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, 2005

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 000-25169

GENEREX BIOTECHNOLOGY CORPORATION

(Exact name of registrant as specified in its charter)

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

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

Telephone Number: (416) 364-2551

Internet Website: www.generex.com

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

Securities registered pursuant to section 12(g) of the Act:

Common Stock, par value $.001 per share

(Title of Class)

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 report(s), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

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. [X]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [  ] No [X]

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ] No [X]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed by reference to the prices at which the common equity was last sold as of January 31, 2005, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $20,523,075.

At October 13, 2005, the registrant had 46,830,957 shares of common stock outstanding.

Documents incorporated by reference: Proxy Statement, or an amendment to this Annual Report on Form 10-K, to be filed within 120 days after the end of the fiscal year.

1

Generex Biotechnology Corporation

Form 10-K

July 31, 2005

Index

		Page
Forward-Looking Statements
Part I
Item 1.	Business.	4
Item 2.	Properties.	28
Item 3.	Legal Proceedings.	29
Item 4.	Submission of Matters to a Vote of Security Holders.	31
Part II
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	31
Item 6.	Selected Financial Data.	33
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	34
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	58
Item 8.	Financial Statements and Supplementary Data.	59
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	108
Item 9A.	Controls and Procedures.	108
Item 9B.	Other Information.
Part III
Item 10.	Directors and Executive Officers of the Registrant.	111
Item 11.	Executive Compensation.	111
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	111
Item 13.	Certain Relationships and Related Transactions.	111
Item 14.	Principal Accountant Fees and Services.	111
Part IV
Item 15.	Exhibits and Financial Statement Schedules.	111
Signatures		122
Schedule II		123

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

2

Forward-Looking Statements

We have made statements in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Annual Report on Form 10-K of Generex Biotechnology Corporation for the fiscal year ended July 31, 2005 that may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). The Act limits our liability in any lawsuit based on forward-looking statements we have made. 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," "plans," "intends," "believes," "will," "estimates," "forecasts," "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:

Ÿ our expectations concerning product candidates for our technologies;

Ÿ our expectations concerning existing or potential development and license agreements for third-party collaborations and joint ventures;

Ÿ our expectations of when different phases of clinical activity may commence; and

Ÿ our expectations of when regulatory submissions may be filed or when regulatory approvals may be received.

Any or all of our forward-looking statements may turn out to be wrong. They may be affected by inaccurate assumptions that we might make or by known or unknown risks and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in our forward-looking statements. Among the factors that could affect future results are:

Ÿ the inherent uncertainties of product development based on our new and as yet not fully proven technologies;

Ÿ the risks and uncertainties regarding the actual effect on humans of seemingly safe and efficacious formulations and treatments when tested clinically;

Ÿ the inherent uncertainties associated with clinical trials of product candidates; and

Ÿ the inherent uncertainties associated with the process of obtaining regulatory approval to market product candidates; and

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

Additional factors that could affect future results are set forth below under the caption Item 1. Business and the subsection thereunder entitled “Certain Additional 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 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.

3

Part I

Item 1.Business.

Overview

We are engaged primarily in the research and development of drug delivery 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.

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 or mucosa inefficient or ineffective.

All injection therapies involve varying degrees of discomfort and inconvenience. With chronic and sub-chronic diseases, the discomfort and inconvenience associated with injection therapies frequently results in less than optimal patient acceptance of, and compliance with, the prescribed treatment plan. Poor acceptance and compliance can lead to medical complications and higher disease management costs. Also, elderly, infirm and pediatric patients with chronic or sub-chronic conditions may not be able to self-inject their medications. In such cases, assistance is required which increases both the cost and inconvenience of the therapy.

Our goal is to develop proprietary formulations of large molecule drugs that can be administered through the buccal mucosa, primarily the inner cheek walls, thereby eliminating or reducing the need for injections. 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, but to date have focused our development efforts on a buccal insulin product.

Our first product is an insulin formulation that is administered as a fine spray into the oral cavity using a hand-held aerosol spray applicator. Between January 1999 and September 2000, we conducted limited clinical trials on this product in the United States, Canada and Europe. In September 2000, we entered into an agreement (the "Development and License Agreement") to develop this product with Eli Lilly and Company ("Lilly"). To date, over 1,100 patients with diabetes have been dosed with our oral insulin product at approved facilities in seven countries. We conducted several clinical trials with insulin supplied by Lilly under our Development and License Agreement. Lilly did not, however, authorize or conduct any clinical trials or provide financial support for those trials. We did receive a $1,000,000 upfront payment from Lilly. On May 23, 2003, we announced that we had agreed with Lilly to end the Development and License Agreement for the development and commercialization of buccal delivery of insulin. On November 5, 2003, we entered into a termination agreement with Lilly terminating the Development and License Agreement, effective as of June 2, 2003. In accordance with the termination agreement, we retained all of the intellectual property and commercialization rights with respect to buccal spray drug delivery technology, and we have the continuing right to develop and commercialize the product. We also entered into a Bulk Supply Agreement (the "Bulk Supply Agreement") for the sale of human insulin crystals by Lilly to us over a three-year period. The Bulk Supply Agreement establishes purchase prices, minimum purchase requirements, maximum amounts which may be purchased in each year and a non-refundable prepayment of $1,500,000 to be applied against amounts due for purchases.

4

In January 2001, we established a joint venture with Elan International Services, Ltd. ("EIS"), a wholly-owned subsidiary of Elan Corporation, plc (EIS and Elan Corporation, plc being collectively referred to as "Elan"), 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, for the treatment of prostate cancer, endometriosis and/or the suppression of testosterone and estrogen. In January 2002, we and Elan agreed to expand the joint venture to encompass the buccal delivery of morphine for the treatment of pain and agreed to pursue buccal morphine as the initial pharmaceutical product for development under Generex (Bermuda) Ltd., the entity through which the joint venture was being conducted. This expansion of the joint venture occurred after we successfully completed a proof of concept clinical study of morphine delivery using our proprietary buccal delivery technology.

In connection with the joint venture, EIS purchased 1,000 shares of our Series A Preferred Stock for $12,015,000, which EIS transferred, shortly thereafter, to Elan Pharmaceuticals Investment III, an affiliate of Elan ("EPIL III"). We applied the proceeds from the sale of the Series A Preferred Stock to subscribe for an 80.1% equity ownership interest in Generex (Bermuda), Ltd. EIS paid in capital of $2,985,000 to subscribe for a 19.9% equity ownership interest in the joint venture entity. In accordance with the terms of the Series A Preferred Stock, if any shares of Series A Preferred Stock were to be outstanding on January 16, 2007, we would have been required to redeem the shares of Series A Preferred Stock at a redemption price equal to the aggregate Series A Preferred Stock liquidation preference, either in cash, or in shares of common stock with a fair market value equal to the redemption price. Alternatively, the Series A Preferred Stock could have been converted, under certain conditions, into shares of our common stock. EIS also purchased 344,116 shares of our common stock for $5,000,000. We were permitted to use the proceeds of this sale for any corporate purpose.

On December 27, 2004, we entered into an agreement (the "Termination Agreement") with Elan, whereby we and Elan agreed to terminate the joint venture through Generex (Bermuda) Ltd. Pursuant to the terms of the Termination Agreement, (i) except for a common stock purchase warrant that was issued by us to Elan, which was amended to permit Elan or any other holder thereof to transfer the warrant without our consent, the parties agreed to terminate all agreements entered into in connection with the joint venture, and (ii) Elan agreed to transfer all shares of capital stock of Generex (Bermuda) owned by it to us. Accordingly, all rights granted by each party to the other terminated, including, without limitation, Elan's right to appoint a member to our Board of Directors, all other rights granted under the terms of the joint venture terminated, each party retained its intellectual property rights, we obtained full ownership of Generex (Bermuda), and all representatives of Elan who were officers and/or directors of Generex (Bermuda) resigned.

In connection with negotiating the Termination Agreement, EPIL III approached us for consent to transfer the Series A Preferred Stock by way of an auction process. Although we provided our consent to the transfer, it was contingent upon EPIL III agreeing to satisfy the following conditions: (i) the auction process could conclude no later than December 15, 2004 and EPIL III's disposition of the shares could conclude no later than December 31, 2004 (the "Closing Date"), (ii) the buyer had to immediately convert the Series A Preferred Stock at the voluntary conversion price of $25.77 (calculated pursuant to the terms of the certificate of designation for the Series A Preferred Stock resulting in the issuance of 534,085 shares of common stock), (iii) EPIL III's registration rights could not be transferred, and (iv) for a period of two (2) years after the Closing Date, the purchaser of the Series A Preferred Stock could not transfer the shares of common stock issuable upon conversion thereof and we would have the right to redeem the shares of common stock at a per share price of 150% of the average closing price of the common stock on The Nasdaq SmallCap Market for the twenty (20) days immediately preceding the Closing Date. On or about December 15, 2004, EPIL III conducted the auction and received an offer to buy the shares of Series A Preferred Stock. On or about December 31, 2004, EPIL III sold the shares of Series A Preferred Stock, and the purchaser thereof immediately converted the Series A Preferred Stock into shares of our common stock.

5

The conversion of the Series A Preferred Stock was particularly critical because the mandatory redemption feature required us to classify the Series A Preferred Stock as approximately $14,300,000 of mezzanine equity. Upon conversion of the Series A Preferred Stock, however, we were able to reclassify the approximately $14,300,000 of mezzanine equity as common equity on our balance sheet. This, in turn, allowed us to regain compliance with NASDAQ's Marketplace Rule 4310(c)(2)(B), which requires us to have a minimum of $2,500,000 in stockholders' equity or $35,000,000 market value of listed securities or $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years.

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.

Our 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). Our 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. The immunomedicine products are in the pre-clinical stage of development except for a current Phase 1 clinical trial in human patients with stage II HER-2/neu positive breast cancer. Development efforts are underway in melanoma, prostate cancer, HIV, influenza virus, smallpox, SARS and Type I diabetes mellitus. We are seeking to establish collaborations with clinical investigators at academic centers to advance the technology.

With the anticipated launch of commercial sales of our oral insulin product in Ecuador in 2005, we expect to receive revenues from product sales in the fiscal year ending July 31, 2006. We do not expect this revenue to be sufficient for all of our cash needs during the year. In the past we were able to fund Antigen expenses with some revenue from research grants for Antigen's immunomedicine products. During the fiscal year ended July 31, 2005, we received a total of $392,112 in such research grants, and we have received a total of $1,019,296 in such research grants. We do not expect to receive such grants on the going forward basis. We expect to satisfy the majority of our cash needs during the current year from capital raised through equity financings.

We are a development stage company, and from inception through the end of the 2005 fiscal year had not received any revenues from operations other than the up-front payment from Lilly. We have begun the regulatory approval process for only three products, our oral insulin formulation, morphine and fentanyl. We have only one product, our oral insulin formulation, that has been approved for commercial marketing and sale by drug regulatory authorities, and that approval was obtained in Ecuador in early May 2005. We believe that our buccal delivery technology is a platform technology that has application to a large number of large molecule drugs in addition to insulin. Estrogen, heparin, monoclonal antibodies, human growth hormone, fertility hormone, as well as a number of vaccines are among the compounds that we have identified as possible candidates for product development.

Buccal Delivery Technology

Our buccal delivery technology involves the preparation of a proprietary formulation 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 quantity and other limitations. The resulting formulation is aerosolized with a pharmaceutical grade chemical propellant and is administered to the patient 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, the patient self-administers the formulation by spraying it 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 insulin product Oral-lyn™, insulin absorption in the buccal cavity has been shown to be very efficacious. We are also evaluating the use of our RapidMist™ device for the delivery of both morphine and fentanyl.

6

Buccal Insulin Product

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.

If not treated, diabetes can lead to blindness, kidney disease, nerve disease, amputation, heart disease and stroke. Each year, between 12,000 and 24,000 people lose their sight because of diabetes. Diabetes is also the leading cause of end-stage renal disease (kidney failure), accounting for about 40% of new cases.

In addition, about 60-70 percent of people with diabetes have mild to severe forms of diabetic nerve damage, which, in severe forms, can lead to lower limb amputations. Diabetics are also 2 to 4 times more likely to have heart disease, which is present in 75 percent of diabetes-related deaths, and are 2 to 4 times more likely to suffer a stroke.

There is no known cure for diabetes. The World Health Organization estimates that there are currently over 1.5 billion diabetics worldwide. It is further estimated that this number will almost double by the year 2025. There are estimated to be 17 million people suffering from diabetes in North America alone, approximately 5 million of whom are undiagnosed, and diabetes is the second largest cause of death by disease in North America.

We conducted the first clinical trials of our buccal insulin formulation with human subjects in Ecuador in January 1998. We ultimately conducted a number of studies in Ecuador in 1998, each of which involved a selection of between 8 and 10 patients. The principal purpose of these studies was to evaluate the effectiveness of our oral insulin formulation in humans 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 Oral-lyn™ and the RapidMist™ Diabetes Management System from the Ecuador Ministry of Public Health. In May 2005, we received approval from the Ecuadorian Ministry of Public Health for the commercial marketing and sale of Oral-lyn™ for treatment of Type 1 and Type 2 diabetes. PharmaBrand is making preparations for the commercial launch of Oral-lyn™ in Ecuador, and we are continuing our efforts to secure the participation of a multi-national pharmaceutical co-marketing partner for the balance of South America.

7

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 protocol 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. Thereafter, a pilot trial was successfully undertaken in Ecuador (the results of which have been reported at several scientific symposia) to optimize the oral insulin formulation to transition to Phase III clinical trials. We are currently in the process of finalizing our submission to Canadian Health Authorities for the approval of initiation of Phase III trials.

We anticipate being in a position to commence Phase III clinical trials of Oral-lyn^TM in Europe and Canada subject to the receipt of regulatory approvals pursuant to meetings we anticipate being held before the end of the second calendar quarter of 2006. We continue to conduct limited clinical studies and seek additional collaborative partners in the United States, and other countries.

Other Large Molecule Drug Projects

We have identified numerous compounds, other than insulin, as candidates for product development.

Morphine and Fentanyl

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 (breakthrough and postoperative pain are characterized as being moderate to severe in intensity, having 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. Often, patients must wait in pain until an attendant can medicate them.

8

We seek to develop a buccal delivery formulation for morphine and fentanyl that will have a critical series of attributes well suited for the treatment of breakthrough and post operative pain and which will be cost-effective and will have a demonstrable improvement over current delivery methods. These include fast access to the circulatory system, precise dosing control and a simple, self-administration procedure.

We made an Investigatory New Drug submission for buccal morphine to the Health Protection Branch in Canada in January 2002, and received permission from the Canadian regulators to proceed with clinical trials in March 2002.

We made an Investigatory New Drug submission for fentanyl to the Health Protection Branch in Canada in August 2002, and received permission from the Canadian regulators to proceed with clinical trials in October 2002.

During fiscal year ended July 31, 2005, we did not actively pursue our buccal morphine and buccal fentanyl projects.

Other Products

We have had discussions of possible research collaborations with various pharmaceutical companies concerning use of our large molecule drug delivery technology with insulin, morphine, fentanyl and other compounds, including monoclonal antibodies, human growth hormone, fertility hormone, estrogen and heparin, and a number of vaccines. We have also developed a proprietary formulated glucose spray, Gluco-gyn™, for the treatment of hypoglycemia in people with diabetes. Gluco-gyn™ works quickly to raise blood sugar, has no side effects, and is effective to counteract the effects of low blood sugar or insulin reaction.

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 developing the insulin product. While the insulin product remains our first priority, we continue developmental work for buccal delivery formulation for morphine and fentanyl.

Immunomedicine Technology and Products

Our new subsidiary, Antigen, is engaged in research and development of technologies and immunomedicines for the treatment of malignant, infectious, autoimmune and allergic diseases. Our 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). Our 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 treat the ailments and conditions.

We have not filed an Investigational New Drug application to begin clinical trials other than a Physician’s Investigational New Drug application for a Phase 1 trial in human patients with stage II HER-2/neu positive breast cancer. Other than the breast cancer trial, our immunomedicine products are in the pre-clinical stage of development and trials in human patients are not expected for at least six months.

Corporate History

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 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.

9

In January 1998, we participated in a "reverse acquisition" with Green Mt. P. S., Inc., a previously 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.

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.

Government Regulation

Our research and development activities, and the eventual manufacturing and marketing of our products, are subject to extensive regulation by the Food and Drug Administration in the United States (the "FDA") 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 if not all cases, we expect that our development partners will participate extensively in the regulatory approval process once a development agreement is in place. 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 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:

10

Ÿ preclinical tests;

Ÿ the submission to the FDA of an Investigational New Drug application, which must become effective before human clinical trials commence;

Ÿ human clinical trials to establish the safety and efficacy of the drug;

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

Ÿ FDA approval of the New Drug Application, including approval of all product labeling and advertising.

Pre-clinical tests include laboratory evaluation of product chemistry, formulation and stability, as well as animal studies to assess the potential safety and efficacy of each product. The results of the pre-clinical tests are submitted to the FDA as part of the Investigational New Drug application and are reviewed by the FDA before the commencement of human clinical trials. Unless the FDA objects to the Investigational New Drug application, the Investigational New Drug application becomes effective 30 days following its receipt by the FDA. The Investigational New Drug application for our oral insulin formulation became effective in November 1998. We filed an Investigational New Drug application for buccal morphine in January 2002.

Clinical trials involve the administration of the new drug to humans under the supervision of a qualified investigator. The protocols for the trials must be submitted to the FDA as part of the Investigational New Drug application. Also, each clinical trial must be approved and conducted under the auspices of an Institutional Review Board, 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. The successful completion of Phase III clinical trials is the precursor to the receipt of the approval of regulatory authorities for the manufacturing, marketing, and sale of products.

In the United States, the results of pre-clinical studies and clinical trials, if successful, are submitted to the FDA in a New Drug Application to seek approval to market and commercialize the drug product for a specified use. The FDA may deny a New Drug Application 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 the FDA approval. 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 Good Manufacturing Practices, 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 Good Manufacturing Practices, 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.

11

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 approved by the regulatory authorities in that country. Although an important consideration, FDA approval does not assure approval by other regulatory authorities. The current approval process varies from country to country, and the time spent in gaining approval varies from that required for FDA approval. The Canadian regulatory process is substantially similar to that of the United States. We obtained regulatory approval to begin clinical trials of our oral insulin formulation in Canada in November 1998. We obtained regulatory approval to begin clinical trials of our buccal morphine product in Canada in March 2002. In April 2003, we received approval of an Oral-lyn™ Phase II-B clinical trial protocol in Canada. We received regulatory approval to begin clinical trials of our fentanyl product in Canada in October 2002. In May 2005, we received approval from the Ecuadorian Ministry of Public Health for the commercial marketing and sale of Oral- lyn™ for treatment of Type 1 and Type 2 diabetes.

Marketing

We intend to rely on contracting or collaborative arrangements with one or more 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.

PharmaBrand, our joint venture partner, is making preparations for the commercial launch of Oral-lyn^TM in Ecuador, and we are continuing our efforts to secure the participation of a multi-national pharmaceutical co-marketing partner in the commercial launch of Oral-lyn^TM in the balance of South America. Except for these arrangements, we do not have any agreements with any other companies for marketing or distributing our products. With respect to our insulin product, we possess the worldwide marketing rights to this product after they reverted to us upon the termination in June 2003 of the Development and License Agreement with Lilly.

Manufacturing

To date, we have produced our oral insulin formulation only on a small scale. In December 2000, we completed our pilot manufacturing facility in Toronto in the same commercial complex in which our original laboratory is located. We believe that this facility will be capable of producing our insulin product at levels necessary to supply our needs for late stage human clinical trials of the product and for initial commercial sales outside the United States. We will need to significantly increase our manufacturing capability in order to manufacture any product in significant commercial quantities. We plan to establish a manufacturing facility in Ecuador for the purposes of commercial supply and sales in that country and, as we procure other registrations, in other South American markets.

Our subsidiary Antigen leases office and laboratory space in Worcester, Massachusetts, which is sufficient for its present needs. The laboratory is approximately 820 square feet and has permission to store and use biohazardous (including recombinant DNA materials) and flammable chemicals.

12

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 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. We also expect to use the RapidMist™ device in connection with our buccal morphine and fentanyl products. We have also secured supply arrangements with the manufacturers of all other components and the propellant that we presently use in our RapidMist™ device for commercial quantities of such components and the propellant. 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 a single source 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 in Europe. Upon termination in June 2003 of our license agreement with Lilly, we entered into a Bulk Supply Agreement with Lilly, pursuant to which Lilly has been contracted to provide us with human insulin crystals over a three-year period for clinical development purposes. 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.

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 currently have seventeen issued U.S. patents and four pending U.S. patent applications (one of which as been allowed) pertaining to aspects of buccal delivery technology including oral administration of macromolecular formulations (including insulin) as well as pain relief medications (e.g. morphine, fentanyl).  We currently hold two issued Canadian patents and eleven pending Canadian patent applications also relating to aspects of buccal drug delivery technology.  We also hold forty-nine issued patents and forty-two pending patent applications covering our drug delivery technology in jurisdictions other than the U.S. and Canada.  In addition, we have three issued Canadian patents and two pending U.S. patent applications pertaining to delivery technologies other than our buccal delivery technology.

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

13

Our subsidiary Antigen currently holds six issued U.S. patents, two Australian patents, and a number of pending U.S. and 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. Humphreys and Dr. Xu, officers of Antigen, are the listed inventors or co-inventors on all of these patents and patent applications, including those licensed from the University of Massachusetts.

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

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

Competition

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

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

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

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

14

Buccal Insulin Product

Nektar Therapeutics, formerly Inhale Therapeutic Systems, Inc. ("Nektar"), is developing a customized insulin formulation that is processed into a fine, dry powder and administered to the deep lung using a proprietary inhalation device developed for this purpose.  Nektar is developing its insulin product in collaboration with Pfizer, Inc. and the sanofi-aventis Group, the world’s third largest pharmaceutical company.  On September 8, 2005, Pfizer Inc and the sanofi-aventis Group announced that a FDA advisory committee panel has recommended the approval of Exubera®, an inhaleable, dry powder insulin developed in conjunction with Nektar, for the treatment of adults with Type 1 and Type 2 diabetes.  Nektar also is developing pulmonary products with large molecule drugs other than insulin and has stated that it is investigating the use of its inhalation technology with small molecule drugs.

Aradigm Corporation ("Aradigm"), which has announced a joint development agreement with Novo Nordisk A/S to jointly develop a pulmonary delivery system for insulin by inhalation, also may be considered a direct competitor of ours in the insulin area. Novo Nordisk is one of the two leading manufacturers of insulin in the world, the other being Lilly.  Aradigm and Novo Nordisk initiated Phase III clinical trials in September 2002.  In April 2004, Novo Nordisk announced results from a planned interim analysis of the initial Phase III trial and has decided to amend the current trial protocol.  Novo Nordisk will make decisions concerning the structure and timing of additional clinical trials after these observations have been fully assessed.

Other companies have announced development efforts relating to non-injection methods of delivering insulin or other large molecule drugs, including Alkermes Pharmaceuticals, Inc., which announced a collaboration with Lilly in April 2000 to develop a pulmonary method of administering insulin and is currently conducting Phase III clinical trials.  MannKind Corporation is developing an inhaled insulin product named Technosphere™ Insulin, which is currently conducting phase III clinical trials in the United States and in Europe.  There are also a number of companies developing alternative means of delivering insulin in the form of oral pills, transdermal patches, and intranasal methods, which are at early stages of development.

In addition to other delivery systems for insulin, there are numerous products which have been approved for use in the treatment of Type 2 diabetics in substitution of, or in addition to, insulin therapy. These products may also be considered competitive with insulin products.

Buccal Morphine and Fentanyl Products

Cephalon, Inc. currently markets Actiq® in the United States and has recently acquired the rights to the product in Europe. Actiq® delivers buccal transmucosal fentanyl to the cheek walls through the use of a lollipop. On November 4, 1998, the FDA cleared Actiq® for marketing for use in the management of breakthrough cancer pain. The product was launched in March 1999 in the United States.

Aradigm is developing the hand-held AERx Pain Management System for the treatment of breakthrough cancer pain. The AERx Pain Management System is a pulmonary delivery system to deliver the drug through inhalation. AERx has distinct advantages over the administration by injection of morphine and similar opiate-derived pain control drugs. Aradigm is in progress to complete both Phase I and II clinical trials of these formulations.

15

Nastech Pharmaceuticals is developing an intranasal formulation of morphine that is in Phase II clinical trials.  Results reported to date show the product to be safe and efficacious in the treatment of episodes of breakthrough pain. Nastech is currently seeking a licensing partner for this product.

Immunomedicine Technology and Products

A number of companies that are engaged in the development of immunomedicines employ technologies that are competitive to our subsidiary Antigen. Zycos Inc. has developed the Biotope® technology, Cel-Sci Corporation has developed the LEAPS delivery technology, and Epimmune Inc. has developed the PADRE® technology. These companies have initiated early stage clinical trials for several products for the treatment of cancer, autoimmune, and allergic diseases. These companies also have established collaborations with academic centers and other companies for the development of certain products. We have not initiated clinical trials with any of our immunomedicine products, nor have we established commercial collaborations to date.

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, 2005, our expenditures on research and development were $55,138,663. These included $7,750,731 in the year ended July 31, 2005, $8,522,984 in the year ended July 31, 2004 and $5,150,075 in the year ended July 31, 2003. The decrease in our research and development activities in 2005 compared to 2004 is due primarily to reduction of our level of research and development activities, offset by increased activities of Antigen and regulatory consultants. The increase in our research and development expenses in 2004 compared to 2003 was due principally to activities of Antigen and our increased development of oral insulin formulation compared to the prior year, including the purchase of bulk insulin.

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 19 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.

16

Employees

At September 30, 2005, we had twenty-one 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, seven are scientific and technical personnel who engage primarily in development activities and in preparing formulations for testing and clinical trials, and two are engaged in corporate and product promotion, public relations and investor relations. 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 do not have fixed term agreements with any of our key management or scientific staff, other than Dr. Pankaj Modi who, on August 26, 2004, resigned from his position as Vice President, Research and Development. While Dr. Modi’s resignation was effective immediately, pursuant to the terms of the Consulting Agreement, the effective date of termination of the Consulting Agreement was August 25, 2005. For more information about the termination of Dr. Modi’s Consulting Agreement, see "Developments in Fiscal 2005" under Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

We also 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	54	Chairman, President, Chief Executive Officer and Director
Rose C. Perri	38	Chief Operating Officer, Chief Financial Officer, Treasurer, Secretary and Director
Gerald Bernstein, M.D.	72	Director, Vice President Medical Affairs
Mark Fletcher, Esquire	40	Executive Vice President and General Counsel
John P. Barratt	61	Director
Mindy J. Allport-Settle	38	Director
Brian T. McGee	44	Director
Peter G. Amanatides	41	Director

17

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

Gerald Bernstein, M.D. Director since October 2002. Dr. Bernstein has served as Vice President Medical Affairs of Generex since October 1, 2001. Dr. Bernstein acts as a key liaison for Generex on medical and scientific affairs to the medical, scientific and financial communities and consults with Generex under a consulting agreement on research and medical affairs and on development activities. Dr. Bernstein has been 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 since 1999. He was president of the American Diabetes Association from 1997 to 1998.

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

John P. Barratt. Director since March 2003. Mr. Barratt currently serves as the Chief Operating Officer of The Caldwell Partners International, a role he commenced in April 2005. The Caldwell Partners International is a Canadian based human capital professional services company. Mr. Barratt continues, concurrently, 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 reports to the bankruptcy court and to the U.S. Trustee’s Office. The Beyond.com case is expected to be granted final decree by the end of 2005 at which point the Chapter 11 case will terminate as will his duties to the court and the U.S. Trustee’s Office. From September 2000 until the date of its Chapter 11 bankruptcy filing in 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 GLP NT Corporation and BNN Split Corporation, and is a member of the Board of Directors and Chairman of the Board Credit Committee of the Bank of China (Canada). Mr. Barratt also serves on the Advisory Boards of the following Brascan SoundVest funds: Diversified Income Fund, Total Return Fund, Rising Distribution Split Trust and Focused Business Trust. In addition, Mr. Barratt is a member of the Advisory Board of the Brascan Adjustable Rate Trust I.

18

Mindy J. Allport-Settle. Director since February 2004. Ms. Allport-Settle has been President and Chief Executive Officer of Integrated Development, LLC ("Integrated") since 1998.  Integrated is an independent consulting firm to the pharmaceutical industry, providing informed guidance in operational, project and contract management, new business development and regulatory compliance.  In addition to her position with Integrated, Ms. Allport-Settle has been a Vice-President of Impact Management Services, Inc. ("IMS") from 2003 to 2005, which also provides consulting services to the pharmaceutical industry.  In her positions at Integrated and IMS, Ms. Allport-Settle has worked with several major pharmaceutical companies. From 2001 to 2002, Ms. Allport-Settle was Director of Client Services for Scriptorium Publishing Services.  From 1992 to 1994, Ms. Allport-Settle was an Eye Bank Technician/Organ Procurement Surgeon for the NC Eye & Human Tissue Bank; and from 1991 to 1998, Ms. Allport-Settle was a healthcare and general medical compliance training consultant and a contract writer and photographer.  Ms. Allport-Settle holds a Bachelor’s degree from the University of North Carolina, a Master of Business Administration in Global Management from the University of Phoenix, and completed Harvard Business School's executive education program Compensation Committees: Preparing for the Challenges Ahead.

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

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

Mr. Amanatides filled the vacancy of J. Michael Rosen who declined to stand for re-election at Generex’s Annual Meeting of Stockholders held on April 5, 2005.

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.

19

Dr. Robert E. Humphreys, M.D., Ph.D., is currently Executive Vice-President and Chief Operating Officer of our subsidiary, Antigen. Dr. Humphreys founded Antigen in 1996 and was its President. He has extensive experience in the National Institute of Health arthritis, cancer and diabetes study sections. Dr. Humphreys is an inventor on six awarded U.S. patents and has over 150 peer-reviewed publications. Prior to founding Antigen, Dr. Humphreys was Professor of Medicine and Pharmacology at University of Massachusetts Medical School. He received his M.D. and Ph.D. degrees from Yale University and was a post-doctoral fellow in biochemistry at Harvard University. He also received his clinical training at Bethesda Naval Hospital and was an Officer at the Naval Medical Research Institute.

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

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

Certain Additional Risk Factors

In addition to historical facts or statements of current condition, this Annual Report on Form 10-K contains forward-looking statements. Forward-looking statements provide our current expectations or forecasts of future events.

The following discussion outlines certain factors that we think could cause our actual outcomes and results to differ materially from our forward-looking statements. These factors are in addition to those set forth elsewhere in this Annual Report on Form 10-K.

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. We do expect to receive some revenue from the sale of our oral insulin product in Ecuador in fiscal 2006. To date, we have not been profitable and our accumulated net loss before preferred stock dividend was $118,233,051 at July 31, 2005. 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.

20

With the exception of our oral insulin formulation which was approved for commercial sale in Ecuador in early May 2005, 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 cannot be sure that we will obtain required regulatory approvals, or successfully research, develop, commercialize, manufacture and market any other product candidates. We expect that these activities, together with future general and administrative activities, will result in significant expenses for the foreseeable future.

We need additional capital.

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

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

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

• to develop other buccal and immunomedicine products;

• to develop new products based on our buccal delivery and immunomedicine technologies, including clinical testing relating to new products;

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

• to establish and expand our manufacturing capabilities;

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

• to finance the research and development activities of our subsidiary Antigen; and

• to otherwise carry on business.

In the past, we have funded most of our development and other costs through equity financing. We anticipate that our existing capital resources will enable us to maintain currently planned operations through the next three 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. Recent changes in the application of the rules of The Nasdaq Stock Market may also make it more difficult for us to raise private equity capital.

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.

Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.

In their audit opinion issued in connection with our consolidated balance sheets as of July 31, 2005 and our consolidated statements of operation, stockholder’s equity and cash flows for the year then ended and for the period from November 2, 1995 (date of inception) to July 31, 2005, our auditors have expressed a substantial doubt about our ability to continue as a going concern given our recurring net losses, negative cash flows from operations and working capital deficiency.

21

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue in existence.

New equity financing could dilute current stockholders.

If we raise funds through equity financing to meet the needs discussed above, it will have a dilutive effect on existing holders of our shares by reducing their percentage ownership. The shares may be sold at a time when the market price is low because we need the funds. This will dilute existing holders more than if our stock price was higher. In addition, equity financings normally involve shares sold at a discount to the current market price.

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

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

Risks Related to Our Technologies

With the exception of Oral-lyn™, our technologies and products are at an early stage of development and we cannot expect revenues in respect thereof in the foreseeable future.

With the exception of Oral-lyn™, our proprietary oral insulin spray formulation which has been approved for commercial marketing and sale in Ecuador for the treatment of Type-1 and Type-2 diabetes, we have no products approved for commercial sale at the present time. To be profitable, we must not only successfully research, develop and obtain regulatory approval for our products under development, but also manufacture, introduce, market and distribute them once development is completed. We may not be successful in one or more of these stages of the development or commercialization of our products, and/or any of the products we develop may not be commercially viable.

While over 1,100 patients with diabetes have been dosed with our oral insulin formulation at approved facilities in seven countries, our insulin product has only recently been approved for marketing in Ecuador. Until we can manufacture, market and distribute our oral insulin product in Ecuador and can establish that it is a commercially viable product, we will not receive revenues from ongoing operations.

Until we receive regulatory approval to sell our products in one or more countries other than Ecuador, 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.

22

Only one of our products has been approved for commercial sale by drug regulatory authorities, and that approval was obtained in Ecuador. We have begun the regulatory approval process for our oral insulin formulation, buccal morphine and fentanyl products in other countries. Our immunomedicine products are in the pre-clinical stage of development, with the exception of our Phase 1 trial in human patients with stage II HER-2/neu positive breast cancer.

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 never receive approval for one or more product candidates in any country other than Ecuador.

In addition, we cannot be sure when or if we will be permitted by regulatory agencies to undertake additional clinical trials or to commence any particular phase of clinical trials. Because of this, statements in this Annual Report on Form 10-K 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 products could result in substantial additional costs to us, and, therefore, could adversely affect our ability to compete with other companies. If regulatory approval is ultimately granted in any country other than Ecuador, the approval may place limitations on the intended use of the product we wish to commercialize, and may restrict the way in which we are permitted to market the product.

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

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

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

Also because of these legal and factual uncertainties, and because pending patent applications are held in secrecy for varying periods in the United States and other countries, even after reasonable investigation we may not know with certainty whether any products that we (or a licensee) may develop will infringe upon any patent or other intellectual property right of a third party. For example, we are aware of certain patents owned by third parties that such parties could attempt to use in the future in efforts to affect our freedom to practice some of the patents that we own or have applied for. Based upon the science and scope of these third-party patents, we believe that the patents that we own or have applied for do not infringe any such third-party patents; however, we cannot know for certain whether we could successfully defend our position, if challenged. We may incur substantial costs if we are required to defend the Company 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.

23

Risks Related to Marketing of Our Potential Products

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

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

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

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

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

We will not receive revenues from our oral insulin formulation in Ecuador or any of our other products that may receive regulatory approval until we can successfully manufacture, market and distribute them in the relevant market.

We will have to depend upon others for marketing and distribution of our products, including Oral-lyn™ in Ecuador, 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. Accordingly, our competitors may succeed in developing competing technologies, obtaining FDA approval for products or gaining market acceptance more rapidly than we can.

24

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

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

Risks Related to Potential Liabilities

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

The administration of drugs or treatments to humans, whether in clinical trials or commercially, can result in product liability claims whether or not the drugs or treatments are actually at fault for causing an injury. Furthermore, our 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.

Outcome of an arbitration proceeding with Sands Brothers may have an adverse impact on us.

On October 2, 1998, Sands Brothers & Co. Ltd., a New York City-based investment banking and brokerage firm, initiated an arbitration against us under New York Stock Exchange rules. Sands alleged that it had the right to receive, for nominal consideration, approximately 1.5 million shares of our common stock. Sands based its claim upon an October 1997 letter agreement that was purported by Sands to confirm an agreement appointing Sands as the exclusive financial advisor to Generex Pharmaceuticals, Inc., a subsidiary that we acquired in late 1997. In exchange therefor, the letter agreement purported to grant Sands the right to acquire 17% of Generex Pharmaceuticals' common stock for nominal consideration. Sands claimed that its right to receive shares of Generex Pharmaceuticals' common stock applies to our common stock since outstanding shares of Generex Pharmaceuticals' common stock were converted into shares of our common stock in the acquisition. Sands' claims also included additional shares allegedly due as a fee related to that acquisition, and $144,000 in monthly fees allegedly due under the terms of the purported agreement.

After several arbitration and court proceedings, on October 29, 2002, the Appellate Division of the New York Supreme Court issued a decision remanding the issue of damages to a new panel of arbitrators and limiting the issue of damages before the new panel to reliance damages which is not to include an award of lost profits. Reliance damages are out-of-pocket damages incurred by Sands.

25

On August 17, 2004, the Arbitration Panel of the New York Stock Exchange issued a final award in the case of Sands versus us, awarding Sands $150,000 in reliance damages. A motion to confirm this award has been awarded to Sands. In September 2005, Sands filed a motion seeking leave from the New York Court of Appeals to appeal the prior orders of the Appellate Division vacating the prior Arbitration Panel's warrant awards. Accordingly, $150,000 has been recorded in the accompanying financial statements, but the case may be subject to further legal proceedings.

The case is still ongoing and our ultimate liability cannot yet be determined with certainty. Our financial condition would be materially adversely affected to the extent that Sands receives shares of our common stock for little or no consideration or substantial monetary damages as a result of this legal proceeding. Apart from $150,000 accrual, we are not able to estimate an amount or range of potential loss from this legal proceeding at the present time.

Risks Related to the Market for Our Common Stock

Our common stock may be delisted from The Nasdaq SmallCap Market.

On June 5, 2003, our common stock was delisted from The Nasdaq National Market because of our failure to maintain a minimum of $10,000,000 in stockholders' equity. On June 5, 2003, our stock began trading on The Nasdaq SmallCap Market. The Nasdaq SmallCap Market has its own standards for continued listing, including a minimum of $2.5 million stockholders' equity. As of July 31, 2004, our stockholders' equity was $529,751. As a result, on November 19, 2004, we received notice from The Nasdaq Stock Market informing us that we do not comply with Marketplace Rule 4310(c)(2)(B), which requires us to have a minimum of $2,500,000 in stockholders' equity or $35,000,000 market value of listed securities or $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years. On December 22, 2004, all outstanding shares of our Series A Convertible Preferred Stock were converted to common stock, resulting in the elimination of approximately $14,300,000 of mezzanine equity and an equal amount was added to additional paid-in capital attributable to the common stock, increasing stockholders' equity by that amount. Based on this, the delisting proceeding relating to failure to meet stockholders’ equity standards was terminated. Because we are still in the development stage, there is no guarantee that we will sustain compliance with this standard. In the event we cannot sustain compliance, our shares of common stock may be delisted from The Nasdaq SmallCap Market and begin trading on the over-the-counter bulletin board.

