GENEREX BIOTECHNOLOGY CORP - Annual Report: 2007 (Form 10-K)

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, 2007

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, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer þ

Non-accelerated filer 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, 2007, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $166,240,654 based on the closing sale price as reported on the NASDAQ Capital Market. Generex Biotechnology Corporation has no non-voting common equity. At October 03, 2007, there were 109,985,836 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, 2007, are incorporated by reference into Part III of this Annual Report on Form 10-K.

Generex Biotechnology Corporation

Form 10-K

July 31, 2007

Index

		Page
Forward-Looking Statements		1

Part I
Item 1.	Business.	2
Item 1A.	Risk Factors.	21
Item 1B.	Unresolved Staff Comments.	28
Item 2.	Properties.	28
Item 3.	Legal Proceedings.	29
Item 4.	Submission of Matters to a Vote of Security Holders.	30

Part II
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	31
Item 6.	Selected Financial Data.	33
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	34
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 8.	Financial Statements and Supplementary Data.	44
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	45
Item 9A.	Controls and Procedures.	45
Item 9B.	Other Information.	46

Part III
Item 10.	Directors, Executive Officers and Corporate Governance.	46
Item 11.	Executive Compensation.	46
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	46
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	46
Item 14.	Principal Accountant Fees and Services.	46

Part IV
Item 15.	Exhibits and Financial Statement Schedules.	47

Signatures		55
Schedule II		56

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;

	·	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; and

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

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.

General

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.

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 seek to develop proprietary formulations of large molecule drugs that can be administered through the buccal mucosa, primarily the inner cheek walls, thereby eliminating or reducing the need for injections. All injection therapies involve varying degrees of discomfort and inconvenience. With chronic and sub-chronic diseases, the discomfort and inconvenience associated with injection therapies frequently results in less than optimal patient acceptance of, and compliance with, the prescribed treatment plan. Poor acceptance and compliance can lead to medical complications and higher disease management costs. Also, elderly, infirm and pediatric patients with chronic or sub-chronic conditions may not be able to self-inject their medications. In such cases, assistance is required which increases both the cost and inconvenience of the therapy.

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™. Using our buccal delivery technology, we have also launched a line of over-the-counter glucose and energy sprays , including Glucose RapidSpray™, GlucoBreak™, and BaBOOM!™ Energy Spray.

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. Development efforts are underway in breast cancer, prostate cancer, influenza virus, avian influenza, HIV, smallpox, SARS and Type I diabetes mellitus. We have established collaborations with clinical investigators at academic centers to advance these technologies.

We are a development stage company although we have four products available for commercial sale. In fiscal 2007, we received revenues from sales of only one of our commercially available products, our confectionary, Glucose RapidSpray™. Glucose RapidSpray™, introduced in August 2006, is currently available in retail stores and independent pharmacies in the United States and Canada. We recently introduced in retail stores in the United States and Canada two other over-the-counter glucose sprays using our proprietary delivery technology, a flavored glucose “energy” spray supplemented with vitamins, BaBOOM!™ Energy Spray, and a fat-free glucose spray to aid in dieting, GlucoBreak™. In fiscal 2008, we expect to receive revenues from sales of our over-the-counter glucose and energy sprays in the United States and Canada. We expect other distribution territories for these products to include the Middle East, 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.

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. Each of these trials involved a selection of between 8 and 20 patients and some of the patients were taking our oral insulin product for the period of twelve month. 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.

Our business partner for the commercialization of Generex Oral-lyn™ in Latin America, PharmaBrand, was responsible for the commercial sales of Generex Oral-lyn™ in Ecuador upon launch in 2006. We are in the process of refining our relationship with PharmaBrand to transition their role to primarily that of a manufacturer for the commercial orders placed worldwide. We expect additional commercial manufacturing runs of the product at its facilities in Quito, Ecuador in the second half of calendar year 2007. In addition, PharmaBrand will continue its marketing and sales efforts in Ecuador in 2008 with a focus towards the IGT population.

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 also recently lapsed without objection.

The preparation for the Phase III clinical trials for Generex Oral-lyn ™ has already commenced. The key vendors for the management of the Phase III program have already been identified and some of the formal Clinical Trial Agreements have been executed. A number of centers for the Phase III clinical studies have also been chosen in the United States, Canada, Europe and Eastern Europe including Russia, Ukraine, Romania, Bulgaria, and Poland. The six-month trial with the six-month follow-up is expected to include 750 patients with Type 1 diabetes mellitus. Patient enrollment is expected to begin at some of the sites during the fourth quarter of calendar year 2007 and expand to several global centers over the course of the study. 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. In anticipation of undertaking such trials, we have secured a manufacturer to produce clinical trial batches of Generex Oral-lyn™.

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 and online. It is to be available in a total of 15 countries in the Middle East, South Africa and expected to expand in other markets in 2008.

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 hypoglycaemia 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 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 (IGT).

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 Master Distributor Agreement with Leosons General Trading Company and in South Africa and six neighboring countries trough the Master Distributor Agreement with Adcock Ingram LLP and Adcock Ingram Healthcare (Pty) Ltd.. We expect to expand to other markets in 2008.

The strategy to develop and launch these over-the-counter products are 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 provides 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.

The initial product samples have been developed for test marketing prior to clinical batch. We anticipate that we will conduct a clinical study in Canada in the spring of 2008 to establish bioequivalence with a Canadian Reference Product. This will encompass the preparation and submission of a Clinical Trial Application (“CTA”) to Health Canada, the authorization to proceed, and the actual execution of the clinical study, which we estimate will be completed in the third or fourth quarter of our 2008 fiscal year. Once completed, we anticipate that an Abbreviated New Drug Submission with full support data will be prepared and submitted to Health Canada, where we will be seeking regulatory approval/authorization for the manufacturing, marketing, and sale of the product. A pre-CTA meeting may be initiated to provide Health Canada with the Study plans and receive concurrence of our initiatives. We expect to conduct similar regulatory activities in the U.S., Europe and other strategic markets within an 18 - 24 month period.

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, 2007, we did not actively pursue our buccal morphine and buccal fentanyl projects. The development of these products will most likely be delayed while the company focuses 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.

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 by the fall of 2008. 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. The trial is expected to commence after stabilization of regulatory affairs in the region.

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. 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. We obtained regulatory approval to begin clinical trials of our oral insulin formulation in Canada in November 1998. We obtained regulatory approval to begin clinical trials of our buccal morphine product in Canada in March 2002. In April 2003, we received approval of an Oral-lyn™ Phase II-B clinical trial protocol in Canada. We received regulatory approval to begin clinical trials of our fentanyl product in Canada in October 2002. 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. 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.

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.

PharmaBrand, our business partner for the commercialization of Generex Oral-lyn™ in Latin and South America, has generated some commercial sales of the product in Ecuador to date. 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 their role to primarily that of a manufacturer for the commercial orders placed worldwide. In addition, PharmaBrand will continue its marketing and sales efforts in Ecuador in 2008 with a focus towards the population with Impaired Glucose Tolerance. We expect to receive revenues from such sales sometime in 2008, but 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 also recently entered into a licensing and distribution agreement with a multinational distributor to initiate the regulatory approval and commercialization process for Generex Oral-lyn™ in 15 Middle Eastern countries. In July 2007, we also 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. Under both of these agreements, 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.

We have entered into distribution agreements with Cardinal Health, AmerisourceBergen Corporation 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 leading retail chains, including Amerimark Direct, Butler Drug Store, DIK Drug Co., Fruth Pharmacy, H.D. Smith Wholesale Drug, Hy-Vee Inc., Kerr Drug Inc., Kinney Drug, Inc., Kinray Inc., Meijer, Smith Drug Company, ShopKo, Weiss Markets Inc., Value Drug Company, RDC, Aurora Pharmacy, Bainder International Drug Stores, Kohl & Frisch Limited, Shoppers Drug Mart and UniPharm Wholesale Drugs Ltd. Glucose RapidSpray™ is also available for sale on the Internet through Amazon.com, Walgreens.com and DiabeticExpress.com. We are also seeking to expand our distribution network in other markets around the world for our over-the-counter line of products. As a result of this effort, Glucose RapidSpray™ is currently being marketed in the Middle East through the Master Distributor Leosons General Trading Company.

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. We are also seeking to expand distribution of these products in other countries.

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.

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, S.A. in Quito, Ecuador for the purposes of commercial supply and sales in Ecuador and other countries that can procure registrations and import licenses. 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 two 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 two issued Canadian patents and ten pending Canadian patent applications also relating to aspects of buccal drug delivery technology. We also hold eighty-seven issued patents and seventy-nine 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, four other foreign patents, six pending U.S. patent applications , 2 pending U.S provisional patents and twenty eight 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, and Dr. Minzhen Xu, an officer of Antigen, are the listed inventors or co-inventors 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™. 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 and/or information available on their web sites.

Buccal Insulin Product

Nektar Therapeutics, formerly Inhale Therapeutic Systems, Inc. ("Nektar"), has developed, in collaboration with Pfizer Inc., a customized insulin formulation that is processed into a fine, dry powder and administered to the deep lung using a proprietary inhalation device developed for this purpose. This product, which is marketed as Exubera®, has been approved in the United States and the European Union for the treatment of adults with Type 1 or Type 2 diabetes for the control of high blood sugar levels. Since May 2006, Pfizer has launched Exubera® in Germany, Ireland, the U.K. and in the U.S. Although initial supplies of Exubera® were available across the U.S. beginning in September 2006, Pfizer has expressed disappointment with its slow acceptance. Pfizer has devoted additional resources to educating and marketing this product. In the U.S., Pfizer began branded direct-to-consumer advertising of Exubera® in print ads in mid-June 2007 and television ads in July 2007. Pfizer also has been sued by Novo Nordisk, which claims that Exubera® infringes a patent now owned by Novo Nordisk. A U.S. district court has denied a preliminary injunction that would have blocked further sales of Pfizer’s inhalable insulin.

Nektar and Pfizer are also collaborating on the development of a next generation inhaled insulin device, which would have improved portability, convenience, reliability and ease of use over Exubera®. On its own, Nektar is developing pulmonary products with large molecule drugs other than insulin and has stated that it is investigating the use of its inhalation technology with small molecule drugs.

Aradigm Corporation ("Aradigm") and Novo Nordisk A/S, which are collaborating on the development of a pulmonary delivery system for insulin by inhalation, also may be considered our direct competitors. Novo Nordisk is one of the two leading manufacturers of insulin in the world, the other being Eli Lilly and Company. The AERx® insulin Diabetes Management System, or AERx iDMS, initially developed by Aradigm, is currently in Phase III clinical trials which began in May 2006. The Phase III clinical trials are expected to include a total of approximately 3,000 Type 1 and Type 2 diabetes patients. The trials include treatment comparisons with other medicaments for the treatment of diabetes. The longest trial is expected to last 27 months. Novo Nordisk announced in October 2006 that it expects the commercial launch of the product in 2010 with a second generation device that is significantly smaller and lighter than its predecessor.

Other companies have announced development efforts relating to non-injection methods of delivering insulin or other large molecule drugs, including Alkermes Inc., which announced collaboration with Lilly in April 2000 to develop a pulmonary method of administering insulin and is currently conducting Phase III clinical trials. MannKind Corporation is developing an inhaled insulin product named Technosphere™ Insulin, which is currently conducting Phase III clinical trials in the United States and in Europe. Following its November 2006 acquisition of Kos Pharmaceuticals, Inc., Abbott Laboratories is expected to continue development of Kos’ inhaled insulin product to complement Abbott’s significant presence in the diabetes market. Bentley Pharmaceuticals, Inc. is developing its intranasal insulin product candidate, Nasulin™, and has concluded a Phase IIA study of Nasulin in Type 1 diabetic patients and has advanced its Phase IIA studies in the U.S. Bentley Pharmaceuticals Inc. has recently received approval from the Drug Controller General of India (DCGI) to proceed with Phase II trials of Nasulin™ in Type 2 diabetic patients. Nastech Pharmaceutical Company Inc. recently started a Phase II clinical trial evaluating its insulin nasal spray in Type 2 diabetics. Another inhalable insulin product, QDose, developed in a joint venture between the U.K. firm Vectura and the U,S. company MicroDose Technologies, is in an early stage of development, but has shown some encouraging results over Exubera®. Other smaller companies, such as Emisphere Technologies, Inc., also are in various stages of developing oral or buccal insulin formulations.

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. currently markets Actiq® in the United States. Actiq® delivers buccal transmucosal fentanyl to the cheek walls through the use of a lollipop. Barr Laboratories, Inc. introduced a generic version of Actiq® in September 2006 in the U.S. Cephalon 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 Johnson & Johnson’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. Results reported to date show the product to be safe and efficacious in the treatment of episodes of breakthrough pain. Nastech is currently seeking a licensing partner for this product.

