Generex Biotechnology PRER14A Preliminary revised proxy

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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SCHEDULE 14A

Amendment # 1

(Rule 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

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☐ Definitive Proxy Statement

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☐ Soliciting Material Pursuant to §240.14a-12

GENEREX BIOTECHNOLOGY CORPORATION

(Name of Registrant as Specified In Its Charter)

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GENEREX BIOTECHNOLOGY CORPORATION

10102 USA Today Way

Miramar, Florida, USA 33025

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD OCTOBER 5, 2017

Dear Stockholder:

You are cordially invited to attend the annual meeting of stockholders of Generex Biotechnology Corporation ("Generex") that will be held on October 5, 2017, at 10:00 a.m. (local time), at ■ for the following purposes, as set forth in the accompanying Proxy Statement:

To elect eight directors;

To approve an amendment to our Restated Certificate of Incorporation to increase the authorized number of shares of common stock from 2,450,000 shares to 750,000,000 shares;

To approve an amendment to our Restated Certificate of Incorporation to change our name to NuGenerex Biotechnology Holdings, Inc.;

To approve the adoption of our 2017 Equity Incentive Plan;

To approve the adjournment of the annual meeting, if necessary, to solicit additional proxies to vote in favor of the proposals set forth inItem 2;

To ratify the appointment of MNP LLP as independent public accountants for the year ending July 31, 2017; and

To conduct any other business as may properly come before the annual meeting or any adjournment or postponement thereof.

The Board of Directors has established the close of business August 28, 2017, as the record date for the determination of stockholders entitled to receive notice of, and to vote at, the annual meeting and any adjournment or postponement thereof. Generex is complying with the Securities and Exchange Commission rule that permits us to furnish proxy materials to stockholders on the Internet. This Notice and the Proxy Statement are being made available to stockholders on or about n, 2017.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER 5, 2017: The proxy statement for the annual meeting of stockholders will be made available to stockholders on the Internet at www.generex.com/proxy.

Your vote is very important. Whether or not you plan to attend the annual meeting of stockholders, we urge you to vote and to submit your proxy over the Internet, by telephone or by mail. If you are a registered stockholder and attend the meeting, you may revoke the proxy and vote your shares in person. If you hold your shares through a bank or broker and want to vote your shares in person at the meeting, please contact your bank or broker to obtain a legal proxy.

By order of the Board of Directors,

/s/ Mark A. Fletcher
Mark A. Fletcher
Secretary

August ■, 2017

iii

GENEREX BIOTECHNOLOGY CORPORATION

10102 USA TODAY WAY

MIRAMAR, FLORIDA, USA 33025

PROXY STATEMENT

TABLE OF CONTENTS

	Page
About the Annual Meeting and Voting at the Meeting	1
Election of Directors(Item 1 on the Proxy Card)	6
Independence and Compensation of Directors	12
Director Independence	12
Non-Employee Directors’ Compensation	13
Corporate Governance	14
Code of Ethics	14
Board Structure; Risk Oversight; Risk Assessment of Compensation Policies and Practices	14
Board Meetings; Annual Meeting Attendance	14
Audit Committee	14
Compensation Committee	15
Corporate Governance and Nominating Committee	15
Director Nominations by Stockholders	16
Communications with Directors	16
Executive Compensation	16
Compensation Discussion and Analysis	16
Compensation Committee Report	21
Executive Compensation Tables	20
Compensation Elements; Employment Agreements and Agreements Providing Payments Upon Retirement, Termination or Change in Control for Named Executives	21
Other Benefit Plans	21
Approval of an Amendment to Generex’s Restated Certificate of Incorporation to Increase the Number of Authorized Shares of Common(Item 2 on the Proxy Card)	22
Approval of an Amendment to Generex’s Restated Certificate of Incorporation to change the corporate name(Item 3 on the Proxy Card)	26
Approval of the 2017 Equity Incentive Plan(Item 4 on the Proxy Card)	27
Approval of the Adjournment of the Annual Meeting, If Necessary to Solicit Additional Proxies for Proposals Set Forth in Item 1(Item 5 on the Proxy Card)	34
Ratification of the Appointment of MNP LLP as Generex’s Independent Public Accountants for Fiscal Year 2017(Item 6 on the Proxy Card)	35
Audit Matters	36
Fees Paid to Generex’s Independent Public Accountants	36
Policy for Pre-Approval of Audit and Non-Audit Services	36
Report of the Audit Committee	37
Security Ownership of Certain Beneficial Owners and Management	37
Certain Transactions	38
Change in Control	38
Section 16(a) Beneficial Ownership Reporting Compliance	40
Other Information	40
Stockholder Proposals for the Next Annual Meeting	40
Appendix A – Audit Committee Charter	A-1
Appendix B – Form of Certificate of Amendment to Restated Certificate of Incorporation	B-1
Appendix C-1– Hema Diagnostic Systems Financial Statements	C-1
Appendix C-2 – Hema Diagnostic Systems Information	C-32
Appendix D – 2017 Equity Incentive Plan	D-1

ABOUT THE ANNUAL MEETING AND VOTING AT THE MEETING

Why am I being furnished this Proxy Statement?

This Proxy Statement is provided to the stockholders of Generex in connection with the solicitation by our Board of Directors of proxies for use at our special meeting of stockholders to be held October 5, 2017 at n, and any adjournments or postponements thereof.

What are the items of business for the meeting?

The items of business for the meeting are as follows:

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To elect eight directors

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To approve an amendment to our Restated Certificate of Incorporation to increase the authorized number of shares of common stock from 2,450,000 shares to 750,000,000 shares;

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To approve an amendment to our Restated Certificate of Incorporation to change our name to NuGenerex Biotechnology Holdings, Inc.;

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To approve the adoption of our 2017 Equity Incentive Plan;

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To approve the adjournment of the annual meeting, if necessary, to solicit additional proxies to vote in favor of the proposals set forth in Item 2 on the proxy card;

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To ratify the appointment of MNP LLP as independent public accountants for the year ending July 31, 2017; and

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To conduct any other business as may properly come before the annual meeting or any adjournment or postponement thereof.

Who is soliciting my proxy?

The Board of Directors is soliciting your proxy in order to provide you with an opportunity to vote on all matters scheduled to come before the meeting whether or not you attend the meeting in person.

What if I received in the mail a Notice of Internet Availability of Proxy Materials?

In accordance with rules adopted by the Securities and Exchange Commission (SEC), we are providing access to our proxy materials over the Internet. Accordingly, on or about n, 2017, we are mailing to our record and beneficial stockholders a Notice of Internet Availability of Proxy Materials, which contains instructions on how to access our proxy materials over the Internet. If you received a Notice of Internet Availability of Proxy Materials, you will not receive a printed copy of our proxy materials by mail unless you request one. You may request a printed copy of our proxy materials for the Special Meeting. If you wish to receive a printed copy of our proxy materials, you should follow the instructions for requesting those materials included in the Notice of Internet Availability of Proxy Materials.

Who is entitled to vote?

You may vote if you owned shares of Generex’s common stock as of the close of business on August 28, 2017, which is the record date. You are entitled to one vote for each share of common stock that you own. As of August 28, 2017, we had ■ shares of common stock outstanding.

The holders of our Series I Preferred Stock are entitled to vote in the election of directors (Item 1) and on the proposal to authorize additional shares of common stock(Item 2). On those proposals, holders of the Series I Preferred Stock, as a class, are entitled to cast a number of votes equal to fifty percent (50%) of the total number of votes entitled to be cast at the Special Meeting by all other outstanding shares of the Company’s capital stock. The holders of the Series I Preferred Stock are Jsoeph Moscato, our CEO, and Lawrence Salvo, a member of our Board. They have agreed vote in favor of the election of Company management’s slate of directors and the Company’s proposal to increase the authorized number of shares of common stock.

How do I vote before the meeting?

If you hold your shares in your own name as the stockholder of record, you have three options for voting and submitting your proxy before the meeting:

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By Internet — We encourage you to vote and submit your proxy over the Internet atwww.proxyvote.com.

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By Telephone — You may vote and submit your proxy by calling 1-800-690-6903[**CONFIRM WITH ALLIANCE ADVISORS**].

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By Mail — If you received your proxy materials by mail, you may vote by completing, signing and returning the enclosed proxy card.

If you are a street-name stockholder, you will receive instructions from your bank, broker or other nominee describing how to vote your shares. Certain of these institutions offer telephone and Internet voting. Please refer to the information forwarded by your bank, broker or other nominee to see which options are available to you.

We provide Internet and telephone proxy voting to allow you to vote your shares on-line or by telephone, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet or telephone access, such as usage charges from Internet access providers and telephone companies.

What shares can I vote?

You may vote all shares owned by you as of the close of business on August 28, 2017, the record date. These shares include:

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Shares held directly in your name as the stockholder of record; and

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Shares of which you are the beneficial owner but not the stockholder of record (typically referred to as being held in “street name”). These are shares that are held for you through a broker, trustee or other nominee such as a bank.

May I vote at the meeting?

You may vote your shares at the meeting if you attend in person. If you hold your shares through an account with a bank or broker, you must obtain a legal proxy from the bank or broker in order to vote at the meeting. Even if you plan to attend the meeting, we encourage you to vote your shares by proxy over the Internet, by telephone or by mail.

How do I revoke my proxy?

You may revoke your proxy at any time before the polls close at the meeting.

If you are the record holder of your shares, you may change you vote by:

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Signing another proxy card with a later date and returning it to us prior to the meeting.

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Voting again over the Internet or by telephone prior to 11:59 p.m., Eastern Time, on October 4. 2017.

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Attending the meeting and notifying the election official that you wish to revoke your proxy and vote in person.

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Sending a written notice to us that you are revoking your proxy. Notices may be sent to 4145 North Service Road, Suite 200, Burlington, Ontario Canada L7L 6A3. Our telephone number is (416) 364-2551.

If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank for revoking your proxy.

Will my shares be voted if I do not return my proxy?

If your shares are registered directly in your name, your shares will not be voted if you do not vote over the Internet, vote by telephone, return your proxy, or vote by ballot at the special meeting.

If your shares are held in “street name,” your brokerage firm, under certain circumstances, may vote your shares for you if you do not return your proxy. Brokerage firms have authority to vote customers’ un-voted shares on some routine matters. It is possible that brokers will not have discretionary voting authority with respect toItem 1 to approve the authorization of additional shares; in which case, if you do not instruct your broker how to vote with respect toItem 1, your broker may not vote with respect to those matters. We encourage you to provide voting instructions to your brokerage firm by giving your proxy. This ensures your shares will be voted at the Special Meeting according to your instructions. You should receive directions from your brokerage firm about how to submit your proxy to them at the time you receive this Proxy Statement.

What if I return my proxy card but do not provide voting instructions?

If you are a stockholder of record and you do not specify your vote on each proposal individually when submitting a proxy via the Internet or by telephone, or if you sign and return a proxy card without giving specific voting instructions, your shares will be voted as follows:

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FORthe election of the nominees for director named on page ■ of this Proxy Statement;

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FORthe approval of the amendment to our Restated Certificate of Incorporation to increase the authorized number of shares of common stock from 2,450,000 shares to 750,000,000 shares;

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FORthe approval of amendment to our Restated Certificate of Incorporation to change our name to NuGenerex Biotechnology Holdings, Inc.;

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FORthe adoption of our 2017 Equity Incentive Plan;

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FORthe approval of the adjournment of the Generex Special meeting, if necessary, to solicit additional proxies for the proposals set forth inItem 2 (increase in the number of authorized shares of common stock) on the proxy card;

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FORthe ratification of the appointment of MNP LLP as independent public accountants for the year ending July 31, 2017; and

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In accordance with the best judgment of the individuals named as proxies on the proxy card on any other matters properly brought before the meeting.

If you are a beneficial owner of shares registered in the name of your broker, bank or other nominee, and you do not provide the broker or other nominee that holds your shares with voting instructions, the broker or other nominee will determine if it has the discretionary authority to vote on the particular matter.

What does it mean if I receive more than one Notice of Internet Availability of Proxy Materials or one proxy card?

Your shares are probably registered in more than one account. You should vote all of your shares. We encourage you to consolidate all of your accounts by registering them in the same name, social security number and address. For assistance consolidating accounts where you are the stockholder of record, you may contact our transfer agent, Broadridge Financial Solutions, at 1-800-733-1121.

May stockholders ask questions at the meeting?

Yes. Generex representatives will answer stockholders’ questions of general interest at the end of the meeting.

How many votes must be present to hold the meeting?

Generally, In order for us to conduct our meeting, a majority of our outstanding shares of common stock as of August 28, 2017 must be present in person or by proxy at the meeting. This is referred to as a quorum. If a quorum is not present, we expect that the annual meeting will be adjourned until we obtain a quorum. Under our By-laws, the holders of a majority of the voting rights for a particular proposal must be present at the meeting for a quorum to exist as to that proposal. Since our Series I Preferred Stock is entitle to vote in the election of directors(Item 1 on the Proxy Card) and on the proposal to increase the authorized capital stock(Item 2 on the Proxy Card), a quorum for those matters will consist of a majority of the votes represented outstanding common stock and Series I Preferred Stock.

Your shares are counted as present at the meeting if you attend the meeting and vote in person or if you properly return a proxy by mail. Shares voted by banks or brokers on behalf of beneficial owners are also counted as present at the meeting. In addition, abstentions and broker non-votes will be counted for purposes of establishing a quorum with respect to any matter properly brought before the meeting. Broker non-votes occur on a matter when a bank or broker is not permitted under applicable rules and regulations to vote on a matter without instruction from the beneficial owner of the underlying shares and no instruction has been given.

How many votes are needed for each proposal and how are the votes counted?

The eight nominees for director receiving the highest number of votes FOR election will be elected as directors(Item 1 on the Proxy Card). This is called a plurality. Abstentions and broker non-votes are not counted for purposes of electing directors. The holders of the Company’s Series I Convertible Preferred Stock is entitled to vote on the election of members of the Board of Directors, and the holders of the Series I Preferred Stock, as a class, are entitled to cast a number of votes on such proposal equal to fifty percent (50%) of the total number of votes entitled to be cast at the Special Meeting by all other outstanding shares of the Company’s capital stock. The holders of the Series I Preferred Stock have agreed to vote in favor of the election of Company management’s slate of directors.

The favorable vote of a majority of the votes represented by our outstanding common stock and Series I Preferred Stock outstanding will be required for the approval of the authorization of additional shares(Item 2 on the Proxy Card). The favorable vote of a majority of our shares of common stock outstanding will be required for the approval of the change in our corporate name(Item 3 on the Proxy card). We believe thatItem 1may be considered a non-routine matter, therefore brokers will not be permitted to vote if the beneficial owners do not provide voting instructions on those matters. The holders of the Company’s Series I Preferred Stock are entitled to vote on the proposal to authorize additional shares of common stock, and the holders of the Series I Preferred Stock, as a class, are entitled to cast a number of votes on such proposal equal to fifty percent (50%) of the total number of votes entitled to be cast at the Special Meeting by all other outstanding shares of the Company’s capital stock. The holder of the Series I Preferred Stock have agreed vote in favor the Company’s proposal to increase the authorized number of shares of common stock.

The affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the particular proposal will be required for:

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The approval of the adoption of our 2017 Equity Incentive Plan(Item 4 on the Proxy Card);

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the adjournment of the annual meeting, if necessary, to solicit additional proxies to vote in favor of the proposal set forth inItem 1 (Item 5 on the Proxy Card);

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the ratification of the appointment of MNP LLP as independent public accountants for the year ending July 31, 2017(Item 6 on the Proxy Card); and

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any other proposal that might properly come before the meeting.

Abstentions and Broker non-votes will not be counted toward the tabulation of votes cast onItem 2. The effect of an abstention or broker non-vote is the same as that of a vote againstItem 1, the proposal to increase our authorized common stock andItem 2, the proposal to change our corporate name.

How will proxies be voted on other items or matters that properly come before the meeting?

If any other items or matters properly come before the meeting, the proxies received will be voted on those items or matters in accordance with the discretion of the proxy holders.

Is Generex aware of any other item of business that will be presented at the meeting?

The Board of Directors does not intend to present, and does not have any reason to believe that others will present, any item of business at the annual meeting other than those specifically set forth in the notice of the meeting. However, if other matters are properly brought before the meeting, the persons named on the enclosed proxy will have discretionary authority to vote all proxies in accordance with their best judgment.

Who can answer any questions I may have about the annual meeting of stockholders and voting my shares?

Shareholders may contact Alliance Advisors, Generex's proxy solicitation agent for the annual meeting of stockholders, toll-free at (877) 777-5092.

Where do I find the voting results of the annual meeting?

We will report the voting results in a current report on Form 8-K within four business days after the end of the annual meeting.

Who bears the costs of soliciting these proxies?

We have hired Alliance Advisors to assist us in soliciting proxies in connection with the annual meeting. We will pay Alliance’s fees, which we expect to be approximately $9,000, plus all expenses for such services. In addition, our directors, officers, and employees may solicit proxies by telephone, e-mail, and in person, without additional compensation. Upon request, we will also reimburse brokerage houses and other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for distributing proxy materials to stockholders. All costs and expenses of any solicitation, including the cost of preparing this proxy statement and posting it on the Internet and mailing the Notice of Internet Availability of Proxy Materials, will be borne by Generex.

ELECTION OF DIRECTORS

(Item 1 on the Proxy Card)

How many directors will be elected at the meeting?

Eight directors are to be elected at the Special Meeting of stockholders. Our bylaws state that the Board shall consist of between three to nine members. Proxies cannot be voted for a greater number of persons than the number of nominees set forth in this proxy statement.

What is the term of office for each director elected at the meeting?

All directors will be elected to hold office until the next annual meeting of stockholders following election and until their successors are duly elected and qualified.

Who are the nominees for election as directors?

The persons named below have been approved by our full Board of Directors as nominees for election as directors. All of the nominees currently serve as our directors.

Mr. Moscato, Mr. Ro, Dr. Lyman. Mr. Salvo and Dr. Eagle became directors in January of 2017. Mr. McGee first joined the Board in 2004 and Dr. Anderson joined in 2011. Mr. Centofanti is not currently a director and is being nominated for the first time. All of our directors hold office until the next annual meeting of stockholders and their successors are duly elected and qualify. Executive officers serve at the request of the board of directors.

Name	Age	Office(s) held
Joseph Moscato	54	Chief Executive Officer, President, Chairman of the Board
Andrew Ro	47	Chief Investment Officer, Senior VP of Investments, Director
Dr. Gary H. Lyman, MD, MPH	71	Director
Dr. Craig Eagle, MD	55	Director
Dr. James M. Anderson, Jr., MD	69	Director
Brian T. McGee	56	Director
Kevin Centofanti		Director
Lawrence Salvo	65	Director

Set forth below is a brief description of the background and business experience of each of our current directors being nominated for a new term and the individuals being nominated for the first time.

Current Director Nominees:

Joseph Moscato. Mr. Moscato serves as the Company’s Chief Executive Officer, President, and Chairman of the Board.

Mr. Moscato has over 30 years of experience in healthcare, sales and marketing, distribution management, and finance. Mr. Moscato brings his marketing and advertising acumen to drug discovery and diagnostic & treatment development and commercialization. Since 2009, Mr. Moscato has been working as an exclusive consultant to the Company. Mr. Moscato has originated and negotiated several licensing deals with the top biopharmaceutical companies; has advised on equity financings totaling over $300 million, and has implemented the broad strategic vision for the Company. Mr. Moscato has worked and consulted for Pfizer in several capacities from sales and marketing to new drug discovery & development for licensing. He has worked with other biopharmaceutical companies such as GlaxoSmithKline, Johnson & Johnson, Parke-Davis, Amgen and others. Mr. Moscato has consulted for several healthcare focused private equity, hedge funds and family offices.

Mr. Moscato also owned several advertising and marketing agencies focused on media, entertainment, and healthcare with clients ranging from Motorola, Chadmoore Wireless, Nextel, Cannon, Sharp, GlaxoSmithKline, Pfizer, and other biopharmaceutical companies. Mr. Moscato’s agency was acquired by William Douglas McAdams, one of the largest independent healthcare advertising and marketing agencies.

Andrew Ro. Mr. Ro serves as the Company’s Chief Investment Officer and a Director.

Mr. Ro has over 20 years’ experience in the financial markets ranging from trading global futures and equity markets, senior secured debt, convertible securities, private investments in public equities (PIPEs) and investing. Mr. Ro was a Consultant and Registered Representative with boutique investment and merchant banks where he consulted and advised US and international companies on capital markets, operational, and regulatory issues as well as being involved in capital raising, mergers & acquisitions, and strategic implementation. Mr. Ro was a Partner with an active Investment Fund where he was involved in originating, structuring, negotiating and closing financing transactions providing growth capital, acquisition financing, recapitalization, restructuring and general working capital to late-stage venture, distressed and middle market companies across all industries and sectors. Mr. Ro originated and structured over $2 billion in total commitments and managed a portfolio of over $650 million in investments. Mr. Ro graduated from George Mason University with a Bachelor in Science in Economics. He also held Series 3, Series 7, and Series 63 licenses.

Dr. Gary H. Lyman, MD, MPH, FASCO, FRCP (Edin).Dr. Lyman serves as an independent Director.

Dr, Lyman is Co-Director of the Hutchinson Institute for Cancer Outcomes Research and Member of the Public Health Sciences and Clinical Research Divisions at the Fred Hutchinson Cancer Research Center. He is also Professor of Medicine as well as Adjunct Professor in the Schools of Public Health and Pharmacy at the University of Washington.

Dr Lyman received his undergraduate and medical degree from the State University of New York in Buffalo and completed his Internal Medicine Residency at the University of North Carolina in Chapel Hill and Hematology/Oncology Fellowship at the Roswell Park Memorial Institute. Dr Lyman subsequently pursued a Postdoctoral Fellowship in Biostatistics at the Harvard School of Public Health and the Dana Farber Cancer Center. After joining the faculty of the University Of South Florida College Of Medicine, Dr Lyman served as Assistant, Associate and then full Professor of Medicine and Director of Medical Oncology. Shortly after his arrival, Dr Lyman began working with Lee Moffitt and leadership of the University to develop plans for the eventual H Lee Moffitt Cancer Center and Research Institute where he served as the founding Chief of Medicine and Director of the Division of Medical Oncology as well as Associate Chairman of the Department of Medicine at USF. During this period, he also served as Professor of Medicine and Professor of Epidemiology and Biostatistics at the University of South Florida. Upon leaving the Moffitt in 2000,

Dr Lyman has held positions as Thomas Ordway Endowed Professor of Medicine and Cancer Center Director at the Albany Medical College and subsequently Professor of Medicine, Associate Cancer Center Director and Director of Health Services and Outcomes Research at the University of Rochester and Strong Memorial Hospital. Prior to relocating to his present position, Dr Lyman served as Professor of Medicine and Director of Comparative Effectiveness and Outcomes Research-Oncology at Duke University and the Duke Cancer Institute and a Senior Fellow at the Duke Center for Clinical Health Policy Research.

Dr Lyman is active with the American Society of Clinical Oncology serving recently on the ASCO Board of Directors chairing the Guideline Methodology Committee and several individual guidelines including those related to Prevention and Treatment of Venous Thromboembolism in Cancer, Sentinel Node Biopsy in Early-Stage Breast Cancer and Melanoma, Use of Antiemetics in Patients Receiving Cancer Chemotherapy and Appropriate Chemotherapy Dosing in Obese Patients with Cancer. Dr Lyman is also a member of the Value of Cancer Care Task Force and Cancer Research Committee along with several additional roles within the Society. In 2010 Dr Lyman received the ASCO Statesman Award. He is also active in the American Association for Cancer Research and the Institute of Medicine as well as the American Society of Hematology where he serves on the Quality and Guideline Oversight Committees and Chairs the forthcoming guideline on cancer and thrombosis. Finally, Dr Lyman is active with SWOG serving as Executive Office for the SWOG NCORP and Symptom Management and Quality of Life Committee.

Dr Lyman is Editor-In-Chief ofCancer Investigationand on the Editorial Board of theJournal of Clinical Oncology, the Journal of Global Oncology and several other specialty journals. In addition to serving as a Fellow of ASCO, Dr Lyman is a Fellow of the Royal College of Physicians (Edinburgh), the American College of Physicians, and the American College of Preventive Medicine. His research interests include precision medicine based on personalized cancer treatment and supportive care, comparative effectiveness and outcomes research related to biomarkers and targeted therapies, mathematical and statistical prognostic and predictive models, advanced methods of evidence synthesis in support of clinical practice guidelines and population studies of patterns of cancer treatment and the impact of health disparities on the quality of cancer care. Dr Lyman has authored or edited more than 15 books and nearly 600 articles in the scientific literature.

Dr. Craig Eagle, MD. Dr. Eagle serves as an independent Director.

Dr. Eagle serves as Vice President of Strategic Alliances and Partnerships for the Oncology business unit at Pfizer Inc. In 2003, Dr. Eagle led the worldwide development of Celecoxib in oncology to oversee the global research program. He was responsible for the global research plans and teams for Irinotecan and Dalteparin. Since 2007, he served as Head of the Oncology Therapeutic Area Global Medical Group for Pfizer, including the US oncology business. Dr. Eagle led, or been directly involved with, teams that resulted in eight new products or indications. He has led integration of the Pfizer/Wyeth oncology businesses and portfolio.

Dr. Eagle has a wealth of oncology experience. He joined Pfizer Australia in 2001 as part of the medical group. In Australia, his role involved leading and participating in scientific research, regulatory and pricing & re-imbursement negotiations for compounds in therapeutic areas including oncology, anti-infectives, respiratory, arthritis and pain management.

Dr. Eagle has been a Member of Scientific Advisory Board at Generex Biotechnology Corp. since August 2010. He has been a Member of Strategic Advisory Board at Provectus Pharmaceuticals, Inc. since August 2011. He has been a Director of Regenicin, Inc. since September 7, 2010. He has been a Director at Assured Pharmacy Inc. since June 2009.

Dr. Eagle attended Medical School at the University of New South Wales, Sydney, Australia and received his general internist training at Royal North Shore Hospital in Sydney. He completed his hemato-oncology and laboratory hematology training at Royal Prince Alfred Hospital in Sydney. He was granted Fellowship in the Royal Australasian College of Physicians (FRACP) and the Royal College of Pathologists Australasia (FRCPA). After his training, Dr. Eagle performed basic research at the Royal Prince of Wales hospital to develop a new monoclonal antibody to inhibit platelets.

Dr. James H. Anderson, Jr., MD. Dr. Anderson serves as an independent Director.

Dr. Anderson has served as Director of the Company since June 2011. Dr. Anderson has previously served as Chairman of the Corporate Governance and Nominating Committee and a member of the Generex Compensation and Audit Committees, and has served on the Generex Scientific Advisory Board since October, 2010. Dr. Anderson is a diabetologist and endocrinologist who has been in the pharmaceutical industry for over 25 years. He is currently CEO and President of Symcopeia, a private drug discovery and development company focused on new mechanisms of action for the treatment of diabetes mellitus, and diabetes related obesity and cardiovascular diseases. Dr. Anderson also serves as medical director of PTS Diagnostics, a cardiometabolic medical device company. From 2005 to 2009, Dr. Anderson served as Senior Medical Director for Diabetes and Cardiometabolic Medicine with Eli Lilly and Company and had medical responsibility for diabetes and cardiometabolic drug development, and drove the clinical development, registration and launch of two families of diabetes care products, Humulin^® and Humalog. At Eli Lilly, Dr. Anderson contributed to the inventions of the first recombinant DNA produced human insulin analog products, led multiple clinical drug development projects, was responsible for 6 US NDAs and had clinical responsibility for all insulin products worldwide. Dr. Anderson is an elected Fellow of the Faculty of Pharmaceutical Medicine of the Royal Colleges of Physicians of the UK, was a founding board member of the American Association of Pharmaceutical Physicians and is a Fellow of the American College of Endocrinology. Dr. Anderson has been active in the American Diabetes Association and is a member of the International Diabetes Federation, the European Association for the Study of Diabetes, and the Endocrine Society. Dr. Anderson is a founding editorial board member of two journals for diabetes, and serves on the editorial boards or as a reviewer for 5 other diabetes/endocrine journals. Dr. Anderson is a Clinical Associate Professor of Medicine for the Division of Endocrinology and Metabolism at the Indiana University School of Medicine and was awarded an M.D. from the LSU School of Medicine. Dr. Anderson attained the rank of Lieutenant Colonel in the US Army Medical Corps and during his military career, he served as the Chairman, Department of Clinical Investigation at the Army’s largest healthcare center, and Chief of the Medical Division of the US Army Medical Research Institute for Infectious Diseases. The Board believes that Dr. Anderson’s extensive experience in the pharmaceutical industry, his experience in the diabetes and endocrinology fields, combined with his business experience and judgment, provide our Board with valuable scientific and operational expertise.

Brian T. McGee. Mr. McGee serves as an independent Director.

Mr. McGee has served as director of Generex since 2004.Mr. McGee has served as Chairman of the Generex Audit Committee and a member of the Generex Compensation and Corporate Governance and Nominating Committees. Mr. McGee has been a partner of Zeifmans LLP ("Zeifmans") since 1995. Mr. McGee began working at Zeifmans shortly after receiving a B.A. degree in Commerce from the University of Toronto in 1985. Zeifmans is a Chartered Accounting firm based in Toronto, Ontario. A significant element of Zeifmans’ business is public corporation accounting and auditing. Mr. McGee is a Chartered Accountant. Throughout his career, Mr. McGee has focused on, among other areas, public corporation accounting and auditing. In 1992, Mr. McGee completed courses focused on International Taxation and Corporation Reorganizations at the Canadian Institute of Chartered Accountants and in 2003, Mr. McGee completed corporate governance courses on compensation and audit committees at Harvard Business School. In April 2004 Mr. McGee received his CPA designation from The American Institute of Certified Public Accountants. Mr. McGee has received a certificate in International Financial Reporting Standards issued by The Institute of Chartered Accountants in England and Wales in 2010. The Board believes that Mr. McGee’s knowledge and understanding of accounting and finance, his education and training in accounting and corporate governance, and his extensive experience in the accounting industry.

Lawrence Salvo. Mr. Salve served as Generex Executive VP of Diagnostics and President of Hema Diagnostic Systems until __________, 2017, and therefore is not independent.

Mr. Salvo has over 20 years of experience in the design and development of rapid medical diagnostic tests for infectious diseases and over 30 years has successfully been directly involved in the management of international distribution and sales including high technology areas in electro-optics and other technical design applications. During that time, Mr. Salvo has developed and maintained substantial and long-term relationships within the People’s Republic of China as well as throughout South and Central America and into the African Continent. His experience includes direct interaction with such international organizations as the WHO, the Global Fund, USAID, the European Union and with multiple supply-chain management groups and multiple NGO’s. Mr. Salvo has been the primary force behind the concept of the design and development of the patented delivery systems of Hema Diagnostic Systems, which are incorporated into many of the current and future RDT’s for various infectious diseases as well as detection applications. These delivery systems continue to evolve and expand the application of rapid testing and are configured for human and veterinary uses.

Mr. Salvo is the founder of Hema Diagnostic Systems which grew out of the predecessor company, International Diagnostics and Medical Supply and has also been directly responsible for all international negotiations. Since leaving Hema Diagnostic Systems, Mr. Salvo has engaged in consulting activities. Mr. Salvo brings the full weight of his international experience, development and design expertise along with his substantial knowledge of the international RDT markets acquired from throughout the world. He is a graduate from St. Vincent de Paul Major Seminary, Boynton Beach, Florida

New Director Nominee:

Kevin Centofanti.If elected, Mr. Centofanti will not be an independent director.

Mr. Centofanti is the President of Brooks, Houghton & Company, Inc. and its affiliates, a middle market merchant bank. Additionally, he is a Registered Principal of Brooks, Houghton Securities, Inc., a member of FINRA and SIPC. As an experienced executive and deal maker in the United States and internationally, he focuses on creating shareholder value and growth for corporate clients. He has extensive experience working with senior management of public and private companies to determine and act upon the best corporate finance options available (capital raising, mergers and acquisitions, and general advisory) to realize growth. Previously, he was a Senior Managing Director of the firm involved in all aspects of its investment banking business. Areas of particular interest to him include healthcare, food and beverage, business services, manufacturing, and intellectual property. Before joining BHC, he was a Partner at The Nassau Group where he focused on technology and special situations for the firm, advising clients on mergers, acquisitions, divestitures/sales and on a wide range of capital raising initiatives. Previously, Mr. Centofanti was a Managing Director at WR Hambrecht + Co., a merchant and investment bank. At WR Hambrecht, Mr. Centofanti focused on advising a variety of companies on public and private capital raising, mergers, acquisitions, and sales. Prior to WR Hambrecht, Mr. Centofanti was at Daiwa Securities America, an international investment bank. He founded that firm's private equity group, which concentrated primarily on funding emerging growth companies in the technology and healthcare industries.

Mr. Centofanti received B.S. degrees in Pharmacy and Business from SUNY at Buffalo, and an M.B.A. in Finance and International Business from Columbia University. Also, he holds the CFA designation. Additionally, he holds Series 7, Series 24, Series 63 and Series 79 licenses.

Are there any family relationships among Generex’s officers and directors?

There are no family relationships among our officers and directors.

What if a nominee is unable or unwilling to serve?

If, for any reason, any of the nominees shall become unavailable for election, the shares represented by proxies may be voted for any substitutes proposed by the Corporate Governance and Nominating Committee and approved by the Board of Directors. At this time, the Board of Directors knows of no reason why any of the nominees might be unavailable to serve.

What if I return my proxy card or submit a proxy by Internet or telephone but do not provide voting instructions with respect to the election of directors?

If you are a stockholder of record and you do not specify your vote on the election of directors when submitting a proxy via the Internet or by telephone, or if you sign and return a proxy card without giving specific voting instructions, the individuals named in the accompanying proxy intend to vote all proxies received by them for the nominees listed above unless otherwise instructed.

If you are a beneficial owner of shares registered in the name of your broker, bank or other nominee and you do not instruct your broker how to vote with respect to the nominees listed above, your broker may not vote with respect to the election of directors.

What if I do not wish to vote for a particular nominee?

If you do not wish your shares to be voted for any of the nominees, you may so indicate.

How does the Board of Directors recommend that I vote?

The holders of the Company’s Series I Preferred Stock are entitled to vote on the election of members of the Board of Directors, and the holders of the Series I Preferred Stock, as a class, are entitled to cast a number of votes on such proposal equal to fifty percent (50%) of the total number of votes entitled to be cast at the Special Meeting by all other outstanding shares of the Company’s capital stock. The holders of the Series I Preferred Stock have agreed vote in favor of the election of Company management’s slate of directors.

EXECUTIVE OFFICERS

The following table sets forth information regarding our executive officers. All of our officers and directors took the offices below on January 18, 2017.

Name	Age	Office(s) held
Joseph Moscato	54	Chief Executive Officer, President, Chairman of the Board
Andrew Ro	47	Chief Investment Officer, Senior VP of Investments, Director
Mark Corrao	59	Chief Financial Officer, Treasurer
Dr. Jason Terrell, MD	36	Chief Scientific Officer, Chief Medical Officer
Mark Fletcher, Esq.	51	Executive Vice President & General Counsel, Secretary
Richard Purcell	57	Senior VP of Research & Drug Development
Dr. Jacob Dagan, PhD	72	Executive Vice President Business Development

Set forth below is a brief description of the background and business experience of each of our current executive officers who are not directors of the Company. The background of executive officers who are also directors is set forth above.

Dr. Jason B. Terrell, MD.Dr. Terrell serves as the Company’s Chief Scientific Officer and Chief Medical Officer.

Dr. Terrell has extensive expertise in the pharmaceutical and medical diagnostic device industry in the areas of business development, clinical trial organization, regulatory affairs and commercialization strategies. Dr. Terrell has served as medical director and chief medical officer for several public and private companies like VolitionRx, a NYSE traded international medical diagnostic company. Dr. Terrell previously served as a Corporate Medical Director for Any Lab Test Now, the nation’s largest direct to consumer medical testing franchise, where he supervised clinical operations for over 70 locations throughout the United States. Dr. Terrell is asumma cum laude graduate from Hardin-Simmons University with a degree in Biochemistry. He graduated as recipient of the Holland Medal of Honor for the top graduate in the School of Science and Mathematics. Dr. Terrell was honored with the Hardin-Simmons University Outstanding Young Alumni Award and currently serves on the University’s Board of Development. Dr. Terrell attended The University of Texas School of Medicine in Houston and received General Medicine Internship and Pathology Residency training at the Texas Tech University Health Sciences Center.

Dr. Jacob Dagan, Ph.D. Dr. Dagan serves as the Company’s Executive Vice President, Business Development.

Dr. Dagan is a senior executive, with more than 25 years of proven success, in: healthcare management, corporate and product development, in the US. Combining extensive experience, in operations, marketing, sales and hospital management, with strong bio medical scientific skills. In 2005 founded with partners ProMed Capital, LLC, an investment organization investing in Israeli medical device startups. Since 2006 invest in eight companies, and six more are in the pipe line. In each company, hands on involvement as active manager, board member or chairman of the board. Continues to own and operate Medical Service Options (MSO-Israel). Member on the Board of Governors of the Technion-Israel Institute of Technology.

In 2013 founded three startups and applied for patent protection for each, covering the fields of New Laser printer, Orthodental brace for bone stimulation and an oral drug delivery device. In 2015 moved back to the USA and started MSO-USA, involved as CEO of two Israeli startups, Meditemp and AlfaRhythm. In 2016 started a corporation for contract development and manufacturing of medical and health related lasers. Currently acts as CEO of a multi-specialty surgical corporation in the City of New York.

Past Director of BioMedical Engineering at Sheeba Medical Center and Associate Professor of Bio-Medical Engineering at Tel Aviv University. Held senior management positions with Sharplan Lasers, developing the field of applications of Lasers in Medicine. Has been involved in fund raising and strategy consulting to Bio-Medical, Bio-Technology companies and on the Board or in operating responsibilities of several start-ups in Israel and the USA.
Received Doctorate from Columbia University focusing on Nuclear Medicine applications in Cardiology B.Sc in Mechanical and Nuclear Engineering and an MSc in Nuclear Sciences from the Technion, Israel Inst. of Technology.

Richard Purcell.Mr. Purcell serves as the Company’s Senior Vice-President of Research & Drug Development.

Mr. Purcell has over 30 years of experience in consulting and advising emerging biopharmaceutical and technology companies on new business strategy, operations management, clinical development of novel compounds, data solutions for clinical and medical applications, patient engagement & communication, medical education for professionals and consumers, and data analytics for outcomes research. Mr. Purcell oversaw strategic planning, clinical operations, data management, regulatory filings, and R&D and was involved with business development and out-licensing activities for the company’s technology platform.

He started his career as a molecular biologist, where he developed and patented a second generation TPA with increased half-life. He also worked at a major pharmaceutical company where he conducted primary research and published several manuscripts on the topics of AIDS and immunomodulators. Mr. Purcell also headed the Life Sciences Consulting Group for Kline and Company, where he conducted market, technology and business analysis for the commercial development of pharmaceutical and biotechnology products for therapeutic and diagnostic applications.

Rich graduated with a degree in Biochemical Sciences from Princeton University, and attended Rutgers Graduate School of Management majoring in marketing and finance. He is a member of NJTC, HIMSS, the Patient-Centered Primary Care Collaborative, the Drug Information Association and the Licensing Executives Society. He is also an Adjunct Professor of Biology at Monmouth University where he developed and teaches The Business of Biotechnology.

Mark Corrao. Mr. Corrao serves as the Company’s Chief Financial Officer, Treasurer.

Mr. Corrao has experience in financial management with a proven track record of raising capital and extraordinary bottom line management. He has been involved in the initial registration of numerous public companies and subsequent SEC quarterly and annual reporting and has developed, authored and presented numerous business plans and models inclusive of budgets, forecasts, cash flow, cash management and investment strategies. From 2012 to present he has been a Managing Director and CFO of The Mariner Group LLC, which has merged with the CFO Squad, creating a much larger and diverse multi-talented organization. The CFO Squad is a financial and business advisory firm providing outsourced and part-time CFO services for emerging to midsized companies (both private and public) in a wide range of businesses and industries. He has been the Chief Financial Officer and a director for a pharmaceutical company specializing in the research and development of novel and new therapeutic agents designed to reduce oxidative stress and act as immune modulators and Neuroprotectants. From 2010-12, he served as Chief Financial Officer of New York Business Efficiency Experts, Inc. which provides professional services in the financial areas of accounting, taxation, auditing, venture capital and SEC registrations (reporting). He served as a Director and Chief Financial Officer for a manufacturer of proprietary software for the prevention of identity theft and the protection of computer systems from unauthorized access. Additionally, Mr. Corrao is currently the CFO for a software company.