In addition, for continued listing on both The Nasdaq National Market and SmallCap Market, our stock price must be at least $1.00. Since October of 2004, our stock price has traded below this minimum per share requirement for thirty (30) consecutive business days. As a result, on November 24, 2004, we received notice from The Nasdaq Stock Market informing us that we do not comply with Market 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. We had 180 calendar days, or until May 23, 2005, subject to extension by The Nasdaq Stock Market under certain circumstances, to regain compliance with the Rule.

On May 25, 2005, we received notice from the Staff of The Nasdaq Stock Market informing us that, during the 180 calendar day period ending May 23, 2005, we had not regained compliance with Marketplace Rule 4310(c)(4); however, the Staff noted that on May 23, 2005, we met all initial inclusion criteria for the SmallCap Market set forth in Marketplace Rule 4310(c), except for bid price. Therefore, in accordance with Marketplace Rule 4310(c)(8)(D), we have an additional 180 calendar days to regain compliance with Rule 4310(c)(4). Although we have until November 21, 2005 to regain compliance with the Rule, there is no guarantee that the bid price of our common stock will close at $1.00 per share or more for a minimum period of ten (10) consecutive business days, which is the minimum period of time The Nasdaq Stock Market requires to regain compliance.

26

In the event that we cannot demonstrate compliance with Marketplace Rule 4310(c)(4) by November 21, 2005 and are not eligible for an additional compliance period, the Staff will notify us that our stock will be delisted, at which time we may 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 SmallCap Market. If we are not successful in such an appeal, our stock will likely trade on NASDAQ’s over-the-counter bulletin board, assuming we meet the requisite criteria.

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

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

The price of our common stock may be volatile.

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

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

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

• variations in operating results;

• changes in governmental regulations;

• developments in patent and other proprietary rights;

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

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

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

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

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

Our outstanding Special Voting Rights Preferred Stock and provisions of our Restated Certificate of Incorporation could delay or prevent the acquisition or sale of our business.

27

Holders of our Special Voting Rights Preferred Stock have the ability to prevent any change of control in us. Dr. Pankaj Modi, a former officer and director of Generex, owns all of our Special Voting Rights Preferred Stock. In addition, 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.

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 product 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 and one is being used for 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 we are currently in the process of obtaining regulatory approval for the pilot manufacturing facility.

We have mortgages on our Toronto properties totaling $3,307,362 at July 31, 2005. These mortgages require the payment of interest, with minimal principal reduction, prior to their due dates. These mortgages currently require an aggregate $30,511 in monthly debt service payments. Aggregate principal maturities for these mortgages will be $2,571,530 in fiscal 2006 and $735,832 in fiscal 2007.

We lease approximately 1,710 square feet of office and laboratory space in Worcester, Massachusetts that Antigen uses for its research and development activities at an annual rent of $94,085. 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, for ultimate use in manufacturing. We have done preliminary work on these facilities, but we do not expect to make a substantial investment in improving and equipping them for manufacturing operations until our requirements in this area are better defined. Both properties are currently leased to third parties.

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.

28

Item 3.Legal Proceedings.

Sands Brothers & Co. Ltd. v. Generex Biotechnology Corporation. On October 2, 1998, Sands Brothers & Co. Ltd., a New York City-based investment banking and brokerage firm, initiated an arbitration against us under New York Stock Exchange rules. Sands alleged that it had the right to receive, for nominal consideration, approximately 1.5 million shares of our common stock. Sands based its claim upon an October 1997 letter agreement that was purported by Sands to confirm an agreement appointing Sands as the exclusive financial advisor to Generex Pharmaceuticals, Inc., a subsidiary that we acquired in late 1997. In exchange, the letter agreement purported to grant Sands the right to acquire 17% of Generex Pharmaceuticals’ common stock for nominal consideration. Sands claimed that its right to receive shares of Generex Pharmaceuticals’ common stock applies to our common stock since outstanding shares of Generex Pharmaceuticals’ common stock were converted into shares of our common stock in the acquisition. Sands' claims also included additional shares allegedly due as a fee related to that acquisition and $144,000 in monthly fees allegedly due under the terms of the purported agreement.

Pursuant to an arbitration award dated September 22, 1999, the arbitration panel that heard this case awarded Sands $14,070 and issued a declaratory judgment requiring us to issue to Sands a warrant to purchase 1,530,020 shares of our common stock pursuant to and in accordance with the terms of the purported October 1997 letter agreement. On October 13, 1999, Sands commenced a special proceeding to confirm the arbitration award in the Supreme Court of the State of New York, County of New York (the "New York Supreme Court"). On November 10, 1999, we moved to vacate the arbitration award. On March 20, 2000, the New York Supreme Court granted Sands’ petition to confirm the award and denied our motion to vacate the award. We appealed, and on January 23, 2001, the New York State Appellate Division, First Department (the "Appellate Division"), modified the judgment of the New York Supreme Court that had confirmed the arbitration award against us. The Appellate Division affirmed the portion of the New York Supreme Court judgment that had confirmed the granting of monetary relief of $14,070 to Sands but modified the judgment to vacate the portion of the arbitration award directing the issuance to Sands of a warrant to purchase 1,530,020 shares of our common stock. The Appellate Division held that the portion of the award directing us to issue warrants to Sands is too indefinite to be enforceable and remanded the matter to the arbitration panel for a final and definite award with respect to such relief or its equivalent (including possibly an award of monetary damages). The arbitration panel commenced hearings on the matters remanded by the Appellate Division in June 2001. On November 7, 2001, the arbitration panel issued an award again requiring us to issue to Sands a warrant to purchase 1,530,020 shares of our common stock purportedly pursuant to and in accordance with the terms of the October 1997 letter agreement. Thereafter, Sands submitted a motion to the New York Supreme Court to modify and confirm the arbitration panel’s award, while we filed a motion with the court to vacate the arbitration award. On February 25, 2002, the New York Supreme Court vacated the arbitration panel’s award. The Supreme Court concluded that the arbitration panel had "disregarded the plain meaning" of the directive given by the Appellate Division in the Appellate Division’s January 23, 2001 decision that remanded the matter of the warrant for reconsideration by the panel. The Supreme Court found that the arbitration panel’s award "lack[ed] a rational basis". The Supreme Court also remanded the matter to the New York Stock Exchange on the issue of whether the arbitration panel should be disqualified. Sands appealed the February 25, 2002 order of the Supreme Court to the Appellate Division. We filed a cross-appeal on issues relating to the disqualification of the arbitration panel.

On October 29, 2002, the Appellate Division issued a decision and order unanimously modifying the lower court's order by remanding the issue of damages to a new panel of arbitrators and otherwise affirming the lower court's order. The Appellate Division's decision and order limited the issue of damages before the new panel of arbitrators to reliance damages which would not to include an award of lost profits. Reliance damages are out-of-pocket damages incurred by Sands. The Appellate Division stated that the lower court properly determined that the arbitration award, which had granted Sands warrants for 1,530,020 shares of the registrant's stock, was incorrect.

29

On March 18, 2003, the Appellate Division of the Supreme Court of New York denied a motion by Sands for re-argument of the October 29, 2002 decision, or, in the alternative, for leave to appeal to the Court of Appeals. A new arbitration took place in early June 2004.

On August 17, 2004, the Arbitration Panel of the New York Stock Exchange issued a final award in the case of Sands versus us, awarding Sands $150,000 in reliance damages. A motion to confirm this award has been awarded to Sands. In September 2005, Sands filed a motion seeking leave from the New York Court of Appeals to appeal the prior orders of the Appellate Division vacating the prior Arbitration Panel's warrant awards. Accordingly, $150,000 has been recorded in the accompanying financial statements, but the case may be subject to further legal proceedings.

Subash Chandarana et al. v. Generex Biotechnology Corporation. In February 2001, a former business associate of Dr. Pankaj Modi ("Modi") and an entity called Centrum Technologies Inc. ("CTI") commenced an action in the Ontario Superior Court of Justice against us and Modi seeking, among other things, damages for alleged breaches of contract and tortious acts related to a business relationship between this former associate and Modi that ceased in July 1996. The plaintiffs’ statement of claim also seeks to enjoin the use, if any, by us of three patents allegedly owned by CTI. On July 20, 2001, we filed a preliminary motion to dismiss the action of CTI as a nonexistent entity or, alternatively, to stay such action on the grounds of want of authority of such entity to commence the action. The plaintiffs brought a cross motion to amend the statement of claim to substitute Centrum Biotechnologies, Inc. ("CBI") for CTI. CBI is a corporation of which 50 percent of the shares are owned by the former business associate and the remaining 50 percent are owned by us. Consequently, the shareholders of CBI are in a deadlock. The court granted our motion to dismiss the action of CTI and denied the plaintiffs’ cross motion without prejudice to the former business associate to seek leave to bring a derivative action in the name of or on behalf of CBI. The former business associate subsequently filed an application with the Ontario Superior Court of Justice for an order granting him leave to file an action in the name of and on behalf of CBI against Modi and us. We opposed the application. In September 2003, the Ontario Superior Court of Justice granted the request and issued an order giving the former business associate leave to file an action in the name of and on behalf of CBI against Modi and us. A statement of claim was served in July 2004. We are not able to predict the ultimate outcome of this legal proceeding at the present time or to estimate an amount or range of potential loss, if any, from this legal proceeding.

Pankaj Modi vs. Generex Biotechnology Corporation. In February 2005, a consultant filed a Statement of Claim in the Ontario Superior Court of Justice, File No., 05-CV-284560 PD1, seeking approximately $600,000 in damages for alleged contract breaches in respect of unpaid remuneration and other compensation allegedly owed to him. We are of the view that we have no liability in this matter and intend to defend this action vigorously. Due to the early stage of this action, we are not able to predict the ultimate outcome of this legal proceeding at the present time or 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.

30

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

None

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 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 closing "bid" prices for our common stock reported on the NASDAQ SmallCap Market for each fiscal quarter in the prior two years ended July 31, 2005. High and low closing "bid" prices, which represent prices between dealers, do not include retail mark-up, mark-down or commission and may not represent actual transactions.

	Bid Prices
	High		Low
Fiscal 2004
First Quarter	$	2.47	$	1.12
Second Quarter	$	2.32	$	1.23
Third Quarter	$	2.02	$	1.26
Fourth Quarter	$	1.86	$	1.00
Fiscal 2005
First Quarter	$	1.25	$	0.80
Second Quarter	$	0.90	$	0.60
Third Quarter	$	0.89	$	0.52
Fourth Quarter	$	0.98	$	0.58

The closing “bid” price for our common stock reported on October 13, 2005 was $0.73.

At October 13, 2005, there were 720 holders of record of our common stock.

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.

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth information as of July 31, 2005 regarding our existing compensation plans and individual compensation arrangements pursuant to which our equity securities are authorized for issuance to employees or non-employees (such as directors, consultants and advisors) in exchange for consideration in the form of services:

31

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders
2000 Stock Option Plan		240,000	$	7.19		1,760,000
2001 Stock Option Plan		11,367,269	$	1.39		632,731
Total		11,607,269	$	1.51		2,392,731
Equity compensation plans not approved by security holders		0		0		0
Total		11,607,269	$	1.51		2,392,731

Sales of Unregistered Securities

In the fiscal year ended July 31, 2005 and the subsequent period, we sold common stock and other securities in transactions in reliance upon exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), as we have reported on Current Reports on Form 8-K and on Quarterly Reports on Form 10-Q filed during the period covered by this Annual Report on Form 10-K and the subsequent period. In addition, during the fiscal quarter ended July 31, 2005, we sold common stock and other securities in transactions in reliance upon exemptions from the registration requirements of the Securities Act as follows:

In June 2005, we issued G&H Associates LTD (“G&H”) 63,207 shares of our common stock as consideration for G&H’s financial consulting services pursuant to the terms of the Corporate Consulting Agreement entered into by us and G&H on November 4, 2004. The sale of the shares to G&H was exempt from registration under the Securities Act in reliance upon Section 4(2) thereof. We believe that G&H 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 were legended to indicate that they are restricted. The sales of such securities did not involve the use of underwriters, and no commissions were paid in connection with the issuance or sale, if any, thereof.

On July 22, 2005, Cranshire Capital, L.P. (“Cranshire”) agreed to extend the interest payment date and the maturity date under the March 28, 2005 Promissory Note and Agreement with us from July 22, 2005 to September 20, 2005. On the same date, Omicron Master Trust (“Omicron”) agreed to extend the interest payment date and the maturity date under the April 6, 2005 Promissory Note and Agreement with us from July 22, 2005 to September 20, 2005. As consideration for the extensions from Cranshire and Omicron, we contemporaneously issued on a warrant to Cranshire to purchase an aggregate of 1,219,512 shares of our common stock and a warrant to Omicron to purchase an aggregate of 243,902 shares of our common stock, both of which will expire on July 22, 2010. The rights of Cranshire and Omicron under the July 22 2005 warrants are described in this Annual Report on Form 10-K below under the caption Financial Condition, Liquidity and Resources of Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The offer and sale of the July 22, 2005 warrants, including shares of common stock into which the July 22, 2005 warrants are exercisable, by us to Cranshire and Omicron was exempt from registration under Section 4(2) of the Securities Act. Each of Cranshire and Omicron has previously represented and warranted to us that it is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act. Any certificates issued representing the July 22, 2005 warrants and shares of common stock issued upon exercise of the July 22, 2005 warrants will be legended to indicate that they are restricted. No sale of these securities involved the use of underwriters, and no commissions were paid in connection with the issuance or sale of the Securities.

32

In the fiscal quarter ended July 31, 2005, we issued 910,447 shares of restricted common stock to certain suppliers of goods and services in satisfaction of an additional aggregate amount of US $746,566 representing accounts payable owed by us. The number of shares awarded was calculated using a price per share of $0.82. The sales of the restricted stock were exempt from registration under the Securities Act in reliance upon Section 4(2) thereof. Each of the suppliers to which we have issued restricted shares of common stock has represented to us that he or it is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D. The certificates issued for the shares of common stock issued to such suppliers were legended to indicate that they are restricted. The sales of such shares did not involve the use of underwriters, and no commissions were paid in connection with the issuance or sale, if any, thereof.

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, 2005.

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 years ended July 31, 2005, 2004 and 2003 were audited by BDO Dunwoody, LLP. Our financial statements for the years ended July 31, 2002 and 2001 were audited by Deloitte & Touche LLP.

in thousands	2005			2004			2003			2002			2001
Operating Results:
Revenue	$	392		$	627			--			--		$	1,000
Net Loss		(24,002	)	$	(18,363	)	$	(13,262	)	$	(13,693	)	$	(27,097	)
Net Loss Available to Common Stockholders		(24,002	)	$	(19,173	)	$	(14,026	)	$	(14,414	)	$	(27,097	)
Cash Dividends per share Common Stockholders		--			--			--			--			--
Loss per Common Share:
Basic and Diluted Net Loss Per Common Share		(.66	)		(.64	)		(.67	)		(.70	)		(1.44	)
Financial Positions:
Total Assets	$	13,466		$	19,012		$	22,639		$	28,161		$	42,666
Long-Term Debt	$	3,288		$	2,225		$	1,895		$	663		$	693
Convertible Debentures	$	1,315			--			--			--			--
Series A, Preferred Stock		--		$	14,310		$	13,501		$	12,736		$	12,015
Stockholder's Equity	$	6,127		$	530		$	5,857		$	12,863		$	27,307

33

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

Operations.

Corporate History

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 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., a previously 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.

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.

Business History

We are engaged primarily in the research and development of drug delivery 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.

34

Our first product is an insulin formulation that is administered as a fine spray into the oral cavity using a hand-held aerosol spray applicator. Between January 1999 and September 2000, we conducted limited clinical trials on this product in the United States, Canada and Europe. In September 2000, we entered into an agreement (the "Development and License Agreement") to develop this product with Eli Lilly and Company ("Lilly"). To date, over 1,100 patients with diabetes have been dosed with our oral insulin product at approved facilities in seven countries. We conducted several clinical trials with insulin supplied by Lilly under our Development and License Agreement. Lilly did not, however, authorize or conduct any clinical trials or provide financial support for those trials. We did receive a $1,000,000 upfront payment from Lilly. On May 23, 2003, we announced that we had agreed with Lilly to end the Development and License Agreement for the development and commercialization of buccal delivery of insulin. On November 5, 2003, we entered into a termination agreement with Lilly terminating the Development and License Agreement, effective as of June 2, 2003. In accordance with the termination agreement, we retained all of the intellectual property and commercialization rights with respect to buccal spray drug delivery technology, and we have the continuing right to develop and commercialize the product. We also entered into a Bulk Supply Agreement (the "Bulk Supply Agreement") for the sale of human insulin crystals by Lilly to us over a three-year period.

In January 2001, we established a joint venture with Elan International Services, Ltd. ("EIS"), a wholly-owned subsidiary of Elan Corporation, plc (EIS and Elan Corporation, plc being collectively referred to as "Elan"), 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, for the treatment of prostate cancer, endometriosis and/or the suppression of testosterone and estrogen. In January 2002, we and Elan agreed to expand the joint venture to encompass the buccal delivery of morphine for the treatment of pain and agreed to pursue buccal morphine as the initial pharmaceutical product for development under Generex (Bermuda) Ltd., the entity through which the joint venture was being conducted. This expansion of the joint venture occurred after we successfully completed a proof of concept clinical study of morphine delivery using our proprietary buccal delivery technology.

In connection with the joint venture, EIS purchased 1,000 shares of our Series A Preferred Stock for $12,015,000, which EIS transferred, shortly thereafter, to Elan Pharmaceuticals Investment III, an affiliate of Elan ("EPIL III"). We applied the proceeds from the sale of the Series A Preferred Stock to subscribe for an 80.1% equity ownership interest in Generex (Bermuda), Ltd. EIS paid in capital of $2,985,000 to subscribe for a 19.9% equity ownership interest in the joint venture entity. In accordance with the terms of the Series A Preferred Stock, if any shares of Series A Preferred Stock were to be outstanding on January 16, 2007, we would have been required to redeem the shares of Series A Preferred Stock at a redemption price equal to the aggregate Series A Preferred Stock liquidation preference, either in cash, or in shares of common stock with a fair market value equal to the redemption price. Alternatively, the Series A Preferred Stock could have been converted, under certain conditions, into shares of our common stock. EIS also purchased 344,116 shares of our common stock for $5,000,000. We were permitted to use the proceeds of this sale for any corporate purpose.

On December 27, 2004, we entered into an agreement (the "Termination Agreement") with Elan, whereby we and Elan agreed to terminate the joint venture through Generex (Bermuda) Ltd. Pursuant to the terms of the Termination Agreement, (i) except for a common stock purchase warrant that was issued by us to Elan, which was amended to permit Elan or any other holder thereof to transfer the warrant without our consent, the parties agreed to terminate all agreements entered into in connection with the joint venture, and (ii) Elan agreed to transfer all shares of capital stock of Generex (Bermuda) owned by it to us. Accordingly, all rights granted by each party to the other terminated, including, without limitation, Elan's right to appoint a member to our Board of Directors, all other rights granted under the terms of the joint venture terminated, each party retained its intellectual property rights, we obtained full ownership of Generex (Bermuda), and all representatives of Elan who were officers and/or directors of Generex (Bermuda) resigned.

35

In connection with negotiating the Termination Agreement, EPIL III approached us for consent to transfer the Series A Preferred Stock by way of an auction process. Although we provided our consent to the transfer, it was contingent upon EPIL III agreeing to satisfy the following conditions: (i) the auction process could conclude no later than December 15, 2004 and EPIL III's disposition of the shares could conclude no later than December 31, 2004 (the "Closing Date"), (ii) the buyer had to immediately convert the Series A Preferred Stock at the voluntary conversion price of $25.77 (calculated pursuant to the terms of the certificate of designation for the Series A Preferred Stock resulting in the issuance of 534,085 shares of common stock), (iii) EPIL III's registration rights could not be transferred, and (iv) for a period of two (2) years after the Closing Date, the purchaser of the Series A Preferred Stock could not transfer the shares of common stock issuable upon conversion thereof and we would have the right to redeem the shares of common stock at a per share price of 150% of the average closing price of the common stock on The Nasdaq SmallCap Market for the twenty (20) days immediately preceding the Closing Date. On or about December 15, 2004, EPIL III conducted the auction and received an offer to buy the shares of Series A Preferred Stock. On or about December 31, 2004, EPIL III sold the shares of Series A Preferred Stock, and the purchaser thereof immediately converted the Series A Preferred Stock into shares of our common stock.

The conversion of the Series A Preferred Stock was particularly critical because the mandatory redemption feature required us to classify the Series A Preferred Stock as approximately $14,300,000 of mezzanine equity. Upon conversion of the Series A Preferred Stock, however, we were able to reclassify the approximately $14,300,000 of mezzanine equity as common equity on our balance sheet. This, in turn, allowed us to regain compliance with NASDAQ's Marketplace Rule 4310(c)(2)(B), which requires us to have a minimum of $2,500,000 in stockholders' equity or $35,000,000 market value of listed securities or $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years.

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.

Our 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). Our 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. The immunomedicine products are in the pre-clinical stage of development, and trials in human patients are not expected for at least six months. Development efforts are underway in melanoma, breast cancer, prostate cancer, HIV, influenza virus, smallpox, SARS and Type I diabetes mellitus. We are establishing collaborations with clinical investigators at academic centers to advance the technology, with the ultimate goal of conducting human clinical testing.

With the anticipated launch of commercial sales of our oral insulin product in Ecuador in 2005, we expect to receive revenues from product sales in the fiscal year ending July 31, 2006. We do not expect this revenue to be sufficient for all of our cash needs during the year. In the past we were able to fund Antigen expenses with some revenue from research grants for Antigen's immunomedicine products. During the fiscal year ended July 31, 2005, we received a total of $392,112 in such research grants, and we have received a total of $1,019,296 in such research grants. We do not expect to receive such grants on the going forward basis. We expect to satisfy the majority of our cash needs during the current year from capital raised through equity financings.

36

Disclosure Regarding Research and Development Projects

Our major research and development projects are the refinement of our basic buccal delivery technology, our buccal insulin project and our buccal morphine product.

Both our insulin product and our morphine product are in clinical trials. During last fiscal year we did not expend resources to further our buccal morphine product. In Canada, we are in the process of finalizing submission to Canadian HPB to start Phase III trials for our insulin. In order to obtain FDA and Canadian HPB approval for any of our product candidates, we will be required to complete "Phase III" trials which involve testing our product with a large number of patients over a significant period of time. The conduct of Phase III trials will require significantly greater funds than we either have on hand or have experience in raising in any year or two years' time. We will therefore need to receive funding from a corporate collaborator, or engage in fundraising on a scale with which we have no experience.

Our insulin product, Oral-lyn™, was approved for commercial sale by drug regulatory authorities in Ecuador in early May 2005. It is our intention that our South American joint venture partner, PharmaBrand S.A., will handle the commercial launch of Oral-lyn™ in Ecuador, subject to obtaining financing needed for launch and a suitable production facility. We will require substantial amounts in additional funding to successfully launch Oral-lyn™ on a commercial basis in Ecuador.

Because of various uncertainties, we cannot predict the timing of completion and commercialization of our buccal insulin or buccal morphine products. 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. For the same reasons, we cannot predict when any products may begin to produce net cash inflows.

Most of our buccal delivery research and development activities to date have involved developing our platform technology for use with insulin and morphine. Insubstantial amounts have been expended on projects with other drugs, and those projects involved a substantial amount of platform technology development. Therefore, in the past, 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 products. During fiscal 2005, approximately 84% of our $7,750,731 in research expenses was attributable to insulin and platform technology development, and did not spend any money on morphine and fentanyl projects. As morphine and fentanyl are both narcotic painkillers, the research is related. In the same period of fiscal 2004, approximately 90% of our $8,522,984 of research and development was expended for insulin and platform technology, and approximately 1% for morphine and fentanyl.

Approximately 16% or $1,210,512 of our research and development expenses for the fiscal year ended July 31, 2005 were related to Antigen's immunomedicine products compared to approximately 11% or $937,385 for the fiscal year ended July 31, 2004. Because these products are in a very early, pre-clinical stage of development, all of the expenses were accounted for as basic research and no distinctions were made as to particular products. Because of the early stage of development, we cannot predict the timing of completion of any products arising from this technology, or when products from this technology might begin producing revenues.

37

Developments in Fiscal 2005

On August 10, 2004, we issued an aggregate 620,000 shares of our common stock and 500,000 warrants to purchase our common stock to certain consultants in exchange for financial services recognizing expense of $1,090,800 to financial services.

On August 26, 2004, Dr. Pankaj Modi resigned from his position as an officer of Generex. Also, on August 26, 2004, Dr. Modi notified us that the Consulting Agreement between Dr. Modi and us would terminate effective August 25, 2005. We do not believe that Dr. Modi's resignation or the termination of his Consulting Agreement with us has, or will, materially adversely affect us.

On October 26, 2004, we granted a total of 1,942,000 options to purchase shares of our common stock to certain employees and consultants at $0.94 per share and 150,000 options to an employee to purchase shares of our common stock at $1.10 per share. The options issued to non-employees resulted in $75,600 charge to operations.

On November 10, 2004, we entered into a Securities Purchase Agreement with four accredited investors for a private placement of 6% Secured Convertible Debentures (the “Debentures”) and warrants for an aggregate purchase price of $4,000,000. We completed this private placement on November 12, 2004. The Debentures have a term of fifteen months and amortize over thirteen months in thirteen equal monthly installments beginning on the first day of the third month following their issuance. Interest on the principal amount outstanding will accrue at a rate of six percent (6%) per annum. We may pay principal and accrued interest in cash or, at our option, in shares of our common stock. 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 lesser of (i) $0.82 and (ii) ninety percent (90%) of the average of the twenty (20) trading day volume weighted average price for the common stock for the twenty (20) trading day period immediately preceding the date of payment. At the option of the holder of each Debenture, the principal amount outstanding under each Debenture is initially convertible at any time after the closing of the private placement into shares of our common stock at a conversion price of $0.82. The conversion price of each Debenture is based on the average of the ten (10) trading day volume weighted average price for our common stock for the ten (10) trading day period immediately preceding the date definitive agreements were signed. The warrants are initially exercisable into the same number of shares of our common stock initially issuable upon conversion of the Debentures. The initial exercise price of each warrant is equal to 110% of the conversion price of the Debentures, or $0.91. The conversion price of the Debentures and the exercise price of the warrants are each subject to an anti-dilution adjustment upon the issuance by us of securities at a price per share less than the then conversion price or exercise price, as applicable. In accordance with the terms of the private placement, we were required to register for resale the shares of common stock issuable upon conversion of the Debentures and upon exercise of the warrants. On December 15, 2004, we filed a Registration Statement on Form S-3 (File No. 333-121309) in connection with this transaction. The Registration Statement became effective on January 24, 2005.

In connection with the November 12, 2004 transaction, we granted an Additional Investment Right to each investor. Pursuant to the terms of each Additional Investment Right, each investor has the right at any time prior to January 24, 2006, to purchase on the same terms and conditions as the private placement, up to the same number of Debentures and warrants purchased by such investor at the closing of the private placement. In addition, we paid to a placement agent (i) a cash fee equal to seven percent (7%) of the gross proceeds received by us and (ii) warrants exercisable into approximately 145,000 shares of our common stock at the same exercise price as the investors' warrants.

38

The aggregate number of shares of common stock issuable pursuant to the November 12, 2004 transaction exceeds 19.99% of the outstanding shares of our common stock prior to such issuance. Because the rules and regulations of The Nasdaq Stock Market prohibit, under certain circumstances, the issuance, without prior stockholder approval, of shares of common stock in excess of 19.99% of an issuer's outstanding common stock prior to such issuance, certain insiders entered into a voting agreement with the investors, whereby such insiders agreed to vote at the 2005 Annual Meeting of Stockholders all shares of our common stock held by them in favor of authorizing the issuance of an amount of shares of our common stock in excess of 19.99% of the outstanding common stock prior to consummating the transaction. As discussed above in Part I - Item 4. Submission of Matters to a Vote of Security Holders, at the 2005 Annual Meeting of Stockholders, this proposal was approved by our stockholders. We undertook this offering in reliance upon Rule 506 of Regulation D and Section 18(b)(4)(D) of the Securities Act.

On November 19, 2004, we received notice from The Nasdaq Stock Market informing us that we did not comply with Marketplace Rule 4310(c)(2)(B), which requires us to have a minimum of $2,500,000 in stockholders' equity or $35,000,000 market value of listed securities or $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years. However, upon consummation in December 2004 of the transactions contemplated by a Termination Agreement we entered into with Elan, as more fully described below, we regained compliance with Marketplace Rule 4310(c)(2)(B).

On November 24, 2004, we received notice from The Nasdaq Stock Market informing us that we did not comply 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 had 180 calendar days from the date of the notice, or until May 23, 2005, to regain compliance with the Rule. As more fully described below, because we met all initial inclusion criteria for the SmallCap Market set forth in Marketplace Rule 4310(c), except for bid price, as of May 23, 2005, we have until November 21, 2005 to regain compliance with Marketplace Rule 4310(c)(4).

On December 27, 2004, we entered into an agreement (the "Termination Agreement") with Elan, whereby we and Elan agreed to terminate the joint venture through Generex (Bermuda) Ltd. Pursuant to the terms of the Termination Agreement, (i) except for a common stock purchase warrant that was issued by us to Elan, which was amended to permit Elan or any other holder thereof to transfer the warrant without our consent, the parties agreed to terminate all agreements entered into in connection with the joint venture, and (ii) Elan agreed to transfer all shares of capital stock of Generex (Bermuda) owned by it to us. Accordingly, all rights granted by each party to the other terminated, including, without limitation, Elan's right to appoint a member to our Board of Directors, all other rights granted under the terms of the joint venture terminated, each party retained its intellectual property rights, we obtained full ownership of Generex (Bermuda), and all representatives of Elan who were officers and/or directors of Generex (Bermuda) resigned.

In connection with negotiating the Termination Agreement, EPIL III approached us for consent to transfer the Series A Preferred Stock by way of an auction process. Although we provided our consent to the transfer, it was contingent upon EPIL III agreeing to satisfy the following conditions: (i) the auction process could conclude no later than December 15, 2004 and EPIL III's disposition of the shares could conclude no later than December 31, 2004 (the "Closing Date"), (ii) the buyer had to immediately convert the Series A Preferred Stock at the voluntary conversion price of $25.77 (calculated pursuant to the terms of the certificate of designation for the Series A Preferred Stock resulting in the issuance of 534,085 shares of common stock), (iii) EPIL III's registration rights could not be transferred, and (iv) for a period of two (2) years after the Closing Date, the purchaser of the Series A Preferred Stock could not transfer the shares of common stock issuable upon conversion thereof and we would have the right to redeem the shares of common stock at a per share price of 150% of the average closing price of the common stock on The Nasdaq SmallCap Market for the twenty (20) days immediately preceding the Closing Date. On or about December 15, 2004, EPIL III conducted the auction and received an offer to buy the shares of Series A Preferred Stock. On or about December 31, 2004, EPIL III sold the shares of Series A Preferred Stock, and the purchaser thereof immediately converted the Series A Preferred Stock into shares of our common stock.

39

The conversion of the Series A Preferred Stock was particularly critical because the mandatory redemption feature required us to classify the Series A Preferred Stock as approximately $14,300,000 of mezzanine equity. Upon conversion of the Series A Preferred Stock, however, we were able to reclassify the approximately $14,300,000 of mezzanine equity as common equity on our balance sheet. This, in turn, allowed us to regain compliance with NASDAQ's Marketplace Rule 4310(c)(2)(B), which requires us to have a minimum of $2,500,000 in stockholders' equity or $35,000,000 market value of listed securities or $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years.

In February 2005, a consultant commenced an action in the Ontario Superior Court of Justice against us seeking approximately $600,000 in damages for alleged contract breaches in respect of unpaid remuneration and other compensation allegedly owed to him. We are of the view that the claims are wholly without merit and intends to defend this action vigorously. We are not able to predict the ultimate outcome of this legal proceeding at the present time or estimate an amount or range of potential loss, if any, from this legal proceeding.

We entered into a Promissory Note and Agreement with Cranshire Capital, L.P. ("Cranshire") on March 28, 2005 and entered into a Promissory Note and Agreement with Omicron Master Trust ("Omicron") on April 6, 2005 pursuant to which Cranshire and Omicron loaned us the principal amount of $500,000 and $100,000, respectively. As additional consideration for the loans from Cranshire and Omicron, we issued on April 28, 2005 a warrant to Cranshire to purchase an aggregate of 1,219,512 shares of our common stock and a warrant to Omicron to purchase an aggregate of 243,902 shares of our common stock, both of which will expire on April 27, 2010. The terms and conditions of the loans from Cranshire and Omicron, as well as the rights of Cranshire and Omicron under the warrants, are described below under the caption Financial Condition, Liquidity and Resources of this Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

On March 30, 2005, we entered into an Assistance Agreement with Eckert Seamans Cherin & Mellott, LLC, ("Eckert Seamans"), pursuant to which Eckert Seamans advanced us funds in the amount of $325,179 for the sole purpose of making the interest payment and the monthly redemption payment due on March 31, 2005 and April 1, 2005, respectively, under our 6% Secured Convertible Debentures. The terms and conditions of the Assistance Agreement with Eckert Seamans, as well as our obligations with respect to the 6% Secured Convertible Debentures, are described below under the caption Financial Condition, Liquidity and Resources of this Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

On March 31, 2005 Generex Pharmaceuticals, Inc. (“GPI”), our wholly-owned subsidiary, entered into a mortgage loan transaction pursuant to which GPI borrowed approximately $183,804 ($230,000 CND) (the “March GPI Loan”). The net proceeds to GPI after fees and disbursements were approximately $159,596 ($200,800 CND). The March GPI Loan was secured by, inter alia, a charge registered against real property owned by GPI. The loan was for a term of two years with an annual interest rate of 13.5 % calculated monthly.

40

On April 5, 2005, our Board of Directors granted stock options to purchase shares of our common stock under our 2001 Stock Option Plan, as amended, to the following officers and directors of the Company:

Anna E. Gluskin, Chairman of the Board of Directors, President and Chief Executive Officer	250,000 shares
Rose C. Perri, Chief Operating Officer, Chief Financial Officer, Treasurer Secretary and Director	250,000 shares
Mark Fletcher, Executive Vice President and General Counsel	250,000 shares
Dr. Gerald Bernstein, Vice President of Medical Affairs and Director	100,000 shares

The effective date of the grant of all of the above-mentioned options is December 13, 2004, and the exercise price is $0.61 per share, which represents the closing price of our common stock on The Nasdaq SmallCap Market on such date. All of the options became exercisable immediately upon grant and expire on December 13, 2009. The option grant to Dr. Bernstein was made pursuant to the terms of his employment agreement with us, dated April 1, 2002, in respect of contract years ending March 31, 2004 and 2005.

On April 5,2005, in recognition of Company management achievements, our Board of Directors also awarded bonuses to certain of our executive officers and directors in the form of stock options to purchase shares of our common stock under the 2001 Stock Option Plan as follows: Ms. Gluskin - 819,672 shares; Ms. Perri - 409,836 shares; and Mr. Fletcher - 327,869 shares. The exercise price for the foregoing options is $0.001 per share. All of the options became exercisable immediately upon grant and expire on April 4, 2010. Our Board of Directors also increased the annual base salaries of certain executive officers effective as of August 1, 2004. Ms. Gluskin’s annual base salary was increased from $350,000 to $425,000; Ms. Perri’s annual base salary was increased from $295,000 to $325,000; and Mr. Fletcher’s annual base salary was increased from $130,000 to $250,000. These were the first salary adjustments for Ms. Gluskin and Ms. Perri since August 1, 2002 and for Mr. Fletcher since April 1, 2003. The Board directed that the payment of any and all unpaid salary amounts to Ms. Gluskin, Ms. Perri and Mr. Fletcher as of April 4, 2005, including all unpaid amounts arising from such retroactive increases and any and all salary amounts foregone by Ms. Gluskin and Ms. Perri, be satisfied by the issuance under the 2001 Stock Option Plan of stock options to purchase shares of our common stock at the exercise price of $0.001 per share. The number of shares awarded was calculated using the closing price of our common stock on The Nasdaq SmallCap Market on April 4, 2005 ($0.56 per share). Accordingly, Ms. Gluskin, Ms. Perri and Mr. Fletcher received options to purchase 301,032, 166,916 and 142,857 shares of our common stock, respectively, in respect of such retroactive salary adjustments calculated for the period from August 1, 2004 to March 31, 2005 and salary accrued through March 31, 2005. All of the options became exercisable immediately upon grant and expire on April 4, 2010.

On April 5, 2005, our Board of Directors also awarded a cash bonus to Dr. Bernstein in the amount of $82,500 that was paid through monthly advances against potential cash bonuses pursuant to the terms of his employment agreement, dated April 1, 2002. On April 5, 2005, we and Dr. Bernstein also agreed to amend Dr. Bernstein’s employment agreement, which expired on March 31, 2005, as follows: the term was extended for three years until March 31, 2008; Dr. Bernstein’s annual base compensation was increased from $150,000 to $200,000 effective April 1, 2005; and the provision entitling Dr. Bernstein to monthly advances against cash bonuses in the amount of $2,500 was deleted as of April 1, 2005.

On April 5, 2005, our Board of Directors also awarded each of our non-employee directors, John P. Barratt, Mindy J. Allport-Settle, Brian T. McGee and Peter G. Amanatides, an option to purchase 100,000 shares of our common stock under the 2001 Stock Option Plan at an exercise price equal to the closing price of our common stock on The Nasdaq SmallCap Market as of April 4, 2005 ($0.56 per share). Each such option became exercisable immediately upon grant and will be exercisable until the fifth anniversary of the date of grant.

41

On April 12, 2005, we issued 175,316 shares of common stock resulting from the conversion of $143,500 of convertible debenture principal.

On April 27, 2005, GPI entered into a mortgage loan transaction pursuant to which GPI borrowed approximately $345,738 ($435,000 CND) (the “April GPI Loan”). The net proceeds to GPI after fees and disbursements were approximately $265,145 ($333,600 CND). The April GPI Loan was secured by, inter alia, charges registered against real property owned by GPI. The loan was for a term of one year with an annual interest rate of 16.5 % calculated monthly.

In May 2005, we issued an aggregate of 1,163,573 shares of common stock resulting from the conversion of $954,000 of convertible debenture principal and $130 of accrued interest.

