Registration
No. 333-150562
PROSPECTUS
GENEREX
BIOTECHNOLOGY CORPORATION
30,191,665
Shares of Common Stock
This
prospectus relates to the offer and sale from time to time by the selling
shareholders identified in this prospectus, and their pledgees, assignees and
successors-in-interest, of (i) up to 22,527,275 shares of our common stock
issuable upon conversions of, and as interest payments on, a $20,650,000
principal amount of our 8% Secured Convertible Notes due September 2009,
(ii) up to 6,309,275 shares of our common stock issuable upon the exercise
of the Series A Warrants and (iii) up to 1,355,117 shares of our common stock
issuable upon the exercise of the Series A-1 Warrants.
We
are
filing the Registration Statement of which this prospectus is a part to register
additional shares in order to fulfill contractual obligations which we undertook
at the time of the original issuance of the Notes, the
Series A Warrants
and the
Series A-1 Warrants.
The
prices at which the selling shareholders may sell shares of our common stock
will be determined by the prevailing market price for such shares or in
negotiated transactions. We will not receive any of the proceeds from the sale
of the shares.
Our
common stock is quoted on the NASDAQ Capital Market under the symbol "GNBT."
The
last sale price of our common stock on July 29, 2008, as reported by NASDAQ,
was
$0.78 per share.
Investing
in our common stock involves a high degree of risk. See “Risk Factors” beginning
on page 5.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The
date of this prospectus is July 29, 2008.
TABLE
OF CONTENTS
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1
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About
Generex Biotechnology Corporation
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1
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Risk
Factors
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5
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Special
Note Regarding Forward-Looking Statements
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11
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Use
of Proceeds
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11
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Description
of Private Placement and Convertible Notes
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12
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Selling
Shareholders
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16
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Plan
of Distribution
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20
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Legal
Matters
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22
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Experts
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22
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Where
You Can Find More Information
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22
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Incorporation
of Certain Documents by Reference
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22
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You
should rely only on the information contained in this prospectus, including
information incorporated by reference in this prospectus, or any supplement
to
which we have referred you. We have not authorized anyone else to provide you
with different information. You should not assume that the information in this
prospectus or any supplement is accurate as of any date other than the date
on
the front of those documents or that any document incorporated by reference
is
accurate as of any date other than its filing date. You should not consider
this
prospectus to be an offer or solicitation relating to the securities in any
jurisdiction in which such an offer or solicitation relating to the securities
is not authorized. Furthermore, you should not consider this prospectus to
be an
offer or solicitation relating to the securities if the person making the offer
or solicitation is not qualified to do so, or if it is unlawful for you to
receive such an offer or solicitation.
PROSPECTUS
SUMMARY
This
summary highlights important features of this offering and the information
included or incorporated by reference in this prospectus. This summary does
not
contain all of the information that you should consider before investing in
our
common stock. You should read this prospectus and the information and documents
incorporated by reference carefully. Such documents contain important
information you should consider when making your investment decision. See
“Incorporation of Certain Documents by Reference” on page 22.
About
Generex Biotechnology Corporation
Generex
Biotechnology Corporation is a Delaware corporation engaged primarily in the
research, development, and commercialization of drug delivery systems and
technologies. Our primary focus at the present time is our proprietary
technology for the administration of formulations of large molecule drugs to
the
oral (buccal) cavity using a hand-held aerosol applicator. Through our
wholly-owned subsidiary, Antigen Express, Inc., we are expanding our focus
to
include immunomedicines. We are a development stage company and operate in
only
one segment: the research, development and commercialization of drug delivery
systems and technologies for metabolic and immunological diseases.
We
have
developed a proprietary platform technology for the delivery of drugs into
the
human body through the oral cavity (with no deposit in the lungs). Our
proprietary liquid formulations allow drugs typically administered by injection
to be absorbed into the body by the lining of the inner mouth using our
proprietary RapidMist™ device. We have a limited number of products that are
ready for commercial marketing and sale: our flagship oral insulin formulation,
Generex Oral-lyn™, has been approved for commercial marketing and sale in
Ecuador and India and is in various stages of clinical trials around the world;
and our over-the-counter line glucose spray products utilizing our proprietary
buccal delivery technology have been launched in retail outlets in the United
States and Canada.
Our
organizational structure consists of Generex Biotechnology Corporation and
five
wholly-owned subsidiaries: Generex Pharmaceuticals Inc., which is incorporated
in Ontario, Canada and which performs all of our Canadian operations; Generex
(Bermuda), Inc., which is incorporated in Bermuda and which currently does
not
conduct any business activities; Antigen Express, Inc., which is incorporated
in
Delaware and which we acquired in 2003; Generex Pharmaceuticals (USA) LLC,
which
we organized in North Carolina in February 2006 and which has not yet commenced
any business operations; and Generex Marketing & Distribution Inc., which we
organized in Ontario, Canada in September 2006 and which has not yet commenced
any business operations.
Recent
Developments
Generex
Oral-lyn™
In
the
remainder of fiscal 2008 and thereafter, our efforts will focus on enrolling
patients and dosing of late-stage clinical trials of Generex Oral-lyn™ in the
United States, Canada, Europe and certain countries in Eastern Europe including
Russia, Ukraine, Bulgaria and Romania and assisting our Indian licensee with
preparation for the commercialization of Generex Oral-lyn™ in India.
We
have
identified key vendors for the management of Phase III clinical trials of
Generex Oral-lyn™ and have selected centers to conduct such trials in the United
States, Canada, Europe and Eastern Europe. In anticipation of undertaking
late-stage clinical trials globally, we have engaged consultants to assist
with
the design and implementation of clinical trials and regulatory strategies
and
have secured a manufacturer to produce clinical trial batches of Generex
Oral-lyn™. We have contracted with our third-party manufacturers for sufficient
quantities of the RapidMist™ device components, the insulin, and the formulary
excipients that will be required for the production of clinical trial batches
of
Generex Oral-lyn™. Patient enrollment has begun at some of the sites with the
first dosing taking place in early June 2008 and is expected expand to several
global centers over the course of the study. The primary objective of the study
is to compare the efficacy of Generex Oral-lyn™ and the RapidMist™ Diabetes
Management System with that of standard regular injectable human insulin therapy
as measured by HbA1c, in patients with Type-1 diabetes mellitus. We expect
to
use the data collected from these trials in the New Drug Submission that will
be
prepared concurrently with the progression of the late-stage trials for Health
Canada, European Union (EMEA) and the U.S. Food and Drug Administration
(FDA).
In
early
November 2007, Generex Oral-lyn™ was approved for importation and commercial
marketing and sale in India for the treatment of diabetes by the Central Drugs
Standard Control Organization (CDSCO), Directorate General of Health Services,
Government of India, which is responsible for authorizing marketing approval
of
all new pharmaceutical products in India. In August 2007 we entered into a
Product Licensing and Distribution Agreement with Shreya Life Sciences Pvt.
Ltd., a leading Indian-based pharmaceutical company and the fourth largest
distributor of insulin in the Indian insulin product market, for the
registration, importation, marketing, distribution, and sale of Generex
Oral-lyn™ in the Republic of India, the Islamic Republic of Pakistan, the
People’s Republic of Bangladesh, the Kingdom of Nepal, the Kingdom of Bhutan,
the Democratic Socialist Republic of Sri Lanka, and the Union of Myanmar. We
are
working with Shreya to prepare for the commercial launch of Generex Oral-lyn™ in
India in the second calendar quarter of 2008. Preparations include marketing
plans and post-approval clinical studies. We do not expect to receive revenues
from the sale of this product in India in fiscal 2008.
In
the
remainder of fiscal 2008, we also plan to continue with the commercialization
of
Generex Oral-lyn™ in Ecuador and efforts to obtain regulatory approval of this
product in other countries using the approved Ecuadorian dossier. Our business
partner for the commercialization of Generex Oral-lyn™ in Ecuador, PharmaBrand,
S.A., expects additional commercial manufacturing runs of the product at its
facilities in Quito, Ecuador later in 2008. We are also working with PharmaBrand
to expand extant production facilities to meet the anticipated demand for the
product in India and other jurisdictions where governmental approvals are
pending. Currently, our relationship with PharmaBrand is governed by a letter
of
intent, and we are in the process of transitioning PharmaBrand’s role into one
of a third-party manufacturer with distribution rights for Ecuador. PharmaBrand
has generated some commercial sales of Generex Oral-lyn™ in Ecuador to date.
While we expect to receive revenues from such sales sometime in calendar year
2008, we do not expect that such sales will be reflected in our financial
statements until we have entered into a definitive licensing and distribution
agreement with PharmaBrand.
Pursuant
to a licensing and distribution agreement with Leosons General Trading Company,
a multinational distributor, we have submitted applications for registration
of
Generex Oral-lyn™ to some of the public health authorities in the Middle East,
but no approvals have been forthcoming to date except for a limited, pharmacy
specific importation license in the United Arab Emirates to import Generex
Oral-lyn™ into Abu Dhabi. We terminated the licensing and distribution agreement
with the Armenian Development Agency (the “ADA”) and Canada Armenia Trading
House Ltd. (“CATH”) relating to the regulatory approval and commercialization of
Generex Oral-lyn™ in Armenia, Georgia, and Kazakhstan as of January 16, 2008,
but we are continuing to prosecute the registration submitted to public health
authorities in Armenia.