Mark A. Fletcher, Esq. Mr. Fletcher serves as the Company’s Executive Vice President & General Counsel, Secretary.

Mr. Fletcher served as our President and Chief Executive Officer from September, 2010 through January 17, 2017. Mr. Fletcher served as a member of the Board of Directors from March 2011 through January 17, 2017. Mr. Fletcher was our Executive Vice-President and General Counsel from April, 2003 until September, 2010, and he resumed those roles as of January 17, 2017. Prior to joining Generex, Mr. Fletcher was engaged in the private practice of law as a partner at Goodman and Carr LLP, a leading Toronto law firm. Mr. Fletcher was previously a partner at Brans, Lehun, Baldwin LLP, a law firm in Toronto. Mr. Fletcher received his LL.B. from the University of Western Ontario in 1989 and was admitted to the Ontario Bar in 1991.

INDEPENDENCE AND COMPENSATION OF DIRECTORS

Director Independence

The Board of Directors currently consists of seven members, four of whom are “independent” as defined under applicable rules of the SEC and The Nasdaq Stock Market LLC. The independent members of the Board of Directors are:

•

Dr. James Anderson, Jr., MD

•

Dr. Craig Eagle, MD

•

Brian T. McGee

•

Dr. Gary Lyman, MD, MPH

•

During the fiscal year ended July 31, 2016, and prior to January 17, 2017, the board consisted of three members, Mr. McGee, Dr. Anderson, and Mark Fletcher. Mr. Fletcher, our former CEO and now our Executive Vice-President and General Counsel, was not independent.

For a director to be considered independent, the Board must determine that the director has no relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

All members of the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee must be independent directors under NASDAQ rules. Members of the Audit Committee also must satisfy a separate SEC independence requirement, which provides that they may not accept directly or indirectly any consulting, advisory or other compensatory fee from the Company or any of its subsidiaries other than their directors’ compensation. In addition, under SEC rules, an Audit Committee member who is an affiliate of the issuer (other than through service as a director) cannot be deemed to be independent.

Due to the Company’s exceptional circumstances throughout fiscal 2016, including the attrition of directors over the last two fiscal years and the Company’s limited operations and diminished financial condition, the Board’s established standing Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee ceased functioning as such during fiscal year 2016. During that year, and through January 17, 2017, the full Board acted in the capacity of these committees as necessary, except to the extent that Mr. Fletcher abstained from determinations regarding executive compensation for the principal executive officers.

We have not re-constituted our Compensation Committee or Corporate Governance and Nominating Committee since the changes in our management and addition of directors on January 17, 2017. We anticipate reconstituting these committees shortly after the Special Meeting. Our Audit Committee consists of Mr. McGee and Mr. Ro. Mr. Ro is not independent, and therefore the Company is non-compliant with the Nasdaq audit committee rules at his time. From January 18, 2017 through May 24, 2017, Andrew Greene also served on the audit committee. Mr. Greene was not independent. The Company expects to appoint other independent directors to the Audit Committee and remove Mr. Ro from the Audit Committee shortly after the Special Meeting, to enable the Audit Committee to comply with audit committee independence rules in time to review the company’s financial statements and Annual Report on Form 10-K for the fiscal year ending July 31, 2017.

Non-Employee Directors' Compensation

Our non-employee directors waived all compensation in our last fiscal year in light of our financial condition; thus, no cash or other compensation was paid to any of our directors in the fiscal year ended July 31, 2016.

Directors who are officers or employees of Generex or its subsidiaries do not receive separate consideration for their service on the Board of Directors. The compensation received by Mr. Fletcher as an employee of Generex is shown in the Summary Compensation Table elsewhere in this proxy statement. The compensation received by our former director Dr. von Hofe as an employee of our subsidiary Antigen Express, Inc. is shown in the Director Compensation Table below under “All Other Compensation”.

Fiscal Year 2016 Director Compensation Table

Name	Fees Earned or Paid in Cash		Stock Awards⁽¹⁾		Option Awards⁽²⁾		All Other Compensation			Total
Brian T. McGee	$	0	$	0	$	0	$	0		$	0
Dr. James H. Anderson, Jr., MD	$	0	$	0	$	0	$	0		$	0
Dr. Eric von Hofe, PhD	$	0	$	0	$	0	$	n	⁽³⁾	$	n

(1) There were no restricted stock awards to directors in fiscal year 2016.

(2) There were no incentive stock options granted to the directors in fiscal 2016. At fiscal year-end 2016, the total number of stock options held by each non-employee director was as follows: Mr. McGee (3,241) and Dr. Anderson (3,565). Dr. von Hofe, who is an employee of our subsidiary Antigen Express, held 12,085 options at fiscal year-end 2016.

(3) Represents employment income earned as president of Antigen Express, Inc. for the fiscal year ended July 31, 2016. On October 26, 2015, the Board of Directors approved stock option grants to certain of Company’s executive officers, including Dr. von Hofe, in full and final payment of the Company’s obligation to pay deferred salary as of October 15, 2015. Dr. von Hofe received options exercisable for 7,610,911 shares at $0.001 per share, in exchange for $60,887 in accrued salary. The options were fully vested upon issuance and exercisable for five years after issuance.

In March, 2017, we implemented a 1 for 1,000 reverse stock split of our common stock. All share numbers in this proxy statement have been adjusted and are presented on a post-reverse stock split basis.

Following the Special Meeting, the Board of Directors will repopulate its Compensation Committee which will review and approve a compensation program for the Company’s non-employee directors in respect of the fiscal years ending July 31, 2017 and 2018, which compensation program will be disclosed in a Form 8-K Current Report filed by the Company with the SEC.

CORPORATE GOVERNANCE

Code of Ethics

Generex has adopted a code of ethics that applies to its directors and the following executive officers: the President, Chief Executive Officer, Chief Financial Officer (principal financial/accounting officer), Chief Operating Officer, any Vice-President, Controller, Secretary, Treasurer and any other personnel performing similar functions. We also expect any consultants or advisors whom we retain to abide by this code of ethics. The Generex Code of Ethics has been posted on Generex's Internet web site -www.generex.com.

Board Structure; Risk Oversight; Risk Assessment of Compensation Policies and Practices

The business affairs of Generex are managed under the direction of our Board of Directors. The Board is actively involved in oversight of risks that could affect Generex. In the past, this oversight was conducted primarily through the separate standing committees of the Board. In fiscal 2016, due to the Company’s then exceptional circumstances, including the attrition of directors over the last two fiscal years and the Company’s limited operations and diminished financial condition, the Board’s established standing Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee ceased functioning. Thus, the full Board has retained responsibility for oversight of risks. The Board satisfies this responsibility through regular reports directly from officers responsible for oversight of particular risks within Generex. The Board believes its administration of its risk oversight function has not affected the Board's leadership structure. We have not re-constituted our Compensation Committee or Corporate Governance and Nominating Committee since the changes in our management and addition of directors on January 17, 2017. We anticipate reconstituting these committees shortly after the Special Meeting. Our Audit Committee consists of Mr. McGee and Mr. Ro. Mr. Greene and Mr. Ro are not independent, and therefore the Company is non-compliant with Nasdaq the audit committee rules at his time. The Company expects to appoint other independent directors to the Audit Committee and remove Mr. Ro from the Audit Committee shortly after the Special Meeting, to enable the Audit Committee comply with the Nasdaq audit committee independence rules in time to review the company’s financial statements and Annual Report on Form 10-K for the fiscal year ending July 31, 2017.

Board Meetings; Board Committees

During the fiscal year ended July 31, 2016, the Board of Directors did not meet or take action by consent other than in connection with filing of the Company’s Annual Report on From 10-K for the fiscal year ended July 31, 2015 and to issue options to executives in lieu of accrued compensation, as discussed below underExecutive Compensation. No Board committees held meetings in fiscal 2016.

Audit Committee

During fiscal 2016, the full Board acted as the Audit Committee. We have recently re-constituted the Audit Committee with Mr. McGee as Chairman, and Mr. Ro.

The Audit Committee reviews and discusses with Generex's management and its independent auditors the audited and unaudited financial statements contained in Generex's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Although Generex's management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls and disclosure controls and procedures, the Audit Committee reviews and discusses the reporting process with management on a regular basis. The Audit Committee also discusses with the independent auditors their judgments as to the quality of Generex's accounting principles, the reasonableness of significant judgments reflected in the financial statements and the clarity of disclosures in the financial statements, as well as such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. Our Board of Directors has determined that at least one person, Mr. McGee, serving on the Audit Committee is an "audit committee financial expert" as defined under Item 407(d)(5)(ii) of Regulation S-K. The Audit Committee has adopted a written charter, A copy of the Audit Committee Charter is attached asAppendix A to this proxy statement.

Compensation Committee

In fiscal 2016, the full Board assumed the responsibilities of the Compensation Committee except that Mr. Fletcher did not participate in determinations regarding the compensation to be paid him in his role as a named executive officer of the Company.

The Compensation Committee had responsibility for reviewing and recommending to the Board of Directors compensation programs and policies for our President and Chief Executive Officer, our Chief Operating Officer and Secretary, and our Chief Financial Officer and Treasurer, who comprised Generex’s executive management team during fiscal 2016.

The Compensation Committee does not delegate its authority. Executive officers (other than Mr. Fletcher) do not attend meetings of the Compensation Committee. The Compensation Committee does not have a charter. It has the authority to use a compensation consultant to assist the Compensation Committee in the evaluation of the compensation of our executive management team and other executive officers and to consult with other outside advisors to assist in its duties to the Company, but in fiscal 2016 it did not engage any compensation consultants or engage in benchmarking activities. The Compensation Committee does not have a written charter.

Corporate Governance and Nominating Committee

In fiscal 2016, we did not have a separate standing Corporate Governance and Nominating Committee, and no action was taken by the full Board functioning as the Committee.

The Corporate Governance and Nominating Committee will consider candidates whom the stockholders of Generex put forward. The name, together with the business experience and other relevant background information of a candidate, should be sent to Mark Fletcher, Secretary of Generex, at Generex’s offices located at 4145 North Service Road, Suite 200, Burlington, Ontario, Canada L7L 6A3. Mr. Fletcher will then submit such information to the chair of the Corporate Governance and Nominating Committee for the Committee’s review and consideration. The process for determining whether to nominate a director candidate put forth by a stockholder is the same as that used for reviewing candidates submitted by directors. After full consideration, the stockholder proponent will be notified of the decision of the committee.

The Corporate Governance and Nominating Committee is responsible for seeking to identify director candidates with the highest personal and professional ethics, integrity and value and diverse experience in business, finance, pharmaceutical and regulatory matters, and other matters relevant to a company such as Generex and who have sufficient time to devote to the company’s affairs. The charter of the Corporate Governance and Nominating Committee sets forth the policy with regard to the consideration of diversity in identifying director nominees and calls for periodic review of director recruitment and selection protocols so that diversity remains a component of any director search. The Corporate Governance and Nominating Committee is charged with developing a formal list of qualifications for members of the Board of Directors as mandated by its charter and criteria to assist the Board in attaining diversity of background and skills in director candidates, but the Committee has yet to develop such a list or criteria. To date, the Corporate Governance and Nominating Committee has not engaged any third party to assist it in identifying director candidates.

In accordance with our bylaws, the Board of Directors is permitted to increase the number of directors and to fill the vacancies created by the increase until the next annual meeting of stockholders.

Director Nominations by Stockholders

Any stockholder entitled to vote for the election of directors may nominate a person for election to the Board of Directors at an annual meeting of stockholders. Any stockholder wishing to do so must submit a notice of such nomination in writing to the Secretary of Generex at Generex’s offices located at 4145 North Service Road, Suite 200, Burlington, Ontario, Canada L7L 6A3 not less than 60 nor more than 90 days prior to such annual meeting. In the event that less than 70 days’ notice or prior disclosure of the date of the meeting is given or made to stockholders, notice of nomination by a stockholder to be timely must be received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. The stockholder's notice of nomination must provide information about both the nominee and the nominating stockholder, as required by Generex's bylaws. A copy of these bylaw requirements will be provided upon request in writing to Mark Fletcher, Secretary of Generex, at Generex’s offices located at 4145 North Service Road, Suite 200, Burlington, Ontario, Canada L7L 6A3.

Communications with Directors

Interested parties who wish to make any concerns known to non-management directors may submit communications at any time in writing to: Mark Fletcher, Secretary of Generex, Generex Biotechnology Corporation, at Generex’s offices located at 4145 North Service Road, Suite 200, Burlington, Ontario, Canada L7L 6A3. The Secretary will determine, in his good faith judgment, which communications will be relayed to the non-management directors.

EXECUTIVE COMPENSATION

Compensation, Discussion & Analysis

Compensation Philosophy

We did not have sufficient resources to pay any cash compensation to our named executive officers in fiscal 2016 (other than the period from August 1, 2015 through October 23, 2015) or subsequently through the date of this Proxy Statement, and did not pay compensation of any kind to our executive officers in fiscal 2016 other than salaries for the period from August 1, 2015 through October 23, 2015 and certain options issued in October, 2015, in satisfaction of accrued and unpaid salary, as discussed in detail below.

The following discussion of our philosophy assumes we have the resources to follow that philosophy.

We are a development stage company focused on research, development, and commercialization of our proprietary drug delivery platform for administration of large molecule drugs to the oral cavity through a hand-held aerosol spray applicator. We are in the process of developing proprietary formulations of drugs that can be delivered through an oral spray thereby eliminating the need for injections and have focused on our Oral-lyn™ insulin formulation, which is administered as a spray into the oral cavity. Our majority owned subsidiary, Hema Diagnostic Systems, LLC, markets and distributes rapid test devices for infectious diseases. We also have a subsidiary, Antigen Express, which focuses on developing proprietary immuno-medicines.

In addition to our existing businesses, our strategic plan is to acquire full ownership, or controlling interests, in companies with promising pharmaceutical and related products in development.

As a development stage company, our future depends on the ability of our executives to obtain necessary regulatory approvals to launch products in key markets such as the United States, Canada, and Europe, as well as furthering the development of products in our pipeline through the clinical trial and regulatory processes. Attracting, retaining, and motivating key executives who can lead Generex through these processes is critical to our success. We have a small executive team that works together closely. Our executives perform multiple roles and need to be able to respond to changing market dynamics quickly.

For these reasons, we seek to ensure that our compensation programs are competitive with similarly sized companies with which we compete for executive talent. The goals of our executive compensation program are to attract and retain top executives, to motivate executives to achieve our business objectives, to align executive and shareholder interests, and to recognize individual contributions and overall business success.

The Compensation Committee of the Board of Directors evaluates the types and amounts of compensation that it believes are appropriate for our policy making executives. We refer herein to these executives as the “named executives.” In prior years, before our recent change in management, we identified our President and Chief Executive Officer, Chief Operating Officer and Chief Financial Officer as our named executives. We have also included Dr. von Hofe, the President of our subsidiary, Antigen Express. We expect to reassess this when our Compensation Committee is re-formed.

In addition to the compensation of our named executives, the Compensation Committee also reviews and approves the compensation of members of our senior management.

Historically, the key components of our executive compensation have been base salary, cash bonuses, and equity incentives, including stock bonuses, restricted stock, and stock options awarded at the discretion of our Compensation Committee and Board of Directors. As a development stage company, we have reviewed compensation of our named executives annually and at the discretion of the Compensation Committee as warranted by our financial condition and achievement of our business goals. While the elements of compensation are considered separately, the Compensation Committee ultimately considers the value of the total compensation package provided to the individual named executive.

The Compensation Committee believes the company’s compensation program must take into account the following factors:

	•	past levels of compensation adjustments;
	•	the expected transition of the company from a development stage company to an operating company;

	•	the nature of the regulatory approval process for the Company’s products; and
	•	the potential for growth of the company in the event that regulatory approvals are obtained.

In fiscal 2016, the Compensation Committee did not implement any changes to base salaries for any of the named executives and did not award any equity incentive awards or cash bonuses to the named executives during fiscal 2016 for fiscal 2015 performance and contributions. The Compensation Committee has not made any determinations as to compensation or equity awards for the named executives with respect to performance or contributions for the fiscal year ended July 31, 2016.

In administering the executive compensation program, our Compensation Committee has relied upon market data provided on a periodic basis by external consultants, as well as its own understanding and assessment of executive compensation trends. In its consideration of compensation for the named executives, the Compensation Committee has reviewed compensation data for pharmaceutical and biotechnology companies in the past, market data provided by external compensation consultants, compensation data compiled by a third-party compensation data firm and publicly available executive compensation data for publicly traded companies.

Use of Compensation Consultant and Benchmarking

In the fiscal year ended July 31, 2016, the Compensation Committee did not engage any compensation consultants or engage in benchmarking activities. The Compensation Committee last undertook a comprehensive review of compensation and engaged a compensation consultant in November 2009.

Determination of Compensation

In prior years, the Compensation Committee typically made compensation determinations, including any increases in base salary for the next calendar year and any bonuses in respect of the prior fiscal year, before or during the first calendar quarter of each year. The Compensation Committee followed such a schedule in order to eliminate the need to award retroactive salary increases. In addition, the Compensation Committee has typically reviewed compensation arrangements in the first calendar quarter to ensure that compensation levels are appropriate in light of Generex’s financial position and performance at that time. Due to the financial position of the Company, the Committee did not follow such a schedule in fiscal 2016, as there were no salary changes or bonus awards made. The company last made changes and awarded bonuses prior to the end of fiscal 2013. Because of the Company’s financial position, no increases were made to base salary, nor were any cash bonuses or stock incentive awards granted to the named executives during fiscal 2015 or 2016.

Components of Compensation

Base Salary

Base salary provides a fixed amount of compensation necessary to retain key executives. It is guaranteed compensation to the named executives for performance of core duties. Historically, base salaries for the named executives may be adjusted upon recommendation by the Compensation Committee and ratification by the Board of Directors, and annual base salaries for the named executives have been reviewed periodically relative to the base pay levels for each executive’s position based on the peer group. The Compensation Committee last undertook such a review in November 2009. Levels of base salary were generally targeted at the market’s second quartile (51% – 75%), but also reflect the compensation goals adopted by the Compensation Committee, operational goals determined by management, the named executive’s individual performance, contribution of the named executive to overall corporate performance, and the level of responsibility of the named executive with respect to his or her specific position. The level of base salary also reflects multiple titles and additional responsibilities of the named executives driven by the operational needs of the company.

Cash Bonuses

Historically, performance-based compensation has been a key component of our compensation philosophy. In the past, cash bonuses have been provided to attract, motivate, and retain highly qualified executives on a competitive basis and provide financial incentives that promote company success. From time to time in the past, the Compensation Committee has granted bonuses to reward achievement relative to specific performance objectives. In awarding bonuses, the Compensation Committee considers various factors, including the named executive’s position within Generex, attainment of specific business objectives and performance milestones, and the named executive’s individual contributions thereto. The Committee exercises discretion with respect to the weight that it gives to these and other factors in determining bonuses. The Compensation Committee also retains discretion with respect to whether any bonuses are paid to the named executives, the amounts of any such bonuses, and the form of any such bonuses.

The Compensation Committee did not grant or accrue any bonuses in fiscal 2016, with respect to the fiscal year ended July 31, 2015, in consideration of the financial position of the Company.

Long-Term Incentives and Equity Awards

Historically, our compensation program has included long-term incentive compensation in the form of equity grants subject to a vesting schedule. We believe such incentive compensation further aligns the interests of management with those of stockholders and enhances shareholder value. Currently, we do not have any long-term cash incentive programs in place for the named executives.

Long-term equity incentive grants have been discretionary. In determining whether such grants are warranted, the Compensation Committee has considered our compensation strategy, market practice concerning long-term incentives provided to executives at peer companies and within the broader market, and the named executive’s specific roles within Generex. Typically, equity incentive awards were granted subject to vesting over a period of time and were not tied to specific performance measures.

Equity grants have historically been made through stock options under our various plans, including Generex’s 2001 Stock Option Plan, as amended, and the Amended and Restated 2006 Stock Plan, which also allows grants of restricted stock. We consider the costs to the Company of granting stock options under Statement of Financial Accounting Standard (SFAS) 123(R) as compared to the costs to named executives of higher income tax liabilities associated with the granting of restricted stock.

There were no discretionary awards of options to purchase shares of our common stock to our named executives in fiscal 2016, with the exception of the following. The Company granted options to purchase, in the aggregate, 15,393,363 shares of our common stock to the named executives and Dr. von Hofe in full and final payment of obligations to pay such individuals deferred salary accrued during up to October 15, 2015. The options were issued in lieu of cash payment of compensation amounts due to such individuals. The number of options granted to each individual was equal to the dollar amount of deferred salary or fees due to such individual divided by $0.015. The stock options had an exercise price equal to $0.001 per share and were made pursuant to the terms of the Company's 2006 Stock Plan. The options were fully vested at on October 26, 2015 and will expire on the fifth anniversary of the date of grant. The grants were valued at the amount of deferred compensation owed to each such individual.

The number of options that the Compensation Committee recommended, and the Board of Directors approved, in respect of the above salary deferrals to the named executives described above were as follows:

Named Executive		No. of Shares Underlying Options
Mr. Fletcher		4,448
Mr. Fellows		1,668
Dr. von Hofe		7,611
Dr. Brusegard		1,668

Benefits and Perquisites

Named executives may participate in benefit plans that are offered generally to salaried employees such as short and long term disability, health and welfare benefits, and paid time off.

We provide very limited perquisites. During fiscal 2016, we did not provide any material perquisites.

We do not offer deferred compensation plans, defined benefit plans, supplemental executive retirement plans, supplemental life insurance, benefit restoration plans, or tax gross-ups on change-in-control benefits.

Employment and Severance Agreements

We do not have employment agreements, plans or arrangements, with any of our named executives whether written or unwritten, relating to compensation, termination of employment or a change in control. There are no benefits currently made available to our named executives which are in addition to benefits available generally to salaried employees.

We anticipate entering into employment agreements with all of our officers following the Special Meeting. We expect the employment agreements to provide for cash compensation as well as significant equity awards and incentives.

Other Benefit Plans

We have no defined benefit or actuarial pension plans.

As of the end of fiscal 2016, each of the named executives employed by the Company at that time held stock options or restricted stock granted pursuant to either the 2001 Stock Option Plan or the 2006 Stock Plan. The 2001 Plan provides that outstanding options will become immediately exercisable and vested upon a change in control, unless the Board of Directors or its designee determines otherwise. In the event that Generex will not be the surviving corporation, the Board or its designee has flexibility under the 2001 Plan to determine how to treat stock options. The 2001 Plan does not condition the acceleration and vesting of stock options in such an event upon an option holder’s termination of employment; however, the terms of the 2001 Plan provide that, unless otherwise provided by the Board or its designee, an option holder can exercise outstanding options after the date of his or her termination of employment only if the option holder voluntarily terminated employment with Generex or was terminated without cause by Generex. Under the terms of the 2006 Plan, unvested stock options and restricted stock will become exercisable or unrestricted, as applicable, thirty days prior to the change-in-control event and such acceleration is not conditioned upon the termination of a participant’s employment with Generex. The 2006 Plan further provides that if Generex is not the surviving corporation as a result of a change in control, all outstanding options that are not exercised will be assumed by, or replaced with comparable options or rights by, the surviving corporation, and outstanding grants of restricted stock will be converted to similar grants of equity in the surviving corporation.

Tax and Accounting Considerations

Historically, the Compensation Committee has considered implications of tax and accounting requirements impacting compensation programs from the perspective of the Company and the individual named executives. The Compensation Committee may also consider sections of the tax code which impact Generex or individual taxpayers. For U.S. taxpayers, the Committee structures its programs to comply with Section 409A of the Internal Revenue Code.

Given the high individual income tax liabilities which result from the awarding of restricted stock to our executives who are all tax residents of Canada, the Compensation Committee expects to grant future equity awards in the form of stock options for the foreseeable future.

Compensation Committee Report

The full Board of Directors of Generex Biotechnology Corporation performing the functions of the Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the full Board of Directors commended and determined that the Compensation Discussion and Analysis be included in Generex’s Annual Report on Form 10-K for the year ended July 31, 2016 and in the proxy statement for the 2017 annual meeting.

THE BOARD OF DIRECTORS

Executive Compensation Tables

The following executive compensation tables pertain to the fiscal year ended July 31, 2016. Therefore, the tables contain information relating to the named executives who served as of the fiscal year end and refer to the positions held by such named executives as of July 31, 2016.

Summary Compensation Table

The following table provides information concerning compensation of Generex’s named executives for Generex’s last completed fiscal year ending July 31, 2016. In respect of that fiscal year, the named executives did not receive compensation in the form of non-equity incentive plan compensation or changes in pension value or non-qualified deferred compensation earnings. Therefore, the table below does not include columns for these types of compensation. The salaries indicated below represent the actual cash amounts paid. The Company did not have sufficient funds to pay the previously agreed upon base salaries. Option exercisable at $$1.00 per share (adjusted for the subsequent 1 for 1,000 reverse stock split) were issued in lieu of cash compensation

Name and Principal Position	Year			Salary			Bonus		Stock Awards		Option Awards			All Other Compensation		Total
Mark A. Fletcher, President	2016		$	71,462	⁽¹⁾	$	—	$	—	$	70,193	⁽³⁾	$	—	$	70,193
Chief Executive Officer	2015	⁽¹⁾	$	n	⁽⁴⁾		—		—	$	[]			—	$	n
	2014		$	n	⁽¹⁾		__		__	$	65,384			__	$	n

Stephen Fellows,	2016		$	39,000	⁽²⁾		—		—	$	26,477	⁽³⁾		—	$	26,477
Chief Financial Officer	2015	⁽³⁾	$	n	⁽⁵⁾		—		—	$	82,212			—	$	n
	2014		$	n	⁽⁵⁾		__		__	$	24,519			__	$	n

David Brusegard,	2016		$	39,000⁽²⁾			—		—	$	26,477	⁽³⁾		—	$	n
Chief Operating Officer	2015		$	n	⁽⁵⁾		—		—	$	82,212			—	$	n
	2014		$	n	⁽⁵⁾		__		__	$	24,519			__	$	n

*Cash compensation is stated in the table in U.S. dollars. To the extent any cash compensation was paid in Canadian dollars, it has been converted into U.S. dollars based on the average Canadian/U.S. dollar exchange rate for the years ended July 31, 2016 and 2015.

(1)		This amount reflects an annualized base salary of $285,848.
(2)		This amount reflects an annualized base salary of $150,000.

(3)		This amount reflects the options set forth in the table below.
(4)
(5)		Agreed base salary was $225,000 in 2015 and 2016.

The following table provides information about the option awards granted to the named executives in the fiscal year ended July 31, 2016, including: (1) the grant date; (2) the number of shares underlying stock options awarded to the named executives, (3) the exercise price of the stock options awarded or extended, and (4) the grant date fair value of each equity award computed in accordance with FASB ASC Topic 718.

Name	Grant Date	Number of Securities Underlying Options (#)			Exercise Price or Base Price of Option Awards ($/Sh)			Grant Date Fair Value of Option Awards
Mark Fletcher, President & Chief Executive Officer	October 26, 2015		4,448	⁽¹⁾	$	1.00	⁽²⁾	$	0.015	⁽³⁾
Stephen Fellows, Chief Financial Officer	October 26, 2015		1,668	⁽¹⁾	$	1.00	⁽²⁾	$	0.015	⁽³⁾
David Brusegard, Chief Operating Officer	October 26, 2015		1,668	⁽¹⁾	$	1.00	⁽²⁾	$	0.015	⁽³⁾

	(1)	The options were granted on October 26, 2015 pursuant to the terms of our 2006 Stock Plan in satisfaction of unpaid compensation. The options vested on issuance.
	(2)	Prior to adjustment for our reverse stock split, the options had an exercise price equal to the par value of the Company’s stock.

(3)

The options are being issued in lieu of cash payment of deferred salary amounts due to such individuals. The executives listed above previously agreed to defer a portion of their salaries in an effort to assist the Company with its cash flow requirements. The stock options have an exercise price equal to $0.001 per share. The options awarded became fully vested on October 26, 2015 and shall expire on the fifth anniversary of the date of grant, subject to earlier termination under the terms set forth in the 2001 Stock Plan or 2006 Stock Plan, as applicable.

Other Benefit Plans

We have no defined benefit or actuarial pension plans.

Outstanding Equity Awards at 2016 Fiscal Year-End

The following table provides information on the current holdings of stock options by the named executives. This table includes unexercised and unvested option awards as of July 31, 2016. Each equity grant is shown separately for each named executive. The vesting schedule for each outstanding award is set forth in the footnotes to the table. We do not have any current “stock awards” or “equity incentive plans” referred to in Regulation S-K Item 402(p)(2); thus, the columns relating to stock awards and equity incentive awards are not included in the table below.

	Option Awards
Name	Grant Date	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)⁽²⁾		Option Expiration Date
Mark E. Fletcher, President and Chief Executive Officer	3-8-2010	300⁽¹⁾⁽²⁾	0	$	640		3-8-2020
Stephen Fellows Chief Financial Officer	3-8-2010	250⁽¹⁾⁽²⁾	0	$	640	0	3-8-2020

(1)

These options were granted on March 8, 2010 (pre-reverse stock split). The grants were made pursuant to the terms of our 2006 Stock Plan. The exercise price per share is equal to the closing price of Generex common stock on March 8, 2010. The options vested as follows: 33% of the options were exercisable on the date of grant; 33% of the options became exercisable on August 1, 2010, and the remaining 33% of the options became exercisable on August 1, 2011.

(2)

Adjusted for our 1 for 1,000 reverse stock split.

Compensation Elements; Employment Agreements and Agreements Providing Payments Upon Retirement, Termination or Change in Control for Named Executives

Historically, the key components of our executive compensation have been base salary, cash bonuses, and equity incentives, including stock bonuses, restricted stock, and stock options awarded at the discretion of our Compensation Committee and Board of Directors. As a development stage company, we have reviewed compensation of our executive management team from time to time and at the discretion of the Compensation Committee when warranted by our financial condition and achievement of our business goals.

APPROVAL OF AN AMENDMENT TO GENEREX’S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK

(Item 2 on the Proxy Card)

What am I voting on?

You are voting on an amendment to our restated certificate of incorporation. On n, 2017, our Board of Directors adopted a resolution that authorizes, subject to stockholder approval, an amendment to our restated certificate of incorporation to increase our authorized common stock, $0.001 par value per share, from 2,450,000 shares to 750,000,000 shares. The additional common stock to be authorized by adoption of this amendment would have rights identical to our currently authorized and outstanding common stock. The number of authorized shares of our preferred stock, 1,000,000 shares, will not be affected by this amendment. The complete text of the increase in authorized capital resolution and amendment is set forth asAppendix B to this proxy statement. If this proposal is approved, the amendment will become immediately effective upon its filing with the Secretary of State of Delaware.

Why is the amendment necessary?

as of ■, 2017, of the 2,450,000 shares presently authorized under our restated certificate of incorporation, ■ shares of common stock were issued and outstanding.

In addition to the issued and outstanding shares, we have obligations to issue:

•

1,200,000 shares of common stock upon conversion of our outstanding Series H Preferred Stock issued on March 28, 2017, and 316,000 shares of common stock upon conversion Series I Preferred Stock issued on April 27, 2017. These transactions are described below under “Certain Transactions” beginning on page n; and

•

up to 15,000,000 shares of common stock pursuant to a stock purchase warrant issuable in connecting with the January 17, 2017 acquisition of a controlling interest in Hema Diagnostic Systems, LLC.

We do not have sufficient authorized shares available to meet the above obligations.

In addition to meeting the above obligations, our Board of Directors believes that the proposed increase in the number of authorized shares of common stock will provide us with greater flexibility to use our common stock for general corporate purposes such as:

•

funding all or some of our operating cash flow requirements;

•

funding research and development, including clinical studies;

•

strategic relationships and joint ventures;

•

funding capital projects and investments; and

•

providing equity incentives to employees, officers and directors.

We have no immediate requirements to use large numbers of shares of common stock to fund any financing, acquisition, strategic venture or capital project. However, we are actively in seeking these transaction, and our ability to do so could be constrained by the limited number of shares of common stock currently available. The currently limited number of shares of common stock that remain available for issuance under our restated certificate of incorporation, and the requirement to obtain stockholder approval for any increase in the authorized shares of common stock, could impact our ability to effect financings, acquisitions or strategic ventures as quickly as may be necessary, particularly in situations where we may face immediate funding needs or intense competition with other bidders, and could constrain our ability to obtain prompt access to capital markets as and when needed in the future. As the Company has historically relied on financing to fund its operations, the Company’s ability to continue operations could be adversely impacted if shareholders do not approve the increase in the number of authorized shares. Our Board of Directors believes that Generex’s ability to act in a timely and flexible manner is important to its competitive position.

Approval of the proposed increase in the number of authorized shares would allow our Board of Directors to authorize the issuance of common stock without waiting for the next meeting of stockholders in order to increase the authorized capital. If, for any particular transaction, stockholder approval were required by law or otherwise deemed advisable by the Board of Directors, then the matter would be referred to the stockholders of Generex notwithstanding approval of the proposed increase in the number of authorized shares of common stock.

If the stockholders do not approve this proposal to increase the number of authorized shares, we will be substantially constrained in the size of transactions that we may undertake using common stock as the form of consideration. We may be required to immediately hold a special stockholders’ meeting to seek approval to increase the authorized number of shares of common stock for a particular transaction, which could cost us in excess of $150,000 in printing, distribution and mailing fees.

Does the Company plan on issuing additional shares?

If the increase in authorize shares is approved, we expect to issue the additional shares summarized in the following table.

Recipient or Purpose	Number of Shares
Outstanding Stock Options		19,639
Berkman Warrant & Shares of Common Stock		15,230,000
Outstanding Series H Preferred Stock		1,200,000
Series I Preferred Stock		316,000
Total		16,765,639

Berkman Warrant & Common Stock

As partial consideration for the acquisition of 51% of Hema Diagnostic Systems, LLC’s equity, the Company agreed to issue to Stephen Berkman, formerly Hema’s majority owner, a warrant to purchase 15,000,000 shares of Generex common stock and an aggregate of 230,000 shares of the Company’s common stock.

Certain historical and pro forma financial statements of Hema Diagnostic Systems, LLC are included as Appendix C-1 to this Proxy Statement. Other information relating to Hema Diagnostic Systems, LLC is included as Appendix C-2 to this Proxy Statement.

Series H and Series I Preferred Stock

We have issued 3,000,000 shares of Series H Preferred Stock which may be converted into 1,200,000 shares of common stock. Pursuant to a Securities Purchase Agreement with the purchaser of these shares of Series H Preferred Stock, we agreed to issue additional shares of Series H and Series I Preferred Stock convertible into additional shares of common stock. The purchaser did not timely close the purchase of the Series I Preferred Stock under the Securities Purchase Agreement, and the Company terminated the purchaser’s further rights under the Securities Purchase Agreement. Subsequently, we issued 391 shares of Series I Preferred Stock to Joseph Moscato, our CEO and 399 shares of Series I Preferred stock to Lawrence Salvo, the president of our subsidiary, Hema Diagnostics, for debt owed to them by the Company. These transactions are further described below under “Certain Transactions” beginning on page n.

In March, 2017, we issued our Convertible Note Due March 6, 2018 (“Note”) in the principal amount of $674,854.96 convertible into common stock at a post-reverse split price of $1.00 per share. We repaid the Note in cash on July 17, 2017 (with a $75,000 late-payment fee).

Will these new shares of common stock have preemptive rights?

No. The additional shares of common stock for which we are seeking authorization would have the same rights and privileges as the shares of common stock presently outstanding. Holders of shares of common stock have no preemptive rights to subscribe to or for any additional shares of stock of Generex.

Am I entitled to dissenters’ or appraisal rights in connection with the proposed amendment to the Restated Certificate of Incorporation?

No. Under Delaware law, Generex’s stockholders are not entitled to dissenters’ or appraisal rights in connection with the proposed increase in the number of shares of common stock authorized for issuance under the restated certificate of incorporation.

What are the effects of the increase in the number of authorized shares of common stock?

The following table shows the number of shares of common stock that (a) are authorized and issued and outstanding, as of Augustn, 2017, (b) authorized and reserved for issuance upon the exercise of outstanding stock options and warrants (assuming vesting of all non-vested shares underlying such options and warrants) and upon conversion of all convertible securities as of Augustn, 2017, (c) authorized and unreserved for issuance after the passage of the proposal set forth inItem 1, (d) would be authorized and issued and outstanding, after the passage of the proposal underItem 1, (e) authorized and reserved for issuance upon the exercise of outstanding stock options and warrants (assuming vesting of all non-vested shares underlying such options and warrants) and upon conversion of all convertible securities after the passage of the proposal set forth inItem 1, and (f) authorized and unreserved for issuance after the passage of the proposal underItem 1 based on our capitalization as of August n, 2017.

As of August n, 2017	Shares issued and outstanding		Shares Authorized and Reserved for Issuance		Shares Authorized and Unreserved		Total Authorized
Prior to Passage ofItem 1		1,129,757		1,219,639		100,604		2,450,000
Following Passage ofItem 1		1,129,757		17,895,396		732,104,604		750,000,000

Although the increase in the authorized number of shares of common stock will not, in and of itself, have any immediate effect on the rights of our stockholders, any the issuance of the reserved shares and future issuance of additional shares of common stock could affect our stockholders in a number of respects, including by:

decreasing the existing stockholders’ percentage equity ownership and voting power, and
depending on the price at which such shares are issued, diluting the earnings per share and book value per share of outstanding shares of our common stock at such time.

In addition, although this proposed amendment to the restated certificate of incorporation is not motivated by anti-takeover concerns and is not considered by the Board of Directors to be an anti-takeover measure, the availability of additional authorized shares of common stock could enable the Board of Directors to issue shares defensively in response to a takeover attempt or to make an attempt to gain control of Generex more difficult or time-consuming. For example, shares of common stock could be issued to purchasers who might side with management in opposing a takeover bid that the Board of Directors determines is not in our best interests, thus diluting the ownership and voting rights of the person seeking to obtain control of Generex. In certain circumstances, the issuance of common stock without further action by the stockholders:

may have the effect of delaying or preventing a change in control of Generex,
may discourage bids for our common stock at a premium over the prevailing market price, and
may adversely affect the market price of our common stock.

As a result, increasing the authorized number of shares of our common stock could render more difficult and less likely:

a hostile takeover,
a tender offer or proxy contest,
the assumption of control by a holder of a large block of our stock, and
the possible removal of our incumbent management.

We are not aware of any proposed attempt to take over Generex or of any present attempt to acquire a large block of our common stock. This proposal is not being made in response to any attempt of which Generex is aware to obtain control of the company or to accumulate the company’s common stock. Generex has no present intention to use the additional shares of common stock to oppose a takeover attempt or delay or prevent changes in the management of the company.

When would the amendment be effective?

If approved by the stockholders at the meeting, the proposed amendment to the restated certificate of incorporation will become effective upon the filing of a certificate of amendment with the Secretary of State of the State of Delaware. Generex intends to file the certificate of amendment as soon as practicable after the meeting; however, if, in the judgment of our Board of Directors, any circumstances exist that would make consummation of the proposed amendment inadvisable, our Board of Directors may abandon the proposed amendment at any time prior to the effectiveness of the filing of the certificate of amendment.

How many votes are needed for this proposal and how are the votes counted?

The affirmative vote of a majority of the votes represented by our outstanding common stock and Series I Preferred Stock is required to approve the amendment to our restated certificate of incorporation to accomplish the increase in the number of authorized shares of common stock. The effect of an abstention or broker non-vote is the same as that of a vote against the proposal.

The holders of the Company’s Series I Preferred Stock are entitled to vote on the proposal to authorize additional shares of common stock, and the holders of the Series I Preferred Stock, as a class, are entitled to cast a number of votes on such proposal equal to fifty percent (50%) of the total number of votes entitled to be cast at the Special Meeting by all other outstanding shares of the Company’s capital stock. The holders of the Series I Preferred Stock are officers of the Company or a subsidiary and have agreed vote in favor the Company’s proposal to increase the authorized number of shares of common stock.

How does the Board of Directors recommend that I vote?

We recommend that you voteFOR the amendment to the restated certificate of incorporation to increase the number of shares that Generex is authorized to issue

APPROVAL OF AN AMENDMENT TO GENEREX’S RESTATED CERTIFICATE OF INCORPORATION TO CHANGE OUR CORPORATE NAME TO NUGENEREX BIOTECHNOLOGY HOLDINGS, INC.

(Item 3 on the Proxy Card)

What am I voting on?

You are voting an amendment to our restated certificate of incorporation. On April n, 2017, our Board of Directors adopted a resolution which authorizes, subject to stockholder approval, an amendment to our restated certificate of incorporation to change our corporate name toNuGenerex Biotechnology Holdings, Inc. The complete text of the amendment is set forth asAppendix B to this proxy statement. If this proposal is approved, the amendment will become immediately effective upon its filing with the Secretary of State of Delaware.

