GENEREX BIOTECHNOLOGY CORP - Annual Report: 2008 (Form 10-K)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
x
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE
SECURITIES EXCHANGE ACT OF 1934
For
the
fiscal year ended July 31, 2008
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE
SECURITIES EXCHANGE ACT OF 1934
For
the
transition period from _______ to _______
Commission
file number 000-25169
GENEREX
BIOTECHNOLOGY CORPORATION
(Exact
name of registrant as specified in its charter)
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Delaware
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98-0178636
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(State
or other jurisdiction of
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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33
Harbour Square, Suite 202, Toronto, Canada
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M5J
2G2
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(Address
of principal executive offices)
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(Zip
Code)
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(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:
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Title
of each class
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Name
of each exchange on which registered
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Common
Stock, $.001 par value per share
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The
NASDAQ Stock Market LLC
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Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined
in
Rule 405 of the Securities Act. Yes
o No
þ
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act.
Yes
o No
þ
Indicate
by check mark whether the registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days.
Yes
þ No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this
Form 10-K. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company.
See
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large
accelerated filer o
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Accelerated
filer þ
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Non-accelerated
filer o
(Do
not check if a smaller reporting company)
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Smaller
reporting company o
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
o No
þ
As
of
January 31, 2008, the aggregate market value of the registrant’s common stock
held by non-affiliates of the registrant was $134,559,102 based on the closing
sale price as reported on the NASDAQ Capital Market. Generex Biotechnology
Corporation has no non-voting common equity. At October 6, 2008, there were
120,302,597 shares of common stock outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE: Portions of the Proxy Statement for the registrant’s
Annual Meeting of Stockholders, or an amendment to this Annual Report on Form
10-K, to filed within 120 after the end of the fiscal year ended July 31, 2008,
are incorporated by reference into Part III of this Annual Report on Form 10-K.
Generex
Biotechnology Corporation
Form
10-K
July
31, 2008
Index
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Page
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Forward-Looking
Statements
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1
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Part
I
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Item
1.
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Business.
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2
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Item
1A.
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Risk
Factors.
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23
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Item
1B.
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Unresolved
Staff Comments.
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30
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Item
2.
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Properties.
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30
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Item
3.
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Legal
Proceedings.
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30
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Item
4.
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Submission
of Matters to a Vote of Security Holders.
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31
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Part
II
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Item
5.
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Market
For Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
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32
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Item
6.
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Selected
Financial Data.
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34
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Item
7.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
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35
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Item
7A.
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Quantitative
and Qualitative Disclosures About Market Risk
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49
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Item
8.
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Financial
Statements and Supplementary Data.
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50
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Item
9.
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Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure.
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94
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Item
9A.
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Controls
and Procedures.
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94
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Item
9B.
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Other
Information.
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95
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Part
III
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Item
10.
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Directors,
Executive Officers and Corporate Governance.
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95
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Item
11.
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Executive
Compensation.
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95
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Item
12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
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96
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Item
13.
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Certain
Relationships and Related Transactions, and Director
Independence.
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96
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Item
14.
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Principal
Accountant Fees and Services.
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96
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Part
IV
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Item
15.
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Exhibits
and Financial Statement Schedules.
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96
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Signatures
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98
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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:
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our
expectations concerning product candidates for our
technologies;
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our
expectations concerning existing or potential development and license
agreements for third-party collaborations and joint
ventures;
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our
expectations of when different phases of clinical activity may commence
and conclude;
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our
expectations of when regulatory submissions may be filed or when
regulatory approvals may be received; and
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our
expectations of when commercial sales of our products may commence
and
when actual revenue from the product sales may be
received.
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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:
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the
inherent uncertainties of product development based on our new and
as yet
not fully proven technologies;
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the
risks and uncertainties regarding the actual effect on humans of
seemingly
safe and efficacious formulations and treatments when tested
clinically;
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the
inherent uncertainties associated with clinical trials of product
candidates;
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the
inherent uncertainties associated with the process of obtaining regulatory
approval to market product candidates;
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the
inherent uncertainties associated with commercialization of products
that
have received regulatory approval; and
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our
ability to obtain the necessary financing to fund our
operations.
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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.
1
Part
I
Item
1. Business.
Corporate
History and Structure
We
were
incorporated in Delaware in September 1997 for the purpose of acquiring Generex
Pharmaceuticals Inc., a Canadian corporation formed in November 1995 to engage
in pharmaceutical and biotechnological research and development and other
activities. Our acquisition of Generex Pharmaceuticals was completed in October
1997 in a transaction in which the holders of all outstanding shares of Generex
Pharmaceuticals exchanged their shares for shares of our common stock.
In
January 1998, we participated in a "reverse acquisition" with Green Mt. P.
S.,
Inc., an inactive Idaho corporation formed in 1983. As a result of this
transaction, our shareholders (the former shareholders of Generex
Pharmaceuticals) acquired a majority (approximately 90%) of the outstanding
capital stock of Green Mt., we became a wholly-owned subsidiary of Green Mt.,
Green Mt. changed its corporate name to Generex Biotechnology Corporation
("Generex Idaho"), and we changed our corporate name to GB Delaware, Inc.
Because the reverse acquisition resulted in our shareholders becoming the
majority holders of Generex Idaho, we were treated as the acquiring corporation
in the transaction for accounting purposes. Thus, our historical financial
statements, which essentially represented the historical financial statements
of
Generex Pharmaceuticals, were deemed to be the historical financial statements
of Generex Idaho.
In
April
1999, we completed a reorganization in which we merged with Generex Idaho.
In
this transaction, all outstanding shares of Generex Idaho were converted into
our shares, Generex Idaho ceased to exist as a separate entity, and we changed
our corporate name back to "Generex Biotechnology Corporation." This
reorganization did not result in any material change in our historical financial
statements or current financial reporting.
Subsidiaries
Following
our reorganization in 1999, Generex Pharmaceuticals Inc., which is incorporated
in Ontario, Canada, remained as our wholly-owned subsidiary. All of our Canadian
operations are performed by Generex Pharmaceuticals.
In
August
2003, we acquired Antigen Express, Inc. Antigen is engaged in the research
and
development of technologies and immunomedicines for the treatment of malignant,
infectious, autoimmune and allergic diseases.
We
formed
Generex (Bermuda), Inc., which is organized in Bermuda, in January 2001 in
connection with a joint venture with Elan International Services, Ltd., a
wholly-owned subsidiary of Elan Corporation, plc, to pursue the application
of
certain of our and Elan's drug delivery technologies, including our platform
technology for the buccal delivery of pharmaceutical products. In December
2004,
we and Elan agreed to terminate the joint venture. Under the termination
agreement, we retained all of our intellectual property rights and obtained
full
ownership of Generex (Bermuda). Generex (Bermuda) currently does not conduct
any
business activities.
We
formed
Generex Pharmaceuticals (USA) LLC, which is organized in North Carolina, USA,
in
February 2006 as a wholly-owned subsidiary. Generex Pharmaceuticals (USA) LLC
has not yet commenced any business operations. We formed Generex Marketing
&
Distribution Inc., which is organized in Ontario, Canada, in September 2006.
Generex Marketing & Distribution Inc. has not yet commenced any business
operations.
Although
not a separate legal entity, we have established a branch office in the
exclusive Dubai Healthcare City operating as “Generex Biotechnology Corporation
MENA” (Middle East and North Africa) to enable us to work closely with the
regulatory and marketing personnel of Leosons General Trading Company, our
licensee in the region.
Overview
of Business
We
are
engaged primarily in the research, development and commercialization of drug
delivery systems and technologies. Our primary focus at the present time is
our
proprietary technology for the administration of formulations of large molecule
drugs to the oral (buccal) cavity using a hand-held aerosol applicator. Through
our wholly-owned subsidiary, Antigen, we have expanded our focus to include
immunomedicines incorporating proprietary vaccine formulations.
2
We
believe that our buccal delivery technology is a platform technology that has
application to many large molecule drugs and provides a convenient,
non-invasive, accurate and cost-effective way to administer such drugs. We
have
identified several large molecule drugs as possible candidates for development,
including estrogen, heparin, monoclonal antibodies, human growth hormone and
fertility hormone, but to date have focused our development efforts primarily
on
one pharmaceutical product, Generex Oral-lyn™, an insulin formulation
administered as a fine spray into the oral cavity using our proprietary
hand-held aerosol spray applicator known as RapidMist™. To date, we have
received regulatory approval in Ecuador and India for the commercial marketing
and sale of Generex Oral-lyn™. In March 2008, we initiated Phase III clinical
trials for this product in the U.S. with the first patient screening for such
trials at a clinical study site in Texas. The patient screening at other
participating clinical sites in the U.S. and Canada is ongoing. Currently over
200 patients have been enrolled in 74 clinical sites around the world, including
sites in the United States, Canada, Bulgaria, Poland, Romania, Russia and
Ukraine.
Using
our
buccal delivery technology, we also have launched a line of over-the-counter
glucose and energy sprays , including Glucose RapidSpray™, GlucoBreak™, and
BaBOOM!™ Energy Spray. We believe these products will complement Generex
Oral-lyn™ and may provide us with an additional revenue stream prior to the
commercialization of Generex Oral-lyn™.
Our
subsidiary, Antigen, concentrates on developing proprietary vaccine formulations
that work by stimulating the immune system to either attack offending agents
(i.e., cancer cells, bacteria, and viruses) or to stop attacking benign elements
(i.e., self proteins and allergens). Our immunomedicine products are based
on
two platform technologies and are in the early stages of development. We
continue clinical development of Antigen’s synthetic peptide vaccines designed
to stimulate a potent and specific immune response against tumors expressing
the
HER-2/neu oncogene for patients with HER-2/neu positive breast cancer in a
Phase
II clinical trial and patients with prostate cancer and against avian influenza
in two Phase I trials. Development efforts also are underway for seasonal
influenza virus, HIV, HPV, melanoma, ovarian cancer, allergy and Type I diabetes
mellitus. We have established collaborations with clinical investigators at
academic centers to advance these technologies.
We
face
competition from other providers of alternate forms of insulin. Some of our
most
significant competitors, Pfizer, Eli Lilly, and Novo Nordisk, recently announced
that they will discontinue development and/or sale of their inhalable forms
of
insulin. Generex Oral-lyn™ is not an inhaled insulin; rather, it is a bucally
absorbed formulation with no residual pulmonary deposition. We believe that
our
buccal delivery technology offers several advantages over inhaled insulin,
including the avoidance of pulmonary inhalation, which requires frequent
physician monitoring, ease of use and portability.
We
are a
development stage company although we have four products available for
commercial sale. In fiscal 2008, we received modest revenues from sales of
our
commercially available products, our confectionary, Glucose RapidSpray™, a
flavored glucose “energy” spray supplemented with vitamins, BaBOOM!™ Energy
Spray, and a fat-free glucose spray to aid in dieting, GlucoBreak™. All three
products are available in retails stores and independent pharmacies in the
United States and Canada. In addition, the products are being distributed in
the
Middle East through our Generex MENA office in Dubai. We expect other
distribution territories for these products to include South Africa, India,
South America and other jurisdictions worldwide.
We
operate in only one segment: the research, development and commercialization
of
drug delivery systems and technologies for metabolic and immunological
diseases.
Our
Business Strategy
Our
goal
is to develop and commercialize our buccal delivery technology to administer
large molecule drugs, including insulin, and proprietary vaccine formulations
based upon two Antigen platform technologies to provide innovative
biopharmaceutical products that offer the potential for superior efficacy and
safety over existing products. To achieve these goals, the key elements of
our
strategy include:
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Conducting
and completing Phase III clinical trials of Generex Oral-lyn™ in the
United States and Canada, Europe and certain countries in Eastern
Europe
including Russia, Ukraine, Bulgaria and Romania;
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Commercializing
Generex Oral-lyn™ in Ecuador and India, the two countries where we have
obtained regulatory approval for its commercial marketing and sale,
by
undertaking additional commercial manufacturing runs of Oral-lyn™ at
PharmaBrand, S.A.’s facilities in Quito, Ecuador later in calendar year
2008 and expanding such production facilities to meet the anticipated
demand for the product in India and other jurisdictions where governmental
approvals are pending and pursuing post-approval clinical studies
and
marketing efforts in India.
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Establishing
strategic relationships worldwide for product development and distribution
and working with our multinational licensed distributors in the Middle
East and throughout Eastern Europe, Africa and Asia to obtain regulatory
approval for the registration, importation, marketing, distribution
and
sale of Generex Oral-lyn™ in those countries.
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Conducting
and completing Phase II clinical trials of Antigen’s synthetic peptide
vaccines designed to stimulate a potent and specific immune response
against tumors expressing the HER-2/neu oncogene for patients with
HER-2/neu positive breast cancer, a Phase I prostate cancer trial
and a
Phase I trial in patients with breast or ovarian cancer;
and
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Conducting
and completing a Phase I clinical trial of Antigen’s synthetic peptide
vaccines against avian influenza.
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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.
4
In
addition, about 60-70 percent of people with diabetes have mild to severe forms
of diabetic nerve damage, which, in severe forms, can lead to lower limb
amputations. Diabetics are also two to four times more likely to have heart
disease, which is present in 75 percent of diabetes-related deaths, and are
two
to four times more likely to suffer a stroke.
There
is
no known cure for diabetes. The World Health Organization estimates that there
are currently over 180 million diabetics worldwide. It is further estimated
that
this number will almost double by the year 2030. There are estimated to be
18
million people suffering from diabetes in North America alone, not including
approximately 5 million of whom are undiagnosed, and diabetes is the second
largest cause of death by disease in North America.
A
substantial number of large molecule drugs (i.e.,
drugs
composed of molecules with a higher than specified molecular weight) have been
approved for sale in the United States or are presently undergoing clinical
trials as part of the process to obtain such approval, including various
proteins, peptides, monoclonal antibodies, hormones and vaccines. Unlike small
molecule drugs, which generally can be administered by various methods, large
molecule drugs historically have been administered predominately by injection.
The principal reasons for this have been the vulnerability of large molecule
drugs to digestion and the relatively large size of the molecule itself, which
makes absorption into the blood stream through the skin inefficient or
ineffective.
We
conducted the first clinical trials of our buccal insulin formulation with
human
subjects in Ecuador in January 1998. We ultimately conducted a total of
approximately 13 studies in Ecuador and an additional 26 trials in other
countries over the period from 1998 to 2007. The principal purpose of these
studies was to evaluate the effectiveness of our oral insulin formulation in
humans as well as to show safety and efficacy of our product compared with
injected insulin and placebos. In March 2004, we entered into a Letter of Intent
for the establishment of a joint venture with PharmaBrand S.A., a distributor
of
pharmaceutical products in Central and Latin America. In August 2004, we sought
approval for the manufacturing, marketing, distribution and sale of Generex
Oral-lyn™ and the RapidMist™ Diabetes Management System from the Ecuadorian
Ministry of Public Health. In May 2005, we received approval from the Ecuadorian
Ministry of Public Health for the commercial marketing and sale of Generex
Oral-lyn™ for treatment of Type 1 and Type 2 diabetes. We have successfully
completed of the delivery and installation of a turnkey Generex Oral-lyn™
filling operation at the facilities of PharmaBrand in Quito, Ecuador. The first
commercial production run of Generex Oral-lyn™ in Ecuador was completed in May,
2006.
On
the
basis of the test results in Ecuador and other pre-clinical data, we made an
Investigatory New Drug submission to the Health Protection Branch in Canada
(Canada's equivalent to the FDA) in July 1998, and received permission from
the
Canadian regulators to proceed with clinical trials in September 1998. We filed
an Investigational New Drug application with the FDA in October 1998, and
received FDA approval to proceed with human trials in November 1998. Annual
reports have been filed with the FDA each year since that time.
We
began
our clinical trial programs in Canada and the United States in January 1999.
Between January 1999 and September 2000, we conducted clinical trials of our
insulin formulation involving approximately 200 Type 1 and Type 2 diabetic
patients and healthy volunteers. The study protocols in most trials involved
administration of two different doses of our insulin formulation following
either a liquid Sustacal meal or a standard meal challenge. The objective of
these studies was to evaluate our insulin formulation's efficacy in controlling
post-prandial (meal related) glucose levels. These trials demonstrated that
our
insulin formulation controlled post-prandial hyperglycemia in a manner
comparable to injected insulin. In April 2003, a Phase II-B clinical trial
protocol was approved in Canada. In September 2006, a Clinical Trial Application
relating to our Generex Oral-lyn™ protocol for late-stage trials was approved by
Health Canada. The FDA’s review period for the protocol lapsed without objection
in July 2007.
In
late
March 2008, we initiated Phase III clinical trials in North America for Generex
Oral-lyn™ with the first patient screening in Texas. Other clinical sites
participating in the study are located in the United States (Texas, Maryland,
Minnesota and California), Canada (Alberta), Europe and Eastern Europe,
including Russia, Ukraine, Romania, Bulgaria, and Poland. At present, over
200
patients have been enrolled in the program in 74 clinical sites around the
world. The Phase III protocol calls for a six-month trial with a six-month
follow-up and is expected to include 750 patients with Type-1 diabetes mellitus.
The primary objective of the study is to compare the efficacy of Generex
Oral-lyn™ and the RapidMist™ Diabetes Management System with that of standard
regular injectable human insulin therapy as measured by HbA1c, in patients
with
Type-1 diabetes mellitus. We expect to use the data collected from these trials
in the New Drug Submission that will be prepared concurrently with the
progression of the late-stage trials for Health Canada, European Union (EMEA)
and the FDA.
5
We
have
engaged a global clinical research organization to provide many study related
site services, including initiation, communication with sites and documentation;
a global central lab service company that will arrange for the logistics of
kits
and blood samples shipment and an Internet-based clinical data management
company to assist us with global project management of the Phase III clinical
trial and regulatory processes. We have contracted with our third-party
manufacturers for sufficient quantities of the RapidMist™ device components, the
insulin, and the formulary excipients that will be required for the production
of clinical trial batches of Generex Oral-lyn™.
In
November 2007, we obtained approval for the importation and commercial marketing
and sale in India of Generex Oral-lyn™ from the Central Drugs Standard Control
Organization (CDSCO), Directorate General of Health Services, Government of
India, which is responsible for authorizing marketing approval of all new
pharmaceutical products in India. In March 2008, we received the first
commercial purchase order for the product from our distributor in India. We
are
currently manufacturing the product to fulfill this order at the PharmaBrand
facility in Ecuador.
We
received Special Access Program (SAP) authorization from Health Canada for
a
patient-specific, physician-supervised treatment of Type-1 diabetes with Generex
Oral-lyn™ in April 2008. SAP provides access to non-marketed drugs for
practitioners treating patients with serious or life-threatening conditions
when
conventional therapies have failed, are not available or unsuitable. We received
similar authorization from health authorities in Netherlands in September 2008.
We will continue to expand our SAP participation in additional countries around
the world.
Buccal
Glucose and Energy Products - Glucose RapidSpray™, BaBOOM! ™ Energy Spray and
GlucoBreak™
Using
our
proprietary buccal delivery technology, we have developed several formulations
of glucose sprays that are available over-the-counter. In the first quarter
of
fiscal year 2007, we introduced, Glucose RapidSpray™. This product uses our
proprietary RapidMist™ platform technology to provide an alternative for people
who require or want additional glucose in their diet and delivers a fat-free,
low-calorie glucose formulation directly into the mouth. Glucose RapidSpray™ is
currently available in the United States and Canada through a number of leading
retail chains, wholesalers and online. It is also available wholesale in the
Middle East through Generex MENA. We plan to expand to South Africa, Baltic,
Nordic and other markets in 2009.
Glucose
RapidSpray™ offers another aid to diabetics who require or need additional
glucose to their diets or daily intake.. Recent studies conducted by scientists
at the University Campus Bio-Medico, Rome, Italy in conjunction with Generex
have demonstrated that Glucose RapidSpray™ used early in the onset of a
hypoglycemia episode can stop such an episode and prevent a further drop in
blood glucose and the noxious feelings that ensue. With our easy-to-use
RapidSpray™ bottle, individuals can easily add additional glucose to their diets
and serves as a medium for first signs of low blood sugar levels. We also
conducted a clinical trial at Department of Endocrinology, Children City
Hospital in Moscow, Russia on children up to 5 years of age with Type-1
diabetes. The study concluded that because of the small dose of glucose and
control over the amount, Glucose RapidSpray™ represents superior tool in very
young patients to control blood sugar levels relative to existing glucose
products available on the market which can also can improve the overall
metabolic control.
We
believe that we can market Glucose RapidSpray™ as a complementary product
Generex Oral-lyn™. We believe that a combination therapy of Generex Oral-lyn™,
Glucose RapidSpray™ and other oral agents, including a metformin gum which we
are jointly developing with Fertin Pharma A/S, could provide a full range of
products used in the treatment of Type-2 diabetes and people with impaired
glucose tolerance.
In
the
fourth quarter of fiscal year 2007, we expanded our line of over-the-counter
products using our proprietary RapidSpray™ delivery device with the introduction
of two new products. GlucoBreak™ is a fat-free glucose spray that is marketed as
an aid for dieters and can be used between meals as part of a daily diet
routine, during exercise and before bedtime. GlucoBreak™ is the first product
related to weight loss that we have launched.
A
separate study also conducted by scientists at the University Campus Bio-Medico,
Rome, Italy had demonstrated that delivery of small amounts of glucose during
the day appeared to reduce the body mass index of subjects using GlucoBreak
™ as
compared to a control group. Such a benefit may be of benefit individuals with
obesity and diabetes. It is estimated that there are over 70 million dieters
in
the United States, the majority of whom try to lose weight by
themselves.
Our
other
new product, BaBOOM!™ Energy Spray is a convenient and pleasant-tasting instant
energy spray designed to enhance energy levels for sports, work, study, travel
and overall fatigue. Its primary ingredients include glucose, caffeine, ginseng
and Vitamins B and C. It is fat-free, has fewer than five calories per serving
and is available in watermelon flavor. BaBOOM! ™ Energy Spray is our first
energy product.
6
Currently,
BaBOOM!™ Energy Spray and GlucoBreak™ are being considered for commercial sale
in several of the largest national and regional retailers and drug store chains
in the United States and Canada. Glucose RapidSpray™ is currently being marketed
in the Middle East through the Generex MENA office in Dubai and in South Africa
and six neighboring countries through the Master Distributor Agreement with
Adcock Ingram Limited and Adcock Ingram Healthcare (Pty) Ltd.. We expect to
expand to other markets in 2009.
The
strategy to develop and launch these over-the-counter products is threefold.
The
first is to demonstrate the expansion of our proprietary RapidSpray ™
technology. The second is to create a brand name in the marketplace particularly
in the diabetes shelf space with Glucose RapidSpray ™ and GlucoBreak ™ and on a
mainstream scale with BaBOOM! ™ Energy Spray. Finally, the product pipeline is
expected to provide us with an additional revenue stream while we attain
registrations and approvals worldwide for our oral insulin product.
Metformin
Gum Product/Strategic Alliance
In
May
2006, we established a collaborative alliance with Fertin Pharma A/S, a leading
Danish manufacturer of medicinal chewing gum, for the development of a metformin
medicinal chewing gum for the treatment of Type-2 diabetes mellitus and obesity.
Metformin is a generic drug used to regulate blood glucose levels by reducing
the amount of glucose produced by the liver, reducing the amount of glucose
absorbed from food in the stomach, and by making the insulin produced by the
body work more effectively to reduce the amount of glucose already in the blood.
It is an important staple of the standard of care for patients with Type-2
diabetes mellitus.
Through
this collaborative relationship, we will seek to combine our proprietary buccal
drug delivery platform technologies with Fertin's know-how related to gum base
formulations, solubilization systems, and taste masking/modification to create
a
metformin medicinal chewing gum that will deliver metformin into the body via
the buccal mucosa rather than in its current tablet form. We anticipate that
this delivery method, in addition to being much more rapid and providing a
much
more specific and effective dosing regimen, could avoid some of the adverse
side
effects associated with taking metformin in tablet form, such as nausea,
vomiting, abdominal pain, diarrhea, abdominal bloating, and increased gas
production. In addition, metformin gum could avoid the bitter taste and large
doses associated with the tablet form and thus improve therapeutic compliance,
particularly among younger patients.
Fertin
is
in the process of producing clinical materials for a bioequivalence study of
our
proprietary metformin chewing gum, MetControl™ , which is expected to commence
before the end of calendar year 2008. We expect to begin testing of MetControl™
on volunteer patients shortly thereafter. In the study, we will compare the
single dose blood level profile of metformin to that of immediate-release
metformin tablet. Once completed, we anticipate that formal Abbreviated New
Drug
Application with full support data will be prepared and submitted to health
authorities in North America, Europe and other global regions where we will
be
seeking regulatory approval for the sale of the product.
If
we
successfully develop the metformin medicinal chewing gum, we would market it
as
a companion product to Generex Oral-lyn™. We believe that a combination therapy
of Generex Oral-lyn™, metformin gum, and other traditional oral agents could
optimize the treatment of Type-2 diabetes and, possibly, delay the onset of
certain complications associated with diabetes.
Potential
Buccal Morphine and Fentanyl Products
The
delivery of morphine and fentanyl by oral formulation (pills) and injection
for
the treatment of moderate to severe breakthrough and postoperative pain often
fails to provide patients with adequate relief and control because, among other
reasons, breakthrough and postoperative pain are characterized as being moderate
to severe in intensity and have a rapid onset of action and a short to medium
duration. Not only does delivery by pills have a slow onset of action, it is
often difficult for patients to adjust their doses, with the result that
patients are either over or under medicated. Injections are invasive and require
an attendant to administer the medication which reduces the patient's control
over the pain and may cause increased anxiety. We believe that a buccal delivery
formulation for morphine and fentanyl would have a critical series of attributes
well suited for the treatment of breakthrough and post operative pain, would
be
cost-effective and would have a demonstrable improvement over current delivery
methods, including fast access to the circulatory system, precise dosing control
and a simple, self-administration procedure.
7
We
made
an Investigatory New Drug submission for buccal morphine to the Health
Protection Branch in Canada in January 2002, and received permission from the
Canadian regulators to proceed with clinical trials in March 2002. We made
an
Investigatory New Drug submission for fentanyl to the Health Protection Branch
in Canada in August 2002, and received permission from the Canadian regulators
to proceed with clinical trials in October 2002. During fiscal year ended July
31, 2008, we did not actively pursue our buccal morphine and buccal fentanyl
projects. The development of these products will most likely be delayed while
we
focus on late stage trials of the oral insulin formulation in the United States,
Canada and Europe.
Other
Potential Buccal Products
We
have
had discussions of possible research collaborations with various pharmaceutical
companies concerning use of our large molecule drug delivery technology with
other compounds, including monoclonal antibodies, human growth hormone,
fertility hormone, estrogen and heparin, and a number of vaccines. We have
not
aggressively pursued development opportunities apart from insulin because we
believe it is more advantageous to concentrate our resources, particularly
our
financial resources, on commercializing the insulin product.
Immunomedicine
Technology and Products
Our
wholly-owned subsidiary Antigen is developing proprietary vaccine formulations
based upon two platform technologies that were discovered by its founder, the
Ii-Key hybrid peptides and Ii-Suppression. These technologies are applicable
for
either antigen-specific immune stimulation or suppression, depending upon the
dosing and formulation of its products. Using active stimulation, we are
focusing on major diseases such as breast and prostate cancer, H5N1 avian
influenza and HIV. Autoimmune disease such as diabetes, multiple sclerosis
and
allergic asthma are the focus of our antigen-specific immune suppression work.
Antigen’s
immunotherapeutic vaccine AE37 is currently in Phase II clinical trials for
patients with HER-2/neu positive breast cancer. The trial is being conducted
with the United States Military Cancer Institute's (USMCI) Clinical Trials
Group
and will examine the rate of relapse in patients with node-positive or high-risk
node-negative breast cancer after two years. The study is randomized and will
compare patients treated with AE37 plus the adjuvant GM-CSF versus GM-CSF alone.
The Phase II trial follows a Phase I trial that demonstrated safety,
tolerability, and immune stimulation of the AE37 vaccine in breast cancer
patients.
Based
on
positive results in trials of the AE37 vaccine in breast cancer patients, we
entered into an agreement in August 2006 with the Euroclinic, a private center
in Athens, Greece, to commence clinical trials with the same compound as an
immunotherapeutic vaccine for prostate cancer. We expect that the new prostate
cancer studies will involve 30 patients and will evaluate primarily
immunological responsiveness to a dose of the vaccine previously shown to be
well tolerated in breast cancer patients. These studies are currently underway
and patient enrolment has been completed.
The
same
technology used to enhance immunogenicity is being applied in the development
of
a synthetic peptide vaccine for H5N1 avian influenza. In April 2007, a Phase
I
clinical trial of Antigen’s proprietary peptides derived from the hemagglutinin
protein of the H5N1 avian influenza virus was initiated in healthy volunteers
in
the Lebanese-Canadian Hospital in Beirut, Lebanon. We anticipate that the trial
will be completed in early 2009. Modified peptide vaccines for avian influenza
offer several advantages over traditional egg-based or cell-culture based
vaccines. Modified peptide vaccines can be manufactured by an entirely synthetic
process which reduces cost and increases both the speed and quantity of
production egg- or cell-culture based vaccines. Another advantage is that the
peptides are derived from regions of the virus that are similar enough in all
H5N1 virus strains such that they would not have to be newly designed for the
specific strain to emerge in a pandemic.
In
March
2007, Antigen entered into an agreement with Beijing Daopei Hospital in Beijing,
China to conduct clinical trials using Antigen’s pioneering technology for RNA
interference (RNAi) stimulation of the immune response against patients’ immune
cells. The strategy developed by Antigen involves modifying the patient's cancer
cells to increase their immunogenicity and thereby enable the immune system
to
fight off the cancer anywhere in the patient's body. Antigen has developed
proprietary methods using RNAi to specifically inhibit expression of the Ii
protein in cancer cells already expressing MHC class II molecules that are
amenable to clinical use. Cancer cells from patients with acute myelogenous
leukemia will be transfected with a vector expressing RNAi to silence Ii
expression. After lethal irradiation, the cells are re-introduced as a
subcutaneous immunization to the patient. Preliminary
work under the agreement has commenced. Due
to
regulatory changes in China’s approval process relating to these types of
studies, it is unclear when the trial might commence.
8
We
have
filed a Physician’s Investigational New Drug application for the Phase I and
Phase II trials in patients with stage II HER-2/neu positive breast cancer.
A
Physician’s Investigational New Drug application for Phase I trial in patients
with breast or ovarian cancer also has been filed. Applications were filed
and
approvals obtained for Phase I prostate cancer using AE37 in Athens, Greece
from
the Hellenic Organization of Drugs. The Ministry of Health in Lebanon gave
approval for Phase I trial of our experimental H5N1 prophylactic vaccine in
Beirut, Lebanon following submission of an application. All other immunomedicine
products are in the pre-clinical stage of development.
Government
Regulation
Our
research and development activities and the manufacturing and marketing of
our
pharmaceutical products are subject to extensive regulation by the FDA in the
United States, Health Protection Branch in Canada and comparable regulatory
authorities in other countries. Among other things, extensive regulation puts
a
burden on our ability to bring products to market. While these regulations
apply
to all competitors in our industry, many of our competitors have more experience
in dealing with the FDA and other regulators. Also, other companies in our
industry are not limited primarily to products which still need to be approved
by government regulators, as we are now.
If
requisite regulatory approvals are not obtained and maintained, our business
will be substantially harmed. In many cases, we expect that extant and
prospective development partners will participate in the regulatory approval
process. The following discussion summarizes the principal features of food
and
drug regulation in the United States and other countries as they affect our
business.
United
States
All
aspects of our research, development and foreseeable commercial activities
relating to pharmaceutical products are subject to extensive regulation by
the
FDA and other regulatory authorities in the United States. United States federal
and state statutes and regulations govern, among other things, the testing,
manufacturing, safety, efficacy, labeling, storage, record keeping, approval,
advertising and promotion of pharmaceutical products. The regulatory approval
process, including clinical trials, usually takes several years and requires
the
expenditure of substantial resources. If regulatory approval of a product is
granted, the approval may include significant limitations on the uses for which
the product may be marketed.
The
steps
required before a pharmaceutical product may be marketed in the United States
include:
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quality
test/studies;
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pre-clinical
tests /studies;
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submission
to the FDA of Investigational New Drug Applications (“INDs”) and/or
Amendments for each planned human clinical trial;
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FDA
acceptance of INDs, which permit human clinical trials to
commence;
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commencement
and completion of numerous human clinical trials to establish the
safety
and efficacy of the subject drug;
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submission
of a New Drug Application to the FDA; and
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FDA
approval of the New Drug Application, including approval of all product
labeling
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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
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Primary
and Secondary Pharmacodynamics
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9
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Safety
Pharmacology
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Other
Pharmacodynamics
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Pharmacokinetics
(“PK”)
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Single
and Multiple Dose Kinetics
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Tissue
Distribution
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Metabolism
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PK
Drug Interactions
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Other
PK studies
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Toxicology
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Single
and Multiple Dose Toxicity
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Genotoxicity
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Carcinogenicity
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Reproduction
Toxicity
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Other
Toxicity
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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.
10
In
the
United States, the results of quality, pre-clinical studies and clinical trials,
if successful, are submitted to the FDA in a New Drug Application (“NDA”) to
seek approval to market and commercialize the drug product for a specified
use.
The NDA is far more specific than the IND and must also include proposed
labeling and detailed technical sections based on the data collected. The FDA
has 10 months to take an action for a standard application (and shorter for
a
priority application). It may deny a NDA if it believes that applicable
regulatory criteria are not satisfied. The FDA also may require additional
testing for safety and efficacy of the drug. We cannot be sure that any of
our
proposed products will receive FDA approval. The multi-tiered approval process
means that our products could fail to advance to subsequent steps without the
requisite data, studies, and FDA approval along the way. Even if approved by
the
FDA, our products and the facilities used to manufacture our products will
remain subject to review and periodic inspection by the FDA.
To
supply
drug products for use in the United States, foreign and domestic manufacturing
facilities must be registered with, and approved by, the FDA. Manufacturing
facilities must also comply with the FDA's current Good Manufacturing Practices
(cGMPs), and such facilities are subject to periodic inspection by the FDA.
Products manufactured outside the United States are inspected by regulatory
authorities in those countries under agreements with the FDA. To comply
with cGMPs, manufacturers must expend substantial funds, time and effort in
the
area of production and quality control. The FDA stringently applies its
regulatory standards for manufacturing. Discovery of previously unknown problems
with respect to a product, manufacturer or facility may result in consequences
with commercial significance. These include restrictions on the product,
manufacturer or facility, suspensions of regulatory approvals, operating
restrictions, delays in obtaining new product approvals, withdrawals of the
product from the market, product recalls, fines, injunctions and criminal
prosecution.
One
final
hurdle that is closely associated with the cGMP inspections is the Pre Approval
Inspection that FDA carries out prior to the issuance of a marketing license.
FDA inspectors combine cGMP compliance with a review of research and development
documents that were used in the formal New Drug Application. A close inspection
of historic data is reviewed to confirm data and to demonstrate that a company
has carried out the activities as presented in the New Drug Application. This
is
generally a long inspection and requires a team of individuals from the company
to “host” the FDA inspector(s).
Foreign
Countries
Before
we
are permitted to market any of our products outside of the United States, those
products will be subject to regulatory approval by foreign government agencies
similar to the FDA. These requirements vary widely from country to
country. Generally, however, no action can be taken to market any drug product
in a country until an appropriate application has been submitted by a sponsor
and approved by the regulatory authorities in that country. Again, similar
to
the FDA, each country will mandate a specific financial consideration for the
Marketing Application dossiers being submitted. Although an important
consideration, FDA approval does not assure approval by other regulatory
authorities. The current approval process varies from country to country, and
the time spent in gaining approval varies from that required for FDA approval.
The Canadian regulatory process is substantially similar to that of the United
States. To date, we have receive the following foreign regulatory approval
for
our product candidates:
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We
obtained regulatory approval to begin clinical trials of our oral
insulin
formulation in Canada in November 1998. In April 2003, we received
approval of an Oral-lyn™ Phase II-B clinical trial protocol in
Canada. In September 2006 Health Canada approved our Clinical Trial
Application in respect of our proposed Generex Oral-lyn™ protocol for
late-stage trials; we expect to use the data collected from these
trials
in the New Drug Submission that will be prepared concurrently with
the
progression of the late-stage trials.
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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.
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In
November 2007, we obtained approval for the importation and commercial
marketing and sale in India of Generex Oral-lyn™ from the Central Drugs
Standard Control Organization (CDSCO), Directorate General of Health
Services, Government of India, which is responsible for authorizing
marketing approval of all new pharmaceutical products in
India.
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11
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We
obtained regulatory approval in Canada to begin clinical trials of
our
buccal morphine product in March 2002 and our fentanyl product in
October
2002.
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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.
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Marketing
and Distribution
We
market
our products through collaborative arrangements with companies that have
well-established pharmaceutical marketing and distribution capabilities,
including expertise in the regulatory approval processes in their respective
jurisdictions.
Generex
Oral-Lyn™
Our
business partner in Ecuador, PharmaBrand, has generated some commercial sales
of
Generex Oral-lyn™ in that country since the product received regulatory approval
in May 2005. Currently, our relationship with PharmaBrand is governed by a
letter of intent, and we are in the process of refining our relationship with
PharmaBrand to transition its role to primarily that of a manufacturer for
the
commercial orders placed worldwide with distribution rights in Ecuador. We
do
not expect that such sales will be reflected in our financial statements until
we have entered into a definitive agreement with PharmaBrand.
We
have
entered into licensing and distribution agreement with numerous multinational
distributors to assist us with the process of gaining regulatory approval for
the registration, marketing, distribution, and sale of Generex Oral-lyn™ in
countries throughout the world, including:
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Leosons
General Trading Company/Generex MENA Office - 15 Middle Eastern
countries;
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Shreya
Life Sciences Pvt. Ltd. - India, Pakistan, Bangladesh, Nepal, Bhutan,
Sri
Lanka, and Myanmar;
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Adcock
Ingram Limited and Adcock Ingram Healthcare (Pty) Ltd. - South Africa,
Lesotho, Swaziland, Botswana, Namibia, Mozambique and
Zimbabwe;
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E&V
Alca Distribution Corp. - Albania, Montenegro, and the Kosovo;
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Medrey
S.A.L. (formerly MedGen Corp.) and Benta S.A.L. –
Lebanon;
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SciGen,
Ltd. - China, Hong Kong, Indonesia, Malaysia, the Philippines, Singapore,
Thailand and Vietnam; and
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Dong
Sung Pharm. Co. Ltd. – South
Korea.
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Under
these licensing and distribution agreements excluding the one with Dong Sung
Pharm Co., we will not receive an upfront license fee, but the distributor
will
bear any and all costs associated with the procurement of governmental approvals
for the sale of Generex Oral-Lyn™, including any clinical and regulatory costs.
We possess the worldwide marketing rights to our oral insulin product.
In
August
2008, we entered into a product licensing and distribution agreement with Dong
Sung Pharm Co. Ltd. for the importation, marketing, distribution and sale of
Generex Oral-lyn™ in South Korea. Under the seven-year agreement, Dong-Sung will
have an exclusive license and will pay us a USD$500,000 non-refundable license
fee upon execution and a USD$500,000 non-refundable license fee at such time
as
governmental approval for the importation, marketing, distribution and sale
of
the product in South Korea is obtained. Under this agreement, we are responsible
for procuring such governmental approval. In addition, when it places its first
purchase order, Dong-Sung will pay us a pre-payment in the amount of
USD$500,000, which will be applied against product purchase orders.
12
Previously,
we entered into a licensing and distribution agreement with the Armenian
Development Agency and the Canada Armenia Trading House Ltd. for the
commercialization of Generex Oral-lyn™ in the Republic of Armenia, Georgia and
the Republic of Kazakhstan. Although an application for registration has been
submitted to public health authorities in Armenia, to date no approval has
been
forthcoming. We terminated this agreement in January 2008, but we are continuing
to prosecute the Armenian application on our own.
Leosons
General Trading Company, has filed submissions of the Generex Oral-lyn™ dossier
with regulatory agencies in Kuwait, Qatar, Jordan, Yemen, and the United Arab
Emirates, but no approvals have been forthcoming to date except for a limited,
pharmacy specific importation license in the United Arab Emirates to import
Generex Oral-lyn™ into Abu Dhabi. We recently established an office in Dubai
Healthcare City Center to facilitate our work with the regulatory and marketing
personnel of Leosons. This office provides greater exposure to the medical
community within the Middle East region.
In
March
2008, we received the first purchase order for 210,000 canisters of Generex
Oral-lyn™ from Shreya Life Sciences Pvt. Ltd., our distributor in India. We are
in the process of completing this order and partial shipment was made in
September 2008. A marketing plan has already been submitted by Shreya Life
Sciences Pvt. Ltd., to Generex on the marketing strategy for the distribution
of
Oral Recosulin™--the trademark under which Shreya will market Generex Oral-lyn™
within India. The marketing plan also includes post-approval marketing
studies.
Over-the-Counter
Products
We
have
entered into distribution agreements with the number of pharmaceutical
wholesalers, including Cardinal Health, AmerisourceBergen Corporation, Amerimark
Direct, DIK Drug Co., H.D. Smith Wholesale Drug, Kinray Inc., Smith Drug
Company, Value Drug Company, RDC, Kohl & Frisch Limited, UniPharm Wholesale
Drugs Ltd and McKesson Canada, for the distribution of Glucose RapidSpray™ in
retail stores in the United States and Canada. Glucose RapidSpray™ is currently
sold in the United States and Canada through a number of retail chains,
including:
| · |
Rite
Aid,
|
| · |
Butler
Drug Store,
|
| · |
Rexall
PharmaPlus,
|
| · |
Fruth
Pharmacy,
|
| · |
Loblaws
Companies Ltd.,
|
| · |
Hy-Vee
Inc.,
|
| · |
Kerr
Drug Inc.,
|
| · |
Kinney
Drug, Inc.,
|
| · |
Medicine
Shop,
|
| · |
Meijer,
|
| · |
ShopKo,
|
| · |
Weiss
Markets Inc.,
|
| · |
Aurora
Pharmacy, and
|
| · |
Shoppers
Drug Mart.
|
13
Glucose
RapidSpray™ is also available for sale on the Internet through Amazon.com,
Walgreens.com, AmericanDiabetesWholesale.com and DiabeticExpress.com as well
as
in a number of independent drugstores throughout North America.
We
have
also established relationships with brokers who serve as a liaison to retail
outlets throughout the U.S. and Canada. These brokers represent multiple
products that are presented to specific product buyers. We believe that our
relationships with the brokers will place us in a stronger position to get
our
products listed and on the shelf in major chains throughout the United States
and Canada.
Our
newly
introduced over-the-counter glucose and energy spray products, BaBOOM!™ Energy
Spray and GlucoBreak™, are being reviewed for commercial sale in several of the
largest national and regional retailers and drug store chains in the United
States and Canada. Recently,
we have begun limited direct marketing of our glucose sprays on the Internet
and
have established web sites for each of Glucose RapidSpray™, BaBOOM!™ Energy
Spray and GlucoBreak™ where consumers may purchase these products directly.
We
continue to seek to expand our existing distribution channels for our
over-the-counter products. We have implemented this strategy with the execution
of a licensing and distribution agreement with Leosons for the marketing,
distribution, and sale in the Middle East of Glucose RapidSpray™. In December
2007, we received a $400,000 purchase order for our over-the-counter products,
including Glucose Rapid Spray™, from Leosons and are currently in the process of
filling the order and partial shipments have been made product. To date,
we have
received approximately $98,000 in revenues from Leosons from sales of Glucose
RapidSpray™.
In
August
2007, we entered into a licensing and distribution agreement with Adcock
Ingram
Limited and Adcock Ingram Healthcare (Pty) Ltd., a leading distributor of
North
American pharmaceutical and healthcare products in South Africa, for the
marketing and distribution of Glucose RapidSpray ™ in South Africa and six
neighboring countries.
Under
these agreement, we will not receive an upfront license fee with respect
to
Glucose RapidSpray™, but the respective distributor will bear all costs
associated with the procurement of governmental approvals for the sale of
the
product, including any clinical and regulator costs.
With
respect to marketing all of our products, we intend to rely primarily on
contracting or collaborative arrangements with other companies that possess
strong pharmaceutical marketing and distribution resources to perform these
functions for us. Accordingly, we may not have the same control over marketing
and distribution that we would have if we conducted these functions ourselves.
Manufacturing
In
December 2000, we completed our pilot manufacturing facility for Generex
Oral-lyn™ in Toronto, Canada in the same commercial complex in which our
laboratories are located. In the first quarter of fiscal year 2006, we initiated
a scale-up commercial production run of several thousand canisters of Generex
Oral-lyn™ at this facility. We will need to significantly increase our
manufacturing capability or engage contract manufacturers in order to
manufacture any product in significant commercial quantities.
In
March
2006, we successfully completed of the delivery and installation of a turnkey
Generex Oral-lyn™ filling operation at the facilities of PharmaBrand, in Quito,
Ecuador for the purposes of commercial supply and sales in Ecuador and other
countries that can procure registrations and import licenses. We expect
additional commercial manufacturing runs of the product at these facilities
before the end of calendar year 2008. We anticipate that the capacity of
this
facility will be sufficient to support commercial sales in Ecuador, other
countries in Latin America and around the world.
In
anticipation of undertaking late-stage clinical trials of Generex Oral-lyn™ in
Canada, we entered into an agreement with Cardinal Health PTS, LLC, now known
as
Catalent Pharma Solutions, in June 2006, pursuant to which Catalent will
manufacture clinical trial batches of Generex Oral-lyn™. Pursuant to pre-extant
supply arrangements, our third-party suppliers have been manufacturing the
quantities of the RapidMist™ device components (valves, canisters, actuators,
and dust caps), the insulin, and the formulary excipients that will be required
for the Catalent production. In addition, our Regulatory Affairs, Quality
Control and R&D personnel have been working with Catalent to prepare and
validate the Catalent production processes.
14
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.
15
We
currently have twenty issued U.S. patents and four pending U.S. patent
application pertaining to aspects of buccal delivery technology including oral
administration of macromolecular formulations (including insulin) as well as
pain relief medications such as morphine and fentanyl. We currently hold
eight issued Canadian patents and five pending Canadian patent applications
also
relating to aspects of buccal drug delivery technology. We also hold one
hundred and four issued patents and one hundred and seventeen pending patent
applications covering our drug delivery technology, including our
over-the-counter glucose and energy spray products and metformin gum, in
jurisdictions other than the U.S. and Canada, including Japan, Mexico, Australia
and several European countries. We plan to continue to expand our patent
portfolio for additional products, formulations and device inventions. We
also plan to expand the territorial coverage of our existing patent portfolio
and new additions to more markets around the world where we plan to do
business.
In
addition, we have one issued Canadian patent, one U.S. patent and one pending
U.S. patent application pertaining to delivery technologies other than our
buccal delivery technology.
We
also
have an indirect interest in seven drug delivery patents held by another
company, Centrum Biotechnologies, Inc.
Our
subsidiary Antigen currently holds eight issued U.S. patents, three Australian
patents, nine other foreign patents, seven pending U.S. patent applications
,
one pending U.S. provisional patents and twenty-five foreign patent applications
concerning technology for modulating the immune system via activation of
antigen-specific helper T lymphocytes. Some of these patents are held under
exclusive licenses from the University of Massachusetts. Dr. Robert Humphreys,
a
retired officer of Antigen, is the listed inventor or co-inventor on all of
these patents and patent applications, including those licensed from the
University of Massachusetts.
In
addition to patents, we hold intellectual property in the form of trademark
applications worldwide on products such as Generex Oral-lyn™ and Oral
Recosulin™. Trademarks have no effect on market exclusivity for a product, but
are considered to have marketing value. Trademark protection continues in some
countries as long as used; in other countries, as long as registered.
Registration is for fixed terms and can be renewed indefinitely.
We
possess the worldwide manufacturing and marketing rights to our oral insulin
product.
Our
long-term success will substantially depend upon our ability to obtain patent
protection for our technology and our ability to protect our technology from
infringement, misappropriation, discovery and duplication. We cannot be sure
that any of our pending patent applications will be granted, or that any patents
which we own or obtain in the future will fully protect our position. Our patent
rights and the patent rights of biotechnology and pharmaceutical companies
in
general, are highly uncertain and include complex legal and factual issues.
We
believe that our existing technology and the patents which we hold or for which
we have applied do not infringe any one else's patent rights. We believe our
patent rights will provide meaningful protection against others duplicating
our
proprietary technologies. We cannot be sure of this, however, because of the
complexity of the legal and scientific issues that could arise in litigation
over these issues. See Part
I - Item 3. Legal Proceedings
for a
discussion of certain legal proceedings involving intellectual property
issues.
We
also
rely on trade secrets and other unpatented proprietary information. We seek
to
protect this information, in part, by confidentiality agreements with our
employees, consultants, advisors and collaborators.
Competition
We
expect
that products based upon our buccal delivery technology and any other products
that we may develop will compete directly with products developed by other
pharmaceutical and biotechnology companies, universities, government agencies
and public and private research organizations.
Products
developed by our competitors may use a different active pharmaceutical agent
or
treatment to treat the same medical condition or indication as our product
or
may provide for the delivery of substantially the same active pharmaceutical
ingredient as our products using different methods of administration. For
example, a number of pharmaceutical and biotechnology companies are engaged
in
various stages of research, development and testing of alternatives to insulin
therapy for the treatment of diabetes, as well as new methods of delivering
insulin. These methods, including nasal, transdermal, needle-free (high
pressure) injection and pulmonary, may ultimately successfully deliver insulin
to diabetic patients. Some biotechnology companies also have developed different
technologies to enhance the presentation of peptide antigens. Some of our
competitors and potential competitors have substantially greater scientific
research and product development capabilities, as well as financial, marketing
and human resources, than we do.
16
Where
the
same or substantially the same active ingredient is available using alternative
delivery means or the same or substantially the same result is achievable with
a
different treatment or technology, we expect that competition among products
will be based, among other things, on product safety, efficacy, ease of use,
availability, price, marketing and distribution. When different active
pharmaceutical ingredients are involved, these same competitive factors will
apply to both the active agent and the delivery method.
We
consider other drug delivery and biotechnology companies to be direct
competitors for the cooperation and support of major drug and biotechnology
companies that own or market proprietary pharmaceutical compounds and
technologies, as well as for the ultimate patient market. Of primary concern
to
us are the competitor companies that are known to be developing delivery systems
for insulin and other pharmaceutical agents that we have identified as product
candidates and technologies to enhance the presentation of peptide antigens.