Immunomedicine Technology and Products

A number of companies that are engaged in the development of immunomedicines employ technologies that are competitive to our subsidiary Antigen. The following companies have initiated early stage clinical trials for several products for the treatment of cancer, autoimmune, and allergic diseases. These companies also have established collaborations with academic centers and other companies for the development of certain products. Zycos Inc. has developed the Biotope® technology. 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. Pharmexa-Epimmune, a subsidiary of Pharmexa A/S, has developed the PADRE® technology. Pharmexa, an international biotechnology company in the field of active immunotherapy and vaccines for the treatment of cancer, serious chronic and infectious diseases, is currently working on a conventional vaccine targeting coat proteins, such as H5, using the Pharmexa-Epimmune PADRE® technology. Pharmexa has announced that it plans to have one or more influenza vaccine candidates ready for clinical development by the end of 2008.

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, 2007, our expenditures on research and development were $73,676,682. These included $11,983,626 in the year ended July 31, 2007, $6,554,393 in the year ended July 31, 2006, and $7,750,731 in the year ended July 31, 2005. The increase in our research and development activities in 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. The decrease in our research and development expenses in 2006 compared to 2005 was due principally to reduced clinical trial activities due to preparations for the Generex Oral-lyn™ Clinical Trial Application 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 17 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, 2007, we had twenty-five 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. Eleven of our employees are executive and administrative, eleven 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, our Vice-President Technology Development, 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	56	Chairman, President, Chief Executive Officer and Director

Rose C. Perri	40	Chief Operating Officer, Chief Financial Officer, Treasurer, Secretary and Director

Gerald Bernstein, M.D.	74	Director, Vice President Medical Affairs

Mark Fletcher, Esquire	41	Executive Vice President and General Counsel

John P. Barratt	63	Director

Brian T. McGee	48	Director

Peter G. Amanatides	43	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.

Gerald Bernstein, M.D. Director since October 2002. Dr. Bernstein has served as Vice President Medical Affairs of Generex since October 1, 2001. 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.

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.

John P. Barratt. Independent Director since March 2003. Mr. Barratt is currently the Chairman of the Generex Compensation Committee and the Corporate Governance and Nominating Committee and a member of the Generex Audit 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 Brascade 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 on the Advisory Boards of the following Brascan SoundVest funds: Diversified Income Fund, Total Return Fund, Rising Distribution Split Trust and Focused Business Trust. In addition, Mr. Barratt is also a member of the Advisory Board of the Brascan Adjustable Rate Trust I and Crystal Fountains Inc.

Brian T. McGee. Independent Director since March 2004. Mr. McGee is currently the Chairman of the Generex Audit Committee. Mr. McGee has been a partner of Zeifman & Company, LLP ("Zeifman") since 1995. Mr. McGee began working at Zeifman shortly after receiving a B.A. degree in Commerce from the University of Toronto in 1985. Zeifman 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.

Peter G. Amanatides. Independent Director since April 2005. Mr. Amanatides has been working in the pharmaceutical and biotechnology industry since 1988. Since November 2004, Mr. Amanatides has been President and Chief Operating Officer of Pharmalogika, Inc., a North Carolina-based service provider for the pharmaceutical and biotechnology industry. Since April 2002, Mr. Amanatides has held the positions of Director and Vice President within the Quality Organization for DSM Pharmaceuticals and DSM Biologics, both divisions of DSM Pharmaceutical Products, Inc. From February 1999 to April 2002, Mr. Amanatides served as Director of Quality Systems for Celera Genomics, a division of Applied Biosystems involved in genomics and pharmaceutical discovery. Mr. Amanatides received a B.S. degree in biology from Regents College, Albany, New York and a M.S. degree in Biotechnology and Molecular Biology from Hood College, Frederick, Maryland. Mr. Amanatides has also held ASQ Certification as a certified Quality Manager.

Nola E. Masterson. Independent Director since May 2007. 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, Mindy J. Allport-Settle and David E. Wires, elected not to stand for re-election to the Board of Directors at the Annual Meeting of Stockholders held on May 29, 2007. Our Board of Directors nominated Ms. Masterson for election as director at the 2007 Annual Meeting of the Stockholders. Our Board now consists of seven directors, four 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 our Vice President, Global Business Development. Mr. Abajian has served in Senior Management and Executive positions 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.

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, 2007, we received nominal revenues from sales of Glucose RapidSpray™. We did not recognize any revenue from the sale of our oral insulin product in Ecuador in fiscal 2007 and do not expect to receive any until we enter into a final agreement with PharmaBrand to manufacture commercial orders of Generex Oral-lyn™ and to continue its marketing and sales efforts in Ecuador in 2008 with a focus towards on the IGT population. To date, we have not been profitable and our accumulated net loss was $212,000,270 at July 31, 2007. 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 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. 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.

Any new equity financing will dilute current stockholders.

If we raise funds through equity financing to meet the needs discussed above, it will have a 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.

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 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™ which is available only in Ecuador 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 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.

Although Generex Oral-lyn™, our proprietary oral insulin spray formulation, has been approved for commercial marketing and sale in Ecuador, and our glucose spray products are available for purchase in the United States and Canada, we have yet to manufacture, market and distribute these products on a large-scale commercial basis. We expect to receive nominal revenues from sales of these products in fiscal year 2008. 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. We have begun the regulatory approval process for our oral insulin, buccal morphine and fentanyl products in other countries, and we expect to begin late stage clinical trials of Generex Oral-lyn™ at some of our clinical trial sites according to the Phase III clinical plan before the end of calendar year 2007.

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, a Phase I trial in human volunteers of a peptide vaccine for use against the H5N1 avian influenza virus and Phase I trial of our experimental H5N1 prophylactic vaccine in 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 country other than Ecuador.

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 country other than Ecuador, 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 or any other prescription pharmaceutical product candidate in another country other than Ecuador, 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™ in Ecuador or in the United States or from any of our other pharmaceuticals products that may receive regulatory approval until we can successfully manufacture, market and distribute them in the relevant market.

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.

A direct competitor to Generex Oral-lyn™ is Exubera®, Pfizer, Inc.’s inhalable form of insulin. Exubera®, which is inhaled through the mouth and absorbed in the lungs, is the first non-injected insulin to be approved by the FDA. Since May 2006, Pfizer has launched Exubera® has in Germany, Ireland, the U.K. and in the U.S. Initial supplies of Exubera were available across the U.S. beginning in September 2006, but Exubera® has had slow acceptance by patients and physicians and underperformed according to sector analysts. Pfizer has had to increase training of its sales force and diabetes educators to assist physicians and patients in understanding the benefits of and in using Exubera®. Pfizer began branded direct-to-consumer advertising of Exubera® in print ads in mid-June 2007 and television ads in July 2007. While we believe that absorption though the buccal cavity offers several advantages over pulmonary absorption, Pfizer’s early approval and significant resources could allow it to capture a large portion of the market.

Pfizer and Nektar are currently collaborating on the development of a next generation inhaled insulin device, which would have improved portability, convenience, reliability and ease of use over Exubera®. In addition to Pfizer and Nektar, we have other direct competitors with development programs underway for inhaled insulin products, which, if approved, could compete against Generex Oral-lyn™. These companies include Novo Nordisk, Eli Lilly Company /Alkermes, Inc, MannKind Corporation, Bentley Pharmaceuticals, Inc. and Abbott Laboratories through its acquisition of Kos Pharmaceuticals, all of which are working on various versions of inhaled insulin products in either a liquid or a dry form. Some products are in late stage clinical testing including Alkermes’s inhalable insulin product (AIR Insulin System™) in Phase III clinical development and Mannkind’s Technosphere® Insulin System also in Phase III clinical development. Other smaller companies, including Emisphere Technologies, Inc., are in various stages of developing oral or buccal insulin formulations.

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 our other potential pharmaceutical products in other markets 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.

In the past, we have failed to comply with certain of NASDAQ’s listing requirements. In late 2004, we did not comply with NASDAQ Rule 4310(c)(2)(B) which requires us to have a minimum of $2,500,000 in stockholders' equity or $35,000,000 market value of listed securities or $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years. While we regained compliance with this standard, we are still in the development stage. Consequently, there is no guarantee that we will sustain compliance with this standard. In the event we cannot sustain compliance, our shares of common stock may be delisted from the NASDAQ Capital Market and begin trading on the over-the-counter bulletin board, assuming we meet the requisite criteria.

In addition, from October 2004 until October 2005, we failed to comply with NASDAQ Rule 4310(c)(4) which requires us to have a minimum bid price per share of at least $1.00. Although we regained compliance with the minimum bid price requirement in November 2005, there is no guarantee that the bid price of our common stock will remain at or above $1.00 per share. In the event that the price of our common stock falls below $1.00 per share for thirty (30) consecutive trading days, we would likely receive a notice from the NASDAQ Stock Market LLC informing us of our noncompliance with NASDAQ Rule 4310(c)(4) and giving us 180 calendar days, subject to extension, to regain compliance with the rule. In the event that we could not demonstrate compliance with NASDAQ Rule 4310(c)(4) by the specified deadline and were not eligible for an additional compliance period, the staff would notify us that our stock would be delisted, at which time we could appeal the staff’s determination to a Listing Qualifications Panel. Pending the decision of the Listing Qualification Panel, our common stock would continue to trade on the NASDAQ Capital Market. If we were 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.

Item1B. 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 $3,143,789 at July 31, 2007. These mortgages require the payment of interest, with minimal principal reduction, prior to their due dates. These mortgages currently require an aggregate approximately $25,800 in monthly debt service payments. Aggregate principal maturities for these mortgages will be $84,503 in fiscal 2008 and $3,059,286 in fiscal 2009 and thereafter.

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 Dr. Pankaj Modi ("Modi") (our former officer) 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. 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. 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 have brought a motion seeking to have the action dismissed as against Generex which motion is presently scheduled for hearing on October 17, 2007. 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.

Shemano Group, Inc. On September 26, 2006, Shemano Group, Inc. initiated a National Association of Securities Dealers arbitration proceeding against us. Shemano claimed it was entitled to be paid fees pursuant to a finder’s agreement in connection with certain private placements effected by us The arbitration hearing took place in June 2007 and in July 2007 the arbitration panel awarded Shemano an aggregate of $1,030,545 in cash in compensatory damages. A third party subsequently initiated an arbitration proceeding claiming an entitlement to 60% of the award. Consequently, we paid 40% of the award to Shemano in September 2007. We are currently seeking a ruling from the court to deposit the remaining portion of the award ($618,327) with the court in respect of the new arbitration 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 29, 2007. At the meeting, 85,778,779 shares of common stock were represented out of 108,247,742 shares that were entitled to vote. Our stockholders took the following actions at the Annual Meeting:

elected all seven nominees to the Board of Directors; and

ratified the appointment of Danziger & Hochman Partners LLP as our independent public accountants for the fiscal year ending July 31, 2007.

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

Election of nominees to Board of Directors for terms expiring May 30, 2008	Votes For	Votes Against	Abstentions

ANNA E. GLUSKIN	98.954%	0.000%	1.040%
	84,881,128	5,200	892,450
JOHN P. BARRATT	99.298%	0.000%	0.696%
	85,176,582	5,200	596,996
BRIAN T. MCGEE	99.282%	0.000%	0.712%
	85,163,212	5,200	610,366
NOLA E. MASTERSON	99.260%	0.000%	0.734%
	85,143,865	5,200	629,713
GERALD BERNSTEIN, M.D.	99.255%	0.000%	0.739%
	85,139,771	5,200	633,807
PETER G. AMANATIDES	99.198%	0.000%	0.796%
	85,090,647	5,200	682,931
ROSE C. PERRI	99.127%	0.000%	0.867%
	85,029,766	5,200	743,812

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

Proposal		Votes For		Votes Against		Abstention		Broker Non-Votes
Ratification of Danziger & Hochman, Chartered Accountants		99.400% 85,264348		0.208% 178,304		0.3392% 336,126		0

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, 2007.

	Bid Prices
	High		Low

Fiscal 2006
First Quarter	$	1.51	$	0.53
Second Quarter	$	1.48	$	0.8
Third Quarter	$	5.02	$	1.15
Fourth Quarter	$	3.25	$	1.3

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

The sales for our common stock reported on October 03, 2007 was $1.48.

As of October 3, 2007, there were approximately 727 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 Securities Exchange Act of 1934, as amended (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 (the “Securities Act”), 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, 2002 and ending on July 31, 2007. The graph assumes that $100 was invested on July 31, 2002, 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 year ended July 31, 2007, we sold common stock and other securities in transactions in reliance upon exemptions from the registration requirements of the Securities Act, as we have reported on Current Reports on Quarterly Reports on Form 10-Q filed during the period covered by this Annual Report on Form 10-K.

As previously reported in our Annual Report on Form 10-K for the fiscal year ended July 31, 2006 and our Quarterly Reports for the quarters ended October 31, 2006, January 31, 2007 and April 30, 2007, 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, 2007. During the three months ended July 31, 2007, we issued 75,000 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 be legended 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 twelve months ended July 31, 2007, we issued 118,185 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 be legended 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 twelve months ended July 31, 2007, we issued 140,912 shares of common stock to Lyons Capital LLC. 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 Lyons Capital LLC. is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the Securities Act. The certificates issued for the shares of common stock will be legended 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.