In
October, 2007 we entered into a product licensing and distribution agreement
with Adcock Ingram Limited and Adcock Ingram Healthcare (Pty) Ltd. for the
registration, importation, marketing, distribution and sale of Generex Oral-lyn™
in the Republic of South Africa, the Kingdom of Lesotho, the Kingdom of
Swaziland, the Republic of Botswana, the Republic of Namibia, the Republic
of
Mozambique, and the Republic of Zimbabwe. In February, 2008 we entered into
a
product licensing and distribution agreement with E&V Alca Distribution
Corp. for the registration, importation, marketing, distribution, and sale
of
Generex Oral-lyn™ in the Republic of Albania, Montenegro, and the Kosovo. In
April, 2008 we entered into a product licensing and distribution agreement
with
SciGen, Ltd. for the registration, importation, marketing, distribution, and
sale of Generex Oral-lyn™ in the People’s Republic of China, Hong Kong, the
Republic of Indonesia, the Republic of Korea, Malaysia, the Republic of the
Philippines, the Republic of Singapore, the Kingdom of Thailand, and the
Socialist Republic of Vietnam. In April 2008, Generex and Medrey S.A.L.
(formerly MedGen Corp.) entered into a sub-distribution agreement with Benta
S.A.L. in respect of the registration, marketing, distribution, and sale of
Generex Oral-lyn™ in the Republic of Lebanon.
We
face
competition from other providers of alternate forms of insulin. Some of our
most
significant competitors, Pfizer, Eli Lilly, and Novo Nordisk, recently announced
their decisions to discontinue development and/or sale of their inhalable forms
of insulin. Generex Oral-lyn™ is not an inhaled insulin; rather, it is a bucally
absorbed formulation with no residual pulmonary deposition. We believe that
our
buccal delivery technology offers several advantages over inhaled insulin,
including the avoidance of pulmonary inhalation, which requires frequent
physician monitoring, ease of use and portability.
Buccal
Glucose and Energy Products - Glucose RapidSpray™, BaBOOM! ™ Energy Spray and
GlucoBreak™
With
the
launch of commercial sales of our over-the-counter oral glucose and energy
spray
products, GlucoBreak™ and BaBOOM!™ Energy Spray, in retail outlets in the United
States and Canada, we expect to receive increased revenues from product sales
in
calendar 2008. We plan to achieve this by increasing our over-the-counter
product line to three products - the two products mentioned above and Glucose
RapidSpray™ - and expanding our existing distribution channels. In addition, we
will increase our advertising and marketing efforts of our products and expand
the availability of our products from North America to the rest of the world.
This strategy has already been implemented by the execution of licensing and
distribution agreements with Leosons General Trading Company for the
distribution and sale of our over-the-counter products in 15 Middle Eastern
countries and Adcock Ingram LLP and Adcock Ingram Healthcare (Pty) Ltd. for
the
distribution and sale of Glucose RapidSpray ™ in South Africa and six
neighboring countries. In December 2007, we received a $400,000 purchase order
for our over-the-counter products, including Glucose Rapid Spray™, from Leosons
General Trading Company. We are currently in the process of filling the order
and partial shipments have been made.
Metformin
Gum Product/Strategic Alliance
During
the remainder of fiscal 2008 and thereafter, we expect to continue joint
development activities with Fertin Pharma A/S with respect to a metformin
medicinal chewing gum for the treatment of Type-2 diabetes mellitus and obesity,
which we anticipate to be a prospective companion product for Generex Oral-lyn™.
Fertin Pharma is in the process of producing clinical materials for a
bioequivalence Phase I study which is expected to commence before the end of
calendar year 2008.
Immunomedicine
Technology and Products
We
continue clinical development of Antigen’s synthetic peptide vaccines designed
to stimulate a potent and specific immune response against tumors expressing
the
HER-2/neu oncogene for patients with HER-2/neu positive breast cancer in a
Phase
II clinical trial and patients with prostate cancer and against avian influenza
in two Phase I trials. The Phase II clinical trial of the Antigen peptide
vaccine in breast cancer patient commenced patient dosing in May 2007. This
trial is being conducted with the United States Military Cancer Institute
Clinical Trials Group under the direction of Colonel George Peoples, M.D. The
trial will compare the rate of relapse after two years in breast cancer patients
treated with Antigen’s immunotherapeutic plus adjuvant versus adjuvant alone.
All patients will have completed standard therapy for node-positive or high-risk
node-negative breast cancer expressing at least low levels of the HER-2/neu
oncogene and who are at increased risk for recurrence. Patient dosing for Phase
I clinical trials with the same compound as being used in breast cancer patients
is currently underway for prostate cancer patients at two hospital sites in
Athens, Greece.
The
Lebanese-Canadian Hospital in Beirut, Lebanon commenced a Phase I clinical
trial
of Antigen’s synthetic avian influenza vaccine in April 2007 and is currently
ongoing. In addition, Antigen entered into an agreement with Drs. Daopei Lu
and
Chunrong Tong and Beijing Daopei Hospital in Beijing, China to conduct a Phase
I
clinical study using Antigen’s novel immunotherapeutic strategy involving RNA
interference to develop a cancer cell vaccine for use in patients with acute
myeloid leukemia. In February 2008, some preliminary pre-clinical work commenced
under this clinical trial agreement.
More
comprehensive information about us is available through our Internet website
at
www.generex.com.
The
information on our website is not incorporated by reference into this
prospectus. Our principal offices are located at 33 Harbour Square, Suite 202,
Toronto, Ontario, Canada M5J 2G2 and our telephone number is (416)
364-2551.
The
Offering
Common
stock offered by selling shareholders:
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30,191,665
shares
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Use
of Proceeds:
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We will not receive any proceeds from the
sale of shares in this offering.
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Risk
Factors:
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See
“Risk Factors” beginning on page 5 for a discussion of factors that you
should read and consider before investing in our
securities
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NASDAQ
Capital Market Symbol:
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GNBT
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We
are
registering our common stock for resale by selling shareholders. The selling
shareholders and the specific number of shares that they each may resell through
this prospectus are listed on pages 16-19.
The
number of shares outstanding before and after this offering is set forth
below:
Common
stock outstanding before the offering 112,178,519 shares of Common Stock
Common
stock to be outstanding after the offering 142,370,184 shares of Common Stock
The
number set forth above for the shares of common stock outstanding before this
offering is the number of shares outstanding on April 23, 2008, including
certain of the shares of common stock offered for resale by this
prospectus.
The
numbers set forth above do not include (i) 6,071,638 shares of our common stock
that, as of the date of this prospectus, are issuable upon the exercise of
outstanding options and (ii) 50,306,595 shares of our common stock that, as
of
the date of this prospectus, are issuable upon the exercise of outstanding
warrants other than those covered by this prospectus. These additional options
and warrants are exercisable at prices ranging from $0.001 to $3.75 per share,
with a weighted average exercise price for the options of $0.71 per share and
a
weighted average exercise price for the warrants of $1.20 per
share.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. Before deciding
whether to invest in our securities, you should consider carefully all the
information we have included or incorporated by reference in this prospectus
supplement and the accompanying prospectus. In addition, you should carefully
consider the risk factors described below related to this offering and an
investment in our securities. If any of these risks actually occurs, our
business, financial condition, results of operations and cash flow could be
seriously harmed. This could cause the trading price of our common stock offered
hereby to decline, resulting in a loss of all or part of your
investment.
Risks
Related to Our Financial Condition
We
have a history of losses and will incur additional
losses.
We
are a
development stage company with a limited history of operations, and do not
expect sufficient revenues to support our operation in the immediately
foreseeable future. In the quarter ended April 30, 2008, we received nominal
revenues from sales of Glucose RapidSpray™. We did not recognize any revenue
from the sale of our oral insulin product in Ecuador in fiscal 2007 and do
not
expect to receive any until we enter into a final agreement with PharmaBrand
to
manufacture commercial orders of Generex Oral-lyn™ and to continue its marketing
and sales efforts in Ecuador in 2008 with a focus on that portion of the
population with the newly identified condition closely related to diabetes
known
as Impaired Glucose Tolerance (IGT). Individuals with IGT usually do not meet
the criteria for the diagnosis of diabetes mellitus but experience abnormally
high blood glucose levels several hours after a meal. While Generex Oral-lyn™
was approved for importation and commercial marketing and sale in India in
November 2007, we do not expect to receive any revenues from sales of the
product in fiscal 2008. We have entered into a licensing and distribution
agreement with a leading Indian-based pharmaceutical company and insulin
distributor and have begun assisting them with preparations for commercial
launch in India sometime in 2008. In January 2008, we commenced a marketing
campaign with a presentation to key opinion leaders and endocrinologists at
a
meeting in Mumbai, India.
To
date,
we have not been profitable and our accumulated net loss was $235,903,538 at
April 30, 2008. Our losses have resulted principally from costs incurred in
research and development, including clinical trials, and from general and
administrative costs associated with our operations. While we seek to attain
profitability, we cannot be sure that we will ever achieve product and other
revenue sufficient for us to attain this objective.
