Generex Biotechnology Corp. (fka GNBTQ)

[abnpayne]

5:08pm Form 10-Q for GENEREX BIOTECHNOLOGY CORP

11-Mar-2009

http://biz.yahoo.com/e/090311/gnbt10-q.html

Results of Operations
Three Months Ended January 31, 2009 Compared to Three Months Ended January 31, 2008

Our net loss for the quarter ended January 31, 2009 was $12,038,440 versus $6,507,174 in the corresponding quarter of the prior fiscal year. The increase in net loss in this fiscal quarter versus the corresponding quarter of the prior fiscal year is primarily due to the interest expense recorded in connection with our convertible debentures, repricing costs of warrants costs also issued in connection with our convertible debentures and an increase in selling expenses. The increase in net loss was partially offset by the decrease in our general and administrative expenses and research and development expenses. Our operating loss for the quarter ended January 31, 2009 decreased to $5,807,232 compared to $6,828,022 in the second fiscal quarter of 2008. The decrease in operating loss resulted from a decrease in general and administrative expenses (to $2,064,522 from $3,086,873) and a slight decrease in research and development expenses (to $3,240,441 from $3,469,624). The decrease was partially offset by the increase in selling expense (to $609,707 from $284,498). Our revenues in the second quarter ended January 31, 2009 increased to $434,636 from $18,627 for the quarter ended January 31, 2008 primarily due to one large order from the Middle East.

The small decrease in research and development expenses in the last fiscal quarter reflects timing differences of the overall increased levels of research and development of our oral insulin product and platform technology in connection with global Phase III clinical trials. The decrease in general and administrative expenses reflects the decrease in expenses for consulting and accounting services in the current fiscal quarter compared to last year, a modest reduction in travel and legal expenses, despite an increase in the expense for financial services. The selling expenses are associated with the commercial sales of our over-the-counter products that began in fiscal 2007.

Our interest expense in the second quarter of fiscal 2009 increased to $6,363,197 compared to interest expense of $58,948 in the second quarter of fiscal 2008 due to interest expense and costs of the repriced warrant recognized on the secured convertible notes issued in March 2008 in connection with a private placement. Our interest income decreased to $52,632 in the second quarter of fiscal 2009 compared to $291,472 in the same quarter for the last year primarily due to lower market interest rates and lower cash balances. We received a slightly lower income from rental operations (net of expense) of $79,359 in the second quarter of fiscal 2009 compared to $88,324 in the same quarter for the last year.

Results of Operations
Six Months Ended January 31, 2009 Compared to Six Months Ended January 31, 2008

Our net loss for the six months ended January 31, 2009 was $23,735,624 versus $13,729,087 in the corresponding six-month period of the prior fiscal year. The increase in net loss in this six-month period versus the corresponding six-month period of the prior fiscal year is primarily due to the increase in interest expense recorded in connection with our convertible debentures, costs of repricing warrants issued in connection with our convertible debentures, an increase in research and development expenses in connection with preparations for global Phase III clinical trials of Generex Oral-lyn� at sites in the United States, Canada, and Europe, and an increase in selling expenses. Our operating loss for the six months ended January 31, 2009 decreased to $13,331,878 compared to $14,534,383 in the corresponding six-month period ended January 31, 2008. The decrease resulted from a decrease in general and administrative expenses (to $4,912,435 from $6,602,793) and an increase in net revenues to $972,982 in the six months ended January 31, 2009 from $63,340 in the six months ended January 31, 2008. The increase in net revenue is attributable to a licensing fee received from South Korea and large order of our over-the-counter drugs from the Middle East. The decrease in operating loss was partially offset by increase in research and development expenses (to $7,596,130 from $7,317,427) and increases in and selling expenses (to $1,446,905 from $651,918).