On May 3, 2005, we announced that Oral-lyn™, our proprietary oral insulin spray formulation, was approved for commercial marketing and sale by the Ecuadorian Ministry of Public Health for the treatment of both Type-1 and Type-2 diabetes. Oral-lyn™ is delivered via our proprietary RapidMist™ device into the human mouth where it is absorbed with no lung deposition. We expect that our South American joint venture partner, PharmaBrand S.A., will handle the commercial launch of Oral-lyn™ in Ecuador, subject to obtaining financing needed for launch and a suitable production facility. We are continuing our efforts to secure the participation of a multi-national pharmaceutical co-marketing partner for the balance of South America.

On May 19, 2005, the March GPI Loan and the April GPI Loan were consolidated and restructured (the “Consolidated GPI Loan”). Pursuant to the revised arrangement, GPI repaid an aggregate of approximately $210,622 ($265,000 CND) (the “Consolidated GPI Loan Repayment”) in respect of the March GPI Loan and the April GPI Loan, leaving a Consolidated GPI Loan principal of approximately $317,920 ($400,000 CND). GPI paid an aggregate of approximately $28,595 in fees and disbursements in connection with the Consolidated GPI Loan. The Consolidated GPI Loan is secured by, inter alia, charges against real property owned by GPI. The loan was for a term of 1 year with an annual interest rate of 16.5 % calculated monthly.

On May 19, 2005, GPI entered into two additional mortgage loan transactions pursuant to which GPI borrowed an aggregate of approximately $643,788 ($810,000 CND) (together, the “May GPI Loans”). The net proceeds to GPI after fees and disbursements (including fees and disbursements in connection with the Consolidated GPI Loan) and the Consolidated GPI Loan Repayment were approximately $377,029 ($474,369 CND). The May GPI Loans are secured by, inter alia, charges registered against real property owned by GPI. Both loans are for a term of one year with an annual interest rate of 4.924% as to the $246,388 loan and 4.913% as to the $397,400 loan calculated semi-annually.

On May 25, 2005, we received notice from the Staff of The Nasdaq Stock Market that, during the 180 calendar day period ending May 23, 2005, we had not regained compliance 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; however, the Staff noted that on May 23, 2005, we met all initial inclusion criteria for the SmallCap Market set forth in Marketplace Rule 4310(c), except for bid price. Therefore, in accordance with Marketplace Rule 4310(c)(8)(D), we have additional 180 calendar days, or until November 21, 2005, to regain compliance with Rule 4310(c)(4). If, at any time before November 21, 2005, the bid price of our common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, we will regain compliance with the Rule. In the event that we cannot demonstrate compliance with Marketplace Rule 4310(c)(4) by November 21, 2005 and we are not eligible for an additional compliance period, the Staff will notify us that our securities will be delisted, at which time we may 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 SmallCap Market.

42

On June 7, 2005, Cranshire agreed to extend the interest payment date and the maturity date under the March 28, 2005 Promissory Note and Agreement with us from May 15, 2005 to July 22, 2005. On June 7, 2005, Omicron agreed to an identical extension of the interest payment date and the maturity date under the April 6, 2005 Promissory Note and Agreement with us. As consideration for the extensions from Cranshire and Omicron, we contemporaneously issued on a warrant to Cranshire to purchase an aggregate of 1,219,512 shares of our common stock and a warrant to Omicron to purchase an aggregate of 243,902 shares of our common stock, both of which will expire on June 7, 2010. The rights of Cranshire and Omicron under the June 7, 2005 warrants are described below under the caption Financial Condition, Liquidity and Resources of this Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

On June 16, 2005, we and each of the investors party to the November 12, 2004 private placement described above entered into Amendment No. 1 to the Securities Purchase Agreement, dated November 10, 2004, and the Registration Rights Agreement, dated November 10, 2004 (“Amendment No. 1”), pursuant to which the investors agreed to exercise of 50% of their Additional Investment Rights in the aggregate amount of $2,000,000. As of June 17, 2005, funding of the transaction occurred, and the closing conditions specified under Amendment No. 1 were satisfied. In consideration for the investors’ exercise of their Additional Investment Rights:

Ÿ we issued the investors Debentures in the aggregate amount of $2,000,000 (the “AIR Debentures”) and reduced the conversion of the AIR Debentures from $0.82 as originally agreed to $0.60; but such reduction in the conversion price of the AIR Debentures will not trigger any anti-dilution adjustments to the existing Debentures and warrants;

Ÿ we issued the investors warrants to purchase an aggregate of 2,439,024 shares of our common stock at the exercise price of $0.82 per share (the “AIR Warrants”);

Ÿ we granted each investor a further Additional Investment Right (each an “Additional AIR” and collectively, the “Additional AIRs”), pursuant to which each investor will have the right to purchase detachable units consisting of (a) additional AIR Debentures in principal amount equal to the principal amount of AIR Debentures issuable to each investor upon the AIR Exercise with a conversion price of $0.82 (the “Additional AIR Debentures”) and (b) additional AIR Warrants entitling the holder thereof to purchase a number of shares of our common stock equal to 100% of the shares of common stock issuable upon the conversion in full at a $0.82 conversion price (subject to adjustment as set forth therein) (without regard to any restrictions on conversion therein contained) of the AIR Debentures contemplated in clause (a) above, at an exercise price equal to the “AIR Warrant Exercise Price” (as such term is defined in the Additional Investment Rights) (the “Additional AIR Warrants”).

Under the terms of Amendment No. 1, we also agreed to provide registration rights with respect to the securities issuable upon conversion/exercise of the AIR Debentures, the Additional AIR Debentures and the Additional AIR Warrants consistent with the investors’ existing registration rights under the Registration Rights Agreement, dated November 10, 2004. On July 15, 2005, we filed a Registration Statement on Form S-3 (File No. 333-126624) in connection therewith. This Registration Statement was declared effective on July 29, 2005 by the Securities and Exchange Commission (the “SEC”).

43

The terms of the AIR Debentures, including the interest rate at which they will accrue, their payment terms and the material terms under which they may be accelerated and increased, are described below under the caption Financial Condition, Liquidity and Resources of this Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The AIR Warrants will be initially exercisable into an aggregate of 2,439,024 shares of our common stock, and the initial exercise price of each AIR Warrant will be equal to $0.82. The conversion price of the AIR Debentures and the exercise price of the AIR Warrants will be subject to an anti-dilution adjustment upon the issuance by us of securities at a price per share less than the then conversion price or exercise price, as applicable.

Each investor may exercise its Additional AIR at any time after the 181st day after closing and on or prior to the earlier of (i) the close of business on the one-year anniversary after the registration statement for the shares of common stock underlying the AIR Debentures and AIR Warrants has gone effective and (ii) June 17, 2007.

In addition, in connection with the transactions contemplated by Amendment No. 1, we issued to a placement agent (i) 170,732 shares of common stock in lieu of a cash fee equal to 7% of the gross proceeds received by us and (ii) warrants exercisable into approximately 60,000 shares of our common stock at the same exercise price as the AIR Warrants.

As we obtained shareholder approval at our April 5, 2005 Annual Meeting of Stockholders for the issuance of up to an aggregate of 10,000,000 shares of common stock or securities convertible into common stock for a price of not less than 70% of the market price at the time of issuance and for aggregate consideration not to exceed $50,000,000, in excess of the number of shares that NASDAQ’s Marketplace Rules 4350(i)(1)(c) and (D) permit us to issue without prior stockholder approval, no further stockholder approval was necessary in connection with the transactions contemplated by Amendment No. 1. We undertook the offer and sale of the AIR Debentures, AIR Warrants and Additional AIRs in reliance upon Rule 506 of Regulation D and Section 18(b)(4)(D) of the Securities Act.

In June 2005, we issued an aggregate of 483,594 shares of common stock resulting from the conversion of $290,000 of convertible debenture principal and $156 of accrued interest.

On July 22, 2005, Cranshire and Omicron agreed to extend the interest payment date and the maturity date under the March 28, 2005 and April 6, 2005 Promissory Note and Agreements with us from July 22, 2005 to September 20, 2005. As consideration for the extensions from Cranshire and Omicron, we contemporaneously issued on a warrant to Cranshire to purchase an aggregate of 1,219,512 shares of our common stock and a warrant to Omicron to purchase an aggregate of 243,902 shares of our common stock, both of which will expire on July 22, 2010. The rights of Cranshire and Omicron under the July 22 2005 warrants are described below under the caption Financial Condition, Liquidity and Resources of this Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In July 2005, we issued an aggregate of 153,398 shares of common stock resulting from the conversion of $92,000 of convertible debenture principal and $199 of accrued interest.

44

Developments Subsequent to Fiscal 2005

On September 8, 2005, we and each of the investors party to the November 12, 2004 private placement and Amendment No. 1 described above entered into an Amendment No. 2 to the Securities Purchase Agreement, dated November 10, 2004 as amended, and the Registration Rights Agreement, dated November 10, 2004 as amended (“Amendment No. 2”), pursuant to which the investors agreed to exercise an additional $2,000,000 in principal amount of Additional Investment Rights (the “Second AIR Exercise”). In connection with this investment:

Ÿ we issued the investors Debentures in the aggregate amount of $2,000,000 (the “AIR Debentures”) and reduced the conversion price of the AIR Debentures from $0.82 as originally agreed to $0.60; but such reduction in the conversion price of the AIR Debentures will not trigger any anti-dilution adjustments to the outstanding Debentures and Warrants;

Ÿ we issued the investors warrants to purchase an aggregate of 2,439,024 shares of the Company’s common stock at the exercise price of $0.82 per share (the “AIR Warrants”); exercisable for five years commencing six months following the issuance thereof;

Ÿ we granted each investor a further Additional Investment Right (each an “Additional AIR” and collectively, the “Additional AIRs”), pursuant to which each investor will have the right to purchase detachable units consisting of (a) additional AIR Debentures in principal amount equal to the principal amount of AIR Debentures issuable to each investor upon the Second AIR Exercise with a conversion price of $0.82 (the “Additional AIR Debentures”) and (b) additional AIR Warrants entitling the holder thereof to purchase a number of shares of our common stock equal to 100% of the shares of common stock issuable upon the conversion in full at a $0.82 conversion price (subject to adjustment as set forth therein) (without regard to any restrictions on conversion therein contained) of the Additional AIR Debentures contemplated in clause (a) above, at an exercise price equal to the “AIR Warrant Exercise Price” (as such term is defined in the Additional Investment Rights), being $0.82 (the “Additional AIR Warrants”).

Under the terms of Amendment No. 2, we agreed to register for resale the securities issuable upon conversion/exercise of the Additional AIR Debentures and the Additional AIR Warrants, as well as additional shares issuable upon conversion of the AIR Debentures due to the decrease in conversion price, consistent with the investors’ existing registration rights under the Registration Rights Agreement, dated November 10, 2004, with the exception that we would have 45 days to file the registration statement rather than 30 days.

The AIR Debentures issued in connection with Amendment No. 2 are identical to the AIR Debentures issued in connection with Amendment No. 1, except that the principal amount outstanding under each AIR Debenture, at the option of the holder, is initially convertible at any time after the closing of Amendment No. 2 into shares of our common stock at a conversion price of $0.60. The terms of the AIR Debentures issued in connection with Amendment No. 1 are described below under the caption Financial Condition, Liquidity and Resources of this Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The occurrence of an Event of Default with respect to an AIR Debenture issued in connection with Amendment No. 2 will have the same effect as an Event Default with respect to an AIR Debenture issued in connection with Amendment No. 1 as discussed below under the caption Financial Condition, Liquidity and Resources of this Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

45

The AIR Warrants issued in connection with Amendment No. 2 are initially exercisable into an aggregate of 2,439,024 shares of our common stock, and the initial exercise price of each AIR Warrant is equal to $0.82. The conversion price of the AIR Debentures and the exercise price of the AIR Warrants are each subject to an anti-dilution adjustment upon the issuance by us of securities at a price per share less than the then conversion price or exercise price, as applicable.

Each investor may exercise its Additional AIR issued in connection with Amendment No. 2 at any time on or after the 181st day after closing and on or prior to the earlier of (i) the close of business on the one-year anniversary after the registration statement for the shares of common stock underlying the AIR Debentures and AIR Warrants has gone effective and (ii) September 8, 2007.

In addition, in connection with the transactions contemplated Amendment No. 2, we issued to a placement agent (i) 170,732 shares of our common stock in lieu of a cash fee equal to 7% of the gross proceeds received by us and (ii) warrants exercisable into approximately 60,000 shares of our common stock at the same exercise price as the AIR Warrants. We are seeking to register these shares, along with the securities issuable upon conversion/exercise of the Additional AIR Debentures and the Additional AIR Warrants issued in connection with Amendment No. 2 and additional shares issuable upon conversion of the AIR Debentures due to the decrease in conversion price, for resale on a Registration Statement on Form S-3 (File No. 333-128328) filed with the SEC on September 15, 2005 and became effective on September 28, 2005.

We undertook the offer and sale of the AIR Debentures, AIR Warrants and Additional AIRs in connection with Amendment No. 2 in reliance upon Rule 506 of Regulation D and Section 18(b)(4)(D) of the Securities Act.

In September and October 2005, we issued an aggregate of 4,763,856 shares of common stock resulting from the conversion of $2,938,419 of convertible debentures principal and interest.

On September 20, 2005, we failed to pay the outstanding principal balances under the $500,000 convertible promissory note entered into with Cranshire on March 28, 2005 and the $100,000 convertible promissory note entered into with Omicron on April 6, 2005. On October 19, 2005 Cranshire converted outstanding principal and accrued interest on its note ($528,082 in total) into 664,003 shares of our common stock. On October 27, 2005 Omicron converted outstanding principal and accrued interest on its note ($105,644 in total) into 128,834 shares of our common stock. The terms and conditions of the notes are described below under the caption Financial Condition, Liquidity and Resources of this Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

On October 1, 2005, we failed to pay the first installment due under the Assistance Agreement with Eckert Seamans pursuant to which we borrowed $325,179. We are currently in negotiations with Eckert Seamans and are seeking to extend the payment dates or to pay the outstanding balance with shares of our common stock. As of October 1, 2005, all amounts due thereunder became payable on demand, and interest began accruing at the rate of 8% per annum. The total arrearage to date under the Assistance Agreement, as well as the terms and conditions of the Assistance Agreement with Eckert Seamans, are described below under the caption Financial Condition, Liquidity and Resources of this Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

In October 2005, in consideration for the exercise of certain outstanding warrants previously issued to each of Cranshire and Iroquois Capital L.P. (“Iroquois”) in connection with their purchase of our 6% Secured Convertible Debentures pursuant to the Securities Purchase Agreement dated November 10, 2004, we issued a five-year warrant to purchase 300,000 shares of our common stock at $1.20 per share to Cranshire and a five-year warrant to purchase 609,756 shares of our common stock at $1.20 per share to Iroquois. We received aggregate proceeds of $1,492,000 in connection with Cranshire’s partial exercise of its outstanding warrant to purchase 1,219,512 shares of our common stock and Iroquois’ full exercise of its outstanding warrant to purchase 1,219,512 shares of our common stock. The rights of Cranshire and Iroquois under the October 2005 warrants are described in this Annual Report on Form 10-K under the caption Financial Condition, Liquidity and Resources of Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

46

In October 2005, in consideration for the exercise of certain outstanding warrants previously issued to the holders of our 6% Secured Convertible Debentures pursuant to the Securities Purchase Agreement dated November 10, 2004, we issued to three of the holders five-year warrant to purchase an aggregate of 1,529,289 shares of our common stock at $1.25 per share. We received aggregate proceeds of approximately $2,508,000 in connection with the exercise of holder’s outstanding warrants to purchase shares of our common stock. The rights of the holders of these warrants are described in this Annual Report on Form 10-K under the caption Financial Condition, Liquidity and Resources of Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations

Year Ended July 31, 2005 Compared to Year Ended July 31, 2004

We had a net loss of $24,001,735 for the year ended July 31, 2005 (fiscal 2005) compared to a net loss of $18,362,583 in the year ended July 31, 2004 (fiscal 2004). The net loss for fiscal 2005 and 2004 excludes $0 and $810,003, respectively, in non-cash stock dividend on preferred shares. The main reason for the increase in net loss for the year is attributed to interest expense and loss on extinguishment of debt incurred in connection with convertible debentures entered during 2005 fiscal year. Our operation loss for the year decreased to $18,558,421 compared to $18,565,341 in operating loss for the fiscal year ended July 31, 2004. The decrease in our fiscal 2005 operating loss resulted from a decrease in research and development expenses (to $7,750,731 from $8,522,984), despite an increase in general and administrative expenses (to $11,199,802 from $10,669,541). Our revenue had also decreased from $627,184 in 2004 to $392,112 in the fiscal year ended July 31, 2005.

The increase in general and administrative expenses for fiscal 2005 reflects the increase in legal, audit and accounting, financial and consulting services and executive compensation. The increase in general and administrative expenses was partially offset by a decrease in level of participation in industry shows and seminars, travel associated with shows and financing activities, as well as decreased advertising and fewer payments on termination agreements.

The decrease in research and development expenses for fiscal 2005 reflects decreased level of research and development activities despite the increase in activities of Antigen. Numbers for fiscal 2004 also reflected bulk insulin purchases that were absent this year.

Our interest expense in fiscal 2005 increased to $4,300,512 compared to interest expense of $116,473 in fiscal 2004 due to interest paid in connection with convertible debentures entered into during the current fiscal year. Our interest and miscellaneous income decreased to $93,213 in 2005 compared to $245,671 l in fiscal 2004 primarily due to lower cash and short term investments balances during the current fiscal year. Our loss on extinguishment of debt, also incurred in connection with convertible debentures, was $1,346,341 in 2005 compared to $0 in fiscal 2004. We received higher income from rental operations (net of expense) of $110,326 in fiscal 2005 compared to $73,560 in fiscal 2004.

Results of Operations

Year Ended July 31, 2004 Compared to Year Ended July 31, 2003

We had a net loss of $18,362,583 for the year ended July 31, 2004 (fiscal 2004) compared to a net loss of $13,261,764 in the year ended July 31, 2003 (fiscal 2003). The net loss for fiscal 2004 and 2003 excludes $810,003 and $764,154, respectively, in non-cash stock dividend on preferred shares. The increase in our fiscal 2004 net loss resulted from an increase in research and development expenses (to $8,522,984 from $5,150,075) and an increase in general and administrative expenses (to $10,669,541 from $8,698,615).

47

The increase in research and development expenses for fiscal 2004 reflects research and development activities of Antigen, the increase in activities of regulatory consultants, bulk insulin purchases and an increase in depreciation of the patents due to additional patents acquired in the acquisition of Antigen. The increase in general and administrative expenses for fiscal 2004 reflects the increase in consulting services, increased level of participation in industry shows and seminars, travel associated with shows and financing activities, increased insurance and depreciation expenses as well as termination agreements. The increase in general and administrative expenses was partially offset by a decrease in legal and litigation expenses and a reduction in executive compensation.

Our interest and miscellaneous income (net of interest expense) in fiscal 2004 decreased to $129,198 from $565,511 in fiscal 2003 due to decreases in our cash and short-term investments and lower interest rates. We received higher income from rental operations (net of expense) of $73,560 in fiscal 2004 compared to $20,790 in fiscal 2003.

In both of the last two fiscal years, we incurred substantial expenses for financial advisory and other financing services that were not related to a specific financing and, therefore, were accounted for as general and administrative expenses. These expenses ($2,256,503 in fiscal 2004 and $2,239,431 in fiscal 2003) were paid partially through the issuance of common stock and/or warrants and options to purchase common stock.

Financial Condition, Liquidity and Resources

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

At July 31, 2005, we had cash and short-term investments of approximately $586,530. At July 31, 2004, our cash and short term investments were approximately $5,000,000. The decrease was attributable to the use of cash for ongoing operations. At July 31, 2005, we believed that our anticipated cash position was sufficient to meet our working capital needs for the next three months based on the pace of our planned development activities. Beyond that, we will likely require additional funds to support our working capital requirements or for other purposes. From time to time as deemed appropriate by management, we may seek to raise funds through private or public equity financing or from other sources. 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.

We entered into a Securities Purchase Agreement dated November 10, 2004 (the “Securities Purchase Agreement”) and issued 6% Secured Convertible Debentures (the “Debentures”) and related warrants on November 12, 2004 in connection with a private placement for an aggregate purchase price of $4,000,000. The Debentures have a term of fifteen months and amortize over thirteen months in thirteen equal monthly installments beginning on February 1, 2005. Interest on the principal amount outstanding will accrue at a rate of six percent per annum. We may pay principal and accrued interest in cash or, at our option, in shares of common stock. 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 lesser of (i) $0.82 and (ii) ninety percent (90%) of the average of the twenty (20) trading day volume weighted average price for the common stock for the twenty (20) trading day period immediately preceding the date of payment. At the option of the holder of each Debenture, the principal amount outstanding under each Debenture is initially convertible at any time after the closing of the private placement into shares of our common stock at a conversion price of $0.82. The conversion price of each Debenture is based on the average of the ten trading day volume weighted average price for the common stock for the ten trading day period immediately preceding the date definitive agreements for purchase of the Debentures were signed. The warrants are initially exercisable into the same number of shares of the common stock initially issuable upon conversion of the Debentures. The initial exercise price of each warrant is equal to 110% of the conversion price of the Debentures, or $0.91. The conversion price of the Debentures and the exercise price of the warrants are each subject to an anti-dilution adjustment upon the issuance by us of securities at a price per share less than the then conversion price or exercise price, as applicable.

48

In connection with the issuance of the Debentures, we granted an Additional Investment Right to holders of the Debentures. Pursuant to the terms of each Additional Investment Right, each holder has the right at any time prior to January 24, 2006, to purchase on the same terms and conditions as the private placement, up to the same number of Debentures and warrants purchased by such holder at the closing of the private placement. We also issued to a placement agent a warrant exercisable into approximately 145,000 shares of common stock at the same exercise price as the warrants issued to the holders of the Debentures.

The aggregate number of shares of common stock issuable pursuant to the November 2004 private placement of Debentures and related warrants exceeded 19.99% of the outstanding shares of our common stock prior to such issuance. Because the rules and regulations of The Nasdaq Stock Market prohibit, under certain circumstances, the issuance, without prior stockholder approval, of shares of common stock in excess of 19.99% of an issuer's outstanding common stock prior to such issuance, certain insiders entered into a voting agreement with the holders of the Debentures, whereby such insiders agreed to vote at the next meeting of the Company’s stockholders all shares of common stock held by them in favor of authorizing the issuance of an amount of shares of common stock in excess of 19.99% of the outstanding common stock prior to consummating the private placement. The issuance of such shares was approved by our stockholders at the Annual Meeting of Stockholders held on April 5, 2005 as described above in Part I - Item 4. Submission of Matters to a Vote of Security Holders.

We entered into a Promissory Note and Agreement with Cranshire Capital, L.P. ("Cranshire") on March 28, 2005 and entered into a Promissory Note and Agreement with Omicron Master Trust ("Omicron") on April 6, 2005 pursuant to which Cranshire and Omicron loaned us the principal amount of $500,000 and $100,000, respectively (the "Notes"). The outstanding principal balance under the Notes and any accrued but unpaid interest thereon was due and payable on May 15, 2005 to the extent that Cranshire and Omicron had not exercised their respective conversion rights under the Notes as described below. The Notes are subordinate to our obligations under the Debentures. We were obligated to use a portion of the proceeds received from Cranshire to pay two of the holders (not including Cranshire or Omicron) of the Debentures the full amount of the March 1, 2005 monthly amortization payments due under the Debentures.

On April 28, 2005, as additional consideration for the loans from Cranshire and Omicron, we issued Cranshire a warrant to purchase an aggregate of 1,219,512 shares of our common stock and issued Omicron a warrant to purchase an aggregate of 243,902 shares of our common stock, both of which will expire on April 27, 2010. At the holders’ option, the outstanding principal balance under the Notes, together with any accrued but unpaid interest thereon, and the April 28, 2005 warrants are convertible or exercisable into shares of common stock at the conversion/exercise price of $0.82 per share. Cranshire and Omicron have agreed that they will neither convert the Notes nor exercise the April 28, 2005 warrants if such conversion or exercise would cause Cranshire and Omicron, together with their respective affiliates, to beneficially own more than 9.99% of the shares of common stock then outstanding. We have registered the shares of common stock issued upon conversion of the Notes and exercise of the April 28, 2005 warrants for resale on the Registration Statement on Form S-3 (File No. 333-126624) that became effective on July 29, 2005.

49

Cranshire's and Omicron’s right to convert the Notes is subject to certain participation rights of Iroquois Capital, L.P. and Smithfield Fiduciary, LLC, which, together with Cranshire and Omicron, are the holders of the Debentures issued pursuant to the Securities Purchase Agreement. The Securities Purchase Agreement is discussed in, and filed as an exhibit to, our Current Report on Form 8-K, filed November 12, 2004. The participation rights granted to the holders of the Debentures under the Securities Purchase Agreement provide that, upon any financing by us or any of our subsidiaries of common stock or debt or securities convertible or exercisable into common stock, each such holder will have the right to purchase up to 100% of such financing. To our knowledge, none of the other holders of Debentures elected to exercise their participation rights with respect to the Notes.

We did not pay the outstanding principal balances originally due on May 15, 2005 under the Notes. Interest on the outstanding principal balances under the Notes began accruing before the maturity date at the rate of 10% per annum. On June 7, 2005, Cranshire and Omicron agreed to extend the interest payment date and the maturity date of each of the Notes from May 15, 2005 to July 22, 2005. In consideration for the foregoing extension, we contemporaneously issued Cranshire a warrant to purchase an aggregate of 1,219,512 shares of our common stock and issued Omicron a warrant to purchase an aggregate of 243,902 shares of our common stock, both of which will expire on June 7, 2010. At the holder’s option, each of the June 7, 2005 warrants will be exercisable into shares of our common stock at the exercise price of $0.82 per share. Each of Cranshire and Omicron has agreed that it will not exercise its June 7, 2005 warrant if such exercise would cause it, together with its affiliates, to beneficially own more than 9.99% of the shares of our common stock then outstanding. We registered the shares of common stock issuable upon exercise of the Amendment Warrants on the Registration Statement on Form S-3 (File No. 333-126624) that became effective on July 29, 2005.

On July 22, 2005, Cranshire and Omicron agreed to extend the interest payment date and the maturity date under the Notes from July 22, 2005 to September 20, 2005. As consideration for the extensions from Cranshire and Omicron, we contemporaneously issued on a warrant to Cranshire to purchase an aggregate of 1,219,512 shares of our common stock and a warrant to Omicron to purchase an aggregate of 243,902 shares of our common stock, both of which will expire on July 22, 2010. At the holder’s option, each of the July 22, 2005 warrants will be exercisable into shares of our common stock at the exercise price of $0.82 per share. Each of Cranshire and Omicron has agreed that it will not exercise its July 22, 2005 warrant if such exercise would cause it, together with its affiliates, to beneficially own more than 9.99% of the shares of our common stock then outstanding.

On September 20, 2005, we failed to pay the outstanding principal balances under the Notes. On October 19, 2005 Cranshire converted outstanding principal and accrued interest on its Note ($528,082 in total) into 664,003 shares of our common stock. On October 27, 2005 Omicron converted outstanding principal and accrued interest on its Note ($105,644 in total) into 128,834 shares of common stock.

On March 30, 2005, we entered into an Assistance Agreement with Eckert Seamans Cherin & Mellott, LLC, ("Eckert Seamans"), pursuant to which Eckert Seamans advanced us funds in the amount of $325,179 for the sole purpose of making the interest payment and the monthly redemption payment due on March 31, 2005 and April 1, 2005, respectively, under the Debentures (the "Assistance Agreement"). In connection with this transaction, we executed a release in favor of Eckert Seamans. Eckert Seamans has represented us in various transactions and matters since 1998 and represented us with respect to the Securities Purchase Agreement and certain other transactions relating to the Debentures but did not represent us with respect to the Assistance Agreement or the release executed in connection therewith.

50

Under the terms of the Assistance Agreement, we agreed to repay such advance without interest in three equal installments due on October 1, 2005, November 1, 2005 and December 1, 2005. On October 1, 2005, we failed to pay the first installment of $108,393 due under the Assistance Agreement. As of such date, all amounts owed to Eckert Seamans became payable on demand, and interest on such unpaid amounts began accruing at the rate of 8% per annum. Attached financial statements reflect interest accrual on this advance as of July 31, 2005. We are currently in negotiations with Eckert Seamans and are seeking to extend the payment dates or to pay the outstanding balance with shares of our common stock. The total arrearage to date under the Assistance Agreement is approximately $15,000.

On June 16, 2005, we and each of the investors party to the November 12, 2004 private placement described above entered into Amendment No. 1 to the Securities Purchase Agreement and the Registration Rights Agreement, dated November 10, 2004 (“Amendment No. 1”), pursuant to which the investors agreed to exercise of 50% of their Additional Investment Rights in the aggregate amount of $2,000,000. As of June 17, 2005, funding of the transaction occurred, and the closing conditions specified under Amendment No. 1 were satisfied. In consideration for the investors’ exercise of their Additional Investment Rights:

Ÿ we issued the investors Debentures in the aggregate amount of $2,000,000 (the “AIR Debentures”) and reduced the conversion of the AIR Debentures from $0.82 as originally agreed to $0.60; but such reduction in the conversion price of the AIR Debentures will not trigger any anti-dilution adjustments to the existing Debentures and warrants;

Ÿ we issued the investors warrants to purchase an aggregate of 2,439,024 shares of our common stock at the exercise price of $0.82 per share (the “AIR Warrants”);

Ÿ we granted each investor a further Additional Investment Right (each an “Additional AIR” and collectively, the “Additional AIRs”), pursuant to which each investor will have the right to purchase detachable units consisting of (a) additional AIR Debentures in principal amount equal to the principal amount of AIR Debentures issuable to each investor upon the AIR Exercise with a conversion price of $0.82 (the “Additional AIR Debentures”) and (b) additional AIR Warrants entitling the holder thereof to purchase a number of shares of our common stock equal to 100% of the shares of common stock issuable upon the conversion in full at a $0.82 conversion price (subject to adjustment as set forth therein) (without regard to any restrictions on conversion therein contained) of the AIR Debentures contemplated in clause (a) above, at an exercise price equal to the “AIR Warrant Exercise Price” (as such term is defined in the Additional Investment Rights) (the “Additional AIR Warrants”).

The AIR Debentures have a term of fifteen months and amortize over thirteen months in thirteen equal monthly installments beginning on the first day of the third month following their issuance. Interest on the principal amount outstanding will accrue at a rate of 6% per annum. We may pay principal and accrued interest in cash or, at our option, in shares of common stock. 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 lesser of (i) $0.60 and (ii) ninety percent (90%) of the average of the twenty trading day volume weighted average price for the common stock for the twenty trading day period immediately preceding the date of payment. At the option of the holder of each AIR Debenture, the principal amount outstanding under each AIR Debenture will be initially convertible at any time after the closing of Amendment No. 1 into shares of our common stock at a conversion price of $0.60.

51

Upon the occurrence of an “Event of Default,” including a default in payment of principal or interest (including late fees) which is not cured within three trading days, the full principal amount of each AIR Debenture, together with interest and other amounts owing in respect thereof, to the date of acceleration will become, at the holder’s election, due and payable in cash. The aggregate amount payable upon an Event of Default shall be equal to the “Mandatory Prepayment Amount.” The Mandatory Prepayment Amount for any AIR Debentures shall equal the sum of (i) the greater of: (A) 130% of the principal amount of AIR Debentures to be prepaid, plus all accrued and unpaid interest thereon, or (B) the principal amount of AIR Debentures to be prepaid, plus all other accrued and unpaid interest thereof, divided by the conversion price on (x) the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is paid in full, whichever is less, multiplied by the daily volume weighted average price of the common stock on (x) the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is paid in full, whichever is greater, and (ii) all other amounts, costs, expenses and liquidated damages due in respect of such AIR Debentures. The interest rate on the AIR Debentures will accrue at the rate of 18% per annum, or such lower maximum amount of interest permitted to be charged under applicable law, beginning five days after the occurrence of any Event of Default that results in the acceleration of the AIR Debentures. A late fee of 18% per annum, or such lower maximum amount of interest permitted to be charged under applicable law, will accrue on a daily basis on all overdue accrued and unpaid interest under the AIR Debentures from the due date to the date of payment.

The AIR Warrants are initially exercisable into an aggregate of 2,439,024 shares of our common stock, and the initial exercise price of each AIR Warrant is equal to $0.82. The conversion price of the AIR Debentures and the exercise price of the AIR Warrants are subject to an anti-dilution adjustment upon the issuance by us of securities at a price per share less than the then conversion price or exercise price, as applicable.

Each investor may exercise its Additional AIR at any time after the 181st day after closing and on or prior to the earlier of (i) the close of business on the one-year anniversary after the registration statement for the shares of common stock underlying the AIR Debentures and AIR Warrants has gone effective and (ii) June 17, 2007.

In addition, in connection with the transactions contemplated by Amendment No. 1, we issued to a placement agent (i) 170,732 shares of common stock in lieu of a cash fee equal to 7% of the gross proceeds received by us and (ii) warrants exercisable into approximately 60,000 shares of our common stock at the same exercise price as the AIR Warrants.

As we obtained shareholder approval at our April 5, 2005 Annual Meeting of Stockholders for the issuance of up to an aggregate of 10,000,000 shares of common stock or securities convertible into common stock for a price of not less than 70% of the market price at the time of issuance and for aggregate consideration not to exceed $50,000,000, in excess of the number of shares that NASDAQ’s Marketplace Rules 4350(i)(1)(c) and (D) permit us to issue without prior stockholder approval, no further stockholder approval was necessary in connection with the transactions contemplated by Amendment No. 1.

On September 8, 2005, we and each of the investors party to the November 12, 2004 private placement and Amendment No. 1 described above entered into an Amendment No. 2 to the Securities Purchase Agreement, as amended, and the Registration Rights Agreement, dated November 10, 2004 as amended (“Amendment No. 2”), pursuant to which the investors agreed to exercise an additional $2,000,000 in principal amount of Additional Investment Rights (the “Second AIR Exercise”). In connection with the Second AIR Investment:

Ÿ we issued the investors Debentures in the aggregate amount of $2,000,000 (the “AIR Debentures”) and reduced the conversion price of the AIR Debentures from $0.82 as originally agreed to $0.60; but such reduction in the conversion price of the AIR Debentures will not trigger any anti-dilution adjustments to the outstanding Debentures and Warrants;

52

Ÿ we issued the investors warrants to purchase an aggregate of 2,439,024 shares of the Company’s common stock at the exercise price of $0.82 per share (the “AIR Warrants”); exercisable for five years commencing six months following the issuance thereof;

Ÿ we granted each investor a further Additional Investment Right (each an “Additional AIR” and collectively, the “Additional AIRs”), pursuant to which each investor will have the right to purchase detachable units consisting of (a) additional AIR Debentures in principal amount equal to the principal amount of AIR Debentures issuable to each investor upon the Second AIR Exercise with a conversion price of $0.82 (the “Additional AIR Debentures”) and (b) additional AIR Warrants entitling the holder thereof to purchase a number of shares of our common stock equal to 100% of the shares of common stock issuable upon the conversion in full at a $0.82 conversion price (subject to adjustment as set forth therein) (without regard to any restrictions on conversion therein contained) of the Additional AIR Debentures contemplated in clause (a) above, at an exercise price equal to the “AIR Warrant Exercise Price” (as such term is defined in the Additional Investment Rights), being $0.82 (the “Additional AIR Warrants”).

The AIR Debentures issued in connection with Amendment No. 2 are identical to the AIR Debentures issued in connection with Amendment No. 1 as described above, except that the principal amount outstanding under each AIR Debenture, at the option of the holder, is initially convertible at any time after the closing of Amendment No. 2 into shares of our common stock at a conversion price of $0.60. The occurrence of an Event of Default with respect to an AIR Debenture issued in connection with Amendment No. 2 will have the same effect as an Event Default with respect to an AIR Debenture issued in connection with Amendment No. 1 as discussed above.

The AIR Warrants issued in connection with Amendment No. 2 are initially exercisable into an aggregate of 2,439,024 shares of our common stock, and the initial exercise price of each AIR Warrant is equal to $0.82. The conversion price of the AIR Debentures and the exercise price of the AIR Warrants are each subject to an anti-dilution adjustment upon the issuance by us of securities at a price per share less than the then conversion price or exercise price, as applicable.

Each investor may exercise its Additional AIR issued in connection with Amendment No. 2 at any time on or after the 181st day after closing and on or prior to the earlier of (i) the close of business on the one-year anniversary after the registration statement for the shares of common stock underlying the AIR Debentures and AIR Warrants has gone effective and (ii) September 8, 2007.

In addition, in connection with the transactions contemplated Amendment No. 2, we issued to a placement agent (i) 170,732 shares of our common stock in lieu of a cash fee equal to 7% of the gross proceeds received by us and (ii) warrants exercisable into approximately 60,000 shares of our common stock at the same exercise price as the AIR Warrants.

In October 2005, in consideration for the exercise of certain outstanding warrants previously issued to each of Cranshire and Iroquois Capital L.P. (“Iroquois”) in connection with their purchase of our Debentures pursuant to the Securities Purchase Agreement, we issued a five-year warrant to pur  chase 300,000 shares of our common stock to Cranshire and a five-year warrant to purchase 609,756 shares of our common stock to Iroquois. We received aggregate proceeds of $1,492,000 in connection with Cranshire’s partial exercise of its outstanding warrant to purchase 1,219,512 shares of our common stock and Iroquois’ full exercise of its outstanding warrant to purchase 1,219,512 shares of our common stock. At the holder’s option, each of the October 2005 warrants is exercisable into shares of common stock at the exercise price of $1.20 per share. The exercise price is subject to an anti-dilution adjustment upon the issuance by us of securities at a price per share less than the then exercise price. If, at any time after the first anniversary of the date of issuance of the October 2005 warrants, there is no effective registration statement registering for resale the shares of common stock into which the warrants are exercisable, each holder may exercise its warrant through a cashless exercise. The number of shares to be issued upon a cashless exercise will be equal to the quotient resulting from the following calculation: [(the VWAP on the trading day immediately preceding the date of such election less the exercise price, as adjusted) multiplied by the number of shares issuable upon exercise of the warrant by means of a cash exercise] divided by the VWAP on the trading day immediately preceding the date of such election. Each holder has agreed that it will not exercise its October 2005 warrant if such exercise would cause the holder, together with its respective affiliates, to beneficially own more than 4.99% of our shares of common stock then outstanding.