With
the
exception of Generex Oral-lyn™ which is currently available for sale in Ecuador
and has been approved for sale in India and our over-the-counter glucose and
energy spray products, Glucose RapidSpray™, BaBOOM!™ Energy Spray and
GlucoBreak™, our product candidates are in research or early stages of
pre-clinical and clinical development. We will need to conduct substantial
additional research, development and clinical trials. We will also need to
receive necessary regulatory clearances both in the United States and foreign
countries and obtain meaningful patent protection for and establish freedom
to
commercialize each of our product candidates. We must also complete further
clinical trials and seek regulatory approvals for Generex Oral-lyn™ in countries
outside of Ecuador and India. We cannot be sure that we will obtain required
regulatory approvals, or successfully research, develop, commercialize,
manufacture and market any other product candidates. We expect that these
activities, together with future general and administrative activities, will
result in significant expenses for the foreseeable future.
We
will need additional capital.
To
progress in product development or marketing, we will need additional capital
which may not be available to us. This may delay our progress in product
development or market.
We
will
require funds in excess of our existing cash resources:
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to
proceed with the development of our buccal insulin
product;
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to
finance the research and development of new products based on our
buccal
delivery and immunomedicine technologies, including clinical testing
relating to new products;
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to
finance the research and development activities of our subsidiary
Antigen
with respect to other potential
technologies;
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to
commercially launch and market developed
products;
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to
develop or acquire other technologies or other lines of
business;
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to
establish and expand our manufacturing capabilities;
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to
finance general and administrative activities that are not related
to
specific products under development; and
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to
otherwise carry on business.
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In
the
past, we have funded most of our development and other costs through equity
financing. We anticipate that our existing capital resources will enable us
to
maintain currently planned operations through the next 12 months. However,
this
expectation is based on our current operating plan, which could change as a
result of many factors, and we may need additional funding sooner than
anticipated. Because our operating and capital resources are insufficient to
meet future requirements, we will have to raise additional funds in the near
future to continue the development and commercialization of our products.
Unforeseen problems, including materially negative developments in our clinical
trials or in general economic conditions, could interfere with our ability
to
raise additional equity capital or materially adversely affect the terms upon
which such funding is available.
It
is
possible that we will be unable to obtain additional funding as and when we
need
it. If we were unable to obtain additional funding as and when needed, we could
be forced to delay the progress of certain development efforts. Such a scenario
poses risks. For example, our ability to bring a product to market and obtain
revenues could be delayed, our competitors could develop products ahead of
us,
and/or we could be forced to relinquish rights to technologies, products or
potential products.
Any
new equity financing will dilute current
stockholders.
The
recent sale of the Notes and Warrants, as well as any other securities that
we
offer and sell pursuant to an equity financing to meet the needs discussed
above, will have a dilutive effect on existing holders of our shares by reducing
their percentage ownership. The shares issuable upon exercise of the Notes
and
Warrants 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. Although the Notes and Warrants were
not
issued at a discount to the market price on the date of issuance, the terms
and
conditions of the Notes and Warrants contemplate situations where the applicable
conversion, redemption or exercise price may be below market.
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.
With
the exception of Generex Oral-lyn™, Glucose RapidSpray™, BaBOOM! ™ Energy Spray
and GlucoBreak™, our technologies and products are at an early stage of
development and we cannot expect revenues in respect thereof in the foreseeable
future.
We
have
no products approved for commercial sale at the present time with the exception
of Generex Oral-lyn™ which is available only in Ecuador and has recently been
approved for commercial sale in India and our glucose sprays which are available
over-the-counter in retail outlets in the United States and Canada. To be
profitable, we must not only successfully research, develop and obtain
regulatory approval for our products under development, but also manufacture,
introduce, market and distribute them once development is completed. We may
not
be successful in one or more of these stages of the development or
commercialization of our products, and/or any of the products we develop may
not
be commercially viable.
Although
Generex Oral-lyn™, our proprietary oral insulin spray formulation, has been
approved for commercial marketing and sale in Ecuador and India, and our glucose
spray products are available for purchase in the United States and Canada,
we
have yet to manufacture, market and distribute these products on a large-scale
commercial basis. We expect to receive nominal revenues from sales of these
products in fiscal year 2008. Until we can establish that they are commercially
viable products, we will not receive significant revenues from ongoing
operations.
Until
we receive regulatory approval to sell our pharmaceutical products in additional
countries, our ability to generate revenues from operations may be limited
and
those revenues may be insufficient to sustain operations. Many factors impact
our ability to obtain approvals for commercially viable
products.
Our
only
pharmaceutical product that has been approved for commercial sale by drug
regulatory authorities is our oral insulin spray formulation, and that approval
has been obtained in Ecuador and, recently, in India. We have begun the
regulatory approval process for our oral insulin, buccal morphine and fentanyl
products in other countries, and we expect to begin late stage clinical trials
of Generex Oral-lyn™ at some of our clinical trial sites according to the Phase
III clinical plan in 2008.
Our
immunomedicine products are in the pre-clinical stage of development, with
the
exception of a Phase II trial in human patients with stage II HER-2/neu positive
breast cancer, a Phase I clinical trial in patients with prostate cancer, a
Phase I trial in human volunteers of a peptide vaccine for use against the
H5N1
avian influenza virus and Phase I trial of our experimental H5N1 prophylactic
vaccine in Beirut, Lebanon.
Pre-clinical
and clinical trials of our products, and the manufacturing and marketing of
our
technologies, are subject to extensive, costly and rigorous regulation by
governmental authorities in the United States, Canada and other countries.
The
process of obtaining required regulatory approvals from the FDA and other
regulatory authorities often takes many years, is expensive and can vary
significantly based on the type, complexity and novelty of the product
candidates. For these reasons, it is possible we will not receive regulatory
approval for any prescription pharmaceutical product candidate in any country
other than Ecuador and India.
In
addition, we cannot be sure when or if we will be permitted by regulatory
agencies to undertake additional clinical trials or to commence any particular
phase of clinical trials. Because of this, statements in this prospectus
regarding the expected timing of clinical trials cannot be regarded as actual
predictions of when we will obtain regulatory approval for any "phase" of
clinical trials.
Delays
in
obtaining United States or other foreign approvals for our pharmaceutical
products could result in substantial additional costs to us, and, therefore,
could adversely affect our ability to compete with other companies. If
regulatory approval is ultimately granted in any country other than Ecuador
and
India, the approval may place limitations on the intended use of the product
we
wish to commercialize, and may restrict the way in which we are permitted to
market the product.
Due
to legal and factual uncertainties regarding the scope and protection afforded
by patents and other proprietary rights, we may not have meaningful protection
from competition.
Our
long-term success will substantially depend upon our ability to protect our
proprietary technologies from infringement, misappropriation, discovery and
duplication and avoid infringing the proprietary rights of others. Our patent
rights, and the patent rights of biotechnology and pharmaceutical companies
in
general, are highly uncertain and include complex legal and factual issues.
Because of this, our pending patent applications may not be granted. These
uncertainties also mean that any patents that we own or will obtain in the
future could be subject to challenge, and even if not challenged, may not
provide us with meaningful protection from competition. Due to our financial
uncertainties, we may not possess the financial resources necessary to enforce
our patents. Patents already issued to us or our pending applications may become
subject to dispute, and any dispute could be resolved against us.
Because
a
substantial number of patents have been issued in the field of alternative
drug
delivery and because patent positions can be highly uncertain and frequently
involve complex legal and factual questions, the breadth of claims obtained
in
any application or the enforceability of our patents cannot be predicted.
Consequently, we do not know whether any of our pending or future patent
applications will result in the issuance of patents or, to the extent patents
have been issued or will be issued, whether these patents will be subject to
further proceedings limiting their scope, will provide significant proprietary
protection or competitive advantage, or will be circumvented or invalidated.
Also
because of these legal and factual uncertainties, and because pending patent
applications are held in secrecy for varying periods in the United States and
other countries, even after reasonable investigation we may not know with
certainty whether any products that we (or a licensee) may develop will infringe
upon any patent or other intellectual property right of a third party. For
example, we are aware of certain patents owned by third parties that such
parties could attempt to use in the future in efforts to affect our freedom
to
practice some of the patents that we own or have applied for. Based upon the
science and scope of these third-party patents, we believe that the patents
that
we own or have applied for do not infringe any such third-party patents;
however, we cannot know for certain whether we could successfully defend our
position, if challenged. We may incur substantial costs if we are required
to
defend our intellectual property in patent suits brought by third parties.
These
legal actions could seek damages and seek to enjoin testing, manufacturing
and
marketing of the accused product or process. In addition to potential liability
for significant damages, we could be required to obtain a license to continue
to
manufacture or market the accused product or process.
Risks
Related to Marketing of Our Potential Products
We
may not become, or stay, profitable even if our products are approved for
sale.
Even
if
we obtain regulatory approval to market our oral insulin product or any other
prescription pharmaceutical product candidate in another country other than
Ecuador and recently India, many factors may prevent the product from ever
being
sold in commercial quantities. Similarly, the successful commercialization
of
our confectionary may be hindered. Some of these factors are beyond our control,
such as:
|
o
|
acceptance
of the formulation or treatment by health care professionals and
diabetic
patients;
|
|
o
|
the
availability, effectiveness and relative cost of alternative diabetes
or
immunomedicine treatments that may be developed by competitors;
and
|
|
o
|
the
availability of third-party (i.e., insurer and governmental agency)
reimbursements.
|
We
will
not receive significant revenues from Generex Oral-lyn™ in Ecuador or India or
Glucose RapidSpray™ in the United States 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,
and
we may be forced to enter into contracts limiting the benefits we may receive
and the control we have over our products. We intend to rely on collaborative
arrangements with one or more other companies that possess strong marketing
and
distribution resources to perform these functions for us. We may not be able
to
enter into beneficial contracts, and we may be forced to enter into contracts
for the marketing and distribution of our products that substantially limit
the
potential benefits to us from commercializing these products. In addition,
we
will not have the same control over marketing and distribution that we would
have if we conducted these functions ourselves.