The
following descriptions of our competitors and their products were obtained
from
their filings with the Securities and Exchange Commission, information available
on their web sites and industry research reports.
Buccal
Insulin Product
|
·
|
Pfizer
announced in October 2007 the discontinuation of development and
marketing
activities relating to Exubera®, the inhaled insulin product developed by
Nektar Therapeutics. Exubera® was the first inhaled insulin formulation to
receive FDA approval. In April 2008, Pfizer and Nektar Therapeutics
announced that clinical trials of Exubera demonstrated increased
lung
cancer rates in certain patient. We are not aware of any product
currently
in Pfizer’s pipeline that directly competes with
Oral-lyn™.
|
|
·
|
Nektar
Therapeutics and Pfizer terminated their collaborative development
and
licensing agreement for Exubera® and Nektar’s next-generation inhaled
insulin product in November 2007. In April 2008, Nektar announced
that it
had ceased all negotiations with potential partners for Exubera® and the
next-general inhaled insulin product as a result of new data analysis
from
ongoing clinical trials conducted by Pfizer which indicated an increased
risk of lung cancer in certain patients. We are not aware of any
product
candidates under development by Nektar that compete directly with
Oral-lyn™.
|
|
·
|
Alkermes,
Inc. and Eli Lilly and Company entered into a licensing agreement
in 2001
for the development of an AIR® inhaled insulin system based upon Alkermes’
AIR® pulmonary drug delivery system for large molecule drugs to the lungs
with a dry power formulation. In March 2008, Eli Lilly announced
its
termination of development work relating to this product.
|
|
·
|
MannKind
Corporation’s product candidates include Technosphere® insulin, comprised
of MannKind’s dry power formulation and proprietary MedTone® inhaler.
Phase III clinical trials are underway in the U.S., Europe and Latin
America.
|
|
·
|
CPEX
Pharmaceuticals, Inc.’s proprietary permeation enhancer, CPE-215®,
provides skin, mouth, nose and eye membrane absorption of a variety
of
pharmaceuticals. CPEX has applied this technology to Nasulin™, through
which insulin is absorbed via nasal mucosa. In 2007, Nasulin™ commenced
Phase III clinical trials which CPEX expects to conclude in mid-2010.
Bentley Pharmaceuticals spun off its drug delivery business as CPEX
prior
to Bentley’s merger with Teva Pharmaceuticals Industries, Ltd.
|
|
·
|
Abbott
Laboratories, which offers a broad array of diabetes products, acquired
Kos Pharmaceuticals in late 2006. Prior to the acquisition, Kos had
conducted Phase II clinical trails for its metered dose inhaler for
aerosol liquid insulin.
|
|
·
|
Emisphere
Technologies, Inc. has an active oral insulin program focused on
developing GLP-1 analogs. GLP-1 may potentially be absorbed through
the GI
tract in tablet form.
|
|
·
|
Novo
Nordisk A/S, one of the two leading manufacturers of insulin in the
world,
announced in May 2008 the termination of clinical testing of the
pulmonary
delivery system for inhaled insulin, the AERx® insulin Diabetes Management
System (AERx iDMS), initially developed by Aradigm Corporation. The
product was in Phase III clinical trials at the time of Novo Nordisk’s
announcement.
|
17
|
·
|
Nastech
Pharmaceutical Company Inc. is conducting a Phase II clinical trial
in
Europe to evaluate its insulin nasal spray in Type 2 diabetics.
|
There
are
also a number of companies developing alternative means of delivering insulin
in
the form of oral pills, transdermal patches, and intranasal methods, which
are
at early stages of development. In addition to other delivery systems for
insulin, there are numerous products which have been approved for use in the
treatment of Type 2 diabetics in substitution of, or in addition to, insulin
therapy. These products may also be considered competitive with insulin
products.
Buccal
Morphine and Fentanyl Products
|
·
|
Cephalon,
Inc. received FDA approval in September 2006 for FENTORA™ and launched the
product in the United States shortly thereafter. FENTORA™ is a fentanyl
buccal tablet that is placed between the patient’s upper cheek and gum and
is indicated for the management of breakthrough pain in patients
with
cancer who are already receiving and are tolerant to opioid therapy
for
their underlying persistent cancer pain. Cephalon anticipates submitting
a
NDA to the FDA in late 2007 to expand the labeled indications for
FENTORA™
to include non-cancer breakthrough pain in opioid-tolerant patients.
Other
competing products commonly prescribed to treat persistent pain are
Ortho-McNeil’s DURAGESIC® and Purdue Pharmaceuticals’ OXYCONTIN® and
MS-CONTIN®.
|
|
·
|
Nastech
Pharmaceuticals is developing an intranasal formulation of morphine
that
is in Phase II clinical trials.
.
|
Immunomedicine
Technology and Products
|
·
|
Advaxis,
Inc. uses a proprietary technique to bioengineer Listeria bacteria
to
create a specific antigen that can stimulate an immune response after
recognition by the recipient’s immune system. Advaxis’ most advanced
product candidate is Lovaxin C, which is used to treat head and neck
cancer and human papillomavirus (HPV)-derived cervical cancer. Advaxis
may
begin Phase II clinical trials for Lovaxin C in 2008 and has prostate
and
breast cancer vaccines in preclinical
phases.
|
|
·
|
Micromet,
Inc. uses two platform technologies to treat cancers, autoimmune
diseases
and inflammation: (i) the creation of Single-Chain Antibodies (SCAs)
through the use of the antigen-binding region of a full-sized antibody,
held together by a linker; and (ii) BiTE® technology which utilizes the
body’s CTLs to attack tumor cells. Micromet has completed Phase I clinical
trials for its most developed product candidate, adecatumumab (MT201),
for
treatment of metastatic breast cancer.
|
|
·
|
Sanofi
Pasteur Inc., the vaccine division of sanofi-aventis and one of the
largest vaccines companies in the world, has product candidates including
inoculations against 20 varieties of infectious diseases. It received
FDA
approval for an H5N1 avian influenza vaccine in April 2007.
|
|
·
|
Dendreon
Corporation’s product portfolio includes therapeutic vaccines, monoclonal
antibodies and small molecules. Its most advanced product candidate
now in
Phase III clinical trials is Provenge® (sipuleucel-T), an investigational
autologous (patient-specific) active cellular immunotherapy (ACI)
for the
treatment of prostate cancer. Dendreon is expected to release interim
survival data compiled from the Phase III trials in late 2008. Dendreon
has completed Phase I clinical trials in of Lapuleucel-T in patients
with
breast, ovarian and colorectal tumors. Lapuleucel-T targets HER/2-positive
cancers.
|
|
·
|
Cell
Genesys, Inc. currently has two clinical stage product platforms:
(i)
off-the-shelf GVAX™ cancer immunotherapies for prostate cancer (Phase
III), pancreatic cancer (Phase II) and leukemia (Phase II), and (2)
oncolytic virus therapies for bladder cancer (Phase I) and other
tumors.
The GVAX™ cancer treatments are composed of tumor cells that are
genetically modified to secrete an immune-stimulating cytokine and
are
irradiated for safety. Cell Genesys and Takeda Pharmaceutical Co.
have
entered into an exclusive licensing agreement for GVAX. Cell Genesys
has
formed a partnership with Novartis AG for development of the oncolytic
virus therapies.
|
18
|
·
|
Pharmexa-Epimmune,
Inc., the U.S. subsidiary of Pharmexa A/S, has in its product pipeline
a
peptide vaccine, GV1001, which is in Phase III clinical trials for
pancreatic cancer and Phase II clinical trials for liver and non-small
cell lung cancer and two vaccines against HER/2-positive breast cancer
in
Phase I and Phase II clinical trials. Pharmexa-Epimmune has received
significant NIH funding for vaccines against malaria and HIV, some
of
which are currently in Phase I testing.
|
|
·
|
Cel-Sci
Corporation has developed the Ligand Epitope Antigen Presentation
System
(L.E.A.P.S.) delivery technology. In April 2006, Cel-Sci filed a
provisional U.S. patent application covering CEL-1000, the lead product
developed from the L.E.A.P.S. technology, for the prevention/treatment
of
bird flu and/or as an adjuvant to be included in a bird flu vaccine.
|
Environmental
Compliance
Our
manufacturing, research and development activities involve the controlled use
of
hazardous materials and chemicals. We believe that our procedures for handling
and disposing of these materials comply with all applicable government
regulations. However, we cannot eliminate the risk of accidental contamination
or injury from these materials. If an accident occurred, we could be held liable
for damages, and these damages could severely impact our financial condition.
We
are also subject to many environmental, health and workplace safety laws and
regulations, particularly those governing laboratory procedures, exposure to
blood-borne pathogens, and the handling of hazardous biological materials.
Violations and the cost of compliance with these laws and regulations could
adversely affect us. However, we do not believe that compliance with the United
States, Canadian or other environmental laws will have a material effect on
us
in the foreseeable future.
Research
and Development Expenditures
A
substantial portion of our activities to date have been in research and
development. In the period from inception to July 31, 2008, our expenditures
on
research and development were $90,035,712. These included $16,359,030 in the
year ended July 31, 2008, $11,983,626 in the year ended July 31, 2007, and
$6,554,393 in the year ended July 31, 2006. The increase in our
research and development activities in 2008 compared to 2007 and 2007 compared
to 2006 is due primarily to the preparation for and the commencement of Phase
III clinical trials of our oral insulin product in Canada.
Financial
Information About Geographic Areas
The
regions in which we had identifiable assets and revenues and the amounts of
such
identifiable assets and revenues for each of the last three fiscal years are
presented Note 16 in the Notes
to Consolidated Financial Statements
in
Part
II - Item. 8 Financial Statements and Supplementary Data
of this
Annual Report on Form 10-K. Identifiable assets are those that can be directly
associated with a geographic area.
Employees
At
September 30, 2008, we had twenty-seven full-time employees, including our
executive officers and other individuals who work for us full-time but are
employed by management companies that provide their services, and ten employees
of our subsidiary Antigen. Twelve of our employees are executive and
administrative, twenty-two are scientific and technical personnel who engage
primarily in development activities and in preparing formulations for testing
and clinical trials, and three are engaged in corporate and product promotion
and product sales. We believe our employee relations are good. None of our
employees is covered by a collective bargaining agreement.
We
will
continue to need qualified scientific personnel and personnel with experience
in
clinical testing, government regulation and manufacturing. We may have
difficulty in obtaining qualified scientific and technical personnel as there
is
strong competition for such personnel from other pharmaceutical and
biotechnology companies, as well as universities and research institutions.
Our
business could be materially harmed if we are unable to recruit and retain
qualified scientific, administrative and executive personnel to support our
expanding activities, or if one or more members of our limited scientific and
management staff were unable or unwilling to continue their association with
us.
We have fixed-term agreements with only certain members of our key management
and scientific staff, including Anna Gluskin, our Chief Executive Officer and
President, Rose Perri, our Chief Operating Officer and Chief Financial Officer,
Mark Fletcher, our Executive Vice-President and General Counsel, Dr. Gerald
Bernstein, our Vice President Medical Affairs, Dr. Jaime Davidson, our Medical
Director, Eric von Hofe, President of Antigen, Minzhen Xu, Vice-President
Biology of Antigen, and Nikoletta Kallinteris, Senior Research Associate.
19
We
use
non-employee consultants to assist us in formulating research and development
strategy, in preparing regulatory submissions, in developing protocols for
clinical trials, and in designing, equipping and staffing our manufacturing
facilities. We also use non-employee consultants to assist us in business
development. These consultants and advisors usually have the right to terminate
their relationship with us on short notice. Loss of some of these key advisors
could interrupt or delay development of one or more of our products or otherwise
adversely affect our business plans.
Executive
Officers and Directors
|
Name
|
|
Age
|
|
Position
Held with Generex
|
|
|
|
|
|
|
|
Anna
E. Gluskin
|
|
57
|
|
Chairman,
President, Chief Executive Officer and Director
|
|
|
|
|
|
|
|
Rose
C. Perri
|
|
41
|
|
Chief
Operating Officer, Chief Financial Officer, Treasurer, Secretary
and
Director
|
|
|
|
|
|
|
|
Mark
Fletcher, Esquire
|
|
42
|
|
Executive
Vice President and General Counsel
|
|
Gerald
Bernstein, M.D.
|
75
|
Vice
President, Medical Affairs
|
||
|
|
|
|
|
|
|
John
P. Barratt
|
|
64
|
|
Director
|
|
Brian
T. McGee
|
|
47
|
|
Director
|
|
|
|
|
|
|
|
Nola
E. Masterson
|
|
61
|
|
Director
|
All
directors are elected to hold office until the next annual meeting of
stockholders following election and until their successors are duly elected
and
qualified. Executive officers are appointed by the Board of Directors and serve
at the discretion of the Board.
Anna
E. Gluskin:
Director since September 1997. Ms. Gluskin has served as the President and
Chief
Executive Officer of Generex since October 1997 and the Chairperson of the
Generex Board of Directors since November 2002. She held comparable positions
with Generex Pharmaceuticals Inc. from its formation in 1995 until its
acquisition by Generex in October 1997.
Rose
C. Perri.
Director since September 1997. Ms. Perri has served as Treasurer and Secretary
of Generex since October 1997 and as Chief Operating Officer since August 1998.
She served as Acting Chief Financial from November 2002 until April 2005 when
she was appointed Chief Financial Officer. She was an officer of Generex
Pharmaceuticals Inc. from its formation in 1995 until its acquisition by Generex
in October 1997.
Mark
Fletcher, Esq.
Mr.
Fletcher has served as our Executive Vice President and General Counsel since
April 2003. From October 2001 to March 2003, Mr. Fletcher was engaged in the
private practice of law as a partner at Goodman and Carr LLP, a leading Toronto
law firm. From March 1993 to September 2001, Mr. Fletcher was a partner at
Brans, Lehun, Baldwin LLP, a law firm in Toronto. Mr. Fletcher received his
LL.B. from the University of Western Ontario in 1989 and was admitted to the
Ontario Bar in 1991.
Gerald
Bernstein, M.D.
has
served as Vice President Medical Affairs of Generex since October 2001. He
served as a Director of Generex from October 2002 to May 2008. Dr. Bernstein
acts as a key liaison for Generex on medical and scientific affairs to the
medical, scientific and financial communities and consults with Generex under
a
consulting agreement on research and medical affairs and on development
activities. Dr. Bernstein is an associate clinical professor at the Albert
Einstein College of Medicine in New York and an attending physician at Beth
Israel Medical Center, Lenox Hill Hospital and Montefore Medical Center, all
in
New York. He was president of the American Diabetes Association from 1998 to
1999.
20
John
P. Barratt.
Independent Director since March 2003. Mr. Barratt is currently the Chairman
of
the Generex Compensation Committee and a member of the Generex Audit Committee
and Corporate Governance and Nominating Committee. Mr. Barratt currently serves
as the Board Liaison Officer of The Caldwell Partners International, a role
he
commenced in July 2006. From April 2005 to July 2006, Mr. Barratt served as
Chief Operating Officer of The Caldwell Partners International. The Caldwell
Partners International is a Canadian-based human capital professional services
company. Mr. Barratt from January 2002 until February 2007 served as the
court-appointed Responsible Person and Liquidation Manager of Beyond.com
Corporation, Debtor-in-Possession, a U.S. Chapter 11 Bankruptcy case, in which
capacity Mr. Barratt reported to the bankruptcy court and to the U.S. Trustee’s
Office. From September 2000 to January 2002, Mr. Barratt acted in the capacity
of Chief Operating Officer of Beyond.com Corporation, an electronic fulfillment
provider. Between 1996 and 2000, Mr. Barratt was partner-in-residence with
the
Quorum Group of Companies, an international investment partnership specializing
in providing debt and/or equity capital coupled with strategic direction to
emerging technology companies. Between 1988 and 1995, Mr. Barratt held a number
of positions with Coscan Development Corporation, a real estate development
company, the last position of which was Executive Vice-President and Chief
Operating Officer. Mr. Barratt currently serves on a number of Boards of
Directors, including Brookfield Investments Corporation and BAM Split
Corporation, and is a member of the Board of Directors and Chairman of the
Risk
Policy Committee of the Bank of China (Canada). Mr. Barratt also serves as
Chairman of the Independent Review Committees of BAM Split Corp. and Brookfield
Investment Funds Management Inc. In addition, Mr. Barratt is a member of the
Advisory Board and also acts in the capacity of Chief Financial Officer of
Crystal Fountains Inc."
Brian
T. McGee.
Independent Director since March 2004. Mr. McGee is currently the Chairman
of
the Generex Audit Committee and a member of the Generex Compensation Committee
and Corporate Governance and Nominating Committee. Mr. McGee has been a partner
of Zeifmans LLP ("Zeifmans") since 1995. Mr. McGee began working at Zeifmans
shortly after receiving a B.A. degree in Commerce from the University of Toronto
in 1985. Zeifmans is a Chartered Accounting firm based in Toronto, Ontario.
A
significant element of Zeifman's business is public corporation accounting
and
auditing. Mr. McGee is a Chartered Accountant. Throughout his career, Mr. McGee
has focused on, among other areas, public corporation accounting and auditing.
In 1992, Mr. McGee completed courses focused on International Taxation and
Corporation Reorganizations at the Canadian Institute of Chartered Accountants
and in 2003, Mr. McGee completed corporate governance courses on compensation
and audit committees at Harvard Business School. In April 2004 Mr. McGee
received his CPA designation from The American Institute of Certified Public
Accountants.
Nola
E. Masterson.
Independent Director since May 2007. Ms. Masterson is currently a Chairperson
of
the Generex Corporate Governance and Nominating Committee and a member of the
Generex Audit Committee and Compensation Committee. Since 1982, she has been
the
chief executive officer of Science Futures Inc., an investment and advisory
firm. Ms. Masterson is currently Managing Member and General Partner of Science
Futures LLC, I, II and III, which are venture capital funds invested in life
science funds and companies. She also serves as a Senior Advisor to TVM Techno
Venture Management, an international venture capital company, and as a member
of
the Board of Directors of Repros Therapeutics Inc., a development stage
biopharmaceutical company formerly known as Zonagen, Inc. (currently trading
on
The NASDAQ Global Market under the symbol “RPRX”). Ms. Masterson was the first
biotechnology analyst on Wall Street, working with Drexel Burnham Lambert and
Merrill Lynch, and is a co-founder of Sequenom, Inc., a genetic analysis company
located in San Diego and Hamburg, Germany. She also started the BioTech Meeting
in Laguna Nigel, CA, the annual Biopharmaceutical Conference in Europe, and
was
nominated to the 100 Irish American Business List in 2003. Ms. Masterson began
her career at Ames Company, a division of Bayer, and spent eight years at
Millipore Corporation in sales and sales management. Ms. Masterson has 31 years
of experience in the life science industry. She received her Masters in
Biological Sciences from George Washington University, and continued Ph.D.
work
at the University of Florida.
Two
of
our former directors, Peter G. Amanatides and Dr. Gerald Bernstein, elected
not
to stand for re-election to the Board of Directors at the Annual Meeting of
Stockholders held on May 27, 2008. Our Board now consists of five directors,
three of whom are independent of Generex management.
Other
Key Employees and Consultants
Slava
Jarnitskii
is our
Financial Controller. He began his employment with Generex Pharmaceuticals
in
September 1996 and has been in the employment of Generex since its acquisition
of Generex Pharmaceuticals in October 1997. Before his employment with Generex
Pharmaceuticals, Mr. Jarnitskii received a Masters of Business Administration
degree from York University in September 1996.
21
William
D. Abajian
is a
Business Development Consultant. Mr. Abajian has served in senior
management and executive positions with various businesses throughout the past
twenty-five years where he played pivotal roles in the development and launches
of a number of pharmaceutical and device products. In 1988 he
founded CPG Inc. in Lincoln Park, New Jersey where he served as Chief Executive
Officer until 2002. CPG Inc. invented, manufactured and sold DNA Synthesis
products, chromatography media’s and molecular biology kits to researchers in
over 40 countries worldwide. This privately-held company was sold to
Millipore Corporation in 2002. Prior to running his own company Mr.
Abajian served as the Vice President of Sales and Marketing at Electro
Nucleonics Inc. in Fairfield, New Jersey between 1981 and 1988. Electro
Nucleonics Inc. invented, manufactured and sold blood chemistry systems and
diagnostic kits worldwide. The company also launched the first FDA
approved AIDS test. At Electro Nucleonics Mr. Abajian was responsible for
procuring $50 million of hospital instrumentation sales, opened up the
veterinarian market for the company and was key to brokering a deal that
required all Armed Forces and The American Red Cross to purchase all HIV tests
from the company. The organization included five regional managers, 45
sales representatives and 20 technical representatives. In 2004, he founded
The
Abajian Group LLC, a company that advises CEOs on strategic planning and assists
in the commercialization of technologies and sales and marketing. He
continues to serve as a trustee of Eva’s Village, a non-for-profit organization
in Paterson, New Jersey, and of St. Joseph’s Hospital in Paterson, New Jersey,
where he previously held the positions of Chairman of the OPEC Committee and
a
member of the hospital’s Finance and Pension Committee and the Executive
Committee.
George
Markus
is our
Manager of Regulatory Affairs. Mr. Markus holds a B.Sc. (Honours) in theoretical
chemistry from Dalhousie University and a M.Sc. in analytical chemistry from
McGill University. He is an instructor at the Academy of Applied Pharmaceutical
Sciences in Toronto, Canada. In his more than twenty years in the industry,
he
has been President & Chief Executive Officer of Consolidated Clinical
Research of Canada Inc., a site management organization (SMO) that manages
the
coordination of clinical research sites, and has worked in Quality Assurance
/
Special Projects / Clinical Operations and as a Director, Regulatory Affairs
for
Dimethaid Research Inc. Mr. Markus has also held regulatory affairs positions
with Pasteur Merieux Connaught, Biovail Corporation International, Sanofi
Winthrop, Genpharm Inc. Pharmaceuticals, and Sandoz Canada Inc.
Dr.
Jaime Davidson, MD, FACP, FACE
was
appointed a consultant Medical Director for Generex in July, 2006. Dr. Davidson
is the President of Endocrine and Diabetes Associates of Texas, based at the
Medical City Dallas Hospital complex, and a Clinical Associate Professor of
Internal Medicine at University of Texas Southwestern Medical Center in Dallas,
Texas. Dr. Davidson chaired the Diabetes Consensus Guidelines for the American
College of Endocrinology and serves as Director of the Annual Intensive
Diabetes, Endocrinology and Metabolic Diseases Course for the University of
Southern California Keck School of Medicine. He serves as a council member
for
the Texas Department of Health Services, appointed by Texas Governor Rick Perry.
In 2006 Dr. Davidson was distinguished by the American Association of Clinical
Endocrinologists with an award for his contributions to the improvement of
endocrine health for under-served populations, and by the American Diabetes
Association with the Harold Rifkin MD award for his international contributions
in the diabetes field. In the past, he has held positions with the National
Diabetes Advisory Board, the National Institutes of Health, the Centers for
Disease Control, the Institute of Medicine, and the boards of directors of
the
American Diabetes Association, the American Association of Clinical
Endocrinologists, and the American College of Endocrinology. He served in higher
education for a six year term as a Regent of Midwestern State University in
Texas appointed by then Governor George W. Bush. He has also served in the
President's Council for Fitness and Sports, chaired the Texas Diabetes Council
of the Texas Department of Health for several years where he instituted the
Texas Diabetes Algorithm, and under his guidance the Texas Diabetes Institute
was established with the University of Texas Health Science Center in San
Antonio, Texas. Dr. Davidson's experience in clinical pharmacology began with
a
Clinical Pharmacology Fellowship at Lilly Laboratories for Clinical Research
and
it continued with multiple clinical trials. In addition, he was an advisor
to
the Food and Drug Administration (FDA) on the Endocrinology and Metabolism
Advisory Board. Dr. Davidson's Internal Medicine training was completed at
Scott
and White Hospital (now known as Texas A&M University) and his Endocrinology
training at University Of Indiana.
Eric
von Hofe, Ph.D.,
is
currently President of Antigen. He has extensive experience with technology
development projects, including his previous position at Millennium
Pharmaceuticals as Director of Programs & Operations, Discovery Research.
Prior to that, Dr. von Hofe was Director, New Targets at Hybridon, Inc., where
he coordinated in-house and collaborative research that critically validated
gene targets for novel antisense medicines. Dr. von Hofe also held the position
of Assistant Professor of Pharmacology at the University of Massachusetts
Medical School, where he received a National Cancer Institute Career Development
Award for defining mechanisms by which alkylating carcinogens create cancers.
He
received his Ph.D. from the University of Southern California in Experimental
Pathology and was a postdoctoral fellow at both the University of Zurich and
Harvard School of Public Health. His work has been published in twenty-eight
articles in peer-reviewed journals, and he has been an inventor on four patents.
22
Dr.
Minzhen Xu
is Vice
President - Biology of Antigen. Dr. Xu received an M.D. from Shanghai Medical
University in China and a Ph.D. in immunology from University of Massachusetts
Medical School. He has been with Antigen since its inception and is the
company’s chief experimentalist.
Available
Information
We
were
incorporated in the State of Delaware in 1997. Our principal executive offices
are located at 33 Harbour Square, Suite 202, Toronto, Canada, and our telephone
number at that address is (416) 364-2551. We maintain an Internet website at
www.generex.com.
However, information found on, or that can be accessed through, our website
is
not incorporated by reference into this annual report on Form 10-K. We make
available free of charge on or through our website our filings with the
Securities and Exchange Commission, or SEC, including this annual report on
Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably
practicable after we electronically file such material with, or furnish it
to,
the SEC. Further, a copy of this annual report is located at the SEC’s Public
Reference Room at 100 F Street N. E., Washington, D.C. 20549. Information on
the
operation of the Public Reference Room can be obtained by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet website that contains reports,
proxy and information statements, and other information regarding our filings
at
www.sec.gov.
Item
1A. Risk
Factors
Our
business and results of operations are subject to numerous risks, uncertainties
and other factors that you should be aware of, some of which are described
below. The risks, uncertainties and other factors described below are not the
only ones facing our company. Additional risks, uncertainties and other factors
not presently known to us or that we currently deem immaterial may also impair
our business operations.
Any
of the risks, uncertainties and other factors could have a materially adverse
effect on our business, financial condition or results of operations and could
cause the trading price of our common stock to decline substantially.
Risks
Related to Our Financial Condition
We
have a history of losses and will incur additional
losses.
We
are a
development stage company with a limited history of operations, and do not
expect sufficient revenues to support our operation in the immediately
foreseeable future. In the fiscal year ended July 31, 2008, we received modest
revenues from sales of Glucose RapidSpray™ .
We did
not recognize any revenue from the sale of our oral insulin product in Ecuador
or India in fiscal 2008. We do not expect to receive any revenues in Ecuador
until we enter into a definitive manufacturing and distribution agreement with
our business partner there. While we have entered into a licensing and
distribution agreement with a leading Indian-based pharmaceutical company and
insulin distributor, we do not anticipate significant revenue from the initial
commercial launch of Generex Oral-lyn™ in India sometime this fiscal
year.
To
date,
we have not been profitable and our accumulated net loss available to
shareholders was $248,229,261 at July 31, 2008. Our losses have resulted
principally from costs incurred in research and development, including clinical
trials, and from general and administrative costs associated with our
operations. While we seek to attain profitability, we cannot be sure that we
will ever achieve product and other revenue sufficient for us to attain this
objective.
With
the
exception of Generex Oral-lyn™ which is currently available for sale in Ecuador
and has been approved for sale in India and our over-the-counter glucose and
energy spray products, Glucose RapidSpray™, BaBOOM!™ Energy Spray and
GlucoBreak™, our product candidates are in research or early stages of
pre-clinical and clinical development. We will need to conduct substantial
additional research, development and clinical trials. We will also need to
receive necessary regulatory clearances both in the United States and foreign
countries and obtain meaningful patent protection for and establish freedom
to
commercialize each of our product candidates. We must also complete further
clinical trials and seek regulatory approvals for Generex Oral-lyn™ in countries
outside of Ecuador and India. We cannot be sure that we will obtain required
regulatory approvals, or successfully research, develop, commercialize,
manufacture and market any other product candidates. We expect that these
activities, together with future general and administrative activities, will
result in significant expenses for the foreseeable future.
23
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:
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to
proceed with the development of our buccal insulin
product;
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·
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to
finance the research and development of new products based on our
buccal
delivery and immunomedicine technologies, including clinical testing
relating to new products;
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·
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to
finance the research and development activities of our subsidiary
Antigen
with respect to other potential technologies;
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·
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to
commercially launch and market developed products;
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·
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to
develop or acquire other technologies or other lines of
business;
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·
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to
establish and expand our manufacturing capabilities;
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·
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to
finance general and administrative activities that are not related
to
specific products under development; and
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·
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to
otherwise carry on business.
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In
the
past, we have funded most of our development and other costs through equity
financing. We anticipate that our existing capital resources will enable us
to
maintain currently planned operations through the next 12 months. However,
this
expectation is based on our current operating plan, which could change as a
result of many factors, and we may need additional funding sooner than
anticipated. Because our operating and capital resources are insufficient to
meet future requirements, we will have to raise additional funds in the near
future to continue the development and commercialization of our products.
Unforeseen problems, including materially negative developments in our clinical
trials or in general economic conditions, could interfere with our ability
to
raise additional equity capital or materially adversely affect the terms upon
which such funding is available.
It
is
possible that we will be unable to obtain additional funding as and when we
need
it. If we were unable to obtain additional funding as and when needed, we could
be forced to delay the progress of certain development efforts. Such a scenario
poses risks. For example, our ability to bring a product to market and obtain
revenues could be delayed, our competitors could develop products ahead of
us,
and/or we could be forced to relinquish rights to technologies, products or
potential products.
Negative
conditions in the global credit markets may impair the liquidity of our
investment in auction rate securities.
Our
short-term investments consist of AAA-rated auction rate securities at a value
of $8.9 million. The continued negative conditions in the global credit markets
have prevented some investors from liquidating their holdings of auction rate
securities
because
the amount of securities submitted for sale has exceeded the amount of purchase
orders for such securities. If the credit markets do not improve, auctions
for
our invested amounts may continue to fail. If an auction continues to fail
for
securities in which we have invested, we may be unable to liquidate some or
all
of our auction rate securities
at par.
In the event we need or desire to access these funds, we will not be able to
do
so until a future auction on these investments is successful or a buyer is
found
outside the auction process. If a buyer is found, such buyer may only be willing
to purchase the investments at price below par. Further, rating downgrades
of
the security issuer or the third-parties insuring such investments may further
impact our ability to auction or sell these securities.
24
We
are
currently seeking alternatives for reducing our exposure to the auction rate
market, but may not be able to identify any such alternative. There can be
no
assurance that we will be able to recoup any of our investments in the auction rate securities.
If we
are not able to monetize some or all of our auction rate securities,
we may
suffer a loss, and such loss could have a material adverse effect on our ability
to finance our future ongoing operations.
On
August
15, 2008, the SEC announced that it had reached a preliminary settlement in
principle with the financial institution through which we hold our auction
rate
securities, which included a plan to restore liquidity to the financial
institution’s customers who invested in auction rate securities. The terms of
the agreement in principle include, among others, the following:
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·
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The
financial institution will offer to purchase the auction rate securities
of large and institutional investors, presumably such as Generex,
in a buy
back that will begin no later than June 10, 2009 and conclude by
June 30,
2009; and
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·
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Until
the financial institution actually provides for the liquidation of
the
auction rate securities, the financial institution will provide customers
no net loans that will remain outstanding until the auction rate
securities are repurchased.
|
The
agreement in principle is subject to finalization, review and approval by the
Securities and Exchange Commission. To date, we have not received notice from
the financial institution of the settlement terms.
Our
research and development and marketing efforts may be highly dependent on
corporate collaborators and other third parties who may not devote sufficient
time, resources and attention to our programs, which may limit our efforts
to
successfully develop and market potential products.
Because
we have limited resources, we have sought to enter into collaboration agreements
with other pharmaceutical companies that will assist us in developing, testing,
obtaining governmental approval for and commercializing products using our
buccal delivery and immunomedicine technologies. Any collaborator with whom
we
may enter into such collaboration agreements may not support fully our research
and commercial interests since our program may compete for time, attention
and
resources with such collaborator's internal programs. Therefore, these
collaborators may not commit sufficient resources to our program to move it
forward effectively, or that the program will advance as rapidly as it might
if
we had retained complete control of all research, development, regulatory and
commercialization decisions.
Risks
Related to Our Technologies
With
the exception of Generex Oral-lyn™, Glucose RapidSpray™, BaBOOM! ™ Energy Spray
and GlucoBreak™, our technologies and products are at an early stage of
development and we cannot expect significant revenues in respect thereof in
the
foreseeable future.
We
have
no products approved for commercial sale at the present time with the exception
of Generex Oral-lyn™ in Ecuador and India and our glucose sprays which are
available over-the-counter in retail outlets in the United States and Canada.
To
be profitable, we must not only successfully research, develop and obtain
regulatory approval for our products under development, but also manufacture,
introduce, market and distribute them once development is completed. We have
yet
to manufacture, market and distribute these products on a large-scale commercial
basis, and we expect to receive only modest revenues from product sales in
fiscal year 2009. We may not be successful in one or more of these stages of
the
development or commercialization of our products, and/or any of the products
we
develop may not be commercially viable. Until we can establish that they are
commercially viable products, we will not receive significant revenues from
ongoing operations.
Until
we receive regulatory approval to sell our pharmaceutical products in additional
countries, our ability to generate revenues from operations may be limited
and
those revenues may be insufficient to sustain operations. Many factors impact
our ability to obtain approvals for commercially viable
products.
Our
only
pharmaceutical product that has been approved for commercial sale by drug
regulatory authorities is our oral insulin spray formulation, and that approval
was obtained in Ecuador and India. We have begun the regulatory approval process
for our oral insulin, buccal morphine and fentanyl products in other countries,
and we have initiated late stage clinical trials of Generex Oral-lyn™ at some of
our clinical trial sites in North America according to the Phase III clinical
plan.
25
Our
immunomedicine products are in the pre-clinical stage of development, with
the
exception of a Phase II trial in human patients with stage II HER-2/neu positive
breast cancer (U.S.), a Phase I trial in human patients with prostate cancer
(Athens, Greece), a Phase I trial in human patients with breast or ovarian
cancer (U.S.) and a Phase I trial in human volunteers of a peptide vaccine
for
use against the H5N1 avian influenza virus (Beirut, Lebanon).
Pre-clinical
and clinical trials of our products, and the manufacturing and marketing of
our
technologies, are subject to extensive, costly and rigorous regulation by
governmental authorities in the United States, Canada and other countries.
The
process of obtaining required regulatory approvals from the FDA and other
regulatory authorities often takes many years, is expensive and can vary
significantly based on the type, complexity and novelty of the product
candidates. For these reasons, it is possible we will not receive regulatory
approval for any prescription pharmaceutical product candidate in any countries
other than Ecuador and India.
In
addition, we cannot be sure when or if we will be permitted by regulatory
agencies to undertake additional clinical trials or to commence any particular
phase of clinical trials. Because of this, statements in this Annual Report
regarding the expected timing of clinical trials cannot be regarded as actual
predictions of when we will obtain regulatory approval for any "phase" of
clinical trials.
Delays
in
obtaining United States or other foreign approvals for our pharmaceutical
products could result in substantial additional costs to us, and, therefore,
could adversely affect our ability to compete with other companies. If
regulatory approval is ultimately granted in any countries other than Ecuador
and India, the approval may place limitations on the intended use of the product
we wish to commercialize, and may restrict the way in which we are permitted
to
market the product.
Due
to legal and factual uncertainties regarding the scope and protection afforded
by patents and other proprietary rights, we may not have meaningful protection
from competition.
Our
long-term success will substantially depend upon our ability to protect our
proprietary technologies from infringement, misappropriation, discovery and
duplication and avoid infringing the proprietary rights of others. Our patent
rights, and the patent rights of biotechnology and pharmaceutical companies
in
general, are highly uncertain and include complex legal and factual issues.
Because of this, our pending patent applications may not be granted. These
uncertainties also mean that any patents that we own or will obtain in the
future could be subject to challenge, and even if not challenged, may not
provide us with meaningful protection from competition. Due to our financial
uncertainties, we may not possess the financial resources necessary to enforce
our patents. Patents already issued to us or our pending applications may become
subject to dispute, and any dispute could be resolved against us.
Because
a
substantial number of patents have been issued in the field of alternative
drug
delivery and because patent positions can be highly uncertain and frequently
involve complex legal and factual questions, the breadth of claims obtained
in
any application or the enforceability of our patents cannot be predicted.
Consequently, we do not know whether any of our pending or future patent
applications will result in the issuance of patents or, to the extent patents
have been issued or will be issued, whether these patents will be subject to
further proceedings limiting their scope, will provide significant proprietary
protection or competitive advantage, or will be circumvented or invalidated.
Also
because of these legal and factual uncertainties, and because pending patent
applications are held in secrecy for varying periods in the United States and
other countries, even after reasonable investigation we may not know with
certainty whether any products that we (or a licensee) may develop will infringe
upon any patent or other intellectual property right of a third party. For
example, we are aware of certain patents owned by third parties that such
parties could attempt to use in the future in efforts to affect our freedom
to
practice some of the patents that we own or have applied for. Based upon the
science and scope of these third-party patents, we believe that the patents
that
we own or have applied for do not infringe any such third-party patents;
however, we cannot know for certain whether we could successfully defend our
position, if challenged. We may incur substantial costs if we are required
to
defend our intellectual property in patent suits brought by third parties.
These
legal actions could seek damages and seek to enjoin testing, manufacturing
and
marketing of the accused product or process. In addition to potential liability
for significant damages, we could be required to obtain a license to continue
to
manufacture or market the accused product or process.
Risks
Related to Marketing of Our Potential Products
We
may not become, or stay, profitable even if our pharmaceutical products are
approved for sale.
Even
if
we obtain regulatory approval to market our oral insulin product outside of
Ecuador and India or to market any other prescription pharmaceutical product
candidate , many factors may prevent the product from ever being sold in
commercial quantities. Some of these factors are beyond our control, such as:
26
|
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·
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acceptance
of the formulation or treatment by health care professionals and
diabetic
patients;
|
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·
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the
availability, effectiveness and relative cost of alternative diabetes
or
immunomedicine treatments that may be developed by competitors;
and
|
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·
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the
availability of third-party (i.e., insurer and governmental agency)
reimbursements.
|
We
will
not receive significant revenues from Generex Oral-lyn™ or any of our other
pharmaceuticals products that may receive regulatory approval until we can
successfully manufacture, market and distribute them in the relevant
markets.
Similarly,
the successful commercialization of our over-the-counter glucose spray products
may be hindered by manufacturing, marketing and distribution
limitations.
We
have
to depend upon others for marketing and distribution of our products, and we
may
be forced to enter into contracts limiting the benefits we may receive and
the
control we have over our products. We intend to rely on collaborative
arrangements with one or more other companies that possess strong marketing
and
distribution resources to perform these functions for us. We may not be able
to
enter into beneficial contracts, and we may be forced to enter into contracts
for the marketing and distribution of our products that substantially limit
the
potential benefits to us from commercializing these products. In addition,
we
will not have the same control over marketing and distribution that we would
have if we conducted these functions ourselves.
We
may not be able to compete with treatments now being marketed and developed,
or
which may be developed and marketed in the future by other
companies.
Our
products will compete with existing and new therapies and treatments. We are
aware of a number of companies currently seeking to develop alternative means
of
delivering insulin, as well as new drugs intended to replace insulin therapy
at
least in part. We are also aware of a number of companies currently seeking
to
develop alternative means of enhancing and suppressing peptides. In the longer
term, we also face competition from companies that seek to develop cures for
diabetes and other malignant, infectious, autoimmune and allergic diseases
through techniques for correcting the genetic deficiencies that underlie such
diseases.
Numerous
pharmaceutical, biotechnology and drug delivery companies, hospitals, research
organizations, individual scientists and nonprofit organizations are engaged
in
the development of alternatives to our technologies. Some of these companies
have greater research and development capabilities, experience, manufacturing,
marketing, financial and managerial resources than we do. Collaborations or
mergers between large pharmaceutical or biotechnology companies with competing
drug delivery technologies could enhance our competitors’ financial, marketing
and other resources. Developments by other drug delivery companies could make
our products or technologies uncompetitive or obsolete. Accordingly, our
competitors may succeed in developing competing technologies, obtaining FDA
approval for products or gaining market acceptance more rapidly than we can.
Some
of
our most significant competitors, Pfizer, Eli Lilly, and Novo Nordisk, recently
announced that they will discontinue development and/or sale of their inhalable
forms of insulin. Unlike inhaled insulin formulations, Generex Oral-lyn™ is a
buccally absorbed formulation with no residual pulmonary deposition. We believe
that our buccal delivery technology offers several advantages over inhaled
insulin, including the avoidance of pulmonary inhalation, which requires
frequent physician monitoring, ease of use and portability.
If
government programs and insurance companies do not agree to pay for or reimburse
patients for our pharmaceutical products, our success will be
impacted.
Sales
of
our oral insulin formulation in Ecuador and India and our other potential
pharmaceutical products in other markets will depend in part on the availability
of reimbursement by third-party payers such as government health administration
authorities, private health insurers and other organizations. Third-party payers
often challenge the price and cost-effectiveness of medical products and
services. Governmental approval of health care products does not guarantee
that
these third-party payers will pay for the products. Even if third-party payers
do accept our product, the amounts they pay may not be adequate to enable us
to
realize a profit. Legislation and regulations affecting the pricing of
pharmaceuticals may change before our products are approved for marketing and
any such changes could further limit reimbursement.
27
Risks
Related to Potential Liabilities
We
face significant product liability risks, which may have a negative effect
on
our financial condition.
The
administration of drugs or treatments to humans, whether in clinical trials
or
commercially, can result in product liability claims whether or not the drugs
or
treatments are actually at fault for causing an injury. Furthermore, our
pharmaceutical products may cause, or may appear to have caused, serious adverse
side effects (including death) or potentially dangerous drug interactions that
we may not learn about or understand fully until the drug or treatment has
been
administered to patients for some time. Product liability claims can be
expensive to defend and may result in large judgments or settlements against
us,
which could have a severe negative effect on our financial condition. We
maintain product liability insurance in amounts we believe to be commercially
reasonable for our current level of activity and exposure, but claims could
exceed our coverage limits. Furthermore, due to factors in the insurance market
generally and our own experience, we may not always be able to purchase
sufficient insurance at an affordable price. Even if a product liability claim
is not successful, the adverse publicity and time and expense of defending
such
a claim may interfere with our business.
Risks
Related to the Market for Our Common Stock
Our
common stock could be delisted from The NASDAQ Capital
Market.
On
July
23, 2008, we received notice from The Nasdaq Stock Market that we were not
compliance with Marketplace Rule 4310(c)(4), which requires us to have a minimum
bid price per share of at least $1.00 for thirty (30) consecutive business
days.
In accordance with Marketplace Rule 4310(c)(8)(D), we have 180 calendar days,
or
until January 20, 2009, subject to extension, to regain compliance with this
Rule. If, at anytime prior to January 20, 2009, the bid price of our
common stock closes at $1.00 per share or more for a minimum period of ten
(10)
consecutive business days, we will regain compliance with the Rule.
In
the
event that we cannot demonstrate compliance with NASDAQ Rule 4310(c)(4) by
the
specified deadline and are not eligible for an additional compliance period,
the
staff will notify us that our stock would be delisted, at which time we can
appeal the staff’s determination to a Listing Qualifications Panel. Pending the
decision of the Listing Qualification Panel, our common stock will continue
to
trade on the NASDAQ Capital Market. If we are not successful in such an appeal,
our stock would likely trade on NASDAQ’s over-the-counter bulletin board,
assuming we meet the requisite criteria.
If
we fail to maintain compliance with applicable NASDAQ Rules and our stock is
delisted from the NASDAQ Capital Market, it may become subject to Penny Stock
Regulations and there will be less interest for our stock in the market. This
may result in lower prices for our stock and make it more difficult for us
to
obtain financing.
If
our
stock is not listed on NASDAQ and fails to maintain a price of $5.00 or more
per
share, our stock would become subject to the Securities and Exchange
Commission's "Penny Stock" rules. These rules require a broker to deliver,
prior
to any transaction involving a Penny Stock, a disclosure schedule explaining
the
Penny Stock Market and its risks. Additionally, broker/dealers who recommend
Penny Stocks to persons other than established customers and accredited
investors must make a special written suitability determination and receive
the
purchaser's written agreement to a transaction prior to the sale. In the event
our stock becomes subject to these rules, it will become more difficult for
broker/dealers to sell our common stock. Therefore, it may be more difficult
for
us to obtain financing.
The
price of our common stock may be volatile.
There
may
be wide fluctuations in the price of our common stock. These fluctuations may
be
caused by several factors including:
|
|
·
|
announcements
of research activities and technology innovations or new products
by us or
our competitors;
|
|
|
·
|
changes
in market valuation of companies in our industry
generally;
|
28
|
|
·
|
variations
in operating results;
|
|
|
·
|
changes
in governmental regulations;
|
|
|
·
|
developments
in patent and other proprietary rights;
|
|
|
·
|
public
concern as to the safety of drugs or treatments developed by us or
others;
|
|
|
·
|
results
of clinical trials of our products or our competitors' products;
and
|
|
|
·
|
regulatory
action or inaction on our products or our competitors'
products.
|
From
time
to time, we may hire companies to assist us in pursuing investor relations
strategies to generate increased volumes of investment in our common stock.
Such
activities may result, among other things, in causing the price of our common
stock to increase on a short-term basis.
Furthermore,
the stock market generally and the market for stocks of companies with lower
market capitalizations and small biopharmaceutical companies, like us, have
from
time to time experienced, and likely will again experience significant price
and
volume fluctuations that are unrelated to the operating performance of a
particular company.
Provisions
of our Restated Certificate of Incorporation could delay or prevent the
acquisition or sale of our business.
Our
Restated Certificate of Incorporation permits our Board of Directors to
designate new series of preferred stock and issue those shares without any
vote
or action by our stockholders. Such newly authorized and issued shares of
preferred stock could contain terms that grant special voting rights to the
holders of such shares that make it more difficult to obtain stockholder
approval for an acquisition of our business or increase the cost of any such
acquisition.
Our
recent equity financing will dilute current stockholders and could prevent
the
acquisition or sale of our business .
The
equity financing that we recently entered into will dilute current stockholders.
Currently approximately 59,731,390 shares of common stock are issuable upon
conversion of the 8% secured convertible notes and exercise of the warrants
that
we issued on March 31, 2008 (without regard to additional shares which may
become issuable due to anti-dilution adjustments or in connection with payments
of interest), which represents approximately 54% of the shares of common stock
outstanding immediately prior to the transaction. In addition, we have the
option, subject to certain conditions, to repay principal and accrued interest
on the notes by converting such amounts into shares of our common stock.
Assuming we pay all principal and interest in shares of common stock or the
holders of the notes and warrants convert and exercise all of the notes and
warrants into shares of common stock, the number of shares of issued and
outstanding common stock will increase significantly, and current stockholders
will own a smaller percentage of the outstanding common stock of Generex. The
issuance of shares of common stock pursuant to the notes and warrants will
also
have a dilutive effect on earnings per share and may adversely affect the market
price of the common stock.
In
addition, the issuance of shares of common stock in connection with our March
31, 2008 private placement of notes and warrants could have an anti-takeover
effect because such issuance will make it more difficult for, or discourage
an
attempt by, a party to obtain control of Generex by tender offer or other means.
The issuance of common stock upon conversion of the notes or exercise of the
warrants will increase the number of shares entitled to vote, increase the
number of votes required to approve a change of control of Generex, and dilute
the interest of a party attempting to obtain control of Generex. As of October
6, 2008, we have issued 9,610,400 shares of common stock in repayment of
principal and accrued interest on the notes.
If
we
raise funds through one or more additional equity financings in the future,
it
will have a further dilutive effect on existing holders of our shares by
reducing their percentage ownership. The shares may be sold at a time when
the
market price is low because we need the funds. This will dilute existing holders
more than if our stock price was higher. In addition, equity financings normally
involve shares sold at a discount to the current market price.
29
Item
1B. Unresolved
Staff Comments.
None.
Item
2. Properties.
Our
executive and principal administrative offices occupy approximately 5,000 square
feet of office space in the Business Centre at 33 Harbour Square in downtown
Toronto, Ontario, Canada. We own the Business Centre, which comprises
approximately 9,100 square feet of usable space. The space in the Business
Centre that is not used by us is leased to third parties.
We
own a
laboratory facility in Toronto that we have used for limited production of
our
oral insulin formulation for clinical purposes, and have completed a pilot
manufacturing facility for our insulin and glucose products in the same
commercial complex. Our laboratory facility is approximately 2,650 square feet.
Our pilot manufacturing facility, which also includes laboratory facilities,
is
approximately 4,800 square feet. We also own all additional units in the same
building where our pilot manufacturing facility is located. These units are
currently leased to third parties with the exception of two units being used
by
us for packaging and storage. These units are reflected in Assets Held for
Investments on accompanying consolidated balance sheets. All of these spaces
could be used for manufacturing facilities if necessary. We have obtained
regulatory approval for the laboratory facility and the pilot manufacturing
facility.
We
have
mortgages on our Toronto properties totaling $3,187,248 at July 31, 2008. These
mortgages require the payment of interest, with minimal principal reduction,
prior to their due dates. These mortgages currently require an aggregate
approximately $26,300 in monthly debt service payments. Aggregate principal
maturities for these mortgages will be $1,832,684 in fiscal 2009.
We
lease
approximately 4,336 square feet of office and laboratory space in Worcester,
Massachusetts that Antigen uses for its research and development activities
at
an annual rent of approximately $156,000. This space is sufficient for Antigen’s
present activities.
We
do not
expect to need additional manufacturing capabilities in Canada related to our
insulin product beyond our pilot facility before the end of the current fiscal
year. We own an 11,625 square foot building in Brampton, Ontario, which is
approximately 25 miles outside Toronto, and a 13,500 square foot building in
Mississauga, Ontario, which is about 20 miles from downtown Toronto. Both
properties are currently leased to third parties. These properties are reflected
in Assets Held for Investments on accompanying consolidated balance
sheets.
We
could
use our other properties to expand research, development or testing of our
buccal and immunomedicine products if current facilities prove inadequate for
our needs. We also may consider other opportunities to expand our manufacturing
capabilities as such opportunities arise.