Why is the Board of Directors Proposing a Change in the Corporate Name?

In January, 2017, we acquired a controlling interest in Hema Diagnostic Systems, Inc., with the intent to complete the acquisition of 100% of that Company. This is the first addition to our business since the acquisition of Antigen Express in 2003. The Board of Directors believes that a change in our name is appropriate to indicate our broader focus, while the name “NuGenerex” also retains a connection with our historical business activities.

When would the amendment be effective?

How many votes are needed for this proposal and how are the votes counted?

The affirmative vote of a majority of the shares of common stock entitled to vote thereon is required to approve the amendment to our restated certificate of incorporation to accomplish the increase in the number of authorized shares of common stock. The effect of an abstention or broker non-vote is the same as that of a vote against the proposal.

How does the Board of Directors recommend that I vote?

We recommend that you voteFOR the amendment to the restated certificate of incorporation to change our corporate name to NuGenerex Biotechnology Holdings, Inc.

APPROVAL OF OUR 2017 EQUITY INCENTIVE PLAN

(Item 4 on the Proxy Card)

General Information

On April 17, 2006,theBoardofDirectors adopted our 2006 Stock Plan (“2006 Plan”), which reserved 10,000 shares(as adjusted for our recent reverse stock split)forissuance thereunder, andwhich was subsequently amended with shareholder approvalto increasethe shares reserved forissuance to 135,000. Since 2006, theCompanyhasbeen granting option and stock awards pursuant to the2006 Plan. The Company also previously granted options under its 2001 Stock Option Plan.

Onn,2017, the Board adopted, subject toshareholder approval, our2017 Equity Incentive Plan(the “2017 Plan”). The 2017Planexpands thetypesofawards availableunderthe 2006Plan andprovides for thegrant ofincentive stock options, non-qualified stock options, and stock appreciation rights (“SARs”), restricted stock, restricted stock units, stockgrants, performance shares,andperformance share units.The2017 Plan also permits thegrant ofawards that are intended toqualify forthe “performance-based compensation” exception to the $1million limitationonthe deduction ofcompensation imposedbySection162(m) of theInternal Revenue Code (the “Tax Code”).If itis approved byshareholders, the 2017 Plan willsupersede and replace thePrior Plan, provided that the Prior Plan will remain ineffect until all awards granted under it have beenexercised, forfeited, canceled, expiredorotherwise terminated.

Inorder tocontinuetohave anappropriate supply ofshares for equity incentives torecruit, hire andretainthetalent requiredtosuccessfully execute ourbusiness plans, the Company isaskingtheshareholderstoapprove the 2017 Planwhichreserves 240,000,000 sharesofcommon stock forgrants, plus sharesfrom anyaward granted under thePrior Plan that terminates, expiresorlapsesforany reason inthe future will beavailable forreissuance under the2017 Plan. While reserving 240,000,000 newsharesunderthe 2017Planwillincrease thepotential dilution toour current shareholders, theBoard believes that ourequity compensation plan will be well-managedand theflexibilitytoissue different types ofawards suchasRSUs may decrease therate ofdilution compared toissuancesofstock options.

Inpreparingthe2017Plan, theCompany hastaken into consideration current best practices with respect toequity-based compensation plans.In thisregard, the 2017Plan contains thefollowing provisions, whichwe believereflectbest practices forequity-compensation plans: (i) prohibits there-pricingofstock options and SARs without shareholder approval, (ii) prohibits thegrant ofstock options and SARs with discounted exercise prices, (iii) prohibits the recycling ofawards tendered inpaymentof anoptionorwithheld tosatisfy taxobligations; (iv) contains adefinitionofchangeincontrol whereby potential accelerationofawards will onlyoccur in theeventof anactual change incontrol transaction; (v) includes, as ageneral rule, double-trigger vesting following achange incontrol;and(vi) imposes a$500,000 limit on thevalueofawards that may begranted to any oneparticipant who is anon-employee director during any12-month period

The Board of Directorsrecommends a vote“FOR” approval of the 2017 EquityIncentive Plan

Thefollowing is asummary of thematerialterms ofthe 2017Plan thatmay be ofimportance toyou.Thesummary isqualified byreferenceto thefull textofthe 2017 Plan, which isattached tothisproxystatementasAppendix D

SummaryofPlan Features

Purpose

TheBoard believes that the 2017Plan will promote the success andenhance the valueofthe Companyby linking thepersonal interests ofparticipants tothose ofCompany shareholders. The Board alsobelieves that the 2017 Planwill enhance theCompany’s ability toattract andretain qualified persons toperform services for the Company,byproviding incentives to suchpersonstoput forth maximum efforts for theCompanyand byrewarding personswhocontributeto theachievement of theCompany’s economic objectives.

Administration

The 2017Planwill beadministeredby the by the Compensation Committee until we reconstitute theCompensation Committee, which we expect to reconstitute shortly following the special meeting. The Compensation Committee will becomprisedof atleast twoindependentmembers ofthe Board. Each Compensation Committee membermust be a“non-employee director” asdefined inRule16b-3 ofthe Securities Exchange Act, an“outside director” asdefinedinSection162(m) of theTax Code, and an“independent” director forpurposesof theapplicable Nasdaq Listing Rules. TheCompensation Committee, bymajority action, isauthorizedtointerpret the2017 Plan, toprescribe, amend, andrescind rules andregulations relating tothe 2017 Plan, to provide for conditions andassurancesdeemednecessary oradvisable toprotect the interestsofthe Company, and tomake allother determinations necessary oradvisable for the administration of the2017Plan, tothe extent they are notinconsistent with the2017Plan.

Subjecttothe express provisionsof the 2017Plan, theCompensation Committeewillhave the authority todeterminetheparticipants who are entitled toreceive awards under the 2017Plan, thetypesofawards, thetimes when awards shallbegranted, the number ofawards,thepurchase price, exercise price,orbase value, ifany, theperiod(s) during which suchawards shall beexercisable (whether inwhole or inpart), the restrictions applicable toawards, andthe form ofeach award agreement. Neither theaward agreement nor theother terms andprovisionsof anyaward must beidentical for eachparticipant. The Compensation Committee alsowillhave the authority tomodify existing awards, subject tospecified provisionsofthe 2017 Plan andthe listing requirementsof Nasdaq, if and when we are listed on Nasdaq. The 2017 PlanprohibitstheCompensation Committee from repricing anypreviously granted optionorSAR without first obtaining shareholder approval.

Inthe caseofawards made tonon-employee directors,theBoard,andnot the Compensation Committee, shall administer the 2017Plan.

StockSubjectto 2017Plan

The total number of shares of common stock reserved under the 2017 Plan is 240,000,000. Subject to the express provisions of the 2017 Plan, if any award granted under the 2017 Plan or any award outstanding under the Prior Plan terminates, expires, or lapses for any reason, or is paid in cash, any stock subject to or surrendered for after the date the 2017 Plan is approved by shareholders, such award will again be stock available for the grant of an award under the 2017 Plan. The exercise of a stock-settled SAR, or broker-assisted ?cashless? exercise of an option (or a portion thereof) will reduce the number of shares of stock available for issuance pursuant to the 2017 Plan by the entire number of shares of stock subject to that SAR or option (or applicable portion thereof), even though a smaller number of shares of stock will be issued upon such an exercise. Also, shares of stock tendered to pay the exercise price of an option or tendered or withheld to satisfy a tax withholding obligation arising in connection with an award will not become available for use under the 2017 Plan.

Individual LimitationsonAwards

Themaximum number ofshares ofcommonstockthat may begranted to any oneparticipant during any12-month periodwithrespect to one ormore awards isn. Theaggregate grant date fairmarketvalue ofawards granted to any oneparticipant who is anon-employee director during any12-month period with respect tooneormore awards is$n.

as of ■,2017, the closing priceoftheCompany’s stock in the over-the-counter marketwas $n pershare.

Eligibility

Allemployees, officers,non-employeedirectorsof,and consultants to, the Company and its subsidiaries and other affiliates,asdetermined bythe Compensation Committee, are eligible toparticipate in the2017 Plan.

Awards Available Under the 2017Plan

Thefollowing types ofawardsmaybegrantedpursuant to the 2017Plan: incentive stock options, nonqualified stock options, SARs, restricted stock, restricted stock units, performance shares, performance share units, stock grants andstock units.

StockOptions. The Compensation Committeemaygrant incentive stock options and non-qualified stock options under the 2017 Plan. Incentive stockoptionsmay begranted only toparticipants who areemployees. Theexercise priceofall options granted under the 2017Planmust be atleast 100% ofthe fairmarketvalue ofthe Company’s common stock on thedategrantedand nooptionmay beexercised more than ten (10) years from thedate ofgrant.TheCompensation Committee will determine how theexercise priceof anoptionmaybe paidandthe form ofpayment, including, withoutlimitation, cash,sharesofstock held for longer than six months (through actual tender or byattestation), anynet- issuance arrangement orother property acceptable to the Compensation Committee (including broker- assisted “cashless exercise” arrangements), and howshares ofstock willbedeliveredordeemeddelivered toparticipants.Aparticipant willhave norightsas ashareholder with respect tooptions until the record dateof thestock purchase.

StockAppreciation Rights. The Compensation Committee alsomaygrant SARs under the2017Plan.SARsgivethe participant theright toreceive the appreciation invalue ofone shareof common stock of theCompany. Appreciationiscalculatedasthe excessof(i) thefairmarketvalue of ashareofcommon stock on thedateofexercise over (ii) thebasevalue fixed by theCompensation Committee on thegrantdate, whichmaynot beless than thefairmarketvalue of ashareofcommon stock on thegrant date.Payment forSARs shall bemadeincash, stock, or acombination thereof.SARs areexercisableatthetime andsubject to therestrictionsandconditionsas theCompensation Committee approves, provided that noSARmaybeexercised more than ten (10)yearsfollowing thegrantdate.

Restricted Stock. The Compensation Committeemaygrant restricted stock underthe2017 Plan. Arestricted stock award gives theparticipanttheright toreceiveaspecified numberofsharesofcommonstock at apurchase price determined bythe Compensation Committee (including andtypically zero).

Restrictions limittheparticipant’s ability totransfer the stock andsubjectthestock to asubstantial risk offorfeiture until specific conditions orgoals are met. The restrictionswilllapse inaccordance with aschedule orother conditions asdetermined by theCompensation Committee, which typically involve the achievement ofspecified performance targets and/or continued employment ofthe participant until aspecified date. As ageneralrule, if aparticipant terminates employment when the restricted stock issubject torestrictions,theparticipant forfeits theunvested restricted stock.

Restricted Stock Units. The Compensation Committee alsomaygrant restrictedstockunit awardsunder the 2017Plan. Arestricted stockunitaward gives theparticipant the right toreceive common stock, or acash payment equal tothe fairmarketvalue ofcommon stock(determinedasof aspecified date), in the future, subject torestrictions and arisk offorfeiture. The restrictions typically involve theachievementofspecified performance targets and/or the continued employment orserviceofthe participant until aspecifieddate.Participants holding restricted stock units havenorights as ashareholder with respectto thesharesofstock subject to their restricted stock unitaward prior tothe issuance of suchshares pursuant to theaward.

StockGrant Awards. TheCompensation Committee may grant stock grant awards upon suchterms andconditions,andat anytime, and fromtime to time, as theCommittee shall determine. Astock grant award gives theparticipant the right toreceive(or purchaseatsuch price asdetermined by theCommittee) sharesofstock, free of anyvesting restrictions. The purchase price, ifany, for astock grant award shallbepayable incashor in anyother form ofconsideration acceptable to theCommittee.A stockgrant awardmay begrantedorsold inrespectofpastservicesorother valid consideration,orinlieu of anycash compensation owed to aparticipant.

StockUnit Awards. TheCommitteemaygrant stock unit awards upon suchterms andconditions, andatanytime, and fromtime totime,asthe Committee shall determine. Astockunitaward gives theparticipant theright toreceive shares ofstock,or acashpayment equal to thefairmarketvalueof adesignated numberofshares,in thefuture, freeof anyvesting restrictions. Astock unitawardmay begrantedorsold inrespectofpast services orothervalidconsideration, or inlieuofany cashcompensation owed to aparticipant.

Performance Shares. The Compensation Committeealsomaygrant performance share awards under the 2017Plan.Aperformance share award gives theparticipant the right toreceive common stock ofthe Company if theparticipant achieves the performance goals specified by theCompensation Committee during aperformanceperiod specified bythe Compensation Committee. Each performance share willhave avalue determined by theCompensation Committeeatthetime ofgrant.

Performance Share Units.TheCompensation Committee alsomaygrant performance share unit awards under the 2017Plan. Aperformance share unit award gives the participant theright toreceive common stock ofthe Company, a cashpaymentor acombinationofstockandcash, if theparticipant achieves the performance goals specified by theCompensation Committee during aperformance period specified bythe Compensation Committee. Each performance share unitwillhave avalue determined by theCompensation Committeeatthetime ofgrant.

Performance-Based Awards. When the Compensation Committee grants options, restricted stock, restricted stock units,stockgrants, stock units, performance shares, performance share units orperformance cash, itmaydesignate the awardas aperformance-based award. Options andSARs granted pursuant to the2017 Plan should, bytheir terms, qualify asperformance-based awards. Performance- basedawards are intended to qualify for the “performance-based compensation” exception to thelimitations on thedeductionofcompensation imposed bySection162(m) ofthe Tax Code.

Section162(m)of theTax Code onlyapplies to“covered employees”asthat term isdefined inSection162(m)of theTax Code. Therefore, onlycovered employees areeligible toreceive awards that aredesignated asperformance-based awards. The Compensation Committee has complete discretion regarding whether tograntawards tocovered employees that qualifyforthe “performance-based compensation” exception.IftheCommittee designates aparticular award as aperformance-based award, theCompensation Committee willattempt todesign and administertheaward in amanner that will allowtheaward toqualify for the “performance-based compensation” exceptionunderSection162(m) of the TaxCode. Nevertheless, the requirementsofthis exception are complex andinsomerespectsvague anddifficult toapply. Consequently, we cannot guarantee that compensation that isintended toqualifyforthe “performance-based compensation” exceptionunderSection162(m)willinfact so qualify. TheCompensation Committeemay, in itsdiscretion,grantawards under the 2017Plantocovered employees that donot qualifyforthe exception.

Thepayment ofoptions, restricted stock, restricted stock units,stock grants, stock units, performance shares, performance shareunitsorperformancecashthat are designatedasperformance-basedawards is contingent upon acovered employee’s achievement ofpre-established performance goals during aspecified performance period. Performance goals are based on any oneormore pre-established performance criteria. Thepre-establishedperformancecriteria are limited to thefollowing: net operating income before taxes and extraordinary charges against income; earnings before interest, and taxes; earnings before interest, taxes, depreciation, and amortization; pre- orafter-taxnetearnings; sales growth; production levels; unit costs; operating earnings; operating cash flow; return onnet assets; return onshareholders’ equity; return onassets; return oncapital;stock price growth; shareholder returns; grossornetprofit margin; earnings pershare; price per share ofstock;marketshare; revenue; income; safety objectives; environmental objectives; andcompletionofmajor projects. Any ofthe performance criteria may bemeasured either inabsoluteterms or ascompared to anyincremental increase orascompared toresultsof apeer group, indices,or anyother basketofcompanies. Performance goalsmay beexpressed interms ofoverallCompanyperformance, theperformanceof adivision, affiliate, orthe performance of anindividual. Financial performance criteriamay,but neednot,becalculatedinaccordance with generally accepted accounting principles (“GAAP”)oranysuccessor method toGAAP,includingInternational Financial Reporting Standards. TheCompensation Committee shall, within thetimeprescribedbySection162(m) of theTax Code, define in anobjectivefashion the manner ofcalculating theperformance criteria it selects touse for aparticular performance period for aparticular participant.

With respectto anyperformance-based award granted to acovered employee that qualifies forthe “performance-based compensation” exception tothe Section162(m)limitation, theCompensation Committeehas thediscretion to:select thelength of theperformance period, the typeofperformance- basedawards tobe issued,the kind and/or level ofperformance goal orgoals andwhether the performance goal orgoals apply tothe Company, anaffiliateor anydivisionorbusiness unitofany ofthem, or to theindividual participantor anygroup ofparticipants. The Compensation Committee hasthe discretion todecrease, but notincrease, theamountofcompensationpayablepursuant toany performance-based award.TheCompensation Committee must certify inwriting prior to thepayment of anyperformance-based award that theperformance goals and anyothermaterial terms andconditions precedent to such payment have beensatisfied.

Theperformance criteria and other related aspectsofthe 2017Plan will besubjecttoshareholder approval again in2021 if (as iscurrently thecase) shareholder approval isthen required tomaintain the tax-deductible nature ofperformance-based compensation under the 2017Plan.

Themaximum performance-based award (other than aperformance cashaward)payable toanyoneparticipant for any12-month period is■ shares ofstock (orthe equivalent cash value). ThemaximumIftheperformanceperiod isless thanorexceeds 12months, the dollar andshare limitsexpressedinthis paragraph shallbereducedorincreased proportionally.

Restrictions

TheCompensation Committeemayimposesuchrestrictions on anyawards under the 2017 Plan as itmay deemadvisable, including restrictions under applicable federal securities law,under the requirementsof anystock exchange uponwhich the Company’s common stock isthen listed andunderany bluesky orstate securities lawapplicable to theawards.

ChangeinControl

Intheeventofaparticipant’s terminationofemployment without “cause” or“goodreason” (as thoseterms aredefined inthe 2017Plan), within 12months following achange in control,all awards that areoutstandingandunvested shallbecomefullyvested andexercisable and allrestrictionsonsuch outstanding awards shall lapseasof thedate oftermination.

Non-transferability

Unlessotherwise determined by theCompensation Committee,noawardgranted under the2017Planmay be sold,transferred, pledged, assigned, orotherwise alienatedorhypothecated, otherwise than by will or bythelaws ofdescent anddistributionorpursuant to adomestic relations order (that would otherwise qualify as aqualified domestic relations orderasdefined inthe TaxCodeorTitle I ofthe Employee Retirement Income SecurityAct of 1974, butforthefact that itrelates to anawardgranted underthe 2017 Plan), or, if applicable, until the termination of anyrestrictedorperformance periodasdeterminedby theCompensation Committee.

Adjustment Provisions

Ifthereisachangeintheoutstanding shares ofstock because of astock dividendorsplit, recapitalization, liquidation, merger, consolidation, combination, exchangeofshares,orother similar corporate change, the aggregate number ofsharesof stockavailable under the 2017 Plan andsubject to eachoutstanding award, and its stated exercise priceorthe basis uponwhich the award ismeasured,shall beadjustedby theCompensation Committee. Moreover, inthe event of such transactionorevent, the Compensation Committee, inits discretionmayprovide insubstitution for any orall outstanding awards underthe2017Plan suchalternative consideration (includingcash) asit, ingood faith, may determineto beequitable under thecircumstancesandmayrequire inconnection therewith the surrenderofallawardssoreplaced. Any adjustment to anincentive stock optionshall bemade consistentwith therequirements ofSection 424of the TaxCode. Further, anyadjustments made shall bemade consistent with the requirements ofSection 409Aofthe TaxCode.

Clawback

Every award grantedunderthe 2017Planissubject topotential forfeiture orrecovery tothe fullest extent called for bylaw, anyapplicable listing standard,orany currentorfuture clawback policy thatmay beadoptedbythe Company fromtime totime, including, without limitation, anyclawback policy adopted tocomplywithfinal rules issued by theSecuritiesandExchangeCommission and anyfinal listing standards tobeadoptedby theNASDAQMarket pursuant toSection954ofthe Dodd- Frank Wall StreetReform andConsumer Protection Act.

Amendment, Modification and Terminationof 2017Plan

Subjectto theBoard’s righttoterminate, amend ormodifythe2017 Planat anytime,the 2017 Planwillremain ineffect untilallawards issued under the2017 Plan expire, terminate, are exercisedorarepaid infull inaccordancewith the 2017Plan provisions and anyaward agreement. However, noawardmay begranted under the 2017 Planafter the tenth anniversary ofthe date the2017 Plan is approved by theCompany’s shareholders.

TheBoard hasdiscretion to terminate, amendormodify the 2017 Plan. Any such action ofthe Board issubject to theapprovalof theshareholders to theextent required by the2017 Plan, law,regulationorthe rulesofany exchange on whichCompany stock islisted. Except asotherwise providedin the2017 Plan, neither theBoard, the CEO, nor the Compensation Committeemay do any of thefollowing without shareholder approval: increase the numberofshares available under the2017 Plan; grant options orSARswith anexercise price or basevalue that isbelowfair marketvalueof ashare ofCompany stock on thegrant date; extend theexerciseperiodorterm of anyoption orSAR beyond 10years from thegrantdate; expand the typesofAwards available for grant under the2017 Plan; orexpand the classofindividuals eligible to participate in the 2017 Plan.

Tax Withholding

TheCompany shallhavethe power towithhold, orrequire aparticipant toremit to theCompany,anamount sufficient tosatisfy federal, state, and local withholding tax requirements on anyaward under the 2017Plan. Tothe extent that alternative methodsofwithholding areavailable underapplicable laws, theCompany willhave thepower tochoose among suchmethods.

Federal Income Tax Information

Thefollowing is abrief summary ofcertainofthe federal income taxconsequencesofcertain transactions under the2017 Plan based onfederal income tax laws ineffectonApril 28,2017. This summary is notintended to beexhaustiveanddoes notdescribe state orlocal taxconsequences.

Asageneral rule, aparticipant will not recognize taxable income withrespecttoany award atthe time ofgrantexcept inthe case of aparticipant who receives arestricted stock grant andmakesthetimely election permitted bySection 83(b)ofthe TaxCode.

Upon exerciseof anonqualified stock option, the lapse ofrestrictions onrestricted stock, orupon thepayment ofSARs, restricted stock units, stock grants, stock units, performance shares, performance share units orperformance cash,the participant will recognize ordinary taxable income in anamount equal to thedifference between the amount paid for theaward,ifany, andthe fair marketvalueof the stock oramount received on thedateofexercise, lapse ofrestriction orpayment. TheCompany will beentitledto aconcurrent income taxdeduction equal to theordinary income recognized by theparticipant.

Aparticipant who isgranted anincentivestockoption willnot recognize taxable income atthe time ofexercise. However,theexcess ofthe stock’s fairmarketvalue over the option price couldbesubject tothe alternative minimum tax in theyear ofexercise (assuming thestock received is notsubjectto asubstantial risk offorfeitureor istransferable).If stockacquired upon exercise of anincentive stockoption is held for aminimum of twoyears from thedate ofgrant and oneyear from the date ofexercise, thegainorloss (in anamount equal to thedifference between the sales price and theexercise price) upon disposition of thestock will betreatedas along-term capital gainorloss, andthe Company will not beentitled to anyincome taxdeduction.If theholding period requirements are not met, theincentive stock option will not meet the requirements of theTax Code and the taxconsequences described for nonqualified stock options willapply.

Ifcertainawardsfailtocomply withSection 409A, aparticipant must include inordinary incomealldeferred compensation conferred bythe award,payinterest from thedateof thedeferral and pay anadditional20% tax.The awardagreement for anyaward that issubject toSection409Amay includeprovisions necessary for complianceasdetermined by theCompensation Committee. The Company intends (but cannot anddoesnotguarantee) thatawardsgranted under the 2017Plan will comply with therequirementsofSection 409A or anexception theretoandintends toadminister andinterpret the 2017 Plan insuch amanner.

Special Rules Applicable to Officers

Inlimitedcircumstances wherethesaleofstock that isreceived asthe result of agrant of anaward could subject anofficer tosuit under Section 16(b)of theExchange Act, thetax consequences to theofficermay differfrom the taxconsequences described above.In thesecircumstances, unless aspecial election has beenmade, the principal difference usually will be topostpone valuation andtaxationofthe stock received solong as thesaleof thestock received could subject the officerordirectortosuit underSection 16(b)ofthe Exchange Act, but notlonger than six months.

Tax Consequencestothe CompanyorIts Affiliates

To theextent that angranteerecognizes ordinaryincome in thecircumstances described above, theCompany or thesubsidiary for which theemployeeperforms services will beentitled to acorresponding deduction provided that, among otherthings, the income meets the test ofreasonableness, is anordinary andnecessarybusinessexpense, isnot an“excess parachute payment” within themeaning ofSection280G of theTax Code and isnot subjecttothe $1.0 million deduction limit for certain executive compensation under Section162(m) of theTax Code.

NewPlanBenefits Table

Awardstoemployees, officers, directors andconsultantsunderthe 2017Plan aremade atthe discretion ofthe Compensation Committee. Therefore, the future benefits and amounts that willbereceived orallocated under the 2017Plan are not determinableatthis time. However, thefollowing table provides information with respect toawards granted under the2006 Plan during thefiscal year ending July 31, 2016totheCompany’s named executive officers (individually), officers, including named executive officers (as agroup), allcurrentnon-employee directors (individually andasagroup), and all employees, including officers who are notnamedexecutive officers (as agroup).

NameandPositionorGroup	Stock Options
Named Executive Officers:
Mark Fletcher		4,447
Stephen Fellows*		1,668
David Brusegard*		1,668
All Officers (including Named Executive Officers) as a Group (3 persons)		7,783
All Non-Employee Directors asaGroup(3 persons)		0
All Employees and Officers (who are not Named Executive Officers) as a Group (1 person*)		7,611

*These individuals are no longer officers, directors or employees of the Company

Approval of the Adjournment of the annual Meeting, if Necessary

TO SOLICIT ADDITIONAL PROXIES FOR PROPOSAL set forth in itemS 4 AND 5

(Item 5 on the Proxy Card)

What am I voting on?

Generex is asking its stockholders to vote on a proposal to approve the adjournment of the annual meeting of stockholders, if necessary, to solicit additional proxies for the proposal set forth asItem 1 on the Proxy Card.

Why is this proposal necessary?

As discussed above, our Board recommends a vote for the increase in authorized shares of common stock underItem. In order to implement the increase in authorized shares or the reverse stock split, Generex is required under Delaware law to obtain the affirmative vote of a majority of all shares of common stock outstanding for each proposal. While we hope to have a majority of all shares of common stock outstanding vote for the increase in authorized shares and the reverse stock split at the annual meeting, it is possible we will not have sufficient votes to do so. If we do not have sufficient votes forItem 1 andItem 2to pass, we could solicit and obtain additional votes and promptly reconvene the annual meeting.

How many votes are needed for this proposal and how are the votes counted?

The affirmative vote of a majority of shares of common stock present in person or by proxy at the annual meeting and entitled to vote on the subject matter is required to approve thisItem 2. Abstentions will have the effect of negative votes.

How does the Board of Directors recommend that I vote?

We recommend that you voteFORthe approval to adjourn the annual meeting of stockholders, if necessary, to solicit additional proxies for the proposal set forth asItem 5on the Proxy Card.

RATIFICATION OF THE APPOINTMENT OF MNP LLP

AS GENEREX’S INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL YEAR 2017

(Item 6 on the Proxy Card)

What am I voting on?

The Audit Committee of the Board of Directors has selected MNP LLP as the independent public accountants to examine the financial statements of Generex and its subsidiaries for thefiscalyear ending July 31, 2017. The Board of Directors has concurred in the Audit Committee’s selection and is presenting the matter to the stockholders for ratification at the annual meeting.MNP LLP ("MNP") has served as our independent auditors since June 1, 2013.

Why is ratification of the selection of MNP LLP necessary?

Stockholder ratification of the selection of MNP LLP as our independent auditors is not required by our bylaws or otherwise. However, we are submitting the selection of MNP LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain MNP LLP. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such a change would be in the best interests of us and our stockholders.

What services will the independent registered public accounting firm provide?

Audit services provided by MNP LLP for fiscal year 2015 will include the examination of the consolidated financial statements of Generex and services related to periodic filings made with the SEC. Audit services for fiscal year 2015 may also include the audit of the effectiveness of the company’s internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002. Additionally, MNP LLP may provide audit-related, tax and other services comparable in nature to the services that it performed in fiscal 2014, as described below under the heading “Audit Matters” and the subheading “Fees Paid to Generex’s Independent Public Accountants.”

Will representatives of the independent registered public accounting firm be present at the 2015 annual meeting?

Representatives of MNP LLP are expected to be present at the meeting, will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

How does the Board of Directors recommend that I vote?

We recommend that you voteFOR the ratification of the appointment of MNP LLP as Generex’s independent registered public accounting firm for the fiscal year ending July 31, 2017.

AUDIT MATTERS

Fees Paid to Generex’s Independent Public Accountants

MNP LLP ("MNP") has served as our independent auditors since June 1, 2013. The appointment of MNP as our independent public accountants was unanimously approved by the Audit Committee of our Board of Directors. MNP is the successor to our former independent auditors, MSCM LLP ("MSCM"), following MNP’s merger with MSCM in June 2013. MSCM served as our independent auditors from September 5, 2008 until June 1, 2013.

The following table sets forth the aggregate fees paid by Generex for the fiscal years ended July 31, 2016 and 2015 to our independent auditors:

	Fiscal Year Ended July 31, 2016		Fiscal Year Ended July 31, 2015
Audit Fees	$	44,840⁽¹⁾	$	57,760⁽¹⁾
Audit-Related Fees	$	-0-	$	-0-
Tax Fees	$	-0-⁽²⁾	$	-0-⁽²⁾
All Other Fees		⁽³⁾	$	3,500⁽³⁾
TOTAL	$	44,840	$	61,160

(1)	Includes fees associated with quarterly reviews of financial statements included in Generex’s Form 10-Q filings.
(2)	MNP LLP did not provide or bill for any tax services.
(3)	Represents fees associated with review of the Company’s registration statements on Form S-1 and Form S-8.

Policy for Pre-Approval of Audit and Non-Audit Services

The Audit Committee’s policy is to pre-approve all audit services and all non-audit services that Generex’s independent auditor is permitted to perform for Generex under applicable federal securities regulations. As permitted by the applicable regulations, the Audit Committee’s policy utilizes a combination of specific pre-approval on a case-by-case basis of individual engagements of the independent auditor and general pre-approval of certain categories of engagements up to predetermined dollar thresholds that are reviewed annually by the Audit Committee. Specific pre-approval is mandatory for the annual financial statement audit engagement, among others.

The pre-approval policy was implemented effective as of October 30, 2003. All engagements of the independent auditor to perform any audit services and non-audit services since that date have been pre-approved by the Audit Committee in accordance with the pre-approval policy. The policy has not been waived in any instance. All engagements of the independent auditor to perform any audit services and non-audit services prior to the date the pre-approval policy was implemented were approved by the Audit Committee in accordance with its normal functions

Report of the Audit Committee

The Audit Committee reviewed and discussed Generex's audited financial statements for the fiscal year ended July 31, 2016 with management. The Audit Committee discussed with MNP LLP, Generex's independent public accountants for the fiscal year ended July 31, 2016, the matters required to be discussed by Statement on Auditing Standards No. 61, as amended as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The Audit Committee received the written disclosures and the letter from MNP LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with MNP LLP its independence. Based on the review and discussions described above, among other things, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Generex's Annual Report on Form 10-K for the fiscal year ended July 31, 2016 for filing with the Securities and Exchange Commission.

Submitted by the Audit Committee

Brian T. McGee (Chairman)

The foregoing Report of the Audit Committee shall not be deemed to be soliciting material, to be filed with the SEC or to be incorporated by reference into any of Generex's previous or future filings with the SEC, except as otherwise explicitly specified by Generex in any such filing.

OTHER MATTERS

The Generex Board of Directors is not aware of any other business that may be brought before the special meeting.

Security Ownership of Certain Beneficial Owners and Management

The table on the following pages sets forth information regarding the beneficial ownership of the common stock by our directors and named executive officers (including persons who served as principal executive officer and principal financial officer during a portion of the fiscal year ended July 31, 2016) and all the named executives and directors as a group. We are not aware of any person or group that beneficially owns more than five percent of our outstanding shares of common stock.

The information contained in this table is as of ■, 2017. At that date, we had n shares of common stock outstanding.

A person is deemed to be a beneficial owner of shares if he has the power to vote or dispose of the shares. This power can be exclusive or shared, direct or indirect. In addition, a person is considered by SEC rules to beneficially own shares underlying options or warrants that are presently exercisable or that will become exercisable within sixty (60) days.

Beneficial Ownership

Name of Beneficial Owner	Number of Shares		Percent of Class

Named Executives, Directors and Nominees

Joseph Moscato⁽¹⁾		156,400		12.2	%
Mark Fletcher⁽²⁾		15,906		1	%
Brian T. McGee⁽³⁾		3,726		*
Andrew Greene⁽⁴⁾		240,000		17.5	%

Named Executives and Directors as a group (n persons)		416,532			_
Other Holders
Pharma Trials, LLC⁽⁵⁾		1,200,000		51.5	%
Alpha Capital Anstalt⁽⁶⁾		98,801		8.4	%

* Less than 1%.

(1)

Consists of 156,400 shares of common stock issuable upon the conversion of 391 shares of Series I Preferred Stock

(2)

Includes 15,606 shares and 300 options which were granted on March 8, 2010 under 2006 Plan.

(3)

Includes 286 shares, 100 options which were granted on March 8, 2010 under the 2006 Plan, 200 options issued March 25, 2011 under the 2001 Stock Option Plan, 508 options issued June 19, 2012 under the 2006 Plan, 1,413 options issued April 1, 2013 under the 2006 Plan, 328 options issued June 6, 2013 under the 2006 Plan and 891 options issued October 31, 2013 under the 2001 (400) and 2006 Plans (491).

(4)

Consists of shares of common stock issuable upon the conversation of Series H Preferred Stock held by Pharma Trials, LLC. Pharma Trials, LLC owns 3,000 shares of Series H Preferred Stock, which are convertible into an aggregate 1,200,000 shares of Common Stock. Mr. Greene owns an indirect 20% interest in Pharma Trials, LLC

(5)

Consists of 1,200,000 shares of common stock issuable upon the conversion of 3,000 shares of Series H Preferred Stock.

(6)

Incudes 1,000,000 shares of common stock and shares issuable under a Right to Shares Agreement with the between the Company and Alpha Capital Anstalt pursuant to which that holder converted 100% of preferred shares held by it and exercise 100% of the common stock purchase warrants held by it. The Company initially delivered 1,000,000 shares pursuant to The Right to Shares Agreement Those remaining shares will be delivered to the holder from time to time based on draw down notices submitted to the Company by that holder.

CERTAIN TRANSACTIONS

Changes in Control

The transactions described below under “Related Transactions” may be deemed a potential change in control of the Generex.

Review of Related Party Transactions

We presently have a policy requiring approval by stockholders or by a majority of disinterested directors of transactions in which one of our directors has a material interest apart from such director's interest in Generex. We also have a policy requiring the approval by the Audit Committee for any transactions in which a director or an executive officer has a material interest apart from such director's or officer’s interest in Generex.

Related Transactions

Brooks, Houghton & Company Engagement

In May, 2017, the Company entered into a letter agreement with Brooks, Houghton & Company, Inc. for Brooks, Houghton to serve as the Company’s exclusive financial advisor in connection with acquisitions by the Company as well as joint ventures, partnerships, strategic alliances and similar transactions. Kevin Centofanti, a nominee for election as a director of Generex at the special meeting, is the President of Brooks, Houghton.

Under the letter agreement, the Company will pay a monthly fee of $15,000, as well as a fee on completion of any acquisition, joint venture, partnership, strategic alliance or similar transaction based on the “transaction amount,” defined as the enterprise value attributed to the Company in the transaction, as follows:

• 3% of the transaction amount below $50 million

• 2.5% of the transaction amount above $50 million up to $100 million

• 2% of the transaction amount over $100 million.

The letter agreement can be terminated on 180 days’ notice.

Pharma Trials Investment

An aggregate of 1,2000,000 shares of the Company’s common stock are issuable upon conversion of the Series H Preferred Stock sold at the initial closing.

The following describes a Securities Purchase Agreement between Pharm Trails, LLC and the Company, as well as the initial issuance of 3,000 shares of Series H Preferred Stock to that investor.

On March 28, 2017, the Company entered into a securities purchase agreement with Pharma Trials, LLC pursuant to which the Company agreed to sell an aggregate of 109,000 shares of its newly designated non-voting Series H Preferred Stock (“Series H Preferred Stock”) and 6,000 shares of its newly designated Series I Preferred Stock (“Series I Preferred Stock”). Andrew Greene, a director of the Company and formerly its Chief Operating Officer, holds a 20% interest in Pharma Trails, LLC. Mr. Greene did not participate in the deliberations of the Company’s Board of Directors with respect to approval of the transactions contemplated by the securities purchase agreement.

The Series H Preferred Stock was scheduled to be sold in four tranches. At closing of the first tranche, the Company issued 3,000 shares of Series H Preferred Stock for a purchase price of $3,000,000. The proceeds of this sale were paid directly on the Company’s behalf to Emmaus Life Sciences, Inc., as an additional deposit under the Company’s letter of intent with Emmaus. The letter of intent with Emmaus was later terminated.

The closing of the sale of 6,000 shares of Series I Preferred Stock ($6,000,000) was to occur on April 17, 2017. Pharma Trials failed to close that sale, despite the Company being ready, willing and able to proceed. Under the securities purchase agreement, in the event Pharma Trails failed to purchase 100% of the shares of preferred stock at any given Closing, it lost its rights to purchase any other preferred stock. Our management made the determination that it was in the Company’s best interest to terminate Pharma Trial’s rights and on April 23, 2017 the Company notified Pharma Trials in writing that its rights to purchase additional shares were forfeit

Issuance of Series I Preferred Stock Exchange for Debt owed to Officers

As previous reported, Joseph Moscato, the Company’s President & CEO and a Director, and Lawrence Salvo, a Director, made personal unsecured cash advances to Company to permit it to pay the initial $500,000 deposit to Emmaus Life Sciences, Inc. under our Letter of Intent with Emmaus. Mr. Salvo and Mr. Moscato have made other advances to permit the Company to pay certain third party expenses in connection with the implementation of the Company’s repurposed business plan, including legal, accounting, transfer agent, Edgarization, and press release fees.

On April 26, 2017, our Board of Directors determined it appropriate to retire the Company’s indebtedness to Messrs. Moscato and Salvo by applying a 20% original issue discount to the aggregate amounts thereof and issuing shares of our Series I Convertible Preferred Stock in full and final satisfaction thereof. The Board considered the 20% original issue discount a reasonable term as it is the same as original issue discount negotiated at arm’s length with an independent investor in March, 2017. The 20% original issue discount means that the actual funds advanced by Messrs. Moscato and Salvo were 80% of the debt recognized and converted into Series I Preferred Stock. Following the Board’s decision, we issued the following shares:

391 shares of Series I Preferred Stock to Mr. Moscato to retire indebtedness of $390,983.52; and

399 shares of Series I Preferred Stock to Mr. Salvo to retire indebtedness of $399,363.22.

The $1,000 per share conversion ratio was based on the $1,000 per share cash price under the securities purchase agreement with Pharma Trails.

The Series I Preferred Stock issued to Mr. Salvo and Mr. Moscato will have a special one-time voting right exercisable at the next meeting of the Company’s stockholders. The Series I Preferred Stock, as a class, will be entitled to cast a number of votes on such proposal equal to fifty percent (50%) of the total number of votes entitled to be cast at such meeting (determined as of the record date for such meeting) by all other outstanding shares of the Company’s capital stock

Conversion and other Terms of the Series H and Series I Preferred Stock

The Series H and Series I Preferred Stock are convertible at the option of the holder at any time into shares of the Company’s common stock at an effective conversion price of $2.50 per share. An aggregate of 1,2000,000 shares of the Company’s common stock are issuable upon conversion of the Series H Preferred Stock sold to Pharma Trials. An aggregate 316,000 shares of the Company’s common stock would be issuable upon conversion of the Series I and Preferred Stock issued to Mr. Moscato and Mr. Salvo.

Neither the Series H Preferred Stock nor the Series I Preferred Stock have special dividend rights. If the Company pays dividends on its common stock, the holders of the preferred stock will receive dividends in the amount they would have received had they converted the preferred stock to common stock.

The conversion price of the preferred stock will be subject to adjustment in the case of stock splits, stock dividends, combinations of shares, similar recapitalization transactions and certain pro-rata distributions to common stockholders. In the event of a fundamental transaction, such as a merger, consolidation, sale of substantially all assets and similar reorganizations or recapitalizations, the holders of convertible preferred stock will be entitled to receive, upon conversion of their shares, any securities or other consideration received by the holders of the Company’s common stock pursuant to the fundamental transaction.