In May, 2007, we issued 450,000 shares of common stock to Sound Capital Inc. 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 Sound Capital, 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 be legended 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, 2007.

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 end July 31, 2007 and 2006 were audited by Danziger Hochman Partners LLP (formerly known as Danziger & Hochman, Chartered Accountants). Our financial statements for the years ended July 31, 2005, 2004 and 2003 were audited by BDO Dunwoody, LLP.

In thousands	2007			2006			2005			2004			2003

Operating Results:
Revenue	$	180		$	175		$	392		$	627		$	—
Net Loss		(23,505	)		(67,967	)		(24,002	)		(18,363	)		(13,262	)
Net Loss Available to Common Stockholders		(23,505	)		(67,967	)		(24,002	)		(19,173	)		(14,026	)
Cash Dividends per share		—			—			—			—			—

Loss per Common Share:
Basic and Diluted Net Loss Per Common Share		(.22	)		(.90	)		(.66	)		(.64	)		(.67	)

Financial Positions:
Total Assets	$	46,404		$	64,105		$	13,466		$	19,012		$	22,639
Long-Term Debt	$	3,144		$	3,036		$	3,288		$	2,225		$	1,895
Convertible Debentures	$	—		$	161		$	1,315		$	—		$	—
Series A, Preferred Stock	$	—		$	—		$	—		$	14,310		$	13,501
Stockholder's Equity	$	36,071		$	55,464		$	6,127		$	530		$	5,857

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, 2005, 2006 and 2007. 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, 2007 and the information discussed in Part I, Item 1A - Risk Factors.

Executive Summary

About the Company

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 are expanding our focus to include immunomedicines. We operate in only one segment: the research, development and commercialization of drug delivery systems and technologies for metabolic and immunological diseases.

We have a limited number of products that are ready for commercial marketing and sale: our oral insulin formulation, Generex Oral-lyn™, has been approved for commercial marketing and sale in Ecuador; and our over-the-counter line glucose spray products utilizing our proprietary RapidMist™ buccal delivery technology have been launched in retail outlets in the United States and Canada.

We have begun the regulatory approval process for six pharmaceutical products: our oral insulin formulation (late-stage), our oral morphine formulation (pre-clinical), the Antigen HER-2/neu positive breast cancer vaccine (Phase II), the Antigen avian influenza vaccine (Phase I), the Antigen prostate cancer vaccine (Phase I), and the Antigen RNAi immunotherapeutic technology for myelogenous leukemia (pre-clinical).

Our organizational structure consists of Generex Biotechnology Corporation and five wholly-owned subsidiaries: Generex Pharmaceuticals Inc., which is incorporated in Ontario, Canada and which performs all of our Canadian operations; Generex (Bermuda), Inc., which is incorporated in Bermuda and which currently does not conduct any business activities; Antigen Express, Inc., which is incorporated in Delaware and which we acquired in 2003; Generex Pharmaceuticals (USA) LLC, which we organized in North Carolina in February 2006 and which has not yet commenced any business operations; and Generex Marketing & Distribution Inc., which we organized in Ontario, Canada in September 2006 and which has not yet commenced any business operations.

We are a development stage company. From inception through the end of the 2007 fiscal year, we have received only limited revenues from operations. Pursuant to a development and license agreement that we entered into with Eli Lilly and Company in September 2000 and terminated as of June 2003, we received a $1,000,000 upfront payment. In fiscal 2007, we received approximately $136,448 in revenues from sales of Glucose RapidSpray™.

Strategy

With the launch of commercial sales of our over-the-counter oral glucose and energy spray products in retail outlets in the United States and Canada, we expect to receive increased revenues from product sales in the fiscal year ending July 31, 2008. We plan to achieve this by increasing our over-the-counter product line to three products and expanding our existing distribution channels. In addition, we will increase our advertising and marketing efforts of our products and expand the availability of our products from North America to the rest of the world. This strategy has already been effected by the execution of agreements with Leosons General Trading Company for all products and Adcock Ingram LLP and Adcock Ingram Healthcare (Pty) Ltd. for Glucose RapidSpray ™.

We also expect to derive some revenue from product sales of our oral insulin formulation Generex Oral-lyn™. We project that revenues generated from sales of both our glucose and energy spray products in the U.S. and Canada and sales of Generex Oral-lyn™ in Ecuador will not be sufficient for all of our cash needs during fiscal year 2008. In the past we were able to fund Antigen expenses with some revenue from research grants for Antigen's immunomedicine products. During the fiscal year ended July 31, 2007, we received a total of $43,750 in such research grants, and we have received a total of $1,238,046 in such research grants. We do not expect to receive such grants on a going forward basis.

We expect to satisfy the majority of our cash needs during the current year from previous capital raised through equity and debt financings with a limited group of investors. We believe that the terms of such financings were favorable to us. Through the financing transactions that we closed in our the fiscal years ending July 31, 2005 and 2006, we believe that we have secured the funds necessary to continue in the short term with the commercialization of Generex Oral-lyn™ in Ecuador, to seek regulatory approval for this product in certain other countries and to pursue late-stage clinical trials of this product in the United States, Canada and Europe. We also project that we will have the funds to support further research and development and limited clinical testing of technology created by Antigen.

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 Food and Drug Administration 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 have filed a shelf registration statement with the Securities and Exchange Commission (“SEC”) to register an indeterminate number of shares of common stock and preferred stock and an indeterminate number of warrants and units, the aggregate initial offering price of which is not to exceed $150,000,000. Management is actively pursuing industry collaboration activities, including product licensing and specific project financing.

In fiscal 2008, we plan to concentrate our activities on enrollment and dosing of late-stage clinical trials of Generex Oral-lyn^TM in the United States, Canada and Europe. In anticipation of undertaking late-stage clinical trials globally, we have engaged consultants to assist with the design and implementation of clinical trials and regulatory strategies. We also have secured a manufacturer to produce clinical trial batches of Generex Oral-lyn™. 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™. We also recently entered into licensing and distribution agreement with multinational distributors to initiate the regulatory approval and commercialization process for Generex Oral-lyn™ in 15 Middle Eastern countries and the Republic of Armenia, Georgia and the Republic of Kazakhstan. We also entered into a distribution agreement for Glucose RapidSpray™, GlucoBreak™ and BaBOOM!™ Energy Spray in 15 Middle Eastern countries. Additionally, we have also entered into a distribution agreement for Glucose RapidSpray ™ in South Africa and six neighboring countries. Under the terms of these agreements, we will not receive an upfront licensing fee, but the distributors will bear all the costs associated with procuring governmental approvals, including any clinical or regulatory costs.

In the next fiscal year, we also plan to continue with the commercialization of Generex Oral-lyn™ in Ecuador and efforts to obtain regulatory approval of this product in other countries using the approved Ecuadorian dossier. Our business partner for the commercialization of Generex Oral-lyn™ in Ecuador, PharmaBrand, expects additional commercial manufacturing runs of the product at its facilities in Quito, Ecuador in the second half of calendar year 2007. Currently, our relationship with PharmaBrand is governed by a letter of intent, and we are in the process of transitioning PharmaBrand’s role into one of a third-party manufacturer with distribution rights for Ecuador. PharmaBrand has generated some commercial sales of Generex Oral-lyn™ in Ecuador to date. We expect to receive revenues from such sales sometime in fiscal 2008, but we do not expect that such sales will be reflected in our financial statements until we have entered into a definitive licensing and distribution agreement with PharmaBrand.

We face competition from other providers of alternate forms of insulin, including Pfizer which has an inhalable form of insulin, marketed as Exubera®. Since May 2006, Pfizer has launched Exubera® in Germany, Ireland, the U.K. and the U.S. Although initial supplies of Exubera® were available across the U.S. beginning in September 2006, Pfizer has expressed disappointment with its slow acceptance. In the U.S., Pfizer began branded direct-to-consumer advertising of Exubera® in print ads in mid-June 2007 and television ads in July 2007. We believe that our buccal delivery technology offers several advantages over alternate forms of insulin.

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 stage II HER-2/neu positive breast cancer and patients with prostate cancer and against avian influenza. In May 2007, the first breast cancer patients received treatment in the Phase II clinical trial of the Antigen peptide vaccine. This trial is being conducted with the United States Military Cancer Institute Clinical Trials Group under the direction of Colonel George Peoples, M.D. The trial will measure the rate of relapse after two years in breast cancer patients who have completed standard therapy for node-positive or high-risk node-negative breast cancer expressing at least low levels of the HER-2/neu oncogene and who are at increased risk for recurrence. Euroclinic, a private center in Athens, Greece, has commenced clinical trials with the same compound as an immunotherapeutic vaccine for prostate cancer in fiscal 2007. The Lebanese-Canadian Hospital in Beirut, Lebanon commenced a Phase I clinical trial of the Antigen synthetic avian influenza vaccine in April 2007.

In addition, Antigen recently entered into an agreement with Beijing Daopei Hospital in Beijing, China to conduct clinical trials using Antigen’s novel immunotherapeutic strategy involving RNA interference to modify a patient’s cancer cells to increase their immunogenicity to enable the immune system to fight cancer anywhere in the patient’s body.

We also expect to continue joint development activities with Fertin Pharma A/S with respect to a metformin medicinal chewing gum for the treatment of Type-2 diabetes mellitus and obesity.

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 last fiscal year, 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. During the last fiscal year, we and PharmaBrand have implemented education, marketing and training programs for physicians in Ecuador to support sales of Generex Oral-lyn™, which is available through physician referrals. While we anticipate generating revenue from sales of Generex Oral-lyn™ in Ecuador in fiscal 2008, we do not expect that such revenues will be sufficient to sustain our research and development and regulatory activities.

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

During the last fiscal year, 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.

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 and morphine. Insubstantial amounts have been expended on projects with other drugs, 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 fiscal 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. During fiscal 2006, approximately 82% of our $6,554,393 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 27% or $3,181,927 of our research and development expenses for the fiscal year ended July 31, 2007 was related to Antigen's immunomedicine products compared to approximately 18% or $1,155,331 for the fiscal year ended July 31, 2006. Because these products are in initial phases of clinical trials or early, pre-clinical stage of development, all of the expenses were accounted for as basic research and no distinctions were made as to particular products. Because of 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.

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.

Results of Operations

Year Ended July 31, 2006 Compared to Year Ended July 31, 2005

We had a net loss of $67,967,204 for the year ended July 31, 2006 (fiscal 2006) compared to a net loss of $24,001,735 for the year ended July 31, 2005 (fiscal 2005). The increase in net loss for the 2006 fiscal year was attributable mainly to interest expense and loss on extinguishment of debt incurred in connection with convertible debentures entered during the 2006 fiscal year. Our operation loss for fiscal 2006 increased slightly to $18,705,983 compared to $18,558,421 in operating loss for fiscal 2005. The increase in our fiscal 2006 operating loss resulted from an increase in general and administrative expenses (to $12,270,562 from $11,199,802), and a decrease in research and development expenses (to $6,554,393 from $7,750,731). Our revenue had decreased from $392,112 in fiscal 2005 to $175,000 in fiscal 2006.

The increase in general and administrative expenses for fiscal 2006 was due primarily to the increase of non cash compensation to financial consultants in fiscal 2006 compared to compensation paid in 2005 and an increase in executive compensation. Our consulting services, travel and advertising expenses also contributed to an increase in general and administrative expenses despite the decrease in office and general expenses.

The decrease in research and development expenses for fiscal 2006 reflected decreased level of research and development activities and fewer clinical trials of our oral insulin formulation despite the increase in the activities of Antigen.

Our interest expense in fiscal 2006 increased to $37,715,275 compared to interest expense of $4,376,043 in fiscal 2005 due to interest paid in connection with convertible debentures entered into during fiscal 2006. Our interest and miscellaneous income increased to $768,098 in fiscal 2006 compared to $93,213 in fiscal 2005 primarily due to substantially higher cash and short term investment balances during the current fiscal year. Our loss on extinguishment of debt, also incurred in connection with convertible debentures, was $12,550,565 in fiscal 2006 compared to $1,346,341 in fiscal 2005. We received a slightly higher income from rental operations (net of expense) of $236,521 in fiscal 2006 compared to $185,857 in fiscal 2005.

Developments in Fiscal Year 2007

In August 2006, we introduced our new Glucose RapidSpray™ product which became available in independent retail pharmacies in the United States and Canada in October, 2006.

In August 2006, we entered into an agreement with the Euroclinic in Athens, Greece to commence clinical trials on an immunotherapeutic vaccine for prostate cancer developed by Antigen. These studies are currently underway.

In September 2006, we executed a clinical supply agreement and a related quality agreement with Cardinal Health PTS, LLC, now known as Catalant Pharma Solutions. We have contracted with Catalant Pharma Solutions for the manufacture of clinical trial batches of our oral insulin product, Generex Oral-lyn™.