Item
3. Legal
Proceedings.
Subash
Chandarana et al. v. Generex Biotechnology Corporation.
In
February 2001, a former business associate of Pankaj Modi ("Modi") (a former
officer of the Company) and an entity called Centrum Technologies Inc. ("CTI")
commenced an action in the Ontario Superior Court of Justice against us and
Modi
seeking, among other things, damages for alleged breaches of contract and
tortious acts related to a business relationship between this former associate
and Modi that ceased in July 1996. The plaintiffs’ statement of claim also seeks
to enjoin the use, if any, by us of three patents allegedly owned by CTI. The
three patents are entitled Liquid
Formulations for Proteinic Pharmaceuticals,
Vaccine
Delivery System for Immunization, Using Biodegradable Polymer
Microspheres,
and
Controlled
Releases of Drugs or Hormones in Biodegradable Polymer
Microspheres.
It is
our position that the buccal drug delivery technologies which are the subject
matter of our research, development, and commercialization efforts, including
Generex Oral-lyn™ and the RapidMist™ Diabetes Management System, do not make use
of, are not derivative of, do not infringe upon, and are entirely different
from
the intellectual property identified in the plaintiffs’ statement of claim. On
July 20, 2001, we filed a preliminary motion to dismiss the action of CTI as
a
nonexistent entity or, alternatively, to stay such action on the grounds of
want
of authority of such entity to commence the action. The plaintiffs brought
a
cross motion to amend the statement of claim to substitute Centrum
Biotechnologies, Inc. ("CBI") for CTI. CBI is a corporation of which 50 percent
of the shares are owned by the former business associate and the remaining
50
percent are owned by us. Consequently, the shareholders of CBI are in a
deadlock. The court granted our motion to dismiss the action of CTI and denied
the plaintiffs’ cross motion without prejudice to the former business associate
to seek leave to bring a derivative action in the name of or on behalf of CBI.
The former business associate subsequently filed an application with the Ontario
Superior Court of Justice for an order granting him leave to file an action
in
the name of and on behalf of CBI against Modi and us. We opposed the
application. In September 2003, the Ontario Superior Court of Justice granted
the request and issued an order giving the former business associate leave
to
file an action in the name of and on behalf of CBI against Modi and us. A
statement of claim was served in July 2004. Since that time, the plaintiffs
have
not taken any steps in furtherance of the proceeding. We are not able to predict
the ultimate outcome of this legal proceeding at the present time or to estimate
an amount or range of potential loss, if any, from this legal proceeding.
30
Michael
Powell.
In
August, 2006, Michael Powell commenced an action against certain defendants,
including us and certain of our officers, in the Ontario Superior Court of
Justice, claiming compensatory damages, special and punitive damages and various
forms of injunctive and declaratory relief for breach of contract and various
business torts. We believe the claims against us are frivolous and completely
without merit. We are not a party to any agreement with the plaintiff. Much
of
the requested relief relates to the plaintiff’s position and ownership interest
in and accounting for the expenses of an entity in which Generex has no
interest. We have not used any intellectual property or information owned by
the
other entity. All intellectual property, information and business claimed to
be
owned or conducted by the entity in which the plaintiff claims an interest
are
completely unrelated to any product or technology we are currently developing
or
intend to develop. Therefore, even if the court were to award some declaratory
or injunctive relief, we would not be affected. We are defending this action
vigorously. We are not able to predict the ultimate outcome of this legal
proceeding at the present time or to estimate an amount or range of potential
loss, if any, from this legal proceeding.
We
are
involved in certain other legal proceedings in addition to those specifically
described herein. Subject to the uncertainty inherent in all litigation, we
do
not believe at the present time that the resolution of any of these legal
proceedings is likely to have a material adverse effect on our financial
position, operations or cash flows.
With
respect to all litigation matters, as additional information concerning the
estimates used by us becomes known, we reassess each matter’s position both with
respect to accrued liabilities and other potential exposures.
Item
4. Submission
of Matters to a Vote of Security Holders.
Our
Annual Meeting of Stockholders was held on May 27, 2008. At the meeting,
79,102,998 shares of common stock were represented out of 110,636,091 shares
that were entitled to vote. Our stockholders took the following actions at
the
Annual Meeting:
|
|
·
|
elected
all five nominees to the Board of Directors (Proposal
1);
|
|
|
·
|
approved
the potential issuance of shares of our common stock upon the conversion
of convertible notes, upon payment of principal and interest due
on the
convertible notes and upon the exercise of warrants at a conversion
or
exercise price (as the case may be) less than the market price on
March
31, 2008, which convertible notes and warrants were issued in a private
placement financing for the purpose of complying with a Securities
Purchase Agreement, dated March 31, 2008, among Generex and the investors
in the private placement, and the rules governing the NASDAQ Capital
Market (Proposal 2); and
|
|
|
·
|
ratified
the appointment of Danziger Hochman Partners LLP as our independent
public
accountants for the fiscal year ending July 31, 2008 (Proposal
3).
|
The
results of the vote for the Board of Directors was as follows:
|
Election
of nominees to Board of Directors for terms expiring May 27,
2009
|
Votes
For
|
Votes
Against
|
Abstentions
|
|||||||
|
Anna
E. Gluskin
|
69.114%
|
|
0.000%
|
|
2.384%
|
|
||||
|
76,465,120
|
0
|
2,637,878
|
||||||||
|
John
P. Barratt
|
69.240%
|
|
0.000%
|
|
2.258%
|
|
||||
|
76,604,807
|
0
|
2,498,191
|
||||||||
|
Brian
T. McGee
|
69.259%
|
|
0.000%
|
|
2.240%
|
|
||||
|
76,625,038
|
0
|
2,477,960
|
||||||||
|
Nola
E. Masterson
|
69.199%
|
|
0.000%
|
|
2.299%
|
|
||||
|
76,559,095
|
0
|
2,543,903
|
||||||||
|
Rose
C. Perri
|
69.171%
|
|
0.000%
|
|
2.327%
|
|
||||
|
76,528,029
|
0
|
2,574,969
|
||||||||
31
The
results on the votes of the proposals were as follows:
|
Proposal
|
Votes
For
|
Votes
Against
|
Abstention
|
Broker
Non-Votes
|
|||||||||
|
Proposal
2
|
63.796%
70,581,523
|
6.753%
7,471,127
|
0.949%
1,050,347
|
1
|
|||||||||
|
Ratification
of Danziger Hochman Partners LLP
|
69.276%
76,643,761
|
1.135%
1,255,761
|
1.088%
1,203,474
|
2
|
|||||||||
PART
II
|
Item
5.
|
Market
For Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity
Securities.
|
Market
Information
Our
common stock has been listed on the NASDAQ Capital Market (formerly the NASDAQ
SmallCap Market) since June 5, 2003. From May 5, 2000 to June 4, 2003, our
common stock was listed on the NASDAQ National Market. From February 1998 to
May
2000, the "bid" and "asked" prices for our common stock were quoted on the
OTC
Bulletin Board operated by the National Association of Securities Dealers.
Prior
to February 1998, there was no public market for our common stock.
The
table
below also sets forth the high and low sales prices for our common stock
reported on the NASDAQ Capital Market for each fiscal quarter in the prior
two
years ended July 31, 2008.
|
|
Bid
Prices
|
||||||
|
|
High
|
Low
|
|||||
|
Fiscal
2007
|
|
|
|||||
|
First
Quarter
|
$
|
2.70
|
1.25
|
||||
|
Second
Quarter
|
$
|
2.32
|
1.53
|
||||
|
Third
Quarter
|
$
|
1.97
|
1.60
|
||||
|
Fourth
Quarter
|
$
|
2.14
|
1.26
|
||||
|
Fiscal
2008
|
|||||||
|
First
Quarter
|
$
|
1.70
|
1.41
|
||||
|
Second
Quarter
|
$
|
1.95
|
1.27
|
||||
|
Third
Quarter
|
$
|
1.45
|
0.81
|
||||
|
Fourth
Quarter
|
$
|
1.19
|
0.74
|
||||
The
sales
for our common stock reported on October 6, 2008 was $0.34.
As
of
October 6, 2008, there were approximately 711 holders of record of our common
stock. Record holders do not include owners whose shares are held in street
name
by a broker or other nominee.
Dividends
We
have
not paid dividends on our common stock in the past and have no present intention
of paying dividends in the foreseeable future.
32
Stock
Performance Graph
The
following information under this heading “Stock Performance Graph” in
this
Part II, Item 5
of this
Annual Report on Form 10-K is not deemed to be “soliciting material” or to be
“filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act,
or to the liabilities of Section 18 of the Exchange Act, and will not be deemed
to be incorporated by reference into any filing under the Securities Act of
1933, as amended, or the Exchange Act, except to the extent we specifically
incorporate it by reference into such a filing.
Set
forth
below is a line graph comparing the cumulative total return on Generex's common
stock with cumulative total returns of the NASDAQ Stock Market (U.S. Companies)
and the NASDAQ Biotechnology Index for the period commencing July 31, 2003
and
ending on July 31, 2008. The graph assumes that $100 was invested on
July 31, 2003, in Generex's common stock, the stocks in the NASDAQ Stock
Market (U.S. Companies) and the stocks comprising the NASDAQ Biotechnology
Index, and that all dividends were reinvested. Generex's common stock began
trading on the NASDAQ SmallCap Market (now known as the NASDAQ Capital Market)
on June 5, 2003.
Sales
of Unregistered Securities
In
the
fiscal quarter ended July 31, 2008, we sold common stock and other securities
in
transactions in reliance upon exemptions from the registration requirements
of
the Securities Act.
We
have
issued shares of our common stock to CEOcast, Inc., a consultant, pursuant
to an
agreement to provide us with investor relation services until August 21, 2008.
The agreement was extended until January 22, 2009. During the three months
ended
July 31, 2008, we issued 50,000 shares of common stock to CEOcast pursuant
to
this agreement. The sale of such shares was exempt from registration under
the
Securities Act in reliance upon Section 4(2) thereof. We believe that CEOcast,
Inc. is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D under the Securities Act. The certificates issued for the shares
of
common stock will include a legend to indicate that they are restricted. The
sales of such securities did not involve the use of underwriters, and no
commissions were paid in connection therewith.
33
During
the three months ended July 31, 2008, we issued 24,000 shares of common stock
to
American Capital Ventures, Inc. pursuant to an agreement with us for financial
services. The sale of such shares was exempt from registration under the
Securities Act in reliance upon Section 4(2) thereof. We believe that American
Capital Ventures, Inc. is an “accredited investor” as that term is defined in
Rule 501(a) of Regulation D under the Securities Act. The certificates issued
for the shares of common stock will include a legend to indicate that they
are
restricted. The sales of such securities did not involve the use of
underwriters, and no commissions were paid in connection therewith.
During
the three months ended July 31, 2008, we issued 37,500 shares of our restricted
common stock as partial consideration for the provision of services by The
Abajian Group, LLC under a consulting agreement with us. William Abajian, a
Business Development Consultant to Generex, is a principal of The Abajian Group,
LLC. The sale of such shares was exempt from registration under the Securities
Act in reliance upon Section 4(2) thereof. We believe that The Abajian Group,
LLC. is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D under the Securities Act. The certificates issued for the shares
of
common stock will include a legend to indicate that they are restricted. The
sales of such securities did not involve the use of underwriters, and no
commissions were paid in connection therewith.
Issuer
Purchases of Equity Securities
Neither
we nor any affiliated purchaser (as defined in Section 240.10 b-18(a)(3) of
the
Exchange Act) purchased any of our equity securities during the fourth quarter
of the fiscal year ending July 31, 2008.
Item
6. Selected
Financial Data.
The
following selected financial data are derived from and should be read in
conjunction with our financial statements and related notes, which appear
elsewhere in this Annual Report on Form 10-K. Our financial statements for
the
year ended July 31, 2008 were audited by MSCM LLP (successor to Danziger Hochman
Partners LLP), and our financial statements for the years ended July 31, 2007
and 2006 were audited by Danziger Hochman Partners LLP (formerly known as
Danziger & Hochman, Chartered Accountants which merged with MSCM LLP
effective as of August 1, 2008). Our financial statements for the years ended
July 31, 2005 and 2004 were audited by BDO Dunwoody, LLP.
|
In
thousands
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||
|
|
|
|
|
|
||||||||||||
|
Operating
Results:
|
||||||||||||||||
|
Revenue
|
$
|
125
|
$
|
180
|
$
|
175
|
$
|
392
|
$
|
627
|
||||||
|
Net
Loss
|
(36,229
|
)
|
(23,505
|
)
|
(67,967
|
)
|
(24,002
|
)
|
(18,363
|
)
|
||||||
|
Net
Loss Available to Common Stockholders
|
(36,229
|
)
|
(23,505
|
)
|
(67,967
|
)
|
(24,002
|
)
|
(19,173
|
)
|
||||||
|
Cash
Dividends per share
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
Loss
per Common Share:
|
||||||||||||||||
|
Basic
and Diluted Net Loss Per Common Share
|
(.33
|
)
|
(.22
|
)
|
(.90
|
)
|
(.66
|
)
|
(.64
|
)
|
||||||
|
Financial
Positions:
|
||||||||||||||||
|
Total
Assets
|
$
|
38,148
|
$
|
46,404
|
$
|
64,105
|
$
|
13,466
|
$
|
19,012
|
||||||
|
Long-Term
Debt
|
$
|
3,187
|
$
|
3,144
|
$
|
3,036
|
$
|
3,288
|
$
|
2,225
|
||||||
|
Convertible
Debentures
|
$
|
4,719
|
$
|
—
|
$
|
161
|
$
|
1,315
|
$
|
—
|
||||||
|
Series
A, Preferred Stock
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
14,310
|
||||||
|
Stockholder's
Equity
|
$
|
22,647
|
$
|
36,071
|
$
|
55,464
|
$
|
6,127
|
$
|
530
|
||||||
34
Item
7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
The
following discussion and analysis by management provides information with
respect to our financial condition and results of operations for the fiscal
years ended July 31, 2006, 2007 and 2008. This discussion should be read in
conjunction with the information in the consolidated financial statements and
the notes pertaining thereto contained in Item
8 - Financial Statements and Supplementary Data
of this
Annual Report on Form 10-K for the year ended July 31, 2008 and the information
discussed in Part
I, Item 1A - Risk Factors.
Overview
of Business
We
are
engaged primarily in the research, development and commercialization of drug
delivery systems and technologies. Our primary focus at the present time is
our
proprietary technology for the administration of formulations of large molecule
drugs to the oral (buccal) cavity using a hand-held aerosol applicator. Through
our wholly-owned subsidiary, Antigen, we have expanded our focus to include
immunomedicines incorporating proprietary vaccine formulations.
We
believe that our buccal delivery technology is a platform technology that has
application to many large molecule drugs and provides a convenient,
non-invasive, accurate and cost-effective way to administer such drugs. We
have
identified several large molecule drugs as possible candidates for development,
including estrogen, heparin, monoclonal antibodies, human growth hormone and
fertility hormone, but to date have focused our development efforts primarily
on
one pharmaceutical product, Generex Oral-lyn™, an insulin formulation
administered as a fine spray into the oral cavity using our proprietary
hand-held aerosol spray applicator known as RapidMist™. To date, we have
received regulatory approval in Ecuador and India for the commercial marketing
and sale of Generex Oral-lyn™. In March 2008, we initiated Phase III clinical
trials for this product in the U.S. with the first patient screening for such
trials at a clinical study site in Texas. The patient screening at other
participating clinical sites in the U.S. and Canada is ongoing. Currently over
200 patients have been enrolled in 74 clinical sites around the world, including
sites in the United States, Canada, Bulgaria, Poland, Romania, Russia and
Ukraine.
We
received Special Access Program (SAP) authorization from Health Canada for
a
patient-specific, physician-supervised treatment of Type-1 diabetes with Generex
Oral-lyn™ in April 2008. SAP provides access to non-marketed drugs for
practitioners treating patients with serious or life-threatening conditions
when
conventional therapies have failed, are not available or unsuitable. We received
similar authorization from health authorities in Netherlands in September 2008.
We will continue to expand our SAP participation in additional countries around
the world.
Using
our
buccal delivery technology, we also have launched a line of over-the-counter
glucose and energy sprays , including Glucose RapidSpray™, GlucoBreak™, and
BaBOOM!™ Energy Spray. We believe these products will complement Generex
Oral-lyn™ and may provide us with an additional revenue stream prior to the
commercialization of Generex Oral-lyn™.
Our
subsidiary, Antigen, concentrates on developing proprietary vaccine formulations
that work by stimulating the immune system to either attack offending agents
(i.e., cancer cells, bacteria, and viruses) or to stop attacking benign elements
(i.e., self proteins and allergens). Our immunomedicine products are based
on
two platform technologies and are in the early stages of development. We
continue clinical development of Antigen’s synthetic peptide vaccines designed
to stimulate a potent and specific immune response against tumors expressing
the
HER-2/neu oncogene for patients with HER-2/neu positive breast cancer in a
Phase
II clinical trial and patients with prostate cancer and against avian influenza
in two Phase I trials. Development efforts also are underway for seasonal
influenza virus, HIV, HPV, melanoma, ovarian cancer, allergy and Type I diabetes
mellitus. We have established collaborations with clinical investigators at
academic centers to advance these technologies.
We
face
competition from other providers of alternate forms of insulin. Some of our
most
significant competitors, Pfizer, Eli Lilly, and Novo Nordisk, recently announced
that they will discontinue development and/or sale of their inhalable forms
of
insulin. Generex Oral-lyn™ is not an inhaled insulin; rather, it is a buccally
absorbed formulation with no residual pulmonary deposition. We believe that
our
buccal delivery technology offers several advantages over inhaled insulin,
including the avoidance of pulmonary inhalation, which requires frequent
physician monitoring, ease of use and portability.
We
are a
development stage company. From inception through the end of the year ended
July
31, 2008, we have received only limited revenues from operations. In the fiscal
years ended July 31, 2008 and 2007, we received approximately $128,039 and
$182,429, respectively, in revenues from sales of Glucose RapidSpray™ . These
numbers do not reflect deferred sales to the customers during the respective
period with the right of return.
35
We
operate in only one segment: the research, development and commercialization
of
drug delivery systems and technologies for metabolic and immunological
diseases.
Accounting
for Research and Development Projects
Our
major
research and development projects are the refinement of our platform buccal
delivery technology, our buccal insulin project (Generex Oral-lyn™), our buccal
morphine product and Antigen’s peptide immunotherapeutic vaccines.
During
the fiscal year ended July 31, 2008, we expended resources on the clinical
testing and commercialization, of our buccal insulin product, Generex Oral-lyn™.
In July 2007, we received no objection from the FDA to proceed with our
long-term multi-center Phase III study protocol for Generex Oral-lyn™.
Late-stage trials involve testing our product with a large number of patients
over a significant period of time. The completion of late-stage trials in Canada
and eventually the United States may require significantly greater funds than
we
currently have on hand.
Generex
Oral-lyn™ was approved for commercial sale by drug regulatory authorities in
Ecuador in May 2005. PharmaBrand handled the commercial launch of Generex
Oral-lyn™ in Ecuador in June 2006. While we anticipate generating revenue from
sales of Generex Oral-lyn™ in Ecuador, we do not expect that such revenues will
be sufficient to sustain our research and development and regulatory activities.
Generex
Oral-lyn™ was approved for importation and commercial sale in India in November
2007. We have entered into a licensing and distribution agreement with Shreya
Life Sciences Pvt. Ltd. and are working with Shreya to prepare for the
commercial launch of the product in India. We received no revenues from the
sale
of Generex Oral-lyn™ in India in the 2008 fiscal year.
Although
we initiated regulatory approval process for our morphine and fentanyl buccal
products, we did not expend resources to further this product during our last
fiscal year.
During
the fiscal year ended July 31, 2008, we expended resources on research and
development relating to Antigen’s peptide immunotherapeutic vaccines and related
technologies. One Antigen vaccine is currently in Phase II clinical trials
in
the United States involving patients with HER-2/neu positive breast cancer,
and
an Antigen vaccine for H5N1 avian influenza is in Phase I clinical trials
conducted at the Lebanese-Canadian Hospital in Beirut. Antigen’s prostate cancer
vaccine based on AE37 is currently in Phase I clinical trials in Greece.
Preliminary pre-clinical work has commenced with respect to the experimental
vaccine for patients with acute myeloid leukemia at Beijing Daopei Hospital
in
China.
Because
of various uncertainties, we cannot predict the timing of completion and
commercialization of our buccal insulin or buccal morphine products or Antigen’s
peptide immunotherapeutic vaccines or related technologies. These uncertainties
include the success of current studies, our ability to obtain the required
financing and the time required to obtain regulatory approval even if our
research and development efforts are completed and successful, our ability
to
enter into collaborative marketing and distribution agreements with
third-parties, and the success of such marketing and distribution arrangements.
For the same reasons, we cannot predict when any products may begin to produce
net cash inflows.
Most
of
our buccal delivery research and development activities to date have involved
developing our platform technology for use with insulin. Insubstantial amounts
have been expended on projects with other drugs, including morphine and
fentanyl, and those projects involved a substantial amount of platform
technology development. As a result, we have not made significant distinctions
in the accounting for research and development expenses among products, as
a
significant portion of all research has involved improvements to the platform
technology in connection with insulin, which may benefit all of our potential
buccal products. During the fiscal year ended July 31, 2008,
approximately 84.6% of our $16,359,030 in research expenses was attributable
to
insulin and platform technology development, and we did not have any research
expenses related to morphine, fentanyl or other buccal projects. During the
fiscal year ended July 31, 2007, approximately 73% of our $11,983,626 in
research expenses was attributable to insulin and platform technology
development, and we did not have any research expenses related to morphine
or
other buccal projects.
36
Approximately
15.4% or $2,517,552 of our research and development expenses for the fiscal
year
ended July 31, 2008 was related to Antigen's immunomedicine products
compared to approximately 27% or $3,181,927 of our research and development
expenses for the fiscal year ended July 31, 2007. Because these products are
in
initial phases of clinical trials or early, pre-clinical stage of development
(with the exception of the Phase II clinical trials of Antigen HER-2/neu
positive breast cancer vaccine that are underway), all of the expenses were
accounted for as basic research and no distinctions were made as to particular
products. Due to the early stage of development, we cannot predict the timing
of
completion of any products arising from this technology, or when products from
this technology might begin producing revenues.
Critical
Accounting Policies
Our
discussion and analysis of our financial condition and results of operations
is
based on our consolidated financial statements which have been prepared in
conformity with accounting principles generally accepted in the United States
of
America. It requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
We
consider certain accounting policies related to impairment of long-lived assets,
intangible assets and accrued liabilities to be critical to our business
operations and the understanding of our results of operations:
Revenue
Recognition.
Net
sales of Glucose RapidSpray™, BaBOOM!™ Energy Spray and GlucoBreak™ are
generally recognized in the period in which the products are delivered. Delivery
of the products generally completes the criteria for revenue recognition for
the
Company. In the event where the customers have the right of return, sales are
deferred until the right of return lapses or the product is resold.
Inventory.
Inventories
are stated at the lower of cost or market with cost determined using the
first-in first-out method. Management considers such factors as the amount
of
inventory on hand and in the distribution channel, estimated time to sell such
inventory, inventories shelf life and current market conditions when determining
whether the lower cost or market is used. As appropriate, a provision is
recorded to reduce inventories to their net realizable value. Inventory also
includes the cost of products sold to the customers with the rights of
return.
Impairment
of Long-Lived Assets.
Management reviews for impairment whenever events or changes in circumstances
indicate that the carrying amount of property and equipment may not be
recoverable under the provisions of Statement of Financial Accounting Standards
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets."
If it
is determined that an impairment loss has occurred based upon expected future
cash flows, the loss is recognized in the Statement of Operations.
Intangible
Assets.
We have
intangible assets related to patents. The determination of the related estimated
useful lives and whether or not these assets are impaired involves significant
judgments. In assessing the recoverability of these intangible assets, we use
an
estimate of undiscounted operating income and related cash flows over the
remaining useful life, market conditions and other factors to determine the
recoverability of the asset. If these estimates or their related assumptions
change in the future, we may be required to record impairment charges against
these assets.
Estimating
accrued liabilities, specifically litigation accruals.
Management's current estimated range of liabilities related to pending
litigation is based on management's best estimate of future costs. While the
final resolution of the litigation could result in amounts different than
current accruals, and therefore have an impact on our consolidated financial
results in a future reporting period, management believes the ultimate outcome
will not have a significant effect on our consolidated results of operations,
financial position or cash flows.
Share-based
compensation
Management determines value of stock-based compensation in accordance with
Statement of Financial Accounting Standards No. 123(R) “Share-Based Payment”
which revises SFAS No. 123 “Accounting for Stock-Based Compensation” for stock
and options grants to employees. We also follow the guidance of Emerging Issues
Task Force 96-18 “Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”
for equity instruments issued to consultants.
37
Results
of Operations
Year
Ended July 31, 2008 Compared to Year Ended July 31, 2007
Our
net
loss for the fiscal year ended July 31, 2008 (fiscal 2008) was $36,228,991
versus $23,504,958 in the fiscal year ended July 31, 2007 (fiscal 2007). The
increase in net loss in fiscal 2008 versus fiscal 2007 is primarily due to
the
increase in research and development expenses in connection with preparations
for global Phase III clinical trials of Generex Oral-lyn™ at sites in the United
States, Canada, and Europe and the increase in general and administrative
expenses. Our operating loss for fiscal 2008 increased to $33,445,470 compared
to $24,876,102 in fiscal 2007. The increase resulted from an increase in
research and development expenses (to $16,359,030 from $11,983,626), an increase
in selling expense (to $1,562,258 from $693,309) and increases in general and
administrative expenses (to $15,597,048 from $12,317,742). Our net revenues
decreased to $124,891 in fiscal 2008 from $180,198 in fiscal 2007. The decrease
in net revenue is attributable to a reduction in sales of Glucose RapidSpray™ in
fiscal 2008 compared to stocking sales in fiscal 2007.
The
increase in research and development expenses in fiscal 2008 reflects an
increased level of research and development of our oral insulin product and
platform technology and additional clinical trials and increased research and
development efforts of Antigen. The increase in general and administrative
expenses reflects the increase in legal, financial, consulting expenses, an
increase in executive and director’s compensation due to cash and non-cash
bonuses and one time impairment change relating to patents write-off. The
increase was offset by the reduction in advertising and travel expenses. The
selling expenses are associated with the commercial sales of Glucose RapidSpray™
and BaBOOM Energy Spray that began in fiscal 2007.
Our
interest expense in fiscal 2008 increased to $4,280,558 compared to interest
expense of $849,548 in fiscal 2007 due to interest paid on the secured
convertible notes issued in March 2008 in connection with a private placement.
In fiscal 2008, we did not incur loss on extinguishment of debt reflecting
monthly amortization payments due on the secured convertible notes. In fiscal
2007, our loss on extinguishment of debt was $237,162. Our interest income
decreased to $1,166,439 in fiscal 2008 compared to $2,180,380 in the last fiscal
year primarily due to substantially lower market interest rates. We received
higher income from rental operations (net of expense) of $330,533 in fiscal
2008
compared to $277,474 in fiscal 2007.
Results
of Operations
Year
Ended July 31, 2007 Compared to Year Ended July 31, 2006
We
had a
net loss of $23,504,958 for the year ended July 31, 2007 (fiscal 2007) compared
to a net loss of $67,967,204 for the year ended July 31, 2006 (fiscal 2006).
The
decrease in net loss for fiscal 2007 is attributable to the fact that in fiscal
2007 we did not have interest expense and loss on extinguishment of debt similar
to that which we incurred during fiscal 2006 fiscal year in connection with
the
issuance of convertible debentures. Our operation loss for fiscal 2007 increased
to $24,876,102 compared to $18,705,983 in operating loss for fiscal 2006. The
increase in our fiscal 2007 operating loss resulted from a significant increase
in research and development expenses (to $11,983,626 from $6,554,393), an
increase in our selling and marketing expenses (to $693,309 from $56,028) and
a
slight increase in general and administrative expenses (to $12, 317,742 from
$12,270,562). Our revenue, excluding the deferred revenue, increased slightly
from $175,000 in fiscal 2006 to $180,198 in fiscal 2007 and is attributable
to
the sales of our over-the-counter products.
The
increase in general and administrative expenses for fiscal 2007 is due primarily
to the increase of non cash compensation to financial consultants in fiscal
2007
compared to compensation paid in 2006, an increase in legal, litigation and
accounting expenses and an increase in travel. The increase was offset by the
reduction in executive and director compensation and the decrease in office
and
general expenses.
The
increase in research and development expenses for fiscal 2007 reflects increased
levels of research and development activities in connection with commencement
of
Phase III clinical trials in Canada and higher level of clinical activities
of
Antigen.
Our
interest expense in fiscal 2007 decreased to $849,548, compared to interest
expense of $37,715,275 in fiscal 2006 relating to interest paid in connection
with convertible debentures entered into during the last fiscal year. Our
interest and miscellaneous income increased to $2,180,380 in fiscal 2007,
compared to $768,098 in fiscal 2006, primarily due to substantially higher
cash
and short term investment balances during fiscal 2007. Our loss on
extinguishment of debt, also incurred in connection with convertible debentures,
was $237,162 in fiscal 2007, compared to $12,550,565 in fiscal 2006. We received
a slightly higher income from rental operations (net of expense) of $277,474
in
fiscal 2007, compared to $236,521 in fiscal 2006.
38
Financial
Condition, Liquidity and Resources
Sources
of Liquidity
To
date
we have financed our development stage activities primarily through private
placements of our common stock and securities convertible into our common stock.
At
July
31, 2008, we had cash and short-term investments of approximately $26 million,
a
decrease of $9 million from the balance as of the end of the prior fiscal year.
All of our short-term investments represent investment in high-grade auction
rate securities. The continued negative conditions in the global credit markets
have prevented some investors from liquidating their holdings of auction rate
securities because the amount of securities submitted for sale has exceeded
the
amount of purchase orders for such securities. In the event we need or desire
to
access these funds, we will not be able to do so until a future auction on
these
investments is successful or a buyer is found outside the auction process.
The
relative buying and selling interest of market participants in our auction
rate
securities and in the auction rate securities market as a whole will vary over
time, and such variations may be affected by, among other things, news relating
to the issuer, the attractiveness of alternative investments, the perceived
risk
of owning the security (whether related to credit, liquidity or any other risk),
the accounting or tax treatment accorded the instruments, reactions to
regulatory actions or press reports, financial reporting cycles and market
sentiment generally. Shifts of demand in response to any one or simultaneous
particular events cannot be predicted and may be short-lived or exist for longer
periods.
It
is
possible that the potential lack of liquidity in our auction rate security
investments could adversely affect our liquidity and our ability to fund our
operations. We cannot predict whether future auctions related to auction rate
securities will be successful. We are currently seeking alternatives for
reducing exposure to the auction rate market, but may not be able to identify
any such alternative. If we are not able to monetize some or all of our auction
rate securities, we could suffer a loss and such loss could have a material
adverse effect on our ability to finance our future ongoing operations. On
August 15, 2008, the SEC announced that it had reached a preliminary settlement
in principle with the financial institution through which we hold our auction
rate securities, which included a plan to restore liquidity to the financial
institution’s customers who invested in auction rate securities. Under the
settlement, the financial institution is required to offer to purchase the
auction rate securities of its customers (other than individual investors,
small
businesses, and charitable organizations) in a buy back that will begin no
later
than June 10, 2009 and conclude by June 30, 2009. In addition, the financial
institution is required by the settlement to offer no net loans that will remain
outstanding until the auction rate securities are repurchased. The preliminary
settlement is subject to finalization and SEC approval. To date, we have not
received confirmation from the financial institution of the settlement
terms.
We
believe that the commencement of Phase III clinical trial trials for Oral-lyn™
in the United States and Canada is a significant milestone event. We also
anticipate that the commercial launch of Oral-lyn™ in India, which is expected
in before the end of calendar 2008, will provide us with revenue in fiscal
2009.
We believe that the successful commercial launch of Oral-lyn™ in India, will
enhance our ability to access additional sources of funding. For instance,
in
August 2008, we entered into a product licensing and distribution agreement
with
Dong Sung Pharm Co. Ltd. for the importation, marketing, distribution and sale
of Generex Oral-lyn™ in South Korea. Under this agreement, we will receive an
upfront non-refundable license fee of $500,000 and a non-refundable license
fee
of $500,000 at such time as we obtain governmental approval for the importation,
marketing, distribution and sale of the product in South Korea is obtained.
When
it places its first order of Oral-lyn™, Dong-Sung also will make a $500,000
pre-payment against which product purchases will be applied.
Further
we anticipate that our principal payment obligations under the convertible
notes
issued in the March 2008 private placement will be largely satisfied without
cash payments through conversion of principal into shares of our common stock
as
permitted by the notes. In addition, we may receive additional proceeds from
the
exercise of warrants issued in the March 2008 private placement. As of October
1, 2008, all of the warrants issued in March 2008 became exercisable.
As
of
July 31, 2008, we believed that our anticipated cash position was sufficient
to
meet our working capital needs for the next twelve months based on the pace
of
our planned activities. Beyond that, we may require additional funds to support
our working capital requirements or for other purposes.
39
We
will
continue to require substantial funds to continue research and development,
including preclinical studies and clinical trials of our product candidates,
and
to commence sales and marketing efforts if the FDA or other regulatory approvals
are obtained. Management may seek to meet all or some of our operating cash
flow
requirements through financing activities, such as private placement of our
common stock, preferred stock offerings and offerings of debt and convertible
debt instruments. We filed a shelf registration statement with the Securities
and Exchange Commission (“SEC”) to register an indeterminate number of shares of
common stock and preferred stock and an indeterminate number of warrants and
units, the aggregate initial offering price of which is not to exceed
$150,000,000, but we have not offered any shares pursuant to this registration
statement to date. Management is actively pursuing industry collaboration
activities, including product licensing and specific project financing. We
are
also examining options for the procurement of a reliable long-term insulin
supply for our future commercial needs.
While
we
have generally been able to raise equity capital as required, our cash balances
were very low during portions of fiscal 2005 and unforeseen problems with our
clinical program, manufacturing and commercialization plans in Ecuador and
India
or materially negative developments in general economic conditions could
interfere with our ability to raise additional equity capital as needed, or
materially adversely affect the terms upon which such capital is available.
If
we are unable to raise additional capital as needed, we could be required to
“scale back” or otherwise revise our business plan. Any significant scale back
of operations or modification of our business plan due to a lack of funding
could be expected to affect our prospects materially and adversely.
Financing
– 8% Secured Convertible Notes and Warrants
On
March
31, 2008, we entered into a Securities Purchase Agreement and related documents
with existing institutional investors relating to a private placement of 8%
secured convertible notes (the “Notes”) and warrants (the “Warrants”) for
aggregate gross proceeds to us of $20,650,000. In connection with the financing,
we entered into a Registration Rights Agreement that required us to file a
registration statement with the SEC by April 30, 2008 covering the resale of
the
shares of our common stock issuable pursuant to the Notes and Warrants.
Also
in
connection with the financing, we and our subsidiaries entered into a Security
Agreement and related documents pledging and granting security interests to
the
investors in all of the non-real estate assets of Generex and our subsidiaries
to secure all of our obligations to the investors, including our obligations
pursuant to the Securities Purchase Agreement and the Notes and Warrants issued
thereunder. With limited exceptions, the Security Agreement prohibits us from
incurring future debt until the Notes are paid or converted. An “Event of
Default” under the Notes constitutes an “Event of Default” under the Security
Agreement.
The
Notes
have an 18-month maturity and amortize over fifteen months in fifteen equal
monthly installments beginning on August 1, 2008. We may pay installments of
principal and accrued interest in cash or, at our option, in shares of our
common stock subject to the satisfaction of certain conditions. If we elect
to
pay principal and interest in shares of our common stock, the value of each
share of common stock will be equal to the lower of (a) the conversion price,
and (b) 90% of the average of the volume weighted average prices of the common
stock on each of the twenty (20) consecutive trading days immediately preceding
the applicable payment date.
At
the
option of each Noteholder, the principal amount outstanding under each Note
is
convertible at any time after March 31, 2008 into shares of our common stock
at
the initial conversion price of $1.21, which represents 110% of the closing
bid
price of our common stock on the NASDAQ Capital Market on the closing date,
March 31, 2008.
Each
Note
lists certain “Events of Default”, which include, without limitation, any
default in the payment of principal of, interest on or other charges in respect
of the Notes as and when they become due and payable, and our failure to observe
or perform any other covenant, agreement or warranty contained in, or otherwise
commit any breach or default of any provision of Note, the Securities Purchase
Agreement or the Security Agreement. Upon the occurrence of an Event of Default,
the holder may require us to redeem all or any portion of a Note by delivering
written notice thereof to us, at a default redemption price as calculated
pursuant to certain formulas set forth in the Note. Until the default redemption
price (together with any interest thereon) is paid in full, the amount of any
Note submitted for redemption (together with any interest thereon) may be
converted, in whole or in part, by the holder into common stock. In the event
of
a partial redemption, the principal amount redeemed shall be deducted from
the
installment amounts relating to the applicable installment date(s) as set forth
in the notice of default and redemption.
The
aggregate amount payable upon an Event of Default is the default redemption
price. The default redemption price is calculated as the greater
of:
|
(i)
|
the
product of (A) the sum of the principal amount to be redeemed together
with accrued and unpaid interest and unpaid late charges with respect
to
such principal amount and (B) 135%,
and
|
40
| (ii) |
the
product of
|
|
(X)
|
the
principal amount of the Notes to be prepaid, plus all other accrued
and
unpaid interest thereof, divided by the conversion price on in effect
at
such time as the holder delivers an Event of Default redemption notice
and
|
|
(Y)
|
the
product of (1) the 135% and (2) the greater of (I) the closing sale
price
of our common stock on the date immediately preceding such Event
of
Default, (II) the closing sale price of our common stock on the date
immediately after such Event of Default and (III) the closing sale
price
of the common stock on the date the holder delivers the Event of
Default
redemption notice.
|
Beginning
from and after the occurrence of any Event of Default, the interest rate on
the
Notes will accrue at the rate of 16% per annum, or such lower maximum amount
of
interest permitted to be charged under applicable law.
The
Securities Purchase Agreement provided that unless and until we obtained
shareholder approval of the issuance of securities pursuant to this transaction,
in no event could we (i) repay the principal amount due and owing under the
Notes with shares of common stock or (ii) issue securities at a price per share
less than the conversion price of the Notes or exercise price of the Warrants.
A
proposal to approve the issuance of securities pursuant to this transaction
was
approved by our shareholders at our Annual Meeting held on May 27,
2008.
We
are
prohibited from issuing any variable priced equity or variable priced
equity-linked securities as long as any Note is outstanding. We also are
prohibited from issuing any equity or equity-linked securities until 90 days
after the effective date of a registration statement covering the resale of
the
shares of our common stock issuable pursuant to the Notes and Warrants, with
limited exceptions. In addition, until the later of (i) 12 months after the
effective date of such a registration statement and (ii) the date the Notes
have
been repaid or converted in full, the investors will have the right to
participate in any capital raising transactions that we undertake.
The
Warrants issued in connection with the March 2008 Securities Purchase Agreement
include:
|
(i)
|
Series
A and A-1 Warrants, which are exercisable for a period of 7 years
into an
aggregate of 75% of the number of shares of our common stock initially
issuable upon conversion of the Notes, with the Series A Warrants
being
exercisable into 5,257,729 shares immediately upon issuance and the
Series
A-1 warrants being exercisable into 7,541,857 shares beginning October
1,
2008;
|
|
|
(ii)
|
Series
B Warrants, which are exercisable beginning October 1, 2008 into
100% of
the shares of our common stock initially issuable upon conversion
of the
Notes (initially 17,066,166 shares) and remaining exercisable for
a period
of 18 months after a registration statement covering the shares of
common
stock issuable upon conversion or exercise of the Notes and Warrants
is
declared effective by the SEC; and
|
|
|
(iii)
|
Series
C Warrants, which are exercisable for a period of 7 years beginning
October 1, 2008, but only to the extent that the Series B Warrant
are
exercised and only in the same percentage that the Series B Warrants
are
exercised, up to a maximum percentage of 75% of the number of shares
of
our common stock initially issuable upon conversion of the Notes
(initially a maximum of 12,799,580 shares).
|
The
initial exercise price of each Series A Warrant, Series A-1 Warrant, Series
B
Warrant and Series C Warrant is $1.21.
In
accordance with the terms of the Notes and the Warrants, no holder may convert
a
Note or exercise a Warrant if after giving effect to such conversion or
exercise, as the case may be, such holder would beneficially own greater than
4.90% or 4.99%, as to certain holders, and 9.90% or 9.99%, as to other holders,
of outstanding shares of our common stock after giving effect to such conversion
or exercise, as applicable.
The
conversion price of the Notes and the exercise price of the Warrants are subject
to a full-ratchet adjustment upon the occurrence of certain events, including
the issuance by us of securities at a price per share less than the conversion
price or exercise price then in effect,
as
applicable. If we issue shares of common stock or options exercisable for or
securities convertible into common stock at an effective price per share of
common stock less than the conversion or exercise price then in effect, the
conversion or exercise price will be reduced to the effective price of the
new
issuance.
41
In
addition, in connection with the transaction, we (a) reduced the strike price
of
our outstanding common stock purchase warrants that are held by the investors
in
the March 2008 private placement and certain other warrant holders and that
have
strike prices ranging from $1.25 to $3.00, to $1.10, which equals the closing
bid price of the common stock on the NASDAQ Capital Market on the closing date,
March 31, 2008, and (b) extended the expiration date of such warrants to
March 31, 2015. The holders of those warrants will waive all
anti-dilution entitlements they have in respect of any of our previously issued
securities with respect to the issuance or conversion of the Notes, the payment
of the installments or interest in shares of the common stock, or the issuance
or exercise of the Warrants.
At
July
31, 2008, we recorded $20,650,000 in aggregate principal amount of the Notes
outstanding. Interest on the principal amount outstanding under the Notes will
accrue at a rate of eight percent (8%) per
annum.
As of
July 31, 2008, we incurred interest expense of $4,048,117 related to the Notes
that includes non cash accounting expense of $3,483,684 relating to debt
discount.
At
July
31, 2008, outstanding Warrants issued in connection with the March 2008
Securities Purchase Agreement and the repriced warrants described above were
as
follows:
|
Date Issued
|
Aggregate
No. of
Shares Unexercised
|
Exercise
Price*
|
Exercise Date
|
Expiration Date
|
|||||||||
|
March
31, 2008
|
12,697,024
|
$
|
1.10
|
March 31, 2008
|
March
31, 2015
|
||||||||
|
|
|||||||||||||
|
March
31, 2008
|
5,257,729
|
$
|
1.21
|
March
31, 2008
|
March
31, 2015
|
||||||||
|
|
|||||||||||||
|
March
31, 2008
|
20,341,437
|
$
|
1.21
|
October 1, 2008
|
October 1, 2015
|
||||||||
|
|
|||||||||||||
|
March
31, 2008
|
17,066,117
|
$
|
1.21
|
October
1, 2008
|
October
1, 2009
|
||||||||
*Subject
to anti-dilution adjustments upon issuance of securities at a price per share
of
common stock less than the then applicable exercise price or the market price
of
our common stock at that time, whichever is lower.
Registration
Statement
On
April
30, 2008, we filed a registration statement with the SEC on Form S-3 covering
the resale of all the shares of our common stock issuable pursuant to the Notes
and Warrants. We received comments on the registration statement from the SEC
Staff and filed amendments to the registration statement. In the third
amendment, we reduced the number of shares to be registered to an aggregate
of
30,191,665 shares, which number is equal to 30% of our public float as measured
prior to the March private placement and includes:
|
·
|
22,527,275
shares of our common stock issuable upon conversion of, and as interest
payments on, the Notes (120%);
|
|
·
|
6,309,275
shares of common stock issuable upon exercise of the Series A Warrants
issued to the holders of the Notes;
and
|
|
·
|
1,355,117
shares of common stock issuable upon exercise of some of the Series
A-1
Warrants.
|
The
registration statement, as amended, was declared effective on July 29,
2008.
Payments
on Notes
In
July
and August 2008, we entered into waiver and consent agreements with the
Noteholders to allow us to convert some or all of the installment amounts due
on
the Notes on the August 1st,
September 1st
and
October 1st
installment dates into shares of our common stock, subject to certain
conditions. We sought waivers from the Noteholders due to our failure to meet
certain conditions precedent to the conversion of installment amounts under
the
Notes as of the August 1st
installment notice date, including:
42
|
·
|
the
registration statement for the resale of all of the shares of common
stock
underlying the Notes and the Warrants was not effective at least
thirty
days prior to the installment notice date of August 1, 2008;
and
|
|
·
|
we
failed to comply with the minimum bid price requirement of Marketplace
Rule 4310(c)(4) of The Nasdaq Stock
Market.
|
Pursuant
to the consent and waiver agreements, all of the Noteholders, with the exception
of Iroquois Master Fund Ltd. and Iroquois Capital Opportunity Fund, LP
(together, the “Iroquois Funds”), agreed to waive satisfaction of (i) the
effective registration statement requirement with respect the September 1,
2008
installment date, and (ii) the listing maintenance condition with respect to
the
September 1, 2008 and October 1, 2008 installment dates. Thus, we converted
the
installment amounts due on each of the September 1st
and
October 1st
installment dates into shares of our common stock. The Iroquois Funds agreed
to
waive satisfaction of the two conditions precedent to our conversion of
installments amounts with respect the September 1, 2008 installment date such
that we converted the September 1, 2008 installment amount due to the Iroquois
Funds into shares of our common stock.
In
addition, subject to certain conditions, three of the investors - Cranshire
Capital, L.P., Portside Growth and Opportunity Fund, and Smithfield Fiduciary
LLC -, consented to our conversion and redemption, as applicable, of the
installment amount due on August 1, 2008 as follows:
|
·
|
On
the August 1st
installment date, we paid the accrued and unpaid interest in
cash.
|
|
·
|
We
paid the balance of the August 1st installment amount in shares of
our
common stock as follows:
|
|
·
|
50%
of the shares were issued at the same time and in the same manner
as the
shares issued in payment of the September 1, 2008 installment amount;
and
|
|
·
|
50%
of the shares were issued at the same time and in the same manner
as the
shares issued in payment of the October 1, 2008 installment
amount.
|
|
·
|
The
shares issued in respect of the August 1st installment amount were
calculated using the lower of:
|
| · |
the
then applicable conversion price,
|
|
·
|
the
price computed as 90% of the arithmetic average of the volume weighted
average price (“VWAP”) of the common stock on each of the twenty
consecutive trading days immediately preceding August 1, 2008
and
|
|
·
|
the
price computed as 90% of the arithmetic average of the VWAP of the
common
stock on each of the twenty consecutive trading days immediately
preceding
the delivery or deemed delivery of our installment notice with respect
to
the installment amount due on September 1, 2008 or October 1, 2008,
as
applicable.
|
Another
investor, Rockmore Investment Master Fund Ltd, consented to our conversion
and
redemption, as the case may be, of the August 1st
installment amount in the manner described above, except that we paid 50% of
the
principal balance of the August 1st
installment amount plus accrued and unpaid interest in cash on August
1st,
andwe
paid the remaining50% of the principal balance of the August 1st
installment amount in shares of common stock, delivering half of such shares
together with the September 1, 2008 installment amount and half of such shares
together with the October 1, 2008 installment amount.
We
obtained similar waivers from all investors in respect to our November 1, 2008
installment amount.
As
of
October 6, 2008, we have issued 9,610,400 shares of common stock and paid
$941,100 in cash to repay Note principal and accrued interest in the aggregate
amount of $4,946,516.
43
Because
of the decrease in our stock price since the filing of the registration
statement required under the Notes, we believe that the registration statement
does not likely include a sufficient number of shares to allow us to make all
of
the remaining principal and interest payments in shares rather than in cash.
We
believe that we will be able to negotiate relief from the requirement that
an
additional registration statement be filed the near future to comply with the
condition precedent under the Notes because all of the shares we would issue
in
the absence of a registration statement would be eligible for resale by the
investors pursuant to Rule 144. (As of October 1, 2008, the Series A-1, Series
B
and Series C Warrants became exercisable. To the extent that the holders
exercise the Series A-1, Series B and Series C Warrants pursuant to the cashless
exercise feature contained therein, the holders will have satisfied the holding
period mandated by the SEC under Rule 144.) As of the filing of this Annual
Report on Form 10-K, however, we have not negotiated such arrangements and
it is
possible that we will need to pay the majority of the remaining principal and
interest on the Notes in cash.
With
respect to our noncompliance with Marketplace Rule 4310(c)(4), which requires
us
to have a minimum bid price per share of at least $1.00 for 30 consecutive
business days, we have 180 calendar days, or until January 20, 2009, to regain
compliance with the Rule. If, at anytime prior to January 20, 2009, the bid
price of our common stock closes at $1.00 per share or more for a minimum period
of ten consecutive business days, we will regain compliance with the Rule.
In
addition, assuming that the we meet the initial listing criteria, we may seek
an
additional 180 calendar day period to regain compliance. We believe that as
our
late-stage clinical trials of Generex Oral-lyn™ progress in the United States,
Canada, Europe and certain countries in Eastern Europe, investor confidence
in
Generex will increase, which would have a positive effect on our stock price
and
enable us to meet the minimum bid price requirement under Marketplace Rule
4310(c)(4). To the extent that we have not achieved compliance with the Rule
by
the December
1st
installment notice date, we will seek further waivers from the Noteholders
with
respect to this condition.
Cash
Flows for the Year Ended July 31, 2008
For
the
year ended July 31, 2008, we used $28,309,464 in cash to fund our operating
activities. The use for operating activities included a net loss of $36,228,991,
a net increase in inventory and inventory deposits of $1,345,939, a $30,701
increase in accounts receivable, offset by an increase of $762,505 in accounts
payable and accrued expenses, an increase of $92,481 in deferred revenue and
a
decrease in other current assets of $53,687.
The
use
of cash was offset by non-cash increases of approximately $1,084,919 related
to
depreciation and amortization, $741,690 write-off of impaired patents, $1,260,263
in stock-based compensation to employees, $1,611,882 in stock-based compensation
for services to consultants, $205,056 in amortization of the loan origination
fee and deferred debt issuance cost and $3,483,684 of amortization of debt
discount related to the convertible note transaction.