The securities purchase agreement and the certificates of designation authorizing the Series H and Series I Preferred Stock include certain agreements and covenants for the benefit of the holders of the convertible preferred stock, including restrictions on the Company’s ability to amend its certificate of incorporation and bylaws in any manner that materially and adversely affects any rights of a preferred holder, prohibition on the Company’s authorizing or issuing any class of capital stock senior to the Series H or Series I Preferred Stock in liquidation, and prohibition on the Company repurchasing more than ade minimisnumber of shares of its common stock or other junior securities.

The Series I Preferred Stock, when issued, shall have a special one-time voting right. At the first meeting of the Company’s stockholders following the initial issuance of the Series I Preferred Stock, the Series I Preferred Stock shall be entitled to vote on (i) the election of individuals to serve as members of the Board of Directors, and (ii) any proposal to increase the authorized number of shares of the Company’s common stock. The Series I Preferred Stock, as a class, shall be entitled to cast a number of votes on such proposal equal to fifty percent (50%) of the total number of votes entitled to be cast at such meeting (determined as of the record date for such meeting) by all other outstanding shares of the Company’s capital stock.

The investor has agreed in the securities purchase agreement to exercise the above rights in favor of (a) the election of Company management’s slate of directors, and (b) the Company’s proposal to increase the authorized number of shares of common stock, both as set forth in Company management’s proxy statement in respect of the first meeting of the Company’s stockholders to be held after the date hereof.

During the period commencing on the date upon which the Company’s stockholders have approved an increase in the authorized number of shares of common stock and ending on December 31, 2018, the holders of any shares issued upon conversion of the preferred stock have agreed to vote such shares in favor of Company management’s slate of directors.

The securities purchase agreement contains representations and warranties and covenants for each party, which must be true and have been performed at each closing. The Company has agreed to indemnify and hold the investor harmless against certain liabilities in connection with the issuance and sale of the convertible preferred stock and warrants under the securities purchase agreement.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires that Generex's directors and executive officers, and any persons who own more than ten percent (10%) of Generex's common stock, file with the Securities and Exchange Commission (the “SEC”) initial reports of ownership and reports of changes in ownership of common stock and other equity securities of Generex. Such persons are required by SEC regulations to furnish Generex with copies of all such reports that they file. To the knowledge of Generex, based upon its review of these reports, all Section 16 reports required to be filed by its directors and executive officers during the fiscal year ended July 31, 2016 were filed on a timely basis.

OTHER INFORMATION

Stockholder Proposals for the Next Annual Meeting

Any proposals of stockholders intended to be presented at the 2017 annual meeting of stockholders must be received by Generex at 4145 North Service Road, Suite 200, Burlington, Ontario, Canada L7L 6A3, no later than a reasonable time before Generex begins to print and distribute its proxy materials in order to be included in the proxy materials and form of proxy relating to such meeting. It is suggested that stockholders submit any proposals by an internationally recognized overnight delivery service to the Secretary of Generex at its principal executive offices located at 4145 North Service Road, Suite 200, Burlington, Ontario, Canada L7L 6A3. Such proposal must meet the requirements set forth in the rules and regulations of the SEC in order to be eligible for inclusion in the proxy materials for such meeting. The 2017 annual meeting is scheduled to take place on August 5, 2017.

For business to be properly brought before the 2017 annual meeting by a stockholder in a form other than a stockholder proposal requested to be included in Generex’s proxy materials, any stockholder who wishes to nominate a person for election as director or bring another item of business before the annual meeting of stockholders must give notice of such intention to nominate or other business item in writing to the Secretary of Generex not less than 60 nor more than 90 days prior to the annual meeting. In the event that less than 70 days’ notice or prior disclosure of the date of the meeting is given or made to stockholders, notice of such nomination or business to be timely must be received by the Secretary of Generex not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. The stockholder's notice of such nomination or business must provide information about the nominee, the nature of the other business and the stockholder proposing such nomination or business, as required by Generex's bylaws. A copy of these bylaw requirements will be provided upon request in writing to David Brusegard, Secretary, at the principal offices of Generex.

If there should be any change in the foregoing submission deadlines, Generex intends to publicly disseminate information concerning the change.

Appendix A

AUDIT COMMITTEE CHARTER

The Audit Committee (the "Committee") is appointed by the Board of Directors (the "Board") to assist the Board in monitoring (1) the integrity of the Company's financial statements and reports and (2) the independence and performance of the Company's auditors. The Committee shall be solely responsible for the appointment, compensation, retention and oversight of the work of any independent auditors employed by the Company for the purpose of preparing or issuing an audit report or related work. The independent auditor so employed shall report directly to the Committee.

The Committee shall pre-approve all auditing and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditor, subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which are approved by the Committee prior to the completion of the audit. The Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that such delegation is in compliance with Section 10A(i)(3) of the Exchange Act and the rules thereunder and decisions of such subcommittees to grant pre-approvals shall be presented to the Committee at its next scheduled meeting. The Committee shall not delegate its responsibilities to pre-approve services performed by the independent auditors to management.

The Committee shall have the authority to retain independent legal, accounting or other consultants or advisors to advise it. The Committee shall have the authority to request any officer or employee of the Company or the Company's outside counsel, auditor or other consultant or advisor to attend a meeting of the Committee or to meet with any members of, or consultants or advisors to, the Committee. The Company shall provide sufficient funds to the Committee for the retention, use or employment of any legal, accounting or other consultant or advisor by the Committee that is necessary for the Committee to carry out its duties under this Charter.

The Committee shall:

Review and reassess the adequacy of this Charter from time to time and recommend any proposed changes to the Board for approval.

Review the Company's annual audited financial statements with management and the Company's independent auditor, including major issues regarding accounting and auditing principles and practices.

Review with management and the Company's independent auditor any significant financial reporting issues and judgments observed by or brought to the attention of the Committee relative to the preparation of the Company's financial statements.

Review the Company's quarterly financial statements prior to the filing of its Form 10-Q.

Review any proposed major changes to the Company's auditing and accounting principles prior to their adoption.

Receive periodic reports from the Company's independent auditor regarding the auditor's independence, discuss such reports with the auditor, and recommend any Board action deemed necessary and appropriate by the Committee to assure the independence of the auditor.

Ensure the rotation of the audit partners of the independent auditor to the extent required by law.

Recommend to the Board policies for the Company's hiring of employees, or former employees, of the Company's independent auditor who participated in any capacity in the audit of the Company, prior to the Company's hiring any such persons.

A-1

Review and discuss reports from the independent auditor on: (a) all critical accounting policies and practices to be used; (b) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and (c) other material communications between the independent auditor and management.

10.

Discuss with the independent auditor the matters required to be discussed with the Committee by the independent auditor under Statement on Auditing Standards No. 61 relating to the conduct of the audit of the Company's financial statements.

11.

Review with the Company's independent auditor any problems or difficulties the auditor may have encountered, as well as any management letter provided by the auditor and the Company's response to that letter.

12.

Review and discuss with management, the independent auditor and the Controller: (a) the adequacy and effectiveness of the Company's internal controls (including any significant deficiencies and significant changes in internal controls reported to the Committee by the independent auditor or management); (b) the Company's internal audit procedures; and (c) the adequacy and effectiveness of the Company's disclosures controls and procedures, and management reports thereon.

13.

Review disclosures made to the Committee by the Company's Chief Executive Officer and Chief Financial Officer during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Company's internal controls.

14.

Prepare the report required by the rules of the Securities and Exchange Commission to be included in the Company's annual proxy statement.

15.

Review with the Company's attorneys such legal matters as the Committee determines may have a material impact on the Company's financial statements.

16.

Evaluate together with the Board the performance of the Company's independent auditor.

17.

Review the appointment and any replacements of the Company's principal accounting officer.

18.

Establish procedures for the receipt, retention and treatment of complaints received regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

The Committee shall consist of no fewer than three members. Each member of the Committee shall be independent and shall have the ability to read and understand financial statements, including the Company's balance sheet, income statement and cash flow statement. For purposes of this Charter, to be considered "independent" a Committee member: (1) must meet the independence requirements of the NASDAQ Stock Market, Inc. and any U.S. Securities and Exchange Commission regulation applicable to the Company; and (2) may not, other than in his or her capacity as a member of the Committee, (a) accept any consulting, advisory or other compensatory fee from the Company or any subsidiary thereof, or (b) be an affiliated person of the Company or any subsidiary thereof.

Committee members shall be members of the Board of the Company and shall be nominated and elected by the full Board annually. The full Board shall promptly fill vacancies that may occur on the Committee. At least one member of the Committee shall have past employment experience in finance or accounting, or comparable experience or background (including, for example, being or having been a chief executive officer, chief financial officer or other senior corporate officer with financial oversight responsibilities) which results in such member having financial sophistication. The qualifications of Committee members shall be determined by the full Board.

A-2

Meetings of the Committee may be called from time to time by the Chairman or any two members of the Committee upon not less than seventy-two (72) hours prior notice (which may but need not state the business intended to be conducted at the meeting), provided that a meeting may be held without such notice if all members are present or, if absent, waive notice of the meeting. A majority of the members of the Committee shall constitute a quorum for the purpose of taking any action upon any matter than may come before it, and the Committee may take any action which it is authorized to take as a committee without the necessity of a meeting if all members of the Committee consent in writing in accordance with Section 141(f) of the Delaware General Corporation Law. The Chairman of the Committee shall promulgate such other rules or procedures as he or she deems necessary or appropriate for the proper and efficient conduct of the business of the Committee.

While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company's financial statements are complete and accurate and in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditor. Nor is it the duty of the Committee to conduct investigations, to resolve disagreements, if any, between management and the independent auditor or to assure the Company's compliance with laws and regulations relating to financial disclosure or any other area.

A-3

Appendix B

FORM OF CERTIFICATE OF AMENDMENT

RESTATED CERTIFICATE OF INCORPORATION

GENEREX BIOTECHNOLOGY CORPORATION

Generex Biotechnology Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”),

DOES HEREBY CERTIFY:

FIRST: That, in accordance with Section 242 of the DGCL, the Board of Directors of Generex Biotechnology Corporation (the “Corporation”), by unanimous written consent filed with the minutes of the Board of Directors, duly adopted by resolution the amendment (the “Amendment”) to the Corporation’s Restated Certificate of Incorporation (the “Certificate of Incorporation”) and directed that said Amendment be submitted to the stockholders of the Corporation for consideration.

SECOND: That thereafter, the holders of a majority of the outstanding stock of the Corporation entitled to vote thereon approved the Amendment at a special meeting of the Corporation’s stockholders in accordance with Section 242 of the DGCL.

THIRD: Effective upon the filing of this Certificate of Amendment with the Delaware Secretary of State, the Certificate of Incorporation is hereby amended by deleting Article FOURTH in its entirety and replacing it with the following:

“FOURTH: The aggregate number of shares of all classes of stock that this Corporation shall have the authority to issue is 751,00,000 shares, consisting of 750,000,000 shares of common stock, par value $.001 per share, and (b) 1,000,000 shares of preferred stock, par value $.001 per share. The preferred stock may be issued in one or more series and may have preferences as to dividends and to liquidation of the Corporation. The Board of Directors of the Corporation shall establish the specific rights, preferences, voting privileges and restrictions of such preferred stock or any series thereof.

FOURTH: Effective upon the filing of this Certificate of Amendment with the Delaware Secretary of State, the Certificate of Incorporation is hereby amended by deleting Article FIRST in its entirety and replacing it with the following:

FIRST: The Name of the Corporation is NuGenerex Biotechnology Holdings, Inc.

FIFTH: This Certificate of Amendment will be effective upon filing.

IN WITNESS WHEREOF, Generex Biotechnology Corporation has caused this Certificate of Amendment to the Restated Certificate of Amendment to be signed by Joseph Moscato, its President & Chief Executive Officer, this day of June, 2017.

		GENEREX BIOTECHNOLOGY CORPORATION

	By:
		Joseph Moscato
		President & Chief Executive Officer

B-1

Appendix C-1

HEMA DIAGNOSTIC SYSTEMS, LLC

FINANCIAL STATEMENTS

C-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Hema Diagnostics Systems, LLC

Miramar, Florida

We have audited the accompanying combined balance sheets of Hema Diagnostics Systems, LLC, Hema Diagnostics Systems Panama, PTY and Rapid Medical Diagnostics, Corp. as of December 31, 2015 and 2014, and the related combined statements of operations, owners’ deficit, and cash flows for the two years then ended. These combined financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these combined financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall combined financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of Hema Diagnostics Systems, LLC, Hema Diagnostics Systems Panama, PTY and Rapid Medical Diagnostics, Corp. as of December 31, 2015 and 2014, and the results of its combined operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred negative working capital and cash flows; and has suffered recurring losses from operations; which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Liggett & Webb, P.A.

Boynton Beach, Florida

November 7, 2016

C-2

HEMA DIAGNOSTIC SYSTEMS, LLC and ASSOCIATES

Combined Balance Sheets

	December 31,
	2015			2014
ASSETS
CURRENT ASSETS:
Cash	$	29,928		$	40,499
Accounts receivable, net		5,604			91
Inventory, net		29,303			41,575
Advances and loans receivable		928,174			782,723
TOTAL CURRENT ASSETS		993,009			864,888

PROPERTY AND EQUIPMENT, NET		12,936			22,767
OTHER ASSETS, NET		38,265			40,829

TOTAL ASSETS	$	1,044,210		$	928,484


LIABILITIES AND OWNERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	368,618		$	367,176
Accrued interest		81,924			54,669
Customer deposits		59,775			59,775
Loan payables - shareholder		14,144,391			14,144,391
Due to affiliates, net		81,054			83,225
Other current liabilities		21,689			29,040
TOTAL CURRENT LIABILITIES		14,757,451			14,738,276

COMMITMENTS AND CONTINGENCIES

OWNERS' DEFICIT:
Owners equity		5,856,329			4,745,329
Accumulated deficit		(19,569,570	)		(18,555,121	)
TOTAL OWNERS' DEFICIT		(13,713,241	)		(13,809,792	)

TOTAL LIABILITIES AND OWNERS' DEFICIT	$	1,044,210		$	928,484

See accompanying notes to the combined financial statements

C-3

HEMA DIAGNOSTIC SYSTEMS, LLC and ASSOCIATES

Combined Statements of Operations


	For the Years Ended December 31,
	2015			2014
REVENUES, NET	$	5,703		$	18,025

COST OF REVENUES		990			9,788

GROSS PROFIT		4,713			8,237

OPERATING EXPENSES
Selling and Marketing Expenses		55,750			58,202
Research and Development		534,809			527,257
General and Administrative Expenses:
Personnel expense		257,998			256,185
Professional fees		16,216			28,965
Facilities		70,617			64,085
Other general and administrative expenses		55,260			47,456
TOTAL OPERATING EXPENSES		990,652			982,150

LOSS FROM OPERATIONS		(985,939	)		(973,913	)

OTHER INCOME (EXPENSE)
Interest income (expense), net		(24,778	)		(25,616	)
Other income (expense), net		(3,732	)		—
TOTAL OTHER INCOME (EXPENSE)		(28,510	)		(25,616	)


NET LOSS	$	(1,014,449	)	$	(999,529	)

See accompanying notes to the combined financial statements

C-4

HEMA DIAGNOSTIC SYSTEMS, LLC and ASSOCIATES

Combined Statements of Owners’ Deficit



				For the Years ended December 31, 2015 and 2014
	Common Stock
	Shares		Amount		Owners’ Equity		Accumulated Deficit			Total Owners’ Deficit
BALANCE AT JANUARY 1, 2014	100	$	0	$	4,745,329	$	(17,555,592	)	$	(12,810,263	)
Net Loss	—		—		—		(999,529	)		(999,529	)
BALANCE AT DECEMBER 31, 2014	100		0		4,745,329		(18,555,121	)		(13,809,792	)
Capital contribution	—		—		1,111,000		—			1,111,000
Net Loss	—		—		—		(1,014,449	)		(1,014,449	)
BALANCE AT DECEMBER 31, 2015	100	$	0	$	5,856,329	$	(19,569,570	)	$	(13,713,241	)

See accompanying notes to the combined financial statements

C-5

HEMA DIAGNOSTIC SYSTEMS, LLC and ASSOCIATES

Combined Statements of Cash Flows

	For the Year Ended December 31,
	2015			2014
CASH FLOW FROM OPERATING ACTIVITIES:
NET LOSS	$	(1,014,449	)	$	(999,529	)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED
IN OPERATING ACTIVITIES:
Depreciation and amortization		11,775			9,284
Allowance for inventory obsolesence		7,750			—
Loss on disposal of fixed asset		620			—
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable, net		(5,513	)		1,184
(Increase) decrease in inventory		4,522			6,697
Increase in accounts payable		(2,828	)		2,932
Accrued interest		27,254			28,930
Increase in customer deposits		—			(2,025	)
Net cash used in operating activities		(970,869	)		(952,527	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Employee loans		(145,451	)		(129,013	)
Purchase of fixed assets		—			(1,659	)
Due to affiliates		3,773			(329	)
Net cash used in investing activities		(141,678	)		(131,001	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shareholder loans		—			1,117,873
Repayment of line of credit		(3,080	)		(5,329	)
Repament of shareholder loan		(5,944	)		(5,944	)
Capital contributions		1,111,000			—
Net cash provided by financing activities		1,101,976			1,106,600

NET CHANGE IN CASH		(10,571	)		23,072

CASH AT THE BEGINNING OF THE PERIOD		40,499			17,427
CASH AT THE END OF THE PERIOD	$	29,927		$	40,499

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes	$	—		$	—
Interest	$	30,687		$	30,903

Non Cash Investing and Financing

During 2015, $296,369 of amounts due from Hema Diagnostics Systems Panama was transferred to our founder and shareholder as partial satisfaction of a balance due him by Hema Diagnostics.

See accompanying notes to the combined financial statements

C-6

HEMA DIAGNOSTIC SYSTEMS, LLC and ASSOCIATES

Notes to Combined Financial Statements

NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS

The Combined Financial Statements of Hema Diagnostic Systems, LLC and Associates (collectively the “Company”) include the accounts of Hema Diagnostic Systems, LLC; Hema Diagnostics Systems Panama, PTY and Rapid Medical Diagnostics, Corp as the entities are under common control and management. All transactions and accounts between and among the entities have been eliminated. The Company has evaluated subsequent events through November 7, 2016, which is the date the Combined Financial Statements were available to be issued.

HEMA DIAGNOSTIC SYSTEMS, LLC (“HDS”), was founded to market and distribute certain third party medical testing device technology. When new and innovative medical device testing technology became available that was both proprietary from and competitive to the previous third party technology, the principals decided to pursue the commercialization of the new technologies. HDS, a Florida limited liability corporation founded December 14, 2000 and began operations in 2002 to perform product research and development, create distribution channels and sales and marking and administration functions and is currently commercializing the new proprietary medical testing device patents and technology. HDS has not yet begun to generate significant revenues and is still in the process of perfecting production techniques and obtaining the appropriate certifications for a series of medical devices that will be able to detect certain diseases quickly and cost effectively.

HEMA DIAGNOSTICS SYSTEMS PANAMA, PTY (“HDP”) was established to distribute HDS products in Central and South America. HDS operates as the administration and disbursing arm for HDP. HDS is affiliated with HDP through common ownership and operates under a Management Services Agreements (“MSA”) that provides for the reimbursement of expenses incurred by HDS on behalf of its affiliates. HDS receives a service fee for performing these administration services as specified in the MSA agreements. The affiliate’s ability to repay HDS for funds advanced on their behalf, is entirely dependent on the successful commercialization of Rapid Medical Diagnostics technology and the resulting royalty payments generated there from. In late 2015, HDP’s balance due to HDS of $295,564 was transferred to a founder and shareholder as partial satisfaction in the balance due to him by HDS.

RAPID MEDICAL DIAGNOSTICS, CORP. (“RMD”) was established to develop products and hold patents for HDS and is affiliated with HDS through common ownership and management. HDS operates as the administration and disbursing arm of RMD in accordance with a Management Services Agreements (“MSA”) between the parties that provides HDS a service fee for performing these administrative and disbursing services. Consequently, HDS records substantial amounts due from RMD as a result of transactions disbursed by HDS on RMD’s behalf. RMD’s ability to repay HDS for funds advanced on its behalf, is entirely dependent on the successful commercialization of RMD patents and technologies by HDS and the resulting royalty payments generated there from. RMD has licensed its patents and technologies exclusively to HDS, which will entitle RMD to receive royalties from HDS once those technologies achieve commercial viability (see Note 8). To date there has been no royalty paid to or earned by RMD. Correspondingly, HDS has waived its right to receive service fees under the MSA until HDS successfully commercializes RMD’s licensed technologies. In late 2013, RMD’s balance due to HDS of approximately $632,000 was transferred to a founder and shareholder as partial satisfaction of the balance due to him by HDS.

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NOTE 2. GOING CONCERN

The accompanying combined financial statements have been prepared assuming that the Company will continue as a going concern. The Company generated net losses of approximately $1,014,000 and $1,000,000 for the years ended December 31, 2015 and 2014, respectively. The net loss incurred in 2015 has resulted in an accumulated deficit of approximately $19,570,000 and a total Owners’ deficit of approximately $13,713,000 at December 31, 2015. Financing activities provided approximately $1,111,000 during 2015, which was primarily due to additional capital contribution from a shareholder. During 2016, the Company continues to incur losses and require cash advances.

In response to the losses incurred in 2015, the Company continues to constantly evaluate and monitor its cash needs and existing cash burn rate, in order to make adjustments to its operating expenses. Cash on hand was approximately $30,000 at December 31, 2015.

No assurances can be given that the Company will achieve success in obtaining sufficient levels of end user sell-through necessary to fully sustain its operations, without seeking additional financing. There also can be no assurances that additional financing, if required, can be obtained, or obtained on reasonable terms acceptable to the Company.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of combined financial statements in accordance with accounting principles generally accepted in the United States of America (“US-GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates. Estimates which are particularly significant to the financial statements include estimates relating to the determination of impairment of assets, the useful life of property and equipment and the recoverability of advances.

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NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cashandcashequivalents

TheCompany considersshort-term interestbearing investmentswith initialmaturitiesof threemonthsorlesstobe cash equivalents. The Company has no cash equivalents at December 31, 2015 and 2014.

Inventory

Inventory is stated at the lower of cost or net realizable value. Cost is determined using the Weighted Average method. The Company periodically evaluates its inventory for any obsolete or slow moving items based on production lot# and advances in production design or technology. Any inventory determined to be obsolete or slow moving is removed from inventory and disposed or a provision is made to reduce slow moving inventory to its net realizable value. At December 31, 2015 and 2014, the Company recorded a reserve for obsolescence of $7,750 and $0, respectively.

Propertyandequipment

Propertyand equipmentconsistsoffurniture andoffice equipment,and isstated at cost lessaccumulateddepreciation. Depreciation isdeterminedbyusingthe200% double declining method for equipment and the straight- linemethodfor leasehold improvements,over theestimateduseful livesof therelated assets,generallyfive tofifteen years.

Expenditures for repairs and maintenance of equipment are charged to expense as incurred. Major replacements and betterments are capitalized and depreciated over the remaining useful lives of the related assets.

Intangible assets, net

The Company’s intangible assets consist of patent patented technology. Amortization is computed by applying the straight line method based on the remaining patent life. The primary patent expires in 2026.

Impairment of Long-Lived Assets

The Company evaluates long-lived assets for impairment, including property, plant and equipment and intangible assets, when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable or the assets are being held for sale. Upon the occurrence of a triggering event, the asset is reviewed to assess whether the estimated undiscounted cash flows expected from the use of the asset plus the residual value from the ultimate disposal exceeds the carrying value of the asset. If the carrying value exceeds the estimated recoverable amounts, the asset is written down to the estimated fair value. Any resulting impairment loss is reflected on the Combined Statements of Operations.

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NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue recognition

The Company has yet to fully commercialize its products and secure appropriate permits and licenses necessary to begin full worldwide distribution. The Company has had negligible sales to date, primarily related to trial samples and evaluation of the efficacy and suitability of the products to specific target markets.

Sales and the related cost of sales are recognized primarily upon shipment of products (normally when title passes). The Company’s revenue recognition policies are in compliance with ASC Topic 605, which establishes criteria that must be satisfied before revenue is realized or realizable and earned.

The Company recognizes revenue when all of the following four criteria are met:

• persuasive evidence of a sales arrangement exists,

• delivery has occurred,

• the sales price is fixed or determinable and

• collectability is probable.

Income taxes

Hema Diagnostic Systems, LLC is a limited liability corporation. Rapid Medical Diagnostic Corp. is a Subchapter S corporation. Federal and state income tax regulations do not require a limited liability corporation or a Subchapter S corporation to pay income taxes. Rather each member’s allocable share of the profit or loss is reported in each member’s individual income tax return. Hema Diagnostics Systems Panama, PTY is a Panamanian company. Due to its operational losses, no taxes are required. Accordingly, no provision or liability for income taxes is reflected for this reporting entity in the accompanying financial statements. The Company’s 2012 – 2015 tax returns remain subject to examination by federal, state or foreign tax authorities.

Risks and uncertainties

The Company’s business could be impacted by continuing price pressure on its product manufacturing, acceptance of its products in the market place, new competitors, changing federal and/or state legislation, new technologies and other factors. Adverse changes in these areas could negatively impact the Company’s financial position, results of operations and cash flows.

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NOTE 4. RECENTLY ISSUED ACCOUNTING STANDARDS AND DEVELOPMENTS

Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Company’s future consolidated financial statements. The following are a summary of recent accounting developments.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810)—Amendments to the Consolidation Analysis (“ASU 2015-02”), which provides guidance on evaluating whether a reporting entity should consolidate certain legal entities. Specifically, the amendments modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities. Further, the amendments eliminate the presumption that a general partner should consolidate a limited partnership, as well as affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. A reporting entity may apply the amendments using a modified retrospective approach or a full retrospective application. The Company is currently evaluating the impact, if any, that adopting ASU 2015-02 will have on its combined financial statements.

In February 2016, the FASB issued ASU 2016-02,Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

In March 2016, the FASB issued ASU 2016-09,Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which relates to the accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

There were various other accounting standards and interpretations issued in 2015, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows.

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NOTE 5. INVENTORY

Inventory at December 31, 2015 and 2014 consisted of the following:

Inventory
	2015			2014
Production materials	$	30,281		$	37,175
Sub-assemblies		5,001			1,900
Finished goods		1,771			2,500
		37,053			41,575
Less: Obsolesence reserve		(7,750	)		—
	$	29,303		$	41,575

Production materials -Consists of certain subcomponents fabricated by outside third parties as well as other components purchased in bulk quantities. The carrying value of these units reflects their direct acquisition cost along with associated transportation costs to the Company’s assembly and packaging facilities.

Sub-assemblies -Consists of units partially completed on the assembly line or by outside third parties. The carrying value of these units includes all direct material and labor costs involved to complete the associated assembly.

Finished goods -Consists of completed units in market ready packaging. The carrying value of these units include the cost of components and materials, labor necessary to assemble them.

Obsolescence reserve -Management evaluated the inventory at December 31, 2015 and 2014 and provided an allowance for obsolescence of $7,750 and $0, respectively, primarily associated with production materials and sub-assemblies. Management’s evaluation for obsolescence includes identifying materials and components that are not currently or likely to be used in production in the near future as well as tracking certain components by lot number and expiry date.

NOTE 6. ADVANCES and LOANS RECEIVABLE

Advances and Loans Receivable as of December 31, 2015 and 2014 consisted of the following:

Other Current Assets
	2015		2014
Advances to officer	$	893,372	$	749,580
Advances to management		20,635		17,253
Advances to employees		14,167		15,890
	$	928,174	$	782,723

Advance to officer - Consists of funds advanced to the Company’s President and CEO, board member and shareholder. During September 2016, the advance to officer of $893,372 was repaid in full.

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NOTE 6. ADVANCES and LOANS RECEIVABLE (continued)

Advances to management - Consists of funds advanced to the Director of Latin American Sales, board member and shareholder. During October 2016, $14,735 was repaid.

Loans to employees - Consists of funds loaned primarily to one employee. That employee has arranged a payback schedule and commencing in August 2016 began making agreed payments of approximately $950 per month.

NOTE 7. PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 2015 and 2014 consisted of the following:

Fixed Assets
	Estimated Useful Lives	2015			2014
Computer Equipment & Software	5 yrs 200DDB	$	10,244		$	15,360
Equipment	5 yrs 200DDB		47,148			44,364
Furniture	7 yrs 200DDB		1,402			1,402
Lab Equipment	5 yrs 200DDB		23,220			70,166
Leasehold Improvements	15 yrs SL		40,445			40,445
Office Equipment	5 yrs 200DDB		1,990			4,206
Tools	5 yrs 200DDB		12,191			183,495
Total			136,640			359,438
Less Accumulated Depreciation			(123,704	)		(336,671	)
Property and Equipment, net		$	12,936		$	22,767

Depreciation expense for the years ended December 31, 2015 and 2014 totaled $9,212 and $5,840 respectively. Equipment additions during the year ended December 31, 2015 and 2014 were $0 and $1,659, respectively.

NOTE 8. OTHER ASSETS

Other assets as of December 31, 2015 and 2014 consisted of the following:

Other Assets
	2015			2014
Deposits	$	8,362		$	8,362
Patents		51,274			51,274
Less Amortization		(21,371	)		(18,807	)
	$	38,265		$	40,829

Amortization expense for the years ended December 31, 2015 and 2014 totaled $2,563 and $3,444 respectively. The Company has several patents most of which are dormant as the Company lacks the funds to properly commercialize them. The current products and planned future products rely on the “Express” patent, the costs of which are reflected above. This patent expires in 2026.

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NOTE 9. LOAN PAYABLE - SHAREHOLDER

The Company received substantially all of its funding from its primary shareholder, who owns 98.9% of the Company as of December 31, 2015 and 2014. The Company borrowed $0 and $1,117,873 during the year ended December 31, 2015 and 2014, respectively. The loan is unsecured, payable on demand and earns interest at 0.21%. Accordingly, the Company recorded interest expense of $27,255 and $28,083 during the year ended December 31, 2015 and 2014, respectively.

NOTE 10. TRANSACTIONS with AFFILIATES

Transactions with affiliates as of December 31, 2015 and 2014 consisted of the following:

DTFAffiliates
	2015			2014
Due from CWW	$	83,554		$	83,554
Due from IDMS		(2,500	)		—
Due from PROVET LABS		—			(329	)
		81,054			83,225
Less: Allowance		—			—
	$	81,054		$	83,225

China World Wide (CWW) -was established 25 years ago to distribute certain third party products that are not competing with HDS products. HDS is affiliated with CWW through common ownership. From inception through 2007, CWW provided supplemental funding to HDS on a non-interest basis. At December 31, 2015 and 2014, HDS had an unpaid balance to CWW of $83,554. CWW has also assisted HDS in the development of its distribution and sourcing in China.

International Diagnostics and Medical Supply Corp. (IDMS) -was established 2 years ago to create hemodialysis facilities on a global scale. These services will not compete with HDS products. HDS is affiliated with IDMS through common ownership. Do to the high initial cost of establishing a hemodialysis facility, IDMS has not yet secured satisfactory funding to execute its business plan. Consequently, it has only engaged in minimal organizational activities. At December 31, 2015 HDS had an unpaid balance due from IDMS of $2,500 advanced to IDMS for legal fees incurred.

ProVet Labs (PROVET) -was established 7 years ago to provide rapid dialysis products for veterinary use. These services will not compete with HDS products. HDS is affiliated with PROVET through common ownership. PROVET has not yet secured satisfactory funding to execute its business plan. Consequently, it has only engaged in minimal organizational activities. At December 31, 2014 HDS had an unpaid balance due from PROVET of $329 advanced to PROVET for business licenses.

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NOTE 11. LICENSES and PATENTS

All patents and licenses are held by Rapid Medical Diagnostics Corporation, an affiliate company through common owners. HDS licenses the rights to certain technologies used in the development, manufacture and commercialization of its products from RMD. Agreements covering these license arrangements were entered into on January 1, 2005 for a term of five years and may be automatically renewed annually, unless either party gives notice 60 days prior to the renewal date. To date the agreements have been renewed annually and are currently in effect. These agreements provide for royalties between the parties, once a commercialized product is marketed and begins distribution.

NOTE 12. COMMITMENTS and CONTINGENCIES

Legal contingencies

From time to time, the Company may be a defendant in pending or threatened legal proceeding arising in the normal course of its business. Management is not aware of any pending, threatened or asserted claims.

Lease commitments

Leases
	2016		2017		2018		2019		2020 and beyond		Total
HDS Office Lease	$	13,696	$	6,979	$	—	$	—	$	—	$	20,675
Auto Lease		12,259		11,789		11,789		3,930				39,767
Computer Equipment												—
Lease #1		3,291		823								4,114
Lease #2		1,663		1,663		139						3,465
	$	30,909	$	21,254	$	11,928	$	3,930	$	—	$	68,021

HDS Office Lease– Business lease for 5,627 square feet of office and storage space located at 10102 USA Today Way, Miramar FL 33025. The lease term is from May 12, 2012 through June 30, 2017. Having previously been extended, the lease provides no further renewal option. The above payment commitments reflect base rent, estimated common are maintenance costs and applicable sales tax.

Auto Lease– Closed end vehicle lease which called for 39 monthly payments of $1,099.85 for our CEO and President which expires in April of 2016 was replaced with a similar closed end vehicle lease which calls for 36 monthly payments of $982.39 expires April 7, 2019. The above payment commitments reflect both vehicle leases.

Computer Lease– Two leases were originated with the same supplier to provide office computer equipment. Lease #1 calls for 36 monthly payments of $274.21 commencing April 1, 2014 and expiring on March 31, 2017. Lease #2 calls for 36 monthly payments of $138.61 commencing February 19, 2015 and expiring on February 18, 2018.

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NOTE 13. CUSTOMER and SUPPLIER CONCENTRATION

Customer concentration –The Company is currently in the process of commercializing its products and as of December 31, 2015 has not begun any substantial sales or marketing efforts. Accordingly, the Company has recorded only marginal sales to date, which were not of sufficient size to classify the customer as significant to the Company’s revenue. Those marginal sales primarily reflect instances where samples and trial products were shipped at a billable value.

Supplier concentration –As the Company is in the process of commercializing its products, the bulk of its purchasing activities are focused on regulatory, legal and consulting services rather than production or branding activities. As to production activities, alternate suppliers of components and raw materials are readily available should the need arise. Legal and consulting services generally relate to intellectual property, regulatory matters and financial consulting. There are a range of alternate consultants available to the Company should the need arise.

NOTE 14. SUBSEQUENT EVENTS

Advances to Shareholder/CEO -As of December 31, 2015, the Company had advanced $893,372 to its Shareholder/CEO. In September 2016, the Shareholder/CEO repaid the advances in full.

Loans from shareholder -During the period from January 1, 2016 through November 7, 2016, the Company has received an additional capital contribution of $884,500 from its principal shareholder. The Company also repaid $898,664 of the outstanding debt, bringing the total balance outstanding to $13,245,737. The loan bears interest at 0.21% in 2015, which was raised to 0.75% for 2016 and is payable on demand.

Letter of intent to be acquired (LOI) -On August 26, 2016 the Company received a Letter of Intent (“LOI”) from Generex Biotechnology Corporation (“Generex”) to acquire the Company. Generex is a registrant under the Securities and Exchange Act of 1934. Its common stock is traded over the counter under the symbol “GNBT”. The terms of the agreement provide that:

•

HDS will –

issue a dedicated class of first ranking voting preferred securities representing 51% of the outstanding equity of the Company to Generex

deliver Stephen Berkman’s full and final release of all indebtedness owed by HDS and its affiliates to Generex

•

Generex will –

issue $250,000 worth of Generex restricted common stock plus 250,000 of restricted common shares to Stephen Berkman

also issue a warrant to acquire up to 15,000,000 shares of Generex common stock to Stephen Berkman

grant Stephen Berkman one seat on the Generex Board of Directors

If at any time during 36 months following the closing date, the aggregate value of the stock consideration is equal to or exceeds $15,000,000, be entitled to acquire 100% of the outstanding equity securities of HDS for $1.00.

This LOI expires on November 30, 2016.

C-16

HEMA DIAGNOSTIC SYSYTEMS, LLC and ASSOCIATES

CONDENSED COMBINED Unaudited Financial Statements

TABLE OF CONTENTS

		Page
Unaudited Financial Statements as of and for the Nine Months Ended September 30, 2016 and 2015

Condensed Combined Balance Sheets as of September 30, 2016 (unaudited) and December 31, 2015		F-16

Unaudited Condensed Combined Statements of Operations for the nine months ended September 30, 2016 and 2015		F-17

Unaudited Condensed Combined Statements of Changes in Owners’ Equity for the period from January 1, 2016 through September 30, 2016		F-18

Unaudited Condensed Combined Statements of Cash Flows for the nine months ended September 30, 2016 and 2015		F-19

Notes to Condensed Combined Unaudited Financial Statements		F-20

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HEMA DIAGNOSTIC SYSTEMS, LLC and ASSOCIATES

Condensed Combined Balance Sheets

	September 30,			December 31,
	2016 (unaudited)			2015
ASSETS
CURRENT ASSETS:
Cash	$	25,441		$	29,928
Accounts receivable, net		7,571			5,604
Inventory, net		33,524			29,303
Advances and loan receivables		113,128			928,174
TOTAL CURRENT ASSETS		179,664			993,009

PROPERTY AND EQUIPMENT, NET		6,640			12,936
OTHER ASSETS, NET		36,343			38,265

TOTAL ASSETS	$	222,647		$	1,044,210


LIABILITIES AND OWNERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	425,128		$	368,618
Accrued interest		158,788			81,924
Customer deposits		59,775			59,775
Loan payables - shareholder		13,260,472			14,144,391
Due to affiliates		80,504			81,054
Other current liabilities		25,994			21,689
TOTAL CURRENT LIABILITIES		14,010,661			14,757,451

COMMITMENTS AND CONTINGENCIES

OWNERS' DEFICIT:
Owners equity		6,740,829			5,856,329
Accumulated deficit		(20,528,843	)		(19,569,570	)
TOTAL OWNERS' DEFICIT		(13,788,014	)		(13,713,241	)

TOTAL LIABILITIES AND OWNERS' DEFICIT	$	222,647		$	1,044,210

See accompanying notes to the condensed combined unaudited financial statements

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HEMA DIAGNOSTIC SYSTEMS, LLC and ASSOCIATES

Condensed Combined Statements of Operations

(Unaudited)

	For the Nine Months Ended September 30,
	2016			2015
REVENUES, NET	$	16,963		$	4,828

COST OF REVENUES		12,414			2,788

GROSS PROFIT		4,549			2,040

OPERATING EXPENSES
Selling and Marketing Expenses		32,197			57,029
Research and Development		407,609			384,100
General and Administrative Expenses:
Personnel expense		212,920			193,220
Professional fees		147,787			6,428
Facilities		52,222			53,166
Other general and administrative expenses		36,613			32,272
TOTAL OPERATING EXPENSES		889,348			726,215

LOSS FROM OPERATIONS		(884,799	)		(724,175	)

OTHER INCOME (EXPENSE)
Interest income (expense), net		(79,572	)		(24,874	)
Other income (expense), net		5,098			2,445
TOTAL OTHER INCOME (EXPENSE)		(74,474	)		(22,428	)


NET LOSS	$	(959,273	)	$	(746,603	)

See accompanying notes to the condensed combined unaudited financial statements

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HEMA DIAGNOSTIC SYSTEMS, LLC and ASSOCIATES

Condensed Combined Statements of Owners’ Deficit

For The Nine months ended September 30, 2016

(Unaudited)

	Common Stock
	Shares	Amount		Owners’ Equity		Accumulated Deficit			Total Owners’ Deficit
BALANCE AT JANUARY 1, 2016	100	0	$	5,856,329	$	(19,569,570	)	$	(13,713,241	)
Capital contribution	—	—		884,500		—			884,500
Net Loss	—	—		—		(959,273	)		(959,273	)
BALANCE AT SEPTEMBER 30, 2016	100	0	$	6,740,829	$	(20,528,844	)	$	(13,788,014	)

See accompanying notes to the condensed combined unaudited financial statements

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HEMA DIAGNOSTIC SYSTEMS, LLC and ASSOCIATES

Condensed Combined Statements of Cash Flows

(Unaudited)


	For the Nine Months Ended September 30,
	2016			2015
CASH FLOW FROM OPERATING ACTIVITIES:
NET LOSS	$	(959,273	)	$	(746,603	)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED
IN OPERATING ACTIVITIES:
Depreciation and amortization		8,218			8,832
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable, net		(1,967	)		(4,017	)
(Increase) decrease in inventory		(4,221	)		(3,469	)
Increase in accounts payable and accrued expenses		56,511			6,926
Increase in customer deposits		76,863			24,520
Decrease in other current liabilities		4,305			3,199
Net cash used in operating activities		(819,564	)		(710,612	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Employee advances		815,046			(105,592	)
Decrease (increase) in other assets		—			(5,151	)
Due to affiliates		(550	)		—
Net cash used in investing activities		814,496			(110,742	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution		884,500			793,400
Proceeds from shareholder loans		(883,919	)		236
Net cash provided by financing activities		581			793,636

NET CHANGE IN CASH		(4,487	)		(27,718	)

CASH AT THE BEGINNING OF THE PERIOD		29,928			40,499
CASH AT THE END OF THE PERIOD	$	25,441		$	12,781

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes	$	—		$	—
Interest	$	—		$	—

See accompanying notes to the condensed combined unaudited financial statements

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HEMA DIAGNOSTIC SYSTEMS, LLC and ASSOCIATES

Notes to Condensed Combined Unaudited Financial Statements

For the Nine months ended September 30, 2016 and 2015 (unaudited)

NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS

The Combined Financial Statements of Hema Diagnostic Systems, LLC and Associates (collectively the “Company”) include the accounts of Hema Diagnostic Systems, LLC; Hema Diagnostics Systems Panama, PTY and Rapid Medical Diagnostics, Corp. as the entities are under common control and management. All transactions and accounts between and among the entities have been eliminated. The Company has evaluated subsequent events through November 17, 2016, which is the date the Combined Financial Statements were available to be issued.

