

Shreya Life Sciences Pvt. Ltd. - India, Pakistan, Bangladesh, Nepal, Bhutan, Sri Lanka, and Myanmar;

Adcock Ingram Limited and Adcock Ingram Healthcare (Pty) Ltd. - South Africa, Lesotho, Swaziland, Botswana, Namibia, Mozambique and Zimbabwe;

E&V Alca Distribution Corp. - Albania, Montenegro, and the Kosovo;

Medrey S.A.L. (formerly MedGen Corp.) and Benta S.A.L. – Lebanon;

SciGen, Ltd. - China, Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam; and

Dong Sung Pharm. Co. Ltd. – South Korea.

Under these licensing and distribution agreements excluding the one with Dong Sung Pharm Co., we will not receive an upfront license fee, but the distributor will bear any and all costs associated with the procurement of governmental approvals for the sale of Generex Oral-Lyn™, including any clinical and regulatory costs. We possess the worldwide marketing rights to our oral insulin product.

In August 2008, we entered into a product licensing and distribution agreement with Dong Sung Pharm Co. Ltd. for the importation, marketing, distribution and sale of Generex Oral-lyn™ in South Korea. Under the seven-year agreement, Dong-Sung will have an exclusive license and will pay us a USD$500,000 non-refundable license fee upon execution and a USD$500,000 non-refundable license fee at such time as governmental approval for the importation, marketing, distribution and sale of the product in South Korea is obtained. Under this agreement, we are responsible for procuring such governmental approval. In addition, when it places its first purchase order, Dong-Sung will pay us a pre-payment in the amount of USD$500,000, which will be applied against product purchase orders.

Previously, we entered into a licensing and distribution agreement with the Armenian Development Agency and the Canada Armenia Trading House Ltd. for the commercialization of Generex Oral-lyn™ in the Republic of Armenia, Georgia and the Republic of Kazakhstan. Although an application for registration has been submitted to public health authorities in Armenia, to date no approval has been forthcoming. We terminated this agreement in January 2008, but we are continuing to prosecute the Armenian application on our own.

Leosons General Trading Company, has filed submissions of the Generex Oral-lyn™ dossier with regulatory agencies in Kuwait, Qatar, Jordan, Yemen, and the United Arab Emirates, but no approvals have been forthcoming to date except for a limited, pharmacy specific importation license in the United Arab Emirates to import Generex Oral-lyn™ into Abu Dhabi. We recently established an office in Dubai Healthcare City Center to facilitate our work with the regulatory and marketing personnel of Leosons. This office provides greater exposure to the medical community within the Middle East region.

In March 2008, we received the first purchase order for 210,000 canisters of Generex Oral-lyn™ from Shreya Life Sciences Pvt. Ltd., our distributor in India. We are in the process of completing this order and partial shipment was made in September 2008. A marketing plan has already been submitted by Shreya Life Sciences Pvt. Ltd., to Generex on the marketing strategy for the distribution of Oral Recosulin™--the trademark under which Shreya will market Generex Oral-lyn™ within India. The marketing plan also includes post-approval marketing studies.

Over-the-Counter Products

We have entered into distribution agreements with the number of pharmaceutical wholesalers, including Cardinal Health, AmerisourceBergen Corporation, Amerimark Direct, DIK Drug Co., H.D. Smith Wholesale Drug, Kinray Inc., Smith Drug Company, Value Drug Company, RDC, Kohl & Frisch Limited, UniPharm Wholesale Drugs Ltd and McKesson Canada, for the distribution of Glucose RapidSpray™ in retail stores in the United States and Canada. Glucose RapidSpray™ is currently sold in the United States and Canada through a number of retail chains, including:

Rite Aid,

Butler Drug Store,

Rexall PharmaPlus,

Fruth Pharmacy,

Loblaws Companies Ltd.,

Hy-Vee Inc.,

Kerr Drug Inc.,

Kinney Drug, Inc.,

Medicine Shop,

Meijer,

ShopKo,

Weiss Markets Inc.,

Aurora Pharmacy, and

Shoppers Drug Mart.

Glucose RapidSpray™ is also available for sale on the Internet through Amazon.com, Walgreens.com, AmericanDiabetesWholesale.com and DiabeticExpress.com as well as in a number of independent drugstores throughout North America.

We have also established relationships with brokers who serve as a liaison to retail outlets throughout the U.S. and Canada. These brokers represent multiple products that are presented to specific product buyers. We believe that our relationships with the brokers will place us in a stronger position to get our products listed and on the shelf in major chains throughout the United States and Canada.

Our newly introduced over-the-counter glucose and energy spray products, BaBOOM!™ Energy Spray and GlucoBreak™, are being reviewed for commercial sale in several of the largest national and regional retailers and drug store chains in the United States and Canada. Recently, we have begun limited direct marketing of our glucose sprays on the Internet and have established web sites for each of Glucose RapidSpray™, BaBOOM!™ Energy Spray and GlucoBreak™ where consumers may purchase these products directly.

We continue to seek to expand our existing distribution channels for our over-the-counter products. We have implemented this strategy with the execution of a licensing and distribution agreement with Leosons for the marketing, distribution, and sale in the Middle East of Glucose RapidSpray™. In December 2007, we received a $400,000 purchase order for our over-the-counter products, including Glucose Rapid Spray™, from Leosons and are currently in the process of filling the order and partial shipments have been made product. To date, we have received approximately $98,000 in revenues from Leosons from sales of Glucose RapidSpray™.

In August 2007, we entered into a licensing and distribution agreement with Adcock Ingram Limited and Adcock Ingram Healthcare (Pty) Ltd., a leading distributor of North American pharmaceutical and healthcare products in South Africa, for the marketing and distribution of Glucose RapidSpray ™ in South Africa and six neighboring countries.

Under these agreement, we will not receive an upfront license fee with respect to Glucose RapidSpray™, but the respective distributor will bear all costs associated with the procurement of governmental approvals for the sale of the product, including any clinical and regulator costs.

With respect to marketing all of our products, we intend to rely primarily on contracting or collaborative arrangements with other companies that possess strong pharmaceutical marketing and distribution resources to perform these functions for us. Accordingly, we may not have the same control over marketing and distribution that we would have if we conducted these functions ourselves.

Manufacturing

In December 2000, we completed our pilot manufacturing facility for Generex Oral-lyn™ in Toronto, Canada in the same commercial complex in which our laboratories are located. In the first quarter of fiscal year 2006, we initiated a scale-up commercial production run of several thousand canisters of Generex Oral-lyn™ at this facility. We will need to significantly increase our manufacturing capability or engage contract manufacturers in order to manufacture any product in significant commercial quantities.

In March 2006, we successfully completed of the delivery and installation of a turnkey Generex Oral-lyn™ filling operation at the facilities of PharmaBrand, in Quito, Ecuador for the purposes of commercial supply and sales in Ecuador and other countries that can procure registrations and import licenses. We expect additional commercial manufacturing runs of the product at these facilities before the end of calendar year 2008. We anticipate that the capacity of this facility will be sufficient to support commercial sales in Ecuador, other countries in Latin America and around the world.

In anticipation of undertaking late-stage clinical trials of Generex Oral-lyn™ in Canada, we entered into an agreement with Cardinal Health PTS, LLC, now known as Catalent Pharma Solutions, in June 2006, pursuant to which Catalent will manufacture clinical trial batches of Generex Oral-lyn™. Pursuant to pre-extant supply arrangements, our third-party suppliers have been manufacturing the quantities of the RapidMist™ device components (valves, canisters, actuators, and dust caps), the insulin, and the formulary excipients that will be required for the Catalent production. In addition, our Regulatory Affairs, Quality Control and R&D personnel have been working with Catalent to prepare and validate the Catalent production processes.

Our subsidiary Antigen leases office and laboratory space in Worcester, Massachusetts, which is sufficient for its present needs. The laboratory has permission to store and use biohazardous (including recombinant DNA materials) and flammable chemicals.

Our over-the-counter glucose and energy products in Canada are manufactured by Pax-All Manufacturing, Inc., contract manufacturing company with the emphasis on over-the-counter and personal care products. The products are manufactured at Pax-All’s manufacturing facility located in Mississauga, Canada.

Raw Material Supplies

The excipients used in our formulation are available from numerous sources in sufficient quantities for clinical purposes, and we believe that they will be available in sufficient quantities for commercial purposes when required, although we have not yet attempted to secure a guaranteed commercial supply of any such products. Components suitable for our RapidMist™ device are available from a limited number of potential suppliers, as is the chemical propellant used in the device. The components which now comprise the device will be utilized with the commercial version of our insulin product in Ecuador and other South American countries, as well as the components for the commercial version of our new glucose spray products in the United States and Canada. We have secured supply arrangements with manufacturers for each of the components and the propellant that we presently use in our RapidMist™ device for commercial quantities of such components. All such suppliers are prominent, reputable and reliable suppliers to the pharmaceutical industry. Because we now have a single supplier for each of these components and propellant, however, we are more vulnerable to supply interruptions than would be the case if we had multiple suppliers for each component. We do not believe that the risk of supply for proprietary raw materials or device components is unusual in the pharmaceutical industry.

Insulin is available worldwide from only a few sources. However, alternative supplies of insulin are under development. We currently procure recombinant human insulin crystals for clinical trials and commercial production in Ecuador from time to time from a European supplier whose production facility is GMP certified by the FDA and European health authorities. We are working towards the establishment of a guaranteed long-term supply arrangement with this supplier. We are also exploring potential alternative sources of supply. We also believe future development and marketing partners under licensing and development agreements, if any, will provide, or assist us to obtain, pharmaceutical compounds that are used in products covered under such agreements.

Components used in the production of our over-the-counter glucose sprays products, including glucose and all excipients, are available from a number of potential suppliers. We have not secured commercial supply agreements with any of them as they are readily available in the commercial quantities.

While morphine is a controlled substance, it is readily available for use in clinical trials. We currently have the appropriate licenses and facilities for acquiring and storing morphine in Canada. Various regulatory issues surround the import of morphine into the United States, and we will need to address these issues prior to commencing clinical trials in the United States.

Raw materials for our pre-clinical development stage immunomedicine products include amino acids (for peptide therapeutics) and oligonucleotides (for genetic constructs). These materials are readily available from commercial suppliers. We utilize the services of several commercial laboratories for the manufacturing of our pre-clinical development stage immunomedicine products.

Intellectual Property

We hold a number of patents in the United States and foreign countries covering our buccal and other delivery technologies. We also have developed brand names and trademarks for products in all areas. We consider the overall protection of our patent, trademark and other intellectual property rights to be of material value and acts to protect these rights from infringement.

Patents are a key determinant of market exclusivity for most branded pharmaceutical products. Protection for individual products or technologies extends for varying periods in accordance with the expiration dates of patents in the various countries. The protection afforded, which may also vary from country to country, depends upon the type of patent, its scope of coverage and the availability of meaningful legal remedies in the country.

We currently have twenty issued U.S. patents and four pending U.S. patent application pertaining to aspects of buccal delivery technology including oral administration of macromolecular formulations (including insulin) as well as pain relief medications such as morphine and fentanyl. We currently hold eight issued Canadian patents and five pending Canadian patent applications also relating to aspects of buccal drug delivery technology. We also hold one hundred and four issued patents and one hundred and seventeen pending patent applications covering our drug delivery technology, including our over-the-counter glucose and energy spray products and metformin gum, in jurisdictions other than the U.S. and Canada, including Japan, Mexico, Australia and several European countries. We plan to continue to expand our patent portfolio for additional products, formulations and device inventions. We also plan to expand the territorial coverage of our existing patent portfolio and new additions to more markets around the world where we plan to do business.

In addition, we have one issued Canadian patent, one U.S. patent and one pending U.S. patent application pertaining to delivery technologies other than our buccal delivery technology.

We also have an indirect interest in seven drug delivery patents held by another company, Centrum Biotechnologies, Inc.

Our subsidiary Antigen currently holds eight issued U.S. patents, three Australian patents, nine other foreign patents, seven pending U.S. patent applications , one pending U.S. provisional patents and twenty-five foreign patent applications concerning technology for modulating the immune system via activation of antigen-specific helper T lymphocytes. Some of these patents are held under exclusive licenses from the University of Massachusetts. Dr. Robert Humphreys, a retired officer of Antigen, is the listed inventor or co-inventor on all of these patents and patent applications, including those licensed from the University of Massachusetts.

In addition to patents, we hold intellectual property in the form of trademark applications worldwide on products such as Generex Oral-lyn™ and Oral Recosulin™. Trademarks have no effect on market exclusivity for a product, but are considered to have marketing value. Trademark protection continues in some countries as long as used; in other countries, as long as registered. Registration is for fixed terms and can be renewed indefinitely.

We possess the worldwide manufacturing and marketing rights to our oral insulin product.

Our long-term success will substantially depend upon our ability to obtain patent protection for our technology and our ability to protect our technology from infringement, misappropriation, discovery and duplication. We cannot be sure that any of our pending patent applications will be granted, or that any patents which we own or obtain in the future will fully protect our position. Our patent rights and the patent rights of biotechnology and pharmaceutical companies in general, are highly uncertain and include complex legal and factual issues. We believe that our existing technology and the patents which we hold or for which we have applied do not infringe any one else's patent rights. We believe our patent rights will provide meaningful protection against others duplicating our proprietary technologies. We cannot be sure of this, however, because of the complexity of the legal and scientific issues that could arise in litigation over these issues. See Part I - Item 3. Legal Proceedings for a discussion of certain legal proceedings involving intellectual property issues.

We also rely on trade secrets and other unpatented proprietary information. We seek to protect this information, in part, by confidentiality agreements with our employees, consultants, advisors and collaborators.

Competition

We expect that products based upon our buccal delivery technology and any other products that we may develop will compete directly with products developed by other pharmaceutical and biotechnology companies, universities, government agencies and public and private research organizations.

Products developed by our competitors may use a different active pharmaceutical agent or treatment to treat the same medical condition or indication as our product or may provide for the delivery of substantially the same active pharmaceutical ingredient as our products using different methods of administration. For example, a number of pharmaceutical and biotechnology companies are engaged in various stages of research, development and testing of alternatives to insulin therapy for the treatment of diabetes, as well as new methods of delivering insulin. These methods, including nasal, transdermal, needle-free (high pressure) injection and pulmonary, may ultimately successfully deliver insulin to diabetic patients. Some biotechnology companies also have developed different technologies to enhance the presentation of peptide antigens. Some of our competitors and potential competitors have substantially greater scientific research and product development capabilities, as well as financial, marketing and human resources, than we do.

Where the same or substantially the same active ingredient is available using alternative delivery means or the same or substantially the same result is achievable with a different treatment or technology, we expect that competition among products will be based, among other things, on product safety, efficacy, ease of use, availability, price, marketing and distribution. When different active pharmaceutical ingredients are involved, these same competitive factors will apply to both the active agent and the delivery method.

We consider other drug delivery and biotechnology companies to be direct competitors for the cooperation and support of major drug and biotechnology companies that own or market proprietary pharmaceutical compounds and technologies, as well as for the ultimate patient market. Of primary concern to us are the competitor companies that are known to be developing delivery systems for insulin and other pharmaceutical agents that we have identified as product candidates and technologies to enhance the presentation of peptide antigens.

The following descriptions of our competitors and their products were obtained from their filings with the Securities and Exchange Commission, information available on their web sites and industry research reports.

Buccal Insulin Product

Pfizer announced in October 2007 the discontinuation of development and marketing activities relating to Exubera®, the inhaled insulin product developed by Nektar Therapeutics. Exubera® was the first inhaled insulin formulation to receive FDA approval. In April 2008, Pfizer and Nektar Therapeutics announced that clinical trials of Exubera demonstrated increased lung cancer rates in certain patient. We are not aware of any product currently in Pfizer’s pipeline that directly competes with Oral-lyn™.

Nektar Therapeutics and Pfizer terminated their collaborative development and licensing agreement for Exubera® and Nektar’s next-generation inhaled insulin product in November 2007. In April 2008, Nektar announced that it had ceased all negotiations with potential partners for Exubera® and the next-general inhaled insulin product as a result of new data analysis from ongoing clinical trials conducted by Pfizer which indicated an increased risk of lung cancer in certain patients. We are not aware of any product candidates under development by Nektar that compete directly with Oral-lyn™.

Alkermes, Inc. and Eli Lilly and Company entered into a licensing agreement in 2001 for the development of an AIR® inhaled insulin system based upon Alkermes’ AIR® pulmonary drug delivery system for large molecule drugs to the lungs with a dry power formulation. In March 2008, Eli Lilly announced its termination of development work relating to this product.

MannKind Corporation’s product candidates include Technosphere® insulin, comprised of MannKind’s dry power formulation and proprietary MedTone® inhaler. Phase III clinical trials are underway in the U.S., Europe and Latin America.

CPEX Pharmaceuticals, Inc.’s proprietary permeation enhancer, CPE-215®, provides skin, mouth, nose and eye membrane absorption of a variety of pharmaceuticals. CPEX has applied this technology to Nasulin™, through which insulin is absorbed via nasal mucosa. In 2007, Nasulin™ commenced Phase III clinical trials which CPEX expects to conclude in mid-2010. Bentley Pharmaceuticals spun off its drug delivery business as CPEX prior to Bentley’s merger with Teva Pharmaceuticals Industries, Ltd.

Abbott Laboratories, which offers a broad array of diabetes products, acquired Kos Pharmaceuticals in late 2006. Prior to the acquisition, Kos had conducted Phase II clinical trails for its metered dose inhaler for aerosol liquid insulin.

Emisphere Technologies, Inc. has an active oral insulin program focused on developing GLP-1 analogs. GLP-1 may potentially be absorbed through the GI tract in tablet form.

Novo Nordisk A/S, one of the two leading manufacturers of insulin in the world, announced in May 2008 the termination of clinical testing of the pulmonary delivery system for inhaled insulin, the AERx® insulin Diabetes Management System (AERx iDMS), initially developed by Aradigm Corporation. The product was in Phase III clinical trials at the time of Novo Nordisk’s announcement.

Nastech Pharmaceutical Company Inc. is conducting a Phase II clinical trial in Europe to evaluate its insulin nasal spray in Type 2 diabetics.

There are also a number of companies developing alternative means of delivering insulin in the form of oral pills, transdermal patches, and intranasal methods, which are at early stages of development. In addition to other delivery systems for insulin, there are numerous products which have been approved for use in the treatment of Type 2 diabetics in substitution of, or in addition to, insulin therapy. These products may also be considered competitive with insulin products.

Buccal Morphine and Fentanyl Products

Cephalon, Inc. received FDA approval in September 2006 for FENTORA™ and launched the product in the United States shortly thereafter. FENTORA™ is a fentanyl buccal tablet that is placed between the patient’s upper cheek and gum and is indicated for the management of breakthrough pain in patients with cancer who are already receiving and are tolerant to opioid therapy for their underlying persistent cancer pain. Cephalon anticipates submitting a NDA to the FDA in late 2007 to expand the labeled indications for FENTORA™ to include non-cancer breakthrough pain in opioid-tolerant patients. Other competing products commonly prescribed to treat persistent pain are Ortho-McNeil’s DURAGESIC® and Purdue Pharmaceuticals’ OXYCONTIN® and MS-CONTIN®.

Nastech Pharmaceuticals is developing an intranasal formulation of morphine that is in Phase II clinical trials. ..

Immunomedicine Technology and Products

Advaxis, Inc. uses a proprietary technique to bioengineer Listeria bacteria to create a specific antigen that can stimulate an immune response after recognition by the recipient’s immune system. Advaxis’ most advanced product candidate is Lovaxin C, which is used to treat head and neck cancer and human papillomavirus (HPV)-derived cervical cancer. Advaxis may begin Phase II clinical trials for Lovaxin C in 2008 and has prostate and breast cancer vaccines in preclinical phases.

Micromet, Inc. uses two platform technologies to treat cancers, autoimmune diseases and inflammation: (i) the creation of Single-Chain Antibodies (SCAs) through the use of the antigen-binding region of a full-sized antibody, held together by a linker; and (ii) BiTE® technology which utilizes the body’s CTLs to attack tumor cells. Micromet has completed Phase I clinical trials for its most developed product candidate, adecatumumab (MT201), for treatment of metastatic breast cancer.

Sanofi Pasteur Inc., the vaccine division of sanofi-aventis and one of the largest vaccines companies in the world, has product candidates including inoculations against 20 varieties of infectious diseases. It received FDA approval for an H5N1 avian influenza vaccine in April 2007.

Dendreon Corporation’s product portfolio includes therapeutic vaccines, monoclonal antibodies and small molecules. Its most advanced product candidate now in Phase III clinical trials is Provenge® (sipuleucel-T), an investigational autologous (patient-specific) active cellular immunotherapy (ACI) for the treatment of prostate cancer. Dendreon is expected to release interim survival data compiled from the Phase III trials in late 2008. Dendreon has completed Phase I clinical trials in of Lapuleucel-T in patients with breast, ovarian and colorectal tumors. Lapuleucel-T targets HER/2-positive cancers.

Cell Genesys, Inc. currently has two clinical stage product platforms: (i) off-the-shelf GVAX™ cancer immunotherapies for prostate cancer (Phase III), pancreatic cancer (Phase II) and leukemia (Phase II), and (2) oncolytic virus therapies for bladder cancer (Phase I) and other tumors. The GVAX™ cancer treatments are composed of tumor cells that are genetically modified to secrete an immune-stimulating cytokine and are irradiated for safety. Cell Genesys and Takeda Pharmaceutical Co. have entered into an exclusive licensing agreement for GVAX. Cell Genesys has formed a partnership with Novartis AG for development of the oncolytic virus therapies.

Pharmexa-Epimmune, Inc., the U.S. subsidiary of Pharmexa A/S, has in its product pipeline a peptide vaccine, GV1001, which is in Phase III clinical trials for pancreatic cancer and Phase II clinical trials for liver and non-small cell lung cancer and two vaccines against HER/2-positive breast cancer in Phase I and Phase II clinical trials. Pharmexa-Epimmune has received significant NIH funding for vaccines against malaria and HIV, some of which are currently in Phase I testing.

Cel-Sci Corporation has developed the Ligand Epitope Antigen Presentation System (L.E.A.P.S.) delivery technology. In April 2006, Cel-Sci filed a provisional U.S. patent application covering CEL-1000, the lead product developed from the L.E.A.P.S. technology, for the prevention/treatment of bird flu and/or as an adjuvant to be included in a bird flu vaccine.

Environmental Compliance

Our manufacturing, research and development activities involve the controlled use of hazardous materials and chemicals. We believe that our procedures for handling and disposing of these materials comply with all applicable government regulations. However, we cannot eliminate the risk of accidental contamination or injury from these materials. If an accident occurred, we could be held liable for damages, and these damages could severely impact our financial condition. We are also subject to many environmental, health and workplace safety laws and regulations, particularly those governing laboratory procedures, exposure to blood-borne pathogens, and the handling of hazardous biological materials. Violations and the cost of compliance with these laws and regulations could adversely affect us. However, we do not believe that compliance with the United States, Canadian or other environmental laws will have a material effect on us in the foreseeable future.

Research and Development Expenditures

A substantial portion of our activities to date have been in research and development. In the period from inception to July 31, 2008, our expenditures on research and development were $90,035,712. These included $16,359,030 in the year ended July 31, 2008, $11,983,626 in the year ended July 31, 2007, and $6,554,393 in the year ended July 31, 2006. The increase in our research and development activities in 2008 compared to 2007 and 2007 compared to 2006 is due primarily to the preparation for and the commencement of Phase III clinical trials of our oral insulin product in Canada.

Financial Information About Geographic Areas

The regions in which we had identifiable assets and revenues and the amounts of such identifiable assets and revenues for each of the last three fiscal years are presented Note 16 in the Notes to Consolidated Financial Statements in Part II - Item. 8 Financial Statements and Supplementary Data of this Annual Report on Form 10-K. Identifiable assets are those that can be directly associated with a geographic area.

Employees

At September 30, 2008, we had twenty-seven full-time employees, including our executive officers and other individuals who work for us full-time but are employed by management companies that provide their services, and ten employees of our subsidiary Antigen. Twelve of our employees are executive and administrative, twenty-two are scientific and technical personnel who engage primarily in development activities and in preparing formulations for testing and clinical trials, and three are engaged in corporate and product promotion and product sales. We believe our employee relations are good. None of our employees is covered by a collective bargaining agreement.

We will continue to need qualified scientific personnel and personnel with experience in clinical testing, government regulation and manufacturing. We may have difficulty in obtaining qualified scientific and technical personnel as there is strong competition for such personnel from other pharmaceutical and biotechnology companies, as well as universities and research institutions. Our business could be materially harmed if we are unable to recruit and retain qualified scientific, administrative and executive personnel to support our expanding activities, or if one or more members of our limited scientific and management staff were unable or unwilling to continue their association with us. We have fixed-term agreements with only certain members of our key management and scientific staff, including Anna Gluskin, our Chief Executive Officer and President, Rose Perri, our Chief Operating Officer and Chief Financial Officer, Mark Fletcher, our Executive Vice-President and General Counsel, Dr. Gerald Bernstein, our Vice President Medical Affairs, Dr. Jaime Davidson, our Medical Director, Eric von Hofe, President of Antigen, Minzhen Xu, Vice-President Biology of Antigen, and Nikoletta Kallinteris, Senior Research Associate.

We use non-employee consultants to assist us in formulating research and development strategy, in preparing regulatory submissions, in developing protocols for clinical trials, and in designing, equipping and staffing our manufacturing facilities. We also use non-employee consultants to assist us in business development. These consultants and advisors usually have the right to terminate their relationship with us on short notice. Loss of some of these key advisors could interrupt or delay development of one or more of our products or otherwise adversely affect our business plans.

Executive Officers and Directors

Name	Age	Position Held with Generex

Anna E. Gluskin	57	Chairman, President, Chief Executive Officer and Director

Rose C. Perri	41	Chief Operating Officer, Chief Financial Officer, Treasurer, Secretary and Director

Mark Fletcher, Esquire	42	Executive Vice President and General Counsel

Gerald Bernstein, M.D.	75	Vice President, Medical Affairs

John P. Barratt	64	Director

Brian T. McGee	47	Director

Nola E. Masterson	61	Director

All directors are elected to hold office until the next annual meeting of stockholders following election and until their successors are duly elected and qualified. Executive officers are appointed by the Board of Directors and serve at the discretion of the Board.

Anna E. Gluskin: Director since September 1997. Ms. Gluskin has served as the President and Chief Executive Officer of Generex since October 1997 and the Chairperson of the Generex Board of Directors since November 2002. She held comparable positions with Generex Pharmaceuticals Inc. from its formation in 1995 until its acquisition by Generex in October 1997.

Rose C. Perri. Director since September 1997. Ms. Perri has served as Treasurer and Secretary of Generex since October 1997 and as Chief Operating Officer since August 1998. She served as Acting Chief Financial from November 2002 until April 2005 when she was appointed Chief Financial Officer. She was an officer of Generex Pharmaceuticals Inc. from its formation in 1995 until its acquisition by Generex in October 1997.

Mark Fletcher, Esq. Mr. Fletcher has served as our Executive Vice President and General Counsel since April 2003. From October 2001 to March 2003, Mr. Fletcher was engaged in the private practice of law as a partner at Goodman and Carr LLP, a leading Toronto law firm. From March 1993 to September 2001, Mr. Fletcher was a partner at Brans, Lehun, Baldwin LLP, a law firm in Toronto. Mr. Fletcher received his LL.B. from the University of Western Ontario in 1989 and was admitted to the Ontario Bar in 1991.

Gerald Bernstein, M.D. has served as Vice President Medical Affairs of Generex since October 2001. He served as a Director of Generex from October 2002 to May 2008. Dr. Bernstein acts as a key liaison for Generex on medical and scientific affairs to the medical, scientific and financial communities and consults with Generex under a consulting agreement on research and medical affairs and on development activities. Dr. Bernstein is an associate clinical professor at the Albert Einstein College of Medicine in New York and an attending physician at Beth Israel Medical Center, Lenox Hill Hospital and Montefore Medical Center, all in New York. He was president of the American Diabetes Association from 1998 to 1999.

John P. Barratt. Independent Director since March 2003. Mr. Barratt is currently the Chairman of the Generex Compensation Committee and a member of the Generex Audit Committee and Corporate Governance and Nominating Committee. Mr. Barratt currently serves as the Board Liaison Officer of The Caldwell Partners International, a role he commenced in July 2006. From April 2005 to July 2006, Mr. Barratt served as Chief Operating Officer of The Caldwell Partners International. The Caldwell Partners International is a Canadian-based human capital professional services company. Mr. Barratt from January 2002 until February 2007 served as the court-appointed Responsible Person and Liquidation Manager of Beyond.com Corporation, Debtor-in-Possession, a U.S. Chapter 11 Bankruptcy case, in which capacity Mr. Barratt reported to the bankruptcy court and to the U.S. Trustee’s Office. From September 2000 to January 2002, Mr. Barratt acted in the capacity of Chief Operating Officer of Beyond.com Corporation, an electronic fulfillment provider. Between 1996 and 2000, Mr. Barratt was partner-in-residence with the Quorum Group of Companies, an international investment partnership specializing in providing debt and/or equity capital coupled with strategic direction to emerging technology companies. Between 1988 and 1995, Mr. Barratt held a number of positions with Coscan Development Corporation, a real estate development company, the last position of which was Executive Vice-President and Chief Operating Officer. Mr. Barratt currently serves on a number of Boards of Directors, including Brookfield Investments Corporation and BAM Split Corporation, and is a member of the Board of Directors and Chairman of the Risk Policy Committee of the Bank of China (Canada). Mr. Barratt also serves as Chairman of the Independent Review Committees of BAM Split Corp. and Brookfield Investment Funds Management Inc. In addition, Mr. Barratt is a member of the Advisory Board and also acts in the capacity of Chief Financial Officer of Crystal Fountains Inc."

Brian T. McGee. Independent Director since March 2004. Mr. McGee is currently the Chairman of the Generex Audit Committee and a member of the Generex Compensation Committee and Corporate Governance and Nominating Committee. Mr. McGee has been a partner of Zeifmans LLP ("Zeifmans") since 1995. Mr. McGee began working at Zeifmans shortly after receiving a B.A. degree in Commerce from the University of Toronto in 1985. Zeifmans is a Chartered Accounting firm based in Toronto, Ontario. A significant element of Zeifman's business is public corporation accounting and auditing. Mr. McGee is a Chartered Accountant. Throughout his career, Mr. McGee has focused on, among other areas, public corporation accounting and auditing. In 1992, Mr. McGee completed courses focused on International Taxation and Corporation Reorganizations at the Canadian Institute of Chartered Accountants and in 2003, Mr. McGee completed corporate governance courses on compensation and audit committees at Harvard Business School. In April 2004 Mr. McGee received his CPA designation from The American Institute of Certified Public Accountants.

Nola E. Masterson. Independent Director since May 2007. Ms. Masterson is currently a Chairperson of the Generex Corporate Governance and Nominating Committee and a member of the Generex Audit Committee and Compensation Committee. Since 1982, she has been the chief executive officer of Science Futures Inc., an investment and advisory firm. Ms. Masterson is currently Managing Member and General Partner of Science Futures LLC, I, II and III, which are venture capital funds invested in life science funds and companies. She also serves as a Senior Advisor to TVM Techno Venture Management, an international venture capital company, and as a member of the Board of Directors of Repros Therapeutics Inc., a development stage biopharmaceutical company formerly known as Zonagen, Inc. (currently trading on The NASDAQ Global Market under the symbol “RPRX”). Ms. Masterson was the first biotechnology analyst on Wall Street, working with Drexel Burnham Lambert and Merrill Lynch, and is a co-founder of Sequenom, Inc., a genetic analysis company located in San Diego and Hamburg, Germany. She also started the BioTech Meeting in Laguna Nigel, CA, the annual Biopharmaceutical Conference in Europe, and was nominated to the 100 Irish American Business List in 2003. Ms. Masterson began her career at Ames Company, a division of Bayer, and spent eight years at Millipore Corporation in sales and sales management. Ms. Masterson has 31 years of experience in the life science industry. She received her Masters in Biological Sciences from George Washington University, and continued Ph.D. work at the University of Florida.