In November 2006, we entered into an agreement with the Lebanese-Canadian Hospital in Beirut, Lebanon to conduct a human clinical trial of a synthetic avian influenza vaccine developed by Antigen Express, representing the first studies to be conducted in humans. The study is being undertaken with the approval of the appropriate Lebanese governmental and regulatory bodies.

In November, 2006, we entered into an agreement with the Lebanese-Canadian Hospital in Beirut, Lebanon to conduct a human clinical trial of a synthetic avian influenza vaccine developed by Antigen Express, representing the first studies to be conducted in humans. This vaccine is based upon peptide-synthesis technology which we believe can be manufactured rapidly, easily and at inexpensive cost. In April 2007, the Lebanese-Canadian Hospital in Beirut, Lebanon commenced a Phase I clinical trial of the Antigen synthetic avian influenza vaccine. The study is being undertaken with the approval of the appropriate Lebanese governmental and regulatory bodies.

In February 2007, in conjunction with the United States Military Cancer Institute’s Clinical Trials Group, we entered into a Phase II clinical trial using the Antigen peptide vaccine in breast cancer patients who have completed standard therapy for node-positive or high-risk node-negative breast cancer expressing at least low levels of the HER-2/neu oncogene and who are at increased risk for recurrence.

In April 2007, we entered into a licensing and distribution agreement with Leosons General Trading Company, a leading distributor of North American pharmaceutical and healthcare products in the Middle East, for the commercialization of Generex Oral-lyn™ in 15 Middle Eastern countries, including Saudi Arabia and the United Arab Emirates. Under this agreement, we will not receive an upfront license fee, but Leosons will bear all costs associated with the procurement of governmental approvals for the sale of the product, including any clinical and regulator costs. Leosons is obligated to file all requisite applications for such approvals by the fall of 2007. In April 2007, we also entered into a licensing and distribution agreement with Leosons for the distribution of Glucose RapidSpray™ in the same 15 Middle Eastern countries.

In May 2007, we introduced two new products in our line of over-the-counter glucose sprays, BaBOOM!™ Energy Spray and GlucoBreak™ dietary aid spray.

In July 2007, 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. While we will receive no upfront fee under this agreement, the distributors 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.

In September 2007, we entered into a licensing and distribution agreement with Adcock Ingram LLP 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 this agreement, we will not receive an upfront license fee, but Adcock Ingram will bear all costs associated with the procurement of governmental approvals for the sale of the product, including any clinical and regulator costs.

Financial Condition, Liquidity and Resources

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

During the fiscal year ended July 31, 2007, we did not engage in any capital-raising transactions. At July 31, 2007, we had cash and short-term investments of approximately $35.0 million, a decrease of $17.5 million from the balance as of the end of the prior fiscal year. As of July 31, 2007, 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. Management plans to meet 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. Management is also actively pursuing industry collaboration activities, including product licensing and specific project financing. 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 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.

As of July 31, 2007, all outstanding 6% secured convertible debentures that we issued in connection with the Securities Purchase Agreement dated November 10, 2004 and amendments thereto have been either repaid or converted to shares of our common stock and the related debt discounts have been fully amortized. Since November 2004, we have issued an aggregate of 20,580,978 shares of common stock resulting from the conversion and repayment of an aggregate of $17,613,894 of debenture principal and accrued interest issued under the auspices of the Securities Purchase Agreement dated November 10, 2004 and amendments thereto.

At July 31, 2007, the following warrants issued under the auspices of the Securities Purchase Agreement dated November 10, 2004 and amendments thereto and the Securities Purchase Agreement dated June 1, 2006 were outstanding:

*Date Issued*	*Aggregate* *No. of* *Shares* *Unexercised*		Exercise Price*		*Exercise Date*		*Expiration Date*
January 23, 2006		622,226	$	1.60		June 2, 2006		July 22, 2011
February 27, 2006		4,770,617	$	3.00		August 27, 2006		August 27, 2011
February. 28, 2006		172,120	$	1.25		August 31, 2006		August 31, 2011
March 1, 2006		800,000	$	3.00		September 6, 2006		September 6, 2011
June 1, 2006		2,560,980	$	2.45		June 1, 2006		June 1, 2011
June 2, 2006		3,273,144	$	2.35		June 2, 2006		June 2, 2011

*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

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.

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

	Payments Due by Period
Contractual Obligations	Total		Less than 1year		1-3 years		3-5 years		More than 5 years
Long-Term Debt Obligations		3,143,789		84,503		2,412,761		646,525		0
Capital Lease Obligations		0		0		0		0		0
Operating Lease Obligations		589,211		148,823		256,079		183,812		497
Purchase Obligations		0		0		0		0		0
Other Long-Term Liabilities Reflected on the Registrant's Balance Sheet under GAAP		0		0		0		0		0
Total	$	3,733,001	$	233,327	$	2,668,839	$	830,338	$	497

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, 2007 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, 2007 and 2006, we paid the management company approximately $47,832 and $46,133, respectively, in management fees.

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 2007, we paid approximately $95,000 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 2008. Mr. Wires elected not to stand for re-election at our annual meeting of stockholders which was held on May 29, 2007.

Consulting Fees. Peter Amanatides, one of our directors, is the Senior Vice-President and Chief Operating Officer of PharmaLogika, Inc., a private consulting firm in the pharmaceuticals regulatory field. During fiscal year 2007, Generex paid $100,000 in fees to PharmaLogika for services rendered, and we owe a balance of $50,000. We do not expect to pay any further fees to PharmaLogika going forward. Mr. Amanatides is neither a director nor a shareholder of PharmaLogika.

New Accounting Pronouncements

In July 2006, the FASB published FASB Interpretation No. 48 (FIN No. 48), “Accounting for Uncertainty in Income Taxes”, to address the noncomparability in reporting tax assets and liabilities resulting from a lack of specific guidance in SFAS No. 109, “Accounting for Income Taxes,” on the uncertainty in income taxes recognized in an enterprise’s financial statements. FIN No. 48 will apply to fiscal years beginning after December 15, 2006, with earlier adoption permitted. We do not expect that the adoption of FIN No. 48 will have a significant impact on our consolidated results of operations or financial position.

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. 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” 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 No. 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 No. 157, Fair Value Measurements. We are currently evaluating the impact of this statement on our results of operations or financial position.

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.

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, 2007, we had fixed rate debt totaling $3,143,789. This amount consists of the following:

Loan Amount	Interest Rate per Annum
441,380		6.82%
273,666		6.82%
667,943		7.60%
375,120		8.50%
210,371		10%
1,175,309		6.07%
3,143,789		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

Report of Independent Registered Public Accounting Firms	F-1 - F-3


Consolidated Balance Sheets
July 31, 2007 and 2006	F-4


Consolidated Statements of Operations
For the Years Ended July 31, 2007, 2006 and 2005
and Cumulative From Inception to July 31, 2007	F-5


Consolidated Statements of Changes in Stockholders’ Equity
For the Period November 2, 1995 (Date of Inception)
to July 31, 2007	F-6 - F-25


Consolidated Statements of Cash Flows
For the Years Ended July 31, 2007, 2006 and 2005
and Cumulative From Inception to July 31, 2007	F-26 - F-27


Notes to Consolidated Financial Statements	F-28 - F-55

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 each of the years in the two-year period ended July 31, 2007. 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 did not audit the consolidated financial statements of Generex Biotechnology Corporation for the period from November 2, 1995 (date of inception) to July 31, 2005. Those statements were audited by other auditors whose report has been furnished to us and our opinion, insofar as it relates to amounts for the period from November 2, 1995 (date of inception) to July 31, 2005, included in cumulative totals, is based solely upon the reports of other auditors.

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 bases for our opinions.

F-1

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, 2007 and 2006, and the results of its operations and its cash flows for each of the years in the two-year period ended July 31, 2007 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.

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/ Danziger Hochman Partners LLP

Toronto, Canada

October 3, 2007

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

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, 2005 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended. We have also audited Schedule II. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit 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 and Schedule II are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and Schedule II, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement and schedule presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Generex Biotechnology Corporation (a development stage company) at July 31, 2005 and the results of its operations and its cash flows the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, Schedule II presents fairly, in all material respects, the information set forth therein.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring net losses and negative cash flows from operations and has a working capital deficiency. These matters raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ BDO Dunwoody LLP

Toronto, Ontario

September 30, 2005

F-3

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

	July 31,
	2007			2006
ASSETS
Current Assets:
Cash and cash equivalents	$	21,026,067		$	38,208,493
Short-term investments		14,011,738			14,372,653
Accounts receivable		58,264			—
Inventory		123,931			—
Other current assets		469,210			237,752
Total Current Assets		35,689,210			52,818,898


Property and Equipment, Net		2,137,027			2,585,744
Assets Held for Investment, Net		3,693,183			3,602,773
Patents, Net		4,884,984			5,097,827

TOTAL ASSETS	$	46,404,404		$	64,105,242


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable and accrued expenses	$	7,156,709		$	5,444,790
Deferred revenue		33,314			—
Current maturities of long-term debt		84,503			428,059
Convertible debentures, net of debt discount of $-0- and $608,737
at July 31, 2007 and 2006, respectively		—			160,494
Total Current Liabilities		7,274,526			6,033,343

Long-Term Debt, Net		3,059,286			2,608,105

Commitments and Contingencies

Stockholders’ Equity:
Special Voting Rights Preferred Stock, $.001 par value;
authorized 1,000 shares at July 31, 2007 and 2006; -0- and 1,000 shares
issued and outstanding at July 31, 2007 and 2006, respectively		—			1
Common stock, $.001 par value; authorized 500,000,000 shares at July 31, 2007
and 2006; 109,616,518 and 107,398,360 shares issued and outstanding at
July 31, 2007 and 2006, respectively		109,616			107,397
Additional paid-in capital		247,079,439			243,097,627
Deficit accumulated during the development stage		(212,000,270	)		(188,495,312	)
Accumulated other comprehensive income		881,807			754,081
Total Stockholders’ Equity		36,070,592			55,463,794

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	46,404,404		$	64,105,242

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

F-4

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,
	2007			2006			2005			2007
Revenues	$	182,429		$	175,000		$	392,112		$	2,376,725
Sales discounts		(2,231	)		—			—			(2,231	)
Net Revenue		180,198			175,000			392,112			2,374,494

Cost of Goods Sold		61,623			—			—			61,623

Operating Expenses:
Research and development		11,983,626			6,554,393			7,750,731			73,456,464
Research and development -
related party		—			—			—			220,218
Selling and marketing		693,309			56,028			—			749,337
General and administrative		12,317,742			12,270,562			11,199,802			90,039,418
General and administrative -
related party		—			—			—			314,328
Total Operating Expenses		24,994,677			18,880,983			18,950,533			164,779,765

Operating Loss		(24,876,102	)		(18,705,983	)		(18,558,421	)		(162,466,894	)

Other Income (Expense):
Miscellaneous income (expense)		—			500			70,345			196,193
Income from Rental Operations, net		277,474			236,521			185,857			920,928
Interest income		2,180,380			767,598			22,868			6,342,458
Interest expense		(849,548	)		(37,715,275	)		(4,376,043	)		(43,602,015	)
Loss on extinguishment of debt		(237,162	)		(12,550,565	)		(1,346,341	)		(14,134,068	)

Net Loss Before Undernoted		(23,504,958	)		(67,967,204	)		(24,001,735	)		(212,743,398	)

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

Net Loss		(23,504,958	)		(67,967,204	)		(24,001,735	)		(209,705,213	)

Preferred Stock Dividend		—			—			—			2,295,057

Net Loss Available to Common
Shareholders	$	(23,504,958	)	$	(67,967,204	)	$	(24,001,735	)	$	(212,000,270	)

Basic and Diluted Net Loss Per
Common Share	$	(.22	)	$	(.90	)	$	(.66	)

Weighted Average Number of Shares
of Common Stock Outstanding		108,416,023			75,416,234			36,537,318

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

F-5

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, 2007

	SVR Preferred Stock				Common Stock				Treasury Stock				Additional Paid-In			Notes Receivable - Common		Deficit Accumulated During the Development			Accumulated Other Comprehensive			Total 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.

F-6

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, 2007

																		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.

F-7

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, 2007

	SVR Preferred Stock				Common Stock				Treasury Stock				Additional Paid-In			Notes Receivable - Common		Deficit Accumulated During the Development			Accumulated Other Comprehensive			Total 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.

F-8

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, 2007

	SVR Preferred Stock				Common Stock						Treasury Stock				Additional Paid-In			Notes Receivable - Common		Deficit Accumulated During the Development			Accumulated Other Comprehensive			Total 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

F-9

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.

F-10

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, 2007

	SVR Preferred Stock				Common Stock						Treasury Stock				Additional Paid-In			Notes Receivable - Common			Deficit Accumulated During the Development			Accumulated Other Comprehensive			Total 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.