HEMA DIAGNOSTIC SYSTEMS, LLC (“HDS”), was founded to market and distribute certain third party medical testing device technology. When new and innovative medical device testing technology became available that was both proprietary from and competitive to the previous third party technology, the principals decided to pursue the commercialization of the new technologies. HDS, a Florida limited liability corporation founded December 14, 2000 and began operations in 2002 to perform product research and development, create distribution channels and sales and marketing and administration functions and is currently commercializing the new proprietary medical testing device patents and technology. HDS has not yet begun to generate significant revenues and is still in the process of perfecting production techniques and obtaining the appropriate certifications for a series of medical devices that will be able to detect certain diseases quickly and cost effectively.

RAPID MEDICAL DIAGNOSTICS, CORP. (“RMD”) was established to develop products and hold patents for HDS and is affiliated with HDS through common ownership and management. HDS operates as the administration and disbursing arm of RMD in accordance with a Management Services Agreements (“MSA”) between the parties that provides HDS a service fee for performing these administrative and disbursing services. Consequently, HDS records substantial amounts due from RMD as a result of transactions disbursed by HDS on RMD’s behalf. RMD’s ability to repay HDS for funds advanced on its behalf, is entirely dependent on the successful commercialization of RMD patents and technologies by HDS and the resulting royalty payments generated there from. RMD has licensed its patents and technologies exclusively to HDS, which will entitle RMD to receive royalties from HDS once those technologies achieve commercial viability. To date there has been no royalty paid to or earned by RMD. Correspondingly, HDS has waived its right to receive service fees under the MSA until HDS successfully commercializes RMD’s licensed technologies.

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NOTE 2. GOING CONCERN

The accompanying combined financial statements have been prepared assuming that the Company will continue as a going concern. The Company generated net losses of approximately $959,000 for the nine months ended September 30, 2016. The net loss incurred in 2016 has resulted in an accumulated deficit of approximately $20,529,000 and a total Owners’ deficit of approximately $13,788,000 at September 30, 2016.

In response to the losses incurred in 2016, the Company continues to constantly evaluate and monitor its cash needs and existing cash burn rate, in order to make adjustments to its operating expenses. Cash on hand was approximately $25,000 at September 30, 2016.

No assurances can be given that the Company will achieve success in obtaining sufficient levels of end user sell-through necessary to fully sustain its operations, without seeking additional financing. The Company intends to pursue the equity transaction discussed in Note 14, seek additional lending, equity or joint venture partners. However, there can be no assurances that additional financing, if required, can be obtained, or obtained on reasonable terms acceptable to the Company.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed combined financial position of Hema Diagnostic Systems, LLC and Associates as of September 30, 2016 and the unaudited condensed combined results of its operations and cash flows for the nine months ended September 30, 2016. The unaudited condensed combined results of operations for the nine months ended September 30, 2016 are not necessarily indicative of the operating results for the full year. It is recommended that these unaudited condensed combined financial statements be read in conjunction with the audited financial statements and related disclosures of the Company for the years ended December 31, 2015 and 2014.

Use of estimates

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NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cashandcashequivalents

TheCompany considersshort-term interestbearing investmentswith initialmaturitiesof threemonthsorlesstobe cash equivalents. The Company has no cash equivalents at September 30, 2016 and December 31, 2015.

Inventory

Inventory is stated at the lower of cost or net realizable value. Cost is determined using the Weighted Average method. The Company periodically evaluates its inventory for any obsolete or slow moving items based on production lot# and advances in production design or technology. Any inventory determined to be obsolete or slow moving is removed from inventory and disposed or a provision is made to reduce slow moving inventory to its net realizable value. At September 30, 2016 and December 31, 2015, the Company recorded a reserve for obsolescence of $7,750 and $7,750, respectively.

Propertyandequipment

Intangible assets, net

Impairment of Long-Lived Assets

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NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue recognition

The Company recognizes revenue when all of the following four criteria are met:

• persuasive evidence of a sales arrangement exists,

• delivery has occurred,

• the sales price is fixed or determinable and

• collectability is probable.

Income taxes

Stock-Basedpayments

The Company accounts for transactions in which services are received in exchange for stock based on the fair value of such services received from non-employees, in accordance with ASC 505-50, "Equity Based Payments to Non-employees."

The Company follows ASC 718, "Compensation — Stock Compensation", in accounting for its stock based payments. This standard states that compensation cost or the value of stock issued for services are measured at the grant date based on the value of the stock granted and is recognized over the vesting or service period.

Risks and uncertainties

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NOTE 4. RECENTLY ISSUED ACCOUNTING STANDARDS AND DEVELOPMENTS

There were various other accounting standards and interpretations issued in 2015 and 2016, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows.

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NOTE 5. INVENTORY

Inventory at September 30, 2016 and December 31, 2015 consisted of the following:

Inventory
	2016			2015
Production materials	$	33,964		$	30,281
Sub-assemblies		4,031			5,001
Finished goods		3,279			1,771
		41,274			37,053
Less: Obsolescence reserve		(7,750	)		(7,750	)
	$	33,524		$	29,303

Finished goods -Consists of completed units in market ready packaging. The carrying value of these units include the cost of components, materials and labor necessary to assemble them.

Obsolescence reserve -Management evaluated the inventory at September 30, 2016 and December 31, 2015 and provided an allowance for obsolescence of $7,750 and $7,750, respectively, primarily associated with production materials and sub-assemblies. Management’s evaluation for obsolescence includes identifying materials and components that are not currently or likely to be used in production in the near future as well as tracking certain components by lot number and expiry date.

NOTE 6. ADVANCES and LOANS RECEIVABLE

Advances and Loans Receivable as of September 30, 2016 and December 31, 2015 consisted of the following:

Other Current Assets
	2016		2015
Loan to officer	$	78,331	$	893,372
Employee advances		16,013		20,635
Loan to employees		18,784		14,167
	$	113,128	$	928,174

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NOTE 6. ADVANCES and LOANS RECEIVABLE (continued)

Advance to officer - Consists of funds advanced to the Company’s President and CEO, board member and shareholder. During September 2016, the CEO repaid $897,000.

Advances to management - Consists of funds advanced to the Director of Latin American Sales, board member and shareholder. During October 2016, $14,735 was repaid.

NOTE 7. PROPERTY AND EQUIPMENT

Property and equipment as of September 30, 2016 and December 31, 2015 consisted of the following:

Fixed Assets
	Estimated Useful Lives	2016			2015
Computer Equipment & Software	5 yrs 200DDB	$	10,244		$	10,244
Equipment	5 yrs 200DDB		47,148			47,148
Furniture	7 yrs 200DDB		1,402			1,402
Lab Equipment	5 yrs 200DDB		23,220			23,220
Leasehold Improvements	15 yrs SL		40,445			40,445
Office Equipment	5 yrs 200DDB		1,990			1,990
Tools	5 yrs 200DDB		12,191			12,191
Total			136,640			136,640
Less Accumulated Depreciation			(130,000	)		(123,704	)
Property and Equipment, net		$	6,640		$	12,936

Depreciation expense for the nine months ended September 30, 2016 and 2015 totaled $6,296 and $6,910, respectively.

NOTE 8. OTHER ASSETS

Other assets as of September 30, 2016 and December 31, 2015 consisted of the following:

Other Assets
	2016			2015
Deposits	$	8,362		$	8,362
Patents		51,274			51,274
Less Amortization		(23,294	)		(21,371	)
		—			—
	$	36,343		$	38,266

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NOTE 8. OTHER ASSETS (continued)

Amortization expense for the nine months ended September 30, 2016 and 2015 totaled $1,922 and $1,922, respectively. The Company has several patents most of which are dormant as the Company lacks the funds to properly commercialize them. The current products and planned future products rely on the “Express” patent, the costs of which are reflected above. This patent expires in 2027.

NOTE 9. LOAN PAYABLE - SHAREHOLDER

The Company received substantially all of its funding from its primary shareholder, who owns 98.9% of the Company as of September 30, 2016. The Company borrowed no funds during the period from January 1, 2016 through September 30, 2016. However, the Company repaid $883,919 in September 2016. The loan is unsecured, payable on demand and earns interest for 2016 at 0.75%, which was increased from 0.21% for 2015. Accordingly, the Company recorded interest expense of $76,863 and $24,874 during the nine months ended September 30, 2016 and 2015, respectively..

NOTE 10. TRANSACTIONS with AFFILIATES

Transactions with affiliates as of September 30, 2016 and December 31, 2015 consisted of the following:

DTFAffiliates
	2016			2015
Due from HDS Panama	$	—		$	—
Due from IDMS		(2,500	)		(2,500	)
Due from RMD		(550	)		—
Loan CWW		83,554			83,554
		80,504			81,054
Less: Allowance		—			—
	$	80,504		$	81,054

China World Wide (CWW) -was established 25 years ago to distribute certain third party products that are not competing with HDS products. HDS is affiliated with CWW through common ownership. From inception through 2007, CWW provided supplemental funding to HDS on a non-interest basis. At December 31, 2015 HDS had an unpaid balance to CWW of $83,554. CWW has also assisted HDS in the development of its distribution and sourcing in China.

International Diagnostics and Medical Supply Corp. (IDMS) -was established 2 years ago to create hemodialysis facilities on a global scale. These services will not compete with HDS products. HDS is affiliated with IDMS through common ownership. Do to the high initial cost of establishing a hemodialysis facility, IDMS has not yet secured satisfactory funding to execute its business plan. Consequently, it has only engaged in minimal organizational activities. At September 30, 2016 HDS had an unpaid balance due from IDMS of $2,500 advanced to IDMS for legal fees incurred.

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NOTE 11. LICENSES and PATENTS

NOTE 12. COMMITMENTS and CONTINGENCIES

Legal contingencies

Operating lease commitments

Leases
	2016		2017		2018		2019		2020 and beyond		Total
HDS Office Lease	$	20,938	$	41,876	$	—	$	—	$	—	$	62,814
Auto Lease		2,947		11,788		11,788		5,892				32,415
Computer Equipment												—
Lease #1		823		823								1,645
Lease #2		416		1,663		139						2,218
Office Copier		1,469		4,406		4,406		4,406		4,682		19,369
	$	26,592	$	60,556	$	16,333	$	10,298	$	4,682	$	118,461

Auto Lease– Closed end vehicle lease which called for 39 monthly payments of $1,099 for our CEO and President which expires in April of 2016 was replaced with a similar closed end vehicle lease which calls for 36 monthly payments of $982 expires April 7, 2019. The above payment commitments reflect both vehicle leases.

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NOTE 12. COMMITMENTS and CONTINGENCIES (continued)

Computer Lease– Two leases were originated with the same supplier to provide office computer equipment. Lease #1 calls for 36 monthly payments of $274 commencing April 1, 2014 and expiring on March 31, 2017. Lease #2 calls for 36 monthly payments of $139 commencing February 19, 2015 and expiring on February 18, 2018.

Copier Lease– The lease was originated to provide office copier equipment. The lease calls for 60 monthly payments of $367 commencing June 3, 2016 and expiring on May 3, 2021.

NOTE 13. CUSTOMER and SUPPLIER CONCENTRATION

Customer concentration –The Company is currently in the process of commercializing its products and as of September 30, 2016 has not begun any substantial sales or marketing efforts. Accordingly, the Company has recorded only marginal sales to date, which were not of sufficient size to classify the customer as significant to the Company’s revenue. Those marginal sales primarily reflect instances where samples and trial products were shipped at a billable value.

NOTE 14. SUBSEQUENT EVENTS

Advances from shareholder -During the period from October 1, 2016 through November 17, 2016, the Company has received an additional capital contribution of $192,500 from its principal shareholder. The Company repaid $14,735 of its outstanding loan balance due to its principal shareholder, bringing the total balance outstanding to $13,245,737. The loan bears interest at 0.75% during 2016 and is payable on demand.

•

HDS will –

issue a dedicated class of first ranking voting preferred securities representing 51% of the outstanding equity of the Company to Generex

deliver Stephen Berkman’s full and final release of all indebtedness owed by HDS and its affiliates to Generex

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NOTE 14. SUBSEQUENT EVENTS (continued)

•

Generex will –

issue $250,000 worth of Generex restricted common stock plus 250,000 of restricted common shares to Stephen Berkman

also issue a warrant to acquire up to 15,000,000 shares of Generex common stock to Stephen Berkman

grant Stephen Berkman one seat on the Generex Board of Directors

This LOI expires on November 30, 2016.

GENEREX BIOTECHNOLOGY CORPORATION
UNAUDITED PROFORMA COMBINED STATEMENT OF OPEREATIONS
FOR THE YEAR ENDED JULY 31, 2016

	10-K Historical
	Generex Biotechnology Corporation			Hema Diagnostics Systems, LLC			Pro Forma Adjustments				Notes		Pro Forma Combined
	12 Months Ended July 31, 2016			12 Months Ended June 30, 2016									12 Months
Net revenue	$	—		$	18,698			$	—				$	18,698

Cost of goods sold		—			11,537				—					11,537

Gross profit		—			7,161				—					7,161

Operating expenses
Research and development		467,382			527,696				—					995,078
General and administrative		1,435,186			560,674				—					1,995,860
Total operating expenses		1,902,568			1,088,370				—					2,990,938

Operating Loss		(1,902,568	)		(1,081,209	)			—					(2,983,777	)

Other Income (Expense):
Impairment of patents		(1,165,864	)		—				—					(1,165,864	)
Interest income		—			5,910				—					5,910
Interest expense		(418,500	)		(32,905	)			—					(451,405	)
Impairment of goodwill		—			—				(14,335,822	)		(B)		(14,335,822	)
Other income (expense)		—			(630	)			—					(630	)
Change in fair value of derivative liabilities		263,823			—				—					263,823

Net (Loss)		(3,223,109	)		(1,108,835	)			(14,335,822	)				(18,667,766	)

Net (loss) attributable to noncontrolling interests		—			—				(543,329	)		(D)		(543,329	)

Net (Loss) Available to Common Stockholders	$	(3,223,109	)	$	(1,108,835	)		$	(13,792,493	)			$	(18,124,437	)

Net (Loss) per Common Share / Unit
Basic	$	(3.66	)	$	(107.65	)		$	(14.76	)			$	(19.40	)
Diluted		(3.66	)		(107.65	)			(14.76	)				(19.40	)

Shares / Units Used to Compute (Loss) per Share / Unit
Basic		880,941			10,300				934,152					934,152
Diluted		880,941			10,300				934,152					934,152

Other Comprehensive Income:
Net (Loss)		(3,223,109	)		(1,108,835	)			(13,792,493	)				(18,124,437	)
Change in foreign currency translation adjustments		(9,865	)		—				—					(9,865	)
Comprehensive Income (Loss) and Comprehensive Income (Loss) Available to Common Stockholders	$	(3,232,974	)	$	(1,108,835	)		$	(13,792,493	)			$	(18,134,302	)

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GENEREX BIOTECHNOLOGY CORPORATION
UNAUDITED PROFORMA COMBINED STATEMENT OF OPEREATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 2017

	Historical
	Generex Biotechnology Corporation			Hema Diagnostics Systems, LLC			Pro Forma Adjustments			Notes		Pro Forma Combined
	6 Months Ended January 31, 2017			6 Months Ended December 31, 2016								12 Months

Net revenue	$	—		$	3,395		$	—				$	3,395

Cost of goods sold		—			7,162			—					7,162

Gross profit		—			(3,766	)		—					(3,766	)

Operating expenses
Research and development		75,640			315,945			(20,472	)		(A)		371,113
General and administrative		242,905			420,685			(32,630	)		(A)		630,960
Total operating expenses		318,545			736,630			(53,102	)				1,002,073

Operating Loss		(318,545	)		(740,396	)		53,102					(1,005,839	)

Other Income (Expense):
Interest expense		(243,508	)		(103,654	)		—					(347,162	)
Impairment of goodwill		(14,335,822	)		—			—					(14,335,822	)
Other income (expense)		—			219,368			2,577			(A)		221,945
Change in fair value of derivative liabilities		(325,074	)		—			—					(325,074	)

Net (Loss)		(15,222,949	)		(624,682	)		55,679					(15,791,952	)

Net (loss) attributable to noncontrolling interests		(27,283	)		—			(278,811	)		(A)(C)		(306,094	)
Net (Loss) Available to Common Stockholders	$	(15,195,666	)	$	(624,682	)	$	334,490				$	(15,485,858	)

Net (Loss) per Common Share / Units
Basic	$	(16.63	)	$	(60.65	)	$	0.35				$	(16.07	)
Diluted		(16.63	)		(60.65	)		0.35					(16.07	)

Shares / Units Used to Compute (Loss) per Share / Unit
Basic		913,479			10,300			963,361					963,361
Diluted		913,479			10,300			963,361					963,361

Other Comprehensive Income:
Net (Loss)		(15,195,666	)		(624,682	)		334,490					(15,485,858	)
Change in foreign currency translation adjustments		8,513			—			—					8,513
Comprehensive Income (Loss) and Comprehensive Income (Loss) Available to Common Stockholders	$	(15,187,153	)	$	(624,682	)	$	334,490				$	(15,477,345	)

C-33

Generex Biotechnology Corporation and

Hema Diagnostics Systems, LLC

Notes to the unaudited pro forma combined financial information

1.Basis of pro forma presentation

The accompanying unaudited pro forma combined financial information is derived from the historical financial statements of Generex and HDS. The unaudited pro forma combined financial information is prepared using the purchase method of accounting, as defined by Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805,Business Combinations, with Generex treated as the acquirer.

Generex, with a year ends on July 31^st , acquired HDS, with a year that ends on December 31st. The pro forma statement of operations for the year ended July 31, 2016 includes (1) Generex’syear ended July 31, 2016 and (2) HDS’s twelve months ended June 30, 2016. The pro forma statement of operations for the six months ended January 31, 2017 includes (1) Generex’ssix months ended January 31, 2017 (the “Generex’s Six Month Results”) and (2) HDS’s six months ended December 31, 2016. Generex’s Six Month Results were issued subsequent to the acquisition of HDS by Generex and include the operating results of HDS for the period January 19, 2017 through January 31, 2017 (the “HDS Post Closing Results”). Unaudited pro forma adjustments, and the assumptions on which they are based, are described in the accompanying Notes to the Unaudited Pro Forma Combined financial information.

The Unaudited Pro Forma Combined Statements of Operations for the year ended July 31, 2016 and for the six months ended January 31, 2017 are presented as if the Acquisition occurred on August 1, 2015 and August 1, 2016, respectively.

The unaudited pro forma combined financial information has been compiled in a manner consistent with the accounting policies adopted by Generex. These accounting policies are similar in most material respects to those of HDS. Generex is currently performing a more detailed review of HDS’s accounting policies. As a result of that review, differences could be identified between the accounting policies of the two companies that, when conformed, could have a material impact on the combined financial statements.

The unaudited pro forma combined financial information is presented for informational purposes only and is not intended to represent the consolidated financial position or consolidated results of operations of Generex that would have been reported had the Acquisition been completed as of the dates described above, and should not be taken as indicative of any future consolidated financial position or consolidated results of operations. The Unaudited Pro Forma Combined Statements of Operations do not reflect any sales or cost savings from synergies that may be achieved with respect to the combined companies, or the impact of non-recurring items, including restructuring liabilities, directly related to the Acquisition.

The unaudited pro forma combined financial information should be read in conjunction with the historical consolidated financial statements and accompanying notes of Generex and HDS.

2.Purchase price

The Acquisition closed on January 18, 2017.

The net purchase price of HDS was determined to be as follows:

	Stock Price at Closing		Shares		Fair Value
Purchase price:
Common Stock at closing	$	4.77		53,191	$	253,721
Common Stock after closing	$	4.77		20		95
Common Stock post reverse stock split	$	4.77		230,000		1,097,100
Net purchase price					$	1,350,916

As of January 18, 2017, the issue of the warrant to acquire 15,000,000 additional common shares of Generex was contingent upon shareholder approval of an increase in the Company’s authorized capital stock. No warrant has been issued by the Company and terms of the warrant have not been finalized. Management is not of the opinion that it is more likely than not that the warrant will be issued and accordingly no value has been attributed to it.

The preliminary purchase price allocation of HDS was determined to be as follows:

Purchase price allocation:
Net assets of HDS			(13,642,900	)
Non-controlling interest			(1,297,939	)
In-Process Research & Development			1,955,932
Goodwill			14,335,823
Total Purchase Price	51% Ownership	$	1,350,916

Non-controlling interest	49% Ownership	$	1,297,939

3.Pro Forma Adjustments

Certain reclassifications have been made to conform HDS’s historical amounts to Generex’s financial statement presentation. The accompanying unaudited pro forma combined statements of operations for the year ended July 31, 2016 and for the six months ended January 31, 2017 have been prepared to reflect the acquisition of HDS by Generex for an aggregate purchase price of $1,351,916 as if the acquisition was completed on August 1, 2015 and August 1, 2016 respectively and reflect the following pro forma adjustments:

(A)

To reflect the elimination of the HDS Post Closing Results and provide HDS results for only six months, including $20,472 of research and development costs, $32,630 of general and administrative costs, $2,577 of interest expense, and $27,283 of net (loss) attributable to non-controlling interests of HDS.

(B)

To record impairment of goodwill that was recorded as a result of the HDS acquisition and the excess of the purchase consideration over the fair value of assets acquired and its full impairment for the acquisition of HDS for the year ended July 31, 2016 as if the acquisition was completed on August 1, 2015.

(C)

To record losses of $306,094 attributable to non-controlling interests of HDS for the 6 months ended January 31, 2017.

(D)

To record losses of $543,329 attributable to non-controlling interests of HDS for the 12 months ended July 31, 2016.

To supplement the consolidated financial results prepared under generally accepted accounting principles (“GAAP”), the Company uses a pro forma measure of net income or loss that consists of GAAP net income or loss adjusted to exclude the impact of amortization of acquisition-related charges and other non-recurring charges and gains.

Pro forma net income gives an indication of the Company’s baseline performance before gains, losses or other charges that are considered by management to be outside of our core operating results. In addition, pro forma net income is among the primary indicators management uses as a basis for planning and forecasting future periods. These measures are not in accordance with or an alternative for GAAP and may be materially different from pro forma non-GAAP measures used by other companies.

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Appendix C-2

EXCERPTS FROM

GENEREX BIOTECHNOLOGY CORPORATION

CURRENT REPORT ON FORM 8-K

FILED JANUARY 20, 2017

RELATING TO HEMA DIAGNOSTIC SYSTEMS, LLC

EXPLANATORY NOTE

OnJanuary 17, 2016, weentered into andclosedAcquisition Agreement(the “Acquisition Agreement”) with the equity owners of Hema Diagnostic Systems, LLC (“Hema”) pursuant to which we acquired a majority of the equity interests in Hema in exchange for our Stock and our obligation to issue Common Stock Purchase Warrants (the “Acquisition”). We have the right to acquire the remainder of the Hema equity interests for nominal consideration provided that the stock and warrants have a specified value and we have registered for resale the Company’s shares issued to the Hema equity owners. The Acquisition is described in detail in Item 2.01 below. We intend to focus Hema’s business going forward, but do not intend to discontinue our pre-Acquisition activities.

Reference’s to Hema include its two wholly owned subsidiaries, Rapid Medical Diagnostics Corp. and Hema Diagnostic Systems Panama, S.A.. Rapid Medical Diagnostics was established to develop products and hold patents used by Hema Diagnostic Systems, LLC. Hema Diagnostic Systems Panama, S.A. was established to distribute Hema Diagnostic Systems, LLC’s products in Central and South America. Prior to the Acquisition, equity interest in Hema Diagnostic Systems Panama, S.A. and Rapid Diagnostic Systems were separately held by the equity owners of Hema, and financial statements of the three companies were prepared on a combined basis, as they were under common control and management. Immediately prior to Closing of the Acquisition, the equity owners contributed to Hema the equity of the other two companies, making them wholly owned subsidiaries of Hema.

This Current Report contains summaries of the material terms of various agreements executed in connection with the transactions described herein. The summaries of these agreements are subject to, and are qualified in their entirety by, reference to these agreements, which are filed as exhibits hereto and incorporated herein by reference.

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Item 1.01. Entry into a Material Definitive Agreement.

Acquisition Agreement

On January 17, 2017, Generex Biotechnology, Inc., entered into the Acquisition Agreement with the equity owners of Hema Diagnostic Systems, LLC. The disclosures set forth in Item 2.01 below relating to the Acquisition Agreement transactions affected thereby are hereby incorporated by reference into this Item 1.01.

Item 2.01. Completion of Acquisition or Disposition of Assets.

ACQUISITION AND RELATED TRANSACTIONS

Acquisition Agreement

On January 17, 2017, we entered into and an Acquisition Agreement (the “Acquisition Agreement”) among Generex Biotechnology Corporation, Hema Diagnostic Systems, LLC, a Florida Limited Liability Company (“Hema”) and the equity owners of Hema pursuant to which we acquired a majority of the equity interests in Hema in exchange for our Stock and commitment to issue Common Stock Purchase Warrants (the “Acquisition”). Closing under the Acquisition Agreement occurred January 18.

At Closing, we acquired 4,950 of Hema’s 10,000 previously outstanding limited liability company units in exchange for 53,191,000 shares of Generex common stock, par value $.0001 per share, which had a value of $250,000, based on the closing bid price for our Common Stock on the OTCPINK marketplace on the trading day immediately preceding the Closing Date. Immediately following closing, we contributed 20,000 shares of Generex common stock to Hema, in exchange for 300 newly limited liability company units. Following these two actions, Generex holds 5,250 of Hema’s 10,300 outstanding units, or approximately 51% of Hema’s equity. The remainder of Hema’s outstanding equity will then be held by Stephen Berkman. Prior to closing, Mr. Berkman was Hema’s majority owner.

Following Closing, we intend to engage in a reverse split of our common stock. Pursuant to the Acquisition Agreement, within two trading days following the effectiveness of a planned reverse stock split, we will issue to Mr. Berkman 230,000 shares of common stock and warrants exercisable for 15,000,000 shares of our common stock at an exercise price equal to the volume weighted average price of the Company’s common stock a ten day period beginning on the day after the reverse stock split is effective.

We will have the right to purchase all of the remaining Hema equity interests form Mr. Berkman for an aggregate price of $1.00 if, at any time within three years after Closing

All of the common stock issued to the Hema equity owners, as well as the common stock for which the warrants may be exercised, have been registered for resale; and
The aggregate value of all such shares, including the share underlying the Warrants, is at least $15,000,000

In the event the above conditions are not me, Mr. Berkman would retain his approximately 49% interest in Hema unless we negotiated a further arm’s length price with him. Pursuant to a Registration Rights Agreement entered into at Closing, we have agreed file a registration statement with respect to all of the shares, including the shares underlying the warrants, within sixty days after effectiveness of the reverse stock split.

Hema is currently indebted to Mr. Berkman in the amount of $13,260,462 for loans, advances and other consideration. This debt was secured by a security interest in Hema’s assets. At Closing. Berkman terminated his security interest on the Company’s assets. At such time as the condition set forth in Section 1.1(e), above, is satisfied, the loan payable from Acquiree to Berkman shall be deemed satisfied in full.

C-36

The Acquisition Agreement contains customary representations, warranties, and covenants of the Generex, Hema and Hema’s equity. Breaches of representations and warranties are secured by customary indemnification provisions.

Hema operates both directly and through two subsidiaries. Prior to closing under the Acquisition Agreement, the two subsidiaries were separately owned by Hema’s equity owners. Immediately prior to Closing, the equity owners assigned the ownership of these two companies to Hema. One of these companies. Hema Diagnostic Systems Panama, S.A., which was organized to distributed Hema’s products in Central and South America, is organized under the laws of Panama. Record transfer of the ownership of this entity requires the consent of the Panamanian agency with authority over business organizations. We have applied for this consent and consider it to be a purely administrative issue.

DESCRIPTION OF BUSINESS

Description of Hema’s Business

As used in the remainder of this Item 2.01, “Company,” “we,” “us,” “our” and HDS refer to Hema.

OVERVIEW

Hema Diagnostic Systems (referred to as HDS or Hema) was established December 2000 as a Florida Limited Liability Company and is in the business of developing, manufacturing, and distributing of in-vitro medical diagnostics for infectious diseases administered at the point of care level with results as soon as 10-15 minutes. We manufacture and sell rapid diagnostic devices based upon our own proprietary EXPRESS technology as well as cassette devices based on customary designs used generally in the industry.

Hema’s mission is to deliver the highest standard of quality product and solutions that are accurate, reliable, and cost effective for worldwide distribution and deployment.

Since its founding, Hema has been developing and continues to develop an expanding line of Rapid Diagnostic Tests (RDTs) including those for the following infectious diseases such as Human Immunodeficiency Virus (HIV) – ½ w/p24Ab, tuberculosis-XT, malaria, hepatitis, syphilis, typhoid, dengue and other infectious diseases.

Today, we have developed a substantial line of RDT’s known as RAPID 1-2-3 HEMA® ready to “go-to-market.”

Due to the potential infectious character of the whole blood test sample, our Express series of RDTs are designed to perform and deliver test results while sealed within the Express housing, carefully controlling the potentially infectious test sample. This design helps to increase our ability to control the possibility of cross-contamination. Most of our competitors’ products, while inexpensive, are not as user-friendly allowing for increased user-error and requires substantially more training and have greater risk of cross-contamination.

We have been designing and engineering delivery systems that incorporate advanced technologies of rapid test strips for use in our Express series of devices and which yield a rapid response for point-of-care patient testing and treatment.

Each RDT incorporates an accurate test strip that has been striped with specific antigens or antibodies combined in a proprietary cocktail and then incorporated into an easy-to-use and user-friendly delivery system. The HDS delivery systems include our standard “cassette” design, our patented “Express” housing device as well as our new “Express II”.

Each system delivers its own advantages which enhance the use, application and performance of each diagnostic. This ease of use in the Express delivery systems ensure that our RDTs perform efficiently and effectively providing the most accurate and repeatable test results available while, at the same time, minimizing the transference of a potentially infected blood sample.

The Company maintains a Federal Drug Administration (FDA) registered facility in Miramar, Florida and is certified under both ISO9001 and ISO13485 for theDesign, Development, Production and Distribution of the in-vitro devices. Approval of our HIV rapid test has been issued by the United States Agency for International Development (USAID). Additionally, some of our products qualified for and carry the European Union “CE” Mark, which allows us to enter into CE Member countries subject to individual country requirements. Currently, we have two malaria rapid tests approved under World Health Organization (WHO) guidelines. We anticipate that a third malaria test will be approved by the end of 2016. Our HDS products have also received registrations and approvals issued by other foreign governments. HDS is currently in the planning phase for entering into the newly announced, WHO “Pre-Qualified Approval” process for other HDS tests. This process allow expedited approval of rapid tests, reducing the current 24-30 month process down to approximately 6-9 months. WHO approval is necessary for our products to be used in those countries which rely upon the expertise of the WHO, as well as for NGO funding for the purchase of diagnostic products.

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We maintain current U.S. Certificates of Exportability that are issued by two FDA divisions-CBER and CDRH. CBER (Center for Biologicals Evaluation and Research) is the FDA regulatory division that oversees biological devices and which include our HIV, Hepatitis B and Hepatitis C. The other division, Center for Devices and Radiological Health (CDRH), is responsible for the oversight of other HDS devices which include Tuberculosis, Syphilis, and the remaining product line. Our HDS facility maintains FDA Establishment Registration status and is in accord with GMP (Good Manufacturing Practice) as confirmed by the FDA.

We do not currently have FDA approval to sell our products in the United States. We intend on submitting our devices to the FDA under a Pre-Market Approval Application (PMA) or through the 510K process. The 510K would require the appropriate regulatory administrative submissions as well as a limited scientific review by the FDA to determine completeness (acceptance and filing reviews); in-depth scientific, regulatory, and Quality System review by appropriate FDA personnel (substantive review); review and recommendation by the appropriate advisory committee (panel review); and final deliberations, documentation, and notification of the FDA decision. The PMA process is more extensive, requiring clinical trials to support the application. We expect to apply to FDA for approval of our first RDT for FDA 510K approval within the next 3 months. We anticipate the FDA process will be completed within 9 months after submission. During this timeline, we will be preparing documentation for additional rapid tests to undergo either the FDA PMA or 510k process including 510k de novo.

OUR PRODUCTS

While we sell “cassette” based diagnostic tests based on standard designs, we expect our success will be tied to development, manufacture and sale of products based on our proprietary Express device platform systems. Recent advances in our device platform technology can be directly applied to individual test strip which is disease specific. line. These technologies further increase the performance capabilities of each test and its’ ability to detect diseases in an efficient and cost-effective manner.

The Rapid 1-2-3 Hema® Express platform is designed to ensure ease of use, accuracy of performance, and cost-effectiveness of production. Test results of each Rapid 1-2-3 Hema Express test device are easy to read under all conditions even while conducting testing in the field. Additionally, the Rapid 1-2-3 Hema Express does not require the use of water or electricity. Testing can be conducted with the patient and test Our Malaria RDTs will be availale in our Express II platform.

The Express platforms are available in the following presentations:

•

Rapid 1-2-3 Hema Express HIV 1/2 w/p24Ab

•

Rapid 1-2-3 Hema Express II HIV 1/2 w/p24Ab

•

Rapid 1-2-3 Hema Express Tuberculosis-XT

•

Rapid 1-2-3 Hema Express II Tuberculosis-XT

•

Rapid 1-2-3 Hema Express II Malaria pF

•

Rapid 1-2-3 Hema Express II Malaria pF/pV

•

Rapid 1-2-3 Hema Express II Malaria pF/Pan

•

Rapid 1-2-3 Hema Express Syphilis

•

Rapid 1-2-3 Hema Express Dengue NS1

•

Rapid 1-2-3 Hema Express Dengue IgG/IgM

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HDS is also in the process of developing the platform for the qualitative testing for other infectious diseases including Typhoid, Chikungunya, Zika and other diseases. A new HDS housing, designated as the Rapid 1-2-3 Hema Express III Sepsis, is currently in the design evaluation process phase.

Our Solution

The degree of difficulty in using a rapid test is generally determined by the delivery system/housing design itself. One of the most common reasons for rapid test failure is due to user-error which is most commonly attributed to the misuse of a rapid test or of the test sample. The greater the degree of difficulty in performing the RDT, the greater the chance for user error. The Express series of devices substantially reduces the difficulty factor through its user-friendly test process and careful controls the test sample. It should be clear that the easier and more user-friendly a rapid test is to use, the greater success in producing and delivering accurate and repeatable test results.

We believe the Express device has the potential to expand its use to include additional test samples such as urine, fecal matter and oral fluids. We need to perform additional testing to validate the use of our products with these other test media.

To expedite the training in the use of the HDS rapid tests, we have designed each Express series device to operate in the same manner thereby reducing the amount of training needed in the use of other Express series RDTs. Once trained in the use of one Express series RDT, the clinician will know and understand how to run each additional Express device regardless of the diseases being tested.

Over the past 30 years, the most common rapid test delivery systems, known as “cassettes,” has undergone very few changes in their design and operation. While the internal tests strips within the cassette have continued to evolve, the cassette design has remained static.

The popularity of the cassette is basically due to the cost of the cassette device and the fact that for years, test administrators have known of no other test platform. The cassette is considered by many, as not being user-friendly and as such, can be counter-productive to delivering an accurate and repeatable test result.

HDS has moved forward with the design of two patent-protected delivery systems. The Express delivery systems, which include the Express and Express II, are both user-friendly and do, to a very great degree, control the possibility of cross-contamination and loss of control of a potentially infected test sample.

The Express and the Express II both incorporate into their design, a sample take-up system that adsorbs the whole blood, serum or plasma sample directly onto the device test strip. When the test sample meets a predetermined line, sufficient sample size has been achieved. The Express or Express II is then inserted directly into a pre-filled diluent pod which contains the exact amount of diluent, creating a water tight seal. This process helps to eliminate cross-contamination from the point of sample acquisition to that of test processing. Once the test procedure is finished, the device remains sealed and can be disposed of through incineration.

Cassettes

Over the past 30 years, most administrators of RDTs have been trained on the use of cassettes. For this reason, we have maintained a line of rapid cassette tests for a number of diseases.

The cassette is a semi-complicated and low cost delivery system that has been used in the worldwide markets. The cassette is not user-friendly and substantial time is required to train the test administrator in its use.

The configuration and method of use of the cassette has not changed over time and it requires that a blood sample be taken from the fingerstick and then added into the cassette device. This method of sample transfer does not allow for control of the potentially infected test sample, nor does it deliver a consistent and reliably accurate test sample volume to run the cassette device effectively. Once the blood sample has been added into the cassette device, diluent drops are added into the cassette device using a hand held dropper bottle. The dropper bottle delivers an unreliable and a relatively inaccurate volume of diluent. The failure of having too little or too much blood sample and/or too little or too much diluent can deliver inaccurate test results know as a “false-positive” or a “false-negative” as well as in some cases a “non-flow”. Once the test process is completed, the test administrator must dispose of all of the multiple potentially infected components

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The process of using a cassette device is prone to misuse -which is the core reason for most cassette test failures. Additionally, cassette test procedure offers a substantial opportunity for cross-contamination. While accepted out of tradition, the cassette is a design that requires substantial care while performing the testing procedure.

Due to the historical nature of the cassette design, we continue to offer our cassette presentation, two of which have already been approved under the World Health Organization (WHO) List of Approved Malaria Devices, and offered o those markets which require WHO approval.

HDS Express

We believe that the first major competitor to the cassette device is the HDS RAPID 1-2-3 HEMA EXPRESS system. This new technology addresses many of the problems that administrators of rapid test devices have encountered when using a cassette type of device- especially concerning ease-of-use and user-error.

The Express system is designed to substantially reduce, human error, cross-contamination and cross-infection which is achieved through its’ simplicity of design and ease of use. This contributes greatly to the delivery of more repeatable and accurate test results.

During the design phase of each new Express device, a test strip is stripped with carefully selected and specific antigens or antibodies specific to a particular diseases. It is then carefully tested and evaluated to determine its degree of “Specificity” (the ability of the test to correctly identify those without the disease) and “Sensitivity” (the ability of a test to correctly identify those with the disease). HDS strives to meet the highest possible sensitivity and specificity performance levels. Once approved, the test strip is then inserted into the previous validated Express and its performance, with each newly design strip, is evaluated. If the device meets design standards, it is validated.

We believe the EXPRESS represents a substantial improvement over the use of a CASSETTE.

The EXPRESS is very user-friendly. Diluent used to operate the device is premeasured and contained in a sealed plastic pod. This helps to prevent user error thereby increasing test accuracy.

The required amount of blood or serum/plasma needed to be taken-up and into the device is easily determined through the use of a visible line on the sample take-up pad. This also helps to prevent user error. The sample pad quickly and easily absorbs the test sample carefully controlling the flow of a potentially infected blood sample.

Unlike the CASSETTE, there is no external transfer of potentially infected blood/serum and unlike the cassette, there is no guess work when combining diluent with the test sample.

The EXPRESS design incorporates the sample take-up pad which absorbs the blood directly up and into the device.

This unique means of blood acquisition substantially decreases the potential transfer of disease to an uninfected person.

The Express® is a patented delivery system which integrates any HDS test strip into a single, self-contained delivery system. It is very easy to use. Each Express device is individually packaged in a foil pouch validated to withstand damaging humidity.

The process for use is very simple:

Read the instructions on the back of the pouch.

Open pouch and remove the Express device, the lancet and the pre-filled diluent pod.

Clean the finger with alcohol and then, prick the finger with a safety lancet and allow a bead of blood to appear on the fingertip.

Touch the tip of the Express sample take-up pad to the drop of blood.

Immediately the blood sample will flow onto and up the sample take-up pad.