Two of our former directors, Peter G. Amanatides and Dr. Gerald Bernstein, elected not to stand for re-election to the Board of Directors at the Annual Meeting of Stockholders held on May 27, 2008. Our Board now consists of five directors, three of whom are independent of Generex management.

Other Key Employees and Consultants

Slava Jarnitskii is our Financial Controller. He began his employment with Generex Pharmaceuticals in September 1996 and has been in the employment of Generex since its acquisition of Generex Pharmaceuticals in October 1997. Before his employment with Generex Pharmaceuticals, Mr. Jarnitskii received a Masters of Business Administration degree from York University in September 1996.

William D. Abajian is a Business Development Consultant. Mr. Abajian has served in senior management and executive positions with various businesses throughout the past twenty-five years where he played pivotal roles in the development and launches of a number of pharmaceutical and device products. In 1988 he founded CPG Inc. in Lincoln Park, New Jersey where he served as Chief Executive Officer until 2002. CPG Inc. invented, manufactured and sold DNA Synthesis products, chromatography media’s and molecular biology kits to researchers in over 40 countries worldwide. This privately-held company was sold to Millipore Corporation in 2002. Prior to running his own company Mr. Abajian served as the Vice President of Sales and Marketing at Electro Nucleonics Inc. in Fairfield, New Jersey between 1981 and 1988. Electro Nucleonics Inc. invented, manufactured and sold blood chemistry systems and diagnostic kits worldwide. The company also launched the first FDA approved AIDS test. At Electro Nucleonics Mr. Abajian was responsible for procuring $50 million of hospital instrumentation sales, opened up the veterinarian market for the company and was key to brokering a deal that required all Armed Forces and The American Red Cross to purchase all HIV tests from the company. The organization included five regional managers, 45 sales representatives and 20 technical representatives. In 2004, he founded The Abajian Group LLC, a company that advises CEOs on strategic planning and assists in the commercialization of technologies and sales and marketing. He continues to serve as a trustee of Eva’s Village, a non-for-profit organization in Paterson, New Jersey, and of St. Joseph’s Hospital in Paterson, New Jersey, where he previously held the positions of Chairman of the OPEC Committee and a member of the hospital’s Finance and Pension Committee and the Executive Committee.

George Markus is our Manager of Regulatory Affairs. Mr. Markus holds a B.Sc. (Honours) in theoretical chemistry from Dalhousie University and a M.Sc. in analytical chemistry from McGill University. He is an instructor at the Academy of Applied Pharmaceutical Sciences in Toronto, Canada. In his more than twenty years in the industry, he has been President & Chief Executive Officer of Consolidated Clinical Research of Canada Inc., a site management organization (SMO) that manages the coordination of clinical research sites, and has worked in Quality Assurance / Special Projects / Clinical Operations and as a Director, Regulatory Affairs for Dimethaid Research Inc. Mr. Markus has also held regulatory affairs positions with Pasteur Merieux Connaught, Biovail Corporation International, Sanofi Winthrop, Genpharm Inc. Pharmaceuticals, and Sandoz Canada Inc.

Dr. Jaime Davidson, MD, FACP, FACE was appointed a consultant Medical Director for Generex in July, 2006. Dr. Davidson is the President of Endocrine and Diabetes Associates of Texas, based at the Medical City Dallas Hospital complex, and a Clinical Associate Professor of Internal Medicine at University of Texas Southwestern Medical Center in Dallas, Texas. Dr. Davidson chaired the Diabetes Consensus Guidelines for the American College of Endocrinology and serves as Director of the Annual Intensive Diabetes, Endocrinology and Metabolic Diseases Course for the University of Southern California Keck School of Medicine. He serves as a council member for the Texas Department of Health Services, appointed by Texas Governor Rick Perry. In 2006 Dr. Davidson was distinguished by the American Association of Clinical Endocrinologists with an award for his contributions to the improvement of endocrine health for under-served populations, and by the American Diabetes Association with the Harold Rifkin MD award for his international contributions in the diabetes field. In the past, he has held positions with the National Diabetes Advisory Board, the National Institutes of Health, the Centers for Disease Control, the Institute of Medicine, and the boards of directors of the American Diabetes Association, the American Association of Clinical Endocrinologists, and the American College of Endocrinology. He served in higher education for a six year term as a Regent of Midwestern State University in Texas appointed by then Governor George W. Bush. He has also served in the President's Council for Fitness and Sports, chaired the Texas Diabetes Council of the Texas Department of Health for several years where he instituted the Texas Diabetes Algorithm, and under his guidance the Texas Diabetes Institute was established with the University of Texas Health Science Center in San Antonio, Texas. Dr. Davidson's experience in clinical pharmacology began with a Clinical Pharmacology Fellowship at Lilly Laboratories for Clinical Research and it continued with multiple clinical trials. In addition, he was an advisor to the Food and Drug Administration (FDA) on the Endocrinology and Metabolism Advisory Board. Dr. Davidson's Internal Medicine training was completed at Scott and White Hospital (now known as Texas A&M University) and his Endocrinology training at University Of Indiana.

Eric von Hofe, Ph.D., is currently President of Antigen. He has extensive experience with technology development projects, including his previous position at Millennium Pharmaceuticals as Director of Programs & Operations, Discovery Research. Prior to that, Dr. von Hofe was Director, New Targets at Hybridon, Inc., where he coordinated in-house and collaborative research that critically validated gene targets for novel antisense medicines. Dr. von Hofe also held the position of Assistant Professor of Pharmacology at the University of Massachusetts Medical School, where he received a National Cancer Institute Career Development Award for defining mechanisms by which alkylating carcinogens create cancers. He received his Ph.D. from the University of Southern California in Experimental Pathology and was a postdoctoral fellow at both the University of Zurich and Harvard School of Public Health. His work has been published in twenty-eight articles in peer-reviewed journals, and he has been an inventor on four patents.

Dr. Minzhen Xu is Vice President - Biology of Antigen. Dr. Xu received an M.D. from Shanghai Medical University in China and a Ph.D. in immunology from University of Massachusetts Medical School. He has been with Antigen since its inception and is the company’s chief experimentalist.

Available Information

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. However, information found on, or that can be accessed through, our website is not incorporated by reference into this annual report on Form 10-K. We make available free of charge on or through our website our filings with the Securities and Exchange Commission, or SEC, including this annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Further, a copy of this annual report is located at the SEC’s Public Reference Room at 100 F Street N. E., Washington, D.C. 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding our filings at www.sec.gov.

Item 1A. Risk Factors

Our business and results of operations are subject to numerous risks, uncertainties and other factors that you should be aware of, some of which are described below. The risks, uncertainties and other factors described 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.

Any of the risks, uncertainties and other factors could have a materially adverse effect on our business, financial condition or results of operations and 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 fiscal year ended July 31, 2008, we received modest revenues from sales of Glucose RapidSpray™ . We did not recognize any revenue from the sale of our oral insulin product in Ecuador or India in fiscal 2008. 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-lyn™ in India sometime this fiscal year.

To date, we have not been profitable and our accumulated net loss available to shareholders was $248,229,261 at July 31, 2008. 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-lyn™ which is currently available for sale in Ecuador and has been approved for sale in India and our over-the-counter glucose and energy spray products, Glucose RapidSpray™, BaBOOM!™ Energy Spray and GlucoBreak™, 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-lyn™ in countries outside of Ecuador and India. 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.

We will need additional capital.

To progress in product development or marketing, we will need additional capital which may not be available to us. This may delay our progress in product development or market.

We will require funds in excess of our existing cash resources:

	·	to proceed with the development of our buccal insulin product;

	·	to finance the research and development of new products based on our buccal delivery and immunomedicine technologies, including clinical testing relating to new products;

	·	to finance the research and development activities of our subsidiary Antigen with respect to other potential technologies;

	·	to commercially launch and market developed products;

	·	to develop or acquire other technologies or other lines of business;

	·	to establish and expand our manufacturing capabilities;

	·	to finance general and administrative activities that are not related to specific products under development; and

	·	to otherwise carry on business.

In the past, we have funded most of our development and other costs through equity financing. We anticipate that our existing capital resources will enable us to maintain currently planned operations through the next 12 months. However, this expectation is based on our current operating plan, which could change as a result of many factors, and we may need additional funding sooner than anticipated. Because our operating and capital resources are insufficient to meet future requirements, we will have to raise additional funds in the near future to continue the development and commercialization of our products. Unforeseen problems, including materially negative developments in our clinical trials or in general economic conditions, could interfere with our ability to raise additional equity capital or materially adversely affect the terms upon which such funding is available.

It is possible that we will be unable to obtain additional funding as and when we need it. If we were unable to obtain additional funding as and when needed, we could be forced to delay the progress of certain development efforts. Such a scenario poses risks. For example, our ability to bring a product to market and obtain revenues could be delayed, our competitors could develop products ahead of us, and/or we could be forced to relinquish rights to technologies, products or potential products.

Negative conditions in the global credit markets may impair the liquidity of our investment in auction rate securities.

Our short-term investments consist of AAA-rated auction rate securities at a value of $8.9 million. The continued negative conditions in the global credit markets have prevented some investors from liquidating their holdings of auction rate securities because the amount of securities submitted for sale has exceeded the amount of purchase orders for such securities. If the credit markets do not improve, auctions for our invested amounts may continue to fail. If an auction continues to fail for securities in which we have invested, we may be unable to liquidate some or all of our auction rate securities at par. In the event we need or desire to access these funds, we will not be able to do so until a future auction on these investments is successful or a buyer is found outside the auction process. If a buyer is found, such buyer may only be willing to purchase the investments at price below par. Further, rating downgrades of the security issuer or the third-parties insuring such investments may further impact our ability to auction or sell these securities.

We are currently seeking alternatives for reducing our exposure to the auction rate market, but may not be able to identify any such alternative. There can be no assurance that we will be able to recoup any of our investments in the auction rate securities. If we are not able to monetize some or all of our auction rate securities, we may suffer a loss, and such loss could have a material adverse effect on our ability to finance our future ongoing operations.

On August 15, 2008, the SEC announced that it had reached a preliminary settlement in principle with the financial institution through which we hold our auction rate securities, which included a plan to restore liquidity to the financial institution’s customers who invested in auction rate securities. The terms of the agreement in principle include, among others, the following:

·	The financial institution will offer to purchase the auction rate securities of large and institutional investors, presumably such as Generex, in a buy back that will begin no later than June 10, 2009 and conclude by June 30, 2009; and

·	Until the financial institution actually provides for the liquidation of the auction rate securities, the financial institution will provide customers no net loans that will remain outstanding until the auction rate securities are repurchased.

The agreement in principle is subject to finalization, review and approval by the Securities and Exchange Commission. To date, we have not received notice from the financial institution of the settlement terms.

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

Because we have limited resources, we have sought to enter into collaboration agreements with other pharmaceutical companies that will assist us in developing, testing, obtaining governmental approval for and commercializing products using our buccal delivery and immunomedicine technologies. Any collaborator with whom we may enter into such collaboration agreements may not support fully our research and commercial interests since our program may compete for time, attention and resources with such collaborator's internal programs. Therefore, these collaborators may not commit sufficient resources to our program to move it forward effectively, or that the program will advance as rapidly as it might if we had retained complete control of all research, development, regulatory and commercialization decisions.

Risks Related to Our Technologies

With the exception of Generex Oral-lyn™, Glucose RapidSpray™, BaBOOM! ™ Energy Spray and GlucoBreak™, our technologies and products are at an early stage of development and we cannot expect significant revenues in respect thereof in the foreseeable future.

We have no products approved for commercial sale at the present time with the exception of Generex Oral-lyn™ in Ecuador and India and our glucose sprays which are available over-the-counter in retail outlets in the United States and Canada. To be profitable, we must not only successfully research, develop and obtain regulatory approval for our products under development, but also manufacture, introduce, market and distribute them once development is completed. We have yet to manufacture, market and distribute these products on a large-scale commercial basis, and we expect to receive only modest revenues from product sales in fiscal year 2009. We may not be successful in one or more of these stages of the development or commercialization of our products, and/or any of the products we develop may not be commercially viable. Until we can establish that they are commercially viable products, we will not receive significant revenues from ongoing operations.

Until we receive regulatory approval to sell our pharmaceutical products in additional countries, our ability to generate revenues from operations may be limited and those revenues may be insufficient to sustain operations. Many factors impact our ability to obtain approvals for commercially viable products.

Our only pharmaceutical product that has been approved for commercial sale by drug regulatory authorities is our oral insulin spray formulation, and that approval was obtained in Ecuador and India. We have begun the regulatory approval process for our oral insulin, buccal morphine and fentanyl products in other countries, and we have initiated late stage clinical trials of Generex Oral-lyn™ at some of our clinical trial sites in North America according to the Phase III clinical plan.

Our immunomedicine products are in the pre-clinical stage of development, with the exception of a Phase II trial in human patients with stage II HER-2/neu positive breast cancer (U.S.), a Phase I trial in human patients with prostate cancer (Athens, Greece), a Phase I trial in human patients with breast or ovarian cancer (U.S.) and a Phase I trial in human volunteers of a peptide vaccine for use against the H5N1 avian influenza virus (Beirut, Lebanon).

Pre-clinical and clinical trials of our products, and the manufacturing and marketing of our technologies, are subject to extensive, costly and rigorous regulation by governmental authorities in the United States, Canada and other countries. The process of obtaining required regulatory approvals from the FDA and other regulatory authorities often takes many years, is expensive and can vary significantly based on the type, complexity and novelty of the product candidates. For these reasons, it is possible we will not receive regulatory approval for any prescription pharmaceutical product candidate in any countries other than Ecuador and India.

In addition, we cannot be sure when or if we will be permitted by regulatory agencies to undertake additional clinical trials or to commence any particular phase of clinical trials. Because of this, statements in this Annual Report regarding the expected timing of clinical trials cannot be regarded as actual predictions of when we will obtain regulatory approval for any "phase" of clinical trials.

Delays in obtaining United States or other foreign approvals for our pharmaceutical products could result in substantial additional costs to us, and, therefore, could adversely affect our ability to compete with other companies. If regulatory approval is ultimately granted in any countries other than Ecuador and India, the approval may place limitations on the intended use of the product we wish to commercialize, and may restrict the way in which we are permitted to market the product.

Due to legal and factual uncertainties regarding the scope and protection afforded by patents and other proprietary rights, we may not have meaningful protection from competition.

Our long-term success will substantially depend upon our ability to protect our proprietary technologies from infringement, misappropriation, discovery and duplication and avoid infringing the proprietary rights of others. Our patent rights, and the patent rights of biotechnology and pharmaceutical companies in general, are highly uncertain and include complex legal and factual issues. Because of this, our pending patent applications may not be granted. These uncertainties also mean that any patents that we own or will obtain in the future could be subject to challenge, and even if not challenged, may not provide us with meaningful protection from competition. Due to our financial uncertainties, we may not possess the financial resources necessary to enforce our patents. Patents already issued to us or our pending applications may become subject to dispute, and any dispute could be resolved against us.

Because a substantial number of patents have been issued in the field of alternative drug delivery and because patent positions can be highly uncertain and frequently involve complex legal and factual questions, the breadth of claims obtained in any application or the enforceability of our patents cannot be predicted. Consequently, we do not know whether any of our pending or future patent applications will result in the issuance of patents or, to the extent patents have been issued or will be issued, whether these patents will be subject to further proceedings limiting their scope, will provide significant proprietary protection or competitive advantage, or will be circumvented or invalidated.

Also because of these legal and factual uncertainties, and because pending patent applications are held in secrecy for varying periods in the United States and other countries, even after reasonable investigation we may not know with certainty whether any products that we (or a licensee) may develop will infringe upon any patent or other intellectual property right of a third party. For example, we are aware of certain patents owned by third parties that such parties could attempt to use in the future in efforts to affect our freedom to practice some of the patents that we own or have applied for. Based upon the science and scope of these third-party patents, we believe that the patents that we own or have applied for do not infringe any such third-party patents; however, we cannot know for certain whether we could successfully defend our position, if challenged. We may incur substantial costs if we are required to defend our intellectual property in patent suits brought by third parties. These legal actions could seek damages and seek to enjoin testing, manufacturing and marketing of the accused product or process. In addition to potential liability for significant damages, we could be required to obtain a license to continue to manufacture or market the accused product or process.

Risks Related to Marketing of Our Potential Products

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

Even if we obtain regulatory approval to market our oral insulin product outside of Ecuador and India or to market any other prescription pharmaceutical product candidate , many factors may prevent the product from ever being sold in commercial quantities. Some of these factors are beyond our control, such as:

acceptance of the formulation or treatment by health care professionals and diabetic patients;

the availability, effectiveness and relative cost of alternative diabetes or immunomedicine treatments that may be developed by competitors; and

the availability of third-party (i.e., insurer and governmental agency) reimbursements.

We will not receive significant revenues from Generex Oral-lyn™ or any of our other pharmaceuticals products that may receive regulatory approval until we can successfully manufacture, market and distribute them in the relevant markets.

Similarly, the successful commercialization of our over-the-counter glucose spray products may be hindered by manufacturing, marketing and distribution limitations.

We have to depend upon others for marketing and distribution of our products, and we may be forced to enter into contracts limiting the benefits we may receive and the control we have over our products. We intend to rely on collaborative arrangements with one or more other companies that possess strong marketing and distribution resources to perform these functions for us. We may not be able to enter into beneficial contracts, and we may be forced to enter into contracts for the marketing and distribution of our products that substantially limit the potential benefits to us from commercializing these products. In addition, we will not have the same control over marketing and distribution that we would have if we conducted these functions ourselves.

We may not be able to compete with treatments now being marketed and developed, or which may be developed and marketed in the future by other companies.

Our products will compete with existing and new therapies and treatments. We are aware of a number of companies currently seeking to develop alternative means of delivering insulin, as well as new drugs intended to replace insulin therapy at least in part. We are also aware of a number of companies currently seeking to develop alternative means of enhancing and suppressing peptides. In the longer term, we also face competition from companies that seek to develop cures for diabetes and other malignant, infectious, autoimmune and allergic diseases through techniques for correcting the genetic deficiencies that underlie such diseases.

Numerous pharmaceutical, biotechnology and drug delivery companies, hospitals, research organizations, individual scientists and nonprofit organizations are engaged in the development of alternatives to our technologies. Some of these companies have greater research and development capabilities, experience, manufacturing, marketing, financial and managerial resources than we do. Collaborations or mergers between large pharmaceutical or biotechnology companies with competing drug delivery technologies could enhance our competitors’ financial, marketing and other resources. Developments by other drug delivery companies could make our products or technologies uncompetitive or obsolete. Accordingly, our competitors may succeed in developing competing technologies, obtaining FDA approval for products or gaining market acceptance more rapidly than we can.

Some of our most significant competitors, Pfizer, Eli Lilly, and Novo Nordisk, recently announced that they will discontinue development and/or sale of their inhalable forms of insulin. Unlike inhaled insulin formulations, Generex Oral-lyn™ 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.

If government programs and insurance companies do not agree to pay for or reimburse patients for our pharmaceutical products, our success will be impacted.

Sales of our oral insulin formulation in Ecuador and India and our other potential pharmaceutical products in other markets will depend in part on the availability of reimbursement by third-party payers such as government health administration authorities, private health insurers and other organizations. Third-party payers often challenge the price and cost-effectiveness of medical products and services. Governmental approval of health care products does not guarantee that these third-party payers will pay for the products. Even if third-party payers do accept our product, the amounts they pay may not be adequate to enable us to realize a profit. Legislation and regulations affecting the pricing of pharmaceuticals may change before our products are approved for marketing and any such changes could further limit reimbursement.

Risks Related to Potential Liabilities

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

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

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), 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 Marketplace Rule 4310(c)(8)(D), we have 180 calendar days, or until January 20, 2009, subject to extension, to regain compliance with this Rule. If, at anytime prior to January 20, 2009, the bid price of our common stock closes at $1.00 per share or more for a minimum period of ten (10) consecutive business days, we will regain compliance with the Rule.

In the event that we cannot demonstrate compliance with NASDAQ Rule 4310(c)(4) by the specified deadline and are not eligible for an additional compliance period, the staff will notify us that our stock would be delisted, at which time we can appeal the staff’s determination to a Listing Qualifications Panel. Pending the decision of the Listing Qualification Panel, our common stock will continue to trade on the NASDAQ Capital Market. If we are not successful in such an appeal, our stock would likely trade on NASDAQ’s over-the-counter bulletin board, assuming we meet the requisite criteria.

If we fail to maintain compliance with applicable NASDAQ Rules and our stock is delisted from the NASDAQ Capital Market, it may become subject to Penny Stock Regulations and there will be less interest for our stock in the market. This may result in lower prices for our stock and make it more difficult for us to obtain financing.

If our stock is not listed on NASDAQ and fails to maintain a price of $5.00 or more per share, our stock would become subject to the Securities and Exchange Commission's "Penny Stock" rules. These rules require a broker to deliver, prior to any transaction involving a Penny Stock, a disclosure schedule explaining the Penny Stock Market and its risks. Additionally, broker/dealers who recommend Penny Stocks to persons other than established customers and accredited investors must make a special written suitability determination and receive the purchaser's written agreement to a transaction prior to the sale. In the event our stock becomes subject to these rules, it will become more difficult for broker/dealers to sell our common stock. Therefore, it may be more difficult for us to obtain financing.

The price of our common stock may be volatile.

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

	·	announcements of research activities and technology innovations or new products by us or our competitors;

	·	changes in market valuation of companies in our industry generally;

	·	variations in operating results;

	·	changes in governmental regulations;

	·	developments in patent and other proprietary rights;

	·	public concern as to the safety of drugs or treatments developed by us or others;

	·	results of clinical trials of our products or our competitors' products; and

	·	regulatory action or inaction on our products or our competitors' products.

From time to time, we may hire companies to assist us in pursuing investor relations strategies to generate increased volumes of investment in our common stock. Such activities may result, among other things, in causing the price of our common stock to increase on a short-term basis.

Furthermore, the stock market generally and the market for stocks of companies with lower market capitalizations and small biopharmaceutical companies, like us, have from time to time experienced, and likely will again experience significant price and volume fluctuations that are unrelated to the operating performance of a particular company.

Provisions of our Restated Certificate of Incorporation could delay or prevent the acquisition or sale of our business.

Our Restated Certificate of Incorporation permits our Board of Directors to designate new series of preferred stock and issue those shares without any vote or action by our stockholders. Such newly authorized and issued shares of preferred stock could contain terms that grant special voting rights to the holders of such shares that make it more difficult to obtain stockholder approval for an acquisition of our business or increase the cost of any such acquisition.

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

The equity financing that we recently entered into will dilute current stockholders. Currently approximately 59,731,390 shares of common stock are issuable upon conversion of the 8% secured convertible notes and exercise of the warrants that we issued on March 31, 2008 (without regard to additional shares which may become issuable due to anti-dilution adjustments or in connection with payments of interest), which represents approximately 54% of the shares of common stock outstanding immediately prior to the transaction. In addition, we have the option, subject to certain conditions, to repay principal and accrued interest on the notes by converting such amounts into shares of our common stock. Assuming we pay all principal and interest in shares of common stock or the holders of the notes and warrants convert and exercise all of the notes and 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 notes and 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 in connection with our March 31, 2008 private placement of notes and warrants 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 conversion of the notes or 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 Generex, and dilute the interest of a party attempting to obtain control of Generex. As of October 6, 2008, we have issued 9,610,400 shares of common stock in repayment of principal and accrued interest on the notes.

If we raise funds through one or more additional equity financings in the future, 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 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our executive and principal administrative offices occupy approximately 5,000 square feet of office space in the Business Centre at 33 Harbour Square in downtown Toronto, Ontario, Canada. We own the Business Centre, which comprises approximately 9,100 square feet of usable space. The space in the Business Centre that is not used by us is leased to third parties.

We own a laboratory facility in Toronto that we have used for limited production of our oral insulin formulation for clinical purposes, and have completed a pilot manufacturing facility for our insulin and glucose products in the same commercial complex. Our laboratory facility is approximately 2,650 square feet. Our pilot manufacturing facility, which also includes laboratory facilities, is approximately 4,800 square feet. We also own all additional units in the same building where our pilot manufacturing facility is located. These units are currently leased to third parties with the exception of two units being used by us for packaging and storage. These units are reflected in Assets Held for Investments on accompanying consolidated balance sheets. All of these spaces could be used for manufacturing facilities if necessary. We have obtained regulatory approval for the laboratory facility and the pilot manufacturing facility.

We have mortgages on our Toronto properties totaling $3,187,248 at July 31, 2008. These mortgages require the payment of interest, with minimal principal reduction, prior to their due dates. These mortgages currently require an aggregate approximately $26,300 in monthly debt service payments. Aggregate principal maturities for these mortgages will be $1,832,684 in fiscal 2009.

We lease approximately 4,336 square feet of office and laboratory space in Worcester, Massachusetts that Antigen uses for its research and development activities at an annual rent of approximately $156,000. This space is sufficient for Antigen’s present activities.

We do not expect to need additional manufacturing capabilities in Canada related to our insulin product beyond our pilot facility before the end of the current fiscal year. We own an 11,625 square foot building in Brampton, Ontario, which is approximately 25 miles outside Toronto, and a 13,500 square foot building in Mississauga, Ontario, which is about 20 miles from downtown Toronto. Both properties are currently leased to third parties. These properties are reflected in Assets Held for Investments on accompanying consolidated balance sheets.

We could use our other properties to expand research, development or testing of our buccal and immunomedicine products if current facilities prove inadequate for our needs. We also may consider other opportunities to expand our manufacturing capabilities as such opportunities arise.

Item 3. Legal Proceedings.

Subash Chandarana et al. v. Generex Biotechnology Corporation. In February 2001, a former business associate of Pankaj Modi ("Modi") (a former officer of the Company) and an entity called Centrum Technologies Inc. ("CTI") commenced an action in the Ontario Superior Court of Justice against us and Modi seeking, among other things, damages for alleged breaches of contract and tortious acts related to a business relationship between this former associate and Modi that ceased in July 1996. The plaintiffs’ statement of claim also seeks to enjoin the use, if any, by us 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 our position that the buccal drug delivery technologies which are the subject matter of our research, development, and commercialization efforts, including Generex Oral-lyn™ and the RapidMist™ 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, we 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 us. Consequently, the shareholders of CBI are in a deadlock. The court granted our 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 Modi and us. We 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 Modi and us. A statement of claim was served in July 2004. Since that time, the plaintiffs have not taken any steps in furtherance of the proceeding. We are 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.

Michael Powell. In August, 2006, Michael Powell commenced an action against certain defendants, including us and certain of our officers, in the Ontario Superior Court of Justice, claiming compensatory damages, special and punitive damages and various forms of injunctive and declaratory relief for breach of contract and various business torts. We believe the claims against us are frivolous and completely without merit. We are not a party to any agreement with the plaintiff. Much of the requested relief relates to the plaintiff’s position and ownership interest in and accounting for the expenses of an entity in which Generex has no interest. We have not used any intellectual property or information owned by the other entity. All intellectual property, information and business claimed to be owned or conducted by the entity in which the plaintiff claims an interest are completely unrelated to any product or technology we are currently developing or intend to develop. Therefore, even if the court were to award some declaratory or injunctive relief, we would not be affected. We are defending this action vigorously. We are 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.

We are involved in certain other legal proceedings in addition to those specifically described herein. Subject to the uncertainty inherent in all litigation, we do not believe at the present time that the resolution of any of these legal proceedings is likely to have a material adverse effect on our financial position, operations or cash flows.

With respect to all litigation matters, as additional information concerning the estimates used by us becomes known, we reassess each matter’s position both with respect to accrued liabilities and other potential exposures.

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

Our Annual Meeting of Stockholders was held on May 27, 2008. At the meeting, 79,102,998 shares of common stock were represented out of 110,636,091 shares that were entitled to vote. Our stockholders took the following actions at the Annual Meeting:

	·	elected all five nominees to the Board of Directors (Proposal 1);

	·	approved the potential issuance of shares of our common stock upon the conversion of convertible notes, upon payment of principal and interest due on the convertible notes and upon the exercise of warrants at a conversion or exercise price (as the case may be) less than the market price on March 31, 2008, which convertible notes and warrants were issued in a private placement financing for the purpose of complying with a Securities Purchase Agreement, dated March 31, 2008, among Generex and the investors in the private placement, and the rules governing the NASDAQ Capital Market (Proposal 2); and

	·	ratified the appointment of Danziger Hochman Partners LLP as our independent public accountants for the fiscal year ending July 31, 2008 (Proposal 3).

The results of the vote for the Board of Directors was as follows:

Election of nominees to Board of Directors for terms expiring May 27, 2009	Votes For	Votes Against	Abstentions

Anna E. Gluskin	69.114%	0.000%	2.384%
	76,465,120	0	2,637,878
John P. Barratt	69.240%	0.000%	2.258%
	76,604,807	0	2,498,191
Brian T. McGee	69.259%	0.000%	2.240%
	76,625,038	0	2,477,960
Nola E. Masterson	69.199%	0.000%	2.299%
	76,559,095	0	2,543,903
Rose C. Perri	69.171%	0.000%	2.327%
	76,528,029	0	2,574,969

The results on the votes of the proposals were as follows:

Proposal	Votes For	Votes Against	Abstention	Broker Non-Votes
Proposal 2	63.796% 70,581,523	6.753% 7,471,127	0.949% 1,050,347	1
Ratification of Danziger Hochman Partners LLP	69.276% 76,643,761	1.135% 1,255,761	1.088% 1,203,474	2

PART II

Item 5.

Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock has been listed on the NASDAQ Capital Market (formerly the NASDAQ SmallCap Market) since June 5, 2003. From May 5, 2000 to June 4, 2003, our common stock was listed on the NASDAQ National Market. From February 1998 to May 2000, the "bid" and "asked" prices for our common stock were quoted on the OTC Bulletin Board operated by the National Association of Securities Dealers. Prior to February 1998, there was no public market for our common stock.

The table below also sets forth the high and low sales prices for our common stock reported on the NASDAQ Capital Market for each fiscal quarter in the prior two years ended July 31, 2008.

	Bid Prices
	High		Low

Fiscal 2007
First Quarter	$	2.70		1.25
Second Quarter	$	2.32		1.53
Third Quarter	$	1.97		1.60
Fourth Quarter	$	2.14		1.26

Fiscal 2008
First Quarter	$	1.70		1.41
Second Quarter	$	1.95		1.27
Third Quarter	$	1.45		0.81
Fourth Quarter	$	1.19		0.74

The sales for our common stock reported on October 6, 2008 was $0.34.

As of October 6, 2008, there were approximately 711 holders of record of our common stock. Record holders do not include owners whose shares are held in street name by a broker or other nominee.

Dividends

We have not paid dividends on our common stock in the past and have no present intention of paying dividends in the foreseeable future.

Stock Performance Graph

The following information under this heading “Stock Performance Graph” in this Part II, Item 5 of this Annual Report on Form 10-K is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act, or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent we specifically incorporate it by reference into such a filing.

Set forth below is a line graph comparing the cumulative total return on Generex's common stock with cumulative total returns of the NASDAQ Stock Market (U.S. Companies) and the NASDAQ Biotechnology Index for the period commencing July 31, 2003 and ending on July 31, 2008. The graph assumes that $100 was invested on July 31, 2003, in Generex's common stock, the stocks in the NASDAQ Stock Market (U.S. Companies) and the stocks comprising the NASDAQ Biotechnology Index, and that all dividends were reinvested. Generex's common stock began trading on the NASDAQ SmallCap Market (now known as the NASDAQ Capital Market) on June 5, 2003.