We
had
net cash flows from investing activities of $4,920,847 in the year ended July
31, 2008, primarily consisting of $28,307,895 in proceeds from maturity of
short
term investments and $51,219 in changes in deposits. This was offset by payments
for property and equipment of $57,136, cost incurred for patents of $232,760
and
re-purchase of short term investments of $23,148,371.
We
had
net cash flows from financing activities of $19,651,109 in the year ended July
31, 2008. Proceeds from convertible notes were $20,450,000 and proceeds from
the
exercise of stock options and warrants were $391,790. We made payments on our
notes payable and long-term debt of $812,225, and repurchased shares of our
common stock from a single stockholder for $378,456
Our
net
working capital at July 31, 2008 decreased from July 31, 2007 by $14,036,931
to
$14,377,753, which was attributed largely to our fiscal 2008 loss offset by
the
net cash flows from our financing activities.
Funding
Requirements
We
expect
to devote substantial resources to obtaining regulatory approval of Generex
Oral-lyn™ in the U.S., Canada and Europe and to commercializing Generex
Oral-lyn™ in India and Ecuador. We also will devote resources to obtaining
approval for the importation, marketing and commercialization of Generex
Oral-lyn™ in other countries where we have licensed distributors. In addition,
we will expend resources on further clinical development of our
immunotherapeutic vaccines. Our future funding requirements and our ability
to
raise additional capital will depend on factors that include:
44
| · |
the
timing and amount of expense incurred to complete our clinical trials;
|
|
·
|
the
costs and timing of the regulatory process as we seek approval of
our
products in development;
|
|
·
|
the
advancement of our products in development;
|
|
·
|
our
ability to generate new relationships with industry partners throughout
the world that will provide us with regulatory assistance and long-term
commercialization opportunities;
|
|
·
|
the
timing, receipt and amount of sales, if any, from Generex Oral-lyn™ in
India and Ecuador;
|
|
·
|
the
timing, receipt and amount of sales, if any, from our over-the-counter
products;
|
|
·
|
the
cost of manufacturing (paid to third parties) of our licensed products,
and the cost of marketing and sales activities of those products;
|
|
·
|
the
costs of prosecuting, maintaining, and enforcing patent claims, if
any
claims are made;
|
|
·
|
our
ability to maintain existing collaborative relationships and establish
new
relationships as we advance our products in development; and
|
|
·
|
the
receptivity of the financial market to biopharmaceutical companies.
|
Off-Balance
Sheet Arrangements
We
have
no off-balance sheet arrangements that have or are reasonably likely to have
a
current or future effect on the Company’s financial condition, changes in
financial condition, revenue or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors, and
we
do not have any non-consolidated special purpose entities.
Contractual
Obligations
The
following table of contractual obligations as of July 31, 2008 includes interest
obligations.
|
Payments Due by Period
|
||||||||||||||||
|
Contractual Obligations
|
Total
|
Less than 1
Year
|
1-3 years
|
3-5 years
|
More
than
5 years
|
|||||||||||
|
Long-Term
Debt Obligations
|
3,472,448
|
1,990,432
|
1,482,016
|
|||||||||||||
|
Convertible
Debt Obligations
|
22,191,866
|
18,005,576
|
4,186,290
|
|||||||||||||
|
Capital
Lease Obligations
|
||||||||||||||||
|
Operating
Lease Obligations
|
493,975
|
153,030
|
230,581
|
109,587
|
777
|
|||||||||||
|
Purchase
Obligations
|
||||||||||||||||
|
Other
Long-Term Liabilities Reflected on the Registrant's
Balance Sheet under GAAP
|
||||||||||||||||
|
Total
|
$
|
26,158,289
|
$
|
20,149,038
|
$
|
5,898,887
|
$
|
109,587
|
$
|
777
|
||||||
Convertible
debt obligations represent scheduled principal and interest payments on our
8%
secured convertible notes. Remaining principal of $20,650,000 is payable in
monthly installments, through September 2009. Principal may be paid, at our
option, in cash or shares of our common stock, subject to the satisfaction
of
certain equity conditions delineated in the notes. Because investors may convert
principal into common stock, at any time, at their option, the timing of
principal and interest payments may accelerate relative to this schedule.
45
Related
Transactions
Prior
to
January 1, 1999, a portion of our general and administrative expenses resulted
from transactions with affiliated persons, and a number of capital transactions
also involved affiliated persons. Although these transactions were not the
result of "arms-length" negotiations, we do not believe that this fact had
a
material impact on our results of operations or financial position. Prior to
December 31, 1998, we classified certain payments to executive officers for
compensation and expense reimbursements as "Research and Development - related
party" and "General and Administrative - related party" because the executive
officers received such payments through personal services corporations rather
than directly. After December 31, 1998, these payments have been and will
continue to be accounted for as though the payments were made directly to the
officers, and not as a related party transaction. With the exception of our
arrangement with our management company described below, we do not foresee
a
need for, and therefore do not anticipate, any related party transactions in
the
current fiscal year.
On
May 3,
2001, we advanced $334,300 to each of three senior officers, who are also our
stockholders, in exchange for promissory notes. These notes bore interest at
8.5% per annum and were payable in full on May 1, 2002. These notes were
guaranteed by a related company owned by these officers and secured by a pledge
of 2,500,000 shares of our common stock owned by this related company. On June
3, 2002, our Board of Directors extended the maturity date of the loans to
October 1, 2002. The other terms and conditions of the loans and guaranty
remained unchanged and in full force and effect. As of July 31, 2002, the
balance outstanding on these notes, including accrued interest, was $1,114,084.
Pursuant to a decision made by the Compensation Committee as of August 30,
2002,
these loans were satisfied through the application of 592,716 shares of pledged
stock, at a value of $1.90 per share, which represented the lowest closing
price
during the sixty days prior to August 30, 2002.
On
December 9, 2005, our Board of Directors approved a one-time recompense payment
in the aggregate amount of $1,000,000 for each of Ms. Gluskin, our Chairwoman,
Chief Executive Officer and President, and Ms. Rose Perri, our Chief Operating
Officer, Chief Financial Officer, Treasurer and Secretary, in recognition of
the
company’s failure to remunerate each of Ms. Gluskin and Ms. Perri in each of the
fiscal years ended July 31, 1998, 1999, 2000 and 2001 in a fair and reasonable
manner commensurate with comparable industry standards and Ms. Gluskin’s and Ms.
Perri’s duties, responsibilities and performance during such years. The payment
of such amount to each of Ms. Gluskin and Ms. Perri will be made (a) in cash
at
such time or times and in such amounts as determined solely by Ms. Gluskin
or
Ms. Perri, as applicable, and/or (b) in shares of our common stock at such
time
or times as determined by Ms. Gluskin or Ms. Perri, as applicable, provided
that
the conversion price for any such shares shall be equal to the average closing
price of our common stock on the NASDAQ Capital Market for the 20 successive
trading days immediately preceding, but not including, December 9, 2005. The
amounts were not paid as of July 31, 2008 with the exception of
$415,742.30 that was used by Ms. Perri to repay Note Receivable, Due from
Related Party. The amount was due from EBI, Inc., a shareholder of the Company
that is controlled by the estate of the Company’s former Chairman of the Board,
Mark Perri. The note was not interest bearing, unsecured and did not have any
fixed terms of repayment. The note was extended to EBI, Inc. in May
1997.
Real
Estate Transactions:
On
August 7, 2002, we purchased real estate with an aggregate purchase price of
approximately $1.6 million from an unaffiliated party. In connection with that
transaction, Angara Enterprises, Inc., a licensed real estate broker that is
an
affiliate of Ms. Gluskin received a commission from the proceeds of the sale
to
the seller in the amount of 3% of the purchase price, or $45,714. We believe
that this is less than the aggregate commission which would have been payable
if
a commission had been negotiated with an unaffiliated broker on an arm's length
basis.
On
December 9, 2005, our Board of Directors approved the grant to Ms. Perri of
a
right of first refusal in respect of any sale, transfer, assignment or other
disposition of either or both real properties municipally known as 1740 Sismet
Road, Mississauga, Ontario and 98 Stafford Drive, Brampton, Ontario
(collectively, the “Properties”). We granted Ms. Perri this right in recognition
of the fair market value transfer to us during the fiscal year ended July 31,
1998 by Ms. Perri (or parties related to her) of the Properties.
We
utilize a management company to manage all of our real properties. The property
management company is owned by Ms. Perri, Ms. Gluskin and the estate of Mark
Perri, our former Chairman of the Board. In the fiscal years ended July 31,
2008
and 2007, we paid the management company approximately $54,473 and $47,832,
respectively, in management fees. We believe that the amounts paid to the
management company approximate the rates that would be charged by a
non-affiliated property management company.
46
Legal
Fees.
David
Wires, a former director, is a partner of the firm Wires Jolley LLP. Wires
Jolley represents us in various matters. During fiscal 2008, we paid
approximately $44,000 in fees to Wires Jolley. We continue to use Wires Jolley
and expect to pay legal fees in similar amounts to the firm in fiscal 2009.
Consulting
Fees.
Peter
Amanatides, a former director, is the Senior Vice-President and Chief Operating
Officer of PharmaLogika, Inc., a private consulting firm in the pharmaceuticals
regulatory field. At July 31, 2008, we owed a balance of $50,000 in fees to
PharmaLogika for services rendered. We do not expect to pay any further fees
to
PharmaLogika going forward. Mr. Amanatides is neither a director nor a
shareholder of PharmaLogika.
Private
Placement of Notes and Warrants.
One of
the institutional investors in the March 2008 private placement of the Notes
and
Warrants was Cranshire Capital, L.P. Cranshire purchased Notes in the aggregate
principal amount of $5,000,000 and received Series A Warrants initially
exercisable for 1,273,058 shares of common stock, Series A-1 Warrants initially
exercisable for 1,826,115 shares, Series B Warrants initially exercisable for
4,132,231 and Series C Warrants initially exercisable for 3,099,173. On April
9,
2008, following the closing of the March 2008 private placement, Cranshire
jointly filed a Schedule 13G with Downsview Capital, Inc. and Mitchell P. Kopin
reporting beneficial ownership of more than 5% of our outstanding shares of
common stock. A description of the March 2008 private placement and the Notes
and Warrants is set forth above the heading “Financial Condition, Liquidity and
Resources - Secured Convertible Notes and Warrants.”
New
Accounting Pronouncements
We
adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109” (“FIN
48”), on August 1, 2007. FIN 48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial statements in accordance
with FASB Statement 109 “Accounting for Income Taxes”, and prescribes a
recognition threshold and measurement process for financial statement
recognition and measurement of a tax position taken or expected to be taken
in a
tax return. FIN 48 also provides guidance on derecognition classification,
interest and penalties accounting in interim periods disclosure and
transition.
Based
on
our evaluation, we have concluded that there are no significant uncertain tax
positions requiring recognition in our financial statements or adjustments
to
our deferred tax assets and related valuation allowance. Our evaluation was
performed for the tax years ended July 31, 2007, 2006, 2005 and 2004, the tax
years which remain subject to examination by major tax jurisdictions as of
July
31, 2008.
We
may
from time to time be assessed interest or penalties by major tax jurisdictions,
although such assessments historically have been minimal and immaterial to
our
financial results. In the event we have received an assessment for interest
and/or penalties, it has been classified in the financial statements as general
and administrative expense.
In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS
157"). SFAS 157 defines fair value, establishes a framework for measuring fair
value in accordance with accounting principles generally accepted in the United
States, and expands disclosures about fair value measurements. SFAS No. 157
is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, with earlier application encouraged. Any amounts recognized
upon adoption as a cumulative effect adjustment will be recorded to the opening
balance of retained earnings in the year of adoption. On November 15, 2007,
the
FASB granted a one year deferral for non-financial assets and liabilities to
comply with SFAS No. 157, however, the effective date for financial assets
remains intact. We are currently evaluating the impact of this statement on
our
results of operations or financial position.
In
February 2007, the FASB issued SFAS No. 159, “Establishing the Fair Value Option
for Financial Assets and Liabilities” (“SFAS 159”) to permit all entities to
choose to elect to measure eligible financial instruments at fair value. The
decision whether to elect the fair value option may occur for each eligible
item
either on a specified election date or according to a preexisting policy for
specified types of eligible items. However, that decision must also take place
on a date on which criteria under SFAS 159 occurs. Finally, the decision to
elect the fair value option shall be made on an instrument-by-instrument basis,
except in certain circumstances. An entity shall report unrealized gains and
losses on items for which the fair value option has been elected in earnings
at
each subsequent reporting date. SFAS 159 applies to fiscal years beginning
after
November 15, 2007, with early adoption permitted for an entity that has also
elected to apply the provisions of SFAS 157. We are currently evaluating the
impact of this statement on our results of operations or financial
position.
47
In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”
(“SFAS 141(R)”). This Statement replaces SFAS No. 141, “Business
Combinations” (“SFAS 141”). This Statement retains the fundamental requirements
in SFAS 141 that the acquisition method of accounting (which SFAS 141 called
the
purchase method) be used for all business combinations and for an acquirer
to be
identified for each business combination. This Statement also establishes
principles and requirements for how the acquirer: a) recognizes and measures
in
its financial statements the identifiable assets acquired, the liabilities
assumed, and any non-controlling interest in the acquiree; b) recognizes and
measures the goodwill acquired in the business combination or a gain from a
bargain purchase and c) determines what information to disclose to enable users
of the financial statements to evaluate the nature and financial effects of
the
business combination. SFAS 141(R) will apply prospectively to business
combinations for which the acquisition date is on or after the beginning of
the
first annual reporting period beginning on or after December 15, 2008. An entity
may not apply it before that date. We are currently evaluating the impact of
this statement on our results of operations or financial position.
In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements” (“SFAS 160”). This Statement amends ARB 51 to
establish accounting and reporting standards for the non-controlling (minority)
interest in a subsidiary and for the deconsolidation of a subsidiary. It
clarifies that a non-controlling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. SFAS 160 is effective for fiscal years,
and
interim periods within those fiscal years, beginning on or after December 15,
2008. Earlier adoption is prohibited. We are currently evaluating the
impact of this statement on our results of operations or financial
position.
In
March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities,” and Amendment of FASB Statement No. 133. SFAS 161
amends SFAS 133, “Accounting for Derivative Instruments and Hedging Activities,”
to amend and expand the disclosure requirements of SFAS 133 to provide greater
transparency about (i) how and why an entity uses derivative instruments, (ii)
how derivative instruments and related hedge items are accounted for under
SFAS
133 and its related interpretations, and (iii) how derivative instruments and
related hedged items affect an entity’s financial position, results of
operations and cash flows. To meet those objectives, SFAS 161 requires
qualitative disclosures about objectives and strategies for using derivatives,
quantitative disclosures about fair value amounts of gains and losses on
derivative instruments and disclosures about credit-risk-related contingent
features in derivative agreements. SFAS 161 is effective for fiscal years and
interim periods beginning after November 15, 2008. Earlier adoption is
encouraged. We are currently evaluating the impact of this statement on our
results of operations or financial position.
In
May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS 162"). SFAS 162 is intended to improve financial
reporting by identifying a consistent framework, or hierarchy, for selecting
accounting principles to be used in preparing financial statements that are
presented in conformity with U.S. GAAP for nongovernmental entities. SFAS 162
is
effective 60 days following the Securities and Exchange Commission's approval
of
the Public Company Accounting Oversight Board auditing amendments to AU Section
411, "The Meaning of Present Fairly in Conformity with Generally Accepted
Accounting Principles." We do not expect SFAS 162 to have a material effect
on
our consolidated financial statements.
The
FASB
issued Staff Position (“FSP”) EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,” in
June 2008. Securities participating in dividends with common stock according
to
a formula are participating securities. This FSP determined unvested shares
of
restricted stock and stock units with nonforfeitable rights to dividends are
participating securities. Participating securities require the “two-class”
method to be used to calculate basic earnings per share. This method lowers
basic earnings per common share. This FSP takes effect in the first quarter
of
fiscal years beginning after December 15, 2008 and will be applied
retrospectively for all periods presented and will be effective for Generex
on
August 1, 2009. We do not expect FSP EITF 03-6-1 to have a material effect
on
our consolidated financial statements.
The
FASB
issued FSP APB 14-1, “Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash Settlements),” in May
2008. This FSP requires a portion of this type of convertible debt to be
recorded as equity and to record interest expense on the debt portion at a
rate
that would have been charged on nonconvertible debt with the same terms. This
FSP takes effect in the first quarter of fiscal years beginning after December
15, 2008 and will be applied retrospectively for all periods presented. It
will
effective for the Generex on August 1, 2009. This FSP will apply to our
convertible debentures. We are currently evaluating how it may affect our
consolidated financial statements.
48
Item.
7A. Quantitative
and Qualitative Disclosures About Market Risk.
We
are
exposed to market risks associated with changes in the exchange rates between
U.S. and Canadian currencies and with changes in the interest rates related
to
our fixed rate debt. We do not believe that any of these risks will have a
material impact on our financial condition, results of operations and cash
flows.
Our
exposure to market risk for changes in interest rates relates primarily to
our
auction rate securities. During last fiscal year, investment banks
were reporting an inability to successfully obtain subscribers for high credit
quality auction rate securities. As of July 31, 2008, we held such
auction rate securities with a par value totaling $8.9 million. In the event
we
need access to the funds invested in these securities, we will not be able
to
liquidate these securities until a future auction of these securities is
successful, they are refinanced and redeemed by the issuers, or a buyer is
found
outside of the auction process.
At
the
present time, we maintain our cash in short-term government or government
guaranteed instruments, short-term commercial paper, and interest bearing bank
deposits or demand bank deposits which do not earn interest. A substantial
majority of these instruments and deposits are denominated in U.S. dollars,
with
the exception of funds denominated in Canadian dollars on deposit in Canadian
banks to meet short-term operating needs in Canada. At the present time, with
the exception of professional fees and costs associated with the conduct of
clinical trials in the United States and Europe, substantially all of our
operating expense obligations are denominated in Canadian dollars. We do not
presently employ any hedging or similar strategy intended to mitigate against
losses that could be incurred as a result of fluctuations in the exchange rates
between U.S. and Canadian currencies.
As
of
July 31, 2008, we had fixed rate debt totaling $3,187,248. This amount consists
of the following:
|
Loan Amount
|
Interest Rate
per Annum
|
||||
|
446,115
|
6.82
|
%
|
|||
|
276,602
|
6.82
|
%
|
|||
|
676,485
|
7.60
|
%
|
|||
|
390,800
|
8.50
|
%
|
|||
|
209,530
|
10
|
%
|
|||
|
1,187,716
|
6.07
|
%
|
|||
|
3,187,248
|
Total
|
||||
These
debt instruments mature from August 2008 through June 2011. As our fixed rate
debt instruments mature, we will likely refinance such debt at the existing
market interest rates which may be more or less than interest rates on the
maturing debt. Since this debt is fixed rate debt, if interest rates were to
increase 100 basis points prior to maturity, there would be no impact on
earnings or cash flows.
We
have
neither issued nor own any long-term debt instruments, or any other financial
instruments, for trading purposes and as to which we would be subject to
material market risks.
49
Item
8. Financial
Statements and Supplementary Data.
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Page
|
|
|
|
|
Reports
of Independent Registered Public Accounting Firms
|
51
|
|
|
|
|
Consolidated
Balance Sheets July 31, 2008 and 2007
|
55
|
|
|
|
|
Consolidated
Statements of Operations For the Years Ended July 31, 2008, 2007
and 2006
and Cumulative From Inception to July 31, 2008
|
56
|
|
|
|
|
Consolidated
Statements of Changes in Stockholders’ Equity For the Period November 2,
1995 (Date of Inception) to July 31, 2008
|
57
|
|
|
|
|
Consolidated
Statements of Cash Flows For the Years Ended July 31, 2008, 2007
and 2006
and Cumulative From Inception to July 31, 2008
|
70
|
|
|
|
|
Notes
to Consolidated Financial Statements
|
71
|
50
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Board of Directors and Stockholders of
Generex
Biotechnology Corporation
(A
Development Stage Company)
We
have
audited the accompanying consolidated balance sheet of Generex Biotechnology
Corporation (a Development Stage Company) as of July 31, 2008 and the related
consolidated statements of operations, stockholders’ equity and comprehensive
income, and cash flows for year then ended and for the period November 5, 1995
(date of inception) to July 31, 2008. We also have audited Generex Biotechnology
Corporation’s internal control over financial reporting as of July 31, 2008,
based on criteria established in Internal Control—Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Generex Biotechnology Corporation’s management is responsible for these
consolidated financial statements, for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on these consolidated financial
statements and an opinion on the Company’s internal control over financial
reporting based on our audit.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement and whether effective
internal control over financial reporting was maintained in all material
respects. Our audit of the financial statements included examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audits provide a reasonable basis
for
our opinions.
51
A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain
to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors
of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial
statements.
Because
of its inherent limitations, internal control over financial reporting may
not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In
our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Generex Biotechnology
Corporation as of July 31, 2008 and the results of its operations and its cash
flows for year then ended and for the period November 5, 1995 (date of
inception) to July 31, 2008 in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, Generex
Biotechnology Corporation maintained, in all material respects, effective
internal control over financial reporting as of July 31, 2008, based on criteria
established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
Our
audits were conducted for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. Schedule II is presented
for
purposes of additional analysis and is not a required part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied to the basic consolidated financial statements
and,
in our opinion, is fairly stated in all material respects in relation to the
basic consolidated financial statements taken as a whole.
/s/
MSCM
LLP
MSCM
LLP
Toronto,
Canada
September
30, 2008
52
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board
of
Directors and Shareholders of
Generex
Biotechnology Corporation
(A
Development Stage Company)
We
have
audited the accompanying consolidated balance sheets of Generex Biotechnology
Corporation (a Development Stage Company) as of July 31, 2007 and 2006 and
the
related consolidated statements of operations, stockholders’ equity, and cash
flows for the years then ended. We also have audited management’s assessment,
included in the accompanying Management’s Annual Report on Internal Control Over
Financial Reporting, that Generex Biotechnology Corporation maintained effective
internal control over financial reporting as of July 31, 2007, based on criteria
established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Generex
Biotechnology Corporation’s management is responsible for these financial
statements, for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on these financial
statements, an opinion on management’s assessment, and an opinion on the
effectiveness of the company’s internal control over financial reporting based
on our audits.
We
conducted our audits, referred to above, in accordance with the standards of
the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement and whether
effective internal control over financial reporting was maintained in all
material respects. An audit of financial statements includes examining, on
a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. An audit of internal control over financial
reporting includes obtaining an understanding of internal control over financial
reporting, evaluating management’s assessment, testing and evaluating the design
and operating effectiveness of internal control, and performing such other
procedures we consider necessary in the circumstances. We believe that our
audits provide reasonable basis for our opinions.
53
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 the years then ended in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion,
management’s assessment that Generex Biotechnology Corporation maintained
effective internal control over financial reporting as of July 31, 2007, is
fairly stated, in all material respects, based on criteria established in
Internal Control—Integrated Framework issued by COSO. Furthermore, in our
opinion, Generex Biotechnology Corporation maintained, in all material respects,
effective internal control over financial reporting as of July 31, 2007, based
on criteria established in Internal Control—Integrated Framework issued by COSO.
/s/
Danziger Hochman Partners LLP
Danziger
Hochman Partners LLP
Toronto,
Canada
October
3, 2007
54
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
BALANCE SHEETS
|
July
31,
|
|||||||
|
2008
|
2007
|
||||||
|
ASSETS
|
|||||||
|
Current
Assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
17,237,510
|
$
|
21,026,067
|
|||
|
Short-term
investments
|
8,852,214
|
14,011,738
|
|||||
|
Accounts
receivable
|
81,784
|
58,264
|
|||||
|
Inventory
|
1,465,222
|
123,931
|
|||||
|
Other
current assets
|
380,927
|
469,210
|
|||||
|
Deferred
debt issuance costs
|
506,608
|
—
|
|||||
|
Total
Current Assets
|
28,524,265
|
35,689,210
|
|||||
|
Deferred
Debt Issuance Costs
|
211,086
|
—
|
|||||
|
Property
and Equipment, Net
|
1,744,974
|
2,137,027
|
|||||
|
Assets
Held for Investment, Net
|
3,713,317
|
3,693,183
|
|||||
|
Patents,
Net
|
3,954,241
|
4,884,984
|
|||||
|
TOTAL
ASSETS
|
$
|
38,147,883
|
$
|
46,404,404
|
|||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
|
Current
Liabilities:
|
|||||||
|
Accounts
payable and accrued expenses
|
$
|
7,469,710
|
$
|
7,156,709
|
|||
|
Deferred
revenue and rebate liability
|
125,598
|
33,314
|
|||||
|
Current
maturities of long-term debt
|
1,832,684
|
84,503
|
|||||
|
Convertible
debentures, net of debt discount of $15,931,480 and $-0-at July 31,
2008
and 2007, respectively
|
4,718,520
|
—
|
|||||
|
Total
Current Liabilities
|
14,146,512
|
7,274,526
|
|||||
|
Long-Term
Debt, Net
|
1,354,564
|
3,059,286
|
|||||
|
Commitments
and Contingencies
|
|||||||
|
Stockholders’
Equity:
|
|||||||
|
Special
Voting Rights Preferred Stock, $.001 par value; authorized 1,000
shares at
July 31, 2008 and 2007; -0- shares issued and outstanding at July
31, 2008
and 2007
|
—
|
—
|
|||||
|
Common
stock, $.001 par value; authorized 500,000,000 shares at July 31,
2008 and
2007; 111,992,603 and 109,616,518 shares issued and outstanding at
July
31, 2008 and 2007, respectively
|
111,992
|
109,616
|
|||||
|
Additional
paid-in capital
|
269,849,581
|
247,079,439
|
|||||
|
Deficit
accumulated during the development stage
|
(248,229,261
|
)
|
(212,000,270
|
)
|
|||
|
Accumulated
other comprehensive income
|
914,495
|
881,807
|
|||||
|
Total
Stockholders’ Equity
|
22,646,807
|
36,070,592
|
|||||
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
38,147,883
|
$
|
46,404,404
|
|||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
55
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
Cumulative From
|
|||||||||||||
|
November 2, 1995
|
|||||||||||||
|
(Date of Inception)
|
|||||||||||||
|
For the Years Ended July 31,
|
to July 31,
|
||||||||||||
|
2008
|
2007
|
2006
|
2008
|
||||||||||
|
Revenues
|
$
|
128,039
|
$
|
182,429
|
$
|
175,000
|
$
|
2,504,764
|
|||||
|
Sales
discounts
|
(3,148
|
)
|
(2,231
|
)
|
—
|
(5,379
|
)
|
||||||
|
Net
Revenue
|
124,891
|
180,198
|
175,000
|
2,499,385
|
|||||||||
|
Cost
of Goods Sold
|
52,025
|
61,623
|
—
|
113,648
|
|||||||||
|
Operating
Expenses:
|
|||||||||||||
|
Research
and development
|
16,359,030
|
11,983,626
|
6,554,393
|
89,815,494
|
|||||||||
|
Research
and development - related party
|
—
|
—
|
—
|
220,218
|
|||||||||
|
Selling
and marketing
|
1,562,258
|
693,309
|
56,028
|
2,311,595
|
|||||||||
|
General
and administrative
|
15,597,048
|
12,317,742
|
12,270,562
|
105,636,466
|
|||||||||
|
General
and administrative - related party
|
—
|
—
|
—
|
314,328
|
|||||||||
|
Total
Operating Expenses
|
33,518,336
|
24,994,677
|
18,880,983
|
198,298,101
|
|||||||||
|
Operating
Loss
|
(33,445,470
|
)
|
(24,876,102
|
)
|
(18,705,983
|
)
|
(195,912,364
|
)
|
|||||
|
Other
Income (Expense):
|
|||||||||||||
|
Miscellaneous
income (expense)
|
65
|
—
|
500
|
196,258
|
|||||||||
|
Income
from rental operations, net
|
330,533
|
277,474
|
236,521
|
1,251,461
|
|||||||||
|
Interest
income
|
1,166,439
|
2,180,380
|
767,598
|
7,508,897
|
|||||||||
|
Interest
expense
|
(4,280,558
|
)
|
(849,548
|
)
|
(37,715,275
|
)
|
(47,882,573
|
)
|
|||||
|
Loss
on extinguishment of debt
|
—
|
(237,162
|
)
|
(12,550,565
|
)
|
(14,134,068
|
)
|
||||||
|
Net
Loss Before Undernoted
|
(36,228,991
|
)
|
(23,504,958
|
)
|
(67,967,204
|
)
|
(248,972,389
|
)
|
|||||
|
Minority
Interest Share of Loss
|
—
|
—
|
—
|
3,038,185
|
|||||||||
|
Net
Loss
|
(36,228,991
|
)
|
(23,504,958
|
)
|
(67,967,204
|
)
|
(245,934,204
|
)
|
|||||
|
Preferred
Stock Dividend
|
—
|
—
|
—
|
2,295,057
|
|||||||||
|
Net
Loss Available to Common Shareholders
|
$
|
(36,228,991
|
)
|
$
|
(23,504,958
|
)
|
$
|
(67,967,204
|
)
|
$
|
(248,229,261
|
)
|
|
|
Basic
and Diluted Net Loss Per Common Share
|
$
|
(.33
|
)
|
$
|
(.22
|
)
|
$
|
(.90
|
)
|
||||
|
Weighted
Average Number of Shares of Common Stock Outstanding
|
110,991,192
|
108,416,023
|
75,416,234
|
||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
56
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31,
2008
|
Deficit
|
||||||||||||||||||||||||||||||||||
|
SVR
|
Notes
|
Accumulated
|
Accumulated
|
|||||||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Additional
|
Receivable -
|
During the
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Stock
|
Stock
|
Stock
|
Paid-In
|
Common
|
Development
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Income (Loss)
|
Equity
|
||||||||||||||||||||||||
|
Balance November 2, 1995
|
||||||||||||||||||||||||||||||||||
|
(Inception)
|
-
|
$
|
-
|
-
|
$
|
-
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||||||||
|
Issuance of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
February
1996, $.0254
|
-
|
-
|
321,429
|
321
|
-
|
-
|
7,838
|
-
|
-
|
-
|
8,159
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
February
1996, $.0510
|
-
|
-
|
35,142
|
35
|
-
|
-
|
1,757
|
-
|
-
|
-
|
1,792
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
February
1996, $.5099
|
-
|
-
|
216,428
|
216
|
-
|
-
|
110,142
|
-
|
-
|
-
|
110,358
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
March
1996, $10.2428
|
-
|
-
|
2,500
|
3
|
-
|
-
|
25,604
|
-
|
-
|
-
|
25,607
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
April
1996, $.0516
|
-
|
-
|
489,850
|
490
|
-
|
-
|
24,773
|
-
|
-
|
-
|
25,263
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
May
1996, $.0512
|
-
|
-
|
115,571
|
116
|
-
|
-
|
5,796
|
-
|
-
|
-
|
5,912
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
May
1996, $.5115
|
-
|
-
|
428,072
|
428
|
-
|
-
|
218,534
|
-
|
-
|
-
|
218,962
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
May
1996, $10.2302
|
-
|
-
|
129,818
|
130
|
-
|
-
|
1,327,934
|
-
|
-
|
1,328,064
|
||||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
-
|
|||||||||||||||||||||||||||||||||
|
July
1996, $.0051
|
-
|
-
|
2,606,528
|
2,606
|
-
|
-
|
10,777
|
-
|
-
|
13,383
|
||||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
July
1996, $.0255
|
-
|
-
|
142,857
|
143
|
-
|
-
|
3,494
|
-
|
-
|
-
|
3,637
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
July
1996, $.0513
|
-
|
-
|
35,714
|
36
|
-
|
-
|
1,797
|
-
|
-
|
-
|
1,833
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
July
1996, $10.1847
|
-
|
-
|
63,855
|
64
|
-
|
-
|
650,282
|
-
|
-
|
-
|
650,346
|
|||||||||||||||||||||||
|
Costs related to issuance of common
|
||||||||||||||||||||||||||||||||||
|
stock
|
-
|
-
|
-
|
-
|
-
|
-
|
(10,252
|
)
|
-
|
-
|
-
|
(10,252
|
)
|
|||||||||||||||||||||
|
Founders Shares transferred for services
|
||||||||||||||||||||||||||||||||||
|
rendered
|
-
|
-
|
-
|
-
|
-
|
-
|
330,025
|
-
|
-
|
-
|
330,025
|
|||||||||||||||||||||||
|
Comprehensive
Income (Loss):
|
||||||||||||||||||||||||||||||||||
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(693,448
|
)
|
-
|
(693,448
|
)
|
|||||||||||||||||||||
|
Other comprehensive income (loss)
|
||||||||||||||||||||||||||||||||||
|
Currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(4,017
|
)
|
(4,017
|
)
|
|||||||||||||||||||||
|
Total Comprehensive Income (Loss)
|
(693,448
|
)
|
(4,017
|
)
|
(697,465
|
)
|
||||||||||||||||||||||||||||
|
Balance,
July 31, 1996
|
-
|
$
|
-
|
4,587,764
|
$
|
4,588
|
-
|
$
|
-
|
$
|
2,708,501
|
$
|
-
|
$
|
(693,448
|
)
|
$
|
(4,017
|
)
|
$
|
2,015,624
|
|||||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
57
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31,
2008
|
Deficit
|
||||||||||||||||||||||||||||||||||
|
SVR
|
Notes
|
Accumulated
|
Accumulated
|
|||||||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Additional
|
Receivable -
|
During the
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Stock
|
Stock
|
Stock
|
Paid-In
|
Common
|
Development
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Income (Loss)
|
Equity
|
||||||||||||||||||||||||
|
Balance,
August 1, 1996
|
-
|
$
|
-
|
4,587,764
|
$
|
4,588
|
-
|
$
|
-
|
$
|
2,708,501
|
$
|
-
|
$
|
(693,448
|
)
|
$
|
(4,017
|
)
|
$
|
2,015,624
|
|||||||||||||
|
Issuance of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
September
1996, $.0509
|
-
|
-
|
2,143
|
2
|
-
|
-
|
107
|
-
|
-
|
-
|
109
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
December
1996, $10.2421
|
-
|
-
|
1,429
|
1
|
-
|
-
|
14,635
|
-
|
-
|
-
|
14,636
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
January
1997, $.0518
|
-
|
-
|
1,466
|
1
|
-
|
-
|
75
|
-
|
-
|
-
|
76
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
March
1997, $10.0833
|
-
|
-
|
12
|
-
|
-
|
-
|
121
|
-
|
-
|
-
|
121
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
May
1997, $.0512
|
-
|
-
|
4,233
|
4
|
-
|
-
|
213
|
-
|
-
|
-
|
217
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
May
1997, $.5060
|
-
|
-
|
4,285,714
|
4,286
|
-
|
-
|
2,164,127
|
-
|
-
|
-
|
2,168,413
|
|||||||||||||||||||||||
|
Costs
related to issuance of common
|
||||||||||||||||||||||||||||||||||
|
stock,
May 1997
|
-
|
-
|
-
|
-
|
-
|
-
|
(108,421
|
)
|
-
|
-
|
-
|
(108,421
|
)
|
|||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
May
1997, $10.1194
|
-
|
-
|
18,214
|
18
|
-
|
-
|
184,297
|
-
|
-
|
-
|
184,315
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
June
1997, $.0504
|
-
|
-
|
10,714
|
11
|
-
|
-
|
529
|
-
|
-
|
-
|
540
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
June
1997, $.5047
|
-
|
-
|
32,143
|
32
|
-
|
-
|
16,190
|
-
|
-
|
-
|
16,222
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
June
1997, $8.9810
|
-
|
-
|
29,579
|
30
|
-
|
-
|
265,618
|
-
|
-
|
-
|
265,648
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
June
1997, $10.0978
|
-
|
-
|
714
|
1
|
-
|
-
|
7,209
|
-
|
-
|
-
|
7,210
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
July
1997, $10.1214
|
-
|
-
|
25,993
|
26
|
-
|
-
|
263,060
|
-
|
-
|
-
|
263,086
|
|||||||||||||||||||||||
|
Costs related to issuance of common
|
||||||||||||||||||||||||||||||||||
|
stock
|
-
|
-
|
-
|
-
|
-
|
-
|
(26,960
|
)
|
-
|
-
|
-
|
(26,960
|
)
|
|||||||||||||||||||||
|
Founders
Shares transferred for services
|
||||||||||||||||||||||||||||||||||
|
rendered
|
-
|
-
|
-
|
-
|
-
|
-
|
23,481
|
-
|
-
|
-
|
23,481
|
|||||||||||||||||||||||
|
Comprehensive
Income (Loss):
|
||||||||||||||||||||||||||||||||||
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,379,024
|
)
|
-
|
(1,379,024
|
)
|
|||||||||||||||||||||
|
Other comprehensive income (loss)
|
||||||||||||||||||||||||||||||||||
|
Currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
3,543
|
3,543
|
|||||||||||||||||||||||
|
Total Comprehensive Income (Loss)
|
(1,379,024
|
)
|
3,543
|
(1,375,481
|
)
|
|||||||||||||||||||||||||||||
|
Balance,
July 31, 1997
|
-
|
$
|
-
|
9,000,118
|
$
|
9,000
|
-
|
$
|
-
|
$
|
5,512,782
|
$
|
-
|
$
|
(2,072,472
|
)
|
$
|
(474
|
)
|
$
|
3,448,836
|
|||||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
58
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31,
2008
|
Deficit
|
||||||||||||||||||||||||||||||||||
|
SVR
|
Notes
|
Accumulated
|
Accumulated
|
|||||||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Additional
|
Receivable -
|
During the
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Stock
|
Stock
|
Stock
|
Paid-In
|
Common
|
Development
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Income (Loss)
|
Equity
|
||||||||||||||||||||||||
|
Balance,
August 1, 1997
|
-
|
$
|
-
|
9,000,118
|
$
|
9,000
|
-
|
$
|
-
|
$
|
5,512,782
|
$
|
-
|
$
|
(2,072,472
|
)
|
$
|
(474
|
)
|
$
|
3,448,836
|
|||||||||||||
|
Issuance of warrants in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, October 1997, $.50
|
-
|
-
|
-
|
-
|
-
|
-
|
234,000
|
-
|
-
|
-
|
234,000
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange
|
||||||||||||||||||||||||||||||||||
|
for
services rendered, December 1997, $0.05
|
-
|
-
|
234,000
|
234
|
-
|
-
|
10,698
|
-
|
-
|
-
|
10,932
|
|||||||||||||||||||||||
|
Issuance
of SVR Preferred Stock in exchange
|
||||||||||||||||||||||||||||||||||
|
for
services rendered, January 1998, $.001
|
1,000
|
1
|
-
|
-
|
-
|
-
|
99
|
-
|
-
|
-
|
100
|
|||||||||||||||||||||||
|
Shares
issued pursuant to the January 9, 1998
|
||||||||||||||||||||||||||||||||||
|
reverse
merger between GBC-Delaware, Inc.and Generex Biotechnology Corporation
|
-
|
-
|
1,105,000
|
1,105
|
-
|
-
|
(1,105
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Issuance
of common stock for cash, March
|
||||||||||||||||||||||||||||||||||
|
1998,
$2.50
|
-
|
-
|
70,753
|
71
|
-
|
-
|
176,812
|
-
|
-
|
-
|
176,883
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash, April
|
||||||||||||||||||||||||||||||||||
|
1998,
$2.50
|
-
|
-
|
60,000
|
60
|
-
|
-
|
149,940
|
-
|
-
|
-
|
150,000
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange
|
||||||||||||||||||||||||||||||||||
|
for
services rendered, April 1998, $2.50
|
-
|
-
|
38,172
|
38
|
-
|
-
|
95,392
|
-
|
-
|
-
|
95,430
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash, May
|
||||||||||||||||||||||||||||||||||
|
1998,
$2.50
|
-
|
-
|
756,500
|
757
|
-
|
-
|
1,890,493
|
-
|
-
|
-
|
1,891,250
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange
|
||||||||||||||||||||||||||||||||||
|
for
services rendered, May 1998, $2.50
|
-
|
-
|
162,000
|
162
|
-
|
-
|
404,838
|
-
|
-
|
-
|
405,000
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, May 1998, $.60
|
-
|
-
|
-
|
-
|
-
|
-
|
300,000
|
-
|
-
|
-
|
300,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash, June
|
||||||||||||||||||||||||||||||||||
|
1998,
$2.50
|
-
|
-
|
286,000
|
286
|
-
|
-
|
714,714
|
-
|
-
|
-
|
715,000
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, June
|
||||||||||||||||||||||||||||||||||
|
1998,
$0.0667
|
-
|
-
|
234,000
|
234
|
-
|
-
|
15,374
|
-
|
-
|
-
|
15,608
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange
|
||||||||||||||||||||||||||||||||||
|
for
services rendered, June 1998, $2.50
|
-
|
-
|
24,729
|
24
|
-
|
-
|
61,799
|
-
|
-
|
-
|
61,823
|
|||||||||||||||||||||||
|
Comprehensive Income (Loss):
|
||||||||||||||||||||||||||||||||||
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(4,663,604
|
)
|
-
|
(4,663,604
|
)
|
|||||||||||||||||||||
|
Other comprehensive income (loss)
|
||||||||||||||||||||||||||||||||||
|
Currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(198,959
|
)
|
(198,959
|
)
|
|||||||||||||||||||||
|
Total Comprehensive Income (Loss)
|
(4,663,604
|
)
|
(198,959
|
)
|
4,862,563
|
|||||||||||||||||||||||||||||
|
Balance,
July 31, 1998
|
1,000
|
$
|
1
|
11,971,272
|
$
|
11,971
|
-
|
$
|
-
|
$
|
9,565,836
|
$
|
-
|
$
|
(6,736,076
|
)
|
$
|
(199,433
|
)
|
$
|
2,642,299
|
|||||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
59
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31,
2008
|
Deficit
|
||||||||||||||||||||||||||||||||||
|
SVR
|
Notes
|
Accumulated
|
Accumulated
|
|||||||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Additional
|
Receivable
-
|
During
the
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Stock
|
Stock
|
Stock
|
Paid-In
|
Common
|
Development
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Income
(Loss)
|
Equity
|
||||||||||||||||||||||||
|
Balance,
August 1, 1998
|
1,000
|
$
|
1
|
11,971,272
|
$
|
11,971
|
-
|
$
|
-
|
$
|
9,565,836
|
$
|
-
|
$
|
(6,736,076
|
)
|
$
|
(199,433
|
)
|
$
|
2,642,299
|
|||||||||||||
|
Issuance of common stock for cash, August
|
||||||||||||||||||||||||||||||||||
|
1998,
$3.00
|
-
|
-
|
100,000
|
100
|
-
|
-
|
299,900
|
-
|
-
|
-
|
300,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash, August
|
||||||||||||||||||||||||||||||||||
|
1998,
$3.50
|
-
|
-
|
19,482
|
19
|
-
|
-
|
68,168
|
-
|
-
|
-
|
68,187
|
|||||||||||||||||||||||
|
Redemption
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
September
1998, $7.75
|
-
|
-
|
(15,357
|
)
|
(15
|
)
|
-
|
-
|
(119,051
|
)
|
-
|
-
|
-
|
(119,066
|
)
|
|||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
September
- October 1998, $3.00
|
-
|
-
|
220,297
|
220
|
-
|
-
|
660,671
|
-
|
-
|
-
|
660,891
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash, August -
|
||||||||||||||||||||||||||||||||||
|
October
1998, $4.10
|
-
|
-
|
210,818
|
211
|
-
|
-
|
864,142
|
-
|
-
|
-
|
864,353
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, August - October 1998, $2.50
|
-
|
-
|
21,439
|
21
|
-
|
-
|
53,577
|
-
|
-
|
-
|
53,598
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, August - October 1998, $4.10
