PINX:AVXL Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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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: March 31, 2012

or

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

For the transition period from _____ to _____

Commission File Number: 000-51652

ANAVEX LIFE SCIENCES CORP.
(Exact name of registrant as specified in its charter)

Nevada 20-8365999
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

720-789 West Pender St., Vancouver, British Columbia V6C 1H2, Canada
(Address of principal executive offices) (Zip Code)

1-800-689-3939
(Registrant’s telephone number, including area code)

459 Forest Street, Palo Alto, California 94301
(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.
[X] Yes     [   ] No

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[X] Yes     [   ] No

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.

Large accelerated filer [   ] Accelerated filer [   ]
Non-accelerated filer [   ]
(Do not check if a smaller reporting company)
Smaller reporting company [X]

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


ii

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:
27,465,174 shares of common stock outstanding as of May 15, 2012.


iii

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION 1
   
                   Item 1. Financial Statements. 1
   
                   Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 2
   
                   Item 3. Quantitative and Qualitative Disclosures about Market Risks 8
   
                   Item 4. Controls and Procedures. 8
   
PART II - OTHER INFORMATION 9
   
                   Item 1. Legal Proceedings. 9
   
                   Item 1A. Risk Factors. 9
   
                   Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 18
   
                   Item 3. Defaults Upon Senior Securities. 18
   
                   Item 4. Mine Safety Disclosures. 18
   
                   Item 5. Other Information. 18
   
                   Item 6. Exhibits. 18
   
SIGNATURES 23


1

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

 

 

 

ANAVEX LIFE SCIENCES CORP.

(A Development Stage Company)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Stated in US Dollars)


ANAVEX LIFE SCIENCES CORP.
(A Development Stage Company)
INTERIM CONSOLIDATED BALANCE SHEETS
March 31, 2012 and September 30, 2011
(Stated in US Dollars)
(Unaudited)

ASSETS   March 31,     September 30,  
    2012     2011  
             
Current            
Cash $  178,647   $  134,702  
VAT recoverable   953     809  
Deferred financing charge - Note 5   9,995     55,464  
Prepaid expenses   -     9,630  
    189,595     200,605  
Equipment - Note 3   1,505     2,434  
  $  191,100   $  203,039  
             
LIABILITIES            
             
Current            
Accounts payable and accrued liabilities - Note 7 $  1,918,747   $  410,024  
Derivative liability - Note 4   -     67,500  
Promissory notes payable - Note 5   1,200,707     867,919  
    3,119,454     1,345,443  
             
             
CAPITAL DEFICIT            
             
Capital stock - Note 6            
Authorized:
150,000,000 common shares, par value $0.001 per share
Issued and outstanding:
27,465,174 common shares (September 30, 2011 - 26,571,574)
  27,466     26,572  
Additional paid-in capital   29,329,105     28,034,245  
Deficit accumulated during the development stage   (32,284,925 )   (29,203,221 )
    (2,928,354 )   (1,142,404 )
  $  191,100   $  203,039  

SEE ACCOMPANYING NOTES


ANAVEX LIFESCIENCES CORP.
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
for the three and six months ended March 31, 2012 and 2011 and
for the period from January 23, 2004 (Date of Inception) to March 31, 2012
(Stated in US Dollars)
(Unaudited)

    Three months ended     Six months ended     January 23, 2004  
    March 31,     March 31,     (Date of Inception) to  
    2012     2011     2012     2011     March 31, 2012  
Expenses                              
Accounting and audit fees $  23,784   $  38,380   $  94,528   $  87,328   $  616,881  
Amortization and depreciation   465     407     929     898     4,126  
Bank charges and interest   947     1,748     3,270     3,791     39,614  
Consulting fees - Note 7 and 8   242,302     1,017,702     549,514     1,669,903     11,138,239  
Insurance   -     16,107     9,630     20,922     57,782  
Investor relations   7,638     25,000     22,638     79,535     746,207  
Legal fees   48,143     37,600     76,154     57,347     603,256  
Management fees   -     -     -     -     14,625  
Office and miscellaneous   2,283     13,151     5,455     19,620     143,992  
Registration and filing fees   9,237     36,363     17,649     45,425     145,253  
Rent and administration   -     10,999     -     52,818     224,670  
Research and development   429,607     730,242     2,146,940     1,227,532     12,052,029  
Travel   31,200     20,026     54,363     51,751     728,681  
Website design and maintenance   -     -     -     -     28,417  
                               
Loss before other income (expenses)   (795,606 )   (1,947,725 )   (2,981,070 )   (3,316,870 )   (26,543,772 )
                               
Other income (expenses)                              
Interest and financing fees   (50,064 )   (3,945 )   (92,484 )   (11,901 )   (580,164 )
Accretion of debt discount - Note 5   (44,613 )   -     (82,788 )   -     (2,159,368 )
Change in fair value of derivative liability - Note 4   12,500     -     67,500     -     (463,274 )
Debt conversion expense   -     -     -     (504,160 )   (504,160 )
Loss on settlement of accounts payable   -     -     -     (249,090 )   (778,053 )
Loss on extinguishment of debt   -     -     -     (198,738 )   (686,207 )
Foreign exchange gain (loss)   (32,418 )   (20,716 )   7,138     (26,206 )   (19,123 )
                               
Net loss for the period $  (910,201 ) $  (1,972,386 ) $  (3,081,704 ) $  (4,306,965 ) $  (31,734,121 )
                               
Basic and diluted loss per share $  (0.03 ) $  (0.08 ) $  (0.11 ) $  (0.17 )      
                               
Weighted average number of shares outstanding   27,342,977     25,166,546     27,039,266     24,711,872        

SEE ACCOMPANYING NOTES


ANAVEX LIFESCIENCES CORP.
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three and six months ended March 31, 2012 and 2011 and
for the period from January 23, 2004 (Date of Inception) to March 31, 2012
(Stated in US Dollars)
(Unaudited)

                January 23, 2004  
    Six months ended March 31,     (Date of Inception) to  
    2012     2011     March 31, 2012  
                   
Cash Flows used in Operating Activities                  
Net loss for the period $  (3,081,704 ) $  (4,306,965 ) $  (31,734,121 )
Adjustments to reconcile net loss to net cash used in operations:                  
Amortization and depreciation   929     898     4,126  
Accretion of debt discount   82,788     -     2,159,368  
Stock-based compensation   203,408     856,229     4,743,747  
Amortization of deferred financing charge   45,470     -     145,783  
Change in fair value of derivative liability   (67,500 )   -     463,274  
Consulting expense recorded in exchange for shares to be issued   -     -     236,337  
Common shares issued for consulting expenses   15,895     -     406,405  
Promissory note issued for severance   -     -     71,500  
Common shares issued for severance   -     -     340,600  
Common shares issued for research and development expenses   -     -     800,000  
Extension of warrants for research and development expenses   80,200     -     80,200  
Management fees contributed   -     -     14,625  
Debt conversion expense   -     504,160     504,160  
Loss on settlement of accounts payable   -     249,090     778,053  
Loss on extinguishment of debt   -     198,738     686,207  
Rent contributed   -     -     3,750  
Changes in non-cash working capital balances related to operations:               -  
VAT recoverable   (144 )   29,162     (953 )
Prepaid expenses   9,630     (26,073 )   -  
Accounts payable and accrued liabilities   1,508,723     821,858     5,000,219  
Net cash used in operating activities   (1,202,305 )   (1,672,903 )   (15,296,720 )
                   
Cash Flows provided by Financing Activities                  
Issuance of common shares, net of share issue costs   996,250     1,411,875     10,246,833  
Share subscriptions received   -     -     -  
Proceeds from promissory notes   250,000     -     5,067,500  
Deferred financing fee   -     -     (100,000 )
Repayment of promissory note   -     -     (100,000 )
Due to related parties   -     -     33,665  
Shareholder advances   -     -     333,000  
Net cash provided by financing activities   1,246,250     1,411,875     15,480,998  
                   
Cash Flows used in Investing Activities                  
Acquisition of equipment   -     -     (5,631 )
Net cash used in investing activities   -     -     (5,631 )
                   
Increase (decrease) in cash during the period   43,945     (261,028 )   178,647  
Cash, beginning of period   134,702     264,669     -  
Cash, end of period $  178,647   $  3,641   $  178,647  
                   
Supplemental Cash Flow Information - Note 9                  

SEE ACCOMPANYING NOTES


ANAVEX LIFE SCIENCES CORP.
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL DEFICIT
for the period from January 23, 2004 (Date of Inception) to March 31, 2012
(Stated in US Dollars)
(Unaudited)

                            Deficit        
    Common Stock     Accumulated        
    Shares     Par Value     Additional     Common     During the        
                Paid-in     Shares to be     Development        
                Capital     Issued     Stage     Total  
                                     
Capital stock issued for cash on January 23, 2004 - at $0.0033   12,000,000   $  12,000   $  28,000   $  -   $  -   $  40,000  
Net loss from January 23, 2004 to September 30, 2004   -     -     -     -     (14,395 )   (14,395 )
                                     
Balance, September 30, 2004   12,000,000     12,000     28,000     -     (14,395 )   25,605  
Capital stock issued for cash on December 31, 2004 - at $0.0033   7,200,000     7,200     16,800     -     -     24,000  
Management fees contributed   -     -     13,000     -     -     13,000  
Rent contributed   -     -     3,000     -     -     3,000  
Net loss for the year   -     -     -     -     (91,625 )   (91,625 )
                                     
Balance, September 30, 2005   19,200,000     19,200     60,800     -     (106,020 )   (26,020 )
Management fees contributed   -     -     1,625     -     -     1,625  
Rent contributed   -     -     750     -     -     750  
Debt forgiven by directors   -     -     33,666     -     -     33,666  
Net loss for the year   -     -     -     -     (25,532 )   (25,532 )
                                     
Balance, September 30, 2006   19,200,000     19,200     96,841     -     (131,552 )   (15,511 )
Capital stock issued for research and development services on September 24, 2007 - at $3.60   222,222     222     799,778     -     -     800,000  
Capital stock issued for settlement of loan payable on September 25, 2007 - at $3.60   92,500     93     332,907     -     -     333,000  
Net loss for the year   -     -     -     -     (1,579,993 )   (1,579,993 )
                                     
Balance, September 30, 2007   19,514,722   $  19,515   $  1,229,526   $  -   $  (1,711,545 ) $  (462,504 )

SEE ACCOMPANYING NOTES


ANAVEX LIFE SCIENCES CORP.
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL DEFICIT
for the period from January 23, 2004 (Date of Inception) to March 31, 2012
(Stated in US Dollars)
(Unaudited)

                            Deficit        
    Common Stock     Accumulated        
    Shares     Par Value     Additional     Common     During the        
                Paid-in     Shares to be     Development        
                Capital     Issued     Stage     Total  
                                     
Balance, September 30, 2007 - brought forward   19,514,722   $  19,515   $  1,229,526   $  -   $  (1,711,545 ) $  (462,504 )
Capital stock issued for cash on December 10, 2007 - at $3.50   150,000     150     524,850     -     -     525,000  
Capital stock issued for consulting services on December 18, 2007 - at $3.86   50,000     50     192,950     -     -     193,000  
Capital stock issued in settlement of debt on December 18, 2007 - at $4.50   10,000     10     44,990     -     -     45,000  
Stock-based compensation for shares issued at a discount   -     -     65,000     -     -     65,000  
Capital stock issued for severance on May 15, 2008 - at $5.24   65,000     65     340,535     -     -     340,600  
Common shares to be issued for consulting services   -     -     -     252,599     -     252,599  
Common stock issued for consulting services on August 19, 2008 - at $5.07   25,000     25     126,725     (126,750 )   -     -  
Capital stock issued for cash on August 19, 2008 - at $4.25   142,698     142     606,325     -     -     606,467  
Stock-based compensation   -     -     1,493,937     -     -     1,493,937  
Net loss for the year   -     -     -     -     (5,351,269 )   (5,351,269 )
                                     
Balance, September 30, 2008   19,957,420   $  19,957   $  4,624,838   $  125,849   $  (7,062,814 ) $  (2,292,170 )

SEE ACCOMPANYING NOTES


ANAVEX LIFE SCIENCES CORP.
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL DEFICIT
for the period from January 23, 2004 (Date of Inception) to March 31, 2012
(Stated in US Dollars)
(Unaudited)

                            Deficit        
    Common Stock     Accumulated        
    Shares     Par Value     Additional     Common     During the        
                Paid-in     Shares to be     Development        
                Capital     Issued     Stage     Total  
                                     