Sales of Unregistered Securities

In the fiscal quarter ended July 31, 2008, we sold common stock and other securities in transactions in reliance upon exemptions from the registration requirements of the Securities Act.

We have issued shares of our common stock to CEOcast, Inc., a consultant, pursuant to an agreement to provide us with investor relation services until August 21, 2008. The agreement was extended until January 22, 2009. During the three months ended July 31, 2008, we issued 50,000 shares of common stock to CEOcast 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 CEOcast, 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 July 31, 2008, we issued 24,000 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 July 31, 2008, 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.

Issuer Purchases of Equity Securities

Neither we nor any affiliated purchaser (as defined in Section 240.10 b-18(a)(3) of the Exchange Act) purchased any of our equity securities during the fourth quarter of the fiscal year ending July 31, 2008.

Item 6. Selected Financial Data.

The following selected financial data are derived from and should be read in conjunction with our financial statements and related notes, which appear elsewhere in this Annual Report on Form 10-K. Our financial statements for the year ended July 31, 2008 were audited by MSCM LLP (successor to Danziger Hochman Partners LLP), and our financial statements for the years ended July 31, 2007 and 2006 were audited by Danziger Hochman Partners LLP (formerly known as Danziger & Hochman, Chartered Accountants which merged with MSCM LLP effective as of August 1, 2008). Our financial statements for the years ended July 31, 2005 and 2004 were audited by BDO Dunwoody, LLP.

In thousands	2008			2007			2006			2005			2004

Operating Results:
Revenue	$	125		$	180		$	175		$	392		$	627
Net Loss		(36,229	)		(23,505	)		(67,967	)		(24,002	)		(18,363	)
Net Loss Available to Common Stockholders		(36,229	)		(23,505	)		(67,967	)		(24,002	)		(19,173	)
Cash Dividends per share		—			—			—			—			—

Loss per Common Share:
Basic and Diluted Net Loss Per Common Share		(.33	)		(.22	)		(.90	)		(.66	)		(.64	)

Financial Positions:
Total Assets	$	38,148		$	46,404		$	64,105		$	13,466		$	19,012
Long-Term Debt	$	3,187		$	3,144		$	3,036		$	3,288		$	2,225
Convertible Debentures	$	4,719		$	—		$	161		$	1,315		$	—
Series A, Preferred Stock	$	—		$	—		$	—		$	—		$	14,310
Stockholder's Equity	$	22,647		$	36,071		$	55,464		$	6,127		$	530

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis by management provides information with respect to our financial condition and results of operations for the fiscal years ended July 31, 2006, 2007 and 2008. This discussion should be read in conjunction with the information in the consolidated financial statements and the notes pertaining thereto contained in Item 8 - Financial Statements and Supplementary Data of this Annual Report on Form 10-K for the year ended July 31, 2008 and the information discussed in Part I, Item 1A - Risk Factors.

Overview of Business

We face competition from other providers of alternate forms of insulin. Some of our most significant competitors, Pfizer, Eli Lilly, and Novo Nordisk, recently announced that they will discontinue development and/or sale of their inhalable forms of insulin. Generex Oral-lyn™ 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.

We are a development stage company. From inception through the end of the year ended July 31, 2008, we have received only limited revenues from operations. In the fiscal years ended July 31, 2008 and 2007, we received approximately $128,039 and $182,429, respectively, in revenues from sales of Glucose RapidSpray™ . These numbers do not reflect deferred sales to the customers during the respective period 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.

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-lyn™), our buccal morphine product and Antigen’s peptide immunotherapeutic vaccines.

During the fiscal year ended July 31, 2008, we expended resources on the clinical testing and commercialization, of our buccal insulin product, Generex Oral-lyn™. 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-lyn™. 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-lyn™ was approved for commercial sale by drug regulatory authorities in Ecuador in May 2005. PharmaBrand handled the commercial launch of Generex Oral-lyn™ in Ecuador in June 2006. While we anticipate generating revenue from sales of Generex Oral-lyn™ in Ecuador, we do not expect that such revenues will be sufficient to sustain our research and development and regulatory activities.

Generex Oral-lyn™ 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 are working with Shreya to prepare for the commercial launch of the product in India. We received no revenues from the sale of Generex Oral-lyn™ in India in the 2008 fiscal year.

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 fiscal year ended July 31, 2008, 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 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.

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 fiscal year ended July 31, 2008, approximately 84.6% of our $16,359,030 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 fiscal year ended July 31, 2007, approximately 73% of our $11,983,626 in research expenses was attributable to insulin and platform technology development, and we did not have any research expenses related to morphine or other buccal projects.

Approximately 15.4% or $2,517,552 of our research and development expenses for the fiscal year ended July 31, 2008 was related to Antigen's immunomedicine products compared to approximately 27% or $3,181,927 of our research and development expenses for the fiscal year ended July 31, 2007. 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:

Revenue Recognition. Net sales of Glucose RapidSpray™, BaBOOM!™ Energy Spray and GlucoBreak™ 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.

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.

Results of Operations

Year Ended July 31, 2008 Compared to Year Ended July 31, 2007

Our net loss for the fiscal year ended July 31, 2008 (fiscal 2008) was $36,228,991 versus $23,504,958 in the fiscal year ended July 31, 2007 (fiscal 2007). The increase in net loss in fiscal 2008 versus fiscal 2007 is primarily due to the increase in research and development expenses in connection with preparations for global Phase III clinical trials of Generex Oral-lyn™ at sites in the United States, Canada, and Europe and the increase in general and administrative expenses. Our operating loss for fiscal 2008 increased to $33,445,470 compared to $24,876,102 in fiscal 2007. The increase resulted from an increase in research and development expenses (to $16,359,030 from $11,983,626), an increase in selling expense (to $1,562,258 from $693,309) and increases in general and administrative expenses (to $15,597,048 from $12,317,742). Our net revenues decreased to $124,891 in fiscal 2008 from $180,198 in fiscal 2007. The decrease in net revenue is attributable to a reduction in sales of Glucose RapidSpray™ in fiscal 2008 compared to stocking sales in fiscal 2007.

The increase in research and development expenses in fiscal 2008 reflects an increased level of research and development of our oral insulin product and platform technology and additional clinical trials and increased research and development efforts of Antigen. The increase in general and administrative expenses reflects the increase in legal, financial, consulting expenses, an increase in executive and director’s compensation due to cash and non-cash bonuses and one time impairment change relating to patents write-off. The increase was offset by the reduction in advertising and travel expenses. The selling expenses are associated with the commercial sales of Glucose RapidSpray™ and BaBOOM Energy Spray that began in fiscal 2007.

Our interest expense in fiscal 2008 increased to $4,280,558 compared to interest expense of $849,548 in fiscal 2007 due to interest paid on the secured convertible notes issued in March 2008 in connection with a private placement. In fiscal 2008, we did not incur loss on extinguishment of debt reflecting monthly amortization payments due on the secured convertible notes. In fiscal 2007, our loss on extinguishment of debt was $237,162. Our interest income decreased to $1,166,439 in fiscal 2008 compared to $2,180,380 in the last fiscal year primarily due to substantially lower market interest rates. We received higher income from rental operations (net of expense) of $330,533 in fiscal 2008 compared to $277,474 in fiscal 2007.

Results of Operations

Year Ended July 31, 2007 Compared to Year Ended July 31, 2006

We had a net loss of $23,504,958 for the year ended July 31, 2007 (fiscal 2007) compared to a net loss of $67,967,204 for the year ended July 31, 2006 (fiscal 2006). The decrease in net loss for fiscal 2007 is attributable to the fact that in fiscal 2007 we did not have interest expense and loss on extinguishment of debt similar to that which we incurred during fiscal 2006 fiscal year in connection with the issuance of convertible debentures. Our operation loss for fiscal 2007 increased to $24,876,102 compared to $18,705,983 in operating loss for fiscal 2006. The increase in our fiscal 2007 operating loss resulted from a significant increase in research and development expenses (to $11,983,626 from $6,554,393), an increase in our selling and marketing expenses (to $693,309 from $56,028) and a slight increase in general and administrative expenses (to $12, 317,742 from $12,270,562). Our revenue, excluding the deferred revenue, increased slightly from $175,000 in fiscal 2006 to $180,198 in fiscal 2007 and is attributable to the sales of our over-the-counter products.

The increase in general and administrative expenses for fiscal 2007 is due primarily to the increase of non cash compensation to financial consultants in fiscal 2007 compared to compensation paid in 2006, an increase in legal, litigation and accounting expenses and an increase in travel. The increase was offset by the reduction in executive and director compensation and the decrease in office and general expenses.

The increase in research and development expenses for fiscal 2007 reflects increased levels of research and development activities in connection with commencement of Phase III clinical trials in Canada and higher level of clinical activities of Antigen.

Our interest expense in fiscal 2007 decreased to $849,548, compared to interest expense of $37,715,275 in fiscal 2006 relating to interest paid in connection with convertible debentures entered into during the last fiscal year. Our interest and miscellaneous income increased to $2,180,380 in fiscal 2007, compared to $768,098 in fiscal 2006, primarily due to substantially higher cash and short term investment balances during fiscal 2007. Our loss on extinguishment of debt, also incurred in connection with convertible debentures, was $237,162 in fiscal 2007, compared to $12,550,565 in fiscal 2006. We received a slightly higher income from rental operations (net of expense) of $277,474 in fiscal 2007, compared to $236,521 in fiscal 2006.

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.

At July 31, 2008, we had cash and short-term investments of approximately $26 million, a decrease of $9 million from the balance as of the end of the prior fiscal year. All of our short-term investments represent investment in high-grade auction rate securities. The continued negative conditions in the global credit markets have prevented some investors from liquidating their holdings of auction rate securities because the amount of securities submitted for sale has exceeded the amount of purchase orders for such securities. In the event we need or desire to access these funds, we will not be able to do so until a future auction on these investments is successful or a buyer is found outside the auction process. The relative buying and selling interest of market participants in our auction rate securities and in the auction rate securities market as a whole will vary over time, and such variations may be affected by, among other things, news relating to the issuer, the attractiveness of alternative investments, the perceived risk of owning the security (whether related to credit, liquidity or any other risk), the accounting or tax treatment accorded the instruments, reactions to regulatory actions or press reports, financial reporting cycles and market sentiment generally. Shifts of demand in response to any one or simultaneous particular events cannot be predicted and may be short-lived or exist for longer periods.

It is possible that the potential lack of liquidity in our auction rate security investments could adversely affect our liquidity and our ability to fund our operations. We cannot predict whether future auctions related to auction rate securities will be successful. We are currently seeking alternatives for reducing exposure to the auction rate market, but may not be able to identify any such alternative. If we are not able to monetize some or all of our auction rate securities, we could suffer a loss and such loss could have a material adverse effect on our ability to finance our future ongoing operations. On August 15, 2008, the SEC announced that it had reached a preliminary settlement in principle with the financial institution through which we hold our auction rate securities, which included a plan to restore liquidity to the financial institution’s customers who invested in auction rate securities. Under the settlement, the financial institution is required to offer to purchase the auction rate securities of its customers (other than individual investors, small businesses, and charitable organizations) in a buy back that will begin no later than June 10, 2009 and conclude by June 30, 2009. In addition, the financial institution is required by the settlement to offer no net loans that will remain outstanding until the auction rate securities are repurchased. The preliminary settlement is subject to finalization and SEC approval. To date, we have not received confirmation from the financial institution of the settlement terms.

We believe that the commencement of Phase III clinical trial trials for Oral-lyn™ in the United States and Canada is a significant milestone event. We also anticipate that the commercial launch of Oral-lyn™ in India, which is expected in before the end of calendar 2008, will provide us with revenue in fiscal 2009. We believe that the successful commercial launch of Oral-lyn™ in India, will enhance our ability to access additional sources of funding. For instance, in August 2008, we entered into a product licensing and distribution agreement with Dong Sung Pharm Co. Ltd. for the importation, marketing, distribution and sale of Generex Oral-lyn™ in South Korea. Under this agreement, we will receive an upfront non-refundable license fee of $500,000 and a non-refundable license fee of $500,000 at such time as we obtain governmental approval for the importation, marketing, distribution and sale of the product in South Korea is obtained. When it places its first order of Oral-lyn™, Dong-Sung also will make a $500,000 pre-payment against which product purchases will be applied.

Further we anticipate that our principal payment obligations under the convertible notes issued in the March 2008 private placement will be largely satisfied without cash payments through conversion of principal into shares of our common stock as permitted by the notes. In addition, we may receive additional proceeds from the exercise of warrants issued in the March 2008 private placement. As of October 1, 2008, all of the warrants issued in March 2008 became exercisable.

As of July 31, 2008, 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 may require additional funds to support our working capital requirements or for other purposes.

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. 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, preferred stock offerings and offerings of debt and convertible debt instruments. We 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, but we have not offered any shares pursuant to this registration statement to date. Management is actively pursuing industry collaboration activities, including product licensing and specific project financing. We are also examining options for the procurement of a reliable long-term insulin supply for our future commercial needs.

While we have generally been able to raise equity capital as required, our cash balances were very low during portions of fiscal 2005 and unforeseen problems with our clinical program, manufacturing and commercialization plans in Ecuador and India or materially negative developments in general economic conditions could interfere with our ability to raise additional equity capital as needed, or materially adversely affect the terms upon which such capital is available. If we are unable to raise additional capital as needed, we could be required to “scale back” or otherwise revise our business plan. Any significant scale back of operations or modification of our business plan due to a lack of funding could be expected to affect our prospects materially and adversely.

Financing – 8% Secured Convertible Notes and Warrants

On March 31, 2008, we entered into a Securities Purchase Agreement and related documents with existing institutional investors relating to a private placement of 8% secured convertible notes (the “Notes”) and warrants (the “Warrants”) for aggregate gross proceeds to us of $20,650,000. In connection with the financing, we entered into a Registration Rights Agreement that required us to file a registration statement with the SEC by April 30, 2008 covering the resale of the shares of our common stock issuable pursuant to the Notes and Warrants.

Also in connection with the financing, we and our subsidiaries entered into a Security Agreement and related documents pledging and granting security interests to the investors in all of the non-real estate assets of Generex and our subsidiaries to secure all of our obligations to the investors, including our obligations pursuant to the Securities Purchase Agreement and the Notes and Warrants issued thereunder. With limited exceptions, the Security Agreement prohibits us from incurring future debt until the Notes are paid or converted. An “Event of Default” under the Notes constitutes an “Event of Default” under the Security Agreement.

The Notes have an 18-month maturity and amortize over fifteen months in fifteen equal monthly installments beginning on August 1, 2008. We may pay installments of principal and accrued interest in cash or, at our option, in shares of our common stock subject to the satisfaction of certain conditions. If we elect to pay principal and interest in shares of our common stock, the value of each share of common stock will be equal to the lower of (a) the conversion price, and (b) 90% of the average of the volume weighted average prices of the common stock on each of the twenty (20) consecutive trading days immediately preceding the applicable payment date.

At the option of each Noteholder, the principal amount outstanding under each Note is convertible at any time after March 31, 2008 into shares of our common stock at the initial conversion price of $1.21, which represents 110% of the closing bid price of our common stock on the NASDAQ Capital Market on the closing date, March 31, 2008.

Each Note lists certain “Events of Default”, which include, without limitation, any default in the payment of principal of, interest on or other charges in respect of the Notes as and when they become due and payable, and our failure to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of Note, the Securities Purchase Agreement or the Security Agreement. Upon the occurrence of an Event of Default, the holder may require us to redeem all or any portion of a Note by delivering written notice thereof to us, at a default redemption price as calculated pursuant to certain formulas set forth in the Note. Until the default redemption price (together with any interest thereon) is paid in full, the amount of any Note submitted for redemption (together with any interest thereon) may be converted, in whole or in part, by the holder into common stock. In the event of a partial redemption, the principal amount redeemed shall be deducted from the installment amounts relating to the applicable installment date(s) as set forth in the notice of default and redemption.

The aggregate amount payable upon an Event of Default is the default redemption price. The default redemption price is calculated as the greater of:

(i)

the product of (A) the sum of the principal amount to be redeemed together with accrued and unpaid interest and unpaid late charges with respect to such principal amount and (B) 135%, and

(ii)

the product of

(X)

the principal amount of the Notes to be prepaid, plus all other accrued and unpaid interest thereof, divided by the conversion price on in effect at such time as the holder delivers an Event of Default redemption notice and

(Y)

the product of (1) the 135% and (2) the greater of (I) the closing sale price of our common stock on the date immediately preceding such Event of Default, (II) the closing sale price of our common stock on the date immediately after such Event of Default and (III) the closing sale price of the common stock on the date the holder delivers the Event of Default redemption notice.

Beginning from and after the occurrence of any Event of Default, the interest rate on the Notes will accrue at the rate of 16% per annum, or such lower maximum amount of interest permitted to be charged under applicable law.

The Securities Purchase Agreement provided that unless and until we obtained shareholder approval of the issuance of securities pursuant to this transaction, in no event could we (i) repay the principal amount due and owing under the Notes with shares of common stock or (ii) issue securities at a price per share less than the conversion price of the Notes or exercise price of the Warrants. A proposal to approve the issuance of securities pursuant to this transaction was approved by our shareholders at our Annual Meeting held on May 27, 2008.

We are prohibited from issuing any variable priced equity or variable priced equity-linked securities as long as any Note is outstanding. We also are prohibited from issuing any equity or equity-linked securities until 90 days after the effective date of a registration statement covering the resale of the shares of our common stock issuable pursuant to the Notes and Warrants, with limited exceptions. In addition, until the later of (i) 12 months after the effective date of such a registration statement and (ii) the date the Notes have been repaid or converted in full, the investors will have the right to participate in any capital raising transactions that we undertake.

The Warrants issued in connection with the March 2008 Securities Purchase Agreement include:

	(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 beginning October 1, 2008;

	(ii)	Series B Warrants, which are exercisable beginning 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 remaining exercisable for a period of 18 months after a registration statement covering the shares of common stock issuable upon conversion or exercise of the Notes and Warrants is declared effective by the SEC; and

	(iii)	Series C Warrants, which are exercisable for a period of 7 years beginning 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 A Warrant, Series A-1 Warrant, Series B Warrant and Series C Warrant is $1.21.

In accordance with the terms of the Notes and the Warrants, no holder may convert a Note or exercise a Warrant if after giving effect to such conversion or exercise, as the case may be, such holder would beneficially own greater than 4.90% or 4.99%, as to certain holders, and 9.90% or 9.99%, as to other holders, of outstanding shares of our common stock after giving effect to such conversion or exercise, as applicable.

The conversion price of the Notes and the exercise price of the Warrants are subject to a full-ratchet adjustment upon the occurrence of certain events, including the issuance by us of securities at a price per share less than the conversion price or exercise price then in effect, as applicable. If we issue shares of common stock or options exercisable for or securities convertible into common stock at an effective price per share of common stock less than the conversion or exercise price then in effect, the conversion or exercise price will be reduced to the effective price of the new issuance.

In addition, in connection with the transaction, we (a) reduced the strike price of our outstanding common stock purchase warrants that are held by the investors in the March 2008 private placement and certain other warrant holders and that have strike prices ranging from $1.25 to $3.00, to $1.10, which equals the closing bid price of the common stock on the NASDAQ Capital Market on the closing date, March 31, 2008, and (b) extended the expiration date of such warrants to March 31, 2015. The holders of those warrants will waive all anti-dilution entitlements they have in respect of any of our previously issued securities with respect to the issuance or conversion of the Notes, the payment of the installments or interest in shares of the common stock, or the issuance or exercise of the Warrants.

At July 31, 2008, we recorded $20,650,000 in aggregate principal amount of the Notes outstanding. Interest on the principal amount outstanding under the Notes will accrue at a rate of eight percent (8%) per annum. As of July 31, 2008, we incurred interest expense of $4,048,117 related to the Notes that includes non cash accounting expense of $3,483,684 relating to debt discount.

At July 31, 2008, outstanding Warrants issued in connection with the March 2008 Securities Purchase Agreement and the repriced warrants described above were as follows:

*Date Issued*	*Aggregate* *No. of* *Shares* *Unexercised*		*Exercise* Price*		*Exercise Date*		*Expiration Date*
March 31, 2008		12,697,024	$	1.10		March 31, 2008		March 31, 2015

March 31, 2008		5,257,729	$	1.21		March 31, 2008		March 31, 2015

March 31, 2008		20,341,437	$	1.21		October 1, 2008		October 1, 2015

March 31, 2008		17,066,117	$	1.21		October 1, 2008		October 1, 2009

*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.

Registration Statement

On April 30, 2008, we filed a registration statement with the SEC on Form S-3 covering the resale of all the shares of our common stock issuable pursuant to the Notes and Warrants. We received comments on the registration statement from the SEC Staff and filed amendments to the registration statement. In the third amendment, we reduced the number of shares to be registered to an aggregate of 30,191,665 shares, which number is equal to 30% of our public float as measured prior to the March private placement and includes:

22,527,275 shares of our common stock issuable upon conversion of, and as interest payments on, the Notes (120%);

6,309,275 shares of common stock issuable upon exercise of the Series A Warrants issued to the holders of the Notes; and

1,355,117 shares of common stock issuable upon exercise of some of the Series A-1 Warrants.

The registration statement, as amended, was declared effective on July 29, 2008.

Payments on Notes

In July and August 2008, we entered into waiver and consent agreements with the Noteholders to allow us to convert some or all of the installment amounts due on the Notes on the August 1^st, September 1^st and October 1^st installment dates into shares of our common stock, subject to certain conditions. We sought waivers from the Noteholders due to our failure to meet certain conditions precedent to the conversion of installment amounts under the Notes as of the August 1^st installment notice date, including:

the registration statement for the resale of all of the shares of common stock underlying the Notes and the Warrants was not effective at least thirty days prior to the installment notice date of August 1, 2008; and

we failed to comply with the minimum bid price requirement of Marketplace Rule 4310(c)(4) of The Nasdaq Stock Market.

Pursuant to the consent and waiver agreements, all of the Noteholders, with the exception of Iroquois Master Fund Ltd. and Iroquois Capital Opportunity Fund, LP (together, the “Iroquois Funds”), agreed to waive satisfaction of (i) the effective registration statement requirement with respect the September 1, 2008 installment date, and (ii) the listing maintenance condition with respect to the September 1, 2008 and October 1, 2008 installment dates. Thus, we converted the installment amounts due on each of the September 1^st and October 1^st installment dates into shares of our common stock. The Iroquois Funds agreed to waive satisfaction of the two conditions precedent to our conversion of installments amounts with respect the September 1, 2008 installment date such that we converted the September 1, 2008 installment amount due to the Iroquois Funds into shares of our common stock.

In addition, subject to certain conditions, three of the investors - Cranshire Capital, L.P., Portside Growth and Opportunity Fund, and Smithfield Fiduciary LLC -, consented to our conversion and redemption, as applicable, of the installment amount due on August 1, 2008 as follows:

On the August 1^st installment date, we paid the accrued and unpaid interest in cash.

We paid the balance of the August 1st installment amount in shares of our common stock as follows:

50% of the shares were issued at the same time and in the same manner as the shares issued in payment of the September 1, 2008 installment amount; and

50% of the shares were issued at the same time and in the same manner as the shares issued in payment of the October 1, 2008 installment amount.

The shares issued in respect of the August 1st installment amount were calculated using the lower of:

the then applicable conversion price,

the price computed as 90% of the arithmetic average of the volume weighted average price (“VWAP”) of the common stock on each of the twenty consecutive trading days immediately preceding August 1, 2008 and

the price computed as 90% of the arithmetic average of the VWAP of the common stock on each of the twenty consecutive trading days immediately preceding the delivery or deemed delivery of our installment notice with respect to the installment amount due on September 1, 2008 or October 1, 2008, as applicable.

Another investor, Rockmore Investment Master Fund Ltd, consented to our conversion and redemption, as the case may be, of the August 1^st installment amount in the manner described above, except that we paid 50% of the principal balance of the August 1^st installment amount plus accrued and unpaid interest in cash on August 1^st, andwe paid the remaining50% of the principal balance of the August 1^st installment amount in shares of common stock, delivering half of such shares together with the September 1, 2008 installment amount and half of such shares together with the October 1, 2008 installment amount.

We obtained similar waivers from all investors in respect to our November 1, 2008 installment amount.

As of October 6, 2008, we have issued 9,610,400 shares of common stock and paid $941,100 in cash to repay Note principal and accrued interest in the aggregate amount of $4,946,516.

Because of the decrease in our stock price since the filing of the registration statement required under the Notes, we believe that the registration statement does not likely include a sufficient number of shares to allow us to make all of the remaining principal and interest payments in shares rather than in cash. We believe that we will be able to negotiate relief from the requirement that an additional registration statement be filed the near future to comply with the condition precedent under the Notes because all of the shares we would issue in the absence of a registration statement would be eligible for resale by the investors pursuant to Rule 144. (As of October 1, 2008, the Series A-1, Series B and Series C Warrants became exercisable. To the extent that the holders exercise the Series A-1, Series B and Series C Warrants pursuant to the cashless exercise feature contained therein, the holders will have satisfied the holding period mandated by the SEC under Rule 144.) As of the filing of this Annual Report on Form 10-K, however, we have not negotiated such arrangements and it is possible that we will need to pay the majority of the remaining principal and interest on the Notes in cash.

With respect to our noncompliance with Marketplace Rule 4310(c)(4), which requires us to have a minimum bid price per share of at least $1.00 for 30 consecutive business days, we have 180 calendar days, or until January 20, 2009, to regain compliance with the Rule. If, at anytime prior to January 20, 2009, the bid price of our common stock closes at $1.00 per share or more for a minimum period of ten consecutive business days, we will regain compliance with the Rule. In addition, assuming that the we meet the initial listing criteria, we may seek an additional 180 calendar day period to regain compliance. We believe that as our late-stage clinical trials of Generex Oral-lyn™ progress in the United States, Canada, Europe and certain countries in Eastern Europe, investor confidence in Generex will increase, which would have a positive effect on our stock price and enable us to meet the minimum bid price requirement under Marketplace Rule 4310(c)(4). To the extent that we have not achieved compliance with the Rule by the December 1^st installment notice date, we will seek further waivers from the Noteholders with respect to this condition.

Cash Flows for the Year Ended July 31, 2008

For the year ended July 31, 2008, we used $28,309,464 in cash to fund our operating activities. The use for operating activities included a net loss of $36,228,991, a net increase in inventory and inventory deposits of $1,345,939, a $30,701 increase in accounts receivable, offset by an increase of $762,505 in accounts payable and accrued expenses, an increase of $92,481 in deferred revenue and a decrease in other current assets of $53,687.

The use of cash was offset by non-cash increases of approximately $1,084,919 related to depreciation and amortization, $741,690 write-off of impaired patents, $1,260,263 in stock-based compensation to employees, $1,611,882 in stock-based compensation for services to consultants, $205,056 in amortization of the loan origination fee and deferred debt issuance cost and $3,483,684 of amortization of debt discount related to the convertible note transaction.

We had net cash flows from investing activities of $4,920,847 in the year ended July 31, 2008, primarily consisting of $28,307,895 in proceeds from maturity of short term investments and $51,219 in changes in deposits. This was offset by payments for property and equipment of $57,136, cost incurred for patents of $232,760 and re-purchase of short term investments of $23,148,371.

We had net cash flows from financing activities of $19,651,109 in the year ended July 31, 2008. Proceeds from convertible notes were $20,450,000 and proceeds from the exercise of stock options and warrants were $391,790. We made payments on our notes payable and long-term debt of $812,225, and repurchased shares of our common stock from a single stockholder for $378,456

Our net working capital at July 31, 2008 decreased from July 31, 2007 by $14,036,931 to $14,377,753, which was attributed largely to our fiscal 2008 loss offset by the net cash flows from our financing activities.

Funding Requirements

We expect to devote substantial resources to obtaining regulatory approval of Generex Oral-lyn™ in the U.S., Canada and Europe and to commercializing Generex Oral-lyn™ in India and Ecuador. We also will devote resources to obtaining approval for the importation, marketing and commercialization of Generex Oral-lyn™ 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;

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-lyn™ in India 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.

Contractual Obligations

The following table of contractual obligations as of July 31, 2008 includes interest obligations.

	Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1-3 years		3-5 years		More than 5 years
Long-Term Debt Obligations		3,472,448		1,990,432		1,482,016
Convertible Debt Obligations		22,191,866		18,005,576		4,186,290
Capital Lease Obligations
Operating Lease Obligations		493,975		153,030		230,581		109,587		777
Purchase Obligations
Other Long-Term Liabilities Reflected on the Registrant's Balance Sheet under GAAP

Total	$	26,158,289	$	20,149,038	$	5,898,887	$	109,587	$	777

Convertible debt obligations represent scheduled principal and interest payments on our 8% secured convertible notes. Remaining principal of $20,650,000 is payable in monthly installments, through September 2009. Principal may be paid, at our option, in cash or shares of our common stock, subject to the satisfaction of certain equity conditions delineated in the notes. Because investors may convert principal into common stock, at any time, at their option, the timing of principal and interest payments may accelerate relative to this schedule.

Certain Relationships and Related Transactions

Related Transactions

Prior to January 1, 1999, a portion of our general and administrative expenses resulted from transactions with affiliated persons, and a number of capital transactions also involved affiliated persons. Although these transactions were not the result of "arms-length" negotiations, we do not believe that this fact had a material impact on our results of operations or financial position. Prior to December 31, 1998, we classified certain payments to executive officers for compensation and expense reimbursements as "Research and Development - related party" and "General and Administrative - related party" because the executive officers received such payments through personal services corporations rather than directly. After December 31, 1998, these payments have been and will continue to be accounted for as though the payments were made directly to the officers, and not as a related party transaction. With the exception of our arrangement with our management company described below, we do not foresee a need for, and therefore do not anticipate, any related party transactions in the current fiscal year.

On May 3, 2001, we advanced $334,300 to each of three senior officers, who are also our stockholders, in exchange for promissory notes. These notes bore interest at 8.5% per annum and were payable in full on May 1, 2002. These notes were guaranteed by a related company owned by these officers and secured by a pledge of 2,500,000 shares of our common stock owned by this related company. On June 3, 2002, our Board of Directors extended the maturity date of the loans to October 1, 2002. The other terms and conditions of the loans and guaranty remained unchanged and in full force and effect. As of July 31, 2002, the balance outstanding on these notes, including accrued interest, was $1,114,084. Pursuant to a decision made by the Compensation Committee as of August 30, 2002, these loans were satisfied through the application of 592,716 shares of pledged stock, at a value of $1.90 per share, which represented the lowest closing price during the sixty days prior to August 30, 2002.

On December 9, 2005, our Board of Directors approved a one-time recompense payment in the aggregate amount of $1,000,000 for each of Ms. Gluskin, our Chairwoman, Chief Executive Officer and President, and Ms. Rose Perri, our Chief Operating Officer, Chief Financial Officer, Treasurer and Secretary, in recognition of the company’s failure to remunerate each of Ms. Gluskin and Ms. Perri in each of the fiscal years ended July 31, 1998, 1999, 2000 and 2001 in a fair and reasonable manner commensurate with comparable industry standards and Ms. Gluskin’s and Ms. Perri’s duties, responsibilities and performance during such years. The payment of such amount to each of Ms. Gluskin and Ms. Perri will be made (a) in cash at such time or times and in such amounts as determined solely by Ms. Gluskin or Ms. Perri, as applicable, and/or (b) in shares of our common stock at such time or times as determined by Ms. Gluskin or Ms. Perri, as applicable, provided that the conversion price for any such shares shall be equal to the average closing price of our common stock on the NASDAQ Capital Market for the 20 successive trading days immediately preceding, but not including, December 9, 2005. The amounts were not paid as of July 31, 2008 with the exception of $415,742.30 that was used by Ms. Perri to repay Note Receivable, Due from Related Party. The amount was due from EBI, Inc., a shareholder of the Company that is controlled by the estate of the Company’s former Chairman of the Board, Mark Perri. The note was not interest bearing, unsecured and did not have any fixed terms of repayment. The note was extended to EBI, Inc. in May 1997.