F-11

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, 2007

																			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

F-12

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.

F-13

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, 2007

																				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.

F-14

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, 2007

																		Notes			Deficit
	SVR																	Receivable			Accumulated			Accumulated
	Preferred				Common				Treasury						Additional			-			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.

F-15

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, 2007

	SVR Preferred Stock				Common Stock						Treasury Stock						Additional Paid-In			Notes Receivable - Common			Deficit Accumulated During the Development			Accumulated Other Comprehensive		Total 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.

F-16

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, 2007

	SVR Preferred Stock				Common Stock						Treasury Stock				Additional Paid-In			Notes Receivable - Common			Deficit Accumulated During the Development			Accumulated Other Comprehensive		Total 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

F-17

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.

F-18

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, 2007

	SVR Preferred Stock				Common Stock				Treasury Stock				Additional Paid-In		Notes Receivable - Common		Deficit Accumulated During the Development			Accumulated Other Comprehensive		Total 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

F-19

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

F-20

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

F-21

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

F-22

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.

F-23

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, 2007

																	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

F-24

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.

F-25

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,
	2007			2006			2005			2007
Cash Flows From Operating Activities:
Net loss	$	(23,504,958	)	$	(67,967,204	)	$	(24,001,735	)	$	(209,705,213	)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization		1,166,090			1,134,676			1,103,948			5,881,946
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			391,103
Write-off of deferred offering costs		—			—			—			3,406,196
Write-off of abandoned patents		21,721			73,699			66,952			171,506
Loss on disposal of property and equipment		—			911			—			911
Loss on extinguishment of debt		237,163			12,550,565			1,346,341			14,134,069
Common stock issued as employee compensation		748,076			1,545,504			—			2,293,580
Common stock issued for services rendered		1,695,013			515,039			1,131,452			6,996,316
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		266,400			172,450			547,755			7,272,723
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	)		(138,000	)
Amortization of deferred debt issuance costs and loan origination fees		—			1,234,772			248,107			1,482,879
Amortization of discount on convertible debentures		608,737			14,586,879			3,734,811			18,930,427
Common stock issued as interest payment on convertible debentures		15,716			191,747			76,996			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			105,300			113,274
Changes in operating assets and liabilities (excluding the effects of acquisition):
Accounts receivable		(56,680	)		—			—			(56,680	)
Miscellaneous receivables		—			—			—			43,812
Inventory		(117,502	)		—			—			(117,502	)
Other current assets		(26,068	)		9,596			731,656			(128,713	)
Accounts payable and accrued expenses		1,682,196			3,780,168			3,255,169			11,328,115
Deferred revenue		33,031			—			—			33,031
Other, net		—			—			—			110,317
Net Cash Used in Operating Activities		(17,231,065	)		(10,573,416	)		(11,400,145	)		(117,888,277	)

Cash Flows From Investing Activities:
Purchase of property and equipment		(93,704	)		(149,991	)		(63,735	)		(4,536,411	)
Costs incurred for patents		(208,606	)		(114,010	)		(193,429	)		(1,817,602	)
Change in restricted cash		—			216,868			19,333			45,872
Proceeds from maturity of short term investments		22,795,763			8,600,000			—			158,082,809
Purchases of short-term investments		(22,434,848	)		(22,972,653	)		—			(172,094,547	)
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		(196,457	)		(29,639	)		395,889			(703,290	)
Change in notes receivable - common stock		—			—			(6,300	)		(91,103	)
Change in due from related parties		—			—			—			(2,222,390	)
Other, net		—			—			—			89,683
Net Cash Provided by (Used in) Investing Activities		(137,852	)		(14,449,425	)		151,758			(24,322,904	)

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

F-26

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,
	2007			2006			2005			2007
Cash Flows From Financing Activities:
Proceeds from short-term advance		—			—			325,179			325,179
Repayment of short-term advance		—			(347,369	)		—			(347,369	)
Proceeds from issuance of long-term debt		—			35,461			815,832			2,005,609
Repayment of long-term debt		(73,151	)		(572,280	)		(98,447	)		(1,852,369	)
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		301,931			3,241,755			—			4,554,126
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		—			13,955,000			6,299,930			20,254,930
Repayments of convertible debentures		(174,399	)		—			(461,358	)		(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		—			—			—			(119,066	)
Net Cash Provided by Financing Activities		179,281			62,649,636			6,881,136			163,207,808

Effect of Exchange Rates on Cash		7,210			(4,832	)		3,362			29,440

Net Increase (Decrease) in Cash and Cash Equivalents		(17,182,426	)		37,621,963			(4,363,889	)		21,026,067

Cash and Cash Equivalents, Beginning of Period		38,208,493			586,530			4,950,419			—

Cash and Cash Equivalents, End of Period	$	21,026,067		$	38,208,493		$	586,530		$	21,026,067

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

F-27

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 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 is 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 (see Note 8). The Company has realized minimal revenues to date from the sale of its commercial products, which currently consists of four commercially available products, Glucose RapidSpray^TM. 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 (see Note 12). All significant intercompany transactions and balances have been eliminated.

Development Stage Corporation

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 a maturity of three months or less to be cash equivalents.

F-28

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Short-Term Investments

Short-term investments consist primarily of 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. At July 31, 2007, the cost of the investments approximated market value.

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, 2007 and 2006, however, actual write-offs may exceed the allowance.

Inventory

Inventories consist primarily of Glucose RapidSpray^TM product and components. Inventories are 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 inventories to their 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.

Property 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.

F-29

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 patents 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 form 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 Notes. 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.

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 lease payments are due.

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.

F-30

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Effective August 1, 2005, the Company adopted SFAS No. 123(R) which revises SFAS No. 123 “Accounting for Stock-Based Compensation” (“SFAS 123”) and supersedes Accounting Principles Board Opinion 25 “Accounting for Stock Issued to Employees.” Under APB 25, the Company used the “intrinsic value” method for employee stock options and did not record any expense because option exercise prices equaled the market value at the date of grant. SFAS 123(R) required 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 adopted SFAS 123(R) using the modified prospective method and, accordingly, prior period financial statements were not revised. 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 15 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.

F-31

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, short-term investments, other current assets, accounts payable and accrued expenses approximate their fair values due to their short-term nature. Due from related party approximated its fair value as it was due on demand. 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

In July 2006, FASB has published FASB Interpretation No. 48 (FIN No. 48), “Accounting for Uncertainty in Income Taxes”, to address the noncomparability in reporting tax assets and liabilities resulting from a lack of specific guidance in SFAS No. 109, “Accounting for Income Taxes”, on the uncertainty in income taxes recognized in an enterprise’s financial statements. FIN No. 48 will apply to fiscal years beginning after December 15, 2006, with earlier adoption permitted. The Company does not expect that the adoption of FIN No. 48 will have a significant impact on the consolidated results of operations or financial position of the Company.

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. The Company is currently evaluating the impact of this statement on its results of operations or financial position of the Company.

In February 2007, the FASB issued SFAS No. 159, “Establishing the Fair Value Option for Financial Assets and Liabilities” 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 items 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 No. 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 No. 157, Fair Value Measurements. The Company is currently evaluating this pronouncement in connection with SFAS No. 157.

F-32

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 - Property and Equipment:

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

	July 31,
	2007		2006

Land	$	213,312	$	201,075
Buildings and Improvements		1,352,010		1,274,448
Furniture and Fixtures		101,705		91,151
Office Equipment		181,273		151,684
Lab Equipment		4,221,152		4,046,520

Total Property and Equipment		6,069,452		5,764,878
Less Accumulated Depreciation		3,932,425		3,179,134
Property and Equipment, Net	$	2,137,027	$	2,585,744

Depreciation expense amounted to $631,597, $605,657 and $631,134 for the years ended July 31, 2007, 2006 and 2005, respectively.

On August 1, 2005, the Company reclassified certain land and building and building improvements classified as property and equipment to property held for investment. At July 31, 2005, the aggregate cost and related accumulated depreciation reclassified was as follows:

Land			$	181,507
Buildings and Improvements				1,147,093

Total Property and Equipment Reclassified				1,328,600
Less Accumulated Depreciation				255,851
Property and Equipment, Net Reclassified			$	1,072,749

Such reclassification had no effect on the consolidated statements of activities as previously reported.

Note 4 - Property Held for Investment, Net:

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

	July 31,
	2007		2006

Assets Held For Investment	$	4,485,179	$	4,227,871

Less: Accumulated Depreciation		791,996		625,098

Assets Held For Investment, Net	$	3,693,183	$	3,602,773

Depreciation expense amounted to $122,171, $125,366 and $73,077 for the years ended July 31, 2007, 2006 and 2005, respectively.

The Company’s intent is to hold this properties for investment purposes and collect rental income. Included in income from rental operations, net is $457,458, $464,150 and $315,514 of rental income and $179,984, $227,629 and $129,657 of rental expenses for the years ended July 31, 2007, 2006 and 2005, respectively.

On August 1, 2005, the Company reclassified certain land and building and building improvements classified as property and equipment to property held for investment (see Note 3).

F-33

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5 - Patents:

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

	July 31,
	2007		2006

Patents	$	6,580,005	$	6,380,006

Less: Accumulated Amortization		1,695,021		1,282,179

Patents, Net	$	4,884,984	$	5,097,827

Weighted Average Life		13.1 years		13.7 years

Amortization expense amounted to $412,322, $403,654 and $399,737 for the years ended July 31, 2007, 2006 and 2005, respectively. Amortization expense is expected to be approximately $419,000 per year for the years ended July 31, 2008 through 2012. During the years ended July 31, 2007, 2006 and 2005, the Company wrote off approximately $22,000, $74,000 and $67,000 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 $19,012,466, $64,252,188 and $20,937,976 for the years ended July 31, 2007, 2006 and 2005, respectively. Pretax losses arising from foreign operations (Canada and Bermuda) were $4,492,492, $3,715,016 and $3,063,759 for the years ended July 31, 2007, 2006 and 2005, respectively. As of July 31, 2007, the Company has net operating loss carryforwards in Generex Biotechnology Corporation of approximately $123,200,000, which expire in 2014 through 2027, in Generex Pharmaceuticals Inc. of approximately $31,000,000, which expire in 2008 through 2013 and in Antigen Express, Inc. of approximately $13,300,000, which expire in 2015 through 2027. 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.

For the years ended July 31, 2007, and 2006, 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,
	2007			2006
Deferred Tax Assets:
Net operating loss carryforwards	$	57,628,338		$	47,811,943
Other timing difference		2,579,377			2,660,938
Total Deferred Tax Assets		60,207,715			50,472,881

Valuation Allowance		(58,873,007	)		(48,991,563	)

Deferred Tax Liabilities
Intangible assets		(1,236,432	)		(1,347,468	)
Other timing difference		(98,276	)		(133,850	)
Total Deferred Tax Liabilities		(1,334,708	)		(1,481,318	)

Net Deferred Income Taxes	$	–		$	–

F-34

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the United States Federal Statutory rate to the Company’s effective tax rate for the years ended July 31, 2007, 2006 and 2005 is as follows:

	2007			2006			2005

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		2.0			--			--
Nondeductible items		--			7.0			3.0
Other timing differences		(10.0	)		6.0			--
Change in valuation allowance		42.0			21.0			31.0

Effective tax rate		--	%		--	%		--	%

Note 7 - Accounts Payable and Accrued Expenses:

Accounts payable and accrued expenses consist of the following:

	July 31,
	2007		2006

Accounts Payable	$	1,791,080	$	1,214,694
Research and Development		1,956,049		696,769
Executive Compensation		2,252,978		2,121,389
Financial Services		1,156,602		1,411,938
Total	$	7,156,709	$	5,444,790

Note 8 - Commitments and Contingent Liabilities:

Consulting Agreements

The Company has entered into a three year 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 $150,000 per annum and an aggregate of 450,000 shares of common stock to be issued quarterly over the term of the agreement.

The Company has entered into a consulting agreement expiring in December 2007 whereby the consultant will provide various services including sourcing and evaluating prospective joint ventures, strategic alliances and licensing arrangements for the Company in respect of the manufacturing, importation, marketing, distribution and sale of the Company’s products. In exchange for these services, the Company is required to pay $15,000 per month. The agreement also requires the payment of bonuses up to $500,000 upon meeting prescribed milestones. At July 31, 2007, no such milestones have been met. Accordingly, no amount has been paid or accrued in the consolidated financial statements.

F-35

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2007 are as follows:

Year	Amount

2008	$	148,823
2009		147,355
2010		108,723
2011		95,772
2012		88,040
Thereafter		497
Total Minimum Lease Payments	$	589,210

Lease expense amounted to approximately $41,000, $39,000 and $37,000 for the years ended July 31, 2007, 2006 and 2005, 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, 2007:

Year	Amount

2008	$	41,309
2009		36,670
2010		13,481
2011 and thereafter		--
Total	$	91,460

Property 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, 2007:

Year	Amount

2008	$	284,686
2009		194,876
2010		114,212
2011		109,459
2012		94,017
Thereafter		61,549
Total	$	858,799

F-36

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 anticipated project timeline is seven months and billed over the term of the project. Either party may terminate the agreement, or any portion thereof, by providing forty-five days written notice.