We
may not be able to compete with treatments now being marketed and developed,
or
which may be developed and marketed in the future by other
companies.
Our
products will compete with existing and new therapies and treatments. We are
aware of a number of companies currently seeking to develop alternative means
of
delivering insulin, as well as new drugs intended to replace insulin therapy
at
least in part. We are also aware of a number of companies currently seeking
to
develop alternative means of enhancing and suppressing peptides. In the longer
term, we also face competition from companies that seek to develop cures for
diabetes and other malignant, infectious, autoimmune and allergic diseases
through techniques for correcting the genetic deficiencies that underlie such
diseases.
Numerous
pharmaceutical, biotechnology and drug delivery companies, hospitals, research
organizations, individual scientists and nonprofit organizations are engaged
in
the development of alternatives to our technologies. Some of these companies
have greater research and development capabilities, experience, manufacturing,
marketing, financial and managerial resources than we do. Collaborations or
mergers between large pharmaceutical or biotechnology companies with competing
drug delivery technologies could enhance our competitors’ financial, marketing
and other resources. Developments by other drug delivery companies could make
our products or technologies uncompetitive or obsolete. Accordingly, our
competitors may succeed in developing competing technologies, obtaining FDA
approval for products or gaining market acceptance more rapidly than we can.
One
of
our most significant competitors, Pfizer, announced in mid-October 2007 that
it
would no longer sell or produce its inhalable form of insulin, marketed as
Exubera®, due to disappointing sales and failure to gain traction with patients
and physicians. Pfizer also announced that it would discontinue development
of a
next generation inhaled insulin device. We believe that our buccal delivery
technology offers several advantages over inhaled insulin, including: the
avoidance of pulmonary inhalation, which requires physician monitoring; ease
of
use; portability; and accurate dosing.
Other
direct competitors have development programs underway for inhaled insulin
products, which, if approved, could compete against Generex Oral-lyn™. These
companies include MannKind Corporation, Bentley Pharmaceuticals, Inc. and Abbott
Laboratories through its acquisition of Kos Pharmaceuticals, all of which are
working on various versions of inhaled insulin products in either a liquid
or a
dry form. Some products are in late stage clinical testing including Mannkind’s
Technosphere® Insulin System in Phase III clinical development. Other smaller
companies, including Emisphere Technologies, Inc., are in various stages of
developing oral or buccal insulin formulations.
If
government programs and insurance companies do not agree to pay for or reimburse
patients for our 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.
Risks
Related to the Market for Our Common Stock
Our
common stock could be delisted from The NASDAQ Capital
Market.
In
the
past, we have failed to comply with certain of NASDAQ’s listing requirements. In
late 2004, we did not comply with NASDAQ Rule 4310(c)(2)(B) which requires
us to
have a minimum of $2,500,000 in stockholders' equity or $35,000,000 market
value
of listed securities or $500,000 of net income from continuing operations for
the most recently completed fiscal year or two of the three most recently
completed fiscal years. While we regained compliance with this standard, we
are
still in the development stage. Consequently, there is no guarantee that we
will
sustain compliance with this standard. In the event we cannot sustain
compliance, our shares of common stock may be delisted from the NASDAQ Capital
Market and begin trading on the over-the-counter bulletin board, assuming we
meet the requisite criteria.
In
addition, from October 2004 until October 2005, we failed to comply with NASDAQ
Rule 4310(c)(4) which requires us to have a minimum bid price per share of
at
least $1.00. Although we regained compliance with the minimum bid price
requirement in November 2005, there is no guarantee that the bid price of our
common stock will remain at or above $1.00 per share. In the event that the
price of our common stock falls below $1.00 per share for thirty (30)
consecutive trading days, we would likely receive a notice from the NASDAQ
Stock
Market LLC informing us of our noncompliance with NASDAQ Rule 4310(c)(4) and
giving us 180 calendar days, subject to extension, to regain compliance with
the
rule. In the event that we could not demonstrate compliance with NASDAQ Rule
4310(c)(4) by the specified deadline and were not eligible for an additional
compliance period, the staff would notify us that our stock would be delisted,
at which time we could appeal the staff’s determination to a Listing
Qualifications Panel. Pending the decision of the Listing Qualification Panel,
our common stock would continue to trade on the NASDAQ Capital Market. If we
were not successful in such an appeal, our stock would likely trade on NASDAQ’s
over-the-counter bulletin board, assuming we meet the requisite
criteria.
If
we fail to maintain compliance with applicable NASDAQ Rules and our stock is
delisted from the NASDAQ Capital Market, it may become subject to Penny Stock
Regulations and there will be less interest for our stock in the market. This
may result in lower prices for our stock and make it more difficult for us
to
obtain financing.
If
our
stock is not listed on NASDAQ and fails to maintain a price of $5.00 or more
per
share, our stock would become subject to the Securities and Exchange
Commission's "Penny Stock" rules. These rules require a broker to deliver,
prior
to any transaction involving a Penny Stock, a disclosure schedule explaining
the
Penny Stock Market and its risks. Additionally, broker/dealers who recommend
Penny Stocks to persons other than established customers and accredited
investors must make a special written suitability determination and receive
the
purchaser's written agreement to a transaction prior to the sale. In the event
our stock becomes subject to these rules, it will become more difficult for
broker/dealers to sell our common stock. Therefore, it may be more difficult
for
us to obtain financing.
The
price of our common stock may be volatile.
There
may
be wide fluctuations in the price of our common stock. These fluctuations may
be
caused by several factors including:
|
o
|
announcements
of research activities and technology innovations or new products
by us or
our competitors;
|
|
o
|
changes
in market valuation of companies in our industry
generally;
|
|
o
|
Variations
in operating results;
|
|
o
|
changes
in governmental regulations;
|
|
o
|
Developments
in patent and other proprietary rights;
|
|
o
|
public
concern as to the safety of drugs or treatments developed by us or
others;
|
|
o
|
results
of clinical trials of our products or our competitors' products;
and
|
|
o
|
regulatory
action or inaction on our products or our competitors'
products.
|
From
time
to time, we may hire companies to assist us in pursuing investor relations
strategies to generate increased volumes of investment in our common stock.
Such
activities may result, among other things, in causing the price of our common
stock to increase on a short-term basis.
Furthermore,
the stock market generally and the market for stocks of companies with lower
market capitalizations and small biopharmaceutical companies, like us, have
from
time to time experienced, and likely will again experience significant price
and
volume fluctuations that are unrelated to the operating performance of a
particular company.
Provisions
of our Restated Certificate of Incorporation could delay or prevent the
acquisition or sale of our business.
Our
Restated Certificate of Incorporation permits our Board of Directors to
designate new series of preferred stock and issue those shares without any
vote
or action by our stockholders. Such newly authorized and issued shares of
preferred stock could contain terms that grant special voting rights to the
holders of such shares that make it more difficult to obtain stockholder
approval for an acquisition of our business or increase the cost of any such
acquisition.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the documents incorporated by reference herein include
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements are those that
predict or describe future events or trends and that do not relate solely to
historical matters. You can generally identify forward-looking statements as
statements containing the words “believe,” “expect,” “will,” “anticipate,”
“intend,” “estimate,” “project,” “plan,” “assume” or other similar expressions,
or negatives of those expressions, although not all forward-looking statements
contain these identifying words. All statements contained or incorporated by
reference in this prospectus regarding our future strategy, future operations,
projected financial position, estimated future revenues, projected costs, future
prospects, the future of our products and the biotechnology industry and results
that might be obtained by pursuing management’s current plans and objectives are
forward-looking statements.
You
should not place undue reliance on our forward-looking statements because the
matters they describe are subject to known and unknown risks, uncertainties
and
other unpredictable factors, many of which are beyond our control. Our
forward-looking statements are based on the information currently available
to
us and speak only as of the date on the cover of this prospectus or, in the
case
of forward-looking statements incorporated by reference, as of the date of
the
filing that includes the statement. New risks and uncertainties arise from
time
to time, and it is impossible for us to predict these matters or how they may
affect us. Over time, our actual results, performance or achievements will
likely differ from the anticipated results, performance or achievements that
are
expressed or implied by our forward-looking statements, and such difference
might be significant and materially adverse to our shareholders. We do not
undertake and specifically decline any obligation to update any forward-looking
statements or to publicly announce the results of any revisions to any
statements to reflect new information or future events or
developments.
We
have
identified some of the important factors that could cause future events to
differ from our current expectations and they are described in this prospectus
under the caption “Risk Factors” as well as in our most recent Annual Report on
Form 10-K, including, without limitation, under the captions “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and in other documents that we may file with the Securities and
Exchange Commission (“SEC”), all of which you should review carefully. Please
consider our forward-looking statements in light of those risks as you read
this
prospectus.