53

In October 2005, in consideration for the exercise of certain outstanding warrants previously issued pursuant to the Securities Purchase Agreement, we issued to Cranshire, Omicron and Smithfield Fuduciary LLC five-year warrants to purchase an aggregate of 1,529,289 shares of our common stock at $1.25 per share. We received aggregate proceeds of approximately $2,508,000 in connection with their exercise of outstanding warrants to purchase shares of our common stock. At the holder’s option, each of the October 2005 warrants is exercisable into shares of common stock at the exercise price of $1.25 per share. The exercise price is subject to an anti-dilution adjustment upon the issuance by us of securities at a price per share less than the then exercise price. If, at any time after the first anniversary of the date of issuance of the October 2005 warrants, there is no effective registration statement registering for resale the shares of common stock into which the warrants are exercisable, each holder may exercise its warrant through a cashless exercise. The number of shares to be issued upon a cashless exercise will be equal to the quotient resulting from the following calculation: [(the VWAP on the trading day immediately preceding the date of such election less the exercise price, as adjusted) multiplied by the number of shares issuable upon exercise of the warrant by means of a cash exercise] divided by the VWAP on the trading day immediately preceding the date of such election. Each holder has agreed that it will not exercise its October 2005 warrant if such exercise would cause the holder, together with its respective affiliates, to beneficially own more than 4.99% of our shares of common stock then outstanding.

In the past, we have funded most of our development and other costs with equity financing. While we have been able to raise equity capital as required, unforeseen problems with our clinical program or materially negative developments in general economic conditions could interfere with our ability to raise additional equity capital as needed, or materially adversely affect the terms upon which such capital is available.

Going Concern Uncertainty

In their audit opinion issued in connection with our consolidated balance sheets as of July 31, 2005 and our consolidated statements of operation, stockholder’s equity and cash flows for the year then ended and for the period from November 2, 1995 (date of inception) to July 31, 2005, our auditors have expressed substantial doubt about our ability to continue as a going concern given our recurring net losses, negative cash flows from operations and working capital deficiency.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. We have experienced negative cash flows from operations since inception and had an accumulated deficit at July 31, 2005 of approximately $120 million. We have funded our activities to date almost exclusively from debt and equity financings.

54

We are in the development stage and have realized minimal revenues to date. We will continue to require substantial funds to continue research and development, including preclinical studies and clinical trials of its product candidates, and to commence sales and marketing efforts, if the FDA or other regulatory approvals are obtained. Management’s plans in order to meet our operating cash flow requirements include financing activities such as private placement of our common stock, preferred stock offerings, debt and convertible debt instruments. Management is also actively pursuing industry collaboration activities including product licensing and specific project financing.

While we believe that we will be successful in obtaining the necessary financing to fund our operations, there are no assurances that such additional funding will be achieved and that we will succeed in our future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue in existence.

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:

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.

55

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 the Company does not have any non-consolidated special purpose entities.

Contractual 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	6,730,755	5,994,915	735,840	0	0
Capital Lease Obligations	0	0	0	0	0
Operating Lease Obligations	78,241	40,586	29,047	8,608	0
Purchase Obligations	0	0	0	0	0
Other Long-Term Liabilities Reflected on the Registrant's Balance Sheet under GAAP	0	0	0	0	0
Total	$6,808,996	$6,035,501	$764,887	$8,608	$0

Related Party Transactions

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.

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 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 Anna Gluskin, our Chairman, President and Chief Executive Officer, 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.

56

We utilize a management company to manage all of our real properties. The property management company is owned by Rose Perri, our Chief Operating Officer, Chief Financial Officer, Treasurer and Secretary, Anna Gluskin and the estate of Mark Perri, our former Chairman of the Board. In the fiscal years ended July 31, 2005 and 2004 we paid the management company approximately $44,024 and $40,180, respectively, in management fees.

New Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R “Share Based Payment.” This statement is a revision to SFAS 123 and supersedes Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and amends FASB Statement No. 95, “Statement of Cash Flows”. This statement requires a public entity to expense the cost of employee services received in exchange for an award of equity instruments using the fair-value-based method. This statement also provides guidance on valuing and expensing these awards, as well as disclosure requirements of these equity arrangements. This statement is effective for the next fiscal year that begins after June 15, 2005.

SFAS 123R permits public companies to choose between the following two adoption methods:

Ÿ A “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123R for all share-based payments granted after the effective date and (b) based on the requirements of Statement 123 for all awards granted to employees prior to the effective date of SFAS 123R that remain unvested on the effective date; or

Ÿ A “modified retrospective” method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under SFAS 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim periods of the year of adoption.

As permitted by SFAS 123, we currently account for share-based payments to employees using APB Opinion 25’s intrinsic value method and, as such, we generally recognize no compensation cost for employee stock options. The impact of the adoption of SFAS 123R cannot be predicted at this time because it will be depend on levels of share-based payments granted in the future. However, valuation of employee stock options under SFAS 123R is similar to SFAS 123, with minor exceptions. The impact on the results of operations and earnings per share had we adopted SFAS 123, is described in the stock-based compensation section of Note 2 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. Accordingly, the adoption of SFAS 123R’s fair value method will have a significant impact on our results of operations, although it will have no impact on our overall financial position. SFAS 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption. Due to timing of the release of SFAS 123R, we have not yet completed the analysis of the ultimate impact that this new pronouncement will have on our results of operations, nor the method of adoption for this new standard.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets - an amendment of APB Opinion No. 29." The statement addresses the measurement of exchanges of nonmonetary assets and eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. We are currently evaluating the impact of adopting this statement.

57

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections.” This statement replaces APB No. 20 and SFAS No. 3 and changes the requirements for the accounting for and reporting of a change in accounting principle. APB No. 20 previously required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the accounting principle. SFAS No. 154 requires retrospective application to prior periods’ financial statements of voluntary changes in accounting principle. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We are currently evaluating the impact of adopting this statement.

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

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

At the present time, we maintain our cash in short-term government or government guaranteed instruments, short-term commercial paper, 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, 2005, we have fixed rate debt totaling $3,307,362. This amount consists of the following:

Loan Amount	Interest Rate per Annum
$790,337	5.8%
$407,790	4.913%
$252,830	4.924%
$612,524	6.85%
$327,040	8.5%
$197,353	10%
$408,800	11.5%
$310,688	16.5%
$3,307,362	Total

These debt instruments mature from October 2005 through August 2006. 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.

58

Item 8.Financial Statements and Supplementary Data.

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	PAGE
Report of Independent Registered Public Accounting Firm	60
Consolidated Balance Sheets
July 31, 2005 and 2004	61
Consolidated Statements of Operations
For the Years Ended July 31, 2005, 2004 and 2003
and Cumulative From Inception to July 31, 2005	62
Consolidated Statements of Changes in Stockholders’ Equity
For the Period November 2, 1995 (Date of Inception)
to July 31, 2005	63-72
Consolidated Statements of Cash Flows
For the Years Ended July 31, 2005, 2004 and 2003
and Cumulative From Inception to July 31, 2005	73
Notes to Consolidated Financial Statements	74-102

59

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Generex Biotechnology Corporation

(A Development Stage Company)

We have audited the accompanying consolidated balance sheets of Generex Biotechnology Corporation (a development stage company) as of July 31, 2005 and 2004 and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended July 31, 2005 and for the period from November 2, 1995 (date of inception) to July 31, 2005. We have also audited the Schedule II. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Generex Biotechnology Corporation (a development stage company) at July 31, 2005 and 2004 and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2005 and for the period from November 2, 1995 (date of inception) to July 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

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

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

/s/ BDO Dunwoody LLP

Toronto, Ontario

September 30, 2005

60

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

	July 31,			July 31,
	2005			2004
ASSETS
Current Assets
Cash and cash equivalents	$	586,530		$	4,950,419
Restricted cash		204,734			206,421
Other current assets		165,586			870,934
Deferred debt issuance costs		337,798			--
Total Current Assets		1,294,648			6,027,774
Property and Equipment, Net		3,976,742			4,291,622
Assets Held for Investment, Net		2,371,749			2,250,506
Patents, Net		5,443,094			5,696,905
Deposits		--			395,889
Due From Related Party		379,612			349,294
TOTAL ASSETS	$	13,465,845		$	19,011,990
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilites
Accounts payable and accrued expenses	$	2,410,846		$	1,947,399
Short-term advance		325,179			--
Current maturities of long-term debt		2,571,530			1,366,122
Convertible Debentures, Net of Debt Discount of $2,108,459 and
$-0- at July 31, 2005 and 2004, respectively		1,314,926			--
Total Current Liabilities		6,622,481			3,313,521
Long-Term Debt, Net		716,361			858,661
Commitments and Contingencies
1,000,000 shares, stated at redemption value,
-0- and 1,191 shares issued and outstanding
at July 31, 2005 and 2004, respectively		--			14,310,057
Stockholders’ Equity
Special Voting Rights Preferred stock, $.001 par value;
authorized, issued and outstanding 1,000 shares at
July 31, 2005 and 2004		1			1
Common stock, $.001 par value; authorized 150,000,000 shares at
July 31, 2005 and 2004; 41,933,898 and 34,262,448 shares issued
and outstanding		41,935			34,264
Additional paid-in capital		126,044,326			97,110,291
Notes receivable - common stock		--			(384,803	)
Deficit accumulated during the development stage		(120,528,108	)		(96,526,373	)
Accumulated other comprehensive income		568,849			296,371
Total Stockholders’ Equity		6,127,003			529,751
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	13,465,845		$	19,011,990

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

61

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

										Cumulative From
										November 2, 1995
	For the Years Ended									(Date of Inception)
	July 31,									to July 31,
	2005			2004			2003			2005
Revenues	$	392,112		$	627,184		$	--		$	2,019,296
Operating Expenses:
Research and development		7,750,731			8,522,984			5,150,075			54,918,445
Research and development - related party		--			--			--			220,218
General and administrative		11,199,802			10,669,541			8,698,615			65,451,114
General and administrative - related party		--			--			--			314,328
Total Operating Expenses		18,950,533			19,192,525			13,848,690			120,904,105
Operating Loss		(18,558,421	)		(18,565,341	)		(13,848,690	)		(118,884,809	)
Other Income (Expense):
Miscellaneous income (expense)		70,345			(3,593	)		94,376			195,693
Income from Rental Operations, net		110,326			73,560			20,790			204,676
Interest income		22,868			249,264			543,336			3,394,480
Interest expense		(4,300,512	)		(116,473	)		(72,201	)		(4,834,935	)
Loss on extinguishment of debt		(1,346,341	)		--			--			(1,346,341	)
Net Loss Before Undernoted		(24,001,735	)		(18,362,583	)		(13,262,389	)		(121,271,236	)
Minority Interest Share of Loss		--			--			625			3,038,185
Net Loss		(24,001,735	)		(18,362,583	)		(13,261,764	)		(118,233,051	)
Preferred Stock Dividend		--			810,003			764,154			2,295,057
Net Loss Available to Common Shareholders	$	(24,001,735	)	$	(19,172,586	)	$	(14,025,918	)	$	(120,528,108	)
Basic and Diluted Net Loss Per Common Share	$	(.66	)	$	(.64	)	$	(.67	)
Weighted Average Number of Shares of
Common Stock Outstanding		36,537,318			30,167,535			20,885,164

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, 2005

																		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.

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, 2005

																		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.

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, 2005

																		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.

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, 2005

																					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.

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, 2005

																					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.

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, 2005

																			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.

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, 2005

																				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.

69

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, 2005

																					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.

70

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, 2005

																							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.

71

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, 2005

																					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.

72

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

										Cumulative From
										November 2, 1995
	For the Years Ended									(Date of Inception)
	July 31,									to July 31,
	2005			2004			2003			2005
Cash Flows From Operating Activities:
Net loss	$	(24,001,735	)	$	(18,362,583	)	$	(13,261,764	)	$	(118,233,051	)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization		1,103,948			1,014,572			589,836			3,581,180
Minority interest share of loss		--			--			(625	)		(3,038,185	)
Reduction of notes receivable - common stock in exchange
for services rendered		--			--			--			423,882
Write-off of uncollectible notes receivable - common stock		391,103			--						391,103
Write-off of deferred offering costs		--			--			--			3,406,196
Write-off of abandoned patents		66,952			--			9,134			76,086
Loss on extinguishment of debt		1,346,341			--			--			1,346,341
Common stock issued for services rendered		1,131,452			1,359,973			153,675			4,786,264
Non-cash compensation expense		--			45,390			--			45,390
Stock options and warrants issued for services rendered		547,755			178,433			1,159,910			6,833,873
Preferred stock issued for services rendered		--			--			--			100
Treasury stock redeemed for non-performance of services		(138,000	)		--			--			(138,000	)
Amortization of deferred debt issuance costs and loan origination fees		248,107			--			--			248,107
Amortization of discount on convertible debentures		3,734,811			--			--			3,734,811
Common stock issued as interest payment on convertible debentures		76,996									76,996
Founders’ shares transferred for services rendered		--			--			--			353,506
Fees in connection with short-term refinancing of long-term debt		105,300			--			--			105,300
Changes in operating assets and liabilities (excluding the effects of acquisition):
Miscellaneous receivables		--			--			13,192			43,812
Other current assets		731,656			(538,795	)		(78,886	)		(112,241	)
Accounts payable and accrued expenses		3,255,169			421,052			(553,606	)		5,874,417
Other, net		--			--			--			110,317
Net Cash Used in Operating Activities		(11,400,145	)		(15,881,958	)		(11,969,134	)		(90,083,796	)
Cash Flows From Investing Activities:
Purchase of property and equipment		(63,735	)		(646,383	)		(506,108	)		(4,292,716	)
Costs incurred for patents		(193,429	)		(285,350	)		(108,576	)		(1,494,986	)
Change in restricted cash		19,333			(7,246	)		(177,488	)		(170,996	)
Proceeds from maturity of short term investments		--			7,000,854			20,570,283			126,687,046
Purchases of short-term investments		--			(4,638,783	)		(10,069,597	)		(126,687,046	)
Cash received in conjunction with merger		--			82,232			--			82,232
Advances to Antigen Express, Inc.		--			(32,000	)		--			(32,000	)
Increase in officers’ loans receivable		--			--			(12,073	)		(1,126,157	)
Change in deposits		395,889			(395,889	)		107,755			(477,194	)
Change in notes receivable - common stock		(6,300	)		(24,805	)		(23,113	)		(91,103	)
Change in due from related parties		--			32,807			--			(2,222,390	)
Other, net		--			--			--			89,683
Net Cash Provided by (Used in) Investing Activities		151,758			1,085,437			9,781,083			(9,735,627	)
Cash Flows From Financing Activities:
Proceeds from short-term advance		325,179			--			--			325,179
Proceeds from issuance of long-term debt		815,832			161,167			--			1,970,148
Repayment of long-term debt		(98,447	)		(73,140	)		(60,004	)		(1,206,938	)
Change in due to related parties		--			--			--			154,541
Proceeds from exercise of warrants		--			--			2,296,502			4,552,984
Proceeds from exercise of stock options		--			126,640			111,300			1,010,440
Proceeds from minority interest investment		--			--			625			3,038,185
Proceeds from issuance of preferred stock		--			--			--			12,015,000
Proceeds from issuance of convertible debentures, net		6,299,930			--			--			6,299,930
Repayments of convertible debentures		(461,358	)		--			--			(461,358	)
Purchase of treasury stock		--			--			(88,338	)		(483,869	)
Proceeds from issuance of common stock, net		--			7,154,739			4,129,682			73,283,715
Purchase and retirement of common stock		--			--			--			(119,066	)
Net Cash Provided by (Used in) Financing Activities		6,881,136			7,369,406			6,389,767			100,378,891
Effect of Exchange Rates on Cash		3,362			20,956			23,399			27,062
Net Increase (Decrease) in Cash and Cash Equivalents		(4,363,889	)		(7,406,159	)		4,225,115			586,530
Cash and Cash Equivalents, Beginning of Period		4,950,419			12,356,578			8,131,463			--
Cash and Cash Equivalents, End of Period	$	586,530		$	4,950,419		$	12,356,578		$	586,530

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

73

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Organization and Business:

Generex Biotechnology Corporation (the Company) is 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.

The Company’s subsidiary, Antigen Express, Inc. (Antigen), is engaged in research and development of technologies and immunomedicines for the treatment of malignant, infectious, autoimmune and allergic diseases.  The Company’s immunomedicine products work by stimulating the immune system to either attack offending agents (i.e., cancer cells, bacteria, and viruses) or to stop attacking benign elements (i.e., self proteins and allergens). The immunomedicine products are based on two platform technologies that were discovered by an executive officer of Antigen, the Ii-Key hybrid peptides and Ii-Suppression. These technologies are expected to greatly boost immune cell responses which diagnose and treat the ailments and conditions.

During the year ended July 31, 2005, the Company acquired the minority interest in Generex (Bermuda), Ltd., making it a wholly-owned subsidiary of the Company (see Note 20).

The Company is a development stage company, which has a limited history of operations and has not generated any revenues from operations prior to the acquisition of Antigen (see Note 3) with the exception of the $1 million received in conjunction with the execution of a development agreement. Subsequent to the acquisition of Antigen, the Company has grant revenue from government agencies related to Antigen’s operations. During the year ended July 31, 2005, the Company received $50,000 in conjunction with the execution of a licensing agreement (see Note 10). The Company has no products approved for commercial sale at the present time with the exception of its oral insulin formulation which was approved for commercial sale in Ecuador in early May 2005. The Company’s products candidates are in 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.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has experienced negative cash flows from operations since inception and had an accumulated deficit at July 31, 2005 of approximately $120 million. The Company has funded its activities to date almost exclusively from debt and equity financings.

The Company will continue to require substantial funds to continue research and development, including preclinical studies and clinical trials of its product candidates, and to commence sales and marketing efforts, if the FDA or other regulatory approvals are obtained.  Management’s plans in order to meet its operating cash flow requirements include financing activities such as private placement of its common stock, preferred stock offerings, debt and convertible debt instruments.  Management is also actively pursuing industry collaboration activities including product licensing and specific project financing. 

While the Company believes that it will be successful in obtaining the necessary financing to fund its operations, there are no assurances that such additional funding will be achieved and that it will succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should the Company be unable to continue in existence.

74

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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. All significant intercompany transactions and balances have been eliminated.

Development Stage Corporation

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

Cash and Cash Equivalents

The Company considersall highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Property and Equipment

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

Property Held for Investment

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

Patents

Legal costs incurred to establish patents are capitalized. Capitalized costs are amortized on the straight-line method over the related patent term. As patents are abandoned, the net book value of the patent is written off.

Impairment or Disposal of Long-Lived Assets

The Company assesses the impairment of patents under SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” whenever events or changes in circumstances indicate that the carrying value may not be recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and fair value.

Convertible Debentures

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

75

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Summary of Significant Accounting Policies (Continued):

Convertible Debentures (Continued)

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

Revenue is derived principally from grants provided by government agencies. The Company recognizes revenue from restricted grants in the period which the Company has incurred the expenditures in compliance with the specific restrictions.

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 not continuing obligations to the other party.

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 has elected to continue to account for its stock compensation plans under the recognition and measurement principles of Accounting Principles Board Opinion (APB) No. 25, "Accounting for Stock Issued to Employees" and related interpretations. Under APB 25, no compensation cost is generally recognized for fixed stock options in which the exercise price is greater than or equal to the market price on the grant date. In connection with the termination of certain employees, the company repriced 1,240,000 options. The repriced options are accounted for under variable accounting and compensation cost is recognized for the difference between the exercise price and the market price of the common shares until such options are exercised, expired or forfeited. During the years ended July 31, 2005, 2004 and 2003, the Company recognized $-0-, $45,390 and $-0- of compensation expense in connection with these options, respectively.

76

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Summary of Significant Accounting Policies (Continued):

Stock-Based Compensation (Continued)

The following table illustrates the effect on net loss and loss per share as if the Company had applied the fair value recognition provisions of SFAS No. 123.

	For the Years Ended July 31
	2005			2004			2003
Net Loss Available to Common
Stockholders, as Reported	$	(24,001,735	)	$	(19,172,586	)	$	(14,025,918	)
Add: Total Stock-Based Employee
Compensation Expense Included
In Reported Net Loss		--			(45,930	)		--
Deduct: Total Stock-Based Employee
Compensation Expense Determined
Under Fair Value Based Method		2,199,300			1,786,920			3,335,731
Pro Forma Net Loss Available
to Common Stockholders	$	(26,201,035	)	$	(20,913,576	)	$	(17,361,649	)
Loss Per Share:
Basic and diluted, as reported	$	(0.66	)	$	(0.64	)	$	(0.67	)
Basic and diluted, pro forma	$	(0.72	)	$	(0.69	)	$	(0.83	)

In the event the Company utilizes equity instruments to acquire goods or services in share-based payment transactions, the fair value of the equity instrument is recorded in the statement of operations, in the underlying expense, and stockholders’ equity.

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 17 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 generally accepted accounting principles 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.

77

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Summary of Significant Accounting Policies (Continued):

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 miscellaneous receivables, accounts payable and accrued expenses approximate their fair values due to their short-term nature. Due from related party approximates its fair value as it is due on demand and long-term debt approximates its fair value based upon the borrowing rates available for the nature of the underlying debt.

The Company follows the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This statement requires companies to record derivatives on the balance sheet as assets or liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting.

Effects of Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R “Share Based Payment.” This statement is a revision to SFAS 123 and supersedes Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and amends FASB Statement No. 95, “Statement of Cash Flows”. This statement requires a public entity to expense the cost of employee services received in exchange for an award of equity instruments using the fair-value-based method. This statement also provides guidance on valuing and expensing these awards, as well as disclosure requirements of these equity arrangements. This statement is effective as of the beginning of the interim reporting period or the annual reporting period that begins after June 15, 2005.

1.   A “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123R for all share-based payments granted after the effective date and (b) based on the requirements of Statement 123 for all awards granted to employees prior to the effective date of SFAS 123R that remain unvested on the effective date, or

2.   A “modified retrospective” method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under SFAS 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim periods of the year of adoption.

78

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Summary of Significant Accounting Policies (Continued):

Effects of Recent Accounting Pronouncements (Continued)

As permitted by SFAS 123, the Company currently accounts for share-based payments to employees using APB Opinion 25’s intrinsic value method and, as such, the Company generally recognizes no compensation cost for employee stock options. The impact of the adoption of SFAS 123R cannot be predicted at this time because it will be depend on levels of share-based payments granted in the future. However, valuation of employee stock options under SFAS 123R is similar to SFAS 123, with minor exceptions. The impact on the results of operations and earnings per share had the Company adopted SFAS 123, is previously described in the stock based compensation section of this Note. Accordingly, the adoption of SFAS 123R’s fair value method will have a significant impact on the Company’s results of operations, although it will have no impact on the Company’s overall financial position. SFAS 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption. Due to timing of the release of SFAS 123R, the Company has not yet completed the analysis of the ultimate impact that this new pronouncement will have on the results of operations, nor the method of adoption for this new standard.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets - an amendment of APB Opinion No. 29." The statement addresses the measurement of exchanges of nonmonetary assets and eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not expect that the adoption of SFAS No. 153 will have a significant impact on the Company’s consolidated financial position or results of operations.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections.” This statement replaces APB No. 20 and SFAS No. 3 and changes the requirements for the accounting for and reporting of a change in accounting principle. APB No. 20 previously required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the accounting principle. SFAS No. 154 requires retrospective application to prior periods’ financial statements of voluntary changes in accounting principle. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not expect that the adoption of SFAS No. 154 will have a significant impact on the consolidated results of operations or financial position of the Company.

Note 3 - Acquisitions:

On August 8, 2003, the Company acquired all of the outstanding capital stock of Antigen Express, Inc. pursuant to an Agreement and Plan of Merger (“Merger Agreement”) and Antigen became a wholly-owned subsidiary of the Company.

Antigen's facilities and headquarters are located in Worcester, Massachusetts. Antigen is engaged in research and development efforts focused on the development of immunomedicines for the treatment of malignant, infectious, autoimmune and allergic diseases.

79

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 - Acquisitions (Continued):

The acquisition of Antigen brought two additional platform technologies to the Company. The immunomedicines based on these technologies allow for specific modulation of the immune system to allow for activation and re-activation against cancer and infectious agents and de-activation in the case of if allergy and autoimmune disease. The delivery technologies currently possessed by the Company, when used with Antigen’s active immunotherapies may provide for breakthrough therapeutics.

The Merger Agreement provided that each holder of Antigen common stock and each holder of each of the four outstanding series of Antigen preferred stock received shares of the Company’s common stock, par value $0.001 per share, for each share of Antigen common stock or preferred stock held by such holder. The Merger Agreement established exchange rates for the conversion of Antigen common and the various series of preferred stock into the Company’s common stock. An aggregate of 2,779,974 shares of the Company’s common stock was issued to the former Antigen stockholders in connection with the Merger. These shares were valued based upon the average trading price as quoted on the NASDAQ for the five days prior and subsequent to the announcement of the acquisition for a total of $4,645,059 or $1.6709 per share. In addition, pursuant to the Merger Agreement, the Company assumed Antigen common stock purchase options. The option holders received 105,000 shares of the Company’s common stock.

In conjunction with this acquisition, the Company recorded approximately $4,878,012 of intangible assets, consisting of granted patents and pending patent applications, which are being amortized on a straight-line basis over their estimated useful lives which range from ten to twenty years. The following table summarizes the fair value of the assets acquired and liabilities assumed in the acquisition:

Current assets	$	100,558
Property and equipment		10,026
Patents		4,878,012
Total assets acquired	$	4,988,596
Current liabilities		191,187
Net assets acquired	$	4,797,409

The results of operations of Antigen have been included in the consolidated financial statements since the date of acquisition.

The following unaudited pro forma financial information assumes that the acquisition consummated in 2003 had occurred as of the beginning of each period:

	July 31,
	2004			2003
Total Revenue	$	627,184		$	584,475
Net Loss Available to Common Stockholders	$	19,172,586		$	14,286,258
Basic and Diluted Net Loss per Common Share	$	(0.64	)	$	(0.60	)

80

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - Property and Equipment:

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

		July 31,
		2005		2004
Land	$	367,478	$	338,129
Buildings and Improvements		2,325,813		2,140,055
Furniture and Fixtures		87,524		83,957
Office Equipment		141,209		125,289
Lab Equipment		3,763,869		3,576,570
Total Property and Equipment		6,685,893		6,264,000
Less Accumulated Depreciation		2,709,151		1,972,378
Property and Equipment, Net	$	3,976,742	$	4,291,622

Depreciation expense amounted to $631,134, $575,709 and $474,764 for the years ended July 31, 2005, 2004 and 2003, respectively.

Note 5 - Property Held for Investment, Net:

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

	July 31,
	2005		2004
Assets Held For Investment	$	2,581,703	$	2,375,507
Less: Accumulated Depreciation		209,954		125,001
Assets Held For Investment, Net	$	2,371,749	$	2,250,506

Depreciation expense amounted to $73,077, $59,715 and $57,877 for the years ended July 31, 2005, 2004 and 2003, 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 $315,514, $237,040 and $252,416 of rental income and $205,188, $163,480 and $231,626 of rental expenses, including interest charges of $75,531, $49,693 and $77,033, for the years ended July 31, 2005, 2004 and 2003, respectively.

Note 6 - Patents:

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

	July 31,
	2005		2004
Patents	$	6,338,104	$	6,199,402
Less: Accumulated Amortization		895,010		502,497
Patents, Net	$	5,443,094	$	5,696,905
Weighted Average Life		15.1 years		16.4 years

Amortization expense amounted to $399,737, $377,719 and $57,195 for the years ended July 31, 2005, 2004 and 2003, respectively. Amortization expense is expected to be approximately $400,000 per year for the years ended July 31, 2006, 2007, 2008, 2009 and 2010. During the year ended July 31, 2005, the Company wrote off approximately $67,000 of patents to general and administrative expenses.

81

82

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - 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 $20,937,976 and $15,357,321 for the years ended July 31, 2005 and 2004, respectively. Pretax losses arising from foreign operations (Canada and Bermuda) were $3,063,759 and $3,815,265 for the years ended July 31, 2005 and 2004, respectively. As of July 31, 2005, the Company has net operating loss carryforwards in Generex Biotechnology Corporation of approximately $68,554,295, which expire in 2014 through 2025, and in Generex Pharmaceuticals Inc. of approximately $26,801,162, which expire in 2007 through 2012. These loss carryforwards are subject to limitation in future years should certain ownership changes occur.

For the years ended July 31, 2005, 2004 and 2003, 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,
	2005			2004
Deferred Tax Assets:
Net operating loss carry forwards	$	32,989,041		$	27,417,561
Other timing difference		3,567,485			1,769,094
Total Deferred Tax Assets		36,556,526			29,186,655
Valuation Allowance		(34,950,200	)		(27,443,257	)
Deferred Tax Liabilities
Intangible assets		(1,449,881	)		(1,552,501	)
Other timing difference		(156,445	)		(190,897	)
Total Deferred Tax Liabilities		(1,606,326	)		(1,743,398	)
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, 2005, 2004 and 2003 is as follows:

	2005			2004			2003
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		--			1.6			1.4
Foreign taxes booked at different rates		--			--			.7
Nondeductible items		3.0			1.8			1.9
Other		--			--			.7
Change in valuation allowance		31.0			30.6			29.3
Effective tax rate		--	%		--	%		--	%

83

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 - Accounts Payable and Accrued Expenses:

Accounts payable and accrued expenses consist of the following:

	July 31,
	2005		2004
Accounts Payable	$	999,726	$	1,173,609
Accrued Legal and Settlements		599,461		252,537
Termination Agreements and Severance Pay		265,720		411,452
Audit and Accounting		274,627		100,000
Executive Compensation		271,312		9,801
Total	$	2,410,846	$	1,947,399

Note 9 - Short-Term Advance:

On March 30, 2005, the Company entered into an agreement with an affiliated party to provide the Company with approximately $325,000 in funding. The funds were designated to assist the Company in satisfying its obligations under the terms of the November convertible debenture agreements. The Company is obligated to repay the advance, without interest, in three equal installments on October 1, 2005, November 1, 2005 and December 1, 2005. Upon failure to repay any installment when due, all amounts become payable on demand and interest on such unpaid amounts will accrue interest at the rate of 8 percent per annum. As of July 31, 2005, the Company has accrued approximately $9,000 in interest expense on the outstanding advance.

Note 10 - Commitments and Contingent Liabilities:

Consulting Services

The Company’s Consulting Agreement with its Vice President of Research and Development (the V.P.), as amended and supplemented, continues through July 31, 2010, subject to termination without cause by the V.P. or the Company at any time after January 31, 2003 upon 12 months prior written notice. The Consulting Agreement provides for an annual base compensation of $250,000 per year (starting August 1, 2000), subject to annual increases. In addition, the Consulting Agreement provides for certain bonus compensation to be paid to the V.P. for achievement of certain milestones under the Company’s development agreements with pharmaceutical companies. During the 2001 fiscal year, the Company paid the V.P. $300,000 for his involvement in securing a development agreement for a specific product with a pharmaceutical company. The Consulting Agreement also provides for the V.P. to be granted options to purchase 150,000 shares of common stock in each of the next 10 fiscal years, starting with the 2001 fiscal year. The options must be granted under option plans approved by the Company’s stockholders.

In connection with amending and supplementing the Consulting Agreement in January 1998, the Company issued 1,000 shares of Special Voting Rights Preferred Stock to the V.P. See Note 15 for description of Special Voting Rights Preferred Stock.

On August 26, 2004, the Vice President of Research and Development resigned from his position as an officer of the Company. The V.P. also gave notice to the Company that the Consulting Agreement between the V.P. and the Company will terminate effective August 25, 2005.

84

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 - Commitments and Contingent Liabilities (Continued):

Leases

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

Aggregate minimum annual lease commitments of the Company under non-cancelable operating leases as of July 31, 2005 are as follows:

Year	Amount
2006	$	40,586
2007		21,669
2008		7,378
2009		7,378
2010		1,230
Thereafter		--
Total Minimum Lease Payments	$	78,241

Lease expense amounted to $37,400, $40,239 and $42,504 for the years ended July 31, 2005, 2004 and 2003, 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 leases a portion of the floor that it owns in an office building located in Toronto, Canada, as well as two commercial buildings. The following represents the approximate minimum amount of sublease income under current lease agreements to be received in years ending after July 31, 2005:

Year	Amount
2006	$	134,644
2007		121,429
2008		79,990
2009		33,033
Thereafter		--
Total	$	369,096

Property Held for Investment

The Company leases 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, 2005:

Year	Amount
2006	$	183,961
2007		158,595
2008		102,108
2009		29,469
Thereafter		--
Total	$	474,133

85

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 - Commitments and Contingent Liabilities (Continued):

Supply Agreements

The Company has a supply agreement with Valois, S.A. and Valois of America, Inc. (collectively Valois), to supply the Company with certain products developed and manufactured by Valois. Pursuant to the agreement, the Company shall pay milestone payments to Valois within 30 days of July 19 beginning in fiscal 2001 for the next five years. These milestone payments are based on exceeding certain specified levels of product purchases. If the milestone obligations are not met after a five-year period, the Company may elect to pay Valois an annual payment of $50,000 until the milestone obligation is met in order to maintain exclusive rights under the agreement. In the event the Company chooses to end the agreement after the fifth anniversary, the Company shall pay Valois a one-time payment of $350,000. There were no milestone payments required by the agreement in the years ended July 31, 2005, 2004 and 2003.

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 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.

On November 5, 2003, the Company entered into a Bulk Supply Agreement with a pharmaceutical company for the sale of human insulin crystals to the Company over a three year period. The Bulk Supply Agreement established purchase prices, minimum purchase requirements, maximum amounts which may be purchased in each year and a non-refundable prepayment of $1,500,000 to be applied against amounts due for purchases. The prepayment was expensed as purchases were made. As of July 31, 2005 and 2004, $-0- and $495,000, respectively, is included in other current assets.

Pending Litigation

On October 2, 1998, Sands Brothers & Co. Ltd., a New York City-based investment banking and brokerage firm, initiated an arbitration against the Company under New York Stock Exchange rules. Sands alleged that it had the right to receive, for nominal consideration, approximately 1.5 million shares of the Company’s common stock. Sands based its claim upon an October 1997 letter agreement that was purported by Sands to confirm an agreement appointing Sands as the exclusive financial advisor to Generex Pharmaceuticals, Inc., a subsidiary of the Company that was acquired in late 1997. In exchange, the letter agreement purported to grant Sands the right to acquire 17 percent of Generex Pharmaceuticals’ common stock for nominal consideration. Sands claimed that its right to receive shares of Generex Pharmaceuticals’ common stock applies to the Company’s common stock since outstanding shares of Generex Pharmaceuticals’ common stock were converted into shares of the Company’s common stock in the acquisition. Sands' claims also included additional shares allegedly due as a fee related to that acquisition, and $144,000 in monthly fees allegedly due under the terms of the purported agreement.

86

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 - Commitments and Contingent Liabilities (Continued):

Pending Litigation (Continued)

Pursuant to an arbitration award dated September 22, 1999, the arbitration panel that heard this case awarded Sands $14,070 and issued a declaratory judgment requiring the Company to issue to Sands a warrant to purchase 1,530,020 shares of the Company’s common stock pursuant to and in accordance with the terms of the purported October 1997 letter agreement. On October 13, 1999, Sands commenced a special proceeding to confirm the arbitration award in the Supreme Court of the State of New York, County of New York (the “New York Supreme Court”). On November 10, 1999, the Company moved to vacate the arbitration award. On March 20, 2000, the New York Supreme Court granted Sands’ petition to confirm the award and denied the Company’s motion to vacate the award. The Company appealed and on January 23, 2001, the New York State Appellate Division, First Department (the “Appellate Division”), modified the judgment of the New York Supreme Court that had confirmed the arbitration award against the Company. The Appellate Division affirmed the portion of the New York Supreme Court judgment that had confirmed the granting of monetary relief of $14,070 to Sands but modified the judgment to vacate the portion of the arbitration award directing the issuance to Sands of a warrant to purchase 1,530,020 shares of the Company’s common stock. The Appellate Division held that the portion of the award directing the Company to issue warrants to Sands is too indefinite to be enforceable and remanded the matter to the arbitration panel for a final and definite award with respect to such relief or its equivalent (including possibly an award of monetary damages). The arbitration panel commenced hearings on the matters remanded by the Appellate Division in June 2001. On November 7, 2001, the arbitration panel issued an award again requiring the Company to issue to Sands a warrant to purchase 1,530,020 shares of the Company’s common stock purportedly pursuant to and in accordance with the terms of the October 1997 letter agreement. Thereafter, Sands submitted a motion to the New York Supreme Court to modify and confirm the arbitration panel’s award while the Company filed a motion with the court to vacate the arbitration award. On February 25, 2002, the New York Supreme Court vacated the arbitration panel’s award. The Supreme Court concluded that the arbitration panel had “disregarded the plain meaning” of the directive given by the Appellate Division in the Appellate Division’s January 23, 2001 decision that remanded the matter of the warrant for reconsideration by the panel. The Supreme Court found that the arbitration panel’s award “lacks a rational basis”. The Supreme Court also remanded the matter to the New York Stock Exchange on the issue of whether the arbitration panel should be disqualified. Sands has appealed the February 25, 2002 order of the Supreme Court to the Appellate Division. The Company fileda cross-appeal on issues relating to the disqualification of the arbitration panel.

On October 29, 2002, the Appellate Division issued a decision and order unanimously modifying the lower court's order by remanding the issue of damages to a new panel of arbitrators and otherwise affirming the lower court's order. The Appellate Division's decision and order limits the issue of damages before the new panel of arbitrators to reliance damages which is not to include an award of lost profits. Reliance damages are out-of-pocket damages incurred by Sands. The Appellate Division stated that the lower court properly determined that the arbitration award, which had granted Sands warrants for 1,530,020 shares of the registrant's stock, was incorrect.

On March 18, 2003, the Appellate Division of the Supreme Court of New York denied a motion by Sands for re-argument of the October 29, 2002 decision, or, in the alternative, for leave to appeal to the Court of Appeals. A new arbitration took place in early June 2004.

87

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 - Commitments and Contingent Liabilities (Continued):

Pending Litigation (Continued)

On August 17, 2004, the Arbitration Panel of the New York Stock Exchange issued a final award in the case of Sands vs. the Company, awarding Sands $150,000 in reliance damages.  A motion to confirm this award has been filed by Sands and was granted on February 1, 2005.  In September 2005 Sands filed a motion seeking leave from the New York Court of Appeals to appeal to the prior orders of the Appellate Division vacating the prior Arbitration Panel’s warrant award. As such, the award may be subject to further legal proceedings. The Company has accrued $150,000 and it is included in the balance sheet under the caption accounts payable and accrued expenses.

In February 2001, a former business associate of the former Vice President of Research and Development (VP), and an entity called Centrum Technologies Inc. (“CTI”) commenced an action in the Ontario Superior Court of Justice against the Company and the VP seeking, among other things, damages for alleged breaches of contract and tortious acts related to a business relationship between this former associate and the VP that ceased in July 1996. The plaintiffs’ statement of claim also seeks to enjoin the use, if any, by the Company of three patents allegedly owned by the company called CTI. On July 20, 2001, the Company filed a preliminary motion to dismiss the action of CTI as a nonexistent entity or, alternatively, to stay such action on the grounds of want of authority of such entity to commence the action. The plaintiffs brought a cross motion to amend the statement of claim to substitute Centrum Biotechnologies, Inc. (“CBI”) for CTI. CBI is a corporation of which 50 percent of the shares are owned by the former business associate and the remaining 50 percent are owned by the Company. Consequently, the shareholders of CBI are in a deadlock. The court granted the Company’s motion to dismiss the action of CTI and denied the plaintiffs’ cross motion without prejudice to the former business associate to seek leave to bring a derivative action in the name of or on behalf of CBI. The former business associate subsequently filed an application with the Ontario Superior Court of Justice for an order granting him leave to file an action in the name of and on behalf of CBI against the VP and the Company. The Company has opposed the application which is now pending before the Court. 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.