Balance, September 30, 2008 - brought forward   19,957,420   $  19,957   $  4,624,838   $  125,849   $  (7,062,814 ) $  (2,292,170 )
Stock-based compensation   -     -     812,336     -     -     812,336  
Capital stock issued for consulting services on November 20, 2008 - $2.63   25,000     25     65,725     (65,750 )   -     -  
Capital stock issued for consulting services on February 20, 2009 - $2.50   25,000     25     62,475     (62,500 )   -     -  
Capital stock issued for cash on March 6, 2009 - at $2.25   89,148     89     200,494     -     -     200,583  
Capital stock issued for consulting services on March 20, 2009 - at $2.00   2,500     3     4,997     -     -     5,000  
Capital stock issued for cash on March 20, 2009 - at $2.25   10,800     11     24,289     -     -     24,300  
Capital stock issued for cash on June 11, 2009 - at $2.25   36,000     36     80,964     -     -     81,000  
Capital stock issued for services on June 11, 2009 - at $2.25   29,227     29     65,731     -     -     65,760  
Capital stock issued for cash on June 19, 2009 - at $2.25   495,556     496     1,114,504     -     -     1,115,000  
Capital stock issued for finders' fees on June 26, 2009 - at $2.51   22,222     22     55,755     -     -     55,777  
Shares to be issued for consulting services - Note 8   -     -     -     236,337     -     236,337  
Capital stock issued for cash on August 19, 2009 - at $2.25   128,888     129     289,869     -     -     289,998  
Less: Finders fees               (72,850 )   -     -     (72,850 )
Beneficial conversion features on convertible debt issuances   -     -     333,056     -     -     333,056  
Extinguishment of debt   -     -     487,469     -     -     487,469  
Cancellation of common shares   (75,000 )   (75 )   234,011     (233,936 )   -     -  
Share subscriptions received   -     -     -     300,000     -     300,000  
Net loss for the year   -     -     -     -     (5,499,419 )   (5,499,419 )
                                     
Balance, September 30, 2009   20,746,761   $  20,747   $  8,383,663   $  300,000   $  (12,562,233 ) $  (3,857,823 )

SEE ACCOMPANYING NOTES


ANAVEX LIFE SCIENCES CORP.
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL DEFICIT
for the period from January 23, 2004 (Date of Inception) to March 31, 2012
(Stated in US Dollars)
(Unaudited)

                            Deficit        
    Common Stock     Accumulated        
    Shares     Par Value     Additional     Common     During the        
                Paid-in     Shares to be     Development        
                Capital     Issued     Stage     Total  
                                     
Balance, September 30, 2009 - brought forward   20,746,761   $  20,747   $  8,383,663   $  300,000   $  (12,562,233 ) $  (3,857,823 )
Cumulative effect of accounting changes   -     -     (333,056 )   -     (550,804 )   (883,860 )
Capital stock issued for cash on October 2, 2009 - at $2.25   266,666     267     599,733     (300,000 )   -     300,000  
Capital stock issued in settlement of promissory note on February 2, 2010 - at $2.02   49,505     49     99,951     -     -     100,000  
Capital stock issued for cash on April 9, 2010 - at $2.60   92,499     93     240,405     -     -     240,498  
Capital stock issued in settlement of debt on April 30, 2010 - at $2.85   9,825     9     27,991     -     -     28,000  
Finders' fees paid in cash   -     -     (24,050 )   -     -     (24,050 )
Capital stock issued for cash on June 29, 2010 - at $2.50   941,000     941     2,351,559     -     -     2,352,500  
Finders' fees paid in cash   -     -     (206,500 )   -     -     (206,500 )
Capital stock issued in settlement of debt on July 5, 2010 - at $2.50   400,000     400     999,600     -     -     1,000,000  
Capital stock issued for cash on September 3, 2010 - at $2.75   163,000     163     448,087     -     -     448,250  
Capital stock issued for finders' fees on September 3, 2010 - at $2.75   9,000     9     (9 )   -     -     -  
Finders' fees paid in cash   -     -     (15,125 )   -     -     (15,125 )
Shares issud on conversion of promissory note on September 30, 2010 - at $2.25   328,058     328     737,802     -     -     738,130  
Shares issud on conversion of promissory note on September 30, 2010 - at $2.35   510,638     511     1,199,489     -     -     1,200,000  
Reclassification of dervative liability on modification of note terms   -     -     3,144,520     -     -     3,144,520  
Settlement of accounts payable   -     -     444,000     -     -     444,000  
Stock-based compensation   -     -     770,055     -     -     770,055  
Equity component of convertible promissory note   -     -     44,220     -     -     44,220  
Net loss for the year   -     -     -     -     (8,783,037 )   (8,783,037 )
                                     
Balance, September 30, 2010   23,516,952   $  23,517   $  18,912,335   $  -   $  (21,896,074 ) $  (2,960,222 )

SEE ACCOMPANYING NOTES


ANAVEX LIFE SCIENCES CORP.
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL DEFICIT
for the period from January 23, 2004 (Date of Inception) to March 31, 2012
(Stated in US Dollars)
(Unaudited)

                            Deficit        
    Common Stock     Accumulated        
    Shares     Par Value     Additional     Common     During the        
                Paid-in     Shares to be     Development        
                Capital     Issued     Stage     Total  
                                     
Balance, September 30, 2010 - brought forward   23,516,952   $  23,517   $  18,912,335   $  -   $  (21,896,074 ) $  (2,960,222 )
Capital stock issued for cash on November 18, 2010 - at $2.75   393,846     393     1,082,682     -     -     1,083,075  
Less: Share Issue costs   -     -     (65,363 )   -     -     (65,363 )
Capital stock issued for finders' fees on November 18, 2010 - at $2.75   3,636     4     (4 )   -     -     -  
Shares issued on the conversion of promissory note on November 18, 2010 - at $2.25   853,075     853     1,918,565     -     -     1,919,418  
Debt conversion expense   -     -     504,160     -     -     504,160  
Shares issued on the conversion of a promissory note on November 18, 2010 - at $4.12   145,063     145     597,515     -     -     597,660  
Capital stock issued in settlement of debt on November 18, 2010 - at $4.12   181,818     182     748,908     -     -     749,090  
Capital stock issued for cash on November 25, 2010 - at $3.35   29,851     30     99,970     -     -     100,000  
Capital stock issued for finders' fees on on November 25, 2010 - at $3.35   2,985     3     (3 )   -     -     -  
Capital stock issued for cash on February 1, 2011 - at $3.75   61,014     61     228,739     -     -     228,800  
Capital stock issued for cash on May 3, 2011 - at $3.00   33,334     34     99,966     -     -     100,000  
Capital stock issued on exercise of warrants for cash on June 19, 2011 - at $2.25   700,000     700     1,574,300     -     -     1,575,000  
Equity units issued in settlement of an account payable on September 28, 2011   650,000     650     1,059,313                 1,059,963  
Stock-based compensation   -     -     1,273,162     -     -     1,273,162  
Net loss for the period   -     -     -     -     (7,307,147 )   (7,307,147 )
                                     
Balance, September 30, 2011   26,571,574   $  26,572   $  28,034,245   $  -   $  (29,203,221 ) $  (1,142,404 )

SEE ACCOMPANYING NOTES


ANAVEX LIFE SCIENCES CORP.
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL DEFICIT
for the period from January 23, 2004 (Date of Inception) to March 31, 2012
(Stated in US Dollars)
(Unaudited)

                            Deficit        
    Common Stock     Accumulated        
    Shares     Par Value     Additional     Common     During the        
                Paid-in     Shares to be     Development        
                Capital     Issued     Stage     Total  
                                     
Balance, September 30, 2011 - brought forward   26,571,574   $  26,572   $  28,034,245   $  -   $  (29,203,221 ) $  (1,142,404 )
Capital stock issued for cash on December 6, 2011 - at $1.25   615,600     616     768,884     -     -     769,500  
Less: Share Issue costs   -     -     (77,000 )   -     -     (77,000 )
Capital stock issued for cash on February 9, 2012 - at $1.25   270,000     270     337,230     -     -     337,500  
Less: Share Issue costs   -     -     (33,750 )   -     -     (33,750 )
Capital stock issued for services on February 9, 2012 - at $1.99   8,000     8     15,888     -     -     15,896  
Stock-based compensation - Note 8   -     -     203,408     -     -     203,408  
Extension of warrants - Note 8               80,200                 80,200  
Net loss for the period   -     -     -     -     (3,081,704 )   (3,081,704 )
                                     
Balance, March 31, 2012   27,465,174   $  27,466   $  29,329,105   $  -   $  (32,284,925 ) $  (2,928,354 )

SEE ACCOMPANYING NOTES


ANAVEX LIFE SCIENCES CORP.
(A Development Stage Company)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2012
(Stated in US Dollars)
(Unaudited)

Note 1 Business Description, Basis of Presentation and Liquidity
   
  Business
   

Anavex Life Sciences Corp. (“the Company”) is a biopharmaceutical company engaged in the discovery and development of novel drug targets to treat serious diseases for which there are urgent unmet medical needs. The Company’s portfolio involves novel compounds (ligands) directed to sigma receptors in preclinical and clinical stages of development that target neurodegenerative diseases and cancer. The Company’s lead drug candidate, ANAVEX 2-73, targeting Alzheimer’s disease (AD), entered first Human Clinical Trials (HCT) in the first quarter of fiscal 2011. The Company plans to continue preclinical work on other compounds, including backup compounds to ANAVEX 2-73, provided sufficient capital is available. Additionally, the Company intends to further develop compounds in earlier preclinical phases, and continue to develop and expand its SIGMACEPTORTM Discovery platform.

 

These unaudited interim financial statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the audited financial statements of the Company for the year ended September 30, 2011. The interim results are not necessarily indicative of the operating results expected for the fiscal year ending on September 30, 2012. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures herein are adequate to make the information presented not misleading.

 

 

Basis of Presentation and Liquidity

 

These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and the instructions to Form 10-Q.

 

These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America on a going concern basis, which assumes that the Company will continue to realize its assets and discharge its obligations and commitments in the normal course of operations. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At March 31, 2012, the Company had an accumulated deficit of $32,284,925 (September 30, 2011 - $29,203,221) since its inception, has a working capital deficit of $2,929,859 and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this but considers obtaining additional funds by equity financing and/or from issuing promissory notes. Management expects the Company’s cash requirement over the next twelve months to be approximately $5,000,000. While the Company is expending best efforts to achieve the above plans, there is no assurance that any such activity will generate funds for operations.



Anavex Life Sciences Corp.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
March 31, 2012
(Stated in US Dollars) – Page 2
(Unaudited)

Note 2 Recent Accounting Pronouncements
   

There are no new accounting pronouncements that the Company recently adopted or are pending the Company’s adoption that are expected to have a material impact on the company’s results of operations, financial position or cash flows.

   
Note 3 Equipment

      March 31, 2012  
            Accumulated        
      Cost     Depreciation     Net  
                     
  Computer equipment $  5,631   $  4,126   $  1,505  

      September 30, 2011  
            Accumulated        
      Cost     Depreciation     Net  
                     
  Computer equipment $  5,631   $  3,197   $  2,434  

Note 4 Derivative Liabilities
   

Derivative liabilities, consisting of the embedded conversion features in the Company’s convertible promissory notes, are accounted for as separate liabilities measured at their respective fair values, as follows:


      Six months ended     Year ended  
      March 31, 2012     September 30, 2011  
               
  Balance, beginning of the period $  67,500   $  -  
  Fair value of embedded conversion feature of convertible            
   promissory notes   -     167,500  
  Change in fair value of derivative liability   (67,500 )   (100,000 )
  Balance, end of the period $  -   $  67,500  

The fair values of the convertible promissory notes embedded call options have been determined using the binomial pricing model using the following weighted average assumptions:

      March 31, 2012     September 30, 2011  
               
  Risk-free interest rate   0.05%     0.13%  
  Expected life of derivative liability   0.05 years     0.56 years  
  Annualized volatility   57.99%     93.45%  
  Dividend rate   0.00%     0.00%  


Anavex Life Sciences Corp.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
March 31, 2012
(Stated in US Dollars) – Page 3
(Unaudited)

Note 5 Promissory Notes Payable

      March 31,     September 30,  
      2012     2011  
               
  Convertible interest bearing promissory notes payable $  750,000   $  750,000  
  Interest bearing promissory notes payable   466,000     216,000  
  Less: fair value of derivative liabilities on date of issuance   (167,500 )   (167,500 )
  Add: accumulated accretion   152,207     69,419  
      1,200,707     867,919  
  Less: current portion   (1,200,707 )   (867,919 )
    $  -   $  -  

Convertible interest bearing promissory notes

The Company issued unsecured convertible interest bearing promissory notes totaling $750,000 during the year ended September 30, 2011. Included in these notes is a promissory note in the amount of $250,000 maturing on April 20, 2012 and a note in the amount of $500,000 maturing on May 4, 2012, each bearing interest at 8% per annum. These notes are convertible at any time at the option of the holder into units of the Company at $3.00 per unit with each unit consisting of one common share and one common share purchase warrant entitling the holder thereof to purchase an additional common share for $4.00 for a period of 2 years from the date of issuance. Otherwise, the notes will automatically be either converted or redeemed should the Company undertake equity financing of an amount of or greater than $2,000,000 within any consecutive 30 calendar days during the period the notes are outstanding. Additionally, by way of an anti-dilution clause, the conversion price on the notes will be adjusted if the Company issues common shares in excess of 10% of common shares outstanding on the dates the notes were issued.

In connection with the issuance of these notes, the Company paid a finder’s fee totaling $100,000 which was deferred and is being amortized to income using the effective interest method over the terms of the notes. As at March 31, 2012 there remains $9,995 (September 30, 2011: $55,464) unamortized in respect of this deferred financing charge.

Pursuant to the guidance of ASC 815-40, the Company determined that the embedded conversion feature of the notes failed to meet the “fixed for fixed” criteria contained within the guidance. Accordingly, the Company bifurcated the embedded conversion features as a separate derivative liability having a fair value of $167,500 at inception. The corresponding debt discount is being accreted over the term of the note. During the six months ended March 31, 2012, the Company recorded accretion expense of $82,788 (2011: $Nil) in respect of this debt discount.

