UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2012~~2013

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~_______~~ to ~~________~~

Commission file number 0-16005

Unigene Laboratories, Inc. (Exact Name of Registrant as Specified in its Charter)
Unigene Laboratories, Inc.
Delaware		22-2328609
(Exact name of registrant as specified in its charter)
(State or Other Jurisdiction of		(IRS Employer Identification No.)
Delaware		22-2328609
Incorporation or Organization)
(State or other jurisdiction of		(IRS Employer Identification No.)
81 Fulton Street, Boonton, New Jersey		07005
incorporation or organization)
(Address of Principal Executive Offices)		(Zip Code)
81 Fulton Street, Boonton, New Jersey		07005
Company’s Telephone Number, Including Area Code:		(973) 265-1100
(Address of principal executive offices)		(Zip Code)
N/A
Registrant's telephone number, including area code:		(973) 265-1100
(Former name, former address and former fiscal year, if changed since last report)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x No o.

Yes x No o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files): Yes x No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act ~~(Check one):~~.

Large accelerated filer o AcceleratedoAccelerated filer oNon-accelerated filer o Smaller reporting company x

Non-accelerated filer o Smaller Reporting Company x

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o No x .

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Common Stock, $.01 Par Value ~~per share~~ – 95,978,952 shares as of ~~January~~April 3130, 2013

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

INDEX

PART I.		FINANCIAL INFORMATION		3
PART 1.		FINANCIAL INFORMATION		3
	Item 1.		Financial Statements ~~(Unaudited)~~	3
			Condensed Balance Sheets as of September 30, 2012 and December 31, 2011	3
		Condensed Balance Sheets as of March 31, 2013 and December 31, 2012		3
			Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2012 and 2011	4
		Condensed Statements of Operations for the Three Months Ended March 31, 2013 and 2012		4
			Condensed Statement of Stockholders' Deficit for the Nine Months Ended September 30, 2012	5
		Condensed Statement of Stockholders' Deficit for the Three Months Ended March 31, 2013		5
			Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011	6
		Condensed Statements of Cash Flows for the Three Months Ended March 31, 2013 and 2012		6
		Notes to Condensed Financial Statements	~~Notes to Condensed Financial Statements~~	7
	Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	3023
	Item 3.		Quantitative and Qualitative Disclosures about Market Risk	4030
	Item 4.		Controls and Procedures	4130
PART II.		OTHER INFORMATION		42
PART 11.		OTHER INFORMATION		31
	Item 1.		Legal Proceedings	4231
	Item 1A.		Risk Factors	4231
	Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	4737
	Item 3.		Defaults Upon Senior Securities	4737
	Item 4.		Mining Safety Disclosures	4737
	Item 5.		Other Information	4737
	Item 6.		Exhibits	4838
SIGNATURES				5039

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

PART 1.

FINANCIAL INFORMATION

Item 1. Financial Statements ~~(Unaudited)~~

Condensed Balance Sheets

~~September~~March 3031, ~~2012~~2013 and December 31, ~~2011~~2012

	September 30, 2012			December 31, 2011
	March 31, 2013			December 31, 2012
	(Unaudited)			(Restated)
ASSETS	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	3353,~~998,867~~223		$	43,~~681~~813,~~683~~492
Accounts receivable		196,~~245,102~~063			276,~~854,038~~255
Accounts receivable - Tarsa		--			8,193
Inventory, net		699,872			898,042
Inventory, net		674,703			1,283,550
Prepaid expenses and other current assets		681,453			848,573
Due from former China Joint Venture partner, net		--			600,000
Total Current Assets		1,830,611			5,636,362
Prepaid expenses and other current assets		632,969			862,761
Noncurrent inventory, net		--			1,063,633
Total Current Assets		6,551,641			10,290,225
Property, plant and equipment, net		1,853,853			2,651,819
Non-current inventory, net		1,434,866			1,946,647
Patents and other intangibles, net		1,621,970			1,920,574
Property, plant and equipment, net		2,804,064			2,977,058
Other assets		40,513			40,513
Patents and other intangibles, net		1,995,503			2,020,458
Total Assets	$	5,346,947		$	11,312,901
Other assets		422,350			960,781
Total Assets	$	13,208,424		$	18,195,169
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	~~878~~458,~~510~~896		$	1731,~~472,925~~359
Accrued expenses		12,~~456~~149,~~280~~436			2,~~094~~244,~~449~~830
Accrued interest		1217,~~183~~197,~~289~~341			--14,618,402
Embedded conversion feature liability		19,460,000			--
Current portion – deferred licensing revenues		1,514,182			1,648,515
Current portion – Deferred licensing revenues		1,599,753			1,262,622
Current portion – deferred gain on sale/leaseback		116,760			116,760
Current portion – Deferred gain on sale/leaseback		116,760			116,760
Current portion – capital lease obligations		39,558			38,566
Current portion – Capital lease obligations		37,599			--
Embedded conversion feature liability		16,850,000			28,700,000
Notes payable – Victory Park, net of discount of $7,624,378 at September 30, 2012		40,192,231			--
Notes payable – Victory Park, net of discount of $4,030,959 and $5,894,361, respectively		43,785,650			41,922,248
Notes payable – Founders		14,437,518			750,000
Notes payable – Levys		14,437,518			14,437,518
Total Current Liabilities		9096,~~361~~549,~~940~~341			5104,~~696~~458,~~756~~198
Notes payable – Victory Park, net of discount of $5,335,294 at December 31, 2011		--			32,683,456
Capital lease obligations, excluding current portion		17,706			27,975
Notes payable – Founders		--			13,987,518
Deferred licensing revenues, excluding current portion		4,787,850			5,050,539
Embedded conversion feature liability		--			12,470,000
Deferred gain on sale/leaseback, excluding current portion		486,533			515,723
Accrued interest		--			11,827,982
Total Liabilities		101,841,430			110,052,435
Deferred licensing revenues, excluding current portion		5,313,230			6,101,287
Deferred gain on sale/leaseback, excluding current portion		544,913			632,483
Capital lease obligations, excluding current portion		37,986			--
Deferred compensation		525,154			492,851
Total Liabilities		96,783,223			83,892,333
Commitments and Contingencies
Stockholders’ Deficit:
Common Stock – par value $.01 per share, authorized 275,000,000 shares; issued 95,586,644 shares at September 30, 2012 and 95,215,599 at December 31, 2011		955,866			952,156
Common Stock – par value $.01 per share, authorized 275,000,000 shares; issued 95,978,952 shares at March 31, 2013 and 95,586,644 at December 31, 2012		959,790			955,866
Additional paid-in capital		~~116~~117,~~755~~194,~~672~~551			~~115~~116,~~691~~932,~~958~~088
Accumulated deficit		(~~201~~214,~~286~~648,~~337~~824	)		(~~182~~216,~~341~~627,~~278~~488	)
Total Stockholders’ Deficit		(8396,~~574~~494,~~799~~483	)		(6598,~~697~~739,~~164~~534	)
Total Liabilities and Stockholders’ Deficit	$	135,~~208~~346,~~424~~947		$	1811,~~195~~312,~~169~~901

See notes to condensed financial statements.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

Condensed Statements of Operations

Three Months Ended March 31, 2013 and 2012 (Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	Three Months Ended March 31,
	2012			2011			2012			2011
	2013			2012
				(Restated)						(Restated)
Revenue:
Revenue:
Product Sales	$	--		$	646,147
Product sales	$	2,049,320		$	1,292,689		$	3,989,080		$	2,586,177
Royalties		84,960			348,744
Royalties		166,553			306,376			661,903			1,225,602
Licensing Revenue		262,689			262,689
Licensing revenue		262,690			679,962			788,068			1,947,813
Development Fees and Other		203,573			165,628
Development fees and other		814,480			722,849			1,464,405			1,201,472
Tarsa Revenue		62,550			328,075
Tarsa revenue		119,658			426,807			998,060			1,062,480
Total Revenue		613,772			1,751,283
Total revenue		3,412,701			3,428,683			7,901,516			8,023,544
Operating Expenses:
Operating expenses:
Research and Development		850,518			1,258,659
Research and development		1,154,302			2,245,000			3,792,335			6,764,287
Cost of Goods Sold		1,635,818			246,357
Cost of goods sold		829,895			493,415			1,528,324			1,028,955
General and Administrative		1,975,187			2,093,172
General and administrative		2,402,984			2,121,859			6,661,001			6,766,754
Unallocated Facility Expenses		529,250			859,113
Loss on sale of patents		--			824,241			--			824,241
Asset Impairment Charges		983,990			--
Unallocated facility expenses		712,531			883,617			2,249,930			2,482,790
Total Operating Expenses		5,974,763			4,457,301
Total operating expenses		5,099,712			6,568,132			14,231,590			17,867,027
Operating Loss		(5,360,991	)		(2,706,018	)
Operating loss		(1,687,011	)		(3,139,449	)		(6,330,074	)		(9,843,483	)
Other Income (Expense):
Other income (expense):
Interest and Other Income		10,538			80,433
Interest and other income		9,743			11,052			92,761			62,105
Interest Expense		(4,520,883	)		(2,867,002	)
Interest expense		(3,465,175	)		(2,815,444	)		(9,613,933	)		(7,943,686	)
Change in fair value of embedded derivative		11,850,000			2,920,000
Gain (loss) on change in fair value of embedded conversion feature		640,000			3,650,000			(1,870,000	)		(12,120,000	)
Loss on Investment in Tarsa		--			(650,571	)
Loss from investment in former China joint venture		--			--			(600,000	)		(1,375,925	)
Income (Loss) Before Income Taxes		1,978,664			(3,223,158	)
Loss from investment in Tarsa		--			(1,301,143	)		(650,571	)		(2,819,143	)
Income Tax Benefit		--			26,757
Loss before income taxes		(4,502,443	)		(3,594,984	)		(12,641,743	)		(34,040,132	)
Net Income (Loss)	$	1,978,664		$	(3,196,401	)
Income tax benefit from refund of federal tax credits		--			--			26,758			--
Net Income (Loss) Per Share:
Net loss	$	(4,502,443	)	$	(3,594,984	)	$	(18,945,059	)	$	(34,040,132	)
Basic	$	0.02		$	(0.03	)
Net loss per share – basic and diluted	$	(0.05	)	$	(0.04	)	$	(0.20	)	$	(0.37	)
Diluted	$	(0.01	)	$	(0.03	)
Weighted average number of shares outstanding - basic and diluted		95,537,312			92,910,238			95,405,110			92,636,692
Weighted Average Number of Shares Outstanding:
Basic		95,950,234			95,314,825
Diluted		507,998,045			95,314,825

See notes to condensed financial statements.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

Condensed Statement of Stockholders’ Deficit

~~Nine~~Three Months Ended ~~September~~March 3031, ~~2012 (Unaudited, Restated)~~2013

	Common Stock
	No. Shares		Par Value		Additional Paid-in Capital			Accumulated Deficit			Total
Balance, January 1, 2012 (Restated)		95,215,599	$	952,156	$	115,691,958		$	(182,341,278	)	$	(65,697,164	)
Balance, January 1, 2013		95,586,644	$	955,866	$	116,932,088		$	(216,627,488	)	$	(98,739,534	)
Stock Issued in Lieu of Director Fees		~~289~~392,~~045~~308		23,~~890~~924		~~113~~49,~~110~~228			--			~~116~~53,~~000~~152
Issuance of Restricted Stock		40,000		400		(400	)		--			--
Stock-based Compensation Expense		--		--		213,235			--			213,235
Recognition of Restricted Stock Compensation Expense		--		--		20,448			--			20,448
Net Income		--		--		--			1,978,664			1,978,664
Recognition of Stock Option Compensation Expense – Employees and Directors		--		--		918,381			--			918,381
Balance, March 31, 2013 (Unaudited)		95,978,952	$	959,790	$	117,194,551		$	(214,648,824	)	$	(96,494,483	)
Recognition of Stock Option Compensation Benefit – Consultants		--		--		(516	)		--			(516	)
Exercise of Stock Options		42,000		420		12,690			--			13,110
Net Loss		--		--		--			(18,945,059	)		(18,945,059	)
Balance, September 30, 2012 (Unaudited)		95,586,644	$	955,866	$	116,755,672		$	(201,286,337	)	$	(83,574,799	)

See notes to condensed financial statements.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

Condensed Statements of Cash Flows

~~Nine~~Three Months Ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012 (Unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2012			2011
	2013			2012
				(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(18,945,059	)	$	(34,040,132	)
Net Income (Loss)	$	1,978,664		$	(3,196,401	)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Amortization of deferred revenue		(1447,~~917,244~~022	)		(2365,~~185,539~~617	)
Amortization of deferred credit		(8729,~~570~~190	)		(3829,~~920~~190	)
Amortization of debt discounts and deferred financing fees		31,~~440~~933,~~492~~395			2941,~~057,892~~492
Non-cash equity compensation		1,028,814			1,242,450
Change in fair value of embedded derivative		(11,850,000	)		(2,920,000	)
Depreciation and amortization of long-lived assets		586,233			529,978
Asset impairment charge		983,990			--
Inventory reserve provision		19,219			--
Inventory reserves		1,635,818			--
Loss on sale of patents		--			824,241
Non-cash equity compensation		266,387			381,571
Loss on investment in Tarsa		650,571			2,819,143
Depreciation and amortization of long-lived assets		157,364			230,322
Loss on investment in former China Joint Venture		600,000			1,375,925
Loss on investment in Tarsa		--			650,571
Loss on change in fair value of embedded conversion feature		1,870,000			12,120,000
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		1,017,129			(294,555	)
(Increase) decrease in accounts receivable		(19,808	)		2,026,374
Decrease in inventory		1,120,628			607,211
(Increase) decrease in inventory		(374,015	)		11,998
Decrease in other assets		197,~~070,655~~127			~~223~~645,~~668~~938
Decrease in accounts payable and accrued expenses		(1379,~~226,312~~988	)		(~~451~~723,~~661~~538	)
Increase in deferred revenue		150,~~466,318~~000			4299,~~717,312~~390
Increase in accrued interest		62,~~153~~578,~~166~~939			51,~~873~~919,~~897~~805
Increase (decrease) in deferred compensation		32,303			(7,850	)
Increase in deferred compensation		12,130			12,275
Net cash used in operating activities		(3,~~120~~406,~~657~~209	)		(4115,~~626,940~~010	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Tarsa		~~(650,571~~--	)		(2650,~~819,143~~571	)
Investment in Nordic joint venture		(50,000	)		--
Capital expenditures		--			(107,177	)
Capital expenditures		(149,792	)		(642,697	)
Increase in patents and other intangibles		(44,784	)		(65,053	)
Proceeds from sale of patents		--			20,000
Net cash used in investing activities		(44,784	)		(822,801	)
Increase in patents and other intangibles		(118,719	)		(244,388	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale/lease back		--			1,119,963
Repayment of capital lease		(9,276	)		(27,153	)
Net cash used in investing activities		(969,082	)		(2,566,265	)
Proceeds from exercise of stock options		--			13,110
CASH FLOWS FROM FINANCING ASSETS:
Net cash used in financing activities		(9,276	)		(14,043	)
Repayment of Founders’ note		(300,000	)		--
Net decrease in cash and cash equivalents		(3,460,269	)		(951,854	)
Repayment of capital lease		(44,187	)		--
Cash and cash equivalents at beginning of period		3,813,492			4,681,683
Proceeds from issuance of debt		4,000,000			--
Cash and cash equivalents at end of period	$	353,223		$	3,729,829
Debt issuance costs		(262,000	)		--
Proceeds from exercise of stock options		13,110			185,424
Net cash provided by financing activities		3,406,923			185,424
Net decrease in cash and cash equivalents		(682,816	)		(7,007,781	)
Cash and cash equivalents at beginning of period		4,681,683			12,200,800
Cash and cash equivalents at end of period	$	3,998,867		$	5,193,019
SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities:
Purchase of equipment through capital lease	$	~~119,772~~--		$	--119,772
Cash payments:
Cash paid for interest		--			--
Cash paid for income taxes		--			--

See notes to condensed financial statements.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

Notes to Condensed Financial Statements

~~September~~March 3031, ~~2012~~2013

(Unaudited)

In November 2012, the Company concluded that the audited financial statements for the years ended December 31, 2011 and 2010 and other financial information included in the Company’s Annual Report on Form 10-K for the years ended December 31, 2011 and 2010 and the unaudited financial statements included in the Company’s Quarterly Reports on Form 10-Q for each quarterly period in the years ended 2011 and 2010 and for the quarterly periods ended June 30, 2012 and March 31, 2012 should no longer be relied upon1. ~~The following financial statement footnotes give effect to the restatement discussed further in Note B of the notes to the financial statements herein.~~ Liquidity

~~NOTE~~At AMarch –31, ~~LIQUIDITY~~2013, the Company had cash and cash equivalents of $353,000, a decrease of $3,460,000 from December 31, 2012. The decrease was primarily due to net cash used in operating activities of $3,406,000. The Company has incurred annual operating losses since its inception and as a result, at March 31, 2013, had an accumulated deficit of approximately $214,649,000.

~~Cash~~As of March 31, 2013, the Company’s total principal debt, inclusive of capital lease obligations and accrued interest, was $79,509,000. On April 8, 2013, the Company entered into a second amendment to a financing agreement with affiliates of Victory Park Capital Advisors, LLC (“VPC”), whereby VPC purchased an additional $750,000 senior secured note, providing the Company with additional working capital (see Note 18). On May 7, 2013, the Company and Nordic Bioscience entered into an equity transfer agreement pursuant to which Nordic Bioscience agreed to purchase the Company’s entire ownership interest in a joint venture between the parties (see Note 12) in exchange for a payment of $1,000,000, which was received on May 13, 2013 (see Note 18). Pursuant to the terms of a forbearance agreement with VPC, the proceeds received from the transaction were required to be remitted to VPC to be applied to the outstanding senior secured notes. The Company will need to obtain significant additional financing in the near term to fund operations, address its current debt and restructure its balance sheet. In the event that the Company is unable to secure additional sources of cash, it will not be able to fund operations beyond June 15, 2013 and the Company will be forced to cease operations. The Company is currently in discussion with potential lenders in regards to obtaining additional financing, however, there can be no assurance that any lender will provide additional funding.

AtThe ~~September~~Company ~~30,~~has ~~2012,~~licensed ~~Unigene~~to Upsher-Smith Laboratories, Inc. (~~the~~ “~~Company~~USL”) ~~had~~its ~~cash~~patented nasal formulation of calcitonin for commercialization in the United States and ~~cash~~has ~~equivalents~~licensed ofthe $development and worldwide commercialization rights (except China) for its Phase 3~~,999,000,~~ aoral ~~decrease~~calcitonin ofto ~~$683~~Tarsa Therapeutics,~~000~~ ~~from~~Inc. ~~December~~(“Tarsa”). On 31March 5, ~~2011~~2013, the U. ~~The~~S. ~~decrease~~Food isand ~~primarily~~Drug ~~due~~Administration to(“FDA”) ~~net~~held ~~cash~~an ~~used~~advisory incommittee ~~operating~~meeting ~~and~~to ~~investing~~discuss ~~activities~~whether the overall benefit-risk assessment of ~~$3,120,000~~calcitonin ~~and~~salmon ~~$969,000,~~products ~~respectively,~~supports ~~partially~~their ~~offset~~continued bymarketing for the ~~$3,500,000~~treatment inof ~~proceeds~~post-menopausal ~~received~~osteoporosis. The ~~(following~~advisory committee concluded that the ~~deposit~~benefits of ~~$500~~salmon calcitonin products,~~000~~ ~~for~~including ~~fees~~Fortical, ofdo not outweigh the ~~lenders)~~potential risks associated with their use and as a result, ofshould ~~refinancing~~not ~~our~~continue ~~debt~~to inbe ~~September~~broadly ~~2012~~marketed. Additionally, ~~(see~~it ~~Note~~was ~~H).~~recommended ~~The~~that ~~Company~~fracture ~~has~~prevention ~~incurred~~data ~~annual~~be ~~operating~~required ~~losses~~for ~~since~~the ~~its~~approval ~~inception,~~of ~~including~~new acalcitonin ~~loss~~products ofin ~~$18~~development for osteoporosis prevention and treatment,~~945,000~~ ~~during~~such as the ~~nine~~oral ~~months~~calcitonin ~~ended~~product ~~September~~being ~~30,~~developed ~~2012,~~by ~~and,~~Tarsa. The asFDA awill ~~result,~~assess atthe ~~September~~recommendations ~~30,~~and ~~2012,~~may ~~had~~or anmay ~~accumulated~~not ~~deficit~~concur ofwith ~~$201,286,000~~the advisory committee. The FDA has not yet issued a response to the advisory committee recommendations. The Company ~~expects~~believes that the advisory committee recommendations have had and will continue to ~~incur~~have ~~net~~a ~~losses~~material adverse impact on the Company’s financial condition and ~~cash~~operations ~~flow~~by ~~deficiencies~~reducing ~~from~~or ~~operating~~eliminating ~~activities~~sales ~~for~~and royalties on Fortical, limiting the ~~foreseeable~~value ~~future~~of current calcitonin development projects and limiting the potential value of its investment in Tarsa.

~~Debt~~Due largely in part to the FDA advisory committee recommendation, in 2013, the Company has not received and does not anticipate receiving additional orders for Fortical in the near term. As a result of the cessation of Fortical production activities and uncertainty regarding any future production requirements, the Company has concluded that its existing assets associated with Fortical are impaired. The Company’s assessment of the carrying value of such assets resulted in the write-off of fixed assets of $675,000, patents of $309,000 and inventories of $1,636,000 in the three months ended March 31, 2013.

AsOn ofApril ~~September 30~~1, ~~2012~~2013, ~~the~~in ~~Company’s~~an ~~total~~effort ~~principal~~to ~~debt,~~conserve ~~inclusive of~~ capital ~~lease obligations~~ and ~~accrued interest, was approximately $74,500,000, inclusive of an additional $4,000,000 note issued in September 2012 as~~ further ~~described~~extend ~~below. Based~~its ~~on managements’ current~~ cash ~~flow projections~~runway, the Company ~~will~~implemented ~~need~~a tostrategic ~~obtain~~reorganization ~~significant additional financing in the near term to fund operations, address its current debt~~ and ~~restructure~~downsizing ~~its~~which ~~balance~~involved ~~sheet. Management’s~~a ~~cash~~reduction ~~flow projections at the time~~ of ~~the~~approximately ~~issuance~~40% of the $4,000,000 note estimated that cash on hand would be sufficient to fund operations through at least June 2013. These estimates included the assumption that our Biotechnologies Strategic Business Unit (“Biotechnologies SBU”) would be able to convert at least one of its ongoing oral peptide delivery feasibility partnerships into a definitive license agreement bearing a significant up-front cash payment, on or before December 31, 2012. While the Company’s ~~is still actively pursuing such opportunities~~workforce, ~~the Company did not enter into a license agreement~~ with athe ~~significant~~majority ~~upfront~~of ~~cash~~affected ~~component~~employees byhaving ~~December~~supported ~~31, 2012. This change in~~ the Company’s ~~projections~~Fortical ismanufacturing ~~the result of an ongoing review of our Biotechnologies SBU~~ and ~~the~~recombinant ~~status~~calcitonin ofproduction ~~its~~operations. In ~~feasibility~~recent ~~programs~~months, ~~including~~Fortical ~~recent~~manufacturing ~~feedback~~and ~~from~~royalty ~~the~~revenues ~~Biotechnologies~~have ~~SBU’s~~been ~~feasibility~~negatively ~~partners~~impacted ~~regarding~~by the ~~criteria~~regulatory ~~and~~recommendations ~~timing~~pertaining ~~for each partners’ decision~~ to ~~license~~the ~~our~~use ~~technology,~~of ascalcitonin ~~well as delays to our ongoing feasibility and partner sponsored Peptelligence™ research programs~~salmon. InThe ~~particular,~~Company ~~several~~estimates ~~early~~that ~~stage~~it ~~development~~will ~~partners~~incur ~~have~~approximately ~~indicated that~~$250,000 in ~~the~~charges ~~current~~related ~~funding~~to ~~environment~~the ~~until~~reduction ~~they~~in ~~themselves are able to partner~~force, ~~they~~all ~~may~~of ~~not~~which ~~have~~would ~~sufficient~~result ~~discretionary~~in cash ~~resources~~expenditures tofor ~~satisfy commercially reasonable licensing terms. In addition, certain feasibility partners participating in longer~~one-~~term~~time ~~research~~employee ~~oriented~~termination ~~feasibility~~benefits ~~work~~and ~~have~~associated ~~decided~~costs. toThe ~~extend~~related orcharges ~~expand~~were ~~their~~recorded ~~current~~in ~~feasibility programs but are not yet ready to enter into a definitive licensing agreement until~~ the ~~ongoing~~second ~~feasibility~~quarter ~~studies~~of ~~yield certain desired targets~~2013. As a result of the ~~corresponding anticipated~~ reduction in ~~the Biotechnologies SBU’s forecasted revenues~~force, ~~management is actively pursuing various alternatives to extend~~ the Company’s ~~cash~~does ~~runway. In~~not ~~accordance~~currently ~~with~~have ~~guidance previously issued by~~ the ~~Company,~~ability ~~in the event that the Company is unable~~ to ~~secure~~manufacture ~~additional sources of revenue, it will not be able to fund operations beyond the first quarter of 2013~~Fortical. ~~Additionally, our current projections would result in the Company defaulting on the minimum cash requirement as of March 31, 2013 under its forbearance agreement.~~

On September 21, 2012 (the “First Amendment Effective Date”), the Company entered into a Forbearance Agreement and First Amendment to Amended and Restated Financing Agreement, by and among the Company, Victory Park Management, LLC, as administrative agent and collateral agent (the “Agent”), Victory Park Credit Opportunities, L.P., VPC Fund II, L.P., VPC Intermediate Fund II (Cayman) L.P., and Victory Park Credit Opportunities Intermediate Fund, L.P. (collectively, the “Lenders” and together with the Agent, the “VPC Parties” and “Victory Park”) (together with all exhibits and schedules thereto, and as amended from time to time, the “Forbearance Agreement”). The Forbearance Agreement evidenced (i) the forbearance by the VPC Parties with respect to the exercise of certain of their rights and remedies arising as a result of the existence of certain events of default under the Restated Financing Agreement; (ii) the amendment of certain provisions of the Amended and Restated Financing Agreement dated as of March 16, 2010, by and among the Company, the Agent, as administrative agent and collateral agent, and the Lenders party thereto (the “Restated Financing Agreement”); and (iii) the other agreements contemplated by the Forbearance Agreement (collectively the “2012 Restructuring”). Pursuant to the Forbearance Agreement, the Company issued to the Lenders a $4,000,000 senior secured note, resulting in a total liability to the Lenders of $51,448,000 as of September 30, 2012, inclusive of principal and interest. As a result of the financial restatement described above and in Note B, the Company was unable to finalize and file this Form 10-Q by the Securities and Exchange Commission’s (the “SEC”) extended filing deadline of November 21, 2012. Therefore, the Company gave the VPC Parties notice that an event of default occurred under the Forbearance Agreement by virtue of the Company’s failure to timely file this Form 10-Q. Refer to Note H for additional details in regards to the terms of the Forbearance Agreement and the implications of the event of default.

On April 5, 2013, the Company received a Notice of Public Sale of Collateral Under Illinois Uniform Commercial Code (the “Notice”) from Victory Park Management LLC, which stated that the Lenders (see Note 7) proposed to initiate a public foreclosure sale on April 15, 2013 in accordance with Article 9 of the Uniform Commercial Code (“UCC”) for the sale of certain of the Company’s assets that secure the senior secured notes issued to the Lenders by Unigene ~~Laboratories~~(the “Proposed Sale”), ~~Inc~~of all of the personal property assets of the Company pledged as collateral under the Restated Financing Agreement (see Note 7) and related documents that relate to the Company’s Biotechnologies Strategic Business Unit (“SBU”), including such assets that are used or intended for use in connection with, or that are necessary or advisable to the continued conduct of, the Company’s Biotechnologies SBU as currently being conducted (but excluding those assets of the Company that are not related to the Biotechnologies SBU). ~~Form~~The ~~10-Q~~Lenders –made ~~Period~~a ~~Ended~~credit ~~September~~bid 30of $15,000,000 ~~2012~~and, at the conclusion of the public auction on April 16, 2013, were deemed the highest bidder for the assets. The assets, which had a carrying value of approximately $2,200,000 as of March 31, 2013, were acquired by the Lenders and contributed to an affiliate of the Lenders on April 25, 2013 in exchange for the satisfaction and discharge of $15,000,000 outstanding under the senior secured notes. As a result, as of April 25, 2013, the Company will no longer benefit from revenues associated with development work, feasibility studies or the potential related licensing and milestone revenues generated by the Biotechnologies SBU.

AsDue ofto the ~~First~~Company’s ~~Amendment~~limited ~~Effective~~financial ~~Date~~resources, the ~~Company~~decline ~~lacked~~and ~~sufficient~~potential ~~shares~~elimination of ~~Common~~Fortical ~~Stock~~sales toand ~~deliver~~royalties, ~~all of~~ the ~~shares~~sale of ~~Common Stock issuable to~~ the ~~Lenders upon conversion of the Victory Park notes (the “Conversion Shares”). The~~ Company’s isBiotechnologies ~~required~~SBU toand ~~obtain~~loss ~~stockholder approval to amend its certificate~~ of ~~incorporation to increase~~ the ~~number~~associated ofrevenues, ~~authorized~~its ~~shares~~inability to ~~allow~~restructure ~~for~~its ~~the~~existing ~~conversion~~Victory ofPark ~~the~~and ~~notes~~founders indebt ~~full~~ and ~~until~~its ~~such~~inability ~~time~~to asraise ~~the~~cash ~~Company receives approval~~ to ~~increase~~fund ~~the authorized shares~~operations, ~~Victory Park has~~ the ~~ability~~Company torequires ~~demand~~significant ~~payment~~financial inresources ~~cash for any shortfall~~ in ~~authorized~~order ~~shares~~to ~~upon~~avoid ~~a notice of conversion. See Note H below for information on~~ the ~~impact~~cessation of ~~the restatement on certain default provisions under the Restated Finance Agreement, as amended by the Forbearance Agreement~~operations.

OnThe ~~May 29, 2012, the~~ Company ~~entered~~will ~~into~~need ~~an agreement~~ to ~~settle~~secure ~~its~~another ~~obligations~~source ~~to Jay Levy, the estate~~ of ~~Jean~~funding ~~Levy,~~in ~~Warren~~order ~~Levy~~to ~~and~~satisfy ~~Ronald~~its ~~Levy~~working ~~(the~~capital ~~“Levys”~~needs. ~~and~~If the ~~“Founders”)~~Company ~~(see~~is ~~Note~~not ~~G). Pursuant~~able to ~~the~~generate ~~settlement~~additional ~~agreement~~cash, ~~the~~it ~~Founders~~will ~~agreed~~not tohave ~~settle~~the ~~any~~ability ~~and~~to ~~all~~continue ~~outstanding~~as ~~obligations~~a ~~due~~going ~~from~~concern. ~~the~~The Company inbelieves ~~exchange~~that ~~for~~satisfying ~~(i)~~its ~~two~~cash ~~installment~~requirements ~~payments~~over ~~of $150,000 each due in May and June 2012 (~~the ~~“Interim~~long ~~Payments”),~~term ~~which~~will ~~were~~require ~~subsequently paid by~~ the ~~Company;~~restructuring ~~(ii)~~of ~~$7,700,000~~its ~~payable~~balance onsheet orto ~~before~~eliminate ~~September 30, 2012; and (iii)~~ the ~~issuance~~outstanding ofdebt ~~5,000,000~~in ~~shares~~addition ofto the ~~Company’s~~successful ~~common~~development ~~stock. In~~and ~~light~~commercialization of ~~the~~its ~~recent~~licensed ~~EMA~~oral ~~recommendation~~calcitonin product, ~~the~~its ~~expected~~oral ~~financial~~parathyroid ~~impact~~hormone on(“PTH”) ~~business operations and the inability of the Company to raise funds~~product, the ~~Company~~obesity ~~was~~program ~~not~~(UGP in281) aor ~~position to fund~~ the ~~debt~~diabetes ~~settlement~~program ~~with~~(UGP ~~the Founders and~~302). However, asit ais ~~result,~~uncertain ~~remains~~whether inany ~~debt~~new toproducts ~~the~~will ~~Founders~~be ~~for~~developed aor ~~total~~approved ofor ~~$22,990,000~~will inbe ~~principal~~commercially ~~and~~successful. ~~accrued~~The ~~interest~~amount as of ~~September~~future 30revenue, ~~2012.~~if ~~On December 21~~any, ~~2012,~~that the Company ~~entered~~will ~~into~~derive afrom ~~further~~Fortical ~~agreement~~is ~~with~~also ~~the Levys regarding the timing of the foregoing installment payments~~uncertain. ~~See Note G below for details regarding such agreement.~~

~~Recent~~Cash ~~developments~~received ~~impacting~~during ~~business~~the ~~operations~~quarter ended March 31, 2013 was primarily from development work and fee-for-service feasibility studies for various companies. The Company’s primary sources of cash have historically been (1) licensing fees for new agreements, (2) milestone and other payments under licensing or development agreements, (3) bulk peptide sales under licensing or supply agreements, (4) loans from its founders and Victory Park, (5) the sale of its common stock, (6) Fortical sales and royalties and (7) the proceeds from the sale of state net operating loss carry-forwards.. There can be no assurance that any of these cash sources will continue to be available to the Company in the future. Moreover, the revenues received in the first quarter primarily related to the Company’s Biotechnology SBU. Those assets have subsequently been sold and as a result, the Company will not receive revenues from such sources in the future. The Company is seeking additional licensing and/or supply agreements with pharmaceutical companies for its oral peptides, including PTH and its obesity peptide (UGP 281). In October 2011, the Company established a Joint Development Vehicle with Nordic Bioscience and on May 7, 2013, sold its share of the related interest to Nordic Bioscience (see Notes 12 and 18). Milestone payments are based upon progress achieved in collaborations, which cannot be guaranteed, and are often subject to factors that are controlled neither by the Company or its licensees. Product sales to the Company’s partners under these agreements are based upon its licensees’ needs, which are sometimes difficult to predict. Sale of the Company’s common stock is dependent upon its ability to attract interested investors, its ability to negotiate favorable terms and the performance of the stock market in general and biotechnology investments in particular. Future Fortical sales and royalties, if any, will also be affected by competition and continued acceptance in the marketplace and could be impacted by manufacturing, distribution or regulatory issues. The Company may not be successful in achieving milestones under its current agreements, raising capital to successfully develop its candidates in obtaining regulatory approval for its other products or in-licensing any of its other products or technologies.

On December 2111, 2012, the Company ~~settled~~announced ~~all~~that ~~claims~~it has retained an investment banker to assist the Company with its ~~former~~exploration ~~patent~~and ~~counsel~~evaluation ~~regarding~~of a broad range of strategic options, including, but not limited to, the strategic partnering of its technology, the out-licensing of intellectual property and divestiture of certain ~~fees~~assets, and the possible sale of the Company or one or more of its business units. ~~See~~The ~~Note~~evaluation Rof ~~below~~strategic ~~for~~initiatives ~~further~~remains ~~details~~on-going.

OnGoing December 11, 2012, the Company announced that it has retained an investment banker to assist the Company with its exploration and evaluation of a broad range of strategic options, including, but not limited to, the strategic partnering of its technology, the out-licensing of intellectual property and divestiture of certain assets, and the possible sale of the Company or one of its business units.Concern

OnThe ~~November~~above ~~27,~~conditions raise ~~2012,~~substantial doubt about the Company’s ~~announced~~ability ~~that~~to ~~certain~~continue ~~previously~~as ~~issued~~a ~~financial~~going ~~statements should no longer be relied upon~~concern. ~~See~~ ~~Note~~The Bfinancial ~~below~~statements ~~for~~included ~~details~~in ~~regarding~~this ~~the~~Quarterly ~~Company’s~~Report ~~restatement~~on ofForm ~~previously~~10-Q ~~issued~~have ~~financial~~been ~~statements. See~~prepared ~~also~~on ~~Note~~a Hgoing ~~below~~concern ~~for~~basis ~~information~~and onas ~~the~~such ~~impact~~do ofnot ~~such~~include ~~restatement~~any onadjustments ~~certain~~that ~~default~~might ~~provisions~~result ~~under~~from the ~~Restated~~outcome ~~Finance~~of ~~Agreement,~~this ~~as amended by the Forbearance Agreement~~uncertainty.

On2. ~~July~~Basis ~~20, 2012 the European Medicines Agency (“EMA”) issued a press release concerning the marketability~~ of ~~approved~~Presentation ~~calcitonin products in Europe, concluding there was evidence of a small increased risk of cancer with long-term use of current calcitonin medications approved~~ and ~~commercially~~Recent ~~available~~Accounting in Europe since 1973, and calling for the curtailment of calcitonin usage. On August 1, 2012, Health Canada announced that it is reviewing whether to follow the European medical authorities and restrict use of a nasal spray prescribed to prevent osteoporosis because of the increased risk of cancer.Pronouncements

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation, which are of a normal and recurring nature only, have been included. Operating results for the three-month period ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 or for any other interim period. For further information, please refer to the Company’s financial statements and footnotes thereto included in Unigene’s annual report on Form 10-K for the year ended December 31, 2012.

~~Unigene~~Recent ~~Laboratories,~~Accounting ~~Inc. Form 10-Q – Period Ended September 30, 2012~~Pronouncements

~~The~~In ~~Company~~December ~~has licensed to Upsher-Smith Laboratories~~2011, ~~Inc.~~an ~~(“USL”)~~update ~~its~~to ~~patented~~guidance ~~nasal~~was ~~formulation~~issued ofregarding ~~calcitonin for commercialization in~~ the ~~United~~offsetting ~~States~~or ~~and~~netting ~~has~~of ~~licensed~~assets ~~the development~~ and ~~worldwide~~liabilities. ~~commercialization~~Entities ~~rights~~are ~~(except~~required ~~China) for its Phase 3 oral calcitonin~~ to ~~Tarsa~~disclose ~~Therapeutics,~~both ~~Inc.~~gross ~~(“Tarsa”). However,~~information ~~since~~and ~~neither~~net ~~the~~information ~~Company~~about ~~nor~~both ~~its~~instruments ~~licensees~~and ~~are~~transactions ~~market~~eligible ~~authorization~~for ~~holders~~offset in ~~Europe, they do not have~~ the ~~right~~statement toof ~~appeal~~financial ~~the~~position ~~EMA's~~and ~~recommendation. On~~instruments ~~October~~and ~~12,~~transactions ~~2012,~~subject ~~Tarsa~~to ~~announced~~ an agreement insimilar ~~principle with Therapicon® Slr~~ to ~~provide~~a ~~consulting~~master ~~assistance~~netting toarrangement. ~~the~~This ~~Italian~~scope ~~firm~~would ininclude ~~its appeal of the recent EMA recommendation. In November 2012~~derivatives, ~~the~~sale ~~EMA~~and ~~announced~~repurchase ~~that~~agreements itand ~~has~~reverse ~~reconfirmed~~sale ~~its~~and ~~original~~repurchase ~~conclusion~~agreements, ~~that~~and ~~the~~securities ~~benefits~~borrowing ~~of calcitonin-containing medicines do not outweigh their risks in the treatment of osteoporosis~~ and ~~that~~securities ~~they~~lending ~~should no longer be used for this condition~~arrangements. The ~~potential~~objective ~~regulatory and commercial impact~~ of this ~~announcement~~disclosure onis ~~calcitonin~~to ~~related~~facilitate ~~products~~comparison ~~marketed~~between orthose ~~under~~entities ~~development~~that byprepare ~~the~~their ~~Company’s licensees and partners in Europe and other markets as well as the resulting~~ financial ~~impact~~statements on ~~its~~the ~~future~~basis ~~business~~of ~~operations is currently being evaluated~~U. ~~There~~S. isGAAP ~~a possibility that other regulatory authorities, including the United States Food~~ and ~~Drug~~those ~~Administration~~entities ~~(“FDA”),~~that ~~could~~prepare ~~take~~their ~~actions~~financial asstatements aon ~~result of~~ the ~~EMA~~basis ~~recommendation,~~of ~~including withdrawing calcitonin products from the market or limiting their use~~IFRS. ~~This~~In ~~could~~January ~~materially~~2013, ~~adversely~~an ~~affect~~update ~~the~~was ~~Company’s~~issued ~~finances~~to ~~and~~amend ~~operations by reducing or eliminating sales~~ and ~~royalties~~clarify ~~on Fortical, limiting~~ the ~~value~~scope of ~~current calcitonin development projects and limiting~~ the ~~potential~~required ~~value~~balance ofsheet ~~its~~offsetting ~~investment in Tarsa~~disclosures. ~~Additionally,~~ ~~this~~The ~~could~~disclosures ~~impact~~are ~~the~~required ~~carrying~~irrespective ~~value~~ of ~~assets,~~whether ~~including~~the ~~fixed~~transactions ~~assets,~~are ~~inventories~~offset ~~and~~in ~~patents, as well as~~ the ~~Company’s~~statement ~~ability~~of tofinancial ~~obtain adequate financing~~position. OnThis ~~January~~amendment ~~14,~~is ~~2013,~~effective ~~the~~as ~~FDA posted notice~~ of anJanuary ~~Advisory Committee Meeting scheduled on March 5~~1, 2013. The toadoption ~~discuss whether the benefit~~ of ~~calcitonin~~this ~~salmon~~update ~~for~~did ~~the~~not ~~treatment~~have ofa ~~postmenopausal~~significant ~~osteoporosis~~effect ~~outweighs~~on athe ~~potential~~Company’s ~~risk~~financial ~~of cancer.~~statements

In3. ~~the~~Upsher-Smith ~~third quarter of 2012 and through the date of this filing, the following events and circumstances indicated that the carrying value of the Company’s long lived assets may not be recoverable:~~ (iUSL) potential impact of the EMA press release; (ii) continuing operating losses; (iii) significant revisions to internal revenue forecasts; and (iv) a significant decline in the Company’s stock price. The Company is in the process of evaluating whether the undiscounted expected future cash flows from the long-lived assets are less than their carrying amount. If undiscounted expected future cash flows are not sufficient to support the recorded value of the assets, an impairment loss may be recognized for the difference between fair value and the carrying value to reduce the long lived assets to their estimated recoverable value. Such analysis could result in a material impairment charge for the twelve months ended December 31, 2012.Agreement

~~Liquidity~~In November 2002, the Company signed an exclusive U.S. licensing agreement with USL for a value before royalties of $10,000,000 to market its patented nasal formulation of calcitonin for the treatment of osteoporosis. There are no potential milestone payments remaining under this agreement. The Company is responsible for manufacturing the product and USL packages the product and distributes it nationwide. Fortical was approved by the FDA and launched by USL in August 2005. Revenue for the three months ended March 31, 2013 consisted of zero sales to USL and $84,000 in royalties from USL. Revenue for the three months ended March 31, 2012 consisted of $646,000 in sales to USL and $349,000 in royalties from USL. At March 31, 2013, accounts receivable from USL were approximately $10,000. From August 2005 through March 2013, the Company has recognized an aggregate of $49,269,000 in Fortical sales and $27,499,000 in Fortical royalties. The Company recognizes USL royalty revenue based on a quarterly royalty report received from USL. This provides for a reliable measure as well as reasonable assurances of collectability. Royalty revenue, computed in a range from the transfer price of product to USL to a royalty rate in the mid-thirties depending on the circumstances, is earned on net sales of Fortical by USL and is recognized in the period Fortical is sold by USL. Future sales and royalties are contingent upon many factors including a recent recommendation by an FDA advisory committee in regards to the use of calcitonin products (see below), competition, pricing, marketing and acceptance in the market place. However, as set forth in Note 1, the Company has concluded that the Fortical assets are impaired and the amount of future sales of Fortical, if any, remains uncertain. Pursuant to an amendment effected in 2009, there are no net sales minimums in the agreement. In December 2008, Apotex and Sandoz launched nasal calcitonin products which are generic to Novartis’ nasal calcitonin product, but not to Fortical. In June 2009, Par also launched a product generic to Novartis’ nasal calcitonin product. Certain providers have substituted these products for Fortical, causing Fortical sales and royalties to steadily decline. This agreement may be terminated by either party by mutual agreement or due to breach of any material provision of the agreement not cured within 60 days. In addition, USL may terminate the agreement under certain circumstances where USL assigns the agreement and the Company does not approve the assignment. The term of the USL agreement shall continue through the expiration of USL’s obligation to pay royalties and continue thereafter, unless terminated earlier.