In February 2005, a consultant commenced an action in the Ontario Superior Court of Justice against the Company seeking approximately $600,000 in damages for alleged contract breaches in respect of unpaid remuneration and other compensation allegedly owed to him. The Company is of the view that the claims are wholly without merit and intends to defend this action vigorously. The Company is not able to predict the ultimate outcome of this legal proceeding at the present time or 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.

88

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 - Commitments and Contingent Liabilities (Continued):

Employment Agreements

On March 17, 2003, the Company entered into an employment agreement for an initial term of five years, whereby the Company is required to pay an annual base salary and bonus of $130,000 to the employee. In the event the agreement is terminated within the initial five-year term, 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.

On August 6, 2003, in conjunction with the Antigen acquisition, (see Note 3) the Company entered into at will employment agreements with five Antigen employees requiring the Company to pay an annual aggregate salary of $621,500 to the five 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. On November 19, 2003, the Company terminated an employment agreement with one of these individuals. Subsequent to the termination, the Company is required to pay an annual aggregate salary of $456,500 to the remaining four employees.

On April 5, 2005, the Company agreed to extend an employment agreement, which expired March 31, 2005, whereby, the Company is required to pay an annual base salary of $200,000, effective April 1, 2005. In the event the agreement is terminated within the three-year term, by reason other than cause, death, voluntary retirement or disability, the Company is required to pay the employee the remaining amounts of base compensation, for the lesser of twelve months or the remainder of the term of this agreement, as well as any other compensation earned by the employee that payment was deferred.

License Agreements

On June 15, 2005 the Company entered into a five-year product licensing and distribution agreement with MedGen Corp.(MedGen) for assistance in the application to the Lebanese Ministry of Public Health seeking approval for the commercial sale of Oral-lyn™. The agreement also sets forth terms including product registration, manufacturing marketing and promotion, selling price and payment and minimum purchase obligations.

In conjunction with the execution of this license agreement, MedGen is obligated to pay the Company a license fee of $500,000, to be received as follows: (i) non-refundable $50,000 fee payable upon execution of the agreement, (ii) $200,000 on or before July 25, 2005 (which was subsequently postponed until November 2005), and (iii) $250,000 on or before the date of certain milestones as stated in the agreement. During the fiscal year end July 31, 2005 the Company received $50,000 under this agreement, which is included in miscellaneous income as all necessary requirements have been satisfied.

Termination Agreements

On March 9, 2004, the Company entered into a Memorandum of Agreement as a result of the termination of one of its employees whereby the Company has committed to pay approximately $432,000 ($575,000 Canadian dollars), the unpaid portion of $265,720 ($325,000 Canadian dollars) is included in accounts payable and accrued expenses at July 31, 2005, and issue options to purchase 450,000 shares of common stock at an exercise price of $1.47.

89

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 - Commitments and Contingent Liabilities (Continued):

Termination Agreements (Continued)

On December 17, 2004, the Company and Elan International Services, Ltd. (EIS) agreed to terminate their joint venture through Generex (Bermuda) Ltd. EIS has agreed to transfer all shares of capital stock or Generex (Bermuda) owned by it to the Company. (See Note 20)

Note 11 - Related Party Transactions:

The amount due from a related party at July 31, exclusive of the officers’ loans receivable, is as follows:

	EBI, Inc.
Beginning Balance, August 1, 2003	$	362,779
Payment Made During 2004		(32,807	)
Effect of Foreign Currency Translation Adjustments		19,322
Ending Balance, July 31, 2004		349,294
Effect of Foreign Current Transaction Adjustment		30,318
Ending Balance, July 31, 2005	$	379,612

This amount, which is due from EBI, Inc., is non-interest bearing, unsecured and has no fixed terms of repayment. EBI, Inc. is a shareholder of the Company and is controlled by the estate of the Company’s former Chairman of the Board.

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

	For the Years Ended July 31,
	2005		2004		2003
Interest Income	$	15,854	$	19,012	$	12,207

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

During the years ended July 31, 2005 and 2004, the Company’s three senior officers, and during the year ended July 31, 2003, the Company’s four senior officers, who are also shareholders of the Company, were compensated indirectly by the Company through management services contracts between the Company and management firms of which they are owners. The amounts paid to these management firms amounted to $183,319, $927,523, and $1,319,238 for the years ended July 31, 2005, 2004 and 2003, respectively.

See Note 10 for a discussion of the consulting agreement with the Company’s Vice President of Research and Development.

The Company utilizes a management company to manage all of its real properties. The property management company is owned by two of the Company’s senior officers and the estate of the Company’s former Chairman of the Board. For the years ended July 31, 2005, 2004 and 2003, the Company has paid the management company $44,024, $40,180 and $33,237, respectively, in management fees.

90

 GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12 - Long-Term Debt:

Long-term debt consists of the following:

		July 31,
		2005		2004
Mortgage payable - interest at 4.924 percent per annum, monthly principal and interest payments of $1,655, final payment due June 2006, secured by real property located at 98 Stafford Drive, Brampton, ON	$	252,830	$	--
Mortgage payable - interest at 16.5 percent per annum, monthly principal payments of $8,176 plus interest, final payment due May 2006, secured by real property located at Brampton and Mississauga, ON		310,688		--
Mortgage payable - interest at 4.913 percent per annum, monthly principal and interest payments of $2,667, final payment due June 2006, secured by real property located at 1740 Sismet Road, Mississauga, ON		407,790		--
Mortgage payable - interest at 6.85 percent per annum, monthly payments of principal and interest of $4,678, final payment due May 2006, secured by first mortgage over real property located at 17 Carlaw Avenue and 33 Harbour Square, Toronto, Canada		612,524		573,184
Mortgage payable - interest at 10 percent per annum, monthly payments of principal and interest of $2,140, final payment due October 2005, secured by real property located at 11 Carlaw Avenue, Toronto, Canada		197,353		187,127
Mortgage payable - interest at 8.5 percent per annum, monthly payments of interest only of $2,316, principal payment due August 2006, secured by real property located at 11 Carlaw Avenue, Toronto, Canada		327,040		300,920
Demand Term Loan payable - interest at 5.8 percent per annum, monthly principal and interest payments of $5,451, final payment due November 2005, secured by real property located at 11 Carlaw Avenue, Toronto, Canada and restricted cash of $204,734		790,337		787,402
Mortgage payable - interest at 11.5 percent per annum, monthly interest payments of $3,428, principal due August 1, 2006, secured by secondary rights to real property located at 11 Carlaw Avenue, Toronto, Canada		408,800		376,150
Total Debt		3,307,362		2,224,783
Less Loan Origination Fees, Net		19,471		--
Total Debt, Net of Loan Origination Fees	$	3,287,891	$	2,224,783

91

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12 - Long-Term Debt (Continued):

	July 31,
	2005		2004
Total Debt, Net of Loan Origination Fees	$	3,287,891	$	2,224,783
Less Current Maturities of Long-Term Debt, Net of
Loan Origination Fees of $19,471 and $-0-, respectively		2,552,059		1,366,122
Total Long-Term Debt	$	735,832	$	858,661

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

Year	Amount
2006	$	2,571,530
2007		735,832
Thereafter		--
Total	$	3,307,362

Note 13 - Convertible Debentures:

$4 Million Convertible Debenture

On November 8, 2004, the Company entered into four definitive agreements with accredited investors, pursuant to which the Company would issue four $1,000,000 convertible promissory notes (“convertible debentures”) for aggregate gross proceeds of $4,000,000. The notes carry a 6% coupon and a 15 month term and amortize in 13 equal monthly installments commencing in the third month of the term. The convertible debentures are convertible into registered common stock of the Company at $0.82 per share. The principal and interest payments are payable in cash or, at the Company's option, in registered stock valued at a 10% discount to the average of the 20-day VWAP at as the payment date, subject to certain restrictions. The transaction terms include 100% five-year warrant coverage at a per share exercise price equal to a 10% premium to the 10-day VWAP on the closing date and a 100% additional investment right exercisable for up to twelve months following the effective date of the registration statement in respect of the transaction.

During December 2004, the Company issued the aforementioned convertible debentures. Proceeds related to the issuance, net of issuance costs of $389,970, amounted to $3,699,930. Included in the issuance costs were warrants issued to a third party to purchase 145,000 shares of common stock at $0.91 per share. The fair value of the warrant was determined to be $89,900 using the Black Scholes pricing model assuming a risk-free rate of 1.79 percent, an expected volatility of 1.0463 and a five year life. The fair value of the warrant, which has been allocated to additional paid in capital, and together with the $300,070 of issuance costs is being amortized over the life of the debt as a deferred debt issuance cost. As of July 31, 2005 $233,982 has been amortized as expense and the remaining $155,988 is included in deferred debt issuance costs.

92

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13 - Convertible Debentures (Continued):

$4 Million Convertible Debenture (Continued)

The holders of the convertible debentures also received warrants to purchase 4,878,048 of common stock at $0.91 per share. 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 in the amount of $1,722,222 to additional paid-in capital and a discount against the convertible debenture. The Company valued the warrants in accordance with EITF 00-27 using the Black-Scholes pricing model assuming a risk-free rate of 1.79 percent, an expected volatility of 1.0463 and a five year life. 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.

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 the value attributable to the beneficial conversion feature, valued at $1,722,222, to additional paid-in capital and a discount against the convertible debenture. 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.

The Company amortized the convertible debenture debt discount attributed to the beneficial conversion feature and the value of the warrants and recorded non-cash interest expense of $2,060,068 for the year ended July 31, 2005. As of July 31, 2005, the Company has issued 1,338,415 shares of common stock to the holders of the convertible debentures upon receipt of the holders’ notice of conversions totaling $1,097,500. In conjunction with the conversions, the Company recognized $753,923 of the unamortized debt discount attributed to the beneficial conversion feature and the value of the warrants as interest expense.

The Company has repaid the note holders $506,564 of the principal and interest in cash and $1,311,829 of the principal and interest in 1,988,731 shares of common stock as of July 31, 2005.

$500,000 Convertible Debenture

On March 28, 2005, the Company entered into a definitive agreement pursuant to which the Company would issue a convertible promissory note for aggregate gross proceeds of $500,000. The note bears interest at 10 percent per annum payable in common stock at the holders option and was due on May 15, 2005. The note is convertible into registered common stock of the Company at a per share price equal $0.82.

The holder of the convertible debenture also received warrants to purchase 1,219,512 of common stock at $0.82 per share. In accordance with EITF 00-27 the Company recognized the value attributable to the warrants, in the amount of $245,521, to additional paid-in capital and a discount against the convertible debenture. The Company valued the warrants in accordance with EITF 00-27 using the Black-Scholes pricing model assuming a risk-free rate of 2.78 percent, an expected volatility of 1.0054 and a five year life. 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.

In accordance with EITF 98-5, the Company recognized the value attributable to the beneficial conversion feature valued at $86,984, to additional paid-in capital and a discount against the convertible debenture. 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.

93

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13 - Convertible Debentures (Continued):

$500,000 Convertible Debenture (Continued)

The Company amortized the convertible debenture debt discount attributed to the beneficial conversion feature and the value of the warrants and recorded non-cash interest expense of $332,505 for the year ended July 31, 2005.

On June 7, 2005 the Company entered into an agreement with the note holder to extend the maturity date of the convertible debenture to July 22, 2005. In consideration for the holder’s agreement to amend the original convertible debenture the Company granted a warrant to purchase 1,219,512 shares of common stock at $0.82 per share with an expiration of June 10, 2010. In accordance with EITF 98-5 the fair value of the warrants, $597,561, was determined to be the reacquisition price on the debt on the extinguishment date and was recorded as a loss on extinguishment of the debt. It was then determined that new debt did not have a beneficial conversion feature.

On July 22, 2005 the Company entered into an agreement with the note holder to extend the maturity date of the convertible debenture to September 20, 2005. In consideration for the holder’s agreement to amend the original convertible debenture the Company granted a warrant to purchase 1,219,512 shares of common stock at $0.82 per share with an expiration of July 22, 2010. In accordance with EITF 98-5 the fair value of the warrants, $524,390, was determined to be the reacquisition price on the debt on the extinguishment date and was recorded as a loss on extinguishment of the debt. It was then determined that new debt did not have a beneficial conversion feature.

$100,000 Convertible Debenture

On April 4, 2005, the Company entered into a definitive agreement pursuant to which the Company would issue a convertible promissory note for aggregate gross proceeds of $100,000. The note bears interest at 10 percent per annum payable in common stock at the holders option and is due on May 15, 2005. The note is convertible into registered common stock of the Company at a per share price equal $0.82.

The holder of the convertible debenture also received warrants to purchase 243,902 of common stock at $0.82 per share. In accordance with EITF 00-27, the Company recognized the value attributable to the warrants in the amount of $49,104 to additional paid-in capital and a discount against the convertible debenture. The Company valued the warrants in accordance with EITF 00-27 using the Black-Scholes pricing model assuming a risk-free rate of 2.78 percent, an expected volatility of 1.0054 and a five year life. 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.

In accordance with EITF 98-5, the Company recognized the value attributable to the beneficial conversion feature valued at $17,397, to additional paid-in capital and a discount against the convertible debenture. 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.

The Company amortized the convertible debenture debt discount attributed to the beneficial conversion feature and the value of the warrants and recorded non-cash interest expense of $66,501 for the year ended July 31, 2005.

94

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13 - Convertible Debentures (Continued):

$100,000 Convertible Debenture (Continued)

On June 7, 2005 the Company entered into an agreement with the note holder to extend the maturity date of the convertible debenture to July 22, 2005. In consideration for the holder’s agreement to amend the original convertible debenture the Company granted a warrant to purchase 243,902 shares of common stock at $0.82 per share with an expiration of June 10, 2010. In accordance with EITF 98-5 the fair value of the warrants, $119,512 was determined to be the reacquisition price on the debt on the extinguishment date and was recorded as a loss on extinguishment of the debt. It was then determined that new debt did not have a beneficial conversion feature.

On July 22, 2005 the Company entered into an agreement with the note holder to extend the maturity date of the convertible debenture to September 20, 2005. In consideration for the holder’s agreement to amend the original convertible debenture the Company granted a warrant to purchase 243,902 shares of common stock at $0.82 per share with an expiration of July 22, 2010. In accordance with EITF 98-5 the fair value of the warrants, $104,878 was determined to be the reacquisition price on the debt on the extinguishment date and was recorded as a loss on extinguishment of the debt. It was then determined that new debt did not have a beneficial conversion feature.

$2 Million Convertible Debenture

On June 17, 2005, the holders of the $4 million convertible debenture exercised 50 percent of their additional investment right “AIR Exercise” resulting in four $500,000 convertible promissory notes (“convertible debentures”) for an aggregate proceeds of $2,000,000. The notes carry a 6% coupon and a 15 month term and amortize in 13 equal monthly installments commencing in the third month of the term. The convertible debentures are convertible into registered common stock of the Company at $0.82 per share. The principal and interest payments are payable in cash or, at the Company's option, in registered stock valued at a 10% discount to the average of the 20-day VWAP at as the payment date, subject to certain restrictions. The transaction terms include 100% five-year warrant coverage at a per share exercise price equal to a 10% premium to the 10-day VWAP on the closing date and a 100% additional investment right exercisable for up to twelve months following the effective date of the registration statement in respect of the transaction. In consideration of the AIR Exercise the Company reduced the conversion price of the convertible debentures issuable upon the AIR Exercise from $0.82 to $0.60 per share.

Proceeds related to the AIR Exercise, net of issuance costs of $160,300, amounted to $1,839,700. Included in the issuance costs were warrants to purchase 35,000 shares of common stock at $0.82 per share and 170,732 shares of common stock valued at $0.82 per share issued to a third party. The fair value of the warrant was determined to be $20,300 using the Black Scholes pricing model assuming a risk-free rate of 3.02 percent, an expected volatility of 0.9775 and a five year life. The fair value of the warrant, which has been allocated to additional paid in capital, together with the $140,000 of issuance costs is being amortized over the life of the debt as a deferred debt issuance cost. As of July 31, 2005 $5,171 has been amortized as expense and the remaining $155,129 is included in deferred debt issuance costs.

95

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13 - Convertible Debentures (Continued):

$2 Million Convertible Debenture (Continued)

The holders of the convertible debentures also received warrants to purchase 2,439,024 of common stock at $0.82 per share. In accordance with EITF 00-27, the Company recognized the value attributable to the warrants in the amount of $828,571 to additional paid-in capital and a discount against the convertible debenture. The Company valued the warrants in accordance with EITF 00-27 using the Black-Scholes pricing model assuming a risk-free rate of 3.02 percent, an expected volatility of 0.9775 and a five year life. 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.

In accordance with EITF 98-5 the Company recognized the value attributable to the beneficial conversion feature valued at $1,171,429, to additional paid-in capital and a discount against the convertible debenture. 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.

The Company amortized the convertible debenture debt discount attributed to the beneficial conversion feature and the value of the warrants and recorded non-cash interest expense of $522,378 for the year ended July 31, 2005. As of July 31, 2005, the Company has issued 636,992 shares of common stock to the holders of the convertible debentures upon receipt of the holders’ notice of conversions totaling $382,000 and related accrued interest of $195. In conjunction with the conversions, the Company recognized $382,033 of the unamortized debt discount attributed to the beneficial conversion feature and the value of the warrants as interest expense.

Note 14 - Series A Preferred Stock:

During 2001, the Company issued 1,000 shares of Series A Preferred Stock (Series A) with a par value of $.001 per share. The holder had the right at any time after January 16, 2004 to convert Series A shares into shares of common stock of the Company; the number of shares of common stock issuable upon conversion was variable based on a formula which reflects the common stock price. The holder also had the option to exchange the shares of the Company’s Series A Preferred stock for 3,612 shares of the Company’s convertible preferred shares of Generex (Bermuda), Ltd. which represents 30.1 percent of the Company’s equity ownership in Generex (Bermuda) Ltd. Upon exercise, the holder and the Company would each own 50 percent of Generex (Bermuda) Ltd. (See Note 20 for discussions of Generex (Bermuda), Ltd.) Holders of Series A shares were not entitled to vote. In addition, the holders of Series A shares were entitled to receive a dividend per share equal to the dividend declared and paid on shares of the Company’s common stock as and when dividends are declared and paid on the Company’s common stock, and were also entitled to receive a mandatory annual dividend equal to 6 percent per year on the original issue price of $12,015 per share. This dividend was to be compounded each anniversary of the date of issuance of the Series A shares and payable by issuance of additional Series A shares valued at the original issue price. Any Series A shares outstanding on January 16, 2007, were to be redeemed for cash or shares of common stock.

On January 15, 2002, the Company paid a 6 percent stock dividend on the Company’s Series A Preferred Stock. The dividend was paid in shares of Series A Preferred Stock, and resulted in a charge to accumulated deficit of $720,900, which was calculated based upon the original issue price of the preferred shares.

96

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14 - Series A Preferred Stock (Continued):

On January 15, 2003, the Company paid a 6 percent stock dividend on the Company’s Series A Preferred Stock. The dividend was paid in shares of Series A Preferred Stock, and resulted in a charge to accumulated deficit of $764,154, which was calculated based upon the original issue price of the preferred shares.

On January 15, 2004, the Company paid a 6 percent stock dividend on the Company’s Series A Preferred Stock. The dividend was paid in shares of Series A Preferred Stock, and resulted in a charge to accumulated deficit of $810,003, which was calculated based upon the original issue price of the preferred shares.

In December 2004, the holder of the Series A Preferred Stock sold its holdings to a third party. In conjunction with sale, all of the Company’s outstanding Series A Preferred Stock was automatically converted to common stock. As a result, the buyer received 534,085 shares of common stock and the Company no longer has any outstanding shares of Series A Preferred Stock. (See Note 20)

At July 31, 2005 and 2004, the Series A had an aggregate liquidation preference of $-0- and $14,310,057, respectively.

97

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 15 - Stockholders’ Equity:

Warrants

As of July 31, 2005, 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
214,484	$6.50	September 29, 2005
114,055	$6.60	September 29, 2005
239,222	$11.13	September 29, 2005
226	$12.99	September 29, 2005
75,000	$25.15	January 16, 2006
666,667	$1.80	June 6, 2006
188,656	$5.09	July 6, 2006
124,859	$10.18	July 6, 2006
50,000	$12.99	March 18, 2007
1,269,519	$1.71	May 27, 2007
70,000	$1.25	November 29, 2007
60,000	$1.88	November 29, 2007
505,000	$2.50	November 29, 2007
30,000	$3.00	November 29, 2007
20,000	$2.50	October 30, 2008
425,170	$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
23,438	$2.02	February 13, 2009
17,169	$2.10	February 13, 2009
1,967,213	$1.68	July 12, 2009
500,000	$1.09	August 10, 2009
5,023,048	$0.91	November 10, 2009
1,563,414	$0.82	April 27, 2010
1,463,414	$0.82	June 7, 2010
1,463,414	$0.82	July 22, 2010
2,474,024	$0.82	December 15, 2010

98

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 15 - Stockholders’ Equity (Continued):

Notes Receivable - Common Stock

Notes receivable - common stock consist of two separate promissory notes. The first promissory note was issued in conjunction with the redemption of Series A Redeemable Common Stock Purchase Warrants in June 1999, and was for $50,000. This note, which was originally due on December 1, 1999, was initially extended until October 1, 2000, and then extended until June 1, 2001. On July 31, 2001, the uncollected balance on this note, including accrued interest at 7 percent per annum, was $57,720 and a new promissory note was signed. Under the terms of the July 31, 2001 note, the principal of $57,720, together with accrued interest at 7 percent per annum, was due July 31, 2002. On July 31, 2002, the uncollected balance on this note, including accrued interest, was $61,867 and a new promissory note was signed. Under the terms of the July 31, 2002 note, the principal of $61,867, together with accrued interest at 7 percent per annum, was due July 31, 2003. On July 31, 2003, the uncollected balance on this note, including accrued interest, was $66,198 and a new promissory note was signed. Under the terms of the July 31, 2003 note, the principal of $66,198, together with accrued interest at 7 percent per annum, is due July 31, 2004. As of July 31, 2004, the outstanding balance on this note, including accrued interest at 7 percent per annum, was $70,857. In January 2005, the Company deemed this note as uncollectible and, therefore, has taken a charge to general and administrative expenses for the outstanding principal and accrued interest in the amount of $72,107.

The second promissory note was issued in conjunction with the exercise of 50,000 Common Stock Options in March 2001, and was for $250,000. This note was originally due on March 15, 2002, when a new promissory note was signed, effectively extending the due date to March 15, 2003. On March 15, 2003 a new promissory note was signed, effectively extending the due date to March 15, 2004. As of July 31, 2004, the outstanding balance on this note, including accrued interest at 7 percent per annum, was $313,946. In January 2005, the Company deemed this note as uncollectible and, therefore, has taken a charge to general and administrative expenses for the outstanding principal and accrued interest in the amount of $318,996.

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.

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 has 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 are 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 are 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.

99

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 16 - Stock Based Compensation:

Stock Option Plans

The Company has three stock option plans under which options exercisable for shares of common stock have been or may be granted to employees, directors, consultants and advisors. A total of 1,500,000 shares of common stock are reserved for issuance under the 1998 Stock Option Plan (the 1998 Plan), a total of 2,000,000 shares of common stock are reserved for issuance under the 2000 Stock Option Plan (the 2000 Plan) and a total of 12,000,000 shares of common stock are reserved for issuance under the 2001 Stock Option Plan (the 2001 Plan).

The 1998, 2000 and 2001 Plans (the Plans) are administered by the Compensation Committee (the Committee). The Committee 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 Committee 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 Committee.

The Plans provide that options may or may not be Incentive Stock Options (ISOs) within the meaning of Section 422 of the Internal Revenue Code. Only employees of the Company are eligible to receive ISOs, while employees and non-employee directors, advisors and consultants are eligible to receive options which are not ISOs, i.e. “Non-Qualified Options.” The options granted by the Board in connection with its adoption of the Plans are Non-Qualified Options.

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

		Weighted Average
	Shares	Exercise Price Per Share
Outstanding - August 1, 2002	4,882,159	$6.18
Granted	2,860,000	$1.85
Canceled	1,077,000	$5.95
Exercised	70,000	$1.59
Outstanding - July 31, 2003	6,595,159	$4.38
Granted	1,846,000	$1.63
Canceled	1,181,600	$5.61
Exercised	45,400	$1.88
Outstanding - July 31, 2004	7,214,159	$3.49
Granted	6,046,110	$0.50
Canceled	1,653,000	$6.49
Exercised	--	$ --
Outstanding - July 31, 2005	11,607,269	$1.51

100

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 16 - Stock Based Compensation (Continued):

Stock Option Plans (Continued)

The following table summarizes information on stock options outstanding at July 31, 2005:

	Options Outstanding						Options Exercisable
			Weighted
	Number		Average		Weighted		Number		Weighted
	Outstanding		Contractual		Average		Exercisable		Average
Range of	at		Life		Exercise		at		Exercise
Exercise Price	July 31, 2005		(Years)		Price		July 31, 2005		Price
$0.001		2,239,610		4.68	$	0.001		2,239,610	$	0.001
$0.56 - $0.94		3,656,500		4.42	$	0.78		3,028,500	$	0.75
$1.00 - $2.19		4,706,000		2.60	$	1.74		4,706,000	$	1.74
$5.15 - $6.54		680,159		1.04	$	5.20		680,159	$	5.20
$7.50 - $8.70		225,000		1.09	$	8.31		225,000	$	8.31
$10.21		100,000		0.50	$	10.21		100,000	$	10.21

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

Options exercisable at July 31, are as follows:

	Number of	Weighted Average
Year	Options	Exercise Price
2003	5,858,659	$ 4.62
2004	6,654,659	$ 3.65
2005	10,979,269	$ 1.54

During the years ended July 31, 2005, 2004 and 2003, $-0-, $45,390, and $-0-, respectively, was charged to compensation expense with respect to options granted to employees and directors of the Company.

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, 2005		2.32	%		5.00		1.0215		--
July 31, 2004		1.00	%		5.01		1.0604		--
July 31, 2003		0.90	%		4.29		1.0219		--

The weighted average fair value of the Company’s stock options calculated using the Black-Scholes option-pricing model for options granted during the years ended July 31, 2005, 2004 and 2003 was $0.59, $1.24 and $1.35 per share, respectively.

101

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 16 - Stock Based Compensation (Continued):

Stock Option Plans (Continued)

During the year ended July 31, 2005 the Company issued 2,239,610 options at an exercise price of $0.001 for outstanding executive compensation. Accordingly, the Company has included a charge for the fair value of these options in the amount of $1,332,052 in the statement of operations.

Equity Instruments Issued for Services Rendered

During the years ended July 31, 2005, 2004 and 2003, 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 17 - Net Loss Per Share:

Basic EPS and Diluted EPS for the years ended July 31, 2005, have been computed by dividing the net loss available to common stockholders for each respective period by the weighted average shares outstanding during that period. All outstanding warrants, options and shares to be issued upon conversion of the outstanding convertible debentures, representing approximately 35,291,316 incremental shares, have been excluded from the 2005 computation of Diluted EPS as they are antidilutive due to the losses generated.

Basic EPS and Diluted EPS for the years ended July 31, 2004 and 2003 have been computed by dividing the net loss available to common stockholders for each respective period by the weighted average shares outstanding during that period. All outstanding warrants, options and shares to be issued upon conversion of Series A Preferred stock, representing approximately 15,058,348 and 12,741,679 incremental shares, have been excluded from the 2004 and 2003, respectively, computation of Diluted EPS as they are antidilutive due to the losses generated.

Note 18 - Supplemental Disclosure of Cash Flow Information:

	For the Years Ended July 31,
	2005		2004		2003
Cash paid during the year for:
Interest	$	184,655	$	166,166	$	149,233
Income taxes	$	--	$	--	$	--

Disclosure of non-cash investing and financing activities:

102

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 18 - Supplemental Disclosure of Cash Flow Information (Continued):

Year Ended July 31, 2005
Costs associated with convertible debentures paid from proceeds	$	300,070
Value of common stock issued in conjunction with capitalized
services upon issuance of convertible debentures	$	140,000
Value of warrants issued in conjunction with capitalized
services upon issuance of convertible debentures	$	110,200
Sale of Series A Preferred Stock and mandatorily converted
to common shares	$	14,310,057
Value of warrants issued in conjunction with issuance of
convertible debentures and related beneficial conversion feature	$	5,843,450
Satisfaction of accounts payable through the issuance of
common stock	$	1,526,326
Principal repayment of convertible debentures through the
issuance of common stock	$	1,235,577
Issuance of common stock in conjunction with convertible
debenture conversions	$	1,479,500
Issuance of below market stock options in satisfaction of
accounts payable and accrued expenses	$	1,332,052
Costs paid from proceeds of issuance of long-term debt	$	54,466
Non-cash repayment of long-term debt from proceeds
of refinancing	$	323,301
Year Ended July 31, 2004
Issuance of Series A Preferred Stock as preferred stock dividend	$	810,003
Application of deposit to advances to Antigen Express, Inc.	$	25,000
Acquisition of Antigen Express, Inc through the issuance of common
stock and the assumption of stock options	$	4,797,409
Retirement of treasury stock	$	1,610,026
Purchase of assets held for investment in exchange for long-term debt	$	138,001
Year Ended July 31, 2003
Issuance of Series A Preferred Stock as preferred stock dividend	$	764,154
Settlement of officer loans receivable in exchange for shares of
common stock held in treasury	$	1,126,157
Assumption of long-term debt in conjunction with building purchase	$	1,080,486
Utilization of deposit in conjunction with building purchase	$	501,839

Note 19 - 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.

103

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 19 - Segment Information (Continued):

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.

	2005		2004		2003
Identifiable Assets
Canada	$	8,722,630	$	14,006,834	$	22,638,708
United States		4,743,215		5,005,156		--
Total	$	13,465,845	$	19,011,990	$	22,638,708
Revenue
Canada	$	--	$	--	$	--
United States		392,112		627,184		--
Total	$	392,112	$	627,184	$	- -

Note 20 - Collaborative Agreements:

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

The Company had a joint venture with Elan International Services, Ltd. (“EIS”), a wholly owned subsidiary of Elan Corporation, plc (EIS and Elan Corporation, plc being collectively referred to as “Elan”). Through the joint venture, the parties agreed to pursue the application of certain of the Company’s and Elan’s drug delivery technologies, including the Company’s platform technology for the buccal delivery of large molecule drugs, to pharmaceutical products for the treatment of prostate cancer, endometriosis and/or the suppression of testosterone and estrogen. In January 2002, the parties expanded the joint venture agreement to include buccal morphine for the management of pain. The parties conducted the joint venture through Generex (Bermuda), Ltd. (Generex Bermuda), a Bermuda limited liability company.

The Company applied the $12,015,000 that it received from Elan for the shares of the Company’s Series A Preferred Stock (see Note 14) to form Generex Bermuda. The Company’s interest in this company consists of 6,000 shares of Generex Bermuda common stock and 3,612 shares of convertible preferred stock, representing an 80.1 percent equity ownership interest in Generex Bermuda. At the same time, Elan remitted $2,985,000 to purchase 2,388 shares of Generex Bermuda convertible preferred stock, representing a 19.9 percent equity ownership interest in Generex Bermuda. The Series A Preferred stock had an exchange feature which allowed Elan to acquire an additional 30.1 percent equity ownership interest in Generex Bermuda. As of July 31, 2005, 2004 and 2003, the minority interest has been reduced to $-0- due to their share of Generex Bermuda’s net loss.

104

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 20 - Collaborative Agreements (Continued):

Generex Bermuda was granted rights to use the Company’s buccal delivery technology and certain Elan drug delivery technologies for purposes of the joint venture. Using the funds from the initial capitalization, Generex Bermuda paid a nonrefundable license fee of $15,000,000 to Elan in consideration for being granted rights to use the Elan drug delivery technologies during the year ended July 31, 2001. The Company expensed the entire cost of the license as a research and development expense because of the uncertainties surrounding the future realization of revenue from the use of the license. During the years ended July 31, 2003 and 2002, Generex Bermuda continued to incur research and development and operational expenses in conjunction with the joint venture’s operations. There has been no research and development and operational activity for the years ended July 31, 2005 and 2004.

On December 17, 2004, the Company entered into a Termination Agreement with Elan. Pursuant to the terms of the Termination Agreement, (i) the parties have agreed to terminate the Joint Venture Agreements and the Securities Agreements, except for the Warrant, which was amended to permit Elan or any other holder thereof to transfer the Warrant without the consent of the Company, and (ii) Elan agreed to transfer all shares of capital stock of Generex (Bermuda) owned by it to the Company. All rights granted by each party to the other terminate, including without limitation, Elan’s right to appoint a member to the Company’s Board of Directors, all other rights granted under the terms of the joint venture terminate, each party retains its intellectual property rights, the Company obtains full ownership of Generex (Bermuda), and all representatives of Elan who are officers and directors of Generex (Bermuda) were required to resign pursuant to the terms of the Termination Agreement.

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

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

105

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 21 - Quarterly Information (Unaudited):

The following schedule sets forth certain unaudited financial data for the preceding eight quarters ending July 31, 2005. In our opinion, the unaudited information set forth below has been prepared on the same basis as the audited information and includes all adjustments necessary to present fairly the information set forth herein. The operating results for the quarter are not indicative of results for any future period.

	Q1			Q2			Q3			Q4
Fiscal Year July 31, 2005:
Contract research revenue	$	142,750		$	76,750		$	43,750		$	128,862
Operating loss	$	(6,674,618	)	$	(5,555,641	)	$	(3,324,521	)	$	(3,003,641	)
Net loss	$	(6,658,028	)	$	(6,298,182	)	$	(4,696,670	)	$	(6,348,855	)
Net loss available to common
stockholders	$	(6,658,028	)	$	(6,298,182	)	$	(4,696,670	)	$	(6,348,855	)
Net loss per share	$	(.19	)	$	(.18	)	$	(.13	)	$	(.16	)
Fiscal Year July 31, 2004:
Contract research revenue	$	68,061		$	117,503		$	235,129		$	206,491
Operating loss	$	(3,790,784	)	$	(4,746,528	)	$	(4,908,093	)	$	(5,119,936	)
Net loss	$	(3,612,270	)	$	(4,774,620	)	$	(4,900,075	)	$	(5,075,618	)
Net loss available to common
stockholders	$	(3,612,270	)	$	(5,584,623	)	$	(4,900,075	)	$	(5,075,618	)
Net loss per share	$	(.13	)	$	(.19	)	$	(.16	)	$	(.17	)
Fiscal Year July 31, 2003:
Contract research revenue	$	--		$	--		$	--		$	--
Operating loss	$	(2,805,371	)	$	(4,700,645	)	$	(2,763,741	)	$	(3,578,933	)
Net loss	$	(2,668,662	)	$	(4,575,030	)	$	(2,607,871	)	$	(3,410,201	)
Net loss available to common
stockholders	$	(2,668,662	)	$	(5,331,975	)	$	(2,607,871	)	$	(3,417,410	)
Net loss per share	$	(.13	)	$	(.27	)	$	(.13	)	$	(.14	)

Note 22 - Subsequent Events:

In August 2005, the Company entered into an agreement with a consultant to provide investor relation services for a term of one year in exchange for 225,000 shares of the Company’s restricted common stock plus an additional 7,143 shares of the Company’s restricted common stock as monthly payments. The issuance of the above shares is subject to the approval by the Company’s Board of Directors.

In September and October 2005, the Company issued an aggregate of 2,363,353 shares of common stock resulting from the conversion of $1,418,012 of principal and accrued interest of the original $2,000,000 convertible debenture (see Note 13).

106

GENEREX BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 22 - Subsequent Events (Continued):

In September 2005, the Company and each of the holders of the $4 million convertible debenture (see Note 13) entered into an Amendment No. 2 to Securities Purchase Agreement and Registration Rights Agreement pursuant to which the investors agreed to exercise an additional $2,000,000 in principal amount of Additional Investment Rights (AIR). In connection with this investment, the Company agreed to reduce the conversion price from $0.82 to $0.60 per share, issue warrants to purchase an aggregate of 2,439,024 shares of the Company’s common stock at the exercise price of $0.82 per share exercisable for five years commencing six months following the issuance thereof and to grant each investor further AIR. In addition, in connection with the transaction contemplated by Amendment No. 2, the Company will issue to a placement agent (i) 170,732 shares of common stock in lieu of a cash fee equal to 7 percent of the gross proceeds received by the Company and (ii) warrants exercisable into approximately 60,000 shares of common stock at the same exercise price as the AIR warrants.

In September and October 2005, the Company issued an aggregate of 2,036,390 shares of common stock resulting from the conversion of $1,221,834 of principal and accrued interest of the aforementioned additional $2,000,000 convertible debenture.

Subsequent to year-end, the Company issued 473,649 shares of common stock to various vendors for the satisfaction of $388,392 of accounts payable and accrued liabilities. The shares were valued at $0.82 per share.

In October 2005, the Company issued an aggregate of 364,113 shares of common stock resulting from the conversion of $298,573 of principal and accrued interest of the original $4,000,000 convertible debenture (see Note 13).

In October 2005, the $500,000 convertible debenture (see Note 13) exercised its right to convert the principal and accrued interest amount of $528,082 as of the date of conversion into 644,003 shares of our stock at $0.82 per share.

In October 2005, the Company issued an aggregate of 909,756 warrants to certain financial consultants. All warrants have a five year term and have an exercise price of $1.20 per share.

In October 2005, the $100,000 convertible debenture (see Note 13) exercised its right to convert the principal and accrued interest amount of $105,644 as of the date of conversion into 128,834 shares of our stock at $0.82 per share.

In October 2005, the Company issued an aggregate of 1,529,289 warrants to certain financial consultants. All warrants have a five year term and have an exercise price of $1.25 per share.

In October 2005, the Company received aggregate cash proceeds of approximately 6.4 million from an exercise of the existing warrants. The Company issued 7,804,966 shares of common stock as a result of these transactions.

107

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

Not applicable.

Item 9A.Controls and Procedures.

Evaluation of disclosure controls and procedures

Based on our management's evaluation (with the participation of our principal executive officer and principal financial officer), as of the end of the period covered by this Annual Report on Form 10-K, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in internal controls

There was no change in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the period covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.Other Information.