USE
OF PROCEEDS
The
proceeds from the sale of each selling shareholder’s shares of common stock will
belong to that selling shareholder. We will not receive any proceeds from those
sales, although we may receive proceeds from the exercise of Warrants by the
selling shareholders, if exercised. We cannot guarantee that the selling
shareholders will exercise any Warrants. If and when we receive such proceeds,
we would use them to support our working capital requirements or for other
purposes.
DESCRIPTION
OF PRIVATE PLACEMENT AND CONVERTIBLE NOTES
On
March
31, 2008, we entered into a Securities Purchase Agreement and related agreements
pursuant to which we agreed to issue 8% Secured Convertible Notes (the “Notes”)
and common stock warrants (the “Warrants”) for an aggregate purchase price of
$20,650,000 in a private placement (the “March Private Placement”) with six
existing institutional investors (the "Investors"). The March Private Placement
closed on March 31, 2008. This prospectus is being delivered in connection
with
the resale of shares of our common stock issuable upon the conversion of the
Notes, as payment of principal and accrued interest thereon, and upon the
exercise of only the Series A Warrants and certain of the Series A-1 Warrants
issued in connection with the March Private Placement.
The
Notes
were issued pursuant to a Securities Purchase Agreement, dated March 31, 2008,
among our company and the Investors. The principal purposes of the March Private
Placement were to strengthen our cash position and to support ongoing clinical
development programs, including undertaking global Phase III clinical trials
of
Generex Oral-lyn™, our proprietary oral insulin formulation, at sites in the
United States, Canada, and Europe. The March Private Placement resulted in
gross
proceeds to us of $20,650,000 before placement agent fees and other expenses
associated with the transaction.
The
Notes
mature September 30, 2009 and amortize over fifteen months in fifteen equal
installments beginning on August 1, 2008. Interest on the principal amount
outstanding accrues at the rate of eight percent per annum. We may pay
installments of principal and accrued interest in cash or, at our option, in
shares of common stock. Our ability to pay with common stock is subject to
certain conditions noted below. If we elect to pay principal and interest in
shares of our common stock, the value of each share of common stock will be
equal to the lower of (a) the initial conversion price of $1.21 per share,
and
(b) 90% of the average of the volume weighted average prices of our common
stock
on each of the twenty (20) consecutive trading days immediately preceding the
applicable payment date. In addition, at the option of the holder of each Note,
all or any part of the principal amount outstanding under each Note is
convertible at any time and from time to time into shares of our common stock
at
an initial conversion price of $1.21 per share. However, the conversion price
may be reduced if we issue securities at a price per share less than the
conversion price of the Notes then in effect.
Beginning
on August 1, 2008, and on the first of each month thereafter, we will be
required to convert one fifteenth of the face value of the Notes into shares
of
our common stock or, at our election, redeem such amount in cash. Our ability
to
convert installment payments into shares of our common stock, however, is
conditioned on shareholder approval. In addition, our ability to convert
installment payments into shares of common stock will be subject to other
conditions, including the existence of an effective registration statement
covering the resale of the shares issued in payment of the installment amount
and certain minimum trading volumes in the stock to be issued. No payment in
shares of our common stock may exceed 25% of the total dollar traded volume
in
our common stock for the 20 trading days prior to the installment notice date.
Any shares of our common stock delivered in satisfaction of an amortization
payment will be valued at the lesser of (i) the conversion price in effect
at the time of the amortization payment or (ii) 90% of the average of the
daily volume weighted average price of the applicable shares for the 20 trading
days prior to the amortization payment.
Each
Note
lists certain “Events of Default”, which include, without limitation, any
default in the payment of principal of, interest on or other charges in respect
of the Notes as and when they become due and payable, and our failure to observe
or perform any other covenant, agreement or warranty contained in, or otherwise
commit any breach or default of any provision of the Notes, the Securities
Purchase Agreement or the Security Agreement. Upon the occurrence of an Event
of
Default, the holder may require us to redeem all or any portion of a Note by
delivering written notice to us at a default redemption price as calculated
pursuant to certain formulas set forth in the Note (“Event of Default Redemption
Right”). Until the default redemption price (together with any interest thereon)
is paid in full, the amount of any Note submitted for redemption (together
with
any interest thereon) may be converted, in whole or in part, by the holder
into
common stock. In the event of a partial redemption, the principal amount
redeemed shall be deducted from the installment amounts relating to the
applicable installment date(s) as set forth in the notice of default and
redemption.
The
Warrants issued to the Investors in the March Private Placement include the
following:
|
•
|
Series
A and A-1 Warrants, which are exercisable for a period of 7 years
into an
aggregate of 75% of the number of shares of our common stock initially
issuable upon conversion of the Notes, with the Series A Warrants
being
exercisable into 5,257,729 shares immediately upon issuance and the
Series
A-1 warrants being exercisable into 7,541,857 shares beginning October
1,
2008;
|
|
•
|
Series
B Warrants, which are exercisable beginning October 1, 2008 into
100% of
the shares of our common stock initially issuable upon conversion
of the
Notes (initially 17,066,117 shares) and remaining exercisable for
a period
of 18 months after a registration statement covering the shares of
our
common stock issuable upon conversion or exercise (as the case may
be) of
the Notes and Warrants is declared effective by the SEC;
and
|
|
•
|
Series
C Warrants, which are exercisable for a period of 7 years beginning
October 1, 2008, but only to the extent that the Series B Warrant
are
exercised and only in the same percentage that the Series B Warrants
are
exercised, up to a maximum percentage of 75% of the number of shares
of
our common stock initially issuable upon conversion of the Notes
(initially a maximum of 12,799,586 shares).
|
The
initial exercise price of each Series A Warrant, Series A-1 Warrant, Series
B
Warrant and Series C Warrant will be the same as the initial conversion price
under the Notes ($1.21 per share). Like the conversion price of the Notes,
the
exercise price of the Warrants is subject to a full-ratchet adjustment upon
the
occurrence of certain events, including our issuance of securities at a price
per share less than the exercise price then in effect. If we issue shares of
common stock or options exercisable for or securities convertible into common
stock at an effective price per share of common stock less than the exercise
price then in effect, the exercise price will be reduced to the effective price
of the new issuance.
In
connection with the March Private Placement, we entered into a Registration
Rights Agreement with the Investors under which we are required, on or before
April 30, 2008, to file a registration statement with the SEC covering the
resale of the shares of our common stock issuable pursuant to the Notes and
Warrants, including as payment of principal and interest on the Notes, and
to
use our best efforts to have the registration statement declared effective
at
the earliest date, but in no event later than 90 days after filing if there
is
no SEC review of the registration statement, or 120 days if there is an SEC
review. The Registration Rights Agreements provides for certain monetary
penalties if the registration statement is not filed or does not become
effective on a timely basis.
Dollar
Value of Underlying Securities and Potential Profits on Conversion
With
respect to the Notes issued in the March Private Placement, the conversion
price
of the Notes was $1.21 per share on March 31, 2008 and the closing bid price
of
our common stock on March 31, 2008 (the date the Notes were issued) was $1.10.
Therefore, the Notes were issued at a premium (not discount) to the market
value
of our common stock on the date of the closing of the March Private
Placement.
Market
price per share at March 31, 2008
|
|
$
|
1.10
|
|
Conversion
Price per share at March 31, 2008
|
|
$
|
1.21
|
|
Total
shares underlying Notes based on conversion price
|
|
|
17,066,117
|
|
Aggregate
market value of underlying shares based on market price as of March
31,
2008
|
|
$
|
18,772,729
|
|
Aggregate
conversion price of underlying shares
|
|
$
|
20,650,000
|
|
Total
Premium to market price of underlying shares after taking into account
original issue discount
|
|
$
|
1,877,271
|
|
In
the
event that we elect to deliver shares of our common stock in satisfaction of
an
amortization payment, such shares will be valued at the lesser of (i) the
conversion price in effect at the time of the amortization payment or (ii)
90%
of the average of the daily volume weighted average price of the applicable
shares for the 20 trading days prior to the amortization payment. For purposes
of the following table, we have assumed that we will pay all installment
payments in shares of our common stock and have valued such shares at $0.9704
per share, which represents 90% of the average of the daily volume weighted
average price of the shares for the 20 trading days prior to March 31, 2008.
Under this scenario, the Notes would be deemed to be issued at a discount to
the
market value of our common stock on the date of the closing of the March Private
Placement.
Market
price per share at March 31, 2008
|
|
$
|
1.10
|
|
90%
of Average VWAP for 20 Trading Days Prior to March 31, 2008
|
|
$
|
0.9704
|
|
Total
shares underlying Notes based on VWAP price
|
|
|
19,173,187
|
|
Aggregate
market value of underlying shares based on market price as of March
31,
2008
|
|
$
|
21,090,506
|
|
Aggregate
VWAP price of underlying shares
|
|
$
|
18,605,660
|
|
Total
Discount to market price of underlying shares after taking into account
original issue discount
|
|
$
|
2,484,846
|
|
With
respect to the Series A and Series A-1 Warrants issued in the March Private
Placement, the exercise price of the Series A Warrants and the Series A-1
Warrants was $1.21 per share and, therefore, the Series A and Series A-1
Warrants were issued at a premium (not discount) to the market value of our
common stock on the date of the closing of the March
Private Placement.