Real Estate Transactions: On August 7, 2002, we purchased real estate with an aggregate purchase price of approximately $1.6 million from an unaffiliated party. In connection with that transaction, Angara Enterprises, Inc., a licensed real estate broker that is an affiliate of Ms. Gluskin received a commission from the proceeds of the sale to the seller in the amount of 3% of the purchase price, or $45,714. We believe that this is less than the aggregate commission which would have been payable if a commission had been negotiated with an unaffiliated broker on an arm's length basis.

On December 9, 2005, our Board of Directors approved the grant to Ms. Perri of a right of first refusal in respect of any sale, transfer, assignment or other disposition of either or both real properties municipally known as 1740 Sismet Road, Mississauga, Ontario and 98 Stafford Drive, Brampton, Ontario (collectively, the “Properties”). We granted Ms. Perri this right in recognition of the fair market value transfer to us during the fiscal year ended July 31, 1998 by Ms. Perri (or parties related to her) of the Properties.

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 fiscal years ended July 31, 2008 and 2007, we paid the management company approximately $54,473 and $47,832, 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.

Legal Fees. David Wires, a former director, is a partner of the firm Wires Jolley LLP. Wires Jolley represents us in various matters. During fiscal 2008, we paid approximately $44,000 in fees to Wires Jolley. We continue to use Wires Jolley and expect to pay legal fees in similar amounts to the firm in fiscal 2009.

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 July 31, 2008, we owed a balance of $50,000 in fees to PharmaLogika for services rendered. 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 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 April 9, 2008, following the closing of the March 2008 private placement, Cranshire jointly filed a Schedule 13G with Downsview Capital, Inc. and Mitchell P. Kopin reporting beneficial ownership of more than 5% of our outstanding shares of common stock. A description of the March 2008 private placement and the Notes and Warrants is set forth above the heading “Financial Condition, Liquidity and Resources - Secured Convertible Notes and Warrants.”

New Accounting Pronouncements

We adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109” (“FIN 48”), on August 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement 109 “Accounting for Income Taxes”, and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition classification, interest and penalties accounting in interim periods disclosure and transition.

Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our financial statements or adjustments to our deferred tax assets and related valuation allowance. Our evaluation was performed for the tax years ended July 31, 2007, 2006, 2005 and 2004, the tax years which remain subject to examination by major tax jurisdictions as of July 31, 2008.

We may from time to time be assessed interest or penalties by major tax jurisdictions, although such assessments historically have been minimal and immaterial to our financial results. In the event we have received an assessment for interest and/or penalties, it has been classified in the financial statements as general and administrative expense.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, with earlier application encouraged. Any amounts recognized upon adoption as a cumulative effect adjustment will be recorded to the opening balance of retained earnings in the year of adoption. On November 15, 2007, the FASB granted a one year deferral for non-financial assets and liabilities to comply with SFAS No. 157, however, the effective date for financial assets remains intact. We are currently evaluating the impact of this statement on our results of operations or financial position.

In February 2007, the FASB issued SFAS No. 159, “Establishing the Fair Value Option for Financial Assets and Liabilities” (“SFAS 159”) to permit all entities to choose to elect to measure eligible financial instruments at fair value. The decision whether to elect the fair value option may occur for each eligible item either on a specified election date or according to a preexisting policy for specified types of eligible items. However, that decision must also take place on a date on which criteria under SFAS 159 occurs. Finally, the decision to elect the fair value option shall be made on an instrument-by-instrument basis, except in certain circumstances. An entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS 159 applies to fiscal years beginning after November 15, 2007, with early adoption permitted for an entity that has also elected to apply the provisions of SFAS 157. We are currently evaluating the impact of this statement on our results of operations or financial position.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS 141(R)”). This Statement replaces SFAS No. 141, “Business Combinations” (“SFAS 141”). This Statement retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement 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. SFAS 141(R) will apply 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. We are currently evaluating the impact of this statement on our results of operations or financial position.

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements” (“SFAS 160”). This Statement amends ARB 51 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. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. We are currently evaluating the impact of this statement on our results of operations or financial position.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities,” and Amendment of FASB Statement No. 133. SFAS 161 amends SFAS 133, “Accounting for Derivative Instruments and Hedging Activities,” to amend and expand the disclosure requirements of SFAS 133 to provide greater transparency about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedge items are accounted for under SFAS 133 and its related interpretations, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. To meet those objectives, SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. Earlier adoption is encouraged. We are currently evaluating the impact of this statement on our results of operations or financial position.

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. GAAP for nongovernmental entities. SFAS 162 is effective 60 days following the Securities and Exchange Commission's approval of the Public Company Accounting Oversight Board auditing amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles." We do not expect SFAS 162 to have a material effect on our consolidated financial statements.

The FASB issued Staff Position (“FSP”) EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities,” in June 2008. Securities participating in dividends with common stock according to a formula are participating securities. This FSP determined 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 FSP takes effect in the first quarter of fiscal years beginning after December 15, 2008 and will be applied retrospectively for all periods presented and will be effective for Generex on August 1, 2009. We do not expect FSP EITF 03-6-1 to have a material effect on our consolidated financial statements.

The FASB issued FSP APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlements),” in May 2008. This FSP 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. This FSP takes effect in the first quarter of fiscal years beginning after December 15, 2008 and will be applied retrospectively for all periods presented. It will effective for the Generex on August 1, 2009. This FSP will apply to our convertible debentures. We are currently evaluating how it may affect our consolidated financial statements.

Item. 7A. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks associated with changes in the exchange rates between U.S. and Canadian currencies and with changes in the interest rates related to our fixed rate debt. We do not believe that any of these risks will have a material impact on our financial condition, results of operations and cash flows.

Our exposure to market risk for changes in interest rates relates primarily to our auction rate securities. During last fiscal year, investment banks were reporting an inability to successfully obtain subscribers for high credit quality auction rate securities. As of July 31, 2008, we held such auction rate securities with a par value totaling $8.9 million. In the event we need access to the funds invested in these securities, we will not be able to liquidate these securities until a future auction of these securities is successful, they are refinanced and redeemed by the issuers, or a buyer is found outside of the auction process.

At the present time, we maintain our cash in short-term government or government guaranteed instruments, short-term commercial paper, and interest bearing bank deposits or demand bank deposits which do not earn interest. A substantial majority of these instruments and deposits are denominated in U.S. dollars, with the exception of funds denominated in Canadian dollars on deposit in Canadian banks to meet short-term operating needs in Canada. At the present time, with the exception of professional fees and costs associated with the conduct of clinical trials in the United States and Europe, substantially all of our operating expense obligations are denominated in Canadian dollars. We do not presently employ any hedging or similar strategy intended to mitigate against losses that could be incurred as a result of fluctuations in the exchange rates between U.S. and Canadian currencies.

As of July 31, 2008, we had fixed rate debt totaling $3,187,248. This amount consists of the following:

Loan Amount		Interest Rate per Annum
	446,115		6.82	%
	276,602		6.82	%
	676,485		7.60	%
	390,800		8.50	%
	209,530		10	%
	1,187,716		6.07	%
	3,187,248		Total

These debt instruments mature from August 2008 through June 2011. As our fixed rate debt instruments mature, we will likely refinance such debt at the existing market interest rates which may be more or less than interest rates on the maturing debt. Since this debt is fixed rate debt, if interest rates were to increase 100 basis points prior to maturity, there would be no impact on earnings or cash flows.

We have neither issued nor own any long-term debt instruments, or any other financial instruments, for trading purposes and as to which we would be subject to material market risks.

Item 8. Financial Statements and Supplementary Data.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page

Reports of Independent Registered Public Accounting Firms	51

Consolidated Balance Sheets July 31, 2008 and 2007	55

Consolidated Statements of Operations For the Years Ended July 31, 2008, 2007 and 2006 and Cumulative From Inception to July 31, 2008	56

Consolidated Statements of Changes in Stockholders’ Equity For the Period November 2, 1995 (Date of Inception) to July 31, 2008	57

Consolidated Statements of Cash Flows For the Years Ended July 31, 2008, 2007 and 2006 and Cumulative From Inception to July 31, 2008	70

Notes to Consolidated Financial Statements	71

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Generex Biotechnology Corporation

(A Development Stage Company)

We have audited the accompanying consolidated balance sheet of Generex Biotechnology Corporation (a Development Stage Company) as of July 31, 2008 and the related consolidated statements of operations, stockholders’ equity and comprehensive income, and cash flows for year then ended and for the period November 5, 1995 (date of inception) to July 31, 2008. We also have audited Generex Biotechnology Corporation’s internal control over financial reporting as of July 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Generex Biotechnology Corporation’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audit of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Generex Biotechnology Corporation as of July 31, 2008 and the results of its operations and its cash flows for year then ended and for the period November 5, 1995 (date of inception) to July 31, 2008 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, Generex Biotechnology Corporation maintained, in all material respects, effective internal control over financial reporting as of July 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Our audits were conducted for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. Schedule II is presented for purposes of additional analysis and is not a required part of the basic consolidated financial statements. This schedule has been subjected to the auditing procedures applied to the basic consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic consolidated financial statements taken as a whole.

/s/ MSCM LLP

MSCM LLP

Toronto, Canada

September 30, 2008

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders of

Generex Biotechnology Corporation

(A Development Stage Company)

We have audited the accompanying consolidated balance sheets of Generex Biotechnology Corporation (a Development Stage Company) as of July 31, 2007 and 2006 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended. We also have audited management’s assessment, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, that Generex Biotechnology Corporation maintained effective internal control over financial reporting as of July 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Generex Biotechnology Corporation’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on these financial statements, an opinion on management’s assessment, and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audits.

We conducted our audits, referred to above, in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures we consider necessary in the circumstances. We believe that our audits provide reasonable basis for our opinions.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Generex Biotechnology Corporation as of July 31, 2007 and 2006, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, management’s assessment that Generex Biotechnology Corporation maintained effective internal control over financial reporting as of July 31, 2007, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by COSO. Furthermore, in our opinion, Generex Biotechnology Corporation maintained, in all material respects, effective internal control over financial reporting as of July 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by COSO.

/s/ Danziger Hochman Partners LLP

Danziger Hochman Partners LLP

Toronto, Canada

October 3, 2007

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

	July 31,
	2008			2007
ASSETS
Current Assets:
Cash and cash equivalents	$	17,237,510		$	21,026,067
Short-term investments		8,852,214			14,011,738
Accounts receivable		81,784			58,264
Inventory		1,465,222			123,931
Other current assets		380,927			469,210
Deferred debt issuance costs		506,608			—
Total Current Assets		28,524,265			35,689,210

Deferred Debt Issuance Costs		211,086			—
Property and Equipment, Net		1,744,974			2,137,027
Assets Held for Investment, Net		3,713,317			3,693,183
Patents, Net		3,954,241			4,884,984

TOTAL ASSETS	$	38,147,883		$	46,404,404

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable and accrued expenses	$	7,469,710		$	7,156,709
Deferred revenue and rebate liability		125,598			33,314
Current maturities of long-term debt		1,832,684			84,503
Convertible debentures, net of debt discount of $15,931,480 and $-0-at July 31, 2008 and 2007, respectively		4,718,520			—
Total Current Liabilities		14,146,512			7,274,526

Long-Term Debt, Net		1,354,564			3,059,286

Commitments and Contingencies

Stockholders’ Equity:
Special Voting Rights Preferred Stock, $.001 par value; authorized 1,000 shares at July 31, 2008 and 2007; -0- shares issued and outstanding at July 31, 2008 and 2007		—			—
Common stock, $.001 par value; authorized 500,000,000 shares at July 31, 2008 and 2007; 111,992,603 and 109,616,518 shares issued and outstanding at July 31, 2008 and 2007, respectively		111,992			109,616
Additional paid-in capital		269,849,581			247,079,439
Deficit accumulated during the development stage		(248,229,261	)		(212,000,270	)
Accumulated other comprehensive income		914,495			881,807
Total Stockholders’ Equity		22,646,807			36,070,592

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	38,147,883		$	46,404,404

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

										Cumulative From
										November 2, 1995
										(Date of Inception)
	For the Years Ended July 31,									to July 31,
	2008			2007			2006			2008

Revenues	$	128,039		$	182,429		$	175,000		$	2,504,764
Sales discounts		(3,148	)		(2,231	)		—			(5,379	)
Net Revenue		124,891			180,198			175,000			2,499,385

Cost of Goods Sold		52,025			61,623			—			113,648

Operating Expenses:
Research and development		16,359,030			11,983,626			6,554,393			89,815,494
Research and development - related party		—			—			—			220,218
Selling and marketing		1,562,258			693,309			56,028			2,311,595
General and administrative		15,597,048			12,317,742			12,270,562			105,636,466
General and administrative - related party		—			—			—			314,328
Total Operating Expenses		33,518,336			24,994,677			18,880,983			198,298,101

Operating Loss		(33,445,470	)		(24,876,102	)		(18,705,983	)		(195,912,364	)

Other Income (Expense):
Miscellaneous income (expense)		65			—			500			196,258
Income from rental operations, net		330,533			277,474			236,521			1,251,461
Interest income		1,166,439			2,180,380			767,598			7,508,897
Interest expense		(4,280,558	)		(849,548	)		(37,715,275	)		(47,882,573	)
Loss on extinguishment of debt		—			(237,162	)		(12,550,565	)		(14,134,068	)

Net Loss Before Undernoted		(36,228,991	)		(23,504,958	)		(67,967,204	)		(248,972,389	)

Minority Interest Share of Loss		—			—			—			3,038,185

Net Loss		(36,228,991	)		(23,504,958	)		(67,967,204	)		(245,934,204	)

Preferred Stock Dividend		—			—			—			2,295,057

Net Loss Available to Common Shareholders	$	(36,228,991	)	$	(23,504,958	)	$	(67,967,204	)	$	(248,229,261	)

Basic and Diluted Net Loss Per Common Share	$	(.33	)	$	(.22	)	$	(.90	)

Weighted Average Number of Shares of Common Stock Outstanding		110,991,192			108,416,023			75,416,234

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008

																		Deficit
	SVR															Notes		Accumulated			Accumulated
	Preferred				Common				Treasury				Additional			Receivable -		During the			Other			Total
	Stock				Stock				Stock				Paid-In			Common		Development			Comprehensive			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Stock		Stage			Income (Loss)			Equity
Balance November 2, 1995
(Inception)		-	$	-		-	$	-		-	$	-	$	-		$	-	$	-		$	-		$	-
Issuance of common stock for cash,
February 1996, $.0254		-		-		321,429		321		-		-		7,838			-		-			-			8,159
Issuance of common stock for cash,
February 1996, $.0510		-		-		35,142		35		-		-		1,757			-		-			-			1,792
Issuance of common stock for cash,
February 1996, $.5099		-		-		216,428		216		-		-		110,142			-		-			-			110,358
Issuance of common stock for cash,
March 1996, $10.2428		-		-		2,500		3		-		-		25,604			-		-			-			25,607
Issuance of common stock for cash,
April 1996, $.0516		-		-		489,850		490		-		-		24,773			-		-			-			25,263
Issuance of common stock for cash,
May 1996, $.0512		-		-		115,571		116		-		-		5,796			-		-			-			5,912
Issuance of common stock for cash,
May 1996, $.5115		-		-		428,072		428		-		-		218,534			-		-			-			218,962
Issuance of common stock for cash,
May 1996, $10.2302		-		-		129,818		130		-		-		1,327,934					-			-			1,328,064
Issuance of common stock for cash,																	-
July 1996, $.0051		-		-		2,606,528		2,606		-		-		10,777					-			-			13,383
Issuance of common stock for cash,
July 1996, $.0255		-		-		142,857		143		-		-		3,494			-		-			-			3,637
Issuance of common stock for cash,
July 1996, $.0513		-		-		35,714		36		-		-		1,797			-		-			-			1,833
Issuance of common stock for cash,
July 1996, $10.1847		-		-		63,855		64		-		-		650,282			-		-			-			650,346
Costs related to issuance of common
stock		-		-		-		-		-		-		(10,252	)		-		-			-			(10,252	)
Founders Shares transferred for services
rendered		-		-		-		-		-		-		330,025			-		-			-			330,025
Comprehensive Income (Loss):
Net loss		-		-		-		-		-		-		-			-		(693,448	)		-			(693,448	)
Other comprehensive income (loss)
Currency translation adjustment		-		-		-		-		-		-		-			-		-			(4,017	)		(4,017	)
Total Comprehensive Income (Loss)																			(693,448	)		(4,017	)		(697,465	)
Balance, July 31, 1996		-	$	-		4,587,764	$	4,588		-	$	-	$	2,708,501		$	-	$	(693,448	)	$	(4,017	)	$	2,015,624

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008

																		Deficit
	SVR															Notes		Accumulated			Accumulated
	Preferred				Common				Treasury				Additional			Receivable -		During the			Other			Total
	Stock				Stock				Stock				Paid-In			Common		Development			Comprehensive			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Stock		Stage			Income (Loss)			Equity
Balance, August 1, 1996		-	$	-		4,587,764	$	4,588		-	$	-	$	2,708,501		$	-	$	(693,448	)	$	(4,017	)	$	2,015,624
Issuance of common stock for cash,
September 1996, $.0509		-		-		2,143		2		-		-		107			-		-			-			109
Issuance of common stock for cash,
December 1996, $10.2421		-		-		1,429		1		-		-		14,635			-		-			-			14,636
Issuance of common stock for cash,
January 1997, $.0518		-		-		1,466		1		-		-		75			-		-			-			76
Issuance of common stock for cash,
March 1997, $10.0833		-		-		12		-		-		-		121			-		-			-			121
Issuance of common stock for cash,
May 1997, $.0512		-		-		4,233		4		-		-		213			-		-			-			217
Issuance of common stock for cash,
May 1997, $.5060		-		-		4,285,714		4,286		-		-		2,164,127			-		-			-			2,168,413
Costs related to issuance of common
stock, May 1997		-		-		-		-		-		-		(108,421	)		-		-			-			(108,421	)
Issuance of common stock for cash,
May 1997, $10.1194		-		-		18,214		18		-		-		184,297			-		-			-			184,315
Issuance of common stock for cash,
June 1997, $.0504		-		-		10,714		11		-		-		529			-		-			-			540
Issuance of common stock for cash,
June 1997, $.5047		-		-		32,143		32		-		-		16,190			-		-			-			16,222
Issuance of common stock for cash,
June 1997, $8.9810		-		-		29,579		30		-		-		265,618			-		-			-			265,648
Issuance of common stock for cash,
June 1997, $10.0978		-		-		714		1		-		-		7,209			-		-			-			7,210
Issuance of common stock for cash,
July 1997, $10.1214		-		-		25,993		26		-		-		263,060			-		-			-			263,086
Costs related to issuance of common
stock		-		-		-		-		-		-		(26,960	)		-		-			-			(26,960	)
Founders Shares transferred for services
rendered		-		-		-		-		-		-		23,481			-		-			-			23,481
Comprehensive Income (Loss):
Net loss		-		-		-		-		-		-		-			-		(1,379,024	)		-			(1,379,024	)
Other comprehensive income (loss)
Currency translation adjustment		-		-		-		-		-		-		-			-		-			3,543			3,543
Total Comprehensive Income (Loss)																			(1,379,024	)		3,543			(1,375,481	)
Balance, July 31, 1997		-	$	-		9,000,118	$	9,000		-	$	-	$	5,512,782		$	-	$	(2,072,472	)	$	(474	)	$	3,448,836

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008

																		Deficit
	SVR															Notes		Accumulated			Accumulated
	Preferred				Common				Treasury				Additional			Receivable -		During the			Other			Total
	Stock				Stock				Stock				Paid-In			Common		Development			Comprehensive			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Stock		Stage			Income (Loss)			Equity
Balance, August 1, 1997		-	$	-		9,000,118	$	9,000		-	$	-	$	5,512,782		$	-	$	(2,072,472	)	$	(474	)	$	3,448,836
Issuance of warrants in exchange for
services rendered, October 1997, $.50		-		-		-		-		-		-		234,000			-		-			-			234,000
Issuance of common stock in exchange
for services rendered, December 1997, $0.05		-		-		234,000		234		-		-		10,698			-		-			-			10,932
Issuance of SVR Preferred Stock in exchange
for services rendered, January 1998, $.001		1,000		1		-		-		-		-		99			-		-			-			100
Shares issued pursuant to the January 9, 1998
reverse merger between GBC-Delaware, Inc.and Generex Biotechnology Corporation		-		-		1,105,000		1,105		-		-		(1,105	)		-		-			-			-
Issuance of common stock for cash, March
1998, $2.50		-		-		70,753		71		-		-		176,812			-		-			-			176,883
Issuance of common stock for cash, April
1998, $2.50		-		-		60,000		60		-		-		149,940			-		-			-			150,000
Issuance of common stock in exchange
for services rendered, April 1998, $2.50		-		-		38,172		38		-		-		95,392			-		-			-			95,430
Issuance of common stock for cash, May
1998, $2.50		-		-		756,500		757		-		-		1,890,493			-		-			-			1,891,250
Issuance of common stock in exchange
for services rendered, May 1998, $2.50		-		-		162,000		162		-		-		404,838			-		-			-			405,000
Issuance of warrants in exchange for
services rendered, May 1998, $.60		-		-		-		-		-		-		300,000			-		-			-			300,000
Issuance of common stock for cash, June
1998, $2.50		-		-		286,000		286		-		-		714,714			-		-			-			715,000
Exercise of warrants for cash, June
1998, $0.0667		-		-		234,000		234		-		-		15,374			-		-			-			15,608
Issuance of common stock in exchange
for services rendered, June 1998, $2.50		-		-		24,729		24		-		-		61,799			-		-			-			61,823
Comprehensive Income (Loss):
Net loss		-		-		-		-		-		-		-			-		(4,663,604	)		-			(4,663,604	)
Other comprehensive income (loss)
Currency translation adjustment		-		-		-		-		-		-		-			-		-			(198,959	)		(198,959	)
Total Comprehensive Income (Loss)																			(4,663,604	)		(198,959	)		4,862,563
Balance, July 31, 1998		1,000	$	1		11,971,272	$	11,971		-	$	-	$	9,565,836		$	-	$	(6,736,076	)	$	(199,433	)	$	2,642,299

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008

																					Deficit
	SVR																	Notes			Accumulated			Accumulated
	Preferred				Common						Treasury				Additional			Receivable -			During the			Other			Total
	Stock				Stock						Stock				Paid-In			Common			Development			Comprehensive			Stockholders’
	Shares		Amount		Shares			Amount			Shares		Amount		Capital			Stock			Stage			Income (Loss)			Equity
Balance, August 1, 1998		1,000	$	1		11,971,272		$	11,971			-	$	-	$	9,565,836		$	-		$	(6,736,076	)	$	(199,433	)	$	2,642,299
Issuance of common stock for cash, August
1998, $3.00		-		-		100,000			100			-		-		299,900			-			-			-			300,000
Issuance of common stock for cash, August
1998, $3.50		-		-		19,482			19			-		-		68,168			-			-			-			68,187
Redemption of common stock for cash,
September 1998, $7.75		-		-		(15,357	)		(15	)		-		-		(119,051	)		-			-			-			(119,066	)
Issuance of common stock for cash,
September - October 1998, $3.00		-		-		220,297			220			-		-		660,671			-			-			-			660,891
Issuance of common stock for cash, August -
October 1998, $4.10		-		-		210,818			211			-		-		864,142			-			-			-			864,353
Issuance of common stock in exchange for
services rendered, August - October 1998, $2.50		-		-		21,439			21			-		-		53,577			-			-			-			53,598
Issuance of common stock in exchange for
services rendered, August - October 1998, $4.10		-		-		18,065			18			-		-		74,048			-			-			-			74,066
Issuance of common stock in exchange
for services rendered, September 1998, $4.10		-		-		180,000			180			-		-		737,820			-			-			-			738,000
Issuance of warrants in exchange for
services rendered, October 1998, $.26		-		-		-			-			-		-		2,064			-			-			-			2,064
Issuance of stock options in exchange for
services rendered, November 1998, $1.85		-		-		-			-			-		-		92,500			-			-			-			92,500
Issuance of warrants in exchange for
services rendered, November 1998, $1.64		-		-		-			-			-		-		246,000			-			-			-			246,000
Issuance of common stock for cash,
November 1998 - January 1999, $3.50		-		-		180,000			180			-		-		629,820			-			-			-			630,000
Issuance of common stock for cash,
November 1998 - January 1999, $4.00		-		-		275,000			275			-		-		1,099,725			-			-			-			1,100,000
Issuance of common stock for cash,
November 1998 - January 1999, $4.10		-		-		96,852			97			-		-		397,003			-			-			-			397,100
Issuance of common stock in exchange
for services rendered, November 1998 -
January 1999, $4.10		-		-		28,718			29			-		-		117,715			-			-			-			117,744
Issuance of common stock for cash,
November 1998 - January 1999, $5.00		-		-		20,000			20			-		-		99,980			-			-			-			100,000
Issuance of common stock for cash,
November 1998 - January 1999, $5.50		-		-		15,000			15			-		-		82,485			-			-			-			82,500
Issuance of common stock in exchange for
services rendered, January 1999, $5.00		-		-		392			-			-		-		1,960			-			-			-			1,960
Issuance of common stock for cash,
February 1999, $5.00		-		-		6,000			6			-		-		29,994			-			-			-			30,000
Issuance of common stock in exchange for
services rendered, February 1999, $6.00		-		-		5,000			5			-		-		29,995			-			-			-			30,000
Issuance of common stock for cash,
March 1999, $6.00		-		-		11,000			11			-		-		65,989			-			-			-			66,000
Issuance of common stock for cash,
April 1999, $5.50		-		-		363,637			364			-		-		1,999,640			-			-			-			2,000,004
Issuance of warrants in exchange for
services rendered, April 1999, $3.21		-		-		-			-			-		-		160,500			-			-			-			160,500
Issuance of warrants in exchange for
services rendered, April 1999, $3.17		-		-		-			-			-		-		317,000			-			-			-			317,000
Issuance of warrants in exchange for
services rendered, April 1999, $2.89		-		-		-			-			-		-		144,500			-			-			-			144,500
Issuance of warrants in exchange for
services rendered, April 1999, $3.27		-		-		-			-							184,310			-			-			-			184,310
Stock adjustment		-		-		714			1			-		-		(1	)		-			-			-			-
Issuance of common stock for cash,
May 1999, $5.50		-		-		272,728			273			-		-		1,499,731			-			-			-			1,500,004
Issuance of common stock in exchange for
services rendered, May - June 1999, $5.50		-		-		60,874			61			-		-		334,746			-									334,807
Exercise of warrants for cash, June 1999, $5.50		-		-		388,375			389			-				1,941,484			-			-			-			1,941,873
Exercise of warrants in exchange for note
receivable, June 1999, $5.00		-		-		94,776			95			-		-		473,787			(473,882	)		-			-			-
Exercise of warrants in exchange for services
rendered, June 1999, $5.00		-		-		13,396			13			-		-		66,967			-			-			-			66,980
Reduction of note receivable in exchange for
services rendered		-		-		-			-			-		-		-			38,979			-			-			38,979
Shares tendered in conjunction with warrant
exercise, June 1999, $7.8125		-		-		(323,920	)		(324	)		-		-		(2,530,301	)		-			-			-			(2,530,625	)
Exercise of warrants for shares tendered,
June 1999, $5.00		-		-		506,125			506			-		-		2,530,119			-			-			-			2,530,625
Cost of warrants redeemed for cash		-		-		-			-			-				(3,769	)		-			-			-			(3,769	)
Cost related to warrant redemption, June 1999		-		-		-			-			-		-		(135,431	)		-			-			-			(135,431	)
Costs related to issuance of common stock		-		-		-			-			-		-		(1,179,895	)		-			-			-			(1,179,895	)
Comprehensive Income (Loss):
Net Loss		-		-		-			-			-		-		-			-			(6,239,602	)		-			(6,239,602	)
Other comprehensive income (loss):
Currency translation adjustment		-		-		-			-			-		-		-			-			-			1,393			1,393
Total Comprehensive Income (Loss)																						(6,239,602	)		1,393			(6,238,209	)
Balance, July 31, 1999		1,000	$	1		14,740,683		$	14,741			-	$	-	$	20,903,728		$	(434,903	)	$	(12,975,678	)	$	(198,040	)	$	7,309,849

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008

																					Deficit
	SVR																	Notes			Accumulated			Accumulated
	Preferred				Common						Treasury				Additional			Receivable -			During the			Other			Total
	Stock				Stock						Stock				Paid-In			Common			Development			Comprehensive			Stockholders’
	Shares		Amount		Shares			Amount			Shares		Amount		Capital			Stock			Stage			Income (Loss)			Equity
Balance, August 1, 1999		1,000	$	1		14,740,683		$	14,741			-	$	-	$	20,903,728		$	(434,903	)	$	(12,975,678	)	$	(198,040	)	$	7,309,849
Adjustment for exercise of warrants recorded
June 1999, $5.00		-		-		(2,300	)		(2	)		-		-		2			-			-			-			-
Issuance of common stock for cash,
September 1999, $6.00		-		-		2,500			2			-		-		14,998			-			-			-			15,000
Issuance of common stock for cash pursuant to
private placement, January 2000, $4.25		-		-		470,590			471			-		-		1,999,537			-			-			-			2,000,008
Financing costs associated with private placement,
January, 2000		-		-		-			-			-		-		(220,192	)		-			-			-			(220,192	)
Issuance of stock in exchange for services
rendered, January 2000, $5.00		-		-		8,100			8			-		-		40,492			-			-			-			40,500
Granting of stock options for services
rendered, January 2000		-		-		-			-			-		-		568,850			-			-			-			568,850
Granting of warrants for services rendered,
January 2000		-		-		-			-			-		-		355,500			-			-			-			355,500
Exercise of warrants for cash, February 2000, $5.50		-		-		2,000			2			-		-		10,998			-			-			-			11,000
Exercise of warrants for cash, March 2000, $5.50		-		-		29,091			29			-		-		159,972			-			-			-			160,001
Exercise of warrants for cash, March 2000, $6.00		-		-		2,000			2			-		-		11,998			-			-			-			12,000
Exercise of warrants for cash, March 2000, $7.50		-		-		8,000			8			-		-		59,992			-			-			-			60,000
Issuance of common stock for cash pursuant to
private placement, June 2000, $6.00		-		-		1,041,669			1,042			-		-		6,248,972			-			-			-			6,250,014
Financing costs associated with private
placement, June 2000		-		-		-			-			-		-		(385,607	)		-			-			-			(385,607	)
Issuance of common stock for services,
June 2000, $6.00		-		-		4,300			4			-		-		25,796			-			-			-			25,800
Exercise of warrants for cash, July 2000, $6.00		-		-		3,000			3			-		-		17,997			-			-			-			18,000
Exercise of warrants for cash, July 2000, $7.50		-		-		16,700			17			-		-		125,233			-			-			-			125,250
Granting of stock options for services
rendered, July 2000		-		-		-			-			-		-		496,800			-			-			-			496,800
Reduction of note receivable in exchange for
services rendered		-		-		-			-			-		-		-			384,903			-			-			384,903
Accrued interest on note receivable		-		-		-			-			-		-		-			(4,118	)		-			-			(4,118	)
Comprehensive Income (Loss):
Net Loss		-		-		-			-			-		-		-			-			(8,841,047	)		-			(8,841,047	)
Other comprehensive income (loss):
Currency translation adjustment		-		-		-			-			-		-		-			-			-			32,514			32,514
Total Comprehensive Income (Loss)																						(8,841,047	)		32,514			(8,808,533	)
Balance, July 31, 2000		1,000	$	1		16,326,333		$	16,327			-	$	-	$	30,435,066		$	(54,118	)	$	(21,816,725	)	$	(165,526	)	$	8,415,025