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 called 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. 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.

F-37

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2007, the Company has an employment agreement with an executive expiring March 2008, whereby the Company is required to pay an annual base salary of $300,000. 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, 2007, the Company has an employment agreement with an executive expiring March 2008, 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.

As of July 31, 2007, the Company has employment agreements with its President and Chief Executive Officer and its Chief Financial Officer and Chief Operating Officer expiring December 2010, whereby the Company is required to pay an annual base salary of $500,000 and $400,000, 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, voluntary termination, the Company may be required to pay the executive the greater of five times base salary or 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, 2007, the Company has three at will employment agreements with Antigen employees requiring the Company to pay an annual aggregate salary of $424,000 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.

Termination Agreements

On December 17, 2004, the Company and Elan International Services, Ltd. (EIS) agreed to terminate their joint venture through Generex (Bermuda) Ltd. EIS has agreed to transfer all shares of capital stock or Generex (Bermuda) owned by it to the Company (see Note 18).

F-38

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 amounts due from a related party at July 31, 2007, 2006 and 2005 were 0, 0 and 379,612, respectively. The amount, which was due from EBI, Inc., is a shareholder of the Company and is controlled by the estate of the Company’s former Chairman of the Board. During April 2006, the Company and EBI, Inc. have agreed to offset the amount due to the Company in exchange for executive compensation due to the sole beneficiary of the estate of the Company’s former Chairman of the Board.

The Company estimates the following additional amounts would have been recorded if such transaction was consummated under arms-length agreements:

	For the Years Ended July 31,
	2007		2006		2005

Interest Income	$	--	$	14,288	$	15,854

The interest income amounts were computed at estimated prevailing rates based on the average receivable balance outstanding during the periods reflected.

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 and the estate of the Company’s former Chairman of the Board. For the years ended July 31, 2007, 2006 and 2005, the Company has paid the management company $47,832, $46,113 and $44,024, respectively, in management fees.

F-39

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
	2007		2006

Mortgage payable - interest at 6.822 percent per annum, monthly principal and interest payments of $2,194, due June 2011, secured by real property located at 98 Stafford Drive, Brampton, O	$	273,666	$	264,579

Mortgage payable - interest at 6.822 percent per annum, monthly principal and interest payments of $3,538, due June 2011, secured by real property located at 1740 Sismet Road, Mississauga, ON		441,380		426,725

Mortgage payable - interest at 7.6 percent per annum, monthly payments of principal and interest of $5,662, due May 2010, secured by first mortgage over real property located at 17 Carlaw Avenue and 33 Harbour Square, Toronto, Canada		667,943		645,898

Mortgage payable - interest at 10 percent per annum, monthly payments of principal and interest of $2,453, due November 2008, secured by real property located at 13-14, 11 Carlaw Avenue, Toronto, Canada				210,371

Mortgage payable - interest at 8.5 percent per annum, monthly payments of interest only of $3,126, principal payment due August 2008, secured by real property located at 10-11, 11 Carlaw Avenue, Toronto, Canada		375,120		353,600

Mortgage payable - interest at 6.07 percent per annum, monthly interest payments of $8,829, principal due March 2009, secured by secondary rights to real property located at 1-8, 11 Carlaw Avenue, Toronto, Canada		1,175,309		1,139,153

Total Debt		3,143,789		3,036,164
Less Current Maturities of Long-Term Debt		84,503		428,059
Total Long-Term Debt	$	3,059,286	$	2,608,105

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

Year	Amount

2008	$	84,503
2009		1,759,069
2010		653,691
2011		646,526
2012 and thereafter		--
Total	$	3,143,789

F-40

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11 - Convertible Debentures:

As of July 31, 2007 and 2006, 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, required the issuance of warrants to the investor in conjunction with the transaction in accordance with the warrant terms in the individual debenture agreement and provided a 100% additional investment right (with the exception of the 1^st $500,000, $100,000 and 3^rd $4,000,000 debentures) exercisable for up to twelve months following the effective date of the registration statement with respect to the transaction.

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.

F-41

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Debenture
	1^st $4,000,000			1^st $500,000			$100,000
Date Issued	12/2004			3/2005			4/2005
Promissory Note Amount	$	1,000,000		$	500,000		$	100,000
# of Promissory Notes		4			1			1
Terms		(A	)		(E	)		(E	)
Conversion Price	$	0.82		$	0.82		$	0.82

Gross Proceeds	$	4,000,000		$	500,000		$	100,000
Issuance Costs Paid in Cash	$	300,070		$	--		$	--
Issuance Costs Paid in Common Stock	$	--		$	--		$	--
Shares of Common Stock		--			--			--
Issuance Costs Paid in Warrants		145,000			--			--
Warrant Exercise Price	$	0.91			n/a			n/a
Warrant Fair Value (WFV)	$	89,900			n/a			n/a
Black Scholes Model Assumptions		(B₁	)		n/a			n/a
Total Issuance Costs (C)	$	389,970		$	--		$	--
Amortization of Issuance Costs as
Non-cash Interest Expense	$	389,970		$	--		$	--

Net Cash Proceeds	$	3,699,930		$	500,000		$	100,000
Warrants Issued to Investor		4,878,048			1,219,512			243,902
Warrant Exercise Price	$	0.91		$	0.82		$	0.82
Warrant Fair Value (WFV)	$	1,722,222		$	245,521		$	49,104
Black Scholes Model Assumptions		(B₁	)		(B₂	)		(B₂	)
Beneficial Conversion Feature (BCF)	$	1,722,222		$	86,984		$	17,397
Amortization of WFV and BCF as
Non-cash Interest Expense	$	3,444,444		$	332,505		$	66,501

Principal and Interest Converted	$	1,628,292		$	528,082		$	105,644
Loss on Extinguishment (D)	$	42,409		$	--		$	--
Shares Issued Upon Conversion		1,985,249			644,003			128,834

Principal and Interest Repayments
in Shares of Common Stock	$	2,005,500		$	--		$	--
Loss on Extinguishment (D)	$	147,457		$	--		$	--
Shares Issued for Principal and
Interest Repayments		3,158,344			--			--
Principal and Interest Repayments
in Cash	$	506,564		$	--		$	--

Warrant Issued to Investor for 1^st
Extension of Maturity Date (F)		n/a			1,219,512			243,902
Warrant Exercise Price		n/a		$	0.82		$	0.82
Warrant Fair Value (WFV)		n/a		$	597,561		$	119,512
Black Scholes Model Assumptions		n/a			(B₂	)		(B₂	)

Warrant Issued to Investor for 2^nd
Extension of Maturity Date (F)		n/a			1,219,512			243,902
Warrant Exercise Price		n/a		$	0.82		$	0.82
Warrant Fair Value (WFV)		n/a		$	524,390		$	104,878
Black Scholes Model Assumptions		n/a			(B₇	)		(B₇	)

F-42

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Debenture
	1st 2,000,000			2nd 2,000,000			2nd $500,000
Date Issued	6/2005			9/2005			10/2005
Promissory Note Amount	$	500,000		$	500,000		$	500,000
# of Promissory Notes		4			4			1
Terms		(A	)		(A	)		(A	)
Conversion Price	$	0.60		$	0.60			0.82

Gross Proceeds	$	2,000,000		$	2,000,000		$	500,000
Issuance Costs Paid in Cash	$	--		$	15,000		$	--
Issuance Costs Paid in Common Stock	$	140,000		$	140,000		$	33,250
Shares of Common Stock		170,732			170,732			35,000
Issuance Costs Paid in Warrants		35,000			60,000			15,000
Warrant Exercise Price	$	0.82		$	0.82		$	0.95
Warrant Fair Value (WFV)	$	20,300		$	30,600		$	14,250
Black Scholes Model Assumptions		(B3	)		(B4	)		(B4	)
Total Issuance Costs (C)	$	160,300		$	185,600		$	47,500
Amortization of Issuance Costs as
Non-cash Interest Expense	$	160,300		$	185,600		$	47,500

Net Cash Proceeds	$	2,000,000		$	1,985,000		$	500,000
Warrants Issued to Investor		2,439,024			2,439,024			609,756
Warrant Exercise Price	$	0.82		$	0.82		$	0.82
Warrant Fair Value (WFV)	$	828,571		$	785,185		$	270,950
Black Scholes Model Assumptions		(B3	)		(B4	)		(B4	)
Beneficial Conversion Feature (BCF)	$	1,171,429		$	1,185,185		$	229,050
Amortization of WFV and BCF as
Non-cash Interest Expense	$	2,000,000		$	1,970,370		$	500,000

Principal and Interest Converted	$	1,800,206		$	1,729,144		$	385,769
Loss on Extinguishment (D)	$	--		$	1,088,868		$	1,180,830
Shares Issued Upon Conversion		3,000,344			2,878,648			470,450
Principal and Interest Repayments
in Shares of Common Stock	$	225,322		$	293,893		$	125,244
Loss on Extinguishment (D)	$	62,242		$	394,912		$	93,361
Shares Issued for Principal and
Interest Repayments		407,075			489,822			152,736
Principal and Interest Repayments
in Cash	$	--		$	--		$	--

F-43

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Debenture
	$3,500,000			2nd $4,000,000			3rd $4,000,000
Date Issued	12/2005			1/2006			2/2006
Promissory Note Amount	$	1,000,000		$	1,000,000		$	1,000,000
# of Promissory Notes		3.5			4			4
Terms		(A	)		(A	)		(A	)
Conversion Price	$	0.82		$	1.05		$	1.25

Gross Proceeds	$	3,500,000		$	4,000,000		$	4,000,000
Issuance Costs Paid in Cash	$	15,000		$	15,000		$	--
Issuance Costs Paid in Common
Stock	$	179,550		$	266,400		$	--
Shares of Common Stock		189,000			266,667			--
Issuance Costs Paid in Warrants		105,000			120,000			--
Warrant Exercise Price	$	0.82		$	1.05			n/a
Warrant Fair Value (WFV)	$	76,650		$	88,800			n/a
Black Scholes Model Assumptions		(B5	)		(B6	)		n/a
Total Issuance Costs (C)	$	271,200		$	370,200		$	--
Amortization of Issuance Costs as
Non-cash Interest Expense	$	271,200		$	370,200		$	--

Net Cash Proceeds	$	3,485,000		$	3,985,000		$	4,000,000
Warrants Issued to Investor		4,268,292			3,809,524			3,200,000
Warrant Exercise Price	$	0.82		$	1.05		$	1.25
Warrant Fair Value (WFV)	$	1,648,387		$	1,653,631		$	2,374,507
Black Scholes Model Assumptions		(B5	)		(B6	)		(B7	)
Beneficial Conversion Feature (BCF)	$	1,851,613		$	1,463,155		$	1,625,493

Amortization of WFV and BCF as
Non-cash Interest Expense	$	3,500,000		$	3,116,786		$	4,000,000

Principal and Interest Converted	$	3,435,735		$	3,635,041		$	3,081,556
Loss on Extinguishment (D)	$	1,473,115		$	4,558,356		$	2,450,301
Shares Issued Upon Conversion		4,189,923			3,461,946			2,448,764

Principal and Interest Repayments
in Shares of Common Stock	$	86,475		$	398,578		$	941,326
Loss on Extinguishment (D)	$	176,556		$	541,854		$	571,782
Shares Issued for Principal and
Interest Repayments		105,456			381,709			641,813
Principal and Interest Repayments
in Cash	$	--		$	--		$	174,399

As of July 31, 2007, all convertible debentures have either been repaid or converted to shares of common stock and the related debt discounts have been fully amortized.

As of July 31, 2006, the $160,494 net outstanding balance of convertible debentures was comprised of $769,231 of debt net of unamortized debt discount of $608,737 related to the 3^rd $4,000,000 convertible debentures. All other convertible debentures had either been repaid or converted to shares of common stock and the related debt discounts had been fully amortized.

F-44

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(A)

The notes carry a 6% coupon and a 15-month term and amortization in 13 equal assignments commencing in the third month of the term. The principal and interest payments are payable in cash or, at the Company's option, the lesser of registered stock valued at a 10% discount to the average of the 20-day VWAP as of the payment date or predetermined conversion price, subject to certain conditions.

Black Scholes pricing model assumptions:

	Risk Free Interest Rate		Expected Volatility		Life (Years)

(B₁)		1.79%		1.0463		5.50
(B₂)		2.78%		1.0054		5.50
(B₃)		3.02%		0.9775		5.50
(B₄)		3.76%		0.9232		5.50
(B₅)		4.02%		0.9288		5.50
(B₆)		4.23%		0.9210		5.50
(B₇)		4.49%		0.9380		5.50

(C)	The issuance cost is amortized over the life of the debt as a deferred debt issuance cost.