|
-
|
-
|
18,065
|
18
|
-
|
-
|
74,048
|
-
|
-
|
-
|
74,066
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange
|
||||||||||||||||||||||||||||||||||
|
for
services rendered, September 1998, $4.10
|
-
|
-
|
180,000
|
180
|
-
|
-
|
737,820
|
-
|
-
|
-
|
738,000
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, October 1998, $.26
|
-
|
-
|
-
|
-
|
-
|
-
|
2,064
|
-
|
-
|
-
|
2,064
|
|||||||||||||||||||||||
|
Issuance
of stock options in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, November 1998, $1.85
|
-
|
-
|
-
|
-
|
-
|
-
|
92,500
|
-
|
-
|
-
|
92,500
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, November 1998, $1.64
|
-
|
-
|
-
|
-
|
-
|
-
|
246,000
|
-
|
-
|
-
|
246,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
November
1998 - January 1999, $3.50
|
-
|
-
|
180,000
|
180
|
-
|
-
|
629,820
|
-
|
-
|
-
|
630,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
November
1998 - January 1999, $4.00
|
-
|
-
|
275,000
|
275
|
-
|
-
|
1,099,725
|
-
|
-
|
-
|
1,100,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
November
1998 - January 1999, $4.10
|
-
|
-
|
96,852
|
97
|
-
|
-
|
397,003
|
-
|
-
|
-
|
397,100
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange
|
||||||||||||||||||||||||||||||||||
|
for
services rendered, November 1998 -
|
||||||||||||||||||||||||||||||||||
|
January
1999, $4.10
|
-
|
-
|
28,718
|
29
|
-
|
-
|
117,715
|
-
|
-
|
-
|
117,744
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
November
1998 - January 1999, $5.00
|
-
|
-
|
20,000
|
20
|
-
|
-
|
99,980
|
-
|
-
|
-
|
100,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
November
1998 - January 1999, $5.50
|
-
|
-
|
15,000
|
15
|
-
|
-
|
82,485
|
-
|
-
|
-
|
82,500
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, January 1999, $5.00
|
-
|
-
|
392
|
-
|
-
|
-
|
1,960
|
-
|
-
|
-
|
1,960
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
February
1999, $5.00
|
-
|
-
|
6,000
|
6
|
-
|
-
|
29,994
|
-
|
-
|
-
|
30,000
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, February 1999, $6.00
|
-
|
-
|
5,000
|
5
|
-
|
-
|
29,995
|
-
|
-
|
-
|
30,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
March
1999, $6.00
|
-
|
-
|
11,000
|
11
|
-
|
-
|
65,989
|
-
|
-
|
-
|
66,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
April
1999, $5.50
|
-
|
-
|
363,637
|
364
|
-
|
-
|
1,999,640
|
-
|
-
|
-
|
2,000,004
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, April 1999, $3.21
|
-
|
-
|
-
|
-
|
-
|
-
|
160,500
|
-
|
-
|
-
|
160,500
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, April 1999, $3.17
|
-
|
-
|
-
|
-
|
-
|
-
|
317,000
|
-
|
-
|
-
|
317,000
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, April 1999, $2.89
|
-
|
-
|
-
|
-
|
-
|
-
|
144,500
|
-
|
-
|
-
|
144,500
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, April 1999, $3.27
|
-
|
-
|
-
|
-
|
184,310
|
-
|
-
|
-
|
184,310
|
|||||||||||||||||||||||||
|
Stock
adjustment
|
-
|
-
|
714
|
1
|
-
|
-
|
(1
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
May
1999, $5.50
|
-
|
-
|
272,728
|
273
|
-
|
-
|
1,499,731
|
-
|
-
|
-
|
1,500,004
|
|||||||||||||||||||||||
|
Issuance of common stock in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, May - June 1999, $5.50
|
-
|
-
|
60,874
|
61
|
-
|
-
|
334,746
|
-
|
334,807
|
|||||||||||||||||||||||||
|
Exercise of warrants for cash, June 1999, $5.50
|
-
|
-
|
388,375
|
389
|
-
|
1,941,484
|
-
|
-
|
-
|
1,941,873
|
||||||||||||||||||||||||
|
Exercise
of warrants in exchange for note
|
||||||||||||||||||||||||||||||||||
|
receivable,
June 1999, $5.00
|
-
|
-
|
94,776
|
95
|
-
|
-
|
473,787
|
(473,882
|
)
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Exercise
of warrants in exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
June 1999, $5.00
|
-
|
-
|
13,396
|
13
|
-
|
-
|
66,967
|
-
|
-
|
-
|
66,980
|
|||||||||||||||||||||||
|
Reduction of note receivable in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
38,979
|
-
|
-
|
38,979
|
|||||||||||||||||||||||
|
Shares
tendered in conjunction with warrant
|
||||||||||||||||||||||||||||||||||
|
exercise,
June 1999, $7.8125
|
-
|
-
|
(323,920
|
)
|
(324
|
)
|
-
|
-
|
(2,530,301
|
)
|
-
|
-
|
-
|
(2,530,625
|
)
|
|||||||||||||||||||
|
Exercise
of warrants for shares tendered,
|
||||||||||||||||||||||||||||||||||
|
June
1999, $5.00
|
-
|
-
|
506,125
|
506
|
-
|
-
|
2,530,119
|
-
|
-
|
-
|
2,530,625
|
|||||||||||||||||||||||
|
Cost
of warrants redeemed for cash
|
-
|
-
|
-
|
-
|
-
|
(3,769
|
)
|
-
|
-
|
-
|
(3,769
|
)
|
||||||||||||||||||||||
|
Cost related to warrant redemption, June 1999
|
-
|
-
|
-
|
-
|
-
|
-
|
(135,431
|
)
|
-
|
-
|
-
|
(135,431
|
)
|
|||||||||||||||||||||
|
Costs
related to issuance of common stock
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,179,895
|
)
|
-
|
-
|
-
|
(1,179,895
|
)
|
|||||||||||||||||||||
|
Comprehensive
Income (Loss):
|
||||||||||||||||||||||||||||||||||
|
Net
Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(6,239,602
|
)
|
-
|
(6,239,602
|
)
|
|||||||||||||||||||||
|
Other
comprehensive income (loss):
|
||||||||||||||||||||||||||||||||||
|
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,393
|
1,393
|
|||||||||||||||||||||||
|
Total
Comprehensive Income (Loss)
|
(6,239,602
|
)
|
1,393
|
(6,238,209
|
)
|
|||||||||||||||||||||||||||||
|
Balance,
July 31, 1999
|
1,000
|
$
|
1
|
14,740,683
|
$
|
14,741
|
-
|
$
|
-
|
$
|
20,903,728
|
$
|
(434,903
|
)
|
$
|
(12,975,678
|
)
|
$
|
(198,040
|
)
|
$
|
7,309,849
|
||||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
60
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31,
2008
|
Deficit
|
||||||||||||||||||||||||||||||||||
|
SVR
|
Notes
|
Accumulated
|
Accumulated
|
|||||||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Additional
|
Receivable
-
|
During
the
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Stock
|
Stock
|
Stock
|
Paid-In
|
Common
|
Development
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Income
(Loss)
|
Equity
|
||||||||||||||||||||||||
|
Balance,
August 1, 1999
|
1,000
|
$
|
1
|
14,740,683
|
$
|
14,741
|
-
|
$
|
-
|
$
|
20,903,728
|
$
|
(434,903
|
)
|
$
|
(12,975,678
|
)
|
$
|
(198,040
|
)
|
$
|
7,309,849
|
||||||||||||
|
Adjustment for exercise of warrants recorded
|
||||||||||||||||||||||||||||||||||
|
June
1999, $5.00
|
-
|
-
|
(2,300
|
)
|
(2
|
)
|
-
|
-
|
2
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
|
Issuance
of common stock for cash,
|
||||||||||||||||||||||||||||||||||
|
September
1999, $6.00
|
-
|
-
|
2,500
|
2
|
-
|
-
|
14,998
|
-
|
-
|
-
|
15,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, January 2000, $4.25
|
-
|
-
|
470,590
|
471
|
-
|
-
|
1,999,537
|
-
|
-
|
-
|
2,000,008
|
|||||||||||||||||||||||
|
Financing costs associated with private placement,
|
||||||||||||||||||||||||||||||||||
|
January,
2000
|
-
|
-
|
-
|
-
|
-
|
-
|
(220,192
|
)
|
-
|
-
|
-
|
(220,192
|
)
|
|||||||||||||||||||||
|
Issuance
of stock in exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
January 2000, $5.00
|
-
|
-
|
8,100
|
8
|
-
|
-
|
40,492
|
-
|
-
|
-
|
40,500
|
|||||||||||||||||||||||
|
Granting
of stock options for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
January 2000
|
-
|
-
|
-
|
-
|
-
|
-
|
568,850
|
-
|
-
|
-
|
568,850
|
|||||||||||||||||||||||
|
Granting
of warrants for services rendered,
|
||||||||||||||||||||||||||||||||||
|
January
2000
|
-
|
-
|
-
|
-
|
-
|
-
|
355,500
|
-
|
-
|
-
|
355,500
|
|||||||||||||||||||||||
|
Exercise of warrants for cash, February 2000, $5.50
|
-
|
-
|
2,000
|
2
|
-
|
-
|
10,998
|
-
|
-
|
-
|
11,000
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, March 2000, $5.50
|
-
|
-
|
29,091
|
29
|
-
|
-
|
159,972
|
-
|
-
|
-
|
160,001
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, March 2000, $6.00
|
-
|
-
|
2,000
|
2
|
-
|
-
|
11,998
|
-
|
-
|
-
|
12,000
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, March 2000, $7.50
|
-
|
-
|
8,000
|
8
|
-
|
-
|
59,992
|
-
|
-
|
-
|
60,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, June 2000, $6.00
|
-
|
-
|
1,041,669
|
1,042
|
-
|
-
|
6,248,972
|
-
|
-
|
-
|
6,250,014
|
|||||||||||||||||||||||
|
Financing
costs associated with private
|
||||||||||||||||||||||||||||||||||
|
placement,
June 2000
|
-
|
-
|
-
|
-
|
-
|
-
|
(385,607
|
)
|
-
|
-
|
-
|
(385,607
|
)
|
|||||||||||||||||||||
|
Issuance
of common stock for services,
|
||||||||||||||||||||||||||||||||||
|
June
2000, $6.00
|
-
|
-
|
4,300
|
4
|
-
|
-
|
25,796
|
-
|
-
|
-
|
25,800
|
|||||||||||||||||||||||
|
Exercise of warrants for cash, July 2000, $6.00
|
-
|
-
|
3,000
|
3
|
-
|
-
|
17,997
|
-
|
-
|
-
|
18,000
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, July 2000, $7.50
|
-
|
-
|
16,700
|
17
|
-
|
-
|
125,233
|
-
|
-
|
-
|
125,250
|
|||||||||||||||||||||||
|
Granting
of stock options for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
July 2000
|
-
|
-
|
-
|
-
|
-
|
-
|
496,800
|
-
|
-
|
-
|
496,800
|
|||||||||||||||||||||||
|
Reduction
of note receivable in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
384,903
|
-
|
-
|
384,903
|
|||||||||||||||||||||||
|
Accrued
interest on note receivable
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(4,118
|
)
|
-
|
-
|
(4,118
|
)
|
|||||||||||||||||||||
|
Comprehensive
Income (Loss):
|
||||||||||||||||||||||||||||||||||
|
Net
Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(8,841,047
|
)
|
-
|
(8,841,047
|
)
|
|||||||||||||||||||||
|
Other
comprehensive income (loss):
|
||||||||||||||||||||||||||||||||||
|
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
32,514
|
32,514
|
|||||||||||||||||||||||
|
Total
Comprehensive Income (Loss)
|
(8,841,047
|
)
|
32,514
|
(8,808,533
|
)
|
|||||||||||||||||||||||||||||
|
Balance,
July 31, 2000
|
1,000
|
$
|
1
|
16,326,333
|
$
|
16,327
|
-
|
$
|
-
|
$
|
30,435,066
|
$
|
(54,118
|
)
|
$
|
(21,816,725
|
)
|
$
|
(165,526
|
)
|
$
|
8,415,025
|
||||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
61
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31,
2008
|
Deficit
|
||||||||||||||||||||||||||||||||||
|
SVR
|
Notes
|
Accumulated
|
Accumulated
|
|||||||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Additional
|
Receivable
-
|
During
the
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Stock
|
Stock
|
Stock
|
Paid-In
|
Common
|
Development
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Income
(Loss)
|
Equity
|
||||||||||||||||||||||||
|
Balance,
August 1, 2000
|
1,000
|
$
|
1
|
16,326,333
|
$
|
16,327
|
-
|
$
|
-
|
$
|
30,435,066
|
$
|
(54,118
|
)
|
$
|
(21,816,725
|
)
|
$
|
(165,526
|
)
|
$
|
8,415,025
|
||||||||||||
|
Exercise of warrants for cash, August 2000, $6.00
|
-
|
-
|
2,000
|
2
|
-
|
-
|
11,998
|
-
|
-
|
-
|
12,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for services rendered
|
||||||||||||||||||||||||||||||||||
|
August
2000
|
-
|
-
|
35,000
|
35
|
-
|
-
|
411,215
|
-
|
-
|
-
|
411,250
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for equity line
|
||||||||||||||||||||||||||||||||||
|
agreement,
August 2000
|
-
|
-
|
-
|
-
|
-
|
-
|
3,406,196
|
-
|
-
|
-
|
3,406,196
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, August 2000, $7.50
|
-
|
-
|
30,300
|
30
|
-
|
-
|
227,220
|
-
|
-
|
-
|
227,250
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, August 2000, $8.6625
|
-
|
-
|
30,000
|
30
|
-
|
-
|
259,845
|
-
|
-
|
-
|
259,875
|
|||||||||||||||||||||||
|
Cashless
exercise of warrants, August 2000
|
-
|
-
|
8,600
|
9
|
-
|
-
|
(9
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Exercise
of warrants for cash, August 2000, $10.00
|
-
|
-
|
10,000
|
10
|
-
|
-
|
99,990
|
-
|
-
|
-
|
100,000
|
|||||||||||||||||||||||
|
Exercise of warrants for cash, September 2000, $8.6625
|
-
|
-
|
63,335
|
63
|
-
|
-
|
548,576
|
-
|
-
|
-
|
548,639
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, September 2000, $5.50
|
-
|
-
|
16,182
|
16
|
-
|
-
|
88,986
|
-
|
-
|
-
|
89,002
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, September 2000, $6.00
|
-
|
-
|
53,087
|
53
|
-
|
-
|
318,470
|
-
|
-
|
-
|
318,523
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, September 2000, $10.00
|
-
|
-
|
9,584
|
10
|
-
|
-
|
95,830
|
-
|
-
|
-
|
95,840
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, September 2000, $7.50
|
-
|
-
|
32,416
|
32
|
-
|
-
|
243,088
|
-
|
-
|
-
|
243,120
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, October 2000, $11.00
|
-
|
-
|
2,151,093
|
2,151
|
-
|
-
|
23,659,872
|
-
|
-
|
-
|
23,662,023
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, Oct. 2000, $6.00
|
-
|
-
|
1,000
|
1
|
-
|
-
|
5,999
|
-
|
-
|
-
|
6,000
|
|||||||||||||||||||||||
|
Financing
costs associated with private placement,
|
||||||||||||||||||||||||||||||||||
|
October
2000
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,956,340
|
)
|
-
|
-
|
-
|
(1,956,340
|
)
|
|||||||||||||||||||||
|
Exercise
of warrants for cash, November - December
|
||||||||||||||||||||||||||||||||||
|
2000,
$4.25
|
-
|
-
|
23,528
|
23
|
-
|
-
|
99,971
|
-
|
-
|
-
|
99,994
|
|||||||||||||||||||||||
|
Cashless
exercise of warrants, December 2000
|
-
|
-
|
3,118
|
3
|
-
|
-
|
(3
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Exercise
of warrants for cash, November - December
|
||||||||||||||||||||||||||||||||||
|
2000,
$6.00
|
-
|
-
|
22,913
|
23
|
-
|
-
|
137,455
|
-
|
-
|
-
|
137,478
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, December 2000, $7.00
|
-
|
-
|
8,823
|
9
|
-
|
-
|
61,752
|
-
|
-
|
-
|
61,761
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee
|
||||||||||||||||||||||||||||||||||
|
compensation,
December 2000
|
-
|
-
|
8,650
|
8
|
-
|
-
|
100,548
|
-
|
-
|
-
|
100,556
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, January 2001, $6.00
|
-
|
-
|
3,000
|
3
|
-
|
-
|
17,997
|
-
|
-
|
-
|
18,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, January 2001, $14.53
|
-
|
-
|
344,116
|
344
|
-
|
-
|
4,999,656
|
-
|
-
|
-
|
5,000,000
|
|||||||||||||||||||||||
|
Financing
costs associated with private placement,
|
||||||||||||||||||||||||||||||||||
|
January
2001
|
-
|
-
|
-
|
-
|
-
|
-
|
(200,000
|
)
|
-
|
-
|
-
|
(200,000
|
)
|
|||||||||||||||||||||
|
Issuance
of common stock pursuant to litigation
|
||||||||||||||||||||||||||||||||||
|
settlement,
January 2001
|
-
|
-
|
2,832
|
2
|
-
|
-
|
21,096
|
-
|
-
|
-
|
21,098
|
|||||||||||||||||||||||
|
Granting
of stock options in exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
January 2001
|
-
|
-
|
-
|
-
|
-
|
-
|
745,000
|
-
|
-
|
-
|
745,000
|
|||||||||||||||||||||||
|
Granting
of stock options in exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
February 2001
|
-
|
-
|
-
|
-
|
-
|
-
|
129,600
|
-
|
-
|
-
|
129,600
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash,
|
||||||||||||||||||||||||||||||||||
|
February
2001, $5.00
|
-
|
-
|
50,000
|
50
|
-
|
-
|
249,950
|
-
|
-
|
-
|
250,000
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, March 2001, $6.00
|
-
|
-
|
500
|
1
|
-
|
-
|
2,999
|
-
|
-
|
-
|
3,000
|
|||||||||||||||||||||||
|
Exercise
of stock options in exchange for note
|
||||||||||||||||||||||||||||||||||
|
receivable,
March 2001
|
-
|
-
|
50,000
|
50
|
-
|
-
|
249,950
|
(250,000
|
)
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Issuance
of common stock in exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
March 2001, $5.50
|
-
|
-
|
8,000
|
8
|
-
|
-
|
43,992
|
-
|
-
|
-
|
44,000
|
|||||||||||||||||||||||
|
Granting
of stock options in exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
May 2001
|
-
|
-
|
-
|
-
|
-
|
-
|
592,300
|
-
|
-
|
-
|
592,300
|
|||||||||||||||||||||||
|
Exercise of stock options for cash, June 2001, $5.00
|
-
|
-
|
75,000
|
75
|
-
|
-
|
374,925
|
-
|
-
|
-
|
375,000
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, June 2001, $5.50
|
-
|
-
|
12,500
|
12
|
-
|
-
|
68,738
|
-
|
-
|
-
|
68,750
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, June 2001, $6.00
|
-
|
-
|
4,000
|
4
|
-
|
-
|
23,996
|
-
|
-
|
-
|
24,000
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, July 2001, $5.00
|
-
|
-
|
7,500
|
8
|
-
|
-
|
37,492
|
-
|
-
|
-
|
37,500
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, July 2001, $5.50
|
-
|
-
|
2,500
|
3
|
-
|
-
|
13,747
|
-
|
-
|
-
|
13,750
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, July 2001, $6.00
|
-
|
-
|
2,000
|
2
|
-
|
-
|
11,998
|
-
|
-
|
-
|
12,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, July 2001, $9.25
|
-
|
-
|
1,254,053
|
1,254
|
-
|
-
|
11,598,736
|
-
|
-
|
-
|
11,599,990
|
|||||||||||||||||||||||
|
Financing
costs associated with private placement,
|
||||||||||||||||||||||||||||||||||
|
July
2001
|
-
|
-
|
-
|
-
|
-
|
-
|
(768,599
|
)
|
-
|
-
|
-
|
(768,599
|
)
|
|||||||||||||||||||||
|
Shares
issued in exchange for services rendered,
|
||||||||||||||||||||||||||||||||||
|
July
2001, $9.25
|
-
|
-
|
23,784
|
24
|
-
|
-
|
219,978
|
-
|
-
|
-
|
220,002
|
|||||||||||||||||||||||
|
Shares
issued for Anti-Dilution Provisions, July 2001
|
-
|
-
|
5,779
|
6
|
-
|
-
|
53,450
|
-
|
-
|
-
|
53,456
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
July 2001
|
-
|
-
|
-
|
-
|
-
|
-
|
19,134
|
-
|
-
|
-
|
19,134
|
|||||||||||||||||||||||
|
Accrued
interest on note receivable
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(10,182
|
)
|
-
|
-
|
(10,182
|
)
|
|||||||||||||||||||||
|
Comprehensive
Income (Loss):
|
||||||||||||||||||||||||||||||||||
|
Net
Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(27,097,210
|
)
|
-
|
(27,097,210
|
)
|
|||||||||||||||||||||
|
Other
comprehensive income (loss):
|
||||||||||||||||||||||||||||||||||
|
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(81,341
|
)
|
(81,341
|
)
|
|||||||||||||||||||||
|
Total
Comprehensive Income (Loss)
|
(27,097,210
|
)
|
(81,341
|
)
|
(27,178,551
|
)
|
||||||||||||||||||||||||||||
|
Balance
at July 31, 2001
|
1,000
|
$
|
1
|
20,681,526
|
$
|
20,681
|
-
|
$
|
-
|
$
|
76,761,860
|
$
|
(314,300
|
)
|
$
|
(48,913,935
|
)
|
$
|
(246,867
|
)
|
$
|
27,307,440
|
||||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
62
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31,
2008
|
Deficit
|
||||||||||||||||||||||||||||||||||
|
SVR
|
Notes
|
Accumulated
|
Accumulated
|
|||||||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Additional
|
Receivable
-
|
During
the
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Stock
|
Stock
|
Stock
|
Paid-In
|
Common
|
Development
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Income
(Loss)
|
Equity
|
||||||||||||||||||||||||
|
Balance,
August 1, 2001
|
1,000
|
$
|
1
|
20,681,526
|
$
|
20,681
|
-
|
$
|
-
|
$
|
76,761,860
|
$
|
(314,300
|
)
|
$
|
(48,913,935
|
)
|
$
|
(246,867
|
)
|
$
|
27,307,440
|
||||||||||||
|
Exercise of stock options for cash,
|
||||||||||||||||||||||||||||||||||
|
August
2001, $5.50
|
-
|
-
|
5,000
|
5
|
-
|
-
|
27,495
|
-
|
-
|
-
|
27,500
|
|||||||||||||||||||||||
|
Purchase
of Treasury Stock for cash
|
||||||||||||||||||||||||||||||||||
|
October
2001, $3.915
|
-
|
-
|
-
|
-
|
(10,000
|
)
|
(39,150
|
)
|
-
|
-
|
-
|
-
|
(39,150
|
)
|
||||||||||||||||||||
|
Issuance
of stock options in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, December 2001
|
-
|
-
|
-
|
-
|
-
|
-
|
25,000
|
-
|
-
|
-
|
25,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee
|
||||||||||||||||||||||||||||||||||
|
compensation,
January 2002
|
-
|
-
|
10,800
|
11
|
-
|
-
|
71,161
|
-
|
-
|
-
|
71,172
|
|||||||||||||||||||||||
|
Preferred
stock dividend paid January 2002
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(720,900
|
)
|
-
|
(720,900
|
)
|
|||||||||||||||||||||
|
Purchase
of Treasury Stock for cash
|
||||||||||||||||||||||||||||||||||
|
February
2002, $4.693
|
-
|
-
|
-
|
-
|
(31,400
|
)
|
(147,346
|
)
|
-
|
-
|
-
|
-
|
(147,346
|
)
|
||||||||||||||||||||
|
Issuance of warrants in exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
March 2002
|
-
|
-
|
-
|
-
|
-
|
-
|
202,328
|
-
|
-
|
-
|
202,328
|
|||||||||||||||||||||||
|
Purchase
of Treasury Stock for cash
|
||||||||||||||||||||||||||||||||||
|
March
2002, $4.911
|
-
|
-
|
-
|
-
|
(7,700
|
)
|
(37,816
|
)
|
-
|
-
|
-
|
-
|
(37,816
|
)
|
||||||||||||||||||||
|
Purchase
of Treasury Stock for cash
|
||||||||||||||||||||||||||||||||||
|
April
2002, $4.025
|
-
|
-
|
-
|
-
|
(12,800
|
)
|
(54,516
|
)
|
-
|
-
|
-
|
-
|
(54,516
|
)
|
||||||||||||||||||||
|
Issuance
of stock options in exchange for
|
||||||||||||||||||||||||||||||||||
|
services
rendered, June 2002
|
-
|
-
|
-
|
-
|
-
|
-
|
132,387
|
-
|
-
|
-
|
132,387
|
|||||||||||||||||||||||
|
Purchase
of Treasury Stock for cash
|
-
|
|||||||||||||||||||||||||||||||||
|
July
2002, $4.025
|
-
|
-
|
-
|
-
|
(34,600
|
)
|
(116,703
|
)
|
-
|
-
|
-
|
-
|
(116,703
|
)
|
||||||||||||||||||||
|
Accrued
interest on note receivable
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(22,585
|
)
|
-
|
-
|
(22,585
|
)
|
|||||||||||||||||||||
|
Comprehensive
Income (Loss):
|
||||||||||||||||||||||||||||||||||
|
Net
Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(13,693,034
|
)
|
-
|
(13,693,034
|
)
|
|||||||||||||||||||||
|
Other
comprehensive income (loss):
|
||||||||||||||||||||||||||||||||||
|
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(71,185
|
)
|
(71,185
|
)
|
|||||||||||||||||||||
|
Total
Comprehensive Income (Loss)
|
(13,693,034
|
)
|
(71,185
|
)
|
(13,764,219
|
)
|
||||||||||||||||||||||||||||
|
Balance
at July 31, 2002
|
1,000
|
$
|
1
|
20,697,326
|
$
|
20,697
|
(96,500
|
)
|
$
|
(395,531
|
)
|
$
|
77,220,231
|
$
|
(336,885
|
)
|
$
|
(63,327,869
|
)
|
$
|
(318,052
|
)
|
$
|
12,862,592
|
||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
63
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31, 2008
|
Deficit
|
||||||||||||||||||||||||||||||||||
|
SVR
|
Notes
|
Accumulated
|
Accumulated
|
|||||||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Additional
|
Receivable -
|
During the
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Stock
|
Stock
|
Stock
|
Paid-In
|
Common
|
Development
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Income (Loss)
|
Equity
|
||||||||||||||||||||||||
|
Balance,
August 1, 2002
|
1,000
|
$
|
1
|
20,697,326
|
$
|
20,697
|
(96,500
|
)
|
$
|
(395,531
|
)
|
$
|
77,220,231
|
$
|
(336,885
|
)
|
$
|
(63,327,869
|
)
|
$
|
(318,052
|
)
|
$
|
12,862,592
|
||||||||||
|
Receipt of restricted shares of common stock as
|
||||||||||||||||||||||||||||||||||
|
settlement for executive loan, September 2002, $1.90
|
-
|
-
|
-
|
-
|
(592,716
|
)
|
(1,126,157
|
)
|
-
|
-
|
-
|
-
|
(1,126,157
|
)
|
||||||||||||||||||||
|
Purchase
of Treasury Stock for cash
|
||||||||||||||||||||||||||||||||||
|
October
2002, $1.5574
|
-
|
-
|
-
|
-
|
(40,000
|
)
|
(62,294
|
)
|
-
|
-
|
-
|
-
|
(62,294
|
)
|
||||||||||||||||||||
|
Issuance
of warrants in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered,
November 2002, $2.50
|
-
|
-
|
-
|
-
|
-
|
-
|
988,550
|
-
|
-
|
-
|
988,550
|
|||||||||||||||||||||||
|
Issuance of stock options in exchange for services
|
||||||||||||||||||||||||||||||||||
|
receivable,
November 2002, $2.10
|
-
|
-
|
-
|
-
|
-
|
-
|
171,360
|
-
|
-
|
-
|
171,360
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
November 2002, $2.10
|
-
|
-
|
30,000
|
30
|
-
|
-
|
62,970
|
-
|
-
|
-
|
63,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee
|
||||||||||||||||||||||||||||||||||
|
compensation, January
2003, $2.10
|
-
|
-
|
9,750
|
10
|
-
|
-
|
20,465
|
-
|
-
|
-
|
20,475
|
|||||||||||||||||||||||
|
Purchase
of Treasury Stock for cash
|
||||||||||||||||||||||||||||||||||
|
December
2002, $2.0034
|
-
|
-
|
-
|
-
|
(13,000
|
)
|
(26,044
|
)
|
-
|
-
|
-
|
-
|
(26,044
|
)
|
||||||||||||||||||||
|
Preferred
stock dividend paid January 2003
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(764,154
|
)
|
-
|
(764,154
|
)
|
|||||||||||||||||||||
|
Issuance of common stock in exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
March 2003, $1.00
|
-
|
-
|
70,000
|
70
|
-
|
-
|
69,930
|
-
|
-
|
-
|
70,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, May 2003, $1.15
|
-
|
-
|
2,926,301
|
2,926
|
-
|
-
|
3,362,324
|
-
|
-
|
-
|
3,365,250
|
|||||||||||||||||||||||
|
Financing
costs associated with private placement,
|
||||||||||||||||||||||||||||||||||
|
May
2003
|
-
|
-
|
-
|
-
|
-
|
-
|
(235,568
|
)
|
-
|
-
|
-
|
(235,568
|
)
|
|||||||||||||||||||||
|
Exercise
of warrants for cash, May 2003, $1.50
|
-
|
-
|
35,000
|
35
|
-
|
-
|
52,465
|
-
|
-
|
-
|
52,500
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, June 2003, $1.50
|
-
|
-
|
666,667
|
667
|
-
|
-
|
999,333
|
-
|
-
|
-
|
1,000,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee
|
||||||||||||||||||||||||||||||||||
|
compensation, June
2003, $2.00
|
-
|
-
|
100
|
-
|
-
|
-
|
200
|
-
|
-
|
-
|
200
|
|||||||||||||||||||||||
|
Exercise
of warrants for cash, June 2003, $1.50
|
-
|
-
|
1,496,001
|
1,496
|
-
|
-
|
2,242,506
|
-
|
-
|
-
|
2,244,002
|
|||||||||||||||||||||||
|
Cashless
exercise of warrants, June 2003
|
-
|
-
|
16,379
|
16
|
-
|
-
|
(16
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Exercise
of stock options for cash, June 2003, $1.59
|
-
|
-
|
70,000
|
70
|
-
|
-
|
111,230
|
-
|
-
|
-
|
111,300
|
|||||||||||||||||||||||
|
Accrued
interest on note receivable
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(23,113
|
)
|
-
|
-
|
(23,113
|
)
|
|||||||||||||||||||||
|
Comprehensive
Income (Loss):
|
||||||||||||||||||||||||||||||||||
|
Net
Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(13,261,764
|
)
|
-
|
(13,261,764
|
)
|
|||||||||||||||||||||
|
Other
comprehensive income (loss)
|
||||||||||||||||||||||||||||||||||
|
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
406,830
|
406,830
|
|||||||||||||||||||||||
|
Total
Comprehensive Income (Loss)
|
(13,261,764
|
)
|
406,830
|
(12,854,934
|
)
|
|||||||||||||||||||||||||||||
|
Balance
at July 31, 2003
|
1,000
|
$
|
1
|
26,017,524
|
$
|
26,017
|
(742,216
|
)
|
$
|
(1,610,026
|
)
|
$
|
85,065,980
|
$
|
(359,998
|
)
|
$
|
(77,353,787
|
)
|
$
|
88,778
|
$
|
5,856,965
|
|||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
64
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR
THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31,
2008
|
Deficit
|
||||||||||||||||||||||||||||||||||
|
SVR
|
Notes
|
Accumulated
|
Accumulated
|
|||||||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Additional
|
Receivable
-
|
During
the
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Stock
|
Stock
|
Stock
|
Paid-In
|
Common
|
Development
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Income
(Loss)
|
Equity
|
||||||||||||||||||||||||
|
Balance,
August 1, 2003
|
1,000
|
$
|
1
|
26,017,524
|
$
|
26,017
|
(742,216
|
)
|
$
|
(1,610,026
|
)
|
$
|
85,065,980
|
$
|
(359,998
|
)
|
$
|
(77,353,787
|
)
|
$
|
88,778
|
$
|
5,856,965
|
|||||||||||
|
Shares
issued pursuant to acquisition of Antigen
|
||||||||||||||||||||||||||||||||||
|
Express
Inc., August 2003
|
-
|
-
|
2,779,974
|
2,780
|
-
|
-
|
4,639,777
|
-
|
-
|
-
|
4,642,557
|
|||||||||||||||||||||||
|
Cost
of stock options to be assumed in conjunction
|
||||||||||||||||||||||||||||||||||
|
with
merger
|
-
|
-
|
-
|
-
|
-
|
-
|
154,852
|
-
|
-
|
-
|
154,852
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, September 2003,
|
||||||||||||||||||||||||||||||||||
|
$1.59
|
-
|
-
|
10,000
|
10
|
-
|
-
|
15,890
|
-
|
-
|
-
|
15,900
|
|||||||||||||||||||||||
|
Exercise of stock options for cash, October 2003, $2.10
|
-
|
-
|
14,900
|
15
|
-
|
-
|
31,275
|
-
|
-
|
-
|
31,290
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, October 2003, $1.59
|
-
|
-
|
10,000
|
10
|
-
|
-
|
15,890
|
-
|
-
|
-
|
15,900
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, October 2003, $0.30
|
-
|
-
|
65,000
|
65
|
-
|
-
|
19,435
|
-
|
-
|
-
|
19,500
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, October 2003, $0.55
|
-
|
-
|
40,000
|
40
|
-
|
-
|
21,960
|
-
|
-
|
-
|
22,000
|
|||||||||||||||||||||||
|
Issuance
of common stock In exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
October 2003, $1.98
|
-
|
-
|
150,000
|
150
|
-
|
-
|
296,850
|
-
|
-
|
-
|
297,000
|
|||||||||||||||||||||||
|
Issuance
of common stock In exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
October 2003, $1.84
|
-
|
-
|
337,500
|
338
|
-
|
-
|
620,662
|
-
|
-
|
-
|
621,000
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered
October 2003 (at $1.35)
|
-
|
-
|
-
|
-
|
-
|
-
|
27,000
|
-
|
-
|
-
|
27,000
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, November 2003,
|
||||||||||||||||||||||||||||||||||
|
$2.10
|
-
|
-
|
10,500
|
10
|
-
|
-
|
22,040
|
-
|
-
|
-
|
22,050
|
|||||||||||||||||||||||
|
Redemption of Treasury Stock, November 2003, $2.17
|
-
|
-
|
(742,216
|
)
|
(742
|
)
|
742,216
|
1,610,026
|
(1,609,284
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
|
Granting
of stock options in exchange for services,
|
||||||||||||||||||||||||||||||||||
|
November
2003 (at $1.71)
|
-
|
-
|
-
|
-
|
-
|
-
|
151,433
|
-
|
-
|
-
|
151,433
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, Jan 2004, $1.47
|
-
|
-
|
1,700,680
|
1,701
|
-
|
-
|
2,498,299
|
-
|
-
|
-
|
2,500,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, Jan 2004, $1.80
|
-
|
-
|
55,556
|
56
|
-
|
-
|
99,944
|
-
|
-
|
-
|
100,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, Jan 2004, $1.75
|
-
|
-
|
228,572
|
229
|
-
|
-
|
399,771
|
-
|
-
|
-
|
400,000
|
|||||||||||||||||||||||
|
Financing
costs associated with private placement,
|
||||||||||||||||||||||||||||||||||
|
January
2004
|
-
|
-
|
-
|
-
|
-
|
-
|
(68,012
|
)
|
-
|
-
|
-
|
(68,012
|
)
|
|||||||||||||||||||||
|
Preferred
Stock Dividend paid in January
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(810,003
|
)
|
-
|
(810,003
|
)
|
|||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, Feb 2004, $1.60
|
-
|
-
|
93,750
|
94
|
-
|
-
|
149,906
|
-
|
-
|
-
|
150,000
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, Feb 2004, $1.66
|
-
|
-
|
68,675
|
69
|
-
|
-
|
113,932
|
-
|
-
|
-
|
114,001
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, Feb 2004, $1.50
|
-
|
-
|
666,667
|
667
|
-
|
-
|
999,334
|
-
|
-
|
-
|
1,000,001
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee
|
||||||||||||||||||||||||||||||||||
|
compensation,
Feb 2004, $1.48
|
-
|
-
|
8,850
|
8
|
-
|
-
|
13,089
|
-
|
-
|
-
|
13,097
|
|||||||||||||||||||||||
|
Issuance of common stock In exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
Feb 2004, $1.48
|
-
|
-
|
175,000
|
175
|
-
|
-
|
258,825
|
-
|
-
|
-
|
259,000
|
|||||||||||||||||||||||
|
Issuance
of common stock In exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
Feb 2004, $1.51
|
-
|
-
|
112,500
|
113
|
-
|
-
|
169,762
|
-
|
-
|
-
|
169,875
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to
|
||||||||||||||||||||||||||||||||||
|
private
placement, July 2004, $1.22
|
-
|
-
|
2,459,016
|
2,459
|
-
|
-
|
2,997,541
|
-
|
-
|
-
|
3,000,000
|
|||||||||||||||||||||||
|
Financing
costs associated with private placement,
|
||||||||||||||||||||||||||||||||||
|
July
2004
|
-
|
-
|
-
|
-
|
-
|
-
|
(41,250
|
)
|
-
|
-
|
-
|
(41,250
|
)
|
|||||||||||||||||||||
|
Variable accounting non-cash compensation expense
|
-
|
-
|
-
|
-
|
-
|
-
|
45,390
|
-
|
-
|
-
|
45,390
|
|||||||||||||||||||||||
|
Accrued
interest on note receivable
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(24,805
|
)
|
-
|
-
|
(24,805
|
)
|
|||||||||||||||||||||
|
Comprehensive
Income (Loss):
|
||||||||||||||||||||||||||||||||||
|
Net
Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(18,362,583
|
)
|
-
|
(18,362,583
|
)
|
|||||||||||||||||||||
|
Other
comprehensive income (loss)
|
||||||||||||||||||||||||||||||||||
|
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
207,593
|
207,593
|
|||||||||||||||||||||||
|
Total
Comprehensive Income (Loss)
|
(18,362,583
|
)
|
207,593
|
(18,154,990
|
)
|
|||||||||||||||||||||||||||||
|
Balance
at July 31, 2004
|
1,000
|
$
|
1
|
34,262,448
|
$
|
34,264
|
-
|
$
|
-
|
$
|
97,110,291
|
$
|
(384,803
|
)
|
$
|
(96,526,373
|
)
|
$
|
296,371
|
$
|
529,751
|
|||||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
65
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31,
2008
|
Deficit
|
||||||||||||||||||||||||||||||||||
|
SVR
|
Notes
|
Accumulated
|
Accumulated
|
|||||||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Additional
|
Receivable
-
|
During
the
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Stock
|
Stock
|
Stock
|
Paid-In
|
Common
|
Development
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Income
(Loss)
|
Equity
|
||||||||||||||||||||||||
|
Balance,
August 1, 2004
|
1,000
|
$
|
1
|
34,262,448
|
$
|
34,264
|
-
|
$
|
-
|
$
|
97,110,291
|
$
|
(384,803
|
)
|
$
|
(96,526,373
|
)
|
$
|
296,371
|
$
|
529,751
|
|||||||||||||
|
Issuance of common stock In exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
Aug 2004, $1.09
|
-
|
-
|
620,000
|
620
|
-
|
-
|
675,180
|
-
|
-
|
-
|
675,800
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered
Aug 2004, $1.08
|
-
|
-
|
-
|
-
|
-
|
-
|
415,000
|
-
|
-
|
-
|
415,000
|
|||||||||||||||||||||||
|
Granting
of stock options in exchange for services,
|
||||||||||||||||||||||||||||||||||
|
Oct
2004, $0.94
|
-
|
-
|
-
|
-
|
-
|
-
|
75,600
|
-
|
-
|
-
|
75,600
|
|||||||||||||||||||||||
|
Cancellation
of common stock for non-performance of
|
||||||||||||||||||||||||||||||||||
|
services,
Oct 2004, $0.94
|
-
|
-
|
(75,000
|
)
|
(75
|
)
|
-
|
-
|
(137,925
|
)
|
-
|
-
|
-
|
(138,000
|
)
|
|||||||||||||||||||
|
Issuance
of warrants in conjunction with financing,
|
||||||||||||||||||||||||||||||||||
|
Nov
2004, $0.91
|
-
|
-
|
-
|
-
|
-
|
-
|
89,900
|
-
|
-
|
-
|
89,900
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with convertible
|
||||||||||||||||||||||||||||||||||
|
debentures,
$4,000,000, Nov 2004 $0.91
|
-
|
-
|
-
|
-
|
-
|
-
|
1,722,222
|
-
|
-
|
-
|
1,722,222
|
|||||||||||||||||||||||
|
Value
of beneficial conversion feature on convertible
|
||||||||||||||||||||||||||||||||||
|
debentures,
$4,000,000, Nov 2004 $0.91
|
-
|
-
|
-
|
-
|
-
|
-
|
1,722,222
|
-
|
-
|
-
|
1,722,222
|
|||||||||||||||||||||||
|
Issuance
of common stock In exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
Dec 2004, $0.71
|
-
|
-
|
48,000
|
48
|
-
|
-
|
34,032
|
-
|
-
|
-
|
34,080
|
|||||||||||||||||||||||
|
Conversion
of Series A Preferred Stock, Dec 2004
|
||||||||||||||||||||||||||||||||||
|
$25.77
|
-
|
-
|
534,085
|
534
|
-
|
-
|
14,309,523
|
-
|
-
|
-
|
14,310,057
|
|||||||||||||||||||||||
|
Issuance
of common stock In exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
Jan 2005, $0.85
|
-
|
-
|
18,000
|
18
|
-
|
-
|
15,282
|
-
|
-
|
-
|
15,300
|
|||||||||||||||||||||||
|
Issuance
of common stock In exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
Jan 2005, $0.75
|
-
|
-
|
40,000
|
40
|
-
|
-
|
29,960
|
-
|
-
|
-
|
30,000
|
|||||||||||||||||||||||
|
Issuance
of common stock In exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
Feb 2005, $0.69
|
-
|
-
|
18,000
|
18
|
-
|
-
|
12,402
|
-
|
-
|
-
|
12,420
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of principal
|
||||||||||||||||||||||||||||||||||
|
and
interest due, $4,000,000, Feb 2005
|
-
|
-
|
250,910
|
251
|
-
|
-
|
181,262
|
-
|
-
|
-
|
181,513
|
|||||||||||||||||||||||
|
Issuance
of common stock In exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
Feb 2005, $0.68
|
-
|
-
|
50,000
|
50
|
-
|
-
|
33,950
|
-
|
-
|
-
|
34,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of principal
|
||||||||||||||||||||||||||||||||||
|
and
interest due, $4,000,000, Mar 2005
|
-
|
-
|
265,228
|
265
|
-
|
-
|
162,197
|
-
|
-
|
-
|
162,462
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of principal
|
||||||||||||||||||||||||||||||||||
|
and
interest due, $4,000,000, Apr 2005
|
-
|
-
|
314,732
|
315
|
-
|
-
|
162,275
|
-
|
-
|
-
|
162,590
|
|||||||||||||||||||||||
|
Issuance of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$143,500
of $4,000,000 debenture, Apr 2005
|
-
|
-
|
175,316
|
175
|
-
|
-
|
143,584
|
-
|
-
|
-
|
143,759
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee
|
||||||||||||||||||||||||||||||||||
|
compensation,
Apr 2005, $0.56
|
-
|
-
|
8,800
|
9
|
-
|
-
|
4,919
|
-
|
-
|
-
|
4,928
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with convertible
|
||||||||||||||||||||||||||||||||||
|
debentures,
$500,000, Apr 2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
245,521
|
-
|
-
|
-
|
245,521
|
|||||||||||||||||||||||
|
Value
of beneficial conversion feature on convertible
|
||||||||||||||||||||||||||||||||||
|
debentures,
$500,000, Apr 2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
86,984
|
-
|
-
|
-
|
86,984
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with convertible
|
||||||||||||||||||||||||||||||||||
|
debentures,
$100,000, Apr 2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
49,104
|
-
|
-
|
-
|
49,104
|
|||||||||||||||||||||||
|
Value
of beneficial conversion feature on convertible
|
||||||||||||||||||||||||||||||||||
|
debentures,
$100,000, Apr 2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
17,397
|
-
|
-
|
-
|
17,397
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered
Apr 2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
40,000
|
-
|
-
|
-
|
40,000
|
|||||||||||||||||||||||
|
Issuance
of common stock In exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
Apr 2005, $0.82
|
-
|
-
|
350,000
|
350
|
-
|
-
|
286,650
|
-
|
-
|
-
|
287,000
|
|||||||||||||||||||||||
|
Issuance
of common stock in satisfaction of
|
||||||||||||||||||||||||||||||||||
|
accounts
payable, Apr 2005, $0.82
|
-
|
-
|
950,927
|
951
|
-
|
-
|
778,809
|
-
|
-
|
-
|
779,760
|
|||||||||||||||||||||||
|
Granting
of stock options in exchange for outstanding
|
||||||||||||||||||||||||||||||||||
|
liabilities,
Apr 2005, $0.001
|
-
|
-
|
-
|
-
|
-
|
-
|
1,332,052
|
-
|
-
|
-
|
1,332,052
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of principal
|
||||||||||||||||||||||||||||||||||
|
and
interest due, $4,000,000, May 2005
|
-
|
-
|
482,071
|
482
|
-
|
-
|
321,877
|
-
|
-
|
-
|
322,359
|
|||||||||||||||||||||||
|
Issuance of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$300,000
of $4,000,000 debenture, May 2005
|
-
|
-
|
365,914
|
366
|
-
|
-
|
299,683
|
-
|
-
|
-
|
300,049
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$244,000
of $4,000,000 debenture, May 2005
|
-
|
-
|
297,659
|
298
|
-
|
-
|
243,783
|
-
|
-
|
-
|
244,081
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$410,000
of $4,000,000 debenture, May 2005
|
-
|
-
|
500,000
|
500
|
-
|
-
|
409,500
|
-
|
-
|
-
|
410,000
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with 1st extension of due
|
||||||||||||||||||||||||||||||||||
|
date of $600,000 convertible debentures, May 2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
717,073
|
-
|
-
|
-
|
717,073
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of principal
|
||||||||||||||||||||||||||||||||||
|
and
interest due, $4,000,000, June 2005
|
-
|
-
|
311,307
|
311
|
-
|
-
|
244,644
|
-
|
-
|
-
|
244,955
|
|||||||||||||||||||||||
|
Issuance
of common stock in conjunction with financing,
|
||||||||||||||||||||||||||||||||||
|
$2,000,000,
June 2005, $0.82
|
-
|
-
|
170,732
|
171
|
-
|
-
|
139,829
|
-
|
-
|
-
|
140,000
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with financing, $2,000,000,
|
||||||||||||||||||||||||||||||||||
|
June
2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
20,300
|
-
|
-
|
-
|
20,300
|
|||||||||||||||||||||||
|
Issuance of warrants in conjunction with convertible debentures,
|
||||||||||||||||||||||||||||||||||
|
$2,000,000,
June 2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
828,571
|
-
|
-
|
-
|
828,571
|
|||||||||||||||||||||||
|
Value
of beneficial conversion feature on convertible
|
||||||||||||||||||||||||||||||||||
|
debentures,
$2,000,000, June 2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
1,171,429
|
-
|
-
|
-
|
1,171,429
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$100,000
of $2,000,000 debenture, June 2005
|
-
|
-
|
166,667
|
167
|
-
|
-
|
99,833
|
-
|
-
|
-
|
100,000
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$190,000
of $2,000,000 debenture, June 2005
|
-
|
-
|
316,927
|
317
|
-
|
-
|
189,839
|
-
|
-
|
-
|
190,156
|
|||||||||||||||||||||||
|
Issuance
of common stock In exchange for services
|
||||||||||||||||||||||||||||||||||
|
rendered,
June 2005, $0.60
|
-
|
-
|
63,207
|
63
|
-
|
-
|
37,861
|
-
|
-
|
-
|
37,924
|
|||||||||||||||||||||||
|
Issuance
of common stock in satisfaction of
|
||||||||||||||||||||||||||||||||||
|
accounts
payable, June 2005, $0.82
|
-
|
-
|
90,319
|
90
|
-
|
-
|
73,971
|
-
|
-
|
-
|
74,061
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$17,000
of $2,000,000 debenture, July 2005
|
-
|
-
|
28,398
|
28
|
-
|
-
|
17,011
|
-
|
-
|
-
|
17,039
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$75,000
of $2,000,000 debenture, July 2005
|
-
|
-
|
125,000
|
125
|
-
|
-
|
75,035
|
-
|
-
|
-
|
75,160
|
|||||||||||||||||||||||
|
Issuance of warrants in conjunction with 2nd extension of due
|
||||||||||||||||||||||||||||||||||
|
date of $600,000 convertible debentures, July 2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
629,268
|
-
|
-
|
-
|
629,268
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of principal
|
||||||||||||||||||||||||||||||||||
|
and
interest due, $4,000,000, July 2005
|
-
|
-
|
364,123
|
364
|
-
|
-
|
237,586
|
-
|
-
|
-
|
237,950
|
|||||||||||||||||||||||
|
Issuance
of common stock in satisfaction of
|
||||||||||||||||||||||||||||||||||
|
accounts
payable, July 2005, $0.82
|
-
|
-
|
820,128
|
820
|
-
|
-
|
671,685
|
-
|
-
|
-
|
672,505
|
|||||||||||||||||||||||
|
Granting
of stock options in exchange for services,
|
||||||||||||||||||||||||||||||||||
|
July
2004, $0.63
|
-
|
-
|
-
|
-
|
-
|
-
|
17,155
|
-
|
-
|
-
|
17,155
|
|||||||||||||||||||||||
|
Accrued
interest on note receivable
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(6,300
|
)
|
-
|
-
|
(6,300
|
)
|
|||||||||||||||||||||
|
Write-off
of uncollectible notes receivable - common
|
||||||||||||||||||||||||||||||||||
|
stock
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
391,103
|
-
|
-
|
391,103
|
|||||||||||||||||||||||
|
Variable
accounting non-cash compensation expense
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
|
Comprehensive
Income (Loss):
|
||||||||||||||||||||||||||||||||||
|
Net
Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(24,001,735
|
)
|
-
|
(24,001,735
|
)
|
|||||||||||||||||||||
|
Other
comprehensive income (loss)
|
||||||||||||||||||||||||||||||||||
|
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
272,478
|
272,478
|
|||||||||||||||||||||||
|
Total
Comprehensive Income (Loss)
|
(24,001,735
|
)
|
272,478
|
(23,729,257
|
)
|
|||||||||||||||||||||||||||||
|
Balance
at July 31, 2005
|
1,000
|
$
|
1
|
41,933,898
|
$
|
41,935
|
-
|
$
|
-
|
$
|
126,044,326
|
$
|
-
|
$
|
(120,528,108
|
)
|
$
|
568,849
|
$
|
6,127,003
|
||||||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
66
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31,
2008
|
Deficit
|
||||||||||||||||||||||||||||||||||
|
SVR
|
Notes
|
Accumulated
|
Accumulated
|
|||||||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Additional
|
Receivable
-
|
During
the
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Stock
|
Stock
|
Stock
|
Paid-In
|
Common
|
Development
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Income
(Loss)
|
Equity
|
||||||||||||||||||||||||
|
Balance,
August 1, 2005
|
1,000
|
$
|
1
|
41,933,898
|
$
|
41,935
|
-
|
$
|
-
|
$
|
126,044,326
|
$
|
-
|
$
|
(120,528,108
|
)
|
$
|
568,849
|
$
|
6,127,003
|
||||||||||||||
|
Issuance of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization payments due, $4,000,000, August 2005
|
-
|
-
|
429,041
|
429
|
-
|
-
|
282,738
|
-
|
-
|
-
|
283,167
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered
August 2005 (at $0.61)
|
-
|
-
|
19,500
|
19
|
-
|
-
|
11,877
|
-
|
-
|
-
|
11,896
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered
August 2005 (at $0.59)
|
-
|
-
|
246,429
|
246
|
-
|
-
|
145,147
|
-
|
-
|
-
|
145,393
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization payments due, $4,000,000, September 2005
|
-
|
-
|
388,730
|
389
|
-
|
-
|
267,835
|
-
|
-
|
-
|
268,224
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $2,000,000, September 2005
|
-
|
-
|
322,373
|
322
|
-
|
-
|
222,115
|
-
|
-
|
-
|
222,437
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$504,538
of $2,000,000 debenture, September 2005
|
-
|
-
|
841,309
|
841
|
-
|
-
|
503,945
|
-
|
-
|
-
|
504,786
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$286,538
of $2,000,000 debenture, September 2005
|
-
|
-
|
477,962
|
478
|
-
|
-
|
286,299
|
-
|
-
|
-
|
286,777
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$457,200
of 2nd $2,000,000 debenture, September 2005
|
-
|
-
|
762,000
|
762
|
-
|
-
|
456,739
|
-
|
-
|
-
|
457,501
|
|||||||||||||||||||||||
|
Issuance
of common stock in satisfaction of accounts
|
||||||||||||||||||||||||||||||||||
|
payable,
September 2005, $0.81
|
-
|
-
|
162,933
|
163
|
-
|
-
|
113,442
|
-
|
-
|
-
|
113,605
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$211,538
of $2,000,000 debenture, September 2005
|
-
|
-
|
353,665
|
354
|
-
|
-
|
211,845
|
-
|
-
|
-
|
212,199
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$150,000
of 2nd $2,000,000 debenture, September 2005
|
-
|
-
|
250,000
|
250
|
-
|
-
|
149,750
|
-
|
-
|
-
|
150,000
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$457,317
of 2nd $2,000,000 debenture, September 2005
|
-
|
-
|
762,195
|
762
|
-
|
-
|
458,209
|
-
|
-
|
-
|
458,971
|
|||||||||||||||||||||||
|
Issuance
of common stock in conjunction with financing,
|
||||||||||||||||||||||||||||||||||
|
2nd
$2,000,000, September 2005, $0.82
|
-
|
-
|
170,732
|
171
|
-
|
-
|
139,829
|
-
|
-
|
-
|
140,000
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with financing,
|
||||||||||||||||||||||||||||||||||
|
2nd