~~The~~On ~~global~~March ~~credit~~5, ~~crisis~~2013, ~~that~~the ~~began~~FDA inheld ~~2007~~an ~~was~~advisory ~~further~~committee ~~exacerbated~~meeting byto ~~events~~discuss ~~occurring~~whether in the ~~financial~~overall ~~markets~~benefit-risk inassessment ~~the~~of ~~fall~~calcitonin ofsalmon ~~2008,~~products ~~and~~supports ~~has~~their continued ~~into~~marketing ~~2012~~for the treatment of post-menopausal osteoporosis. ~~These~~The ~~events~~advisory ~~have~~committee ~~negatively~~concluded ~~impacted~~that the ~~ability~~benefits of ~~corporations~~salmon tocalcitonin ~~raise~~products, ~~capital~~including ~~through~~Fortical, ~~equity~~do ~~financings~~not oroutweigh ~~borrowings. The~~the ~~credit~~potential ~~crisis~~risks ~~may~~associated with their use and as a result, should not continue ~~for~~to ~~the~~be ~~foreseeable~~broadly ~~future~~marketed. The InFDA ~~addition,~~will ~~uncertainty~~assess ~~about~~the ~~current~~recommendation and ~~future~~may ~~global~~or ~~economic~~may ~~conditions~~not ~~may~~concur ~~impact~~with the ~~Company’s~~advisory ~~ability~~committee. The toFDA ~~license~~has ~~its~~not ~~products~~yet ~~and~~issued ~~technologies~~a response to ~~other~~the ~~companies~~advisory ~~and~~committee ~~may~~recommendation. ~~cause~~Due ~~consumers~~largely in part to ~~defer~~the ~~purchases~~FDA ofadvisory ~~prescription~~committee ~~medicines~~recommendation, ~~such~~the asCompany has not received and does not anticipate receiving additional orders for Fortical, in ~~response~~the tonear ~~tighter~~term ~~credit,~~and ~~decreased~~has ~~cash~~ceased ~~availability~~production of Fortical and ~~declining~~written ~~consumer~~off ~~confidence~~all related assets. ~~Accordingly~~Additionally, ~~future~~the ~~demand~~Company received a deposit of $400,000 from USL in the fourth quarter of 2012 as an advance for future Fortical purchase orders, which in the ~~Company’s~~absence ~~products~~of ~~and~~any ~~technologies~~such ~~could~~purchase ~~differ~~orders, ~~negatively~~will ~~from~~be ~~its~~applied ~~current~~against ~~expectations~~future royalties due from USL.

Due to the Company’s limited financial resources, any further significant decline in Fortical sales and/or royalties, or delay in achieving milestones under its existing license agreements, or in signing new license, feasibility or distribution agreements for its products or technologies or loss of patent protection, ability to sell additional shares of its common stock, its inability to restructure its existing Victory Park debt, or ability to not violate its covenants with Victory Park could have a material adverse effect on the Company’s cash flow and operations (see Notes D, E, H, J, N, and R)4. As aNovartis result of advancing purchase orders from USL previously scheduled for the first quarter of 2013, the Company received approximately $1,255,000 in additional cash in the fourth quarter of 2012. Additionally, the Company was advanced $400,000 from USL in the fourth quarter of 2012 for the production of additional batches in 2013. This will reduce sales of Fortical in future periods. Agreement

IfIn April 2004, the Company issigned ~~unable~~a toworldwide ~~achieve~~licensing ~~significant~~agreement ~~milestones~~with orNovartis ~~sales~~for ~~under~~a ~~its~~value ~~existing~~before ~~agreements~~royalties ~~and/or~~of ~~enter~~up ~~into~~to ~~new~~$18,700,000 ~~significant~~to ~~revenue~~allow ~~generating~~Novartis ~~licenses~~to ormanufacture ~~other~~calcitonin ~~arrangements~~using inits ~~the~~patented ~~near-term,~~peptide ~~the~~production ~~Company~~process. ~~will~~The ~~need~~Company tohas ~~secure~~received ~~another~~an ~~source~~aggregate of ~~funding~~$13,700,000 infrom ~~order~~Novartis under this agreement and there are up to ~~satisfy~~$5,000,000 ~~its~~in ~~working~~potential ~~capital~~milestone ~~needs~~payments remaining. The Company will ~~also~~receive ~~need~~royalties, toat ~~avoid~~rates ~~further~~in ~~events~~the ofsingle ~~default~~digits, ~~under~~on ~~and~~net ~~maintain~~sales ~~compliance~~of ~~with~~any ~~the~~existing ~~covenants~~or infuture ~~its~~Novartis ~~financing~~products ~~agreement~~that ~~with~~contain ~~Victory~~recombinant ~~Park~~salmon ~~(see~~calcitonin ~~Note~~which ~~H).~~in If the ~~Company~~future isare ~~not~~approved ~~able~~for tosale ~~generate~~by ~~additional~~health ~~cash~~authorities, itand ~~will~~are ~~need~~manufactured toby ~~significantly~~Novartis ~~curtail~~using its ~~operations~~technology. ~~Should~~For the ~~funding~~three ~~required~~months toended ~~sustain~~March ~~the~~31, ~~Company’s~~2013 ~~working~~and ~~capital needs be unavailable or prohibitively expensive~~2012, the Company ~~would~~recognized ~~not~~$223,000 ~~have~~in ~~the~~licensing ~~ability~~revenue. Although tothe ~~continue~~Novartis asagreement ahas ~~going~~not ~~concern.~~been ~~The~~formally ~~Company~~terminated, ~~believes~~Novartis ~~that~~has ~~satisfying~~informed ~~its cash requirements over~~ the ~~long~~Company ~~term~~that ~~will~~due ~~require~~to the ~~successful~~failure ~~commercialization~~ of its ~~licensed~~late ~~oral~~stage orclinical ~~nasal~~development ~~calcitonin products~~program, ~~and~~it ~~one~~has orno ~~more~~further ofneed ~~its~~to ~~Peptelligence™~~manufacture ~~biotechnologies,~~calcitonin ~~its~~utilizing ~~oral~~the ~~parathyroid~~Company’s ~~hormone~~patented ~~(“PTH”)~~peptide ~~product~~production ~~or the obesity program~~process. The ~~However,~~Company itexpects isthe ~~uncertain~~agreement ~~whether~~to ~~any~~be ~~new~~terminated ~~products~~in ~~will~~2013, bewhich ~~approved or~~ will beresult ~~commercially~~in ~~successful.~~the ~~The~~recognition ~~amount~~ of ~~future revenue~~ the ~~Company~~remaining ~~will~~deferred ~~derive~~licensing ~~from Fortical is also uncertain~~revenues.

~~Unigene Laboratories, Inc~~5. ~~Form~~Asset ~~10-Q – Period Ended September 30, 2012~~Impairment

InThe ~~December~~Company ~~2011,~~assesses the ~~Company~~carrying ~~announced~~value aof ~~restructuring~~its ~~plan~~long-lived ~~that~~assets ~~included~~whenever aan ~~reduction~~indicator inof ~~workforce~~impairment ~~and~~is ~~expenses~~present. toOn ~~improve~~March ~~operational~~5, ~~efficiencies~~2013, ~~and~~an toadvisory ~~better~~committee ~~match~~to ~~resources~~the ~~with~~FDA ~~market~~concluded ~~demand.~~that ~~Under~~ the ~~comprehensive~~benefits ~~plan,~~of ~~the~~salmon ~~Company~~calcitonin isproducts, ~~continuing~~including Fortical, ~~production~~do ~~and~~not ~~maintaining~~outweigh ~~all~~the ofpotential ~~its~~risks ~~core~~associated ~~programs~~with their use and ~~partnered~~as ~~activities~~a ~~while~~result, ~~decreasing~~should ~~cash~~not ~~expenditures~~continue to be broadly marketed. Subsequent Into ~~2010,~~the ~~since~~FDA recommendation, the Company ~~had~~reassessed anits ~~adequate~~manufacturing ~~inventory~~operations ofand ~~enzyme~~held todiscussions ~~support~~with ~~expected~~USL in regards to anticipated future purchase orders for Fortical. Based ~~production~~on ~~needs~~this assessment, it ~~temporarily~~was ~~suspended~~determined ~~manufacturing~~that ofthere ~~those~~would ~~materials~~be atno ~~its~~additional ~~Boonton~~purchase ~~facility.~~orders ~~However~~submitted for Fortical in the near future and as a result, the Company isceased ~~maintaining~~its ~~the~~manufacturing ~~cGMP~~operations ~~status~~in oflate ~~the~~March ~~facility~~2013 and ~~the~~implemented ~~ability~~a toreduction ~~manufacture~~in ~~and~~force ~~tablet~~on ~~solid~~April ~~dosage~~1, ~~forms~~2013, ofwhich ~~peptides~~included atall ~~that~~personnel ~~location~~directly contributing to Fortical production. ~~This~~As ~~cessation~~a result of ~~production~~the ~~continued~~lack ~~through~~of ~~2012,~~any ~~however,~~anticipated ~~the~~production ~~Company~~of ~~plans~~Fortical and uncertainty related to ~~engage~~any infuture ~~the~~Fortical ~~production~~manufacturing ofrevenues ~~calcitonin~~and inroyalties, the ~~first~~Company ~~quarter~~concluded ofthat ~~2013. Implementation~~all of ~~the~~its ~~restructuring~~assets ~~plan~~that ~~resulted~~pertain into anFortical ~~immediate~~are ~~company-wide~~impaired ~~workforce~~as ~~reduction~~ of ~~approximately~~March ~~25%.~~31, 2013. The ~~cash~~change ~~requirements~~ in ~~2012~~the tocarrying ~~operate~~amount of the ~~research~~Company’s ~~and~~long-lived ~~peptide~~assets ~~manufacturing~~during ~~facilities~~the ~~and~~three ~~develop~~months ~~products~~ended ~~decreased~~March ~~from~~31, ~~2011~~2013 ~~due~~is tosummarized ~~the~~as ~~December 2011 restructuring.~~follows:

Cash received during the nine months ended September 30, 2012 was primarily from the net proceeds of $3,500,000 as a result of the Victory Park refinancing (see Note H); Fortical sales and royalties received under the agreement with USL; accounts receivable collected from GlaxoSmithKline (“GSK”) for work performed in 2011; and from development work and fee-for-service feasibility studies for various companies, including Tarsa. The Company’s primary sources of cash have historically been (1) licensing fees for new agreements, (2) milestone and other payments under licensing or development agreements, (3) bulk peptide sales under licensing or supply agreements, (4) loans from its founders and Victory Park, (5) the sale of its common stock, (6) Fortical sales and royalties and (7) the proceeds from the sale of state net operating loss carryforwards. In 2011, the Company divested its equity interest in its former China Joint Venture as well as its Site Directed Bone Growth (“SDBG”) program, which may result in additional sources of cash in the future. There can be no assurance that any of these cash sources will continue to be available to the Company in the future. The Company is actively seeking additional licensing and/or supply agreements with pharmaceutical companies for various oral peptides, including PTH and its obesity peptide, and for its recombinant peptide manufacturing technology. In October 2011, the Company announced its decision to establish a Joint Development Vehicle with Nordic Bioscience (see Note N). Licensing fees from new collaborations are dependent upon the successful completion of complex and lengthy negotiations and are often subject to the completion of successful feasibility programs. Milestone payments are based upon progress achieved in collaborations, which cannot be guaranteed, and are often subject to factors that are controlled neither by the Company or its licensees. Product sales to the Company’s partners under these agreements are based upon its licensees’ needs, which are sometimes difficult to predict. Sale of the Company’s common stock is dependent upon its ability to attract interested investors, its ability to negotiate favorable terms and the performance of the stock market in general and biotechnology investments in particular. Future Fortical sales and royalties will be affected by competition and continued acceptance in the marketplace and could be impacted by manufacturing, distribution or regulatory issues. The Company may not be successful in achieving milestones under its current agreements, in obtaining regulatory approval for its other products or in-licensing any of its other products or technologies.

	Inventories			Fixed Assets			Patents
Balance at December 31, 2012	$	1,961,675		$	2,651,819		$	1,920,574
Additions		374,015			--			44,784
Impairment Charges		(1,635,818	)		(675,065	)		(308,925	)
Depreciation and Amortization		--			(122,901	)		(34,463	)

Balance at March 31, 2013	$	699,872		$	1,853,853		$	1,621,970

~~Going~~The ~~Concern~~impairment charge to inventory is reflected within cost of goods sold and the impairment charges to fixed assets and patents are reflected within the impairment charges line item in the accompanying statement of operations for the three months ended March 31, 2013. The balance of long-lived assets at March 31, 2013 is comprised of the following: (i) inventories of approximately $700,000 primarily consisting of materials to be provided to Nordic Bioscience pursuant to a joint venture agreement (see Note 12) and laboratory materials; (ii) fixed assets of approximately $1,854,000 primarily consisting of tableting machinery and equipment utilized in supporting the Company’s Biotechnologies SBU and leasehold improvements at the corporate offices; and (iii) patents of approximately $1,622,000 related to the Company’s oral drug delivery technology, its Phase II oral PTH product and pre-clinical obesity (UGP 281) and diabetes (UGP 302) therapeutic assets.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the above conditions raise substantial doubt about the Company’s ability to do so6. ~~Refer~~Notes toPayable ~~the financial statements and footnotes thereto included in Unigene’s Annual Report on Form 10~~-K for the year ended December 31, 2011, as amended and restated, including the accompanying Report of Independent Registered Public Accounting Firm, dated March 15, 2012 (except for Note 29 and the effects thereof, as to which the date is January 31, 2013), of Grant Thornton LLP. The condensed financial statements included in this Quarterly Report on Form 10-Q have been prepared on a going concern basis and as such do not include any adjustments that might result from the outcome of this uncertainty, including the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities.Levys

~~NOTE~~To Bsatisfy the Company’s short-term ~~BASIS~~liquidity OFneeds, ~~PRESENTATION~~Jay ~~AND~~Levy, ~~RECENT~~Jean ~~ACCOUNTING~~Levy, ~~PRONOUNCEMENTS~~Warren Levy and Ronald Levy (the Levys) from time to time (prior to 2003) made loans to the Company. Jay Levy, the Company’s former director, Chairman of the Board, Treasurer and Assistant Secretary, and Jean Levy are/were the parents of Warren Levy and Ronald Levy, the Company’s former executive officers and directors. Total interest expense on all Levy loans was approximately $427,000 and $442,000, respectively, for the three months ended March 31, 2013 and 2012. As of March 31, 2013, total accrued interest on all Levy loans was $9,422,000 and the principal amount of the outstanding loans by the Levys to us totaled $14,437,000 for an aggregate owed to them of $23,859,000. These loans are collateralized by secondary security interests in the Company’s equipment and certain of its patents.

~~The~~On ~~accompanying~~March ~~unaudited~~10, ~~condensed~~2011, ~~financial~~the ~~statements~~Company ~~have~~entered ~~been~~into ~~prepared in accordance with accounting principles generally accepted in~~ the ~~United~~Settlement ~~States~~and ofRelease ~~America~~Agreement ~~for interim financial information~~ and ~~with~~Amendments (the ~~instructions~~“Settlement toAgreement”) ~~Form~~by ~~10-Q~~ and ~~Article~~among ~~10 of Regulation S-X. Accordingly, they do not include all of~~ the ~~information~~Company and ~~footnotes required by accounting principles generally accepted in~~ the ~~United~~Estate ~~States~~ of ~~America~~Jean ~~for~~Levy, ~~complete~~The ~~annual~~Jaynjean ~~financial~~Levy ~~statements.~~Family InLimited ~~the~~Partnership, ~~opinion~~Dr. ofWarren ~~management~~Levy, ~~all~~the ~~adjustments~~Company’s ~~considered~~former ~~necessary for a fair presentation~~president, ~~which are of a normal~~ and ~~recurring nature only, have been included~~Dr. ~~Certain~~Ronald ~~prior year amounts have been reclassified for presentation purposes~~S. ~~Operating~~ ~~results~~Levy, ~~for~~ the ~~three~~Company’s ~~and~~former ~~nine~~executive ~~month~~vice ~~periods~~president ~~ended September 30~~(collectively, ~~2012 are not necessarily indicative of~~ the ~~results~~“Levy ~~that~~Parties”). Pursuant ~~may~~to ~~be expected for~~ the ~~year~~Settlement ~~ending December 31~~Agreement, ~~2012~~the orCompany ~~for~~made ~~any~~the ~~interim~~following ~~period.~~payments ~~For further information, including a summary of significant accounting policies and practices, please refer to our financial statements and footnotes thereto included~~ in ~~Unigene’s annual report on Form 10-K, as amended and restated, for~~ the ~~year~~nine months ended ~~December~~September 3130, 2011.:

In March 2011, the Company paid (a) Dr. Warren Levy a lump-sum severance payment in the amount of $327,750; (b) Dr. Ronald Levy a lump-sum severance payment in the amount of $280,250; and (c) into escrow remaining severance payments in the aggregate amount of $304,000, $163,875 of which was released to Dr. Warren Levy and $140,125 of which was released to Dr. Ronald Levy, each in accordance with his respective employment agreement in monthly increments beginning September 2011 through February 2012;

~~Unigene~~2. ~~Laboratories~~In March 2011, ~~Inc~~the Company paid (a) $151,268 to Dr. ~~Form~~Warren ~~10-Q~~Levy –representing ~~Period~~a ~~Ended~~portion ~~September~~of 30his vacation pay and (b) $136,736 ~~2012~~to Dr. Ronald Levy representing a portion of his vacation pay;

~~Restatement~~Pursuant ofto ~~Previously~~the ~~Issued~~Settlement ~~Financial~~Agreement, ~~Statements~~the Company was obligated to make the following payments:

In November 2012, the Company identified an error related to the Company’s accounting for an embedded derivative liability associated with the Company’s senior secured convertible notes, which were issued in March 2010, during the periods ended June 30, 2012 and March 31, 2012 and the years ended December 31, 2011 and 2010 and interim periods therein, which resulted in the restatement of previously issued financial statements. Specifically, management determined that the Company’s convertible notes contain a conversion reset provision that lowers the stated conversion price under certain circumstances, which requires the conversion feature to be accounted for as an embedded derivative that must be marked to fair value each reporting period. As a result, the Company should not have reversed the carrying value of the liability for the embedded derivative in the quarter ended June 30, 2010 and should have continued to mark such liability to fair value in its financial statements for the quarterly periods from June 30, 2010 through June 30, 2012. Additionally, the Company determined that the methodology utilized to determine the fair value of the embedded derivative liability for the quarter ended March 31, 2010 was not appropriate as it did not properly consider a reset feature contained within the related convertible notes and consequently, that the conclusion that the issuance of the senior secured convertible notes in March 2010 represented a troubled debt restructuring was incorrect. As a result of the re-assessment of the transaction, the Company has concluded that the addition of the conversion feature to the notes indicates the new notes are substantially different from the previously issued notes and as a result, the transaction should have been accounted for as a debt extinguishment.

On October 11, 2012 and November 13, 2012, the Company was obligated to pay an aggregate amount of $162,296: $85,241 to Dr. Warren Levy and $77,055 to Dr. Ronald Levy, in full satisfaction of their respective vacation pay; and

On November 13, 2012 and December 11, 2012, the Company was obligated to pay an aggregate amount of $200,000 into Rabbi Trust Accounts, $100,000 into an account for the benefit of Dr. Warren Levy and $100,000 into an account for the benefit of Dr. Ronald Levy, in full satisfaction of its obligations to each of them under the deferred compensation program.

Loan payments under the amended notes of $500,000 previously due on November 10, 2010 and $250,000 due on May 10, 2011 have been postponed under the Settlement Agreement. The new payment schedule specifies five monthly payments of $150,000 from May 2012 through September 2012.

On May 29, 2012, the Company entered into an agreement to settle its obligations to the Levys (the “Revised Settlement Agreement). Pursuant to the Revised Settlement Agreement, the Founders agreed to settle any and all outstanding obligations due from the Company in exchange for (i) two installment payments of $150,000 each due in May and June 2012, which were subsequently paid by the Company; (ii) $7,700,000 payable on or before September 30, 2012; and (iii) the issuance of 5,000,000 shares of the Company’s common stock. The Company did not meet the conditions to effectiveness under the Revised Settlement Agreement on or prior to September 30, 2012, including the payment of $8,000,000 (less the amount of the two $150,000 interim installment payments) and the issuance of 5,000,000 shares of common stock to the Levy Parties. As a result, the Revised Settlement Agreement has been terminated and is otherwise of no force and effect (other than as specifically identified) and all payments then or previously payable (and not previously paid) under the ~~aforementioned~~Settlement ~~accounting~~Agreement ~~errors~~through and including September 30, ~~the~~2012 ~~financial~~became ~~statements~~immediately ~~presented~~due ~~herein~~and payable as ~~well~~of such date. Furthermore, as ~~footnotes~~a Hresult of the termination of the Revised Settlement Agreement, Ino release of any of the Levy claims has occurred and Sall ~~have~~the ~~been~~rights ~~amended~~of the Levy Parties that existed under the Settlement Agreement, the related notes and ~~restated~~with respect to ~~reflect~~ their prior employment remain in full force and effect as if the ~~following~~Revised ~~accounting~~Settlement ~~corrections:~~Agreement had not been entered into by them.

·On ~~As of~~ December 3121, ~~2011:~~2012, the Company entered into an agreement (ithe “Second Revised Settlement Agreement”) with the ~~adjustment~~Levys. The ofSecond ~~deferred~~Revised ~~financing~~Settlement ~~fees~~Agreement ~~within~~modified ~~other~~the ~~assets~~Settlement ~~related~~Agreement. Pursuant to the ~~convertible~~Settlement ~~note~~Agreement, ~~issuance;~~payments ~~(ii)~~of $150,000 were due to the ~~recordation~~Levy Parties on each of anOctober ~~embedded~~11, ~~conversion~~2012 ~~feature~~and ~~liability~~November ~~representing~~13, ~~the~~2012 ~~fair~~and ~~value~~a payment of ~~the~~$62,296 ~~conversion~~was ~~feature;~~due ~~(iii)~~on December 11, 2012. According to the ~~adjustment~~terms of the ~~debt~~Second ~~discount~~Revised ~~related~~Settlement Agreement, the Company paid $100,000 to the ~~convertible~~Levy ~~note~~Parties ~~issuance;~~on December 21, 2012, which represented partial payment of the October 11, 2012 installment payment. Furthermore, under the Second Revised Settlement Agreement, the payments of each of (ivi) the ~~reversal~~remaining of$50,000 related to the ~~accounting~~October ~~adjustment~~11, ~~that~~2012 ~~was~~installment ~~recorded~~payment, in(ii) ~~2010~~the to$150,000 ~~reverse~~installment payment due on November 13, 2012 and the ~~embedded~~$62,296 ~~derivative~~installment ~~liability~~payment ~~through~~due ~~additional~~on ~~paid-in~~December ~~capital~~11, 2012, and (viii) the ~~cumulative~~$150,000 ~~impact~~installment payments due to ~~accumulated~~the ~~deficit~~partnership on each of ~~related~~July ~~adjustments~~11, to2012, August 13, 2012, and September 11, 2012 under the ~~statements~~terms of ~~operations~~the Settlement Agreement, have been deferred until June 18, 2013. All other terms of the Settlement Agreement remain in full force and effect.

·Notwithstanding ~~For~~ the ~~three~~foregoing, any and ~~nine~~all ~~months~~payments ~~ended~~by ~~September~~the ~~30,~~Company ~~2011:~~on account of any of the Company’s notes in favor of the Levy Parties (iexcept the interim installment payments) remain subject to the ~~recordation~~terms and conditions of ~~changes~~that incertain ~~fair~~Affiliate ~~value~~Subordination ofAgreement, dated September 30, 2008, among various Levy Parties, the ~~embedded~~Company ~~derivative~~and Victory Park Management, LLC, a Delaware limited liability ~~through~~company, ~~gain~~as ~~(loss)~~agent onfor ~~change~~all senior lenders, as the same may be amended, restated, supplemented and in ~~fair~~effect ~~value~~from oftime ~~embedded~~to ~~conversion~~time, ~~feature~~including ~~within~~pursuant ~~the~~to ~~statements~~that certain Reaffirmation of ~~operations~~Affiliate ~~and~~Subordination ~~(ii)~~Agreement ~~the~~dated ~~recordation~~as of ~~adjustments~~March to17, ~~non-cash~~2010, ~~interest~~and ~~expense~~as ~~based~~amended onby ~~the~~that ~~revised~~certain ~~debt~~letter ~~discount~~dated March 16, 2011 from Victory Park Management LLC regarding “Consent and Amendment” (the “Subordination Agreement”). As a result, the Company may not make additional payments to ~~reflect~~the Levy Parties unless such ~~interest~~payments ~~expense~~can ~~based~~be onmade in accordance with the ~~effective~~terms ~~interest~~of ~~rate~~the ~~method~~Subordination Agreement assuming any such payment constitutes “Permitted Subordinated Debt Payments” thereunder.

~~The~~7. ~~following~~Note ~~represents~~Payable a– ~~summary~~Victory ~~of the adjustments by financial statement line item:~~Park

	December 31, 2011
Balance sheet data:
Prepaid expenses and other current assets	$	-
Other assets		520,474
Total assets		520,474
Embedded conversion feature liability		12,470,000
Notes payable - Victory Park, net		(1,390,170	)
Total liabilities		11,079,830
Additional paid-in capital		(16,724,000	)
Accumulated deficit		6,164,644
Stockholders' deficit		(10,559,356	)

On September 30, 2008, the Company entered into a financing agreement with Victory Park pursuant to which the Company borrowed $15,000,000 from Victory Park and, in connection therewith, issued to Victory Park a three-year senior secured non-convertible term note.

	September 30, 2011
	Three Months Ended		Nine Months Ended
Statements of operations data:
Gain (loss) on change in fair value of embedded conversion feature	$	3,650,000	$	(12,120,000	)
Interest expense		46,329		452,163
Net income (loss)		3,696,329		(11,667,837	)

On March 16, 2010, the Company entered into the Restated Financing Agreement with Victory Park. The Restated Financing Agreement amended and restated in its entirety and replaced the financing agreement dated as of September 30, 2008.

~~Unigene~~Under ~~Laboratories~~the terms of the Restated Financing Agreement, ~~Inc.~~the ~~Form~~Company 10issued to Victory Park $33,000,000 aggregate principal amount of three-Qyear, –senior ~~Period~~secured ~~Ended~~convertible notes in exchange for the three-year, senior secured non-convertible notes previously issued pursuant to the original financing agreement, in the aggregate principal amount of approximately $19,358,000, and additional net proceeds of approximately $13,642,000 (before debt issuance costs). These convertible notes were purchased at a 2% discount to the face amount. The Company received net cash proceeds of approximately $11,635,000. The maturity date of the convertible notes was extended to March 17, 2013 from September 30, 2011 under the original notes. The convertible notes accrue interest at a rate per annum equal to the greater of the prime rate plus 5% and 15%, which, in the absence of an event of default, shall be added to the outstanding principal balance of the convertible notes on each anniversary of the date of issuance other than the maturity date. As a result, in 2012, $5,797,859 in accrued interest was reclassified from accrued interest to notes payable.

	December 31, 2011
	As Reported			As Restated
Balance sheet data:
Prepaid expenses and other current assets	$	862,761		$	862,761
Other assets		440,307			960,781
Total assets		17,674,695			18,195,169
Embedded conversion feature liability		-			12,470,000
Notes payable - Victory Park, net		34,073,626			32,683,456
Total liabilities		72,812,503			83,892,333
Additional paid-in capital		132,415,958			115,691,958
Accumulated deficit		(188,505,922	)		(182,341,278	)
Stockholders' deficit		(55,137,808	)		(65,697,164	)

Under the terms of the Forbearance Agreement: (i) the VPC Parties, subject to any future defaults (except certain pre-designated, anticipated defaults), agreed to forbear from exercising their respective rights and remedies under the Restated Financing Agreement and other transaction documents during the forbearance period, which commenced on the First Amendment Effective Date and will end on the first anniversary of the First Amendment Effective Date unless earlier terminated as a result of any such future default; (ii) the Company has (A) issued to the Lenders upon the terms and conditions stated in the Forbearance Agreement a one-year senior secured convertible note in the aggregate principal amount of $4,000,000 (the “First Amendment Note”); and (B) re-issued to the Lenders on September 24, 2012 (the first business day after the First Amendment Effective Date) all four notes in existence (collectively, the “Re-issued Notes” and together with the First Amendment Note, the “Notes”); (iii) the Company agreed to deposit $500,000 with the Agent on the First Amendment Effective Date to reimburse the Agent and the Lenders for certain existing and future fees, costs and expenses incurred by (or to be incurred by) the VPC Parties in connection with the 2012 Restructuring and thereafter; (iv) each Lender shall, subject to certain conditions precedent as set forth in the Forbearance Agreement including lack of any events of default (see Note B above and the discussion of the impact of the financial restatement and related matters below), make available to the Company additional loans (“Re-Loans”) in an aggregate principal amount not to exceed such Lender’s pro rata share of the sum of the first $3,500,000 of the mandatory prepayments received by the Lenders from the Company pursuant to the terms of the Restated Financing Agreement (other than mandatory prepayments made with the proceeds of the sale of the tax benefits resulting from net operating losses for prior periods (“NOL Sale Proceeds”)), plus the amount of any mandatory prepayments received by the Lenders pursuant to the Restated Financing Agreement on account of NOL Sale Proceeds, such Re-Loans shall be deemed loans funded under the Restated Financing Agreement and shall be evidenced by notes (“Re-Loan Notes”) on the same terms as, and on a pari passu basis with, the First Amendment Note (except the conversion rate, as described below); and (v) the Company has delivered to the VPC Parties a quarterly cash flow forecast with respect to the fiscal quarter ending December 31, 2012 and shall deliver to the VPC Parties a quarterly cash flow forecast on a consolidated basis for the Company and its subsidiaries during the term of the Forbearance Agreement. Events of default under the Forbearance Agreement include (among various other events of default) a quarterly reconciliation that shows a negative variance of 10% or more of actual cash revenue minus actual cash expenses for an applicable quarter versus the applicable quarterly cash flow forecast delivered by the Company (as described above), failure to maintain a cash balance in a specified account in excess of $250,000, and a breach of any agreement or covenant contained in the Forbearance Agreement. The Forbearance Agreement amended the terms of the mandatory prepayment on certain mandatory prepayment events set forth in the Restated Financing Agreement, such as upon receipt of certain proceeds from asset sales, equity issuances, milestone payments under the Company’s material license agreements and certain other receipts of cash outside the ordinary course of business. In accordance with the terms of the Forbearance Agreement, the Company received a net amount of $3,500,000 from the Lenders in exchange for the issuance of the First Amendment Note.

	Three months ended
	September 30, 2011
	As Reported			As Restated
Statements of operations data:
Gain (loss) on change in fair value of embedded conversion feature	$	-		$	3,650,000
Interest expense		(2,861,773	)		(2,815,444	)
Net income (loss)		(7,291,313	)		(3,594,984	)
Net income (loss) per share - basic and diluted		(0.08	)		(0.04	)

	Nine months ended
	September 30, 2011
	As Reported			As Restated
Statements of operations data:
Gain (loss) on change in fair value of embedded conversion feature	$	-		$	(12,120,000	)
Interest expense		(8,395,849	)		(7,943,686	)
Net income (loss)		(22,372,295	)		(34,040,132	)
Net income (loss) per share - basic and diluted		(0.24	)		(0.37	)
Statements of cash flows data:
Net income (loss)		(22,372,295	)		(34,040,132	)
Amortization of debt discounts and deferred financing fees		2,510,055			2,057,892
Loss on change in fair value of embedded conversion feature		-			12,120,000

~~Unigene~~The ~~Laboratories~~maturity date of the Re-issued Notes was March 17, ~~Inc~~2013 and the maturity date of the First Amendment Note is September 21, 2013. Non-payment ~~Form~~of 10the Re-Qissued –Notes ~~Period~~on ~~Ended~~March ~~September~~17, 302013 constitutes an “Incipient Event of Default” under the Forbearance Agreement for which the VPC Parties will be required to forbear, ~~2012~~unless there are other events of default (see Note B above and the discussion of the impact of the financial restatement and related matters below). Under the terms of the Forbearance Agreement and the Restated Financing Agreement, the Notes are secured by a first priority lien on all current and future assets of the Company. The Notes will accrue interest at a rate per annum equal to the greater of (x) the prime rate (announced by Citibank N.A. from time to time) plus 5% and (y) 15%, which, in the absence of an event of default, accrued and unpaid interest due and payable with respect to the Notes shall, instead of being required to be paid in cash, shall be capitalized and added to the outstanding principal balance of the Notes payable on the maturity date. For so long as an event of default is continuing, the unpaid principal amount of the Notes shall bear interest at the default interest rate, which is the current interest rate plus 3%. The Notes are convertible into shares of common stock of the Company, par value $0.01 per share (the “Common Stock”), at the Lender’s option. The initial conversion rate for the First Amendment Note is calculated by dividing the sum of the principal to be converted plus all accrued and unpaid interest thereon by $0.05 per share. The initial conversion rate for the Re-issued Notes is calculated by dividing the sum of the principal to be converted plus all accrued and unpaid interest thereon by $0.15 per share (which amends the prior conversion rate of $0.70 per share). The initial conversion rate of any Re-Loan Notes will be calculated by dividing the sum of the principal to be converted plus all accrued and unpaid interest thereon by the conversion price of the Reissued Notes in effect on the date of issuance of such Re-Loan Note. All such conversion rates are subject to adjustment, including a reduction in the conversion rate in the event the Company issues certain shares of common stock at a purchase price less than the then current conversion price. The Company may be liable for certain cash damages in the case of a failure to timely convert the Notes and a failure to timely convert is also an event of default, subject to additional remedies described in the Restated Financing Agreement.

~~Recent~~As ~~Accounting~~of ~~Pronouncements~~the First Amendment Effective Date, the Company lacked sufficient shares of Common Stock to deliver all of the Conversion Shares. The Company is required to obtain stockholder approval to amend its certificate of incorporation to increase the number of authorized shares to allow for the conversion of the Notes in full and until such time as the Company receives approval to increase the authorized shares, Victory Park has the ability to demand payment in cash for any shortfall in authorized shares upon a notice of conversion. The Company was required to prepare and file proxy materials with the SEC and hold a stockholder meeting no later than January 21, 2013 to increase the number of authorized shares of its common stock. To date, the Company has not filed the required proxy materials nor held a stockholder meeting.

InSection ~~December~~8.18 ~~2011,~~of anthe ~~update~~Restated toFinance ~~guidance~~Agreement ~~was~~requires ~~issued~~that ~~regarding~~ the ~~offsetting~~Company ortimely ~~netting~~file ofall ~~assets~~reports ~~and liabilities. Entities are~~ required to ~~disclose~~be ~~both~~filed ~~gross~~with ~~information~~the ~~and~~SEC ~~net~~pursuant ~~information~~to ~~about~~the ~~both~~Securities ~~instruments~~Exchange ~~and~~Act ~~transactions~~of ~~eligible~~1934, ~~for~~as ~~offset~~amended. Under inSection ~~the~~10.1(z) ~~statement~~ of ~~financial~~such ~~position~~agreement, ~~and~~the ~~instruments~~Company’s ~~and~~failure ~~transactions~~to ~~subject~~timely tofile anany ~~agreement~~such ~~similar~~report tois aan ~~master~~event ~~netting~~of ~~arrangement~~default. As ~~This~~a ~~scope~~result ~~would~~of ~~include~~a ~~derivatives~~financial restatement, ~~sale~~the ~~and~~Company ~~repurchase~~was ~~agreements~~unable ~~and~~to ~~reverse~~finalize ~~sale~~ and ~~repurchase~~file ~~agreements,~~its ~~and~~Form ~~securities~~10-Q ~~borrowing~~for ~~and~~the ~~securities~~quarter ~~lending~~ended ~~arrangements.~~September ~~The~~30, ~~objective~~2012 ofby ~~this~~the ~~disclosure~~SEC’s isextended tofiling ~~facilitate~~deadline ~~comparison~~of ~~between~~November ~~those~~21, ~~entities~~2012. Therefore, ~~that~~the ~~prepare~~Company ~~their~~gave ~~financial statements on~~ the ~~basis~~VPC ofParties ~~U.S.~~notice ~~Generally Accepted Accounting Principles and those entities~~ that ~~prepare~~an ~~their~~event ~~financial statements on the basis~~ of ~~International~~default ~~Financial~~occurred ~~Reporting~~under ~~Standards.~~the ~~This~~Restated ~~amendment~~Finance ~~was~~Agreement ~~effective~~by asvirtue of ~~January~~the ~~1, 2013. The~~ Company’s ~~does~~failure ~~not~~to ~~believe~~timely ~~that~~file ~~the~~its ~~adoption~~Form of10-Q ~~this~~for ~~update~~the ~~will~~quarter ~~have~~ended aSeptember ~~significant~~30, ~~effect on its financial statements~~2012.

InUnder ~~May~~Section ~~2011~~2.1 of the Restated Finance Agreement, for so long as an ~~update~~event toof ~~guidance~~default ~~was~~is ~~issued~~continuing, ~~clarifying~~the ~~how~~unpaid toprincipal ~~measure~~amount ~~and~~of ~~disclose~~the ~~fair~~Notes ~~value.~~shall ~~This~~bear ~~guidance~~interest ~~amends~~at the ~~application~~default ofinterest rate, which is the ~~“highest~~current ~~and~~interest ~~best~~rate ~~use”~~under ~~concept~~the toagreement beplus ~~used~~3%. In ~~only~~addition, inthe Lenders have the ~~measurement~~right, offollowing ~~fair~~written ~~value~~notice ofto ~~nonfinancial~~the ~~assets~~Company, ~~clarifies~~to ~~that~~cause the ~~measurement~~Company to redeem all or any portion of the ~~fair~~Notes. The ~~value~~price offor ~~equity-classified~~redemption ~~financial~~of ~~instruments~~the ~~should~~Notes shall be ~~performed~~equal ~~from~~to the ~~perspective~~greater of a(i) ~~market~~an ~~participant~~amount ~~who~~equal ~~holds~~to the ~~instrument~~sum asof anone ~~asset,~~hundred ~~clarifies~~fifteen ~~that~~percent an(115%) ~~entity~~of ~~that~~the ~~manages~~outstanding aprincipal ~~group~~amount of ~~financial~~the ~~assets~~Notes to be redeemed, plus accrued and ~~liabilities~~unpaid oninterest ~~the~~thereon, ~~basis~~plus ofaccrued ~~its~~and ~~net~~unpaid ~~risk~~late ~~exposure~~charges, ~~can~~and ~~measure~~(ii) ~~those~~an ~~financial~~amount ~~instruments~~equal onto the ~~basis~~product of ~~its~~(A) ~~net~~the ~~exposure~~number toof ~~those~~shares ~~risks,~~of ~~and~~the ~~clarifies~~Company’s ~~when~~common ~~premiums~~stock into which the principal amount and ~~discounts~~all ~~should~~accrued beand ~~taken~~unpaid ~~into~~interest ~~account~~outstanding ~~when~~under ~~measuring~~the ~~fair~~Notes ~~value.~~to ~~The~~be ~~fair~~redeemed ~~value~~may, ~~disclosure~~without ~~requirements~~giving ~~also~~effect ~~were~~to ~~amended.~~any ~~This~~limitations ~~amendment~~set ~~was~~forth ~~effective~~in Section 4 of the Notes, be converted as of ~~January~~November 122, 2012 (i.e., ~~The~~the ~~adoption~~date ofon which the ~~amended~~Company ~~guidance~~was ~~did~~deficient ~~not~~in ~~have~~filing aits ~~significant~~quarterly ~~effect~~report on Form 10-Q for the quarter ended September 30, 2012), multiplied by (B) the “Weighted Average Price” (as defined in the Notes) for one share of the Company'’s ~~financial~~common ~~statements~~stock as of such date.