Subsequent to March 31, 2012, the $500,000 note with accrued interest of $40,000 maturing May 4, 2012 and a promissory note having a principal value of $250,000 and accrued interest of $9,389 that matured on January 20, 2012 were exchanged for a new 12% interest bearing promissory note having a principal balance of $799,389 maturing June 19, 2012.

Interest bearing promissory notes

During the year ended September 30, 2010, the Company issued a promissory note having a principal balance of $200,000 with terms that included interest at 8% per annum and maturing on May 4, 2011. On May 4, 2011, this note, including accrued interest of $16,000 thereon, was exchanged for a new 8% interest bearing promissory note having a principal balance of $216,000 maturing May 4, 2012. The company plans to negotiate new terms to extend the maturity of this note.


Anavex Life Sciences Corp.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
March 31, 2012
(Stated in US Dollars) – Page 4
(Unaudited)

Note 5 Promissory Notes Payable – (cont’d)
   

On November 1, 2011, the Company issued a promissory note having a principal balance of $250,000 with terms that included interest at 8% per annum and maturing on January 20, 2012. This promissory note with accrued interest of $9,389 along with the $500,000 Convertible Note with accrued interest of $40,000 maturing May 4, 2012 were exchanged for a new 12% interest bearing promissory note having a principal balance of $799,389 maturing June 19, 2012 .

 

Note 6

Capital Stock

 

On May 24, 2006, the board of directors approved a six (6) for one (1) forward split of the authorized issued and outstanding common stock. The Company’s authorized capital increased from 25,000,000 shares of common stock to 150,000,000 shares of common stock.

 

On September 24, 2007, the Company issued 222,222 common shares common shares at $3.60 per share for a total of $800,000 for research and development expenses. The common shares were recorded based upon the quoted market price of the Company’s common stock on the agreement date.

 

On September 25, 2007, the Company settled a loan payable in the amount of $333,000 by issuing 92,500 common shares at $3.60 per share, being the quoted market price of the Company’s common stock on the settlement date.

 

On December 10, 2007, the Company issued 150,000 units at $3.50 per unit for proceeds of $525,000. Each unit consisted of one common share and one common share purchase warrant entitling the holder to purchase an additional common share at $5.00 per share until December 10, 2009.

 

On December 18, 2007, the Company issued 10,000 shares at $4.50 per share for a total of $45,000 pursuant to an agreement to settle a debt and issued 50,000 shares at $3.86 per share for a total of $193,000 pursuant to a consulting agreement. The Company recorded compensation expense of $65,000 in respect of these issuances based on the excess of the fair value of these shares over the balances at which they were recorded by the Company.

 

On May 15, 2008, the Company issued 65,000 common shares at $5.24 per share for a total of $340,600 to its former CEO in accordance with the terms of a severance agreement upon the termination of his services. The common shares were recorded based upon the quoted market price of the Company’s common stock on the agreement date.

 

On August 19, 2008, the Company issued 25,000 common shares at $5.07 per share for a total of $ 126,750 to a director of the Company pursuant to an agreement to provide consulting services. The common shares were recorded based upon the quoted market price of the Company’s common stock on the agreement date.

 

On August 19, 2008, the Company issued 142,698 units at $4.25 per unit for proceeds of $606,467 pursuant to private placement agreements. Each unit consisted of one common share and one common share purchase warrant entitling the holder to purchase an additional common share at $5.00 per share until August 19, 2009.

 

On November 20, 2008, the Company issued 25,000 common shares at $2.63 per share for a total of $65,750 to a director of the Company pursuant to an agreement to provide consulting services. The common shares were recorded based upon the quoted market price of the Company’s common stock on the issuance date.

 

On February 20, 2009, the Company issued 25,000 common shares at $2.50 per share for a total of $62,500 to a director of the Company pursuant to an agreement to provide consulting services. The common shares were recorded based upon the quoted market price of the Company’s common stock on the issuance date.



Anavex Life Sciences Corp.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
March 31, 2012
(Stated in US Dollars) – Page 5
(Unaudited)

Note 6 Capital Stock – (cont’d)
   

On March 6, 2009, the Company issued 89,148 units at $2.25 per unit for proceeds of $200,583 pursuant to private placement agreements. Each unit consisted of one common share and one common share purchase warrant entitling the holder to purchase an additional common share at $4.00 per share until March 6, 2010.

 

On March 20, 2009, the Company issued 10,800 units at $2.25 per unit for proceeds of $24,300 pursuant to private placement agreements. Each unit consisted of one common share and one common share purchase warrant entitling the holder to purchase an additional common share at $4.00 per share until March 20, 2010.

 

On March 20, 2009, the Company issued 2,500 common shares at $2.00 per share for a total of $5,000 to a public relations consultant pursuant to an agreement to provide consulting services. The common shares were recorded based upon the quoted market price of the Company’s common stock on the issuance date.

 

On May 14, 2009, the Company entered into a revised consulting agreement with a director whereby the consultant returned 75,000 common shares to the Company for cancellation. The return of shares was recorded in the same amount at which they were originally issued.

 

On June 11, 2009 the Company issued 36,000 units at $2.25 per unit for proceeds of $81,000 pursuant to private placement agreements. Each unit consisted of one common share and one common share purchase warrant entitling the holder to purchase an additional common share at $4.00 per share until June 11, 2010. The Company paid finders’ fees in the amount of $8,100 in relation to this private placement.

 

On June 11, 2009 the Company issued 29,227 common shares at $2.25 per share for service rendered by consultants. The common shares were recorded based upon the fair value of the Company’s common stock on the issuance date of the shares.

 

On June 19, 2009, the Company issued 495,556 units at $2.25 per Unit for total proceeds of $1,115,000 pursuant to private placement agreements. Each unit consisted on one common share and one and one- half of a common share purchase warrant entitling the holder to purchase additional common shares at $2.25 per share until June 19, 2011.

 

On June 26, 2009, the Company issued 22,222 common shares at $2.51 per share for finder’s fees related to the issuance of a $500,000 note payable. The common shares were recorded based upon the quoted market price of the Company’s common stock on the issue date.

 

On August 19, 2009, the Company issued 128,888 units at $2.25 per Unit for total proceeds of $289,998. Of these placements, 40,000 Units consisted of one common share and one share purchase warrant entitling the holder to purchase an additional common share at $4.00 per share until July 9, 2010 and 88,888 Units consisted on one common share and one and one-eighth share purchase warrant entitling the holder to purchase an additional common shares at $2.25 per share until August 4, 2011. The Company paid finders’ fees totalling $19,000 in respect of these private placements.

 

On October 2, 2009 the Company issued 266,666 units at $2.25 per unit for proceeds of $600,000 pursuant to private placement agreement. Each unit consisted of one common share and one and one- eighth common share purchase warrant entitling the holder to purchase an additional common share at $2.25 per share until October 2, 2011. The Company had received $300,000 of this amount in the year ended September 30, 2010.

 

On February 2, 2010 the Company issued 49,505 common shares of the Company, at their fair value of $2.02 per share pursuant to an agreement with a former officer to settle an outstanding amount owed.

 

On April 9, 2010, the Company issued 92,499 units at $2.60 per unit for proceeds of $240,498 pursuant to private placement agreement. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $3.50 per share until April 9, 2011.



Anavex Life Sciences Corp.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
March 31, 2012
(Stated in US Dollars) – Page 6
(Unaudited)

Note 6 Capital Stock – (cont’d)
 

On April 30, 2010, the Company issued 9,825 common shares of the Company, at $2.85 per share as consideration for terminating a consulting agreement and for services rendered under the agreement. The common shares were recorded based upon the quoted market price of the Company’s common stock on the date of the termination of the agreement.

 

On June 29, 2010, the Company issued 941,000 units at $2.50 per unit for total proceeds of $2,352,500 pursuant to private placement agreements. Each unit consisted on one common share and one-half of a common share purchase warrant entitling the holder to purchase additional common shares at $3.50 per share until December 29, 2011.

 

On July 5, 2010, the Company issued 400,000 units in settlement of $1,000,000 owing to a creditor. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at 3.50 per share until January 5, 2012. The fair value of the units issued was determined to be $1,444,000 on the date they were issued and thus the Company recorded a loss on settlement of accounts payable of $444,000 with a corresponding credit to additional paid-in capital of the same amount on date of issuance. The fair value of the shares included in the units was determined with reference to their quoted market price and the value of the warrants was determined using the Black-Scholes model with the following assumptions: exercise price - $3.50, stock price - $3.15, expected volatility – 68.45%, expected life – 1.5 years, dividend yield – 0.00%.

 

On September 3, 2010, the Company issued 163,000 units at $2.75 per unit for proceeds of $448,250 pursuant to private placement agreement. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $3.75 per share until March 3, 2012.

 

On September 3, 2010, the Company issued 9,000 units at $2.75 per unit for finder’s fees related to the private placement of the same date. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $3.75 per share until March 3, 2012.

 

On September 30, 2010, the Company issued 510,638 common shares at $2.35 per share pursuant to the terms of a convertible note payable.

 

On September 30, 2010, the Company issued 82,310 units at $2.25 per unit pursuant to the terms of convertible notes payable. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $3.50 per share until September 30, 2011.

 

On September 30, 2010, the Company issued 245,748 units at $2.25 per unit pursuant to the terms of convertible notes payable. Each unit consisted of one common share and one common share purchase warrant entitling the holder to purchase an additional common share at $3.00 per share until September 30, 2012.

 

On November 18, 2010, the Company issued 393,846 units at $2.75 per unit for proceeds of $1,083,075 pursuant to a private placement agreement. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $4.50 per share until May 18, 2012. The Company paid a finder’s fee totalling $65,363 in respect of this private placement.

 

On November 18, 2010, the Company issued 3,636 units at $2.75 per unit for finder’s fees related to the private placement of the same date. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $4.50 per share until May 18, 2012.



Anavex Life Sciences Corp.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
March 31, 2012
(Stated in US Dollars) – Page 7
(Unaudited)

Note 6 Capital Stock – (cont’d)
   

On November 18, 2010, the Company issued 853,075 units in the conversion of two notes payable originally convertible at $2.50. The Company recorded debt conversion expense of $504,160, related to the fair value of the additional units issued as a result of converting at the lower conversion price. Each unit consisted of one common share and one common share purchase warrant entitling the holder to purchase an additional common share at $3.00 per share until November 18, 2012. The fair value of the shares included in the units was determined with reference to their quoted market price and the value of the warrants was determined using the Black-Scholes model with the following assumptions: exercise price - $3.00, stock price - $4.12, expected volatility – 78.33%, expected life – 2.0 years, dividend yield – 0.00%, risk-free rate – 0.52%.

 

On November 18, 2010, the Company issued 145,063 shares of common stock at their fair value of $4.12 per share based on their quoted market price pursuant to settling non-convertible interest bearing notes payable outstanding in the amount of $398,922, including accrued interest of $26,032. The Company recorded a loss on settlement of debt of $198,738 based on the difference between the carrying value of the debt settled and the fair value of the shares issued.

 

On November 18, 2010, the Company issued 181,818 shares of common stock at their fair value of $4.12 per share based on the quoted value of units issued in a private placement on the same date to one creditor in settlement of $500,000 of debt owing. The Company recorded a loss on settlement of accounts payable of $249,090 based on the difference of the carrying value of the account payable and the fair value of the shares issued.

 

On November 25, 2010, the Company issued 29,851 units at $3.35 per unit for proceeds of $100,000 pursuant to a private placement agreement. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $4.50 per share until November 25, 2012.

 

On November 25, 2010, the Company issued 2,985 units at $3.35 per unit for finder’s fees related to the private placement of the same date. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $4.50 per share until November 25, 2012.

 

On February 1, 2011, the Company issued 61,014 units at $3.75 per unit for proceeds of $228,800 pursuant to a private placement agreement. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $5.25 per share until August 1, 2012.

 

On May 3, 2011, the Company issued 33,334 units at $3.00 per unit for proceeds of $100,000 pursuant to a private placement agreement. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $4.00 per share until April 20, 2013.

 

On June 19, 2011, the Company issued 700,000 common shares at $2.25 per share for proceeds of $1,575,000 pursuant to the exercise of warrants.

 

On September 26, 2011, the Company issued 650,000 units in settlement of $975,000 of debt owing. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $2.00 per share until September 26, 2012. The Company recorded a loss on settlement of account payable in the amount of $84,963 based on the fair value of shares being $975,000 at their issuance and the fair value of the warrants determined to be $84,963. The fair value of the shares included in the units was determined with reference to their quoted market price and the value of the warrants was determined using the Black-Scholes model with the following assumptions: exercise price - $2.00, stock price - $1.50, expected volatility – 69%, expected life – 1.0 years, dividend yield – 0.00%, risk-free interest rate – 0.10%.



Anavex Life Sciences Corp.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
March 31, 2012
(Stated in US Dollars) – Page 8
(Unaudited)

Note 6 Capital Stock – (cont’d)
   

On December 6, 2011, the Company issued 615,600 units at $1.25 per unit for proceeds of $769,500 pursuant to private placement agreements. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $2.00 per share until December 6, 2012. The Company paid finder’s fees of $77,000 in connection with this private placement.