$2,000,000, September 2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
30,600
|
-
|
-
|
-
|
30,600
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with convertible debentures,
|
||||||||||||||||||||||||||||||||||
|
2nd
$2,000,000, September 2005 (at $0.82)
|
-
|
-
|
-
|
-
|
-
|
-
|
785,185
|
-
|
-
|
-
|
785,185
|
|||||||||||||||||||||||
|
Value
of Beneficial Conversion Feature on Convertible
|
||||||||||||||||||||||||||||||||||
|
Debentures,
2nd $2,000,000, September 2005 (at $0.82)
|
-
|
-
|
-
|
-
|
-
|
-
|
1,185,185
|
-
|
-
|
-
|
1,185,185
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $4,000,000, October 2005
|
-
|
-
|
243,836
|
244
|
-
|
-
|
163,126
|
-
|
-
|
-
|
163,370
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $2,000,000, October 2005
|
-
|
-
|
67,949
|
68
|
-
|
-
|
45,458
|
-
|
-
|
-
|
45,526
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$307,317
of 2nd $2,000,000 debenture, October 2005
|
-
|
-
|
512,195
|
512
|
-
|
-
|
306,805
|
-
|
-
|
-
|
307,317
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$300,000
of $2,000,000 debenture, October 2005
|
-
|
-
|
501,397
|
501
|
-
|
-
|
300,337
|
-
|
-
|
-
|
300,838
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$500,000
of $500,000 debenture, October 2005
|
-
|
-
|
644,003
|
644
|
-
|
-
|
527,438
|
-
|
-
|
-
|
528,082
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$113,077
of $2,000,000 debenture, October 2005
|
-
|
-
|
189,019
|
189
|
-
|
-
|
113,222
|
-
|
-
|
-
|
113,411
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$297,692
of $4,000,000 debenture, October 2005
|
-
|
-
|
364,113
|
364
|
-
|
-
|
298,209
|
-
|
-
|
-
|
298,573
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, October 2005, $0.82
|
-
|
-
|
8,404,876
|
8,405
|
-
|
-
|
6,883,593
|
-
|
-
|
-
|
6,891,998
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, October 2005, $0.63
|
-
|
-
|
101,500
|
101
|
-
|
-
|
63,844
|
-
|
-
|
-
|
63,945
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, October 2005, $0.94
|
-
|
-
|
40,000
|
40
|
-
|
-
|
37,560
|
-
|
-
|
-
|
37,600
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$100,000
of $100,000 debenture, October 2005
|
-
|
-
|
128,834
|
129
|
-
|
-
|
105,515
|
-
|
-
|
-
|
105,644
|
|||||||||||||||||||||||
|
Issuance of warrants in conjunction with financing, $500,000,
|
||||||||||||||||||||||||||||||||||
|
October
2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
14,250
|
-
|
-
|
-
|
14,250
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with convertible
|
||||||||||||||||||||||||||||||||||
|
debentures,
$500,000, October 2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
270,950
|
-
|
-
|
-
|
270,950
|
|||||||||||||||||||||||
|
Issuance
of warrants as exercise inducement Oct 2005, $1.20
|
-
|
-
|
-
|
-
|
-
|
-
|
573,146
|
-
|
-
|
-
|
573,146
|
|||||||||||||||||||||||
|
Issuance
of warrants as exercise inducement Oct 2005, $1.25
|
-
|
-
|
-
|
-
|
-
|
-
|
2,501,390
|
-
|
-
|
-
|
2,501,390
|
|||||||||||||||||||||||
|
Value
of Beneficial Conversion Feature on Convertible
|
||||||||||||||||||||||||||||||||||
|
Debentures,
$500,000, October 2005 (at $0.82)
|
-
|
-
|
-
|
-
|
-
|
-
|
229,050
|
-
|
-
|
-
|
229,050
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $4,000,000, Nov 2005, $1.17
|
-
|
-
|
108,006
|
108
|
-
|
-
|
126,259
|
-
|
-
|
-
|
126,367
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $2,000,000, Nov 2005, $1.17
|
-
|
-
|
16,753
|
17
|
-
|
-
|
19,584
|
-
|
-
|
-
|
19,601
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, November 2005, $0.94
|
-
|
-
|
100,000
|
100
|
-
|
-
|
93,900
|
-
|
-
|
-
|
94,000
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, November 2005, $0.63
|
-
|
-
|
1,500
|
2
|
-
|
-
|
944
|
-
|
-
|
-
|
946
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, November 2005, $0.82
|
-
|
-
|
3,058,536
|
3,058
|
-
|
-
|
2,504,942
|
-
|
-
|
-
|
2,508,000
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered
November 2005, $0.97
|
-
|
-
|
64,287
|
64
|
-
|
-
|
62,294
|
-
|
-
|
-
|
62,358
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$42,800
of 2nd $2,000,000 debenture, Nov 2005, $1.23
|
-
|
-
|
72,058
|
72
|
-
|
-
|
88,559
|
-
|
-
|
-
|
88,631
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered
August 2005, $0.97
|
-
|
-
|
19,500
|
19
|
-
|
-
|
18,897
|
-
|
-
|
-
|
18,916
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$230,769
of $4,000,000 debenture, November 2005,$0.97
|
-
|
-
|
282,721
|
283
|
-
|
-
|
273,957
|
-
|
-
|
-
|
274,240
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $2,000,000, Dec 2005, $0.98
|
-
|
-
|
212,750
|
213
|
-
|
-
|
208,282
|
-
|
-
|
-
|
208,495
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$1,451,000
of $3,500,000 debenture, Dec 2005, $0.93
|
-
|
-
|
1,770,223
|
1,770
|
-
|
-
|
1,644,537
|
-
|
-
|
-
|
1,646,307
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$4,221
of 2nd $2,000,000 debenture, Dec 2005, $0.85
|
-
|
-
|
7,042
|
7
|
-
|
-
|
5,979
|
-
|
-
|
-
|
5,986
|
|||||||||||||||||||||||
|
Issuance
of common stock in conjunction with financing,
|
||||||||||||||||||||||||||||||||||
|
$3,500,000,
December 2005, $0.95
|
-
|
-
|
224,000
|
224
|
-
|
-
|
212,576
|
-
|
-
|
-
|
212,800
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with financing, $3,500,000,
|
||||||||||||||||||||||||||||||||||
|
December
2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
76,650
|
-
|
-
|
-
|
76,650
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with convertible
|
||||||||||||||||||||||||||||||||||
|
debentures,
$3,500,000, December 2005, $0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
1,648,387
|
-
|
-
|
-
|
1,648,387
|
|||||||||||||||||||||||
|
Value
of Beneficial Conversion Feature on Convertible
|
||||||||||||||||||||||||||||||||||
|
Debentures,
$3,500,000, December 2005,$0.82
|
-
|
-
|
-
|
-
|
-
|
-
|
1,851,613
|
-
|
-
|
-
|
1,851,613
|
|||||||||||||||||||||||
|
Issuance
of warrants as exercise inducement Dec 2005, $1.25
|
-
|
-
|
-
|
-
|
-
|
-
|
1,115,853
|
-
|
-
|
-
|
1,115,853
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$82,000
of $3,500,000 debenture, December 2005, $0.84
|
-
|
-
|
100,000
|
100
|
-
|
-
|
83,900
|
-
|
-
|
-
|
84,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, 2nd $2,000,000, Jan 2006, $0.81
|
-
|
-
|
75,149
|
75
|
-
|
-
|
60,796
|
-
|
-
|
-
|
60,871
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $500,000, Jan 2006, $0.81
|
-
|
-
|
53,612
|
54
|
-
|
-
|
43,372
|
-
|
-
|
-
|
43,426
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$617,000
of $3,500,000 debenture, January 2005, $0.94
|
-
|
-
|
757,630
|
758
|
-
|
-
|
711,415
|
-
|
-
|
-
|
712,173
|
|||||||||||||||||||||||
|
Issuance
of common stock in conjunction with financing,
|
||||||||||||||||||||||||||||||||||
|
$4,000,000,
January 2006, $1.00
|
-
|
-
|
266,667
|
267
|
-
|
-
|
266,400
|
-
|
-
|
-
|
266,667
|
|||||||||||||||||||||||
|
Issuance of warrants in conjunction with financing, $4,000,000,
|
||||||||||||||||||||||||||||||||||
|
January
2006, $1.05
|
-
|
-
|
-
|
-
|
-
|
-
|
88,800
|
-
|
-
|
-
|
88,800
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with convertible
|
||||||||||||||||||||||||||||||||||
|
debentures,
4,000,000, January 2006, $1.05
|
-
|
-
|
-
|
-
|
-
|
-
|
1,653,631
|
-
|
-
|
-
|
1,653,631
|
|||||||||||||||||||||||
|
Value
of Beneficial Conversion Feature on Convertible
|
||||||||||||||||||||||||||||||||||
|
Debentures,
4,000,000, January 2006, $1.05
|
-
|
-
|
-
|
-
|
-
|
-
|
1,463,155
|
-
|
-
|
-
|
1,463,155
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, January 2006, $0.82
|
-
|
-
|
7,317,072
|
7,317
|
-
|
-
|
5,992,682
|
-
|
-
|
-
|
5,999,999
|
|||||||||||||||||||||||
|
Issuance
of warrants as exercise inducement Jan 2006, $1.60
|
-
|
-
|
-
|
-
|
-
|
-
|
3,109,756
|
-
|
-
|
-
|
3,109,756
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, January 2006, $0.63
|
-
|
-
|
10,000
|
10
|
-
|
-
|
6,290
|
-
|
-
|
-
|
6,300
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$850,000
of $3,500,000 debenture, January 2006, $1.06
|
-
|
-
|
1,045,779
|
1,046
|
-
|
-
|
1,107,480
|
-
|
-
|
-
|
1,108,526
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $500,000, Feb 2006, $1.23
|
-
|
-
|
49,812
|
50
|
-
|
-
|
61,219
|
-
|
-
|
-
|
61,269
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $2,000,000, Feb 2006, $1.23
|
-
|
-
|
67,746
|
68
|
-
|
-
|
83,260
|
-
|
-
|
-
|
83,328
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation,
|
||||||||||||||||||||||||||||||||||
|
December
2005, $0.90
|
-
|
-
|
140,115
|
140
|
-
|
-
|
125,964
|
-
|
-
|
-
|
126,104
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, February 2006, $0.82
|
-
|
-
|
303,902
|
304
|
-
|
-
|
248,896
|
-
|
-
|
-
|
249,200
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered
February 2006, $1.53
|
-
|
-
|
50,000
|
50
|
-
|
-
|
76,450
|
-
|
-
|
-
|
76,500
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, February 2006, $0.94
|
-
|
-
|
80,000
|
80
|
-
|
-
|
75,120
|
-
|
-
|
-
|
75,200
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, February 2006, $1.59
|
-
|
-
|
80,000
|
80
|
-
|
-
|
127,120
|
-
|
-
|
-
|
127,200
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, February 2006, $1.38
|
-
|
-
|
20,000
|
20
|
-
|
-
|
27,580
|
-
|
-
|
-
|
27,600
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, February 2006, $1.05
|
-
|
-
|
3,809,524
|
3,810
|
-
|
-
|
3,996,191
|
-
|
-
|
-
|
4,000,001
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, February 2006, $1.20
|
-
|
-
|
909,756
|
910
|
-
|
-
|
1,090,797
|
-
|
-
|
-
|
1,091,707
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, February 2006, $1.25
|
-
|
-
|
4,578,048
|
4,578
|
-
|
-
|
5,717,982
|
-
|
-
|
-
|
5,722,560
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, February 2006, $1.72
|
-
|
-
|
34,782
|
35
|
-
|
-
|
59,790
|
-
|
-
|
-
|
59,825
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$950,000
of Jan $4,000,000 debenture, Feb 2006, $2.38
|
-
|
-
|
904,762
|
905
|
-
|
-
|
2,152,429
|
-
|
-
|
-
|
2,153,334
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with convertible
|
||||||||||||||||||||||||||||||||||
|
debentures,
4,000,000, February 2006, $1.05
|
-
|
-
|
-
|
-
|
-
|
-
|
2,374,507
|
-
|
-
|
-
|
2,374,507
|
|||||||||||||||||||||||
|
Value
of Beneficial Conversion Feature on Convertible
|
||||||||||||||||||||||||||||||||||
|
Debentures,
4,000,000, February 2006, $1.05
|
-
|
-
|
-
|
-
|
-
|
-
|
1,625,493
|
-
|
-
|
-
|
1,625,493
|
|||||||||||||||||||||||
|
Issuance
of warrants as exercise inducement Feb 2006, $3.00
|
-
|
-
|
-
|
-
|
-
|
-
|
8,294,141
|
-
|
-
|
-
|
8,294,141
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$1,550,000
of Jan $4,000,000 debenture, Mar 2006, $2.21
|
-
|
-
|
1,485,349
|
1,485
|
-
|
-
|
3,281,136
|
-
|
-
|
-
|
3,282,621
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, March 2006, $1.72
|
-
|
-
|
347,913
|
348
|
-
|
-
|
598,062
|
-
|
-
|
-
|
598,410
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $2,000,000, Mar 2006, $2.31
|
-
|
-
|
67,094
|
67
|
-
|
-
|
154,920
|
-
|
-
|
-
|
154,987
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $500,000, March 2006, $2.31
|
-
|
-
|
49,312
|
49
|
-
|
-
|
113,861
|
-
|
-
|
-
|
113,910
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $3,500,000, Mar 2006, $2.31
|
-
|
-
|
55,644
|
56
|
-
|
-
|
128,482
|
-
|
-
|
-
|
128,538
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered
March 2006, $2.31
|
-
|
-
|
50,000
|
50
|
-
|
-
|
115,450
|
-
|
-
|
-
|
115,500
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, March 2006, $0.94
|
-
|
-
|
300,222
|
300
|
-
|
-
|
281,909
|
-
|
-
|
-
|
282,209
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$2,350,000
of Feb $4,000,000 debenture, Mar 2006, $2.31
|
-
|
-
|
1,880,000
|
1,880
|
-
|
-
|
4,340,920
|
-
|
-
|
-
|
4,342,800
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, March 2006, $1.47
|
-
|
-
|
274,500
|
274
|
-
|
-
|
403,241
|
-
|
-
|
-
|
403,515
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, March 2006, $1.25
|
-
|
-
|
1,600,000
|
1,600
|
-
|
-
|
1,998,400
|
-
|
-
|
-
|
2,000,000
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, March 2006, $0.91
|
-
|
-
|
60,000
|
60
|
-
|
-
|
54,540
|
-
|
-
|
-
|
54,600
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, March 2006, $1.59
|
-
|
-
|
263,700
|
264
|
-
|
-
|
419,019
|
-
|
-
|
-
|
419,283
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$500,000
of Feb $4,000,000 debenture, Mar 2006, $2.20
|
-
|
-
|
400,592
|
401
|
-
|
-
|
880,902
|
-
|
-
|
-
|
881,303
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, March 2006, $0.82
|
-
|
-
|
48,000
|
48
|
-
|
-
|
39,312
|
-
|
-
|
-
|
39,360
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, March 2006, $1.05
|
-
|
-
|
46,000
|
46
|
-
|
-
|
48,254
|
-
|
-
|
-
|
48,300
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$200,000
of Jan $4,000,000 debenture, March 2006, $2.31
|
-
|
-
|
192,136
|
192
|
-
|
-
|
443,642
|
-
|
-
|
-
|
443,834
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, March 2006, $1.71
|
-
|
-
|
180,000
|
180
|
-
|
-
|
307,620
|
-
|
-
|
-
|
307,800
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$384,615
of $500,000 debenture, March 2006, $3.33
|
-
|
-
|
470,450
|
470
|
-
|
-
|
1,566,129
|
-
|
-
|
-
|
1,566,599
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, March 2006, $1.68
|
-
|
-
|
1,639,344
|
1,639
|
-
|
-
|
2,752,459
|
-
|
-
|
-
|
2,754,098
|
|||||||||||||||||||||||
|
Cashless
exercise of stock warrants, March 2006, $2.50
|
-
|
-
|
8,179
|
8
|
-
|
-
|
(8
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Exercise
of stock warrants for cash, March 2006, $1.25
|
-
|
-
|
68,000
|
68
|
-
|
-
|
84,932
|
-
|
-
|
-
|
85,000
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, March 2006, $2.10
|
-
|
-
|
175,000
|
175
|
-
|
-
|
367,325
|
-
|
-
|
-
|
367,500
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, March 2006, $1.10
|
-
|
-
|
150,000
|
150
|
-
|
-
|
164,850
|
-
|
-
|
-
|
165,000
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, March 2006, $1.52
|
-
|
-
|
150,000
|
150
|
-
|
-
|
227,850
|
-
|
-
|
-
|
228,000
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, March 2006, $2.19
|
-
|
-
|
150,000
|
150
|
-
|
-
|
328,350
|
-
|
-
|
-
|
328,500
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, March 2006, $2.15
|
-
|
-
|
2,000
|
2
|
-
|
-
|
4,298
|
-
|
-
|
-
|
4,300
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, March 2006, $1.88
|
-
|
-
|
31,000
|
31
|
-
|
-
|
58,249
|
-
|
-
|
-
|
58,280
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, March 2006, $2.02
|
-
|
-
|
23,438
|
23
|
-
|
-
|
47,322
|
-
|
-
|
-
|
47,345
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, March 2006, $0.63
|
-
|
-
|
120,750
|
121
|
-
|
-
|
75,952
|
-
|
-
|
-
|
76,073
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, March 2006, $1.86
|
-
|
-
|
170,068
|
170
|
-
|
-
|
316,156
|
-
|
-
|
-
|
316,326
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered
March 2006, $2.96
|
-
|
-
|
25,000
|
25
|
-
|
-
|
73,975
|
-
|
-
|
-
|
74,000
|
|||||||||||||||||||||||
|
Issuance
of common stock in satisfaction of accounts
|
||||||||||||||||||||||||||||||||||
|
payable
March 2006, $3.20
|
-
|
-
|
2,390
|
2
|
-
|
-
|
7,646
|
-
|
-
|
-
|
7,648
|
|||||||||||||||||||||||
|
Issuance
of warrants as exercise inducement Mar 2006, $3.00
|
-
|
-
|
-
|
-
|
-
|
-
|
1,293,953
|
-
|
-
|
-
|
1,293,953
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $2,000,000, April 2006, $2.70
|
-
|
-
|
67,083
|
67
|
-
|
-
|
181,057
|
-
|
-
|
-
|
181,124
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, $3,500,000, April 2006, $2.70
|
-
|
-
|
49,812
|
50
|
-
|
-
|
134,443
|
-
|
-
|
-
|
134,493
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization payments due, Jan $4,000,000, Apr 2006, $2.70
|
-
|
-
|
167,144
|
167
|
-
|
-
|
451,122
|
-
|
-
|
-
|
451,289
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, April 2006, $1.88
|
-
|
-
|
29,000
|
29
|
-
|
-
|
54,491
|
-
|
-
|
-
|
54,520
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, April 2006, $1.47
|
-
|
-
|
95,500
|
95
|
-
|
-
|
140,290
|
-
|
-
|
-
|
140,385
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$307,692
of 2nd $2,000,000 debenture, April 2006, $2.63
|
-
|
-
|
513,158
|
513
|
-
|
-
|
1,349,092
|
-
|
-
|
-
|
1,349,605
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$423,077
of $3,500,000 debenture, April 2005, $2.63
|
-
|
-
|
516,291
|
516
|
-
|
-
|
1,357,329
|
-
|
-
|
-
|
1,357,845
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of
|
||||||||||||||||||||||||||||||||||
|
$923,077
of Jan $4,000,000 debenture, April 2006, $2.63
|
-
|
-
|
879,699
|
880
|
-
|
-
|
2,312,729
|
-
|
-
|
-
|
2,313,609
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, April 2006, $0.94
|
-
|
-
|
25,000
|
25
|
-
|
-
|
23,475
|
-
|
-
|
-
|
23,500
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, April 2006, $0.82
|
-
|
-
|
132,000
|
132
|
-
|
-
|
108,108
|
-
|
-
|
-
|
108,240
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, April 2006, $0.91
|
-
|
-
|
60,000
|
60
|
-
|
-
|
54,540
|
-
|
-
|
-
|
54,600
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, April 2006, $1.05
|
-
|
-
|
69,000
|
69
|
-
|
-
|
72,381
|
-
|
-
|
-
|
72,450
|
|||||||||||||||||||||||
|
Issuance
of common stock in satisfaction of deposit
|
||||||||||||||||||||||||||||||||||
|
April
2006, $1.25
|
-
|
-
|
204,465
|
204
|
-
|
-
|
255,377
|
-
|
-
|
-
|
255,581
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered
April 2006, $2.67
|
-
|
-
|
38,400
|
38
|
-
|
-
|
102,490
|
-
|
-
|
-
|
102,528
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for the services rendered
|
||||||||||||||||||||||||||||||||||
|
April
2006, $2.66
|
-
|
-
|
-
|
-
|
-
|
-
|
137,200
|
-
|
-
|
-
|
137,200
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, Jan $4,000,000, May 2006, $3.10
|
-
|
-
|
74,322
|
74
|
-
|
-
|
230,324
|
-
|
-
|
-
|
230,398
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, Feb $4,000,000, May 2006, $3.10
|
-
|
-
|
172,713
|
173
|
-
|
-
|
535,238
|
-
|
-
|
-
|
535,411
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, May 2006, $2.10
|
-
|
-
|
25,000
|
25
|
-
|
-
|
52,475
|
-
|
-
|
-
|
52,500
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, May 2006, $1.47
|
-
|
-
|
10,000
|
10
|
-
|
-
|
14,690
|
-
|
-
|
-
|
14,700
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for the services rendered
|
||||||||||||||||||||||||||||||||||
|
May
2006, $1.91
|
-
|
-
|
-
|
-
|
-
|
-
|
35,250
|
-
|
-
|
-
|
35,250
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation
|
||||||||||||||||||||||||||||||||||
|
May
2006, $1.88
|
-
|
-
|
755,000
|
755
|
-
|
-
|
1,418,645
|
-
|
-
|
-
|
1,419,400
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered
May 2006, $1.85
|
-
|
-
|
3,784
|
4
|
-
|
-
|
6,997
|
-
|
-
|
-
|
7,001
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered
May 2006, $1.88
|
-
|
-
|
38,000
|
38
|
-
|
-
|
71,402
|
-
|
-
|
-
|
71,440
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, Jan $4,000,000, Jun 2006, $1.96
|
-
|
-
|
73,979
|
74
|
-
|
-
|
144,925
|
-
|
-
|
-
|
144,999
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, Feb $4,000,000, Jun 2006, $1.96
|
-
|
-
|
83,911
|
84
|
-
|
-
|
164,382
|
-
|
-
|
-
|
164,466
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, June 2006, $1.25
|
-
|
-
|
1,327,880
|
1,328
|
-
|
-
|
1,658,522
|
-
|
-
|
-
|
1,659,850
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, June 2006, $1.60
|
-
|
-
|
3,036,310
|
3,036
|
-
|
-
|
4,855,060
|
-
|
-
|
-
|
4,858,096
|
|||||||||||||||||||||||
|
Issuance
of warrants as exercise inducement June 2006, $2.35
|
-
|
-
|
-
|
-
|
-
|
-
|
4,549,670
|
-
|
-
|
-
|
4,549,670
|
|||||||||||||||||||||||
|
Issuance
of common stock for cash pursuant to private
|
||||||||||||||||||||||||||||||||||
|
placement,
June 2006, $2.05
|
-
|
-
|
3,414,636
|
3,415
|
-
|
-
|
6,996,589
|
-
|
-
|
-
|
7,000,004
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered
June 2006, $1.85
|
-
|
-
|
3,784
|
4
|
-
|
-
|
6,997
|
-
|
-
|
-
|
7,001
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization
payments due, Jan $4,000,000, July 2006, $1.75
|
-
|
-
|
66,264
|
66
|
-
|
-
|
115,896
|
-
|
-
|
-
|
115,962
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly
|
||||||||||||||||||||||||||||||||||
|
amortization payments due, Feb $4,000,000, July 2006, $1.75
|
-
|
-
|
64,923
|
65
|
-
|
-
|
113,550
|
-
|
-
|
-
|
113,615
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services
|
||||||||||||||||||||||||||||||||||
|
rendered
July 2006, $1.40
|
-
|
-
|
5,000
|
5
|
-
|
-
|
6,995
|
-
|
-
|
-
|
7,000
|
|||||||||||||||||||||||
|
Comprehensive
Income (Loss):
|
||||||||||||||||||||||||||||||||||
|
Net
Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(67,967,204
|
)
|
-
|
(67,967,204
|
)
|
|||||||||||||||||||||
|
Other
comprehensive income (loss)
|
||||||||||||||||||||||||||||||||||
|
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
185,232
|
185,232
|
|||||||||||||||||||||||
|
Total
Comprehensive Income (Loss)
|
(67,967,204
|
)
|
185,232
|
(67,781,972
|
)
|
|||||||||||||||||||||||||||||
|
Balance
at July 31, 2006
|
1,000
|
$
|
1
|
107,398,360
|
$
|
107,397
|
$
|
-
|
$
|
-
|
$
|
243,097,627
|
$
|
-
|
$
|
(188,495,312
|
)
|
$
|
754,081
|
$
|
55,463,794
|
|||||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
67
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31,
2008
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
||||||||||||||||||||||||
|
SVR
|
|
|
|
Notes
|
Accumulated
|
Accumulated
|
|
|||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Additional
|
Receivable
-
|
During
the
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Stock
|
Stock
|
Stock
|
Paid-In
|
Common
|
Development
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Income
(Loss)
|
Equity
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Balance,
August 1, 2006
|
1,000
|
$
|
1
|
107,398,360
|
$
|
107,397
|
$
|
-
|
$
|
-
|
$
|
243,097,627
|
$
|
-
|
$
|
(188,495,312
|
)
|
$
|
754,081
|
$
|
55,463,794
|
|||||||||||||
|
Issuance
of common stock as repayment of monthly amortization payments due,
Feb
$4,000,000, Aug 2006, $1.48
|
-
|
-
|
64,718
|
65
|
-
|
-
|
95,718
|
-
|
-
|
-
|
95,783
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Aug 2006,
$1.43
|
-
|
-
|
25,000
|
25
|
-
|
-
|
35,725
|
-
|
-
|
-
|
35,750
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly amortization payments due
Feb
$4,000,000, Sep 2006 $1.53
|
-
|
-
|
64,400
|
64
|
-
|
-
|
98,468
|
-
|
-
|
-
|
98,532
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Oct 2006,
$1.50
|
-
|
-
|
25,000
|
25
|
-
|
-
|
37,475
|
-
|
-
|
-
|
37,500
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly amortization payments due
, Feb
$4,000,000, Oct 2006, $1.65
|
-
|
-
|
64,000
|
64
|
-
|
-
|
105,536
|
-
|
-
|
-
|
105,600
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Oct 2006,
$1.83
|
-
|
-
|
27,262
|
27
|
-
|
-
|
49,862
|
-
|
-
|
-
|
49,889
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Oct 2006,
$1.50
|
-
|
-
|
25,000
|
25
|
-
|
-
|
37,475
|
-
|
-
|
-
|
37,500
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Oct 2006, $1.83
|
-
|
-
|
100,000
|
100
|
-
|
-
|
182,900
|
-
|
-
|
-
|
183,000
|
|||||||||||||||||||||||
|
Exercise
of stock warrants for cash, Oct 2006, $1.25
|
-
|
-
|
100,000
|
100
|
-
|
-
|
124,900
|
-
|
-
|
-
|
125,000
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, Oct 2006, $1.59
|
-
|
-
|
90,300
|
90
|
-
|
-
|
143,487
|
-
|
-
|
-
|
143,577
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, Oct 2006, $1.47
|
-
|
-
|
6,500
|
6
|
-
|
-
|
9,549
|
-
|
-
|
-
|
9,555
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly amortization payments due
Feb
$4,000,000, Nov 2006, $2.02
|
-
|
-
|
63,764
|
64
|
-
|
-
|
128,740
|
-
|
-
|
-
|
128,804
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, Nov 2006, $1.59
|
-
|
-
|
15,000
|
15
|
-
|
-
|
23,835
|
-
|
-
|
-
|
23,850
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Nov 2006,
$2.15
|
-
|
-
|
50,000
|
50
|
-
|
-
|
107,450
|
-
|
-
|
-
|
107,500
|
|||||||||||||||||||||||
|
Issuance
of common stock as repayment of monthly amortization payments due,
Feb
$4,000,000, Dec 2006, $2.08
|
-
|
-
|
63,384
|
63
|
-
|
-
|
131,775
|
-
|
-
|
-
|
131,838
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Dec 2006,
$1.68
|
-
|
-
|
25,000
|
25
|
-
|
-
|
41,975
|
-
|
-
|
-
|
42,000
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Jan 2007,
$1.77
|
-
|
-
|
25,000
|
25
|
-
|
-
|
44,225
|
-
|
-
|
-
|
44,250
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversation of $52,554 of Feb
$4,000,000 debenture, Jan, $1.74
|
-
|
-
|
42,043
|
42
|
-
|
-
|
73,113
|
-
|
-
|
-
|
73,155
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of 52,554 of Feb
$4,000,000
debenture, Jan, $1.77
|
-
|
-
|
42,043
|
42
|
-
|
-
|
74,374
|
-
|
-
|
-
|
74,416
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Feb 2007,
$1.90
|
-
|
-
|
25,000
|
25
|
-
|
-
|
47,475
|
-
|
-
|
-
|
47,500
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Mar 2007,
$1.71
|
-
|
-
|
100,000
|
100
|
-
|
-
|
170,900
|
-
|
-
|
-
|
171,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Mar 2007, $1.71
|
-
|
-
|
9,844
|
10
|
-
|
-
|
16,823
|
-
|
-
|
-
|
16,833
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for the services rendered Mar 2007,
$1.71
|
-
|
-
|
|
|
-
|
-
|
125,000
|
-
|
-
|
-
|
125,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Mar 2007, $1.71
|
-
|
-
|
296,000
|
296
|
-
|
-
|
505,864
|
-
|
-
|
-
|
506,160
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Mar 2007,
$1.65
|
-
|
-
|
13,637
|
13
|
-
|
-
|
22,487
|
-
|
-
|
-
|
22,500
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Mar 2007,
$1.69
|
-
|
-
|
25,000
|
25
|
-
|
-
|
42,225
|
-
|
-
|
-
|
42,250
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of $52,554 of Feb
$4,000,000
debenture, Mar 2007, $1.71
|
-
|
-
|
42,043
|
42
|
-
|
-
|
71,851
|
-
|
-
|
-
|
71,893
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Mar 2007, $1.70
|
-
|
-
|
4,951
|
5
|
-
|
-
|
8,412
|
-
|
-
|
-
|
8,417
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Apr 2007,
$1.71
|
-
|
-
|
22,728
|
23
|
-
|
-
|
38,842
|
-
|
-
|
-
|
38,865
|
|||||||||||||||||||||||
|
Preferred
Shares Redemption, April 2007
|
(1,000
|
)
|
(1
|
)
|
-
|
-
|
-
|
-
|
(99
|
)
|
-
|
-
|
-
|
(100
|
)
|
|||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Apr 2007,
$1.65
|
-
|
-
|
13,637
|
14
|
-
|
-
|
22,486
|
-
|
-
|
-
|
22,500
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Apr 2007,
$1.69
|
-
|
-
|
25,000
|
25
|
-
|
-
|
42,225
|
-
|
-
|
-
|
42,250
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Apr 2007, $1.64
|
-
|
-
|
5,132
|
5
|
-
|
-
|
8,411
|
-
|
-
|
-
|
8,416
|
|||||||||||||||||||||||
|
Issuance
of common stock in connection with conversion of $52,554 of Feb
$4,000,000
debenture, Apr 2007, $1.61
|
-
|
-
|
42,043
|
42
|
-
|
-
|
67,647
|
-
|
-
|
-
|
67,689
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered May 2007,
$1.60
|
-
|
-
|
22,728
|
23
|
-
|
-
|
36,342
|
-
|
-
|
-
|
36,365
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, May 2007, $0.63
|
-
|
-
|
5,000
|
5
|
-
|
-
|
3,145
|
-
|
-
|
-
|
3,150
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered May 2007,
$1.47
|
-
|
-
|
25,000
|
25
|
-
|
-
|
36,725
|
-
|
-
|
-
|
36,750
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered May 2007,
$1.47
|
-
|
-
|
13,637
|
14
|
-
|
-
|
20,033
|
-
|
-
|
-
|
20,047
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation May 2007, $1.45
|
-
|
-
|
5,805
|
6
|
-
|
-
|
8,411
|
-
|
-
|
-
|
8,417
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation May 2007, $1.45
|
-
|
-
|
450,000
|
450
|
-
|
-
|
652,050
|
-
|
-
|
-
|
652,500
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for the services rendered May 2007,
$1.45
|
-
|
-
|
|
|
-
|
-
|
141,400
|
-
|
-
|
-
|
141,400
|
|||||||||||||||||||||||
|
Cancellation
of common stock, May 2007, $1.45
|
-
|
-
|
(150,000
|
)
|
(150
|
)
|
-
|
-
|
150
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Jun 2007
,
$1.40
|
-
|
-
|
22,728
|
23
|
-
|
-
|
31,796
|
-
|
-
|
-
|
31,819
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Jun 2007,
$1.83
|
-
|
-
|
13,637
|
14
|
-
|
-
|
24,942
|
-
|
-
|
-
|
24,956
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for services rendered Jun 2007,
$1.80
|
-
|
-
|
25,000
|
25
|
-
|
-
|
44,975
|
-
|
-
|
-
|
45,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation, Jul 2007, $1.78
|
-
|
-
|
4,728
|
5
|
-
|
-
|
8,411
|
-
|
-
|
-
|
8,416
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Jul 2007,
$1.78
|
-
|
-
|
22,728
|
23
|
-
|
-
|
40,433
|
-
|
-
|
-
|
40,456
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, Jul 2007, $0.94
|
-
|
-
|
70,000
|
70
|
-
|
-
|
65,730
|
-
|
-
|
-
|
65,800
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, Jul 2007, $0.56
|
-
|
-
|
100,000
|
100
|
-
|
-
|
55,900
|
-
|
-
|
-
|
56,000
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Jul 2007,
$1.75
|
-
|
-
|
13,637
|
14
|
-
|
-
|
23,851
|
-
|
-
|
-
|
23,865
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Jul 2007,
$1.68
|
-
|
-
|
25,000
|
25
|
-
|
-
|
41,975
|
-
|
-
|
-
|
42,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation April 2007, $1.65
|
-
|
-
|
5,101
|
5
|
-
|
-
|
8,412
|
-
|
-
|
-
|
8,417
|
|||||||||||||||||||||||
|
Comprehensive
Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Net
Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(23,504,958
|
)
|
-
|
(23,504,958
|
)
|
|||||||||||||||||||||
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
127,726
|
127,726
|
|||||||||||||||||||||||
|
Total
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
(23,504,958
|
)
|
127,726
|
(23,377,232
|
)
|
||||||||||||||||||||||
|
Balance
at July 31, 2007
|
-
|
-
|
109,616,518
|
109,616
|
-
|
-
|
247,079,439
|
-
|
(212,000,270
|
)
|
881,807
|
36,070,592
|
||||||||||||||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
68
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE PERIOD NOVEMBER 2, 1995 (DATE OF INCEPTION) TO JULY 31,
2008
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
||||||||||||||||||||||||
|
SVR
|
|
|
|
Notes
|
Accumulated
|
Accumulated
|
|
|||||||||||||||||||||||||||
|
Preferred
|
Common
|
Treasury
|
Additional
|
Receivable
-
|
During
the
|
Other
|
Total
|
|||||||||||||||||||||||||||
|
Stock
|
Stock
|
Stock
|
Paid-In
|
Common
|
Development
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Income
(Loss)
|
Equity
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
Balance,
August 1, 2007
|
-
|
$
|
-
|
109,616,518
|
$
|
109,616
|
-
|
$
|
-
|
$
|
247,079,439
|
$
|
-
|
$
|
(212,000,270
|
)
|
$
|
881,807
|
$
|
36,070,592
|
||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Aug 2007,
$1.57
|
-
|
-
|
22,728
|
23
|
-
|
-
|
35,660
|
-
|
-
|
-
|
35,683
|
|||||||||||||||||||||||
|
Issuance
of restricted common stock to officers as employee compensation
Aug
2007
|
-
|
-
|
550,000
|
550
|
-
|
-
|
(550
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Stock-based
compensation - officers
|
-
|
-
|
-
|
-
|
-
|
-
|
527,909
|
-
|
-
|
-
|
527,909
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Aug 2007, $1.51 (Issued
under the
2006 Plan and fully vested)
|
-
|
-
|
100,000
|
100
|
-
|
-
|
150,900
|
-
|
-
|
-
|
151,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Aug 2007, $1.50
|
-
|
-
|
5,611
|
6
|
-
|
-
|
8,411
|
-
|
-
|
-
|
8,417
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Sep 2007,
$1.48
|
-
|
-
|
22,728
|
22
|
-
|
-
|
33,615
|
-
|
-
|
-
|
33,637
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Sep 2007,
$1.61
|
-
|
-
|
8,000
|
8
|
-
|
-
|
12,872
|
-
|
-
|
-
|
12,880
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Sep 2007,
$1.53
|
-
|
-
|
50,000
|
50
|
-
|
-
|
76,450
|
-
|
-
|
-
|
76,500
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Sep 2007, $1.55
|
-
|
-
|
5,430
|
5
|
-
|
-
|
8,411
|
-
|
-
|
-
|
8,416
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Oct 2007,
$1.50
|
-
|
-
|
22,728
|
23
|
-
|
-
|
34,069
|
-
|
-
|
-
|
34,092
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Oct 2007, $1.52
|
-
|
-
|
446,000
|
446
|
-
|
-
|
677,474
|
-
|
-
|
-
|
677,920
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Oct 2007,
$1.53
|
-
|
-
|
8,000
|
8
|
-
|
-
|
12,232
|
-
|
-
|
-
|
12,240
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Oct 2007,
$1.50
|
-
|
-
|
37,500
|
38
|
-
|
-
|
56,213
|
-
|
-
|
-
|
56,251
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Oct 2007, $1.53
|
-
|
-
|
5,501
|
6
|
-
|
-
|
8,411
|
-
|
-
|
-
|
8,417
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Nov 2007,
$1.71
|
-
|
-
|
22,728
|
23
|
-
|
-
|
38,842
|
-
|
-
|
-
|
38,865
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Nov 2007,
$1.75
|
-
|
-
|
8,000
|
8
|
-
|
-
|
13,992
|
-
|
-
|
-
|
14,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Nov 2007, $1.70
|
-
|
-
|
4,951
|
5
|
-
|
-
|
8,412
|
-
|
-
|
-
|
8,417
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Nov 2007,
$1.54
|
-
|
-
|
228,087
|
228
|
-
|
-
|
349,771
|
-
|
-
|
-
|
349,999
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Nov 2007,
$1.53
|
-
|
-
|
98,168
|
98
|
-
|
-
|
149,903
|
-
|
-
|
-
|
150,001
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Dec 2007,
$1.80
|
-
|
-
|
22,728
|
23
|
-
|
-
|
40,888
|
-
|
-
|
-
|
40,911
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Dec 2007,
$1.84
|
-
|
-
|
8,000
|
8
|
-
|
-
|
14,712
|
-
|
-
|
-
|
14,720
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, Dec 2007, $1.59
|
-
|
-
|
31,000
|
31
|
-
|
-
|
49,259
|
-
|
-
|
-
|
49,290
|
|||||||||||||||||||||||
|
Stock-based
compensation - officers
|
-
|
-
|
-
|
-
|
-
|
-
|
67,242
|
-
|
-
|
-
|
67,242
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Dec 2007,
$1.74
|
-
|
-
|
50,000
|
50
|
-
|
-
|
86,950
|
-
|
-
|
-
|
87,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Dec 2007, $7.75
|
-
|
-
|
4,810
|
5
|
-
|
-
|
8,413
|
-
|
-
|
-
|
8,418
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Jan 2008,
$1.61
|
-
|
-
|
22,728
|
23
|
-
|
-
|
36,569
|
-
|
-
|
-
|
36,592
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Jan 2008,
$1.38
|
-
|
-
|
8,000
|
8
|
-
|
-
|
11,032
|
-
|
-
|
-
|
11,040
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Jan 2008,
$1.34
|
-
|
-
|
37,500
|
37
|
-
|
-
|
50,213
|
-
|
-
|
-
|
50,250
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Oct 2007, $1.36
|
-
|
-
|
6,189
|
6
|
-
|
-
|
8,411
|
-
|
-
|
-
|
8,417
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Feb 2008,
$1.36
|
-
|
-
|
22,728
|
23
|
-
|
-
|
30,887
|
-
|
-
|
-
|
30,910
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Feb 2008,
$1.34
|
-
|
-
|
8,000
|
8
|
-
|
-
|
10,712
|
-
|
-
|
-
|
10,720
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, Feb 2008, $1.00
|
-
|
-
|
70,000
|
70
|
-
|
-
|
69,930
|
-
|
-
|
-
|
70,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Feb 2008, $1.32
|
-
|
-
|
6,376
|
6
|
-
|
-
|
8,410
|
-
|
-
|
-
|
8,416
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Mar 2008,
$1.00
|
-
|
-
|
8,000
|
8
|
-
|
-
|
7,992
|
-
|
-
|
-
|
8,000
|
|||||||||||||||||||||||
|
Stock-based
compensation - officers
|
-
|
-
|
50,000
|
50
|
-
|
-
|
67,242
|
-
|
-
|
-
|
67,292
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Mar 2008,
$0.95
|
-
|
-
|
8,093
|
8
|
-
|
-
|
47,450
|
-
|
-
|
-
|
47,458
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Mar 2008, $1.04
|
-
|
-
|
200,000
|
200
|
-
|
-
|
8,409
|
-
|
-
|
-
|
8,609
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Mar 2008,
$1.14
|
-
|
-
|
-
|
-
|
-
|
-
|
227,800
|
-
|
-
|
-
|
227,800
|
|||||||||||||||||||||||
|
Issuance
of warrants in exchange for the services rendered Mar 2008,
$3.75
|
-
|
-
|
-
|
-
|
-
|
-
|
52,500
|
-
|
-
|
-
|
52,500
|
|||||||||||||||||||||||
|
Issuance
of warrants as employee compensation Mar 2008, $0.94
|
-
|
-
|
-
|
-
|
-
|
-
|
29,500
|
-
|
-
|
-
|
29,500
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with convertible debenture, Mar 2008,
$1.10
|
-
|
-
|
-
|
-
|
-
|
-
|
5,323,109
|
-
|
-
|
-
|
5,323,109
|
|||||||||||||||||||||||
|
Issuance
of warrants in conjunction with convertible debentures, Mar 2008,
$1.21
|
-
|
-
|
-
|
-
|
-
|
-
|
5,323,109
|
-
|
-
|
-
|
5,323,109
|
|||||||||||||||||||||||
|
Repurchase
of common stock Mar 2008, $1.16
|
-
|
-
|
(326,255
|
)
|
(326
|
)
|
-
|
-
|
(378,130
|
)
|
-
|
-
|
-
|
(378,456
|
)
|
|||||||||||||||||||
|
Option
repricing costs Mar 2008
|
-
|
-
|
-
|
-
|
-
|
-
|
14,500
|
-
|
-
|
-
|
14,500
|
|||||||||||||||||||||||
|
Value
of Beneficial Conversion Feature on Convertible Debentures, Mar
2008,
$1.21
|
-
|
-
|
-
|
-
|
-
|
-
|
8,768,946
|
-
|
-
|
-
|
8,768,946
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, Apr 2008, $1.00
|
-
|
-
|
50,000
|
50
|
-
|
-
|
49,950
|
-
|
-
|
-
|
50,000
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Apr 2008,
$1.19
|
-
|
-
|
8,000
|
8
|
-
|
-
|
9,512
|
-
|
-
|
-
|
9,520
|
|||||||||||||||||||||||
|
Exercise
of stock options for cash, Apr 2008, $0.89
|
-
|
-
|
250,000
|
250
|
-
|
-
|
222,250
|
-
|
-
|
-
|
222,500
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Apr 2008,
$1.06
|
-
|
-
|
37,500
|
37
|
-
|
-
|
39,713
|
-
|
-
|
-
|
39,750
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Apr 2008, $1.08
|
-
|
-
|
7,793
|
8
|
-
|
-
|
8,409
|
-
|
-
|
-
|
8,417
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered May 2008,
$1.05
|
-
|
-
|
8,000
|
8
|
-
|
-
|
8,392
|
-
|
-
|
-
|
8,400
|
|||||||||||||||||||||||
|
Stock-based
compensation - officers stock options, May 2008, $0.96
|
-
|
-
|
-
|
-
|
-
|
-
|
58,078
|
-
|
-
|
-
|
58,078
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation May 2008, $1.00
|
-
|
-
|
8,417
|
8
|
-
|
-
|
8,409
|
-
|
-
|
-
|
8,417
|
|||||||||||||||||||||||
|
Stock-based
compensation - officers stock
|
-
|
-
|
-
|
-
|
-
|
-
|
67,242
|
-
|
-
|
-
|
67,242
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered May 2008,
$0.97
|
-
|
-
|
50,000
|
50
|
-
|
-
|
48,450
|
-
|
-
|
-
|
48,500
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Jun 2008,
$0.95
|
-
|
-
|
8,000
|
8
|
-
|
-
|
7,592
|
-
|
-
|
-
|
7,600
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Jun 2008, $0.97
|
-
|
-
|
8,677
|
9
|
-
|
-
|
8,409
|
-
|
-
|
-
|
8,418
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Jul 2008,
$0.79
|
-
|
-
|
8,000
|
8
|
-
|
-
|
6,312
|
-
|
-
|
-
|
6,320
|
|||||||||||||||||||||||
|
Issuance
of common stock in exchange for the services rendered Jul 2008,
$0.80
|
-
|
-
|
37,500
|
37
|
-
|
-
|
29,963
|
-
|
-
|
-
|
30,000
|
|||||||||||||||||||||||
|
Issuance
of common stock as employee compensation Jul 2008, $0.83
|
-
|
-
|
10,141
|
10
|
-
|
-
|
8,409
|
-
|
-
|
-
|
8,419
|
|||||||||||||||||||||||
|
Comprehensive
Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Net
Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(36,228,991
|
)
|
-
|
(36,228,991
|
)
|
|||||||||||||||||||||
|
Other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
32,688
|
32,688
|
|||||||||||||||||||||||
|
Total
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
(36,228,991
|
)
|
32,688
|
(36,196,303
|
)
|
|||||||||||||||||||||
|
Balance
at July 31, 2008
|
-
|
$
|
-
|
111,992,603
|
$
|
111,992
|
-
|
$
|
-
|
$
|
269,849,581
|
$
|
-
|
$
|
(248,229,261
|
)
|
$
|
914,495
|
$
|
22,646,807
|
||||||||||||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
69
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
Cumulative From
|
|||||||||||||
|
November 2, 1995
|
|||||||||||||
|
(Date of Inception)
|
|||||||||||||
|
For the Year Ended July 31,
|
to July 31,
|
||||||||||||
|
2008
|
2007
|
2006
|
2008
|
||||||||||
|
Cash
Flows From Operating Activities:
|
|||||||||||||
|
Net
loss
|
$
|
(36,228,991
|
)
|
$
|
(23,504,958
|
)
|
$
|
(67,967,204
|
)
|
$
|
(245,934,204
|
)
|
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|||||||||||||
|
Depreciation
and amortization
|
1,084,919
|
1,166,090
|
1,134,676
|
6,966,865
|
|||||||||
|
Minority
interest share of loss
|
—
|
—
|
—
|
(3,038,185
|
)
|
||||||||
|
Reduction
of notes receivable - common stock in exchange for services
rendered
|
—
|
—
|
—
|
423,882
|
|||||||||
|
Write-off
of uncollectible notes receivable - common stock
|
—
|
—
|
—
|
391,103
|
|||||||||
|
Write-off
of deferred offering costs
|
—
|
—
|
—
|
3,406,196
|
|||||||||
|
Write-off
of abandoned patents
|
741,690
|
21,721
|
73,699
|
913,196
|
|||||||||
|
Loss
on disposal of property and equipment
|
—
|
—
|
911
|
911
|
|||||||||
|
Loss
on extinguishment of debt
|
—
|
237,163
|
12,550,565
|
14,134,069
|
|||||||||
|
Common
stock issued as employee compensation
|
1,187,685
|
748,076
|
1,545,504
|
3,481,265
|
|||||||||
|
Issuance
of options and option modifications as employee
compensation
|
72,578
|
—
|
—
|
72,578
|
|||||||||
|
Common
stock issued for services rendered
|
1,529,882
|
1,695,013
|
515,039
|
8,526,198
|
|||||||||
|
Amortization
of prepaid services in conjunction with common stock
issuance
|
—
|
—
|
138,375
|
138,375
|
|||||||||
|
Non-cash
compensation expense
|
—
|
—
|
—
|
45,390
|
|||||||||
|
Stock
options and warrants issued for services rendered
|
82,000
|
266,400
|
172,450
|
7,354,723
|
|||||||||
|
Issuance
of warrants as additional exercise right inducement
|
—
|
—
|
21,437,909
|
21,437,909
|
|||||||||
|
Preferred
stock issued for services rendered
|
—
|
—
|
—
|
100
|
|||||||||
|
Treasury
stock redeemed for non-performance of services
|
—
|
—
|
—
|
(138,000
|
)
|
||||||||
|
Amortization
of deferred debt issuance costs and loan origination fees
|
205,056
|
—
|
1,234,772
|
1,687,935
|
|||||||||
|
Amortization
of discount on convertible debentures
|
3,483,684
|
608,737
|
14,586,879
|
22,414,111
|
|||||||||
|
Common
stock issued as interest payment on convertible debentures
|
—
|
15,716
|
191,747
|
284,459
|
|||||||||
|
Interest
on short-term advance
|
—
|
—
|
13,524
|
22,190
|
|||||||||
|
Founders’
shares transferred for services rendered
|
—
|
—
|
—
|
353,506
|
|||||||||
|
Fees
in connection with short-term refinancing of long-term
debt
|
—
|
—
|
7,974
|
113,274
|
|||||||||
|
Changes
in operating assets and liabilities (excluding the effects of
acquisition):
|
|||||||||||||
|
Accounts
receivable
|
(30,701
|
)
|
(56,680
|
)
|
—
|
(87,381
|
)
|
||||||
|
Miscellaneous
receivables
|
—
|
—
|
—
|
43,812
|
|||||||||
|
Inventory
|
(1,345,939
|
)
|
(117,502
|
)
|
—
|
(1,463,441
|
)
|
||||||
|
Other
current assets
|
53,687
|
(26,068
|
)
|
9,596
|
(75,026
|
)
|
|||||||
|
Accounts
payable and accrued expenses
|
762,505
|
1,682,196
|
3,780,168
|
12,090,620
|
|||||||||
|
Deferred
revenue
|
92,481
|
33,031
|
—
|
125,512
|
|||||||||
|
Other,
net
|
—
|
—
|
—
|
110,317
|
|||||||||
|
Net
Cash Used in Operating Activities
|
(28,309,464
|
)
|
(17,231,065
|
)
|
(10,573,416
|
)
|
(146,197,741
|
)
|
|||||
|
Cash
Flows From Investing Activities:
|
|||||||||||||
|
Purchase
of property and equipment
|
(57,136
|
)
|
(93,704
|
)
|
(149,991
|
)
|
(4,593,547
|
)
|
|||||
|
Costs
incurred for patents
|
(232,760
|
)
|
(208,606
|
)
|
(114,010
|
)
|
(2,050,362
|
)
|
|||||
|
Change
in restricted cash
|
—
|
—
|
216,868
|
45,872
|
|||||||||
|
Proceeds
from maturity of short term investments
|
28,307,895
|
22,795,763
|
8,600,000
|
186,390,704
|
|||||||||
|
Purchases
of short-term investments
|
(23,148,371
|
)
|
(22,434,848
|
)
|
(22,972,653
|
)
|
(195,242,918
|
)
|
|||||
|
Cash
received in conjunction with merger
|
—
|
—
|
—
|
82,232
|
|||||||||
|
Advances
to Antigen Express, Inc.
|
—
|
—
|
—
|
(32,000
|
)
|
||||||||
|
Increase
in officers’ loans receivable
|
—
|
—
|
—
|
(1,126,157
|
)
|
||||||||
|
Change
in deposits
|
51,219
|
(196,457
|
)
|
(29,639
|
)
|
(652,071
|
)
|
||||||
|
Change
in notes receivable - common stock
|
—
|
—
|
—
|
(91,103
|
)
|
||||||||
|
Change
in due from related parties
|
—
|
—
|
—
|
(2,222,390
|
)
|
||||||||
|
Other,
net
|
—
|
—
|
—
|
89,683
|
|||||||||
|
Net
Cash Provided by (Used in) Investing Activities
|
4,920,847
|
(137,852
|
)
|
(14,449,425
|
)
|
(19,402,057
|
)
|
||||||
|
Cash
Flows From Financing Activities:
|
|||||||||||||
|
Proceeds
from short-term advance
|
—
|
—
|
—
|
325,179
|
|||||||||
|
Repayment
of short-term advance
|
—
|
—
|
(347,369
|
)
|
(347,369
|
)
|
|||||||
|
Proceeds
from issuance of long-term debt
|
—
|
—
|
35,461
|
2,005,609
|
|||||||||
|
Repayment
of long-term debt
|
(89,475
|
)
|
(73,151
|
)
|
(572,280
|
)
|
(1,941,844
|
)
|
|||||
|
Change
in due to related parties
|
—
|
—
|
—
|
154,541
|
|||||||||
|
Proceeds
from exercise of warrants
|
—
|
125,000
|
39,337,065
|
44,015,049
|
|||||||||
|
Proceeds
from exercise of stock options
|
391,790
|
301,931
|
3,241,755
|
4,945,916
|
|||||||||
|
Proceeds
from minority interest investment
|
—
|
—
|
—
|
3,038,185
|
|||||||||
|
Proceeds
from issuance of preferred stock
|
—
|
—
|
—
|
12,015,000
|
|||||||||
|
Redemption
of SVR preferred stock
|
—
|
(100
|
)
|
—
|
(100
|
)
|
|||||||
|
Proceeds
from issuance of convertible debentures, net
|
20,450,000
|
—
|
13,955,000
|
40,704,930
|
|||||||||
|
Payment
of costs associated with convertible debentures
|
(722,750
|
)
|
—
|
—
|
(722,750
|
)
|
|||||||
|
Repayments
of convertible debentures
|
—
|
(174,399
|
)
|
—
|
(635,757
|
)
|
|||||||
|
Purchase
of treasury stock
|
—
|
—
|
—
|
(483,869
|
)
|
||||||||
|
Proceeds
from issuance of common stock, net
|
—
|
—
|
7,000,004
|
80,283,719
|
|||||||||
|
Purchase
and retirement of common stock
|
(378,456
|
)
|
—
|
—
|
(497,522
|
)
|
|||||||
|
Net
Cash Provided by Financing Activities
|
19,651,109
|
179,281
|
62,649,636
|
182,858,917
|
|||||||||
|
Effect
of Exchange Rates on Cash
|
(51,049
|
)
|
7,210
|
(4,832
|
)
|
(21,609
|
)
|
||||||
|
Net
Increase (Decrease) in Cash and Cash Equivalents
|
(3,788,557
|
)
|
(17,182,426
|
)
|
37,621,963
|
17,237,510
|
|||||||
|
Cash
and Cash Equivalents, Beginning of Period
|
21,026,067
|
38,208,493
|
586,530
|
—
|
|||||||||
|
Cash
and Cash Equivalents, End of Period
|
$
|
17,237,510
|
$
|
21,026,067
|
$
|
38,208,493
|
$
|
17,237,510
|
|||||
The
Notes
to Consolidated Financial Statements are an integral part of these
statements.