~~NOTE~~There Care other events of default in existence including: (i) the Company’s stock is not currently listed on the OTCBB; (ii) the Company has not had the Registration Statement on Form S-1 ~~GLAXOSMITHKLINE~~it ~~AGREEMENTS~~was required to file pursuant to the Forbearance Agreement declared effective; (iii) the Company has not filed its definitive proxy statement for 2011; and (iv) the Company has not held an annual shareholders’ meeting to obtain the approval of additional authorized shares for Victory Park. Other events of default may exist.

InThe ~~April~~Notes ~~2002,~~are weconvertible ~~signed~~into ashares ~~licensing~~of ~~agreement~~the ~~with~~Company’s ~~GSK~~common ~~for~~stock and as a ~~value~~result ~~before~~of ~~royalties~~a reset provision contained in the Notes, ~~PTH~~the ~~sales~~conversion ~~and~~feature ~~reimbursement~~is ofconsidered ~~development~~an ~~expenses,~~embedded ofderivative upthat tomust ~~$150,000,000~~be marked to ~~develop~~fair anvalue ~~oral~~each ~~formulation~~reporting period through the term of anthe ~~analog~~Notes. The fair value was determined by utilizing a probability-weighted scenario analysis that incorporates the likelihood of ~~PTH~~an event that might trigger the reset provision. In ~~Under~~order to record the ~~terms~~debt at fair value on the date of issuance in March 2010, the ~~agreement~~Company recorded a debt discount and corresponding derivative liability of $21,190,000, ~~GSK~~representing ~~received~~the anfair ~~exclusive~~value ~~worldwide~~of ~~license~~the toembedded ~~develop~~conversion feature on the Notes as of such date and ~~commercialize~~recorded the ~~product.~~Notes ~~GSK~~at ~~reimbursed~~their usfair value of $23,810,000 for ~~certain~~a ~~development~~total ~~activities~~liability ~~during~~of $45,000,000. The $12,000,000 premium over the ~~program~~par value of the $33,000,000 ~~including~~notes ~~our~~was ~~activities~~reflected as a reduction in the ~~production~~debt ofdiscount. On ~~raw~~September ~~material~~21, ~~for~~2012, ~~development~~the ~~and~~Company ~~clinical~~recorded ~~supplies,~~the ~~and~~change ~~was~~in tofair ~~pay~~value usof athe ~~royalty~~embedded atconversion feature of the Re-issued Notes as a ~~rate~~result inof the ~~low~~modification toof ~~mid-teens~~$4,160,000 ~~based~~as a charge to loss on ~~its~~change ~~worldwide~~in ~~sales~~value of embedded conversion feature with a corresponding increase to the ~~product~~derivative liability. Also Anon ~~aggregate~~September 21, 2012, the Company recorded a debt discount and corresponding derivative liability of $165,~~000~~120,000 inrepresenting upthe fair value of the embedded conversion feature on the Re-~~front~~issued ~~and~~Notes ~~milestone~~as ~~payments~~of ~~has~~such ~~been~~date. The ~~received~~debt ~~from~~discount ~~inception~~is being accreted to interest expense based on the effective interest rate method over the remaining term of the Re-issued Notes through ~~termination~~September in21, ~~December~~2013. ~~2011~~During the quarters ended March 31, ~~including~~2013 and 2012, the ~~two~~Company recognized a non-cash gain on the change in value of the embedded conversion feature of $411,850,000 and $2,920,000, ~~payments~~respectively ~~received~~as inwell ~~December~~as ~~2010~~a ~~and~~corresponding ~~May~~decrease ~~2011~~to the derivative liability, ~~described~~representing ~~below~~the change in fair value of the embedded conversion feature of the Re-issued Notes during each period. WeAt ~~have~~March ~~also~~31, ~~received~~2013 anand ~~additional~~December $731,~~500~~ 2012,~~000~~ ~~from~~there ~~GSK~~was ~~for~~a ~~PTH~~liability ~~sales~~in ~~and~~the inaccompanying ~~support~~balance sheets representing the fair value of ~~our~~the ~~PTH~~embedded ~~development~~conversion ~~activities~~feature ~~from~~in ~~inception~~the ~~through~~amount ~~December~~of ~~2011.~~$16,850,000 and $28,700,000, respectively

In December 2010, we entered into an amended and restated exclusive worldwide license agreement with GSK and we received $4,000,000 for Phase 2 development costs. This revenue was recognized in full through December 2011 due to the termination of the agreement.

We received an additional $4,000,000 in May 2011 due to the completion of Phase 2 patient enrollment in April 2011. We recognized $1,010,000 of revenue under these two milestones in the nine months ended September 30, 2011.

On August 3, 2011, we entered into a Development Services and Clinical Supply Agreement with GSK. Under the terms of the agreement, we received approximately $2,000,000 in payments from GSK for certain development and manufacturing activities related to the active pharmaceutical ingredient and finished drug product of an oral PTH analog. This agreement has been terminated.

In December 2011, we terminated the then existing agreements with GSK. The termination of the agreements followed notification by GSK of its decision not to proceed based on its internal evaluation criteria. As a result, we regained the exclusive worldwide rights to our oral PTH program with no financial obligations to GSK. We will now seek to publish the full data set of the statistically significant Phase 2 results in a scientific journal and at appropriate scientific conferences. We intend to advance the oral PTH program via a partnership.

~~Unigene~~The ~~Laboratories~~Company recorded an additional debt discount of $262,000 ~~Inc~~for expenses reimbursed to Victory Park pertaining to the 2012 Restructuring. Such ~~Form~~expenses ~~10-Q~~were –applied ~~Period~~against ~~Ended~~the ~~September~~$500,000 30deposit made by the Company from the proceeds of the First Amendment Note at closing. An additional $204,000 in costs not related to the 2012 Restructuring were applied against the deposit and charged to general and administrative expense, such that the remaining balance of the deposit is $34,000 as of March 31, 2013. The deposit balance is classified within prepaid expenses and other current assets in the accompanying balance sheet. As the September 2012 refinancing transaction was accounted for as a debt modification, the existing deferred financing costs and debt discount from the March 2010 financing transaction remained on the accompanying balance sheets. The balance of deferred financing costs of $132,000 and note discount of $4,031,000 as of March 31, 2013 are being accreted over the one-year term of the Notes to interest expense based on the effective interest rate method.

~~NOTE~~Pursuant Dto –the ~~UPSHER~~amended and restated registration rights agreement executed in connection with the March 2010 financing, the Company filed a registration statement with the SEC registering the resale of the shares then currently or to be held by Victory Park with respect to the conversion of the debt then held by Victory Park, which registration statement was declared effective on July 13, 2010 and was amended on April 21, 2011 (the “Previous Registration Statement”). Pursuant to a Second Amended and Restated Registration Rights Agreement, dated as of September 21, 2012, by and amongst the Company and certain selling stockholders affiliated with Victory Park, the Company agreed to file registration statements to cover the resale by the selling stockholders of certain shares of its common stock, including the Conversion Shares, issuable from time to time upon the conversion of the Notes. However, the number of the Company’s authorized shares of common stock is currently insufficient to cover all the Conversion Shares issuable if the Notes were converted in full. On October 19, 2012, the Company filed a registration statement on Form S-~~SMITH~~1 ~~AGREEMENT~~(which has not been declared effective by the SEC) that contains a combined prospectus relating to the shares of common stock which were previously registered under the Previous Registration Statement and a portion of the additional Conversion Shares up to the number of shares of common stock that have been authorized, unissued and otherwise unreserved. The Company has not obtained stockholder approval as required under the Forbearance Agreement, to increase the number of authorized shares of common stock to a number that will be sufficient to cover the full number of Conversion Shares plus a buffer equal to an additional 10% of those shares, which represents an event of default under the Forbearance Agreement. The Company is required to file with the SEC a new registration statement covering the resale of Conversion Shares not then covered by an effective registration statement for resales pursuant to Rule 415. The Company agreed to use its reasonably best efforts to have the registration statements declared effective as soon as practicable, but in no event later than the earlier of (i) the date that is ninety (90) days after the closing date and (ii) the fifth (5th) business day after the Company is notified by the SEC that the applicable registration statement will not be reviewed or is no longer subject to further review and comment. On October 31, 2012, the Company was notified by the SEC that it would not review the registration statement and Victory Park subsequently extended the timing for the registration statement to be declared effective to November 30, 2012. Notwithstanding such requirements under the agreement, the Company has not requested that the registration statement be declared effective. The Company also agreed to keep the registration statements effective at all times until the earlier of (i) the date as of which all the registrable securities may be sold without restriction pursuant to Rule 144 and (ii) the date on which all of the registrable securities covered by such registration statement have been sold. If a registration statement required to be filed by us is not filed with the SEC on or before the filing deadline or filed with the SEC but not declared effective by the SEC on or before the effectiveness deadline (as is the case with respect to the Company’s failure to meet its obligations), or on any day after the effective date of the registration statement, sales of all of the registration securities cannot be made (other than during an allowable grace period) pursuant to the registration statement (including because of a suspension or delisting of the Company’s common stock on its principal market or a failure to register a sufficient number of shares of common stock), then as partial relief for the damages to any holder of registrable securities the Company shall pay to each holder of registrable securities an amount in cash equal to two percent (2%) of the aggregate value of such holder’s registrable securities required to be included in such registration statement for each 30 day period (pro-rated for periods totaling less than 30 days) until September 21, 2014, excluding for days prior to the date that the convertible notes become convertible, the value of any conversion shares included in such registrable securities. There is no limit on the amount payable to Victory Park pursuant to the registration rights agreement.

InFor ~~November 2002, we signed an exclusive U.S. licensing agreement with USL for a value before royalties of $10,000,000 to market our patented nasal formulation of calcitonin for~~ the ~~treatment~~three of osteoporosis. We are responsible for manufacturing the product and USL packages the product and distributes it nationwide. Fortical was approved by the FDA and launched by USL in August 2005. Revenue for the nine months ended ~~September~~March 3031, ~~2012~~2013 ~~consisted~~and ofMarch $331,~~989,000~~ ~~in sales to USL and $662~~2012,~~000~~ ~~in royalties from USL. Revenue for~~ the ~~nine~~Company ~~months~~recognized ~~ended~~approximately ~~September 30, 2011 consisted of~~ $24,~~586~~085,000 ~~in sales to USL~~ and $12,~~226~~420,000 ~~in royalties from USL. At September 30~~, ~~2012~~respectively, ~~our accounts receivable from USL were approximately $932,000. From August 2005 through September 2012, we have recognized an aggregate of $48,878,000~~ in ~~Fortical~~cash ~~sales~~ and $27,387,000 in Fortical royalties. We recognize USL royalty revenue based upon quarterly sales reports provided by USL. Royalty revenue, computed in a range from the transfer price of product to USL to a royalty rate in the midnon-~~thirties~~cash ~~depending~~interest onexpense ~~the circumstances, is earned~~ on net sales of Fortical by USL and is recognized in the period Fortical is sold by USL. Future sales and royalties are contingent upon many factors including competition, pricing, marketing and acceptance in the marketplace and, therefore, are difficult to predict. Pursuant to an amendment effected in 2009, there are no net sales minimums in the agreement. In December 2008, Apotex and Sandoz launched nasal calcitonin products that are generic to Novartis’ nasal calcitonin product, but not to Fortical. In June 2009, Par also launched a product generic to Novartis’ nasal calcitonin product. Certain providers have substituted these ~~products for Fortical, causing Fortical sales and royalties to steadily decline~~notes. This agreement may be terminated by either party by mutual agreement or due to breach of any material provision of the agreement not cured within 60 days. In addition, USL may terminate the agreement under certain circumstances where USL assigns the agreement and we do not approve the assignment. The term of the USL agreement shall continue through the expiration of USL’s obligation to pay royalties and continue thereafter indefinitely unless earlier terminated. See “Note A – LIQUIDITY – Recent developments impacting business operations” above regarding the EMA’s 2012 actions and the FDA meeting scheduled for March 5, 2013 pertaining to calcitonin-containing medicines.

~~NOTE~~On EApril –8, ~~NOVARTIS~~2013, ~~AGREEMENT~~the Company entered into a second amendment to a financing agreement with affiliates of VPC, whereby VPC agreed purchased an additional $750,000 senior secured note, providing the Company with additional working capital (see Note 18).

In April 2004, we signed a worldwide licensing agreement with Novartis for a value before royalties of up to $18,700,000 to allow Novartis to manufacture calcitonin using our patented peptide production process. We have received an aggregate of $13,700,000 from Novartis under this agreement and there are up to $5,000,000 in potential milestone payments remaining. We will receive royalties, at rates in the single digits, on net sales of any existing or future Novartis products that contain recombinant salmon calcitonin which in the future are approved for sale by health authorities, and are manufactured by Novartis using our technology. For both the nine months ended September 30, 2012 and 2011, we recognized $670,000 in licensing revenue pursuant to the licensing agreement. Although the Novartis agreement has not been formally terminated, Novartis has informed the Company that due to the failure of its late stage clinical development program, it has no further need to manufacture calcitonin utilizing the Company’s patented peptide production process.

~~Unigene Laboratories, Inc~~8. ~~Form 10-Q – Period Ended September 30, 2012~~Debt

~~NOTE~~The FCompany –has ~~INVENTORY~~short-term and long-term debt outstanding to Victory Park and the Levys as well as a capital lease.

~~Inventory~~Aggregate ~~consisted~~maturities of ~~the~~all ~~following~~outstanding asdebt ofat ~~September~~March ~~30,~~31 ~~2012~~were ~~and~~as ~~December 31, 2011~~follows:

	September 30, 2012			December 31, 2011
	March 31,
Current Inventory
2013	$	62,293,683
Finished Goods – Net of allowances of $1,144,000 and $1,151,000, respectively	$	438,715		$	873,341
Thereafter		17,706
Raw Materials – Net of allowances of $54,000 and $38,000, respectively		235,988			410,209
		62,311,389
Total	$	674,703		$	1,283,550
Discount – Victory Park (see Note 7)		(4,030,959	)
Noncurrent Inventory
	$	58,280,430
Raw Materials	$	1,326,161		$	1,373,545
Finished Goods		108,705			573,102
Total	$	1,434,866		$	1,946,647

~~Typically,~~ Presentation ~~finished~~on ~~goods~~Balance and work-in-process inventory are fully reserved except for the amounts deemed saleable by management based upon current or anticipated orders, primarily under contractual arrangements. Our reserves for finished goods and raw materials were $1,198,000 at September 30, 2012, an increase of $9,000 from December 31, 2011. Based upon expected future orders, $109,000 of our finished goods inventory and $1,326,000 of our raw material inventory were classified as a noncurrent asset at September 30, 2012. We expect this inventory to be fully recoverable, therefore no reserve was established. In 2010, we temporarily ceased production of calcitonin and enzyme. This cessation of production continued through 2012, however, the Company plans to engage in the production of calcitonin in the first quarter of 2013. The Company is in the process of assessing whether production of enzyme will be continued internally or outsourced and how that decision will impact the carrying value of our inventories and fixed assets.Sheet:

NOTE G – NOTES PAYABLE – FOUNDERS

	March 31, 2012		December 31, 2012
Notes payable – Levys: short-term (see Note 6)	$	14,437,518	$	14,437,518
Notes payable – Victory Park: net of discount of $4,030,959 at March 31, 2013 and $5,894,361 at December 31, 2012 (see Note 7)		43,785,648		41,922,248
Capital lease – short-term		39,558		38,566
Capital lease – long-term		17,706		27,975
	$	58,280,430	$	56,426,307

~~To satisfy our short-term liquidity needs, the founding Levy family from time to time (prior to 2003) made loans to us~~9. Jay Levy, our former director, Chairman of the Board, Treasurer and Assistant Secretary, and Jean Levy are/were the parents of Warren Levy and Ronald Levy, our former executive officers and directors. Total interest expense on all Levy loans was approximately $437,000 and $430,000 for the three months ended September 30, 2012 and 2011, respectively. Total interest expense on all Levy loans was approximately $1,318,000 and $1,263,000 for the nine months ended September 30, 2012 and 2011, respectively. As of September 30, 2012, total accrued interest on all Levy loans was $8,552,000 and the principal amount of the outstanding loans by the Levys to us totaled $14,438,000, for an aggregate owed to them of $22,990,000. These loans are collateralized by secondary security interests in our equipment and certain of our patents.Tarsa

OnIn ~~March~~October 102009, ~~2011,~~the weCompany ~~entered~~licensed ~~into~~its Phase 3 oral calcitonin program (the ~~Settlement~~Program) ~~and~~to ~~Release~~Tarsa, ~~Agreement~~a private company, and ~~Amendments~~acquired ~~(the~~an ~~“Settlement~~equity ~~Agreement”)~~interest byin ~~and~~Tarsa. ~~among~~As an equity method investment, the Company ~~and~~is ~~the~~required ~~Estate~~to recognize its proportionate share of ~~Jean~~Tarsa’s ~~Levy,~~earnings and losses. The ~~Jaynjean~~Tarsa ~~Levy~~equity ~~Family~~interest ~~Limited~~is ~~Partnership,~~pledged Dras security under the Victory Park loans. ~~Warren~~The ~~Levy,~~Company ~~our~~is ~~former~~eligible ~~president~~to receive up to $3,000,000 ~~and~~in ~~Dr.~~milestone ~~Ronald~~payments S.based ~~Levy,~~on ~~our~~the ~~former~~achievement ~~executive~~of ~~vice~~certain ~~president~~sales ~~(collectively~~benchmarks, ~~the~~as ~~“Levy~~well ~~Parties”). Pursuant~~as toroyalties, at rates in the ~~Settlement~~single ~~Agreement~~digits, ~~the~~on product sales. The Company ~~made~~has ~~the~~no ~~following~~further ~~payments~~cash inor ~~the~~non-cash ~~nine~~obligations ~~months~~to ~~ended~~Tarsa ~~September~~or ~~30,~~the ~~2011:~~ Program.

1.The InCompany ~~March~~recognized ~~2011,~~approximately ~~we paid (a) Dr. Warren Levy a lump-sum severance payment in the amount of~~ $~~327~~63,~~750;~~000 ~~(b)~~and ~~Dr. Ronald Levy a lump-sum severance payment in the amount of~~ $~~280~~328,~~250;~~000 ~~and (c) into escrow remaining severance payments in the aggregate amount~~ of ~~$304~~revenue,~~000,~~ ~~$163~~respectively,~~875~~ offor ~~which~~development, ~~was~~testing ~~released to Dr. Warren Levy~~ and ~~$140,125~~other ofservices ~~which~~performed ~~was~~for ~~released~~Tarsa tounder ~~Dr.~~statements ~~Ronald~~of ~~Levy,~~work ~~each~~ in ~~accordance~~the ~~with~~three ~~his~~months ~~respective~~ended ~~employment~~March ~~agreement~~31, in2013 ~~monthly~~and ~~increments beginning September 2011 through February~~ 2012;, respectively.

2.On InApril ~~March~~8, 2011, wealong ~~paid~~with ~~(a)~~the ~~$151~~founding investors of Tarsa,~~268~~ tothe ~~Dr.~~Company ~~Warren~~entered ~~Levy~~into ~~representing~~an aagreement ~~portion~~to ofpurchase ~~his~~$1,518,000 ~~vacation~~in ~~pay~~convertible promissory notes and warrants (bthe “Purchase Agreement”) ~~$136,736~~from Tarsa to Drhelp fund Tarsa’s business operations into the first half of 2012. After ~~Ronald~~recording ~~Levy~~this ~~representing~~investment in Tarsa, the Company recognized its proportionate share of Tarsa’s accumulated losses which exceeded the book value of the Company’s investment and, as a ~~portion~~result, reduced the book value of ~~his~~the ~~vacation~~investment ~~pay;~~in Tarsa to zero.

~~Pursuant~~In toJanuary 2012, the ~~Settlement~~Company ~~Agreement~~made an additional investment in Tarsa by purchasing convertible promissory notes in the principal amount of $650,571 and warrants to purchase up to an aggregate of 67,435 shares of Series A Preferred Stock. As a result of such investment, the Company ~~was~~recognized ~~obligated~~a toloss ~~make~~on the ~~following~~investment ~~payments:~~as the accumulated losses of Tarsa exceed the carrying value of the original investment.

1.Following Onthe ~~October~~closing ~~11,~~of ~~2012~~Tarsa’s ~~and~~Series ~~November~~B ~~13,~~Preferred Stock financing in March 2012 (in which the Company did not participate), weUnigene ~~were~~owned ~~obligated~~approximately to16% ~~pay~~of anthe ~~aggregate~~outstanding ~~amount~~capital stock of ~~$162~~Tarsa,~~296:~~ ~~$85,241~~on toa Drfully-diluted basis. Unigene's ~~Warren~~ownership ~~Levy~~position ~~and~~in ~~$77,055~~Tarsa is subject to Drpotential future dilution, including dilution as a result of a potential second Series B closing. As ~~Ronald~~a ~~Levy~~result of the Company’s ability to exert influence over Tarsa, the investment in ~~full~~Tarsa ~~satisfaction~~will ofcontinue ~~their~~to ~~respective~~be ~~vacation~~accounted ~~pay;~~for ~~and~~as an equity method investment.

2.During Onthe ~~November~~three ~~13,~~months ~~2012~~ended ~~and~~March ~~December 11~~31, 2013 and 2012, wethe ~~were~~Company ~~obligated~~recognized toa ~~pay~~loss anon ~~aggregate~~its ~~amount~~investment of ~~$200,000~~Tarsa ~~into Rabbi Trust Accounts, $100,000 into an account for the benefit~~ of ~~Dr.~~zero ~~Warren Levy~~ and $~~100~~650,~~000 into an account for the benefit of Dr. Ronald Levy~~571, ~~in full satisfaction of our obligations to each of them under the deferred compensation program~~respectively.

The Company believes that the March 5, 2013 FDA advisory committee recommendations (see Note 1) will have a material adverse impact on its investment in Tarsa.

~~Unigene Laboratories, Inc~~10. ~~Form 10-Q – Period Ended September 30, 2012~~Inventory

~~Loan~~Inventories ~~payments~~consisted ~~under the amended notes~~ of ~~$500,000 previously due on November 10, 2010 and $250,000 due on May 10, 2011 have been postponed under~~ the ~~Settlement Agreement. The new payment schedule specifies five monthly payments of $150,000 from May 2012 through September 2012.~~following:

On May 29, 2012, the Company entered into an agreement to settle its obligations to the Levys (the “Revised Settlement Agreement). Pursuant to the Revised Settlement Agreement, the Founders agreed to settle any and all outstanding obligations due from the Company in exchange for (i) two installment payments of $150,000 each due in May and June 2012, which were subsequently paid by the Company; (ii) $7,700,000 payable on or before September 30, 2012; and (iii) the issuance of 5,000,000 shares of the Company’s common stock. The Company did not meet the conditions to effectiveness under the Revised Settlement Agreement on or prior to September 30, 2012, including the payment of $8,000,000 (less the amount of the two $150,000 interim installment payments) and the issuance of 5,000,000 shares of common stock to the Levy Parties. As a result, the Revised Settlement Agreement has been terminated and is otherwise of no force and effect (other than as specifically identified) and all payments then or previously payable (and not previously paid) under the Settlement Agreement through and including September 30, 2012 became immediately due and payable as of such date. Following termination of the Revised Settlement Agreement, the full amount of the Company’s remaining payment obligations to the Levy Parties under the Settlement Agreement are principal in the aggregate amount of $14,738,000 and accrued interest, through September 30, 2012, in the aggregate amount of $8,552,000. Furthermore, as a result of the termination of the Revised Settlement Agreement, no release of any of the Levy claims has occurred and all the rights of the Levy Parties that existed under the Settlement Agreement, the related notes and with respect to their prior employment remain in full force and effect as if the Revised Settlement Agreement had not been entered into by them.

	March 31, 2013		December 31, 2012
Current Inventory
Work in process – net of allowances of $1,573,000 and $1,144,000, respectively	$	562,600	$	428,708
Raw materials – net of allowances of zero and $25,000, respectively		137,272		469,334

Total	$	699,872	$	898,042

Noncurrent Inventory
Raw Materials, net of allowances of $1,282,000 and $83,000, respectively	$	--	$	1,063,633

Total	$	699,872	$	1,063,633

OnAs ~~December~~of 21March 31, ~~2012~~2013, the Company ~~entered~~concluded ~~into~~that ancertain ~~agreement~~of ~~(the~~its ~~"Second Revised Settlement Agreement") with the Levys. The Second Revised Settlement Agreement modified the Settlement Agreement. Pursuant to the Settlement Agreement~~assets, ~~payments~~primarily ofrelated ~~$150,000 were due~~ to ~~the~~its ~~Levy~~Fortical ~~Parties on each of October 11~~business, ~~2012~~are ~~and~~impaired ~~November~~as ~~13, 2012 and~~ a ~~payment~~result of ~~$62,296~~recent ~~was~~events ~~due~~negatively onimpacting ~~December 11~~operations, ~~2012.~~including ~~According~~regulatory torecommendations ~~the~~by ~~terms~~an ofadvisory ~~the~~committee ~~Second~~to ~~Revised Settlement Agreement,~~ the ~~Company~~FDA ~~paid~~and ~~$100,000 to~~ the ~~Levy~~related ~~Parties~~impact on ~~December~~Fortical ~~21,~~manufacturing ~~2012, which~~revenues ~~represented~~and ~~partial~~royalties ~~payment~~(see ofNote ~~the October 11, 2012 installment payment~~5). This ~~Furthermore,~~resulted ~~under~~in the ~~Second~~write-off ~~Revised~~of ~~Settlement~~substantially ~~Agreement,~~all ~~the payments~~ of ~~each of (i)~~ the ~~remaining~~Company’s ~~$50,000~~inventories ~~related~~with to the ~~October~~exception ~~11,~~of ~~2012~~materials ~~installment~~to ~~payment,~~be ~~(ii)~~provided ~~the~~to ~~$150,000~~Nordic ~~installment~~Bioscience ~~payment~~pursuant ~~due~~to ona ~~November~~joint ~~13,~~venture ~~2012~~(see ~~and~~Note ~~the~~12) ~~$62,296 installment payment due on December 11, 2012,~~ and ~~(iii)~~laboratory ~~the~~materials. The ~~$150,000~~corresponding ~~installment~~charge ~~payments due to the partnership on each~~ of ~~July 11~~$1, ~~2012~~635,818 ~~August~~is ~~13,~~reflected ~~2012,~~within ~~and~~cost ~~September~~of ~~11,~~goods ~~2012~~sold ~~under~~for the ~~terms~~three ofmonths ~~the~~ended ~~Settlement~~March ~~Agreement~~31, ~~have been deferred until June 18,~~ 2013. ~~All other terms of the Settlement Agreement remain in full force and effect.~~

Notwithstanding the foregoing, any and all payments by the Company on account of any of the Company’s notes in favor of the Levy Parties (except the interim installment payments) remain subject to the terms and conditions of that certain Affiliate Subordination Agreement, dated September 30, 2008, among various Levy Parties, the Company and Victory Park Management, LLC, a Delaware limited liability company, as agent for all senior lenders, as the same may be amended, restated, supplemented and in effect from time to time, including pursuant to that certain Reaffirmation of Affiliate Subordination Agreement dated as of March 17, 2010, and as amended by that certain letter dated March 16, 2011 from Victory Park Management LLC regarding “Consent and Amendment” (the “Subordination Agreement”)11. As a result, the Company may not make additional payments to the Levy Parties unless such payments can be made in accordance with the terms of the Subordination Agreement assuming any such payment constitutes “Permitted Subordinated Debt Payments” thereunder.Sale/Leaseback

~~NOTE~~On HMay -24, ~~NOTE~~2011 ~~PAYABLE~~(the –Closing ~~VICTORY~~Date), ~~PARK~~the Company sold its real property located at 110 Little Falls Road, Fairfield, New Jersey, with the buildings and improvements thereon, and any furniture, machinery, equipment and other personal property (other than property used in the conduct of its laboratory business) that the Company owned and used to operate, repair and maintain the property (the Property), to RCP Birch Road, L.L.C. (the Purchaser). This sale was affected pursuant to an Agreement for Sale of Real Estate, dated as of January 31, 2011, by and between the Company and the Purchaser. In connection with the transfer of title of the Property, on the Closing Date, the Company received an aggregate purchase price of $1,200,000 from the Purchaser. In connection with the transfer of title of the Property, pursuant to the Settlement Agreement, Victory Park and the Levy Parties, respectively, released their primary and secondary mortgages and related liens on the Property (see Notes 6 and 7).

OnIn ~~September~~connection ~~30,~~with ~~2008~~the sale of the Property, wethe ~~entered~~Company ~~into~~executed a ~~financing~~Lease ~~agreement~~for ~~with~~Real ~~Victory~~Property, ~~Park~~dated as of the Closing Date, pursuant to which wethe ~~borrowed~~Company ~~$15,000,000~~has leased the Property from ~~Victory~~the ~~Park~~Purchaser ~~and~~for an initial term of seven years, inwhich ~~connection~~may ~~therewith~~be extended for one renewal term of five years, wefor ~~issued~~an annual base rent during the initial term ranging from $135,000 to ~~Victory~~$145,000, ~~Park~~and aup ~~three-year~~to ~~senior~~approximately ~~secured~~$156,000 ~~non-convertible~~in ~~term~~the ~~note~~renewal term.

OnAfter ~~March~~expenses 16of $80,000, ~~2010~~the Company received net proceeds of $1,120,000. weThe ~~entered~~Company’s ~~into~~basis in the ~~Restated~~land, ~~Financing~~building ~~Agreement~~and ~~with~~improvements ~~Victory~~was ~~Park~~$303,000. ~~The~~Therefore, ~~Restated~~the ~~Financing~~Company ~~Agreement~~will ~~amended~~recognize ~~and~~a ~~restated~~gain on this transaction in ~~its~~the ~~entirety~~amount of $817,000. This gain is being recognized ratably over seven years, the length of the lease term. For the three months ended March 31, 2013 and ~~replaced~~March 31, 2012, the ~~financing~~Company ~~agreement~~recognized ~~dated~~a asgain ofin ~~September~~the 30amount of $29,000, ~~2008~~which is reflected in the statements of operations as a reduction in rent expense.

Under the terms of the Restated Financing Agreement, we issued to Victory Park $33,000,000 aggregate principal amount of three-year, senior secured convertible notes in exchange for the three-year, senior secured non-convertible notes previously issued pursuant to the original financing agreement, in the aggregate principal amount of approximately $19,358,000, and additional net proceeds of approximately $13,642,000 (before debt issuance costs)12. ~~These~~Nordic convertible notes were purchased at a 2% discount to the face amount. We received net cash proceeds of approximately $11,635,000. The maturity date of the convertible notes was extended to March 17, 2013 from September 30, 2011 under the original notes. The convertible notes accrue interest at a rate per annum equal to the greater of the prime rate plus 5% and 15%, which, in the absence of an event of default, shall be added to the outstanding principal balance of the convertible notes on each anniversary of the date of issuance other than the maturity date. As a result, $5,797,859 and $5,018,750 in accrued interest was reclassified from accrued interest to notes payable in 2012 and 2011, respectively.Bioscience

In October 2011, the Company and Nordic Bioscience announced their decision to establish a Joint Development Vehicle (“JDV”) to progress up to three of the Company’s internally developed proprietary calcitonin analogs through Phase 2 proof-of-concept in humans for the treatment of Type 2 diabetes, osteoarthritis and osteoporosis. In exchange for a 50% ownership interest in the JDV, Unigene and Nordic were to contribute $100,000 and $1,000,000, respectively, towards the incorporation of the JDV as a Swiss GmbH. Pursuant to a First Amendment to the Joint Development Agreement dated August 15, 2012, the initial contributions to be made by Unigene and Nordic were $50,000 and $950,000, respectively. The initial contributions were funded on August 15, 2012.

~~Unigene~~In ~~Laboratories~~addition to the option for an exclusive, ~~Inc~~royalty free license grant, it is anticipated that the Company will supply to the JDV, without charge, the analogs selected for development by the JDV for preclinical studies and, thereafter, manufacture sufficient quantities of the selected lead analog for clinical trials. ~~Form~~In ~~10-Q~~exchange –for ~~Period~~a ~~Ended~~50% ~~September~~ownership 30of the JDV, Nordic is responsible for conducting and fully funding all preclinical, toxicology and clinical development through Phase 2 proof-of-concept for the Type 2 diabetes indication. In August 2012, the Company announced, under the JDV, the preliminary selection of the lead compound for the Type 2 diabetes indication (UGP302) and executed certain agreements ancillary to the Joint Development Agreement dated October 2011.

On ~~the~~October ~~First~~5, ~~Amendment Effective Date~~2011, the Company entered into a ~~Forbearance~~Common ~~Agreement,~~Stock byPurchase and ~~among~~Option ~~the~~Agreement ~~Company~~pursuant to which Dr. Claus Christiansen, ~~the~~Chairman ~~Agent~~of Nordic Bioscience, ~~and~~purchased 1,691,729 shares of the ~~Lenders.~~Company’s ~~The~~common ~~Forbearance~~stock ~~Agreement~~for ~~evidenced the~~an ~~forbearance~~aggregate bypurchase ~~the~~of ~~VPC~~$1,500,000, ~~Parties~~at ~~with~~a ~~respect~~purchase price equivalent to the ~~exercise~~average ofshare ~~certain~~price ofover ~~their~~the ~~rights~~previous ~~and~~30 ~~remedies~~days, ~~arising~~through ashis aDanish ~~result~~foundation, DDF, with an option to purchase an additional $1,500,000 worth of the ~~existence~~Company’s ofcommon ~~certain~~stock ~~events~~on ofor ~~default~~before ~~under~~March ~~the~~15, ~~Restated~~2012. ~~Financing~~DDF ~~Agreement;~~also ~~(ii)~~had ~~the~~an ~~amendment~~option ofto ~~certain~~make ~~provisions~~an additional equity investment of up to $3,000,000 in the ~~Restated~~Company’s ~~Financing~~common ~~Agreement;~~stock ~~and~~on ~~(iii)~~or ~~the~~before ~~other~~June ~~agreements~~30, ~~contemplated~~2012. Each byof the 2012 ~~Restructuring~~common stock purchase options expired unexercised.

~~Under~~The ~~the~~Company ~~terms of the Forbearance Agreement: (i) the VPC Parties, subject to any future defaults (except certain pre-designated, anticipated defaults), agreed to forbear from exercising their respective rights~~ and ~~remedies~~Nordic ~~under~~Bioscience ~~the~~each ~~Restated~~maintain ~~Financing~~50% ~~Agreement~~of ~~and other transaction documents during~~ the ~~forbearance~~JDV ~~period,~~voting ~~which~~rights ~~commenced on the First Amendment Effective Date~~ and ~~will~~all ~~end~~decisions onmust ~~the~~be ~~first~~pursuant ~~anniversary~~to ~~of the First Amendment Effective Date unless earlier terminated as~~ a ~~result~~unanimous ofvote ~~any~~and ~~such~~neither ~~future~~party ~~default;~~has ~~(ii)~~ the ~~Company~~ability ~~has (A) issued~~ to ~~the~~overrule ~~Lenders upon~~ the ~~terms~~other ~~and~~party ~~conditions stated~~ in the ~~Forbearance~~event ~~Agreement~~of a ~~one-year~~disagreement. ~~senior~~The secured convertible note in the aggregate principal amount of $4,000,000 (the “First Amendment Note”); and (B) re-issued to the Lenders on September 24, 2012 (the first business day after the First Amendment Effective Date) all four notes in existence (collectively, the “Re-issued Notes” and together with the First Amendment Note, the “Notes”); (iii) the Company ~~agreed~~has todetermined ~~deposit~~that ~~$500,000~~JDV ~~with~~is ~~the~~a ~~Agent~~variable oninterest ~~the~~entity ~~First~~as ~~Amendment Effective Date to reimburse~~ the ~~Agent~~equity ~~and~~investment ~~the~~at ~~Lenders~~risk ~~for~~is ~~certain~~not ~~existing~~sufficient ~~and future fees, costs and expenses incurred by (or~~ to bepermit ~~incurred by)~~ the ~~VPC~~entity ~~Parties in connection with the 2012 Restructuring and thereafter; (iv) each Lender shall, subject~~ to ~~certain~~finance ~~conditions~~its ~~precedent~~activities aswithout ~~set~~additional ~~forth~~subordinated ~~in the Forbearance Agreement including lack of any events of default (see Note B above and the discussion of the impact of the~~ financial ~~restatement~~support ~~and~~from ~~related~~other ~~matters~~parties. The ~~below), make available to the~~ Company ~~additional~~will ~~loans (“Re-Loans”) in an aggregate principal amount~~ not toconsolidate ~~exceed such Lender’s pro rata share of~~ the ~~sum~~financial ofstatements ~~the first $3,500,000~~ of the ~~mandatory~~JDV ~~prepayments~~since ~~received by~~ the ~~Lenders from the~~ Company ~~pursuant~~is tonot the ~~terms~~primary beneficiary of the ~~Restated~~entity ~~Financing~~as ~~Agreement~~a ~~(other~~result ~~than mandatory prepayments made with the proceeds~~ of the ~~sale~~Company ofnot ~~the~~having ~~tax benefits resulting from net operating losses for prior periods (“NOL Sale Proceeds”)), plus~~ the ~~amount~~ability ofto ~~any~~direct ~~mandatory prepayments received by~~ the ~~Lenders~~activities ~~pursuant to the Restated Financing Agreement on account~~ of ~~NOL Sale Proceeds, such Re-Loans shall be deemed loans funded under~~ the ~~Restated~~JDV ~~Financing Agreement~~ and ~~shall~~because ~~be evidenced by notes (“Re-Loan Notes”) on~~ the ~~same~~Company ~~terms~~has ~~as,~~concluded ~~and~~that onNordic aBioscience ~~pari~~is ~~passu~~more ~~basis~~involved ~~with,~~in the ~~First~~daily ~~Amendment~~operations ~~Note~~of ~~(except~~ the ~~conversion~~entity. As ~~rate~~such, ~~as described below); and (v)~~ the Company ~~has~~will ~~delivered~~account to the VPC Parties a quarterly cash flow forecast with respect to the fiscal quarter ending December 31, 2012 and shall deliver to the VPC Parties a quarterly cash flow forecast on a consolidated basis for ~~the Company and~~ its ~~subsidiaries~~investment ~~during~~in the ~~term~~JDV ofunder the ~~Forbearance~~equity ~~Agreement. Events~~method, ofwhereby ~~default under~~ the ~~Forbearance~~initial ~~Agreement~~carrying ~~include~~value ~~(among various other events~~ of ~~default) a quarterly reconciliation that shows a negative variance of 10% or more of actual cash revenue minus actual cash expenses for an applicable quarter versus~~ the ~~applicable~~investment ~~quarterly~~represented ~~cash flow forecast delivered by~~ the ~~Company (as described above), failure to maintain a cash balance in a specified account in excess of~~ $~~250~~50,000, ~~and~~cash ~~a breach of any agreement or covenant contained in the Forbearance Agreement~~contribution. The ~~Forbearance~~Company ~~Agreement~~will ~~amended~~adjust the ~~terms~~carrying value of the ~~mandatory~~JDV ~~prepayment~~investment based on ~~certain mandatory prepayment events set forth in~~ the ~~Restated Financing Agreement, such as upon receipt of certain proceeds from asset sales, equity issuances, milestone payments under the~~ Company’s ~~material~~50% ~~license~~share ~~agreements and certain other receipts~~ of ~~cash outside~~ the ~~ordinary~~earnings ~~course~~or losses of ~~business. In accordance with~~ the ~~terms~~JDV ofas ~~the~~well ~~Forbearance~~as ~~Agreement,~~for the ~~Company~~book ~~received~~value ~~a net amount~~ of ~~$3,500,000~~analogs ~~from~~contributed ~~the~~to ~~Lenders in exchange for~~ the ~~issuance of the First Amendment Note~~JDV.

~~The~~As ~~maturity date~~ of ~~the Re-issued Notes is~~ March 1731, 2013 ~~and the maturity date of the First Amendment Note is September 21~~, ~~2013. Non-payment of~~ the ~~Re-issued~~carrying ~~Notes~~value ~~on March 17, 2013 constitutes an “Incipient Event~~ of ~~Default” under~~ the ~~Forbearance~~investment Agreement for which the VPC Parties will be required to forbear, unless there are other events of default (see Note B above and the discussion of the impact of the financial restatement and related matters below). Under the terms of the Forbearance Agreement and the Restated Financing Agreement, the Notes are secured by a first priority lien on all current and future assets of the Company. The Notes will accrue interest at a rate per annum equal to the greater of (x) the prime rate (announced by Citibank N.A. from time to time) plus 5% and (y) 15%, which, in the ~~absence~~accompanying of an event of default, accrued and unpaid interest due and payable with respect to the Notes shall, instead of being required to be paid in cash, shall be capitalized and added to the outstanding principal balance ofsheet ~~the Notes payable on the maturity date. For so long as an event of default~~ is ~~continuing,~~zero ~~the~~since ~~unpaid principal amount of~~ the ~~Notes shall bear interest at the default interest rate, which is the current interest rate plus 3%. The Notes are convertible into shares of common stock of the~~ Company,’s ~~par value $0.01 per~~ share ~~(the~~of ~~“Common Stock”), at~~ the ~~Lender~~JDV’s ~~option. The~~losses ~~initial conversion rate for the First Amendment Note~~ is ~~calculated~~in byexcess ~~dividing the sum~~ of ~~the~~its ~~principal to be converted plus all accrued and unpaid interest thereon by $0~~contributions.~~05 per share.~~ The ~~initial~~Company’s ~~conversion~~maximum ~~rate~~exposure ~~for the Re-issued Notes is calculated by dividing the sum of the principal~~ to beloss ~~converted plus all accrued and unpaid interest thereon by $0.15 per share (which amends the prior conversion rate~~ of ~~$0.70 per share). The initial conversion rate of any Re-Loan Notes will be calculated by dividing~~ the ~~sum~~JDV ofis ~~the~~limited ~~principal~~ to ~~be converted plus all accrued and unpaid interest thereon by~~ the ~~conversion~~value ~~price~~ of ~~the~~cash ~~Reissued~~and ~~Notes~~analogs incontributed ~~effect~~and on the ~~date of issuance of such Re-Loan Note. All such conversion rates are subject to adjustment, including a reduction in the conversion rate in the event the~~ Company ~~issues~~does ~~certain~~not ~~shares~~have ofany ~~common~~commitment ~~stock at a purchase price less than the then current conversion price. The Company may be liable for certain cash damages in the case of a failure~~ to ~~timely~~fund ~~convert~~future ~~the~~losses ~~Notes and a failure to timely convert is also an event~~ of ~~default, subject to additional remedies described in~~ the ~~Restated Financing Agreement~~JDV.