In January 2005 we issued DP Morton and Associates LLC (“DP Morton”) 40,000 shares of our common stock as consideration for DP Morton’s financial consulting services pursuant to the terms of the Corporate Consulting Agreement entered into by us and DP Morton on January 18, 2005. Under the Corporate Consulting Agreement, we agreed to register the shares of common stock issued to DP Morton for resale. The sale of the shares to DP Morton was exempt from registration under the Securities Act in reliance upon Section 4(2) thereof. We believe that DP Morton 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 were legended to indicate that they are restricted. The sales of such securities did not involve the use of underwriters, and no commissions were paid in connection with the issuance or sale, if any, thereof.

In June 2005, we issued G&H Associates LTD (“G&H”) 63,207 shares of our common stock as consideration for G&H’s financial consulting services pursuant to the terms of the Corporate Consulting Agreement entered into by us and G&H on November 4, 2004. The sale of the shares to G&H was exempt from registration under the Securities Act in reliance upon Section 4(2) thereof. We believe that G&H 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 were legended to indicate that they are restricted. The sales of such securities did not involve the use of underwriters, and no commissions were paid in connection with the issuance or sale, if any, thereof.

On June 15, 2005, we entered into a five-year product licensing and distribution agreement with MedGen Corp.(“MedGen”) for assistance in the application to the Lebanese Ministry of Public Health seeking approval for the commercial sale of Oral-lyn™. The agreement also sets forth terms including product registration, manufacturing marketing and promotion, selling price and payment and minimum purchase obligations. Under the terms of the agreement, MedGen is obligated to pay the Company a license fee in the aggregate amount of $500,000, $50,000 of which was paid upon execution of the agreement.

108

In August 2005, we entered into an agreement with CEOcast, Inc., a consultant, to provide investor relation services for a term of one year in exchange for 225,000 shares of our restricted common stock plus an additional 7,143 shares of our restricted common stock as monthly payments. The issuance of these shares is subject to approval by our Board of Directors. The sale of such shares is exempt from registration under the Securities Act in reliance upon Section 4(2) thereof. We believe that CEOcast, Inc. is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the Securities Act. The certificates issued for the shares of common stock will be legended to indicate that they are restricted. The sales of such securities did not involve the use of underwriters, and no commissions were paid in connection therewith.

On July 22, 2005, Cranshire Capital, L.P. (“Cranshire”) agreed to extend the interest payment date and the maturity date under the March 28, 2005 Promissory Note and Agreement with us from July 22, 2005 to September 20, 2005. On the same date, Omicron Master Trust (“Omicron”) agreed to extend the interest payment date and the maturity date under the April 6, 2005 Promissory Note and Agreement with us from July 22, 2005 to September 20, 2005. As consideration for the extensions from Cranshire and Omicron, we contemporaneously issued a warrant to Cranshire to purchase an aggregate of 1,219,512 shares of our common stock and a warrant to Omicron to purchase an aggregate of 243,902 shares of our common stock, both of which will expire on July 22, 2010. The rights of Cranshire and Omicron under the July 22 2005 warrants are described in this Annual Report on Form 10-K above under the caption Financial Condition, Liquidity and Resources of Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The offer and sale of the July 22, 2005 warrants, including shares of common stock into which such warrants are exercisable, by us to Cranshire and Omicron was exempt from registration under Section 4(2) of the Securities Act. Each of Cranshire and Omicron has previously represented and warranted to us that it is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act. Any certificates issued representing the July 22, 2005 warrants and shares of common stock issued upon exercise of such warrants will be legended to indicate that they are restricted. No sale of these securities involved the use of underwriters, and no commissions were paid in connection with the issuance or sale of the securities.

On September 20, 2005, we failed to pay the outstanding principal balances under the $500,000 convertible promissory note entered into with Cranshire on March 28, 2005 and the $100,000 convertible promissory note entered into with Omicron on April 6, 2005. On October 19, 2005 Cranshire converted outstanding principal and accrued interest on its note ($528,082 in total) into 664,003 shares of our common stock. On October 27, 2005 Omicron converted outstanding principal and accrued interest on its Note ($105,644 in total) into 128,834 shares of common stock. Terms and conditions of the note, are described in this Annual Report on Form 10-K above under the caption Financial Condition, Liquidity and Resources of Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

On October 1, 2005, we failed to pay the first installment of $108,393 due under the Assistance Agreement with Eckert Seamans Cherin & Mellott, LLC (“Eckert Seamans”) pursuant to which Eckert Seamans advanced us funds in the amount of $325,179 for the sole purpose of making the interest payment and the monthly redemption payment due on March 31, 2005 and April 1, 2005, respectively, under our 6% Secured Convertible Debentures. We are currently in negotiations with Eckert Seamans and are seeking to extend the payment dates or to pay the outstanding balance with shares of our common stock. As of October 1, 2005, all amounts due thereunder became payable on demand, and interest began accruing at the rate of 8% per annum. The total arrearage to date, as well as the terms and conditions of the Assistance Agreement with Eckert Seamans, are described in this Annual Report on Form 10-K above under the caption Financial Condition, Liquidity and Resources of Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

109

On October 20, 2005, in consideration for the exercise of certain outstanding warrants previously issued to each of Cranshire and Iroquois Capital L.P. (“Iroquois”) in connection with their purchase of our 6% Secured Convertible Debentures pursuant to the Securities Purchase Agreement dated November 10, 2004, we issued a five-year warrant to purchase 300,000 shares of our common stock at $1.20 per share to Cranshire and a five-year warrant to purchase 609,756 shares of our common stock at $1.20 per share to Iroquois. We received aggregate proceeds of $1,492,000 in connection with Cranshire’s partial exercise of its outstanding warrant to purchase 1,219,512 shares of our common stock and Iroquois’ full exercise of its outstanding warrant to purchase 1,219,512 shares of our common stock. The rights of Cranshire and Iroquois under the October 2005 warrants are described in this Annual Report on Form 10-K under the caption Financial Condition, Liquidity and Resources of Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The offer and sale of such warrants, including the shares of common stock into which such warrants are exercisable, are exempt from registration under the Securities Act in reliance upon Section 4(2) thereof. Each of Cranshire and Iroquois has previously represented and warranted to us that it is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act. Any certificates representing such warrants and shares of common stock issued upon exercise of such warrants will be legended to indicate that they are restricted. The sale of such securities did not involve the use of underwriters, and no commissions were paid in connection therewith.

On October 28, 2005, in consideration for their exercise of certain outstanding warrants previously issued pursuant to the Securities Purchase Agreement dated November 10, 2004, we issued to Cranshire, Omicron and Smithfield Fiduciary LLC ("Smithfield") five-year warrants to purchase an aggregate of 1,529,289 shares of our common stock at $1.25 per share. We received aggregate proceeds of approximately $2,508,000 in connection with their exercise of holder’s outstanding warrants to purchase shares of our common stock. The rights of holders of these warrants are described in this Annual Report on Form 10-K under the caption Financial Condition, Liquidity and Resources of Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The offer and sale of such warrants, including the shares of common stock into which such warrants are exercisable, are exempt from registration under the Securities Act in reliance upon Section 4(2) thereof. Each of Cranshire, Omicron and Smithfield has previously represented and warranted to us that it is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act. Any certificates representing such warrants and shares of common stock issued upon exercise of such warrants will be legended to indicate that they are restricted. The sale of such securities did not involve the use of underwriters, and no commissions were paid in connection therewith.

As previously reported on our Quarterly Report on Form 10-Q for the period ending April 30, 2005, prior to April 30, 2005, we issued an aggregate of 950,927 shares of restricted common stock to certain suppliers of goods and services in satisfaction of an aggregate of US $779,760 in accounts payable owed by us. Subsequent to April 30, 2005 and prior to July 31, 2005, we issued an additional 910,447 shares of restricted common stock to certain suppliers of goods and services in satisfaction of an additional aggregate amount of US $746,566 representing accounts payable owed by us. In the period subsequent to year-end, we issued additional 473,649 restricted shares in satisfaction of $388,392 in accounts payable. The number of shares awarded was calculated using a price per share of $0.82. The sales of the restricted stock were exempt from registration under the Securities Act in reliance upon Section 4(2) thereof. Each of the suppliers to which we have issued restricted shares of common stock has represented to us that he or it is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D. The certificates issued for the shares of common stock issued to such suppliers were legended to indicate that they are restricted. The sales of such shares did not involve the use of underwriters, and no commissions were paid in connection with the issuance or sale, if any, thereof.

110

PART III

Item 10. Directors and Executive Officers of the Registrant.

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 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.

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.

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. 15Exhibits and Financial Statements and Schedules.

(a)1.Financial Statements - See Part II - Item 8. Financial Statements and Supplementary Data hereof on page 59.

The financial statements include the following:

Consolidated Balance Sheets as of July 31, 2005 and 2004

Consolidated Statements of Operations for the Year Ended July 31, 2005, 2004 and 2003 and Cumulative from Inception to July 31, 2005

Consolidated Statements of Changes in Stockholders’ Equity for the Period November 2, 1995 (Date of Inception) to July 31, 2005

Consolidated Statements of Cash Flows for the Years Ended July 31, 2005, 2004 and 2003 and Cumulative from Inception to July 31, 2005

111

2.Financial Statement Schedule and Auditor’s Report

Schedule I - Condensed financial information of registrant

This schedule is not applicable.

Schedule II - Valuation and qualifying accounts

See Schedule II on page 123

3.Exhibits

Exhibit Number	Description of Exhibit(1)
2	Agreement and Plan of Merger among Generex Biotechnology Corporation, Antigen Express, Inc. and AGEXP Acquisition Inc. (incorporated by reference to Exhibit 2.1 to Generex Biotechnology Corporation’s Current Report on Form 8-K filed on August 15, 2003)
3(I)	Restated Certificate of Incorporation of Generex Biotechnology Corporation, as amended (incorporated by reference to Exhibit 3.1 to Generex Biotechnology Corporation’s Report on Form 10-Q filed on March 15, 2004)
3(II)	Bylaws of Generex Biotechnology Corporation (incorporated by reference to Exhibit 3.2 to Generex Biotechnology Corporation’s Registration Statement on Form S-1 (File No. 333-82667) filed on July 12, 1999)
4.1	Form of common stock certificate (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Registration Statement on Form S-1 (File No. 333-82667) filed on July 12, 1999)
4.2	Certificate of Designations, Preferences and Rights of Series A Preferred Stock (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on January 23, 2001)
4.3	Form of Warrant issued to Ladenburg Thalmann & Co., Inc. dated July 6, 2001 (incorporated by reference to Exhibit 4.15 to Generex Biotechnology Corporation’s Registration Statement on Form S-3 (File No. 333-67118) filed on August 8, 2001)
4.4	Form of Warrant granted to Cranshire Capital, L.P.; RAM Trading Ltd.; Gryphon Master Fund; Kodiak Opportunity, L.P.; Kodiak Opportunity 3C7, L.P.; Kodiak Opportunity Offshore, Ltd.; Novelly Exempt Trust; Langley Partners, L.P.; Montrose Investments, Ltd.; WEC Asset Management, LLC; ZLP Master Technology Fund, Ltd.; Alpha Capital Aktiengesellschaft; and The dotCOM Fund, LLC, dated July 6, 2001 (incorporated by reference to Exhibit 3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on July 17, 2001)
4.5	Warrant granted to Capital Ventures International, dated July 3, 2001 (incorporated by reference to Exhibit 6 to Generex Biotechnology Corporation’s Report on Form 8-K filed on July 17, 2001)

112

Exhibit Number	Description of Exhibit(1)
4.6	Warrant issued to Elliott International, L.P. and Elliott Associates, L.P., dated July 5, 2001 (incorporated by reference to Exhibit 9 to Generex Biotechnology Corporation’s Report on Form 8-K filed on July 17, 2001)
4.7	Form of Warrant issued to certain parties to October 2000 Private Placement (incorporated by reference to Exhibit 4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on October 16, 2000)
4.8	Form of Warrant (GCR Series) held by Robert P. Carter, Harvey Kaye, Fittube, Inc., Edward Maskaly and Gulfstream Capital Group, L.C. (incorporated by reference to Exhibit 4.4.2 to Generex Biotechnology Corporation’s Registration Statement on Form 10 filed on December 14, 1998, as amended February 24, 1999)
4.9	Letter Agreement and Warrant with M. H. Meyerson & Co., Inc. dated November 17, 1998 (incorporated by reference to Exhibit 4.4.4 to Generex Biotechnology Corporation’s Registration Statement on Form 10 filed on December 14, 1998, as amended February 24, 1999)
4.10.1	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)
4.10.2	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)
4.10.3	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)
4.10.4	Form of Securities Purchase Agreement entered into with Cranshire Capital, L.P. dated June 6, 2003 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 10-Q/A for the quarter ended April 30, 2003 filed on August 13, 2003)
4.10.5	Form of Registration Rights Agreement entered into with Cranshire Capital, L.P. dated June 6, 2003 (incorporated by reference to Exhibit 4.5 to Generex Biotechnology Corporation’s Report on Form 10-Q/A for the quarter ended April 30, 2003 filed on August 13, 2003)
4.10.6	Form of Warrant granted to Cranshire Capital, L.P. dated June 6, 2003 (incorporated by reference to Exhibit 4.6 to Generex Biotechnology Corporation’s Report on Form 10-Q/A for the quarter ended April 30, 2003 filed on August 13, 2003)

113

Exhibit Number	Description of Exhibit(1)
4.10.7	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)
4.11.1	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)
4.11.2	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)
4.11.3	Form of Warrant issued in connection with Exhibit 4.11.1 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K/A filed on March 24, 2004)
4.11.4	Form of Additional Investment Right issued in connection with Exhibit 4.11.1 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K/A filed on March 24, 2004)
4.12.1	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)
4.12.2	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)
4.12.3	Warrant issued in connection with Exhibit 4.12.1 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.12.4	Additional Investment Right issued in connection with Exhibit 4.12.1 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.13.1	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)
4.13.2	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)
4.13.3	Warrant issued in connection with Exhibit 4.13.1 (incorporated by reference to Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.13.4	Additional Investment Right issued in connection with Exhibit 4.13.1 (incorporated by reference to Exhibit 4.8 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)

114

Exhibit Number	Description of Exhibit(1)
4.14.1	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)
4.14.2	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)
4.14.3	Warrant issued in connection with Exhibit 4.14.1 (incorporated by reference to Exhibit 4.11 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.14.4	Additional Investment Right issued in connection with Exhibit 4.14.1 (incorporated by reference to Exhibit 4.12 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.14.5	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)
4.15.1	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)
4.15.2	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)
4.15.3	Warrant issued in connection with Exhibit 4.15.1 (incorporated by reference to Exhibit 4.16 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.15.4	Additional Investment Right issued in connection with Exhibit 4.15.1 (incorporated by reference to Exhibit 4.17 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.16.1	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)
4.16.2	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)
4.16.3	Warrant issued in connection with Exhibit 4.16.1 (incorporated by reference to Exhibit 4.20 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)

115

Exhibit Number	Description of Exhibit(1)
4.16.4	Additional Investment Right issued in connection with Exhibit 4.16.1 (incorporated by reference to Exhibit 4.21 Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.17.1	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)
4.17.2	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)
4.17.3	Form of Warrant issued in connection with Exhibit 4.17.1 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on July 14, 2004)
4.17.4	Form of Additional Investment Right issued in connection Exhibit 4.17.1 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on July 14, 2004)
4.18.1	Securities Purchase Agreement, dated November 10, 2004, by and among Generex Biotechnology Corporation and the investors named therein (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)
4.18.2	Form of 6% Secured Convertible Debenture issued in connection with Exhibit 4.21.1 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)
4.18.3	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)
4.18.4	Form of Warrant issued in connection with Exhibit 4.18.1 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)
4.18.5	Form of Additional Investment Right issued in connection with Exhibit 4.18.1 (incorporated by reference to Exhibit 4.5 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)
4.18.6	Custodial and Security Agreement, dated November 10, 2004, by and among Generex Biotechnology Corporation, Feldman Weinstein LLP, as custodian, and the investors named therein (incorporated by reference to Exhibit 4.6 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)
4.18.7	Form of Voting Agreement entered into in connection with Exhibit 4.18.1 (incorporated by reference to Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)

116

Exhibit Number	Description of Exhibit(1)
4.19	Termination Agreement, dated December 17, 2004, by and among Generex Biotechnology Corporation and Elan Corporation plc and Elan International Services, Ltd. (incorporated by reference to Exhibit 4.19 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)
4.20	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)
4.21.1	Promissory Note and Agreement, dated March 28, 2005 by and between Generex Biotechnology Corporation and Cranshire Capital, L.P. (incorporated by reference to Exhibit 4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on April 1, 2005)
4.21.2	Warrant issued to Cranshire Capital, L.P. entered into in connection with Exhibit 4.21.1 (incorporated by reference to Exhibit 4.21.2 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)
4.22.1	Promissory Note and Agreement, entered intoApril 6, 2005 by and between Generex Biotechnology Corporation and Omicron Master Trust (incorporated by reference to Exhibit 4.22.1 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)
4.22.2	Warrant issued to Omicron Master Trust entered into in connection with Exhibit 4.22.1 (incorporated by reference to Exhibit 4.22.2 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)
4.23.1	June 7, 2005 Amendment to Promissory Note and Agreement, dated March 28, 2005 by and between Generex Biotechnology Corporation and Cranshire Capital, L.P. (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 10, 2005)
4.23.2	Warrant issued by Generex Biotechnology Corporation to Cranshire Capital, L.P. on June 7, 2005 in connection with Exhibit 4.23.1 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 10, 2005)
4.24.1	June 7, 2005 Amendment to Promissory Note and Agreement, entered into April 6, 2005 by and between Generex Biotechnology Corporation and Omicron Master Trust(incorporated by reference to Exhibit 4.24.1 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)
4.24.2	Warrant issued by Generex Biotechnology Corporation to Omicron Master Trust on June 7, 2005 in connection with Exhibit 4.24.1 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 10, 2005)
4.25.1	Amendment No. 1 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 (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 17, 2005)
4.25.2	Form of AIR Debenture issued in connection with Exhibit 4.25.1

117

Exhibit Number	Description of Exhibit(1)
4.25.3	Form of AIR Warrant issued in connection with Exhibit 4.25.1
4.25.4	Form of Additional AIR issued in connection with Exhibit 4.25.1
4.26.1	Amendment No. 2 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 (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on September 9, 2005)
4.26.2	Form of Air Debenture issued in connection with Exhibit 4.26.1 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on September 9, 2005)
4.26.3	Form of AIR Warrant issued in connection with Exhibit 4.26.1 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on September 9, 2005)
4.26.4	Form of Additional AIR issued in connection with Exhibit 4.26.1 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on September 9, 2005)
4.27.1	July 22, 2005 Amendment to Promissory Note and Agreement, entered into March 28, 2005 by and between Generex Biotechnology Corporation and Cranshire Capital, L.P.
4.27.2	Warrant issued by Generex Biotechnology Corporation to Cranshire Capital, L.P. on July 22, 2005 in connection with Exhibit 4.27.1
4.28.1	June 22, 2005 Amendment to Promissory Note and Agreement, entered into April 6, 2005 by and between Generex Biotechnology Corporation and Omicron Master Trust
4.28.2	Warrant issued by Generex Biotechnology Corporation to Omicron Master Trust on July 22, 2005 in connection with Exhibit 4.28.1
4.29	Warrant issued by Generex Biotechnology Corporation to Cranshire Capital, L.P. on October 20, 2005
4.30	Warrant issued by Generex Biotechnology Corporation to Iroquois Capital, L.P. on October 20, 2005
4.31	Form of Warrant issued by Generex Biotechnology Corporation on October 27, 2005.
9	Form of Voting Agreement entered into in connection with Exhibit 4.18.1 (incorporated by reference to Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)
10.1	Assistance Agreement, dated March 30, 2005 by and between Generex Biotechnology Corporation and Eckert Seamans Cherin & Mellott, LLC (incorporated by reference to Exhibit 10 to Generex Biotechnology Corporation’s Report on Form 8-K filed on April 1, 2005)

118

Exhibit Number	Description of Exhibit(1)
10.2	Stock Option Agreement by and between Generex Biotechnology Corporation and Mindy J. Allport-Settle to purchase 100,000 shares of Common Stock at the exercise price of $0.56 per share (incorporated by reference to Exhibit 10.2 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*
10.3	Stock Option Agreement by and between Generex Biotechnology Corporation and Peter G. Amanatides to purchase 100,000 shares of Common Stock at the exercise price of $0.56 per share (incorporated by reference to Exhibit 10.3 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*
10.4	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)*
10.5	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)*
10.6	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)*
10.7	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)*
10.8	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)*
10.9	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)*
10.10	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)*
10.11	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)*

119

Exhibit Number	Description of Exhibit(1)
10.12	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)*
10.13	Stock Option Agreement by and between Generex Biotechnology Corporation and Anna E. Gluskin to purchase 1,120,704 shares of Common Stock at the exercise price of $0.001 per share (incorporated by reference to Exhibit 10.13 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*
10.14	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)*
10.15	Annual Base Salaries for Certain Executive Officers Effective August 1, 2004 (incorporated by reference to Exhibit 10.15 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*
10.16	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)*
10.17	Promissory Note and Agreement, dated March 28, 2005 by and between Generex Biotechnology Corporation and Cranshire Capital, L.P. (incorporated by reference to Exhibit 4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on April 1, 2005)
10.18	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)*
10.19	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)*
10.20	2001 Stock Option Plan (incorporated by reference to Exhibit 4.2.3 to Generex Biotechnology Corporation’s Annual Report on Form 10-K filed on October 29, 2001)*
10.21	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)*
10.22	Memorandum of Agreement dated January 7, 1998 between Generex Pharmaceuticals, Inc., GHI Inc., Generex Biotechnology Corporation, Dr. Pankaj Modi and Galaxy Technology, Canada and Consulting Agreement between Generex Pharmaceuticals, Inc. and Pankaj Modi dated October 1, 1996 (incorporated by reference to Exhibit 10.1.1 to Generex Biotechnology Corporation’s Registration Statement on Form 10 filed on December 14, 1998, as amended February 24, 1999)*
10.23	Assignment and Assumption Agreement between Generex Pharmaceuticals, Inc. and Pankaj Modi dated October 1, 1996 (incorporated by reference to Exhibit 10.12 to Generex Biotechnology Corporation’s Registration Statement on Form 10/A filed on February 24, 1999)*

120

Exhibit Number	Description of Exhibit(1)
10.24	Supplemental Agreement dated December 31, 2000 between Generex Pharmaceuticals, Inc., Generex Biotechnology Corporation and Dr. Pankaj Modi (incorporated by reference to Exhibit 10.1.4 to Generex Biotechnology Corporation’s Annual Report on Form 10-K filed on October 29, 2001)*
10.25	Amended and Restated License Agreement dated January 15, 2002 between Generex Biotechnology Corporation and Generex (Bermuda) Ltd. (incorporated by reference to Exhibit 10.3 to Generex Biotechnology Corporation’s Current Report on Form 8-K/A filed on September 9, 2003)
10.26	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)
21	Subsidiaries of the Registrant
23.1	Consent of BDO Dunwoody, LLP, independent registered public accounting firm
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Management contract or management compensatory plan or arrangement.

(1) In the case of incorporation by reference to documents filed by the Registrant under the Exchange Act, the Registrant’s file number under the Exchange Act is 000-25169.

121

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 28th day of October 2005.

GENEREX BIOTECHNOLOGY CORPORATION
By:	/s/ Anna E. Gluskin
	Name:Anna E. Gluskin
	Title: 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 Director (Principal	October 28, 2005
Anna E. Gluskin	Executive Officer)
/s/ Rose C. Perri	Chief Operating Officer, Chief Financial Officer, Treasurer, Secretary	October 28, 2005
Rose C. Perri	and Director (Principal Financial and Accounting Officer)
/s/ Gerald Bernstein, M.D.	Vice President Medical Affairs and Director	October 28, 2005
Gerald Bernstein, M.D.
/s/ Mindy J. Allport-Settle	Director	October 28, 2005
Mindy J. Allport-Settle
/s/ Brian T. McGee	Director	October 28, 2005
Brian T. McGee
/s/ John P. Barratt	Director	October 28, 2005
John P. Barratt
/s/ Peter G. Amanatides	Director	October 28, 2005
Peter G. Amanatides
/s/ Slava Jarnitskii	Controller	October 28, 2005
Slava Jarnitskii

122

SCHEDULE II

	Balance at		Additions						Balance
	Beginning		Charged		Other				at End of
	Of Period		to Expenses		Additions		Deductions		Period
Year Ended July 31, 2003 Valuation Allowance on Deferred Tax Asset	$	15,558,091		--	$	4,197,557		--	$	19,755,648
Year Ended July 31, 2004 Valuation Allowance on Deferred Tax Asset	$	19,755,648		--	$	7,687,609		--	$	27,443,257
Year Ended July 31, 2005 Valuation Allowance on Deferred Tax Asset	$	27,443,257		--	$	7,506,943		--	$	34,950,200

123

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, as amended (incorporated by reference to Exhibit 3.1 to Generex Biotechnology Corporation’s Report on Form 10-Q filed on March 15, 2004)
3(II)	Bylaws of Generex Biotechnology Corporation (incorporated by reference to Exhibit 3.2 to Generex Biotechnology Corporation’s Registration Statement on Form S-1 (File No. 333-82667) filed on July 12, 1999)
4.1	Form of common stock certificate (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Registration Statement on Form S-1 (File No. 333-82667) filed on July 12, 1999)
4.2	Certificate of Designations, Preferences and Rights of Series A Preferred Stock (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on January 23, 2001)
4.3	Form of Warrant issued to Ladenburg Thalmann & Co., Inc. dated July 6, 2001 (incorporated by reference to Exhibit 4.15 to Generex Biotechnology Corporation’s Registration Statement on Form S-3 (File No. 333-67118) filed on August 8, 2001)
4.4	Form of Warrant granted to Cranshire Capital, L.P.; RAM Trading Ltd.; Gryphon Master Fund; Kodiak Opportunity, L.P.; Kodiak Opportunity 3C7, L.P.; Kodiak Opportunity Offshore, Ltd.; Novelly Exempt Trust; Langley Partners, L.P.; Montrose Investments, Ltd.; WEC Asset Management, LLC; ZLP Master Technology Fund, Ltd.; Alpha Capital Aktiengesellschaft; and The dotCOM Fund, LLC, dated July 6, 2001 (incorporated by reference to Exhibit 3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on July 17, 2001)
4.5	Warrant granted to Capital Ventures International, dated July 3, 2001 (incorporated by reference to Exhibit 6 to Generex Biotechnology Corporation’s Report on Form 8-K filed on July 17, 2001)

124

Exhibit Number	Description of Exhibit(1)
4.6	Warrant issued to Elliott International, L.P. and Elliott Associates, L.P., dated July 5, 2001 (incorporated by reference to Exhibit 9 to Generex Biotechnology Corporation’s Report on Form 8-K filed on July 17, 2001)
4.7	Form of Warrant issued to certain parties to October 2000 Private Placement (incorporated by reference to Exhibit 4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on October 16, 2000)
4.8	Form of Warrant (GCR Series) held by Robert P. Carter, Harvey Kaye, Fittube, Inc., Edward Maskaly and Gulfstream Capital Group, L.C. (incorporated by reference to Exhibit 4.4.2 to Generex Biotechnology Corporation’s Registration Statement on Form 10 filed on December 14, 1998, as amended February 24, 1999)
4.9	Letter Agreement and Warrant with M. H. Meyerson & Co., Inc. dated November 17, 1998 (incorporated by reference to Exhibit 4.4.4 to Generex Biotechnology Corporation’s Registration Statement on Form 10 filed on December 14, 1998, as amended February 24, 1999)
4.10.1	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)
4.10.2	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)
4.10.3	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)
4.10.4	Form of Securities Purchase Agreement entered into with Cranshire Capital, L.P. dated June 6, 2003 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 10-Q/A for the quarter ended April 30, 2003 filed on August 13, 2003)
4.10.5	Form of Registration Rights Agreement entered into with Cranshire Capital, L.P. dated June 6, 2003 (incorporated by reference to Exhibit 4.5 to Generex Biotechnology Corporation’s Report on Form 10-Q/A for the quarter ended April 30, 2003 filed on August 13, 2003)
4.10.6	Form of Warrant granted to Cranshire Capital, L.P. dated June 6, 2003 (incorporated by reference to Exhibit 4.6 to Generex Biotechnology Corporation’s Report on Form 10-Q/A for the quarter ended April 30, 2003 filed on August 13, 2003)

125

Exhibit Number	Description of Exhibit(1)
4.10.7	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)
4.11.1	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)
4.11.2	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)
4.11.3	Form of Warrant issued in connection with Exhibit 4.11.1 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K/A filed on March 24, 2004)
4.11.4	Form of Additional Investment Right issued in connection with Exhibit 4.11.1 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K/A filed on March 24, 2004)
4.12.1	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)
4.12.2	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)
4.12.3	Warrant issued in connection with Exhibit 4.12.1 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.12.4	Additional Investment Right issued in connection with Exhibit 4.12.1 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.13.1	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)
4.13.2	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)
4.13.3	Warrant issued in connection with Exhibit 4.13.1 (incorporated by reference to Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.13.4	Additional Investment Right issued in connection with Exhibit 4.13.1 (incorporated by reference to Exhibit 4.8 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)

126

Exhibit Number	Description of Exhibit(1)
4.14.1	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)
4.14.2	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)
4.14.3	Warrant issued in connection with Exhibit 4.14.1 (incorporated by reference to Exhibit 4.11 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.14.4	Additional Investment Right issued in connection with Exhibit 4.14.1 (incorporated by reference to Exhibit 4.12 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.14.5	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)
4.15.1	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)
4.15.2	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)
4.15.3	Warrant issued in connection with Exhibit 4.15.1 (incorporated by reference to Exhibit 4.16 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.15.4	Additional Investment Right issued in connection with Exhibit 4.15.1 (incorporated by reference to Exhibit 4.17 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.16.1	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)
4.16.2	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)
4.16.3	Warrant issued in connection with Exhibit 4.16.1 (incorporated by reference to Exhibit 4.20 to Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)

127

Exhibit Number	Description of Exhibit(1)
4.16.4	Additional Investment Right issued in connection with Exhibit 4.16.1 (incorporated by reference to Exhibit 4.21 Generex Biotechnology Corporation’s Report on Form 8-K filed on March 1, 2004)
4.17.1	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)
4.17.2	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)
4.17.3	Form of Warrant issued in connection with Exhibit 4.17.1 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on July 14, 2004)
4.17.4	Form of Additional Investment Right issued in connection Exhibit 4.17.1 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on July 14, 2004)
4.18.1	Securities Purchase Agreement, dated November 10, 2004, by and among Generex Biotechnology Corporation and the investors named therein (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)
4.18.2	Form of 6% Secured Convertible Debenture issued in connection with Exhibit 4.21.1 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)
4.18.3	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)
4.18.4	Form of Warrant issued in connection with Exhibit 4.18.1 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)
4.18.5	Form of Additional Investment Right issued in connection with Exhibit 4.18.1 (incorporated by reference to Exhibit 4.5 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)
4.18.6	Custodial and Security Agreement, dated November 10, 2004, by and among Generex Biotechnology Corporation, Feldman Weinstein LLP, as custodian, and the investors named therein (incorporated by reference to Exhibit 4.6 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)
4.18.7	Form of Voting Agreement entered into in connection with Exhibit 4.18.1 (incorporated by reference to Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)

128

Exhibit Number	Description of Exhibit(1)
4.19	Termination Agreement, dated December 17, 2004, by and among Generex Biotechnology Corporation and Elan Corporation plc and Elan International Services, Ltd. (incorporated by reference to Exhibit 4.19 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)
4.20	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)
4.21.1	Promissory Note and Agreement, dated March 28, 2005 by and between Generex Biotechnology Corporation and Cranshire Capital, L.P. (incorporated by reference to Exhibit 4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on April 1, 2005)
4.21.2	Warrant issued to Cranshire Capital, L.P. entered into in connection with Exhibit 4.21.1 (incorporated by reference to Exhibit 4.21.2 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)
4.22.1	Promissory Note and Agreement, entered intoApril 6, 2005 by and between Generex Biotechnology Corporation and Omicron Master Trust (incorporated by reference to Exhibit 4.22.1 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)
4.22.2	Warrant issued to Omicron Master Trust entered into in connection with Exhibit 4.22.1 (incorporated by reference to Exhibit 4.22.2 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)
4.23.1	June 7, 2005 Amendment to Promissory Note and Agreement, dated March 28, 2005 by and between Generex Biotechnology Corporation and Cranshire Capital, L.P. (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 10, 2005)
4.23.2	Warrant issued by Generex Biotechnology Corporation to Cranshire Capital, L.P. on June 7, 2005 in connection with Exhibit 4.23.1 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 10, 2005)
4.24.1	June 7, 2005 Amendment to Promissory Note and Agreement, entered into April 6, 2005 by and between Generex Biotechnology Corporation and Omicron Master Trust(incorporated by reference to Exhibit 4.24.1 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)
4.24.2	Warrant issued by Generex Biotechnology Corporation to Omicron Master Trust on June 7, 2005 in connection with Exhibit 4.24.1 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 10, 2005)
4.25.1	Amendment No. 1 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 (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on June 17, 2005)
4.25.2	Form of AIR Debenture issued in connection with Exhibit 4.25.1

129

Exhibit Number	Description of Exhibit(1)
4.25.3	Form of AIR Warrant issued in connection with Exhibit 4.25.1
4.25.4	Form of Additional AIR issued in connection with Exhibit 4.25.1
4.26.1	Amendment No. 2 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 (incorporated by reference to Exhibit 4.1 to Generex Biotechnology Corporation’s Report on Form 8-K filed on September 9, 2005)
4.26.2	Form of Air Debenture issued in connection with Exhibit 4.26.1 (incorporated by reference to Exhibit 4.2 to Generex Biotechnology Corporation’s Report on Form 8-K filed on September 9, 2005)
4.26.3	Form of AIR Warrant issued in connection with Exhibit 4.26.1 (incorporated by reference to Exhibit 4.3 to Generex Biotechnology Corporation’s Report on Form 8-K filed on September 9, 2005)
4.26.4	Form of Additional AIR issued in connection with Exhibit 4.26.1 (incorporated by reference to Exhibit 4.4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on September 9, 2005)
4.27.1	July 22, 2005 Amendment to Promissory Note and Agreement, entered into March 28, 2005 by and between Generex Biotechnology Corporation and Cranshire Capital, L.P.
4.27.2	Warrant issued by Generex Biotechnology Corporation to Cranshire Capital, L.P. on July 22, 2005 in connection with Exhibit 4.27.1
4.28.1	June 22, 2005 Amendment to Promissory Note and Agreement, entered into April 6, 2005 by and between Generex Biotechnology Corporation and Omicron Master Trust
4.28.2	Warrant issued by Generex Biotechnology Corporation to Omicron Master Trust on July 22, 2005 in connection with Exhibit 4.28.1
4.29	Warrant issued by Generex Biotechnology Corporation to Cranshire Capital, L.P. on October 20, 2005
4.30	Warrant issued by Generex Biotechnology Corporation to Iroquois Capital, L.P. on October 20, 2005
4.31	Form of Warrant issued by Generex Biotechnology Corporation on October 27, 2005.
9	Form of Voting Agreement entered into in connection with Exhibit 4.18.1 (incorporated by reference to Exhibit 4.7 to Generex Biotechnology Corporation’s Report on Form 8-K filed on November 12, 2004)
10.1	Assistance Agreement, dated March 30, 2005 by and between Generex Biotechnology Corporation and Eckert Seamans Cherin & Mellott, LLC (incorporated by reference to Exhibit 10 to Generex Biotechnology Corporation’s Report on Form 8-K filed on April 1, 2005)

130

Exhibit Number	Description of Exhibit(1)
10.2	Stock Option Agreement by and between Generex Biotechnology Corporation and Mindy J. Allport-Settle to purchase 100,000 shares of Common Stock at the exercise price of $0.56 per share (incorporated by reference to Exhibit 10.2 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*
10.3	Stock Option Agreement by and between Generex Biotechnology Corporation and Peter G. Amanatides to purchase 100,000 shares of Common Stock at the exercise price of $0.56 per share (incorporated by reference to Exhibit 10.3 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*
10.4	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)*
10.5	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)*
10.6	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)*
10.7	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)*
10.8	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)*
10.9	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)*
10.10	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)*
10.11	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)*

131

Exhibit Number	Description of Exhibit(1)
10.12	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)*
10.13	Stock Option Agreement by and between Generex Biotechnology Corporation and Anna E. Gluskin to purchase 1,120,704 shares of Common Stock at the exercise price of $0.001 per share (incorporated by reference to Exhibit 10.13 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*
10.14	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)*
10.15	Annual Base Salaries for Certain Executive Officers Effective August 1, 2004 (incorporated by reference to Exhibit 10.15 to Generex Biotechnology Corporation’s Quarterly Report on Form 10-Q filed on June 14, 2005)*
10.16	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)*
10.17	Promissory Note and Agreement, dated March 28, 2005 by and between Generex Biotechnology Corporation and Cranshire Capital, L.P. (incorporated by reference to Exhibit 4 to Generex Biotechnology Corporation’s Report on Form 8-K filed on April 1, 2005)
10.18	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)*
10.19	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)*
10.20	2001 Stock Option Plan (incorporated by reference to Exhibit 4.2.3 to Generex Biotechnology Corporation’s Annual Report on Form 10-K filed on October 29, 2001)*
10.21	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)*
10.22	Memorandum of Agreement dated January 7, 1998 between Generex Pharmaceuticals, Inc., GHI Inc., Generex Biotechnology Corporation, Dr. Pankaj Modi and Galaxy Technology, Canada and Consulting Agreement between Generex Pharmaceuticals, Inc. and Pankaj Modi dated October 1, 1996 (incorporated by reference to Exhibit 10.1.1 to Generex Biotechnology Corporation’s Registration Statement on Form 10 filed on December 14, 1998, as amended February 24, 1999)*
10.23	Assignment and Assumption Agreement between Generex Pharmaceuticals, Inc. and Pankaj Modi dated October 1, 1996 (incorporated by reference to Exhibit 10.12 to Generex Biotechnology Corporation’s Registration Statement on Form 10/A filed on February 24, 1999)*

132

Exhibit Number	Description of Exhibit(1)
10.24	Supplemental Agreement dated December 31, 2000 between Generex Pharmaceuticals, Inc., Generex Biotechnology Corporation and Dr. Pankaj Modi (incorporated by reference to Exhibit 10.1.4 to Generex Biotechnology Corporation’s Annual Report on Form 10-K filed on October 29, 2001)*
10.25	Amended and Restated License Agreement dated January 15, 2002 between Generex Biotechnology Corporation and Generex (Bermuda) Ltd. (incorporated by reference to Exhibit 10.3 to Generex Biotechnology Corporation’s Current Report on Form 8-K/A filed on September 9, 2003)
10.26	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)
21	Subsidiaries of the Registrant
23.1	Consent of BDO Dunwoody, LLP, independent registered public accounting firm
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Management contract or management compensatory plan or arrangement.