70
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–lynTM
the
first product based on this platform technology, is in the various stages of
regulatory approval in different jurisdictions around the world.
The
Company’s wholly-owned subsidiary, Antigen Express, Inc. (Antigen), is engaged
in research and development of technologies and immunomedicines for the
treatment of malignant, infectious, autoimmune and allergic diseases. The
Company’s immunomedicine products work by stimulating the immune system to
either attack offending agents (i.e., cancer cells, bacteria, and viruses)
or to
stop attacking benign elements (i.e., self proteins and allergens). The
immunomedicine products are based on two platform technologies that were
discovered by an executive officer of Antigen, the Ii-Key hybrid peptides and
Ii-Suppression. These technologies are expected to greatly boost immune cell
responses which diagnose and treat the ailments and conditions.
The
Company is a development stage company, which has a limited history of
operations and whose revenues primarily comprised of $1 million received in
conjunction with the execution of a development agreement, grant revenue from
government agencies related to Antigen’s operations and $50,000 in conjunction
with the execution of a licensing agreement. The Company currently is
recognizing revenue from the sale of three of its four commercially available
products. Additionally, the Company has several product candidates that are
in
various research or early stages of pre-clinical and clinical development.
There
can be no assurance that the Company will be successful in obtaining regulatory
clearance for the sale of existing or any future products or that any of the
Company’s products will be commercially viable.
Note
2 - Summary of Significant Accounting Policies:
Principles
of Consolidation
The
consolidated financial statements include the accounts of the Company and all
of
its subsidiaries in which a controlling interest is maintained. For those
consolidated subsidiaries where the Company ownership is less than 100 percent,
the outside stockholders’ interests are shown as minority interests. Effective
December 17, 2004, the Company’s ownership in all consolidated subsidiaries is
100 percent. All significant intercompany transactions and balances have been
eliminated.
Development
Stage Company
The
accompanying consolidated financial statements have been prepared in accordance
with the provisions of Statement of Financial Accounting Standard (SFAS) No.
7,
“Accounting and Reporting by Development Stage Enterprises.”
Cash
and Cash Equivalents
The
Company considers all
highly liquid investments purchased with an original maturity of three months
or
less to be cash equivalents.
71
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Short-Term
Investments
Short-term
investments include auction rate securities and short-term U.S. term deposits
with original maturities of between three to twelve months. These short-term
notes are classified as held to maturity and are valued at amortized cost.
The
auction rate securities are classified as available for sale and are recorded
at
fair value. At July 31, 2008, the short-term investments consisted of auction
rate securities.
Accounts
Receivable
Accounts
receivable are customer obligations due under normal trade terms. The Company
sells its product to various distributors and retailers. The Company performs
ongoing credit evaluations of customers’ financial condition and does not
require collateral.
Management
reviews accounts receivable on a monthly basis to determine collectibility.
Balances that are determined to be uncollectible are written off to the
allowance for doubtful accounts. The allowance for doubtful accounts contains
a
general accrual for estimated bad debts and had a balance of zero at July 31,
2008
and
2007,
however, actual write-offs may exceed the allowance.
Inventory
Inventory
consists of commercially available products and their components. Inventory
is
stated at the lower of cost or market with cost determined using the first-in
first-out (“FIFO”) method. In evaluating whether inventory is stated at the
lower of cost or market, management considers such factors as the amount of
inventory on hand and in the distribution channel, estimated time required
to
sell such inventory, remaining shelf life and current and expected market
conditions, including levels of competition. As appropriate, a provision is
recorded to reduce inventory to its net realizable value.
Property
and Equipment
Property
and equipment are recorded at cost less accumulated depreciation. Depreciation
is provided on the straight-line method over the estimated useful lives of
the
assets, which range from three to thirty years. Gains and losses on depreciable
assets retired or sold are recognized in the statement of operations in the
year
of disposal. Repairs and maintenance expenditures are expensed as
incurred.
Assets
Held for Investment
Property
held for investment is recorded at cost less accumulated depreciation.
Depreciation is provided on the straight-line method over the estimated useful
lives of the assets of thirty years. Gains and losses on depreciable assets
retired or sold are recognized in the statement of operations in the year of
disposal. Repairs and maintenance expenditures are expensed as incurred.
Patents
Capitalized
patent costs represent legal costs incurred to establish patents and a portion
of the acquisition price paid attributed to patents upon the acquisition of
Antigen in August 2003. When patents reach a mature stage any associated
legal costs are comprised mostly of maintenance fees and costs of national
applications and are expensed as incurred. Capitalized patent costs are
amortized on a straight line method over the related patent term. As
patents are abandoned, the net book value of the patent is written
off.
72
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Impairment
or Disposal of Long-Lived Assets
The
Company assesses the impairment of long-lived assets under SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-Lived Assets” whenever events
or changes in circumstances indicate that the carrying value may not be
recoverable. For long-lived assets to be held and used, the Company recognizes
an impairment loss only if its carrying amount is not recoverable and exceeds
its fair value. The carrying amount of the long-lived asset is not recoverable
if it exceeds the sum of the undiscounted cash flows expected to result from
the
use and eventual disposal of the asset.
Convertible
Debentures
In
accordance with Emerging Issues Task Force Issue 98-5, Accounting for
Convertible Securities with a Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios ("EITF 98-5"), the Company recognized an imbedded
beneficial conversion feature present in the convertible debentures. The Company
allocated a portion of the proceeds equal to the intrinsic value of that feature
to additional paid-in capital. The debt discount attributed to the beneficial
conversion feature is amortized over the convertible debenture's maturity period
as interest expense using the effective yield method.
In
accordance with Emerging Issues Task Force Issue 00-27, Application of Issue
No.
98-5 to Certain Convertible Instruments ("EITF 00-27"), the Company recognized
the value attributable to the warrants to additional paid-in capital and a
discount against the convertible debentures. The Company valued the warrants
in
accordance with EITF 00-27 using the Black-Scholes pricing model. The debt
discount attributed to the value of the warrants issued is amortized over the
convertible debenture’s maturity period as interest expense using the effective
yield method.
Revenue
Recognition
Revenues
from the sale of commercial products are recognized at the time title of goods
passes to the buyer and the buyer assumes the risks and rewards of ownership.
Certain product sales are made to retailers under agreements allowing for a
right to return unsold products. In accordance with SFAS No. 48, “Revenue
Recognition When Right of Return Exists (as amended)” recognition of revenue on
all sales to these retailers is deferred until the right of return expires,
the
product is sold to a third party or a provision for returns can be reasonably
estimated based on historical experience. The cost of inventory under these
sales is considered to be a consigned inventory until the revenue is recognized.
Sales are reported net of estimated returns and allowances, discounts, mail-in
rebate redemptions and credit card chargebacks. If actual sales returns,
allowances, discounts, mail-in rebate redemptions or credit card chargebacks
are
greater than estimated by management, additional expense may be
incurred.
Grant
revenue is recognized as the Company provides the services stipulated in the
underlying grant based on the time and expenditures incurred. Amounts received
in advance of services provided are recorded as deferred revenue and amortized
as revenue when the services are provided.
Included
in miscellaneous income are fees received under licensing agreements.
Nonrefundable fees received under licensing agreements are recognized as revenue
when received if the Company has no continuing obligations to the other
party.
Rental
income is recognized as revenue in the period in which the space is
occupied.
73
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Research
and Development Costs
Expenditures
for research and development are expensed as incurred and include, among other
costs, those related to the production of experimental drugs, including payroll
costs, and amounts incurred for conducting clinical trials. Amounts expected
to
be received from governments under research and development tax credit
arrangements are offset against current income tax expense.
Income
Taxes
Income
taxes are accounted for under the asset and liability method prescribed by
SFAS
No. 109, “Accounting for Income Taxes.”
Deferred income taxes are recorded for temporary differences between financial
statement carrying amounts and the tax basis of assets and liabilities. Deferred
tax assets and liabilities reflect the tax rates expected to be in effect for
the years in which the differences are expected to reverse. A valuation
allowance is provided if it is more likely than not that some or all of the
deferred tax asset will not be realized.
Stock-Based
Compensation
The
Company follows SFAS No. 123(R) “Share-Based Payment” which revises SFAS No. 123
“Accounting for Stock-Based Compensation” (“SFAS 123”). SFAS 123(R) requires
that new, modified and unvested share-based payment transactions with employees,
such as grants of stock options and restricted stock, be recognized in the
financial statements based on their fair value at the grant date and recognized
as compensation expense over their vesting periods. The Company estimates the
fair value of stock options as of the date of grant using the Black-Scholes
pricing model and restricted stock based on the quoted market price. The Company
also follows the guidance in EITF 96-18, “Accounting for Equity Instruments That
Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services” for equity instruments issued to
consultants.
Net
Loss Per Common Share
Basic
EPS
is computed by dividing income (loss) available to common stockholders by the
weighted average number of common shares outstanding during the period. Diluted
EPS gives effect to all dilutive potential common shares outstanding during
the
period. The computation of Diluted EPS does not assume conversion, exercise
or
contingent exercise of securities that would have an anti-dilutive effect on
earnings. Refer to Note 14 for methodology for determining net loss per
share.
Comprehensive
Loss
Other
comprehensive income (loss), which includes only foreign currency translation
adjustments, is shown in the Statement of Changes in Stockholders’
Equity.
Concentration
of Credit Risk
The
Company maintains cash balances, at times, with financial institutions in excess
of amounts insured by the Canada Deposit Insurance Corporation and the Federal
Deposit Insurance Corporation. Management monitors the soundness of these
institutions and considers the Company’s risk negligible.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates
of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
74
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Foreign
Currency Translation
Foreign
denominated assets and liabilities of the Company are translated into U.S.
dollars at the prevailing exchange rates in effect at the end of the reporting
period. Income statement accounts are translated at a weighted average of
exchange rates which were in effect during the period. Translation adjustments
that arise from translating the foreign subsidiary’s financial statements from
local currency to U.S. currency are recorded in the other comprehensive loss
component of stockholders’ equity.
Financial
Instruments
The
carrying values of cash and cash equivalents, accounts receivable, short-term
investments, other current assets, accounts payable and accrued expenses
approximate their fair values due to their short-term nature. Long-term debt
and
convertible debentures approximates their fair value based upon the borrowing
rates available for the nature of the underlying debt.
Effects
of Recent Accounting Pronouncements
The
Company adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (“FIN
48”), on August 1, 2007. FIN 48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial statements in accordance
with FASB Statement 109 “Accounting for Income Taxes,” and prescribes a
recognition threshold and measurement process for financial statement
recognition and measurement of a tax position taken or expected to be taken
in a
tax return. FIN 48 also provides guidance on derecognition classification,
interest and penalties accounting in interim periods disclosure and
transition.
Based
on
the Company’s evaluation, management has concluded that there are no significant
uncertain tax positions requiring recognition in the financial statements or
adjustments to deferred tax assets and related valuation allowance. The
evaluation was performed for the tax years ended July 31, 2007, 2006, 2005
and
2004, the tax years which remain subject to examination by major tax
jurisdictions as of July 31, 2008.
The
Company may from time to time be assessed interest or penalties by major tax
jurisdictions, although such assessments historically have been minimal and
immaterial to our financial results. If the Company receives an assessment
for
interest and/or penalties, it would be classified in the financial statements
as
general and administrative expense.
In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS
157"). SFAS 157 defines fair value, establishes a framework for measuring fair
value in accordance with accounting principles generally accepted in the United
States, and expands disclosures about fair value measurements. SFAS No. 157
is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, with earlier application encouraged. Any amounts recognized
upon adoption as a cumulative effect adjustment will be recorded to the opening
balance of retained earnings in the year of adoption. On February 12, 2008,
the
FASB delayed the effective date for non-financial assets and liabilities to
fiscal years beginning after November 15, 2008; however, the effective date
for
financial assets remains intact. The Company is currently evaluating the impact
of this statement on its results of operations or financial
position.
75
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
In
February 2007, the FASB issued SFAS No. 159, “Establishing the Fair Value Option
for Financial Assets and Liabilities” (“SFAS 159”) to permit all entities to
choose to elect to measure eligible financial instruments and certain other
items at fair value. The decision whether to elect the fair value option
may occur for each eligible item either on a specified election date or
according to a preexisting policy for specified types of eligible items.
However, that decision must also take place on a date on which criteria under
SFAS 159 occurs. Finally, the decision to elect the fair value option
shall be made on an instrument-by-instrument basis, except in certain
circumstances. An entity shall report unrealized gains and losses on items
for which the fair value option has been elected in earnings at each subsequent
reporting date. SFAS 159 applies to fiscal years beginning after November 15,
2007.
On
February 12, 2008, the FASB delayed the effective date for non-financial assets
and liabilities to fiscal years beginning after November 15, 2008; however
the
effective date for the financial assets remains intact. The
Company is currently evaluating this pronouncement in connection with SFAS
157.
In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”
(“SFAS 141(R)”). This Statement replaces SFAS No. 141, “Business
Combinations” (“SFAS 141”). This Statement retains the fundamental requirements
in SFAS 141 that the acquisition method of accounting (which SFAS 141 called
the
purchase method) be used for all business combinations and for an acquirer
to be
identified for each business combination. This Statement also establishes
principles and requirements for how the acquirer: a) recognizes and measures
in
its financial statements the identifiable assets acquired, the liabilities
assumed, and any non-controlling interest in the acquiree; b) recognizes and
measures the goodwill acquired in the business combination or a gain from a
bargain purchase and c) determines what information to disclose to enable users
of the financial statements to evaluate the nature and financial effects of
the
business combination. SFAS 141(R) will apply prospectively to business
combinations for which the acquisition date is on or after the beginning of
the
first annual reporting period beginning on or after December 15, 2008. An entity
may not apply it before that date. The Company is currently evaluating the
impact of this statement on its results of operations or financial
position.
In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements” (“SFAS 160”). This Statement amends ARB 51 to
establish accounting and reporting standards for the non-controlling (minority)
interest in a subsidiary and for the deconsolidation of a subsidiary. It
clarifies that a non-controlling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. SFAS 160 is effective for fiscal years,
and
interim periods within those fiscal years, beginning on or after December 15,
2008. Earlier adoption is prohibited. The Company is currently evaluating
the impact of this statement on its results of operations or financial
position.
In
March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities,” and Amendment of FASB Statement No. 133. SFAS 161
amends SFAS 133, “Accounting for Derivative Instruments and Hedging Activities,”
to amend and expand the disclosure requirements of SFAS 133 to provide greater
transparency about (i) how and why an entity uses derivative instruments, (ii)
how derivative instruments and related hedge items are accounted for under
SFAS
133 and its related interpretations, and (iii) how derivative instruments and
related hedged items affect an entity’s financial position, results of
operations and cash flows. To meet those objectives, SFAS 161 requires
qualitative disclosures about objectives and strategies for using derivatives,
quantitative disclosures about fair value amounts of gains and losses on
derivative instruments and disclosures about credit-risk-related contingent
features in derivative agreements. SFAS 161 is effective for fiscal years and
interim periods beginning after November 15, 2008. Earlier adoption is
encouraged. The Company is currently evaluating the impact of SFAS 161 on its
financial position, results of operations or cash flows.
76
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
In
May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS 162"). SFAS 162 is intended to improve financial
reporting by identifying a consistent framework, or hierarchy, for selecting
accounting principles to be used in preparing financial statements that are
presented in conformity with U.S. GAAP for nongovernmental entities. SFAS 162
is
effective 60 days following the Securities and Exchange Commission's approval
of
the Public Company Accounting Oversight Board auditing amendments to AU Section
411, "The Meaning of Present Fairly in Conformity with Generally Accepted
Accounting Principles." The Company does not expect SFAS 162 to have a material
effect on its consolidated financial statements.
In
May
2008, the FASB issued FSP APB 14-1, “Accounting for Convertible Debt Instruments
That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlements).” This FSP requires a portion of this type of convertible debt to
be recorded as equity and to record interest expense on the debt portion at
a
rate that would have been charged on nonconvertible debt with the same terms.
This FSP takes effect in the first quarter of fiscal years beginning after
December 15, 2008 and will be applied retrospectively for all periods presented.
It will effective for the Company on August 1, 2009. This FSP will apply to
the
Company’s convertible debentures. The Company is currently evaluating how it may
affect the consolidated financial statements.
In
June
2008, the FASB issued Staff Position (“FSP”) EITF 03-6-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities.” Securities participating in dividends with common stock according
to a formula are participating securities. This FSP determined unvested shares
of restricted stock and stock units with nonforfeitable rights to dividends
are
participating securities. Participating securities require the “two-class”
method to be used to calculate basic earnings per share. This method lowers
basic earnings per common share. This FSP takes effect in the first quarter
of
fiscal years beginning after December 15, 2008 and will be applied
retrospectively for all periods presented. It will be effective for the Company
on August 1, 2009. The Company does not expect FSP EITF 03-6-1 to have a
material effect on its consolidated financial statements.
Note
3 - Property and Equipment:
The
costs
and accumulated depreciation of property and equipment are summarized as
follows:
|
July
31,
|
|||||||
|
2008
|
2007
|
||||||
|
Land
|
$
|
222,228
|
$
|
213,312
|
|||
|
Buildings
and Improvements
|
1,408,524
|
1,352,010
|
|||||
|
Furniture
and Fixtures
|
105,668
|
101,705
|
|||||
|
Office
Equipment
|
189,787
|
181,273
|
|||||
|
Lab
Equipment
|
4,354,027
|
4,221,152
|
|||||
|
Total
Property and Equipment
|
6,280,234
|
6,069,452
|
|||||
|
Less
Accumulated Depreciation
|
4,535,260
|
3,932,425
|
|||||
|
Property
and Equipment, Net
|
$
|
1,744,974
|
$
|
2,137,027
|
|||
Depreciation
expense amounted to $517,057, $631,597 and $605,657 for the years ended July
31,
2008,
2007
and
2006,
respectively.
77
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
4 - Assets Held for Investment, Net:
The
costs
and accumulated depreciation of assets held for investment are summarized as
follows:
|
July
31,
|
|||||||
|
2008
|
2007
|
||||||
|
Assets
Held For Investment
|
$
|
4,672,659
|
$
|
4,485,179
|
|||
|
Less:
Accumulated Depreciation
|
959,342
|
791,996
|
|||||
|
Assets
Held For Investment, Net
|
$
|
3,713,317
|
$
|
3,693,183
|
|||
Depreciation
expense amounted to $136,565, $122,171 and $125,366 for the years ended July
31,
2008,
2007
and
2006,
respectively.
The
Company’s intent is to hold this property for investment purposes and collect
rental income. Included in income from rental operations, net is $531,757,
$457,458 and $464,150 of rental income and $201,224, $179,984 and $227,629
of
rental expenses for the years ended July 31, 2008,
2007
and
2006,
respectively.
Note
5 - Patents:
The
costs
and accumulated amortization of patents are summarized as follows:
|
July
31,
|
|||||||
|
2008
|
2007
|
||||||
|
Patents
|
$
|
5,844,026
|
$
|
6,580,005
|
|||
|
Less:
Accumulated Amortization
|
1,889,785
|
1,695,021
|
|||||
|
Patents,
Net
|
$
|
3,954,241
|
$
|
4,884,984
|
|||
|
Weighted
Average Life
|
12.8
years
|
13.1
years
|
|||||
Amortization
expense amounted to $431,297, $412,322 and $403,654 for the years ended July
31,
2008,
2007
and
2006,
respectively. Amortization expense is expected to be approximately $388,000
per
year for the years ended July 31, 2009 through 2013. During the years ended
July
31, 2008,
2007
and
2006,
the
Company wrote off approximately $741,690, $22,000 and $74,000 of net book value
of patents to general and administrative expenses, respectively.
Note
6 - Income Taxes:
The
Company has incurred losses since inception, which have generated net operating
loss carryforwards. The net operating loss carryforwards arise from both United
States and Canadian sources. Pretax losses arising from domestic operations
(United States) were $30,277,058, $19,012,466 and $64,252,188 for the years
ended July 31, 2008,
2007
and
2006,
respectively. Pretax losses arising from foreign operations (Canada and Bermuda)
were $5,951,933, $4,492,492 and $3,715,016 for the years ended July 31,
2008,
2007
and
2006,
respectively. As of July 31, 2008,
the
Company has net operating loss carryforwards in Generex Biotechnology
Corporation of approximately $144,878,000, which expire in 2015 through 2028,
in
Generex Pharmaceuticals Inc. of approximately $34,817,000, which expire in
2009
through 2027 and in Antigen Express, Inc. of approximately $16,886,000, which
expire in 2016 through 2028. These loss carryforwards are subject to limitation
due to the acquisition of Antigen and may be limited in future years should
certain ownership changes occur.
78
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
For
the
years ended July 31, 2008,
and
2007,
the
Company’s effective tax rate differs from the federal statutory rate principally
due to net operating losses and other temporary differences for which no benefit
was recorded.
Deferred
income taxes consist of the following:
|
July
31,
|
|||||||
|
2008
|
2007
|
||||||
|
Deferred
Tax Assets:
|
|||||||
|
Net
operating loss carryforwards
|
$
|
67,575,522
|
$
|
57,628,338
|
|||
|
Other
timing difference
|
1,545,671
|
2,579,377
|
|||||
|
Total
Deferred Tax Assets
|
69,121,193
|
60,207,715
|
|||||
|
Valuation
Allowance
|
(68,133,445
|
)
|
(58,873,007
|
)
|
|||
|
Deferred
Tax Liabilities
|
|||||||
|
Intangible
assets
|
(907,327
|
)
|
(1,236,432
|
)
|
|||
|
Other
timing difference
|
(80,421
|
)
|
(98,276
|
)
|
|||
|
Total
Deferred Tax Liabilities
|
(987,748
|
)
|
(1,334,708
|
)
|
|||
|
Net
Deferred Income Taxes
|
$
|
—
|
$
|
—
|
|||
A
reconciliation of the United States Federal Statutory rate to the Company’s
effective tax rate for the years ended July 31, 2008,
2007
and
2006
is as
follows:
|
2008
|
2007
|
2006
|
||||||||
|
Federal
statutory rate
|
(34.0)
|
%
|
(34.0)
|
%
|
(34.0
|
)%
|
||||
|
Increase
(decrease) in income taxes resulting from:
|
||||||||||
|
Imputed
interest income on intercompany receivables from foreign
subsidiaries
|
1.0
|
2.0
|
—
|
|||||||
|
Nondeductible
items
|
1.0
|
—
|
7.0
|
|||||||
|
Other
timing differences
|
6.0
|
(10.0
|
)
|
6.0
|
||||||
|
Change
in valuation allowance
|
26.0
|
42.0
|
21.0
|
|||||||
|
Effective
tax rate
|
—
|
%
|
—
|
%
|
—
|
%
|
||||
Note
7 - Accounts Payable and Accrued Expenses:
Accounts
payable and accrued expenses consist of the following:
|
July
31,
|
|||||||
|
2008
|
2007
|
||||||
|
Accounts
Payable
|
$
|
2,613,789
|
$
|
1,791,080
|
|||
|
Research
and Development
|
2,048,101
|
1,956,049
|
|||||
|
Executive
Compensation
|
2,469,026
|
2,252,978
|
|||||
|
Financial
Services
|
338,794
|
1,156,602
|
|||||
|
Total
|
$
|
7,469,710
|
$
|
7,156,709
|
|||
79
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
8 - Commitments and Contingent Liabilities:
Consulting
Agreements
The
Company is obligated under a non-exclusive consulting agreement expiring in
2010
with a service provider whereby the service provider will solicit and evaluate
prospective third party wholesale and retail distribution channels for the
Company’s Oral-lynTM.
In
exchange for these services, the Company is required to pay $300,000 per annum
and an aggregate of 450,000 shares of common stock to be issued quarterly over
the term of the agreement, of which 300,000 shares of common stock remain to
be
issued.
The
Company has entered into a one year consulting agreement expiring in 2009 with
a
consultant to provide various management services including but not limited
to
assisting the Company with obtaining additional financing. In exchange for
these
services, the Company is required to pay $90,000 per annum and a contingent
advisory fee in the event of successfully obtaining additional
financing.
Leases
The
Company has entered into various operating lease agreements for the use of
operating space, vehicles and office equipment.
Aggregate
minimum annual lease commitments of the Company under non-cancelable operating
leases as of July 31, 2008
are as
follows:
|
Year
|
Amount
|
|||
|
2009
|
$
|
153,030
|
||
|
2010
|
122,473
|
|||
|
2011
|
108,108
|
|||
|
2012
|
107,257
|
|||
|
2013
|
2,330
|
|||
|
Thereafter
|
777
|
|||
|
Total
Minimum Lease Payments
|
$
|
493,975
|
||
Lease
expense amounted to approximately $131,000, $41,000 and $39,000 for the years
ended July 31, 2008,
2007
and
2006,
respectively.
The
preceding data reflects existing leases and does not include replacements upon
their expiration. In the normal course of business, operating leases are
generally renewed or replaced by other leases.
Rental
Operations
The
Company sub-leases a portion of the floor that it owns in an office building
located in Toronto, Canada. The following represents the approximate minimum
amount of sublease income under current lease agreements to be received in
years
ending after July 31, 2008:
|
Amount
|
||||
|
2009
|
$
|
69,226
|
||
|
2010
|
45,610
|
|||
|
2011
|
32,118
|
|||
|
2012
|
32,680
|
|||
|
2013
|
15,098
|
|||
|
—
|
||||
|
Total
|
$
|
194,732
|
||
80
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Assets
Held for Investment
The
Company leases two commercial buildings located in Brampton and Mississauga,
Canada, and units of property that it owns located in Toronto, Canada. The
following represents the approximate minimum amount in lease income under
current lease agreements to be received in years ending after July 31,
2008:
|
Year
|
Amount
|
|||
|
2009
|
$
|
335,664
|
||
|
2010
|
246,358
|
|||
|
2011
|
215,770
|
|||
|
2012
|
182,008
|
|||
|
2013
|
84,535
|
|||
|
Thereafter
|
21,618
|
|||
|
Total
|
$
|
1,085,953
|
||
Supply
Agreements
The
Company has a supply agreement with Presspart Manufacturing Limited, whereby
the
Company will purchase its entire requirements for products to use in the
administration of insulin through the buccal mucosa and shall not purchase
the
products or any metal containers competitive to the products from any other
person in exchange for an exclusive non-transferable royalty-free irrevocable
license to use the products. The contract shall continue for a minimum period
of
four contract years from the end of the first contract year in which the total
quantity of products purchased by the Company from Presspart exceeds 10,000,000
units, and thereafter, shall continue until terminated by either party by giving
twelve months written notice.
The
Company has a supply agreement with Catalant Pharma Solutions whereby the
Company will perform a technical transfer for the production of Oral-lyn™ drug
product for use in the Company’s Phase III clinical trials and/or studies. The
project is billed over the term of the project. Either party may terminate
the
agreement, or any portion thereof, by providing forty-five days written
notice.
81
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Pending
Litigation
In
February 2001, a former business associate of the former Vice President of
Research and Development (“VP”) of the Company and an entity known as Centrum
Technologies Inc. (“CTI”) commenced an action in the Ontario Superior Court of
Justice against the Company and the VP seeking, among other things, damages
for
alleged breaches of contract and tortious acts related to a business
relationship between this former associate and the VP that ceased in July 1996.
The plaintiffs’ statement of claim also seeks to enjoin the use, if any, by the
Company of three patents allegedly owned by CTI. The three patents are entitled
Liquid
Formulations for Proteinic Pharmaceuticals,
Vaccine
Delivery System for Immunization, Using Biodegradable Polymer
Microspheres,
and
Controlled
Releases of Drugs or Hormones in Biodegradable Polymer
Microspheres.
It is
the Company’s position that the buccal drug delivery technologies which are the
subject matter of the Company’s research, development, and commercialization
efforts, including Generex Oral-lyn™ and the RapidMist™ Diabetes Management
System, do not make use of, are not derivative of, do not infringe upon, and
are
entirely different from the intellectual property identified in the plaintiffs’
statement of claim. On July 20, 2001, the Company filed a preliminary motion
to
dismiss the action of CTI as a nonexistent entity or, alternatively, to stay
such action on the grounds of want of authority of such entity to commence
the
action. The plaintiffs brought a cross motion to amend the statement of claim
to
substitute Centrum Biotechnologies, Inc. (“CBI”) for CTI. CBI is a corporation
of which 50 percent of the shares are owned by the former business associate
and
the remaining 50 percent are owned by the Company. Consequently, the
shareholders of CBI are in a deadlock. The court granted the Company’s motion to
dismiss the action of CTI and denied the plaintiffs’ cross motion without
prejudice to the former business associate to seek leave to bring a derivative
action in the name of or on behalf of CBI. The former business associate
subsequently filed an application with the Ontario Superior Court of Justice
for
an order granting him leave to file an action in the name of and on behalf
of
CBI against the VP and the Company. The Company opposed the application. In
September 2003, the Ontario Superior Court of Justice granted the request and
issued an order giving the former business associate leave to file an action
in
the name of and on behalf of CBI against the VP and the Company. A statement
of
claim was served in July 2004. The Company is not able to predict the ultimate
outcome of this legal proceeding at the present time or to estimate an amount
or
range of potential loss, if any, from this legal proceeding.
The
Company is involved in certain other legal proceedings in addition to those
specifically described herein. Subject to the uncertainty inherent in all
litigation, the Company does not believe at the present time that the resolution
of any of these legal proceedings is likely to have a material adverse effect
on
the Company’s financial position, operations or cash flows.
With
respect to all litigation, as additional information concerning the estimates
used by the Company becomes known, the Company reassesses its position both
with
respect to accrued liabilities and other potential exposures.
Employment
Agreements
As
of
July 31, 2008, the Company has an employment agreement with an executive
expiring December 2010, whereby the Company is required to pay an annual base
salary of $315,000. In the event the agreement is terminated, by reason other
than cause, death, voluntary retirement or disability, the Company is required
to pay the employee in one lump sum twelve months base salary and the average
annual bonus.
As
of
July 31, 2008, the Company has an employment agreement with an executive
expiring March 2012, whereby the Company is required to pay an annual base
salary of $200,000. In the event the agreement is terminated, by reason other
than cause, death, voluntary retirement or disability, the Company is required
to pay the employee in one lump sum twelve months base salary and the average
annual bonus.
82
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
As
of
July 31, 2008, the Company has employment agreements with its President/Chief
Executive Officer and its Chief Financial Officer/Chief Operating Officer
expiring December 2010, whereby the Company is required to pay an annual base
salary of $525,000 and $420,000, respectively, and bonuses at the discretion
of
the Compensation Committee of the Board of Directors. The agreements require
six
months notice of non-renewal/termination. In the event either agreement is
terminated, by reason other than cause, death or disability or voluntary
termination, the Company may be required to pay the executive the greater of
five times base salary at the date of termination or $5,000,000 in a combination
of cash and common stock of the Company and provide benefits for a period of
twelve months following the date of termination.
As
of
July 31, 2008, the Company has three at will employment agreements with Antigen
employees requiring the Company to pay an annual aggregate salary of $460,000
to
the three employees. In the event any agreement is terminated by reason other
than death, disability, a voluntary termination not for good reason (as defined
in the agreement) or a termination for cause, the Company is required to pay
the
employee severance in accordance with the terms of the individual employment
agreement.
Collaboration
Agreements
The
Company has a research and development agreement with Fertin Pharma A/S (Fertin)
whereby the parties have established collaboration for the development of a
metformin medicinal chewing gum for the treatment of Type-2 diabetes mellitus
and obesity. The agreement includes certain milestone payments required of
the
Company upon Fertin’s completion of various development phases. The Company is
required to pay all development costs related to the development of the product
together with royalty payments amounting to five percent of the sale or
licensing of the products. In lieu of receiving reimbursement for development
costs, Fertin, at its discretion and upon written notice, may elect to receive
royalty payments amounting to twenty-five percent of the sale or licensing
of
the products. The agreement shall remain in effect ten years from the date
of
market introduction and commercial sale. Either party may terminate the
agreement by providing sixty days written notice.
Note
9 - Related Party Transactions:
The
Company utilizes a management company to manage all of its real estate
properties. The property management company is owned by two of the Company’s
senior officers. For the years ended July 31, 2008,
2007
and
2006,
the
Company has paid the management company $54,473, $47,832 and $46,113,
respectively, in management fees.
83
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
10 - Long-Term Debt:
Long-term
debt consists of the following:
|
July
31,
|
|||||||
|
2008
|
2007
|
||||||
|
Mortgage
payable - interest at 6.822 percent per annum, monthly principal
and
interest payments of $2,285, due June 2011, secured by real property
located at 98 Stafford Drive, Brampton, Canada
|
$
|
276,602
|
$
|
273,666
|
|||
|
Mortgage
payable - interest at 6.822 percent per annum, monthly principal
and
interest payments of $3,686, due June 2011, secured by real property
located at 1740 Sismet Road, Mississauga, Canada
|
446,115
|
441,380
|
|||||
|
Mortgage
payable - interest at 7.6 percent per annum, monthly payments of
principal
and interest of $5,899, due May 2010, secured by first mortgage over
real
property located at 17 Carlaw Avenue and 33 Harbour Square, Toronto,
Canada
|
676,485
|
667,943
|
|||||
|
Mortgage
payable - interest at 10 percent per annum, monthly payments of principal
and interest of $2,557, due November 2008, secured by real property
located at 13-14, 11 Carlaw Avenue, Toronto, Canada
|
209,530
|
210,371
|
|||||
|
Mortgage
payable - interest at 8.5 percent per annum, monthly payments of
interest
only of $2,768, principal payment due August 2008, secured by real
property located at 10-11, 11 Carlaw Avenue, Toronto,
Canada
|
390,800
|
375,120
|
|||||
|
Mortgage
payable - interest at 6.07 percent per annum, monthly interest payments
of
$9,100, principal due March 2009, secured by secondary rights to
real
property located at 1-8, 11 Carlaw Avenue, Toronto, Canada
|
1,187,716
|
1,175,309
|
|||||
|
Total
Debt
|
3,187,248
|
3,143,789
|
|||||
|
Less
Current Maturities of Long-Term Debt
|
1,832,684
|
84,503
|
|||||
|
Total
Long-Term Debt
|
$
|
1,354,564
|
$
|
3,059,286
|
|||
Aggregate
maturities of long-term debt of the Company due within the next five years
are
as follows:
|
Year
|
Amount
|
|||
|
2009
|
$
|
1,832,684
|
||
|
2010
|
681,015
|
|||
|
2011
|
673,549
|
|||
|
2012
and thereafter
|
—
|
|||
|
Total
|
$
|
3,187,248
|
||
84
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
11 - Convertible Debentures:
During
the years ended July 31, 2008
and
2007,
the
Company was contractually obligated under various convertible promissory notes
(“convertible debentures”) with accredited investors. The convertible debentures
were convertible into shares of the Company's common stock at a price as
stipulated in each agreement.
The
convertible debentures are accounted for in accordance with EITF 98-5 and 00-27
(see Note 2). The following summarizes the significant terms and accounting
for
each convertible debenture entered into by the Company.
|
Notes/Debenture
|
||||
|
$20,650,000
|
||||
|
Date
Issued
|
3/2008
|
|||
|
Promissory
Note Amount
|
$
|
(A
|
)
|
|
|
#
of Promissory Notes
|
6
|
|||
|
Terms
|
(B
|
)
|
||
|
Conversion
Price
|
$
|
1.21
|
||
|
Gross
Proceeds
|
$
|
20,650,000
|
||
|
Net
Cash Proceeds
|
$
|
20,450,000
|
||
|
Warrants
Issued to Investors (C)
|
42,665,274
|
|||
|
Warrant
Exercise Price
|
$
|
1.21
|
||
|
Existing
Warrants Re-priced (D)
|
12,697,024
|
|||
|
Re-priced
Warrant Exercise Price (D)
|
1.10
|
|||
|
Warrant
Fair Value (WFV) (includes value of re-priced warrants)
|
$
|
21,976,130
|
||
|
Warrant
Relative Fair Value (WRFV)
|
$
|
10,646,218
|
||
|
Black-Scholes
Model Assumptions
|
(E
|
)
|
||
|
Beneficial
Conversion Feature (BCF)
|
$
|
8,768,946
|
||
|
Costs
associated with issuance classified as deferred
|
||||
|
debt
issuance costs
|
$
|
722,750
|
||
|
Amortization
of WFV and BCF as
|
||||
|
Non-cash
Interest Expense
|
$
|
3,483,684
|
||
|
Principal
and Interest Converted
|
$
|
—
|
||
|
Shares
Issued Upon Conversion
|
—
|
|||
|
Principal
and Interest Repayments
|
||||
|
in
Shares of Common Stock
|
$
|
—
|
||
|
Shares
Issued for Principal and
|
||||
|
Interest
Repayments
|
—
|
|||
|
Principal
and Interest Repayments
|
||||
|
in
Cash
|
$
|
—
|
||
As
of
July 31, 2008, the $4,718,520 net outstanding balance of convertible debentures
is comprised of $20,650,000 of debt net of unamortized debt discount of
$15,931,480. As of July 31, 2007, the net outstanding balance of convertible
notes amounted to $-0-.
85
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
| (A) |
$7,000,000;
$5,000,000; $3,650,000; (2) $2,000,000;
$1,000,000
|
| (B) |
The
notes carry an 8% coupon and mature September 30, 2009, provided,
however,
the maturity date may be extended at the option of the holder. The
notes
carry a 19-month term and amortization in 15 installments commencing
in
the fifth month of the term. The principal and interest payments
are
payable in cash or, at the Company's option, the lower of (i) the
then
applicable conversion price and (ii) the price which shall be computed
as
90% of the arithmetic average of the VWAP of the common stock on
each of
the twenty (20) consecutive trading days immediately preceding the
applicable installment date, subject to certain conditions. Each
note
lists certain “Events of Default”, which include, without limitation, any
default in the payment of principal or interest in respect of the
notes as
when they become due and payable, the Company’s failure to observe or
perform any other covenant, agreement or warranty contained in the
agreements relating to the notes. Upon the occurrence of the “Event of
Default”, the holder may require us to redeem all or any portion of the
notes upon written notice. Other conditions in the notes impede the
Company’s ability to make its monthly installment payments in shares of
its common stock. Two of such conditions - the effectiveness of the
registration statement for at least 30 days prior to installment
notice
and listing maintenance minimum bid price requirement of Nasdaq Stock
Market, were not met as of July 31, 2008, requiring the Company to
procure
waivers from the note holders in respect to these conditions.
|
| (C) |
The
warrants issued to investors are comprised of the following: Series
A
warrants 5,257,729; Series A-1 warrants 7,541,857; Series B warrants
17,066,108; Series C warrants 12,799,580.
|
The
Series C warrants are issuable contingent upon exercise of Series B warrants.
The relative fair value associated with the Series C warrants at the commitment
date amounted to $1,234,836. At such time the contingency is met, the Company
would include the relative fair value as a charge to interest expense. The
Company has accounted for this contingency in accordance with EITF 98-5 and
00-27. At July 31, 2008, Series B warrants have not been exercised and therefore
the contingency has not been met.
| (D) |
The
Company re-priced 12,697,024 existing warrants. The value associated
with
the re-priced warrants amounted to $5,399,160 and was valued using
the
Black-Scholes pricing model. The value of the re-priced warrants
have been
added to the value of the new warrants issued (see (C) above) and
accounted for in accordance with EITF 98-5 and
00-27.
|
| (E) |
Black-Scholes
pricing model assumptions used in valuing the warrants were: risk
free
interest (2.70 percent); expected volatility (.8611); life of 1 ½ years, 7
years and 7 ½ years.
|
86
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
12 - Stockholders’ Equity:
Warrants
As
of
July 31, 2008,
the
Company has the following warrants to purchase common stock
outstanding:
|
Number of Shares
|
Warrant Exercise
|
Warrant
|
||||||
|
To be Purchased
|
Price Per Share
|
Expiration Date
|
||||||
|
85,034
|
$
|
1.86
|
January
9, 2009
|
|||||
|
57,143
|
|
$
|
2.20
|
January
9, 2009
|
||||
|
13,889
|
$
|
2.25
|
January
9, 2009
|
|||||
|
166,667
|
$
|
1.89
|
February
13, 2009
|
|||||
|
17,169
|
$
|
2.10
|
February
13, 2009
|
|||||
|
17,066,117
|
$
|
1.21
|
October
1, 2009
|
|||||
|
500,000
|
$
|
1.09
|
August
10, 2009
|
|||||
|
100,000
|
$
|
0.82
|
April
27, 2010
|
|||||
|
102,232
|
$
|
1.25
|
April
17, 2011
|
|||||
|
70,000
|
$
|
2.66
|
April
17, 2011
|
|||||
|
25,000
|
$
|
1.91
|
May
29, 2011
|
|||||
|
5,000
|
$
|
1.05
|
July
19, 2011
|
|||||
|
100,000
|
$
|
1.71
|
March
3, 2012
|
|||||
|
140,000
|
$
|
1.45
|
May
27, 2012
|
|||||
|
50,000
|
$
|
0.94
|
March
9, 2013
|
|||||
|
125,000
|
$
|
3.75
|
March
26, 2013
|
|||||
|
12,697,024
|
$
|
1.10
|
March
31, 2015
|
|||||
|
5,257,729
|
$
|
1.21
|
March
31, 2015
|
|||||
|
20,341,437
|
$
|
1.21
|
October
1, 2015
|
|||||
|
56,919,441
|
||||||||
Preferred
Stock
The
Company has authorized 1,000,000 shares of preferred stock with a par value
of
one-tenth of a cent ($.001) per share. The preferred stock may be issued in
various series and shall have preference as to dividends and to liquidation
of
the Company. The Company’s Board of Directors is authorized to establish the
specific rights, preferences, voting privileges and restrictions of such
preferred stock, or any series thereof. At July 31, 2008
and
2007,
no
shares of preferred stock were issued or outstanding.
Special
Voting Rights Preferred Stock
In
1997,
the Company issued 1,000 shares of Special Voting Rights Preferred Stock (SVR
Shares) with a par value of $.001. The Company had the right at any time after
December 31, 2000, upon written notice to all holders of preferred shares,
to
redeem SVR Shares at $.10 per share. Holders of SVR Shares were not entitled
to
vote, except as specifically required by applicable law or in the event of
change in control, as defined. In addition, holders of SVR Shares were entitled
to receive a dividend per share equal to the dividend declared and paid on
shares of the Company’s common stock as and when dividends are declared and paid
on the Company’s common stock. During the year ended July 31, 2007, the Company
redeemed and cancelled 1,000 shares of Special Voting Rights Preferred Stock
for
$100. This redemption represented all issued and outstanding
shares.
87
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Equity
Instruments Issued for Services Rendered
During
the years ended July 31, 2008,
2007
and
2006,
the
Company issued stock options, warrants and shares of common stock in exchange
for services rendered to the Company. The fair value of each stock option and
warrant was valued using the Black Scholes pricing model which takes into
account as of the grant date the exercise price and expected life of the stock
option or warrant, the current price of the underlying stock and its expected
volatility, expected dividends on the stock and the risk free interest rate
for
the term of the stock option or warrant. Shares of common stock are valued
at
the quoted market price on the date of grant. The fair value of each grant
was
charged to the related expense in the statement of operations for the services
received.
Note
13 – Stock-Based Compensation:
Stock
Option Plans
As
of
July 31, 2008, the Company had three stockholder-approved stock incentive plans
under which shares and options exercisable for shares of common stock have
been
or may be granted to employees, directors, consultants and advisors. A total
of
2,000,000 shares of common stock are reserved for issuance under the 2000 Stock
Option Plan (the 2000 Plan), a total of 12,000,000 shares of common stock are
reserved for issuance under the 2001 Stock Option Plan (the 2001 Plan) and
10,000,000 shares of common stock are reserved for issuance under the 2006
Stock
Plan (the 2006 Plan). Restricted shares can only be issued under the 2006 Plan.
At July 31, 2008, there were 2,000,000, 2,612,490 and 7,837,000 shares of common
stock reserved for future awards under the 2000 Plan, 2001 Plan and 2006 Plan,
respectively.
The
2000,
2001 and 2006 Plans (the Plans) are administered by the Board of Directors
(the
Board). The Board is authorized to select from among eligible employees,
directors, advisors and consultants those individuals to whom options are to
be
granted and to determine the number of shares to be subject to, and the terms
and conditions of the options. The Board is also authorized to prescribe, amend
and rescind terms relating to options granted under the Plans. Generally, the
interpretation and construction of any provision of the Plans or any options
granted hereunder is within the discretion of the Board.
The
Plans
provide that options may or may not be Incentive Stock Options (ISOs) within
the
meaning of Section 422 of the Internal Revenue Code. Only employees of the
Company are eligible to receive ISOs, while employees and non-employee
directors, advisors and consultants are eligible to receive options which are
not ISOs, i.e. “Non-Qualified Options.” The options granted by the Board in
connection with its adoption of the Plans were Non-Qualified Options. In
addition, the 2006 Plan also provides for restricted stock grants.
Effective
August 1, 2005, the Company implemented the fair value recognition provisions
of
SFAS 123(R) and SAB 107 for all share-based compensation. Share-based
employee compensation related to stock options for the years ended July 31,
2008, 2007 and 2006 amounted to $72,578, $-0- and $-0- (net of related tax)
for
each year and is included in the statements of operations. Share-based
employee compensation related to common stock grants for the years ended July
31, 2008, 2007 and 2006 amounted to $1,659,558, $748,076 and $1,545,504,
respectively, and is included in the statements of operations.
88
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
fair
value of each option granted is estimated on grant date using the Black-Scholes
option pricing model which takes into account as of the grant date the exercise
price and expected life of the option, the current price of the underlying
stock
and its expected volatility, expected dividends on the stock and the risk-free
interest rate for the term of the option. The following is the average of the
data used to calculate the fair value:
|
Risk-Free
|
|
Expected
|
|
Expected
|
|
Expected
|
|
||||||
|
|
|
Interest
Rate
|
|
Life
(Years)
|
|
Volatility
|
|
Dividends
|
|||||
|
July
31, 2008
|
1.96
|
%
|
5.0
|
73.76
|
%
|
-0-
|
|||||||
|
July
31, 2007 and 2006
|
n/a
|
n/a
|
n/a
|
n/a
|
|||||||||
The
following is a summary of the common stock options granted, forfeited or expired
and exercised under the Plan:
|
Weighted Average
|
|||||||
|
Exercise Price
|
|||||||
|
Options
|
Per Share
|
||||||
|
Outstanding
- August 1, 2005
|
11,607,269
|
$
|
1.51
|
||||
|
Granted
|
—
|
$
|
—
|
||||
|
Forfeited
or expired
|
(755,000
|
)
|
$
|
5.97
|
|||
|
Exercised
|
(2,352,672
|
)
|
$
|
1.37
|
|||
|
Outstanding
- July 31, 2006
|
8,499,597
|
$
|
1.15
|
||||
|
Granted
|
—
|
$
|
—
|
||||
|
Forfeited
or expired
|
(250,159
|
)
|
$
|
7.86
|
|||
|
Exercised
|
(286,800
|
)
|
$
|
1.05
|
|||
|
Outstanding
- July 31, 2007
|
7,962,638
|
$
|
1.12
|
||||
|
Granted
|
175,000
|
$
|
0.96
|
||||
|
Forfeited
or expired
|
(1,490,000
|
)
|
$
|
2.10
|
|||
|
Exercised
|
(401,000
|
)
|
$
|
0.98
|
|||
|
Outstanding
- July 31, 2008
|
6,246,638
|
$
|
0.66
|
||||
|
Exercisable
- July 31, 2008
|
6,159,138
|
$
|
0.66
|
||||
Options
typically vest over a period of two to three years and have a contractual life
of five years.