On May 7, 2013, the Company and Nordic Bioscience entered into an equity transfer agreement pursuant to which Nordic Bioscience agreed to purchase the Company’s entire ownership interest in the JDV in exchange for a payment of $1,000,000, which was received on May 13, 2013. Also on May 7, 2013, the Company and the JDV entity entered into an exclusive license agreement (see Note 18).

13. Stock-Based Compensation

Compensation expense is calculated each quarter for consultants, employees and directors using the Black-Scholes option pricing model, until the option is fully vested.

For the three months ended March 31, 2013, the Company recognized share-based compensation cost for employees and directors of $213,000 which consisted of $160,000 in general and administrative expenses and $53,000 in research and development expenses. For the three months ended March 31, 2012, the Company recognized share-based compensation cost for employees and directors of $311,000, which consisted of $245,000 in general and administrative expenses, and $66,000 in research and development expenses. The Company did not capitalize any share-based compensation cost.

As of March 31, 2013, there was approximately $494,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the stock option plan. That cost is expected to be recognized over a weighted-average period of approximately 0.5 years.

There were no option awards granted during the three months ended March 31, 2013. For the three months ended March 31, 2012, the Company estimated the fair value of each option award on the date of grant using the Black-Scholes model. The Company utilized the risk-free interest rate for periods equal to the expected term of the option based upon U.S. Treasury securities in effect at the time of the grant. Currently, there is no present intention of declaring any dividends. Expected volatility is based on historical volatility and the expected term of stock options is estimated using historical exercise experience. Option forfeiture rates are based on the Company’s historical forfeiture rates.

~~Unigene~~The ~~Laboratories,~~following ~~Inc.~~table ~~Form~~shows ~~10-Q~~the –weighted ~~Period~~average ~~Ended~~assumptions ~~September~~used ~~30,~~to ~~2012~~develop the fair value estimates:

As of the First Amendment Effective Date, the Company lacked sufficient shares of Common Stock to deliver all of the Conversion Shares. The Company is required to obtain stockholder approval to amend its certificate of incorporation to increase the number of authorized shares to allow for the conversion of the Notes in full and until such time as the Company receives approval to increase the authorized shares, Victory Park has the ability to demand payment in cash for any shortfall in authorized shares upon a notice of conversion. The Company was required to prepare and file proxy materials with the SEC and hold a stockholder meeting no later than January 21, 2013 to increase the number of authorized shares of its common stock. As a result of the financial restatement and related matters described in Note B above, the Company has not completed the required proxy materials nor held a stockholder meeting.

	Three Months Ended March 31,
	2013		2012
Expected volatility		n/a	61.7	%
Expected dividends		n/a	--
Expected term (in years)		n/a	7.0
Risk-free rate		n/a	1.5	%
Forfeiture rate - employees		n/a	25	%
Forfeiture rate – officers and directors		n/a	0	%

~~Section~~As ~~8.18~~ of ~~the~~March ~~Restated Finance Agreement requires that the Company timely file all reports required to be filed with the SEC pursuant to the Securities Exchange Act of 1934~~31, ~~as amended. Under Section 10.1(z) of such agreement~~2013, ~~the~~a ~~Company’s~~forfeiture ~~failure~~rate ~~to timely file any such report is an event~~ of ~~default. As~~15% ~~a result of the financial restatement described in Note B above, the Company~~ was ~~unable~~applied to ~~finalize~~employees and ~~file~~officer ~~this~~grants ~~Form~~and ~~10-Q~~a byforfeiture ~~the~~rate ~~SEC’s extended filing deadline~~ of ~~November~~0% ~~21,~~was ~~2012. Therefore,~~applied ~~the Company gave the VPC Parties notice that an event of default occurred under the Restated Finance Agreement by virtue of the Company’s failure~~ to ~~timely~~director ~~file this Form 10-Q~~grants.

~~Under Section 2~~ 14.1 ofNet ~~the~~Income Restated Finance Agreement, for so long as an event of default is continuing, the unpaid principal amount of the Notes shall bear interest at the default interest rate, which is the current interest rate under the agreement plus 3%. In addition, the Lenders have the right, following written notice to the Company, to cause the Company to redeem all or any portion of the Notes. The price for redemption of the Notes shall be equal to the greater of (iLoss) anPer amount equal to the sum of one hundred fifteen percent (115%) of the outstanding principal amount of the Notes to be redeemed, plus accrued and unpaid interest thereon, plus accrued and unpaid late charges, and (ii) an amount equal to the product of (A) the number of shares of the Company’s common stock into which the principal amount and all accrued and unpaid interest outstanding under the Notes to be redeemed may, without giving effect to any limitations set forth in Section 4 of the Notes, be converted as of November 22, 2012 (i.e., the date on which the Company was deficient in filing its quarterly report on Form 10-Q for the quarter ended September 30, 2012), multiplied by (B) the “Weighted Average Price” (as defined in the Notes) for one share of the Company’s common stock as of such date.Share

~~There~~The ~~are~~calculation ~~other events~~ of ~~default~~diluted inloss ~~existence~~per ~~including~~common ~~(i)~~and ~~the~~common ~~Company’s~~equivalent ~~stock~~share is not currently listed on the OTCBB, (ii) the Company has not had the S-1 it was required to file pursuant to the Forbearance Agreement declared effective, (iii) the Company has not filed its definitive proxy statement for 2011 and (iv) the Company has not held an annual shareholders’ meeting to obtain the approval of additional authorized shares for Victory Park. The Company also expects to default on the minimum cash requirement as ~~of March 31, 2013. Other events of default may exist.~~follows:

The Notes are convertible into shares of our common stock and as a result of a reset provision contained in the Notes, the conversion feature is considered an embedded derivative that must be marked to fair value each reporting period through the term of the Notes. The fair value was determined by utilizing a probability-weighted scenario analysis that incorporates the likelihood of an event that might trigger the reset provision. In order to record the debt at fair value on the date of issuance in March 2010, the Company recorded a debt discount and corresponding derivative liability of $21,190,000, representing the fair value of the embedded conversion feature on the Notes as of such date and recorded the Notes at their fair value of $23,810,000 for a total liability of $45,000,000. The $12,000,000 premium over the par value of the $33,000,000 notes was reflected as a reduction in the debt discount. The Company therefore recognized a non-cash gain of $640,000 and $3,650,000 in the three months ended September 30, 2012 and 2011 and non-cash expense of $1,870,000 and $12,120,000 in the nine months ended September 30, 2012 and 2011, respectively, which represents the change in the fair value of the conversion feature of the original notes during each period through the date of modification, which was September 21, 2012. On September 21, 2012, the Company recorded the change in fair value of the embedded conversion feature of the Re-issued Notes as a result of the modification of $4,160,000 as a charge to loss on change in value of embedded conversion feature with a corresponding increase to the derivative liability. Also on September 21, 2012, the Company recorded a debt discount and corresponding derivative liability of $5,120,000 representing the fair value of the embedded conversion feature on the Re-issued Notes as of such date. The debt discount is being accreted to interest expense based on the effective interest rate method over the remaining term of the Re-issued Notes through September 21, 2013. On September 30, 2012, the Company recognized a non-cash charge to loss on change in value of embedded conversion feature of $1,996,000 and a corresponding increase to the derivative liability, representing the change in fair value of the embedded conversion feature of the Re-issued Notes from the date of modification through such date, primarily driven by the change in the market price of the Company’s common stock. At September 30, 2012 and December 31, 2011, there was a liability in the accompanying balance sheets representing the fair value of the embedded conversion feature in the amount of $19,460,000 and $12,470,000, respectively.

	March 31,
	2013			2012
Net income (loss) applicable to common stock	$	1,978,664		$	(3,196,401	)
Add: Interest expense attributable to senior secured notes		4,085,142			--
Less: Gain on change in fair value of embedded derivative liability		(11,850,000	)		--

Net loss applicable to dilutive common stock	$	(5,786,194	)	$	(3,196,401	)


Weighted average number of common shares outstanding - Basic:		95,950,234			95,314,825
Effect of dilutive securities:
Convertible senior secured notes		412,047,811			--
Weighted average number of common shares outstanding - Diluted		507,998,045			95,314,825

Net loss per share - Diluted	$	(0.01	)	$	(0.03	)

The Company computes and presents both basic and diluted earnings per share (EPS) on the face of the Statement of Operations. Basic EPS is computed using the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock at the beginning of the period (or as of the date of issuance if issued in the current year) being reported on, and the effect was dilutive. The following potentially dilutive securities were excluded from the calculation of diluted net loss per share, as the effect would have been anti-dilutive:

	March 31,
	2013		2012

Victory Park convertible debt upon conversion to common stock (1)		--		62,986,376
Options to purchase common stock		17,875,698		9,994,060
Warrants to purchase common stock		20,000		60,000
Unvested restricted stock		20,000		40,000

		17,915,698		73,080,436

(1)

Assumes conversion of principal plus accrued interest as of March 31.

~~Unigene~~Reconciliation ~~Laboratories,~~between ~~Inc.~~the ~~Form~~number ~~10-Q~~of –issued ~~Period~~shares ~~Ended~~shown ~~September~~on 30the balance sheet and the number of shares used to determine EPS at March 31, 2013 and 2012:

The Company recorded an additional debt discount of $262,000 for expenses reimbursed to Victory Park pertaining to the 2012 Restructuring. Such expenses were applied against the $500,000 deposit made by the Company from the proceeds of the First Amendment Note at closing. An additional $94,000 in costs not related to the 2012 Restructuring were applied against the deposit and charged to general and administrative expense, such that the remaining balance of the deposit is $144,000 as of September 30, 2012. The deposit balance is classified within prepaid expenses and other current assets in the accompanying balance sheet. As the September 2012 refinancing transaction as accounted for as a debt modification, the existing deferred financing costs and debt discount from the March 2010 financing transaction will remained on the accompanying balance sheets. The balance of deferred financing costs of $272,000 and note discount of $7,624,000 as of September 30, 2012 are being accreted over the one-year term of the Notes to interest expense based on the effective interest rate method.

	2013			2012
Issued shares per balance sheet		95,978,952			95,374,927
Unvested restricted stock		(20,000	)		(40,000	)
Shares used in determining EPS		95,958,952			95,334,927

Pursuant to the amended and restated registration rights agreement executed in connection with the March 2010 financing, we filed a registration statement with the SEC registering the resale of the shares then currently or to be held by Victory Park with respect to the conversion of the debt then held by Victory Park, which registration statement was declared effective on July 13, 2010 and was amended on April 21, 2011 (the “Previous Registration Statement”)15. ~~Pursuant~~Patents ~~to a Second Amended~~ and ~~Restated~~Other Registration Rights Agreement, dated as of September 21, 2012, by and among us and certain selling stockholders affiliated with Victory Park, we agreed to file registration statements to cover the resale by the selling stockholders of certain shares of our common stock, including the Conversion Shares, issuable from time to time upon the conversion of the Notes. However, the number of our authorized shares of common stock is currently insufficient to cover all the Conversion Shares issuable if the Notes were converted in full. On October 19, 2012, we filed a registration statement on Form S-1 (which has not been declared effective by the SEC) that contains a combined prospectus relating to the shares of common stock which were previously registered under the Previous Registration Statement and a portion of the additional Conversion Shares up to the number of shares of common stock that we have authorized, unissued and otherwise unreserved. As required under the Forbearance Agreement, we intend to seek stockholder approval at our next meeting of stockholders to be held on or prior to January 21, 2013 to increase the number of authorized shares of common stock to a number that will be sufficient to cover the full number of Conversion Shares plus a buffer equal to an additional 10% of those shares. If stockholder approval is obtained, we intend to promptly file an amendment to our Certificate of Incorporation to effect such increase in the number of authorized shares of our common stock. If stockholder approval of the amendment to our certificate of incorporation is not so obtained, we will be required to call a stockholders meeting every four months to seek approval of the amendment until the date on which such approval is obtained. Thereafter, we will be required to file with the SEC a new registration statement covering the resale of Conversion Shares not then covered by an effective registration statement for resales pursuant to Rule 415. We agreed to use our reasonably best efforts to have the registration statements declared effective as soon as practicable, but in no event later than the earlier of (i) the date that is ninety (90) days after the closing date and (ii) the fifth (5th) business day after we are notified by the SEC that the applicable registration statement will not be reviewed or is no longer subject to further review and comment. On October 31, 2012, the Company was notified by the SEC that it would not review the registration statement and Victory Park subsequently extended the timing for the registration statement to be declared effective to November 30, 2012. Notwithstanding such requirements under the agreement, as a result of the financial statement restatement described in Note B, the Company has not requested that the registration statement be declared effective. We also agreed to keep the registration statements effective at all times until the earlier of (i) the date as of which all the registrable securities may be sold without restriction pursuant to Rule 144 and (ii) the date on which all of the registrable securities covered by such registration statement have been sold. If a registration statement required to be filed by us is not filed with the SEC on or before the filing deadline or filed with the SEC but not declared effective by the SEC on or before the effectiveness deadline, or on any day after the effective date of the registration statement, sales of all of the registration securities cannot be made (other than during an allowable grace period) pursuant to the registration statement (including because of a suspension or delisting of our common stock on its principal market or a failure to register a sufficient number of shares of common stock), then as partial relief for the damages to any holder of registrable securities we shall pay to each holder of registrable securities an amount in cash equal to two percent (2%) of the aggregate value of such holder’s registrable securities required to be included in such registration statement for each 30 day period (pro-rated for periods totaling less than 30 days) until September 21, 2014, excluding for days prior to the date that the convertible notes become convertible, the value of any conversion shares included in such registrable securities. We do not believe that this provision will have a material impact on our financial condition.Intangibles

For the three months ended September 30, 2012 and 2011 we recognized approximately $3,021,000 and $2,382,000, respectively, in cash and non-cash interest expense on the Victory Park notes. For the nine months ended September 30, 2012 and 2011 we recognized approximately $8,276,000 and $6,669,000, respectively, in cash and non-cash interest expense on these notes.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

NOTE I - DEBT

We have short-term and long-term debt outstanding to Victory Park and the Levys, as well as a capital lease.

Aggregate maturities of all outstanding debt at September 30 were as follows:

	September 30,
2013	$	62,291,726
2014		37,986
Thereafter		--
Total debt, gross		62,329,712
Discount – Victory Park (see Note H)		(7,624,378	)
Total debt, net	$	54,705,334

Presentation on Balance Sheet:

	September 30, 2012		December 31, 2011
Notes payable – Founders: long-term (see Note G)	$	--	$	13,987,518
Notes payable – Founders: short-term (see Note G)		14,437,518		750,000
Notes payable – Victory Park: net of discount of $7,624,378 at September 30, 2012 and $5,335,294 at December 31, 2011 (see Note H)		40,192,231		32,683,456
Capital lease payable– short-term		37,599		--
Capital lease payable– long-term		37,986		--
Total	$	54,705,334	$	47,420,974

NOTE J - TARSA

In October 2009, we licensed our Phase 3 oral calcitonin program (the “Program”) to Tarsa, a private company formed by a syndicate of three venture capital funds specializing in the life sciences: MVM Life Science Partners, Quaker BioVentures and Novo A/S.

In consideration for our sale to Tarsa of an exclusive license for the Program, we received from Tarsa approximately $8,993,000 in cash and 9,215,000 shares of common stock in Tarsa, which initially represented a 26% ownership on a non-diluted basis (see below). We account for our Tarsa investment under the equity method. As of September 30, 2012 and December 31, 2011, the carrying amount of our investment in Tarsa was zero due to our proportionate share of losses recognized by Tarsa in prior periods being higher than the book value of our investments.

In April 2011, we announced that Tarsa had selected us to conduct the stability testing for its oral calcitonin and has agreed to pay us $1,040,000 for these services. The stability testing results will be included in Tarsa’s NDA.

We recognized $998,000 and $1,062,000 of revenue for development, testing and other services performed for Tarsa under statements of work in the nine months ended September 30, 2012 and 2011, respectively.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

On April 8, 2011, along with the founding investors of Tarsa, we entered into an agreement to purchase $1,518,000 in convertible promissory notes and warrants from Tarsa to help fund Tarsa’s business operations. After recording this investment in Tarsa, we recognized our proportionate share of Tarsa’s accumulated losses which exceeded the book value of our investment and, as a result, reduced the book value of our investment in Tarsa to zero. In addition, pursuant to the agreement, Tarsa’s three founding investors could elect to purchase additional convertible promissory notes and warrants from Tarsa in one or more subsequent closings to occur between the April 2011 closing date and December 2011. If we did not purchase our pro rata portion of such additional securities in those subsequent closings, our outstanding principal and accrued interest under the notes previously purchased would mandatorily, automatically convert into shares of Tarsa common stock at the then current conversion price for the Series A Preferred Stock set forth in Tarsa’s certificate of incorporation, as amended from time to time. Therefore, on July 8, 2011, we entered into another Purchase Agreement and we invested an additional $1,301,000 in Tarsa convertible promissory notes and warrants. After recording this investment in Tarsa, we recognized our proportionate share of Tarsa’s accumulated losses and reduced our investment in Tarsa to zero.

In January 2012, we made an additional investment in Tarsa by purchasing convertible promissory notes in the principal amount of $651,000 and warrants to purchase up to an aggregate of 67,435 shares of Series A Preferred Stock. As a result of such investment, in the first quarter of 2012, we recognized a loss on the investment in the amount of $651,000 as the accumulated losses of Tarsa exceeded the carrying value of our investment.

In March 2012, Tarsa announced the closing of a Series B Preferred Stock financing. Prior to such closing, Unigene owned 9,215,000 shares of Tarsa's common stock, three convertible promissory notes in the aggregate principal amount of $3,469,714, and warrants to purchase Tarsa's Series A Preferred Stock. At the time of the closing of the Series B Preferred Stock financing, the convertible promissory notes, including all principal and accrued interest, were converted into 3,662,305 shares of Tarsa's Series A Preferred Stock. Unigene did not acquire any of Tarsa's Series B Preferred Stock in the financing. As a result, following the closing of Tarsa's Series B Preferred Stock financing, Unigene owned approximately 16% of the outstanding capital stock of Tarsa, on a fully-diluted basis. Unigene's ownership position in Tarsa is subject to potential future dilution, including dilution as a result of a potential second Series B closing. Unigene continues to account for its investment in Tarsa under the equity method as we maintain significant influence over Tarsa.

NOTE K – CHINA JOINT VENTURE

On June 7, 2011, we entered into an Equity Sale and Purchase Agreement with an effective date of June 4, 2011, (which agreement was restated and replaced in July 2011 without altering the substantive terms of the June agreement; as so restated, the “Equity Transfer Agreement”), under which we sold our equity interest in Unigene Biotechnology Co., Ltd. (the “China Joint Venture”), which represents forty-five percent (45%) of the registered capital and the profits and losses of the China Joint Venture. Thereunder, we sold the equity interest to China Charmaine Pharmaceutical Company Limited (the “Purchaser”), an affiliate of China Pharmaceutical Group Limited (“CPG”) for an aggregate purchase price of up to $1,050,000, payable in two installments in the amounts and at the times described below.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

In consideration for the sale and transfer of the equity interest: (i) upon the receipt of certain governmental approvals and satisfaction of certain other customary conditions, the Purchaser shall pay the first installment of $600,000 to us; and (ii) the Purchaser shall pay the remaining $450,000 (the “Final Payment”) on the date the option (as defined) is exercised, provided that if the option is not exercised on or before the Final Payment Date and the Shares are not otherwise disposed of by the holder, we will forego the Final Payment.

Furthermore, as of June 4, 2011, we had no further obligations under the Joint Venture Contract or the Articles of Association, both dated as of June 15, 2000 between us and CPG’s predecessor.

As of June 7, 2011, our investment in the China Joint Venture was $2,873,070 and we had recorded a liability to the China Joint Venture in the amount of $1,200,000 for a net investment of $1,673,070. In June 2011, due to the expected first payment of $600,000, we recognized a loss of $1,073,070 on the termination and sale of the China Joint Venture. We will recognize a gain if we receive the $450,000 contingent final payment, which we believe is very unlikely.

During the first half of 2012, the Company made repeated unsuccessful attempts to collect the balance owed under the first installment of $600,000 pursuant to the Equity Transfer Agreement. To date, the Purchaser has failed to provide an adequate explanation as to why the closing referred to in the Equity Transfer Agreement has not occurred in a timely manner and why the first installment has not been paid. While the Company intends to vigorously pursue collection of this outstanding receivable, the Company can no longer be reasonably certain that the payment will be received and has opted to record an allowance equivalent to the full amount of the receivable. The charge is reflected as a Loss from Investment in the former China Joint Venture in the accompanying Statements of Operations for the nine months ended September 30, 2012.

In 2008, we initiated the transfer of technology and know-how to the China Joint Venture. This technology and know-how contribution gave rise to a basis difference between our investment in the China Joint Venture and our 45% equity interest in the underlying assets of the China Joint Venture. This basis difference was being recognized over 17 years, the estimated life of the transferred assets. In 2011, we revised our accounting prospectively to account for the calculation of the basis difference between our investment in the China Joint Venture and our 45% equity interest in the underlying net assets of the China Joint Venture. We had originally calculated the amortization of the difference based upon the $4,500,000 of intellectual property (licensed patent rights, know-how, etc.) that had been and was agreed to be contributed to the China Joint Venture. However, as of January 1, 2011, we calculated the amortization of the difference based upon the $2,100,000 of intellectual property that had been contributed to that date and recorded on the financial statements of the China Joint Venture. The cumulative adjustment in the first quarter of 2011 totaled $317,643. We also recognized a revised basis difference of $30,882. Therefore, the net basis difference recognized in the first quarter of 2011 was an expense of $286,761. These expenses are included in our statements of operations under “Loss from investment in former China Joint Venture.” Our share of the former China Joint Venture’s losses for the nine months ended September 30, 2012 and 2011 were zero and $16,000, respectively.

NOTE L – SALE/LEASEBACK

On May 24, 2011, we sold our real property located at 110 Little Falls Road, Fairfield, New Jersey, with the buildings and improvements thereon, and any furniture, machinery, equipment and other personal property (other than property used in the conduct of our laboratory business) that we owned and used to operate, repair and maintain the property (the “Property”), to RCP Birch Road, L.L.C. (“RCP”). This sale was affected pursuant to an Agreement for Sale of Real Estate, dated as of January 31, 2011, by and between us and RCP. In connection with the transfer of title of the Property, on May 24, 2011, we received an aggregate purchase price of $1,200,000 from RCP. In connection with the transfer of title of the Property, pursuant to the Settlement Agreement, Victory Park and the Levy Parties, respectively, released their primary and secondary mortgages and related liens on the Property (see Notes G and H).

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

In connection with the sale of the Property, on the same date we executed a Lease for Real Property, pursuant to which we have leased the Property from RCP for an initial term of seven years, which may be extended for one renewal term of five years, for an annual base rent during the initial term ranging from $135,000 to $145,000, and up to approximately $156,000 in the renewal term.

After expenses of $80,000, we received net proceeds of $1,120,000. Our basis in the land, building and improvements was $303,000. Therefore, we will recognize a gain on this transaction in the amount of $817,000. This gain is being recognized ratably over seven years, the length of the lease term. For the nine months ended September 30, 2012 and 2011, we recognized a gain in the amount of $88,000 and $10,000, respectively, which is included in the statements of operations as a reduction in rent expense.

NOTE M - SITE-DIRECTED BONE GROWTH

In September 2011, we sold our non-core asset, the Site Directed Bone Growth program, by assigning seven patent applications to Kieran Murphy, LLC. In addition, we terminated an Exclusive License Agreement and Consulting Agreement with Kieran Murphy, LLC, as well as a License Option Agreement and Research Agreement with Yale University. In exchange for the assignment of the patents and patent applications, we will receive sales royalties in excess of seven percent (7%) and will receive forty percent (40%) of any future licensing revenue and/or forty percent (40%) of all considerations received upon the subsequent sale of the patent portfolio by Kieran Murphy, LLC.

NOTE N - NORDIC BIOSCIENCE

In October 2011, we and Nordic Bioscience announced our decision to establish a Joint Development Vehicle (“JDV”) to progress up to three of our internally developed, proprietary calcitonin analogs through Phase 2 proof-of-concept in humans for the treatment of Type 2 diabetes, osteoarthritis and osteoporosis. In exchange for a 50% ownership interest in the JDV, Unigene and Nordic were to contribute $100,000 and $1,000,000, respectively, towards the incorporation of the JDV as a Swiss GmbH. Pursuant to a First Amendment to the Joint Development Agreement dated August 15, 2012, the initial contributions to be made by Unigene and Nordic were $50,000 and $950,000, respectively. The initial contributions were funded on August 15, 2012.

In addition to the option for an exclusive, royalty free license grant, it is anticipated that we will supply to the JDV, without charge, the analogs selected for development by the JDV for preclinical studies and, thereafter, manufacture sufficient quantities of the selected lead analog for clinical trials. In exchange for a 50% ownership of the JDV, Nordic is responsible for conducting and fully funding all preclinical, toxicology and clinical development through Phase 2 proof-of-concept for the Type 2 diabetes indication. In August 2012, we announced, under the JDV, the preliminary selection of the lead compound for the Type 2 diabetes indication (UGP302) and executed certain agreements ancillary to the Joint Development Agreement dated October 2011.

The Company and Nordic Bioscience each maintain 50% of the JDV voting rights and all decisions must be pursuant to a unanimous vote and neither party has the ability to overrule the other party in the event of a disagreement. The Company has determined that JDV is a variable interest entity as the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties.. The Company will not consolidate the financial statements of the JDV since the Company is not the primary beneficiary of the entity as a result of the Company not having the ability to direct the activities of the JDV. As such, the Company will account for its investment in the JDV under the equity method, whereby the initial carrying value of the investment represents the $50,000 cash contribution. We will adjust the carrying value of the JDV investment based on our 50% share of the earnings or losses of the JDV as well as for the book value of analogs contributed to the JDV. As of September 30, 2012, the carrying value of the JDV investment was $56,000, which consisted of the initial cash contribution of $50,000 and analogs contributed to the JDV with a carrying value of $6,000. The JDV investment is classified within other assets in the accompanying balance sheet.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

NOTE O – STOCK-BASED COMPENSATION

Compensation expense is calculated using a Black-Scholes option pricing model and is recorded over the vesting period of each award.

Based upon options issued to consultants, we recognized a compensation benefit of $500 in the nine months ended September 30, 2012, which was recorded in the first quarter of 2012. We recognized a compensation benefit of $4,000 in the three months ended September 30, 2011 and we recognized compensation expense of $1,000 in the nine months ended September 30, 2011 pursuant to options issued to consultants. These amounts are included in research and development expenses.

For the three months ended September 30, 2012, we recognized share-based compensation cost for employees and directors of $265,000, which consisted of $193,000 in general and administrative expenses and $72,000 in research and development expenses. For the three months ended September 30, 2011, we recognized share-based compensation cost for employees and directors of $260,000, which consisted of $242,000 in general and administrative expenses, and $18,000 in research and development expenses. For the nine months ended September 30, 2012, we recognized share-based compensation cost for employees and directors of $919,000 which consisted of $706,000 in general and administrative expenses, and $213,000 in research and development expenses. For the nine months ended September 30, 2011, we recognized share-based compensation cost for employees and directors of $758,000, which consisted of $698,000 in general and administrative expenses, and $60,000 in research and development expenses. The share-based compensation expense within general and administrative expenses for the three and nine months ended September 30, 2012 includes charges of $9,000 and $56,000, respectively, related to the modification of stock option awards granted to former employees. We did not capitalize any share-based compensation cost.

As of September 30, 2012, there was approximately $1,424,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the stock option plan. That cost is expected to be recognized over a weighted-average period of approximately 0.7 years.

For the three and nine months ended September 30, 2012 and 2011, we estimated the fair value of each option award on the date of grant using the Black-Scholes model. We utilized the risk-free interest rate for periods equal to the expected term of the option based upon U.S. Treasury securities in effect at the time of the grant. We have no present intention of declaring any dividends. We based expected volatility on historical volatility. We estimated the expected term of stock options using historical exercise experience.

The following table shows the weighted average assumptions we used to develop the fair value estimates:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Expected volatility		69.9	%		59.5	%		68.1	%		59.6	%
Expected dividends		--			--			--			--
Expected term (in years)		7.0			6.0			7.0			6.0
Risk-free rate		1.0	%		1.1	%		1.1	%		1.8	%
Forfeiture rate - employees		25	%		20	%		25	%		20	%
Forfeiture rate – officers and directors		0	%		0	%		0	%		0	%

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

A summary of option activity as of September 30, 2012 and changes during the nine months then ended is presented below:

Options	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2012		8,027,950	$	1.09
Granted		13,944,248	$	0.22
Exercised		(42,000)	$	0.31
Forfeited or Expired		(1,239,154)	$	1.19
Outstanding at September 30, 2012		20,691,044	$	0.50		8.0	$	418,000
Exercisable at September 30, 2012		5,949,031	$	1.09		4.3	$	--

The weighted-average grant-date fair value of options granted during the three months ended September 30, 2012 and 2011 was $0.06 and $0.55, respectively. The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2012 and 2011 was $0.11 and $0.40, respectively. The total intrinsic value, which represents the difference between the underlying stock’s market price and the option’s exercise price, of options exercised during the three months ended September 30, 2012 and 2011 was zero and $198,000, respectively, and the total intrinsic value of options exercised during the nine months ended September 30, 2012 and 2011 was $12,000 and $279,000, respectively.

Cash received from option exercises under all share-based payment arrangements for both the three and nine months ended September 30, 2012 was $13,000 and was $131,000 and $185,000 for the three and nine months ended September 30, 2011, respectively. No tax benefit was realized from option exercises.

Warrants

At September 30, 2012, there were warrants outstanding to purchase an aggregate of 60,000 shares of common stock at exercise prices ranging from $2.00 to $2.20 per share, with expiration dates ranging from 2012 to 2015.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

Restricted Stock Awards

During 2012 and 2011, we granted restricted stock awards to directors, which generally vest six months to one year from their grant date. We recognized $2,000 and $12,000 of compensation expense during the three months ended September 30, 2012 and 2011, respectively and $20,000 and $31,000 of compensation expense during the nine months ended September 30, 2012 and 2011, respectively, related to restricted stock awards. Stock compensation expense is recognized over the vesting period of the restricted stock. At September 30, 2012 we had $5,000 of total unrecognized compensation cost related to non-vested restricted stock.

	Shares			Weighted Average Grant Date Fair Value
Non-vested balance at January 1, 2012		40,000		$	1.24
Changes during the period:
Shares granted		40,000			0.43
Shares vested		(60,000	)		0.97
Shares forfeited		--			--
Non-vested balance as of September 30, 2012		20,000		$	0.43

NOTE P – NET LOSS PER SHARE

We compute and present both basic and diluted earnings per share (“EPS”) on the face of the statements of operations. Basic EPS is computed using the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock at the beginning of the period (or as of the date of issuance if issued in the current year) being reported on, and the effect was dilutive.

The following potentially dilutive securities were excluded from the calculation of diluted net loss per share, as the effect would have been anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Victory Park convertible debt upon conversion to common stock (1)		396,543,198		54,313,000		396,543,198		39,391,000
Options to purchase common stock		10,526,002		8,845,000		9,901,923		9,229,000
Warrants to purchase common stock		60,000		60,000		60,000		60,000
Unvested restricted stock		20,000		40,000		32,117		40,000
Total		407,149,200		63,258,000		406,537,238		48,720,000

(1) Assumes conversion of principal plus accrued interest as of September 30.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

Reconciliation between the number of issued shares shown on the balance sheet and the number of shares used to determine EPS at September 30, 2012 and 2011:

	September 30, 2012		September 30, 2011
Issued shares per balance sheet		95,586,644		93,023,870
Unvested restricted stock		(20,000)		(40,000	)
Treasury Stock		--		--
Shares used in determining EPS		95,566,644		92,983,870

NOTE Q – PATENTS AND OTHER INTANGIBLES

Details of intangible assets are summarized as follows:

	September 30, 2012							December 31, 2011
	March 31, 2013							December 31, 2012
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Patents	$	1,~~707~~335,~~425~~130	$	~~(466~~383,~~239~~236	)	$	1951,~~241,186~~894	$	1,~~179~~625,~~883~~292	$	~~(377~~458,~~073~~831	)	$	~~802~~1,~~810~~166,461
Deferred Patents		~~754~~670,~~317~~076		--			~~754~~670,~~317~~076		1754,~~217,648~~113		--			1754,~~217,648~~113
Trademarks		--		--			--		144,226		(144,226	)		--
	$	2,005,206	$	383,236		$	1,621,970	$	2,379,405	$	458,831		$	1,920,574
	$	2,461,742	$	(466,239	)	$	1,995,503	$	2,541,757	$	(521,299	)	$	2,020,458

~~Trademarks~~As ~~and~~of ~~patents~~March ~~are~~31, ~~intangible~~2013, the Company concluded that certain of its assets, ~~with~~primarily ~~definite~~related ~~useful~~to ~~lives~~its ~~and~~Fortical ~~therefore~~business, ~~continue~~are impaired as a result of recent events negatively impacting operations, including regulatory recommendations by an advisory committee to bethe ~~amortized~~FDA inand ~~accordance~~the ~~with~~related ~~accounting~~impact ~~guidance~~on Fortical manufacturing revenues and royalties (see Note 5). As ~~Amortization~~a ~~expense~~result, ~~amounted~~during tothe ~~$89~~first quarter of 2013,~~000~~ ~~and~~the Company wrote-off impaired patent applications in the aggregate amount of $71309,000, ~~for~~which are reflected within the ~~nine~~line ~~months~~item ~~ended~~impairment ~~September~~charges ~~30,~~in ~~2012~~the ~~and~~accompanying ~~2011,~~consolidated ~~respectively~~statement of operations. During ~~The~~the ~~trademarks~~first ~~are~~quarter ~~fully~~of ~~amortized.~~2012, ~~The~~the ~~weighted~~Company wrote-~~average~~off ~~remaining~~impaired ~~amortization~~patent ~~period~~and ~~for~~trademark ~~patents~~applications atin ~~September~~the 30aggregate amount of $55,000 ~~2012~~as ~~was~~well ~~approximately~~as 10fully ~~years.~~amortized ~~Future~~expired ~~amortization~~trademarks ~~expense~~in onthe ~~our~~aggregate ~~amortizable~~amount ~~intangible~~of ~~assets~~$144,000, ~~over~~which ~~the~~are ~~next~~reflected ~~five~~within ~~years~~general isand ~~estimated~~administrative asexpenses ~~follows:~~in the accompanying statements of operations.

2012	$	30,000
2013		132,000
2014		132,000
2015		131,000
2016		129,000
	$	554,000

Patents are intangible assets with definite useful lives and therefore continue to be amortized. Amortization expense amounted to $34,000 and $27,000 for the three months ended March 31, 2013 and March 31, 2012, respectively. The weighted-average remaining amortization period for patents at March 31, 2013 was approximately 11 years. Future amortization expense on intangible assets over the next five years is estimated as follows:

During the nine months ended September 30, 2012, we wrote-off impaired patent applications in the aggregate amount of $55,000. This charge is included in general and administrative expenses in our statements of operations. We also wrote-off fully amortized expired trademarks in the aggregate amount of $144,000. During the nine months ended September 30, 2011, we wrote-off fully amortized expired patents in the aggregate amount of $270,000.

2013	$	105,000
2014		123,000
2015		97,000
2016		80,000
2017		49,000
	$	454,000

~~NOTE~~16. RLegal ~~- LEGAL PROCEEDINGS~~Proceedings

OnFortical, ~~September~~the 8,Company’s ~~2011,~~nasal calcitonin product for the ~~United~~treatment ~~States~~of ~~Patent~~postmenopausal ~~and~~osteoporosis ~~Trademark~~is ~~Office~~covered ~~(“USPTO”)~~by ~~granted~~U.S. aPatent ~~request~~No. ~~for~~6,440,392, ~~inter~~which ~~partes~~was ~~reexamination~~reissued ofon ~~the~~June ~~Fortical~~30, ~~Patent~~2009 ~~filed~~as byU.S. ~~Apotex,~~Patent ~~Inc~~No. RE 40,812 (the “~~Apotex~~Fortical Patent”). onIn ~~July~~June 152006, ~~2011.~~the InCompany ~~granting~~received ~~the~~a ~~Request~~Paragraph ~~for~~IV ~~Reexamination,~~certification ~~the~~letter ~~USPTO~~from ~~gave~~Apotex ~~Unigene~~Inc., a ~~two~~Canadian ~~month~~generic ~~time~~pharmaceutical ~~period~~manufacturer, toalleging ~~respond~~that tothis ~~the~~patent ~~substantial~~is ~~new~~invalid ~~questions~~and oftherefore ~~patentability~~not ~~raised~~infringed inby ~~the~~Apotex’s ~~Reexamination~~nasal ~~Office~~calcitonin ~~Action~~product, ~~dated~~which ~~September~~is 8,the ~~2011.~~subject ~~Unigene~~of ~~filed~~an ~~its~~Apotex ~~response~~pending toANDA. ~~the~~On ~~Reexamination~~July ~~Office~~24, ~~Action~~2006, onthe ~~November~~Company 8,and ~~2011.~~USL ~~Apotex~~jointly filed ~~Third~~a ~~Party~~lawsuit ~~Comments~~against onApotex ~~December~~Inc. 7and Apotex Corp., ~~2011~~its ~~and~~U.S. ~~January~~subsidiary 9(together, ~~2012~~“Apotex”), in the U.S. ~~Because~~District Court for the ~~Supreme~~Southern ~~Court~~District ~~denied~~of ~~Apotex’s~~New ~~petition~~York for ~~certiorari,~~infringement onof ~~April~~the 5,Fortical ~~2012,~~Patent. ~~Unigene~~Due ~~moved~~ to ~~Suspend~~the ~~Reexamination~~filing of ~~Claim~~the 19above-mentioned bylawsuit, ~~filing~~the aHatch-Waxman ~~Petition~~Act ~~with~~provided ~~the~~for ~~USPTO.~~an Onautomatic ~~April~~stay ~~19,~~of ~~2012,~~FDA approval for Apotex’s ~~filed~~ANDA aof ~~Response~~up to ~~Unigene’s~~30 ~~Petition~~months. ~~with~~In ~~the~~December ~~USPTO,~~2008 ~~asking~~this stay ended and the ~~USPTO~~parties agreed to ~~deny~~a ~~Unigene’s~~preliminary ~~Petition.~~injunction ~~Unigene~~entered isby ~~waiting~~the toCourt ~~hear~~which enjoined Apotex from engaging in the ~~USPTO~~commercial manufacture, ~~which~~use, ~~may~~marketing, ~~take~~distribution, ~~over~~selling, ~~one~~transportation ~~year~~or importation of any Fortical generic equivalent product in the United States. The ~~Reexamination~~preliminary ~~reopens~~injunction ~~the~~was ~~USPTO~~to ~~prosecution~~remain ofin ~~all~~effect ~~claims~~until ~~13,~~the ~~14,~~court ~~16,~~rendered ~~17,~~a 19final decision on the validity and ~~24-29~~infringement of ~~the~~Unigene’s ~~Fortical~~U.S. Patent. ~~Based~~In onobtaining ~~USPTO~~the ~~statistics~~preliminary injunction, ~~reexamination~~Unigene ~~proceedings~~and ~~take~~USL anwere ~~average~~required ofto ~~about~~post 36a ~~months~~bond. toIn ~~complete~~August 2009, the U.S. ~~Potential~~District ~~outcomes~~Court, ~~for~~Southern ~~reexamination~~District ~~include~~of New York, confirmed the validity of Unigene’s patent ~~emerges~~and ~~with~~issued ~~the~~an ~~patent~~order ~~claims~~permanently ~~remaining~~enjoining ~~unchanged,~~Apotex ~~patent~~from ~~claims~~engaging ~~being~~in ~~amended,~~any oractivity ~~all~~that infringes the patent. Apotex ~~claims~~appealed ~~being~~this ~~canceled~~decision. ~~There~~In isOctober 2009, the ~~usual~~District ~~USPTO~~Court ~~prosecution~~vacated ~~risk~~its ~~that~~order wesubject ~~will~~to ~~not~~reinstatement beand ~~successful~~asked the parties to identify any claims that remain in the ~~reexamination~~case. ~~and~~As ~~potentially~~a ~~subsequent~~result, ~~USPTO~~Apotex’s orappeal ~~litigation~~was ~~proceedings~~deactivated. In July 2010, the ~~event~~District Court ruled that weno doclaims ~~not~~remain ~~prevail,~~at ~~then~~issue ~~Apotex~~and ~~could~~it bereinstated inits aopinion ~~position~~and toorder ~~market~~of August 2009 in its ~~nasal~~entirety. Apotex ~~calcitonin~~appealed ~~product~~this ifdecision ~~and~~to ~~when~~the ~~its~~United ~~pending~~States ~~ANDA~~Court ~~receives~~of ~~FDA~~Appeals ~~approval.~~for ~~This~~the ~~could~~Federal ~~have~~Circuit and a ~~material~~hearing ~~adverse~~was ~~impact~~held on ~~our~~March ~~results~~7, ~~and financial position~~2011. On August 1425, ~~2012~~2011, the ~~USPTO~~United States Court of Appeals for the Federal Circuit issued ~~RE43,580~~a ~~patent to~~decision ~~Unigene entitled~~affirming ~~“Nasal~~the ~~Calcitonin~~District ~~Formulations” that~~Court’s ~~covers~~ruling ~~Fortical. On~~confirming ~~December~~the 7,validity ~~2012~~ of Unigene's Fortical Patent. Apotex filed a petition tofor ~~terminate~~certiorari for review of the ~~inter~~Appeals ~~partes~~Court ~~reexamination~~decision ~~with~~by ~~respect~~the toU.S. ~~claim~~Supreme 19Court on January 13, 2012, which was ~~granted~~ ~~and~~assigned ~~therefore~~Supreme ~~the~~Court ~~inter~~Docket ~~partes~~Number ~~reexamination~~11-879. Unigene ~~with~~filed ~~regard~~an toopposition ~~claim~~brief 19on ~~will~~February ~~not~~17, be2012, ~~further~~and ~~maintained~~on byFebruary ~~the~~28, ~~USPTO~~2012, Apotex filed a reply brief. ~~Claim~~On March 19, ~~covers~~2012, the ~~Fortical Patent~~U.S. ~~The~~Supreme ~~inter~~Court ~~parties~~denied ~~reexamination~~Apotex’s ~~remains~~petition ~~open~~for certiorari, meaning that all of Apotex’s appeals in this case were exhausted, and the ruling in the civil litigation in favor of Unigene is “final”. The bond required for ~~claims~~the 13preliminary injunction was released, 14and in January 2013, 16the U.S. District Court, 17Southern District of New York, allowed the notice of taxation of costs to proceed and ~~24-29~~in February, 2013 approved the taxation of costs resulting in the ~~Fortical~~receipt ~~Patent~~of $54,000 by the Company.