(1) In the case of incorporation by reference to documents filed by the Registrant under the Exchange Act, the Registrant’s file number under the Exchange Act is 000-25169.

133

EX-4.25.2

Exhibit 4.25.2

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

Original Issue Date: June 17, 2005

Original Conversion Price (subject to adjustment herein): $0.60

$500,000

6% SECURED CONVERTIBLE DEBENTURE

DUE SEPTEMBER 16, 2006

THIS DEBENTURE is one of a series of duly authorized and issued 6% Secured Convertible Debentures of Generex Biotechnology Company, a Delaware corporation, having a principal place of business at 33 Harbour Square, Suite 202, Toronto, Ontario Canada M5J2G2 (the “Company”), designated as its 6% Convertible Debenture, due September 16, 2006 (the “Debenture(s)”).

FOR VALUE RECEIVED, the Company promises to pay to ___________ or its registered assigns (the “Holder”), the principal sum of $500,000 on September 16, 2006 or such earlier date as the Debentures are required or permitted to be repaid as provided hereunder (the “Maturity Date”), and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with the provisions hereof. This Debenture is subject to the following additional provisions:

Section 1.Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Debenture: (a) capitalized terms not otherwise defined herein have the meanings given to such terms in the Purchase Agreement Amendment, or if not found therein, the Purchase Agreement and (b) the following terms shall have the following meanings:

“Alternate Consideration” shall have the meaning set forth in Section 5(d).

1

“Base Conversion Price” shall have the meaning set forth in Section 5(b).

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

“Buy-In” shall have the meaning set forth in Section 4(d)(v).

“Change of Control Transaction” means the occurrence after the date hereof of any of (i) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 33% of the voting securities of the Company, or (ii) a replacement at one time or within a three year period of more than one-half of the members of the Company’s board of directors which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), or (iii) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (i) or (ii).

“Common Stock” means the common stock, par value $0.001 per share, of the Company and stock of any other class into which such shares may hereafter have been reclassified or changed.

“Conversion Date” shall have the meaning set forth in Section 4(a).

“Conversion Price” shall have the meaning set forth in Section 4(b).

“Conversion Shares” means the shares of Common Stock issuable upon conversion of Debentures or as payment of interest in accordance with the terms.

“Debenture Register” shall have the meaning set forth in Section 2(c).

“Dilutive Issuance” shall have the meaning set forth in Section 5(b).

“Dilutive Issuance Notice” shall have the meaning set forth in Section 5(b).

“Effectiveness Period” shall have the meaning given to such term in the Registration Rights Agreement and the Purchase Agreement Amendment.

“Equity Conditions” shall mean, during the period in question, (i) the Company shall have duly honored all conversions and redemptions scheduled to occur or occurring by virtue of one or more Notice of Conversions, if any, (ii) all liquidated damages and other amounts owing in respect of the Debentures shall have been paid; (iii) there is an effective Registration Statement pursuant to which the Holder is permitted to utilize the prospectus thereunder to resell all of the shares issuable pursuant to the Transaction Documents (and the Company believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future), (iv) the Common Stock is trading on the Trading Market and all of the shares issuable pursuant to the Transaction Documents are listed for trading on a Trading Market (and the Company believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (v) there is a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the shares issuable pursuant to the Transaction Documents, (vi) there is then existing no Event of Default or event which, with the passage of time or the giving of notice, would constitute an Event of Default, (vii) all of the shares issued or issuable pursuant to the transaction proposed would not violate the limitations set forth in Section 4(c), (viii) no public announcement of a pending or proposed Fundamental Transaction, Change of Control Transaction or acquisition transaction has occurred that has not been consummated, and (ix) the Holder is not then in possession of what could be deemed material, non-public information, in the reasonable determination of the Holder.

2

“Event of Default” shall have the meaning set forth in Section 8.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fundamental Transaction” shall have the meaning set forth in Section 5(d).

“Interest Conversion Rate” means the lesser of (a) the Conversion Price and (b) 90% of the average of the 20 VWAPs immediately prior to the applicable Interest Payment Date.

“Interest Payment Date” shall have the meaning set forth in Section 2(a).

“Late Fees” shall have the meaning set forth in Section 2(d).

“Mandatory Prepayment Amount” for any Debentures shall equal the sum of (i) the greater of: (A) 130% of the principal amount of Debentures to be prepaid, plus all accrued and unpaid interest thereon, or (B) the principal amount of Debentures to be prepaid, plus all other accrued and unpaid interest hereon, divided by the Conversion Price on (x) the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is paid in full, whichever is less, multiplied by the VWAP on (x) the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is paid in full, whichever is greater, and (ii) all other amounts, costs, expenses and liquidated damages due in respect of such Debentures.

3

“Monthly Conversion Price” shall have the meaning set forth in Section 6(a) hereof.

“Monthly Redemption” shall mean the redemption of this Debenture pursuant to Section 6(a) hereof.

“Monthly Redemption Amount” shall mean, as to a Monthly Redemption, $38,461.54^{1the original principal amount of this Debenture divided by 13.}, or such lesser principal amount of this Debenture then outstanding.

“Monthly Redemption Date” means the first Trading Day of every month, commencing on September 1, 2005 and ending on the date when there is no principal amount of this Debenture outstanding.

“New York Courts” shall have the meaning set forth in Section 9(d).

“Notice of Conversion” shall have the meaning set forth in Section 4(a).

“Original Issue Date” shall mean the date of the first issuance of the Debentures regardless of the number of transfers of any Debenture and regardless of the number of instruments which may be issued to evidence such Debenture.

“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

“Purchase Agreement” means the Securities Purchase Agreement, dated as of November 9, 2004, to which the Company and the original Holder are parties, as amended, modified or supplemented from time to time in accordance with its terms.

“Purchase Agreement Amendment” means Amendment No. 1 to Securities Purchase Agreement and Registration Rights Agreement dated June 16, 2005, to which the Company and the original Holder are parties, as amended, modified or supplemented from time to time in accordance with its terms.

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, to which the Company and the original Holder are parties, as amended, modified or supplemented from time to time in accordance with its terms.

“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement, covering among other things the resale of the Conversion Shares and naming the Holder as a “selling stockholder” thereunder.

4

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Shareholder Approval” shall have the meaning given to such term in the Purchase Agreement.

“Subsidiary” shall have the meaning given to such term in the Purchase Agreement.

“Trading Day” means a day on which the Common Stock is traded on a Trading Market.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock Exchange or the Nasdaq National Market.

“Transaction Documents” shall have the meaning set forth in the Purchase Agreement.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b)  if the Common Stock is not then listed or quoted on a Trading Market and if prices for the Common Stock are then quoted on the OTC Bulletin Board, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders and reasonably acceptable to the Company.

Section 2.Interest.

a)Payment of Interest in Cash or Kind. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture at the rate of 6% per annum, payable quarterly on March 31, June 30, September 30 and December 31, beginning on the first such date after the Original Issue Date and on each Conversion Date (as to that principal amount then being converted) and on the Maturity Date (except that, if any such date is not a Business Day, then such payment shall be due on the next succeeding Business Day) (each such date, an “Interest Payment Date”), in cash or shares of Common Stock in an amount equal to the amount of interest then due and owing divided by the Interest Conversion Rate, or a combination thereof; provided, however, payment in shares of Common Stock may only occur if during the 20 Trading Days immediately prior to the applicable Interest Payment Date all of the Equity Conditions have been met and the Company shall have given the Holder notice in accordance with the notice requirements set forth below.

5

b)Company’s Election to Pay Interest in Kind. Subject to the terms and conditions herein, the decision whether to pay interest hereunder in shares of Common Stock or cash shall be at the discretion of the Company. Not less than 20 Trading Days prior to each Interest Payment Date, the Company shall provide the Holder with written notice of its election to pay interest hereunder either in cash or shares of Common Stock (the Company may indicate in such notice that the election contained in such notice shall continue for later periods until revised). Within 20 Trading Days prior to an Interest Payment Date, the Company’s election (whether specific to an Interest Payment Date or continuous) shall be irrevocable as to such Interest Payment Date. Subject to the aforementioned conditions, failure to timely provide such written notice shall be deemed an election by the Company to pay the interest on such Interest Payment Date in cash.

c)Interest Calculations. Interest shall be calculated on the basis of a 360-day year and shall accrue daily commencing on the Original Issue Date until payment in full of the principal sum, together with all accrued and unpaid interest and other amounts which may become due hereunder, has been made. Payment of interest in shares of Common Stock shall otherwise occur pursuant to Section 4(d)(ii) and only for purposes of the payment of interest in shares, the Interest Payment Date shall be deemed the Conversion Date. Interest shall cease to accrue with respect to any principal amount converted, provided that the Company in fact delivers the Conversion Shares within the time period required by Section 4(d)(ii). Interest hereunder will be paid to the Person in whose name this Debenture is registered on the records of the Company regarding registration and transfers of Debentures (the “Debenture Register”). Except as otherwise provided herein, if at any time the Company pays interest partially in cash and partially in shares of Common Stock, then such payment shall be distributed ratably among the Holders based upon the principal amount of Debentures held by each Holder.

d)Late Fee. All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at the rate of 18% per annum (or such lower maximum amount of interest permitted to be charged under applicable law) (“Late Fees”) which will accrue daily, from the date such interest is due hereunder through and including the date of payment. Notwithstanding anything to the contrary contained herein, if on any Interest Payment Date the Company has elected to pay interest in Common Stock and is not able to pay accrued interest in the form of Common Stock because it does not then satisfy the conditions for payment in the form of Common Stock set forth above, then, at the option of the Holder, the Company, in lieu of delivering either shares of Common Stock pursuant to this Section 2 or paying the regularly scheduled cash interest payment, shall deliver, within three Trading Days of each applicable Interest Payment Date, an amount in cash equal to the product of the number of shares of Common Stock otherwise deliverable to the Holder in connection with the payment of interest due on such Interest Payment Date and the highest VWAP during the period commencing on the Interest Payment Date and ending on the Trading Day prior to the date such payment is made.

6

e)Prepayment. Except as otherwise set forth in this Debenture, the Company may not prepay any portion of the principal amount of this Debenture without the prior written consent of the Holder.

Section 3.Registration of Transfers and Exchanges.

a)Different Denominations. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration of transfer or exchange.

b)Investment Representations. This Debenture has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations.

c)Reliance on Debenture Register. Prior to due presentment to the Company for transfer of this Debenture, the Company and any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

Section 4.Conversion.

a)Voluntary Conversion. At any time after the Original Issue Date until this Debenture is no longer outstanding, this Debenture shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time and from time to time (subject to the limitations on conversion set forth in Section 4(c) hereof). The Holder shall effect conversions by delivering to the Company the form of Notice of Conversion attached hereto as Annex A (a “Notice of Conversion”), specifying therein the principal amount of Debentures to be converted and the date on which such conversion is to be effected (a “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is provided hereunder. To effect conversions hereunder, the Holder shall not be required to physically surrender Debentures to the Company unless the entire principal amount of this Debenture plus all accrued and unpaid interest thereon has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Debenture in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount converted and the date of such conversions. The Company shall deliver any objection to any Notice of Conversion within 2 Business Days of receipt of such notice. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less than the amount stated on the face hereof.

7

b)Conversion Price. The conversion price in effect on any Conversion Date shall be equal to $0.60 (subject to adjustment herein)(the “Conversion Price”).

c)Holder’s Restriction on Conversion. The Company shall not effect any conversion of this Debenture, and the Holder shall not have the right to convert any portion of this Debenture, pursuant to Section 4(a) or otherwise, to the extent that after giving effect to such conversion, the Holder (together with the Holder’s affiliates), as set forth on the applicable Notice of Conversion, would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such conversion.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted portion of this Debenture beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Debentures or the Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 4(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. To the extent that the limitation contained in this section applies, the determination of whether this Debenture is convertible (in relation to other securities owned by the Holder) and of which a portion of this Debenture is convertible shall be in the sole discretion of such Holder. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. For purposes of this Section 4(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of the Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Debenture, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.

8

d)Mechanics of Conversion

i.Conversion Shares Issuable Upon Conversion of Principal Amount. The number of shares of Common Stock issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be converted by (y) the Conversion Price.

ii.Delivery of Certificate Upon Conversion. Not later than three Trading Days after any Conversion Date, the Company will deliver to the Holder (A) a certificate or certificates representing the Conversion Shares which shall be free of restrictive legends and trading restrictions (other than those required by the Purchase Agreement) representing the number of shares of Common Stock being acquired upon the conversion of Debentures (including, if so timely elected by the Company, shares of Common Stock representing the payment of accrued interest) and (B) a bank check in the amount of accrued and unpaid interest (if the Company is required to pay accrued interest in cash). The Company shall, if available and if allowed under applicable securities laws, use its commercially reasonable efforts to deliver any certificate or certificates required to be delivered by the Company under this Section electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions.

iii.Failure to Deliver Certificates. If in the case of any Notice of Conversion such certificate or certificates are not delivered to or as directed by the applicable Holder by the third Trading Day after a Conversion Date, the Holder shall be entitled by written notice to the Company at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Company shall immediately return the certificates representing the principal amount of Debentures tendered for conversion; provided that if as a result of the limitations set forth in Section 4(c) hereof, such failure by the Company is for a portion of the Securities for which a Notice of Conversion has been delivered, the Holder shall be permitted to rescind solely that portion not so converted.

iv.Obligation Absolute; Partial Liquidated Damages. Subject to the limitations set forth in Section 4(c) hereof, if the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(d)(ii) by the third Trading Day after the Conversion Date, the Company shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $1000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day after 5 Trading Days after such damages begin to accrue) for each Trading Day after such third Trading Day until such certificates are delivered. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event a Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or any one associated or affiliated with the Holder of has been engaged in any violation of law, agreement or for any other reason, unless, an injunction from a court, on notice, restraining and or enjoining conversion of all or part of this Debenture shall have been sought and obtained and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the principal amount of this Debenture outstanding, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of an injunction precluding the same, the Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 8 herein for the Company’s failure to deliver Conversion Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holders from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

9

v.Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder, if the Company fails for any reason, other than as a result of the limitations set forth in Section 4(c) hereof, to deliver to the Holder such certificate or certificates pursuant to Section 4(d)(ii) by the third Trading Day after the Conversion Date, and if after such third Trading Day the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which the Holder anticipated receiving upon such conversion (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition to any remedies available to or elected by the Holder) the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder anticipated receiving from the conversion at issue multiplied by (2) the actual sale price of the Common Stock at the time of the sale (including brokerage commissions, if any) giving rise to such purchase obligation and (B) at the option of the Holder, either reissue Debentures in principal amount equal to the principal amount of the attempted conversion or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its delivery requirements under Section 4(d)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of Debentures with respect to which the actual sale price of the Conversion Shares at the time of the sale (including brokerage commissions, if any) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In. Notwithstanding anything contained herein to the contrary, if a Holder requires the Company to make payment in respect of a Buy-In for the failure to timely deliver certificates hereunder and the Company timely pays in full such payment, the Company shall not be required to pay such Holder liquidated damages under Section 4(d)(iv) in respect of the certificates resulting in such Buy-In.

10

vi.Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of the Debentures and payment of interest on the Debenture, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holders, not less than such number of shares of the Common Stock as shall (subject to any additional requirements of the Company as to reservation of such shares set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the outstanding principal amount of the Debentures and payment of interest hereunder. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid, nonassessable and, if the Registration Statement is then effective under the Securities Act, registered for public sale in accordance with such Registration Statement.

vii.Fractional Shares. Upon a conversion hereunder the Company shall not be required to issue stock certificates representing fractions of shares of the Common Stock, but may if otherwise permitted, make a cash payment in respect of any final fraction of a share based on the VWAP at such time. If the Company elects not, or is unable, to make such a cash payment, the Holder shall be entitled to receive, in lieu of the final fraction of a share, one whole share of Common Stock.

11

viii.Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of the Debentures shall be made without charge to the Holders thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of such Debentures so converted and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

Section 5.Certain Adjustments.

a)Stock Dividends and Stock Splits. If the Company, at any time while the Debentures are outstanding: (A) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Debenture, including as interest thereon), (B) subdivide outstanding shares of Common Stock into a larger number of shares, (C) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b)Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while Debentures are outstanding, shall offer, sell, grant any option to purchase or offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances collectively, a “Dilutive Issuance”), as adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder in writing, no later than the Business Day following the issuance of any Common Stock or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or of applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of Conversion Shares based upon the Base Conversion Price regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion. Notwithstanding the foregoing, no adjustment will be made hereunder in respect of (i) an Exempt Issuance other than an Exempt Issuance that involves an MFN Transaction or a Variable Rate Transaction for which the adjustment provisions of Section 5 shall be applicable or (ii) issuances of up to, in the aggregate, the first 500,000 shares of Common Stock or Common Stock Equivalents (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement) to consultants of the Company in any 12 month period pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose.

12

c)Pro Rata Distributions. If the Company, at any time while Debentures are outstanding, shall distribute to all holders of Common Stock (and not to Holders) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security, then in each such case the Conversion Price shall be determined by multiplying such Conversion Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holders of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

d)Fundamental Transaction. If, at any time while this Debenture is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then upon any subsequent conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion absent such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common Stock (the “Alternate Consideration”). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new debenture consistent with the foregoing provisions and evidencing the Holder’s right to convert such debenture into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (c) and insuring that this Debenture (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

13

e)Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. The number of shares of Common Stock outstanding at any given time shall not include shares of Common Stock owned or held by or for the account of the Company, and the description of any such shares of Common Stock shall be considered on issue or sale of Common Stock. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

f)Notice to Holders.

i.Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any of this Section 5, the Company shall promptly mail to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. If the Company issues a variable rate security, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised in the case of a Variable Rate Transaction (as defined in the Purchase Agreement), or the lowest possible adjustment price in the case of an MFN Transaction (as defined in the Purchase Agreement).

14

ii.Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of the Debentures, and shall cause to be mailed to the Holders at their last addresses as they shall appear upon the stock books of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. Holders are entitled to convert Debentures during the 20-day period commencing the date of such notice to the effective date of the event triggering such notice.

Section 6. Monthly Redemptions.

a)Monthly Redemption. On each Monthly Redemption Date, the Company shall redeem the Monthly Redemption Amount plus accrued but unpaid interest, the sum of all liquidated damages and any other amounts then owing to the Holder in respect of this Debenture. The Monthly Redemption Amount due on each Monthly Redemption Date shall, except as provided in this Section, be paid in cash. As to any Monthly Redemption and upon 20 Trading Days’ prior written irrevocable notice, in lieu of a cash redemption payment the Company may elect to pay 100% of a Monthly Redemption in Conversion Shares based on a conversion price equal to the lesser of (i) 90% of the average of the 20 VWAPs immediately prior to the applicable Monthly Redemption Date (subject to adjustment for any stock dividend, stock split, stock combination or other similar event affecting the Common Stock during such 20 Trading Day period)and ( The Holders may convert, pursuant to Section 4(a), any principal amount of this Debenture subject to a Monthly Redemption at any time prior to the date that the Monthly Redemption Amount and all amounts owing thereon are due and paid in full. Unless otherwise directed by the Holder in the applicable Notice of Conversion, any portion of this Debenture converted during any 20 day period until the date the Monthly Redemption Amount is paid shall be first applied to the principal amount of Debenture subject to the Monthly Redemption and such Holder’s cash payment of the Monthly Redemption Amount on such Monthly Redemption Date shall be reduced accordingly. The Company covenants and agrees that it will honor all Notice of Conversions tendered up until such amounts are paid in full.

15

b)Redemption Procedure. The payment of cash and/or issuance of Common Stock, as the case may be, pursuant to a Monthly Redemption shall be made on the Monthly Redemption Date. If any portion of the cash payment for a Monthly Redemption shall not be paid by the Company by the respective due date, interest shall accrue thereon at the rate of 18% per annum (or the maximum rate permitted by applicable law, whichever is less) until the payment of the Monthly Redemption Amount plus all amounts owing thereon is paid in full. Alternatively, if any portion of the Monthly Redemption Amount remains unpaid after such date, the Holders subject to such redemption may elect, by written notice to the Company given at any time thereafter, to invalidate ab initio such redemption, notwithstanding anything herein contained to the contrary. Notwithstanding anything to the contrary in this Section 6, the Company’s determination to redeem in cash or shares of Common Stock shall be applied ratably among the Holders of Debentures based upon the principal amount of Debentures initially purchased by each Holder, adjusted upward ratably in the event all of the principal amount of any Holder are no longer outstanding. The Holder may elect to convert the outstanding principal amount of this Debenture pursuant to Section 4 prior to actual payment in cash for any redemption under this Section 6 by fax delivery of a Notice of Conversion to the Company.

Section 7.Negative Covenants. So long as any portion of this Debenture is outstanding, the Company will not and will not permit any of its Subsidiaries to directly or indirectly:

a)enter into, create, incur, assume or suffer to exist any indebtedness or liens of any kind, on or with respect to any of its property or assets (including, without limitation, in respect to any of the Secured Proceeds as that terms is defined in the Custodial Agreement) now owned or hereafter acquired or any interest therein or any income or profits therefrom that is senior to, or paripassu with, in any respect, the Company’s obligations under the Debentures;

16

b)amend its certificate of incorporation, bylaws or to the charter documents so as to adversely affect any rights of the Holder;

c)other than redemption payments with respect to the Company's Special Voting Rights Preferred Stock not to exceed $5,000 in the aggregate and repurchases of the Company's Series A Convertible Preferred Stock to the extent that the cash payments in respect of any such repurchases does not exceed, in the aggregate, $50,000, repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or other equity or debt securities other than as to the Conversion Shares to the extent permitted or required under the Transaction Documents or as otherwise permitted by the Transaction Documents; or

d)enter into any agreement with respect to any of the foregoing.

Section 8.Events of Default.

a)“Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

i.any default in the payment of (A) the principal amount of any Debenture, or (B) interest (including Late Fees) on, or liquidated damages in respect of, any Debenture, in each case free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured, within 3 Trading Days;

ii.the Company shall fail to observe or perform any other covenant or agreement contained in this Debenture or any of the other Transaction Documents (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion which breach is addressed in clause (xii) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice of such default sent by the Holder or by any other Holder and (B)10 Trading Days after the Company shall become or should have become aware of such failure;

iii.a default or event of default (subject to any grace or cure period provided for in the applicable agreement, document or instrument) shall occur under (A) any of the Transaction Documents other than the Debentures, or (B) any other material agreement, lease, document or instrument to which the Company or any Subsidiary is bound;

17

iv.any representation or warranty made herein, in any other Transaction Documents, in any written statement pursuant hereto or thereto, or in any other report, financial statement or certificate made or delivered to the Holder or any other holder of Debentures shall be untrue or incorrect in any material respect as of the date when made or deemed made;

v.(i) the Company or any of its Subsidiaries shall commence, or there shall be commenced against the Company or any such Subsidiary, a case under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any Subsidiary commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any Subsidiary thereof or (ii) there is commenced against the Company or any Subsidiary thereof any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 60 days; or (iii) the Company or any Subsidiary thereof is adjudicated by a court of competent jurisdiction insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or (iv) the Company or any Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of 60 days; or (v) the Company or any Subsidiary thereof makes a general assignment for the benefit of creditors; or (vi) the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or (vii) the Company or any Subsidiary thereof shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (viii) the Company or any Subsidiary thereof shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or (ix) any corporate or other action is taken by the Company or any Subsidiary thereof for the purpose of effecting any of the foregoing;

vi.the Company or any Subsidiary shall default in any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company in an amount exceeding $150,000, whether such indebtedness now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

18

vii.the Common Stock shall not be eligible for quotation on or quoted for trading on a Trading Market and shall not again be eligible for and quoted or listed for trading thereon within five Trading Days;

viii.the Company shall be a party to any Change of Control Transaction or Fundamental Transaction, shall agree to sell or dispose of all or in excess of 33% of its assets in one or more transactions (whether or not such sale would constitute a Change of Control Transaction) or shall redeem or repurchase more than a de minimis number of its outstanding shares of Common Stock or other equity securities of the Company (other than redemption payments with respect to the Company's Special Voting Rights Preferred Stock not to exceed $5,000 in the aggregate during the term of this Debenture);

ix.a Registration Statement shall not have been declared effective by the Commission on or prior to the 180^thcalendar day after the Closing Date;

x.if, during the Effectiveness Period (as defined in the Registration Rights Agreement), the effectiveness of the Registration Statement lapses for any reason or the Holder shall not be permitted to resell Registrable Securities (as defined in the Registration Rights Agreement) under the Registration Statement, in either case, for more than 30 consecutive Trading Days or 60 non-consecutive Trading Days during any 12 month period; provided, however, that in the event that the Company is negotiating a merger, consolidation, acquisition or sale of all or substantially all of its assets or a similar transaction and in the written opinion of counsel to the Company, the Registration Statement, would be required to be amended to include information concerning such transactions or the parties thereto that is not available or may not be publicly disclosed at the time, the Company shall be permitted an additional 10 consecutive Trading during any 12 month period relating to such an event;

xi.an Event (as defined in the Registration Rights Agreement) shall not have been cured to the satisfaction of the Holder prior to the expiration of thirty days from the Event Date (as defined in the Registration Rights Agreement) relating thereto (other than an Event resulting from a failure of an Registration Statement to be declared effective by the Commission on or prior to the Effectiveness Date (as defined in the Registration Rights Agreement), which shall be covered by Section 8(a)(ix);

xii.the Company shall fail for any reason, other than as a result of the limitations set forth in Section 4(c) hereof, to deliver certificates to a Holder prior to the fifth Trading Day after a Conversion Date pursuant to and in accordance with Section 4(d) or the Company shall provide notice to the Holder, including by way of public announcement, at any time, of its intention not to comply with requests for conversions of any Debentures in accordance with the terms hereof;

19

xiii.the Company shall fail for any reason to pay in full the amount of cash due pursuant to a Buy-In within 5 Trading Days after notice therefor is delivered hereunder or shall fail to pay all amounts owed on account of an Event of Default within five days of the date due;

xiv.any Person shall breach the agreements delivered to the initial Holders pursuant to Section 2.2(a)(iv) of the Purchase Agreement and the Company does not obtain Shareholder Approval.

b)Remedies Upon Event of Default. If any Event of Default occurs, the full principal amount of this Debenture, together with interest and other amounts owing in respect thereof, to the date of acceleration shall become, at the Holder’s election, immediately due and payable in cash. The aggregate amount payable upon an Event of Default shall be equal to the Mandatory Prepayment Amount. Commencing 5 days after the occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the interest rate on this Debenture shall accrue at the rate of 18% per annum, or such lower maximum amount of interest permitted to be charged under applicable law. All Debentures for which the full Mandatory Prepayment Amount hereunder shall have been paid in accordance herewith shall promptly be surrendered to or as directed by the Company. The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a Debenture holder until such time, if any, as the full payment under this Section shall have been received by it. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

Section 9.Miscellaneous.

a)Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, facsimile number 416-364-9363, Attn: Anna E. Gluskin, President, or such other address or facsimile number as the Company may specify for such purposes by notice to the Holders delivered in accordance with this Section. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile telephone number or address of such Holder appearing on the books of the Company, or if no such facsimile telephone number or address appears, at the principal place of business of the Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 5:00 p.m. (New York City time), (ii) the date after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section later than 5:00 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

20

b)Absolute Obligation. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, interest and liquidated damages (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt obligation of the Company and, pursuant to the Cusotdial Agreement dated the date hereof by and between the Company and the Purchasers (as defined therein), is secured by a first priority security interest in certain Secured Proceeds (as defined in the Custodial Agreement) for the benefit of the Holder. This Debenture ranks paripassu with all other Debentures now or hereafter issued under the terms set forth herein.

c)Lost or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, and indemnity, if requested, all reasonably satisfactory to the Company.

d)Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Debenture and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Debenture or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

21

e)Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in writing.

f)Severability. If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Debenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

g)Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

h)Headings. The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall not be deemed to limit or affect any of the provisions hereof.

*********************

22

IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above indicated.

GENEREX BIOTECHNOLOGY CORPORTION
By:
	Name: Title:

23

ANNEX A

NOTICE OF CONVERSION

The undersigned hereby elects to convert principal under the 6% Convertible Debenture of Generex Biotechnology Company, a Delaware corporation (the “Company”), due on September 16, 2006 , into shares of common stock, par value $0.001 per share (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts determined in accordance with Section 13(d) of the Exchange Act, specified under Section 4 of this Debenture.

The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.

Conversion calculations:

Date to Effect Conversion:

Principal Amount of Debentures to be Converted:

Payment of Interest in Common Stock __ yes __ no

If yes, $_____ of Interest Accrued on Account of Conversion at Issue.

Is conversion to be applied against next Monthly Redemption Payment and if so, what portion? (note failure to answer deemed entire portion to be applied) $_________

Number of shares of Common Stock to be issued:

Signature:

Name:

Address:

24

Schedule 1

CONVERSION SCHEDULE

The 6% Convertible Debentures due on September 16, 2006, in the aggregate principal amount of $____________ issued by Generex Biotechnology Company. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Debenture.

Dated:

  Date of Conversion (or for first entry, Original Issue Date)   Amount of Conversion   Aggregate Principal Amount Remaining Subsequent to Conversion (or original Principal Amount)   Company Attest

25

EX-4.25.3

Exhibit 4.25.3

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

To Purchase 609,756 Shares of Common Stock of

GENEREX BIOTECHNOLOGY CORPORATION

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, __________ (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the 181^st day after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the five anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Generex Biotechnology Corporation, a Delaware corporation (the “Company”), up to 609,756 shares (the “Warrant Shares”) of Common Stock, par value $0.001 per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1.Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Amendment No. 1 to Securities Purchase Agreement and Registration Rights Agreement dated June 16, 2005 (the ‘Purchase Agreement Amendment”), and if not found therein, that certain Securities Purchase Agreement (the “Purchase Agreement”), dated November 10, 2004, among the Company and the purchasers signatory thereto.

Section 2.Exercise.

a)Exercise of Warrant. Subject to the terms hereof, exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, within 5 Trading Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased in cash or by wire transfer of immediately available funds.

1

b)Exercise Price. The exercise price of the Common Stock under this Warrant shall be $0.82, subject to adjustment hereunder (the “Exercise Price”).

c)Cashless Exercise. If at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the VWAP on the Trading Day immediately preceding the date of such election;

(B) = the Exercise Price of this Warrant, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

d)Exercise Limitations. The Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2(c) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such issuance.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Debentures or Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged by Holder that the Company is not representing to Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and of which a portion of this Warrant is exercisable shall be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed to be such Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. For purposes of this Section 2(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of the Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.

2

e)Mechanics of Exercise.

i.Authorization of Warrant Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.

3

ii.Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”). This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vii) prior to the issuance of such shares, have been paid.

iii.Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iv.Rescission Rights. If the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 2(e)(iv) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; provided that if as a result of the limitations set forth in Section 2(d) hereof, such failure by the Company is for a portion of the Warrant Shares for which a Notice of Exercise has been delivered, the Holder shall be permitted to rescind solely that portion not so exercised.

v.Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

4

vi.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

vii.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

5

viii.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

Section 3.CertainAdjustments.

a)Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Warrant), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b)Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall offer, sell, grant any option to purchase or offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then Exercise Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”), as adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price), then, the Exercise Price shall be reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or of applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. Notwithstanding the foregoing, no adjustment will be made hereunder in respect of (i) an Exempt Issuance other than an Exempt Issuance that involves an MFN Transaction or a Variable Rate Transaction for which the adjustment provisions of Section 3(b) shall be applicable or (ii) issuances of up to, in the aggregate, the first 500,000 shares of Common Stock or Common Stock Equivalents (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement) to consultants of the Company in any 12 month period pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose.

6

c)Pro Rata Distributions. If the Company, at any time prior to the Termination Date, shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holders of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

d)Fundamental Transaction. If, at any time while this Warrant is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent conversion of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise absent such Fundamental Transaction, at the option of the Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Alternate Consideration receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event or (b) if the Company is acquired in an all cash transaction, cash equal to the value of this Warrant as determined in accordance with the Black-Scholes option pricing formula (the “Alternate Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 3(d) and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

7

e)Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. The number of shares of Common Stock outstanding at any given time shall not includes shares of Common Stock owned or held by or for the account of the Company, and the description of any such shares of Common Stock shall be considered on issue or sale of Common Stock. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

f)Voluntary Adjustment By Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

g)Notice to Holders.

i.Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company shall promptly mail to each Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. If the Company issues a variable rate security, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised in the case of a Variable Rate Transaction (as defined in the Purchase Agreement), or the lowest possible adjustment price in the case of an MFN Transaction (as defined in the Purchase Agreement.

8

ii.Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last addresses as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this Warrant during the 20-day period commencing the date of such notice to the effective date of the event triggering such notice.

Section 4.Transfer of Warrant.

a)Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

9

b)New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

c)Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

d)Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act.

Section 5.Miscellaneous.

a)Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 4 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

10

b)No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

c)Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

d)Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

e)Authorized Shares.

The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

11

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

f)Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

g)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

h)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

i)Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

j)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

k)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

12

l)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

m)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

n)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

o)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

13

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: June 17, 2005

GENEREX BIOTECHNOLOGY CORPORATION
By:
	Name: Title:

14

NOTICE OF EXERCISE

TO:GENEREX BIOTECHNOLOGY CORPORATION

(1)The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2)Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3)Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following:

_______________________________

_______________________________

_______________________________

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Dated: ______________, _______

Holder’s Signature:	_____________________________
Holder’s Address:	_____________________________
	_____________________________

Signature Guaranteed: ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

EX-4.25.4

Exhibit 4.25.4

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

ADDITIONAL INVESTMENT RIGHT

To Purchase $500,000 Principal Amount of 6% Convertible Debentures and Warrants

Generex Biotechnology Corporation

THIS ADDITIONAL INVESTMENT RIGHT (the “AIR”) certifies that, for value received, _____________ (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the 181^st day following the date hereof (the “Initial Exercise Date”) and on or prior to the earlier of the close of business on the 12 month anniversary of the Effective Date and the two year anniversary of the date hereof (the “Termination Date”) but not thereafter, to subscribe for and purchase from Generex Biotechnology Corporation, a Delaware corporation (the “Company”), up to $500,000 principal amount of 6% Convertible Debentures (the “AIR Debenture”) and warrants to purchase shares of Common Stock of the Company as described herein at an exercise price of $0.82 per share (the “AIR Warrant Exercise Price”) (subject to adjustment hereunder and thereunder) (the “AIR Warrant”). Subject to the terms and conditions hereof, upon the purchase hereunder of AIR Debenture, the Holder shall receive a warrant to purchase a number of shares of Common Stock equal to 100% of the shares of Common Stock underlying such AIR Debenture when issued. The initial conversion price of the Debenture shall be equal to $0.82, subject to adjustment thereunder and hereunder (“AIR Debenture Conversion Price”). The AIR Debenture and AIR Warrant shall be in the form of the Debentures and Warrants (with the same rights, privileges and preferences set forth in the Transaction Documents) issued pursuant to the Purchase Agreement Amendment, mutatis mutandis. The AIR Debentures and the AIR Warrant shall be collectively referred to as the “AIR Securities.” The AIR Warrant Exercise Price and the AIR Debenture Conversion Price shall be collectively referred to herein as the “AIR Conversion Price.”

1

Section 1.Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Amendment No. 1 to Securities Purchase Agreement and Registration Rights Agreement dated June 16, 2005 (the “Purchase Agreement Amendment”), or, if not found therein, the Securities Purchase Agreement dated November 10, 2004, among the Company and the purchasers signatory thereto.

Section 2.Exercise.

a)Exercise of AIR. Subject to the terms and conditions contained herein, exercise of the purchase rights represented by this AIR may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company) and the payment of the Stated Value thereby purchased by wire transfer or cashier’s check drawn on a United States bank. Subject to the terms and conditions contained herein, upon exercise of the AIR, the Company shall issue AIR Debentures with a Stated Value equal to the amount paid by the Holder and the AIR Warrant to purchase a number of shares of Common Stock equal to 100% of the shares of Common Stock issuable upon conversion of such AIR Debenture.

b)Mechanics of Exercise.

i.Authorization of AIR Debenture and the AIR Warrant. The Company covenants that during the period the AIR is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of all of the shares of Common Stock underlying the AIR Debenture and AIR Warrant (the collectively, “AIR Conversion Shares”). The Company further covenants that its issuance of this AIR shall constitute full authority to its officers who are charged with the duty of executing certificates to execute and issue the necessary certificates for the AIR Securities upon the exercise of the purchase rights under this AIR and certificates upon conversion and exercise of the AIR Securities. The Company covenants that the AIR Securities which may be issued upon the exercise of the purchase rights represented by this AIR and the AIR Conversion Shares issuable thereunder will, upon exercise of the purchase rights represented by this AIR, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company will take all such reasonable action as may be necessary to assure that the AIR Securities and AIR Conversion Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.

2

ii.Delivery of Certificates Upon Exercise. Certificates for the AIR Securities purchased hereunder shall be delivered to the Holder within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this AIR and payment of the Stated Value as set forth above (“AIR Security Delivery Date”). This AIR shall be deemed to have been exercised on the date the payment of the principal amount is received by the Company. The AIR Securities shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such security for all purposes, as of the date the AIR has been exercised by payment to the Company of the principal amount and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vii) prior to the issuance of such security, have been paid.

iii.Delivery of New AIRs Upon Exercise. If this AIR shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing the AIR Securities, deliver to Holder a new AIR evidencing the rights of Holder to purchase the unpurchased AIR Securities called for by this AIR, which new AIR shall in all other respects be identical with this AIR.

iv.Rescission Rights. If the Company fails to deliver to the Holder a certificate or certificates representing the AIR Securities pursuant to this Section 2(e)(iv) by the AIR Security Delivery Date, then the Holder will have the right to rescind such exercise.

v.Charges, Taxes and Expenses. Issuance of certificates for AIR Securities shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for AIR Securities are to be issued in a name other than the name of the Holder, this AIR when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

vi.Closing of Books. The Company will not close its records in any manner which prevents the timely exercise of this AIR, pursuant to the terms hereof or the conversion of the AIR Securities pursuant to the terms hereof.

3

Section 3.Certain Adjustments.

a)Stock Dividends and Splits. If the Company, at any time while this AIR is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to the AIR Securities), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the AIR Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b)Subsequent Equity Sales. At any time after Shareholder Approval has been obtained, if the Company or any Subsidiary thereof, as applicable, at any time while this AIR is outstanding, shall offer, sell, grant any option to purchase or offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then AIR Conversion Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”), as adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the AIR Conversion Price, such issuance shall be deemed to have occurred for less than the AIR Conversion Price), then the AIR Conversion Prices shall be reduced to equal to the Base Share Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or of applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of securities based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.

c)Pro Rata Distributions. If the Company, at any time while this AIR is outstanding, distributes to all holders of Common Stock (and not to Holders) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b), then in each such case the AIR Conversion Price shall be determined by multiplying such AIR Conversion Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the Closing Price determined as of the record date mentioned above, and of which the numerator shall be such Closing Price on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

4

d)Calculations. All calculations and adjustments to the AIR Conversion Price under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) outstanding.

e)Notice to Holders.

i.Adjustment to AIR Conversion Price. Whenever the AIR Conversion Price is adjusted pursuant to this Section 3, the Company shall promptly mail to each Holder a notice setting forth the AIR Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

ii.Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last addresses as it shall appear upon the AIR Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this AIR during the 20-day period commencing the date of such notice to the effective date of the event triggering such notice.