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008

																			Deficit
	SVR															Notes			Accumulated			Accumulated
	Preferred				Common				Treasury				Additional			Receivable -			During the			Other			Total
	Stock				Stock				Stock				Paid-In			Common			Development			Comprehensive			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Stock			Stage			Income (Loss)			Equity
Balance, August 1, 2000		1,000	$	1		16,326,333	$	16,327		-	$	-	$	30,435,066		$	(54,118	)	$	(21,816,725	)	$	(165,526	)	$	8,415,025
Exercise of warrants for cash, August 2000, $6.00		-		-		2,000		2		-		-		11,998			-			-			-			12,000
Issuance of common stock for services rendered
August 2000		-		-		35,000		35		-		-		411,215			-			-			-			411,250
Issuance of warrants in exchange for equity line
agreement, August 2000		-		-		-		-		-		-		3,406,196			-			-			-			3,406,196
Exercise of warrants for cash, August 2000, $7.50		-		-		30,300		30		-		-		227,220			-			-			-			227,250
Exercise of warrants for cash, August 2000, $8.6625		-		-		30,000		30		-		-		259,845			-			-			-			259,875
Cashless exercise of warrants, August 2000		-		-		8,600		9		-		-		(9	)		-			-			-			-
Exercise of warrants for cash, August 2000, $10.00		-		-		10,000		10		-		-		99,990			-			-			-			100,000
Exercise of warrants for cash, September 2000, $8.6625		-		-		63,335		63		-		-		548,576			-			-			-			548,639
Exercise of warrants for cash, September 2000, $5.50		-		-		16,182		16		-		-		88,986			-			-			-			89,002
Exercise of warrants for cash, September 2000, $6.00		-		-		53,087		53		-		-		318,470			-			-			-			318,523
Exercise of warrants for cash, September 2000, $10.00		-		-		9,584		10		-		-		95,830			-			-			-			95,840
Exercise of warrants for cash, September 2000, $7.50		-		-		32,416		32		-		-		243,088			-			-			-			243,120
Issuance of common stock for cash pursuant to
private placement, October 2000, $11.00		-		-		2,151,093		2,151		-		-		23,659,872			-			-			-			23,662,023
Exercise of warrants for cash, Oct. 2000, $6.00		-		-		1,000		1		-		-		5,999			-			-			-			6,000
Financing costs associated with private placement,
October 2000		-		-		-		-		-		-		(1,956,340	)		-			-			-			(1,956,340	)
Exercise of warrants for cash, November - December
2000, $4.25		-		-		23,528		23		-		-		99,971			-			-			-			99,994
Cashless exercise of warrants, December 2000		-		-		3,118		3		-		-		(3	)		-			-			-			-
Exercise of warrants for cash, November - December
2000, $6.00		-		-		22,913		23		-		-		137,455			-			-			-			137,478
Exercise of warrants for cash, December 2000, $7.00		-		-		8,823		9		-		-		61,752			-			-			-			61,761
Issuance of common stock as employee
compensation, December 2000		-		-		8,650		8		-		-		100,548			-			-			-			100,556
Exercise of warrants for cash, January 2001, $6.00		-		-		3,000		3		-		-		17,997			-			-			-			18,000
Issuance of common stock for cash pursuant to
private placement, January 2001, $14.53		-		-		344,116		344		-		-		4,999,656			-			-			-			5,000,000
Financing costs associated with private placement,
January 2001		-		-		-		-		-		-		(200,000	)		-			-			-			(200,000	)
Issuance of common stock pursuant to litigation
settlement, January 2001		-		-		2,832		2		-		-		21,096			-			-			-			21,098
Granting of stock options in exchange for services
rendered, January 2001		-		-		-		-		-		-		745,000			-			-			-			745,000
Granting of stock options in exchange for services
rendered, February 2001		-		-		-		-		-		-		129,600			-			-			-			129,600
Exercise of stock options for cash,
February 2001, $5.00		-		-		50,000		50		-		-		249,950			-			-			-			250,000
Exercise of warrants for cash, March 2001, $6.00		-		-		500		1		-		-		2,999			-			-			-			3,000
Exercise of stock options in exchange for note
receivable, March 2001		-		-		50,000		50		-		-		249,950			(250,000	)		-			-			-
Issuance of common stock in exchange for services
rendered, March 2001, $5.50		-		-		8,000		8		-		-		43,992			-			-			-			44,000
Granting of stock options in exchange for services
rendered, May 2001		-		-		-		-		-		-		592,300			-			-			-			592,300
Exercise of stock options for cash, June 2001, $5.00		-		-		75,000		75		-		-		374,925			-			-			-			375,000
Exercise of stock options for cash, June 2001, $5.50		-		-		12,500		12		-		-		68,738			-			-			-			68,750
Exercise of warrants for cash, June 2001, $6.00		-		-		4,000		4		-		-		23,996			-			-			-			24,000
Exercise of stock options for cash, July 2001, $5.00		-		-		7,500		8		-		-		37,492			-			-			-			37,500
Exercise of stock options for cash, July 2001, $5.50		-		-		2,500		3		-		-		13,747			-			-			-			13,750
Exercise of warrants for cash, July 2001, $6.00		-		-		2,000		2		-		-		11,998			-			-			-			12,000
Issuance of common stock for cash pursuant to
private placement, July 2001, $9.25		-		-		1,254,053		1,254		-		-		11,598,736			-			-			-			11,599,990
Financing costs associated with private placement,
July 2001		-		-		-		-		-		-		(768,599	)		-			-			-			(768,599	)
Shares issued in exchange for services rendered,
July 2001, $9.25		-		-		23,784		24		-		-		219,978			-			-			-			220,002
Shares issued for Anti-Dilution Provisions, July 2001		-		-		5,779		6		-		-		53,450			-			-			-			53,456
Issuance of warrants in exchange for services
rendered, July 2001		-		-		-		-		-		-		19,134			-			-			-			19,134
Accrued interest on note receivable		-		-		-		-		-		-		-			(10,182	)		-			-			(10,182	)
Comprehensive Income (Loss):
Net Loss		-		-		-		-		-		-		-			-			(27,097,210	)		-			(27,097,210	)
Other comprehensive income (loss):
Currency translation adjustment		-		-		-		-		-		-		-			-			-			(81,341	)		(81,341	)
Total Comprehensive Income (Loss)																				(27,097,210	)		(81,341	)		(27,178,551	)
Balance at July 31, 2001		1,000	$	1		20,681,526	$	20,681		-	$	-	$	76,761,860		$	(314,300	)	$	(48,913,935	)	$	(246,867	)	$	27,307,440

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008

																				Deficit
	SVR																Notes			Accumulated			Accumulated
	Preferred				Common				Treasury						Additional		Receivable -			During the			Other			Total
	Stock				Stock				Stock						Paid-In		Common			Development			Comprehensive			Stockholders’
	Shares		Amount		Shares		Amount		Shares			Amount			Capital		Stock			Stage			Income (Loss)			Equity
Balance, August 1, 2001		1,000	$	1		20,681,526	$	20,681		-		$	-		$	76,761,860	$	(314,300	)	$	(48,913,935	)	$	(246,867	)	$	27,307,440
Exercise of stock options for cash,
August 2001, $5.50		-		-		5,000		5		-			-			27,495		-			-			-			27,500
Purchase of Treasury Stock for cash
October 2001, $3.915		-		-		-		-		(10,000	)		(39,150	)		-		-			-			-			(39,150	)
Issuance of stock options in exchange for
services rendered, December 2001		-		-		-		-		-			-			25,000		-			-			-			25,000
Issuance of common stock as employee
compensation, January 2002		-		-		10,800		11		-			-			71,161		-			-			-			71,172
Preferred stock dividend paid January 2002		-		-		-		-		-			-			-		-			(720,900	)		-			(720,900	)
Purchase of Treasury Stock for cash
February 2002, $4.693		-		-		-		-		(31,400	)		(147,346	)		-		-			-			-			(147,346	)
Issuance of warrants in exchange for services
rendered, March 2002		-		-		-		-		-			-			202,328		-			-			-			202,328
Purchase of Treasury Stock for cash
March 2002, $4.911		-		-		-		-		(7,700	)		(37,816	)		-		-			-			-			(37,816	)
Purchase of Treasury Stock for cash
April 2002, $4.025		-		-		-		-		(12,800	)		(54,516	)		-		-			-			-			(54,516	)
Issuance of stock options in exchange for
services rendered, June 2002		-		-		-		-		-			-			132,387		-			-			-			132,387
Purchase of Treasury Stock for cash																					-
July 2002, $4.025		-		-		-		-		(34,600	)		(116,703	)		-		-			-			-			(116,703	)
Accrued interest on note receivable		-		-		-		-		-			-			-		(22,585	)		-			-			(22,585	)
Comprehensive Income (Loss):
Net Loss		-		-		-		-		-			-			-		-			(13,693,034	)		-			(13,693,034	)
Other comprehensive income (loss):
Currency translation adjustment		-		-		-		-		-			-			-		-			-			(71,185	)		(71,185	)
Total Comprehensive Income (Loss)																					(13,693,034	)		(71,185	)		(13,764,219	)
Balance at July 31, 2002		1,000	$	1		20,697,326	$	20,697		(96,500	)	$	(395,531	)	$	77,220,231	$	(336,885	)	$	(63,327,869	)	$	(318,052	)	$	12,862,592

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008

																					Deficit
	SVR																	Notes			Accumulated			Accumulated
	Preferred				Common				Treasury						Additional			Receivable -			During the			Other			Total
	Stock				Stock				Stock						Paid-In			Common			Development			Comprehensive			Stockholders’
	Shares		Amount		Shares		Amount		Shares			Amount			Capital			Stock			Stage			Income (Loss)			Equity
Balance, August 1, 2002		1,000	$	1		20,697,326	$	20,697		(96,500	)	$	(395,531	)	$	77,220,231		$	(336,885	)	$	(63,327,869	)	$	(318,052	)	$	12,862,592
Receipt of restricted shares of common stock as
settlement for executive loan, September 2002, $1.90		-		-		-		-		(592,716	)		(1,126,157	)		-			-			-			-			(1,126,157	)
Purchase of Treasury Stock for cash
October 2002, $1.5574		-		-		-		-		(40,000	)		(62,294	)		-			-			-			-			(62,294	)
Issuance of warrants in exchange for the services
rendered, November 2002, $2.50		-		-		-		-		-			-			988,550			-			-			-			988,550
Issuance of stock options in exchange for services
receivable, November 2002, $2.10		-		-		-		-		-			-			171,360			-			-			-			171,360
Issuance of common stock in exchange for services
rendered, November 2002, $2.10		-		-		30,000		30		-			-			62,970			-			-			-			63,000
Issuance of common stock as employee
compensation, January 2003, $2.10		-		-		9,750		10		-			-			20,465			-			-			-			20,475
Purchase of Treasury Stock for cash
December 2002, $2.0034		-		-		-		-		(13,000	)		(26,044	)		-			-			-			-			(26,044	)
Preferred stock dividend paid January 2003		-		-		-		-		-			-			-			-			(764,154	)		-			(764,154	)
Issuance of common stock in exchange for services
rendered, March 2003, $1.00		-		-		70,000		70		-			-			69,930			-			-			-			70,000
Issuance of common stock for cash pursuant to
private placement, May 2003, $1.15		-		-		2,926,301		2,926		-			-			3,362,324			-			-			-			3,365,250
Financing costs associated with private placement,
May 2003		-		-		-		-		-			-			(235,568	)		-			-			-			(235,568	)
Exercise of warrants for cash, May 2003, $1.50		-		-		35,000		35		-			-			52,465			-			-			-			52,500
Issuance of common stock for cash pursuant to
private placement, June 2003, $1.50		-		-		666,667		667		-			-			999,333			-			-			-			1,000,000
Issuance of common stock as employee
compensation, June 2003, $2.00		-		-		100		-		-			-			200			-			-			-			200
Exercise of warrants for cash, June 2003, $1.50		-		-		1,496,001		1,496		-			-			2,242,506			-			-			-			2,244,002
Cashless exercise of warrants, June 2003		-		-		16,379		16		-			-			(16	)		-			-			-			-
Exercise of stock options for cash, June 2003, $1.59		-		-		70,000		70		-			-			111,230			-			-			-			111,300
Accrued interest on note receivable		-		-		-		-		-			-			-			(23,113	)		-			-			(23,113	)
Comprehensive Income (Loss):
Net Loss		-		-		-		-		-			-			-			-			(13,261,764	)		-			(13,261,764	)
Other comprehensive income (loss)
Currency translation adjustment		-		-		-		-		-			-			-			-			-			406,830			406,830
Total Comprehensive Income (Loss)																						(13,261,764	)		406,830			(12,854,934	)
Balance at July 31, 2003		1,000	$	1		26,017,524	$	26,017		(742,216	)	$	(1,610,026	)	$	85,065,980		$	(359,998	)	$	(77,353,787	)	$	88,778		$	5,856,965

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008

																							Deficit
	SVR																			Notes			Accumulated			Accumulated
	Preferred				Common						Treasury						Additional			Receivable -			During the			Other		Total
	Stock				Stock						Stock						Paid-In			Common			Development			Comprehensive		Stockholders’
	Shares		Amount		Shares			Amount			Shares			Amount			Capital			Stock			Stage			Income (Loss)		Equity
Balance, August 1, 2003		1,000	$	1		26,017,524		$	26,017			(742,216	)	$	(1,610,026	)	$	85,065,980		$	(359,998	)	$	(77,353,787	)	$	88,778	$	5,856,965
Shares issued pursuant to acquisition of Antigen
Express Inc., August 2003		-		-		2,779,974			2,780			-			-			4,639,777			-			-			-		4,642,557
Cost of stock options to be assumed in conjunction
with merger		-		-		-			-			-			-			154,852			-			-			-		154,852
Exercise of stock options for cash, September 2003,
$1.59		-		-		10,000			10			-			-			15,890			-			-			-		15,900
Exercise of stock options for cash, October 2003, $2.10		-		-		14,900			15			-			-			31,275			-			-			-		31,290
Exercise of stock options for cash, October 2003, $1.59		-		-		10,000			10			-			-			15,890			-			-			-		15,900
Exercise of stock options for cash, October 2003, $0.30		-		-		65,000			65			-			-			19,435			-			-			-		19,500
Exercise of stock options for cash, October 2003, $0.55		-		-		40,000			40			-			-			21,960			-			-			-		22,000
Issuance of common stock In exchange for services
rendered, October 2003, $1.98		-		-		150,000			150			-			-			296,850			-			-			-		297,000
Issuance of common stock In exchange for services
rendered, October 2003, $1.84		-		-		337,500			338			-			-			620,662			-			-			-		621,000
Issuance of warrants in exchange for the services
rendered October 2003 (at $1.35)		-		-		-			-			-			-			27,000			-			-			-		27,000
Exercise of stock options for cash, November 2003,
$2.10		-		-		10,500			10			-			-			22,040			-			-			-		22,050
Redemption of Treasury Stock, November 2003, $2.17		-		-		(742,216	)		(742	)		742,216			1,610,026			(1,609,284	)		-			-			-		-
Granting of stock options in exchange for services,
November 2003 (at $1.71)		-		-		-			-			-			-			151,433			-			-			-		151,433
Issuance of common stock for cash pursuant to
private placement, Jan 2004, $1.47		-		-		1,700,680			1,701			-			-			2,498,299			-			-			-		2,500,000
Issuance of common stock for cash pursuant to
private placement, Jan 2004, $1.80		-		-		55,556			56			-			-			99,944			-			-			-		100,000
Issuance of common stock for cash pursuant to
private placement, Jan 2004, $1.75		-		-		228,572			229			-			-			399,771			-			-			-		400,000
Financing costs associated with private placement,
January 2004		-		-		-			-			-			-			(68,012	)		-			-			-		(68,012	)
Preferred Stock Dividend paid in January		-		-		-			-			-			-			-			-			(810,003	)		-		(810,003	)
Issuance of common stock for cash pursuant to
private placement, Feb 2004, $1.60		-		-		93,750			94			-			-			149,906			-			-			-		150,000
Issuance of common stock for cash pursuant to
private placement, Feb 2004, $1.66		-		-		68,675			69			-			-			113,932			-			-			-		114,001
Issuance of common stock for cash pursuant to
private placement, Feb 2004, $1.50		-		-		666,667			667			-			-			999,334			-			-			-		1,000,001
Issuance of common stock as employee
compensation, Feb 2004, $1.48		-		-		8,850			8			-			-			13,089			-			-			-		13,097
Issuance of common stock In exchange for services
rendered, Feb 2004, $1.48		-		-		175,000			175			-			-			258,825			-			-			-		259,000
Issuance of common stock In exchange for services
rendered, Feb 2004, $1.51		-		-		112,500			113			-			-			169,762			-			-			-		169,875
Issuance of common stock for cash pursuant to
private placement, July 2004, $1.22		-		-		2,459,016			2,459			-			-			2,997,541			-			-			-		3,000,000
Financing costs associated with private placement,
July 2004		-		-		-			-			-			-			(41,250	)		-			-			-		(41,250	)
Variable accounting non-cash compensation expense		-		-		-			-			-			-			45,390			-			-			-		45,390
Accrued interest on note receivable		-		-		-			-			-			-			-			(24,805	)		-			-		(24,805	)
Comprehensive Income (Loss):
Net Loss		-		-		-			-			-			-			-			-			(18,362,583	)		-		(18,362,583	)
Other comprehensive income (loss)
Currency translation adjustment		-		-		-			-			-			-			-			-			-			207,593		207,593
Total Comprehensive Income (Loss)																								(18,362,583	)		207,593		(18,154,990	)
Balance at July 31, 2004		1,000	$	1		34,262,448		$	34,264			-		$	-		$	97,110,291		$	(384,803	)	$	(96,526,373	)	$	296,371	$	529,751

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008

																					Deficit
	SVR																	Notes			Accumulated			Accumulated
	Preferred				Common						Treasury				Additional			Receivable -			During the			Other		Total
	Stock				Stock						Stock				Paid-In			Common			Development			Comprehensive		Stockholders’
	Shares		Amount		Shares			Amount			Shares		Amount		Capital			Stock			Stage			Income (Loss)		Equity

Balance, August 1, 2004		1,000	$	1		34,262,448		$	34,264			-	$	-	$	97,110,291		$	(384,803	)	$	(96,526,373	)	$	296,371	$	529,751
Issuance of common stock In exchange for services
rendered, Aug 2004, $1.09		-		-		620,000			620			-		-		675,180			-			-			-		675,800
Issuance of warrants in exchange for services
rendered Aug 2004, $1.08		-		-		-			-			-		-		415,000			-			-			-		415,000
Granting of stock options in exchange for services,
Oct 2004, $0.94		-		-		-			-			-		-		75,600			-			-			-		75,600
Cancellation of common stock for non-performance of
services, Oct 2004, $0.94		-		-		(75,000	)		(75	)		-		-		(137,925	)		-			-			-		(138,000	)
Issuance of warrants in conjunction with financing,
Nov 2004, $0.91		-		-		-			-			-		-		89,900			-			-			-		89,900
Issuance of warrants in conjunction with convertible
debentures, $4,000,000, Nov 2004 $0.91		-		-		-			-			-		-		1,722,222			-			-			-		1,722,222
Value of beneficial conversion feature on convertible
debentures, $4,000,000, Nov 2004 $0.91		-		-		-			-			-		-		1,722,222			-			-			-		1,722,222
Issuance of common stock In exchange for services
rendered, Dec 2004, $0.71		-		-		48,000			48			-		-		34,032			-			-			-		34,080
Conversion of Series A Preferred Stock, Dec 2004
$25.77		-		-		534,085			534			-		-		14,309,523			-			-			-		14,310,057
Issuance of common stock In exchange for services
rendered, Jan 2005, $0.85		-		-		18,000			18			-		-		15,282			-			-			-		15,300
Issuance of common stock In exchange for services
rendered, Jan 2005, $0.75		-		-		40,000			40			-		-		29,960			-			-			-		30,000
Issuance of common stock In exchange for services
rendered, Feb 2005, $0.69		-		-		18,000			18			-		-		12,402			-			-			-		12,420
Issuance of common stock as repayment of principal
and interest due, $4,000,000, Feb 2005		-		-		250,910			251			-		-		181,262			-			-			-		181,513
Issuance of common stock In exchange for services
rendered, Feb 2005, $0.68		-		-		50,000			50			-		-		33,950			-			-			-		34,000
Issuance of common stock as repayment of principal
and interest due, $4,000,000, Mar 2005		-		-		265,228			265			-		-		162,197			-			-			-		162,462
Issuance of common stock as repayment of principal
and interest due, $4,000,000, Apr 2005		-		-		314,732			315			-		-		162,275			-			-			-		162,590
Issuance of common stock in connection with conversion of
$143,500 of $4,000,000 debenture, Apr 2005		-		-		175,316			175			-		-		143,584			-			-			-		143,759
Issuance of common stock as employee
compensation, Apr 2005, $0.56		-		-		8,800			9			-		-		4,919			-			-			-		4,928
Issuance of warrants in conjunction with convertible
debentures, $500,000, Apr 2005, $0.82		-		-		-			-			-		-		245,521			-			-			-		245,521
Value of beneficial conversion feature on convertible
debentures, $500,000, Apr 2005, $0.82		-		-		-			-			-		-		86,984			-			-			-		86,984
Issuance of warrants in conjunction with convertible
debentures, $100,000, Apr 2005, $0.82		-		-		-			-			-		-		49,104			-			-			-		49,104
Value of beneficial conversion feature on convertible
debentures, $100,000, Apr 2005, $0.82		-		-		-			-			-		-		17,397			-			-			-		17,397
Issuance of warrants in exchange for services
rendered Apr 2005, $0.82		-		-		-			-			-		-		40,000			-			-			-		40,000
Issuance of common stock In exchange for services
rendered, Apr 2005, $0.82		-		-		350,000			350			-		-		286,650			-			-			-		287,000
Issuance of common stock in satisfaction of
accounts payable, Apr 2005, $0.82		-		-		950,927			951			-		-		778,809			-			-			-		779,760
Granting of stock options in exchange for outstanding
liabilities, Apr 2005, $0.001		-		-		-			-			-		-		1,332,052			-			-			-		1,332,052
Issuance of common stock as repayment of principal
and interest due, $4,000,000, May 2005		-		-		482,071			482			-		-		321,877			-			-			-		322,359
Issuance of common stock in connection with conversion of
$300,000 of $4,000,000 debenture, May 2005		-		-		365,914			366			-		-		299,683			-			-			-		300,049
Issuance of common stock in connection with conversion of
$244,000 of $4,000,000 debenture, May 2005		-		-		297,659			298			-		-		243,783			-			-			-		244,081
Issuance of common stock in connection with conversion of
$410,000 of $4,000,000 debenture, May 2005		-		-		500,000			500			-		-		409,500			-			-			-		410,000
Issuance of warrants in conjunction with 1st extension of due
date of $600,000 convertible debentures, May 2005, $0.82		-		-		-			-			-		-		717,073			-			-			-		717,073
Issuance of common stock as repayment of principal
and interest due, $4,000,000, June 2005		-		-		311,307			311			-		-		244,644			-			-			-		244,955
Issuance of common stock in conjunction with financing,
$2,000,000, June 2005, $0.82		-		-		170,732			171			-		-		139,829			-			-			-		140,000
Issuance of warrants in conjunction with financing, $2,000,000,
June 2005, $0.82		-		-		-			-			-		-		20,300			-			-			-		20,300
Issuance of warrants in conjunction with convertible debentures,
$2,000,000, June 2005, $0.82		-		-		-			-			-		-		828,571			-			-			-		828,571
Value of beneficial conversion feature on convertible
debentures, $2,000,000, June 2005, $0.82		-		-		-			-			-		-		1,171,429			-			-			-		1,171,429
Issuance of common stock in connection with conversion of
$100,000 of $2,000,000 debenture, June 2005		-		-		166,667			167			-		-		99,833			-			-			-		100,000
Issuance of common stock in connection with conversion of
$190,000 of $2,000,000 debenture, June 2005		-		-		316,927			317			-		-		189,839			-			-			-		190,156
Issuance of common stock In exchange for services
rendered, June 2005, $0.60		-		-		63,207			63			-		-		37,861			-			-			-		37,924
Issuance of common stock in satisfaction of
accounts payable, June 2005, $0.82		-		-		90,319			90			-		-		73,971			-			-			-		74,061
Issuance of common stock in connection with conversion of
$17,000 of $2,000,000 debenture, July 2005		-		-		28,398			28			-		-		17,011			-			-			-		17,039
Issuance of common stock in connection with conversion of
$75,000 of $2,000,000 debenture, July 2005		-		-		125,000			125			-		-		75,035			-			-			-		75,160
Issuance of warrants in conjunction with 2nd extension of due
date of $600,000 convertible debentures, July 2005, $0.82		-		-		-			-			-		-		629,268			-			-			-		629,268
Issuance of common stock as repayment of principal
and interest due, $4,000,000, July 2005		-		-		364,123			364			-		-		237,586			-			-			-		237,950
Issuance of common stock in satisfaction of
accounts payable, July 2005, $0.82		-		-		820,128			820			-		-		671,685			-			-			-		672,505
Granting of stock options in exchange for services,
July 2004, $0.63		-		-		-			-			-		-		17,155			-			-			-		17,155
Accrued interest on note receivable		-		-		-			-			-		-		-			(6,300	)		-			-		(6,300	)
Write-off of uncollectible notes receivable - common
stock		-		-		-			-			-		-		-			391,103			-			-		391,103
Variable accounting non-cash compensation expense		-		-		-			-			-		-		-			-			-			-		-
Comprehensive Income (Loss):
Net Loss		-		-		-			-			-		-		-			-			(24,001,735	)		-		(24,001,735	)
Other comprehensive income (loss)
Currency translation adjustment		-		-		-			-			-		-		-			-			-			272,478		272,478
Total Comprehensive Income (Loss)																						(24,001,735	)		272,478		(23,729,257	)
Balance at July 31, 2005		1,000	$	1		41,933,898		$	41,935			-	$	-	$	126,044,326		$	-		$	(120,528,108	)	$	568,849	$	6,127,003

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008

																		Deficit
	SVR															Notes		Accumulated			Accumulated
	Preferred				Common				Treasury				Additional			Receivable -		During the			Other		Total
	Stock				Stock				Stock				Paid-In			Common		Development			Comprehensive		Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Stock		Stage			Income (Loss)		Equity