(D)	Loss on extinguishment represents the difference between the quoted market price of the Company's common stock and lower of predetermined conversion price or the 10% discount to the average of the 20-day VWAP.

(E)	The notes carry a 10% coupon and a 1 ½ month term. The principal and interest payments are payable in cash or, at the Holder's option, in common stock at a per share price equal to $0.82.

(F)

The Company extended the maturity date of the convertible debenture from May to July and later to September 2005. In consideration for the holder’s agreement to extend the maturity date, the Company issued the holder additional warrants. In accordance with EITF 98-5, the fair value of the warrants was determined to be the reacquisition price on the debt extinguishment date and was recorded as a loss on extinguishment.

Note 12 - Series A Preferred Stock:

During 2001, the Company issued 1,000 shares of Series A Preferred Stock (Series A) with a par value of $.001 per share. The holder had the right at any time after January 16, 2004 to convert Series A shares into shares of common stock of the Company as well as the option to exchange the shares of the Company’s Series A Preferred stock for shares of the Company’s convertible preferred shares of Generex (Bermuda), Ltd. Holders of Series A shares were not entitled to vote. In addition, the holders of Series A 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, and were also entitled to receive a mandatory annual dividend equal to 6 percent per year on the original issue price of $12,015 per share.

In December 2004, the holder of the Series A Preferred Stock sold its holdings to a third party. In conjunction with sale, all of the Company’s outstanding Series A Preferred Stock was automatically converted to common stock. As a result, the buyer received 534,085 shares of common stock and the Company no longer has any outstanding shares of Series A Preferred Stock (see Note 18).

F-45

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13 - Stockholders’ Equity:

Warrants

As of July 31, 2007, 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

5,000	$	2.50	November 29, 2007
30,000	$	3.00	November 29, 2007
500,000	$	2.50	January 15, 2008
255,102	$	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
327,869	$	1.68	July 12, 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
3,273,144	$	2.35	May 31, 2011
2,560,980	$	2.45	May 31, 2011
5,000	$	1.05	July 19, 2011
622,226	$	1.60	July 22, 2011
4,770,617	$	3.00	August 26, 2011
172,120	$	1.25	August 27, 2011
800,000	$	3.00	September 2, 2011
100,000	$	1.71	March 3, 2012
140,000	$	1.45	May 27, 2012
14,614,158

F-46

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Notes Receivable - Common Stock

Notes receivable - common stock consist of two separate promissory notes. The first promissory note was issued in conjunction with the redemption of Series A Redeemable Common Stock Purchase Warrants in June 1999, and was for $50,000. This note was originally due on December 1, 1999. After multiple extensions, the note together with accrued interest at 7 percent per annum, was due July 31, 2004. In January 2005, the Company deemed this note as uncollectible and, therefore, has taken a charge to general and administrative expenses for the outstanding principal and accrued interest in the amount of $72,107. This charge is included in operations for the year ended July 31, 2005.

The second promissory note was issued in conjunction with the exercise of 50,000 Common Stock Options in March 2001, and was for $250,000. This note was originally due on March 15, 2002. After multiple extensions, the note together with accrued interest at 7 percent per annum was due March 15, 2004. In January 2005, the Company deemed this note as uncollectible and, therefore, has taken a charge to general and administrative expenses for the outstanding principal and accrued interest in the amount of $318,996. This charge is included in operations for the year ended July 31, 2005.

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, 2007 and 2006, 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.

Equity Instruments Issued for Services Rendered

During the years ended July 31, 2007, 2006 and 2005, 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.

F-47

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14 - Stock Based Compensation:

Stock Option Plans

As of July 31, 2007, 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, 2007, there were 1,940,000, 1,182,490 and 9,108,000 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 are 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, 2007 and 2006 amounted to $-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, 2007 and 2006 amounted to $748,076 and $1,545,504, respectively, and is included in the statements of operations.

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, 2007 and 2006

n/a

July 31, 2005

2.32%

5.00

1.0215

F-48

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2004		7,214,159		$	3.49
Granted		6,046,110		$	0.50
Forfeited or expired		(1,653,000	)	$	6.49
Exercised		--		$	--
Outstanding - July 31, 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
Exercisable - July 31, 2007		7,962,638		$	1.12

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

The Company had no non-vested stock options outstanding as of July 31, 2007. Accordingly, there was no unrecognized compensation related to non-vested stock options granted under the Company’s stock option plans.

F-49

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Options Outstanding
					Weighted
	Number		Weighted		Average
	Outstanding		Average		Remaining		Aggregate
Range of	at		Exercise		Life		Intrinsic
Exercise Price	July 31, 2007		Price		(Years)		Value
$0.001		2,239,610	$	0.001		2.68
$0.56 - $0.94		2,702,528		0.77		2.39
$1.00 - $2.19		3,020,500		1.80		0.73
		7,962,638				1.84	$	6,059,852

	Options Exercisable

	Number		Weighted
	Outstanding		Average		Aggregate
Range of	at		Exercise		Intrinsic
Exercise Price	July 31, 2007		Price		Value
$0.001		2,239,610	$	0.001
$0.56 - $0.94		2,702,528		0.77
$1.00 - $2.19		3,020,500		1.80
		7,962,638			$	6,059,852

	For the Year Ended July 31,
	2007		2006		2005

Weighted Average Grant Date Fair Value of Options Granted	$	--	$	--	$	0.59
Aggregate Intrinsic Value of Options Exercised	$	238,179	$	3,499,814	$	--
Cash Received for Exercise of Stock Options	$	301,932	$	3,241,755	$	--

During the year ended July 31, 2005 the Company issued 2,239,610 options at an exercise price of $0.001 as settlement for outstanding executive compensation. Accordingly, the Company has included a charge for the fair value of these options in the amount of $1,332,052 in the statement of operations. No gain or loss was recorded as a result of this transaction.

The intrinsic value is calculated as the difference between the market value as of July 31, 2007 and the exercise price of the shares. The market value as of July 31, 2007 was $1.60 as reported by the NASDAQ Stock Market.

F-50

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table illustrates the pro forma effect on net income and earnings per share for the year ended July 31, 2005, assuming the Company had applied the fair value recognition provisions of SFAS 123(R) to all previously granted share-based awards after giving consideration to potential forfeitures during such periods.

	Year Ended
	July 31,
	2005

Net Loss Available to Common
Stockholders, as Reported	$	(24,001,735	)

Add: Total Stock-Based Employee
Compensation Expense Included
In Reported Net Loss		--

Deduct: Total Stock-Based Employee
Compensation Expense Determined
Under Fair Value Based Method		2,199,300

Pro Forma Net Loss Available
to Common Stockholders	$	(26,201,035	)

Loss Per Share:
Basic and diluted, as reported	$	(0.66	)
Basic and diluted, pro forma	$	(0.72	)

Note 15 - Net Loss Per Share:

Basic earnings per shares (EPS) and Diluted EPS for the years ended July 31, 2007, 2006 and 2005 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 warrants, options and shares to be issued upon conversion of the outstanding convertible debentures, representing approximately 22,576,796, 24,455,964 and 35,291,316 incremental shares, have been excluded from the 2007, 2006 and 2005 computation of Diluted EPS as they are antidilutive due to the losses generated.

Note 16 - Supplemental Disclosure of Cash Flow Information:

	For the Years Ended July 31,
	2007		2006		2005
Cash paid during the year for:
Interest	$	256,836	$	273,097	$	184,655
Income taxes	$	--	$	--	$	--

Disclosure of non-cash investing and financing activities:

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

F-51

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Year Ended July 31, 2005
Costs associated with convertible debentures paid from proceeds	$	300,070
Value of common stock issued in conjunction with capitalized
services upon issuance of convertible debentures	$	140,000
Value of warrants issued in conjunction with capitalized
services upon issuance of convertible debentures	$	110,200
Sale of Series A Preferred Stock and mandatorily converted
to common shares	$	14,310,057
Value of warrants issued in conjunction with issuance of
convertible debentures and related beneficial conversion feature	$	5,843,450
Satisfaction of accounts payable through the issuance of
common stock	$	1,526,326
Principal repayment of convertible debentures through the
issuance of common stock	$	1,235,577
Issuance of common stock in conjunction with convertible
debenture conversions	$	1,479,500
Issuance of below market stock options in satisfaction of
accounts payable and accrued expenses	$	1,332,052
Costs paid from proceeds of issuance of long-term debt	$	54,466
Repayment of long-term debt through the issuance of long-term debt
upon refinancing	$	323,301

F-52

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 17 - 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.

	2007		2006		2005
Identifiable Assets

Canada	$	41,899,734	$	59,583,574	$	8,722,630
United States		4,504,670		4,521,668		4,743,215
Total	$	46,404,404	$	64,105,242	$	13,465,845

Revenue

Canada	$	25,242	$	--	$	--
United States		157,187		175,000		392,112
Total	$	182,429	$	175,000	$	392,112

Note 18 - Collaborative Agreements:

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.

The Company had a joint venture with Elan International Services, Ltd. (“EIS”), a wholly owned subsidiary of Elan Corporation, plc (EIS and Elan Corporation, plc being collectively referred to as “Elan”). The parties conducted the joint venture through Generex (Bermuda), Ltd. (Generex Bermuda), a Bermuda limited liability company.

F-53

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company applied the $12,015,000 that it received from Elan for the shares of the Company’s Series A Preferred Stock (see Note 12) to form Generex Bermuda. The Company’s interest in this company consisted of 6,000 shares of Generex Bermuda common stock and 3,612 shares of convertible preferred stock, representing an 80.1 percent equity ownership interest in Generex Bermuda. At the same time, Elan remitted $2,985,000 to purchase 2,388 shares of Generex Bermuda convertible preferred stock, representing a 19.9 percent equity ownership interest in Generex Bermuda. The Series A Preferred stock had an exchange feature which allowed Elan to acquire an additional 30.1 percent equity ownership interest in Generex Bermuda. As of July 31, 2007, 2006 and 2005, the minority interest has been reduced to $-0- due to their share of Generex Bermuda’s net loss.

On December 17, 2004, the Company entered into a Termination Agreement with Elan. In connection with negotiating the Termination Agreement, Elan approached the Company for consent to transfer the Series A Preferred Stock by way of an auction process. The Company responded to Elan request by delivering a proposal letter describing the terms and conditions pursuant to which the Company would consent to the transfer of the Series A Preferred Stock (the Proposal). The Proposal required that (i) the auction process conclude no later than December 15, 2004 and the Elan’s disposition of the shares conclude no later than December 31, 2004 (the Closing Date), (ii) the buyer immediately convert the preferred stock at the voluntary conversion price of $25.77 (calculated pursuant to the terms of the certificate of designation for the preferred stock resulting in the issuance of 534,085 shares of common stock), (iii) Elan’s registration rights may not be transferred, and (iv) for a period of two (2) years after the Closing Date, the purchaser of the Series A Preferred Stock may not transfer the shares of common stock issuable upon conversion thereof of the Company shall have the right to redeem the shares of common stock at a per share price of 150 percent of the average closing price of the common stock on the Nasdaq SmallCap Market for the twenty (20) days immediately preceding the Closing Date.

Subsequently, the purchaser of the Series A Preferred Stock converted all outstanding shares into 534,085 shares of common stock of the Company and, the Company no longer has any outstanding shares of Series A Preferred Stock. (See Note 12)

Note 19 - Quarterly Information (Unaudited):

The following schedule sets forth certain unaudited financial data for the preceding eight quarters ending July 31, 2007. 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.

	Q1			Q2			Q3			Q4
Fiscal Year July 31, 2007:
Revenues	$	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	)

F-54

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Year July 31, 2006:
Contract research revenue	$	43,750		$	43,750		$	43,750		$	43,750
Operating loss	$	(2,107,485	)	$	(5,184,252	)	$	(3,890,499	)	$	(7,523,747	)
Net loss	$	(9,003,218	)	$	(14,400,597	)	$	(31,773,494	)	$	(12,789,895	)
Net loss available to common
stockholders	$	(9,003,218	)	$	(14,400,597	)	$	(31,773,494	)	$	(12,789,895	)
Net loss per share	$	(.20	)	$	(.22	)	$	(.36	)	$	(.12	)

Note 20 - Subsequent Events:

During August 2007, the Company issued an aggregate of 550,000 shares of common stock value at $1.51 to three executives of the Company under the 2006 Stock Plan, of which 312,500 shares were unrestricted and issued for past services to the Company. Accordingly, the Company has included the value of these shares in the consolidated financial statements for the year ended July 31, 2007. The remaining 237,500 shares are restricted for a period ranging from one to two years. Accordingly, the value of the restricted shares will be measured at the grant date at $1.51 and amortized over their respective restriction periods. In addition, the Company retroactively awarded the same executives salary increases amounting to approximately $179,000 in the aggregate. Accordingly, the Company has included this amount in the consolidated financial statements for the year ended July 31, 2007.