Once the blood sample reached the “sufficient sample” line. Open the pre-filled diluent pod and insert the Express into the pre-filled diluent pod, creating a water-tight seal.

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The diluent will immediately mix with the blood sample and flow up and onto the test strip.

Over the next few minutes the “Control” line will appear confirming the test is operational. If the patient is positive for the disease being tested, a second “Test” line.

Once the test is completed, dispose in an appropriate manner.

HDS Express II®

The newly designed and developed RAPID 1-2-3 HEMA EXPRESS II establishes a common ground between the EXPRESS and the cassette.

This new hybrid design combines the same basic simple, easy to use system of the EXPRESS with the lower production costs of a cassette - all while maintaining same performance standards and repeatability of the EXPRESS.

With fewer components in the EXPRESS II configuration, the cost of assembly was reduced by up to 30% without any loss in performance.

Automated assembly further decreases production costs through the elimination of additional labor and the associated overhead.

MARKET GROWTH

In a recently released report entitled “GLOBAL MARKETS FOR RAPID MEDICAL DIAGNOSTIC KITS” fromBCC Research,it stated that the global market for rapid medical diagnostic kits (RDTs) was valued at nearly $18.4 billion in 2012. BCC Research expects the market to reach more than $24.2 billion by 2017 and register a five-year compound annual growth rate (CAGR) of 5.7% for the period 2012 to 2017.

Frost and Sullivan, a multi-national research and consulting organization reported in a June 23, 2016, that the U.S. Point of Care testing market is expected to reach $4.6 billion by 2020, with the largest growth segments in Infectious Diseases, Cardiac and Coagulation PT/NR. Their report further explained that growth is driven, in part, by the following:

Point of Care Testing (POC/RDT):

“POC tests are expanding into the retail space with large consumers (CVS, Walgreens and Target) building their footprint.” This also translates into patients getting tested at their doctor's office or medical clinic and getting results for immediate diagnosis and treatment. Additionally, “new business models such as expanding into retail clinics, mobile clinics and patient self-testing -testing opens up a wide range of opportunities..."

Need for Speed in Test Results:

In-vitro diagnostics delivers results faster with minimal invasive diagnostic tools. Additionally, POCs “…reduce turn-around-time from days to minutes”.

Affordable Pricing:

“Use of cheaper disposable consumables eliminates expensive reagent costs…” The cost in providing accurate test results is always a factor. POCs when combined with accuracy, simplicity of use and a lower cost will create a greater demand, further feeding the expansion of the POC market.

The demand for affordable POCs/RDTs continues to increase driven by cost, reliability and performance. As a POC test can be administered and evaluated in a pharmacy, a clinic or a doctors’ office, the need to incur laboratory costs, including sample transport, are avoided. Cost savings when using a POC/RDT versus a laboratory process is substantial.

While we do not yet have any products approved for sale in the United States, HDS products are also designed to address the need for testing in the expanding U.S. Point of Care. As such, it is our intention to enter into the appropriate regulatory processes to achieve the sale and use of multiple HDS Express devices in the U.S. some of which are anticipated to enter into the Over-the-Counter (OTC) market.

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Internationally, many countries are seeing an expanding use of POC RTDs as new tests and technologies arise to address the detection of new infectious diseases. This is especially true where laboratory testing is difficult to access or non-existent.

Additionally, POCs/RDTs can be developed and validated more easily than lab based tests, allowing for a quicker response to address new and emerging diseases.

Market growth on an international basis targets three primary diseases, Malaria, HIV and Tuberculosis. In the World Malaria Day Report issued by the WHO in April 2016, it was reported that therewere 214 million new cases of malaria worldwide in 2015 (range 149–303 million). The African Region accounted for most global cases of malaria (88%), followed by the South-East Asia Region (10%) and the Eastern Mediterranean Region (2%). Excluded were other parts of the world including the key markets of South America, the Caribbean and now, Western Europe. RDT sales in the WHO noted markets was approximately 314 million.

Human Immunodeficiency Virus (HIV) Testing Market

In 2015, the Grand View Research stated that the Global HIV Diagnostics Market is expected to reach $4.48 billion by 2022, growing at an estimated compound annual growth rate of 9.5% from 2015 to 2022.

According to AVERT, there are over 36.9 million people living with HIV worldwide. It is estimated that over 2 million new cases are diagnosed each year.

The illustration below shows that the majority of the people living with HIV are in the Sub-Saharan Africa with 25.8 million people followed by Asia & the Pacific with 5.0 million and Western & Central Europe and North America with 2.4 million people.

By 2018, it is reported that the HIV rapid diagnostic test market is projected to be 162 million tests per year which is an increase from 81 million tests sold or deployed.

Our RTDs would be the first line of defense in diagnosing that would lead to mitigating the spread of the HIV disease.

Tuberculosis (TB) Testing Market

According to the US CDC, Tuberculosis (TB) is the leading infectious cause of death worldwide. TB is an airborne disease and spread by coughing or sneezing, and the most vulnerable are women, children, and those living with HIV/AIDS. It is highly contagious in closed or confined locations.

According to the WHO report reviewed in October 2016. In 2015, the WHO reported that 10.4 million were infected with TB and 1.8 million died from TB including 400,000 who were co-infected with HIV. Additionally,over 95% of TB deaths occur in low and middle-income countries, and it is among the top 5 causes of death for women between the ages of 15 to 44.

The WHO repost also estimated that 1 million children become infected and 170,000 die from TB. This number excludes those with an HIV co-infection. TB is also a leading cause of death of people living with HIV. In 2015, it is reported that 35% of HIV/TB deaths are due to TB.

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The World Health Organization (WHO) estimates that two billion people—one third of the world's population—are infected with Mycobacterium tuberculosis (M.tb), the bacteria that causes TB. This includes the three tiered infections of TB: 1) M. Tuberculosis only; 2) M.TB and HIV coinfection; 3) M.TB MDR (multiple drug resistant)

M.TB MDR refers to the growing resistance of TB to available drugs, which means the disease is becoming more deadly and difficult to treat. It is reported that 480,000 new cases of people who are resistant to existing drugs for TB each year. A contributor to the growth of the drug resistant form of TB is the unnecessary TB treatment given to those patients who were improperly tested with an inaccurate TB test- being deemed to be positive when really being negative.

It is our hope that early detection and identification would lead to a faster treatment and care.

Malaria Testing Market

According to the World Malaria Report 2015 issued by the WHO, malaria transmission occurs in five WHO regions with 214 million cases of malaria globally.

In that same report, it is reported that approximately 3.2 billion people, which is nearly half of the world's population, are at risk of malaria with 88% of malaria cases and 90% of malaria deaths occurring in Sub-Saharan Africa. Children aged under 5 years account for more than two thirds of all deaths. Additionally, in 2015, an estimated 214 million cases were reported.

Countries most affected by malaria in Africa

In the March 14, 2016 report issued by the WHO, it stated that the sale of RTDs in the endemic countries has increased from 46 million units in 2008 to 319 million units in 2013. It is projected that this volume will grow to 400 million units in 2016 and beyond.

It is our desire to be the more cost effective alternative solution.

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Other Infectious Disease Test Markets

The Company is developing and engineering in-vitro diagnostics for the following infectious diseases. Our goal is to deliver a diagnostic that is specific for each disease, circumventing the difficulty of cross-reactivity which is especially for Vector Diseases such as Chikungunya and Zika:

Typhoid
Chikungunya
Zika
Anthrax
Sepsis, among others

Sepsis

The Company intends to devote resources to develop and engineer a new and novel rapid diagnostic test for sepsis. Sepsis is a systemic infection of the body primarily found in hospital environments and a major cause of disease and death in the United States and worldwide.

As recently reported by the Global Sepsis Alliance (GSA), it stated “In the U.S., sepsis accounts for far more deaths than the number of deaths from prostate cancer, breast cancer and AIDS combined.” “GSA is a nonprofit organization that support the efforts of more than 1 million caregivers in than 70 countries as they seek to better understand and combat what many experts believe to be the leading cause of death worldwide: Sepsis.

In a recent PR Newswire release dated Sept. 28, 2016, it was reported that “the sepsis diagnostics market is expected to reach USD 564.1 million by 2021, at a CAGR of 8.8% from 2016 to 2021.

The sepsis diagnostics market is primarily driven by the rising prevalence of sepsis in the neonate and adult population across the globe. In addition, rising geriatric population, growing number of surgical procedures, high incidence of hospital-acquired infections, and increasing number of product approvals are supporting the growth of this market. On the other hand, lack of standard protocols and awareness as well as shortage of skilled staff are the major challenges in this market.

The Company is developing a quantitative, multiplex, rapid point-of-care diagnostic assay for direct bedside as well as for E.R. use by physicians and medical personnel to either rule in infectious sepsis or rule it out. The assay is to be configured for use with a simple volume of blood and the results will be available in 15-20 minutes.

The multiplex assay will be a rapid triage or screening tool but it will also allow the physician to monitor the progress of the patient after a definitive diagnosis has been made. As such, it is a multi-purpose diagnostic and monitoring assay.

This assay will be based on the detection of biomarkers, usually proteins, which are normally produced in the body under sepsis conditions. The detection of multiple biomarkers in sepsis patients and their quantitation will also allow the physician to closely monitor the development of the sepsis syndrome in real-time and to aid in determining the overall effects of treatment choices and to alter treatment, if necessary

PATENTS AND INTELLECTUAL PROPERTY

We hold a U.S. Patent for our sample delivery system which expires in 2026. This is the basis for our Express system platforms, as follows:

U.S. Patent No.	Issued	Expires	Nature	Type	Description
7,749,771	7/6/2010	/ /2026	test device	utility	Device and methods for detecting analyte in a sample

We also have received or applied for patent protection in Brazil.

We two US registered trademarks for the names Rapid 1-2-3 Hema Express® and Rapid 1-2-3®.

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We believe our long-term success will substantially depend upon our ability to obtain patent protection for our technology and our ability to protect our technology from infringement, misappropriation, discovery and duplication. We cannot be sure that any future patents will be granted, or that any patents which we now own or obtain in the future will fully protect our position. Our patent rights and the patent rights of medical device companies in general, are uncertain and con include complex legal and factual issues. We believe that our existing technology and the patents which we hold or for which we have applied do not infringe anyone else's patent rights. We believe our patent rights will provide meaningful protection against others duplicating our proprietary technologies. We cannot be sure of this, however, because of the complexity of the legal and scientific issues that could arise in litigation over these issues.

REGULATORY PROCESS AND APPROVAL

Governmental Regulation

The manufacturing and marketing of the our existing and proposed diagnostic products are regulated by the United States Food and Drug Administration ( “FDA" ) and comparable regulatory bodies in other countries. Our products are also regulated by, subject to approval by, or must meet standards set by, of certain non-governmental organizations involved in the purchase and distribution of products like ours. These regulations and standards govern almost all aspects of development, production and marketing, including product testing, authorizations to market, labeling, promotion, manufacturing and record keeping.

The Company's FDA regulated products require some form of action by that agency before they can be marketed in the United States, and, after approval or clearance, the Company must continue to comply with other FDA requirements applicable to marketed products, e.g. Quality Systems (for medical devices). Failure to comply with the FDA ' s requirements can lead to significant penalties, both before and after approval or clearance.

There are two review procedures by which medical devices can receive FDA clearance or approval. Some products may qualify for clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act, in which the manufacturer provides a pre-market notification that it intends to begin marketing the product, and shows that the product is substantially equivalent to another legally marketed product (i.e., that it has the same intended use and is as safe and effective as a legally marketed device and does not raise different questions of safety and effectiveness). In some cases, the submission must include data from human clinical studies. Marketing may commence when the FDA issues a clearance letter finding such substantial equivalence.

If the medical device does not qualify for the 510(k) procedure (either because it is not substantially equivalent to a legally marketed device or because it is required by statute and the FDA ' s implementing regulations have an approved application), the FDA must approve a Pre-Marketing Application ( " PMA " ) before marketing can begin. PMA ' s must demonstrate, among other matters, that the medical device provides a reasonable assurance of safety and effectiveness. A PMA application is typically a complex submission, including the results of non-clinical and clinical studies. Preparing a PMA application is a much more expensive, detailed and time-consuming process as compared with a 510(K) pre-market notification.

In addition, the FDA regulates the export of medical devices that have not been approved for marketing in the United States. The Federal Food, Drug and Cosmetic Act contains general requirements for any medical device that may not be sold in the United States and is intended for export. Specifically, a medical device intended for export is not deemed to be adulterated or misbranded if the product: (1) complies with the specifications of the foreign purchaser; (2) is not in conflict with the laws of the country to which it is intended for export; (3) is prominently labeled on the outside of the shipping package that it is intended for export; and (4) is not sold or offered for sale in the United States. However, the Federal Food, Drug and Cosmetic Act does permit the export of devices to any country in the world, if the device complies with the laws of the importing country and has valid marketing authorization in one of several " listed " countries under the theory that these listed countries have sophisticated mechanisms for the review of medical devices for safety and effectiveness.

The Company is also subject to regulations in foreign countries governing products, human clinical trials and marketing, and may need to obtain approval or evaluations by international public health agencies, such as the World Health Organization, in order to sell diagnostic products in certain countries. Approval processes vary from country to country, and the length of time required for approval or to obtain other clearances may in some cases be longer than that required for United States governmental approvals. On the other hand, the fact that our HIV diagnostic tests are of value in the AIDS epidemic may lead to some government process being expedited. The extent of potentially adverse governmental regulation affecting HDS that might arise from future legislative or administrative action cannot be predicted.

Our products rely on international regulatory approvals for sale into markets outside of the USA, and, domestically, our devices would require US FDA approval and in some cases, WHO approvals. These approvals allow for passage to the Global Fund funding process.

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It is our intent to focus on both the domestic and international regulatory approvals.

Domestically, we intend on submitting our devices to the FDA under a Pre-Market Approval Application (PMA) or through the 510K process. The 510K would require the appropriate regulatory administrative submissions as well as a limited scientific review by the FDA to determine completeness (acceptance and filing reviews); in-depth scientific, regulatory, and Quality System review by appropriate FDA personnel (substantive review); review and recommendation by the appropriate advisory committee (panel review); and final deliberations, documentation, and notification of the FDA decision. The PMA process is more extensive, requiring clinical trials to support the application. We expect to apply to FDA for approval of our first RDT to be submitted to the FDA for 510K approval within the next 3 months. We anticipate the FDA process will be completed within 9-12 months after submission. During this timeline we will be preparing documentation for additional rapid tests to undergo either the FDA PMA or 510k process. We have not yet competed an assessment of whether our products will qualify for approval under the 5010K process or we will be required to engage in the more cumbersome Pre-Market Approval Application.

Internationally, we intend on submitting our Express devices and cassettes to the World Health Organization (WHO) process which requires a full regulatory and quality documentation dossier, produced and compiled by the Company. WHO process requires laboratory testing and evaluation and then clinical trials for public deployment and documentation throughout the whole process.

Once the WHO process is complete and documented, there is a submission into the Global Fund, which is a partnership between governments, civil society, the private sector and people affected by infectious diseases specifically HIV/AIDs, tuberculosis, and malaria.

The Global Fund raises and invests nearly $4 billion a year to support programs run by local experts in countries that are most in need.

It is our intent to submit all of our RTDs and cassettes and Express to the FDA, WHO and the Global Fund for regulatory review and approval for HIV, TB and malaria.

Currently, both our cassette malaria pF and malaria pF/pV have been approved under the WHO process. The cassette malaria pF/Pan was submitted to the WHO in February 2015, and we anticipate final review and approval before the end of the year.

PRODUCT STRATEGY

Our product strategy is to offer RTDs and other medical devices and tests that are consistent with simplicity in design; that are cost effective; that are easy to use; deliver fast and accurate results with a substantially reduced possibility of user error.

All product components required to operate the RDT are contained in each individual RDT foil pouch based upon options selected by the buyer. Each pouch has written and pictorial instructions clearly illustrating product use on the back. Each is color coded for each specific diagnostic thereby making test administering easy. This minimizes cross-contamination.

Our product mix was achieved by incorporating our Express or Express II housing/delivery system with a validated test strip. This allows us to accommodate our current and future test strips into either delivery system.

COMPETITIVE ADVANTAGE

We believe our unique and simple EXPRESS product design delivers significant advantages over our competition.

Due to the potential infectious character of the whole blood test sample, our Express series of RDTs are designed to perform and deliver test results while sealed within the Express housing, carefully controlling the potentially infectious test sample. This design helps to increase our ability to control the possibility of cross-contamination. Most of our competitors’ products, while inexpensive, are not as user-friendly, require substantially more training and have greater risk of cross- contamination.

Our products are more intuitive and self-explanatory than our competitors making it easier and safer to use. Our products require less training and education. Each Express is configured to operate in the same way regardless of the type of disease being tested.

With ease of use, simple design and faster results, our products allow for more tests administered at the patient point of care level.

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We will compete on the basis these advantages. Most of our competitors’ products, while inexpensive, are not as user-friendly, require substantially more training and have greater risk of cross- contamination.

COMPETITION

The diagnostics industry is a multi-billion dollar international industry and is intensely competitive. Many of our competitors are substantially larger and have greater financial, research, manufacturing and marketing resources. Industry competition in general is based on the following:

•	Scientific and technological capability;

•	Proprietary know-how;

•	The ability to develop and market products and processes;

•	The ability to obtain FDA or other required regulatory approvals;

•

The ability to manufacture products that meet applicable governmental and NGO requirements;

•

The ability to manufacture products cost-effectively;

•	Access to adequate capital;

•	The ability to attract and retain qualified personnel; and

•	The availability of patent protection.

We believe our scientific and technological capabilities as well as our proprietary technology and know-how relating to our rapid tests, particularly for the development and manufacture of tests for the detection of antibodies to infectious diseases, are very strong.

Alere Inc.

Alere is our main competitor and one of the major player in RTDs for infectious diseases. Alere markets the Alere HIV Combo Ag/Ab test, which uses the lateral flow technology patent. Alere acquired the patent from Abbott over a decade ago. Alere subsequently acquired Standard Diagnostics of Korea and Accon of China.

In early 2016, Abbot Laboratories agreed to acquire Alere for $5.8 billion. However, Abbot recently started litigation to terminate the agreement. In the event Abbot does acquire Alere, Alere would lose the strength of Abbott, becoming as formidable competitor as it currently is.

Standard Diagnostics

Standard Diagnostics was a state funded entity in South Korea established to build and expand into the international markets under its own brand until it was acquired by Inverness, the predecessor to Alere, in 2006.

With funding from Inverness for regulatory registrations and a previously established cassette product line, Standard was able to capture a strong market share of purchased for use in Africa with funding from WHO and the Global Fund. Currently, Standard is the strongest competitor on an international basis, incorporating a cassette design into each of their products.

Chembio Diagnostic Systems, Inc.

Chembio Diagnostic Systems is a publicly traded diagnostic company that develops, manufactures and commercializes diagnostic solutions. Chembio uses its patented Next Generation DPP (Dual Path Platform) technology that makes claims of significant advantages over the Alere’s lateral-flow technology.

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It has continued building its product line and entered into US FDA approval for a rapid HIV test approved for professional use only in the United States.

Other Competition

As infectious diseases are epidemic and in the minds of the public, there will be more competitors coming into the market place. However, competition will be based upon the implementation of a cassette or a “dipstick” format.

FACILITIES

The Company’s corporate office for product development and regulatory affairs is an FDA Registered Facility with a fully staffed laboratory and assembly facility in Miramar, Florida.

Based on order size, delivery requirements and current orders in process, our Miramar facility can handle up to 4 million RTD devices, all of which are currently hand assembled. We have long-standing relationships with subcontractors to handle additional production requirements. Currently, shipments have been made to agencies for regulatory approvals and for initial market entry and we are in process to apply for a US. FDA, and newly announced WHO approvals which will reduce the WHO process form 24-30 months down to approximately 6-9 months.

Cassette production is conducted through subcontractors in India and China. Each site operates under GMP (Good Manufacturing Practice) as well as being compliant with ISO 9001 and ISO13485. All HDS cassettes are included in our U.S. Certificate of Exportability and European Union CE Mark registrations. Additionally, two of our cassette malaria tests are approved by the WHO with a third approval due to be announced before the end of 2016.

We have established Quality and Assembly Agreements as well as Confidentiality Agreements with our subcontractors. All are subject to our inspection at a moment’s notice.

The quality of final assembly of each of our products is maintained under the strict guidelines of our internal Quality System, which forms the basis for the Company’s ISO13485 rating.

Full quality oversight is mandatory and final batch release testing is conducted on each lot of products assembled prior to shipment release.

With full automation, the Company anticipates to produce up to 10 million Express devices annually. Expanded production would allow for additional expansion beyond this volume. Additionally, subcontractors would provide approximately 60 million cassette tests per year.

SALES DEVELOPMENT

Our sales will be dependent on regulatory approvals issued by such agencies as the WHO, FDA and registration with the Global Fund. These approvals are a key element in the sales and marketing effort on an international basis.

WHO Approved

Following the successful fulfillment of previous PFSCM (Partnership for Supply Chain Management) and WHO shipments, HDS continues to participate in requests for proposals from PFSCM for our currently WHO-approved HDS Malaria test.

The Company is now awaiting the approval of an additional Malaria RDT which the WHO has stated will be announced by December 15, 2016 pending test results. This will then be the third HDS Malaria test that is approved under the WHO program.

The Company will also participate in the newly designed and recently announced WHO Pre-Qualification Program for Malaria RDTs. It is our intention to present the new Malaria Express II devices for Pf, Pf/Pv and Pf/Pan for this Pre-Qualification Program. The WHO will also extend the expedited approval process to include other diseases including HIV.

Long Term WHO Agreement

In February 2016, HDS signed a Long Term Two Year Agreement with the WHO for the supply of the first HDS Malaria tests.

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Offering a highly competitive rate in close cooperation with our subcontractor, we expect to see increased sales for these products during the life of that agreement. However, the agreement with WHO allows us to compete for WHO funded projects, but does not guarantee any specific sales.

USAID

USAID has submitted to the Company a request for participation in a Long Term Agreement for the HDS Malaria Tests. The prerequisite will be the same as those requirements satisfied during the WHO evaluation process and which qualified our tests for purchase by the WHO. In FY2105, USAID purchased $24.5 million in malaria tests. USAID is the lead U.S. Government agency that works to end extreme global poverty and enable resilient, democratic societies to realize their potential and which supports the sale of RDTs to those same countries.

European Union

The European Union has also initiated the preliminary purchase process of our Express devices for Typhoid, Hepatitis-C, Hepatitis-B, Tuberculosis, Syphilis, Malaria and Dengue.

The requirement was made by established NGOs in Greece in cooperation with other international funding agencies.

Purchases of EXPRESS devices for Malaria and Tuberculosis ordered are to be financed by the Internal Security Fund of the European Union and details in the RFQ specifies the advanced performance specifications of the “HEMA RAPID” device.

The current requirement is for 300,000 total tests at an average of $2.10/test and is pending confirmation of funds and a renegotiation on ship schedule. Currently, due to difficulties within Greece, this requirement has been held up pending resolution.

Concurrent to this requirement is a pending order for approximately 250,000 HDS Express HIV tests. This order is being coordinated by a Netherlands NGO that has and continues to act as supply-chain management. This organization has committed to including HDS products in their current inventories and has additional requirements that span beyond the initial 250,000 devices. This includes several other RFP opportunities for other HDS testing approved products.

We have received a commitment from an NGO in Paris with sustaining ties to the country of Nigeria. The commitment signals a storing intent on the part of this NGO, but is not a binding order for products. The issuance of the order depends greatly upon the exchange rate of the target country and the US dollar. As of this date, the rate of exchange has delayed the issuance of a purchase order.

LEGAL PROCEEDINGS

Hema is not a party to any pending legal proceedings. Pursuant to the terms of the Acquisition Agreement, responsibility for any Hema liability emerging from Hema’s business prior to closing relies wholly with the pre-transaction Hema shareholders but there is no assurance they would have the assets available to pay any liability resulting from litigation.

RISK FACTORS RELATING TO HEMA’S BUSINESS

In addition to the other information included in this Current Report on Form 8-K, you should carefully review and consider the factors discussed in Part I, Item 1A - Risk Factors of our Annual Report on Form 10-K for the year ended July 31, 2016 and our subsequent Quarterly Reports on Form 10-Q. These factors materially affect our business, financial condition or future results of operations. The risks, uncertainties and other factors described in our Annual Report on Form 10-K, our Reports on Form 10-Q and below are not the only ones facing our company. Additional risks, uncertainties and other factors not presently known to us or that we currently deem immaterial may also impair our business operations, financial condition or operating results. Any of the risks, uncertainties and other factors could cause the trading price of our common stock to decline substantially.

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Risks related to our industry, business and strategy

Because we may not be able to obtain or maintain the necessary regulatory approvals for some of our products, we may not generate revenues in the amounts we expect, or in the amounts necessary to continue our business. Our existing products as well as our manufacturing facility must meet quality standards and are subject to inspection by a number of domestic regulatory and other governmental and non-governmental agencies.

All of Hema’s proposed and existing products are subject to regulation in the U.S. by the U.S. Food and Drug Administration, the U.S. Department of Agriculture and/or other domestic and international governmental, public health agencies, regulatory bodies or non-governmental organizations. In particular, we are subject to strict governmental controls on the development, manufacturing, labeling, distribution and marketing of our products. The process of obtaining required approvals or clearances varies according to the nature of, and uses for, a specific product. These processes can involve lengthy and detailed laboratory testing, human or animal clinical trials, sampling activities, and other costly, time-consuming procedures. The submission of an application to a regulatory authority does not guarantee that the authority will grant an approval or clearance for that product. Each authority may impose its own requirements and can delay or refuse to grant approval or clearance, even though a product has been approved in another country.

The time taken to obtain approval or clearance varies depending on the nature of the application and may result in the passage of a significant period of time from the date of submission of the application. Delays in the approval or clearance processes increase the risk that we will not succeed in introducing or selling the subject products, and we may determine to devote our resources to different products.

Changes in government regulations could increase our costs and could require us to undergo additional trials or procedures, or could make it impractical or impossible for us to market our products for certain uses, in certain markets, or at all.

Changes in government regulations may adversely affect our financial condition and results of operations because we may have to incur additional expenses if we are required to change or implement new testing, manufacturing and control procedures. If we are required to devote resources to develop such new procedures, we may not have sufficient resources to devote to research and development, marketing, or other activities that are critical to our business.

We can manufacture and sell our products only if we comply with regulations and quality standards established by government agencies such as the FDA and the U.S. Department of Agriculture (“USDA”) as well as by non-governmental organizations such as the International Organization for Standardization (“ISO”) and WHO. We have implemented a quality control system that is intended to comply with applicable regulations. Although FDA approval is not required for the export of our products, there are export regulations promulgated by the FDA that specifically relate to the export of our products that require compliance with FDA quality system regulation and that also require meeting certain documentary requirements regarding the approval of the product in export markets. Although we believe that we meet the regulatory standards required for the export of our products, these regulations could change in a manner that could adversely impact our ability to export our products.

Our products may not be able to compete with new diagnostic products or existing products developed by well-established competitors, which would negatively affect our business.

The diagnostic industry is focused on the testing of biological specimens in a laboratory or at the point-of-care and is highly competitive and rapidly changing. Some of our principal competitors may have considerably greater financial, technical and marketing resources than we do. Several companies produce diagnostic tests that compete directly with our testing product line, including but not limited to, Chembio Diagnostics and Abbot Laboratories. Furthermore these and/or other companies have or may have products incorporating molecular and/or other advanced technologies that over time could directly compete with our testing product line. As new products incorporating new technologies enter the market, our products may become obsolete or a competitor's products may be more effective or more effectively marketed and sold.

There are competing products that could significantly reduce our U.S. sales of rapid HIV tests.

In 2006 Alere, Inc. acquired a division from Abbott Diagnostic located in Japan that manufactured and marketed a rapid HIV test product line called Determine®. The Determine® format was developed for the developing world and remote settings and, central to the needs of that market. The format is essentially a test strip that is integrated into a thin foil wrapper. When opened, the underside of the wrapper serves as the test surface for applying the blood sample and performing the test. This design reduces costs and shipping weights and volumes and provides an advantage for the developing world markets it serves. Some of the disadvantages of the platform are the amount of blood sample that is needed (50 microliters versus 2.5, 5 and 10 for our lateral flow barrel, lateral flow cassette, and DPP® products respectively), the open nature of the test surface, and the absence of a true control that differentiates biological from other kinds of samples.

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The so-called "3rd generation" version of this product has been marketed for many years and is the leading rapid HIV test that is used in a large majority of the national algorithms of countries funded by PEPFAR and the Global Fund, as well as many other countries in the world. That product is not FDA-approved though it is CE marked. The newest Determine® HIV version, which was developed and manufactured by Alere's subsidiary in Israel, Orgenics, is the so-called "4th Generation" version Determine® test. According to its claims, this product detects HIV antibodies and P24 HIV antigens. Because the P24 antigen is known to occur in HIV-positive individuals' blood samples before antibodies do, the 4th generation Determine® test is designed to detect HIV infection earlier than tests that solely rely on antibody detection. HDS’ tests, as well as all of the other currently FDA-approved rapid HIV tests, only detect antibodies.

The initial "4th generation" Alere Determine® rapid test product that was also CE marked and that Alere launched internationally some years ago has not been successfully commercialized to the best of our knowledge and at least certain published studies were not favorable for this product. However the 4th generation product that is now FDA-approved was apparently modified as compared to the initial international version, and it may perform more satisfactorily. Alere received FDA approval of this modified product in August 2013 and CLIA waiver for it in December 2014. Alere is also aggressively pursuing development of the market for this product. Moreover there is support by a number of key opinion leaders for the public health value of such 4th generation tests, and this product represents a significant competitive threat to Chembio as well as to each of the other rapid HIV test manufacturers (OraSure and Trinity primarily).

During 2011, Biolytical, Inc. of Vancouver, Canada received FDA approval and in 2012 received CLIA waiver of a flow-through rapid HIV test called "INSTI". The flow-through technology used in the INSTI test is older than lateral flow, and requires handling of multiple components (3 vials of solution) to perform the test in multiple steps. However, these steps can be accomplished in less than ten minutes, and the actual test results occur in only one minute after those steps are completed. Therefore sample-to-result time is shorter than any of the competitive products. The product also has good performance claims. There are settings where that reduced total test time, despite the multiple steps required, may be a distinct advantage, and we believe Biolytical has made some progress in penetrating certain public health markets.

Therefore, even though our lateral flow products currently enjoy a substantial market share in the U.S. rapid HIV test market, and we have an additional rapid HIV test, the DPP® HIV 1/2 Assay, there a number of risks and uncertainties concerning current and anticipated developments in this market. Although we have no specific knowledge of any other new product that is a significant competitive threat to our products, or that will render our products obsolete, if we fail to maintain and enhance our competitive position or fail to introduce new products and product features, our customers may decide to use products developed by our competitors, which could result in a loss of revenues and cash flow.

More generally, the point-of-care diagnostics industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services. As new technologies become introduced into the point-of-care diagnostic testing market, we may be required to commit considerable additional efforts, time and resources to enhance our current product portfolio or develop new products. We may not have the available time and resources to accomplish this, and many of our competitors have substantially greater financial and other resources to invest in technological improvements. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers, which would materially harm our operating results.

Our use of third-party suppliers, some of which may constitute our sole supply source, for certain important product components presents a risk that could have negative consequences for other business.

A number of our components and critical raw materials are provided by third-party suppliers, some of which may be sole-source suppliers, which impacts our ability to manufacture or sell product if our suppliers cannot or will not deliver those materials in a timely fashion, or at all, due to an interruption in their supply, quality or technical issues, or any other reason. If this occurs, we could incur substantial expense and time to be able to reestablish the appropriate quality, cost, regulatory and market-acceptance circumstances needed for commercial success. Even with the needed expense and time, we may not be able to reestablish any or all of these factors. The absence of any one or more of these factors could prevent us from being able to commercially produce and market the affected product or products.

New developments in health treatments or new non-diagnostic products may reduce or eliminate the demand for our products.

The development and commercialization of products outside of the diagnostics industry could adversely affect sales of our products. For example, the development of a safe and effective vaccine to HIV or treatments for other diseases or conditions that our products are designed to detect, could reduce or eventually eliminate the demand for our HIV or other diagnostic products and result in a loss of revenues.

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We may not have sufficient resources to effectively introduce and market our products, which could materially harm our operating results.

Introducing and achieving market acceptance for our products will require substantial marketing efforts and will require us and/or our contract partners, sales agents, and/or distributors to make significant expenditures of time and money. In some instances we will be significantly or totally reliant on the marketing efforts and expenditures of our contract partners, sales agents, and/or distributors. If they do not have or commit the expertise and resources to effectively market the products that we manufacture, our operating results will be materially harmed.

The success of our business depends on, in addition to the market success of our products, our ability to raise additional capital through the sale of debt or equity or through borrowing, and we may not be able to raise capital or borrow funds on attractive terms and/or in amounts necessary to continue our business, or at all.

Our liquidity and cash requirements will depend on several factors. These factors include, among others, (1) the level of revenues; (2) the extent to which, if any, that revenue level improves operating cash flows; (3) our investments in research and development, facilities, marketing, regulatory approvals, and other investments we may determine to make; and (4) our investment in capital equipment and the extent to which it improves cash flow through operating efficiencies. We do not expect to generate positive cash flow in next twelve months, and we cannot be sure that we will be successful in raising sufficient capital to fund our needs. If we are not able to raise additional capital from another source, we will be required to substantially reduce our operating costs, including the possibilities of suspending our unfunded research and development activities, and quickly curtailing any cash flow negative product initiatives.

Our near term sales are difficult to predict in the uncertain status of pending orders and certain regulatory approvals, and the uncertain time until we have approval to sell in the US. We believe that underlying demand for HIV rapid testing in the United States remains strong, and that the restoration of some of the funding cutbacks from sequestration and the implementation of the Affordable Care Act and of the United States Preventive Services Task Force recommendations will have a positive impact on the development of the market.

However, development of new customers with this product is costly and time-consuming.

Currently, we are dependent on international sales of our products, since we have no products approved by the FDA for US sales. The nature of international business is such that it can be volatile from period to period, depending on ordering patterns of donor-funded programs.

A number of factors can slow or prevent international sales increases or cause sales decreases, or substantially increase the cost of achieving sales assuming they are achieved. These factors include:

•

economic conditions and the absence of or reduction in available funding sources;

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regulatory requirements and customs regulations;

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cultural and political differences;

	•	foreign exchange rates, currency fluctuations and tariffs;
	•	dependence on and difficulties in managing international distributors or representatives;

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the creditworthiness of foreign entities;

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difficulties in foreign accounts receivable collection;

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competition;

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pricing; and

•

any inability we may have in maintaining or increasing revenues.

If we are unable to increase our revenues from domestic and/or international customers, our operating results will be materially harmed.

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Although we have an ethics and anti-corruption policy in place, and have no knowledge or reason to know of any practices by our employees, agents or distributors that could be construed as in violation of such policies, our business includes sales of products to countries where there is or may be widespread corruption.

HDS has a policy in place prohibiting its employees, distributors and agents from engaging in corrupt business practices, including activities prohibited by the United States Foreign Corrupt Practices Act (the “FCPA”). Nevertheless, because we work through independent sales agents and distributors outside the United States, we do not have control over the day-to-day activities of such independent agents and distributors. In addition, in the donor-funded markets in Africa where we sell our products, there is significant oversight from PEPFAR, the Global Fund, and advisory committees comprised of technical experts concerning the development and establishment of national testing protocols. This is a process that includes an overall assessment of a product which includes extensive product performance evaluations including five active collaborations and manufacturer’s quality systems, as well as price and delivery. In Brazil, where we have had a total of six product collaborations with FIOCRUZ, the programs through which our products may be deployed are all funded by the Brazilian Ministry of Health. Although FIOCRUZ is affiliated with the Brazilian Ministry of Health, and is its sole customer. We have no knowledge or reason to know of any activities by our employees, distributors or sales agents of any actions which could be in violation of the FCPA, although there can be no assurance of this.

To the extent that we are unable to collect our outstanding accounts receivable, our operating results could be materially harmed.

There may be circumstances and timing that require us to accept payment terms, including delayed payment terms, from distributors or customers, which, if not satisfied, could cause financial losses.

We generally accept payment terms which require us to ship product before the contract price has been paid fully, and there also are circumstances pursuant to which we may accept further delayed payment terms pursuant to which we may continue to deliver product. To the extent that these circumstances result in significant accounts receivables and those accounts receivables are not paid on a timely basis, or are not paid at all, especially if concentrated in one or two customers, we could suffer financial losses.

Item 3 Properties.

Hema’s corporate offices, product development facilities, regulatory affairs offices, and laboratory and assembly facilities are contained in a 5,627 square foot facility in Mirama, Florida. The facility is leased through June 30, 2017, with a current monthly rent of $4,134. Our facility is an FDA Registered Facility. Based on order size, delivery requirements and current orders in process, our Miramar facility can handle up to 4 million RTD devices, all of which are currently hand assembled. We have relationships with subcontractors to handle additional production requirements.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF HEMA.

The following discussion and analysis by management provides information with respect to Hema’s financial condition and results of operations for the fiscal years ended December 31, 2015 and 2014, as well as the nine month periods ended September 30, 2016 and 2015. This discussion should be read in conjunction with the information in the consolidated financial statements and the notes pertaining thereto contained inItem 9.01 - Financial Statements of Business Acquiredof this Current Report on Form 8-K and the information discussed in, Item 1A - Risk Factors. This discussion includes forward-looking statements that involve risk and uncertainties. As a result of many factors, such as those set forth above under “Risk Factors,” actual results may differ materially from those anticipated in these forward-looking statements.

The Hema financial statements included in this Report are were prepared on a combined basis with Rapid Medical Diagnostics Corp. and Hema Diagnostic Systems, S.A.. During the periods represented by the financial statements, these two companies were separately owned by Hema’s equity owners. Immediately prior to the Acquisition, these two companies became wholly owned subsidiaries of Hema, and our financial statements for periods after the Acquisition will be presented on a consolidated basis. Since all transactions and accounts between and among the three entities have been eliminated in the combined financial statements, we do not believe the combined financial statements differ materially from financial statements presented on a consolidated basis.

Overview of Business

Hema Diagnostic Systems was established in December, 2000 to market and distribute rapid test devices for infectious diseases. Since 2002, we have been developing an expanding line of rapid diagnostic tests (RDTs) including such diseases as Human Immunodeficiency Virus (HIV) – 1/2, tuberculosis, malaria, hepatitis, syphilis, typhoid, dengue as well as other infectious diseases. We distribute our own products and manufacture our devices in-house as well as through contract manufacturers. Some sub-components, made to our specifications, are produced in China, India and Germany. Our products are rapid immunochromatographic medical diagnostics that are administered at the point of care (POC) level and which can produce results as in as little as 10-15 minutes.

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Due to the potential infectious character of the whole blood test sample, our Express series of RDTs are designed to perform and deliver test results while within the sealed Express housing, carefully controlling the potentially infectious test sample. This design helps to increase our ability to control the possibility of cross-contamination. Most of our competitors’ products, while inexpensive, are not as user-friendly, require substantially more training and have greater risk of cross- contamination.

We have two subsidiaries which are integral parts of our primary business. Rapid Medical Diagnostics Corp. has historically been the reserve for our research and development and holds the patent(s) on our technology. Hema Diagnostic Systems, S.A. was established to distribute our products in Central and South America.

Our products are subject to extensive regulatory oversight by government and other organizations and rely on international regulatory approvals for sale into markets outside of the USA. Domestically, our devices would require US FDA approval and in some cases, international sales require World Health Organization (WHO) approval.

We maintain a Federal Drug Administration (FDA) registered facility in Miramar, Florida and are certified under both ISO9001 and ISO13485 for the “Design, Development, Production and Distribution” of the in-vitro devices. Approval of our HIV rapid test has been issued by the United States Agency for International Development (USAID). USAID approval allows us to offer our product to those countries where USAID provides such funding. Some of our products have qualified for and use the European Union issued “CE” Mark, which allows us to enter into CE Member countries subject to individual country documentation and approval. Currently, two malaria rapid tests are approved under World Health Organization (WHO) guidelines with a third awaiting approval in December 2016 pending test results. WHO approval is necessary for those countries who rely upon the expertise of the WHO, as well as for NGO funding. HDS products have also received registrations and approvals issued by other foreign governments. HDS is currently in the planning phase for entering into the newly announced, WHO “Pre-Qualified Approval” process for other HDS tests. This process allows expedited approval of rapid tests, reducing the current 24-30 month process time down to approximately 6-9 months. HDS products are also listed and offered internationally through the UNICEF and UNDP. On February 2016, we entered into a Long Term Agreement with the WHO for the approved rapid tests. While receiving small orders resulting from this Agreement, we anticipate larger orders from the WHO as our relationship expands.