 

On February 9, 2012 the Company issued 8,000 units for service rendered by a director and officer of the Company. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $2.00 per share until February 9, 2013. The fair value of the units issued was determined to be $15,895 on the date they were issued and the Company recorded consulting fees of $15,895 on the statement of operations for the six months ended March 31, 2012. The fair value of the shares included in the units was determined with reference to their quoted market price and the value of the warrants was determined using the Black-Scholes model with the following assumptions: exercise price - $2.00, stock price - $1.74, expected volatility – 84.88%, expected life – 1.0 years, risk free interest rate – 0.15%, dividend yield – 0.00%.

 

On February 9, 2012, the Company issued 270,000 units at $1.25 per unit for proceeds of $337,500 pursuant to private placement agreements. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $2.00 per share until February 9, 2012. The Company paid a finder’s fee of $33,750 in connection with this private placement.

 

Note 7 Related Party Transactions
   
  The following amounts have been donated to the Company by the directors:

      Three months     Six months     January 23, 2004  
      ended March 31,     ended March 31,     (Date of Inception)  
      2012     2011     2012     2011     to March 31, 2012  
                                 
  Management fees $  -   $ -   $          -   $  -   $  14,625  
 

Rent

  -     -     -     -     3,750  
  Debt forgiven by directors   -     -     -     -     33,666  
    $  -   $ -   $         -   $  -   $  52,041  

During the three and six months ended March 31, 2012, the Company was charged consulting fees totaling $70,396 and $149,670 respectively (2011: $232,897 and $481,438 respectively) by directors, officers and a significant shareholder of the Company.

As at March 31, 2012, included in accounts payable and accrued liabilities is $44,514 (September 30, 2011: $20,833) owing to directors and officers of the Company and a former director and officer of the Company.


Anavex Life Sciences Corp.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
March 31, 2012
(Stated in US Dollars) – Page 9
(Unaudited)

Note 8 Commitments

  a)

Share Purchase Warrants

     
 

A summary of the Company’s share purchase warrants outstanding is presented below:


          Weighted  
          Average  
          Exercise  
    Number of Shares     Price  
             
Balance, September 30, 2010   2,047,151   $  2.87  
Expired   (148,749 ) $  2.64  
Exercised   (700,000 ) $  2.25  
Issued   1,457,077   $  3.07  
Balance, September 30, 2011   2,655,479   $  3.16  
Expired   (711,499 ) $  3.26  
Issued   446,800   $  2.00  
Balance, March 31, 2012   2,390,780   $  2.74  

At March 31, 2012, the Company has 2,390,780 currently exercisable share purchase warrants outstanding as follows:

Number     Exercise Price     Expiry Date  
198,741   $  4.50     May 18, 2012  
30,508   $  5.25     August 1, 2012  
325,000   $  2.00     September 26, 2012  
41,155   $  3.50     September 30, 2012  
245,748   $  3.00     September 30, 2012  
853,075   $  3.00     November 18, 2012  
16,419   $  4.50     November 25, 2012  
307,800   $  2.00     December 6, 2012  
200,000   $  1.50     January 5, 2013  
135,000   $  2.00     February 9, 2013  
4,000   $  2.00     February 9, 2013  
33,334   $  4.00     April 20, 2013  
2,390,780              

During the six months ended March 31, 2012, the exercise price and expiry of 200,000 warrants exercisable at $3.50 and expiring January 5, 2012 were modified and extended such that these warrants are now exercisable at $1.50 until January 5, 2013. The fair value of this modification was determined to be $80,200 and was determined using the Black-Scholes option pricing model using the following weighted average assumptions: risk-free interest rate: 0.11%, expected life: 1.0 year, annualized volatility: 79.46% , dividend rate: 0%.


Anavex Life Sciences Corp.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
March 31, 2012
(Stated in US Dollars) – Page 10
(Unaudited)

Note 8 Commitments – (cont’d)

  b)

Stock–based Compensation Plan

     
 

In April, 2007, the Company adopted a stock option plan which provides for the granting of stock options to selected directors, officers, employees or consultants in an aggregate amount of up to 3,000,000 common shares of the Company and, in any case, the number of shares to be issued to any one individual pursuant to the exercise of options shall not exceed 10% of the issued and outstanding share capital. The granting of stock options, exercise prices and terms are determined by the Company's Board of Directors. If no vesting schedule is specified by the Board of Directors on the grant of options, then the options shall vest over a 4-year period with 25% the granted vesting each year commencing 1 year from the grant date. For stockholders who have greater than 10% of the outstanding common shares of the Company and who have granted options, the exercise price of their options shall not be less than 110% of the fair of the stock on grant date. Otherwise, options granted shall have an exercise price equal to their fair value on grant date.

     
 

On February 2, 2011, the Company amended and restated the 2007 stock option plan to increase the number of options authorized to 4,000,000.

     
 

A summary of the status of Company’s outstanding stock purchase options for the six months ended March 31, 2012 is presented below:


            Weighted        
            Average     Weighted Average  
            Exercise     Grant Date fair  
      Number of Shares     Price     value  
  Outstanding at September 30, 2010   2,775,000   $  3.29        
  Forfeited   (1,000,000 ) $  3.93        
  Cancelled   (50,000 ) $  2.75        
  Granted   650,000   $  4.06   $  2.95  
  Outstanding at September 30, 2011   2,375,000   $  3.18        
  Forfeited   (1,100,000 ) $  2.82        
  Granted   500,000   $  1.50   $  0.72  
  Outstanding at March 31, 2012   1,775,000   $  2.94        
  Exercisable at March 31, 2012   905,000   $  2.81        
  Exercisable at September 30, 2011   930,000   $  2.90        


Anavex Life Sciences Corp.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
March 31, 2012
(Stated in US Dollars) – Page 11
(Unaudited)

Note 8 Commitments – (cont’d)

  b)

Stock–based Compensation Plan – (cont’d)

     
 

At March 31, 2012, the following stock options were outstanding:


Number of Shares                 Aggregate     Remaining  
      Number     Exercise           Intrinsic     Contractual  
Total     Vested     Price     Expiry Date     Value     Life (yrs)  
                               
50,000 (1 )   50,000   $  3.75     November 1, 2012     -     0.84  
                               
100,000 (2 )   -   $  3.86     December 1, 2012     -     0.92  
                               
150,000 (3 )   150,000   $  3.10     June 3, 2013     -     1.42  
                               
400,000 (4 )   400,000   $  2.50     September 15, 2013     -     1.71  
                               
500,000 (5 )   -   $  2.50     October 19, 2013     -     1.79  
                               
5,000 (6 )   5,000   $  2.50     March 2, 2014     -     2.17  
                               
50,000 (7 )   50,000   $  3.50     June 29, 2015     -     3.50  
                               
150,000 (8 )   150,000   $  3.72     February 24, 2016     -     4.15  
                               
100,000 (9 )   100,000   $  3.67     March 30, 2016     -     4.25  
                               
270,000 (10 )   -   $  3.00     February 8, 2017     -     5.11  
1,775,000     905,000                 -        

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted market price of the Company’s stock for the options that were in-the-money at March 31, 2012.

  (1)

As at March 31, 2012 and September 30, 2011, these options had fully vested. The Company did not recognize any stock-based compensation for these options during the six month period ended March 31, 2012 (2011: $nil).

     
  (2)

As at March 31, 2012 and September 30, 2011, these options have not vested. The options vest upon the Company listing its shares on the American Stock Exchange or any other nationally recognized stock exchange by December 1, 2012 or in the event of a change of control a listing on a nationally recognized stock exchange is not required. No stock-based compensation has been recorded in the financial statements as the performance condition has not yet been met.

     
  (3)

As at March 31, 2012 and September 30, 2011, these options had fully vested. The Company did not recognize any stock-based compensation during the six month period ended March 31, 2012 (2011: $nil).

     
  (4)

As at March 31, 2012 and September 30, 2011, these options had fully vested. The Company did not recognize any stock-based compensation for these options during the six month period ended March 31, 2012 (2011: $500,000).



Anavex Life Sciences Corp.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
March 31, 2012
(Stated in US Dollars) – Page 12
(Unaudited)

Note 8 Commitments – (cont’d)

  b)

Stock–based Compensation Plan – (cont’d)


  (5)

As at March 31, 2012 and September 30, 2011 none of these options have vested. The options vest as to 100,000 per compound entered into a phase II trial. The fair value of these options was calculated to be $740,000, which the Company has not yet recognized in the financial statements as the performance conditions have not yet been met.

   

  (6)

As at March 31, 2012 and September 30, 2011, these options had fully vested. The Company did not recognize any stock-based compensation for these options in the six month period ended March 31, 2012 (2010: $nil).

   

  (7)

As at March 31, 2012 and September 30, 2011these options had fully vested. The Company did not recognize any stock-based compensation for the six month period ended March 31, 2012 (2011: $125,000).

   

  (8)

As at March 31, 2012 these options had fully vested (September 30, 2011: none of these options have vested). The options vested on February 24, 2012. The fair value of these options was calculated to be $281,000, of which the Company recognized stock-based compensation in the amount of $163,415 for the six month period ended March 31, 2012 (2011: $38,979).

   

  (9)

These options were granted during the year ended September 30, 2011. At September 30, 2011, 75,000 of these options have vested. The remaining 25,000 options vested during the six month period ended March 31, 2012. The fair value of these options was calculated to be $183,000, of which the Company has recognized $6,500 as stock based compensation during the six month period ended March 31, 2012 (2011: $66,750).

   

  (10)

As at March 31, 2012 and September 30, 2011, these options have not vested. The options vest upon one or more compounds: entering Phase II trial – 90,000 options; entering Phase III trial – 90,000 options; and receiving FDA approval – 90,000 options. No stock-based compensation has been recorded in the financial statements as none of the performance conditions have yet been met.

   

 

During the six month period ended March 31, 2012, a total of 1,100,000 options were forfeited for which the Company had recognized stock-based compensation of $158,493 in respect of these options. The Company recognized stock-based compensation of $33,493 in respect of these options during the six month period ended March 31, 2012 (2011: $Nil).

   

 

During the year ended September 30, 2011, 200,000 options were cancelled for which the Company recognized stock based compensation expense of $125,500 during the six month period ended March 31, 2011.



Anavex Life Sciences Corp.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
March 31, 2012
(Stated in US Dollars) – Page 13
(Unaudited)

Note 8 Commitments – (cont’d)

  b)

Stock–based Compensation Plan – (cont’d)

     
 

The fair value of stock options granted has been determined using the Black-Scholes option pricing model using the following weighted average assumptions applied to stock options granted during the periods:


    March 31,     September 30,  
    2012     2011  
Risk-free interest rate   0.83% - 2.19%     0.96% - 2.21%  
Expected life of options   4.25 - 5.0 years     4.5 - 5.0 years  
Annualized volatility   57.87% - 95.25%     56.27% - 62.52%  
Dividend rate   0%     0%  

At March 31, 2012, the following summarizes the unvested stock options:

                  Weighted  
                  Average  
      Number of     Weighted Averag     Grant-Date  
      Shares     Exercise Price     Fair Value  
  Unvested options at September 30, 2011   1,445,000   $  3.33   $  2.17  
  Granted   500,000   $  1.50   $  0.72  
  Forfeited   (900,000 ) $  2.74   $  1.60  
  Vested   (175,000 ) $  3.71   $  2.70  
  Unvested options at March 31, 2012   870,000   $  2.81   $  1.82  

As at March 31, 2012, there was no unrecognized compensation cost associated with unvested share-based compensation awards that will become vested exclusive of achieving any performance milestones that is expected to be recognized in current fiscal year. There has been no stock-based compensation recognized in the financial statements for the period ended March 31, 2012 (2010: $nil) for options that will vest upon the achievement of performance milestones because the Company has determined that satisfaction of the performance milestones was not probable. Compensation relating to stock options exercisable upon achieving performance milestones will be recognized in the period the milestones are achieved.

Stock-based compensation amounts, including those relating to shares issued for services during the three and six month periods ended March 31, 2012 and 2011 are classified in the Company’s Statement of Operations as follows:

      Three months     Six months  
      ended March 31,     ended March 31,  
      2012     2011     2012     2011  
  Consulting fees $  80,144   $  668,479   $  203,408   $  856,229  
  Research and development $  80,200   $  -   $  80,200   $  -  
    $  160,344   $  668,479   $  283,608   $  856,229  


Anavex Life Sciences Corp.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
March 31, 2012
(Stated in US Dollars) – Page 14
(Unaudited)

Note 9 Supplemental Cash Flow Information
   

Investing and financing activities that do not have a direct impact on current cash flows are excluded from the statement of cash flows.

 

During the six months ended March 31, 2012, the Company issued 8,000 units for service rendered by a director and officer of the Company. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $2.00 per share until February 9, 2013. The fair value of the units issued was determined to be $15,895 on the date they were issued and the Company recorded consulting fees of $15,895 on the statement of operations for the six months ended March 31, 2012.