The
Investors hold no other warrants, options, notes, or other securities
convertible into shares of our common stock, other than the Notes and Warrants
issued in connection with the March Private Placement, and certain warrants
described in the following sentence. In connection with the March Private
Placement, we (a) reduced the strike price of our outstanding common stock
purchase warrants that are held by certain of the Investors and that had strike
prices ranging from $1.25 to $3.00 and (b) extended the expiration date of
such
warrants to March 31, 2015. We reduced the strike price of these warrants to
$1.10, which equaled the closing bid price of the common stock on the NASDAQ
Capital Market on March 31, 2008. Therefore, these other outstanding warrants
held by certain of the Investors were issued at a premium (not discount) to
the
market value of our common stock on the date of the closing of the March Private
Placement.
Net
Proceeds from March Private Placement of Notes
The
following table sets forth the gross proceeds received from the March Private
Placement of the Notes and calculates the net proceeds from the March Private
Placement of the Notes after deduction of the anticipated payments pursuant
to
the Notes and the other March Private Placement documents. The net proceeds
do
not include the payment of any contingent payments, such as repayment premiums
in the case of default or a fundamental transaction. The net proceeds assumes
that all interest and principal will be paid in cash notwithstanding that we
may
pay interest and principal in shares of our common stock under specified
circumstances, as described above. The interest amount reflected below assumes
that all payments are made when due without any event of default, and the table
assumes that none of the Notes are converted prior to maturity. Based on the
foregoing assumptions, the net proceeds represent approximately 85.5% of the
gross proceeds.
Gross
Proceeds
|
|
$
|
20,650,000
|
|
Approximate
Aggregate Interest Payments
|
|
$
|
2,478,000
|
|
Approximate
Transaction Costs (including Placement Agent Fees)
|
|
$
|
922,750
|
|
Net
Proceeds
|
|
$
|
17,249,250
|
|
Comparison
of Issuer Proceeds to Potential Investor Profit
We
plan
to use the proceeds from the sale of the Notes and Warrants to strengthen our
cash position and to support ongoing clinical development programs, including
undertaking global Phase III clinical trials of Generex Oral-lyn™, our
proprietary oral insulin formulation, at sites in the United States, Canada,
and
Europe. The following table summarizes the potential proceeds we will receive
pursuant to the Securities Purchase Agreement, Notes, and Warrants. For purposes
of this table, we have assumed that the Investors will exercise all of the
Warrants on a cash basis. We have also assumed that the Notes will be held
by
the Investors through the maturity date of the Notes.
|
|
Premium for
Investor
Conversion
($1.21/share)
|
|
Discount for
Company’s
Installment Payment
in Shares
($0.09704/per share)
|
|
Total
Gross Proceeds Payable to Company in the Current Transaction (1)
|
|
$
|
72,275,000
|
|
|
72,275,000
|
|
All
Payments that have been made or may be required to be made by Company
until Maturity (2)
|
|
$
|
14,847,733
|
|
|
14,847,733
|
|
Net
Proceeds to Company Assuming Maximum Payments made by Company (3)
|
|
$
|
57,427,267
|
|
|
57,427,267
|
|
Total
Possible Profit to the Investors (4)
|
|
$
|
0
|
|
|
2,484,846
|
|
Percentage
(%) of Payments and Profit over Net Proceeds (5)
|
|
|
25.85
|
%
|
|
30.18
|
%
|
Percentage
(%) of Payments and Profit over Net Proceeds per year of Term (6)
|
|
|
17.24
|
%
|
|
20.12
|
%
|
(1)
|
Includes
gross proceeds payable to our company on the sale of the Notes in
the
amount of $20,650,000 and assumes full exercise of the Series A,
Series
A-1, Series B and Series C Warrants to yield an aggregate exercise
price
of $51,625,000. However, there is no assurance that any Warrants
will
actually be exercised.
|
|
|
(2)
|
Total
possible payments (excluding repayment of principal) payable by us
to the
Investors or their affiliates assuming the Notes remain outstanding
until
the maturity date and that interest is paid in cash. Assumes that
no
default redemption premium on the Notes will be applicable.
|
|
|
(3)
|
Total
net proceeds to us calculated by subtracting the result in footnote
(2)
from the results in footnote (1).
|
|
|
(4)
|
Total
possible profit to the Investors includes only the aggregate premium
or
discount to market price of the shares underlying the Notes as discussed
above under “Dollar Value of Underlying Securities and Potential Profits
on Conversion.”
|
|
|
(5)
|
Percentage
of the total possible payments to the Investors as calculated in
footnote
(2) plus profit calculated in footnote (4) compared to the net proceeds
disclosed in footnote (3).
|
|
|
(6)
|
Based
on 18-month term of the Notes.
|
SELLING
SHAREHOLDERS
This
prospectus relates to the resale from time to time of up to a total of
30,191,665 shares of our common stock by the selling shareholders, comprising:
|
•
|
|
22,527,275
shares of common stock issuable upon conversion of, and as interest
payments on, the Notes;
|
|
|
|
|
|
•
|
|
6,309,275
shares of common stock issuable upon exercise of the Series A Warrants
issued to the holders of the Notes; and
|
|
|
|
|
|
•
|
|
1,355,117
shares of common stock issuable upon exercise of some of the Series
A-1
Warrants issued to the holders of the
Notes
|
The
Notes
and the Series A and Series A-1 Warrants were issued in the March Private
Placement and are described above under the caption “DESCRIPTION OF PRIVATE
PLACEMENT AND CONVERTIBLE NOTES.” We are registering the shares being offered
under this prospectus pursuant to a Registration Rights Agreement, dated March
31, 2008, that was entered into between us and the selling shareholders in
connection with the private placement.
We
are
registering the shares to permit the selling shareholders to offer these shares
for resale from time to time. The selling shareholders may sell all, some or
none of the shares covered by this prospectus. All information with respect
to
beneficial ownership has been furnished to us by the selling shareholders.
For
more information, see the section of this prospectus entitled “PLAN OF
DISTRIBUTION.”
The
aggregate numbers of 22,527,275 and 6,309,275 shares of common stock set forth
in the table above represent 120% of the number of shares issuable as of the
date of the Registration Rights Agreement pursuant to the Notes and the Series
A
Warrants, which is a good faith estimate of the maximum number of shares of
common stock issuable pursuant to the Notes and the Series A Warrants. The
aggregate number of 1,355,117 shares of common stock set forth in the table
above represents approximately 18% of the shares of common stock issuable as
of
the date of the Registration Rights Agreement upon the exercise of the Series
A-1 Warrants. The total aggregate number of 30,191,665 shares of common stock
being registered represents 30% of our public float prior to the March Private
Placement.
The
following table, based upon information currently known by us, sets forth as
of
April 23, 2008: (i) the number of shares held of record or beneficially by
the selling shareholders as of such date and assuming conversion or exercise
(as
the case may be) of all Notes, Warrants and other warrants and rights held
by
the selling shareholders as of such date, (ii) the number of shares that
may be offered under this prospectus, and (iii) a footnote reference to any
material relationship between us and the selling shareholder, if any. The table
below includes 100% (not 120%) of the shares issuable upon conversion of the
Notes and as interest payments thereon and upon exercise of the Series A
Warrants; therefore, the sum of the shares listed in the “Number of Shares
Offered by Selling shareholder” column does not reflect the additional 4,806,090
shares we are registering under this prospectus based upon our good faith
estimate of the maximum number of shares of common stock issuable pursuant
to
the Notes and the Series A Warrants. Beneficial ownership is determined under
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. None of the selling shareholders set forth in the following table
is
a broker-dealer or an affiliate of a broker-dealer.
For
each
selling shareholder, the table below assumes the sale by that selling
shareholder of all of its shares of common stock available for resale under
this
prospectus. Percentage calculations are based on 142,370,184 shares of our
common stock issued and outstanding after this offering.
Shareholder
|
|
Common
Stock Beneficially
Owned
Prior to the
Offering (1),(2)
|
|
Number of Shares
Offered by Selling
Shareholder (2),(3)
|
|
Common Stock
Owned Upon
Completion of
this Offering (2),(3)
|
|
Percentage of
Common
Stock Owned
Upon
Completion
of this
Offering (3)
|
|
Cranshire
Capital, L.P.(4)
|
|
|
6,899,463
|
|
|
6,146,629
|
(2)
|
|
5,368,538
|
|
|
3.77
|
%
|
Smithfield
Fiduciary LLC(5)
|
|
|
23,586,175
|
|
|
8,605,279
|
(2)
|
|
7,104,272
|
|
|
4.99
|
%
|
Iroquois
Master Fund Ltd.(6)
|
|
|
10,859,505
|
|
|
4,487,038
|
(2)
|
|
6,372,467
|
|
|
4.48
|
%
|
Iroquois
Capital Opportunity Fund, LP(6)
|
|
|
2,975,207
|
|
|
1,229,326
|
(2)
|
|
1,745,881
|
|
|
1.23
|
%
|
Portside
Growth and Opportunity Fund(7)
|
|
|
6,744,759
|
|
|
2,458,651
|
(2)
|
|
4,286,108
|
|
|
3.01
|
%
|
Rockmore
Investment Master Fund Ltd.(8)
|
|
|
7,318,101
|
|
|
2,458,652
|
(2)
|
|
4,859,449
|
|
|
3.41
|
%
|
(1)
|
Includes
all shares beneficially owned by selling shareholder as of April
23,
2008.