We maintain current U.S. Certificates of Exportability that are issued by two FDA divisions-CBER and CDRH. CBER (Center for Biologicals Evaluation and Research) is the FDA regulatory division that oversees biological devices and which include our HIV, Hepatitis B and Hepatitis C. The other division, Center for Devices and Radiological Health (CDRH), is responsible for the oversight of other HDS devices which include Tuberculosis, Syphilis, and the remaining product line. Certificates of Exportability are issued to Hema Diagnostic Systems. Our HDS facility maintains FDA Establishment Registration status and is in accord with GMP (Good Manufacturing Practice) as confirmed by the FDA.

We do not currently have FDA approval to sell any of our products in the United States. We intend on submitting our devices to the FDA under a Pre-Market Approval Application (PMA) or through the 510K process. The 510K would require the appropriate regulatory administrative submissions as well as a limited scientific review by the FDA to determine completeness (acceptance and filing reviews); in-depth scientific, regulatory, and Quality System review by appropriate FDA personnel (substantive review); review and recommendation by the appropriate advisory committee (panel review); and final deliberations, documentation, and notification of the FDA decision. The PMA process is more extensive, requiring clinical trials to support the application. We expect to apply to FDA for approval of our first RDT to be submitted to the FDA for 510K approval within the next 3 months. We anticipate the FDA process will be completed within 9 months after submission. During this timeline we will be preparing documentation for additional rapid tests to undergo either the FDA PMA or 510k process.

Our target markets include domestic sales within the USA as well as internationally. The US FDA approval will serve to expedite international approvals as well as allow us to enter into the domestic market.

We have a limited history of operations, and our revenues have been insignificant compared to our expenses. We have not been profitable and our owners deficit was $13,788,014 at September 30, 2016. As of September 30, 2016, our current cash position is not sufficient to meet our working capital needs for the next twelve months. To continue operations, we will require additional funds to support our working capital requirements and any development activities, or will need to suspend operations. Our past activities have been primarily financed by loans and capital contributions from our former primary. We entered into the Acquisition with the expectation that the existence of a public market for Generex’s stock would enable us to access financing from various sources. We cannot provide any assurance that we will obtain the required funding. Our inability to obtain required funding in the near future or our inability to obtain funding on favorable terms will have a material adverse effect on our operations and our strategic development plan for future growth. If we cannot successfully raise additional capital and implement our strategic development plan, our liquidity, financial condition and business prospects will be materially and adversely affected and we may have to cease operations.

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Hema operates in only one segment: in-vitro medical diagnostic devices (RDTs) administered at the point of care level.

Accounting for Research and Development Projects

In the fiscal years ended December 31. 2015 and 2014, research and development expenses were more than 50% of our total expense. In the nine months ended September 30, 2015, research and development continued to be our largest expense category. Most of research and development activities to date have involved developing the platform technologies for our in-vitro point of care level rapid response diagnostics. As a result, we have not made significant distinctions in the accounting for research and development expenses among products, as a significant portion of all research has involved improvements to the platform technologies which benefits all of our products.

Because of various uncertainties, including the requirements for governmental regulatory approvals, WHO approvals and the issuance of purchase orders by governmental and non-governmental agencies who are the primary purchasers of our products, we cannot predict when any products may begin to produce net cash inflows.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements which have been prepared in conformity with accounting principles generally accepted in the United States of America. It requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

We consider certain accounting policies related to impairment of long-lived assets, intangible assets and accrued liabilities to be critical to our business operations and the understanding of our results of operations:

Going Concern. As shown in the accompanying financial statements, we have not been profitable and have reported recurring losses from operations. These factors raise substantial doubt about our ability to continue to operate in the normal course of business. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. Estimates which are particularly significant to our financial statements include estimates relating to the determination of impairment of assets, the useful life of property and equipment and the recoverability of advances.

Inventory. Our inventory is stated at the lower of cost or net realizable value. Cost is determined using the Weighted Average method. We periodically evaluates our inventory for any obsolete or slow moving items based on production lots and advances in production design or technology. Any inventory determined to be obsolete or slow moving is removed from inventory and disposed or a provision is made to reduce slow moving inventory to its net realizable value. At December 31, 2015 and 2014, we recorded a reserve for obsolescence of $7,750 and $0, respectively.

Revenue Recognition. We have yet to fully commercialize its products and secure appropriate permits, approvals and licenses necessary to begin full worldwide distribution. We have had minimal sales to date. The revenue we have received primarily are related to trial samples and evaluation of the efficacy and suitability of the products to specific target markets. Sales and the related cost of sales are recognized primarily upon shipment of products (normally when title passes). Our revenue recognition policies are in compliance with ASC Topic 605, which establishes criteria that must be satisfied before revenue is realized or realizable and earned.

We recognize revenue when all of the following four criteria are met:

persuasive evidence of a sales arrangement exists,
delivery has occurred,
the sales price is fixed or determinable and
collectability is probable.

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Impairment of Long-Lived Assets. We evaluate long-lived assets for impairment, including property, plant and equipment and intangible assets, when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable or the assets are being held for sale. Upon the occurrence of a triggering event, the asset is reviewed to assess whether the estimated undiscounted cash flows expected from the use of the asset plus the residual value from the ultimate disposal exceeds the carrying value of the asset. If the carrying value exceeds the estimated recoverable amounts, the asset is written down to the estimated fair value. Any resulting impairment loss is reflected on the Combined Statements of Operations..

Intangible Assets. Our intangible assets consist of patent patented technology and trademarks. The determination of the related estimated useful lives and whether or not these assets are impaired involves significant judgments. Amortization is computed by applying the straight line method based on the remaining patent life. Our primary patent expires in 2026.

Income Taxes. Hema Diagnostic Systems, LLC is a limited liability corporation. Prior to the Acquisition, Rapid Medical Diagnostic Corp. was a Subchapter S corporation. Federal and state income tax regulations do not require a limited liability corporation or a Subchapter S corporation to pay income taxes. Rather each member’s allocable share of the profit or loss is reported in each member’s individual income tax return. Hema Diagnostics Systems Panama, S.A. is a Panamanian company. Due to its operational losses, no taxes are required. Accordingly, no provision or liability for income taxes is reflected for this reporting entity in the financial statements filed with tis Current Report. Following the Acquisition, all of these entities will be wholly owned subsidiary’s consolidated in Generex’s US federal income tax returns.

Results of Operations

Year ended December 31, 2015 Compared to Year ended December 31, 2014

We had a net loss for the fiscal year ended December 31, 2015 $1,041,889 versus a net loss of $999,529 in the prior fiscal year. The net loss in both years resulted from operating losses in of $985,939 in 2015 and $982,150 in 2014. Our major categories of expenses were materially consistent over both years Our revenues decreased from $18,023 in 2014 to $5,703 in 2015, primarily due to a decrease in available funds to purchase our products.

Our accrued interest expense, net of interest income in fiscal 2015 was $24,778 compared to the previous year’s fiscal period at $23,616. Interest expense arose primarily from loans payable to Stephen Berkman, Hema’s founder and former primary shareholder

Nine Months ended September 30, 2016 Compared to Nine Months ended September 30, 2015

Our net loss for the nine months ended September 30, 2016 was $959,273, an increase from our net loss of $724,175 for the comparable nine month period in 2015. The increase in net loss is attributable to an increase in operating expenses, which were $889,348 in the 2016 period and $724,173 in the 2015 period. An increase in interest expense net of interest income, which was $79,572 in the nine months ended September 30, 2016, an increase from $24,874 in the comparable 2015 period, also contributed to the increased net loss. The increase in operating expenses is primarily attributable to an increase in professional fees, which were $147,787 in the 2016 period versus $5,428 in the 2015 period. The increase in professional fees is primarily attributable to audit fees, accounting and increase in as well as an increase in fund raising and business development fees. The variation in interest expense is attributable to an increase in the interest rate from .21% to .75%.

Our revenues increased from $4,828 in the none months ended September 30, 2015 to $16,953 in the comparable 2016 period primarily due to expanded purchases from Supply Chain Management organizations. As additional products are approved by such agencies as the FDA and the WHO, we expect to see increased revenue. These approvals will allow easier access to international acceptance and registrations on a country by country basis allowing an increase in revenue.

Financial Condition, Liquidity and Resources

Sources of Liquidity

To date we have financed our development stage activities primarily from capital contributions and loans from Hema’s previous primary owner.

In the 9 months ended September 30, 2016, the former primary owner contributed $884,500 to the capital of the Company. Additional cash was generated in this period by the repayment in full of an $897,000 loan to Lawrence Salvo, Hema’s President and CEO and now a member of our board of directors. During the year ended December 31, 2015, Hema’s former principal owner made capital contributions of $1,111,000.

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While Hema did not receive any loans from it former principal owner in 2015 or 2016, as of the date of this Current Report, Hema owed this individual $13,260,472 for previous loans. The loans bear interest at .75% per annum and by their terms are payable on demand. In connection with the acquisition, the former principal owner has agreed to forgive these loans if the value of our stock owned by him achieves a specific level and the stock is registered for resale. See Item 1 – Acquisition, above.

As of September 31, 2016 and the date of this Current report, our current cash position is not sufficient to meet our working capital needs for the next twelve months. Therefore, we will require additional funds to support our working capital requirements and any development or other activities, or will need to curtail our research and development and other planned activities or suspend operations.

We will no longer be able to rely on Hema’s former primary owner for necessary financing. Going forward, we expect to finance our activities date primarily through private placements of Generex common stock, or preferred stock or debt securities convertible into common stock. These transactions will likely require us to register the privately sold securities for resale. We have no commitments for any such financing, however, and we do not know if we will be able to obtain the required financing.

Unforeseen problems with the conduct or results of Phase III clinical trials for Oral-lyn™ or further negative developments in general economic conditions could interfere with our ability to raise additional capital as needed, or materially adversely affect the terms upon which such capital is available. We cannot provide any assurance that we will obtain the required funding. Our inability to obtain required funding in the near future or our inability to obtain funding on favorable terms will have a material adverse effect on our operations and our strategic development plan for future growth. If we cannot successfully raise additional capital and implement our strategic development plan, our liquidity, financial condition and business prospects will be materially and adversely affected and we may have to cease operations.

Funding Requirements and Commitments

If we obtain necessary financing, we expect to devote substantial resources to obtaining WHO approval for additional products, obtaining FDA approval to sell our products in the United States, further developing our existing products and developing applications of our products for new diseases and conditions, as well as producing the necessary molds for the production of our delivery platforms and in the purchase of automated assembly equipment necessary to establish and maintain a competitive price in the world markets.

Our future funding requirements and commitments and our ability to raise additional capital will depend on factors that include:

•

the timing and amount of expense incurred to complete research and development;

•

the costs and timing of the regulatory process as we seek approval of our existing and new products in development;

•

our ability to generate new relationships with industry partners throughout the world that will provide us with long-term commercialization opportunities;

•

the timing, receipt and amount of sales, if any, from our products which are currently approved by WHO;

•

the cost of manufacturing of our products as well as component costs from our qualified sub-contractors, and the cost of marketing and sales activities of those products;

•

the costs of prosecuting, maintaining, and enforcing patent claims, if any claims are made;

•

our ability to obtain the necessary financing to fund our operations and effect our strategic development plan; and

•

the receptivity of the financial market to medical device and diagnostics companies.

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Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors, and we do not have any non-consolidated special purpose entities.

Tabular Disclosure of Contractual Obligations

Hema is, and both before and after the Acquisition, Generex is, a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.

Recently Adopted Accounting Pronouncements

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810)—Amendments to the Consolidation Analysis (“ASU 2015-02”), which provides guidance on evaluating whether a reporting entity should consolidate certain legal entities. Specifically, the amendments modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities. Further, the amendments eliminate the presumption that a general partner should consolidate a limited partnership, as well as affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. A reporting entity may apply the amendments using a modified retrospective approach or a full retrospective application. We are currently evaluating the impact, if any, that adopting ASU 2015-02 will have on Hema’s financial statements.

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CERTAIN TRANSACTIONS

Changes in Control

We know of no arrangements, including any pledge by any person of our securities, the operation of which may at a subsequent date result in the change in control of Generex.

Review of Related Party Transactions

Related Transactions

Prior to January 1, 2016, Hema advanced an aggregate of $893,372 to the Lawrence Salvo, Hema’s President and CEO, and since the closing of the Acquisition an officer and director Generex. These advances bore interest at .21% during 2015 and until paid in September, 2016. During September, 2016, the advances were repaid in full.

Hema is currently indebted to Stephen Berkman, the former principal equity owner of HDS, in the amount of $13,260,462 for loans, advances and other consideration. This debt was secured by a security interest in Hema’s assets. At Closing. Berkman terminated his security interest on the Company’s assets. At such time as certain conditions relating to the value of Generex securities owned by Mr. Berkman are satisfied, the loan payable from to Mr. Berkman will be deemed satisfied in full. See “Acquisition and Related Transactions,” above.

The debt to Mr. Berkman accrued prior to 2015. HDS did not receive any loans from Mr. Berkman in 2015 or 2016. The loans bear interest at .75% per annum and by their terms are payable on demand.

Hema historically made advances to Luis Agudelo, Hema’s Director of Latin American Sales and board member. As of December 31, 2015, net advances were $20,635. As of September 30, 206, net advances werer$16,013. During October 2016, an additional $14,735 was repaid. Mr. Agudelo is not an officer or director of Generex.

HDS has historically engaged in commercial and financial transactions with companies owned by one or more of its equity owners. From inception through 2007, China World Wide, a company owned by Mr. Salvo and Mr. Berkman provided supplemental funding to HDS on a non-interest basis. At September 30, 2016, HDS had an unpaid balance to China World Wide of $83,554. China World Wide has also assisted HDS in the development of its distribution and sourcing in China.

International Diagnostics and Medical Supply Corp. (IDMS) was established to create hemodialysis facilities on a global scale. IDMS is owned by Mr. Salvo, Mr. Agudelo and Mr. Berkman. Due to the high initial cost of establishing a hemodialysis facility, IDMS has not yet secured satisfactory funding to execute its business plan. Consequently, it has only engaged in minimal organizational activities. At September 30, 2016 HDS had an unpaid balance due from IDMS of $2,500 advanced to IDMS for legal fees incurred

Section 16(a) Beneficial Ownership Reporting Compliance

Item 3.02. Unregistered Sales of Equity Securities.

The disclosures set forth in Item 2.01 above are hereby incorporated by reference into this Item 3.02. The securities issued in connection with the Acquisition Agreement are restricted securities issued in reliance on the exemption provided in Section 4(a)(2) of the Securities Act of 1933.

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Appendix D

2017 EQUITY INCENTIVE PLAN

ARTICLE1

ESTABLISHMENT,PURPOSE,EFFECTIVEDATE,EXPIRATIONDATE

• ESTABLISHMENT.NuGenerex Biotechnology Holdings, Inc. (f/k/a Generex Biotechnology Corporation), aDelaware corporation (the “Company”), herebyestablishes theNuGenerex Biotechnology Holdings, Inc.2017Equity IncentivePlan(the “Plan”).

• PURPOSE. The purposeof thePlanis toadvance the interests of theCompanyand itsshareholders byenhancing theCompany’s ability toattract and retain qualified persons toperform services for theCompany,byproviding incentives to suchpersons to putforth maximum efforts for theCompany and byrewarding persons who contributetothe achievement of theCompany’s economic objectives. Tofurther theseobjectives,thePlan provides for thegrant ofOptions, StockAppreciation Rights, Restricted Stock, Restricted Stock Units,Stock Grants, Stock Units,Performance Shares and Performance Share Units. ThePlan also permits the grantofAwards that qualifyforthe “performance-based compensation” exception to thelimitationsonthe deductionofcompensation imposed bySection162(m) of theCode. At the same time, the Planpermits the Committee, inthe exercise ofits discretion,togrant Awards toCovered Employeesthatdo notqualify for the “performance-based compensation” exception.

• EFFECTIVE DATE. The Plan willbecomeeffectiveonthe date it is approved bythe shareholdersatthe Company’s 2017Special Meetingof Stockholders(the “Effective Date”).

1.4 EXPIRATIONDATE.ThePlanwill expire on, and noAward maybegranted underthe Plan after, the tenth(10th)anniversary oftheEffectiveDate (the “Expiration Date”). Any Awards that are outstanding on theExpiration Dateshall remain inforce according to thetermsof thePlan and theapplicable Award Agreement.

ARTICLE2

GLOSSARY; CONSTRUCTION

2.1GLOSSARY. Whenawordorphrase appears in this Plan document with the initial letter capitalized, and thewordorphrase does not commence asentence,theword orphrase will generally begiven themeaning ascribed to it inArticle 1 or inthe attached Glossary, whichis incorporated into and ispart ofthe Plan. Allofthese key terms are listed in theGlossary. Whenever these key terms areused,theywillbegiven the defined meaning unless aclearly different meaning isrequiredbythe context.

2.2CONSTRUCTION.Themasculine gender, where appearing in thePlan, shall include the feminine gender (andviceversa), and thesingular shall include the plural, unless thecontext clearly indicates to thecontrary.If anyprovisionofthis Plan isdetermined tobefor anyreason invalidorunenforceable, the remaining provisions shall continue infull force andeffect.

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ARTICLE3

ELIGIBILITYANDPARTICIPATION

1. GENERAL ELIGIBILITY. Persons eligibletoparticipateinthis Plan include allemployees, officers,Non-EmployeeDirectorsof, andConsultants to,the Companyorany Affiliate. Awardsmayalsobegranted to prospective employees orNon-Employee Directors but noportionof any suchAward will vest, become exercisable,beissued,orbecomeeffective prior tothe date on whichsuch individual begins toprovide services to the Company or itsAffiliates.

2.ACTUALPARTICIPATION. Subject totheprovisionsofthe Plan, the Committeemay, fromtime totime, select fromamongalleligible individuals, those towhom Awards will begranted andwilldetermine thenature and amountofeach Award.

ARTICLE4

ADMINISTRATION

4.1 GENERAL.ThePlan shall beadministered by theCommittee or, withrespect toindividuals who are Non-Employee Directors, the Board. All references inthe Plan to the“Committee” shall refer to theCommitteeorBoard, asapplicable. TheCommittee,bymajority action thereof, is authorized tointerpret the Plan, toprescribe, amend, andrescind rules andregulations as itmay deem necessary oradvisable toadminister thePlan, toprovide forconditionsandassurancesdeemednecessaryoradvisable to protect theinterestsofthe Company, and tomakeallother determinations necessary oradvisable for the administration of thePlan, but only tothe extent not contrary to theexpress provisions of thePlan. Determinations, interpretations, orother actions made ortakenby theCommittee ingood faith pursuanttothe provisions ofthe Planshallbefinal, binding andconclusive forall purposesofthe Plan.

4.2 COMMITTEE RESPONSIBILITIES. Subjectto theprovisionsofthe Plan, theCommittee shall have the authority to: (a) designate the Participants who are entitledtoreceive Awards under thePlan;(b)determine the types of Awards and thetimes when Awards will begranted;(c)determinethenumberofAwardsto begranted andthe number ofshares ofStock to which anAward will relate; (d) determine thetermsandconditionsof anyAward, including,but notlimitedto,the purchase priceorexercise price orbase value, the grant price, the period(s) duringwhich such Awards shall beexercisable (whether inwholeorin part); (e) anyrestrictions orlimitationsontheAward,anyschedule forlapseofrestrictions orlimitations, and accelerationsorwaivers thereof, based ineach caseon suchconsiderations as theCommittee determines; provided, however, that except in thecaseofaChange inControl, theCommittee shall not have the authority toaccelerate thevestingorwaive theforfeiture restrictionsonany Performance-Based Award; (f) determine whether, towhat extent, and inwhat circumstances anAward may besettledin, orthe exercise priceorpurchase price ofanAwardmaybepaid incash, Stock, orother Awards,orother property, orwhetheranAwardmay becanceled, forfeited, exchanged orsurrendered; (g) prescribe the form of eachAward Agreement, which need notbe thesameforeach Participant;(h)decide all other matters thatmust bedetermined in connection with anAward; (i) interpret thetermsof, anddetermine anymatter arisingpursuant to,the Planor anyAward Agreement; and (j)make allother decisions or determinations thatmayberequired pursuant tothe Planor anAwardAgreement as theCommitteedeemsnecessary oradvisable toadministerthePlan. TheCommittee shall also have the authority tomodify existingAwards to the extent that such modification iswithin the power andauthorityofthe Committee asset forth in the Plan.

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4.3 DECISIONS FINAL. The Committee shallhavetheauthority to interpret the Plan andsubjectto theprovisions ofthe Plan, anyAward Agreement, and alldecisions anddeterminations by theCommittee withrespect tothe Planare final, binding andconclusive on allparties. No member of theCommittee shallbeliable forany actionordetermination made ingood faith with respect to thePlan or anyAward granted under thePlan.

ARTICLE5

SHARES AVAILABLEFORGRANT

5.1 NUMBER OF SHARES. SubjecttoadjustmentasprovidedinSection5.4, theaggregatenumber ofsharesofStock reserved and available for grant pursuant to thePlan shall be n. ThesharesofStock delivered pursuant to anyAward may consist, inwholeorinpart, ofauthorizedbyunissued Stock, treasury Stock notreserved for anyother purposes, orStock purchasedonthe openmarket.

5.2 SHARECOUNTING.Thefollowingrulesshall apply solely forpurposesofdetermining thenumber ofshares ofStock available forgrantunder the Plan at anygiven time:

(a) IntheeventanyAward granted under thePlan,or anyaward outstanding underthe PriorPlanafter the EffectiveDate isterminated, expired, forfeited,orcanceled for anyreason, thenumber ofsharesof Stocksubject to suchAwardwill again beavailable forgrant under thePlan (i.e., any priorcharge against thelimit set forth inSection 5.1 shallbereversed).

(b) IfsharesofStock are notdelivered in connection with anAward because theAwardmayonly besettled in cash rather than inStock,nosharesofStock shallbecounted against thelimit set forthin Section 5.1.If anyAward may be settled incashorStock,therules set forth inSection 5.2(a) shall apply until the Award is settled, atwhichtimetheunderlying sharesofStock will be addedback to theshares available forgrantpursuanttoSection 5.1 but only if theAward is settled incash.

(c) Theexerciseof astock-settled SARorbroker-assisted “cashless” exerciseof anOption (or aportion thereof) will reduce the number ofshares available for grant under Section 5.1 by theentirenumber ofsharesofStock subject to that SAR orOption(orapplicable portion thereof), even though asmaller numberofsharesofStockwill beissued uponsuchanexercise.

(d) Sharesof Stocktendered to pay theexercise price of an Optionortendered, withheldorotherwise relinquished by aParticipanttosatisfy atax withholding obligation arising inconnection with anAward will not againbecome Stock available forgrantunder the Plan. Moreover, shares ofStock purchasedon the openmarketwith cash proceeds generated bythe exercise of anOptionwillnot increaseorreplenish the number ofshares availableforgrantunder Section 5.1.

(e) Iftheprovisions ofthis Section 5.2 are inconsistent with therequirements of anyregulations issued pursuant toSection 422of theCode, the provisionsofsuch regulations shall control over the provisionsofthis Section 5.2, but only asthis Section 5.2relatestoIncentive Stock Options.

(f) TheCommitteemay adopt suchother reasonable rulesandprocedures asitdeemsto beappropriate for determiningthenumberofsharesofStock that areavailable for grant under Section 5.1.

5.3 AWARDLIMITS. Notwithstandinganyother provision inthe Plan, and subject to adjustment asprovided in Section 5.4:

(a) The maximum number of sharesofStock thatmaybe issued as Incentive Stock Options under the Plan shall be the same numeric limit set forth in Section 5.1.

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(b) The maximum number of shares of Stock thatmaybe granted to any one Participant during any 12-month period with respect to one or more Awards shall be n

(c) The aggregate Grant Date Fair Market Value of Awards granted to any one Participant who is a Non-Employee Director during any one 12-month period with respect to one or more Awards shall be $n.

5.4ADJUSTMENT INCAPITALIZATION.In the eventof anychangein theoutstanding shares ofStock by reasonof aStock dividend orsplit, recapitalization, liquidation, merger, consolidation, combination, exchange ofshares,orother similar corporate change, theCommittee shall make aproportionate adjustment in:(a) thenumber andclassofshares ofStock made available for grant pursuant to Section 5.1; (b) thenumberofsharesofStocksetforth inSection 5.3, 11.9, andany other similar numeric limit expressed inthe Plan; (c) thenumber andclass ofand/or priceofsharesofStock subject to thenoutstanding Awards; (d) subject tothelimitations imposed onPerformance-BasedAwards, theperformance targetsorother goals applicable to anyoutstanding Awards; or(e)anyother terms of anAward that are affected by theevent. Moreover, in theeventof suchtransactionorevent, the Committee, inits discretionmayprovide insubstitutionfor any orall outstanding awards under the Plansuchalternative consideration (including cash)asit, in good faith,maydetermineto beequitable under thecircumstancesandmayrequire inconnection therewith the surrenderofall Awards soreplaced. Any actiontaken pursuantto this Section 5.4shall betakenin amanner consistentwith therequirements ofSection 409A of theCode and, inthe caseofIncentive Stock Options, in accordancewiththe requirements ofSection 424(a) of theCode.

5.5 REPLACEMENT AWARDS. Intheevent of anycorporate transaction inwhich theCompany or anAffiliate acquires acorporate entity which, atthetime of suchtransaction, maintainsanequity compensation plan pursuant to whichawardsofstock options, stock appreciation rights, restricted stock, or anyother form ofequity basedcompensation are then outstanding(the“Acquired Plan”), the Committeemay makeAwards toassume, substitute orconvert such outstanding awards in suchmannerasmay bedetermined tobeappropriate andequitablebytheCommittee; provided, however, that thenumberofshares ofStock subject to anyAward shall alwaysbe awhole number byrounding any fractional share to thenearest whole share. Options orSARs issued pursuant tothis Section 5.5shall notbesubjectto therequirement that theexercise priceofsuch Award notbeless thanthe Fair Market Value of Stock on thedate theAward is granted. Sharesused inconnection with anAward granted insubstitution for anaward outstanding underanAcquired Planunderthis Section 5.5 shall not becounted against the numberofsharesofStock available for grant under Section 5.1. Any sharesofStock authorized andavailable for issuance under theAcquired Plan shall, subject toadjustmentasdescribed inSection5.4,beavailable for use inmaking Awards under this Plan withrespect topersons eligible undersuch Acquired Plan, byvirtueof theCompany’s assumption ofsuch Acquired Plan,consistent with Nasdaq Rules(or rules of anyother exchange uponwhichthe Stock is thentraded), assuch Rulesmay beamended orreplaced from time totime.

5.6 FRACTIONALSHARES. No fractional sharesof Stockshallbeissued pursuant tothe Plan. Unlessthe Committee specifies otherwise in theAward Agreement,or pursuant to anypolicy adoptedby theCommittee, cash will begiveninlieuoffractional shares.In theeventof adjustment asprovided inSection 5.4 or theissuance ofreplacement awards asprovided in Section 5.5, thetotalnumber ofshares ofStock subject to anyaffected Award shall always be awhole numberby rounding anyfractional shareto thenearest whole share.

ARTICLE6

STOCK OPTIONS

6.1 OPTIONS. Subject to the termsandprovisionsof the Plan theCommittee, atany timeand fromtime totime, may grant Optionstooneormore Participants upon suchterms andconditionsand in suchamounts, asshall bedetermined by theCommittee. Options arealso subject to thefollowing additionalterms andconditions:

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(a) Exercise Price. No Option shallbegrantedat anexercise price that isless thantheFairMarket Value ofone share ofStock on theGrantDate.

(b) ExerciseofOption. Options shallbeexercisableatsuch times and in suchmanner, andshallbesubject tosuch restrictions orconditions,asthe Committee shall ineachinstance approve,which need not be thesame foreach grantorfor each Participant.

(c) TermofOption. Each Option shall expireatsuch time asdetermined by theCommittee; provided, however, that no Optionshall beexercisable later than thetenth (10th) anniversary theGrantDate.

(d) Payment. The exercise price forany Optionshallbe paid incash orsharesofStock held forlonger than six (6) months (through actual tenderor byattestation).IntheAward Agreement, the Committeealsomayprescribe other methods bywhich the exercise priceof anOptionmaybepaid and theformofpayment including, without limitation, anynet-issuancearrangementorother property acceptableto theCommittee (including broker-assisted “cashless exercise” arrangements),andthe methodsby whichsharesofStockshallbedeliveredor deemed to bedelivered toParticipants.TheCommittee, inconsiderationofapplicable accounting standards andapplicable law,maywaivethe six (6)month share holding period described inthe first sentence ofthis paragraph (d) in theevent payment of anOption ismade through the tendering ofshares.

(e) RESERVED.

(f) NontransferabilityofOptions. No Optionmaybesold, transferred, pledged, assigned, orotherwise alienated orhypothecated, other than by will or by thelawsofdescent anddistribution. Further, all Options granted to aParticipant shall beexercisable during his or herlifetime only by suchParticipantor his or herlegal representative. Notwithstandingtheforegoing, theCommitteemay,in itsdiscretion, permit thetransferofanOption to aFamily Member, trust orpartnership,or to acharitable organization, provided that novalueorconsideration isreceivedby theParticipant with respect to such transfer.

6.2 INCENTIVESTOCK OPTIONS. Incentive Stock Options shallbegranted only toParticipants who areemployeesand theterms of anyIncentive StockOptionsgrantedpursuant tothe Plan must comply with thefollowing additional provisions ofthis Section 6.2:

(a)Exercise Price. SubjecttoSection 6.2(e), theexercise price pershareofStock pursuant to anyIncentiveStockOption shall be set by theCommittee, provided that theexercise price for anyIncentiveStockOption shall not beless thantheFair Market Value ofone share ofStock as ofthe Grant Date.

(b) TermofIncentive Stock Option.Innoevent may anyIncentiveStockOptionbeexercisable for more than ten (10) years from theGrantDate.

(c)LapseofOption. An Incentive StockOptionshall lapse in the following circumstances:

(1) TheIncentive Stock Option shall lapse ten(10) years from theGrant Date, unless anearliertime isset in the Award Agreement;

(2) TheIncentive Stock Option shall lapse upon aTerminationofEmploymentfor any reasonother than the Participant’s death orDisability, unless otherwise provided in theAward Agreement; and

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(3) IftheParticipant incurs aTerminationofEmploymentonaccountofDisabilityordeath before the Option lapses pursuant toparagraph(i) or(ii) above, theIncentive Stock Optionshall lapse, unless it ispreviously exercised, on theearlier of: (a) thescheduled termination dateoftheOption; or(b)twelvemonths after thedateofthe Participant’s Termination ofEmploymentonaccountofdeathorDisability. Upon the Participant’s deathorDisability,anyIncentive Stock Options exercisableattheParticipant’s deathorDisability may beexercisedby theParticipant’s legal representative or representatives, bythe person orpersons entitled to do sopursuanttothe Participant’s last will andtestament, or, if the Participant fails tomaketestamentary disposition of suchIncentiveStock Option or diesintestate,by thepersonorpersons entitled to receive theIncentiveStockOption pursuantto theapplicable laws ofdescent and distribution.

(d) Individual Dollar Limitation.Theaggregate Fair Market Value (determined as ofthe time anAwardismade) of allshares ofStockwithrespectto whichIncentive StockOptionsare first exercisable by aParticipantin anycalendar yearmay not exceed $100,000 orsuch other limitationasimposedbySection 422(d)of theCode,or anysuccessor provision. Tothe extent that Incentive Stock Options are first exercisable by aParticipant inexcessofsuch limitation, theexcess shall beconsidered Non-Qualified Stock Options.

(e) Ten Percent Owners. An IncentiveStock Optionmaybegranted toany individual who, atthe Grant Date,owns stock possessing morethanten percent (10%) of thetotal combined voting power ofall classesofStock of theCompany only if suchOption isgrantedataprice that isnot less than110%ofFair Market Valueonthe Grant DateandtheOption is exercisable fornomore thanfive (5)yearsfrom theGrant Date.

(f) RighttoExercise. Except asprovided inSection 6.2(c)(iii),anIncentive Stock Option may beexercised only by theParticipant during theParticipant’s lifetime.

(g) LimitationonNumberof SharesSubject toAwards.Inaccordance with Section 5.3(a), but subject to adjustment asprovided inSection5.4, themaximum number ofsharesofStock thatmaybeissuedasIncentive Stock Options under thePlan shall bethe same numeric limit set forth inSection 5.1.

ARTICLE7

STOCKAPPRECIATIONRIGHTS

7.1STOCKAPPRECIATIONRIGHTS. Subjecttotheterms andprovisionsofthe Plan, theCommittee, at anytime and fromtime totime, may grantSARs to oneormore Participants uponsuchterms andconditions and insuch amounts, asshallbedetermined by theCommittee.SARs may begranted inconnectionwiththe grantof anOption,inwhich case theexercise ofsuch SARs will result inthe surrender oftheright topurchase the shares under theOption as towhichtheSARs were exercised. When SARs aregrantedinconnection anIncentive Stock Option, theSARs shall have suchterms andconditions asshallberequired bySection 422 ofthe Code. Alternatively, SARsmay begranted independently ofOptions. SARs are also subject to thefollowing additional terms and conditions:

(a)Base Value. No SAR shallbegrantedat abase value that isless than theFair MarketValueofone shareofStock on theGrant Date.

(b) ExerciseofSARs.SARsshallbeexercisableatsuch times and besubject tosuch restrictionsandconditions as theCommittee shall,in eachinstance approve, which need notbethesame for allParticipants.

(c) TermofSARs. Each SAR shall expireat suchtimeasdetermined by theCommittee; provided, however, that noSAR shall beexercisable later than the tenth (10th) anniversary theGrant Date.

(d) PaymentofSAR Amount. Upon the exerciseofaSAR, theParticipant shallbeentitledtoreceive the payment ofanamount determined bymultiplying: (i) the excess, ifany, of theFairMarket Value of ashareofStock on thedate ofexercise, over thebase value fixed bythe CommitteeontheGrant Date; by(ii)thenumber ofshares with respect towhich theSAR isexercised.Paymentfor SARs shall bemade inmanner andat thetime specified by theCommitteeinthe Award Agreement. At thediscretionof theCommittee, theAward Agreementmayprovide for payment ofSARsincash, shares ofStock ofequivalent value, orin acombination thereof.

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(e) RESERVED.

(f) NontransferabilityofSARs. No SAR maybesold, transferred, pledged, assigned, orotherwise alienatedorhypothecated, other than by will or by the laws ofdescentanddistribution. Further, all SARs granted to aParticipant shall beexercisable during his or herlifetimeonly by suchParticipant orhisor herlegal representative. Notwithstandingtheforegoing, the Committeemay, in itsdiscretion, permit thetransfer of aSAR to aFamily Member, trust orpartnership,or to acharitable organization, provided that novalue orconsiderationisreceivedby theParticipant with respect to such transfer.

ARTICLE8

RESTRICTEDSTOCKANDRESTRICTED STOCK UNITS

8.1 RESTRICTEDSTOCK. Subjecttotheterms andprovisions ofthe Plan, the Committee,at anytime andfrom time totime, may grant RestrictedStock toone ormore Participants upon suchterms andconditions, andin suchamounts, asshallbedetermined by theCommittee. Restricted Stock Awards arealso subject to thefollowing additionalterms andconditions:

(a) Issuance and Restrictions. Restricted Stock shallbesubjecttosuch conditions and/or restrictionsas theCommitteemayimpose (including, without limitation, limitations ontransferability, therighttoreceive dividends,ortheright tovote the Restricted Stock), which need not bethesameforeachgrant or for eachParticipant. These restrictionsmaylapse separatelyor incombination at suchtimes, pursuanttosuch circumstances, in suchinstallments,orotherwise, asdetermined by theCommittee. Except asotherwise providedinthe Award Agreement, Participants holding shares of Restricted Stockmaynot exercise voting rights withrespectto theshares ofRestricted Stock duringtheperiodofrestriction.

(b) Forfeiture.Except asotherwise provided in the Award Agreement,upon aTerminationofEmployment (orTermination ofService in thecase of aConsultantorNon-Employee Director) during theapplicable periodofrestriction, Restricted Stock that is atthattimesubject torestrictions shallbeforfeited.

(c) EvidenceofOwnership for Restricted Stock. Restricted Stock grantedpursuanttothe Planmay beevidenced insuch manner as theCommittee shall determine, which may includeanappropriate book entrycredit on thebooks ofthe Company or a dulyauthorized transferagent ofthe Company.Ifcertificates representing sharesofRestricted Stock areregistered inthe name of theParticipant, the certificates must bear anappropriate legend referring tothe terms, conditions, andrestrictions applicable to suchRestricted Stock, and the Companymay, in itsdiscretion, retain physical possession ofthe certificate until suchtimeas allapplicable restrictions lapse.

8.2 RESTRICTEDSTOCK UNITS. Subjecttothe terms andprovisions of thePlan, the Committee,at anytime and fromtime totime,maygrant Restricted Stock Units to one ormore Participants upon suchterms andconditions,and in suchamounts, asshallbedetermined bythe Committee. Restricted Stock Unit Awards are also subject to the following additionaltermsandconditions:

(a) Issuance and Restrictions. Restricted StockUnitAwardsgrant aParticipant the right to receiveaspecified numberofsharesofStock, or acash payment equal to theFair Market Value (determined asofaspecified date) of aspecified numberofshares ofStock, subject to suchconditions and/or restrictions asthe Committeemayimpose, whichneed not be thesame for each grant orforeachParticipant. These restrictions may lapseseparatelyor incombinationat suchtimes,insuch circumstances, insuch installments,orotherwise,asdeterminedby theCommittee.

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(b) Forfeiture.Except asotherwise provided in the Award Agreement,upon aTerminationofEmployment (orTermination ofService in thecase of aConsultantorNon-Employee Director) during theapplicable period ofrestriction, RestrictedStockUnits that areatthattimesubject torestrictions shall be forfeited.

(c) Form and TimingofPayment.PaymentforvestedRestricted Stock Unitsshallbemade in themannerand atthe time designated by theCommitteein theAward Agreement.In theAward Agreement, theCommittee may provide that payment will bemade in cash orStock,or in acombination thereof.

ARTICLE9

STOCKGRANT ANDSTOCK UNITS

9.1 STOCKGRANTS.Subjectto theterms andprovisions ofthePlan, theCommittee,at anytimeand fromtime totime,maygrant Stock Awards to one ormore Participantsupon suchterms andconditions, and in suchamounts, asshallbedetermined by theCommittee. SubjecttoSection 5.3(e), aStock Grant Award grants theParticipant the right toreceive(orpurchaseatsuch priceasdeterminedbytheCommittee) adesignated number ofsharesofStock free of anyvesting restrictions. The purchase price, if any, for aStock Grant Award shall bepayable incashorother form ofconsideration acceptable to theCommittee. A StockGrant Award may begrantedorsoldasdescribed inthe preceding sentenceinrespect ofpast services orother valid consideration, or inlieuof anycash compensation due tosuch Participant.

9.2 STOCK UNITS. Subjectto thetermsandprovisionsofthe Plan, the Committee,at anytime andfrom time totime, may grant Stock UnitAwards to oneormore Participants uponsuchterms andconditions, and in suchamounts, asshallbedeterminedby theCommittee. Subject toSection 5.3(e), aStock UnitAward grants the Participant theright toreceive adesignated number ofsharesofStock, or acash payment equalto the FairMarket Value (determinedas of aspecified date) of adesignatednumber ofsharesofStock, inthe futurefreeof anyvesting restrictions. A StockUnit Awardmay begrantedasdescribed in the preceding sentence inrespectofpast servicesorother valid consideration,or inlieu of anycash compensation due tosuch Participant.

ARTICLE10

PERFORMANCESHARES,ANDPERFORMANCE SHAREUNITS

10.1 PERFORMANCESHARES.Subject totheterms andprovisions ofthePlan,the Committee, at anytime and fromtime totime,maygrant Performance Shares to one ormore Participants upon suchterms andconditions, and in suchamounts, asshall bedetermined by theCommittee. APerformance Share grants theParticipant the right toreceiveaspecified number ofshares ofStock depending on thesatisfaction of anyone ormore Performance Goals. Performancemay bemeasured on aspecified date ordates orover anyperiodorperiods determined bythe Committee. Unless otherwise provided in theAward Agreement, payment for vested Performance Shares shallbemade inStock.