 

 

During the six months ended March 31, 2011:


  a)

The Company issued 3,636 units at $2.75 per unit for finder’s fees related to the private placement. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $4.50 per share until May 18, 2012.

     
  b)

The Company issued 853,065 units at the calculated fair value of $6.24 per unit in the conversion of two notes payable. The Company recorded debt conversion expense of $504,160 related to the fair value of the additional units issued based on the difference between the fair value of the units issued and the carrying value of the debt. Each unit consisted of one common share and one common share purchase warrant entitling the holder to purchase an additional common share at $3.00 per share until November 18, 2012.

     
  c)

The Company issued 145,063 shares of common stock at their fair value of $4.12 per share to settle non-convertible interest bearing notes payable outstanding in the amount of $398,923, including accrued interest of $26,032 (included in accounts payable and accrued liabilities). The Company recorded a loss on debt settlement of $198,738 as a result of this transaction.

     
  d)

The Company issued 181,818 shares of common stock at their fair value of $4.12 per share based on their quoted market price to one creditor in settlement of $500,000 of accounts payable. The Company recorded a loss on settlement of accounts payable of $249,000 as a result of the difference between the carrying value of the account payable and the fair value of the shares issued.

     
  e)

The Company issued 2,985 units at $3.35 per unit for finder’s fees related to the private placement of the same date. Each unit consisted of one common share and one-half common share purchase warrant entitling the holder to purchase an additional common share at $4.50 per share until November 25, 2012.


Note 10 Subsequent Events
   

On April 2, 2012, the Company issued a promissory note having a principal balance of $32,500 with terms that included interest at 10% per annum and maturing on April 2, 2013.


2

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This quarterly report on Form 10-Q includes forward-looking statements. All statements other than statements of historical facts contained in this quarterly report on Form 10-Q, including statements regarding our anticipated future clinical and regulatory milestone events, future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such forward-looking statements include, without limitation, statements regarding the anticipated start dates, durations and completion dates of our ongoing and future clinical studies, statements regarding the anticipated designs of our future clinical studies, statements regarding our anticipated future regulatory submissions and statements regarding our anticipated future cash position. We have based these forward-looking statements largely on our current expectations and projections about future events, including the responses we expect from the U.S. Food and Drug Administration, or FDA, and other regulatory authorities and financial trends that we believe may affect our financial condition, results of operations, business strategy, preclinical and clinical trials and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions including without limitation the risks described in the section entitled “Risk Factors”. These risks are not exhaustive. Other sections of this quarterly report on Form 10-Q include additional factors which could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable laws including the securities laws of the United States and Canada, we assume no obligation to update or supplement forward-looking statements.

As used in this report, the terms “we”, “us”, “our”, and “Anavex” mean Anavex Life Sciences Corp., unless the context clearly requires otherwise.

Our Current Business

We are a biopharmaceutical company engaged in the discovery and development of novel drug targets to treat serious diseases for which there are urgent unmet medical needs. The ANAVEX portfolio involves novel compounds (ligands) directed to sigma receptor in preclinical and clinical stages of development that target neurodegenerative diseases and cancer. Our lead drug candidate, ANAVEX 2-73, targeting Alzheimer’s disease (AD), entered first Human Clinical Trials (HCT) in the first quarter of 2011. This study was conducted in Germany in collaboration with ABX-CRO Advanced Pharmaceutical Services. On November 14, 2011, we announced the successful completion of a Phase 1 single ascending dose (SAD) clinical trial of ANAVEX 2-73. We plan to continue preclinical work on other CNS compounds targeting epilepsy, depression and neuropathic pain provided sufficient capital is available. Additionally, we intend to further develop compounds in earlier preclinical phases, which target various types of cancer and continue to develop and expand our SIGMACEPTOR™ Discovery platform.

Our Pipeline

Our proprietary SIGMACEPTOR™ Discovery Platform has generated small molecule drug candidates with unique modes of action, by making use of our leading understanding of sigma receptors. Sigma receptors represent potential targets for therapeutics to potentially combat many human diseases, including AD. When bound by the appropriate ligands, these receptors influence the functioning of multiple biochemical signals that are involved in the pathogenesis (origin or development) of disease.


3

With our SIGMACEPTOR™-N program, we are focused on developing disease-modifying treatments for CNS conditions using ligands that activate sigma-1 receptors. Among our lead CNS drug candidates, we have made significant progress with ANAVEX 2-73, our lead drug candidate for the treatment of AD, and ANAVEX 19-144, the only and active metabolite of ANAVEX 2-73.

Our molecules may offer a disease-modifying approach in AD. Preclinical data reveals that ANAVEX 2-73 and ANAVEX 19-144 exhibit significant anti-amnesic, neuroprotective and anticonvulsant properties in a variety of in vitro systems and specialized animal models. These activities involve sigma-1, muscarinic and NMDA receptors as well as ion channels, indicating a unique mode of action. In AD animal models, ANAVEX 2-73 has shown pharmacological, histological and behavioral evidence as a potential neuroprotective, anti-amnesic, anti-convulsive and anti-depressive therapeutic agent, due to its potent affinity to sigma-1 receptors and moderate affinities to M1-4 type muscarinic receptors. ANAVEX 2-73 has shown a potential dual mechanism which may impact both amyloid and tau pathology. ANAVEX 19-144 controls seizures and the epileptogenesis process in animal models. Moreover, its neuroprotective properties may prevent the process that causes long-term damage to tissue and cells as well as biochemical and physiological alterations to the brain from epileptic seizures.

On November 14, 2011 we announced the successful completion of a Phase 1 single ascending dose (SAD) clinical trial of ANAVEX 2-73. In this Phase 1 SAD trial, the maximum tolerated single dose was defined per protocol as 55-60 mg. This dose is above the equivalent dose shown to have positive effects in mouse models of AD. There were no significant changes in laboratory or electrocardiogram (ECG) parameters. ANAVEX 2-73 was well tolerated below the 55-60 mg dose with only mild adverse events in some volunteers. Observed adverse events at doses above the maximum tolerated single dose included headache and dizziness, which were moderate in severity and reversible. These side effects are often seen with drugs that target central nervous system (CNS) conditions, including AD.

The ANAVEX 2-73 Phase 1 SAD trial was conducted as a randomized, placebo-controlled study. Healthy male volunteers between the ages of 18 and 55 received single, ascending oral doses over the course of the trial. Study endpoints included safety and tolerability together with pharmacokinetic parameters. Pharmacokinetics includes the absorption and distribution of a drug, the rate at which a drug enters the blood and the duration of its effect, as well as chemical changes of the substance in the body. This study was conducted in Germany in collaboration with ABX-CRO, a clinical research organization that has conducted several Alzheimer’s disease studies, and the Technical University of Dresden.

We have also reported promising developments with ANAVEX 1-41, which is a sigma-1 agonist. Preclinical tests revealed significant neuroprotective benefits (i.e., protects nerve cells from degeneration or death) through the modulation of endoplasmic reticulum, mitochondrial and oxidative stress, which damages and destroys cells and is believed by some scientists to be a primary cause of AD. In addition, in animal models, ANAVEX 1-41 prevented the expression of caspase-3, an enzyme that plays a key role in apoptosis (programmed cell death) and loss of cells in the hippocampus, the part of the brain that regulates learning, emotion and memory. These activities involve both muscarinic and sigma-1 receptor systems through a novel mechanism of action.

Our SIGMACEPTOR™-C program leverages the unique properties of sigma-1 and/or sigma-2 receptor ligands, which may allow for the development of a new class of promising drug candidates designed to combat various types of solid tumors. Sigma receptors are highly expressed in different tumor cell types. Binding by appropriate sigma-1 and/or sigma-2 ligands can induce selective apoptosis. In addition, through tumor cell membrane reorganization and interactions with ion channels, our drug candidates are believed to play an important role in inhibiting the processes of metastasis (spreading of cancer cells from the original site to other parts of the body), angiogenesis (the formation of new blood vessels) and tumor cell proliferation. The compounds in our oncology program are in pre-clinical testing, and there is no guarantee that the activity demonstrated in pre-clinical models will be shown in human testing.

ANAVEX 7-1037, our lead drug candidate for the treatment of prostate cancer, is a low molecular weight, synthetic compound exhibiting high affinity for sigma-1 receptors at nanomolar levels and moderate affinity for sigma-2 receptors and sodium channels at micromolar levels. In advanced preclinical studies, this compound revealed antitumor potential with no toxic side effects. It has also been shown to selectively kill human cancer cells without affecting normal/healthy cells and also to significantly suppress tumor growth in immune-deficient mice models.


4

Scientific publications emphasize the promise of sigma receptor ligands, highlighting the fact that these ligands may stop tumor growth and induce selective cell death in various tumor cell lines, including leukemia, melanoma and cancers of the colon, breast, prostate, lung, brain, ovary and kidney.

Numerous additional compounds are currently in the early discovery and lead optimization stages of our SIGMACEPTOR™-N and SIGMACEPTOR™-C programs.

Results of Operations

Revenue

We have not earned any revenues since our inception on January 23, 2004. We are still in the development stage and do not anticipate earning any revenues until we can establish an alliance with other companies to develop, co-develop, license, acquire or market our products.

Expenses

Our expenses for the three months ended March 31, 2012 and 2011 were as follows:

    Three Months     Three Months     Six Months     Six Months  
    Ended     Ended     Ended     Ended  
    March 31,     March 31,     March 31,     March 31,  
    2012     2011     2012     2011  
Accounting and audit fees $  23,784   $  38,380   $  94,528   $  87,328  
Amortization   465     407     929     898  
Bank charges and interest   947     1,748     3,270     3,791  
Consulting   242,302     1,017,702     549,514     1,669,903  
Investor relations   7,638     25,000     22,638     79,535  
Legal fees   48,143     37,600     76,154     57,347  
Office and miscellaneous   2,283     13,151     5,455     19,620  
Insurance   -     16,107     9,630     20,922  
Registration and filing fees   9,237     36,363     17,649     45,425  
Rent   -     10,999     -     52,818  
Research and development   429,607     730,242     2,146,940     1,227,532  
Travel   31,200     20,026     54,363     51,751  
Website design and maintenance   -     -     -     -  
Total expenses $ 795,606     1,947,725     2,981,070     3,316,870  

Three Months Ended March 31, 2012 and 2011

Expenses for the three months ended March 31, 2012 decreased by $ 1,152,119 over the same period in 2011. Consulting fees decreased by $775,400 from $1,017,702 for the three months ended March 31, 2011 to $242,302 for the same period in 2012 primarily as a result of decreased management infrastructure and a decrease in stock based compensation from additional option issuances resulting therefrom. Insurance expense decreased by $16,107 from $16,107 for the three months ended March 31, 2011 to $nil for the same period in 2012 primarily related to the expiry of the Director and Officer liability insurance policy in December 2011. Registration and filing fees decreased by $27,126 from $36,363 for the three months ended March 31, 2011 to $9,237 for the same period in 2012 primarily related to not incurring expenses related to costs associated with preparing and issuing the proxy statement and the annual meeting. Rent and administration expenses decreased by $10,999 from $10,999 for the three months ended March 31, 2011 to $0 for the same period in 2012 primarily as a result of our office lease agreement in New Jersey expiring in 2011. Legal fees increased by $10,543 from $37,600 for the three months ended March 31, 2011 to $48,143 for the same period in 2012 primarily related to increased patent and general counsel activity. Research and Development charges decreased by $300,635 from $730,242 for the three months ended March 31, 2011 to $429,607 for the same period in 2012 primarily related to decreased preclinical activities.


5

Six Months Ended March 31, 2012 and 2011

Expenses for the six months ended March 31, 2012 decreased by $335,800 over the same period in 2011. Consulting fees decreased by $1,120,389 from $1,669,903 for the six months ended March 31, 2011 to $549,514 for the same period in 2012 primarily as a result of decreased management infrastructure and a decrease in stock based compensation from additional option issuances resulting therefrom. Insurance expense decreased by $11,292 from $20,922 for the six months ended March 31, 2011 to $9,630 for the same period in 2012 primarily related to the expiry of a Director and Officer liability insurance policy. Registration and filing fees decreased by $27,776 from $45,425 for the six months ended March 31, 2011 to $17,649 for the same period in 2012 primarily related to not occurring expenses related to costs associated with preparing and issuing the proxy report and the annual meeting to date. Rent and administration expenses decreased by $52,818 from $52,818 for the six months ended March 31, 2011 to $nil for the same period in 2012 primarily as a result of our office lease expiring. Legal fees increased by $18,807 from $57,347 for the six months ended March 31, 2011 to $76,154 for the same period in 2012 primarily related to increased patent and general counsel activity. Research and Development charges increased by $919,408 from $1,227,532 for the six months ended March 31, 2011 to $2,146,940 for the same period in 2012 primarily related to increased clinical trial preparation activity related to ANAVEX 2-73. Travel expense increased by $2,612 from $51,751 for the six months ended March 31, 2011 to $54,363 for the same period in 2012 due to international travel.

Income and loss

Other income and (loss) for the three month period ended March 31, 2012, amounted to $(114,595) as compared to $(24,661) for the comparable three month period ended March 31, 2011. The increase in loss of $(89,934) is primarily attributable to a) the loss from accretion of debt discount of $(44,613) recognized in the three month period ended March 31, 2012 with no corresponding loss recognized in the same period in 2011, b) the change in fair value of derivative liabilities of $12,500 recognized in the three month period ended March 31, 2012 with no corresponding expense recognized in the same period in 2011, c) interest expense of $(50,064) recognized in the three month period ended March 31, 2012 as compared to lower interest expense of $(3,945) recognized in the same period in 2011 as a result of debt conversions that occurred in the six month period ended March 31, 2012, and d) the foreign exchange loss of $32,418 recognized in the three month period ended March 31, 2012 as compared with a loss of $(20,716) recognized in the same period in 2011.