Balance, August 1, 2005		1,000	$	1		41,933,898	$	41,935		-	$	-	$	126,044,326		$	-	$	(120,528,108	)	$	568,849	$	6,127,003
Issuance of common stock as repayment of monthly
amortization payments due, $4,000,000, August 2005		-		-		429,041		429		-		-		282,738			-		-			-		283,167
Issuance of common stock in exchange for the services
rendered August 2005 (at $0.61)		-		-		19,500		19		-		-		11,877			-		-			-		11,896
Issuance of common stock in exchange for the services
rendered August 2005 (at $0.59)		-		-		246,429		246		-		-		145,147			-		-			-		145,393
Issuance of common stock as repayment of monthly
amortization payments due, $4,000,000, September 2005		-		-		388,730		389		-		-		267,835			-		-			-		268,224
Issuance of common stock as repayment of monthly
amortization payments due, $2,000,000, September 2005		-		-		322,373		322		-		-		222,115			-		-			-		222,437
Issuance of common stock in connection with conversion of
$504,538 of $2,000,000 debenture, September 2005		-		-		841,309		841		-		-		503,945			-		-			-		504,786
Issuance of common stock in connection with conversion of
$286,538 of $2,000,000 debenture, September 2005		-		-		477,962		478		-		-		286,299			-		-			-		286,777
Issuance of common stock in connection with conversion of
$457,200 of 2nd $2,000,000 debenture, September 2005		-		-		762,000		762		-		-		456,739			-		-			-		457,501
Issuance of common stock in satisfaction of accounts
payable, September 2005, $0.81		-		-		162,933		163		-		-		113,442			-		-			-		113,605
Issuance of common stock in connection with conversion of
$211,538 of $2,000,000 debenture, September 2005		-		-		353,665		354		-		-		211,845			-		-			-		212,199
Issuance of common stock in connection with conversion of
$150,000 of 2nd $2,000,000 debenture, September 2005		-		-		250,000		250		-		-		149,750			-		-			-		150,000
Issuance of common stock in connection with conversion of
$457,317 of 2nd $2,000,000 debenture, September 2005		-		-		762,195		762		-		-		458,209			-		-			-		458,971
Issuance of common stock in conjunction with financing,
2nd $2,000,000, September 2005, $0.82		-		-		170,732		171		-		-		139,829			-		-			-		140,000
Issuance of warrants in conjunction with financing,
2nd $2,000,000, September 2005, $0.82		-		-		-		-		-		-		30,600			-		-			-		30,600
Issuance of warrants in conjunction with convertible debentures,
2nd $2,000,000, September 2005 (at $0.82)		-		-		-		-		-		-		785,185			-		-			-		785,185
Value of Beneficial Conversion Feature on Convertible
Debentures, 2nd $2,000,000, September 2005 (at $0.82)		-		-		-		-		-		-		1,185,185			-		-			-		1,185,185
Issuance of common stock as repayment of monthly
amortization payments due, $4,000,000, October 2005		-		-		243,836		244		-		-		163,126			-		-			-		163,370
Issuance of common stock as repayment of monthly
amortization payments due, $2,000,000, October 2005		-		-		67,949		68		-		-		45,458			-		-			-		45,526
Issuance of common stock in connection with conversion of
$307,317 of 2nd $2,000,000 debenture, October 2005		-		-		512,195		512		-		-		306,805			-		-			-		307,317
Issuance of common stock in connection with conversion of
$300,000 of $2,000,000 debenture, October 2005		-		-		501,397		501		-		-		300,337			-		-			-		300,838
Issuance of common stock in connection with conversion of
$500,000 of $500,000 debenture, October 2005		-		-		644,003		644		-		-		527,438			-		-			-		528,082
Issuance of common stock in connection with conversion of
$113,077 of $2,000,000 debenture, October 2005		-		-		189,019		189		-		-		113,222			-		-			-		113,411
Issuance of common stock in connection with conversion of
$297,692 of $4,000,000 debenture, October 2005		-		-		364,113		364		-		-		298,209			-		-			-		298,573
Exercise of stock warrants for cash, October 2005, $0.82		-		-		8,404,876		8,405		-		-		6,883,593			-		-			-		6,891,998
Exercise of stock options for cash, October 2005, $0.63		-		-		101,500		101		-		-		63,844			-		-			-		63,945
Exercise of stock options for cash, October 2005, $0.94		-		-		40,000		40		-		-		37,560			-		-			-		37,600
Issuance of common stock in connection with conversion of
$100,000 of $100,000 debenture, October 2005		-		-		128,834		129		-		-		105,515			-		-			-		105,644
Issuance of warrants in conjunction with financing, $500,000,
October 2005, $0.82		-		-		-		-		-		-		14,250			-		-			-		14,250
Issuance of warrants in conjunction with convertible
debentures, $500,000, October 2005, $0.82		-		-		-		-		-		-		270,950			-		-			-		270,950
Issuance of warrants as exercise inducement Oct 2005, $1.20		-		-		-		-		-		-		573,146			-		-			-		573,146
Issuance of warrants as exercise inducement Oct 2005, $1.25		-		-		-		-		-		-		2,501,390			-		-			-		2,501,390
Value of Beneficial Conversion Feature on Convertible
Debentures, $500,000, October 2005 (at $0.82)		-		-		-		-		-		-		229,050			-		-			-		229,050
Issuance of common stock as repayment of monthly
amortization payments due, $4,000,000, Nov 2005, $1.17		-		-		108,006		108		-		-		126,259			-		-			-		126,367
Issuance of common stock as repayment of monthly
amortization payments due, $2,000,000, Nov 2005, $1.17		-		-		16,753		17		-		-		19,584			-		-			-		19,601
Exercise of stock options for cash, November 2005, $0.94		-		-		100,000		100		-		-		93,900			-		-			-		94,000
Exercise of stock options for cash, November 2005, $0.63		-		-		1,500		2		-		-		944			-		-			-		946
Exercise of stock warrants for cash, November 2005, $0.82		-		-		3,058,536		3,058		-		-		2,504,942			-		-			-		2,508,000
Issuance of common stock in exchange for the services
rendered November 2005, $0.97		-		-		64,287		64		-		-		62,294			-		-			-		62,358
Issuance of common stock in connection with conversion of
$42,800 of 2nd $2,000,000 debenture, Nov 2005, $1.23		-		-		72,058		72		-		-		88,559			-		-			-		88,631
Issuance of common stock in exchange for the services
rendered August 2005, $0.97		-		-		19,500		19		-		-		18,897			-		-			-		18,916
Issuance of common stock in connection with conversion of
$230,769 of $4,000,000 debenture, November 2005,$0.97		-		-		282,721		283		-		-		273,957			-		-			-		274,240
Issuance of common stock as repayment of monthly
amortization payments due, $2,000,000, Dec 2005, $0.98		-		-		212,750		213		-		-		208,282			-		-			-		208,495
Issuance of common stock in connection with conversion of
$1,451,000 of $3,500,000 debenture, Dec 2005, $0.93		-		-		1,770,223		1,770		-		-		1,644,537			-		-			-		1,646,307
Issuance of common stock in connection with conversion of
$4,221 of 2nd $2,000,000 debenture, Dec 2005, $0.85		-		-		7,042		7		-		-		5,979			-		-			-		5,986
Issuance of common stock in conjunction with financing,
$3,500,000, December 2005, $0.95		-		-		224,000		224		-		-		212,576			-		-			-		212,800
Issuance of warrants in conjunction with financing, $3,500,000,
December 2005, $0.82		-		-		-		-		-		-		76,650			-		-			-		76,650
Issuance of warrants in conjunction with convertible
debentures, $3,500,000, December 2005, $0.82		-		-		-		-		-		-		1,648,387			-		-			-		1,648,387
Value of Beneficial Conversion Feature on Convertible
Debentures, $3,500,000, December 2005,$0.82		-		-		-		-		-		-		1,851,613			-		-			-		1,851,613
Issuance of warrants as exercise inducement Dec 2005, $1.25		-		-		-		-		-		-		1,115,853			-		-			-		1,115,853
Issuance of common stock in connection with conversion of
$82,000 of $3,500,000 debenture, December 2005, $0.84		-		-		100,000		100		-		-		83,900			-		-			-		84,000
Issuance of common stock as repayment of monthly
amortization payments due, 2nd $2,000,000, Jan 2006, $0.81		-		-		75,149		75		-		-		60,796			-		-			-		60,871
Issuance of common stock as repayment of monthly
amortization payments due, $500,000, Jan 2006, $0.81		-		-		53,612		54		-		-		43,372			-		-			-		43,426
Issuance of common stock in connection with conversion of
$617,000 of $3,500,000 debenture, January 2005, $0.94		-		-		757,630		758		-		-		711,415			-		-			-		712,173
Issuance of common stock in conjunction with financing,
$4,000,000, January 2006, $1.00		-		-		266,667		267		-		-		266,400			-		-			-		266,667
Issuance of warrants in conjunction with financing, $4,000,000,
January 2006, $1.05		-		-		-		-		-		-		88,800			-		-			-		88,800
Issuance of warrants in conjunction with convertible
debentures, 4,000,000, January 2006, $1.05		-		-		-		-		-		-		1,653,631			-		-			-		1,653,631
Value of Beneficial Conversion Feature on Convertible
Debentures, 4,000,000, January 2006, $1.05		-		-		-		-		-		-		1,463,155			-		-			-		1,463,155
Exercise of stock warrants for cash, January 2006, $0.82		-		-		7,317,072		7,317		-		-		5,992,682			-		-			-		5,999,999
Issuance of warrants as exercise inducement Jan 2006, $1.60		-		-		-		-		-		-		3,109,756			-		-			-		3,109,756
Exercise of stock options for cash, January 2006, $0.63		-		-		10,000		10		-		-		6,290			-		-			-		6,300
Issuance of common stock in connection with conversion of
$850,000 of $3,500,000 debenture, January 2006, $1.06		-		-		1,045,779		1,046		-		-		1,107,480			-		-			-		1,108,526
Issuance of common stock as repayment of monthly
amortization payments due, $500,000, Feb 2006, $1.23		-		-		49,812		50		-		-		61,219			-		-			-		61,269
Issuance of common stock as repayment of monthly
amortization payments due, $2,000,000, Feb 2006, $1.23		-		-		67,746		68		-		-		83,260			-		-			-		83,328
Issuance of common stock as employee compensation,
December 2005, $0.90		-		-		140,115		140		-		-		125,964			-		-			-		126,104
Exercise of stock warrants for cash, February 2006, $0.82		-		-		303,902		304		-		-		248,896			-		-			-		249,200
Issuance of common stock in exchange for the services
rendered February 2006, $1.53		-		-		50,000		50		-		-		76,450			-		-			-		76,500
Exercise of stock options for cash, February 2006, $0.94		-		-		80,000		80		-		-		75,120			-		-			-		75,200
Exercise of stock options for cash, February 2006, $1.59		-		-		80,000		80		-		-		127,120			-		-			-		127,200
Exercise of stock options for cash, February 2006, $1.38		-		-		20,000		20		-		-		27,580			-		-			-		27,600
Exercise of stock warrants for cash, February 2006, $1.05		-		-		3,809,524		3,810		-		-		3,996,191			-		-			-		4,000,001
Exercise of stock warrants for cash, February 2006, $1.20		-		-		909,756		910		-		-		1,090,797			-		-			-		1,091,707
Exercise of stock warrants for cash, February 2006, $1.25		-		-		4,578,048		4,578		-		-		5,717,982			-		-			-		5,722,560
Exercise of stock warrants for cash, February 2006, $1.72		-		-		34,782		35		-		-		59,790			-		-			-		59,825
Issuance of common stock in connection with conversion of
$950,000 of Jan $4,000,000 debenture, Feb 2006, $2.38		-		-		904,762		905		-		-		2,152,429			-		-			-		2,153,334
Issuance of warrants in conjunction with convertible
debentures, 4,000,000, February 2006, $1.05		-		-		-		-		-		-		2,374,507			-		-			-		2,374,507
Value of Beneficial Conversion Feature on Convertible
Debentures, 4,000,000, February 2006, $1.05		-		-		-		-		-		-		1,625,493			-		-			-		1,625,493
Issuance of warrants as exercise inducement Feb 2006, $3.00		-		-		-		-		-		-		8,294,141			-		-			-		8,294,141
Issuance of common stock in connection with conversion of
$1,550,000 of Jan $4,000,000 debenture, Mar 2006, $2.21		-		-		1,485,349		1,485		-		-		3,281,136			-		-			-		3,282,621
Exercise of stock warrants for cash, March 2006, $1.72		-		-		347,913		348		-		-		598,062			-		-			-		598,410
Issuance of common stock as repayment of monthly
amortization payments due, $2,000,000, Mar 2006, $2.31		-		-		67,094		67		-		-		154,920			-		-			-		154,987
Issuance of common stock as repayment of monthly
amortization payments due, $500,000, March 2006, $2.31		-		-		49,312		49		-		-		113,861			-		-			-		113,910
Issuance of common stock as repayment of monthly
amortization payments due, $3,500,000, Mar 2006, $2.31		-		-		55,644		56		-		-		128,482			-		-			-		128,538
Issuance of common stock in exchange for the services
rendered March 2006, $2.31		-		-		50,000		50		-		-		115,450			-		-			-		115,500
Exercise of stock options for cash, March 2006, $0.94		-		-		300,222		300		-		-		281,909			-		-			-		282,209
Issuance of common stock in connection with conversion of
$2,350,000 of Feb $4,000,000 debenture, Mar 2006, $2.31		-		-		1,880,000		1,880		-		-		4,340,920			-		-			-		4,342,800
Exercise of stock options for cash, March 2006, $1.47		-		-		274,500		274		-		-		403,241			-		-			-		403,515
Exercise of stock warrants for cash, March 2006, $1.25		-		-		1,600,000		1,600		-		-		1,998,400			-		-			-		2,000,000
Exercise of stock warrants for cash, March 2006, $0.91		-		-		60,000		60		-		-		54,540			-		-			-		54,600
Exercise of stock options for cash, March 2006, $1.59		-		-		263,700		264		-		-		419,019			-		-			-		419,283
Issuance of common stock in connection with conversion of
$500,000 of Feb $4,000,000 debenture, Mar 2006, $2.20		-		-		400,592		401		-		-		880,902			-		-			-		881,303
Exercise of stock warrants for cash, March 2006, $0.82		-		-		48,000		48		-		-		39,312			-		-			-		39,360
Exercise of stock warrants for cash, March 2006, $1.05		-		-		46,000		46		-		-		48,254			-		-			-		48,300
Issuance of common stock in connection with conversion of
$200,000 of Jan $4,000,000 debenture, March 2006, $2.31		-		-		192,136		192		-		-		443,642			-		-			-		443,834
Exercise of stock options for cash, March 2006, $1.71		-		-		180,000		180		-		-		307,620			-		-			-		307,800
Issuance of common stock in connection with conversion of
$384,615 of $500,000 debenture, March 2006, $3.33		-		-		470,450		470		-		-		1,566,129			-		-			-		1,566,599
Exercise of stock warrants for cash, March 2006, $1.68		-		-		1,639,344		1,639		-		-		2,752,459			-		-			-		2,754,098
Cashless exercise of stock warrants, March 2006, $2.50		-		-		8,179		8		-		-		(8	)		-		-			-		-
Exercise of stock warrants for cash, March 2006, $1.25		-		-		68,000		68		-		-		84,932			-		-			-		85,000
Exercise of stock options for cash, March 2006, $2.10		-		-		175,000		175		-		-		367,325			-		-			-		367,500
Exercise of stock options for cash, March 2006, $1.10		-		-		150,000		150		-		-		164,850			-		-			-		165,000
Exercise of stock options for cash, March 2006, $1.52		-		-		150,000		150		-		-		227,850			-		-			-		228,000
Exercise of stock options for cash, March 2006, $2.19		-		-		150,000		150		-		-		328,350			-		-			-		328,500
Exercise of stock warrants for cash, March 2006, $2.15		-		-		2,000		2		-		-		4,298			-		-			-		4,300
Exercise of stock warrants for cash, March 2006, $1.88		-		-		31,000		31		-		-		58,249			-		-			-		58,280
Exercise of stock warrants for cash, March 2006, $2.02		-		-		23,438		23		-		-		47,322			-		-			-		47,345
Exercise of stock options for cash, March 2006, $0.63		-		-		120,750		121		-		-		75,952			-		-			-		76,073
Exercise of stock warrants for cash, March 2006, $1.86		-		-		170,068		170		-		-		316,156			-		-			-		316,326
Issuance of common stock in exchange for the services
rendered March 2006, $2.96		-		-		25,000		25		-		-		73,975			-		-			-		74,000
Issuance of common stock in satisfaction of accounts
payable March 2006, $3.20		-		-		2,390		2		-		-		7,646			-		-			-		7,648
Issuance of warrants as exercise inducement Mar 2006, $3.00		-		-		-		-		-		-		1,293,953			-		-			-		1,293,953
Issuance of common stock as repayment of monthly
amortization payments due, $2,000,000, April 2006, $2.70		-		-		67,083		67		-		-		181,057			-		-			-		181,124
Issuance of common stock as repayment of monthly
amortization payments due, $3,500,000, April 2006, $2.70		-		-		49,812		50		-		-		134,443			-		-			-		134,493
Issuance of common stock as repayment of monthly
amortization payments due, Jan $4,000,000, Apr 2006, $2.70		-		-		167,144		167		-		-		451,122			-		-			-		451,289
Exercise of stock warrants for cash, April 2006, $1.88		-		-		29,000		29		-		-		54,491			-		-			-		54,520
Exercise of stock options for cash, April 2006, $1.47		-		-		95,500		95		-		-		140,290			-		-			-		140,385
Issuance of common stock in connection with conversion of
$307,692 of 2nd $2,000,000 debenture, April 2006, $2.63		-		-		513,158		513		-		-		1,349,092			-		-			-		1,349,605
Issuance of common stock in connection with conversion of
$423,077 of $3,500,000 debenture, April 2005, $2.63		-		-		516,291		516		-		-		1,357,329			-		-			-		1,357,845
Issuance of common stock in connection with conversion of
$923,077 of Jan $4,000,000 debenture, April 2006, $2.63		-		-		879,699		880		-		-		2,312,729			-		-			-		2,313,609
Exercise of stock options for cash, April 2006, $0.94		-		-		25,000		25		-		-		23,475			-		-			-		23,500
Exercise of stock warrants for cash, April 2006, $0.82		-		-		132,000		132		-		-		108,108			-		-			-		108,240
Exercise of stock warrants for cash, April 2006, $0.91		-		-		60,000		60		-		-		54,540			-		-			-		54,600
Exercise of stock warrants for cash, April 2006, $1.05		-		-		69,000		69		-		-		72,381			-		-			-		72,450
Issuance of common stock in satisfaction of deposit
April 2006, $1.25		-		-		204,465		204		-		-		255,377			-		-			-		255,581
Issuance of common stock in exchange for the services
rendered April 2006, $2.67		-		-		38,400		38		-		-		102,490			-		-			-		102,528
Issuance of warrants in exchange for the services rendered
April 2006, $2.66		-		-		-		-		-		-		137,200			-		-			-		137,200
Issuance of common stock as repayment of monthly
amortization payments due, Jan $4,000,000, May 2006, $3.10		-		-		74,322		74		-		-		230,324			-		-			-		230,398
Issuance of common stock as repayment of monthly
amortization payments due, Feb $4,000,000, May 2006, $3.10		-		-		172,713		173		-		-		535,238			-		-			-		535,411
Exercise of stock options for cash, May 2006, $2.10		-		-		25,000		25		-		-		52,475			-		-			-		52,500
Exercise of stock options for cash, May 2006, $1.47		-		-		10,000		10		-		-		14,690			-		-			-		14,700
Issuance of warrants in exchange for the services rendered
May 2006, $1.91		-		-		-		-		-		-		35,250			-		-			-		35,250
Issuance of common stock as employee compensation
May 2006, $1.88		-		-		755,000		755		-		-		1,418,645			-		-			-		1,419,400
Issuance of common stock in exchange for the services
rendered May 2006, $1.85		-		-		3,784		4		-		-		6,997			-		-			-		7,001
Issuance of common stock in exchange for the services
rendered May 2006, $1.88		-		-		38,000		38		-		-		71,402			-		-			-		71,440
Issuance of common stock as repayment of monthly
amortization payments due, Jan $4,000,000, Jun 2006, $1.96		-		-		73,979		74		-		-		144,925			-		-			-		144,999
Issuance of common stock as repayment of monthly
amortization payments due, Feb $4,000,000, Jun 2006, $1.96		-		-		83,911		84		-		-		164,382			-		-			-		164,466
Exercise of stock warrants for cash, June 2006, $1.25		-		-		1,327,880		1,328		-		-		1,658,522			-		-			-		1,659,850
Exercise of stock warrants for cash, June 2006, $1.60		-		-		3,036,310		3,036		-		-		4,855,060			-		-			-		4,858,096
Issuance of warrants as exercise inducement June 2006, $2.35		-		-		-		-		-		-		4,549,670			-		-			-		4,549,670
Issuance of common stock for cash pursuant to private
placement, June 2006, $2.05		-		-		3,414,636		3,415		-		-		6,996,589			-		-			-		7,000,004
Issuance of common stock in exchange for the services
rendered June 2006, $1.85		-		-		3,784		4		-		-		6,997			-		-			-		7,001
Issuance of common stock as repayment of monthly
amortization payments due, Jan $4,000,000, July 2006, $1.75		-		-		66,264		66		-		-		115,896			-		-			-		115,962
Issuance of common stock as repayment of monthly
amortization payments due, Feb $4,000,000, July 2006, $1.75		-		-		64,923		65		-		-		113,550			-		-			-		113,615
Issuance of common stock in exchange for the services
rendered July 2006, $1.40		-		-		5,000		5		-		-		6,995			-		-			-		7,000
Comprehensive Income (Loss):
Net Loss		-		-		-		-		-		-		-			-		(67,967,204	)		-		(67,967,204	)
Other comprehensive income (loss)
Currency translation adjustment		-		-		-		-		-		-		-			-		-			185,232		185,232
Total Comprehensive Income (Loss)																			(67,967,204	)		185,232		(67,781,972	)
Balance at July 31, 2006		1,000	$	1		107,398,360	$	107,397	$	-	$	-	$	243,097,627		$	-	$	(188,495,312	)	$	754,081	$	55,463,794

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008

																						Deficit
	SVR																			Notes		Accumulated			Accumulated
	Preferred						Common						Treasury				Additional			Receivable -		During the			Other		Total
	Stock						Stock						Stock				Paid-In			Common		Development			Comprehensive		Stockholders’
	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Stock		Stage			Income (Loss)		Equity

Balance, August 1, 2006		1,000		$	1			107,398,360		$	107,397		$	-	$	-	$	243,097,627		$	-	$	(188,495,312	)	$	754,081	$	55,463,794
Issuance of common stock as repayment of monthly amortization payments due, Feb $4,000,000, Aug 2006, $1.48		-			-			64,718			65			-		-		95,718			-		-			-		95,783
Issuance of common stock in exchange for the services rendered Aug 2006, $1.43		-			-			25,000			25			-		-		35,725			-		-			-		35,750
Issuance of common stock as repayment of monthly amortization payments due Feb $4,000,000, Sep 2006 $1.53		-			-			64,400			64			-		-		98,468			-		-			-		98,532
Issuance of common stock in exchange for the services rendered Oct 2006, $1.50		-			-			25,000			25			-		-		37,475			-		-			-		37,500
Issuance of common stock as repayment of monthly amortization payments due , Feb $4,000,000, Oct 2006, $1.65		-			-			64,000			64			-		-		105,536			-		-			-		105,600
Issuance of common stock in exchange for the services rendered Oct 2006, $1.83		-			-			27,262			27			-		-		49,862			-		-			-		49,889
Issuance of common stock in exchange for the services rendered Oct 2006, $1.50		-			-			25,000			25			-		-		37,475			-		-			-		37,500
Issuance of common stock as employee compensation Oct 2006, $1.83		-			-			100,000			100			-		-		182,900			-		-			-		183,000
Exercise of stock warrants for cash, Oct 2006, $1.25		-			-			100,000			100			-		-		124,900			-		-			-		125,000
Exercise of stock options for cash, Oct 2006, $1.59		-			-			90,300			90			-		-		143,487			-		-			-		143,577
Exercise of stock options for cash, Oct 2006, $1.47		-			-			6,500			6			-		-		9,549			-		-			-		9,555
Issuance of common stock as repayment of monthly amortization payments due Feb $4,000,000, Nov 2006, $2.02		-			-			63,764			64			-		-		128,740			-		-			-		128,804
Exercise of stock options for cash, Nov 2006, $1.59		-			-			15,000			15			-		-		23,835			-		-			-		23,850
Issuance of common stock in exchange for the services rendered Nov 2006, $2.15		-			-			50,000			50			-		-		107,450			-		-			-		107,500
Issuance of common stock as repayment of monthly amortization payments due, Feb $4,000,000, Dec 2006, $2.08		-			-			63,384			63			-		-		131,775			-		-			-		131,838
Issuance of common stock in exchange for the services rendered Dec 2006, $1.68		-			-			25,000			25			-		-		41,975			-		-			-		42,000
Issuance of common stock in exchange for the services rendered Jan 2007, $1.77		-			-			25,000			25			-		-		44,225			-		-			-		44,250
Issuance of common stock in connection with conversation of $52,554 of Feb $4,000,000 debenture, Jan, $1.74		-			-			42,043			42			-		-		73,113			-		-			-		73,155
Issuance of common stock in connection with conversion of 52,554 of Feb $4,000,000 debenture, Jan, $1.77		-			-			42,043			42			-		-		74,374			-		-			-		74,416
Issuance of common stock in exchange for the services rendered Feb 2007, $1.90		-			-			25,000			25			-		-		47,475			-		-			-		47,500
Issuance of common stock in exchange for the services rendered Mar 2007, $1.71		-			-			100,000			100			-		-		170,900			-		-			-		171,000
Issuance of common stock as employee compensation Mar 2007, $1.71		-			-			9,844			10			-		-		16,823			-		-			-		16,833
Issuance of warrants in exchange for the services rendered Mar 2007, $1.71		-			-									-		-		125,000			-		-			-		125,000
Issuance of common stock as employee compensation Mar 2007, $1.71		-			-			296,000			296			-		-		505,864			-		-			-		506,160
Issuance of common stock in exchange for the services rendered Mar 2007, $1.65		-			-			13,637			13			-		-		22,487			-		-			-		22,500
Issuance of common stock in exchange for the services rendered Mar 2007, $1.69		-			-			25,000			25			-		-		42,225			-		-			-		42,250
Issuance of common stock in connection with conversion of $52,554 of Feb $4,000,000 debenture, Mar 2007, $1.71		-			-			42,043			42			-		-		71,851			-		-			-		71,893
Issuance of common stock as employee compensation Mar 2007, $1.70		-			-			4,951			5			-		-		8,412			-		-			-		8,417
Issuance of common stock in exchange for the services rendered Apr 2007, $1.71		-			-			22,728			23			-		-		38,842			-		-			-		38,865
Preferred Shares Redemption, April 2007		(1,000	)		(1	)		-			-			-		-		(99	)		-		-			-		(100	)
Issuance of common stock in exchange for the services rendered Apr 2007, $1.65		-			-			13,637			14			-		-		22,486			-		-			-		22,500
Issuance of common stock in exchange for the services rendered Apr 2007, $1.69		-			-			25,000			25			-		-		42,225			-		-			-		42,250
Issuance of common stock as employee compensation Apr 2007, $1.64		-			-			5,132			5			-		-		8,411			-		-			-		8,416
Issuance of common stock in connection with conversion of $52,554 of Feb $4,000,000 debenture, Apr 2007, $1.61		-			-			42,043			42			-		-		67,647			-		-			-		67,689
Issuance of common stock in exchange for the services rendered May 2007, $1.60		-			-			22,728			23			-		-		36,342			-		-			-		36,365
Exercise of stock options for cash, May 2007, $0.63		-			-			5,000			5			-		-		3,145			-		-			-		3,150
Issuance of common stock in exchange for the services rendered May 2007, $1.47		-			-			25,000			25			-		-		36,725			-		-			-		36,750
Issuance of common stock in exchange for the services rendered May 2007, $1.47		-			-			13,637			14			-		-		20,033			-		-			-		20,047
Issuance of common stock as employee compensation May 2007, $1.45		-			-			5,805			6			-		-		8,411			-		-			-		8,417
Issuance of common stock as employee compensation May 2007, $1.45		-			-			450,000			450			-		-		652,050			-		-			-		652,500
Issuance of warrants in exchange for the services rendered May 2007, $1.45		-			-									-		-		141,400			-		-			-		141,400
Cancellation of common stock, May 2007, $1.45		-			-			(150,000	)		(150	)		-		-		150			-		-			-		-
Issuance of common stock in exchange for the services rendered Jun 2007 , $1.40		-			-			22,728			23			-		-		31,796			-		-			-		31,819
Issuance of common stock in exchange for the services rendered Jun 2007, $1.83		-			-			13,637			14			-		-		24,942			-		-			-		24,956
Issuance of common stock in exchange for services rendered Jun 2007, $1.80		-			-			25,000			25			-		-		44,975			-		-			-		45,000
Issuance of common stock as employee compensation, Jul 2007, $1.78		-			-			4,728			5			-		-		8,411			-		-			-		8,416
Issuance of common stock in exchange for the services rendered Jul 2007, $1.78		-			-			22,728			23			-		-		40,433			-		-			-		40,456
Exercise of stock options for cash, Jul 2007, $0.94		-			-			70,000			70			-		-		65,730			-		-			-		65,800
Exercise of stock options for cash, Jul 2007, $0.56		-			-			100,000			100			-		-		55,900			-		-			-		56,000
Issuance of common stock in exchange for the services rendered Jul 2007, $1.75		-			-			13,637			14			-		-		23,851			-		-			-		23,865
Issuance of common stock in exchange for the services rendered Jul 2007, $1.68		-			-			25,000			25			-		-		41,975			-		-			-		42,000
Issuance of common stock as employee compensation April 2007, $1.65		-			-			5,101			5			-		-		8,412			-		-			-		8,417
Comprehensive Income (Loss):
Net Loss		-			-			-			-			-		-		-			-		(23,504,958	)		-		(23,504,958	)
Other comprehensive income (loss)
Currency translation adjustment		-			-			-			-			-		-		-			-		-			127,726		127,726
Total Comprehensive Income (Loss)																							(23,504,958	)		127,726		(23,377,232	)
Balance at July 31, 2007		-			-			109,616,518			109,616			-		-		247,079,439			-		(212,000,270	)		881,807		36,070,592

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008

																				Deficit
	SVR																	Notes		Accumulated			Accumulated
	Preferred				Common						Treasury				Additional			Receivable -		During the			Other		Total
	Stock				Stock						Stock				Paid-In			Common		Development			Comprehensive		Stockholders’
	Shares		Amount		Shares			Amount			Shares		Amount		Capital			Stock		Stage			Income (Loss)		Equity

Balance, August 1, 2007		-	$	-		109,616,518		$	109,616			-	$	-	$	247,079,439		$	-	$	(212,000,270	)	$	881,807	$	36,070,592
Issuance of common stock in exchange for the services rendered Aug 2007, $1.57		-		-		22,728			23			-		-		35,660			-		-			-		35,683
Issuance of restricted common stock to officers as employee compensation Aug 2007		-		-		550,000			550			-		-		(550	)		-		-			-		-
Stock-based compensation - officers		-		-		-			-			-		-		527,909			-		-			-		527,909
Issuance of common stock as employee compensation Aug 2007, $1.51 (Issued under the 2006 Plan and fully vested)		-		-		100,000			100			-		-		150,900			-		-			-		151,000
Issuance of common stock as employee compensation Aug 2007, $1.50		-		-		5,611			6			-		-		8,411			-		-			-		8,417
Issuance of common stock in exchange for the services rendered Sep 2007, $1.48		-		-		22,728			22			-		-		33,615			-		-			-		33,637
Issuance of common stock in exchange for the services rendered Sep 2007, $1.61		-		-		8,000			8			-		-		12,872			-		-			-		12,880
Issuance of common stock in exchange for the services rendered Sep 2007, $1.53		-		-		50,000			50			-		-		76,450			-		-			-		76,500
Issuance of common stock as employee compensation Sep 2007, $1.55		-		-		5,430			5			-		-		8,411			-		-			-		8,416
Issuance of common stock in exchange for the services rendered Oct 2007, $1.50		-		-		22,728			23			-		-		34,069			-		-			-		34,092
Issuance of common stock as employee compensation Oct 2007, $1.52		-		-		446,000			446			-		-		677,474			-		-			-		677,920
Issuance of common stock in exchange for the services rendered Oct 2007, $1.53		-		-		8,000			8			-		-		12,232			-		-			-		12,240
Issuance of common stock in exchange for the services rendered Oct 2007, $1.50		-		-		37,500			38			-		-		56,213			-		-			-		56,251
Issuance of common stock as employee compensation Oct 2007, $1.53		-		-		5,501			6			-		-		8,411			-		-			-		8,417
Issuance of common stock in exchange for the services rendered Nov 2007, $1.71		-		-		22,728			23			-		-		38,842			-		-			-		38,865
Issuance of common stock in exchange for the services rendered Nov 2007, $1.75		-		-		8,000			8			-		-		13,992			-		-			-		14,000
Issuance of common stock as employee compensation Nov 2007, $1.70		-		-		4,951			5			-		-		8,412			-		-			-		8,417
Issuance of common stock in exchange for the services rendered Nov 2007, $1.54		-		-		228,087			228			-		-		349,771			-		-			-		349,999
Issuance of common stock in exchange for the services rendered Nov 2007, $1.53		-		-		98,168			98			-		-		149,903			-		-			-		150,001
Issuance of common stock in exchange for the services rendered Dec 2007, $1.80		-		-		22,728			23			-		-		40,888			-		-			-		40,911
Issuance of common stock in exchange for the services rendered Dec 2007, $1.84		-		-		8,000			8			-		-		14,712			-		-			-		14,720
Exercise of stock options for cash, Dec 2007, $1.59		-		-		31,000			31			-		-		49,259			-		-			-		49,290
Stock-based compensation - officers		-		-		-			-			-		-		67,242			-		-			-		67,242
Issuance of common stock in exchange for the services rendered Dec 2007, $1.74		-		-		50,000			50			-		-		86,950			-		-			-		87,000
Issuance of common stock as employee compensation Dec 2007, $7.75		-		-		4,810			5			-		-		8,413			-		-			-		8,418
Issuance of common stock in exchange for the services rendered Jan 2008, $1.61		-		-		22,728			23			-		-		36,569			-		-			-		36,592
Issuance of common stock in exchange for the services rendered Jan 2008, $1.38		-		-		8,000			8			-		-		11,032			-		-			-		11,040
Issuance of common stock in exchange for the services rendered Jan 2008, $1.34		-		-		37,500			37			-		-		50,213			-		-			-		50,250
Issuance of common stock as employee compensation Oct 2007, $1.36		-		-		6,189			6			-		-		8,411			-		-			-		8,417
Issuance of common stock in exchange for the services rendered Feb 2008, $1.36		-		-		22,728			23			-		-		30,887			-		-			-		30,910
Issuance of common stock in exchange for the services rendered Feb 2008, $1.34		-		-		8,000			8			-		-		10,712			-		-			-		10,720
Exercise of stock options for cash, Feb 2008, $1.00		-		-		70,000			70			-		-		69,930			-		-			-		70,000
Issuance of common stock as employee compensation Feb 2008, $1.32		-		-		6,376			6			-		-		8,410			-		-			-		8,416
Issuance of common stock in exchange for the services rendered Mar 2008, $1.00		-		-		8,000			8			-		-		7,992			-		-			-		8,000
Stock-based compensation - officers		-		-		50,000			50			-		-		67,242			-		-			-		67,292
Issuance of common stock in exchange for the services rendered Mar 2008, $0.95		-		-		8,093			8			-		-		47,450			-		-			-		47,458
Issuance of common stock as employee compensation Mar 2008, $1.04		-		-		200,000			200			-		-		8,409			-		-			-		8,609
Issuance of common stock in exchange for the services rendered Mar 2008, $1.14		-		-		-			-			-		-		227,800			-		-			-		227,800
Issuance of warrants in exchange for the services rendered Mar 2008, $3.75		-		-		-			-			-		-		52,500			-		-			-		52,500
Issuance of warrants as employee compensation Mar 2008, $0.94		-		-		-			-			-		-		29,500			-		-			-		29,500
Issuance of warrants in conjunction with convertible debenture, Mar 2008, $1.10		-		-		-			-			-		-		5,323,109			-		-			-		5,323,109
Issuance of warrants in conjunction with convertible debentures, Mar 2008, $1.21		-		-		-			-			-		-		5,323,109			-		-			-		5,323,109
Repurchase of common stock Mar 2008, $1.16		-		-		(326,255	)		(326	)		-		-		(378,130	)		-		-			-		(378,456	)
Option repricing costs Mar 2008		-		-		-			-			-		-		14,500			-		-			-		14,500
Value of Beneficial Conversion Feature on Convertible Debentures, Mar 2008, $1.21		-		-		-			-			-		-		8,768,946			-		-			-		8,768,946
Exercise of stock options for cash, Apr 2008, $1.00		-		-		50,000			50			-		-		49,950			-		-			-		50,000
Issuance of common stock in exchange for the services rendered Apr 2008, $1.19		-		-		8,000			8			-		-		9,512			-		-			-		9,520
Exercise of stock options for cash, Apr 2008, $0.89		-		-		250,000			250			-		-		222,250			-		-			-		222,500
Issuance of common stock in exchange for the services rendered Apr 2008, $1.06		-		-		37,500			37			-		-		39,713			-		-			-		39,750
Issuance of common stock as employee compensation Apr 2008, $1.08		-		-		7,793			8			-		-		8,409			-		-			-		8,417
Issuance of common stock in exchange for the services rendered May 2008, $1.05		-		-		8,000			8			-		-		8,392			-		-			-		8,400
Stock-based compensation - officers stock options, May 2008, $0.96		-		-		-			-			-		-		58,078			-		-			-		58,078
Issuance of common stock as employee compensation May 2008, $1.00		-		-		8,417			8			-		-		8,409			-		-			-		8,417
Stock-based compensation - officers stock		-		-		-			-			-		-		67,242			-		-			-		67,242
Issuance of common stock in exchange for the services rendered May 2008, $0.97		-		-		50,000			50			-		-		48,450			-		-			-		48,500
Issuance of common stock in exchange for the services rendered Jun 2008, $0.95		-		-		8,000			8			-		-		7,592			-		-			-		7,600
Issuance of common stock as employee compensation Jun 2008, $0.97		-		-		8,677			9			-		-		8,409			-		-			-		8,418
Issuance of common stock in exchange for the services rendered Jul 2008, $0.79		-		-		8,000			8			-		-		6,312			-		-			-		6,320
Issuance of common stock in exchange for the services rendered Jul 2008, $0.80		-		-		37,500			37			-		-		29,963			-		-			-		30,000
Issuance of common stock as employee compensation Jul 2008, $0.83		-		-		10,141			10			-		-		8,409			-		-			-		8,419
Comprehensive Income (Loss):
Net Loss		-		-		-			-			-		-		-			-		(36,228,991	)		-		(36,228,991	)
Other comprehensive income (loss):
Currency translation adjustment		-		-		-			-			-		-		-			-		-			32,688		32,688
Total Comprehensive Income (Loss)																					(36,228,991	)		32,688		(36,196,303	)
Balance at July 31, 2008		-	$	-		111,992,603		$	111,992			-	$	-	$	269,849,581		$	-	$	(248,229,261	)	$	914,495	$	22,646,807