2719

~~Unigene~~On ~~Laboratories~~September 8, 2011, after the Federal Circuit affirmance, the United States Patent and Trademark Office (“USPTO”) granted a request for inter partes reexamination of the Fortical Patent filed by Apotex, Inc. ~~Form~~on ~~10-Q~~July –15, ~~Period~~2011. ~~Ended~~In granting the Request for Reexamination, the USPTO gave Unigene a two month time period to respond to the substantial new questions of patentability raised in the Reexamination Office Action dated September 308, 2011. Unigene filed its response to the Reexamination Office Action on November 8, 2011. Apotex filed Third Party Comments on December 7, 2011 and January 9, 2012. Because claim 19 of the Fortical Patent had been upheld as valid by the Court of Appeals for the Federal Circuit, Unigene moved to Suspend Reexamination of Claim 19 by filing a Petition with the USPTO. On April 19, 2012, Apotex filed a Response to Unigene’s Petition with the USPTO, asking the USPTO to deny Unigene’s Petition. On December 7, 2012, Unigene's petition to terminate the inter partes reexamination with respect to claim 19 was granted and therefore the inter partes reexamination with regard to claim 19 will not be further maintained by the USPTO. Claim 19 covers the Fortical product. The inter parties reexamination remains open for claims 13, 14, 16, 17 and 24-29 of the Fortical Patent. On January 16, 2013, the USPTO issued an Action Closing Prosecution (“ACP”) indicating that claims 13, 14, 16, 17 and 24-29 remain rejected, and on April 3, 2013, the USPTO issued a Right of Appeal Notice (“RAN”). To appeal the claim rejections, Unigene must file a Notice of Appeal with the USPTO by May 3, 2013. Unigene will then have two months to prepare and file an Appeal Brief with the USPTO. There is the usual USPTO prosecution risk that the Company will not be successful in the reexamination and potentially subsequent USPTO or litigation proceedings.

~~Apotex~~On ~~may~~December ~~now~~20, ~~file~~2012, Apotex filed a request for an ex parte reexamination of ~~claim~~claims 13, 14, 16, 17, 19 and 24-29 of the Fortical Patent. IfOn ~~Apotex~~March ~~files~~4, ~~such~~2013, athe ~~request~~USPTO issued an Office Communication indicating that claims 13-14, it16-17 ~~would~~and ~~remain~~24-29, ~~enjoined~~will bynot be reexamined in the ~~District~~ex ~~Court’s~~parte ~~injunction~~reexamination ~~unless~~proceeding; ~~and~~only ~~until~~claim ~~they~~19 ~~were~~will ~~relieved~~be ofsubject to ex parte reexamination. Unigene has the ~~injunction~~option to file a Patent Owner Statement by ~~the~~May ~~District~~4, ~~Court~~2013. Then ~~after~~Unigene will wait to hear from the USPTO. Only ~~finally~~Unigene ~~rejects~~can ~~claim~~participate 19in the ex parte reexamination proceedings, Apotex will not be allowed to participate in the ex parte reexamination proceedings. Based on USPTO statistics, reexamination proceedings take an average of about 36 months to complete. Potential outcomes for reexamination include the patent emerges with the patent claims remaining unchanged, patent claims being amended, or all patent claims being canceled. There is the usual USPTO prosecution risk that the Company will not be successful in the reexamination and potentially subsequent USPTO or litigation proceedings. In the ~~Federal~~event ~~Circuit~~that ~~affirms~~the Company does not prevail, then Apotex could be in a position to market its nasal calcitonin product if and when its pending ANDA receives FDA approval and if the U.S. District Court, Southern District of New York, relieves Apotex of the injunction. This could have a material adverse impact on the Company’s results of operations and financial position. On August 14, 2012, the USPTO issued RE43,580 patent to Unigene entitled “Nasal Calcitonin Formulations” that covers the Fortical product.

On May 18, 2012, the Company’s former patent counsel, Ostrolenk Faber LLP, filed suit against it in the United States District Court for the Southern District of New York for unpaid legal fees and disbursements in an amount not less than $401,748 plus interest of $35,245 and legal fees17. ~~The~~ ~~Company~~Fair ~~answered~~Value the lawsuit and filed counterclaims that assert amongst other things claims for legal malpractice and a breach of fiduciary duty. The Company contends that Ostrolenk Faber LLP’s actions and/or inactions caused the loss of the Company’s intellectual property in Brazil. On December 21, 2012, the parties agreed to settle all claims and counterclaims in the action. The terms of the settlement include an upfront payment by the Company to Ostrolenk in the amount of $40,000, which was paid on December 21, 2012, and 24 monthly installment payments of $5,500 on or before the 1st day of each month, commencing on February 1, 2013.Measurements

~~NOTE~~ U.S. –GAAP ~~FAIR~~defines ~~VALUE~~fair ~~MEASUREMENTS~~value as the price that would be received to sell an asset or paid to transfer a liability to a third party with the same credit standing (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In many cases, the exit price and the transaction (or entry) price will be the same at initial recognition. However, in certain cases, the transaction price may not represent fair value. Given the Company’s financial condition described in Note 1, it is not practicable to estimate the fair value of the subordinated Levy debt at March 31, 2013 and December 31, 2012. The Company believes that the carrying amounts of its cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term nature. Fair value is a market-based measurement determined based on a hypothetical transaction at the measurement date, considered from the perspective of a market participant, not based solely upon the perspective of the reporting entity. When quoted prices are not used to determine fair value, consideration is given to three broad valuation techniques: (i) the market approach, (ii) the income approach, and (iii) the cost approach. Entities are required to determine the most appropriate valuation technique to use, given what is being measured and the availability of sufficient inputs. Inputs to fair valuation techniques are prioritized, allowing for the use of unobservable inputs to the extent that observable inputs are not available. The applicable guidance establishes a three-level hierarchy, based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An asset or liability’s classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. The input levels are defined as follows:

U.S. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability to a third party with the same credit standing (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In many cases, the exit price and the transaction (or entry) price will be the same at initial recognition. However, in certain cases, the transaction price may not represent fair value. Given our financial condition described in Note A, it is not practicable to estimate the fair value of our subordinated debt (payable to the Levys) at September 30, 2012 and December 31, 2011. We believe that the carrying amounts of cash and cash equivalents, our accounts receivable and accounts payable approximate fair value due to their short-term nature. We believe that our capital lease obligation accrues interest at a rate which approximates prevailing market rates for instruments with similar characteristics and, therefore, approximates fair value.

Fair value is a market-based measurement determined based on a hypothetical transaction at the measurement date, considered from the perspective of a market participant, not based solely upon the perspective of the reporting entity. When quoted prices are not used to determine fair value, consideration is given to three broad valuation techniques: (i) the market approach, (ii) the income approach, and (iii) the cost approach. Entities are required to determine the most appropriate valuation technique to use, given what is being measured and the availability of sufficient inputs. Inputs to fair valuation techniques are prioritized, allowing for the use of unobservable inputs to the extent that observable inputs are not available. The applicable guidance establishes a three-level hierarchy, based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An asset or liability’s classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. The input levels are defined as follows:

Level 1

Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2

Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1, quoted prices in markets that are not active, or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3

Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as those for which the determination of fair value requires significant management judgment or estimation.

28The Company has categorized its liabilities measured at fair value into the three-level fair value hierarchy, as defined above, based upon the priority of inputs to respective valuation techniques. The valuation methodology uses a combination of observable and unobservable inputs in calculating fair value.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

Liabilities measured at estimated fair value on a recurring basis and their corresponding fair value hierarchy is summarized as follows:

Embedded conversion feature	Significant Unobservable Inputs (Level 3) Total Fair Value
September 30, 2012	$	19,460,000
March 31, 2013	$	16,850,000
December 31, 2011	$	12,470,000
December 31, 2012	$	28,700,000

The Company has categorized its liabilities measured at fair value into the three-level fair value hierarchy, as defined above, based upon the priority of inputs to respective valuation techniques. Liabilities included within ~~level~~Level 3 of the fair value hierarchy ~~presented in the preceding table~~ consist of an embedded conversion feature which requires ~~adjustments to~~ fair value on a recurring basis. The valuation methodology uses a combination of observable and unobservable inputs in calculating fair value. The fair value of the conversion feature was determined based on a probability-weighted scenario analysis that includes a Monte Carlo pricing model and incorporates the likelihood of an event that might trigger the reset provision. Significant observable inputs include the market price of ~~our~~the Company’s common stock, volatility, remaining term, risk-free interest rate, credit spread and dividend yield (zero in all periods). Significant unobservable inputs include the probability of triggering a reset feature on the embedded derivative which would result in a reduction in the conversion price. The ~~fair~~following ~~value~~is a summary of the ~~embedded~~significant ~~conversion~~assumptions ~~feature~~ as of ~~September~~March 3031, ~~2012~~2013 ~~assumes~~and ~~that~~December ~~the~~31, ~~reset feature is not triggered during the term of the instrument. The following is a summary of the significant assumptions~~2012:

	September 30, 2012			December 31, 2011
	March 31, 2013			December 31, 2012
Expected volatility		~~140.0~~129	%		~~83.5~~119	%
Probability of trigger of reset provision		--75	%		2050	%
Remaining term (in years)		1.0.5			10.27
Risk-free rate		0.21	%		0.21	%
Credit spread		~~25.8~~24	%		~~28.3~~26	%
Stock price	$	0.1008		$	0.5314

If the assumptions ~~related to the probability of the reset feature being triggered~~ were modified, it could result in a material change to the carrying value of the embedded conversion feature. An increase in the probability of the reset ~~feature~~ being triggered of 10% would result in an increase to the fair value of the embedded conversion feature of $1,~~500~~090,000 and $~~540~~710,000 as of ~~September~~March 3031, ~~2012~~2013 and December 31, ~~2011~~2012, respectively.

~~The changes in level 3 liabilities measured at fair value on a recurring basis during the nine months ended September 30, 2012 and 2011 are summarized as follows:~~21

	Balance Beginning of Period		Issuance		(Gain) or Loss Recognized in Earnings from Change in Fair Value		Balance End of Period
For the nine months ended September 30, 2012
Embedded conversion feature	$	12,470,000	$	5,120,000	$	1,870,000	$	19,460,000
For the nine months ended September 30, 2011
Embedded conversion feature	$	22,860,000	$	--	$	12,120,000	$	34,980,000

The changes in Level 3 liabilities measured at fair value on a recurring basis during the three months ended March 31, 2013 and 2012 are summarized as follows:

For the periods ended September 30, 2012 and 2011, $1,870,000 and $12,120,000, respectively, is reflected as a loss on change in fair value of the embedded conversion feature in the accompanying statements of operations. At September 30, 2012 and December 31, 2011, there was a liability in the accompanying balance sheets representing the fair value of the embedded conversion feature in the amount of $19,460,000 and $12,470,000, respectively.

	Balance Beginning of Period		Issuance		Loss or (Gain) Recognized in Earning from Change in Fair Value			Balance End of Period
For the three months ended March 31, 2013
Embedded conversion feature	$	28,700,000	$	--	$	(11,850,000	)	$	16,850,000

For the three months ended March 31, 2012
Embedded conversion feature	$	12,470,000	$	--	$	(2,920,000	)	$	9,550,000

29For the periods ended March 31, 2013 and 2012, $11,850,000 and $2,920,000 is reflected as a gain on change in fair value of the embedded conversion feature in the accompanying statements of operations. At March 31, 2013 and December 31, 2012, there was a liability in the accompanying balance sheets representing the fair value of the embedded conversion feature in the amount of $16,850,000 and $28,700,000, respectively.

~~Unigene Laboratories, Inc~~18. ~~Form~~Subsequent ~~10-Q – Period Ended September 30, 2012~~Events

Second Amendment to Amended and Restated Financing Agreement

On April 8, 2013 (the “Second Amendment Effective Date”), the Company entered into a Second Amendment to Amended and Restated Financing Agreement with the VPC Parties (together with all exhibits and schedules thereto, and as amended from time to time, the “Second Amendment”). The Second Amendment evidenced the amendment of certain provisions of the Amended and Restated Financing Agreement dated as of March 16, 2010, as amended by the Forbearance Agreement and First Amendment to Amended and Restated Financing Agreement, dated as of September 21, 2012 and the other agreements contemplated by the Second Amendment (collectively, the “2013 Loan”).

Under the terms of the Second Amendment: (i) the Company has (A) issued to the Lenders upon the terms and conditions stated in the Second Amendment a 60-day senior secured convertible note in the aggregate principal amount of $750,000 (the “Second Amendment Note”); (ii) the Company agreed to deposit $50,000 with the Agent on the Second Amendment Effective Date to reimburse the Agent and the Lenders for certain fees, costs and expenses incurred by (or to be incurred by) the VPC Parties in connection with the Second Amendment and thereafter. In accordance with the terms of the Second Amendment, the Company received a net amount of $700,000 from the Lenders in exchange for the issuance of the Second Amendment Note. The maturity date of the Second Amendment Note is June 7, 2013. The Second Amendment Note will accrue interest at a rate per annum equal to the greater of (x) the prime rate (announced by Citibank N.A. from time to time) plus 5% and (y) 15%, which, in the absence of an event of default, accrued and unpaid interest due and payable with respect to the Second Amendment Note shall, instead of being required to be paid in cash, shall be capitalized and added to the outstanding principal balance of the Second Amendment Note payable on the maturity date; provided, however, in the event of a default such as currently exists (see Note 7), the Second Amendment Note will accrue interest at the default interest rate per annum equal to eighteen percent (18%).

Equity Transfer Agreement and Exclusive License Agreement

On May 7, 2013, the Company, Nordic Bioscience and, for limited purposes, the JDV entity, NU-Co Development GmBH (“NU-Co”) entered into an equity transfer agreement (the “Equity Transfer Agreement”), pursuant to which Nordic agreed to purchase the Company’s entire ownership interest in the JDV in exchange for a payment of $1,000,000 to Unigene, payable upon the execution of the Equity Transfer Agreement. The Equity Transfer Agreement also provides for the termination of the Joint Development Agreement (see Note 12), and provides for mutual releases by the Company and Nordic of certain claims relating to the Joint Development Agreement.

Also on May 7, 2013, Unigene and NU-Co entered into a licensing agreement (the “Exclusive License Agreement”), pursuant to which the Company granted NU-Co an exclusive, royalty-bearing license to develop and commercialize products incorporating any of the three licensed analogs for the treatment of Type 2 diabetes, osteoarthritis and osteoporosis in humans. The exclusive license granted to NU-Co may be expanded, at NU-Co’s election, to include products for the treatment of obesity/satiety in humans, if the Company discontinues clinical development of its UGP 281 candidate for such indications. NU-Co is required to use commercially reasonable efforts to develop a licensed analog as required to obtain regulatory approvals in the United States and the European Union for one or more licensed products, and to market and promote licensed products throughout those countries in which regulatory approvals are obtained. The Exclusive License Agreement provides for the payment of royalties to the Company of 10% of net sales of licensed products that incorporate Unigene-developed oral formulation technology and 7.5% of net sales of licensed products that do not incorporate such technology, and also provides for the payment to the Company of 25% of amounts received for any sublicenses granted by NU-Co under the Exclusive License Agreement. During the term of the Exclusive License Agreement and for one (1) year thereafter, the Company shall not pursue development of (or license, sell or transfer to any third party) any calcitonin peptide analogs for use in the indications licensed to NU-Co, other than naturally-occurring calcitonin peptides and other than the Company’s existing development project with Tarsa. The Exclusive License Agreement provides for the termination of license and supply agreements that were entered into between the Company and NU-Co on August 15, 2012. The Exclusive License Agreement contains other customary representations, warranties, covenants and indemnities by each of the parties.

Pursuant to the terms of the Forbearance Agreement with Victory Park, the proceeds received under the Equity Transfer Agreement on May 13, 2013 were required to be remitted to Victory Park to be applied to the outstanding Notes. Pursuant to a letter agreement with Victory Park dated May 10, 2013, Victory Park has agreed to re-loan to the Company $500,000 of the proceeds from the Equity Transfer Agreement.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Annual Report on Form 10-K, ~~as amended,~~ for the year ended December 31, ~~2011~~2012, including the financial statements and notes contained therein.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Various statements in the items captioned “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” or variations of such words and similar expressions, are intended to identify such forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or activities of our business, or industry results, to be materially different from any future results, performance or activities expressed or implied by the forward-looking statements. These factors include: general economic and business conditions, our financial condition, product sales and royalties, competition, our dependence on other companies to commercialize, manufacture and sell products using our technologies, the uncertainty of results of animal and human testing, the risk of product liability and liability for human trials, our dependence on patents and other proprietary rights, dependence on key management officials, the availability and cost of capital, the availability of qualified personnel, changes in, or the failure to comply with, governmental regulations, the failure to obtain regulatory approvals for our products, litigation, and other factors discussed in this Form 10-Q. Unless required by law, we undertake no obligation to update publicly any forward- looking statements, whether as a result of new information, future events or otherwise. However, readers should carefully review the statements set forth in other reports or documents we file from time to time with the Securities and Exchange Commission, particularly the Annual Reports on Form 10-K, the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K.

RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

In November 2012, we announced that the audited financial statements for the quarters ended June 30, 2012 and March 31, 2012 and for the years ended December 31, 2011 and 2010 and other financial information included in our Annual Report on Form 10-K, as amended, for the years ended December 31, 2011 and 2010 and the unaudited financial statements included in our previously filed Quarterly Reports on Form 10-Q for each quarterly period in the years ended 2012, 2011 and 2010 should no longer be relied upon. The following management discussion and analysis of financial condition and results of operations gives effect to the restatement discussed in Note B of the notes to the financial statements herein.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

RESULTS OF OPERATIONS

Introduction

Unigene Laboratories, Inc., a biopharmaceutical company, was incorporated in the State of Delaware in 1980. Our single business segment ~~focuses~~has historically focused on the research, production and delivery of small proteins, referred to as peptides, for medical use. We have patented oral and nasal drug delivery technologies that have been shown to deliver medically useful amounts of various peptides into the bloodstream and patented manufacturing technologies for producing certain natural peptides cost-effectively. Collectively, we ~~brand~~branded our patented peptide drug delivery and manufacturing technologies as “Peptelligence™”. We have three operating locations: administrative and regulatory offices in Boonton, New Jersey; a laboratory research facility in Fairfield, New Jersey; and a pharmaceutical production facility in Boonton, New Jersey.

~~Strategy~~23

Our three-step strategic intent is focused on: increasing available cash for operations by prudent cash conservancy and incremental revenue generation; as resources permit, restructuring our debt and selectively investing in the advancement of existing core development programs; and maximizing shareholder value by exploiting the full potential of our Peptelligence™ technologies platform.

Strategic Business Units

WeIn ~~are pursuing this strategic intent and~~2011, ~~for marketing purposes only,~~ we ~~have~~ focused our resources into two strategic business units: Unigene Biotechnologies and Unigene Therapeutics.

Peptides are a rapidly growing therapeutic class with more than 150 programs currently in active development throughout the industry. To date, more than fifty peptide-based therapeutics have reached the market. Our goal is to see our Peptelligence™ platform, which represents a distinctive set of capabilities and assets, incorporated into as many peptide programs as possible as they advance through development towards commercialization.

Our Peptelligence™ encompasses extensive intellectual property covering oral drug delivery and manufacturing technologies, peptide research and development expertise, and proprietary know-how. Our core Peptelligence™ assets include proprietary oral and nasal peptide drug delivery technologies, and proprietary, high-yield, scalable and reproducible recombinant manufacturing technologies.

We are focusing our Unigene Therapeutics development pipeline on metabolic diseases with significant unmet medical and socioeconomic needs. Programs which do not fit our core focus will continue to be monetized, out-licensed or terminated. We also intend to focus our Unigene Biotechnologies business unit on generating near-term fee-for-service revenues and longer-term milestone payments and royalties by customizing drug delivery and manufacturing solutions for novel therapeutic peptides.

Our first product to market, Fortical®, a nasal calcitonin product, received approval from the Food and Drug Administration (the “FDA”) in 2005 and is marketed in the United States by Upsher-Smith Laboratories, Inc. (“USL”) for the treatment of postmenopausal osteoporosis. Other product development programs include oral calcitonin licensed to Tarsa Therapeutics, Inc. (“Tarsa”), which has completed Phase 3 testing for the treatment of osteoporosis, and oral parathyroid hormone (“PTH”), which has successfully completed Phase 2 clinical studies for the treatment of osteoporosis. Our oral PTH license with GlaxoSmithKline LLC (“GSK”) was terminated in December 2011 after we received notification from GSK of its product portfolio decision not to proceed with the oral PTH program. As a result, we regained the exclusive worldwide rights to the oral PTH program and are currently seeking a new licensee for this program.

Unigene Biotechnologies Business Unit

WeOur ~~are expanding our~~ Peptelligence™ platform of peptide oral drug delivery and manufacturing assets and capabilities was created with the goal of establishing a portfolio of partnered opportunities., Wegenerating ~~plan to generate~~ near-term revenue from fee-for-service feasibility studies and ~~establish~~establishing a solid foundation for potential high-value milestone payments and royalties. We hope to apply our Peptelligence™ platform to as many therapeutic peptide programs as possible and help our partners co-develop those peptides through advanced clinical testing and commercialization. Since the formation of our Biotechnologies Business Unit, we ~~have~~ initiated 14 feasibility studies with various bio-pharmaceutical partners.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

Unigene Therapeutics Business Unit

~~Our~~ Unigene Therapeutics ~~business unit~~ constitutes our own pipeline of proprietary therapeutic peptide drug development programs focused on metabolic disease and inflammation. Our ~~Currently~~first product to market, weFortical®, ~~are~~a ~~concentrating~~nasal ~~our~~calcitonin ~~peptide~~product, ~~drug~~received approval from the United States Food and Drug Administration (FDA) in 2005 and is marketed in the United States by Upsher-Smith Laboratories, Inc. (USL) for the treatment of postmenopausal osteoporosis. Other product development ~~expertise~~programs oninclude oral calcitonin licensed to Tarsa Therapeutics, Inc. (Tarsa), which has completed Phase 3 testing for the ~~advancement~~treatment of ~~our~~osteoporosis, ~~lead~~and ~~proprietary~~oral ~~preclinical~~parathyroid ~~anorexigenic~~hormone ~~peptide~~(PTH), ~~UGP281~~which has successfully completed Phase 2 clinical studies for ~~obesity~~the treatment of osteoporosis. Our oral PTH license with GlaxoSmithKline (GSK) was terminated in December 2011, after we received notification from GSK of its decision not to proceed with the program. As a result, we regained the exclusive worldwide rights to the oral PTH program and are currently seeking a new licensee for advanced development and commercialization.

InRecent ~~2009,~~Events weImpacting licensed our late-stage oral calcitonin formulation to Tarsa, a venture-financed company founded exclusively to conduct Phase 3 clinical testing and prepare our proprietary oral calcitonin formulation for commercialization. We currently own an approximately 16% fully-diluted stake in Tarsa, subject to liquidating preferences and to possible future dilution. In March 2011, Tarsa announced positive Phase 3 study top-line results for its multinational, randomized, double-blind, placebo-controlled Phase 3 ORACAL trial in postmenopausal women with osteoporosis. In October 2012, Tarsa also announced positive Phase 2 study top-line results for its 48-week oral calcitonin trial for prevention of bone loss in postmenopausal women with low bone mass. In November 2011, we announced positive top-line results of our Phase 2 clinical study evaluating an experimental oral PTH analog for the treatment of osteoporosis in 93 postmenopausal women. The study achieved its primary endpoint of statistically significant percentage change from baseline of Bone Mineral Density (BMD). We sponsored the Phase 2 study as part of the now terminated exclusive worldwide option and licensing agreement with GSK. We are actively seeking a licensing partner for our oral PTH program. We expect to present the full data from the Phase 2 study in a peer review journal in the fourth quarter of 2012.Operations

InOn ~~February~~March ~~2011~~5, we2013, ~~announced~~the ~~our~~FDA” ~~plans~~held an advisory committee meeting to ~~accelerate~~discuss whether the ~~development~~overall benefit-risk assessment of ~~our~~calcitonin ~~lead~~salmon ~~proprietary~~products ~~anorexigenic~~supports ~~peptide,~~their ~~UGP281.~~continued Anmarketing ~~anorexigenic~~for ~~peptide~~the istreatment ~~one~~of post-menopausal osteoporosis. The advisory committee concluded that ~~diminishes~~the orbenefits ~~controls~~of ~~appetite~~salmon ~~and~~calcitonin ~~offers~~products, including Fortical, do not outweigh the potential ~~therapeutic~~risks ~~benefit~~associated with their use and as a result, should not continue to ~~obese~~be ~~patients~~broadly marketed. Additionally, ~~This~~it ~~program~~was isrecommended ~~currently~~that ~~completing~~fracture ~~pre-clinical~~prevention data be required for the approval of new calcitonin products in development for osteoporosis prevention and ~~toxicology~~treatment, ~~studies~~such ~~following~~as ~~which~~the weoral calcitonin product being developed by Tarsa. The FDA will ~~prepare~~assess tothe ~~file~~recommendations anand ~~Investigational~~may ~~New~~or ~~Drug~~may ~~(IND)~~not ~~application~~concur with the advisory committee. The FDA has not yet issued a response to ~~begin~~the ~~clinical~~advisory ~~testing~~committee recommendations. We believe that the advisory committee recommendations have had and will continue to have a material adverse impact on our financial condition and operations by reducing or eliminating sales and royalties on Fortical, limiting the value of current calcitonin development projects and limiting the potential value of our investment in Tarsa.

InOn ~~October~~April ~~2011~~1, ~~Unigene~~2013, ~~and~~in ~~Nordic~~an ~~Bioscience~~effort ~~announced~~to conserve capital and further extend our ~~decision~~cash torunway, ~~establish~~we implemented a ~~Joint~~strategic ~~Development~~reorganization ~~Vehicle~~and todownsizing ~~progress~~which upinvolved toa ~~three~~reduction of ~~our~~approximately ~~internally~~40% ~~developed~~of our workforce, ~~proprietary~~with the majority of affected employees having supported our Fortical manufacturing and recombinant calcitonin ~~analogs~~production ~~through~~operations. In ~~Phase~~recent 2months, ~~proof-~~Fortical manufacturing and royalty revenues have been negatively impacted by the regulatory recommendations pertaining to the use of~~-concept~~ calcitonin salmon. We estimate that we will incur approximately $250,000 in ~~humans~~charges ~~for~~related to the ~~treatment~~reduction in force, all of ~~Type~~which 2would ~~diabetes,~~result ~~osteoarthritis~~in cash expenditures for one-time employee termination benefits and ~~osteoporosis~~associated costs. In ~~August~~The ~~2012,~~related wecharges ~~announced~~were recorded in the ~~preliminary~~end ~~selection~~of the second quarter of ~~our~~2013. As ~~lead~~a ~~compound~~result ~~for~~of the ~~Type~~reduction 2in ~~diabetes~~force, ~~indication~~we ~~(UGP302)~~do not currently have the ability to manufacture Fortical.

~~During~~Due ~~2010,~~largely ~~our~~in ~~Annexin~~part ~~1 analog and Site Directed Bone Growth (“SDBG”) programs were put on hold~~ to ~~conserve~~the ~~cash.~~FDA Inadvisory ~~September~~committee ~~2011~~recommendation, ~~we sold our SDBG program by assigning seven patent applications to Kieran Murphy, LLC, and,~~ in ~~connection with this sale~~2013, we ~~terminated~~have annot ~~Exclusive~~received ~~License Agreement~~ and ~~Consulting~~do ~~Agreement~~not ~~with~~anticipate ~~Kieran~~receiving ~~Murphy,~~additional ~~LLC,~~orders asfor ~~well~~Fortical asin athe ~~License~~near ~~Option Agreement and Research Agreement with Yale University~~term. As Ina ~~exchange~~result ~~for~~of the ~~assignment~~cessation of ~~the~~Fortical ~~patents~~production activities and ~~patent~~uncertainty ~~applications,~~regarding weany ~~are eligible to receive sales royalties and~~ future ~~licensing~~production ~~revenue~~requirements, ~~and/or~~we ahave ~~percentage~~concluded ofthat ~~all~~our ~~considerations~~existing ~~received~~assets ~~upon~~associated ~~the~~with ~~subsequent~~Fortical ~~sale~~are ~~of the SDBG patent portfolio by Kieran Murphy, LLC~~impaired. Our ~~business~~assessment ~~strategy~~of isthe tocarrying ~~develop~~value ~~proprietary~~of ~~products~~such ~~and~~assets ~~processes~~resulted ~~with applications~~ in ~~human~~the ~~health care to generate revenues from license fees, royalties on third~~write-~~party~~off ~~sales~~of ~~and~~fixed ~~direct~~assets ~~sales~~ of ~~bulk or finished products. Generally~~$675, ~~we fund our internal research activities and~~000, ~~due~~patents toof ~~our limited financial resources~~$309,000 we rely on licensees, which are likely to be established pharmaceutical companies, to provide development funding. We also generally expect to rely on these licensees to take responsibility for obtaining appropriate regulatory approvals, human testing and ~~marketing~~inventories of ~~products derived from our research activities. However~~$1, ~~we may~~636,000 in ~~some cases, retain~~ the ~~responsibility~~three ~~for~~months ~~human~~ended ~~testing~~March ~~and~~31, ~~for obtaining the required regulatory approvals for a particular product~~2013.

~~Our~~On ~~patented~~April ~~manufacturing~~5, ~~and~~2013, ~~drug~~we ~~delivery~~received ~~technologies~~a ~~provide~~Notice of Public Sale of Collateral Under Illinois Uniform Commercial Code (the ~~technological~~“Notice”) ~~foundation~~from Victory Park Management LLC, which stated that our lenders proposed to initiate a public foreclosure sale on April 15, 2013 in accordance with Article 9 of the Uniform Commercial Code (“UCC”) for the sale of certain of our ~~business~~assets ~~strategy.~~that ~~The~~secure ~~potential~~the ~~pharmaceutical~~senior ~~products~~secured notes issued to the lenders by Unigene (the “Proposed Sale”), of all of the personal property assets of the Company pledged as collateral under the Restated Financing Agreement and related documents that werelate to our Biotechnologies Strategic Business Unit (“SBU”), including such assets that are ~~developing~~used or intended for use ~~one~~in orconnection with, inor ~~some~~that ~~cases~~are necessary or advisable to the continued conduct of, ~~both~~our Biotechnologies SBU as currently being conducted (but excluding those assets of ~~these~~that ~~technologies~~are not related to the Biotechnologies SBU). ~~Our~~The ~~oral~~lenders ~~calcitonin~~made a credit bid of $15,000,000 and, ~~oral~~at ~~PTH~~the ~~products~~conclusion ~~would~~of ~~utilize~~the ~~our~~public ~~peptide~~auction ~~production~~on ~~process~~April 16, as2013, ~~well~~were deemed the highest bidder for the assets. The assets, which had a carrying value of approximately $2,200,000 as ~~our~~of ~~oral~~March ~~drug~~31, ~~delivery~~2013, ~~system~~were ~~for~~acquired ~~peptides.~~by ~~These~~an ~~products~~affiliate ~~are~~of ~~currently~~the lenders on April 25, 2013 in ~~development~~exchange for the satisfaction and discharge of $15,000,000 ifoutstanding ~~approved~~under our senior secured notes. As a result, ~~they~~as ~~most~~of ~~likely~~April ~~would~~25, be2013, ~~introduced~~we ~~into~~will ~~the~~no ~~market~~longer ~~years~~benefit from ~~now~~revenues associated with development work, feasibility studies or the potential related licensing and milestone revenues generated by the Biotechnologies SBU.

Our products, other than Fortical in the United States, will require clinical trials and/or approvals from regulatory agencies, and all of our products will require acceptance in the marketplace. There are risks that these clinical trials will not be successful and that we will not receive regulatory approval or significant revenue for these products. We compete with specialized biotechnology companies, major pharmaceutical and chemical companies and universities and research institutions. Most of these competitors have substantially greater resources than we do.24

32As a result of the Article 9 sale of our Biotechnologies SBU, we can no longer rely on that business unit as a source of future revenues. In order to maximize the potential value of the remaining Unigene Therapeutics assets, we will need to eliminate our outstanding debt, which will require our lenders to convert their remaining debt into equity of the Company. Under this scenario, we would seek to partner with entities with a product pipeline that would complement the Unigene Therapeutics assets and seek additional financing. In the event that we are unable to come to terms with our lenders resulting in the conversion of their debt to equity, it is likely that our remaining assets will be acquired by third parties via additional Article 9 sales and the Company will be forced to cease operations.

~~Unigene~~On ~~Laboratories~~May 7, ~~Inc.~~2013, ~~Form~~we ~~10-Q~~entered –into ~~Period~~an ~~Ended~~agreement ~~September~~with 30Nordic Bioscience pursuant to which Nordic Bioscience agreed to purchase our entire ownership interest in a joint venture between the parties in exchange for a payment of $1,000,000, ~~2012~~which was received on May 13, 2013.

Unigene Therapeutics Assets

In 2009, we licensed our advanced clinical-stage proprietary oral calcitonin formulation to Tarsa, a venture capital financed company founded exclusively to complete Phase 3 clinical testing and prepare our proprietary oral calcitonin formulation for commercialization. We currently own approximately 16% of Tarsa on a fully-diluted basis, subject to liquidating preferences and possible future dilution. On March 24, 2011, we announced that statistically significant top-line results from Tarsa’s Phase 3 ORACAL study of oral calcitonin for postmenopausal osteoporosis validate our proprietary oral peptide drug delivery technology. The ORACAL study achieved its primary endpoint that was agreed with the FDA through a formalized Special Protocol Assessment (“SPA”) process. Tarsa was also the sponsor of a Phase 2, 48-week, oral calcitonin trial for prevention of bone loss in postmenopausal women with low bone mass. On September 19, 2011, we announced that Tarsa presented positive Phase 3 data from its ORACAL trial of OSTORATM during the annual American Society for Bone and Mineral Research (ASBMR) 2011 meeting. The data demonstrated that OSTORATM achieved all of the efficacy endpoints in the trial and indicated that the safety profile of OSTORATM did not substantially differ from nasal calcitonin or placebo. We announced in April 2011 that Tarsa had selected Unigene to conduct the stability testing for its oral calcitonin and has agreed to pay $1,040,000 for these services. The stability testing results will be included in Tarsa’s NDA to be filed with the FDA. Tarsa has not provided an update on when it expects to file a New Drug Application (NDA) submission for oral calcitonin since the July 2012 EMA announcement regarding the curtailment of calcitonin product usage in Europe. The recommendations of the March 5, 2013, FDA advisory committee meeting regarding the risks and benefits of calcitonin products will impact Tarsa’s business and our investment in Tarsa.

On November 9, 2011, we announced positive top-line results of our Phase 2 clinical study evaluating an experimental oral PTH analog for the treatment of osteoporosis in 93 postmenopausal women. The study achieved its primary endpoint of a statistically significant percent change in BMD from baseline. The full results of the successful trial were published online in December 2012, by Bone, the Official Journal of the International Bone and Mineral Society. We sponsored the Phase 2 study as part of our now terminated exclusive worldwide license agreement with GSK. We are seeking a new licensing partner for the oral PTH program as we do not currently possess the resources to advance this candidate.

In February 2011, we announced plans to accelerate the development of our lead proprietary anorexigenic therapeutic peptide, UGP281. An anorexigenic peptide is one that diminishes or controls appetite and offers potential therapeutic benefit to clinically obese patients. We are seeking a new licensing partner for the obesity program (UGP 281) as we do not currently possess the resources to advance this candidate.

In October 2011, we announced our decision to establish a Joint Development Vehicle (JDV) with Nordic Bioscience to progress up to three of our internally developed, proprietary therapeutic peptide analogs through Phase 2 proof-of-concept in humans for the treatment of Type 2 diabetes, osteoarthritis and osteoporosis. In August 2012, we further announced the preliminary selection of our lead compound for the Type 2 diabetes indication (UGP302). On May 7, 2013, we entered into an agreement with Nordic Bioscience pursuant to which Nordic Bioscience agreed to purchase our entire ownership interest in the JDV in exchange for a payment of $1,000,000, which was received on May 13, 2013.

Revenue

Revenue is summarized as follows for the three ~~and nine~~ -month periods ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012
	2012		2011		2012		2011
Product Sales	$	--	$	646,147
Product Sales	$	2,049,320	$	1,292,689	$	3,989,080	$	2,586,177
Royalties		84,960		348,744
Royalties		166,553		306,376		661,903		1,225,602
Licensing Revenue		262,689		262,689
Licensing Revenue		262,690		679,962		788,068		1,947,813
Development Fees and Other		266,123		493,703
Development Fees and other		934,138		1,149,656		2,462,465		2,263,952
	$	613,772	$	1,751,283
Total Revenue	$	3,412,701	$	3,428,683	$	7,901,516	$	8,023,544

Revenue for the three months ended ~~September~~March 3031, ~~2012~~2013 ofdecreased $31,~~413~~137,000, ~~approximated~~or ~~revenue~~65%, ofto $3614,~~429~~000 from $1,751,000 in the comparable period in ~~2011~~2012. This was primarily due to a decrease in Fortical sales toand royalties from USL ~~for~~due ~~the~~to ~~three~~increased ~~month~~competition ~~period~~in ~~ended~~the ~~September~~nasal 30calcitonin market, ~~2012~~as ~~increased~~well ~~$756,000~~as orto ~~59%~~a decrease in licensing revenue. Fortical sales to ~~$2,049,000~~USL ~~from~~were ~~$1,293,000~~zero in the ~~comparable~~three ~~period~~months inended ~~2011~~March ~~due~~31, ~~primarily~~2013 as compared to $646,000 for the ~~acceleration~~three ofmonths ~~Fortical~~ended March 31, 2012 as USL advanced purchase orders from the ~~fourth~~first quarter of 2013 into 2012. Due largely in part to an FDA advisory committee recommendation, the Company has not received and does not anticipate receiving additional orders for Fortical ~~sales~~in ~~fluctuate~~the ~~each~~near ~~quarter~~term ~~based~~and ~~upon~~has ~~USL’s~~ceased ~~ordering~~all ~~schedule.~~related production activities. Fortical royalties for the ~~three~~quarter ~~months~~ ended ~~September~~March 3031, ~~2012~~2013 decreased $~~139~~264,000, or 4676%, to $~~167~~85,000 from $~~306~~349,000 in the comparable period of ~~2011~~2012. Fortical royalties fluctuate each quarter based upon the timing and pricing of USL’s shipment to its customers. In the ~~three~~first ~~months~~quarter ~~ended~~of ~~September 30~~2013, ~~2012,~~ both quantities of units sold by USL as well as their net selling price per vial ~~of Fortical~~ declined from the comparable period in ~~2011~~2012, causing royalties to decrease. Additionally, the Company was notified by USL that there were negative adjustments recorded to their gross to net sales reserves in the three months ended September 30, 2012 primarily due to an increase to reserves for government rebates for prior period claims. Licensing revenue represents the partial recognition of milestones and up-front payments received in prior years. Licensing revenue decreased $417,000 or 61% in the three months ended September 30, 2012 as compared to the comparable period in 2011. The decrease was primarily due to the $4,000,000 payment received from GSK in December 2010, of which $367,000 was recognized in the three months ended September 30, 2011 (See Note C).

~~Revenue~~Licensing for the nine months ended September 30, 2012 decreased $122,000, or 2%, to $7,902,000 from $8,024,000 in the comparable period in 2011. This was primarily due to the continuing decline in royalties from Fortical due to increased competition in the nasal calcitonin market and negative gross to net sales adjustments recorded by USL, as well as to a decrease in licensing revenue ~~primarily~~represents ~~due to~~ the ~~termination~~partial ofrecognition the GSK license agreement. Fortical sales to USL for the nine month period ended September 30, 2012 increased $1,403,000 or 54% to $3,989,000 from $2,586,000 in the comparable period in 2011 due primarily to the acceleration of ~~Fortical~~milestones purchase orders from the fourth quarter of 2012. Fortical sales fluctuate each quarter based upon USL’s ordering schedule. Fortical royalties for the nine months ended September 30, 2012 decreased $564,000, or 46%, to $662,000 from $1,226,000 in the comparable period of 2011. Fortical royalties fluctuate each quarter based upon the timing and ~~pricing~~up-front ofpayments ~~USL’s~~received ~~shipment to its customers. In the nine months ended September 30, 2012, both quantities of units sold by USL as well as their net selling price per vial of Fortical declined from the comparable period~~ in 2011, causing royalties to decrease. Additionally, the Company was notified by USL that there were negative adjustments recorded to their gross to net sales reserves in the nine months ended September 30, 2012 primarily due to an increase to reserves for government rebates for prior ~~period claims~~years. Licensing revenue ~~decreased $1,160,000 or 60% in the nine months ended September 30, 2012 as compared to the comparable period in 2011. The decrease~~ was ~~primarily due to the~~ $4263,000~~,000~~ ~~payment received from GSK~~ in ~~December 2010, of which $1,010,000 was recognized in~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2011~~2013 ~~(See~~and ~~Note C)~~2012.