Other income and (loss) for the six month period ended March 31, 2012, amounted to $(100,634) as compared to a loss of $(990,095) for the comparable six month period ended March 31, 2011. The decrease in loss of $(889,461) is primarily attributable to a) debt conversion expense of $(504,160) recognized in the six month period ended March 31, 2011 compared with no similar expense for the same period in 2012, b) the foreign exchange loss of $(26,206) recognized in the six month period ended March 31, 2011 as compared with a gain of $7,138 recognized in the same period in 2012, c) the gain in fair value of derivative liability of $0 recognized in the six month period ended March 31, 2011 with a gain of $67,500 recognized in the same period in 2012, offset by d) the loss from accretion of debt discount of $0 recognized in the six month period ended March 31, 2011 with a loss 0f $(82,788)recognized in the same period in 2012, e) interest expense of $(11,901) recognized in the six month period ended March 31, 2011 as compared to higher interest expense of $(92,484) recognized in the same period in 2012 as a result of debt conversions that occurred in the six month period ended March 31, 2012, f) loss on settlement of accounts payable of $(249,090) recognized in the six month period ended March 31, 2011 with no corresponding loss in the six months ended March 31, 2012 , g) the loss on extinguishment of debt of $(198,738) recognized in the six months ended March 31, 2011 with no corresponding loss in the six months ended March 31, 2012 and h) debt conversion expense incurred on the induced conversion of convertible promissory notes totaling $(504,160) in the six months ended March 31, 2011 with no corresponding charge in the six months ended March 31, 2012.

Change in fair value of derivative liability

We recognized a change in fair value of derivative liability totaling $12,500 on derivative financial instruments for the three month period ended March 31, 2012, as compared to $nil for the prior year’s comparable period. This gain arises as a result of the requirement of generally accepted accounting principles in the United States to re-measure derivatives to their respective fair values each reporting period.


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We recognized a change in fair value of derivative liability totaling $67,500 on derivative financial instruments for the six month period ended March 31, 2012, as compared to $nil for the prior year’s comparable period. This gain arises as a result of the requirement of generally accepted accounting principles in the United States to re-measure derivatives to their respective fair values each reporting period.

Liquidity and Capital Resources

Working Capital

    March 31, 2012     September 30, 2011  
Current Assets   189,595     200,605  
Current Liabilities   3,119,454     1,345,443  
Working Capital (Deficit) $  (2,929,859 )   (1,144,838 )

As of March 31, 2012, we had $178,647 in cash, an increase of $43,945 from September 30, 2011. The principal components of this increase in cash related to VAT refunds obtained by our subsidiary company.

We anticipate that we will require up to $5,000,000 for the 12 month period ending March 31, 2013 to implement our plan of operation of researching and developing our patents, the related compounds and any further intellectual property we may acquire. The majority of our capital resources requirement is needed to complete the next clinical trial for ANAVEX 2-73, and to perform work necessary to prepare for further clinical development. If we are not able to secure additional financing, we will not be able to implement and fund this work.

Cash Flows

    Six Month Period     Six Month Period  
    Ended     Ended  
    March 31, 2012     March 31, 2011  
Cash flows used in operating activities $  1,202,305   $  1,672,903  
Cash flows from financing activities   1,246,250     1,411,875  
Cash flows from investing activities   Nil     Nil  
Increase (decrease) in cash $  43,945   $  (261,028 )

Cash flow used in operating activities

Our cash used in operating activities for the six month period ended March 31, 2012 was $1,202,305 compared to $1,672,903 used in operating activities for the comparative six month period ended March 31, 2011.

Cash flow provided by financing activities

Our cash provided by financing activities for the six month period ended March 31, 2012 was $1,246,250 compared to $1,411,875.

Cash Provided by Investing Activities

No cash was used in or provided by investing activities for the six month period ended March 31, 2012 or 2011.

Going Concern

At March 31, 2012, we had an accumulated deficit of $32,284,925 since our inception and incurred a net loss of $3,081,704 for the six month period ended March 31, 2012. We expect to incur further losses in the development of our business, all of which casts substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our independent auditors included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern in their report on our annual financial statements for the fiscal year ended September 30, 2011.


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Future Financing

We will require additional financing to fund our planned operations, including further strengthening our patents, securing patents for other compounds and any further intellectual property that we may acquire and commencing clinical development. We currently do not have committed sources of additional financing and may not be able to obtain additional financing, particularly, if the volatile conditions in the stock and financial markets, and especially the market for early development stage pharmaceutical and biotechnology research and development company stocks persist.

There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to delay or scale down some or all of our research and development activities or perhaps even cease the operation of our business.

Since inception we have funded our operations primarily through equity and debt financings and we expect that we will continue to fund our operations through the equity and debt financing. If we raise additional financing by issuing equity securities, our existing stockholders’ ownership will be diluted. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There is no assurance that we will be able to maintain operations at a level sufficient for investors to obtain a return on their investment in our common stock. Further, we may continue to be unprofitable.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

Application of Critical Accounting Policies

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.

We base our assumptions and estimates on historical experience and other sources that we believe to be reasonable at the time. Actual results may vary from our estimates due to changes in circumstances, weather, politics, global economics, mechanical problems, general business conditions and other factors. Our significant estimates are related to the valuation of warrants and options.

There are accounting policies that we believe are significant to the presentation of our financial statements. The most significant of these accounting policies relates to the accounting for our research and development expenses and stock-based compensation expense.

Research and Development Expenses

Research and developments costs are expensed as incurred. These expenses are comprised of the costs of our proprietary research and development efforts, including salaries, facilities costs, overhead costs and other related expenses as well as costs incurred in connection with third-party collaboration efforts. Milestone payments made by us to third parties are expensed when the specific milestone has been achieved.

In addition, we incur expenses in respect of the acquisition of intellectual property relating to patents and trademarks. The probability of success and length of time to developing commercial applications of the drugs subject to the acquired patents and trademarks is difficult to determine and numerous risks and uncertainties exist with respect to the timely completion of the development projects. There is no assurance the acquired patents and trademarks will ever be successfully commercialized. Due to these risks and uncertainties, we expense the acquisition of patents and trademarks.


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Stock-based Compensation

We account for all stock-based payments and awards under the fair value based method.

Stock-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The fair value of stock-based payments to non-employees is periodically re-measured until the counterparty performance is complete, and any change therein is recognized over the vesting period of the award and in the same manner as if we had paid cash instead of paying with or using equity based instruments. The cost of the stock-based payments to non-employees that are fully vested and non-forfeitable as at the grant date is measured and recognized at that date, unless there is a contractual term for services in which case such compensation would be amortized over the contractual term.

We account for the granting of share purchase options to employees using the fair value method whereby all awards to employees will be recorded at fair value on the date of the grant. The fair value of all share purchase options are expensed over their vesting period with a corresponding increase to additional capital surplus. Upon exercise of share purchase options, the consideration paid by the option holder, together with the amount previously recognized in additional capital surplus, is recorded as an increase to share capital.

We use the Black-Scholes option valuation model to calculate the fair value of share purchase options at the date of the grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in assumptions can materially affect the fair value estimate and therefore the Black-Scholes model does not necessarily provide a reliable single measure of the fair value of our share purchase options.

Derivative Liabilities

Our convertible promissory notes include embedded conversion options which, prior to their amendments, were required to be accounted for as separate derivative liabilities. These liabilities were required to be measured at fair value. These instruments were adjusted to reflect fair value at each period end. Any increase or decrease in the fair value was recorded in results of operations as change in fair value of derivative liabilities. In determining the appropriate fair value, we used the binomial pricing model.

The debt discount arising from bifurcating the derivative liability from the host debt instrument was accreted to income during the period.

Recent Accounting Pronouncements

There are no new accounting pronouncements that we recently adopted or are pending our adoption that are expected to have a material impact on the company’s results of operations, financial position or cash flows.

Item 3. Quantitative and Qualitative Disclosures about Market Risks.

Not Applicable.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, our management, with the participation of our principal executive officer and our principal financial officer, evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report on Form 10-Q. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to our principal executive officer and our principal financial officer to allow timely decisions regarding required disclosure.


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Based on that evaluation, our management, with the participation of our principal executive officer and principal financial officer, concluded that as of the end of the period covered by this quarterly report on Form 10-Q, our disclosure controls and procedures were not effective. The ineffectiveness of our disclosure controls and procedures was due to the material weaknesses disclosed in our annual report on Form 10-K filed on December 22, 2011.

We intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies. We intend to consider the results of our remediation efforts and related testing as part of our year-end 2012 assessment of the effectiveness of our internal control over financial reporting. In our fiscal year ended September 30, 2012, we intend to hire accounting staff that possess the requisite knowledge of accounting for complex US GAAP matters. Due to our size and nature, segregation of all conflicting duties has not always been possible and may not be economically feasible. However, we are in the process of implementing new processes and procedures that will mitigate any material weaknesses identified. We believe that the foregoing steps will remediate the deficiencies identified, and we intend to continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the fiscal quarter ended March 31, 2012 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We know of no material, existing or pending legal proceedings to which we are a party or of which any of our properties is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities. We know of no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder is a party adverse to our company or has a material interest adverse to our company.

Item 1A. Risk Factors.

In addition to other information in this quarterly report on Form 10-Q, the following risk factors should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business, operating results, liquidity and financial condition. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, the trading price of our securities could decline, and you may lose all or part of your investment.


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Risks Related to our Company

We have had a history of losses and no revenue, which raise substantial doubt about our ability to continue as a going concern.

Since inception on January 23, 2004, we have incurred aggregate net losses of $31,734,121 from operations. We can offer no assurance that we will ever operate profitably or that we will generate positive cash flow in the future. To date, we have not generated any revenues from our operations. Our history of losses and no revenues raise substantial doubt about our ability to continue as a going concern. As a result, our management expects the business to continue to experience negative cash flow for the foreseeable future and cannot predict when, if ever, our business might become profitable. We will need to raise additional funds, and such funds may not be available on commercially acceptable terms, if at all. If we are unable to raise funds on acceptable terms, we may not be able to execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements. This may seriously harm our business, financial condition and results of operations.

We are an early development stage pharmaceutical research and development company and may never be able to successfully develop marketable products or generate any revenue. We have a very limited relevant operating history upon which an evaluation of our performance and prospects can be made. There is no assurance that our future operations will result in profits. If we cannot generate sufficient revenues, we may suspend or cease operations.

We are an early development stage company and have not generated any revenues to date and have no operating history. All of our potential drug compounds are in the concept stage or early clinical development stage. Moreover, we cannot be certain that our research and development efforts will be successful or, if successful, that our potential drug compounds will ever be approved for sales to pharmaceutical companies or generate commercial revenues. We have no relevant operating history upon which an evaluation of our performance and prospects can be made. We are subject to all of the business risks associated with a new enterprise, including, but not limited to, risks of unforeseen capital requirements, failure of potential drug compounds either in non-clinical testing or in clinical trials, failure to establish business relationships and competitive disadvantages as against larger and more established companies. If we fail to become profitable, we may suspend or cease operations.

We will need additional funding and may be unable to raise additional capital when needed, which would force us to delay, reduce or eliminate our research and development activities.

We will need to raise additional funding, but the current economic condition will most likely have a negative impact on our ability to raise additional needed capital on terms that are favorable to our company or at all. We do not anticipate that we will generate significant revenues for several years, if at all. Until we can generate significant revenues, if ever, we expect to satisfy our future cash needs through equity or debt financing. We cannot be certain that additional funding will be available on acceptable terms, or at all. If adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our research and development activities.

We may be unable to continue as a going concern in which case our securities will have little or no value.

Our independent auditors have noted in their report concerning our annual financial statements for the fiscal year ended September 30, 2011 that we have incurred substantial losses since inception, which raises substantial doubt about our ability to continue as a going concern. In the event we are not able to continue operations you will likely suffer a complete loss of your investment in our securities.


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Risks Related to our Business

Even if we are able to develop our potential drug compounds, we may not be able to receive regulatory approval, or if approved, we may not be able to generate significant revenues or successfully commercialize our products, which will adversely affect our financial results and financial condition and we will have to delay or terminate some or all of our research and development plans and we may be forced to cease operations.

All of our potential drug compounds will require extensive additional research and development, including non-clinical testing and clinical trials, as well as regulatory approvals, before we can market them. We cannot predict if or when any of the potential drug compounds we intend to develop will be approved for marketing. There are many reasons that we may fail in our efforts to develop our potential drug compounds. These include:

  • the possibility that non-clinical testing or clinical trials may show that our potential drug compounds are ineffective and/or cause harmful side effects;
  • our potential drug compounds may prove to be too expensive to manufacture or administer to patients;
  • our potential drug compounds may fail to receive necessary regulatory approvals from the United States Food and Drug Administration or foreign regulatory authorities in a timely manner, or at all;
  • even if our potential drug compounds are approved, we may not be able to produce them in commercial quantities or at reasonable costs;
  • even if our potential drug compounds are approved, they may not achieve commercial acceptance;
  • regulatory or governmental authorities may apply restrictions to any of our potential drug compounds, which could adversely affect their commercial success; and
  • the proprietary rights of other parties may prevent us or our potential collaborative partners from marketing our potential drug compounds.

If we fail to develop our potential drug compounds, our financial results and financial condition will be adversely affected, we will have to delay or terminate some or all of our research and development plans and may be forced to cease operations.

Our research and development plans will require substantial additional future funding which could impact our operational and financial condition. Without the required additional funds, we will likely cease operations.