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

										Cumulative From
										November 2, 1995
										(Date of Inception)
	For the Year Ended July 31,									to July 31,
	2008			2007			2006			2008
Cash Flows From Operating Activities:
Net loss	$	(36,228,991	)	$	(23,504,958	)	$	(67,967,204	)	$	(245,934,204	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,084,919			1,166,090			1,134,676			6,966,865
Minority interest share of loss		—			—			—			(3,038,185	)
Reduction of notes receivable - common stock in exchange for services rendered		—			—			—			423,882
Write-off of uncollectible notes receivable - common stock		—			—			—			391,103
Write-off of deferred offering costs		—			—			—			3,406,196
Write-off of abandoned patents		741,690			21,721			73,699			913,196
Loss on disposal of property and equipment		—			—			911			911
Loss on extinguishment of debt		—			237,163			12,550,565			14,134,069
Common stock issued as employee compensation		1,187,685			748,076			1,545,504			3,481,265
Issuance of options and option modifications as employee compensation		72,578			—			—			72,578
Common stock issued for services rendered		1,529,882			1,695,013			515,039			8,526,198
Amortization of prepaid services in conjunction with common stock issuance		—			—			138,375			138,375
Non-cash compensation expense		—			—			—			45,390
Stock options and warrants issued for services rendered		82,000			266,400			172,450			7,354,723
Issuance of warrants as additional exercise right inducement		—			—			21,437,909			21,437,909
Preferred stock issued for services rendered		—			—			—			100
Treasury stock redeemed for non-performance of services		—			—			—			(138,000	)
Amortization of deferred debt issuance costs and loan origination fees		205,056			—			1,234,772			1,687,935
Amortization of discount on convertible debentures		3,483,684			608,737			14,586,879			22,414,111
Common stock issued as interest payment on convertible debentures		—			15,716			191,747			284,459
Interest on short-term advance		—			—			13,524			22,190
Founders’ shares transferred for services rendered		—			—			—			353,506
Fees in connection with short-term refinancing of long-term debt		—			—			7,974			113,274
Changes in operating assets and liabilities (excluding the effects of acquisition):
Accounts receivable		(30,701	)		(56,680	)		—			(87,381	)
Miscellaneous receivables		—			—			—			43,812
Inventory		(1,345,939	)		(117,502	)		—			(1,463,441	)
Other current assets		53,687			(26,068	)		9,596			(75,026	)
Accounts payable and accrued expenses		762,505			1,682,196			3,780,168			12,090,620
Deferred revenue		92,481			33,031			—			125,512
Other, net		—			—			—			110,317
Net Cash Used in Operating Activities		(28,309,464	)		(17,231,065	)		(10,573,416	)		(146,197,741	)

Cash Flows From Investing Activities:
Purchase of property and equipment		(57,136	)		(93,704	)		(149,991	)		(4,593,547	)
Costs incurred for patents		(232,760	)		(208,606	)		(114,010	)		(2,050,362	)
Change in restricted cash		—			—			216,868			45,872
Proceeds from maturity of short term investments		28,307,895			22,795,763			8,600,000			186,390,704
Purchases of short-term investments		(23,148,371	)		(22,434,848	)		(22,972,653	)		(195,242,918	)
Cash received in conjunction with merger		—			—			—			82,232
Advances to Antigen Express, Inc.		—			—			—			(32,000	)
Increase in officers’ loans receivable		—			—			—			(1,126,157	)
Change in deposits		51,219			(196,457	)		(29,639	)		(652,071	)
Change in notes receivable - common stock		—			—			—			(91,103	)
Change in due from related parties		—			—			—			(2,222,390	)
Other, net		—			—			—			89,683
Net Cash Provided by (Used in) Investing Activities		4,920,847			(137,852	)		(14,449,425	)		(19,402,057	)

Cash Flows From Financing Activities:
Proceeds from short-term advance		—			—			—			325,179
Repayment of short-term advance		—			—			(347,369	)		(347,369	)
Proceeds from issuance of long-term debt		—			—			35,461			2,005,609
Repayment of long-term debt		(89,475	)		(73,151	)		(572,280	)		(1,941,844	)
Change in due to related parties		—			—			—			154,541
Proceeds from exercise of warrants		—			125,000			39,337,065			44,015,049
Proceeds from exercise of stock options		391,790			301,931			3,241,755			4,945,916
Proceeds from minority interest investment		—			—			—			3,038,185
Proceeds from issuance of preferred stock		—			—			—			12,015,000
Redemption of SVR preferred stock		—			(100	)		—			(100	)
Proceeds from issuance of convertible debentures, net		20,450,000			—			13,955,000			40,704,930
Payment of costs associated with convertible debentures		(722,750	)		—			—			(722,750	)
Repayments of convertible debentures		—			(174,399	)		—			(635,757	)
Purchase of treasury stock		—			—			—			(483,869	)
Proceeds from issuance of common stock, net		—			—			7,000,004			80,283,719
Purchase and retirement of common stock		(378,456	)		—			—			(497,522	)
Net Cash Provided by Financing Activities		19,651,109			179,281			62,649,636			182,858,917

Effect of Exchange Rates on Cash		(51,049	)		7,210			(4,832	)		(21,609	)

Net Increase (Decrease) in Cash and Cash Equivalents		(3,788,557	)		(17,182,426	)		37,621,963			17,237,510

Cash and Cash Equivalents, Beginning of Period		21,026,067			38,208,493			586,530			—

Cash and Cash Equivalents, End of Period	$	17,237,510		$	21,026,067		$	38,208,493		$	17,237,510

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

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Organization and Business:

Generex Biotechnology Corporation (the Company) and its wholly-owned subsidiary Generex Pharmaceuticals, Inc. are engaged in the research and development of drug delivery systems and technology. Since its inception, the Company has devoted its efforts and resources to the development of a platform technology for the oral administration of large molecule drugs, including proteins, peptides, monoclonal antibodies, hormones and vaccines, which historically have been administered by injection, either subcutaneously or intravenously. Oral–lyn^TM the first product based on this platform technology, is in the various stages of regulatory approval in different jurisdictions around the world.

The Company’s wholly-owned subsidiary, Antigen Express, Inc. (Antigen), is engaged in research and development of technologies and immunomedicines for the treatment of malignant, infectious, autoimmune and allergic diseases. The Company’s immunomedicine products 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). The immunomedicine products are based on two platform technologies that were discovered by an executive officer of Antigen, the Ii-Key hybrid peptides and Ii-Suppression. These technologies are expected to greatly boost immune cell responses which diagnose and treat the ailments and conditions.

The Company is a development stage company, which has a limited history of operations and whose revenues primarily comprised of $1 million received in conjunction with the execution of a development agreement, grant revenue from government agencies related to Antigen’s operations and $50,000 in conjunction with the execution of a licensing agreement. 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.

Note 2 - Summary of Significant Accounting Policies:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all of its subsidiaries in which a controlling interest is maintained. For those consolidated subsidiaries where the Company ownership is less than 100 percent, the outside stockholders’ interests are shown as minority interests. Effective December 17, 2004, the Company’s ownership in all consolidated subsidiaries is 100 percent. All significant intercompany transactions and balances have been eliminated.

Development Stage Company

The accompanying consolidated financial statements have been prepared in accordance with the provisions of Statement of Financial Accounting Standard (SFAS) No. 7, “Accounting and Reporting by Development Stage Enterprises.”

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Short-Term Investments

Short-term investments include auction rate securities and short-term U.S. term deposits with original maturities of between three to twelve months. These short-term notes are classified as held to maturity and are valued at amortized cost. The auction rate securities are classified as available for sale and are recorded at fair value. At July 31, 2008, the short-term investments consisted of auction rate securities.

Accounts Receivable

Accounts receivable are customer obligations due under normal trade terms. The Company sells its product to various distributors and retailers. The Company performs ongoing credit evaluations of customers’ financial condition and does not require collateral.

Management reviews accounts receivable on a monthly basis to determine collectibility. Balances that are determined to be uncollectible are written off to the allowance for doubtful accounts. The allowance for doubtful accounts contains a general accrual for estimated bad debts and had a balance of zero at July 31, 2008 and 2007, however, actual write-offs may exceed the allowance.

Inventory

Inventory consists of commercially available products and their components. Inventory is stated at the lower of cost or market with cost determined using the first-in first-out (“FIFO”) method. In evaluating whether inventory is stated at the lower of cost or market, management considers such factors as the amount of inventory on hand and in the distribution channel, estimated time required to sell such inventory, remaining shelf life and current and expected market conditions, including levels of competition. As appropriate, a provision is recorded to reduce inventory to its net realizable value.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation. Depreciation is provided on the straight-line method over the estimated useful lives of the assets, which range from three to thirty years. Gains and losses on depreciable assets retired or sold are recognized in the statement of operations in the year of disposal. Repairs and maintenance expenditures are expensed as incurred.

Assets Held for Investment

Property held for investment is recorded at cost less accumulated depreciation. Depreciation is provided on the straight-line method over the estimated useful lives of the assets of thirty years. Gains and losses on depreciable assets retired or sold are recognized in the statement of operations in the year of disposal. Repairs and maintenance expenditures are expensed as incurred.

Patents

Capitalized patent costs represent legal costs incurred to establish patents and a portion of the acquisition price paid attributed to patents upon the acquisition of Antigen in August 2003. When patents reach a mature stage any associated legal costs are comprised mostly of maintenance fees and costs of national applications and are expensed as incurred. Capitalized patent costs are amortized on a straight line method over the related patent term. As patents are abandoned, the net book value of the patent is written off.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Impairment or Disposal of Long-Lived Assets

The Company assesses the impairment of long-lived assets under SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” whenever events or changes in circumstances indicate that the carrying value may not be recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable and exceeds its fair value. The carrying amount of the long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposal of the asset.

Convertible Debentures

In accordance with Emerging Issues Task Force Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion Features or Contingently Adjustable Conversion Ratios ("EITF 98-5"), the Company recognized an imbedded beneficial conversion feature present in the convertible debentures. The Company allocated a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. The debt discount attributed to the beneficial conversion feature is amortized over the convertible debenture's maturity period as interest expense using the effective yield method.

In accordance with Emerging Issues Task Force Issue 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments ("EITF 00-27"), the Company recognized the value attributable to the warrants to additional paid-in capital and a discount against the convertible debentures. The Company valued the warrants in accordance with EITF 00-27 using the Black-Scholes pricing model. The debt discount attributed to the value of the warrants issued is amortized over the convertible debenture’s maturity period as interest expense using the effective yield method.

Revenue Recognition

Revenues from the sale of commercial products are recognized at the time title of goods passes to the buyer and the buyer assumes the risks and rewards of ownership. Certain product sales are made to retailers under agreements allowing for a right to return unsold products. In accordance with SFAS No. 48, “Revenue Recognition When Right of Return Exists (as amended)” recognition of revenue on all sales to these retailers is deferred until the right of return expires, the product is sold to a third party or a provision for returns can be reasonably estimated based on historical experience. The cost of inventory under these sales is considered to be a consigned inventory until the revenue is recognized. Sales are reported net of estimated returns and allowances, discounts, mail-in rebate redemptions and credit card chargebacks. If actual sales returns, allowances, discounts, mail-in rebate redemptions or credit card chargebacks are greater than estimated by management, additional expense may be incurred.

Grant revenue is recognized as the Company provides the services stipulated in the underlying grant based on the time and expenditures incurred. Amounts received in advance of services provided are recorded as deferred revenue and amortized as revenue when the services are provided.

Included in miscellaneous income are fees received under licensing agreements. Nonrefundable fees received under licensing agreements are recognized as revenue when received if the Company has no continuing obligations to the other party.

Rental income is recognized as revenue in the period in which the space is occupied.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Research and Development Costs

Expenditures for research and development are expensed as incurred and include, among other costs, those related to the production of experimental drugs, including payroll costs, and amounts incurred for conducting clinical trials. Amounts expected to be received from governments under research and development tax credit arrangements are offset against current income tax expense.

Income Taxes

Income taxes are accounted for under the asset and liability method prescribed by SFAS No. 109, “Accounting for Income Taxes.” Deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax asset will not be realized.

Stock-Based Compensation

The Company follows SFAS No. 123(R) “Share-Based Payment” which revises SFAS No. 123 “Accounting for Stock-Based Compensation” (“SFAS 123”). SFAS 123(R) requires that new, modified and unvested share-based payment transactions with employees, such as grants of stock options and restricted stock, be recognized in the financial statements based on their fair value at the grant date and recognized as compensation expense over their vesting periods. The Company estimates the fair value of stock options as of the date of grant using the Black-Scholes pricing model and restricted stock based on the quoted market price. The Company also follows the guidance in EITF 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.

Net Loss Per Common Share

Basic EPS is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period. The computation of Diluted EPS does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings. Refer to Note 14 for methodology for determining net loss per share.

Comprehensive Loss

Other comprehensive income (loss), which includes only foreign currency translation adjustments, is shown in the Statement of Changes in Stockholders’ Equity.

Concentration of Credit Risk

The Company maintains cash balances, at times, with financial institutions in excess of amounts insured by the Canada Deposit Insurance Corporation and the Federal Deposit Insurance Corporation. Management monitors the soundness of these institutions and considers the Company’s risk negligible.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Foreign Currency Translation

Foreign denominated assets and liabilities of the Company are translated into U.S. dollars at the prevailing exchange rates in effect at the end of the reporting period. Income statement accounts are translated at a weighted average of exchange rates which were in effect during the period. Translation adjustments that arise from translating the foreign subsidiary’s financial statements from local currency to U.S. currency are recorded in the other comprehensive loss component of stockholders’ equity.

Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable, short-term investments, other current assets, accounts payable and accrued expenses approximate their fair values due to their short-term nature. Long-term debt and convertible debentures approximates their fair value based upon the borrowing rates available for the nature of the underlying debt.

Effects of Recent Accounting Pronouncements

The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (“FIN 48”), on August 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement 109 “Accounting for Income Taxes,” and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition classification, interest and penalties accounting in interim periods disclosure and transition.

Based on the Company’s evaluation, management has concluded that there are no significant uncertain tax positions requiring recognition in the financial statements or adjustments to deferred tax assets and related valuation allowance. The evaluation was performed for the tax years ended July 31, 2007, 2006, 2005 and 2004, the tax years which remain subject to examination by major tax jurisdictions as of July 31, 2008.

The Company may from time to time be assessed interest or penalties by major tax jurisdictions, although such assessments historically have been minimal and immaterial to our financial results. If the Company receives an assessment for interest and/or penalties, it would be classified in the financial statements as general and administrative expense.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, with earlier application encouraged. Any amounts recognized upon adoption as a cumulative effect adjustment will be recorded to the opening balance of retained earnings in the year of adoption. On February 12, 2008, the FASB delayed the effective date for non-financial assets and liabilities to fiscal years beginning after November 15, 2008; however, the effective date for financial assets remains intact. The Company is currently evaluating the impact of this statement on its results of operations or financial position.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In February 2007, the FASB issued SFAS No. 159, “Establishing the Fair Value Option for Financial Assets and Liabilities” (“SFAS 159”) to permit all entities to choose to elect to measure eligible financial instruments and certain other items at fair value. The decision whether to elect the fair value option may occur for each eligible item either on a specified election date or according to a preexisting policy for specified types of eligible items. However, that decision must also take place on a date on which criteria under SFAS 159 occurs. Finally, the decision to elect the fair value option shall be made on an instrument-by-instrument basis, except in certain circumstances. An entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS 159 applies to fiscal years beginning after November 15, 2007. On February 12, 2008, the FASB delayed the effective date for non-financial assets and liabilities to fiscal years beginning after November 15, 2008; however the effective date for the financial assets remains intact. The Company is currently evaluating this pronouncement in connection with SFAS 157.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS 141(R)”). This Statement replaces SFAS No. 141, “Business Combinations” (“SFAS 141”). This Statement retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement 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. SFAS 141(R) will apply 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. The Company is currently evaluating the impact of this statement on its results of operations or financial position.

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements” (“SFAS 160”). This Statement amends ARB 51 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. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company is currently evaluating the impact of this statement on its results of operations or financial position.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities,” and Amendment of FASB Statement No. 133. SFAS 161 amends SFAS 133, “Accounting for Derivative Instruments and Hedging Activities,” to amend and expand the disclosure requirements of SFAS 133 to provide greater transparency about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedge items are accounted for under SFAS 133 and its related interpretations, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. To meet those objectives, SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. Earlier adoption is encouraged. The Company is currently evaluating the impact of SFAS 161 on its financial position, results of operations or cash flows.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. GAAP for nongovernmental entities. SFAS 162 is effective 60 days following the Securities and Exchange Commission's approval of the Public Company Accounting Oversight Board auditing amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles." The Company does not expect SFAS 162 to have a material effect on its consolidated financial statements.

In May 2008, the FASB issued FSP APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlements).” This FSP 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. This FSP takes effect in the first quarter of fiscal years beginning after December 15, 2008 and will be applied retrospectively for all periods presented. It will effective for the Company on August 1, 2009. This FSP will apply to the Company’s convertible debentures. The Company is currently evaluating how it may affect the consolidated financial statements.

In June 2008, the FASB issued Staff Position (“FSP”) EITF 03-6-1, “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 FSP determined 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 FSP takes effect in the first quarter of fiscal years beginning after December 15, 2008 and will be applied retrospectively for all periods presented. It will be effective for the Company on August 1, 2009. The Company does not expect FSP EITF 03-6-1 to have a material effect on its consolidated financial statements.

Note 3 - Property and Equipment:

The costs and accumulated depreciation of property and equipment are summarized as follows:

	July 31,
	2008		2007

Land	$	222,228	$	213,312
Buildings and Improvements		1,408,524		1,352,010
Furniture and Fixtures		105,668		101,705
Office Equipment		189,787		181,273
Lab Equipment		4,354,027		4,221,152

Total Property and Equipment		6,280,234		6,069,452

Less Accumulated Depreciation		4,535,260		3,932,425

Property and Equipment, Net	$	1,744,974	$	2,137,027

Depreciation expense amounted to $517,057, $631,597 and $605,657 for the years ended July 31, 2008, 2007 and 2006, respectively.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - Assets Held for Investment, Net:

The costs and accumulated depreciation of assets held for investment are summarized as follows:

	July 31,
	2008		2007

Assets Held For Investment	$	4,672,659	$	4,485,179

Less: Accumulated Depreciation		959,342		791,996

Assets Held For Investment, Net	$	3,713,317	$	3,693,183

Depreciation expense amounted to $136,565, $122,171 and $125,366 for the years ended July 31, 2008, 2007 and 2006, respectively.

The Company’s intent is to hold this property for investment purposes and collect rental income. Included in income from rental operations, net is $531,757, $457,458 and $464,150 of rental income and $201,224, $179,984 and $227,629 of rental expenses for the years ended July 31, 2008, 2007 and 2006, respectively.

Note 5 - Patents:

The costs and accumulated amortization of patents are summarized as follows:

	July 31,
	2008		2007

Patents	$	5,844,026	$	6,580,005

Less: Accumulated Amortization		1,889,785		1,695,021

Patents, Net	$	3,954,241	$	4,884,984

Weighted Average Life		12.8 years		13.1 years

Amortization expense amounted to $431,297, $412,322 and $403,654 for the years ended July 31, 2008, 2007 and 2006, respectively. Amortization expense is expected to be approximately $388,000 per year for the years ended July 31, 2009 through 2013. During the years ended July 31, 2008, 2007 and 2006, the Company wrote off approximately $741,690, $22,000 and $74,000 of net book value of patents to general and administrative expenses, respectively.

Note 6 - Income Taxes:

The Company has incurred losses since inception, which have generated net operating loss carryforwards. The net operating loss carryforwards arise from both United States and Canadian sources. Pretax losses arising from domestic operations (United States) were $30,277,058, $19,012,466 and $64,252,188 for the years ended July 31, 2008, 2007 and 2006, respectively. Pretax losses arising from foreign operations (Canada and Bermuda) were $5,951,933, $4,492,492 and $3,715,016 for the years ended July 31, 2008, 2007 and 2006, respectively. As of July 31, 2008, the Company has net operating loss carryforwards in Generex Biotechnology Corporation of approximately $144,878,000, which expire in 2015 through 2028, in Generex Pharmaceuticals Inc. of approximately $34,817,000, which expire in 2009 through 2027 and in Antigen Express, Inc. of approximately $16,886,000, which expire in 2016 through 2028. These loss carryforwards are subject to limitation due to the acquisition of Antigen and may be limited in future years should certain ownership changes occur.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended July 31, 2008, and 2007, the Company’s effective tax rate differs from the federal statutory rate principally due to net operating losses and other temporary differences for which no benefit was recorded.

Deferred income taxes consist of the following:

	July 31,
	2008			2007
Deferred Tax Assets:
Net operating loss carryforwards	$	67,575,522		$	57,628,338
Other timing difference		1,545,671			2,579,377
Total Deferred Tax Assets		69,121,193			60,207,715

Valuation Allowance		(68,133,445	)		(58,873,007	)

Deferred Tax Liabilities
Intangible assets		(907,327	)		(1,236,432	)
Other timing difference		(80,421	)		(98,276	)
Total Deferred Tax Liabilities		(987,748	)		(1,334,708	)

Net Deferred Income Taxes	$	—		$	—

A reconciliation of the United States Federal Statutory rate to the Company’s effective tax rate for the years ended July 31, 2008, 2007 and 2006 is as follows:

	2008			2007			2006

Federal statutory rate		(34.0)	%		(34.0)	%		(34.0	)%

Increase (decrease) in income taxes resulting from:
Imputed interest income on intercompany receivables from foreign subsidiaries		1.0			2.0			—
Nondeductible items		1.0			—			7.0
Other timing differences		6.0			(10.0	)		6.0
Change in valuation allowance		26.0			42.0			21.0

Effective tax rate		—	%		—	%		—	%

Note 7 - Accounts Payable and Accrued Expenses:

Accounts payable and accrued expenses consist of the following:

	July 31,
	2008		2007

Accounts Payable	$	2,613,789	$	1,791,080
Research and Development		2,048,101		1,956,049
Executive Compensation		2,469,026		2,252,978
Financial Services		338,794		1,156,602
Total	$	7,469,710	$	7,156,709

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 - Commitments and Contingent Liabilities:

Consulting Agreements

The Company is obligated under a non-exclusive consulting agreement expiring in 2010 with a service provider whereby the service provider will solicit and evaluate prospective third party wholesale and retail distribution channels for the Company’s Oral-lyn^TM. In exchange for these services, the Company is required to pay $300,000 per annum and an aggregate of 450,000 shares of common stock to be issued quarterly over the term of the agreement, of which 300,000 shares of common stock remain to be issued.

The Company has entered into a one year consulting agreement expiring in 2009 with a consultant to provide various management services including but not limited to assisting the Company with obtaining additional financing. In exchange for these services, the Company is required to pay $90,000 per annum and a contingent advisory fee in the event of successfully obtaining additional financing.

Leases

The Company has entered into various operating lease agreements for the use of operating space, vehicles and office equipment.

Aggregate minimum annual lease commitments of the Company under non-cancelable operating leases as of July 31, 2008 are as follows:

Year	Amount

2009	$	153,030
2010		122,473
2011		108,108
2012		107,257
2013		2,330
Thereafter		777
Total Minimum Lease Payments	$	493,975

Lease expense amounted to approximately $131,000, $41,000 and $39,000 for the years ended July 31, 2008, 2007 and 2006, respectively.

The preceding data reflects existing leases and does not include replacements upon their expiration. In the normal course of business, operating leases are generally renewed or replaced by other leases.

Rental Operations

The Company sub-leases a portion of the floor that it owns in an office building located in Toronto, Canada. The following represents the approximate minimum amount of sublease income under current lease agreements to be received in years ending after July 31, 2008:

Year	Amount

2009	$	69,226
2010		45,610
2011		32,118
2012		32,680
2013		15,098
Thereafter		—
Total	$	194,732

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Assets Held for Investment

The Company leases two commercial buildings located in Brampton and Mississauga, Canada, and units of property that it owns located in Toronto, Canada. The following represents the approximate minimum amount in lease income under current lease agreements to be received in years ending after July 31, 2008:

Year	Amount

2009	$	335,664
2010		246,358
2011		215,770
2012		182,008
2013		84,535
Thereafter		21,618
Total	$	1,085,953

Supply Agreements

The Company has a supply agreement with Presspart Manufacturing Limited, whereby the Company will purchase its entire requirements for products to use in the administration of insulin through the buccal mucosa and shall not purchase the products or any metal containers competitive to the products from any other person in exchange for an exclusive non-transferable royalty-free irrevocable license to use the products. The contract shall continue for a minimum period of four contract years from the end of the first contract year in which the total quantity of products purchased by the Company from Presspart exceeds 10,000,000 units, and thereafter, shall continue until terminated by either party by giving twelve months written notice.

The Company has a supply agreement with Catalant Pharma Solutions whereby the Company will perform a technical transfer for the production of Oral-lyn™ drug product for use in the Company’s Phase III clinical trials and/or studies. The project is billed over the term of the project. Either party may terminate the agreement, or any portion thereof, by providing forty-five days written notice.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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-lyn™ and the RapidMist™ 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.

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.

Employment Agreements

As of July 31, 2008, the Company has an employment agreement with an executive expiring December 2010, whereby the Company is required to pay an annual base salary of $315,000. In the event the agreement is terminated, by reason other than cause, death, voluntary retirement or disability, the Company is required to pay the employee in one lump sum twelve months base salary and the average annual bonus.

As of July 31, 2008, the Company has an employment agreement with an executive expiring March 2012, whereby the Company is required to pay an annual base salary of $200,000. In the event the agreement is terminated, by reason other than cause, death, voluntary retirement or disability, the Company is required to pay the employee in one lump sum twelve months base salary and the average annual bonus.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of July 31, 2008, the Company has employment agreements with its President/Chief Executive Officer and its Chief Financial Officer/Chief Operating Officer expiring December 2010, whereby the Company is required to pay an annual base salary of $525,000 and $420,000, respectively, and bonuses at the discretion of the Compensation Committee of the Board of Directors. The agreements require six months notice of non-renewal/termination. In the event either agreement is terminated, by reason other than cause, death or disability or voluntary termination, the Company may be required to pay the executive the greater of five times base salary at the date of termination or $5,000,000 in a combination of cash and common stock of the Company and provide benefits for a period of twelve months following the date of termination.

As of July 31, 2008, the Company has three at will employment agreements with Antigen employees requiring the Company to pay an annual aggregate salary of $460,000 to the three employees. In the event any agreement is terminated by reason other than death, disability, a voluntary termination not for good reason (as defined in the agreement) or a termination for cause, the Company is required to pay the employee severance in accordance with the terms of the individual employment agreement.

Collaboration Agreements

The Company has a research and development agreement with Fertin Pharma A/S (Fertin) whereby the parties have established collaboration for the development of a metformin medicinal chewing gum for the treatment of Type-2 diabetes mellitus and obesity. The agreement includes certain milestone payments required of the Company upon Fertin’s completion of various development phases. The Company is required to pay all development costs related to the development of the product together with royalty payments amounting to five percent of the sale or licensing of the products. In lieu of receiving reimbursement for development costs, Fertin, at its discretion and upon written notice, may elect to receive royalty payments amounting to twenty-five percent of the sale or licensing of the products. The agreement shall remain in effect ten years from the date of market introduction and commercial sale. Either party may terminate the agreement by providing sixty days written notice.