33Development fees and other revenue decreased 46% to $266,000 in the first quarter of 2013 from $494,000 in the first quarter of 2012, primarily due a reduction in development work performed on behalf of Tarsa. On April 25, 2013, the Company’s oral drug delivery assets were acquired by Enteris Biopharma, Inc. via an Article 9 sale pursuant to the Uniform Commercial Code. As a result, as of such date, the Company will no longer benefit from revenues associated with development work, feasibility studies or the potential related licensing and milestone revenues.

~~Unigene~~Future ~~Laboratories~~sales and royalties are contingent upon many factors including competition, ~~Inc~~pricing, marketing and acceptance in the marketplace and, therefore, are difficult to predict. ~~Form~~Sales ~~10-Q~~revenue –from ~~Period~~Fortical ~~Ended~~in ~~September~~the 30future will depend on Fortical’s continued acceptance in the marketplace, ~~2012~~as well as competition and other factors, including recent recommendations by a U.S. FDA advisory committee. There may not be future sales of Fortical. In December 2008, Apotex and Sandoz launched nasal calcitonin products which are generic to Novartis’ nasal calcitonin product, but not to Fortical. In June 2009, Par also launched a product generic to Novartis’ nasal calcitonin product. Certain providers have substituted these products for Fortical, causing Fortical sales and royalties to decrease. Therefore, Fortical alone will never generate sufficient revenue for us to achieve profitability. In addition, Apotex has a pending ANDA for a nasal calcitonin product that we claim infringes on our Fortical patent. If we do not ultimately prevail in defending our patent, then Apotex could be in a position to market its nasal calcitonin product if and when its pending ANDA receives FDA approval. Additionally, there can be no assurance that the Company will be able to partner and monetize its therapeutic assets.

Development fees and other revenue decreased 19% to $934,000 in the three months ended September 30, 2012 from $1,150,000 in the comparable period in 2011, and increased 9% to $2,462,000 in the nine months ended September 30, 2012 from $2,264,000 in the comparable period in 2011. The changes in development fees and other revenue in both periods is primarily due to the timing and amount of development work and fee-for-service feasibility studies we perform for various pharmaceutical and biotechnology companies, including Tarsa.

Future sales and royalties are contingent upon many factors including competition, pricing, marketing and acceptance in the marketplace and, therefore, are difficult to predict. Milestone revenue is based upon one-time events and is generally correlated with the development strategy of our licensees. It is therefore subject to uncertain timing and not predictive of future revenue. Bulk peptide sales to our partners under license or supply agreements prior to product approval are typically of limited quantity and duration and also not necessarily predictive of future revenue. Additional peptide sales are dependent upon the future needs of our partners, which we cannot currently estimate. Sales revenue from Fortical in 2012 and future years will depend on Fortical’s continued acceptance in the marketplace, as well as current and future competition and other factors. In December 2008, Apotex and Sandoz launched nasal calcitonin products that are generic to Novartis’ nasal calcitonin product, but not to Fortical. In June 2009, Par also launched a product generic to Novartis’ nasal calcitonin product. Certain providers have substituted these products for Fortical, causing Fortical sales and royalties to steadily decline. Therefore, Fortical alone will never generate sufficient revenue for us to achieve profitability. In addition, Apotex has a pending ANDA for a nasal calcitonin product that we claim infringes on our Fortical patent. If we do not ultimately prevail in defending our patent, then Apotex could be in a position to market its nasal calcitonin product if and when its pending ANDA receives FDA approval.

Expenses

InOn ~~December~~April ~~2011~~1, we2013, ~~announced a restructuring plan that included a reduction~~ in ~~our~~an ~~workforce~~effort ~~and expenses~~ to ~~improve~~conserve ~~operational~~capital ~~efficiencies~~ and tofurther ~~better~~extend ~~match~~its ~~resources~~cash ~~with market demand. Under the comprehensive plan~~runway, we ~~will~~implemented ~~continue~~a ~~Fortical~~strategic ~~production~~reorganization and ~~will~~downsizing ~~maintain~~which ~~all~~involved ofa ~~our~~reduction ~~core~~of ~~programs~~approximately ~~and~~40% ~~partnered~~of ~~activities~~the ~~while~~Company’s ~~decreasing annual cash expenditures by approximately $1~~workforce,~~000,000.~~ Inwith ~~2010,~~the ~~since~~majority ~~we had an adequate multi-year inventory~~ of ~~calcitonin~~affected ~~and~~employees ~~enzyme~~having tosupported ~~support~~our Fortical, ~~we temporarily suspended~~ manufacturing ofand ~~those~~recombinant ~~materials~~calcitonin atproduction ~~our Boonton facility~~operations. In ~~However~~recent months, weFortical ~~are~~manufacturing ~~maintaining~~and ~~the~~royalty ~~cGMP~~revenues ~~status~~have ofbeen ~~the~~negatively ~~facility~~impacted ~~and~~by the ~~ability~~regulatory torecommendations ~~manufacture~~pertaining ~~and~~to ~~tablet~~the ~~solid~~use ~~dosage forms~~ of ~~peptides~~calcitonin ~~at that location~~salmon. We ~~This~~estimate ~~cessation~~that ofwe ~~production~~will isincur ~~expected~~approximately ~~to continue through 2012~~$250,000 ~~however,~~in wecharges ~~plan~~related to ~~engage in~~ the ~~production~~reduction ~~of calcitonin~~ in ~~the~~force, ~~first~~all ~~quarter~~ of ~~2013.~~which ~~Implementation~~would ofresult ~~the plan resulted~~ in ancash ~~immediate~~expenditures ~~company-wide~~for ~~workforce reduction of approximately 25%. From~~ one-time toemployee ~~time,~~termination webenefits ~~will~~and ~~evaluate~~associated ~~the~~costs. ~~feasibility~~The ofrelated ~~additional~~charges ~~expenditures~~were inrecorded ~~areas such as preclinical and/or clinical studies~~ in ~~order~~the tosecond ~~add~~quarter ~~value to certain~~ of ~~our current research projects~~2013.

We allocate costs associated with our manufacturing facility in Boonton, New Jersey to the manufacture of production batches for inventory purposes, cost of goods sold, research and development expenses, unallocated facility ~~cost~~costs or inventory ~~reserve~~reserves based upon the activities undertaken by the personnel in Boonton each period.

Research and Development Expenses

Research and development expenses primarily consist of personnel costs, preclinical and clinical trials, supplies, outside testing and consultants primarily related to our research and development efforts or activities related to our license agreements, as well as depreciation and amortization expense. Research and development expense decreased $1408,~~091,~~000, or 4932% to $1851,~~154,~~000 from $21,~~245~~259,000 for the three months ended ~~September~~March 3031, ~~2012~~2013 as compared to the same period in ~~2011~~2012. ~~and~~This ~~decreased~~decrease ~~$2,972,000,~~was orprimarily ~~44%~~due to ~~$3,792,000 from $6,764,000 for~~ the ~~nine~~capitalization ~~months~~of ~~ended~~a ~~September~~significant ~~30,~~portion ~~2012~~of ~~as compared to~~ the ~~same~~research ~~period in 2011. The decreases were primarily due to declines of $2,335,000~~ and ~~$3,245,000,~~development ~~respectively,~~expenses incurred in the three ~~and~~months ~~nine month periods~~ ended ~~September~~March 3031, ~~2012~~2013. Such incapitalized ~~expenses~~costs ~~related~~relate to ~~our~~the ~~oral~~production ~~PTH~~of ~~program~~UGP302 ~~due~~materials tofor ause ~~reduction~~ in ~~Phase 2~~ pre-clinical ~~trial~~studies ~~expenditures~~pursuant ~~as compared~~ to ~~the~~our ~~comparable~~joint ~~period~~venture inwith ~~2011. Research~~Nordic ~~and development expenses are expected to increase in the fourth quarter of 2012 due to the recommencement of the UGP281 program in October 2012~~Bioscience.

Cost of Goods Sold

Cost of goods sold consists primarily of inventory reserve charges, material costs, personnel costs, manufacturing supplies and overhead costs, such as depreciation and maintenance. Cost of goods sold ~~increased~~was ~~68% to~~ $~~830~~1,636,000 ~~from~~and $~~493~~248,000 ~~for~~in the three months ended ~~September~~March 3031, ~~2012~~2013 asand ~~compared~~2012, ~~to the same period in 2011~~respectively. Cost of goods sold ~~increased~~in ~~49%~~2013 torepresents ~~$1,528,000~~charges ~~from~~to ~~$1,029,000~~reduce ~~for~~ the ~~nine~~carrying ~~months~~value ~~ended~~of ~~September~~certain ~~30,~~inventories ~~2012~~to zero as ~~compared~~a toresult of the ~~same~~cessation ~~period~~of inproduction ~~2011.~~of Fortical and the lack of future production orders. Cost of goods sold ~~primarily~~in ~~represents~~2012 represented our costs associated with Fortical production for USL, whose purchases from us fluctuate each quarter. There ~~The~~have ~~increase~~been inno ~~cost~~sales of ~~goods sold in both periods was the result of higher shipments of~~ Fortical ~~due to the timing of shipments~~ in ~~the three and nine month periods ended September 30, 2012, partially driven by the acceleration of Fortical purchase orders from the fourth quarter of 2012~~2013. Cost of goods sold as a percentage of sales was ~~41% and~~ 38%, ~~respectively,~~ for the three months ended ~~September~~March 3031, 2012 ~~and 2011 and 38% and 40%, respectively, for the nine months ended September 30, 2012 and 2011~~. The decrease in margin in the three months ended September 30, 2012 was primarily due to higher direct material costs as a result of lower production yields. The improved margin in the nine months ended September 30, 2012 was the result of lower direct material costs as a result of improved production yields in the first six months of 2012. Future production related expenses for ~~2012~~2013 and later years will be dependent upon the level of future Fortical sales, asif ~~well as possible peptide production, to meet our partners’ needs~~any.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

General and Administrative Expenses

General and administrative expenses ~~increased~~decreased $~~281~~118,000, or 136%, to $21,~~403~~975,000 from $2,~~122~~093,000 for the three months ended ~~September~~March 3031, ~~2012~~2013 as compared to the same period in ~~2011 and decreased $106,000, or 2%, to $6,661,000 from $6,767,000 for the nine months ended September 30,~~ 2012 ~~as compared to the same period in 2011~~. The ~~increase~~decrease inwas ~~expense in the three months ended September 30, 2012 is~~ primarily attributed to ~~higher~~a ~~legal expenses in 2012 associated with restructuring our debt. The~~ decrease in ~~expense~~executive inand ~~the~~administrative ~~nine months ended September 30, 2012 is primarily attributed to a one-time, non-cash charge for stock option~~ compensation ~~of $350~~,~~000~~ ~~for former executive officers of the Company recorded in 2011,~~ partially offset by an increase in accounting and legal ~~expenses~~fees.

Loss on Sale of Patents

In September 2011, we sold our non-core asset, the SDBG program, by assigning seven patent applications to Kieran Murphy, LLC (See Note M). In association with this transaction, we divested various SDBG patents and patent applications with a total book value at September 30, 2011 of $844,000 and received $20,000 in proceeds from the sale. We therefore recognized a non-cash loss of $824,000 on the sale of SDBG in the three and nine months ended September 30, 2011.

Unallocated Facility Cost

Unallocated facility cost represents ~~idle facility costs associated with the~~ underutilization of our Boonton manufacturing facility. These costs primarily consist of salaries, as well as overhead expenses, which decreased $~~171~~330,000, or 1938%, to $~~713~~529,000 for the three months ended ~~September~~March 3031, ~~2012~~2013 as compared to $~~884~~859,000 in the same period in ~~2011 and decreased $233,000, or 9%, to $2,250,000 for the nine months ended September 30,~~ 2012 ~~as compared to $2,483,000 in the same period in 2011~~. The expenses in ~~2012~~2013 and ~~2011~~2012 primarily relate to the cessation of calcitonin and enzyme production~~. The~~, ~~lower~~as ~~expenses~~well inas ~~2012~~the ~~are~~decreased ~~primarily due to increased~~ production of Fortical.

Asset Impairment Charges

Due largely in part to the FDA advisory committee recommendation, we have not received and do not anticipate receiving additional orders for Fortical in the near term. As a result of the cessation of Fortical production activities and uncertainty regarding any future production requirements, we have concluded that all Fortical assets are impaired. The impairment charges recorded during the three months ended March 31, 2013 consisted of the write-off of fixed assets and patents of $675,000 and $309,000, respectively.

Other Income/Expense

Change in Fair Value of Embedded Conversion Feature

The Victory Park notes issued in March 2010 are convertible into shares of our common stock and as a result of a reset provision contained in the notes, the conversion feature is considered an embedded derivative that must be marked to fair value each reporting period. Accordingly, the liability for the conversion feature was marked to fair value each quarterly period subsequent to issuance, resulting in the recording of a non-cash gain of $11,850,000 and $2,920,000 in the quarters ended March 31, 2013 and 2012, respectively, which represented the change in the fair value of the embedded conversion feature during each period.

Interest Expense

Interest expense increased 1458% in the ~~three~~first ~~months~~quarter ~~ended~~of ~~September~~2013 ~~30, 2012~~ to $34,~~254~~521,000 from $2,~~862~~867,000 in the ~~three~~first ~~months~~quarter ~~ended~~of ~~September~~2012. ~~30,~~These ~~2011.~~increases ~~During~~were ~~the~~primarily ~~three~~due ~~months~~to ~~ended~~higher ~~September~~debt ~~30,~~principal ~~2012~~outstanding and ~~2011~~increased weamortization ~~recognized~~of ~~$2,809,000~~the ~~and~~debt ~~$2,428,000,~~discount ~~respectively,~~and indeferred ~~cash~~financing ~~and~~fees ~~non-cash~~associated ~~interest~~with ~~expense~~the ~~under~~debt ~~the~~restructurings with Victory Park ~~convertible~~in ~~notes~~March 2010 and September 2012. InThe ~~addition,~~original ~~interest~~notes ~~expense~~were onissued ~~the~~in ~~Levy~~March ~~loans~~2010 ~~increased~~for toan aggregate of $~~437~~33,000,000 inand ~~the~~an ~~three~~additional ~~months~~$4,000,000 ~~ended~~note ~~September~~was ~~30,~~issued in September 2012. ~~from~~These ~~$430,000~~notes inbear ~~the~~interest ~~three~~at ~~months~~the ~~ended~~prime ~~September~~rate 30plus 5%, ~~2011. The~~with ~~increase~~a infloor of 15% plus an additional 3% default interest ~~expense~~commencing ~~during~~November 2012. During the three months ended ~~September~~March 3031, ~~2012~~2013 ~~was~~and ~~primarily~~2012, ~~due~~we torecognized ~~higher~~$4,085,000 ~~debt~~and ~~discount~~$2,240,000, ~~amortization~~respectively, asin ainterest ~~result~~expense ofunder the Victory Park ~~refinancing~~convertible innotes. ~~September~~In ~~2012~~addition, ininterest ~~addition~~expense toon athe ~~higher~~Levy ~~principal~~notes ~~balance~~was on$427,000 and $442,000 in the ~~Victory~~three ~~Park~~months ~~debt~~ended inMarch 31, 2013 and 2012, respectively.

Interest expense increased 7% in the nine months ended September 30, 2012 to $8,960,000 from $8,396,000 in the nine months ended September 30, 2011. During the nine months ended September 30, 2012 and 2011 we recognized $7,622,000 and $7,121,000 respectively, in cash and non-cash interest expense under the Victory Park convertible notes. In addition, interest expense on the Levy loans increased to $1,318,000 in the nine months ended September 30, 2012 from $1,263,000 in the nine months ended September 30, 2011. The increase in interest expense during the nine months ended September 30, 2012 was primarily due to higher debt discount amortization as a result of the Victory Park refinancing in September 2012, in addition to a higher principal balance on the Victory Park debt in 2012.27

Loss on Change in Fair Value of Embedded Conversion Feature

The Victory Park notes issued in March 2010 and September 2012 are convertible into shares of our common stock and as a result of a reset provision contained in the notes, the conversion feature is considered an embedded derivative that must be marked to fair value each reporting period. Accordingly, the liability for the conversion feature was marked to fair value each quarterly period subsequent to issuance, resulting in the recording of a non-cash gain of $640,000 and $3,650,000 in the three months ended September 30, 2012 and 2011 and non-cash expense of $1,870,000 and $12,120,000 in the nine months ended September 30, 2012 and 2011, respectively, representing the change in fair value of the embedded conversion feature during each period.

Loss from Investment in Tarsa

In January 2012, we made an additional investment in Tarsa by purchasing convertible promissory notes in the principal amount of $~~651~~650,~~000~~571 and warrants to purchase up to an aggregate of 67,435 shares of Series A Preferred Stock. After recording this investment in Tarsa, we recognized our proportionate share of Tarsa’s prior years’ losses up to our $~~651~~650,~~000~~571 investment, thereby reducing our investment in Tarsa to zero.

35Net Income (Loss)

~~Unigene~~We ~~Laboratories~~generated net income of $1,979,000 ~~Inc~~for the three months ended March 31, 2013 and incurred a net loss of $3,196,000 in the three months ended March 31, 2012. ~~Form~~This ~~10-Q~~was –primarily ~~Period~~due ~~Ended~~to ~~September~~an 30increase in the gain on change in fair value of an embedded conversion feature of $8,930,000, partially offset by an increase in operating expenses of $1,517,000 as a result of impairment charges, a decrease in revenues of $1,138,000 and an increase in interest expense of $1,654,000. In the three months ended March 31, 2012, we wrote-off our investment in Tarsa of $651,000. Net losses will continue unless we achieve or sign new revenue generating agreements and may be impacted by the change in fair value of a non-cash embedded derivative liability.

On April 8, 2011, along with the founding investors of Tarsa, we entered into an agreement to purchase $1,518,000 in convertible promissory notes and warrants from Tarsa to help fund Tarsa’s business operations into the first half of 2012. After recording this investment in Tarsa, we recognized Tarsa’s prior years’ losses up to our $1,518,000 investment, reducing our investment in Tarsa to zero. On July 8, 2011, along with the founding investors of Tarsa, we purchased $1,301,000 in additional convertible promissory notes and warrants from Tarsa to further help fund Tarsa’s business operations. After recording this investment in Tarsa, we recognized Tarsa’s prior years’ losses up to our $1,301,000 investment, again reducing our investment in Tarsa to zero. These two transactions resulted in our recognizing losses from our investment in Tarsa in the amounts of $1,301,000 and $2,819,000, respectively, for the three-month and nine-month periods ended September 30, 2011.

Loss from Investment in former China Joint Venture

For the nine months ended September 30, 2011, this loss includes our sale of our 45% ownership interest in the China Joint Venture. We recognized a loss of $1,073,000 based upon the near-term first payment of $600,000 and our net investment of $1,673,000. If we eventually receive the contingent second payment in the amount of $450,000, which we consider very unlikely, we would recognize a gain at that time.

The 2011 loss also includes the basis difference between our investment of the intellectual property in the joint venture and our 45% equity interest in the underlying assets of the joint venture. This basis difference was being recognized over 17 years, the estimated life of the transferred assets. We revised our accounting prospectively to account for the calculation of the basis difference between our investment in the China Joint Venture and our 45% equity interest in the underlying net assets of the China Joint Venture. We had originally calculated the amortization of the difference based upon the $4,500,000 of intellectual property (licensed patent rights, know-how, etc.) that has been and was agreed to be contributed to the China Joint Venture. However, as of January 1, 2011, we calculated the amortization of the difference based upon the $2,100,000 of intellectual property that has been contributed to that date and recorded on the financial statements of the China Joint Venture. The cumulative adjustment in the nine months ended September 30, 2011 totaled $317,643. In the nine months ended September 30, 2011 we also recognized a revised basis difference of $30,882. Therefore, the net basis difference included in the nine months ended September 30, 2011 was an expense of $286,761.

Net Loss

Net loss for the three months ended September 30, 2012 decreased approximately $907,000, or 25%, to $4,502,000 from $3,595,000 for the corresponding period in 2011. This was primarily due to a decrease in operating expenses of $1,468,000 and a non-cash gain of $640,000,000 on the change in fair value of an embedded conversion feature partially offset by an increase in interest expense of $650,000. In the three months ended September 30, 2011, we recognized a loss on the sale of SDBG patents of $824,000 and wrote-off our investment in Tarsa of $1,301,000 and a gain on the change in fair value of an embedded conversion feature of $3,650,000.

Net loss for the nine months ended September 30, 2012 decreased approximately $15,095,000, or 44%, to $18,945,000 from $34,040,000 for the corresponding period in 2011. The decrease was primarily driven by a decrease in operating expenses of $3,635,000 offset by an increase in interest expense of $1,670,000, a loss of $600,000 on the sale of our former joint venture in China, the write-off of our investment in Tarsa of $651,000 and a non-cash loss of $1,870,000 on the change in fair value of an embedded conversion feature. In the nine months ended September 30, 2011, we recognized a loss of $12,120,000 on the change in fair value of an embedded conversion feature, a loss of $1,376,000 on the sale of our former joint venture in China, a loss of $824,000 on the sale of SDBG patents and wrote-off our investment in Tarsa of $2,819,000. Net losses will continue unless we achieve sufficient non-deferred revenue under our USL or Tarsa agreements or sign new revenue generating research, licensing or distribution agreements and may be impacted by the change in fair value of a non-cash embedded derivative liability.

LIQUIDITY AND CAPITAL RESOURCES

~~Cash~~At March 31, 2013, we had cash and cash equivalents of $353,000 a decrease of $3,460,000 from December 31, 2012. The decrease is primarily due to net cash used in operating activities of $3,406,000. We have incurred annual operating losses since our inception and, as a result, at March 31, 2013, had an accumulated deficit of approximately $214,649,000.

AtAs ~~September~~of 30March 31, ~~2012~~2013, ~~the~~our ~~Company~~total ~~had~~principal ~~cash~~debt, inclusive of capital lease obligations and ~~cash~~accrued ~~equivalents~~interest, ofwas $379,~~999~~509,000. As On April 8, 2013, we entered into a ~~decrease~~second amendment to a financing agreement with affiliates of Victory Park Capital Advisors, LLC (“VPC”), whereby VPC agreed to purchase an additional $~~683~~750,000 ~~from~~senior ~~December~~secured 31note, ~~2011~~providing us with additional working capital. ~~The~~On ~~decrease~~May is7, ~~primarily~~2013, ~~due~~we entered into an agreement with Nordic Bioscience pursuant to ~~net~~which ~~cash~~Nordic ~~used~~Bioscience agreed to purchase our entire ownership interest in ~~operating~~a ~~and~~joint ~~investing~~venture ~~activities~~between the parties in exchange for a payment of $31,~~120,~~000 ~~and $969~~,000, ~~respectively~~which was received on May 13, ~~partially~~2013. ~~offset~~Pursuant byto the $3terms of a forbearance agreement with VPC,~~500,000~~ inthe proceeds received ~~(following~~from the ~~deposit~~transaction ofwere ~~$500,000~~required ~~for~~to ~~fees~~be ofremitted to VPC to be applied to the ~~lender)~~outstanding assenior asecured ~~result~~notes. We ofwill ~~refinancing~~need ~~our~~to ~~debt~~obtain insignificant ~~September~~additional ~~2012.~~financing Wein ~~have~~the ~~incurred~~near ~~annual~~term ~~operating~~to ~~losses~~fund ~~since~~operations, address our ~~inception~~current debt and, asrestructure aour ~~result,~~balance atsheet. In ~~September~~the ~~30,~~event ~~2012,~~that ~~had~~we anare ~~accumulated~~unable ~~deficit~~to secure additional sources of ~~$201~~cash,~~286~~ we will not be able to fund operations beyond June 15,~~000~~ 2013 and the Company will be forced to cease operations. We ~~expect~~are currently in discussion with potential lenders in regards to ~~incur~~obtaining ~~net~~additional ~~losses~~financing, ~~and~~however, ~~cash~~there ~~flow~~can ~~deficiencies~~be ~~from~~no ~~operating~~assurance ~~activities~~that ~~for~~any ~~the~~lender ~~foreseeable~~will ~~future~~provide additional funding.

36Due largely in part to a recent FDA advisory committee recommendation, in 2013, we have not received and do not anticipate receiving additional orders for Fortical in the near term. As a result of the cessation of Fortical production activities and uncertainty regarding any future production requirements, we have concluded that our existing assets associated with Fortical are impaired. Our assessment of the carrying value of such assets resulted in the write-off of fixed assets of $675,000, patents of $309,000 and inventories of $1,636,000 in the three months ended March 31, 2013.

On April 5, 2013, we received a Notice of Public Sale of Collateral Under Illinois Uniform Commercial Code (the “Notice”) from Victory Park Management LLC, which stated that our lenders proposed to initiate a public foreclosure sale on April 15, 2013 in accordance with Article 9 of the Uniform Commercial Code for the sale of certain of our assets that secure the senior secured notes issued to the lenders by Unigene ~~Laboratories~~(the “Proposed Sale”), ~~Inc~~of all of the personal property assets of the Company pledged as collateral under the Restated Financing Agreement and related documents that relate to our Biotechnologies Strategic Business Unit (“SBU”), including such assets that are used or intended for use in connection with, or that are necessary or advisable to the continued conduct of, our Biotechnologies SBU as currently being conducted (but excluding those assets of that are not related to the Biotechnologies SBU). ~~Form~~The ~~10-Q~~lenders –made ~~Period~~a ~~Ended~~credit ~~September~~bid 30of $15,000,000 ~~2012~~and, at the conclusion of the public auction on April 16, 2013, were deemed the highest bidder for the assets. The assets, which had a carrying value of approximately $2,200,000 as of March 31, 2013, were acquired by an affiliate of the lenders on April 25, 2013 in exchange for the satisfaction and discharge of $15,000,000 outstanding under our senior secured notes. As a result, as of April 25, 2013, we will no longer benefit from revenues associated with development work, feasibility studies or the potential related licensing and milestone revenues generated by the Biotechnologies SBU.

~~Debt~~As a result of the Article 9 sale of our Biotechnologies SBU, we can no longer rely on that business unit as a source of future revenues. In order to maximize the potential value of the remaining Unigene Therapeutics assets, we will need to eliminate our outstanding debt, which will require our lenders to convert their remaining debt into equity of the Company. Under this scenario, we would seek to partner with entities with a product pipeline that would complement the Unigene Therapeutics assets and seek additional financing. In the event that we are unable to come to terms with our lenders resulting in the conversion of their debt to equity, it is likely that our remaining assets will be acquired by third parties via additional Article 9 sales and the Company will be forced to cease operations.

As of September 30, 2012, our total principal debt, inclusive of capital lease obligations and accrued interest, was approximately $74,500,000 inclusive of an additional $4,000,000 note issued in September 2012 as further described below. Based on our current cash flow projections, we will need to obtain significant additional financing in the near term to fund operations, address our current debt and restructure our balance sheet. Management’s cash flow projections at the time of the issuance of the $4,000,000 note estimated that cash on hand would be sufficient to fund operations through at least June 2013. These estimates included the assumption that our Biotechnologies Strategic Business Unit (“Biotechnologies SBU”) would be able to convert at least one of its ongoing oral peptide delivery feasibility partnerships into a definitive license agreement bearing a significant up-front cash payment, on or before December 31, 2012. While the Company is still actively pursuing such opportunities, we did not enter into a license agreement with a significant upfront cash component by December 31, 2012. This change in the Company’s projections is the result of an ongoing review of our Biotechnologies SBU and the status of its feasibility programs, including recent feedback from the Biotechnologies SBU’s feasibility partners regarding the criteria and timing for each partners’ decision to license our technology, as well as delays to our ongoing feasibility and partner sponsored Peptelligence™ research programs. In particular, several early stage development partners have indicated that, in the current funding environment until they themselves are able to partner, they may not have sufficient discretionary cash resources to satisfy commercially reasonable licensing terms. In addition, certain feasibility partners participating in longer-term research oriented feasibility work have decided to extend or expand their current feasibility programs but are not yet ready to enter into a definitive licensing agreement until the ongoing feasibility studies yield certain desired targets. As a result of the corresponding anticipated reduction in the Biotechnologies SBU’s forecasted revenues, management is actively pursuing various alternatives to extend our cash runway. In the event that we are unable to secure additional sources of revenue, we will not be able to fund operations beyond the first quarter of 2013. Additionally, our current projections would result in the Company defaulting on the minimum cash requirement as of March 31, 2013 under our forbearance agreement.28

OnWe ~~September~~will ~~21,~~need ~~2012~~to ~~(the~~secure ~~“First~~sources ~~Amendment~~of ~~Effective~~funding ~~Date”),~~in weorder ~~entered into a Forbearance Agreement and First Amendment~~ to ~~Amended~~satisfy ~~and~~our ~~Restated~~working ~~Financing~~capital ~~Agreement, by and among the Company, Victory Park Management, LLC, as administrative agent and collateral agent (the “Agent”), Victory Park Credit Opportunities, L~~needs.~~P.,~~ ~~VPC~~If ~~Fund~~we ~~II,~~are ~~L.P.,~~not ~~VPC~~able ~~Intermediate~~to ~~Fund~~generate IIadditional ~~(Cayman) L.P.~~cash, ~~and~~we ~~Victory~~will ~~Park~~not ~~Credit~~have ~~Opportunities Intermediate Fund, L.P. (collectively,~~ the ~~“Lenders”~~ability ~~and~~to ~~together~~continue ~~with the Agent, the “VPC Parties”) (together with all exhibits and schedules thereto, and~~ as ~~amended~~a ~~from~~going ~~time to time, the “Forbearance Agreement”)~~concern. ~~The~~We ~~Forbearance~~believe ~~Agreement~~that ~~evidenced~~satisfying ~~(i)~~our ~~the~~cash ~~forbearance~~requirements byover the ~~VPC~~long ~~Parties~~term ~~with~~will ~~respect~~require to the ~~exercise~~restructuring of ~~certain~~our ofbalance ~~their~~sheet ~~rights~~to ~~and~~reduce ~~remedies~~or ~~arising~~eliminate ~~as a result of~~ the ~~existence~~outstanding ofdebt ~~certain~~in ~~events~~addition ofto ~~default under~~ the ~~Restated~~successful ~~Financing~~commercialization ~~Agreement ; (ii) the amendment~~ of ~~certain~~our ~~provisions~~licensed oforal ~~the~~or ~~Amended~~nasal ~~and~~calcitonin ~~Restated Financing Agreement dated as of March 16~~products, ~~2010,~~our byoral ~~and~~parathyroid ~~among~~hormone ~~the Company, the Agent, as administrative agent and collateral agent, and the Lenders party thereto~~ (~~the~~ “~~Restated Financing Agreement~~PTH”); ~~and~~product, ~~(iii)~~our ~~the~~obesity ~~other~~program ~~agreements contemplated by the Forbearance Agreement~~ (~~collectively~~UGP ~~the “2012 Restructuring”~~281)~~. Pursuant~~ toor ~~the~~our ~~Forbearance~~diabetes ~~Agreement,~~program ~~we issued to the Lenders a $4,000,000 senior secured note~~ (~~the~~UGP ~~“First Amendment Note” and collectively with the previously issued notes, the “Notes”~~302), resulting in a total liability to the Lenders of $51,448,000 as of September 30, 2012, inclusive of principal and interest As a result of the financial restatement described above, we were unable to finalize and file this Form 10-Q by the Securities and Exchange Commission’s extended filing deadline of November 21, 2012. ~~Therefore~~However, ~~the~~it ~~Company~~is ~~gave~~uncertain ~~the~~whether ~~VPC~~any ~~Parties~~new ~~notice~~products ~~that~~will anbe ~~event~~approved ofor ~~default~~will ~~occurred~~be ~~under~~commercially ~~the Restated Finance Agreement by virtue of the Company’s failure to timely file this Form 10-Q~~successful. ~~Pursuant~~ toThe ~~the terms of the Restated Finance Agreement, for so long as an event of default is continuing, the unpaid principal~~ amount of ~~the~~future ~~Notes~~revenue ~~shall~~we ~~bear~~will ~~interest~~derive atfrom ~~the~~Fortical ~~default interest rate, which~~ is ~~the~~also ~~current interest rate under the agreement plus 3%~~uncertain. ~~In addition, the Lenders have the right, following written notice to us, to cause us to redeem all or any portion of the Notes.~~

~~There~~The ~~are~~global ~~other~~credit ~~events~~crisis ofthat ~~default~~began in ~~existence~~2007 ~~including~~was ~~(i)~~further ~~our~~exacerbated ~~stock~~by isevents ~~not~~occurring ~~currently~~in ~~listed~~the onfinancial markets in the ~~OTCBB~~fall of 2008, ~~(ii)~~and wehas continued into 2012. These events have ~~not~~negatively ~~had~~impacted the ~~S-1~~ability weof ~~were~~corporations ~~required~~ to ~~file~~raise ~~pursuant~~capital tothrough ~~the~~equity ~~Forbearance~~financings ~~Agreement~~or ~~declared~~borrowings. ~~effective,~~The ~~(iii)~~credit wecrisis ~~have~~may ~~not~~continue ~~filed~~for ~~our~~the ~~definitive~~foreseeable ~~proxy~~future. ~~statement~~In ~~for~~addition, ~~2011~~uncertainty ~~and~~about ~~(iv)~~current weand ~~have~~future ~~not~~global ~~held~~economic anconditions ~~annual~~may ~~shareholders’~~impact ~~meeting~~our ability to ~~obtain~~license ~~the~~our ~~approval~~products ofand ~~additional~~technologies ~~authorized~~to ~~shares~~other ~~for~~companies ~~Victory~~and ~~Park. We~~may ~~also~~cause ~~expect~~consumers to ~~default~~defer onpurchases ~~the~~of ~~minimum~~prescription ~~cash~~medicines, ~~requirement~~such as ofFortical, ~~March~~in 31response to tighter credit, ~~2013~~decreased cash availability and declining consumer confidence. ~~Other~~ ~~events~~Accordingly, offuture ~~default~~demand ~~may~~for ~~exist~~our products and technologies could differ from our current expectations.

AsDue ofto ~~the~~our ~~First~~limited ~~Amendment~~financial ~~Effective Date~~resources, wethe ~~lacked~~decline ~~sufficient~~and ~~shares~~potential ofelimination ~~Common Stock to deliver all~~ of ~~the~~Fortical ~~shares~~sales ofand ~~Common~~royalties, ~~Stock issuable to~~ the ~~Lenders~~sale ~~upon conversion~~ of ~~the~~our ~~Victory~~Biotechnologies ~~Park~~SBU ~~notes~~and ~~(the~~loss ~~“Conversion Shares”). We are required to obtain stockholder approval to amend its certificate~~ of ~~incorporation to increase~~ the ~~number~~associated ofrevenues, ~~authorized~~our ~~shares~~inability to ~~allow~~restructure ~~for~~our ~~the~~existing ~~conversion~~Victory ofPark ~~the~~and ~~notes~~Levy indebt ~~full~~ and ~~until~~our ~~such~~inability ~~time~~to asraise wecash ~~receive approval~~ to ~~increase~~fund ~~the authorized shares~~operations, ~~Victory~~we ~~Park~~require ~~has~~significant ~~the~~financial ~~ability~~resources ~~to demand payment~~ in ~~cash~~order ~~for~~to ~~any~~avoid ~~shortfall~~the incessation ~~authorized shares upon a notice~~ of ~~conversion~~operations.

OnCash ~~May~~received ~~29,~~during ~~2012~~the quarter ended March 31, we2013 ~~entered~~was ~~into~~primarily anfrom ~~agreement~~development towork ~~settle~~and ~~our~~fee-for-service ~~obligations~~feasibility tostudies ~~Jay~~for ~~Levy,~~various ~~the~~companies. ~~estate~~Our primary sources of ~~Jean~~cash ~~Levy,~~have ~~Warren~~historically ~~Levy~~been ~~and~~(1) licensing ~~Ronald~~fees ~~Levy~~for new agreements, (~~the~~2) milestone ~~“Levys”~~and other payments under licensing or ~~the~~development ~~“Founders”~~agreements, (3)~~. Pursuant~~ bulk topeptide ~~the~~sales ~~settlement~~under ~~agreement,~~licensing ~~the~~or ~~Founders~~supply ~~agreed~~agreements, to(4) ~~settle~~loans ~~any~~from our stockholders and ~~all~~Victory ~~outstanding~~Park, ~~obligations~~(5) the ~~due~~sale ~~from~~of usour incommon ~~exchange~~stock, ~~for~~and (i6) ~~two~~Fortical ~~installment~~sales ~~payments~~and royalties. We cannot be certain that any of ~~$150,000~~these ~~each~~cash ~~due~~sources will continue to be available to us in ~~May~~the ~~and~~future. Moreover, ~~June~~the ~~2012~~revenues (received in the ~~“Interim~~first ~~Payments”),~~quarter ~~which~~of ~~were~~2013 ~~subsequently~~primarily ~~paid~~related byto the Company;’s ~~(ii)~~Biotechnology ~~$7,700,000~~SBU. Those ~~payable~~assets onhave orsubsequently ~~before~~been ~~September~~sold 30and as a result, ~~2012;~~the ~~and~~Company ~~(iii)~~will not receive revenues from such sources in the ~~issuance~~future. ofProduct 5sales to our partners under these agreements are based upon our licensees’ needs,~~000,000~~ ~~shares~~which are sometimes difficult to predict. Sale of our common stock~~. Currently,~~ weis dodependent ~~not~~upon ~~have~~our ~~sufficient~~ability ~~cash~~ to ~~make~~attract ~~the~~interested ~~final~~investors, ~~payment~~our ~~contemplated~~ability ~~under~~to negotiate favorable terms and the ~~agreement~~performance ~~with~~of the ~~Founders~~stock market in general and biotechnology investments in particular. In ~~light~~Future ofFortical ~~the~~sales and royalties have been negatively impacted by recent ~~EMA~~recommendations ~~recommendation,~~by ~~the~~an ~~expected~~FDA ~~financial~~advisory ~~impact~~committee. onWe ~~business~~are ~~operations~~seeking additional licensing and/or supply agreements with pharmaceutical companies for our ~~inability~~oral topeptides, ~~raise~~including ~~funds~~oral PTH and our obesity peptide (UGP 281). In October 2011, we ~~were~~announced ~~not~~our ~~able~~decision to ~~fund~~establish ~~the~~a ~~debt~~JDV ~~settlement~~ with ~~the~~Nordic ~~Founders~~Bioscience. ~~and~~On asMay a7, ~~result~~2013, we ~~remain~~entered ininto ~~debt~~an agreement with Nordic Bioscience pursuant to which Nordic Bioscience agreed to purchase our entire ownership interest in the ~~Founders~~JDV in exchange for a ~~total~~payment of $221,~~990~~000,000, which was received on May 13, 2013. We may not be successful in ~~principal~~achieving ~~and~~milestones ~~accrued~~under ~~interest~~our ascurrent agreements, in obtaining regulatory approval for our other products or in licensing any of ~~September~~our ~~30,~~other ~~2012~~products or technologies.

37Net Cash Used in Operating Activities: Net cash used in operating activities was $3,406,000 in the first quarter of 2013, which was primarily due to our net income adjusted for non-cash items of $7,349,000 partially offset by a net change in our operating assets and liabilities of $1,964,000, primarily from increased accrued interest on our Victory Park and founder notes.

~~Unigene~~Net ~~Laboratories~~cash used in operating activities was $115,000 ~~Inc.~~in ~~Form~~the 10first quarter of 2012, which was primarily due to an increase in our net loss adjusted by non-Qcash –items ~~Period~~of ~~Ended~~$1,111,000 ~~September~~partially 30offset by a net change in our operating assets and liabilities of $4,192,000, ~~2012~~primarily from decreased accounts receivable and increased accrued interest on our Victory Park and Levy notes.

OnNet ~~December~~Cash ~~21,~~Used ~~2012,~~in weInvesting ~~entered~~Activities: ~~into~~Net acash ~~revised~~used ~~settlement~~in ~~agreement~~investing ~~with~~activities ~~the~~was ~~Levys. Pursuant to the terms of the original settlement agreement dated March 10, 2011, payments of~~ $~~150~~45,000 ~~were~~in ~~due to~~ the ~~Levy~~first ~~Parties~~quarter ~~on each~~ of ~~October~~2013 ~~11, 2012~~ and ~~November~~related ~~13,~~to ~~2012~~expenditures ~~and~~for ~~a payment of $62,296 was due on December 11, 2012~~patents. Net ~~According~~cash toused ~~the~~in ~~terms~~investing ofactivities ~~the~~was ~~revised settlement agreement, we paid~~ $~~100~~823,000 toin the ~~Levy~~first ~~Parties~~quarter ~~on December 21, 2012 which represented partial payment~~ of ~~the October 11,~~ 2012 ~~installment payment. Furthermore~~, ~~the~~primarily ~~payments of each of (i) the remaining $50,000~~ related to ~~the~~our ~~October~~investment ~~11,~~in ~~2012~~Tarsa ~~installment~~as ~~payment,~~well ~~(ii)~~as the ~~$150,000~~purchase ~~installment payment due on November 13, 2012 and the $62,296 installment payment due on December 11, 2012, and (iii) the $150,000 installment payments due to the partnership on each~~ of ~~July 11, 2012, August 13, 2012, and September 11, 2012 under the terms of the revised settlement agreement, have been deferred until June 18, 2013~~equipment. ~~All other terms of the original settlement agreement remain in full force and effect.~~

~~Recent~~Net ~~developments~~Cash ~~impacting~~Used ~~business~~in ~~operations~~Financing Activities: Net cash used in financing activities was $9,000 in the first quarter of 2013 and related to payments under a capital lease financing. Net cash used in financing activities was $14,000 in the first quarter of 2012, primarily due to payments under a capital lease financing partially offset by proceeds from the exercise of stock options.