|
|
|
(2)
|
Includes
shares of common stock issuable upon conversion of, and as interest
payments on, the Notes and shares of common stock issuable upon exercise
of the Series A and Series A-1 Warrants. The Notes and Series A and
Series
A-1 Warrants contain conversion and exercise limitations providing
that a
holder thereof may not convert or exercise (as the case may be) -
and that
Generex shall not effect any conversion of a Note or otherwise convert
any
installment payment and accrued interest under a Note into shares
of
common stock - to the extent (but only to the extent) that, if after
giving effect to such conversion or exercise (as the case may be),
the
holder or any of its affiliates would beneficially own in excess
of 4.99%
or 9.99%, as applicable (the “Maximum Percentage”) of the outstanding
shares of common stock immediately after giving effect to such conversion
or exercise (as the case may be). To the extent the above limitation
applies, the determination of whether a Note or Warrant shall be
convertible (vis-à-vis other convertible, exercisable or exchangeable
securities owned by the holder) shall, subject to such Maximum Percentage
limitation, be determined on the basis of the first submission to
Generex
for conversion, exercise or exchange (as the case may
be).
|
|
|
|
Accordingly,
the number of shares of common stock set forth in the table as being
registered for a selling shareholder may exceed the number of shares
of
common stock that the selling shareholder could own beneficially
at any
given time through its ownership of the Notes and Warrants. Additionally,
for purposes of calculating the “Shares Owned After Sale of Registered
Shares,” the registered shares are being treated as though they were all
sold on the same day, and therefore because of the foregoing conversion
and exercise limitations, the number of shares reflected as being
owned
after the sale of the registered shares may be less than the shares
underlying other remaining Notes and Warrants, if any, held by the
selling
shareholder (including any Notes and Warrants issued in our the March
Private Placement). The number of shares offered by the Selling
Shareholders in the table above reflects 100% of the shares issuable
upon
conversion of the Notes and as interest payments thereon and upon
the
exercise of the Series A Warrants and a portion of the Series A-1
Warrants; we are registering 120% of the number of shares issuable
pursuant to the Notes and the Series A Warrants, which is a good
faith
estimate of the maximum number of shares of common stock that may
be
issuable pursuant to the Notes and the Series A Warrants. In the
event
such additional shares become issuable the additional shares shall
be
allocated among the Selling Shareholders holding the Notes and the
Series
A Warrants proportionally with their holdings.
|
(3)
|
Assumes
that the shareholders dispose of all the shares of common stock covered
by
this prospectus and do not acquire or dispose of any additional shares
of
common stock. The selling shareholders are not representing, however,
that
any of the shares covered by this prospectus will be offered for
sale, and
the selling shareholders reserve the right to accept or reject, in
whole
or in part, any proposed sale of shares. On March 31, 2008, we entered
into a Registration Rights Agreement with the selling shareholders
listed
above. See the section of this prospectus entitled “DESCRIPTION OF PRIVATE
PLACEMENT AND CONVERTIBLE NOTES.” Under the Registration Rights Agreement,
we are required to file a resale registration statement for the shares
underlying the Notes and Warrants to enable the resale of such shares
by
the selling shareholders on a delayed or continuous basis under Rule
415
of the Securities Act. Pursuant to the terms of the Notes, we also
may
make installment and interest payments with shares of our common
stock.
|
(4)
|
Downsview
Capital, Inc. (“Downsview”) is the general partner of Cranshire Capital,
L.P. (“Cranshire”) and consequently has voting control and investment
discretion over securities held by Cranshire. Mitchell P. Kopin (“Mr.
Kopin”), President of Downsview, has voting control over Downsview. As
a
result, each of Mr. Kopin, Downsview and Cranshire may be deemed
to have
beneficial ownership (as determined under Section 13(d) of the Securities
Exchange Act of 1934, as amended) of the shares owned by Cranshire
which
are being registered hereunder.
Includes
(i) 1,324,106 shares of common stock, (ii) 4,132,231 shares of common
stock issuable upon conversion of a Senior Secured Convertible Note
(the
“Note”), (iii) 170,068 shares of common stock issuable upon exercise of
a
warrant (the “Warrant”) and (iv) 1,273,058 shares of common stock issuable
upon exercise of a Series A Warrant (the “Series A Warrant”), in each
case, held by Cranshire, which determination is based on (1) 111,675,275
shares of common stock issued and outstanding as of March 31, 2008,
plus
(2) (A) 4,132,231 shares of common stock issuable upon conversion
of the
Note, (B) 170,068 shares of common stock issuable upon exercise of
the
Warrant and (C) 1,273,058 shares of common stock issuable upon exercise
of
the Series A Warrant, in each case, held by Cranshire. Excludes (x)
an
aggregate of 3,874,363 shares of Common Stock issuable upon exercise
of
warrants held by Cranshire because each of such warrants contain
a blocker
provision under which the holder thereof does not have the right
to
exercise such warrants to the extent that such exercise would result
in
beneficial ownership by the holder thereof, together with its affiliates,
of more than 4.99% or 4.999% (as the case may be) of the shares of
common
stock outstanding after giving effect to such exercise and (y) an
aggregate of 9,057,519 shares of common stock issuable upon exercise
of
warrants held by Cranshire (that were acquired on March 31, 2008)
because
each of such warrants is not exercisable until the six month and
one day
anniversary of the issuance date thereof (which was March 31, 2008)
(each
of such warrants also contain a blocker provision under which the
holder
thereof does not have the right to exercise such warrants to the
extent
that such exercise would result in beneficial ownership by the holder
thereof, together with its affiliates, of more than 9.99% of the
shares of
common stock outstanding after giving effect to such exercise). Without
such blocker provisions (and assuming the warrants described in clause
(y)
are currently exercisable), each of Mr. Kopin, Downsview and Cranshire
would be deemed to beneficially own 19,831,345 shares of common stock.
|
|
|
(5) |
Highbridge
Capital Management, LLC is the trading manager of Smithfield Fiduciary
LLC
and consequently has voting control and investment discretion over
securities held by Smithfield Fiduciary LLC. Glenn Dubin and Henry
Swieca
control Highbridge Capital Management, LLC. Each of Highbridge Capital
Management, LLC, Glenn Dubin and Henry Swieca disclaims beneficial
ownership of the securities held by Smithfield Fiduciary LLC. Shares
of
common stock beneficially owned prior to the offering includes all
shares
of common stock issuable upon conversion of, and as interest payments
on,
the Notes and shares of common stock issuable upon exercise of the
Warrants without regard to the blocker provisions as described in
footnote
2 and exercise limitations on certain Warrants. Shares of common
stock
owned upon completion of the offering does not include 7,876,624
shares of
common stock issuable upon exercise of warrants held by Smithfield
because
each of such warrants contains a blocker provision under which the
holder
thereof does not have the right to exercise such warrants to the
extent
that such exercise would result in beneficial ownership by the holder
thereof, together with its affiliates, of more than 4.99% of the
shares of
common stock outstanding after giving effect to such exercise
|
|
|
(6)
|
Joshua
Silverman, indirectly through respective investment management companies,
has voting control and investment discretion over securities held
by
Iroquois Master Fund Ltd. and Iroquois Capital Opportunity Fund,
LP. Mr.
Silverman disclaims beneficial ownership of the shares held by Iroquois
Master Fund Ltd. and Iroquois Capital Opportunity Fund, LP. Iroquois
Capital, LP, an affiliated investment fund of Iroquois Master Fund
Ltd.
and Iroquois Capital Opportunity Fund, LP beneficially owns 3,087,597
shares of our common stock. Shares of common stock beneficially owned
prior to the offering includes all shares of common stock issuable
upon
conversion of, and as interest payments on, the Notes and shares
of common
stock issuable upon exercise of the Warrants without regard to the
blocker
provisions as described in footnote 2 and exercise limitations on
certain
Warrants.
|
(7)
|
Ramius
LLC (“Ramius”) is the investment adviser of Portside Growth and
Opportunity Fund (“Portside”) and consequently has voting control and
investment discretion over securities held by Portside. Ramius disclaims
beneficial ownership of these securities. C4S & Co., L.L.C. (“C4S”) is
the managing member of Ramius and may be considered the beneficial
owner
of any securities deemed to be beneficially owned by Ramius. C4S
disclaims
beneficial ownership of these securities. Peter A. Cohen, Morgan
B. Stark,
Thomas W. Strauss and Jeffrey M. Solomon are the sole managing members
of
C4S and may be considered beneficial owners of any securities deemed
to be
beneficially owned by C4S. Messrs. Cohen, Stark, Strauss and Solomon
disclaim beneficial ownership of these securities. Shares of common
stock
beneficially owned prior to the offering includes all shares of common
stock issuable upon conversion of, and as interest payments on, the
Notes
and shares of common stock issuable upon exercise of the Warrants
without
regard to the blocker provisions as described in footnote 2 and exercise
limitations on certain Warrants.
|
|
|
(8)
|
Rockmore
Capital, LLC (“Rockmore Capital”) and Rockmore Partners, LLC (“Rockmore
Partners”), each a limited liability company formed under the laws of the
State of Delaware, serve as the investment manager and general partner,
respectively, to Rockmore Investments (US) LP, a Delaware limited
partnership, which invests all of its assets through Rockmore Investment
Master Fund Ltd., an exempted company formed under the laws of Bermuda
(“Rockmore Master Fund”). By reason of such relationships, Rockmore
Capital and Rockmore Partners may be deemed to share dispositive
power
over the shares of our common stock owned by Rockmore Master Fund.