10.2PERFORMANCE SHAREUNITS. Subjectto thetermsandprovisions ofthe Plan, theCommittee,at anytimeand fromtime totime,maygrant Performance Share Units to oneormore Participants uponsuchtermsandconditions, and insuch amounts,asshall bedetermined by theCommittee. APerformance Share Unit grants the Participant the right toreceive aspecified numberofsharesofStockor acash payment equal tothe Fair Market Value (determined as of aspecified date) of aspecified number ofsharesof Stockdepending on thesatisfactionof any one ormore Performance Goals.Performancemay bemeasuredon aspecifieddate ordatesorover anyperiodorperiods determined by theCommittee. At thediscretionof theCommittee, the Award Agreement may provide forpayment forvested Performance Share Units in cash, shares ofStock ofequivalent cash value, or in acombination thereof.

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10.4 PERFORMANCEGOALS. The Performance GoalorGoals applicable to anyPerformance Share or Performance Share UnitAward shallbebased onthe Performance Criteria selected by theCommittee anddesignatedin theAwardAgreement. The Performance Criteria applicable to anyPerformance Share orPerformanceShare Unit Awardgranted to aCovered Employee that is designated as, ordeemed to be, aPerformance-Based Award pursuant to Section 11shall belimitedtothe Performance Criteria specifically listed inthe Glossary. The Performance Criteria applicable to anyother Performance Share orPerformanceShare Unit Award shall include thePerformance Criteria specifically listed in theGlossaryandsuch other criteria orfactorsas may bedetermined bythe Committee andspecified inthe Award Agreement. Except asotherwise provided inSection11with respect toPerformance- Based Awards toCovered Employees, theCommittee shall retain the power toadjust the Performance Goals, thelevelofattainment of the Performance Goalsorotherwise increaseordecrease the amount payable withrespect to anyAward made pursuant to this Section 10.

ARTICLE11

PERFORMANCE-BASED AWARDS

11.1PURPOSE. Section162(m)ofthe Code limitsthe amountof theCompany’s deductions for compensation payable toCovered Employees to $1,000,000per year. “Performance-based compensation” that meets therequirements set forth inSection 162(m) of theCodeis notsubject tothis limitation. Thepurposeofthis Section 11 is toenable theCommitteetoqualify some or all of theAwards granted pursuant toSections 8 and 10 as“performance-based compensation” pursuant toSection 162(m)oftheCode. If theCommitteedecidesthat aparticular Award to aCovered Employee should qualify as“performance-based compensation,” the Committee willprovide in theAward Agreement orotherwise that the Award isintendedtobe aPerformance-Based Award.

11.2APPLICABILITY. This Section11shall apply only toPerformance-Based Awards.IfthisSection 11applies, its provisions control over anycontrary provision contained in any othersectionofthis Plan or anyAward Agreement. The provisions ofthis Section 11 and anyAward Agreement for aPerformance-Based Award shall beinterpretedin amanner consistentwith therequirementsofSection 162(m) of theCode.If anyprovisionofthis Plan orany AwardAgreementfor aPerformance-Based Award doesnot comply with oris inconsistent with the requirementsofSection 162(m) of theCode, suchprovision shall beconstrued ordeemedamended to theextent necessary toconform tosuch requirements.

11.3 COMMITTEE DISCRETION WITHRESPECTTOPERFORMANCE-BASED AWARDS.Withregardto aparticular Performance Period, the Committee shall have fulldiscretiontoselect thelengthofthe Performance Period, the type ofPerformance-Based Awards tobeissued, the kind and/orlevel of thePerformance Goal or Goalsand whether thePerformanceGoalor Goalsapply to theCompany or anAffiliate or anydivision orbusiness unit thereofor theParticipantor anygroup ofParticipants. Dependingonthe Performance Criteria usedtoestablish thePerformance Goals,the Performance Goalsmay bestatedinterms ofabsolute levels orrelative to another company or to an index orindices.

11.4 ESTABLISHMENT OFPERFORMANCEGOALS.APerformance-Based Award shall provide for payment only upon theattainment of oneormore pre-established, objective Performance Goals. ThePerformance Goals, andthe process by whichthey are established, shall satisfy all ofthe requirements ofSection 162(m) ofthe Code. By way ofillustration, but not limitation, the following requirements must besatisfied:

(a) The Performance Goals shall be based solely on the Performance Criteria specifically identified in the Glossary;

(b) The Performance Goals shall be considered tobepre-established only if the Performance Goals are established by the Committee in writing not later than 90 days after the commencementofthe Performance Period forsuchAward provided that: (i) the outcome must be substantially uncertain at thetimethe Committee establishes the Performance Goals; and (ii) in no eventmaythe Committee establish thePerformanceGoals for any Performance-Based Award after 25%ofthe Performance Period for such Award has elapsed;

(c) A Performance Goalwillbe considered to be objective only if a third party having knowledge of the relevant facts could determine whether the Performance Goal has been met;

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(d) ThePerformance Goal must state, interms of anobjective formulaorstandard, the method forcomputing theamountofcompensation payable tothe Covered Employee if theGoalisattained. For this purpose, theformulawill beconsidered to beobjective only if athird party having knowledge ofthe relevant performance results could calculate theamount tobepaid tothe Covered Employee; and

(e) Theobjective formula orstandard must preclude discretion to increase theamountofcompensation payable that wouldotherwisebedue upon attainment of thePerformance Goal.

11.5 PERFORMANCEEVALUATION;ADJUSTMENTOFGOALS. At thetime aPerformance-Based Awardisfirst issued, theCommittee, in theAward Agreement or inanother written document, shall specify whether performance will beevaluated including orexcluding theeffect of anyofthe following events thatoccurduring thePerformance Period, asthe Committee deems appropriate: (a) judgments entered orsettlements reached inlitigation orregulator proceedings; (b)thewrite down orsaleofassets; (c) the impact of anyreorganizationorrestructuring; (d)the impact ofchanges intax laws,accounting principles, regulatory actionsorotherlawsaffecting reported results; (e) items that are unusual innatureorinfrequently occurring asdescribedinAccounting Standards Update 2015-01 and/orin management’s discussion andanalysis offinancial condition andresults ofoperations appearing inthe Company’s annual report toshareholdersorAnnual Report onForm 10-K, as thecasemay be,fortheapplicable year; (f)the impactof anymergers,acquisitions, spin-offs orother divestitures; and (g) foreign exchange gains andlosses.

Theinclusionorexclusionofthese items shall beexpressed in a formthat satisfies therequirements ofSection 162(m)of theCode. The Committee, inits discretion, alsomay,within thetimeprescribed bySection 162(m) of theCode, adjust ormodifythecalculation ofPerformance Goals for such Performance Period inorder topreventthedilution orenlargement ofthe rights ofParticipants: (i) in theevent of,or inanticipation of, anyunusual orextraordinary corporate item, transaction, event, ordevelopment; or(ii)inrecognition of, or inanticipationof, anyother unusualornonrecurring events affecting theCompany, or thefinancial statements of theCompany, or inresponse to, or inanticipation of, changes inapplicable laws, regulations, accounting principles, orbusiness conditions.

11.6ADJUSTMENTOFPERFORMANCE-BASEDAWARDS.Notwithstanding any provisionherein to the contrary, theCommitteemay notmake anyadjustmentortake anyother action with respect to anyPerformance-Based Award thatwill increase theamount payable under anysuch Award. TheCommittee shall retain thesole discretion to adjust Performance-Based Awards downwardor tootherwise reduce the amount payable with respect to anyPerformance-Based Award.

11.7CONTINUED EMPLOYMENT REQUIRED.Unlessotherwise provided in therelevant Award Agreementor in the case of aChange inControl,aParticipant mustbe anemployeeofthe Company oranAffiliate on theday aPerformance-Based Award for such Performance Period is paid to theParticipant.

11.8 CERTIFICATION BY COMMITTEE. Notwithstandinganyprovisionstothe contrary, thepaymentof aPerformance-Based Award shall notoccur until theCommittee certifies, inwriting, that the pre-established Performance Goals andany other material terms andconditions precedent tosuchpaymenthave beensatisfied. Committee certification is notrequired forcompensation that isattributable solely to theincrease in the value of theCompany’s Stock.

11.9 MAXIMUM AWARDPAYABLE.Inaccordance with Section 5.3, butsubject to adjustmentasprovidedinSection 5.4, the maximum Performance-Based Award payable to any oneparticipantfor any12-month Performance Period is 1,000,000 shares ofStockorthe equivalent cash value.Ifthe Performance Period exceeds 12months, thedollar and share limits expressed in thepreceding sentences shall bereduced orincreased proportionately, as thecasemay be.For example, if thePerformance Periodisthree (3) years, thelimit shallbeincreased bymultiplying it by three.

11.10MISCELLANEOUS.Thedesignationof aCovered Employee as aParticipantfor anyPerformance Period shall not in anymanner entitle theParticipant toreceive aPerformance-Based Award for suchPerformance Period. Moreover, designation of aCovered Employee as aParticipantfor aparticular Performance Period shall not require designationofsuch Covered Employeeas aParticipant for anysubsequent Performance Period.

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ARTICLE12

CHANGEINCONTROL

12.1DOUBLETRIGGERVESTING.Notwithstandingany otherprovisionin thePlan to the contrary, andexceptasotherwise provided inthe applicable Change inControl transaction documents, inthe event that anemployee Participant incurs aTerminationofEmployment without Cause or forGoodReasonwithin12months following aChange in Control, anyAwards that are still outstanding following suchChangeinControl shall become fully vested andexercisableand allrestrictions onsuch Awards shall lapse as of thedateof theParticipant’s Termination ofEmploymentwithoutCause orTermination ofEmployment forGood Reason. To theextent that this provision causes Incentive Stock Options toexceed the dollar limitation setforth inSection 422(d) ofthe Code or anysuccessor provision, theexcess Options shall bedeemedto beNon-Qualified StockOptions.

12.2 PARTICIPANT CONSENTNOT REQUIRED.Nothing inthis Section12 or anyother provisionofthis Plan isintendedtoprovide anyParticipant with anyright to consent toorobjectto anytransaction thatmightresultin aChange inControl andeach provisionofthis Plan shall beinterpreted in amanner consistent with this intent. Similarly, nothing inthis Section 12 or anyother provision ofthis Plan is intended toprovideanyParticipant with anyright to consentto orobject toany actiontakenby theBoard orCommittee inconnection with aChange inControl transaction.

ARTICLE13

OTHERPROVISIONS APPLICABLE TOAWARDS

13.1 AWARDAGREEMENTS.AllAwards shall beevidenced by anAward Agreement.TheAward Agreement shall include suchtermsandprovisionsas theCommittee determines appropriate. Theterms of theAward Agreementmayvary depending on thetype ofAward, the employee orclassificationofthe employee towhom theAwardismade andsuch other factors asthe Committeedeemsappropriate.

13.2 TERMINATION OFEMPLOYMENTORSERVICE.Subject to theprovisions ofthis Plan, theCommittee shalldetermineand setforth inthe applicable Award Agreement theextent to which aParticipant shallhavethe right toretain and/or exercise anAward following aTerminationofEmployment or(Termination ofService inthe context of aConsultantorNon-Employee Director). Such provisions need notbeuniform among alltypesofAwards andmayreflectdistinctions based on thereasons for such terminations, including, but notlimited to,death, Disability, atermination forCauseorreasons relating tothe breach orthreatened breachofrestrictive covenants.

13.3FORM OF PAYMENT. Subject totheprovisionsofthis Plan, theAward Agreement and anyapplicable law, payments ortransfersto bemadeby theCompanyor anyAffiliate onthe grant, exercise,orsettlement of anyAward made bemade in suchform asdetermined by theCommittee including,withoutlimitation, cash, Stock, other Awards,orotherproperty, or anycombination thereof, andmay bemade in asingle payment ortransfer, ininstallments,or anycombination thereof, ineach case determined by rulesadoptedby theCommittee.

13.4 LIMITSONTRANSFER.

(a)General. Exceptasprovided in Section 6.1(f),Section7.1(f), Section 13.4(b) orSection 13.5, noAward granted under the Planmay besold, transferred, pledged, assigned, orotherwise alienatedorhypothecated, other thanby will or by the laws ofdescent anddistributionorpursuant to adomestic relations order (that wouldotherwise qualify as aqualified domestic relationsorder asdefined inthe CodeorTitleI ofERISA but for thefactthat the order pertains to anAward) infavorof aspouse or, ifapplicable, until the expiration of anyperiod during which anyrestrictionsareapplicable or anyPerformance Periodasdetermined by theCommittee.

(b) TransfertoFamily Members.TheCommittee shall have theauthoritytoadopt awritten policy that isapplicabletoexisting Awards, new Awards,orboth, which permits aParticipant totransferAwards during hisorherlifetime to anyFamily Member.In theevent anAwardistransferred aspermitted by suchpolicy, suchtransferred Awardmay not besubsequently transferred by thetransferee (other than another transfer meeting theconditions set forth in thepolicy) except by willorthe laws ofdescent anddistribution.Atransferred Award shall continue tobegoverned by andsubject to theterms andlimitations of thePlan and relevant Award Agreement, andthe transferee shall beentitledtothe same rights as theParticipant,asif thetransfer had not taken place.

13.5BENEFICIARIES. Notwithstanding Section 13.4(a),aParticipantmay, inthe manner determined by theCommittee, designate abeneficiarytoexercise therights ofthe Participant and toreceive anydistribution with respect to anyAward upon the Participant’s death, and inaccordance with Section 6.2(c)(iii), uponthe Participant’s Disability. Abeneficiary, legal guardian, legal representative, orother person claiming anyrights pursuant tothe Plan is subject toall terms andconditions of thePlan andany Award Agreement applicable tothe Participant, except to theextent the Plan and Award Agreement otherwise provide, and to anyadditional restrictions deemed necessary orappropriateby theCommittee.If nobeneficiaryhas beendesignated orsurvives theParticipant, payment shall bemade to theperson entitled thereto pursuant tothe Participant’s will or thelaws ofdescentanddistribution. Subject tothe foregoing,abeneficiary designation may bechangedorrevoked by aParticipantat anytimeprovidedthechange orrevocation isprovidedto theCommittee.

13.6EVIDENCEOFOWNERSHIP. Notwithstanding anything herein tothe contrary, theCompany shall not berequired toissue ordeliver anycertificates,makeany book entrycredits,ortakeanyotheraction toevidence shares ofStock pursuant to theexerciseof anyAward, unless anduntiltheCompany hasdetermined, withadvice ofcounsel, that theissuanceanddelivery ofsuch certificates, book entrycredits,orother evidenceofownership isin compliance with all applicable laws, regulations ofgovernmental authorities and,if applicable, therequirementsof anyexchange orquotation system on which thesharesof Stock are listed,quoted ortraded. All Stockcertificates, book entrycredits, orother evidence ofownership delivered pursuant to thePlan aresubject to anystop-transfer orders andother restrictionsasthe Company deems necessary oradvisable to comply withFederal, state, orforeign jurisdiction, securities orother laws, rules and regulations and therulesof anynational securities exchange orautomated quotation system on whichthe Stockislisted, quoted,ortraded. The Companymayplacelegends on any Stockcertificatetoreferencerestrictions applicable to the Stock.Inaddition to thetermsandconditions provided herein, theCompany may requirethat aParticipantmake suchreasonable covenants, agreements,andrepresentations as theCompany,in itsdiscretion,deemsadvisable in order tocomply withany suchlaws, regulations, orrequirements.

13.7CLAWBACK. Every Award issued pursuanttothis Plan is subject topotential forfeitureorrecovery tothe fullest extent called for by law, anyapplicable listing standard, or anycurrentorfuture clawback policy thatmay beadopted by theCompanyfromtime totime, including, without limitation, anyclawback policy adopted tocomplywiththe final rules issued by theSecurities and Exchange Commission andthe final listing standards to beadoptedby theNasdaq pursuant toSection 954 ofthe Dodd-Frank Wall Street Reform andConsumer Protection Act. By accepting anAward, eachParticipant consents to thepotential forfeiture orrecoveryofhisorher Awards pursuant toapplicable law, listing standard, and/or Company clawbackpolicy, and agrees tobe bound by andcomply with theclawback policy and toreturn the full amount required by theclawback policy. As a conditionto thereceiptofany Award, aParticipant may berequired toexecute anyrequested additional documents consenting to andagreeing toabideby theCompany clawbackpolicy asit may beamended fromtimetotime.

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ARTICLE14

AMENDMENT,MODIFICATION,ANDTERMINATION

14.1 AMENDMENT,MODIFICATIONANDTERMINATION OF THEPLAN. TheBoardmay at anytime, and fromtimetotime, terminate, amend ormodify the Plan; provided however, that anysuchactionof theBoard shallbesubjecttoapprovalof theshareholderstothe extent required by law,regulationor any stockexchange rule for any exchangeonwhich sharesof Stock arelisted. Notwithstanding theabove, tothe extent permitted by law, theBoardmaydelegate tothe Committee orthe CEO theauthority toapprove non-substantive amendments tothe Plan. Except asprovidedinSection 5.4,neither theBoard, the CEO, nor theCommitteemay,without the approval oftheshareholders:(a)reduce the exercise price orbase valueof anyoutstanding Award, includingany Option orSAR;(b) increase the numberofshares available under the Plan; (c)grantOptions orSARswith anexercise price orbase value that is belowFairMarket Value on theGrantDate; (d)reprice previously granted Options orSARs ortakeanyaction relative to anyOptionsorSARs that would betreatedas arepricing under applicable NYSE Listing Rules (ortherulesofany exchange onwhich the Stock is thenlisted);(e)cancel any OptionorSARsinexchange forcash or any otherAward or inexchange for any OptionorSAR with anexercise priceorbase value that isless than theexercise priceorbase value for theoriginal OptionorSAR; (f)extend theexercise period orterm of any OptionorSAR beyond 10years from theGrant Date; (g) expandthe typesofAward available forgrantunderthe Plan; or(h) expand the classofindividuals eligible to participant inthe Plan.

14.2 AWARDSPREVIOUSLYGRANTED.No amendment, modification,orterminationofthe Planor anyAward underthe Planshall in anymanner adversely affect in anymaterial way therightsof theholder under anyAward previously granted pursuant to the Planwithout theprior written consent of theholderof theAward. Such consent shall not berequired if thechange: (a) is required by law orregulation; (b) does notadversely affect inany material way therightsof theholder; (c) is required tocause thebenefits under thePlan to qualify asperformance-based compensation within the meaning ofSection 162(m) ofthe Codeor tocomplywith therequirements ofSection 409A of theCode; or (d) ismade pursuant to anyadjustment described inSection 5.4.

14.3PERFORMANCE-BASED AWARDS.Except in the caseof aChangeinControl, the Committee shall not have theauthoritytoamend anAward Agreement toaccelerate thevesting orwaivetheforfeiture restrictionsof anyPerformance-Based Award.In addition,the Committee shall not take anyother action that would cause aPerformance-Based Award to fail tosatisfytherequirements of theperformance-based compensation exception to thededuction limitations imposed bySection162(m) ofthe Codeunless theCommittee concludes that thededuction limitations willnotbecomeapplicableorthat the amendment is appropriate despitethededuction limitations imposed by Section162(m)of theCode.

ARTICLE15

TAXWITHHOLDING

TheCompany shall have the power towithhold, orrequire aParticipant toremitto theCompany, theminimum amount necessarytosatisfy federal, state, andlocal withholding taxrequirements onany Award underthe Plan. TheCompanymaypermit theParticipanttosatisfy atax withholding obligation by: (a) directing theCompany towithhold sharesofStock to which theParticipantisentitled pursuant to theAward inanamount necessary tosatisfy the Company’s applicable federal, state, localorforeign income andemployment taxwithholding obligations withrespect to suchParticipant;(b)tendering previously-owned sharesofStock heldby theParticipant forsix (6) monthsorlongertosatisfy theCompany’sapplicable federal, state, local,orforeign income andemployment taxwithholding obligations withrespect to theParticipant (which holding periodmay bewaived inaccordance with Section 6.1(d)); (c) abroker-assisted “cashless” transaction;or(d) personal check orother cashequivalent acceptable tothe Company.

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ARTICLE16

INDEMNIFICATION

Each person whois orshall have been amember oftheCommitteeor of theBoardshall beindemnifiedand heldharmless by theCompany againstandfrom anyloss, cost, liability,orexpense thatmay beimposed upon orreasonably incurred byhim or her inconnectionwith orresultingfrom anyclaim, action,suit, orproceeding to whichhe or shemaybe aparty or inwhichhe or shemay beinvolved by reason of anyaction taken orfailure to actunderthe Plan andagainstand from any andall amounts paid by him orherinsettlement thereof,withthe Company’s approval,orpaid by him orher insatisfactionofanyjudgment in any suchaction, suit,orproceeding against him orher, providedheor sheshallgivetheCompany anopportunity,atits own expense, tohandle anddefend thesame beforeheundertakes tohandleanddefend it onhisorher behalf. Theforegoing rightofindemnification shall notbeexclusive of anyother rightsofindemnification towhichsuchpersonmay beentitledunder theCompany’s articles ofincorporation, bylaws, resolution oragreement, as amatterof law,orotherwise.

ARTICLE17

GENERALPROVISIONS

17.1 NORIGHTS TOAWARDS.No Participantorother person shallhave anyclaim to begranted anyAward andneither the Company nor theCommittee isobligatedtotreat Participants andotherpersons uniformly.

17.2 CONTINUEDEMPLOYMENT.Nothinginthe Plan or anyAward Agreement shall interferewithorlimit in anywaytherightof theCompanyor anyAffiliate to terminate any Participant’s employmentorserviceat anytime,norconfer upon anyParticipant anyright tocontinue in theemployorservice ofthe Company.

17.3FUNDING.TheCompanyshall not berequired tosegregate any ofitsassets toensure the payment of anyAward under the Plan. Neither the Participant nor anyother persons shallhave anyinterest in any fundorin anyspecific assetorassetsofthe Company or any otherentity by reason of anyAward, except totheextent expressly provided hereunder. The interests ofeach Participant andformerParticipant hereunder are unsecured andshallbesubjectto thegeneral creditors ofthe Company.

17.4EXPENSES. The expensesofadministeringthePlan shall beborne by theCompany.

17.5 NO SHAREHOLDERSRIGHTS. No Award givestheParticipantany of therights of ashareholderofthe Company unlessand until sharesof Stock are infact issuedto suchperson inconnection with suchAward.

17.6 TITLESANDHEADINGS. The titlesandheadingsof theSections inthe Plan are for convenienceofreference only and, in theeventof anyconflict,thetextofthe Plan, rather than such titles orheadings, shall control.

17.7 SUCCESSORS ANDASSIGNS.ThePlan shallbebinding uponand inure tothe benefit ofthe successorsandpermitted assigns of theCompany, including withoutlimitation, whether bywayofmerger, consolidation, operation of law,assignment, purchase, orother acquisitionofsubstantially all ofthe assetsorbusiness ofthe Company, and any andall such successors and assigns shall absolutely and unconditionally assume allof theCompany’s obligations under the Plan.

17.8 SURVIVALOFPROVISIONS.Therights, remedies, agreements, obligations andcovenants contained in ormade pursuant to this Plan,any Agreement, and any othernotices oragreementsinconnection therewith, shall survive theexecution and delivery of suchnotices andagreementsand thedelivery andreceipt of suchsharesofStock.

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17.9 REQUIREMENTS OF LAW.ThegrantingofAwards and theissuanceofshares and/or cash underthe Plan shallbesubject toall applicable laws, rules, andregulations, and to suchapprovalsbyany governmental agencies ornational securities exchanges asmay berequired. The Company shall beunder noobligation toregister pursuant tothe Securities Act of 1933, any of thesharesof Stock paidpursuant tothe Plan.If theshares ofStock paid pursuant to thePlanmay incertain circumstancesbe exempt fromregistration pursuant tothe SecuritiesAct of1933, theCompany may restrict the transferofsuch shares in suchmanneras itdeemsadvisable toensure the availability of any suchexemption. The Committee shall impose suchrestrictionson anyAwardasitmay deemadvisable, including without limitation, restrictions under applicable federal securities law, under therequirementsofNasdaq (or anyotherexchange uponwhich theStockis thentraded), and under anyother blue sky orstate securities law applicable to such Award.

17.10 GOVERNINGLAW.Theplaceofadministrationof thePlan shallbeconclusively deemed to bewithin theState ofDelaware,and therights andobligationsof any and allpersons having orclaimingtohave had aninterest under the Planor anyAward Agreement shallbegovernedbyandconstrued exclusively andsolelyinaccordance with the laws oftheState ofDelaware without regard tothe conflict of lawsprovisionsof anyjurisdictions.Allpartiesagree tosubmit to thejurisdictionof thestate and federal courts ofDelaware withrespect to matters relating to the Plan andagree not toraise orassert thedefense that suchforumisnot convenient for suchparty. ThePlan isanunfunded performance-based bonus plan for aselect groupofmanagementorhighly compensated employees and isnotintended to beeither anemployee pensionorwelfare benefit plan subject toERISA.

17.11 SECURITIESLAWCOMPLIANCE.Withrespectto anyParticipant who is, on therelevantdate,obligated tofile reports pursuanttoSection 16 of theExchange Act,transactions pursuant tothisPlanareintended tocomply withall applicable conditions of Rule16b-3 or itssuccessors pursuant tothe Exchange Act.Notwithstandinganyother provisionofthe Plan, the Committeemayimpose suchconditions onthe exerciseofanyAward asmay berequiredtosatisfy therequirements ofRule 16b-3 or itssuccessors pursuant to theExchange Act. To theextent any provisionof thePlan oractionbythe Committee fails to socomply,itshallbevoidtothe extent permitted by law andvoidableasdeemedadvisable bythe Committee.

17.12SECTION409AOFTHECODE.

(a) General Compliance.Someof theAwards thatmay begranted pursuant tothe Plan(including, butnot necessarily limited to,Restricted Stock UnitsAwards, Performance Share Awards, Performance Share Unit Awardsand Stock UnitAwards)may beconsideredto be “non-qualifieddeferredcompensation” subject to Section 409A of theCode.IfanAward issubjecttoSection 409A of theCode, theCompany intends (but cannot anddoes notguarantee) that the Award Agreement andthis Plan comply with andmeetallof therequirements ofSection409A of theCode or anexception theretoand theAward Agreement shall include such provisions, inaddition to theprovisionsofthis Plan, asmay benecessary toassurecompliance with Section 409Aofthe Code oranexception thereto.

(b) Delay forSpecified Employees.If, atthe timeof aParticipant’s Separation from Service, theCompany has any Stock which ispubliclytraded onanestablished securitiesmarket orotherwise, andif the Participant isconsidered to be aSpecified Employee, tothe extent anypayment for anyAward is subject to therequirementsofSection 409A of theCode and ispayable uponthe Participant’s Separation from Service, such payment shall notcommence prior tothe first business day following thedate which issix(6)months after the Participant’s Separation fromService (or thedateofthe Participant’s death ifearlier than the end of thesix (6)month period). Any amounts that would have been distributed during such sixmonth period will bedistributed on the dayfollowingtheexpirationofthe six (6) month period.

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(c) ProhibitiononAcceleration orDeferral. Undernocircumstances may thetimeorscheduleof anypaymentforany Award that issubject to therequirements ofSection 409Aofthe Code beacceleratedorsubject to furtherdeferralexceptasotherwise permitted orrequired pursuant toregulationsandother guidance issued pursuant to Section 409A ofthe Code.If theCompany fails tomakeanypayment pursuant tothe payment provisions applicable to anAward that issubjecttoSection 409A ofthe Code, either intentionally orunintentionally, within thetimeperiod specified in suchprovisions, but thepayment ismade within thesame calendar year, suchpaymentwill betreated asmade within the specified time period.In addition, in theeventof adispute with respect toanypayment, suchpayment may bedelayed in accordance with theregulations and other guidance issued pursuant toSection 409Aof theCode.

NUGENREX BIOTECHNOLOGY HOLDINGS, INC.

By:

Its:

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GLOSSARY

1. “Affiliate” means anymemberof a“controlled group ofcorporations” (within themeaningofSection 414(b)ofthe Code asmodified bySection 415(h)of theCode) that includes theCompany as amemberofthegroup.Inapplying Section 1563(a)(1), (2) and (3) ofthe Code forpurposesofdetermining the members of acontrolled group ofcorporations under Section 414(b) of theCode, thelanguage “atleast 50percent” shallbe used instead of“at least 80percent” each place it appears inSection 1563(a)(1), (2) and(3).

2. “Award” meansanyOption,StockAppreciation Right, Restricted Stock, Restricted Stock Unit, StockGrant, Stock Unit,Performance Share or Performance Share Unit granted to aParticipant under thePlan.

3. “Award Agreement” meansanywritten agreement, contract, orother instrument ordocument, including anelectronicagreement ordocument, evidencing anAward.

4. “Board” means the Company’s BoardofDirectors,asconstituted from timetotime.

5. “Cause” meansany of thefollowing:

5.1 Participant’s commission of,orassistanceto orconspiracy withothers to commit, fraud, misrepresentation, theft orembezzlement ofCompany assets;

5.2 Participant’s material intentional violationsoflaw or ofmaterial Company policies;

5.3 Participant’s repeated insubordinationorwillful failure tosubstantially perform his orher employment dutiesorduties as aNon-Employee Director; or

5.4 Participant’s willfulengagementinconduct thatisdemonstrably andmaterially injurioustothe Company or anyAffiliate.

6. “CEO” meanstheChiefExecutive Officer ofthe Company.

7. “ChangeinControl” means any ofthe following:

7.1 Thesale, lease, exchange orother transfer ofallorsubstantially all ofthe Company’s assets inone transaction or in aseries ofrelated transactions;

7.2 any person(as such term is used inSection 13(d)and14(d) oftheExchangeAct)becoming directly orindirectlythe“beneficialowner”(as defined inRule13d-3underthe Exchange Act),ofsecurities representing 50%ormore ofthe combined voting poweroftheCompany’soutstanding securities ordinarily having theright to vote at theelections ofdirectors;or

7.3 individuals who constitutetheBoardasof theEffective Datecease for anyreason toconstitute atleast amajority of theBoard, provided that anyperson becoming adirector subsequent to theEffective Datewhose election,ornomination forelectionby theCompany’s shareholders, was approved by avoteof atleast amajority of thedirectors comprising ordeemed pursuant heretotocomprise the Board as of theEffectiveDate(either by aspecific voteor byapproval ofthe proxy statement ofthe Company in which suchpersonisnamed as anominee for director) shallbe,forpurposes ofthis clause, considered asthough suchperson were amember oftheBoardasofthe Effective Dateofthe Plan.

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For sakeofclarity,a“Change inControl” willnot bedeemed tohaveoccurred forpurposes ofthe Plan untilthetransaction (orservices oftransactions) that would otherwisebeconsidered a“Change inControl” closes. Thetransfer ofStockorassets of theCompanyinconnection with abankruptcy filing by oragainst theCompany underTitle11 ofthe United States Code will not beconsideredto be a“Change inControl” for purposesofthis Plan. Notwithstandingtheforegoing a“Change inControl” shall notoccur forpurposes ofthis Plan inthecase ofAwards that are subject tothe requirements ofSection 409A ofthe Code unless such “Change inControl” constitutes a“change incontrol event”asdefined inSection 409A of theCode andthe regulations thereunder.

8. “Code” meanstheInternal Revenue Code of 1986, asamended. Allreferences to theCode shall beinterpreted toinclude areference to anyapplicable regulations, rulings orother official guidance promulgated pursuant tosuch section of theCode.

9. “Committee” exceptasset forth inSection 4.1,means the Compensation Committee of theBoard. At all times theCommittee shall consistof atleast two(2)ormore individuals, each ofwhom qualifies as:

2. a“non-employee director” asdefined in Rule16b-3(b)(3)ofthe ExchangeAct;(ii) an“outside director”asdefined inSection 162(m) ofthe Code; and(iii)as“independent” for purposesofthe applicable NYSE Listing Rules. In the event no properly constituted Compensation Committee exists, “Committee” shall mean the Board.

10. “Company” means NuGenerex Biotechnology Holdings, Inc..

11. “Consultant” meansaconsultantoradviser that provides bona fide services to theCompanyor anAffiliateas anindependent contractor and not as anemployee; provided, however that suchpersonmaybecome aParticipantin thePlan only if theConsultant: (i) is anatural person; and (ii) does notprovide services inconnection withthe offeror saleof theCompany’s securities in acapital-raising transaction and do notpromoteormaintain amarketfor the Company’s securities.

12. “Covered Employee” meansanEmployee who is orcould be a“covered employee” withinthemeaning ofSection162(m) ofthe Code.

13. “Disability” meanstheinabilityof aParticipant toengage in anysubstantially gainful activity byreasonof anymedically determinable physicalormental impairment that can beexpected to result in deathorwhichhas lasted or can beexpectedtolast for acontinuous periodofnot lessthan12months. Thepermanenceanddegreeofimpairment shall besupported bymedical evidence. For purposes of anIncentive StockOption, “Disability” shallhave themeaning ascribed toit inSection 22(e)(3) of theCode.

14. “Effective Date” means the datethePlan is approved by theshareholders atthe Company’s 2016Annual Meeting.

15. .“ERISA” meanstheEmployee RetirementIncomeSecurity Actof1974,asamended.Allreferencesto asection ofERISA shall beinterpreted to include areference toany applicableregulations, rulings orother official guidance promulgated pursuant tosuchsection ofERISA.

16. “Exchange Act” meanstheSecurities Exchange Actof 1934, asamended from time totime. All references to theExchange Act shall beinterpreted toincludeareference to anyapplicable regulations,rulings orother official guidance promulgated pursuant tosuch section of theExchange Act.

17. “ExpirationDate”means the tenth (10th) anniversaryofthe Effective Date.

18. “Fair Market Value”means,as of any date, theclosingpricefor the Stockasreported on theNYSE MKT (or any otherexchange onwhich theStockis thanlisted)forthat date or, if noprices are reportedforthat date,theclosing price on thelast day on whichsuch prices were reported.

19. “Family Member” meansaParticipant’s spouse and any parent,stepparent, grandparent,child,stepchild, orgrandchild, including adoptive relationships or atrust or anyother entity inwhich thesepersons(ortheParticipant) have more than 50% of thebeneficial interest.

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20. “Good Reason” means anyofthe following:

20.1 Amaterial reductionofParticipant’s duties, authority orresponsibilities, ineffect immediately prior to suchreduction;

20.2 Amaterial reduction ofParticipant’s then-existing base salary;or

20.3 The Company’s decision to relocate a Participant’s principal place of work by more than50miles.

21. “Grant Date” meansthedatetheCommittee approves theAwardor adate inthe futureonwhich theCommittee determines the Awardwill becomeeffective.

22. “IncentiveStock Option”meansan Optionthat is intended tomeet therequirementsofSection 422 of theCodeoranysuccessor provision thereto.

23. “Non-Employee Director” meansamemberof theCompany’s Board who is not acommon-law employee of theCompany.

24. “Non-Qualified Stock Option” means an Option that is not intended to be an Incentive Stock Option.

25. “Option” meansaright granted to aParticipant under Section 7.An Option may beeitheranIncentiveStockOption or aNon-Qualified Stock Option.

26. “Participant” meansaperson who hasbeen granted anAward underthePlan.

27. “Performance-Based Awards” meansanAward intended tosatisfy therequirementsofthe performance-based compensation exception tothe limitations imposed by Section162(m) of theCodeon the taxdeductibility ofcompensation payable toCovered Employees.

28. “Performance Criteria” meansthecriteriathat theCommittee selects for purposesofestablishing thePerformance GoalorPerformance Goals for aParticipant for aPerformance Period. ThePerformance Criteria that will be used toestablish Performance Goals are limited tothe following: net operating income beforetaxes andextraordinary charges against income; earnings before interest, and taxes; earnings before interest, taxes, depreciation, and amortization; pre- orafter-tax net earnings; sales growth; production levels; unit costs; operating earnings; operating cashflow; return onnet assets; return onshareholders’ equity; return onassets; return oncapital; Stock pricegrowth;shareholder returns; gross ornet profit margin;earnings pershare; price per shareofStock;marketshare; revenue; income; safety objectives; environmental objectives; andcompletionofmajor projects. ThePerformance Criteria thatwill beused to establish Performance Goals with respect toany Awardother than aPerformance-Based Award that issubject to Article 11willinclude the above-listed Performance Criteria and suchother criteria asmaybe setforth in theapplicable Award Agreement. Any of thePerformance Criteriamaybemeasured either inabsoluteterms or ascompared to anyincremental increaseor ascompared to results of apeer group, indices, or anyother basketofcompanies. Financial Performance Criteriamay,but need not, becalculated inaccordance withgenerally acceptedaccounting principles (“GAAP”) or anysuccessor method toGAAP, including International Financial Reporting Standards. The Committee shall, within the time prescribed bySection162(m)of theCode, define in anobjective fashion themanner ofcalculating thePerformance Criteria it selects touse for aparticularPerformancePeriodfor aparticular Participant.

29. Performance Goals” means, for a Performance Period, the goals established in writing by the Committee for the Performance Period based upon the Performance Criteria. Depending “on thePerformanceCriteria used to establish such Performance Goals, the Performance Goalsmaybeexpressed interms ofoverall Company performanceorthe performanceofadivision,subsidiary,business unitor anindividual. ThePerformance Goals may bestated interms ofabsolute levels orrelative toanother company orcompanies or to anindexorindices.

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30. “Performance Period” means theone ormoreperiods oftime (but not less than 12months), whichmay be ofvaryingandoverlapping durations,as theCommitteemayselect, over which the attainment of oneormore Performance Goalswill bemeasured forthepurposeofdeterminingaParticipant’s right to,and the payment of, anAward.

31. “PerformanceShare”meansaright granted to aParticipantunderSection 10.

32. “Performance Share Unit” meansaright granted to aParticipant under Section 10.

33. “Plan” meansthisNuGenerex Biotechnology Holdings, Inc. Equity Incentive Plan, asamended from time

34. “Restricted Stock” meansStockgrantedto aParticipant under Section 9.

35. “Restricted StockUnit”meansaright granted to aParticipant under Section9.

36. “Securities Act” means the Securities Actof1933,asamended fromtimetotime. All references tothe SecuritiesActshall beinterpretedtoinclude areference to anyapplicable regulations, rulings orother official guidance promulgated pursuant to such section ofthe Securities Act.

37. “Separation from Service”is atermthatapplies only in thecontext of anAward thattheCompanyconcludes issubject toSection 409Aofthe Code.In thatlimited context, the term “Separation fromService” means either: (i) the terminationof aParticipant’s employment withthe Company and allAffiliates due todeath, retirementorother reasons; or(ii) apermanentreductioninthe levelof bonafide services theParticipant provides tothe Company andall Affiliates to anamount that isless than 50%of theaverage levelof bona fideservices theParticipant provided tothe Company and allAffiliates in theimmediately preceding36months, with thelevel ofbona fide service calculated inaccordance with Treasury Regulation Section 1.409A-1(h)(1)(ii). Solely forpurposes ofdetermining whether aParticipant has a“Separation fromService,” aParticipant’s employment relationship istreatedascontinuing while the Participant is onmilitary leave, medicalor sickleave, orother bonafide leave ofabsence (if theperiod ofsuch leave does notexceed six(6) months, orif longer, so long asthe Participant’s right toreemployment with theCompanyor aAffiliate isprovided either bystatuteorcontract).If theParticipant’s period ofleave exceeds six (6)months andthe Participant’s right toreemploymentisnot provided either bystatuteor bycontract, the employment relationshipisdeemed toterminate onthe first dayimmediately following theexpirationofsuch six (6)month period.Whether aTerminationof Employment hasoccurred will bedeterminedbased onallofthe facts andcircumstances and inaccordance with Section 409A ofthe Code.

37.1 InthecaseofaNon-Employee Director, Separation from Service means that such member hasceased to be amemberofthe Board. Whether anindependent contractor consultant has incurred aSeparation from Service will bedeterminedinaccordance with Treasury Regulation Section 1.409A-1(h).

38. “Specified Employee” means certain officersandhighly compensated employees of theCompany asdefinedinTreasury Regulation Section 1.409A-1(i). The identificationdatefor determining whether anyemployeeis aSpecified Employee during anycalendar year shall bethe September 1precedingthecommencement of suchcalendar year.

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39. ”Stock” means thecommonstockofthe Company and suchother securitiesofthe Company thatmaybesubstituted forStockpursuanttoSection5.

40. “StockAppreciation Right” or“SAR” means aright granted to aParticipant under Section 7.

41. “StockGrant Award” means aright granted toaParticipantunderSection9.

42. “StockUnit” means aright granted to aParticipantunderSection 9.

43. “TerminationofEmployment”orTermination ofService” means thecessationofperformanceofservices for theCompany. For thispurpose, thetransfer of aParticipant among theCompany and anyAffiliate, ortransfer from a position as amember of theBoard toEmployee,shallnot beconsidered aTerminationofServiceoraTerminationofEmploymentwith theCompany. In thecontext of anAward that is subject to the Code, theterms “Termination ofService” and “Termination of Employment”mean aSeparation fromService.

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Generex Biotechnology (GNBTQ) PRER14APreliminary revised proxy