~~On December 21, 2012, we settled all claims with our former patent counsel regarding certain fees.~~29

On December 11, 2012, we announced that we have retained an investment banker to assist us with the exploration and evaluation of a broad range of strategic options, including, but not limited to, the strategic partnering of our technology, the out-licensing of intellectual property and divestiture of certain assets, and the possible sale of the Company or one of its business units.

On November 27, 2012, we announced that certain previously issued financial statements should no longer be relied upon, resulting in a default under our Restated Finance Agreement, as amended by the Forbearance Agreement.

On July 20, 2012 the European Medicines Agency (“EMA”) issued a press release concerning the marketability of approved calcitonin products in Europe, concluding there was evidence of a small increased risk of cancer with long-term use of current calcitonin medications approved and commercially available in Europe since 1973, and calling for the curtailment of calcitonin usage. On August 1, 2012, Health Canada announced that it is reviewing whether to follow the European medical authorities and restrict use of a nasal spray prescribed to prevent osteoporosis because of the increased risk of cancer.

We licensed to USL our patented nasal formulation of calcitonin for commercialization in the United States and have licensed the development and worldwide commercialization rights (except China) for our Phase 3 oral calcitonin to Tarsa. However, since neither the Company nor its licensees are market authorization holders in Europe, we do not have the right to appeal the EMA's recommendation. On October 12, 2012, Tarsa announced an agreement in principle with Therapicon® Slr to provide consulting assistance to the Italian firm in its appeal of the recent EMA recommendation. In November 2012, the EMA announced that it has reconfirmed its original conclusion that the benefits of calcitonin-containing medicines do not outweigh their risks in the treatment of osteoporosis and that they should no longer be used for this condition. The potential regulatory and commercial impact of this announcement on calcitonin related products marketed or under development by our licensees and partners in Europe and other markets as well as the resulting financial impact on our future business operations is currently being evaluated. There is a possibility that other regulatory authorities, including the United States Food and Drug Administration (“FDA”), could take actions as a result of the EMA recommendation, including withdrawing calcitonin products from market or limiting their use. This could materially adversely affect our finances and operations by reducing or eliminating sales and royalties on Fortical, limiting the value of current calcitonin development projects and limiting the potential value of our investment in Tarsa. Additionally, this could impact the carrying value of assets, including fixed assets, inventories and patents, as well as our ability to obtain adequate financing. On January 14, 2013, the FDA posted notice of an Advisory Committee Meeting scheduled on March 5, 2013 to discuss whether the benefit of calcitonin salmon for the treatment of postmenopausal osteoporosis outweighs a potential risk of cancer.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

In the third quarter of 2012 and through the date of this filing, the following events and circumstances indicated that the carrying value of our long lived assets may not be recoverable: (i) potential impact of the EMA press release; (ii) continuing operating losses; (iii) significant revisions to internal revenue forecasts; and (iv) a significant decline in our stock price. We are in the process of evaluating whether the undiscounted expected future cash flows from the long-lived assets are less than their carrying amount. If undiscounted expected future cash flows are not sufficient to support the recorded value of the assets, an impairment loss may be recognized for the difference between fair value and the carrying value to reduce the long lived assets to their estimated recoverable value. Such analysis could result in a material impairment charge for the twelve months ended December 31, 2012.

Liquidity

The global credit crisis that began in 2007 was further exacerbated by events occurring in the financial markets in the fall of 2008, and has continued into 2012. These events have negatively impacted the ability of corporations to raise capital through equity financings or borrowings. The credit crisis may continue for the foreseeable future. In addition, uncertainty about current and future global economic conditions may impact our ability to license its products and technologies to other companies and may cause consumers to defer purchases of prescription medicines, such as Fortical, in response to tighter credit, decreased cash availability and declining consumer confidence. Accordingly, future demand for our products and technologies could differ from its current expectations.

Due to our limited financial resources, any further significant decline in Fortical sales and/or royalties, or delay in achieving milestones under our existing license agreements, or in signing new license, feasibility or distribution agreements for our products or technologies or loss of patent protection, ability to sell additional shares of our common stock, or ability to not violate our covenants with Victory Park could have a material adverse effect on our cash flow and operations (see Notes D, E, J, N, and R). As a result of advancing purchase orders from USL previously scheduled for the first quarter of 2013, we received approximately $1,255,000 in additional cash in the fourth quarter of 2012. Additionally, the Company was advanced $400,000 from USL in the fourth quarter of 2012 for the production of additional batches in 2013. This will reduce sales of Fortical in future periods.

If we are unable to achieve significant milestones or sales under our existing agreements and/or enter into new significant revenue generating license or other arrangements in the near-term, we will need to secure another source of funding in order to satisfy our working capital needs. We will also need to avoid further events of default under and maintain compliance with the covenants in our financing agreement with Victory Park. If we are not able to generate additional cash, we will need to significantly curtail our operations. Should the funding required to sustain our working capital needs be unavailable or prohibitively expensive, the Company would not have the ability to continue as a going concern. We believe that satisfying our cash requirements over the long term will require the successful commercialization of one or more of our biotechnologies or our licensees’ oral or nasal calcitonin products, our oral parathyroid hormone (“PTH”) product or the obesity program. However, it is uncertain whether any new products will be approved or will be commercially successful. The amount of future revenue we will derive from Fortical is also uncertain.

In December 2011, we announced a restructuring plan that included a reduction in workforce and expenses to improve operational efficiencies and to better match resources with market demand. Under the comprehensive plan, we are continuing Fortical production and maintaining all of its core programs and partnered activities while decreasing cash expenditures. Since we are currently maintaining an adequate inventory of enzyme to support expected Fortical needs, we continue to suspend manufacturing of those materials at its Boonton facility. However, we are maintaining the cGMP status of the facility and the ability to manufacture and tablet solid dosage forms of peptides at that location. The cessation of production continued through 2012, however, the Company plans to engage in the production of calcitonin in the first quarter of 2013. Implementation of the restructuring plan resulted in an immediate company-wide workforce reduction of approximately 25%. The cash requirements in 2012 to operate the research and peptide manufacturing facilities and develop products decreased from 2011 due to the December 2011 restructuring.

Cash received during the nine months ended September 30, 2012 was primarily from the net proceeds of $3,500,000 as a result of the Victory Park refinancing (see Note H); Fortical sales and royalties received under our agreement with Upsher-Smith Laboratories, Inc. (“USL”); accounts receivable collected from GlaxoSmithKline (“GSK”) for work performed in 2011; and from development work and fee-for-service feasibility studies for various companies, including Tarsa Therapeutics, Inc. (“Tarsa”). Our primary sources of cash have historically been (1) licensing fees for new agreements, (2) milestone and other payments under licensing or development agreements, (3) bulk peptide sales under licensing or supply agreements, (4) loans from our founders and Victory Park, (5) the sale of our common stock, (6) Fortical sales and royalties and (7) the proceeds from the sale of state net operating loss carryforwards. In 2011, we divested our equity interest in our former China Joint Venture as well as our Site Directed Bone Growth (“SDBG”) program, which may result in additional sources of cash in the future. There can be no assurance that any of these cash sources will continue to be available to us in the future. Licensing fees from new collaborations are dependent upon the successful completion of complex and lengthy negotiations and are often subject to the completion of successful feasibility programs. Milestone payments are based upon progress achieved in collaborations, which cannot be guaranteed, and are often subject to factors that are controlled neither by our licensees nor us. Product sales to our partners under these agreements are based upon our licensees’ needs, which are sometimes difficult to predict. Sale of our common stock is dependent upon our ability to attract interested investors, our ability to negotiate favorable terms and the performance of the stock market in general and biotechnology investments in particular. Future Fortical sales and royalties will be affected by competition and continued acceptance in the marketplace and could be impacted by manufacturing, distribution or regulatory issues. We are actively seeking additional licensing and/or supply agreements with pharmaceutical companies for various oral peptides, including PTH and its obesity peptide, and for our peptide manufacturing technology. In October 2011, we announced our decision to establish a Joint Development Vehicle with Nordic Bioscience (see Note N). We may not be successful in achieving milestones under our current agreements, in obtaining regulatory approval for other products or in-licensing any of our other products or technologies.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

Net Cash Used in Operating Activities: Net cash used in operating activities was $3,121,000 in the nine months ended September 30, 2012, which was primarily due to our net loss adjusted for non-cash items of $6,191,000 and a net change in our operating assets and liabilities of $9,634,000, primarily from a decrease in accounts receivable, inventory and other assets and increased accrued interest on our Victory Park and Levy notes and increased deferred revenue.

Net cash used in operating activities was $4,627,000 in the nine months ended September 30, 2011, which was primarily due to our net loss adjusted for non-cash items of $18,745,000 and an increase in our operating assets and liabilities of $10,668,000, primarily from proceeds from deferred revenue as well as increased accrued interest on our Victory Park and Levy notes.

Net Cash Used in Investing Activities: Net cash used in investing activities was $969,000 in the nine months ended September 30, 2012, primarily related to our investment in Tarsa, the purchase of equipment and patent expenditures and an investment in a joint venture with Nordic Bioscience. Net cash used in investing activities was $2,566,000 in the nine months ended September 30, 2011, primarily related to our April and July investments in Tarsa and capital expenditures, partially offset by proceeds from the sale/leaseback transaction.

Net Cash Provided by Financing Activities: Net cash provided by financing activities was $3,407,000 in the nine months ended September 30, 2012, primarily due to the proceeds from the issuance of an additional note to Victory Park of $4,000,000, partially offset by debt issuance costs, the repayment of $300,000 of principal due on the Levy notes and payments under a capital lease financing. Net cash provided by financing activities was $185,000 in the nine months ended September 30, 2011, resulting from the proceeds received from stock option exercises.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

On September 30, 2008, we entered into a financing agreement with Victory Park whereby Victory Park purchased $15,000,000 of three-year senior secured non-convertible term notes from us. In May 2009, we issued an additional $5,000,000 in notes to affiliates of Victory Park. In March 2010, we restructured our debt with Victory Park and increased our borrowing to $33,000,000. Under our agreement with Victory Park, accrued and unpaid interest is added to the outstanding principal balance. As a result, $5,018,750 ~~and $5,797,859~~ in accrued interest was added to the principal balance ~~during~~which ~~the~~now ~~nine~~totals ~~months ended September 30~~$38, ~~2011 and 2012~~018, ~~respectively~~750. Additionally, pursuant to a forbearance agreement and first amended and restated financing agreement dated September 21, 2012, we issued to Victory Park a $4,000,000 senior secured note. The total outstanding principal balance isas ~~now~~of March 31, 2013 is $47,816,609 and is payable in full on September 21, 2013. These convertible notes bear interest at the prime rate plus 5%, subject to a floor of 15% per annum plus 3% penalty interest in the event of default. Therefore, we are exposed to interest rate fluctuations in the near-term until these notes are converted or repaid in full. We do not employ specific strategies, such as the use of derivative instruments or hedging, to manage our interest rate exposure. We estimate that, due to the short-term nature of our cash and investments, a change of 100 basis points in interest rates would not have materially affected their fair value.

The ~~Company~~information ~~currently~~below ~~lacks~~summarizes ~~sufficient~~our ~~shares~~market ofrisks ~~Common~~associated ~~Stock~~with tointerest ~~deliver~~bearing ~~all~~debt ofobligations ~~the~~as ~~shares~~ of ~~Common~~March ~~Stock~~31, ~~issuable to Victory Park upon conversion of the notes~~2013. The ~~Company~~table isbelow ~~required~~presents toprincipal ~~obtain~~cash ~~stockholder~~flows ~~approval~~and torelated ~~amend~~interest ~~its~~rates ~~certificate~~by year of ~~incorporation~~maturity tobased ~~increase~~on the ~~number~~terms of ~~authorized~~the ~~shares~~debt. toGiven ~~allow~~our ~~for~~financial ~~the~~condition, ~~conversion~~described ~~of the notes~~ in ~~full~~“Liquidity and ~~until~~Capital ~~such~~Resources,” ~~time~~it asis ~~the~~not ~~Company~~practicable ~~receives approval~~ to ~~increase~~estimate the ~~authorized~~fair ~~shares,~~value ~~Victory~~of ~~Park~~our ~~has~~subordinated ~~the~~debt ~~ability~~(payable to ~~demand payment in cash for any shortfall in authorized shares upon a notice of conversion~~Levys).

The information below summarizes our market risks associated with interest bearing debt obligations as of September 30, 2012. The table below presents principal cash flows and related interest rates by year of maturity based on the terms of the debt. Given our financial condition, described in “Liquidity and Capital Resources,” it is not practicable to estimate the fair value of our subordinated debt (payable to Levys).

Debt Obligation	Carrying Amount		2013		Thereafter
Note Payable – Victory Park Variable Interest Rate: 15%(1)	$	47,816,609	$	47,816,609	$	--
Notes Payable – Levys Fixed Interest Rate: 12%		14,437,518		14,437,518		--
Total	$	62,254,127	$	62,254,127	$	--

Debt Obligation	Carrying Amount		2012		2013		2014
Note Payable – Victory Park Variable Interest Rate: 15%(1)	$	47,816,609	$	--	$	47,816,609	$	--
Notes Payable – Levys Fixed Interest Rate: 12%		14,437,518		450,000		13,987,518		--
Capital Lease Fixed Interest Rate: 10%		75,585		9,044		38,566		27,975
Total	$	62,329,712	$	459,044	$	61,842,693	$	27,975

(1)	Prime rate plus 5%, with a floor of 15% plus 3% default interest

~~(1)~~The ~~Prime~~conversion ~~rate~~feature ~~plus~~on 5%our senior secured convertible notes represents an embedded derivative which is required to be bifurcated and marked to fair value on a recurring basis. The aggregate fair value of the embedded derivative liability in our balance sheets as of March 31, ~~with~~2013 and December 31, 2012 was $16,850,000 and $28,700,000, respectively. The fair value was determined based on valuation models using a ~~floor~~combination of ~~15%~~observable and unobservable inputs utilizing a probability-weighted scenario analysis that includes a Monte Carlo pricing model. Significant observable inputs include the market price of our common stock, ~~plus~~volatility, 3%remaining ~~default~~term, risk-free interest rate, credit spread and dividend yield. Significant unobservable inputs include the probability of triggering a reset feature on the embedded derivative which would result in a reduction in the conversion price. If the assumptions were modified, it could result in a material change to the carrying value of the embedded conversion feature.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

The conversion feature on our senior secured convertible notes represents an embedded derivative which is required to be bifurcated and marked to fair value on a recurring basis. The aggregate fair value of the embedded derivative liability in our balance sheets as of September 30, 2012 and December 31, 2011 was $19,460,000 and $12,470,000, respectively. The fair value was determined based on valuation models using a combination of observable and unobservable inputs utilizing a probability-weighted scenario analysis that includes a Monte Carlo pricing model. Significant observable inputs include the market price of our common stock, volatility, remaining term, risk-free interest rate, credit spread and dividend yield. Significant unobservable inputs include the probability of triggering a reset feature on the embedded derivative which would result in a reduction in the conversion price. If the assumptions were modified, it could result in a material change to the carrying value of the embedded conversion feature.

Item 4. Controls and Procedures

For the quarterly period ~~ended~~ending ~~September~~March 3031, ~~2012~~2013, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this report. Based upon this evaluation, our principal executive officer and our principal financial officer concluded that ~~our~~, ~~disclosure controls and procedures are still not effective~~ as of ~~September~~March 3031, ~~2012~~2013, ~~with respect to the material weakness disclosed in~~ our ~~Form~~disclosure ~~10-K,~~controls asand ~~amended,~~procedures ~~for~~were ~~the period ended December 31, 2011~~effective.

Prior to the identification of the material weakness in November 2012, in the second quarter of 2012 the Company hired new accounting personnel including a Chief Financial Officer and a Corporate Controller with relevant industry and accounting expertise in order to enhance its internal control over financial reporting. Additionally, in response to the material weakness described above, management, with the input, oversight, and support of the Audit Committee, identified and took the following steps beginning during the fourth quarter of 2012: (i) non ordinary course transactions are considered and evaluated by senior finance management; (ii) we enhanced our controls related to the preparation of accounting position papers for all complex transactions; and (iii) where appropriate, management seeks the advice of qualified outside consultants on accounting matters related to the application of U.S. GAAP to complex, non-ordinary course transactions and in other instances as warranted.30

Our management, including the principal executive officer and principal financial officer, does not expect that our internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, cannot provide assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Additionally, our principal executive officer and principal financial officer determined that, other than as described above, there were no changes in our internal control over financial reporting during the quarterly period ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

OnNot September 8, 2011, the USPTO granted a request for inter partes reexamination of the Fortical Patent filed by Apotex on July 15, 2011. In granting the Request for Reexamination, the USPTO gave Unigene a two month time period to respond to the substantial new questions of patentability raised in the Reexamination Office Action dated September 8, 2011. Unigene filed its response to the Reexamination Office Action on November 8, 2011. Apotex filed Third Party Comments on December 7, 2011 and January 9, 2012. Because the Supreme Court denied Apotex’s petition for certiorari, on April 5, 2012, Unigene moved to Suspend Reexamination of Claim 19 by filing a Petition with the USPTO. On April 19, 2012, Apotex filed a Response to Unigene’s Petition with the USPTO, asking the USPTO to deny Unigene’s Petition. Unigene is waiting to hear from the USPTO, which may take over one year. The Reexamination reopens the USPTO prosecution of all claims 13, 14, 16, 17, 19 and 24-29 of the Fortical Patent. Based on USPTO statistics, reexamination proceedings take an average of about 36 months to complete. Potential outcomes for reexamination include the patent emerges with the patent claims remaining unchanged, patent claims being amended, or all patent claims being canceled. There is the usual USPTO prosecution risk that we will not be successful in the reexamination and potentially subsequent USPTO or litigation proceedings. In the event that we do not prevail, then Apotex could be in a position to market its nasal calcitonin product if and when its pending ANDA receives FDA approval. This could have a material adverse impact on our results and financial position. On August 14, 2012, the USPTO issued RE43,580 patent to Unigene entitled “Nasal Calcitonin Formulations” that covers Fortical. On December 7, 2012 Unigene's petition to terminate the inter partes reexamination with respect to claim 19 was granted and therefore the inter partes reexamination with regard to claim 19 will not be further maintained by the USPTO. Claim 19 covers the Fortical Patent. The inter parties reexamination remains open for claims 13, 14, 16, 17 and 24-29 of the Fortical Patent. Apotex may now file a request for an ex parte reexamination of claim 19. If Apotex files such a request, it would remain enjoined by the District Court’s injunction unless and until they were relieved of the injunction by the District Court after the USPTO finally rejects claim 19 in the ex parte reexamination and the Federal Circuit affirms.Applicable

On May 18, 2012 the Company’s former patent counsel, Ostrolenk Faber LLP, filed suit against it in the United States District Court for the Southern District of New York for unpaid legal fees and disbursements in an amount not less than $401,748 plus interest of $35,245 and legal fees. The Company answered the lawsuit and filed counterclaims that assert amongst other things claims for legal malpractice and a breach of fiduciary duty. The Company contends that Ostrolenk Faber LLP’s actions and/or inactions caused the loss of the Company’s intellectual property in Brazil. On December 21, 2012, the parties agreed to settle all claims and counterclaims in the action. The terms of the settlement include an upfront payment by the Company to Ostrolenk in the amount of $40,000 which was paid on December 21, 2012, and 24 monthly installment payments of $5,500 on or before the 1st day of each month, commencing on February 1, 2013.

Item 1A.

Risk Factors

WeYou ~~make~~should ~~various~~consider ~~statements~~carefully these risk factors together with all of the information included or incorporated by reference in this ~~section~~annual ~~which~~report ~~constitute~~in ~~“forward-looking~~addition ~~statements”~~to ~~under~~our ~~Section~~financial ~~27A~~statements ofand the ~~Securities~~notes ~~Act~~to ofour ~~1933,~~financial asstatements. ~~amended~~This section includes forward-looking statements. You ~~See~~should ~~“Special~~not ~~Note~~place ~~Regarding~~undue ~~Forward-Looking~~reliance ~~Statements”~~on inthese ~~Part~~forward-looking 1statements, ~~Item~~which 2apply only as of the date of this ~~Quarterly~~quarterly ~~Report~~report.

~~Our~~The ~~performance~~following ~~and~~is ~~financial~~a ~~results~~discussion ~~are~~of ~~subject~~the torisk ~~risks~~factors ~~and~~that ~~uncertainties~~we ~~including,~~believe ~~but~~are ~~not~~material ~~limited~~ to, ~~the~~us ~~specific~~at ~~risks~~this ~~disclosed~~time. inThese ~~Part~~risks I,and ~~Item~~uncertainties ~~1A,~~are ~~Risk~~not ~~Factors,~~the inonly ~~our~~ones ~~Annual~~facing ~~Report~~us onand ~~Form~~there ~~10-K,~~may asbe ~~amended, for~~additional ~~the~~matters ~~year~~that ~~ended~~we ~~December~~are ~~31,~~unaware ~~2011.~~of ~~Except~~or asthat ~~noted~~we ~~below,~~currently noconsider ~~material~~immaterial. ~~changes~~All toof ~~the~~these ~~risk~~could ~~factors~~adversely ~~disclosed~~affect inour ~~the~~business, ~~10-K~~results ~~have~~of ~~been~~operations, ~~identified~~financial ~~during~~condition ~~the~~and ~~three~~cash ~~months ended September 30, 2012:~~flows.

~~Our~~Risk ~~independent~~Related ~~auditors have expressed substantial doubt about our ability~~ to ~~continue~~Our asFinancial ~~a going concern.~~Condition

~~Our~~The ~~independent~~audit ~~registered public accounting firm added a paragraph to their~~ opinion ~~issued~~on inour ~~connection with their audit of the~~ financial statements ~~as of and~~ for the year ended December 31, ~~2011~~2012 ~~that~~contains ~~emphasizes conditions that raise substantial doubt about our ability to continue as~~ a going concern. ~~Our ability to generate additional revenue or obtain additional funding will determine our ability to continue as a going concern for a reasonable period of time~~modification. ~~Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.~~

WeThe ~~require~~opinion ~~additional~~issued ~~cash~~by in the ~~near-term~~independent toregistered ~~sustain~~public accounting firm that audited our ~~operations~~financial statements as of and ~~our~~for the year ended December 31, 2012 contained a paragraph that emphasizes conditions that raise substantial doubt about Unigene’s ability to ~~secure~~continue as a going concern. Unigene’s ability to generate additional ~~cash~~revenue isor ~~uncertain~~obtain additional funding will determine its ability to continue as a going concern for a reasonable period of time. Unigene’s financial statements as of and for the year ended December 31, 2012 do not include any adjustments that might result from the outcome of this uncertainty.

We ~~had~~expect ato ~~cash~~run ~~flow~~out ~~deficit from operations~~ of ~~$3,121,000~~cash ~~for~~imminently ~~the nine months ended September 30, 2012, $6,766,000 for the year ended December 31, 2011, $1,660,000 for the year ended December 31, 2010~~ and ~~$11,291,000~~require ~~for~~an ~~the~~immediate ~~year~~infusion ~~ended~~of ~~December~~capital ~~31, 2009. We believe that, in the near-term, we will generate cash~~ to ~~apply~~sustain ~~toward funding~~ our operations ~~through Fortical royalties and sales~~; from anticipated receipt of licensing fees and revenue generated from fee-for-service feasibility studies; and from other corporate development activities. These funds may not be adequate to fully support our ~~operations~~ability ~~in the near-term. Notwithstanding the refinancing arrangement with Victory Park we entered into on September 21, 2012, we continue~~ to ~~need~~secure additional ~~sources of~~ cash ~~in order to maintain future operations. Unless the Company~~ is ~~successful in generating additional cash, the current cash on hand will not be sufficient to fund operations through June 2013~~uncertain. In the event that the Company is unable to secure additional sources of revenue, it will not be able to fund operations beyond the first quarter of 2013 without defaulting on the minimum cash requirement under its forbearance agreement. We may be unable to raise, on acceptable terms, if at all, the substantial capital resources necessary to conduct our operations. If we are unable to raise the required capital, we may be forced to further limit some or all of our research and development programs and related operations, curtail development of our product candidates and the ability to license our technologies, and, ultimately, cease operations. Our future capital requirements will depend on many factors, including:

42We had cash flow deficits from operations of $3,406,000 for the three month period ended March 31, 2013, $3,177,000 for the year ended December 31, 2012; $6,766,000 for the year ended December 31, 2011 and $1,669,000 for the year ended December 31, 2010. Our cash and cash equivalents totaled $353,000 on March 31, 2013. Based upon management’s projections, we believe our current cash will only be sufficient to support our current operations through June 15, 2013. Therefore, we need additional sources of cash in order to maintain all or a portion of our operations. We may be unable to raise, on acceptable terms, if at all, the substantial capital resources necessary to conduct our operations. If we are unable to raise the required capital, we may be forced to close our facilities and cease our operations. If we are unable to resolve outstanding creditor claims, we may have no other alternative than to seek protection under available bankruptcy laws.

~~Unigene~~Even ~~Laboratories~~if we are able to raise additional capital, ~~Inc~~as a result of the April 25, 2013 Article 9 sale of our Biotechnologies Strategic Business Unit, we no longer have any assets that currently generate revenues. If ~~Form~~we ~~10-Q~~are –able ~~Period~~to ~~Ended~~raise ~~September~~capital, 30our future capital requirements will depend on many factors, ~~2012~~including the scope of operations we are able to maintain and our ability to acquire or license new technologies and products.

·We ~~our~~have ~~ability~~incurred tosubstantial ~~engage~~costs ~~new~~and ~~partners~~could ~~for~~face ~~fee-for-service~~additional ~~feasibility~~material ~~studies~~costs related to a financial restatement and ~~licensing~~a ~~agreements~~material weakness in our internal controls; Any material weaknesses or deficiencies in our internal control over financial reporting could harm stockholder and business confidence in our financial reporting, our ability to obtain financing and other aspects of our business.

·In response to the ~~level~~accounting associated with an embedded derivative liability associated with our March 2010 senior secured convertible notes, we needed to restate certain prior period financial statements and amend related disclosure. As a result, we incurred materially increased professional fees and are subject to the possibility of ~~Fortical~~future ~~sales~~investigations, ~~particularly~~litigation inor ~~light~~other actions, such as shareholder activism, arising out of ~~new~~the restatement, which would further increase our costs and ~~potential~~expenses ~~competition;~~and consume management time, and could lead to fines, penalties, settlements or damages. These matters have had, and could continue to have, an adverse effect on our financial condition.

·The existence of one or more material weaknesses or significant deficiencies could result in future errors in our ~~ability~~financial statements. Substantial costs and resources may be required to ~~successfully~~rectify ~~defend~~any internal control deficiencies. If we cannot produce reliable financial reports, our ~~Fortical~~business ~~patent~~and ~~against~~financial ~~Apotex’s~~condition, ~~claim;~~including our ability to obtain financing and operate our business, could be harmed.

~~· the generation of revenue from our Tarsa agreement;~~31

·We ~~continued~~are ~~scientific~~required ~~progress~~to make payments under the Victory Park promissory notes in ~~our~~the ~~discovery~~principal ~~and~~amount ~~research~~of ~~programs;~~$41,505,000, plus accrued interest.

·We ~~progress~~owe an aggregate principal amount of $41,505,000, plus accrued interest of $417,000 as of April 25, 2013 (after taking into account the sale of the assets pertaining to our Biotechnologies Strategic Business Unit), on various promissory notes payable to Victory Park affiliates that become due on September 21, 2013. Notwithstanding the maturity dates of such promissory notes, we are currently in default under such promissory notes. As a result, Victory Park could accelerate our payment obligations in accordance with ~~preclinical~~the ~~studies~~terms of the notes and ~~clinical~~related ~~trials;~~financing agreement. We do not currently have sufficient cash to repay these notes. We may not be able to generate sufficient cash from operations or from other sources in order to make the payments when due.

·We ~~the~~are ~~magnitude~~required ~~and~~to ~~scope~~make ofpayments ~~our~~under ~~discovery,~~the ~~research~~Levy ~~and~~loans ~~development~~in ~~programs;~~June 2013.

·We ~~our~~owe ~~ability~~an aggregate original principal amount of $14,437,000 on notes payable to ~~maintain~~the ~~existing~~founding Levy family. As of March 31, 2013, principal and ~~establish~~interest ~~additional~~on these notes aggregated $23,859,000. We ~~corporate~~do ~~partnerships~~not ~~and~~currently ~~licensing~~have ~~arrangements;~~sufficient cash to repay these notes. We may not be able to generate sufficient cash from operations or from other sources in order to make the payments when due in June 2013. If we do not make the required payments when due, we will be in default under the terms of the applicable notes.

·We ~~our~~have ~~partners’~~significant ~~ability~~historical tolosses ~~sell~~ and ~~market~~expect ~~our~~to ~~products~~continue orto ~~their~~incur ~~products~~losses ~~utilizing~~for ~~our~~the ~~technologies;~~foreseeable future.

·We have incurred annual losses since our inception, and we may never achieve profitability. At March 31, 2013, we had an accumulated deficit of approximately $214,649,000. Our gross revenues for the ~~time~~quarter ended March 31, 2013 were $614,000. Our gross revenues for the years ended December 31, 2012, 2011 and ~~costs~~2010 ~~involved~~were $9,438,000, $20,508,000 and $11,340,000, respectively. Our revenues have not been sufficient to sustain our operations. Our revenues for the quarter ended March 31, 2013 consisted primarily of licensing revenue and Peptelligence™ revenue from our Biotechnologies strategic business unit. Our revenues for the years ended December 31, 2012, 2011 and 2010 consisted primarily of Fortical sales and royalties, licensing revenue and Peptelligence™ revenue. The Peptelligence™ assets were sold to VPC on April 25, 2013 and as a result, Unigene will no longer receive any additional revenues from this business. We believe that to achieve profitability we will require the successful commercialization of our oral PTH product candidate and our obesity program (UGP 281), neither of which has been out-licensed, and additional product candidates, which we are unlikely to be able to in-license ~~obtaining~~without ~~regulatory~~a ~~approvals;~~significant infusion of cash. Our products, product candidates and technologies may never become commercially successful. For the three month period ended March 31, 2013, we had losses from operations of $5,361,000. For 2012, 2011 and 2010, we had a loss from operations of $9,371,000, $3,466,000 and $10,324,000, respectively. Our net income for the three month period ended March 31, 2013 was $1,979,000 and our net losses for the years ended December 31, 2012, 2011 and 2010 were $34,286,000, $7,096,000 and $32,534,000, respectively.

·Risks ~~the~~Related ~~time~~to ~~and~~Our ~~costs involved in maintaining our production facility;~~Business

·An FDA ~~the~~advisory ~~costs~~committee's recent ~~involved~~review inof ~~preparing,~~calcitonin ~~filing,~~products ~~prosecuting,~~has ~~maintaining,~~negatively ~~defending~~impacted ~~and~~our ~~enforcing~~operations; ~~patent~~Future ~~claims;~~Fortical revenues are uncertain and our Fortical Assets are impaired

·On July 20, 2012, the ~~pharmaceutical~~EMA ~~industry’s~~issued ~~need~~a press release concerning the marketability of calcitonin products in Europe, concluding there was evidence of increased risk of cancer with long-term use of such calcitonin medications, and calling for curtailment of their use. In November 2012, the EMA reconfirmed its original conclusion. Subsequently, other health authorities, including, Health Canada, announced that they were reviewing the calcitonin data to ~~acquire~~determine orwhether ~~license~~to ~~new~~follow ~~technologies~~suit. On March 5, 2013, an advisory committee meeting to the FDA held a meeting and concluded that the benefits of salmon calcitonin products, including Fortical, do not outweigh the potential risks associated with their use and as a result, should not continue to be broadly marketed. Additionally, it was recommended that fracture prevention data be required for the approval of new calcitonin products in development for osteoporosis prevention and treatment, such as the oral calcitonin product being developed by Tarsa. We previously wrote down the value of our investment in Tarsa to zero.

We have ~~incurred~~not ~~substantial~~received ~~costs~~any ~~and~~orders ~~face~~for Fortical in 2013. As a result of various factors identified above, it was determined that there would be no additional ~~material~~purchase ~~costs~~orders submitted for Fortical in the near future and as a result, we ceased manufacturing operations in late March 2013 and implemented a reduction in force on April 1, 2013, which included all personnel directly contributing to Fortical production. As a result of the lack of any anticipated production of Fortical and uncertainty related to ~~our~~any ~~financial~~future ~~statement~~Fortical ~~restatement~~manufacturing revenues and aroyalties, ~~material~~we ~~weakness~~concluded that all of our assets that pertain to Fortical are impaired as of March 31, 2013, resulting in impairment charges to our ~~internal~~fixed ~~controls~~assets of $675,000, to our patents of $309,000 and to our inventories of $1,636,000 in the three months ended March 31, 2013.

In response to the accounting for an embedded derivative liability associated with our March 2010 senior secured convertible notes, our Audit Committee undertook an investigation into our practices and determined, in conjunction with management, that we needed to undertake the Restatement. As a result, we:32

·We ~~withdrew~~have ~~prior~~defaulted ~~financial~~under ~~statements~~various agreements with Victory Park, ~~which~~including ~~has~~the ~~caused~~Amended usand toRestated ~~fall~~Financing ~~out~~Agreement, ofas ~~compliance~~amended ~~with~~by ~~various~~the ~~SEC~~Forbearance ~~regulations;~~Agreement and First Amendment, our senior promissory notes and the Second Amended and Restated Registration Rights Agreement

·Our ~~incurred~~failure ~~materially~~to ~~increased~~timely ~~professional~~file ~~fees;~~our Quarterly Report on Form 10-Q for the period ended September 30, 2012 as a result of a financial restatement caused an event of default under the Amended and Restated Financing Agreement dated March 16, 2010, among the Company, Victory Park Management, LLC, as administrative agent and collateral agent, and Victory Park Credit Opportunities Master Fund, Ltd., as amended by the Forbearance Agreement and First Amendment to Amended and Restated Financing Agreement, dated as of September 21, 2012, by and among the Company, Agent, Victory Park Credit Opportunities, L.P., VPC Fund II, L.P., VPC Intermediate Fund II (Cayman) L.P., and Victory Park Credit Opportunities Intermediate Fund, L.P.

·As ~~are~~of ~~subject~~September 21, 2012, we lacked sufficient shares of common stock to deliver all of the ~~possibility~~shares issuable upon the conversion of ~~future~~the ~~investigations,~~promissory ~~litigation~~notes orheld ~~other~~by ~~actions,~~the ~~such~~Victory asPark ~~shareholder~~entities. Under ~~activism~~the restated financing agreement, ~~arising~~we ~~out~~are required to obtain stockholder approval to amend our certificate of incorporation to increase the ~~Restatement,~~number ~~which~~of ~~would~~authorized ~~further~~shares ~~increase~~to ~~our~~allow ~~costs~~for ~~and~~the ~~expenses~~conversion of the notes in full and ~~consume~~until ~~management~~such time as we receive approval to increase the authorized shares, ~~and~~Victory ~~could~~Park ~~lead~~has the ability to ~~fines~~demand payment in cash for any shortfall in authorized shares upon a notice of conversion. Under the restated financing agreement, ~~penalties~~we were required to prepare and file proxy materials with the SEC and hold a stockholder meeting no later than January 21, ~~settlements~~2013 to increase the number of authorized shares of our common stock. As a result of the financial restatement and related matters, orwe ~~damages~~have neither filed the required proxy materials nor held a stockholder meeting.

~~These~~In ~~matters~~addition ~~have~~to ~~had~~the foregoing, ~~and~~under ~~could~~the ~~continue~~terms of the restated financing agreement with Victory Park, as amended by the forbearance agreement, we are required to ~~have~~trade our common stock on the OTCBB. However, anour common stock now trades on the pink sheets. Additionally, we must maintain a cash balance in a specified account in excess of $250,000. The restated financing agreement also specifies numerous additional events of default, including without limitation: failure to pay principal or interest; filing for bankruptcy; breach of covenants, representation or warranties; the occurrence of a material adverse effect on(as defined in the agreement); a change in control (as defined in the agreement); the failure of any registration statement required to be filed to be declared effective by the SEC and maintain effective pursuant to the terms of the our ~~financial~~registration ~~results~~rights agreement with Victory Park (which is described further in the following paragraph); any material decline or depreciation in the value or market price of the collateral. We may now or in the foreseeable future also be in default under one or more of the additional provisions of the restated financing agreement.

~~Failure~~Under tothe ~~timely~~restated ~~file~~financing ~~periodic~~agreement, ~~reports~~for ~~caused~~so ~~events~~long as an event of default ~~related~~is continuing, the unpaid principal amount of the promissory notes bears interest at the default interest rate, which is the current interest rate under the agreement plus 3%. In addition, the lenders have the right, following written notice, to cause us to redeem all or any portion of the notes. The price for redemption of the notes shall be equal to the greater of (i) an amount equal to the sum of one hundred fifteen percent (115%) of the outstanding principal amount of the notes to be redeemed, plus accrued and unpaid interest thereon, plus accrued and unpaid late charges, and (ii) an amount equal to the product of (A) the number of shares of our ~~senior~~common stock into which the principal amount and all accrued and unpaid interest outstanding under the notes ~~held~~to be redeemed may, without giving effect to any limitations set forth in Section 4 of the notes, as of the effective date of conversion (in accordance with the terms of the note), multiplied by ~~Victory~~(B) ~~Park~~the “Weighted Average Price” (as defined in the notes) for one share of our common stock as of such date. We do not have sufficient cash to redeem the notes.

~~The~~Pursuant ~~failure~~ to ~~timely~~a ~~file~~Second ~~our~~Amended ~~Quarterly~~and ~~Report~~Restated onRegistration ~~Form~~Rights ~~10-Q~~Agreement, ~~for~~dated ~~the~~as ~~period~~of ~~ended~~ September 3021, 2012, ~~caused~~by anand ~~event~~among ofus ~~default~~and ~~under the~~certain ~~Amended~~selling ~~and~~stockholders ~~Restated~~affiliated ~~Financing~~with ~~Agreement~~Victory ~~dated~~Park, ~~March~~we ~~16,~~agreed ~~2010,~~to ~~among~~file registration statements to cover the ~~Company,~~resale ~~Victory~~by ~~Park~~the ~~Management,~~selling ~~LLC,~~stockholders asof ~~administrative~~certain ~~agent~~shares ~~and~~of ~~collateral~~our ~~agent,~~common ~~and~~stock ~~Victory~~issuable ~~Park~~from ~~Credit~~time ~~Opportunities~~to ~~Master~~time ~~Fund,~~upon ~~Ltd~~the conversion of the notes. On October 19, as2012, ~~amended~~we filed a registration statement on Form S-1 (which has not been declared effective by the ~~Forbearance~~SEC) ~~Agreement~~relating ~~and~~to ~~First~~certain ~~Amendment~~shares of our common stock. We agreed to ~~Amended~~use ~~and~~our ~~Restated~~reasonably ~~Financing~~best ~~Agreement,~~efforts ~~dated~~to have the registration statement declared effective as ofsoon ~~September~~as 21practicable, ~~2012,~~but byin ~~and~~no ~~among~~event later than the ~~Company,~~earlier ~~Agent,~~of ~~Victory~~(i) ~~Park~~the ~~Credit~~date ~~Opportunities,~~that ~~L.P.,~~is ~~VPC~~ninety ~~Fund~~(90) ~~II,~~days ~~L.P.,~~after ~~VPC~~the ~~Intermediate~~closing ~~Fund~~date IIand (~~Cayman~~ii) ~~L.P.,~~the ~~and~~fifth ~~Victory~~(5th) ~~Park~~business ~~Credit~~day ~~Opportunities~~after ~~Intermediate~~we ~~Fund,~~are ~~L.P.~~notified ~~and~~by athe ~~result~~SEC ofthat the ~~Restatement,~~applicable ~~under~~registration ~~Section~~statement ~~2.2~~will ofnot ~~such~~be ~~agreement,~~reviewed ~~for~~or sois ~~long~~no aslonger ansubject ~~event~~to offurther ~~default~~review isand ~~continuing~~comment. On October 31, ~~the~~2012, ~~unpaid~~we ~~principal~~were ~~amount~~notified ofby the ~~notes~~SEC ~~shall~~that ~~bear~~it ~~interest~~would atnot review the ~~default~~registration ~~interest~~statement ~~rate,~~and ~~which~~Victory isPark ~~the~~subsequently ~~current~~extended ~~interest~~the ~~rate~~timing ~~under~~for the ~~agreement~~registration ~~plus~~statement 3%to be declared effective to November 30, 2012. InNotwithstanding ~~addition,~~such requirements under the ~~lenders~~agreement ~~have~~and ~~the~~Victory ~~right~~Park’s extension, ~~following~~we ~~written~~have ~~notice~~not torequested that the ~~Company,~~registration statement be declared effective. We also agreed to ~~cause~~keep the ~~Company~~registration tostatements ~~redeem~~effective at all ortimes ~~any~~until ~~portion~~the earlier of (i) the ~~Notes. The~~date ~~price~~as ~~for~~of ~~redemption~~which ofall the ~~notes~~registrable ~~shall~~securities may be ~~equal~~sold without restriction pursuant to ~~the~~Rule ~~greater~~144 ofand (iii) anthe ~~amount~~date ~~equal~~on which all of the registrable securities covered by such registration statement have been sold. If a registration statement required to be filed by us is not filed with the ~~sum~~SEC ofon ~~one~~or ~~hundred~~before ~~fifteen~~the ~~percent~~filing ~~(115%)~~deadline ofor filed with the ~~outstanding~~SEC ~~principal~~but ~~amount~~not ofdeclared effective by the ~~notes~~SEC toon beor ~~redeemed~~before the effectiveness deadline, ~~plus~~or ~~accrued~~on ~~and~~any ~~unpaid~~day ~~interest~~after ~~thereon,~~the ~~plus~~effective ~~accrued~~date ~~and~~of ~~unpaid~~the ~~late~~registration ~~charges~~statement, ~~and~~sales of all of the registration securities cannot be made (~~ii)~~other than during an ~~amount~~allowable ~~equal~~grace period) pursuant to the ~~product~~registration ofstatement (A)including ~~the~~because ~~number~~ of ~~shares~~a ofsuspension ~~the~~or ~~Company’s~~delisting of our common stock ~~into~~on ~~which~~its ~~the~~ principal ~~amount~~market ~~and~~or ~~all~~a ~~accrued~~failure ~~and~~to ~~unpaid~~register ~~interest~~a ~~outstanding~~sufficient ~~under~~number ~~the~~of ~~notes~~shares toof becommon ~~redeemed may~~stock), ~~without~~then ~~giving~~as ~~effect~~partial relief for the damages to any ~~limitations~~holder ~~set~~of ~~forth~~registrable insecurities ~~Section~~we 4shall pay to each holder of ~~the~~registrable ~~notes,~~securities bean ~~converted~~amount asin ofcash ~~November~~equal ~~22,~~to ~~2012~~two percent (~~i.e.,~~2%) of the ~~date~~aggregate onvalue ~~which~~of ~~the~~such ~~Company~~holder’s ~~was~~registrable ~~deficient~~securities required to be included in ~~filing~~such ~~its~~registration ~~quarterly~~statement ~~report~~for oneach ~~Form~~30 10day period (pro-Qrated for ~~the~~periods ~~quarter~~totaling ~~ended~~less ~~September~~than 30, ~~2012~~days) until September 21, ~~multiplied~~2014, byexcluding ~~(B)~~for days prior to the ~~“Weighted~~date ~~Average~~that ~~Price”~~the ~~(as~~convertible ~~defined~~notes inbecome convertible, the ~~Notes)~~value ~~for~~of ~~one~~any ~~share~~conversion ofshares ~~the~~included ~~Company’s~~in ~~common~~such ~~stock~~registrable assecurities. As a result of ~~such~~our ~~date~~limited resources, we do not expect to be able to complete the required registrations in the near-term.