Rockmore Capital and Rockmore Partners disclaim beneficial ownership
of
such shares of our common stock. Rockmore Partners has delegated
authority
to Rockmore Capital regarding the portfolio management decisions
with
respect to the shares of common stock owned by Rockmore Master Fund
and,
as of April 23, 2008 Mr. Bruce T. Bernstein and Mr. Brian Daly, as
officers of Rockmore Capital, are responsible for the portfolio management
decisions of the shares of common stock owned by Rockmore Master
Fund. By
reason of such authority, Messrs. Bernstein and Daly may be deemed
to
share dispositive power over the shares of our common stock owned
by
Rockmore Master Fund. Messrs. Bernstein and Daly disclaim beneficial
ownership of such shares of our common stock and neither of such
persons
has any legal right to maintain such authority. No other person has
sole
or shared voting or dispositive power with respect to the shares
of our
common stock as those terms are used for purposes under Regulation
13D-G
of the Securities Exchange Act of 1934, as amended. No person or
“group”
(as that term is used in Section 13(d) of the Securities Exchange
Act of
1934, as amended, or the SEC’s Regulation 13D-G) controls Rockmore Master
Fund. Shares of common stock beneficially owned prior to the offering
includes all shares of common stock issuable upon conversion of,
and as
interest payments on, the Notes and shares of common stock issuable
upon
exercise of the Warrants without regard to the blocker provisions
as
described in footnote 2 and exercise limitations on certain
Warrants.
|
The
selling shareholders may sell all or a portion of the shares of common stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the shares of
common stock are sold through underwriters or broker-dealers, the selling
shareholders will be responsible for underwriting discounts or commissions
or
agent’s commissions. The shares of common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions, which may involve crosses or block
transactions,
|
· |
on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
|
|
· |
in
the over-the-counter market;
|
|
· |
in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
|
|
· |
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
|
· |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
· |
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
· |
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
|
· |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
· |
privately
negotiated transactions;
|
|
· |
short
sales made after the date the Registration Statement is declared
effective
by the SEC, subject to any applicable limitations on short sales
contained
in any agreement between a selling shareholder and the
Company;
|
|
· |
sales
pursuant to Rule 144;
|
|
· |
broker-dealers
may agree with the selling shareholder to sell a specified number
of such
shares at a stipulated price per
share;
|
|
· |
a
combination of any such methods of sale;
and
|
|
· |
any
other method permitted pursuant to applicable
law.
|
If
the
selling shareholders effect such transactions by selling shares of common stock
to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling shareholders or commissions from
purchasers of the shares of common stock for whom they may act as agent or
to
whom they may sell as principal (which discounts, concessions or commissions
as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with sales
of
the shares of common stock or otherwise, the selling shareholders may enter
into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the shares of common stock in the course of hedging in positions they
assume. The selling shareholders may also sell shares of common stock short
and
deliver shares of common stock covered by this prospectus to close out short
positions and to return borrowed shares in connection with such short sales.
The
selling shareholders may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares.
The
selling shareholders may pledge or grant a security interest in some or all
of
the notes, warrants or shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time pursuant to
this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act, amending, if necessary, the list
of
selling shareholders to include the pledgee, transferee or other successors
in
interest as selling shareholders under this prospectus. The selling shareholders
also may transfer and donate the shares of common stock in other circumstances
in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this
prospectus.
The
selling shareholders and any broker-dealer participating in the distribution
of
the shares of common stock may be deemed to be “underwriters” within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. At the time a particular offering of
the
shares of common stock is made, a prospectus supplement, if required, will
be
distributed which will set forth the aggregate amount of shares of common stock
being offered and the terms of the offering, including the name or names of
any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling shareholders and any discounts,
commissions or concessions allowed or reallowed or paid to
broker-dealers.
Under
the
securities laws of some states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers. In addition,
in
some states the shares of common stock may not be sold unless such shares have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
There
can
be no assurance that any selling shareholder will sell any or all of the shares
of common stock registered pursuant to the shelf registration statement, of
which this prospectus forms a part.
The
selling shareholders and any other person participating in such distribution
will be subject to applicable provisions of the Exchange Act, and the rules
and
regulations thereunder, including, without limitation, to the extent applicable,
Regulation M of the Exchange Act, which may limit the timing of purchases and
sales of any of the shares of common stock by the selling shareholders and
any
other participating person. To the extent applicable, Regulation M may also
restrict the ability of any person engaged in the distribution of the shares
of
common stock to engage in market-making activities with respect to the shares
of
common stock. All of the foregoing may affect the marketability of the shares
of
common stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.
We
will
pay all expenses of the registration of the shares of common stock pursuant
to
the registration rights agreement, estimated to be $38,245.86 in total,
including, without limitation, Securities and Exchange Commission filing fees
and expenses of compliance with state securities or “blue sky” laws;
provided,
however,
that a
selling shareholder will pay all underwriting discounts and selling commissions,
if any. We will indemnify the selling shareholders against liabilities,
including some liabilities under the Securities Act, in accordance with the
registration rights agreements, or the selling shareholders will be entitled
to
contribution. We may be indemnified by the selling shareholders against civil
liabilities, including liabilities under the Securities Act, that may arise
from
any written information furnished to us by the selling shareholder specifically
for use in this prospectus, in accordance with the related registration rights
agreements, or we may be entitled to contribution.
Once
sold
under the shelf registration statement, of which this prospectus forms a part,
the shares of common stock will be freely tradable in the hands of persons
other
than our affiliates.
LEGAL
MATTERS
EXPERTS
The
audited financial statements for the fiscal year ended July 31, 2005
incorporated in this prospectus and elsewhere in the registration statement
by
reference to the Annual Report on Form 10-K for the year ended July 31, 2007
have been so incorporated in reliance on the report of BDO Dunwoody LLP, an
independent registered public accounting firm, given on the authority of said
firm as experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
are a
reporting company and file annual, quarterly and current reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy any document we file with the SEC at the Public Reference
Room (Room 1580), 100 F Street, N.E., Washington, D.C. 20549. You may also
obtain information on the operations of the Public Reference Room by calling
the
SEC at 1-800-SEC-0330. The SEC maintains a website (www.sec.gov)
that
contains the reports, proxy and information statements, and other information
that we file electronically with the SEC.
This
prospectus is part of a Registration Statement on Form S-3 that we filed with
the SEC. The Registration Statement contains more information than this
prospectus regarding us and the securities, including certain exhibits and
schedules. You can obtain a copy of the Registration Statement from the SEC
at
the above address or from the SEC’s Internet site.
The
SEC
allows us to “incorporate by reference” information contained in documents that
we file with the SEC, which means that we can disclose important information
to
you by referring you to those other documents. The information incorporated
by
reference is an important part of this prospectus, and information that we
file
later with the SEC will automatically update and supersede this information.
We
incorporate by reference the documents listed below and any future filings
we
will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act prior to the termination of this offering:
|
•
|
|
our
Annual Report on Form 10-K for the fiscal year ended July 31,
2007, filed with the SEC on October 15,
2007;
|
|
•
|
|
Amendment
No. 1 to our Annual Report on Form 10-K for the fiscal year ended
July 31,
2007, filed with the SEC on November 28, 2007;
|
|
|
|
|
|
•
|
|
Amendment
No. 2 to our Annual Report on Form 10-K for the fiscal year ended
July 31,
2007, filed with the SEC on March 13, 2008;
|
|
|
|
|
|
•
|
|
our
Quarterly Report on Form 10-Q for the quarter ended October 31, 2007,
filed with the SEC on December 7,
2007;
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our
Quarterly Report on Form 10-Q for the quarter ended January 31, 2008,
filed with the SEC on March 11, 2008;
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our
Quarterly Report on Form 10-Q for the quarter ended April 30, 2008,
filed
with the SEC on June 9, 2008;
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our
Current Reports on Form 8-K filed with the SEC on August 23, 2007,
December 5, 2007, March 14, 2008, April 2, 2008, May 1, 2008, May
9, 2008,
May 29, 2008 and July 25, 2008;
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our
definitive Proxy Statement filed with the SEC on April 23, 2008 in
connection with our 2008 Annual Meeting of Stockholders;
and
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the
description of our common stock contained in our registration statement
on
Form 10 filed on December 14, 1998, as amended by a Form 10/A filed
on
February 24, 1999, and including any amendment or report subsequently
filed for the purpose of update the description.
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All
documents that we subsequently file pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, prior to the termination of this offering shall
be deemed to be incorporated by reference in this registration statement and
to
be a part hereof from the date of filing of such documents; except as to any
portion of any future annual or quarterly report to stockholders or document
that is not deemed filed under such provisions. For the purposes of this
prospectus, any statement contained in a document incorporated or deemed to
be
incorporated by reference herein shall be deemed to be modified or superseded
to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
You
may
request a copy of these documents (other than an exhibit to a filing unless
that
exhibit is specifically incorporated by reference into that filing), which
will
be provided to you at no cost, by writing or telephoning us using the following
contact information:
Generex
Biotechnology Corporation
Attention:
Mark Fletcher, Executive Vice President and General Counsel
33
Harbour Square, Suite 202
Toronto,
Ontario
Canada
M5J 2G2
GENEREX
BIOTECHNOLOGY CORPORATION
PROSPECTUS
July
29, 2008