Note 9 - Related Party Transactions:

The Company utilizes a management company to manage all of its real estate properties. The property management company is owned by two of the Company’s senior officers. For the years ended July 31, 2008, 2007 and 2006, the Company has paid the management company $54,473, $47,832 and $46,113, respectively, in management fees.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 - Long-Term Debt:

Long-term debt consists of the following:

	July 31,
	2008		2007

Mortgage payable - interest at 6.822 percent per annum, monthly principal and interest payments of $2,285, due June 2011, secured by real property located at 98 Stafford Drive, Brampton, Canada	$	276,602	$	273,666

Mortgage payable - interest at 6.822 percent per annum, monthly principal and interest payments of $3,686, due June 2011, secured by real property located at 1740 Sismet Road, Mississauga, Canada		446,115		441,380

Mortgage payable - interest at 7.6 percent per annum, monthly payments of principal and interest of $5,899, due May 2010, secured by first mortgage over real property located at 17 Carlaw Avenue and 33 Harbour Square, Toronto, Canada		676,485		667,943

Mortgage payable - interest at 10 percent per annum, monthly payments of principal and interest of $2,557, due November 2008, secured by real property located at 13-14, 11 Carlaw Avenue, Toronto, Canada		209,530		210,371

Mortgage payable - interest at 8.5 percent per annum, monthly payments of interest only of $2,768, principal payment due August 2008, secured by real property located at 10-11, 11 Carlaw Avenue, Toronto, Canada		390,800		375,120

Mortgage payable - interest at 6.07 percent per annum, monthly interest payments of $9,100, principal due March 2009, secured by secondary rights to real property located at 1-8, 11 Carlaw Avenue, Toronto, Canada		1,187,716		1,175,309

Total Debt		3,187,248		3,143,789
Less Current Maturities of Long-Term Debt		1,832,684		84,503
Total Long-Term Debt	$	1,354,564	$	3,059,286

Aggregate maturities of long-term debt of the Company due within the next five years are as follows:

Year	Amount

2009	$	1,832,684
2010		681,015
2011		673,549
2012 and thereafter		—
Total	$	3,187,248

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11 - Convertible Debentures:

During the years ended July 31, 2008 and 2007, the Company was contractually obligated under various convertible promissory notes (“convertible debentures”) with accredited investors. The convertible debentures were convertible into shares of the Company's common stock at a price as stipulated in each agreement.

The convertible debentures are accounted for in accordance with EITF 98-5 and 00-27 (see Note 2). The following summarizes the significant terms and accounting for each convertible debenture entered into by the Company.

	Notes/Debenture
	$20,650,000

Date Issued		3/2008
Promissory Note Amount	$	(A	)
# of Promissory Notes		6
Terms		(B	)
Conversion Price	$	1.21

Gross Proceeds	$	20,650,000
Net Cash Proceeds	$	20,450,000
Warrants Issued to Investors (C)		42,665,274
Warrant Exercise Price	$	1.21
Existing Warrants Re-priced (D)		12,697,024
Re-priced Warrant Exercise Price (D)		1.10
Warrant Fair Value (WFV) (includes value of re-priced warrants)	$	21,976,130
Warrant Relative Fair Value (WRFV)	$	10,646,218
Black-Scholes Model Assumptions		(E	)
Beneficial Conversion Feature (BCF)	$	8,768,946
Costs associated with issuance classified as deferred
debt issuance costs	$	722,750

Amortization of WFV and BCF as
Non-cash Interest Expense	$	3,483,684
Principal and Interest Converted	$	—
Shares Issued Upon Conversion		—

Principal and Interest Repayments
in Shares of Common Stock	$	—
Shares Issued for Principal and
Interest Repayments		—
Principal and Interest Repayments
in Cash	$	—

As of July 31, 2008, the $4,718,520 net outstanding balance of convertible debentures is comprised of $20,650,000 of debt net of unamortized debt discount of $15,931,480. As of July 31, 2007, the net outstanding balance of convertible notes amounted to $-0-.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(A)

$7,000,000; $5,000,000; $3,650,000; (2) $2,000,000; $1,000,000

(B)

The notes carry an 8% coupon and mature September 30, 2009, provided, however, the maturity date may be extended at the option of the holder. The notes carry a 19-month term and amortization in 15 installments commencing in the fifth month of the term. The principal and interest payments are payable in cash or, at the Company's option, the lower of (i) the then applicable conversion price and (ii) the price which shall be computed as 90% of the arithmetic average of the VWAP of the common stock on each of the twenty (20) consecutive trading days immediately preceding the applicable installment date, subject to certain conditions. Each note lists certain “Events of Default”, which include, without limitation, any default in the payment of principal or interest in respect of the notes as when they become due and payable, the Company’s failure to observe or perform any other covenant, agreement or warranty contained in the agreements relating to the notes. Upon the occurrence of the “Event of Default”, the holder may require us to redeem all or any portion of the notes upon written notice. Other conditions in the notes impede the Company’s ability to make its monthly installment payments in shares of its common stock. Two of such conditions - the effectiveness of the registration statement for at least 30 days prior to installment notice and listing maintenance minimum bid price requirement of Nasdaq Stock Market, were not met as of July 31, 2008, requiring the Company to procure waivers from the note holders in respect to these conditions.

(C)

The warrants issued to investors are comprised of the following: Series A warrants 5,257,729; Series A-1 warrants 7,541,857; Series B warrants 17,066,108; Series C warrants 12,799,580.

The Series C warrants are issuable contingent upon exercise of Series B warrants. The relative fair value associated with the Series C warrants at the commitment date amounted to $1,234,836. At such time the contingency is met, the Company would include the relative fair value as a charge to interest expense. The Company has accounted for this contingency in accordance with EITF 98-5 and 00-27. At July 31, 2008, Series B warrants have not been exercised and therefore the contingency has not been met.

(D)

The Company re-priced 12,697,024 existing warrants. The value associated with the re-priced warrants amounted to $5,399,160 and was valued using the Black-Scholes pricing model. The value of the re-priced warrants have been added to the value of the new warrants issued (see (C) above) and accounted for in accordance with EITF 98-5 and 00-27.

(E)

Black-Scholes pricing model assumptions used in valuing the warrants were: risk free interest (2.70 percent); expected volatility (.8611); life of 1 ½ years, 7 years and 7 ½ years.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12 - Stockholders’ Equity:

Warrants

As of July 31, 2008, the Company has the following warrants to purchase common stock outstanding:

Number of Shares		Warrant Exercise		Warrant
To be Purchased		Price Per Share		Expiration Date

	85,034	$	1.86		January 9, 2009
	57,143	$	2.20		January 9, 2009
	13,889	$	2.25		January 9, 2009
	166,667	$	1.89		February 13, 2009
	17,169	$	2.10		February 13, 2009
	17,066,117	$	1.21		October 1, 2009
	500,000	$	1.09		August 10, 2009
	100,000	$	0.82		April 27, 2010
	102,232	$	1.25		April 17, 2011
	70,000	$	2.66		April 17, 2011
	25,000	$	1.91		May 29, 2011
	5,000	$	1.05		July 19, 2011
	100,000	$	1.71		March 3, 2012
	140,000	$	1.45		May 27, 2012
	50,000	$	0.94		March 9, 2013
	125,000	$	3.75		March 26, 2013
	12,697,024	$	1.10		March 31, 2015
	5,257,729	$	1.21		March 31, 2015
	20,341,437	$	1.21		October 1, 2015
	56,919,441

Preferred Stock

The Company has authorized 1,000,000 shares of preferred stock with a par value of one-tenth of a cent ($.001) per share. The preferred stock may be issued in various series and shall have preference as to dividends and to liquidation of the Company. The Company’s Board of Directors is authorized to establish the specific rights, preferences, voting privileges and restrictions of such preferred stock, or any series thereof. At July 31, 2008 and 2007, no shares of preferred stock were issued or outstanding.

Special Voting Rights Preferred Stock

In 1997, the Company issued 1,000 shares of Special Voting Rights Preferred Stock (SVR Shares) with a par value of $.001. The Company had the right at any time after December 31, 2000, upon written notice to all holders of preferred shares, to redeem SVR Shares at $.10 per share. Holders of SVR Shares were not entitled to vote, except as specifically required by applicable law or in the event of change in control, as defined. In addition, holders of SVR Shares were entitled to receive a dividend per share equal to the dividend declared and paid on shares of the Company’s common stock as and when dividends are declared and paid on the Company’s common stock. During the year ended July 31, 2007, the Company redeemed and cancelled 1,000 shares of Special Voting Rights Preferred Stock for $100. This redemption represented all issued and outstanding shares.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Equity Instruments Issued for Services Rendered

During the years ended July 31, 2008, 2007 and 2006, the Company issued stock options, warrants and shares of common stock in exchange for services rendered to the Company. The fair value of each stock option and warrant was valued using the Black Scholes pricing model which takes into account as of the grant date the exercise price and expected life of the stock option or 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 stock option or warrant. Shares of common stock are valued at the quoted market price on the date of grant. The fair value of each grant was charged to the related expense in the statement of operations for the services received.

Note 13 – Stock-Based Compensation:

Stock Option Plans

As of July 31, 2008, 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 10,000,000 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 July 31, 2008, there were 2,000,000, 2,612,490 and 7,837,000 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.

Effective August 1, 2005, the Company implemented the fair value recognition provisions of SFAS 123(R) and SAB 107 for all share-based compensation. Share-based employee compensation related to stock options for the years ended July 31, 2008, 2007 and 2006 amounted to $72,578, $-0- and $-0- (net of related tax) for each year and is included in the statements of operations. Share-based employee compensation related to common stock grants for the years ended July 31, 2008, 2007 and 2006 amounted to $1,659,558, $748,076 and $1,545,504, respectively, and is included in the statements of operations.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value of each option granted is estimated on 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. The following is the average of the data used to calculate the fair value:

Risk-Free

Expected

Interest Rate

Life (Years)

Volatility

Dividends

July 31, 2008

1.96

5.0

73.76

-0-

July 31, 2007 and 2006

n/a

The following is a summary of the common stock options granted, forfeited or expired and exercised under the Plan:

				Weighted Average
				Exercise Price
	Options			Per Share

Outstanding - August 1, 2005		11,607,269		$	1.51
Granted		—		$	—
Forfeited or expired		(755,000	)	$	5.97
Exercised		(2,352,672	)	$	1.37
Outstanding - July 31, 2006		8,499,597		$	1.15
Granted		—		$	—
Forfeited or expired		(250,159	)	$	7.86
Exercised		(286,800	)	$	1.05
Outstanding - July 31, 2007		7,962,638		$	1.12
Granted		175,000		$	0.96
Forfeited or expired		(1,490,000	)	$	2.10
Exercised		(401,000	)	$	0.98
Outstanding - July 31, 2008		6,246,638		$	0.66
Exercisable - July 31, 2008		6,159,138		$	0.66

Options typically vest over a period of two to three years and have a contractual life of five years.

The following is a summary of the non-vested common stock options granted, vested and forfeited under the Plan:

				Weighted Average
				Grant Date
	Options			Fair Value

Outstanding - August 1, 2007		—		$	—
Granted		175,000		$	0.59
Vested		(87,500	)	$	0.59
Forfeited		—		$	—
Outstanding - July 31, 2008		87,500		$	0.59

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of July 31, 2008, the Company had $45,172 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 1.8 years.

During the year ended July 31, 2008, the Company extended the contractual life of 300,000 fully vested options for an additional 30 days. As a result of that modification, the Company recognized additional compensation expense of $14,500.

The following table summarizes information on stock options outstanding at July 31, 2008:

	Options Outstanding
					Weighted
	Number		Weighted		Average
	Outstanding		Average		Remaining		Aggregate
Range of	at		Exercise		Life		Intrinsic
Exercise Price	July 31, 2008		Price		(Years)		Value
$0.001		2,239,610	$	0.001		1.68
$0.56 - $0.96		2,877,528		0.78		1.60
$1.47 - $1.71		1,129,500		1.68		0.29
		6,246,638				1.39	$	2,061,326

	Options Exercisable

	Number		Weighted
	Outstanding		Average		Aggregate
Range of	at		Exercise		Intrinsic
Exercise Price	July 31, 2008		Price		Value
$0.001		2,239,610	$	0.001
$0.56 - $0.96		2,790,028		0.77
$1.47 - $1.71		1,129,500		1.68
		6,159,138			$	2,061,326

	For the Year Ended July 31,
	2008		2007		2006
Weighted Average Grant Date Fair Value of Options Granted	$	0.59	$	—	$	—
Aggregate Intrinsic Value of Options Exercised	$	103,850	$	238,179	$	3,499,814
Cash Received for Exercise of Stock Options	$	391,790	$	301,932	$	3,241,755

The intrinsic value is calculated as the difference between the market value as of July 31, 2008 and the exercise price of the shares. The market value as of July 31, 2008 was $0.80 as reported by the NASDAQ Stock Market.

Note 14 - Net Loss Per Share:

Basic earnings per shares (EPS) and Diluted EPS for the years ended July 31, 2008, 2007 and 2006 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 6,246,638, 56,919,441, 237,500 and 17,066,116 incremental shares, have been excluded from the 2008, 2007 and 2006 computation of Diluted EPS as they are antidilutive due to the losses generated.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 15 - Supplemental Disclosure of Cash Flow Information:

	For the Years Ended July 31,
	2008		2007		2006
Cash paid during the year for:
Interest	$	232,440	$	256,836	$	273,097
Income taxes	$	—	$	—	$	—

Disclosure of non-cash investing and financing activities:

Year Ended July 31, 2008
Issuance of common stock as satisfaction of accrued executive compensation	$	471,875
Deferred debt issuance costs paid from the proceeds of convertible notes	$	200,000
Value of warrants issued in conjunction with issuance of convertible debentures and related beneficial conversion feature	$	19,415,164

Year Ended July 31, 2007
Principal repayment of convertible debentures through the issuance of common stock	$	384,616
Issuance of common stock in conjunction with convertible debenture conversion	$	210,216
Par value in connection with voluntary relinquishment and cancellation of 150,000 shares of common stock	$	150

Year Ended July 31, 2006
Value of common stock issued in conjunction with capitalized services upon issuance of convertible debentures	$	619,467
Value of warrants issued in conjunction with capitalized services upon issuance of convertible debentures	$	210,300
Costs paid from proceeds in conjunction with capitalized services upon issuance of convertible debentures	$	45,000
Value of warrants issued in conjunction with issuance of convertible debentures and related beneficial conversion feature	$	13,087,156
Satisfaction of accounts payable through the issuance of common stock	$	391,147
Principal repayment of convertible debentures through the issuance of common stock	$	2,102,689
Issuance of common stock in conjunction with convertible debenture conversion	$	14,551,466
Increase in other current assets for the prepayment of services through the issuance of common stock	$	184,500
Satisfaction of due from related party through reduction of accrued executive compensation	$	415,828
Repayment of long-term debt through the issuance of long-term debt upon refinancing	$	1,082,443

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 16 - Segment Information:

The Company follows SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” (SFAS No. 131). SFAS No. 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. SFAS No. 131 also establishes standards for related disclosures about products and services, geographic areas, and major customers.

SFAS No. 131 uses a management approach for determining segments. The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company’s reportable segments. The Company’s management reporting structure provides for only one segment.

The regions in which the Company had identifiable assets and revenues are presented in the following table. Identifiable assets are those that can be directly associated with a geographic area.

	2008		2007		2006
Identifiable Assets

Canada	$	34,529,104	$	41,899,734	$	59,583,574
United States		3,618,779		4,504,670		4,521,668
Total	$	38,147,883	$	46,404,404	$	64,105,242

Revenue

Canada	$	6,198	$	25,242	$	—
United States		121,841		157,187		175,000
Total	$	128,039	$	182,429	$	175,000

Note 17 - Collaborative Agreements:

The Company has a research and development agreement with Fertin Pharma A/S (Fertin) whereby the Parties have established collaboration for the development of a metformin medicinal chewing gum for the treatment of Type-2 diabetes mellitus and obesity (see Note 8).

The Company has a collaboration agreement with Stallergenes, S.A., a European firm in immunological treatments and asthma. Through the collaboration the parties agreed to pursue the design and test of li-key/allergen epitope hybid pepticles to create a novel approach for the control of both dangerous forms of asthma and functionally disabling allergic reactions.

Note 18 - Quarterly Information (Unaudited):

The following schedule sets forth certain unaudited financial data for the preceding eight quarters ending July 31, 2008. In our opinion, the unaudited information set forth below has been prepared on the same basis as the audited information and includes all adjustments necessary to present fairly the information set forth herein. The operating results for the quarter are not indicative of results for any future period.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Q1			Q2			Q3			Q4
Fiscal Year July 31, 2008:
Revenues	$	44,713		$	18,627		$	1,530		$	60,021
Operating loss	$	(7,706,361	)	$	(6,828,022	)	$	(9,852,072	)	$	(9,059,015	)
Net loss	$	(7,221,913	)	$	(6,507,174	)	$	(10,174,181	)	$	(12,325,723	)
Net loss available to common
stockholders	$	(7,221,913	)	$	(6,507,174	)	$	(10,174,181	)	$	(12,325,723	)
Net loss per share	$	(.07	)	$	(.06	)	$	(.09	)	$	(.11	)

Fiscal Year July 31, 2007:
Revenues, net	$	139,005		$	45,421		$	10,960		$	(15,188	)
Operating loss	$	(3,980,182	)	$	(5,478,477	)	$	(8,006,072	)	$	(7,411,371	)
Net loss	$	(3,658,045	)	$	(5,195,634	)	$	(7,718,355	)	$	(6,932,924	)
Net loss available to common
stockholders	$	(3,658,045	)	$	(5,195,634	)	$	(7,718,355	)	$	(6,932,924	)
Net loss per share	$	(0.03	)	$	(0.05	)	$	(0.07	)	$	(0.07	)

Note 19 - Subsequent Events:

During August 2008, the Company entered into an exclusive product licensing and distribution agreement with a corporation incorporated under the laws of the Republic of Korea for the importation, marketing, distribution and sale of Generex Ora-lyn^TM (the product) within a certain territory. Under the agreement, the Company is entitled to non-refundable licensing fees totaling $1,000,000 payable to the Company upon completion of certain milestones and an additional $500,000 which will be applied against product purchase orders. The initial term of the agreement shall commence September 1, 2008 and continue in effect for a period of 7 years following procurement of the certain registrations with an option to renew for an additional 5 years.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

On July 28, 2008, we received notice of the merger of Danziger Hochman Partners LLP (“Danziger”), our independent registered public accountants, with MSCM LLP ("MSCM"), to be effective as of August 1, 2008. The merger of Danziger and MSCM did not close until the week of September 15, 2008. On September 5, 2008, the Audit Committee of our Board of Directors received an engagement letter from MSCM and approved the engagement of MSCM as Danziger’s successor to continue as our independent registered public accountant for the fiscal year ending July 31, 2008.

The reports of Danziger on our financial statements for the fiscal years ended July 31, 2007 and 2006 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.

During our fiscal years ended July 31, 2008 and 2007 and the subsequent interim period through September 5, 2008, the date on which our Audit Committee approved the engagement of MSCM and Danziger ceased being our auditors, there were no disagreements between us and Danziger on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Danziger, would have caused Danziger to make reference to the subject matter of the disagreements in connection with its audit reports on our financial statements. During our past fiscal years ended July 31, 2008 and 2007 and the interim period through September 5, 2008, Danziger did not advise us of any of the matters specified in Item 304(a)(1)(v) of Regulation S-K.

We requested that Danziger deliver to us a letter addressed to the Securities and Exchange Commission stating whether Danziger agreed with the disclosures made by us in response to Item 304(a) of Regulation S-K, and if not, stating the respects in which it did not agree. Danziger's letter was filed as Exhibit 16 to our Current Report on Form 8-K/A filed with the SEC on September 19, 2008.

During our fiscal years ended July 31, 2008 and 2007 and the subsequent interim period through September 5, 2008, we had no consultations with MSCM regarding (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements as to which we received a written report or oral advice that was an important factor in reaching a decision on any accounting, auditing or financial reporting issue; (b) any matter that was the subject of a disagreement, as defined in Item 304(a)(1)(iv) of Regulation S-K, or (c) any matter that was the subject of a reportable event, as defined in Item 304(a)(1)(v) of Regulation S-K.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Prior to the filing of this Report on Form 10-K, an evaluation was performed under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Report on Form 10-K, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company 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 the Company’s management, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes during the fiscal quarter ended July 31, 2008 in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, those controls.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Generex Biotechnology Corporation (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:

(i)

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(iii)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of July 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on management’s assessment using those criteria, management has concluded that the Company’s internal control over financial reporting was effective as of July 31, 2008.

MSCM LLP, the independent registered public accounting firm that audited the financial statements that appear in the Company’s Annual Report on Form 10-K for the year ended July 31, 2008, has issued an attestation report on the Company’s internal control over financial reporting as of July 31, 2008, which is included in Part II, Item 8 - Financial Statements and Supplementary Data of this Annual Report on Form 10-K..

Item 9B. Other Information.

Reference is made to the disclosure set forth under the caption Sales of Unregistered Securities in Item 5 of this Annual Report on Form 10-K, which is incorporated by reference herein.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by this Item is incorporated by reference from the Proxy Statement, or an amendment to this Annual Report on Form 10-K, to be filed with the Commission not later than 120 days after the end of the fiscal year to which this report relates.

Information with respect to our Executive Officers appears in Part I of this report.

We have adopted a Code of Ethics and Business Conduct that applies to our President and Chief Executive Officer, our Chief Financial Officer and Chief Operating Officer, any Vice-President, Controller, Secretary, Treasurer and any other personnel performing similar functions. A copy of this Code of Ethics is posted on our Internet website, which is www.generex.com.

Item 11. Executive Compensation.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Item 14. Principal Accounting Fees and Services.

PART IV

Item. 15 Exhibits and Financial Statements and Schedules.

(a) 1. Financial Statements - See Part II - Item 8. Financial Statements and Supplementary Data hereof on page 50.

The financial statements include the following:

Consolidated Balance Sheets as of July 31, 2008 and 2007

Consolidated Statements of Operations for the Year Ended July 31, 2008, 2007 and 2006 and Cumulative from Inception to July 31, 2008

Consolidated Statements of Changes in Stockholders’ Equity for the Period November 2, 1995 (Date of Inception) to July 31, 2008

Consolidated Statements of Cash Flows for the Years Ended July 31, 2008, 2007 and 2006 and Cumulative from Inception to July 31, 2008

2. Financial Statement Schedule and Auditor’s Report

Schedule I - Condensed financial information of registrant

This schedule is not applicable.

Schedule II - Valuation and qualifying accounts

	Balance at Beginning Of Period		Additions Charged to Expenses		Other Additions		Deductions		Balance at End of Period

Year Ended July 31, 2006 Valuation Allowance on Deferred Tax Asset	$	34,950,200		—		—		14,041,363	$	48,991,563

Year Ended July 31, 2007 Valuation Allowance on Deferred Tax Asset	$	48,991,563		—		—		9,881,444	$	58,873,007

Year Ended July 31, 2008 Valuation Allowance on Deferred Tax Asset	$	58,873,007		—		—		9,260,438	$	68,133,445

The auditors’ report of MSCM LLP with respect to the Financial Statement Schedule information for the years ended July 31, 2008 is included with its report on our financial statements located at page 51.

3. Exhibits

Exhibits are incorporated herein by reference or are filed with this Annual Report as set forth in the Exhibit Index beginning on page 99 hereof.

All other schedules and exhibits are omitted because they are not applicable, not required, or because the information required has been given as part of this report.

Signatures

Pursuant to the requirements of Section 13 or 15(d) 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 this 10th day of October 2008.

GENEREX BIOTECHNOLOGY CORPORATION

By:	/s/ Anna E. Gluskin
	Name: Anna E. Gluskin
	Title: Chief Executive Officer and President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Capacity in Which Signed	Date

/s/ Anna E. Gluskin	President, Chief Executive Officer and	October 10, 2008
Anna E. Gluskin	Director (Principal Executive Officer)

/s/ Rose C. Perri	Chief Operating Officer, Chief Financial	October 10, 2008
Rose C. Perri	Officer, Treasurer, Secretary and Director (Principal Financial and Accounting Officer)

/s/ Brian T. McGee	Director	October 10, 2008
Brian T. McGee

/s/ John P. Barratt	Director	October 10, 2008
John P. Barratt

/s/ Nola E. Masterson	Director	October 10, 2008
Nola E. Masterson

/s/ Slava Jarnitskii	Controller	October 10, 2008
Slava Jarnitskii

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 3(II) to Generex Biotechnology Corporation’s Report on Form 10-Q filed on June 19, 2006)

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 April 30, 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 April 30, 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 April 30, 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)

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)

Exhibit Number		Description of Exhibit⁽¹⁾

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)

Exhibit Number		Description of Exhibit⁽¹⁾

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)

Exhibit Number		Description of Exhibit⁽¹⁾

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)

Exhibit Number		Description of Exhibit⁽¹⁾

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).

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)

Exhibit Number		Description of Exhibit⁽¹⁾

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)

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 April 30, 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 April 30, 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 April 30, 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 April 30, 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 April 30, 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)

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		Stock Option Agreement by and between Generex Biotechnology Corporation and Peter G. Amanatides to purchase 100,000 shares of Common Stock at the exercise price of $0.56 per share (incorporated by reference to Exhibit 10.3 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

Exhibit Number		Description of Exhibit⁽¹⁾

10.2		Stock Option Agreement by and between Generex Biotechnology Corporation and John P. Barratt to purchase 100,000 shares of Common Stock at the exercise price of $0.56 per share (incorporated by reference to Exhibit 10.4 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

10.3		Stock Option Agreement by and between Generex Biotechnology Corporation and Brian T. McGee to purchase 100,000 shares of Common Stock at the exercise price of $0.56 per share (incorporated by reference to Exhibit 10.5 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

10.4		Stock Option Agreement by and between Generex Biotechnology Corporation and John P. Barratt to purchase 35,714 shares of Common Stock at the exercise price of $0.001 per share (incorporated by reference to Exhibit 10.6 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

10.5		Stock Option Agreement by and between Generex Biotechnology Corporation and Brian T. McGee to purchase 35,714 shares of Common Stock at the exercise price of $0.001 per share (incorporated by reference to Exhibit 10.7 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

10.6		Stock Option Agreement by and between Generex Biotechnology Corporation and Gerald Bernstein, M.D. to purchase 100,000 shares of Common Stock at the exercise price of $0.61 per share (incorporated by reference to Exhibit 10.8 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

10.7		Stock Option Agreement by and between Generex Biotechnology Corporation and Mark Fletcher to purchase 250,000 shares of Common Stock at the exercise price of $0.61 per share (incorporated by reference to Exhibit 10.9 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

10.8		Stock Option Agreement by and between Generex Biotechnology Corporation and Anna E. Gluskin to purchase 250,000 shares of Common Stock at the exercise price of $0.61 per share (incorporated by reference to Exhibit 10.10 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

10.9		Stock Option Agreement by and between Generex Biotechnology Corporation and Rose C. Perri to purchase 250,000 shares of Common Stock at the exercise price of $0.61 per share (incorporated by reference to Exhibit 10.11 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

10.10		Stock Option Agreement by and between Generex Biotechnology Corporation and Mark A. Fletcher to purchase 470,726 shares of Common Stock at the exercise price of $0.001 per share (incorporated by reference to Exhibit 10.12 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

10.11		Stock Option Agreement by and between Generex Biotechnology Corporation and Anna E. Gluskin to purchase 1,120,704 shares of Common Stock at the exercise price of $0.001 per share (incorporated by reference to Exhibit 10.13 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

Exhibit Number		Description of Exhibit⁽¹⁾

10.12		Stock Option Agreement by and between Generex Biotechnology Corporation and Rose C. Perri to purchase 576,752 shares of Common Stock at the exercise price of $0.001 per share (incorporated by reference to Exhibit 10.14 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

10.13		Employment Agreement by and between Generex Biotechnology Corporation and Gerald Bernstein M.D. (incorporated by reference to Exhibit 10.16 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

10.14		1998 Stock Option Plan (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Registration Statement on Form S-1 (File No. 333-82667) filed on July 12, 1999)*

10.15		2000 Stock Option Plan (incorporated by reference to Exhibit 4.3.2 to Generex Biotechnology Corporation’s Annual Report on Form 10-K filed on October 30, 2000)*

10.16		Amended 2001 Stock Option Plan (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on December 15, 2003)*

10.17		2006 Stock Plan (incorporated by reference to Annex A to Generex Biotechnology Corporation’s Proxy Statement for the Annual Meeting of Stockholders held on May 30, 2006)*

10.18		Stockholders Agreement among Generex Biotechnology Corporation and the former holders of capital stock of Antigen Express, Inc. (incorporated by reference to Exhibit 10.4 to Generex Biotechnology Corporation’s Annual Report on Form 10-K filed on October 29, 2003)

10.19		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)*

10.20		Quotation for Contract Manufacturing of Oral-lyn™ entered into between Generex Biotechnology Corporation and Cardinal Health PTS, LLC on June 20, 2006 (subject to confidential treatment) (incorporated by reference to Exhibit 10.25 to Generex Biotechnology Corporation’s Report on Form 10-K/A filed on February 14, 2007)

10.21		Quotation Amendment for Contract Manufacturing of Oral-lyn™ entered into between Generex Biotechnology Corporation and Cardinal Health PTS, LLC on August 18, 2006 (subject to confidential treatment) (incorporated by reference to Exhibit 10.26 to Generex Biotechnology Corporation’s Report on Form 10-K filed on October 16, 2006)

10.22		Clinical Supply Agreement entered into between Generex Biotechnology Corporation and Cardinal Health PTS, LLC on September 6, 2006 (subject to confidential treatment) (incorporated by reference to Exhibit 10.27 to Generex Biotechnology Corporation’s Report on Form 10-K filed on October 16, 2006)

10.23		Form of Restricted Stock Agreement for awards to executive officers of Generex Biotechnology Corporation under the Generex Biotechnology Corporation 2006 Stock Plan (incorporated by reference to Exhibit 10.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on August 23, 2007)*

Exhibit Number		Description of Exhibit⁽¹⁾

10.24		Summary of Annual Base Salaries of Executive Officers of Generex Biotechnology Corporation (incorporated by reference to Exhibit 10.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on August 23, 2007)*

10.25		Summary of Compensation of the Directors of Generex Biotechnology Corporation (incorporated by reference to Exhibit 10.27 to Generex Biotechnology Corporation’s Report on Form 10-K filed on October 15, 2007)*

10.26		Summary of Employment Terms for Anna Gluskin effective as of January 1, 2006 (incorporated by reference to Exhibit 10.28 to Generex Biotechnology Corporation’s Report on Form 10-K/A filed on November 28, 2007)*

10.27		Summary of Employment Terms for Rose Perri effective as of January 1, 2006 (incorporated by reference to Exhibit 10.29 to Generex Biotechnology Corporation’s Report on Form 10-K/A filed on November 28, 2007)*

10.28		Summary of Employment Terms for Mark A. Fletcher effective as of April 21, 2003 (incorporated by reference to Exhibit 10.30 to Generex Biotechnology Corporation’s Report on Form 10-K/A filed on November 28, 2007)*

10.29		Employment Agreement between Generex Biotechnology Corporation and Gerald Bernstein, M.D., effective as of April 1, 2002 (incorporated by reference to Exhibit 10.31 to Generex Biotechnology Corporation’s Report on Form 10-K/A filed on November 28, 2007)*

10.30		Form of Consent and Waiver Agreement entered into with Cranshire Cranshire Capital, L.P., Portside Growth and Opportunity Fund and, Smithfield Fiduciary LLC (incorporated by reference to Exhibit 10.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on August 1, 2008)

10.31		Form of Consent and Waiver Agreement entered into with Rockmore Investment Master Fund Ltd. (incorporated by reference to Exhibit 10.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on August 1, 2008)

10.32		Form of Consent and Waiver Agreement entered into with the Iroquois Funds (incorporated by reference to Exhibit 10.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on August 1, 2008)

10.33		Summary of Annual Base Salaries for Executive Officers of Generex Biotechnology Corporation Effective January 1, 2008*

10.34		Summary of Compensation of the Directors of Generex Biotechnology Corporation effective May 27, 2008*

16		Letter of Concurrence From Danziger Hochman Partners LLP, dated September 18, 2008 (incorporated by reference to Exhibit 16 to Generex Biotechnology Corporation’s Report on Form 8-K/A filed on September 19, 2008)

21		Subsidiaries of the Registrant

23.1		Consent of MSCM LLP, independent registered public accounting firm

Exhibit Number		Description of Exhibit⁽¹⁾

23.2		Consent of Danziger Hochman Partners LLP, independent registered public accounting firm

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Management contract or management compensatory plan or arrangement.

(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.