There are other events of default in existence including (i) the Company’s stock is not currently listed on the OTCBB, (ii) the Company has not had the S-1 it was required to file pursuant to the Forbearance Agreement declared effective, (iii) the Company has not filed its definitive proxy statement for 2011 and (iv) the Company has not held an annual shareholders’ meeting to obtain the approval of additional authorized shares for Victory Park. The Company also expects to default on the minimum cash requirement as of March 31, 2013. Other events of default may exist.33

~~Our~~The ~~success~~Assets isPertaining ~~dependent~~to on our ~~ability~~Biotechnologies toStrategic ~~establish~~Business ~~and~~Unit ~~maintain~~were ~~commercial partnerships and currently we have only two significant license agreements; we may not be able to relicense our oral PTH program~~sold.

WeOn ~~are~~April ~~pursuing~~16, ~~additional~~2013, ~~opportunities~~Victory toPark ~~license~~Capital orAdvisors, ~~enter~~LLC ~~into~~(“VPC ~~distribution~~Advisors”) ~~arrangements~~held a public auction conducted in accordance with Article 9 of the Uniform Commercial Code for ~~products~~the sale of certain assets of the Company that ~~utilize~~secured ~~our~~approximately ~~oral~~$56,700,000 ~~and~~in ~~nasal~~senior ~~delivery~~secured ~~technologies~~notes issued to affiliates of VPC Advisors. The assets concerned included the Company’s Peptelligence™ drug delivery and~~/or~~ ~~our~~recombinant manufacturing ~~technology,~~platforms asand ~~well~~all asother ~~our~~assets ~~other~~that ~~technologies~~comprised the Company’s Biotechnologies strategic business unit. ~~Given~~The holders of the ~~current~~senior ~~state~~secured ofnotes ~~our~~made ~~financial~~a ~~position~~credit bid of $15,000,000 and, at the ~~success~~conclusion of ~~such~~the ~~commercial~~public ~~partnerships~~auction, iswere ~~important~~deemed the highest bidder for usthe toassets. ~~maintain~~On ~~our~~April ~~current~~25, ~~operations.~~2013, ~~However~~the assets were acquired by Enteris BioPharma, weInc., ~~may~~a ~~not~~Delaware becorporation ~~successful~~and inan affiliate of VPC Advisors. We did not receive any cash payment for the sale of ~~these~~the ~~efforts~~Company’s biotechnologies strategic business unit assets and do not expect to receive any future revenues in relation to such assets.

WeRisks doRelated ~~not currently have, nor do we expect~~ to ~~have~~Product inDevelopment ~~the near future, sufficient financial resources~~ and personnel to develop and market products on our own. Accordingly, we expect to continue to depend on pharmaceutical companies for revenues from sales of products, research sponsorship and distribution of our products.Commercialization

43We do not have sufficient resources to develop or commercialize products and, as a result, our success is partially dependent on our ability to establish and maintain partnerships for product development and commercialization; We may not be able to license our remaining candidates.

~~Unigene~~We ~~Laboratories~~do not currently have, ~~Inc~~nor do we expect to have in the near future, sufficient financial resources and personnel to develop or commercialize products on our own. Thus, ~~Form~~we 10do not currently have the resources to fund any preclinical or clinical development of any product candidates, including additional Phase 2 studies for oral PTH, without a new licensee. Accordingly, we expect to depend on other pharmaceutical companies for the development and commercialization of product candidates. We have spent significant time and resources trying to identify a licensee for our oral PTH program or our pre-Qclinical –obesity ~~Period~~asset ~~Ended~~(UGP ~~September~~281), 30but have been unsuccessful to date. Currently, ~~2012~~we do not have any significant license agreements relating to such third party development of our product candidates.

~~The~~Following ~~process~~the sale of ~~establishing~~the ~~partnerships~~assets isrelating ~~difficult and time-consuming. Our discussions with potential partners may not lead~~ to ~~the~~our ~~establishment~~Biotechnologies ofStrategic ~~new~~Business ~~partnerships on favorable terms~~Unit, ifmost atof ~~all.~~our Ifremaining weproduct ~~successfully~~candidates ~~establish~~are ~~new partnerships, the partnerships may never result~~ in ~~the~~early ~~successful~~stages ~~development~~ of ~~our~~development ~~product~~and ~~candidates~~any orlicensees ~~the~~may ~~generation~~not ofbe ~~significant~~successful ~~revenue.~~in ~~Management~~efforts ofto ~~our~~develop ~~relationships~~products ~~with~~for ~~these~~many ~~partners~~years, ~~would~~if ~~require:~~ever.

·Except ~~significant~~with ~~time~~respect to the Phase 3 calcitonin program licensed to Tarsa, which may be adversely impacted by the outcome of the FDA advisory committee meeting held on March 5, 2013 regarding calcitonin products, our product candidates are in early stages of development and ~~effort~~have ~~from~~not been out-licensed. Even if the outcome of the FDA advisory committee meeting is positive, additional data may be required of Tarsa and the successful development of an oral calcitonin product may take several more years. Similarly, oral PTH may never be successfully developed. Even if we and/or a licensee is successful in developing any product, it is likely that development of any product will take several years. Our ability to achieve profitability is dependent on a number of factors, including our ~~management~~and ~~team;~~our licensees’ ability to complete development efforts and obtain regulatory approval for additional product candidates.

·We ~~coordination~~may ofnot be successful in our ~~research~~efforts ~~with~~to ~~the~~gain ~~research~~regulatory ~~priorities~~approval for any of our ~~corporate~~product ~~partners;~~candidates and, if approved, the approval may not be on a timely basis.

·Even ~~effective~~if ~~allocation~~we or any licensees are successful in our development efforts, we may not be able to obtain the necessary regulatory approval for our product candidates. The FDA must approve the commercial manufacture and sale of pharmaceutical products in the United States. Similar regulatory approvals are required for the sale of pharmaceutical products outside of the United States. None of our product candidates has been approved for sale in the United States and may never receive the approvals necessary for commercialization. Additional human testing must be conducted on our product candidates before they can be approved for commercial sale and such testing requires the investment of significant resources. Any delay in receiving, or failure to ~~multiple~~receive, ~~projects;~~these ~~and~~approvals would adversely affect our ability to generate product revenues.

~~· an ability to attract and retain key management, scientific, production and other personnel.~~34

WeOur ~~may~~technology ~~not~~or beproducts ~~able~~could togive ~~manage~~rise ~~these~~to ~~relationships~~product ~~successfully~~liability claims.

WeOur ~~currently~~business ~~have~~exposes ~~significant~~us ~~license~~to ~~agreements~~the ~~with~~risk ~~USL~~of inproduct ~~the~~liability ~~United~~claims ~~States~~from ~~for~~human ~~Fortical~~testing, manufacturing and ~~with~~sale ~~Tarsa~~of ~~worldwide~~pharmaceutical ~~(except~~products. ~~for~~The ~~China)~~administration of drugs to humans, whether in clinical trials or commercially, can result in product liability claims even if our products are not actually at fault for ~~oral~~causing ~~calcitonin~~an injury. ~~Our~~Furthermore, ~~oral~~our ~~PTH~~products ~~license~~may ~~with~~cause, ~~GSK~~or ~~was~~may ~~terminated~~appear into ~~December~~cause, ~~2011~~adverse ~~after~~side weeffects ~~received~~or ~~notification~~potentially ~~from~~dangerous ~~GSK~~drug ofinteractions ~~its~~that ~~decision~~we may not tolearn ~~proceed~~about ~~with~~or understand fully until the ~~oral~~drug ~~PTH~~is ~~program~~actually manufactured and sold. AsProduct aliability claims can be expensive to defend and may result, wein ~~regained~~large ~~the~~judgments ~~exclusive~~against ~~worldwide~~us. ~~rights~~Even toif a product liability claim is not successful, the ~~oral~~adverse ~~PTH~~publicity, ~~program~~time and ~~are~~expense ~~currently~~involved ~~seeking~~in defending such a ~~new~~claim ~~licensee~~may ~~for~~interfere ~~this~~with ~~program~~our business. We domay not ~~currently~~ have ~~the~~sufficient resources to ~~fund~~defend ~~additional~~against ~~clinical~~or ~~development~~satisfy ~~for~~these ~~oral~~claims. ~~PTH~~We ~~without~~currently amaintain ~~new~~$10,000,000 ~~licensee~~in product liability insurance coverage. However, this amount may not be sufficient to protect us against losses or may be unavailable in the future on acceptable terms, if at all.

~~There~~Risks ~~are~~Related ~~numerous default provisions under our financing agreements with Victory Park. Unless we are able~~ to ~~generate~~Government ~~or raise cash, we will incur additional events of default under these agreements.~~Regulation

~~Under~~Because ~~the~~we ~~Restated~~are ~~Financing Agreement, as amended by the Forbearance Agreement, future events of defaults include~~ a ~~quarterly~~biopharmaceutical cash flow reconciliation that shows a negative variance of 10% or more of actual cash revenue minus actual cash expenses for an applicable quarter versus the applicable quarterly cash flow forecast delivered by us; failure to maintain a cash balance in a specified account in excess of $250company,~~000;~~ failure to pay principal or interest; filing for bankruptcy; breach of covenants, representations or warranties; the occurrence of a material adverse effect (as defined in the Restated Financing Agreement); a change in control (as defined in the Restated Financing Agreement); any material decline or depreciation in the value or market price of the collateral; the failure of any registration statement required to be filed to be declared effective by the Securities and Exchange Commission (“SEC”), and maintained effective pursuant to the terms of a Second Amended and Restated Registration Rights Agreement, dated as of September 21, 2012; failure to obtain a required amendment to our certificate of incorporation to increase the authorized shares of our common stock; a Conversion Failure (as defined in the Notes) and a breach of any agreement or covenant contained in the Forbearance Agreement. Upon any default, among other remedies, both principal and interest would be accelerated and additional charges would apply. In addition, there is no assurance that the Notes will be converted into common stock, in which case, we may not have sufficient cash from operations orare ~~from~~subject ~~new financings~~ to ~~repay~~extensive ~~the~~government ~~Notes when they come due~~regulation. There can be no assurance that new financings will be available on acceptable terms, if at all. In the event that we default, the VPC Parties could acquire control of the Company and will have the ability to force us into involuntary bankruptcy and liquidate our assets.

~~Recent~~We, ~~developments~~and inany ~~the~~licensees ~~European~~and ~~market~~collaborators, are subject to significant regulation by federal, state, local and foreign governmental authorities. The regulatory approval process for a pharmaceutical product requires substantial resources and may ~~negatively~~take ~~impact~~many years. Our inability to obtain approvals or delays in obtaining approvals would adversely affect our ~~operations~~ability to undertake any development program, to manufacture and sell our products, and to receive revenue from milestone payments, product sales or royalties.

OnRisks ~~July~~Related 20, 2012 the EMA issued a press release concerning the marketability of approved calcitonin products in Europe, concluding there was evidence of a small increased risk of cancer with long-term use of current calcitonin medications approved and commercially available in Europe since 1973, and calling for curtailment of calcitonin usage. On August 1, 2012, Health Canada announced that it is reviewing whether to ~~follow European medical authorities and restrict use of a nasal spray prescribed to prevent osteoporosis because of the increased risk of cancer.~~Operations

We ~~licensed~~may tobe ~~USL~~unable ~~our~~to ~~patented~~retain ~~nasal~~key ~~formulation~~employees ~~of calcitonin for commercialization in the United States~~ and ~~have licensed~~ the ~~development~~members and worldwide commercialization rights (except China) for our Phase 3 oral calcitonin to Tarsa. However, since neither the Company nor its licensees are Market Authorization Holders in Europe, they do not have the right to appeal the EMA's recommendation. On October 12, 2012, Tarsa announced an agreement in principle with Therapicon® Slr to provide consulting assistance to the Italian firm in its appeal of the recent EMA recommendation. In November 2012, the EMA announced that it has reconfirmed its original conclusion that the benefits of calcitonin-containing medicines do not outweigh their risks in the treatment of osteoporosis and that they should no longer be used for this condition. The potential regulatory and commercial impact of this announcement on calcitonin related products marketed or under development by our ~~licensees~~Board and partners in Europe and other markets as well as the resulting financial impact on our future business operations is currently being evaluated. There is a possibility that other regulatory authorities, including the FDA, could take actions as a result of ~~the~~Directors ~~EMA recommendation, including withdrawing calcitonin products from the market~~ or ~~limiting~~recruit ~~their~~additional ~~use. This~~qualified could materially adversely affect our finances and operations by reducing or eliminating sales and royalties on Fortical, limiting the value of current calcitonin development projects and limiting the potential value of our investment in Tarsapersonnel. Additionally, this could impact the carrying value of our assets, including fixed assets, inventories and patents, as well as our ability to obtain adequate financing. On January 14, 2013, the FDA posted notice of an Advisory Committee Meeting scheduled on March 5, 2013 to discuss whether the benefit of calcitonin salmon for the treatment of postmenopausal osteoporosis outweighs a potential risk of cancer. We are in the process of evaluating whether the undiscounted expected future cash flows from our long-lived assets are less than their carrying amount. If undiscounted expected future cash flows are not sufficient to support the recorded value of the assets, an impairment loss may be recognized for the difference between fair value and the carrying value to reduce the long lived assets to their estimated recoverable value. Such analysis could result in a material impairment charge for the twelve months ended December 31, 2012.

44Because of the specialized scientific nature of our business, we are highly dependent upon qualified personnel. We also rely on the expertise and experience of our Board of Directors. There is intense competition for qualified personnel in our business. However, even if we are able to raise additional capital in the near term, our financial condition may not allow us to pay competitive cash compensation. In addition, we have limited ability to issue equity compensation at this time. There can be no guarantee that existing compensation will serve to prevent our employees, including our key employees, and directors from resigning. We may not be able to attract and retain the qualified personnel necessary to maintain and develop our business. The loss of the services of existing personnel, as well as the failure to recruit additional key personnel in a timely manner, could harm our programs and our business.

~~Unigene~~Compliance ~~Laboratories,~~with ~~Inc.~~regulations ~~Form~~governing ~~10-Q~~public –company ~~Period~~corporate ~~Ended~~governance ~~September~~and ~~30,~~reporting ~~2012~~is complex and expensive.

WeLaws, ~~are~~regulations inand ~~default~~standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of ~~our~~2002, ~~debt~~the ~~agreement~~eXtensible Business Reporting Language, or XBRL, requirements, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 have significantly increased the costs and risks associated with accessing the ~~Founders~~public asmarkets and public reporting. This legislation made significant changes to corporate governance and executive compensation rules for public companies. Our management team is required to invest significant time and financial resources to comply with both existing and evolving standards for public companies, which results in significant general and administrative expenses and a ~~result~~diversion of ~~not~~management ~~having~~time ~~funded~~and ~~the~~attention ~~related~~from ~~debt~~revenue ~~settlement~~generating ~~arrangement~~activities to compliance activities.

OnInsurance ~~May~~coverage ~~29,~~is ~~2012,~~increasingly wemore ~~entered~~costly ~~into~~and andifficult ~~agreement with the Founders~~ to ~~settle~~obtain our debt obligations. Pursuant to the settlement agreement, the Founders agreed to settle any and all outstanding obligations due from us in exchange for (i) two installment payments of $150,000 due in May and June 2012, which were subsequently paid by us; (ii) $7,700,000 payable on or ~~before September 30, 2012; and (iii) the issuance of 5,000,000 shares of our common stock~~maintain. In light of the recent EMA recommendation, the expected financial impact on business operations and our inability to raise funds, we were not in a position to fund the debt settlement with the Founders and as a result, we remain in debt to the Founders for a total of $22,990,000 in principal and accrued interest as of September 30, 2012.

~~The~~While ~~conversion~~we ofcurrently have insurance for our business, property, directors and officers, and our products, insurance is increasingly more costly and narrower in scope, and we may be required to assume more risk in the ~~Victory~~future. If ~~Park~~we ~~Notes~~are subject to claims or suffer a loss or damage in excess of our insurance coverage, we will ~~have~~be required to share that risk in excess of our insurance limits. If we are subject to claims or suffer a ~~dilutive~~loss or damage that is outside of our insurance coverage, we may incur significant uninsured costs associated with loss or damage that could have an adverse effect on our ~~stock~~operations ~~price~~ and ~~could~~financial ~~lead~~position. Furthermore, any claims made on our insurance policies may impact our ability to aobtain ~~change~~or inmaintain ~~control~~insurance coverage at reasonable costs or at all.

In March 2010, we issued promissory notes (the “2010 Notes”) to the Lenders which come due in March 2013 (which 2010 Notes were re-issued in September 2012 as the “Re-issued Notes”), and in September 2012, we issued an additional note (the “First Amendment Note”) to one of the Lenders. The initial conversion rate, which is subject to adjustment as set forth in the Notes, is calculated by dividing the sum of the principal to be converted, plus all accrued and unpaid interest thereon, by $0.15 per share for the Re-issued Notes and $0.05 for the First Amendment Note. If we subsequently make certain issuances of common stock or common stock equivalents at an effective purchase price less than the then-applicable conversion price, the conversion price of the notes will be reduced to such lower price. Assuming that the Notes were converted in full on September 30, 2012 at the current conversion prices (with conversion of the original principal amount plus interest thereon into the conversion shares), then, together with the shares and other securities owned by them, the VPC parties would beneficially own in the aggregate approximately 79% of our outstanding common stock (as diluted by outstanding options) as of that date.

We have significant historical losses and may continue to incur losses in the future.

We have incurred annual losses since our inception, and we may never achieve profitability. As a result, at September 30, 2012, we had an accumulated deficit of $201,286,000. Our gross revenues for the nine months ended September 30, 2012 were $7,900,000 and for the years ended December 31, 2011, 2010 and 2009 were $20,508,000, $11,340,000, and $12,792,000, respectively. Our revenues have not been sufficient to sustain our operations. Revenue consisted primarily of Fortical sales and royalties, licensing revenue and Peptelligence™ revenue. As of December 31, 2011, we had two material revenue generating license agreements. We believe that to achieve profitability we will require at least the successful commercialization of one or more of our licensees’ oral or nasal calcitonin products, our oral PTH product, our obesity program or another peptide product or biotechnology in the U.S. and/or abroad. However, our products or technologies under development may never become commercially successful. For the nine months ended September 30, 2012, we had a loss from operations of $6,330,000 and for 2011, 2010 and 2009, we had losses from operations of $3,466,000, $10,324,000, and $12,380,000, respectively. Our net loss for the nine months ended September 30, 2012 was $18,945,000 and for the years ended December 31, 2011, 2010 and 2009 were $7,096,000, $32,534,000, and $13,380,000, respectively.

Our success depends upon our ability to protect our intellectual property rights.

We filed applications for U.S. patents relating to proprietary peptide manufacturing technology and oral and nasal formulations that we have invented in the course of our research. Our most important U.S. manufacturing and delivery patents expire from 2016 to 2026 and we have applications pending that could extend that protection. To date, twenty-five U.S. patents have issued and other applications are pending. We have also made patent application filings in selected foreign countries and seventy-six foreign patents have issued with other applications pending. We face the risk that any of our pending applications will not be issued as patents. In addition, our patents may be found to be invalid or unenforceable. Our business also is subject to the risk that our issued patents will not provide us with significant competitive advantages if, for example, a competitor were to independently develop or obtain similar or superior technologies. To the extent we are unable to protect our patents and patent applications, our investment in those technologies may not yield the benefits that we expect.

We also rely on trade secrets to protect our inventions. Our policy is to include confidentiality obligations in all research contracts, joint development agreements and consulting relationships that provide access to our trade secrets and other know-how. However, parties with confidentiality obligations could breach their agreements causing us harm. If a secrecy obligation were to be breached, we may not have the financial resources necessary for a legal challenge. If licensees, consultants or other third parties use technological information independently developed by them or by others in the development of our products, disputes may arise from the use of this information and as to the ownership rights to products developed using this information. These disputes may not be resolved in our favor and could materially impact our business.

If our stockholders do not approve the amendment to our certificate of incorporation, we may be in default under the terms of the Restated Financing Agreement, as amended by the Forbearance Agreement.

At our next meeting of stockholders, we will seek stockholder approval of an amendment to increase the total number of authorized shares of common stock available for issuance from 275,000,000 to 650,000,000 (the “Amendment”). Under the Forbearance Agreement, if stockholder approval of the Amendment is not so obtained, we will be required to call a stockholders meeting every four months to seek approval of the Amendment until the date on which such approval is obtained. This undertaking will be costly and will distract management from the business of running Unigene. We were required under the Forbearance Agreement to hold our next meeting of stockholders no later than January 21, 2013. As a result of not having held such meeting, the Company is in default of this provision.

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

In addition, in the event the Amendment is not approved by the stockholders, we will not have a sufficient number of shares of common stock authorized and available for issuance upon conversion of the Notes. Pursuant to the terms of the Notes, if for any reason, the holders have not received all of the shares of Common Stock issuable to the Lenders upon conversion of the Notes prior to the third business day after Unigene has received a notice for conversion of the Notes, such failure will result in an event of default under the Restated Financing Agreement as amended by the Forbearance Agreement. Upon such an event of default, in addition to all other available remedies that the holders of the Notes may pursue under the Notes and the Restated Financing Agreement, as amended by the Forbearance Agreement, we are required to pay certain additional damages to such holders for each day after the date on which such conversion is not timely effected, as set forth in the Notes. Furthermore, upon such an event of default, the holders may require Unigene to redeem all or any portion of the Notes at the price equal to the greater of (i) an amount equal to the sum of one hundred fifteen percent (115%) of the outstanding principal amount of the Notes, plus accrued and unpaid interest, plus accrued and unpaid late charges and (ii) an amount equal to the product of (A) the number of shares into which the principal amount and all accrued and unpaid interest outstanding under the Notes may be converted at the time of the default pursuant to the terms of the Notes, multiplied by (B) the market value per share of common stock as determined under the Restated Financing Agreement, as amended by the Forbearance Agreement. Notwithstanding the foregoing, prior to the filing of the Amendment, we are not obligated to issue all of the shares of Common Stock issuable to the Lenders upon conversion of the Notes in excess of the number of shares required to be reserved for issuance under the terms of the Restated Financing Agreement, as amended by the Forbearance Agreement.

We have recommended that the stockholders vote in favor of the Amendment. However, we cannot guarantee if or when the Amendment will be approved by our stockholders. If the Amendment is not approved by our stockholders, we may be in default under the terms of the Forbearance Agreement and the holders could require mandatory redemption as described above. Such a mandatory redemption would likely leave us with insufficient working capital to operate our business and would likely force us to seek additional financing to fund that redemption and our operations on terms that could be unfavorable and that could materially and adversely affect the interests of our stockholders. There can be no assurance given that we would have sufficient cash on hand or that we would be able to obtain such additional financing (on any terms) to fund the mandatory redemption.

We may be unable to retain key employees and members of our board of directors or recruit additional qualified personnel.

Because of the specialized scientific nature of our business, we are highly dependent upon qualified scientific, technical, production and managerial personnel. There is intense competition for qualified personnel in our business. Therefore, we may not be able to attract and retain the qualified personnel necessary for the development of our business. To promote the retention of our employees and directors, and to motivate them, on September 20, 2012, the board of directors approved the issuance of retention stock option grants outside of our existing equity compensation plan to all of the existing employees and directors (except Richard Levy). There is no guarantee that these grants will serve to prevent our employees, including our key employees, or directors from resigning. Our financial position may not allow us to pay competitive compensation. The loss of the services of existing personnel or members of our board of directors, as well as the failure to recruit additional key personnel in a timely manner, could harm our programs and our business.

We may not be able to renew our Directors and Officers insurance policy, as well as our other insurance policies, including our product liability insurance policy.

As a result of our financial condition, including lack of liquidity, we may not be able to renew our existing insurance on terms that are acceptable to us, if at all. If we are unable to maintain adequate insurance coverage this would have a material adverse effect on our ability to sustain operations. Furthermore, if we do not have an effective Directors and Officers insurance policy, it will be extremely difficult to attract qualified directors and officers.

Any material weaknesses or deficiencies in our internal control over financial reporting could harm stockholder and business confidence in our financial reporting, our ability to obtain financing and other aspects of our business.35

AsRisks ~~described~~Related in Part I, Item 4 above, we identified a material weakness that resulted in improper accounting for a significant non-routine transaction. Management has determined that the material weakness was a result of inadequate processes and personnel in place to assess the accounting for significant non-routine transactions. However, prior to the identification of the material weakness, we hired a Chief Financial Officer and a Corporate Controller with relevant industry and accounting expertise to enhance our ~~internal~~Capital controls over financial reporting. Additionally, we enhanced our controls related to the preparation of accounting position papers for complex transactions and where appropriate, management seeks the advice of qualified outside consultants on accounting matters related to the application of U.S. GAAP to complex, non-ordinary course transactions and in other instances as warranted. As a result of the material weakness, management determined that we did not maintain effective internal control over financial reporting. The existence of one or more material weaknesses or significant deficiencies could result in future errors in our financial statements. Substantial costs and resources may be required to rectify any internal control deficiencies. If we fail to achieve and maintain the adequacy of our internal controls in accordance with applicable standards, we may be unable to conclude on an ongoing basis that we have effective internal controls over financial reporting. If we cannot produce reliable financial reports, our business and financial condition could be harmed, investors could lose confidence in our reported financial information, or the market price of our stock could decline significantly. In addition, our ability to obtain additional financing to operate and expand our business, or obtain additional financing on favorable terms, could be materially and adversely affected, which, in turn, could materially and adversely affect our business, our financial condition and the market value of our securities. Moreover, our reputation with customers, lenders, investors, securities analysts and others may be adversely affected.Stock

46The market price of our common stock is volatile and our common stock is thinly traded.

~~Unigene~~The ~~Laboratories~~market price of our common stock has been, ~~Inc~~and we expect it to continue to be, highly unstable. ~~Form~~Factors, 10that have caused volatility and could cause additional volatility in the market price of our common stock include, among others: our announcements regarding results or pre-Qclinical –or ~~Period~~clinical ~~Ended~~work; ~~September~~announcements 30by regulatory agencies and other companies; regulatory matters; research and development activities; new or existing products or procedures; signing or termination of licensing agreements; concerns about competition; sales; our financial condition; operating results; litigation; government regulation, ~~2012~~developments or disputes relating to agreements; patents or proprietary rights; and public concern over the safety of activities or products. We expect such factors to continue to impact our market price and volume for the foreseeable future. Fluctuations in stock prices can sometimes occur as a result of matters that are not directly related to the actual performance of the affected companies. In addition, future sales of shares of our common stock by us or our stockholders, and by the exercise and subsequent sale of our common stock by the holders of outstanding and future warrants and options, could have an adverse effect on the price of our stock.

Victory Park is able to exercise substantial control over our business.

Victory Park Management, L.L.C., or Victory Park, and its affiliates hold 9,147,464 shares of our common stock, which represented approximately 10.0% of our outstanding common stock as of April 30, 2013. Victory Park’s affiliates also hold promissory notes in the aggregate principal amount of $41,505,000, which are convertible into shares of our common stock. As of April 30, 2013, Victory Park and its affiliates could acquire approximately 65% of our voting securities on a fully diluted basis assuming the conversion of certain principal and interest as of such date (based on the current authorized shares available for issuance), which would result in a change in control. Victory Park has the right to designate two persons for election to our Board of Directors for so long as Victory Park and its affiliates own a significant percentage of our securities. Pursuant to this right, Richard Levy serves as a member of our Board of Directors and Victory Park is entitled to fill a vacancy on the Board of Directors, if it so chooses. As a result of the foregoing, Victory Park is able to exercise substantial influence over our business, policies and practices.

Our common stock is classified as a “penny stock” under SEC rules, which may make it more difficult for our stockholders to resell our common stock.

Our common stock is traded on the pink sheets. As a result, the holders of our common stock may find it more difficult to obtain accurate quotations concerning the market value of the stock. Stockholders are likely to experience greater difficulties in attempting to sell the stock than if it was listed on a stock exchange. Because our common stock is not traded on a stock exchange and the market price of our common stock is less than $5.00 per share, our common stock is classified as a “penny stock.” Rule 15g-9 of the Exchange Act imposes additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as an “established customer” or an “accredited investor.” These include the requirement that a broker-dealer must make a determination that investments in penny stocks are suitable for the customer and must make special disclosures to the customer concerning our common stock and the risks of penny stocks. Application of the penny stock rules to our common stock could reduce funding activity for our common stock and, as a result, adversely affect the market liquidity of our shares. This may also affect the ability of holders of our common stock to resell the stock.

The conversion of the Victory Park notes will have a dilutive effect on our stock price.

In March 2010, we issued promissory notes to various Victory Park affiliates that were subsequently re-issued in September 2012 in relation to the financing at such time (the “Re-issued Notes”), which became due and payable on March 17, 2013. In September 2012, we also issued an additional promissory note (the “First Amendment Note”) to a Victory Park affiliate, which becomes due and payable on September 21, 2013 and on April 8, 2013 we issued an additional promissory note (the “Second Amendment Note”) to a Victory Park affiliate, which becomes due and payable on June 7, 2013. The initial conversion rate, which is subject to adjustment as set forth in the notes, is calculated by dividing the sum of the principal to be converted, plus all accrued and unpaid interest thereon, by $0.15 per share for the Re-issued Notes, $0.05 for the First Amendment Note and $0.09 for the Second Amendment Note. If we subsequently make certain issuances of common stock or common stock equivalents at an effective purchase price less than the then-applicable conversion price, the conversion price of the notes will be reduced to such lower price. Assuming that certain of the outstanding principal and interest under the notes (based on the current authorized shares available for issuance) were converted on April 25, 2013 at the current conversion prices (after accounting for the sale of the assets pertaining to the Company’s Biotechnologies strategic business unit), then, together with the shares and other securities owned by them, Victory Park and its affiliates would receive an additional 154,700,154 shares of our common stock resulting in beneficial ownership of approximately 65% of our outstanding common stock (as diluted by outstanding options) as of that date.

In addition to the conversion of the Victory Park notes, the exercise of warrants and options, as well as other issuances of shares, will likely have a dilutive effect on our stock price.

As of March 31, 2013, there were outstanding warrants to purchase 20,000 shares of our common stock, which are currently exercisable at an exercise price of $2.00 per share. There were also outstanding stock options to purchase an aggregate of 17,875,698 shares of common stock, at an average exercise price of $0.49, of which 6,631,694 are currently exercisable. If our stock price should increase above the exercise price of these derivative securities, then such exercise at prices below the market price of our common stock could adversely affect the price of our common stock. Additional dilution may result from the issuance of shares of our common stock in connection with collaborations or licensing agreements or in connection with other financing efforts, including our issuance of stock upon the conversion of Victory Park's notes.

The anti-takeover provisions of Delaware law may discourage, delay or prevent a change in control of Unigene.

We are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law. Under these provisions, if anyone becomes an “interested stockholder,” we may not enter a “business combination” with that person for three years without special approval, which could discourage a third party from making a take-over offer and could delay or prevent a change of control. For purposes of Section 203, “interested stockholder” means, generally, someone owning 15% or more of our outstanding voting stock or an affiliate of ours that owned 15% or more of our outstanding voting stock during the past three years, subject to certain exceptions as described in Section 203. These provisions may discourage, delay or prevent someone from acquiring or merging with us.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Not Applicable

Item 3.

Defaults Upon Senior Securities

Not Applicable

Item 4.

Mining Safety Disclosures

Not Applicable

Item 5.

Other Information

OnNot November 9, 2012, we announced on Current Report on Form 8-K and Form 12b-25 that we would delay, for a short period, the filing of our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012 due on November 9, 2012. This delay was due to the temporary inability to access our corporate headquarters and electronic data due to the impact of Hurricane Sandy. On November 14, 2012, the United States Securities and Exchange Commission issued Release No. 68224, which extended the quarterly reporting deadline for entities adversely impacted by Hurricane Sandy during this period to November 21, 2012. On November 23, 2012, we announced on Form 12b-25 (and previously disclosed on Current Report on Form 8-K filed on November 20, 2012) that we had identified a potential issue in our historic methodology of accounting for a non-cash embedded derivative liability related to our senior secured convertible notes issued on March 16, 2010. As a result, the Company was unable to finalize and file its Form 10-Q within the extended filing deadline provided for by the U.S. Securities and Exchange Commission of November 21, 2012. See Notes B and H of the notes to the financial statements contained herein for additional information regarding the agreements with Victory Park, the restatement of certain financial statements and the related impact.Applicable

4737

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

Item 6.

Exhibits

EXHIBIT INDEX

Exhibit No.	Document Description
3.1	Certificate of Incorporation of Unigene Laboratories, Inc., dated October 31, 1980, as filed with the Secretary of State in the State of Delaware on November 3, 1980, and all amendments thereto through June 15, 2006 (incorporated by reference from Exhibit 3.1 to the ~~Company~~Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006).
3.2	Certificates of Amendment to Certificate of Incorporation of Unigene Laboratories, Inc., dated June 16, 2010, as filed with the Secretary of State in the State of Delaware on June 16, 2010 (incorporated by reference from Exhibit 3.2 to the ~~Company~~Registrant’s Annual Report on Form 10-K for the year ended December 31, 2010).
3.3	Amended By-Laws of Unigene Laboratories, Inc. (incorporated by reference from Exhibit 3.2 to the ~~Company~~Registrant’s Annual Report on Form 10-K for the year ended December 31, 2004).
3.4	Amendment No. 1 to the By-Laws of Unigene Laboratories, Inc. (incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K filed September 7, 2012).
10.1	Second Amendment to Amended and Restated Financing Agreement, dated as of April 8, 2013, by and among the Company, the Lenders and Victory Park Management, LLC as agent (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 12, 2013).
4.1	Rights Agreement between Unigene Laboratories, Inc. and Registrar and Transfer Company, dated December 20, 2002 (incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed December 23, 2002).
10.2	Senior Secured Convertible Note, issued by the Company as of April 8, 2013 to VPC Fund II, L.P. (incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed April 12, 2013).
4.2	Amendment to Rights Agreement, dated March 16, 2010 (incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed March 17, 2010).
10.3	Senior Secured Convertible Note, reissued by the Company as of April 25, 2013 in favor of VPC Intermediate Fund II (Cayman), L.P. (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 1, 2013).
4.3	Second Amendment to Rights Agreement, dated September 21, 2012 (incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K filed September 26, 2012).
10.4	Senior Secured Convertible Note, reissued by the Company as of April 25, 2013 in favor of VPC Fund II, L.P. (incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed May 1, 2013).
4.4	Specimen Certificate for Common Stock, par value $.01 per share (incorporated by reference from Exhibit 3.1.1 to the Registrant’s Registration Statement No. 33-6877 on Form S-1, filed July 1, 1986).
10.5	Senior Secured Convertible Note, reissued by the Company as of April 25, 2013 in favor of Victory Park Credit Opportunities Intermediate Fund, L.P. (incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed May 1, 2013).
10.1	Employment Agreement dated September 5, 2012 between Unigene Laboratories, Inc. and Gregory Mayes (incorporated by reference from Exhibit 10.91 to the Company’s Registration Statement on Form S-1 filed October 19, 2012).
10.6	Senior Secured Convertible Note, reissued by the Company as of April 25, 2013 in favor of Victory Park Credit Opportunities, L.P. (incorporated by reference from Exhibit 10.4 to the Company’s Current Report on Form 8-K filed May 1, 2013).
10.2	Form of 2012 Key Employee Performance and Incentive Agreement (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 3, 2012).
31.1	Certification by Ashleigh Palmer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
10.3	Form of Stock Option Agreement (incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 3, 2012).
31.2	Certification by Brian Zietsman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
10.4	Employment Agreement dated September 27, 2012 between Unigene Laboratories, Inc. and Brian Zietsman (incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed October 3, 2012).
32.1	Certification by Ashleigh Palmer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
10.5	Stock Option Agreement dated September 27, 2012 between Unigene Laboratories, Inc. and Brian Zietsman (incorporated by reference from Exhibit 10.4 to the Company’s Current Report on Form 8-K filed October 3, 2012).
32.2	Certification by Brian Zietsman pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
10.6	Employment Agreement dated September 27, 2012 between Unigene Laboratories, Inc. and Nozer Mehta (incorporated by reference from Exhibit 10.5 to the Company’s Current Report on Form 8-K filed October 3, 2012).
101.INS	XBRL Instance Document**
10.7	Forbearance Agreement and First Amendment to Amended and Restated Financing Agreement, dated as of September 21, 2012, by and among the Company, the Lenders and Victory Park Management, LLC, as agent (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 26, 2012).
101.SCH	XBRL Taxonomy Extension Schema Document**
10.8	Senior Secured Convertible Note, reissued by Company as of September 24, 2012 in favor of VPC Intermediate Fund II (Cayman), L.P. (incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed September 26, 2012).
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
10.9	Senior Secured Convertible Note, reissued by the Company as of September 24, 2012 in favor of VPC Fund II, L.P. (incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed September 26, 2012).
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
10.10	Senior Secured Convertible Note, reissued by the Company as of September 24, 2012 in favor of Victory Park Credit Opportunities Intermediate Fund, L.P. (incorporated by reference from Exhibit 10.4 to the Company’s Current Report on Form 8-K filed September 26, 2012).
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document**
10.11	Senior Secured Convertible Note, reissued by the Company as of September 24, 2012 in favor of Victory Park Credit Opportunities, L.P. (incorporated by reference from Exhibit 10.5 to the Company’s Current Report on Form 8-K filed September 26, 2012).
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**
10.12	Senior Secured Convertible Note, issued by the Company as of September 21, 2012 in favor of VPC Fund II, L.P. (incorporated by reference from Exhibit 10.6 to the Company’s Current Report on Form 8-K filed September 26, 2012).
10.13	Second Amended and Restated Registration Rights Agreement, dated as of September 21, 2012, by and among the Company and the Lenders (incorporated by reference from Exhibit 10.7 to the Company’s Current Report on Form 8-K filed September 26, 2012).
10.14	Indemnification Agreement dated September 21, 2012 between the Company and Richard N. Levy (incorporated by reference from Exhibit 10.8 to the Company’s Current Report on Form 8-K filed September 26, 2012).
10.15	Patent Security Agreement, dated September 21, 2012 by the Company in favor of Victory Park Management, LLC, as agent (incorporated by reference from Exhibit 10.9 to the Company’s Current Report on Form 8-K filed September 26, 2012).
10.16	Trademark Security Agreement, dated September 21, 2012 by the Company in favor of Victory Park Management, LLC, as agent (incorporated by reference from Exhibit 10.10 to the Company’s Current Report on Form 8-K filed September 26, 2012).
10.17	Form of Indemnification Agreement dated September 21, 2012 between the Company and various directors (incorporated by reference from Exhibit 10.11 to the Company’s Current Report on Form 8-K filed September 26, 2012).

10.18	Separation Agreement dated September 28, 2012 between Unigene Laboratories, Inc. and Jenene Thomas (incorporated by reference from Exhibit 10.110 to the Company’s Registration Statement on Form S-1 filed October 19, 2012).
10.19	Letter Agreement dated December 21, 2012 the Company and the Jaynjean Levy Family Limited Partnership, Warren P. Levy and Ronald S. Levy
31.1	Certification by Ashleigh Palmer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Brian Zietsman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Ashleigh Palmer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by Brian Zietsman pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**

* Management contract or compensatory plan.

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

4938

Unigene Laboratories, Inc. Form 10-Q – Period Ended September 30, 2012

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	UNIGENE LABORATORIES, INC.
	(Registrant)
Date: January 31, 2013	By:	/s/Ashleigh Palmer
Date: May 14, 2013	By:	/s/Ashleigh Palmer
		Ashleigh Palmer, Chief Executive Officer
		Principal Executive Officer
		(Chief Executive Officer)

Date: January 31, 2013	By:	/s/ Brian Zietsman
Date: May 14, 2013	By:	/s/ Brian Zietsman
		Brian Zietsman, Chief Financial Officer
		Principal Financial Officer and Principal Accounting Officer
		(Principal Financial Officer)

5039

Filing Compare · UNIGENE LABORATORIES INC