5

f)Fundamental Transaction. If, at any time while this AIR is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent exercise of this AIR the Holder shall have the right to receive upon conversion or exercise of the AIR Securities, as applicable, for each AIR Conversion Share that would have been issuable upon such exercise and then subsequent conversion absent such Fundamental Transaction, at the option of the Holder, (a) upon conversion or exercise of the AIR Securities, shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Alternate Consideration receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which the underlying AIR Securities are convertible immediately prior to such event or (b) cash equal to the value of this AIR as determined in accordance with the Black-Scholes option pricing formula (the “Alternate Consideration”). For purposes of any such deemed conversion, the determination of the AIR Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the AIR Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion or exercise of the AIR Securities underlying this AIR following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new additional investment right consistent with the foregoing provisions and evidencing the Holder’s right to exercise such additional investment right ultimately into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (f) and insuring that this AIR (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

6

g)Exempt Issuance. Notwithstanding the foregoing, no adjustments, Alternate Consideration nor notices shall be made, paid or issued under this Section 3 in respect of an Exempt Issuance other than an Exempt Issuance that involves an MFN Transaction or a Variable Rate Transaction for which the adjustment, Alternate Consideration and notice provision Section 3 shall be applicable.

h)Voluntary Adjustment By Company. The Company may at any time during the term of this AIR reduce the then current AIR Conversion Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

Section 4.Transfer of AIR.

a)Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Sections 5(a) and 4(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this AIR and all rights hereunder are transferable, in whole or in part, upon surrender of this AIR at the principal office of the Company, together with a written assignment of this AIR substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new AIR or AIRs in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new AIR evidencing the portion of this AIR not so assigned, and this AIR shall promptly be cancelled. An AIR, if properly assigned, may be exercised by a new holder for the purchase of AIR Securities without having a new AIR issued.

b)New AIRs. This AIR may be divided or combined with other AIRs upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new AIRs are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new AIR or AIRs in exchange for the AIR or AIRs to be divided or combined in accordance with such notice.

c)AIR Register. The Company shall register this AIR, upon records to be maintained by the Company for that purpose (the “AIR Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this AIR as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary

7

d)Transfer Restrictions. If, at the time of the surrender of this AIR in connection with any transfer of this AIR, the transfer of this AIR shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this AIR, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act.

Section 5.Miscellaneous.

a)Title to the Additional Investment Right. Prior to the Termination Date and subject to compliance with applicable laws and Section 4 of this AIR, this AIR and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this AIR together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

b)No Rights as Shareholder Until Exercise. This AIR does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this AIR and the payment of the aggregate principal, the AIR Securities so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

c)Loss, Theft, Destruction or Mutilation of AIR. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this AIR or any certificate relating to the AIR Securities, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the AIR, shall not include the posting of any bond), and upon surrender and cancellation of such AIR or certificate, if mutilated, the Company will make and deliver a new AIR or certificate of like tenor and dated as of such cancellation, in lieu of such AIR or certificate.

d)Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

8

e)Authorized Shares.

The Company covenants that during the period the AIR is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the shares of Common Stock issuable upon conversion and exercise, as applicable, of the AIR Securities. The Company further covenants that its issuance of this AIR shall constitute full authority to its officers who are charged with the duty of executing certificates to execute and issue the necessary certificates for the AIR Securities upon the exercise of the purchase rights under this AIR. The Company will take all such reasonable action as may be necessary to assure that such AIR Securities and AIR Conversion Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this AIR or the AIR Securities, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this AIR and the AIR Securities against impairment. Without limiting the generality of the foregoing, the Company will (a) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable AIR Securities upon the exercise of this AIR and AIR Conversion Shares upon conversion and exercise of the AIR Securities, and (b) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this AIR and the AIR Securities.

Before taking any action which would result in an adjustment in the AIR Securities for which this AIR is exercisable or in the AIR Conversion Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

f)Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this AIR shall be determined in accordance with the provisions of the Purchase Agreement Amendment.

g)Restrictions. The Holder acknowledges that the AIR Securities acquired upon the exercise of this AIR, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

9

h)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this AIR, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

i)Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement Amendment.

j)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this AIR or purchase AIR Securities, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

k)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this AIR. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this AIR and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

l)Successors and Assigns. Subject to applicable securities laws, this AIR and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this AIR are intended to be for the benefit of all Holders from time to time of this AIR and shall be enforceable by any such Holder or holder of AIR Securities.

m)Amendment. This AIR may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

n)Severability. Wherever possible, each provision of this AIR shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this AIR shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this AIR.

o)Headings. The headings used in this AIR are for the convenience of reference only and shall not, for any purpose, be deemed a part of this AIR.

********************

10

IN WITNESS WHEREOF, the Company has caused this AIR to be executed by its officer thereunto duly authorized.

Dated: June 17, 2005

GENEREX BIOTECHNOLOGY CORPORATION
By:
	Name: Title:

11

NOTICE OF EXERCISE

TO:GENEREX BIOTECHNOLOGY CORPORATION

(1)The undersigned hereby elects to purchase $________ Principal Amount of AIR Debenture and Warrants to purchase _____ shares of Common Stock of Generex Biotechnology Corporation pursuant to the terms of the attached AIR and tenders herewith payment of the principal in full, together with all applicable transfer taxes, if any.

(2)Payment shall take the form of (check applicable box) in lawful money of the United States; or

(3)Please issue a certificate or certificates representing said AIR Securities in the name of the undersigned or in such other name as is specified below:

_______________________________

The AIR Securities shall be delivered to the following:

_______________________________

_______________________________

_______________________________

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing AIR and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Dated: ______________, _______

Holder’s Signature:	_____________________________
Holder’s Address:	_____________________________
	_____________________________

Signature Guaranteed: ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the AIR, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing AIR.

EX-4.27.1

Exhibit 4.27.1

Generex Biotechnology Corporation

33 Harbour Square, Suite 202

Toronto, Ontario

Canada M5J 2G2

July 22, 2005

Cranshire Capital, L.P.

666 Dundee Road, Suite 1901

Northbrook, Illinois

USA 60062

Dear Sirs:

Re:Generex Biotechnology Corporation

- Promissory Note & Agreement dated March 28, 2005

We make reference to the Promissory Note & Agreement (the “Note”) dated March 28, 2005 in the principal amount of Five Hundred Thousand Dollars ($500,000) executed and delivered by Generex Biotechnology Corporation (the “Borrower”) in favour of Cranshire Capital, L.P. (the “Holder”), as the same was amended by letter agreement dated June 7, 2005.

We hereby confirm the mutual agreement of the Borrower and the Holder to further amend the terms of the Note by extending the interest payment date and the maturity date thereof from July 22, 2005 to September 20, 2005.

We hereby further confirm that, in consideration for the Holder’s agreement to the foregoing amendment of the Note, the Borrower will forthwith issue to the Holder a warrant (the “Amendment Warrant”) to purchase an aggregate of 1, 219,512 shares of the Borrower’s common stock (the “Amendment Warrant Shares”) at a per-share price of Eighty Two Cents ($0.82), such warrant to expire on July 22, 2010.

From and after the date hereof, the term “Warrant” in the Note will be deemed to include the Amendment Warrant, and the term “Warrant Shares” in the Note will be deemed to include the Amendment Warrant Shares.

continued…………………………………………………………………………………………......

In all other respects, the Note will remain in full force and effect and unamended.

Yours truly,

Generex Biotechnology Corporation

/s/ Rose C. Perri

____________________________________

Rose C. Perri

Chief Financial Officer

AGREED.

Cranshire Capital, L.P.

/s/ Lawrence A. Prosser

____________________________________

Lawrence A. Prosser

Chief Financial Officer - Downsview Capital, Inc.

The General Partner

2

EX-4.27.2

Exhibit 4.27.2

WARRANT

THE SECURITIES REPRESENTED BY THIS WARRANT AND SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL IN FORM REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT. ANY SUCH OFFER, SALE, ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH THE APPLICABLE STATE SECURITIES LAWS.

Generex Biotechnology Corporation

Warrant To Purchase Common Stock

Warrant No.: 2005_____	Number of Shares: 1,219,512
Date of Original Issuance: July 22, 2005

Generex Biotechnology Corporation, a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Cranshire Capital, L.P., the registered holder hereof or its permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company upon surrender of this Warrant, at any time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time on the Expiration Date (as defined herein) 1,219,512 fully paid nonassessable shares of Common Stock (as defined herein) of the Company (the “Warrant Shares”) at the purchase price per share provided in Section 1(b) below.

Section 1.

(a)Note. This Warrant is one of a series of Warrants (the “Warrants”) issued pursuant to the terms of one or more Promissory Note and Agreements, as amended, pursuant to which the Company has borrowed funds and issued securities including this Warrant between March 28, 2005 and July 22, 2005 (collectively, the “Note”).

(b)Definitions. The following words and terms as used in this Warrant shall have the following meanings:

(i)“Approved Stock Plan” shall mean any employee benefit plan as defined in Rule 405 under the Securities Act which has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued to any employee, officer, director, consultant or other service provider for services provided to the Company.

(ii)“Common Stock” means (i) the Company’s common stock, $.001 par value per share, and (ii) any capital stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock.

(iii)“Conversion Entitlement” shall have the meaning ascribed to it in the Note.

(iv)“Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exchangeable for Common Stock.

(v)“Expiration Date” means July 22, 2010.

(vi)“Options” means any rights, warrants, or options to subscribe for or purchase Common Stock or Convertible Securities.

(vii)“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

(viii)“Principal Market” means the Nasdaq National Market or Nasdaq Small-Cap Market.

(ix)“Securities Act” means the Securities Act of 1933, as amended.

(x)“Warrant” means this Warrant and all Warrants issued in exchange, transfer or replacement of any thereof.

(xi)“Warrant Exercise Price” shall be $0.82 per common share, subject to adjustment as hereinafter provided.

Section 2.Exercise of Warrant.

(a)Subject to the terms and conditions hereof, this Warrant may be exercised by the holder hereof then registered on the books of the Company, in whole or in part, at any time on any business day on or after the opening of business on the date hereof and prior to 11:59 P.M. Eastern Time on the Expiration Date by (i) delivery of a written notice, in the form of the subscription notice attached as Exhibit A hereto (the “Exercise Notice”), of such holder’s election to exercise this Warrant, which notice shall specify the number of Warrant Shares to be purchased, (ii) payment to the Company of an amount equal to the Warrant Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (plus any applicable issue or transfer taxes) (the “Aggregate Exercise Price”) in cash or by check or wire transfer; and (iii) the surrender to a common carrier for delivery to the Company as soon as practicable following such date, this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction); provided, that if such Warrant Shares are to be issued in any name other than that of the registered holder of this Warrant, such issuance shall be deemed a transfer and the provisions of Section 7 shall be applicable. In the event of any exercise of the rights represented by this Warrant in compliance with this Section 2(a), a certificate or certificates for the Warrant Shares so purchased, in such denominations as may be requested by the holder hereof and registered in the name of, or as directed by, the holder, shall be issued as soon as practicable, and in no event later than five (5) business days after the Company’s receipt of the Exercise Notice, the Aggregate Exercise Price and this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction), and deliver the same at the Company’s expense to, or as directed by, such holder. Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to in clause (ii) above, the holder of this Warrant shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of this Warrant as required by clause (iii) above or the certificates evidencing such Warrant Shares. In the case of a dispute as to the determination of the Warrant Exercise Price, the Company shall promptly issue to the holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the holder via facsimile within five (5) business days of receipt of the holder’s subscription notice.

2

(b)Unless the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, as soon as practicable and in no event later than five (5) business days after any exercise and at its own expense, issue a new Warrant identical in all respects to this Warrant exercised except it shall represent rights to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant exercised, less the number of Warrant Shares with respect to which such Warrant is exercised.

(c)Notwithstanding anything in this Warrant to the contrary, in no event shall the holder of this Warrant be entitled to exercise a number of Warrant Shares (or portions thereof) to the extent that after giving effect to any such exercise the holder (together with its affiliates) would beneficially own in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such exercise (not including shares of Common Stock issuable upon (a) exercise of any remainder of the Conversion Entitlement or any remainder of the Warrant, or (b) conversion or exercise of the non-converted or unexercised portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the holder or any of its affiliates). For purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Regulation 13D-G of the Securities Exchange Act of 1934, as amended, except as otherwise provided in clauses (a) and (b) of the preceding sentence. To the extent the foregoing limitation applies, the determination whether or not the Warrant is exercisable and to what extent shall be in the sole discretion of the holder.

Section 3.Representations and Covenants as to Common Stock. The Company hereby represents and covenants as follows:

(a)This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized and validly issued.

3

(b)All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.

(c)During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved at least 100% of the number of shares of Common Stock needed to provide for the exercise of the rights then represented by this Warrant and the par value of said shares will at all times be less than or equal to the applicable Warrant Exercise Price.

(d)The Company shall promptly secure the listing of the shares of Common Stock issuable upon exercise of this Warrant upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance upon exercise of this Warrant) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system.

(e)The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent with the tenor and purpose of this Warrant will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

(f)This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets.

Section 4.Taxes. The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.

Section 5.Warrant Holder Not Deemed a Stockholder. Except as otherwise specifically provided herein, no holder, as such, of this Warrant shall be entitled to vote or receive dividends or be deemed the holder of shares of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the holder of this Warrant of the Warrant Shares which he or she is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on such holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 5, the Company will provide the holder of this Warrant with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

4

Section 6.Representations of Holder.The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act; provided, however, that by making the representations herein, the holder does not agree to hold this Warrant or any of the Warrant Shares for any minimum or other specific term and reserves the right to dispose of this Warrant and the Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. The holder of this Warrant further represents, by acceptance hereof, that, as of this date, such holder is an “accredited investor” as such term is defined in Rule 501(a)(1) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act (an “Accredited Investor”).

Section 7.Ownership and Transfer.

(a)The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant.

(b)This Warrant and the rights granted to the holder hereof are transferable, in whole or in part, upon surrender of this Warrant, together with a properly executed warrant power in the form of Exhibit B attached hereto; provided, however, that any transfer or assignment shall be subject to the conditions set forth in Section 7(c) below.

(c)The holder of this Warrant understands that this Warrant has not been and is not expected to be, registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (i) subsequently registered thereunder, or (ii) the transferee is an affiliated entity that is an Accredited Investor, or (iii) such holder shall have delivered to the Company an opinion of counsel, in generally acceptable form, to the effect that the securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to Regulation S under the Securities Act or to an exemption from such registration; provided that (A) any sale of such securities made in reliance on Rule 144 promulgated under the Securities Act may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the Securities and Exchange Commission thereunder; and (B) neither the Company nor any other person is under any obligation to register the Warrants under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

5

(d)The initial holder of this Warrant is entitled to certain piggyback registration rights in respect of the Warrant Shares such that the Warrant Shares shall be included on the next registration statement on Form S-2 or Form S-3 that the Company files after the date hereof to register shares of Common Stock under the Securities Act, other than any registration statement that the Company files to register shares of Common Stock issuable pursuant to any employee benefit plan.

Section 8.Adjustment of Warrant Exercise Price and Number of Shares. The Warrant Exercise Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted from time to time as follows:

(a)Adjustment of Warrant Exercise Price upon Subdivision or Combination of Common Stock. If the Company at any time after the date of issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Warrant Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately increased. If the Company at any time after the date of issuance of this Warrant combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Warrant Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately decreased.

(b)Distribution of Assets. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement or other transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case:

(i)the Warrant Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Warrant Exercise Price by a fraction of which (A) the numerator shall be the Closing bid price on the trading day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (B) the denominator shall be the Closing bid price on the trading day immediately preceding such record date; and

(ii)either (A) the number of Warrant Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i), or (B) in the event that the Distribution is of common stock of a company whose common stock is traded on a national securities exchange or a national automated quotation system, then the holder of this Warrant shall receive an additional warrant to purchase Common Stock, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the amount of the assets that would have been payable to the holder of this Warrant pursuant to the Distribution had the holder exercised this Warrant immediately prior to such record date and with an exercise price equal to the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding clause (i).

6

(c)Certain Events. If any event occurs of the type contemplated by the provisions of this Section 8 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Warrant Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Warrants; provided that no such adjustment will increase the Warrant Exercise Price or decrease the number of shares of Common Stock obtainable as otherwise determined pursuant to this Section 8.

(d)Notices.

(i)Immediately upon any adjustment of the Warrant Exercise Price, the Company will give written notice thereof to the holder of this Warrant, setting forth in reasonable detail, and certifying, the calculation of such adjustment.

(ii)The Company will give written notice to the holder of this Warrant at least twenty (20) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change (as defined below), dissolution or liquidation, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder.

(iii)The Company will also give written notice to the holder of this Warrant at least twenty (20) days prior to the date on which any Organic Change, dissolution or liquidation will take place, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder.

Section 9.Purchase Rights; Reorganization, Reclassification, Consolidation, Merger or Sale. (a) In addition to any adjustments pursuant to Section 8 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the holder of this Warrant will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder could have acquired if such holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

7

(b) Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets to another Person or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as “Organic Change.” Prior to the consummation of any (i) sale of all or substantially all of the Company’s assets to an acquiring Person or (ii) other Organic Change following which the Company is not a surviving entity, the Company will secure from the Person purchasing such assets or the successor resulting from such Organic Change (in each case, the “Acquiring Entity”) written agreement (in form and substance satisfactory to the holders of Warrants representing a majority of the shares of Common Stock obtainable upon exercise of the Warrants then outstanding) to deliver to each holder of Warrants in exchange for such Warrants, a security of the Acquiring Entity evidenced by a written instrument substantially similar in form and substance to this Warrant and satisfactory to the holders of the Warrants (including, an adjusted warrant exercise price equal to the value for the Common Stock reflected by the terms of such consolidation, merger or sale, and exercisable for a corresponding number of shares of Common Stock acquirable and receivable upon exercise of the Warrants, if the value so reflected is less than the Warrant Exercise Price in effect immediately prior to such consolidation, merger or sale). Prior to the consummation of any other Organic Change, the Company shall make appropriate provision (in form and substance satisfactory to the holders of Warrants representing a majority of the shares of Common Stock obtainable upon exercise of the Warrants then outstanding) to insure that each of the holders of the Warrants will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the exercise of such holder’s Warrants, such shares of stock, securities or assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock which would have been acquirable and receivable upon the exercise of such holder’s Warrant as of the date of such Organic Change (without taking into account any limitations or restrictions on the exercisability of this Warrant).

Section 10.Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company shall, on receipt of an indemnification undertaking, issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.

Section 11.Notice. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (iii) upon receipt, when sent by e-mail (provided that the transmission is electronically tracked and the results of tracking kept on file by the sending party); or (iv) one business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The mailing addresses, facsimile numbers and e-mail addresses for such communications shall be as set forth below:

8

If to the Company:

Generex Biotechnology Corporation

33 Harbour Square, Suite 202

Toronto, Ontario M5J 2G2

Telephone:(416) 364-2551

Facsimile:(416) 364-9363

E-mail:mfletcher@generex.com

Attention:Mark A. Fletcher

Executive Vice-President and General Counsel

With a copy to:

Eckert Seamans Cherin & Mellott

1515 Market Street, 9^th Floor

Philadelphia, Pennsylvania 19102-1909

Telephone:(215) 851-8472

Facsimile:(215) 851-8383

E-mail:gmiller@escm.com

Attention:Gary A. Miller, Esq.

Or at such other mailing address, facsimile number or e-mail address that the Company shall specify by notice to the holder.

To a holder of this Warrant:

Cranshire Capital, L.P.

666 Dundee Road, Suite 1901

Northbrook, Illinois 60062

Telephone:_____________

Facsimile:_____________

Or at such other mailing address, facsimile number or e-mail address that the holder of this Warrant shall specify by notice to the Company.

Each party shall provide five days’ prior written notice to the other party of any change in mailing address, facsimile number or e-mail address.

Section 12.Amendments. This Warrant and any term hereof may be changed, waived, discharged, or terminated only by an instrument in writing signed by the party or holder hereof against which enforcement of such change, waiver, discharge or termination is sought.

Section 13.Date. This Warrant, in all events, shall be wholly void and of no effect after the close of business on the Expiration Date, except that notwithstanding any other provisions hereof, the provisions of Section 7 shall continue in full force and effect after such date as to any Warrant Shares or other securities issued upon the exercise of this Warrant.

9

Section 14.Descriptive Headings; Governing Law. The descriptive headings of the several Sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be governed by the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware.

This Warrant has been duly executed by the Company this 22^nd day of July, 2005.

GENEREX BIOTECHNOLOGY CORPORATION
By:	/s/ Mark A. Fletcher
	Name:Mark A. Fletcher
	Title:Executive Vice-President, General Counsel

10

EXHIBIT A TO WARRANT

SUBSCRIPTION FORM

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Generex Biotechnology Corporation, a Delaware corporation (the “Company”), evidenced by the attached Warrant (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

1. Form of Warrant Exercise Price. The Holder intends that payment of the Warrant Exercise Price shall be made as:

a “Cash Exercise” with respect to _______________________ Warrant Shares.

2. Payment of Warrant Exercise Price. If the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder is transmitting herewith the sum of $___________________ to the Company in payment for such Warrant Shares.

3. Delivery of Warrant Shares. The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant.

Date: ________ ___, 200_

Name of Registered Holder:

________________________________

Signature:

By: _______________________________________

Print Name and Title: __________________________

Title: ______________________________________

11

EXHIBIT B TO WARRANT

FORM OF WARRANT POWER

FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to ________________, Federal Identification No. __________, a warrant to purchase ____________ shares of the capital stock of Generex Biotechnology Corporation, a Delaware corporation, represented by warrant certificate no. _____, standing in the name of the undersigned on the books of said corporation. The undersigned does hereby irrevocably constitute and appoint ______________, attorney to transfer the warrants of said corporation, with full power of substitution in the premises.

Dated: _________, 200_

____________________________________________

By:________________________________________________

Name:______________________________________________

Title:_______________________________________________

EX-4.28.1

Exhibit 4.28.1

Generex Biotechnology Corporation

33 Harbour Square, Suite 202

Toronto, Ontario

Canada M5J 2G2

July 22, 2005

Omicron Master Trust

650 5^th Ave., 24^th Floor

New York, New York

USA 10019

Dear Sirs:

Re:Generex Biotechnology Corporation

- Promissory Note & Agreement dated April 4, 2005

We make reference to the Promissory Note & Agreement (the “Note”) dated April 4, 2005 in the principal amount of One Hundred Thousand Dollars ($100,000) executed and delivered by Generex Biotechnology Corporation (the “Borrower”) in favour of Omicron Master Trust (the “Holder”), as the same was amended by letter agreement dated June 7, 2005.

We hereby confirm the mutual agreement of the Borrower and the Holder to amend the terms of the Note by extending the interest payment date and the maturity date thereof from July 22, 2005 to September 20, 2005.

We hereby further confirm that, in consideration for the Holder’s agreement to the foregoing amendment of the Note, the Borrower will forthwith issue to the Holder a warrant (the “Amendment Warrant”) to purchase an aggregate of 243,902 shares of the Borrower’s common stock (the “Amendment Warrant Shares”) at a per-share price of Eighty Two Cents ($0.82), such warrant to expire on July 20, 2010.

From and after the date hereof, the term “Warrant” in the Note will be deemed to include the Amendment Warrant, and the term “Warrant Shares” in the Note will be deemed to include the Amendment Warrant Shares.

continued…………………………………………………………………………………………......

In all other respects, the Note will remain in full force and effect and unamended.

Yours truly,

Generex Biotechnology Corporation

/s/ Rose C. Perri

____________________________________

Rose C. Perri

Chief Financial Officer

AGREED.

Omicron Master Trust

/s/ Bruce Bernstein

____________________________________

Bruce Bernstein

Managing Partner

2

EX-4.29

Exhibit 4.29

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

To Purchase 300,000 Shares of Common Stock of

GENEREX BIOTECHNOLOGY CORPORATION

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Cranshire Capital, L.P. (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the 181^st day after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the fifth (5^th) anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Generex Biotechnology Corporation, a Delaware corporation (the “Company”), up to 300,000 shares (the “Warrant Shares”) of Common Stock, par value $0.001 per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1.Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated November 10, 2004, among the Company and the purchasers signatory thereto.

Section 2.Exercise.

a)Exercise of Warrant. Subject to the terms hereof, exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, within 5 Trading Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased in cash or by wire transfer of immediately available funds.

1

b)Exercise Price. The exercise price of the Common Stock under this Warrant shall be $1.20, subject to adjustment hereunder (the “Exercise Price”).

c)Cashless Exercise. If at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the VWAP on the Trading Day immediately preceding the date of such election;

(B) = the Exercise Price of this Warrant, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

d)Exercise Limitations. The Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2(c) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such issuance.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Debentures or Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged by Holder that the Company is not representing to Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and of which a portion of this Warrant is exercisable shall be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed to be such Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. For purposes of this Section 2(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of the Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.

2

e)Mechanics of Exercise.

i.Authorization of Warrant Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.

ii.Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”). This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vii) prior to the issuance of such shares, have been paid.

3

iii.Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iv.Rescission Rights. If the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 2(e)(iv) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; provided that if as a result of the limitations set forth in Section 2(d) hereof, such failure by the Company is for a portion of the Warrant Shares for which a Notice of Exercise has been delivered, the Holder shall be permitted to rescind solely that portion not so exercised.

v.Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

4

vi.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

vii.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

viii.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

5

Section 3.CertainAdjustments.

a)Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Warrant), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b)Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall offer, sell, grant any option to purchase or offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then Exercise Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”), as adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price), then, the Exercise Price shall be reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or of applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. Notwithstanding the foregoing, no adjustment will be made hereunder in respect of (i) an Exempt Issuance other than an Exempt Issuance that involves an MFN Transaction or a Variable Rate Transaction for which the adjustment provisions of Section 3(b) shall be applicable or (ii) issuances of up to, in the aggregate, the first 1,500,000 shares of Common Stock or Common Stock Equivalents (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement) to consultants of the Company in any 12 month period pursuant to a resolution duly adopted by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose.

6

c)Pro Rata Distributions. If the Company, at any time prior to the Termination Date, shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holders of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

d)Fundamental Transaction. If, at any time while this Warrant is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent conversion of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise absent such Fundamental Transaction, at the option of the Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Alternate Consideration receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event or (b) if the Company is acquired in an all cash transaction, cash equal to the value of this Warrant as determined in accordance with the Black-Scholes option pricing formula (the “Alternate Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 3(d) and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

7

e)Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. The number of shares of Common Stock outstanding at any given time shall not includes shares of Common Stock owned or held by or for the account of the Company, and the description of any such shares of Common Stock shall be considered on issue or sale of Common Stock. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

f)Voluntary Adjustment By Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

g)Notice to Holders.

i.Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company shall promptly mail to each Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. If the Company issues a variable rate security, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised in the case of a Variable Rate Transaction (as defined in the Purchase Agreement), or the lowest possible adjustment price in the case of an MFN Transaction (as defined in the Purchase Agreement.

8

ii.Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last addresses as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this Warrant during the 20-day period commencing the date of such notice to the effective date of the event triggering such notice.

Section 4.Transfer of Warrant.

a)Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

9

b)New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

c)Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

d)Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act.

Section 5.Miscellaneous.

a)Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 4 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

b)No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

10

c)Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

d)Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

e)Authorized Shares.

The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

11

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

f)Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

g)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

h)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

i)Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

j)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

k)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

l)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

12

m)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

n)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

o)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: October 20, 2005

GENEREX BIOTECHNOLOGY CORPORATION
By:	/s/ Mark A. Fletcher
	Name: Mark A. Fletcher Title: Executive Vice-President, General Counsel

13

NOTICE OF EXERCISE

TO:GENEREX BIOTECHNOLOGY CORPORATION

(1)The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2)Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3)Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following:

_______________________________

_______________________________

_______________________________

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Dated: ______________, _______

Holder’s Signature:	_____________________________
Holder’s Address:	_____________________________
	_____________________________

Signature Guaranteed: ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

EX-4.30

Exhibit 4.30

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

To Purchase 609,756 Shares of Common Stock of

GENEREX BIOTECHNOLOGY CORPORATION

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Iroquois Capital LP (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the 181^st day after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the fifth (5^th) anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Generex Biotechnology Corporation, a Delaware corporation (the “Company”), up to 609,756 shares (the “Warrant Shares”) of Common Stock, par value $0.001 per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1.Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated November 10, 2004, among the Company and the purchasers signatory thereto.

Section 2.Exercise.

a)Exercise of Warrant. Subject to the terms hereof, exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, within 5 Trading Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased in cash or by wire transfer of immediately available funds.

1

b)Exercise Price. The exercise price of the Common Stock under this Warrant shall be $1.20, subject to adjustment hereunder (the “Exercise Price”).

c)Cashless Exercise. If at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the VWAP on the Trading Day immediately preceding the date of such election;

(B) = the Exercise Price of this Warrant, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

d)Exercise Limitations. The Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2(c) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such issuance.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Debentures or Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged by Holder that the Company is not representing to Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and of which a portion of this Warrant is exercisable shall be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed to be such Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. For purposes of this Section 2(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of the Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.

2

e)Mechanics of Exercise.

i.Authorization of Warrant Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.

ii.Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”). This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vii) prior to the issuance of such shares, have been paid.

3

iii.Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iv.Rescission Rights. If the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 2(e)(iv) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; provided that if as a result of the limitations set forth in Section 2(d) hereof, such failure by the Company is for a portion of the Warrant Shares for which a Notice of Exercise has been delivered, the Holder shall be permitted to rescind solely that portion not so exercised.

v.Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

4

vi.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

vii.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

viii.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

5

Section 3.CertainAdjustments.

a)Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Warrant), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b)Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall offer, sell, grant any option to purchase or offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then Exercise Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”), as adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price), then, the Exercise Price shall be reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or of applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. Notwithstanding the foregoing, no adjustment will be made hereunder in respect of (i) an Exempt Issuance other than an Exempt Issuance that involves an MFN Transaction or a Variable Rate Transaction for which the adjustment provisions of Section 3(b) shall be applicable or (ii) issuances of up to, in the aggregate, the first 1,500,000 shares of Common Stock or Common Stock Equivalents (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement) to consultants of the Company in any 12 month period pursuant to a resolution duly adopted by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose.

6

c)Pro Rata Distributions. If the Company, at any time prior to the Termination Date, shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holders of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

d)Fundamental Transaction. If, at any time while this Warrant is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent conversion of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise absent such Fundamental Transaction, at the option of the Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Alternate Consideration receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event or (b) if the Company is acquired in an all cash transaction, cash equal to the value of this Warrant as determined in accordance with the Black-Scholes option pricing formula (the “Alternate Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 3(d) and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

7

e)Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. The number of shares of Common Stock outstanding at any given time shall not includes shares of Common Stock owned or held by or for the account of the Company, and the description of any such shares of Common Stock shall be considered on issue or sale of Common Stock. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

f)Voluntary Adjustment By Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

g)Notice to Holders.

i.Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company shall promptly mail to each Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. If the Company issues a variable rate security, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised in the case of a Variable Rate Transaction (as defined in the Purchase Agreement), or the lowest possible adjustment price in the case of an MFN Transaction (as defined in the Purchase Agreement.

8

ii.Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last addresses as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this Warrant during the 20-day period commencing the date of such notice to the effective date of the event triggering such notice.

Section 4.Transfer of Warrant.

a)Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

9

b)New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

c)Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

d)Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act.

Section 5.Miscellaneous.

a)Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 4 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

b)No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

10

c)Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

d)Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

e)Authorized Shares.

The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

11

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

f)Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

g)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

h)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

i)Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

j)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

k)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

l)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

12

m)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

n)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

o)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: October 20, 2005

GENEREX BIOTECHNOLOGY CORPORATION
By:	/s/ Mark A. Fletcher
	Name: Mark A. Fletcher Title: Executive Vice-President, General Counsel

13

NOTICE OF EXERCISE

TO:GENEREX BIOTECHNOLOGY CORPORATION

(1)The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2)Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3)Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following:

_______________________________

_______________________________

_______________________________

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Dated: ______________, _______

Holder’s Signature:	_____________________________
Holder’s Address:	_____________________________
	_____________________________

Signature Guaranteed: ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

EX-4.31

Exhibit 4.31

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

To Purchase · Shares of Common Stock of

GENEREX BIOTECHNOLOGY CORPORATION

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, · (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the 181^st day after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the fifth (5^th) anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Generex Biotechnology Corporation, a Delaware corporation (the “Company”), up to · shares (the “Warrant Shares”) of Common Stock, par value $0.001 per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1.Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated November 10, 2004, among the Company and the purchasers signatory thereto.

1

Section 2.Exercise.

a)Exercise of Warrant. Subject to the terms hereof, exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, within 5 Trading Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased in cash or by wire transfer of immediately available funds.

b)Exercise Price. The exercise price of the Common Stock under this Warrant shall be $1.25, subject to adjustment hereunder (the “Exercise Price”).

c)Cashless Exercise. If at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the VWAP on the Trading Day immediately preceding the date of such election;

(B) = the Exercise Price of this Warrant, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

d)Exercise Limitations. The Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2(c) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such issuance.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Debentures or Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged by Holder that the Company is not representing to Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and Holder is solely

2

responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and of which a portion of this Warrant is exercisable shall be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed to be such Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. For purposes of this Section 2(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of the Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.

e)Mechanics of Exercise.

i.Authorization of Warrant Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.

3

ii.Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”). This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vii) prior to the issuance of such shares, have been paid.

iii.Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iv.Rescission Rights. If the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 2(e)(iv) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; provided that if as a result of the limitations set forth in Section 2(d) hereof, such failure by the Company is for a portion of the Warrant Shares for which a Notice of Exercise has been delivered, the Holder shall be permitted to rescind solely that portion not so exercised.

v.Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to

4

such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

vi.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

vii.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

viii.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

5

Section 3.CertainAdjustments.

a)Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Warrant), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b)Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall offer, sell, grant any option to purchase or offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then Exercise Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”), as adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price), then, the Exercise Price shall be reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or of applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. Notwithstanding the foregoing, no adjustment will be made hereunder in respect of (i) an Exempt Issuance other than an Exempt Issuance that involves an MFN Transaction or a Variable Rate Transaction for which the adjustment provisions of Section 3(b) shall be applicable or (ii) issuances of up to, in the aggregate, the first 1,500,000 shares of Common Stock or Common Stock Equivalents (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement) to consultants of the Company in any 12 month period pursuant to a resolution duly adopted by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose.

6

c)Pro Rata Distributions. If the Company, at any time prior to the Termination Date, shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holders of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

d)Fundamental Transaction. If, at any time while this Warrant is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent conversion of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise absent such Fundamental Transaction, at the option of the Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Alternate Consideration receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event or (b) if the Company is acquired in an all cash transaction, cash equal to the value of this Warrant as determined in accordance with the Black-Scholes option pricing formula (the “Alternate Consideration”). For purposes of any such exercise, the

7

determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 3(d) and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

e)Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. The number of shares of Common Stock outstanding at any given time shall not includes shares of Common Stock owned or held by or for the account of the Company, and the description of any such shares of Common Stock shall be considered on issue or sale of Common Stock. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

f)Voluntary Adjustment By Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

g)Notice to Holders.

i.Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company shall promptly mail to each Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. If the Company issues a variable rate security, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised in the case of a Variable Rate Transaction (as defined in the Purchase Agreement), or the lowest possible adjustment price in the case of an MFN Transaction (as defined in the Purchase Agreement.

8

ii.Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last addresses as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this Warrant during the 20-day period commencing the date of such notice to the effective date of the event triggering such notice.

Section 4.Transfer of Warrant.

a)Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

9

b)New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

c)Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

d)Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act.

Section 5.Miscellaneous.

a)Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 4 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

b)No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

10

c)Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

d)Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

e)Authorized Shares.

The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

11

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

f)Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

g)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

h)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

i)Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

j)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

k)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

l)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

12

m)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

n)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

o)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: October 27, 2005

GENEREX BIOTECHNOLOGY CORPORATION

By:________________________________________

Name: Mark A. Fletcher

Title: Executive Vice-President, General Counsel

13

NOTICE OF EXERCISE

TO:GENEREX BIOTECHNOLOGY CORPORATION

(1)The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2)Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3)Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following:

_______________________________

_______________________________

_______________________________

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

14

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Dated: ______________, _______

Holder’s Signature:_____________________________

Holder’s Address:_____________________________

 _____________________________

Signature Guaranteed: ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

15

EX-21

Exhibit 21

SUBSIDIARIES OF GENEREX BIOTECHNOLOGY CORPORATION

Name	Place of Incorporation
Generex Pharmaceuticals, Inc.	Ontario, Canada
Generex (Bermuda), Inc.	Bermuda
Antigen Express, Inc.	Delaware, USA

All subsidiaries are 100% owned.

All subsidiaries conduct business only under their respective corporate names.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Generex Biotechnology Corporation

Toronto, Ontario

We hereby consent to the incorporation by reference in the Registration Statements on Forms S-3 (No. 333-67118, 333-51194, 333-42452, 333-112891, 333-106519, 333-110493, 333-117822, 333-121309, 333-126624 and 333-128328) of Generex Biotechnology Corporation, of our report dated September 30, 2005, relating to the consolidated financial statements and Schedule II, which appears in this Annual Report on Form 10-K. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.

/s/ BDO Dunwoody LLP

Toronto, Ontario

October 28, 2005

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Anna E. Gluskin, certify that:

1.	I have reviewed this annual report on Form 10-K of Generex Biotechnology Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE: October 28, 2005	By:	/s/ Anna E. Gluskin
		Anna E. Gluskin, Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Rose C. Perri, certify that:

1.	I have reviewed this annual report on Form 10-K of Generex Biotechnology Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE: October 28, 2005	By:	/s/ Rose C. Perri
		Rose C. Perri, Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32

Exhibit 32

CERTIFICATIONS

Pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. ss. 1350, as adopted), Anna E. Gluskin, Chief Executive Officer and President of Generex Biotechnology Corporation (the "Company"), and Rose C. Perri, Chief Financial Officer of the Company, each hereby certifies that, to the best of her knowledge:

1. The Company's Annual Report on Form 10-K for the period ended July 31, 2005, and to which this Certification is attached as Exhibit 32 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the end of the period covered by the Report.

DATE: October 28, 2005	By:	/s/ Anna E. Gluskin
		Anna E. Gluskin, Chief Executive Officer (Principal Executive Officer)

DATE: October 28, 2005	By:	/s/ Rose C. Perri
		Rose C. Perri, Chief Financial Officer (Principal Financial and Accounting Officer)