It will take several years before we are able to develop potentially marketable products, if at all. Our research and development plans will require substantial additional capital, arising from costs to:

  • conduct research, non-clinical testing and human studies;
  • establish pilot scale and commercial scale manufacturing processes and facilities; and
  • establish and develop quality control, regulatory, marketing, sales, finance and administrative capabilities to support these programs.

Our future operating and capital needs will depend on many factors, including:

  • the pace of scientific progress in our research and development programs and the magnitude of these programs;
  • the scope and results of preclinical testing and human studies;
  • the time and costs involved in obtaining regulatory approvals;
  • the time and costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;
  • competing technological and market developments;
  • our ability to establish additional collaborations;
  • changes in our existing collaborations;
  • the cost of manufacturing scale-up; and
  • the effectiveness of our commercialization activities.

We base our outlook regarding the need for funds on many uncertain variables. Such uncertainties include the success of our research initiatives, regulatory approvals, the timing of events outside our direct control such as negotiations with potential strategic partners and other factors. Any of these uncertain events can significantly change our cash requirements as they determine such one-time events as the receipt or payment of major milestones and other payments.


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Additional funds will be required to support our operations and if we are unable to obtain them on favorable terms, we may be required to cease or reduce further research and development of our drug product programs, sell some or all of our intellectual property, merge with another entity or cease operations.

If we fail to demonstrate efficacy in our non-clinical studies and clinical trials our future business prospects, financial condition and operating results will be materially adversely affected.

The success of our research and development efforts will be greatly dependent upon our ability to demonstrate potential drug compound efficacy in non-clinical studies, as well as in clinical trials. Non-clinical studies involve testing potential drug compounds in appropriate non-human disease models to demonstrate efficacy and safety. Regulatory agencies evaluate these data carefully before they will approve clinical testing in humans. If certain non-clinical data reveals potential safety issues or the results are inconsistent with an expectation of the potential drug compound’s efficacy in humans, the regulatory agencies may require additional more rigorous testing, before allowing human clinical trials. This additional testing will increase program expenses and extend timelines. We may decide to suspend further testing on our potential drug compounds if, in the judgment of our management and advisors, the non-clinical test results do not support further development.

Moreover, success in non-clinical testing and early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the results of later clinical trials will replicate the results of prior clinical trials and non-clinical testing. The clinical trial process may fail to demonstrate that our potential drug compounds are safe for humans and effective for indicated uses. This failure would cause us to abandon a drug candidate and may delay development of other potential drug compounds. Any delay in, or termination of, our non-clinical testing or clinical trials will delay the filing of an investigational new drug application and new drug application with the Food and Drug Administration or the equivalent applications with pharmaceutical regulatory authorities outside the United States and, ultimately, our ability to commercialize our potential drug compounds and generate product revenues. In addition, we expect that our early clinical trials will involve small patient populations. Because of the small sample size, the results of these early clinical trials may not be indicative of future results.

Following successful non-clinical testing, potential drug compounds will need to be tested in a clinical development program to provide data on safety and efficacy prior to becoming eligible for product approval and licensure by regulatory agencies. From the first human trial through to regulatory approval can take many years and 10-12 years is not unusual for certain compounds.

If any of our future clinical development potential drug compounds become the subject of problems, our ability to sustain our development programs will become critically compromised. For example, efficacy or safety concerns may arise, whether or not justified, that could lead to the suspension or termination of our clinical programs. Examples of problems that could arise include, among others:

  • efficacy or safety concerns with the potential drug compounds, even if not justified;
  • manufacturing difficulties or concerns;
  • regulatory proceedings subjecting the potential drug compounds to potential recall;
  • publicity affecting doctor prescription or patient use of the potential drug compounds;
  • pressure from competitive products; or
  • introduction of more effective treatments.

Each clinical phase is designed to test attributes of the drug and problems that might result in the termination of the entire clinical plan can be revealed at any time throughout the overall clinical program. The failure to demonstrate efficacy in our clinical trials would have a material adverse effect on our future business prospects, financial condition and operating results.

If we do not obtain the support of qualified scientific collaborators, our revenue, growth and profitability will likely be limited, which would have a material adverse effect on our business.

We will need to establish relationships with leading scientists and research institutions. We believe that such relationships are pivotal to establishing products using our technologies as a standard of care for various indications. Additionally, although in discussion, there is no assurance that our current research partners will continue to work with us or that we will be able to attract additional research partners. If we are not able to establish scientific relationships to assist in our research and development, we may not be able to successfully develop our potential drug compounds. If this happens, our business will be adversely affected.


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We may not be able to develop market or generate sales of our products to the extent anticipated. Our business may fail and investors could lose all of their investment in our company.

Assuming that we are successful in developing our potential drug compounds and receiving regulatory clearances to market our products, our ability to successfully penetrate the market and generate sales of those products may be limited by a number of factors, including the following:

  • If our competitors receive regulatory approvals for and begin marketing similar products in the United States, the European Union, Japan and other territories before we do, greater awareness of their products as compared to ours will cause our competitive position to suffer;

  • Information from our competitors or the academic community indicating that current products or new products are more effective or offer compelling other benefits than our future products could impede our market penetration or decrease our future market share; and,

  • The pricing and reimbursement environment for our future products, as well as pricing and reimbursement decisions by our competitors and by payers, may have an effect on our revenues.

If this happens, our business will be adversely affected.

None of our potential drug compounds may reach the commercial market for a number of reasons and our business may fail.

Successful research and development of pharmaceutical products is high risk. Most products and development candidates fail to reach the market. Our success depends on the discovery of new drug compounds that we can commercialize. It is possible that our products may never reach the market for a number of reasons. They may be found ineffective or may cause harmful side-effects during non-clinical testing or clinical trials or fail to receive necessary regulatory approvals. We may find that certain products cannot be manufactured at a commercial scale and, therefore, they may not be economical to produce. Our potential products could also fail to achieve market acceptance or be precluded from commercialization by proprietary rights of third parties. Our patents, trademarks and other intellectual property may be challenged and this may delay or prohibit us from effectively commercializing our products. Furthermore, we do not expect our potential drug compounds to be commercially available for a number of years, if at all. If none of our potential drug compounds reach the commercial market, our business will likely fail and investors will lose all of their investment in our company. If this happens, our business will be adversely affected.

If our competitors succeed in developing products and technologies that are more effective or with a better profile than our own, or if scientific developments change our understanding of the potential scope and utility of our potential products, then our technologies and future products may be rendered undesirable or obsolete.

We face significant competition from industry participants that are pursuing technologies in similar disease states to those that we are pursuing and are developing pharmaceutical products that are competitive with our products. Nearly all of our industry competitors have greater capital resources, larger overall research and development staffs and facilities, and a longer history in drug discovery and development, obtaining regulatory approval and pharmaceutical product manufacturing and marketing than we do. With these additional resources, our competitors may be able to respond to the rapid and significant technological changes in the biotechnology and pharmaceutical industries faster than we can. Our future success will depend in large part on our ability to maintain a competitive position with respect to these technologies. Rapid technological development, as well as new scientific developments, may result in our products becoming obsolete before we can recover any of the expenses incurred to develop them. For example, changes in our understanding of the appropriate population of patients who should be treated with a targeted therapy like we are developing may limit the drug’s market potential if it is subsequently demonstrated that only certain subsets of patients should be treated with the targeted therapy.


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Our reliance on third parties, such as university laboratories, contract manufacturing organizations and contract or clinical research organizations, may result in delays in completing, or a failure to complete, non-clinical testing or clinical trials if they fail to perform under our agreements with them.

In the course of product development, we may engage university laboratories, other biotechnology companies or contract or clinical manufacturing organizations to manufacture drug material for us to be used in non-clinical and clinical testing and contract research organizations to conduct and manage non-clinical and clinical studies. If we engage these organizations to help us with our non-clinical and clinical programs, many important aspects of this process have been and will be out of our direct control. If any of these organizations we may engage in the future fail to perform their obligations under our agreements with them or fail to perform non-clinical testing and/or clinical trials in a satisfactory manner, we may face delays in completing our clinical trials, as well as commercialization of any of our potential drug compounds. Furthermore, any loss or delay in obtaining contracts with such entities may also delay the completion of our clinical trials, regulatory filings and the potential market approval of our potential drug compounds.

If we fail to compete successfully with respect to partnering, licensing, mergers, acquisitions, joint venture and other collaboration opportunities, we may be limited in our ability to research and develop our potential drug compounds.

Our competitors compete with us to attract established biotechnology and pharmaceutical companies or organizations for partnering, licensing, mergers, acquisitions, joint ventures or other collaborations. Collaborations include contracting with academic research institutions for the performance of specific scientific testing. If our competitors successfully enter into partnering arrangements or license agreements with academic research institutions, we will then be precluded from pursuing those specific opportunities. Since each of these opportunities is unique, we may not be able to find a substitute. Other companies have already begun many drug development programs, which may target diseases that we are also targeting, and have already entered into partnering and licensing arrangements with academic research institutions, reducing the pool of available opportunities.

Universities and public and private research institutions also compete with us. While these organizations primarily have educational or basic research objectives, they may develop proprietary technology and acquire patents that we may need for the development of our potential drug compounds. We will attempt to license this proprietary technology, if available. These licenses may not be available to us on acceptable terms, if at all. If we are unable to compete successfully with respect to acquisitions, joint venture and other collaboration opportunities, we may be limited in our ability to develop new products.

The use of any of our products in clinical trials may expose us to liability claims, which may cost us a significant amounts of money to defend against or pay out, causing our business to suffer.

The nature of our business exposes us to potential liability risks inherent in the testing, manufacturing and marketing of our products. We currently have one drug compound in clinical trials, however, when any of our products enter into clinical trials or become marketed products they could potentially harm people or allegedly harm people and we may be subject to costly and damaging product liability claims. Some of the patients who participate in clinical trials are already ill when they enter a trial or may intentionally or unintentionally fail to meet the exclusion criteria. The waivers we obtain may not be enforceable and may not protect us from liability or the costs of product liability litigation. Although we intend to obtain product liability insurance that we believe is adequate, we are subject to the risk that our insurance will not be sufficient to cover claims. The insurance costs along with the defence or payment of liabilities above the amount of coverage could cost us significant amounts of money and management distraction from other elements of the business, causing our business to suffer.

The patent positions of biopharmaceutical products are complex and uncertain and we may not be able to protect our patented or other intellectual property. If we cannot protect this property, we may be prevented from using it or our competitors may use it and our business could suffer significant harm. Also, the time and money we spend on acquiring and enforcing patents and other intellectual property will reduce the time and money we have available for our research and development, possibly resulting in a slow down or cessation of our research and development.

We own patents related to our potential drug compounds. However, these patents do not ensure the protection of our intellectual property for a number of reasons, including the following:


15

  1.

Competitors may interfere with our patent process in a variety of ways. Competitors may claim that they invented the claimed invention prior to us. Competitors may also claim that we are infringing their patents and restrict our freedom to operate as claimed under our patents and patent applications. Competitors may also contest our patents and patent application, if issued, by showing the patent examiner that the invention was not original, was not novel or was obvious. In litigation, a competitor could claim that our patents and patent application are not valid for a number of reasons. If a court agrees, we would lose that patents or patent application. As a company, we have no meaningful experience with competitors interfering with our patents or patent applications.

     
  2.

Because of the time, money and effort involved in obtaining and enforcing patents, our management may spend less time and resources on developing potential drug compounds than they otherwise would, which could increase our operating expenses and delay product programs.

     
  3.

Receipt of a patent may not provide much practical protection. If we receive a patent with a narrow scope, then it will be easier for competitors to design products that do not infringe our patent(s).

     
  4.

Our patents are not issued in all possible geographies where our products may be marketed. Currently, we have submitted for patent protection and have been issued patents for certain claims in Greece. We have submitted for patent protection on all of the major markets in the world. We may not necessarily be successful in securing patents for further claims and products in Greece, nor may we necessarily be successful in securing the existing claims and product patents in countries and jurisdictions where we have applied but have not yet had those patents issued. If we do not receive issued patents in these other key markets, our ability to advance our compounds will be severely hampered and we will be much less attractive to potential partners.

     
  5.

In addition, competitors also seek patent protection for their inventions. Due to the number of patents in our field, we cannot be certain that we do not infringe on existing patents or that we will not infringe on patents granted in the future. If a patent holder believes our potential drug compound infringes on their patent, the patent holder may sue us even if we have received patent protection for our technology. If someone else claims we infringe on their patent, we would face a number of issues which could cause a slow down or cessation of our research and development, including the following:

  (a)

Defending a lawsuit takes significant time and can be very expensive.

  (b)

If the court decides that our potential drug compound infringes on the competitor’s patent, we may have to pay substantial damages for past infringement.

  (c)

The court may prohibit us from selling or licensing the potential drug compound unless the patent holder licenses the patent to us. The patent holder is not required to grant us a license. If a license is available, we may have to pay substantial royalties or grant cross licenses to our patents.

  (d)

Redesigning our potential drug compounds so that they do not infringe on other patents may not be possible or could require substantial funds and time.

It is also unclear whether our trade secrets are adequately protected. While we use reasonable efforts to protect our trade secrets, our employees or consultants may unintentionally or willfully disclose our information to competitors. Enforcing a claim that someone else illegally obtained and is using our trade secrets, like patent litigation, is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Our competitors may independently develop equivalent knowledge, methods and know-how.