The
following is a summary of the non-vested common stock options granted, vested
and forfeited under the Plan:
|
Weighted Average
|
|||||||
|
Grant Date
|
|||||||
|
Options
|
Fair Value
|
||||||
|
Outstanding
- August 1, 2007
|
—
|
$
|
—
|
||||
|
Granted
|
175,000
|
$
|
0.59
|
||||
|
Vested
|
(87,500
|
)
|
$
|
0.59
|
|||
|
Forfeited
|
—
|
$
|
—
|
||||
|
Outstanding
- July 31, 2008
|
87,500
|
$
|
0.59
|
||||
89
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
As
of
July 31, 2008, the Company had $45,172 of total unrecognized compensation cost
related to non-vested share-based compensation arrangements granted under the
Plan. That cost is expected to be recognized over a weighted-average period
of
1.8 years.
During
the year ended July 31, 2008, the Company extended the contractual life of
300,000 fully vested options for an additional 30 days. As a result of that
modification, the Company recognized additional compensation expense of
$14,500.
The
following table summarizes information on stock options outstanding at July
31,
2008:
|
Options Outstanding
|
|||||||||||||
|
Weighted
|
|||||||||||||
|
Number
|
Weighted
|
Average
|
|||||||||||
|
Outstanding
|
Average
|
Remaining
|
Aggregate
|
||||||||||
|
Range
of
|
at
|
Exercise
|
Life
|
Intrinsic
|
|||||||||
|
Exercise
Price
|
July
31, 2008
|
Price
|
(Years)
|
Value
|
|||||||||
|
$0.001
|
2,239,610
|
$
|
0.001
|
1.68
|
|||||||||
|
$0.56
- $0.96
|
2,877,528
|
0.78
|
1.60
|
||||||||||
|
$1.47
- $1.71
|
1,129,500
|
1.68
|
0.29
|
||||||||||
|
6,246,638
|
1.39
|
$
|
2,061,326
|
||||||||||
|
Options
Exercisable
|
||||||||||
|
Number
|
Weighted
|
|||||||||
|
Outstanding
|
Average
|
Aggregate
|
||||||||
|
Range
of
|
at
|
Exercise
|
Intrinsic
|
|||||||
|
Exercise
Price
|
July
31, 2008
|
Price
|
Value
|
|||||||
|
$0.001
|
2,239,610
|
$
|
0.001
|
|||||||
|
$0.56
- $0.96
|
2,790,028
|
0.77
|
||||||||
|
$1.47
- $1.71
|
1,129,500
|
1.68
|
||||||||
|
6,159,138
|
$
|
2,061,326
|
||||||||
|
For
the Year Ended July 31,
|
||||||||||
|
2008
|
|
2007
|
|
2006
|
||||||
|
Weighted
Average Grant Date Fair Value of Options Granted
|
$
|
0.59
|
$
|
—
|
$
|
—
|
||||
|
Aggregate
Intrinsic Value of Options Exercised
|
$
|
103,850
|
$
|
238,179
|
$
|
3,499,814
|
||||
|
Cash
Received for Exercise of Stock Options
|
$
|
391,790
|
$
|
301,932
|
$
|
3,241,755
|
||||
The
intrinsic value is calculated as the difference between the market value as
of
July 31, 2008 and the exercise price of the shares. The market value as of
July
31, 2008 was $0.80 as reported by the NASDAQ Stock Market.
Note
14 - Net Loss Per Share:
Basic
earnings per shares (EPS) and Diluted EPS for the years ended July 31,
2008,
2007
and
2006
have
been computed by dividing the net loss available to common stockholders for
each
respective period by the weighted average shares outstanding during that period.
All outstanding options, warrants, non-vested restricted stock and shares to
be
issued upon conversion of the outstanding convertible debentures, representing
approximately 6,246,638, 56,919,441, 237,500 and 17,066,116 incremental shares,
have been excluded from the 2008,
2007
and
2006
computation of Diluted EPS as they are antidilutive due to the losses
generated.
90
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
15 - Supplemental Disclosure of Cash Flow Information:
|
For
the Years Ended July 31,
|
||||||||||
|
2008
|
2007
|
2006
|
||||||||
|
Cash
paid during the year for:
|
||||||||||
|
Interest
|
$
|
232,440
|
$
|
256,836
|
$
|
273,097
|
||||
|
Income
taxes
|
$
|
—
|
$
|
—
|
$
|
—
|
||||
Disclosure
of non-cash investing and financing activities:
|
Year
Ended July 31, 2008
|
||||
|
Issuance
of common stock as satisfaction of accrued executive
compensation
|
$
|
471,875
|
||
|
Deferred
debt issuance costs paid from the proceeds of convertible
notes
|
$
|
200,000
|
||
|
Value
of warrants issued in conjunction with issuance of convertible debentures
and related beneficial conversion feature
|
$
|
19,415,164
|
||
|
Year
Ended July 31, 2007
|
||||
|
Principal
repayment of convertible debentures through the issuance of common
stock
|
$
|
384,616
|
||
|
Issuance
of common stock in conjunction with convertible debenture
conversion
|
$
|
210,216
|
||
|
Par
value in connection with voluntary relinquishment and cancellation
of
150,000 shares of common stock
|
$
|
150
|
||
|
Year
Ended July 31, 2006
|
||||
|
Value
of common stock issued in conjunction with capitalized services upon
issuance of convertible debentures
|
$
|
619,467
|
||
|
Value
of warrants issued in conjunction with capitalized services upon
issuance
of convertible debentures
|
$
|
210,300
|
||
|
Costs
paid from proceeds in conjunction with capitalized services upon
issuance
of convertible debentures
|
$
|
45,000
|
||
|
Value
of warrants issued in conjunction with issuance of convertible debentures
and related beneficial conversion feature
|
$
|
13,087,156
|
||
|
Satisfaction
of accounts payable through the issuance of common stock
|
$
|
391,147
|
||
|
Principal
repayment of convertible debentures through the issuance of common
stock
|
$
|
2,102,689
|
||
|
Issuance
of common stock in conjunction with convertible debenture
conversion
|
$
|
14,551,466
|
||
|
Increase
in other current assets for the prepayment of services through the
issuance of common stock
|
$
|
184,500
|
||
|
Satisfaction
of due from related party through reduction of accrued executive
compensation
|
$
|
415,828
|
||
|
Repayment
of long-term debt through the issuance of long-term debt upon
refinancing
|
$
|
1,082,443
|
||
91
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
16 - Segment Information:
The
Company follows SFAS No. 131, “Disclosures about Segments of an Enterprise and
Related Information” (SFAS No. 131). SFAS No. 131 establishes standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports.
SFAS
No. 131 also establishes standards for related disclosures about products and
services, geographic areas, and major customers.
SFAS
No.
131 uses a management approach for determining segments. The management approach
designates the internal organization that is used by management for making
operating decisions and assessing performance as the source of the Company’s
reportable segments. The Company’s management reporting structure provides for
only one segment.
The
regions in which the Company had identifiable assets and revenues are presented
in the following table. Identifiable assets are those that can be directly
associated with a geographic area.
|
2008
|
2007
|
2006
|
||||||||
|
Identifiable
Assets
|
||||||||||
|
Canada
|
$
|
34,529,104
|
$
|
41,899,734
|
$
|
59,583,574
|
||||
|
United
States
|
3,618,779
|
4,504,670
|
4,521,668
|
|||||||
|
Total
|
$
|
38,147,883
|
$
|
46,404,404
|
$
|
64,105,242
|
||||
|
Revenue
|
||||||||||
|
Canada
|
$
|
6,198
|
$
|
25,242
|
$
|
—
|
||||
|
United
States
|
121,841
|
157,187
|
175,000
|
|||||||
|
Total
|
$
|
128,039
|
$
|
182,429
|
$
|
175,000
|
||||
Note
17 - Collaborative Agreements:
The
Company has a research and development agreement with Fertin Pharma A/S (Fertin)
whereby the Parties have established collaboration for the development of a
metformin medicinal chewing gum for the treatment of Type-2 diabetes mellitus
and obesity (see Note 8).
The
Company has a collaboration agreement with Stallergenes, S.A., a European firm
in immunological treatments and asthma. Through the collaboration the parties
agreed to pursue the design and test of li-key/allergen epitope hybid pepticles
to create a novel approach for the control of both dangerous forms of asthma
and
functionally disabling allergic reactions.
Note
18 - Quarterly Information (Unaudited):
The
following schedule sets forth certain unaudited financial data for the preceding
eight quarters ending July 31, 2008.
In our
opinion, the unaudited information set forth below has been prepared on the
same
basis as the audited information and includes all adjustments necessary to
present fairly the information set forth herein. The operating results for
the
quarter are not indicative of results for any future period.
92
GENEREX
BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
Q1
|
Q2
|
Q3
|
Q4
|
||||||||||
|
Fiscal
Year July 31, 2008:
|
|||||||||||||
|
Revenues
|
$
|
44,713
|
$
|
18,627
|
$
|
1,530
|
$
|
60,021
|
|||||
|
Operating
loss
|
$
|
(7,706,361
|
)
|
$
|
(6,828,022
|
)
|
$
|
(9,852,072
|
)
|
$
|
(9,059,015
|
)
|
|
|
Net
loss
|
$
|
(7,221,913
|
)
|
$
|
(6,507,174
|
)
|
$
|
(10,174,181
|
)
|
$
|
(12,325,723
|
)
|
|
|
Net
loss available to common
|
|||||||||||||
|
stockholders
|
$
|
(7,221,913
|
)
|
$
|
(6,507,174
|
)
|
$
|
(10,174,181
|
)
|
$
|
(12,325,723
|
)
|
|
|
Net
loss per share
|
$
|
(.07
|
)
|
$
|
(.06
|
)
|
$
|
(.09
|
)
|
$
|
(.11
|
)
|
|
|
Fiscal
Year July 31, 2007:
|
|||||||||||||
|
Revenues,
net
|
$
|
139,005
|
$
|
45,421
|
$
|
10,960
|
$
|
(15,188
|
)
|
||||
|
Operating
loss
|
$
|
(3,980,182
|
)
|
$
|
(5,478,477
|
)
|
$
|
(8,006,072
|
)
|
$
|
(7,411,371
|
)
|
|
|
Net
loss
|
$
|
(3,658,045
|
)
|
$
|
(5,195,634
|
)
|
$
|
(7,718,355
|
)
|
$
|
(6,932,924
|
)
|
|
|
Net
loss available to common
|
|||||||||||||
|
$
|
(3,658,045
|
)
|
$
|
(5,195,634
|
)
|
$
|
(7,718,355
|
)
|
$
|
(6,932,924
|
)
|
||
|
Net
loss per share
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
$
|
(0.07
|
)
|
$
|
(0.07
|
)
|
|
Note
19 - Subsequent Events:
During
August 2008, the Company entered into an exclusive product licensing and
distribution agreement with a corporation incorporated under the laws of the
Republic of Korea for the importation, marketing, distribution and sale of
Generex Ora-lynTM
(the
product) within a certain territory. Under the agreement, the Company is
entitled to non-refundable licensing fees totaling $1,000,000 payable to the
Company upon completion of certain milestones and an additional $500,000 which
will be applied against product purchase orders. The initial term of the
agreement shall commence September 1, 2008 and continue in effect for a period
of 7 years following procurement of the certain registrations with an option
to
renew for an additional 5 years.
93
Item
9. Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure.
On
July
28, 2008, we received notice of the merger of Danziger Hochman Partners LLP
(“Danziger”), our independent registered public accountants, with MSCM LLP
("MSCM"), to be effective as of August 1, 2008. The merger of Danziger and
MSCM
did not close until the week of September 15, 2008. On September 5, 2008, the
Audit Committee of our Board of Directors received an engagement letter from
MSCM and approved the engagement of MSCM as Danziger’s successor to continue as
our independent registered public accountant for the fiscal year ending July
31,
2008.
The
reports of Danziger on our financial statements for the fiscal years ended
July
31, 2007 and 2006 did not contain an adverse opinion or a disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope, or accounting
principles.
During
our fiscal years ended July 31, 2008 and 2007 and the subsequent interim period
through September 5, 2008, the date on which our Audit Committee approved the
engagement of MSCM and Danziger ceased being our auditors, there were no
disagreements between us and Danziger on any matter of accounting principles
or
practices, financial statement disclosure, or auditing scope or procedure,
which
disagreements, if not resolved to the satisfaction of Danziger, would have
caused Danziger to make reference to the subject matter of the disagreements
in
connection with its audit reports on our financial statements. During our past
fiscal years ended July 31, 2008 and 2007 and the interim period through
September 5, 2008, Danziger did not advise us of any of the matters specified
in
Item 304(a)(1)(v) of Regulation S-K.
We
requested that Danziger deliver to us a letter addressed to the Securities
and
Exchange Commission stating whether Danziger agreed with the disclosures made
by
us in response to Item 304(a) of Regulation S-K, and if not, stating the
respects in which it did not agree. Danziger's letter was filed as Exhibit
16 to
our Current Report on Form 8-K/A filed with the SEC on September 19, 2008.
During
our fiscal years ended July 31, 2008 and 2007 and the subsequent interim period
through September 5, 2008, we had no consultations with MSCM regarding (a)
the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered
on
our consolidated financial statements as to which we received a written report
or oral advice that was an important factor in reaching a decision on any
accounting, auditing or financial reporting issue; (b) any matter that was
the
subject of a disagreement, as defined in Item 304(a)(1)(iv) of Regulation S-K,
or (c) any matter that was the subject of a reportable event, as defined in
Item
304(a)(1)(v) of Regulation S-K.
Item
9A. Controls
and Procedures.
Evaluation
of Disclosure Controls and Procedures
Prior
to
the filing of this Report on Form 10-K, an evaluation was performed under the
supervision of and with the participation of our management, including our
Chief
Executive Officer and Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures. Based on the evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that, as of the end of the
period covered by this Report on Form 10-K, the Company’s disclosure controls
and procedures were effective to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in SEC rules and forms and is accumulated and communicated to the
Company’s management, as appropriate, to allow timely decisions regarding
required disclosure.
Changes
in Internal Control over Financial Reporting
There
were no changes during the fiscal quarter ended July 31, 2008 in our internal
control over financial reporting that materially affected, or are reasonably
likely to materially affect, those controls.
MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The
management of Generex Biotechnology Corporation (the “Company”) is responsible
for establishing and maintaining adequate internal control over financial
reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities
Exchange Act of 1934, as amended. The Company’s internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. The
Company’s internal control over financial reporting includes those policies and
procedures that:
94
|
(i)
|
pertain
to the maintenance of records that, in reasonable detail, accurately
and
fairly reflect the transactions and dispositions of the assets of
the
Company;
|
|
(ii)
|
provide
reasonable assurance that transactions are recorded as necessary
to permit
preparation of financial statements in accordance with U.S. generally
accepted accounting principles, and that receipts and expenditures
of the
Company are being made only in accordance with authorizations of
management and directors of the Company; and
|
|
(iii)
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that
could have a material effect on the financial statements.
|
Because
of its inherent limitations, internal control over financial reporting may
not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
The
Company’s management assessed the effectiveness of the Company’s internal
control over financial reporting as of July 31, 2008. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework. Based on management’s assessment using those criteria, management has
concluded that the Company’s internal control over financial reporting was
effective as of July 31, 2008.
MSCM
LLP,
the independent registered public accounting firm that audited the financial
statements that appear in the Company’s Annual Report on Form 10-K for the year
ended July 31, 2008, has issued an attestation report on the Company’s internal
control over financial reporting as of July 31, 2008, which is included in
Part
II, Item
8 - Financial Statements and Supplementary Data
of this
Annual Report on Form 10-K..
Item
9B. Other
Information.
Reference
is made to the disclosure set forth under the caption Sales
of Unregistered Securities
in Item
5 of this Annual Report on Form 10-K, which is incorporated by reference
herein.
PART
III
Item
10. Directors,
Executive Officers and Corporate Governance.
The
information required by this Item is incorporated by reference from the Proxy
Statement, or an amendment to this Annual Report on Form 10-K, to be filed
with
the Commission not later than 120 days after the end of the fiscal year to
which
this report relates.
Information
with respect to our Executive Officers appears in Part I of this report.
We
have
adopted a Code of Ethics and Business Conduct that applies to our President
and
Chief Executive Officer, our Chief Financial Officer and Chief Operating
Officer, any Vice-President, Controller, Secretary, Treasurer and any other
personnel performing similar functions. A copy of this Code of Ethics is posted
on our Internet website, which is www.generex.com.
Item
11. Executive
Compensation.
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.
95
Item
12. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
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.
Item
13. Certain
Relationships and Related Transactions, and Director
Independence.
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.
Item
14. Principal
Accounting Fees and Services.
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.
PART
IV
Item.
15 Exhibits
and Financial Statements and Schedules.
(a) 1. Financial
Statements - See Part
II - Item 8. Financial Statements and Supplementary Data
hereof
on page 50.
The
financial statements include the following:
Consolidated
Balance Sheets as of July 31, 2008 and 2007
Consolidated
Statements of Operations for the Year Ended July 31, 2008, 2007 and 2006 and
Cumulative from Inception to July 31, 2008
Consolidated
Statements of Changes in Stockholders’ Equity for the Period November 2, 1995
(Date of Inception) to July 31, 2008
Consolidated
Statements of Cash Flows for the Years Ended July 31, 2008, 2007 and 2006 and
Cumulative from Inception to July 31, 2008
2. Financial
Statement Schedule and Auditor’s Report
Schedule
I - Condensed financial information of registrant
This
schedule is not applicable.
Schedule
II - Valuation and qualifying accounts
|
Balance at
Beginning
Of Period
|
Additions
Charged
to Expenses
|
Other
Additions
|
Deductions
|
Balance
at End of
Period
|
||||||||||||
|
Year
Ended July 31, 2006 Valuation Allowance on Deferred Tax
Asset
|
$
|
34,950,200
|
—
|
—
|
14,041,363
|
$
|
48,991,563
|
|||||||||
|
Year
Ended July 31, 2007 Valuation Allowance on Deferred Tax
Asset
|
$
|
48,991,563
|
—
|
—
|
9,881,444
|
$
|
58,873,007
|
|||||||||
|
Year
Ended July 31, 2008 Valuation Allowance on Deferred Tax
Asset
|
$
|
58,873,007
|
—
|
—
|
9,260,438
|
$
|
68,133,445
|
|||||||||
96
The
auditors’ report of MSCM LLP with respect to the Financial Statement Schedule
information for the years ended July 31, 2008 is included with its report on
our
financial statements located at page 51.
3. Exhibits
Exhibits
are incorporated herein by reference or are filed with this Annual Report as
set
forth in the Exhibit Index beginning on page 99 hereof.
All
other
schedules and exhibits are omitted because they are not applicable, not
required, or because the information required has been given as part of this
report.
97
Signatures
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by
the undersigned, thereunto duly authorized this 10th day of October 2008.
|
GENEREX
BIOTECHNOLOGY CORPORATION
|
|
|
By:
|
/s/
Anna E. Gluskin
|
|
|
Name:
Anna E. Gluskin
|
|
|
Title:
Chief Executive Officer and
President
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
|
Name
|
|
Capacity in Which Signed
|
|
Date
|
|
|
|
|
|
|
|
/s/
Anna E. Gluskin
|
|
President,
Chief Executive Officer and
|
|
October
10, 2008
|
|
Anna
E. Gluskin
|
Director
(Principal Executive Officer)
|
|||
|
|
|
|
|
|
|
/s/
Rose C. Perri
|
|
Chief
Operating Officer, Chief Financial
|
|
October
10, 2008
|
|
Rose
C. Perri
|
Officer,
Treasurer, Secretary and Director (Principal Financial and Accounting
Officer)
|
|||
|
|
|
|
|
|
|
/s/
Brian T. McGee
|
|
Director
|
|
October
10, 2008
|
|
Brian
T. McGee
|
||||
|
|
|
|
|
|
|
/s/
John P. Barratt
|
|
Director
|
|
October
10, 2008
|
|
John
P. Barratt
|
||||
|
|
|
|
|
|
|
/s/
Nola E. Masterson
|
|
Director
|
|
October
10, 2008
|
|
Nola
E. Masterson
|
||||
|
|
|
|
|
|
|
/s/
Slava Jarnitskii
|
|
Controller
|
|
October
10, 2008
|
|
Slava
Jarnitskii
|
98
EXHIBIT
INDEX
|
Exhibit
Number
|
Description
of Exhibit(1)
|
|
|
|
|
|
|
2
|
|
Agreement
and Plan of Merger among Generex Biotechnology Corporation, Antigen
Express, Inc. and AGEXP Acquisition Inc. (incorporated by reference
to
Exhibit 2.1 to Generex Biotechnology Corporation’s Current Report on Form
8-K filed on August 15, 2003)
|
|
|
|
|
|
3(i)
|
|
Restated
Certificate of Incorporation of Generex Biotechnology Corporation
(incorporated by reference to Exhibit 3(II) to Generex Biotechnology
Corporation’s Report on Form 10-Q filed on June 19,
2006)
|
|
|
|
|
|
3(ii)
|
|
Amended
and Restated By-Laws of Generex Biotechnology Corporation (incorporated
by
reference to Exhibit 3.2(ii) to Generex Biotechnology Corporation’s Report
on Form 8-K filed December 5, 2007)
|
|
|
|
|
|
4.1
|
|
Form
of Common Stock Certificate (incorporated by reference to Exhibit
4.1 to
Generex Biotechnology Corporation’s Registration Statement on Form S-1
(File No. 333-82667) filed on July 12, 1999)
|
|
4.2.1
|
|
Form
of Securities Purchase Agreement entered into with Cranshire Capital,
L.P.; Gryphon Partners, L.P.; Langley Partners, L.P.; Lakeshore Capital,
Ltd.; LH Financial; Omicron Capital; Photon Fund, Ltd.; Howard Todd
Horberg and Vertical Ventures, LLC dated May 29, 2003 (incorporated
by
reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
Form 10-Q/A for the quarter ended April 30, 2003 filed on August
13,
2003)
|
|
|
|
|
|
4.2.2
|
|
Form
of Registration Rights Agreement entered into with Cranshire Capital,
L.P.; Gryphon Partners, L.P.; Langley Partners, L.P.; Lakeshore Capital,
Ltd.; LH Financial; Omicron Capital; Photon Fund, Ltd.; Howard Todd
Horberg and Vertical Ventures, LLC dated May 29, 2003 (incorporated
by
reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on
Form 10-Q/A for the quarter ended April 30, 2003 filed on August
13,
2003)
|
|
|
|
|
|
4.2.3
|
|
Form
of Warrant granted to Cranshire Capital, L.P.; Gryphon Partners,
L.P.;
Langley Partners, L.P.; Lakeshore Capital, Ltd.; LH Financial; Omicron
Capital; Photon Fund, Ltd.; Howard Todd Horberg and Vertical Ventures,
LLC
dated May 29, 2003 (incorporated by reference to Exhibit 4.3 to Generex
Biotechnology Corporation’s Report on Form 10-Q/A for the quarter ended
April 30, 2003 filed on August 13, 2003)
|
|
4.3
|
|
Form
of replacement Warrant issued to warrant holders exercising at reduced
exercise price in May and June 2003 (incorporated by reference to
Exhibit
4.13.7 to Generex Biotechnology Corporation’s Report on Form 10-K for the
period ended July 31, 2003 filed on October 29, 2003)
|
|
|
|
|
|
4.4.1
|
|
Securities
Purchase Agreement, dated December 19, 2003, by and among Generex
Biotechnology Corporation and the investors named therein (incorporated
by
reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
Form 8-K/A filed on March 24, 2004)
|
|
|
|
|
|
4.4.2
|
|
Registration
Rights Agreement, dated December 19, 2003, by and among Generex
Biotechnology Corporation and the investors named therein (incorporated
by
reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on
Form 8-K/A filed on March 24, 2004)
|
|
|
|
|
|
4.4.3
|
|
Form
of Warrant issued in connection with Exhibit 4.4.1 (incorporated
by
reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on
Form 8-K/A filed on March 24, 2004)
|
|
Exhibit
Number
|
Description
of Exhibit(1)
|
|
|
4.4.4
|
|
Form
of Additional Investment Right issued in connection with Exhibit
4.4.1
(incorporated by reference to Exhibit 4.4 to Generex Biotechnology
Corporation’s Report on Form 8-K/A filed on March 24,
2004)
|
|
|
|
|
|
4.5.1
|
|
Securities
Purchase Agreement, dated January 7, 2004, by and between Generex
Biotechnology Corporation and ICN Capital Limited (incorporated by
reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on March 1, 2004)
|
|
|
|
|
|
4.5.2
|
|
Registration
Rights Agreement, dated January 7, 2004, by and between Generex
Biotechnology Corporation and ICN Capital Limited (incorporated by
reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on March 1, 2004)
|
|
|
|
|
|
4.5.3
|
|
Warrant
issued in connection with Exhibit 4.5.1 (incorporated by reference
to
Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K
filed on March 1, 2004)
|
|
|
|
|
|
4.5.4
|
|
Additional
Investment Right issued in connection with Exhibit 4.5.1 (incorporated
by
reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on March 1, 2004)
|
|
|
|
|
|
4.6.1
|
|
Securities
Purchase Agreement, dated January 9, 2004, by and between Generex
Biotechnology Corporation and Vertical Ventures, LLC (incorporated
by
reference to Exhibit 4.5 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on March 1, 2004)
|
|
|
|
|
|
4.6.2
|
|
Registration
Rights Agreement, dated January 9, 2004, by and between Generex
Biotechnology Corporation and Vertical Ventures, LLC (incorporated
by
reference to Exhibit 4.6 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on March 1, 2004)
|
|
|
|
|
|
4.6.3
|
|
Warrant
issued in connection with Exhibit 4.6.1 (incorporated by reference
to
Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K
filed on March 1, 2004)
|
|
|
|
|
|
4.6.4
|
|
Additional
Investment Right issued in connection with Exhibit 4.6.1 (incorporated
by
reference to Exhibit 4.8 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on March 1, 2004)
|
|
|
|
|
|
4.7.1
|
|
Securities
Purchase Agreement, dated February 6, 2004, by and between Generex
Biotechnology Corporation and Alexandra Global Master Fund, Ltd.
(incorporated by reference to Exhibit 4.9 to Generex Biotechnology
Corporation’s Report on Form 8-K filed on March 1,
2004)
|
|
|
|
|
|
4.7.2
|
|
Registration
Rights Agreement, dated February 6, 2004, by and between Generex
Biotechnology Corporation and Alexandra Global Master Fund, Ltd.
(incorporated by reference to Exhibit 4.10 to Generex Biotechnology
Corporation’s Report on Form 8-K filed on March 1,
2004)
|
|
|
|
|
|
4.7.3
|
|
Warrant
issued in connection with Exhibit 4.7.1 (incorporated by reference
to
Exhibit 4.11 to Generex Biotechnology Corporation’s Report on Form 8-K
filed on March 1, 2004)
|
|
|
|
|
|
4.7.4
|
|
Additional
Investment Right issued in connection with Exhibit 4.7.1 (incorporated
by
reference to Exhibit 4.12 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on March 1, 2004)
|
|
Exhibit
Number
|
Description
of Exhibit(1)
|
|
|
|
|
|
|
4.7.5
|
|
Escrow
Agreement, dated February 26, 2004, by and among Generex Biotechnology
Corporation, Eckert Seamans Cherin & Mellott, LLC and Alexandra Global
Master Fund, Ltd. (incorporated by reference to Exhibit 4.13 to Generex
Biotechnology Corporation’s Report on Form 8-K filed on March 1,
2004)
|
|
|
|
|
|
4.8.1
|
|
Securities
Purchase Agreement, dated February 11, 2004, by and between Generex
Biotechnology Corporation and Michael Sourlis (incorporated by reference
to Exhibit 4.14 to Generex Biotechnology Corporation’s Report on Form 8-K
filed on March 1, 2004)
|
|
|
|
|
|
4.8.2
|
|
Registration
Rights Agreement, dated February 11, 2004, by and between Generex
Biotechnology Corporation and Michael Sourlis (incorporated by reference
to Exhibit 4.15 to Generex Biotechnology Corporation’s Report on Form 8-K
filed on March 1, 2004)
|
|
|
|
|
|
4.8.3
|
|
Additional
Investment Right issued in connection with Exhibit 4.8.1 (incorporated
by
reference to Exhibit 4.17 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on March 1, 2004)
|
|
|
|
|
|
4.9.1
|
|
Securities
Purchase Agreement, dated February 13, 2004, by and between Generex
Biotechnology Corporation and Zapfe Holdings, Inc. (incorporated
by
reference to Exhibit 4.18 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on March 1, 2004)
|
|
|
|
|
|
4.9.2
|
|
Registration
Rights Agreement, dated February 13, 2004, by and between Generex
Biotechnology Corporation and Zapfe Holdings, Inc. (incorporated
by
reference to Exhibit 4.19 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on March 1, 2004)
|
|
|
|
|
|
4.9.3
|
|
Warrant
issued in connection with Exhibit 4.9.1 (incorporated by reference
to
Exhibit 4.20 to Generex Biotechnology Corporation’s Report on Form 8-K
filed on March 1, 2004)
|
|
|
|
|
|
4.9.4
|
|
Additional
Investment Right issued in connection with Exhibit 4.9.1 (incorporated
by
reference to Exhibit 4.21 Generex Biotechnology Corporation’s Report on
Form 8-K filed on March 1, 2004)
|
|
|
|
|
|
4.10.1
|
|
Securities
Purchase Agreement, dated June 23, 2004, by and among Generex
Biotechnology Corporation and the investors named therein (incorporated
by
reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on July 14, 2004)
|
|
|
|
|
|
4.10.2
|
|
Registration
Rights Agreement, dated June 23, 2004, by and among Generex Biotechnology
Corporation and the investors (incorporated by reference to Exhibit
4.2 to
Generex Biotechnology Corporation’s Report on Form 8-K filed on July 14,
2004)
|
|
|
|
|
|
4.10.3
|
|
Form
of Warrant issued in connection with Exhibit 4.10.1 (incorporated
by
reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on July 14, 2004)
|
|
|
|
|
|
4.10.4
|
|
Form
of Additional Investment Right issued in connection Exhibit 4.10.1
(incorporated by reference to Exhibit 4.4 to Generex Biotechnology
Corporation’s Report on Form 8-K filed on July 14,
2004)
|
|
|
|
|
|
4.11.1
|
|
Securities
Purchase Agreement, dated November 10, 2004, by and among Generex
Biotechnology Corporation and the investors named therein (incorporated
by
reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on November 12,
2004)
|
|
Exhibit
Number
|
Description
of Exhibit(1)
|
|
|
|
|
|
|
4.11.2
|
|
Form
of 6% Secured Convertible Debenture issued in connection with Exhibit
4.11.1 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology
Corporation’s Report on Form 8-K filed on November 12,
2004)
|
|
|
|
|
|
4.11.3
|
|
Registration
Rights Agreement, dated November 10, 2004, by and among Generex
Biotechnology Corporation and the investors named therein (incorporated
by
reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on
Form 8-K filed on November 12, 2004)
|
|
|
|
|
|
4.11.4
|
|
Form
of Voting Agreement entered into in connection with Exhibit 4.11.1
(incorporated by reference to Exhibit 4.7 to Generex Biotechnology
Corporation’s Report on Form 8-K filed on November 12,
2004)
|
|
|
|
|
|
4.12
|
|
Warrant
issued to The Aethena Group, LLC on April 28, 2005 (incorporated
by
reference to Exhibit 4.20 to Generex Biotechnology Corporation’s Quarterly
Report on Form 10-Q filed on June 14, 2005)
|
|
|
|
|
|
4.13.1
|
|
Amendment
No. 4 to Securities Purchase Agreement and Registration Rights Agreement
entered into by and between Generex Biotechnology Corporation and
the
Purchasers listed on the signature pages thereto on January 19, 2006
(incorporated by reference herein to Exhibit 4.1 to Generex Biotechnology
Corporation’s Report on Form 8-K filed on January 20,
2006)
|
|
|
|
|
|
4.13.2
|
|
Form
of Additional AIRs issued in connection with Exhibit 4.13.1 (incorporated
by reference herein to Exhibit 4.4 to Generex Biotechnology Corporation’s
Report on Form 8-K filed on January 20, 2006)
|
|
|
|
|
|
4.14
|
|
Form
of Warrant issued by Generex Biotechnology Corporation on January
23, 2006
(incorporated by reference to Exhibit 4.2 to Generex Biotechnology
Corporation’s Report on Form 8-K filed on January 24,
2006)
|
|
|
|
|
|
4.15.1
|
|
Agreement
to Amend Warrants between Generex Biotechnology Corporation and Cranshire
Capital L.P. dated February 27, 2006 (incorporated by reference to
Exhibit
4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on
February 28, 2006).
|
|
|
|
|
|
4.15.2
|
|
Agreement
to Amend Warrants between Generex Biotechnology Corporation and Omicron
Master Trust dated February 27, 2006 (incorporated by reference to
Exhibit
4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on
February 28, 2006).
|
|
|
|
|
|
4.15.3
|
|
Agreement
to Amend Warrants between Generex Biotechnology Corporation and Iroquois
Capital L.P. dated February 27, 2006 (incorporated by reference to
Exhibit
4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on
February 28, 2006).
|
|
|
|
|
|
4.15.4
|
|
Agreement
to Amend Warrants between Generex Biotechnology Corporation and Smithfield
Fiduciary LLC dated February 27, 2006 (incorporated by reference
to
Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K
filed on February 28, 2006).
|
|
|
|
|
|
4.15.5
|
|
Form
of Warrant issued by Generex Biotechnology Corporation on February
27,
2006 (incorporated by reference to Exhibit 4.26 to Generex Biotechnology
Corporation’s Report on Form 10-K filed on October 16,
2006)
|
|
Exhibit
Number
|
Description
of Exhibit(1)
|
|
|
|
|
|
|
4.16.1
|
|
Agreement
to Amend Additional Investment Right between Generex Biotechnology
Corporation and Cranshire Capital, L.P. dated February 28, 2006
(incorporated by reference to Exhibit 4.1 to Generex Biotechnology
Corporation’s Report on Form 8-K filed on March 1, 2006).
|
|
|
|
|
|
4.16.2
|
|
Agreement
to Amend Additional Investment Right between Generex Biotechnology
Corporation and Omicron Master Trust dated February 28, 2006 (incorporated
by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report
on Form 8-K filed on March 1, 2006).
|
|
|
|
|
|
4.16.3
|
|
Agreement
to Amend Additional Investment Right between Generex Biotechnology
Corporation and Iroquois Capital LP dated February 28, 2006 (incorporated
by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report
on Form 8-K filed on March 1, 2006).
|
|
|
|
|
|
4.16.4
|
|
Agreement
to Amend Additional Investment Right between Generex Biotechnology
Corporation and Smithfield Fiduciary LLC dated February 28, 2006
(incorporated by reference to Exhibit 4.4 to Generex Biotechnology
Corporation’s Report on Form 8-K filed on March 1, 2006).
|
|
|
|
|
|
4.16.5
|
|
Form
of Additional AIR Debenture issued by Generex Biotechnology Corporation
on
February 28, 2006 (incorporated by reference to Exhibit 4.31 to Generex
Biotechnology Corporation’s Report on Form 10-K filed on October 16,
2006)
|
|
|
|
|
|
4.16.6
|
|
Form
of Additional AIR Warrant issued by Generex Biotechnology Corporation
on
February 28, 2006 (incorporated by reference to Exhibit 4.32 to Generex
Biotechnology Corporation’s Report on Form 10-K filed on October 16,
2006)
|
|
|
|
|
|
4.17.1
|
|
Form
of Agreement to Amend Warrants between Generex Biotechnology Corporation
and the Investors dated March 6, 2006 (incorporated by reference
to
Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K
filed on March 7, 2006).
|
|
|
|
|
|
4.17.2
|
|
Form
of Warrant issued by Generex Biotechnology Corporation on March 6,
2006
(incorporated by reference to Exhibit 4.2 to Generex Biotechnology
Corporation’s Report on Form 8-K filed on March 7,
2006)
|
|
|
|
|
|
4.18
|
|
Warrant
issued by Generex Biotechnology Corporation on April 17, 2006 to
Zapfe
Holdings, Inc. (incorporated by reference to Exhibit 4.33 to Generex
Biotechnology Corporation’s Report on Form 10-Q filed on June 14,
2006)
|
|
|
|
|
|
4.19
|
|
Form
of Warrant issued by Generex Biotechnology Corporation on April 17,
2006
to certain employees (incorporated by reference to Exhibit 4.34 to
Generex
Biotechnology Corporation’s Report on Form 10-Q filed on June 14,
2006).
|
|
|
|
|
|
4.20.1
|
|
Securities
Purchase Agreement entered into by and between Generex Biotechnology
Corporation and four Investors on June 1, 2006 (incorporated by reference
to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K
filed on June 2, 2006)
|
|
|
|
|
|
4.20.2
|
|
Form
of Warrant issued by Generex Biotechnology Corporation on June 1,
2006
(incorporated by reference to Exhibit 4.2 to Generex Biotechnology
Corporation’s Report on Form 8-K filed on June 2, 2006)
|
|
|
|
|
|
4.21.1
|
|
Form
of Amendment to Outstanding Warrants (incorporated by reference to
Exhibit
4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on
June 2, 2006)
|
|
Exhibit
Number
|
Description
of Exhibit(1)
|
|
|
|
|
|
|
4.21.2
|
|
Form
of Warrant issued by Generex Biotechnology Corporation on June 1,
2006 in
connection with Exhibit 4.39 (incorporated by reference to Exhibit
4.4 to
Generex Biotechnology Corporation’s Report on Form 8-K filed on June 2,
2006)
|
|
4.22.1
|
Securities
Purchase Agreement, dated as of March 31, 2008 among the Registrant
and
each of the purchasers named therein (incorporated by reference to
Exhibit
4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on
April 2, 2008)
|
|
|
4.22.2
|
Form
of 8% Secured Convertible Note, as amended (incorporated by reference
to
Exhibit 4.2 to Generex Biotechnology Corporation’s Registration Statement
(333-150562) on Form S-3 filed on April 30, 2008)
|
|
|
4.22.3
|
Form
of Series A Warrant, as amended (incorporated by reference to Exhibit
4.3
to Generex Biotechnology Corporation’s Registration Statement on Form S-3
(333-150562) filed on April 30, 2008)
|
|
|
4.22.4
|
Form
of Series A-1 Warrant, as amended (incorporated by reference to Exhibit
4.4 to Generex Biotechnology Corporation’s Registration Statement on Form
S-3 (333-150562) filed on April 30, 2008)
|
|
|
4.22.5
|
Form
of Series B Warrant, as amended (incorporated by reference to Exhibit
4.5
to Generex Biotechnology Corporation’s Registration Statement on Form S-3
(333-150562) filed on April 30, 2008)
|
|
|
4.22.6
|
Form
of Series C Warrant, as amended (incorporated by reference to Exhibit
4.6
to Generex Biotechnology Corporation’s Registration Statement on Form S-3
(333-150562) filed on April 30, 2008)
|
|
|
4.22.7
|
Registration
Rights Agreement, dated March 31, 2008, among Registrant and each
of the
purchasers under Securities Purchase Agreement (incorporated by reference
to Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K
filed on April 2, 2008)
|
|
|
4.22.8
|
Security
Agreement (incorporated by reference to Exhibit 4.8 to Generex
Biotechnology Corporation’s Report on Form 8-K filed on April 2,
2008)
|
|
|
4.22.9
|
Form
of Guaranty (incorporated by reference to Exhibit 4.9 to Generex
Biotechnology Corporation’s Report on Form 8-K filed on April 2,
2008)
|
|
|
|
|
|
|
9
|
|
Form
of Voting Agreement entered into in connection with Exhibit 4.11.1
(incorporated by reference to Exhibit 4.7 to Generex Biotechnology
Corporation’s Report on Form 8-K filed on November 12,
2004)
|
|
10.1
|
|
Stock
Option Agreement by and between Generex Biotechnology Corporation
and
Peter G. Amanatides to purchase 100,000 shares of Common Stock at
the
exercise price of $0.56 per share (incorporated by reference to Exhibit
10.3 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q
filed on June 14, 2005)*
|
|
Exhibit
Number
|
Description
of Exhibit(1)
|
|
|
|
|
|
|
10.2
|
|
Stock
Option Agreement by and between Generex Biotechnology Corporation
and John
P. Barratt to purchase 100,000 shares of Common Stock at the exercise
price of $0.56 per share (incorporated by reference to Exhibit 10.4
to
Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on
June 14, 2005)*
|
|
|
|
|
|
10.3
|
|
Stock
Option Agreement by and between Generex Biotechnology Corporation
and
Brian T. McGee to purchase 100,000 shares of Common Stock at the
exercise
price of $0.56 per share (incorporated by reference to Exhibit 10.5
to
Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on
June 14, 2005)*
|
|
|
|
|
|
10.4
|
|
Stock
Option Agreement by and between Generex Biotechnology Corporation
and John
P. Barratt to purchase 35,714 shares of Common Stock at the exercise
price
of $0.001 per share (incorporated by reference to Exhibit 10.6 to
Generex
Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June
14, 2005)*
|
|
|
|
|
|
10.5
|
|
Stock
Option Agreement by and between Generex Biotechnology Corporation
and
Brian T. McGee to purchase 35,714 shares of Common Stock at the exercise
price of $0.001 per share (incorporated by reference to Exhibit 10.7
to
Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on
June 14, 2005)*
|
|
|
|
|
|
10.6
|
|
Stock
Option Agreement by and between Generex Biotechnology Corporation
and
Gerald Bernstein, M.D. to purchase 100,000 shares of Common Stock
at the
exercise price of $0.61 per share (incorporated by reference to Exhibit
10.8 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q
filed on June 14, 2005)*
|
|
|
|
|
|
10.7
|
|
Stock
Option Agreement by and between Generex Biotechnology Corporation
and Mark
Fletcher to purchase 250,000 shares of Common Stock at the exercise
price
of $0.61 per share (incorporated by reference to Exhibit 10.9 to
Generex
Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June
14, 2005)*
|
|
|
|
|
|
10.8
|
|
Stock
Option Agreement by and between Generex Biotechnology Corporation
and Anna
E. Gluskin to purchase 250,000 shares of Common Stock at the exercise
price of $0.61 per share (incorporated by reference to Exhibit 10.10
to
Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on
June 14, 2005)*
|
|
|
|
|
|
10.9
|
|
Stock
Option Agreement by and between Generex Biotechnology Corporation
and Rose
C. Perri to purchase 250,000 shares of Common Stock at the exercise
price
of $0.61 per share (incorporated by reference to Exhibit 10.11 to
Generex
Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June
14, 2005)*
|
|
|
|
|
|
10.10
|
|
Stock
Option Agreement by and between Generex Biotechnology Corporation
and Mark
A. Fletcher to purchase 470,726 shares of Common Stock at the exercise
price of $0.001 per share (incorporated by reference to Exhibit 10.12
to
Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on
June 14, 2005)*
|
|
|
|
|
|
10.11
|
|
Stock
Option Agreement by and between Generex Biotechnology Corporation
and Anna
E. Gluskin to purchase 1,120,704 shares of Common Stock at the exercise
price of $0.001 per share (incorporated by reference to Exhibit 10.13
to
Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on
June 14, 2005)*
|
|
Exhibit
Number
|
Description
of Exhibit(1)
|
|
|
|
|
|
|
10.12
|
|
Stock
Option Agreement by and between Generex Biotechnology Corporation
and Rose
C. Perri to purchase 576,752 shares of Common Stock at the exercise
price
of $0.001 per share (incorporated by reference to Exhibit 10.14 to
Generex
Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June
14, 2005)*
|
|
|
|
|
|
10.13
|
|
Employment
Agreement by and between Generex Biotechnology Corporation and Gerald
Bernstein M.D. (incorporated by reference to Exhibit 10.16 to Generex
Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June
14, 2005)*
|
|
|
|
|
|
10.14
|
|
1998
Stock Option Plan (incorporated by reference to Exhibit 4.3 to Generex
Biotechnology Corporation’s Registration Statement on Form S-1 (File No.
333-82667) filed on July 12, 1999)*
|
|
|
|
|
|
10.15
|
|
2000
Stock Option Plan (incorporated by reference to Exhibit 4.3.2 to
Generex
Biotechnology Corporation’s Annual Report on Form 10-K filed on October
30, 2000)*
|
|
|
|
|
|
10.16
|
|
Amended
2001 Stock Option Plan (incorporated by reference to Exhibit 4.1
to
Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on
December 15, 2003)*
|
|
|
|
|
|
10.17
|
|
2006
Stock Plan (incorporated by reference to Annex A to Generex Biotechnology
Corporation’s Proxy Statement for the Annual Meeting of Stockholders held
on May 30, 2006)*
|
|
10.18
|
|
Stockholders
Agreement among Generex Biotechnology Corporation and the former
holders
of capital stock of Antigen Express, Inc. (incorporated by reference
to
Exhibit 10.4 to Generex Biotechnology Corporation’s Annual Report on Form
10-K filed on October 29, 2003)
|
|
|
|
|
|
10.19
|
|
Form
of Warrant issued by Generex Biotechnology Corporation on April 17,
2006
to certain employees (incorporated by reference to Exhibit 4.34 to
Generex
Biotechnology Corporation’s Report on Form 10-Q filed on June 14,
2006)*
|
|
|
|
|
|
10.20
|
|
Quotation
for Contract Manufacturing of Oral-lyn™ entered into between Generex
Biotechnology Corporation and Cardinal Health PTS, LLC on June 20,
2006
(subject to confidential treatment) (incorporated by reference to
Exhibit
10.25 to Generex Biotechnology Corporation’s Report on Form 10-K/A filed
on February 14, 2007)
|
|
|
|
|
|
10.21
|
|
Quotation
Amendment for Contract Manufacturing of Oral-lyn™ entered into between
Generex Biotechnology Corporation and Cardinal Health PTS, LLC on
August
18, 2006 (subject to confidential treatment) (incorporated by reference
to
Exhibit 10.26 to Generex Biotechnology Corporation’s Report on Form 10-K
filed on October 16, 2006)
|
|
|
|
|
|
10.22
|
|
Clinical
Supply Agreement entered into between Generex Biotechnology Corporation
and Cardinal Health PTS, LLC on September 6, 2006 (subject to confidential
treatment) (incorporated by reference to Exhibit 10.27 to Generex
Biotechnology Corporation’s Report on Form 10-K filed on October 16,
2006)
|
|
10.23
|
Form
of Restricted Stock Agreement for awards to executive officers of
Generex
Biotechnology Corporation under the Generex Biotechnology Corporation
2006
Stock Plan (incorporated by reference to Exhibit 10.1 to Generex
Biotechnology Corporation’s Report on Form 8-K filed on August 23,
2007)*
|
|
Exhibit
Number
|
Description
of Exhibit(1)
|
|
|
10.24
|
Summary
of Annual Base Salaries of Executive Officers of Generex Biotechnology
Corporation (incorporated by reference to Exhibit 10.2 to Generex
Biotechnology Corporation’s Report on Form 8-K filed on August 23,
2007)*
|
|
|
10.25
|
Summary
of Compensation of the Directors of Generex Biotechnology Corporation
(incorporated by reference to Exhibit 10.27 to Generex Biotechnology
Corporation’s Report on Form 10-K filed on October 15,
2007)*
|
|
|
10.26
|
Summary
of Employment Terms for Anna Gluskin effective as of January 1, 2006
(incorporated by reference to Exhibit 10.28 to Generex Biotechnology
Corporation’s Report on Form 10-K/A filed on November 28,
2007)*
|
|
|
10.27
|
Summary
of Employment Terms for Rose Perri effective as of January 1, 2006
(incorporated by reference to Exhibit 10.29 to Generex Biotechnology
Corporation’s Report on Form 10-K/A filed on November 28,
2007)*
|
|
|
10.28
|
Summary
of Employment Terms for Mark A. Fletcher effective as of April 21,
2003
(incorporated by reference to Exhibit 10.30 to Generex Biotechnology
Corporation’s Report on Form 10-K/A filed on November 28,
2007)*
|
|
|
10.29
|
Employment
Agreement between Generex Biotechnology Corporation and Gerald Bernstein,
M.D., effective as of April 1, 2002 (incorporated by reference to
Exhibit
10.31 to Generex Biotechnology Corporation’s Report on Form 10-K/A filed
on November 28, 2007)*
|
|
|
10.30
|
Form
of Consent and Waiver Agreement entered into with Cranshire Cranshire
Capital, L.P., Portside Growth and Opportunity Fund and, Smithfield
Fiduciary LLC (incorporated by reference to Exhibit 10.1 to Generex
Biotechnology Corporation’s Report on Form 8-K filed on August 1,
2008)
|
|
|
10.31
|
Form
of Consent and Waiver Agreement entered into with Rockmore Investment
Master Fund Ltd. (incorporated by reference to Exhibit 10.2 to Generex
Biotechnology Corporation’s Report on Form 8-K filed on August 1,
2008)
|
|
|
10.32
|
Form
of Consent and Waiver Agreement entered into with the Iroquois Funds
(incorporated by reference to Exhibit 10.3 to Generex Biotechnology
Corporation’s Report on Form 8-K filed on August 1,
2008)
|
|
|
10.33
|
Summary
of Annual Base Salaries for Executive Officers of Generex Biotechnology
Corporation Effective January 1, 2008*
|
|
|
10.34
|
Summary
of Compensation of the Directors of Generex Biotechnology Corporation
effective May 27, 2008*
|
|
|
16
|
Letter
of Concurrence From Danziger Hochman Partners LLP, dated September
18,
2008 (incorporated by reference to Exhibit 16 to Generex Biotechnology
Corporation’s Report on Form 8-K/A filed on September 19, 2008)
|
|
|
21
|
|
Subsidiaries
of the Registrant
|
|
|
|
|
|
23.1
|
|
Consent
of MSCM LLP, independent registered public accounting
firm
|
|
Exhibit
Number
|
Description
of Exhibit(1)
|
|
|
23.2
|
Consent
of Danziger Hochman Partners LLP, independent registered public accounting
firm
|
|
|
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
|
|
|
31.2
|
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
|
|
|
32
|
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to
Section
906 of the Sarbanes-Oxley Act of
2002
|
|
*
Management contract or management compensatory plan or arrangement.
|
||
|
(1)
|
In
the case of incorporation by reference to documents filed by the
Registrant under the Exchange Act, the Registrant’s file number under the
Exchange Act is 000-25169.
|
|