During August 2007, the Company issued an aggregate of 100,000 unrestricted shares of common stock valued at $1.51 to a director of the Company.

During September 2007, the Company issued an aggregate of 50,000 restricted shares of common stock valued at $1.53 to a financial consultant.

F-55

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

None.

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 Securities Exchange Act of 1934, as amended, 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, 2007 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, 2007. 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, 2007.

Danziger Hochman Partners 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, 2007, has issued an attestation report on the Company’s internal control over financial reporting as of July 31, 2007, 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 44.

The financial statements include the following:

Consolidated Balance Sheets as of July 31, 2007 and 2006

Consolidated Statements of Operations for the Year Ended July 31, 2007, 2006 and 2005 and Cumulative from Inception to July 31, 2007

Consolidated Statements of Changes in Stockholders’ Equity for the Period November 2, 1995 (Date of Inception) to July 31, 2007

Consolidated Statements of Cash Flows for the Years Ended July 31, 2007, 2006 and 2005 and Cumulative from Inception to July 31, 2007

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

See Schedule II on page 56.

3. Exhibits

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)		Bylaws of Generex Biotechnology Corporation (incorporated by reference to Exhibit 3.2 to Generex Biotechnology Corporation’s Registration Statement on Form S-1 (File No. 333-82667) filed on July 12, 1999)

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)

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)

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)

4.11.2		Form of 6% Secured Convertible Debenture issued in connection with Exhibit 4.11.1 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)

4.11.3		Registration Rights Agreement, dated November 10, 2004, by and among Generex Biotechnology Corporation and the investors named therein (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)

4.11.4		Form of Voting Agreement entered into in connection with Exhibit 4.11.1 (incorporated by reference to Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)

4.12		Warrant issued to The Aethena Group, LLC on April 28, 2005 (incorporated by reference to Exhibit 4.20 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)

4.13.1		Amendment No. 4 to Securities Purchase Agreement and Registration Rights Agreement entered into by and between Generex Biotechnology Corporation and the Purchasers listed on the signature pages thereto on January 19, 2006 (incorporated by reference herein to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on January 20, 2006)

4.13.2		Form of Additional AIRs issued in connection with Exhibit 4.13.1 (incorporated by reference herein to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on January 20, 2006)

4.14		Form of Warrant issued by Generex Biotechnology Corporation on January 23, 2006 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on January 24, 2006)

4.15.1		Agreement to Amend Warrants between Generex Biotechnology Corporation and Cranshire Capital L.P. dated February 27, 2006 (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on February 28, 2006).

4.15.2		Agreement to Amend Warrants between Generex Biotechnology Corporation and Omicron Master Trust dated February 27, 2006 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on February 28, 2006).

4.15.3		Agreement to Amend Warrants between Generex Biotechnology Corporation and Iroquois Capital L.P. dated February 27, 2006 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on February 28, 2006).

4.15.4		Agreement to Amend Warrants between Generex Biotechnology Corporation and Smithfield Fiduciary LLC dated February 27, 2006 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on February 28, 2006).

4.15.5		Form of Warrant issued by Generex Biotechnology Corporation on February 27, 2006 (incorporated by reference to Exhibit 4.26 to Generex Biotechnology Corporation’s Report on Form 10-K filed on October 16, 2006)

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

4.16.2		Agreement to Amend Additional Investment Right between Generex Biotechnology Corporation and Omicron Master Trust dated February 28, 2006 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2006).

4.16.3		Agreement to Amend Additional Investment Right between Generex Biotechnology Corporation and Iroquois Capital LP dated February 28, 2006 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2006).

4.16.4		Agreement to Amend Additional Investment Right between Generex Biotechnology Corporation and Smithfield Fiduciary LLC dated February 28, 2006 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2006).

4.16.5		Form of Additional AIR Debenture issued by Generex Biotechnology Corporation on February 28, 2006 (incorporated by reference to Exhibit 4.31 to Generex Biotechnology Corporation’s Report on Form 10-K filed on October 16, 2006)

4.16.6		Form of Additional AIR Warrant issued by Generex Biotechnology Corporation on February 28, 2006 (incorporated by reference to Exhibit 4.32 to Generex Biotechnology Corporation’s Report on Form 10-K filed on October 16, 2006)

4.17.1		Form of Agreement to Amend Warrants between Generex Biotechnology Corporation and the Investors dated March 6, 2006 (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 7, 2006).

4.17.2		Form of Warrant issued by Generex Biotechnology Corporation on March 6, 2006 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 7, 2006)

4.18		Warrant issued by Generex Biotechnology Corporation on April 17, 2006 to Zapfe Holdings, Inc. (incorporated by reference to Exhibit 4.33 to Generex Biotechnology Corporation’s Report on Form 10-Q filed on June 14, 2006)

4.19		Form of Warrant issued by Generex Biotechnology Corporation on April 17, 2006 to certain employees (incorporated by reference to Exhibit 4.34 to Generex Biotechnology Corporation’s Report on Form 10-Q filed on June 14, 2006).

4.20.1		Securities Purchase Agreement entered into by and between Generex Biotechnology Corporation and four Investors on June 1, 2006 (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 2, 2006)

4.20.2		Form of Warrant issued by Generex Biotechnology Corporation on June 1, 2006 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 2, 2006)

4.21.1		Form of Amendment to Outstanding Warrants (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 2, 2006)

4.21.2		Form of Warrant issued by Generex Biotechnology Corporation on June 1, 2006 in connection with Exhibit 4.39 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 2, 2006)

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 Mindy J. Allport-Settle to purchase 100,000 shares of Common Stock at the exercise price of $0.56 per share (incorporated by reference to Exhibit 10.2 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

10.2		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)*

10.3		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)*

10.4		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)*

10.5		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)*

10.6		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)*

10.7		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)*

10.8		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)*

10.9		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)*

10.10		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)*

10.11		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)*

10.12		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)*

10.13		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)*

10.14		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)*

10.15		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)*

10.16		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)*

10.17		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)*

10.18		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)*

10.19		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)

10.20		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)*

10.21		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)

10.22		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)

10.23		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)

10.24		Summary of Bonuses Awarded to Executive Officers in Respect of FY 2006 (incorporated by reference to Exhibit 10 to Generex Biotechnology Corporation’s Report on Form 10-K/A filed on November 28, 2006)*

10.25		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)*

10.26		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)*

10.27		Summary of Compensation of the Directors of Generex Biotechnology Corporation*

21		Subsidiaries of the Registrant

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

23.2		Consent of BDO Consent of BDO Dunwoody, 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.

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 15th day of October 2007.


	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 Anna E. Gluskin	President, Chief Executive Officer and Director (Principal Executive Officer)	October 15, 2007

/s/ Rose C. Perri Rose C. Perri	Chief Operating Officer, Chief Financial Officer, Treasurer, Secretary and Director (Principal Financial and Accounting Officer)	October 15, 2007

/s/ Gerald Bernstein, M.D. Gerald Bernstein, M.D.	Vice President Medical Affairs and Director	October 15, 2007

/s/ Brian T. McGee Brian T. McGee	Director	October 15, 2007

/s/ John P. Barratt John P. Barratt	Director	October 15, 2007

/s/ Peter G. Amanatides Peter G. Amanatides	Director	October 15, 2007

/s/ Nola E. Masterson Nola E. Masterson	Director	October 15, 2007

/s/ Slava Jarnitskii Slava Jarnitskii	Controller	October 15, 2007

Schedule II

SCHEDULE II

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


Year Ended July 31, 2005 Valuation Allowance on Deferred Tax Asset	$	27,443,257		—		—		7,506,943	$	34,950,200

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

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)		Bylaws of Generex Biotechnology Corporation (incorporated by reference to Exhibit 3.2 to Generex Biotechnology Corporation’s Registration Statement on Form S-1 (File No. 333-82667) filed on July 12, 1999)

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)

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)

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)

4.11.2		Form of 6% Secured Convertible Debenture issued in connection with Exhibit 4.11.1 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)

4.11.3		Registration Rights Agreement, dated November 10, 2004, by and among Generex Biotechnology Corporation and the investors named therein (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)

4.11.4		Form of Voting Agreement entered into in connection with Exhibit 4.11.1 (incorporated by reference to Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)

4.12		Warrant issued to The Aethena Group, LLC on April 28, 2005 (incorporated by reference to Exhibit 4.20 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)

4.13.1		Amendment No. 4 to Securities Purchase Agreement and Registration Rights Agreement entered into by and between Generex Biotechnology Corporation and the Purchasers listed on the signature pages thereto on January 19, 2006 (incorporated by reference herein to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on January 20, 2006)

4.13.2		Form of Additional AIRs issued in connection with Exhibit 4.13.1 (incorporated by reference herein to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on January 20, 2006)

4.14		Form of Warrant issued by Generex Biotechnology Corporation on January 23, 2006 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on January 24, 2006)

4.15.1		Agreement to Amend Warrants between Generex Biotechnology Corporation and Cranshire Capital L.P. dated February 27, 2006 (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on February 28, 2006).

4.15.2		Agreement to Amend Warrants between Generex Biotechnology Corporation and Omicron Master Trust dated February 27, 2006 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on February 28, 2006).

4.15.3		Agreement to Amend Warrants between Generex Biotechnology Corporation and Iroquois Capital L.P. dated February 27, 2006 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on February 28, 2006).

4.15.4		Agreement to Amend Warrants between Generex Biotechnology Corporation and Smithfield Fiduciary LLC dated February 27, 2006 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on February 28, 2006).

4.15.5		Form of Warrant issued by Generex Biotechnology Corporation on February 27, 2006 (incorporated by reference to Exhibit 4.26 to Generex Biotechnology Corporation’s Report on Form 10-K filed on October 16, 2006)

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

4.16.2		Agreement to Amend Additional Investment Right between Generex Biotechnology Corporation and Omicron Master Trust dated February 28, 2006 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2006).

4.16.3		Agreement to Amend Additional Investment Right between Generex Biotechnology Corporation and Iroquois Capital LP dated February 28, 2006 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2006).

4.16.4		Agreement to Amend Additional Investment Right between Generex Biotechnology Corporation and Smithfield Fiduciary LLC dated February 28, 2006 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2006).

4.16.5		Form of Additional AIR Debenture issued by Generex Biotechnology Corporation on February 28, 2006 (incorporated by reference to Exhibit 4.31 to Generex Biotechnology Corporation’s Report on Form 10-K filed on October 16, 2006)

4.16.6		Form of Additional AIR Warrant issued by Generex Biotechnology Corporation on February 28, 2006 (incorporated by reference to Exhibit 4.32 to Generex Biotechnology Corporation’s Report on Form 10-K filed on October 16, 2006)

4.17.1		Form of Agreement to Amend Warrants between Generex Biotechnology Corporation and the Investors dated March 6, 2006 (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 7, 2006).

4.17.2		Form of Warrant issued by Generex Biotechnology Corporation on March 6, 2006 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 7, 2006)

4.18		Warrant issued by Generex Biotechnology Corporation on April 17, 2006 to Zapfe Holdings, Inc. (incorporated by reference to Exhibit 4.33 to Generex Biotechnology Corporation’s Report on Form 10-Q filed on June 14, 2006)

4.19		Form of Warrant issued by Generex Biotechnology Corporation on April 17, 2006 to certain employees (incorporated by reference to Exhibit 4.34 to Generex Biotechnology Corporation’s Report on Form 10-Q filed on June 14, 2006).

4.20.1		Securities Purchase Agreement entered into by and between Generex Biotechnology Corporation and four Investors on June 1, 2006 (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 2, 2006)

4.20.2		Form of Warrant issued by Generex Biotechnology Corporation on June 1, 2006 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 2, 2006)

4.21.1		Form of Amendment to Outstanding Warrants (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 2, 2006)

4.21.2		Form of Warrant issued by Generex Biotechnology Corporation on June 1, 2006 in connection with Exhibit 4.39 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 2, 2006)

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 Mindy J. Allport-Settle to purchase 100,000 shares of Common Stock at the exercise price of $0.56 per share (incorporated by reference to Exhibit 10.2 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*

10.2		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)*

10.3		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)*

10.4		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)*

10.5		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)*

10.6		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)*

10.7		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)*

10.8		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)*

10.9		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)*

10.10		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)*

10.11		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)*

10.12		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)*

10.13		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)*

10.14		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)*

10.15		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)*

10.16		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)*

10.17		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)*

10.18		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)*

10.19		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)

10.20		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)*

10.21		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)

10.22		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)

10.23		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)

10.24		Summary of Bonuses Awarded to Executive Officers in Respect of FY 2006 (incorporated by reference to Exhibit 10 to Generex Biotechnology Corporation’s Report on Form 10-K/A filed on November 28, 2006)*

10.25		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)*

10.26		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)*

10.27		Summary of Compensation of the Directors of Generex Biotechnology Corporation*

21		Subsidiaries of the Registrant

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

23.2		Consent of BDO Consent of BDO Dunwoody, 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.