We may also support and collaborate in research conducted by government organizations, hospitals, universities or other educational institutions. These research partners may be unwilling to grant us any exclusive rights to technology or products derived from these collaborations prior to entering into the relationship.

If we do not obtain required licenses or rights, we could encounter delays in our product development efforts while we attempt to design around other patents or even be prohibited from developing, manufacturing or selling potential drug compounds requiring these licenses. There is also a risk that disputes may arise as to the rights to technology or potential drug compounds developed in collaboration with other parties.


16

We incur substantial costs as a result of laws and regulations and proposed changes in laws and regulations and we cannot predict the impact of any future changes in law.

We face burdens relating to corporate governance and financial reporting standards. Legislations or regulations such as Section 404 of the Sarbanes-Oxley Act of 2002 impose strict corporate governance and financial reporting standards and have led to substantial costs of compliance including consulting, auditing and legal fees. Any new rules could make it more difficult or more costly for us to obtain certain types of insurance, including directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. A failure to comply with these new laws and regulations may impact market perception of our financial condition and could materially harm our business. Additionally, it is unclear what additional laws or regulations may develop, and we cannot predict the ultimate impact of any future changes in law.

Our substantial debt and other financial obligations could impair our financial condition and our ability to fulfill our debt obligations. Any refinancing of this substantial debt could be at significantly higher interest rates.

As of March 31, 2012, we had total liabilities of $3,119,454 and accumulated deficit of $32,284,925. Our substantial indebtedness and other current financial obligations and any that we may become a party to in the future could:

  • impair our ability to obtain financing in the future for working capital, capital expenditures, or general corporate purposes;
  • have a material adverse effect on us if we fail to comply with financial and affirmative and restrictive covenants in debt agreements and an event of default occurs as a result of a failure that is not cured or waived;
  • require us to dedicate a substantial portion of our cash flow for interest payments on our indebtedness and other financial obligations, thereby reducing the availability of our cash flow to fund working capital and capital expenditures;
  • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and
  • place us at a competitive disadvantage compared to our competitors that have proportionally less debt.

If we are unable to meet our debt service obligations and other financial obligations, we could be forced to restructure or refinance our indebtedness and other financial transactions, seek additional equity capital or sell our assets. We might then be unable to obtain such financing or capital or sell our assets on satisfactory terms, if at all. Any refinancing of our indebtedness could be at significantly higher interest rates, and/or incur significant transaction fees.

Risks Related to our Common Stock

A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations and would severely dilute existing or future investors if we were to raise funds at lower prices.

A prolonged decline in the price of our common stock could result in a reduction in our ability to raise capital. Because our operations have been financed through the sale of equity securities, a decline in the price of our common stock could be especially detrimental to our continued operations. Any reduction in our ability to raise equity capital in the future would force us to reallocate funds from other planned uses and would have a significant negative effect on our business plans and operations, including our ability to develop new products and continue our current operations. If the stock price declines, there can be no assurance that we can raise additional capital or generate funds from operations sufficient to meet our obligations. We believe the following factors could cause the market price of our common stock to continue to fluctuate widely and could cause our common stock to trade at a price below the price at which you purchase your shares of common stock:

  • actual or anticipated variations in our quarterly operating results;
  • announcements of new services, products, acquisitions or strategic relationships by us or our competitors;
  • changes in accounting treatments or principles;
  • changes in earnings estimates by securities analysts and in analyst recommendations; and

17

  • general political, economic, regulatory and market conditions.

The market price for our common stock may also be affected by our ability to meet or exceed expectations of analysts or investors. Any failure to meet these expectations, even if minor, could materially adversely affect the market price of our common stock.

If we issue additional shares of common stock in the future, it will result in the dilution of our existing stockholders.

Our articles of incorporation authorize the issuance of 150,000,000 shares of common stock. Our board of directors has the authority to issue additional shares of common stock up to the authorized capital stated in the articles of incorporation. Our board of directors may choose to issue some or all of such shares of common stock to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares of common stock will result in a reduction of the book value or market price of the outstanding shares of our common stock. If we do issue any such additional shares of common stock, such issuance also will cause a reduction in the proportionate ownership and voting power of all other stockholders. Further, any such issuance may result in a change of control of our corporation.

Trading of our common stock may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.

There is currently a limited market for our common stock and the volume of our common stock traded on any day may vary significantly from one period to another. Our common stock is quoted on the OTC Bulletin Board. Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. The availability of buyers and sellers represented by this volatility could lead to a market price for our common stock that is unrelated to operating performance. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities quoted on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a stock exchange like NASDAQ. There is no assurance that a sufficient market will develop in the stock, in which case it could be difficult for our stockholders to resell their stock.

Our stock is classed as a “penny stock”. Trading of our stock may be restricted by the Securities and Exchange Commission’s penny stock regulations which may limit a stockholder’s ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 (excluding the value of the primary residence of such individuals) or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.


18

The Financial Industry Regulatory Authority sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority or FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for shares of our common stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. [Reserved]

Item 5. Other Information.

On May 1, 2012 pursuant to our Contract Lease Agreement with Euro Genet Labs S.A. (“Euro Genet”) the Company has given notice to Euro Genet to terminate the agreement effective August 1, 2012. In addition the Company has also provided one month termination notice to thirteen contracted consultants whom performed services for the Company at the Euro Genet Facility.

On April 20, 2012, the $500,000 convertible note with accrued interest of $40,000 maturing May 4, 2012 and a promissory note having a principal value of $250,000 and accrued interest of $9,389 that matured on January 20, 2012 were exchanged for a new 12% interest bearing promissory note having a principal balance of $799,389 maturing June 19, 2012. The holder of the new promissory note is Georgia Georgopoulou.

Item 6. Exhibits.

Exhibit
Number

Description
(3)

Articles of Incorporation and Bylaws

3.1

Articles of Incorporation (incorporated by reference to an exhibit to our Registration Statement on Form SB-2 filed on January 13, 2005)

3.2

Bylaws (incorporated by reference to an exhibit to our Registration Statement on Form SB-2 filed on January 13, 2005)

3.3

Articles of Merger filed with the Secretary of State of Nevada on January 10, 2007 and which is effective January 25, 2007 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on January 25, 2007)

(4)

Instruments defining rights of security holders, including indentures

4.1

Specimen Stock Certificate (incorporated by reference to an exhibit to our Registration Statement on Form SB-2 filed on January 13, 2005)

4.2

Form of Convertible Loan Agreement (incorporated by reference to an exhibit to our Form 8-K filed on April 3, 2009)

4.3

8% Convertible Loan Agreement dated June 3, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)



19

Exhibit
Number

Description
4.4

8% Convertible Loan Agreement dated June 19, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 26, 2009)

(10)

Material Contracts

10.1

Agreement between Anavex Life Sciences Corp. and Dr. Alexandre Vamvakides dated January 31, 2007 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2007)

10.2

Abstract of Disclosure of Greek Patent Number 1002616 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2007)

10.3

Abstract of Disclosure of Greek Patent Number 1004208 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2007)

10.4

Abstract of Disclosure of Greek Patent Number 1004868 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2007)

10.5

Written description of Greek Patent Application Number 20070100020 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2007)

10.6

Form of Stock Option Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 22, 2007)

10.7

Shares for Services and Subscription Agreement dated September 11, 2007 between our company and Eurogenet Labs S.A. (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 27, 2007)

10.8

2007 Stock Option Plan (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 28, 2007)

10.9

Consulting Agreement with Cameron Durrant dated May 20, 2008 (incorporated by reference to an exhibit to our Quarterly Report on Form 10-QSB filed on August 18, 2008

10.10

Form of Convertible Loan Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 3, 2009)

10.11

Consulting Agreement with Tariq Arshad dated March 2, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 3, 2009)

10.13

Consulting Agreement with Dr. Mark Smith dated January 13, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 3, 2009)

10.14

Form of Subscription Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 3, 2009)

10.15

Form of Warrant Certificate (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 3, 2009)

10.16

Amended Consulting Agreement with Cameron Durrant dated May 14, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)

10.17

CEO Consulting Agreement with Dr. Herve de Kergrohen dated June 12, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)

10.18

Form of Private Placement subscription agreement dated June 15, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)

10.19

Shares for Services Agreement with Andreas Eleuthariadis dated June 10, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)

10.20

Shares for Services Agreement with Vasileios Kourafalos dated June 10, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)

10.21

Shares for Services Agreement with George Kalkanis dated June 10, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)

10.22

Stock Option Agreement with Alexandre Vamvakides dated June 11, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)

10.23

Form of Private Placement Subscription Agreement Convertible Loan (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 26, 2009)



20

Exhibit
Number

Description
10.24

Form of Private Placement Subscription Agreement for Units (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 26, 2009)

10.25

Consultant Services Agreement with NAD Ltd. dated July 1, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 24, 2009)

10.26

Form of Subscription Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 24, 2009)

10.27

Form of Warrant Certificate (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on August 12, 2009)

10.28

Stock Option Agreement with Alexander Vamvakides dated October 19, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 24, 2009)

10.29

Promissory note issued to Stonehedge Limited on January 1, 2010 (incorporated by reference to an exhibit to our Quarterly Report on Form 10-Q filed on March 31, 2010)

10.30

Second Amended Consulting Agreement with Dr. Cameron Durrant dated January 2, 2010 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 9, 2010)

10.31

Contract Lease Agreement with Euro Genet Labs SA dated February 1, 2010 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 9, 2010)

10.32

Form of Subscription Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 9, 2010)

10.33

Form of Warrant Certificate (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 9, 2010)

10.34

Form of Convertible Loan Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 9, 2010)

10.35

Form of Subscription Agreement for US subscribers (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 6, 2010)

10.36

Form of Subscription Agreement for non-US subscribers (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 6, 2010)

10.37

Form of Warrant Certificate for US warrant holders (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 6, 2010)

10.38

Form of Warrant Certificate for non-US warrant holders (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 6, 2010)

10.39

Shares for Services Agreement dated July 5, 2010 with Eurogenet Labs SA (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 9, 2010)

10.40

Form of Warrant Certificate for non-US warrant holders (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 9, 2010)

10.41

Agreement for Services with Genesis Biopharma Group LLC dated August 10, 2010 (incorporated by reference to an exhibit of our Current Report on Form 8-K filed on August 18, 2010) (portions of the exhibit have been omitted pursuant to a request for confidential treatment)

10.42

Agreement for Services with ABX-CRO Advanced Pharmaceutical Services dated August 10, 2010 (incorporated by reference to an exhibit of our Current Report on Form 8-K filed on August 18, 2010) (portions of the exhibit have been omitted pursuant to a request for confidential treatment)

10.43

Form of Subscription Agreement (US Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 9, 2010)

10.44

Form of Subscription Agreement (Canadian and Offshore Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 9, 2010)

10.45

Form of Warrant Certificate (US warrant holders)(incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 9, 2010)

10.46

Form of Warrant Certificate (Canadian and Offshore warrant holders) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 9, 2010)



21

Exhibit
Number

Description
10.47

Consulting Agreement dated August 2, 2010 with Tom Skarpelos (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 27, 2010)

10.48

Independent Contractor Agreement dated September 1, 2010 with David Tousley (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 27, 2010)

10.49

Sublease Contract with Genesis Research LLC dated September 15, 2010 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 27, 2010)

10.50

Form of Subscription Agreement (US Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 22, 2010)

10.51

Form of Subscription Agreement (non-US Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 22, 2010)

10.52

Form of Warrant Certificate (US Warrant Holders) (US Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 22, 2010)

10.53

Form of Warrant Certificate (non-US Warrant Holders) (US Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 22, 2010)

10.54

Shares for Service and Subscription Agreement dated November 1, 2010 with Eurogenet Labs SA (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 22, 2010)

10.55

Subscription Agreement with Stonehedge Limited dated November 17, 2010 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 22, 2010)

10.56

Form of Subscription Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 30, 2010)

10.57

Form of Warrant Certificate Form of Subscription Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 30, 2010)

10.58

Shares for Services Agreement Form of Subscription Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 30, 2010)

10.59

Form of Subscription Agreement (non-US Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2011)

10.60

Form of Warrant Certificate (non-US Warrant Holders) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2011)

10.61

Termination Agreement dated February 2, 2011 with Genesis BioPharma Group, LLC (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2011)

10.62

Independent Contractor Agreement with Harvey Lalach dated February 1, 2011 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2011)

10.63

Independent Contractor Agreement with Dr. Angelos Stergiou dated February 1, 2011 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2011)

10.64

Amended and Restated 2007 Stock Option Plan (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 8, 2011)

10.65

Form of Advisory Board Consulting Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 28, 2011)

10.66

Consulting Agreement dated March 30, 2011 with Shackleton Consulting Corp. (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 13, 2011)

10.67

Form of subscription agreement for convertible debenture (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 26, 2011)

10.68

Form of subscription agreement for convertible debenture (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on May 9, 2011)

10.69

Form of warrant certificate (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on May 9, 2011)

10.70

Amended Stock Option Agreement dated September 16, 2011 with Cameron Durrant (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 21, 2011)



22

Exhibit
Number

Description
10.71

Consulting Agreement dated effective October 10, 2011, with George Tidmarsh (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on October 14, 2011)

10.72

Form of subscription agreement for services (US purchaser) (incorporated by reference to our current report on Form 8-K filed on February 10, 2012)

10.73

Form of subscription agreement for units (Offshore purchasers) (incorporated by reference to our current report on Form 8-K filed on February 10, 2012)

10.74*

Unsecured Promissory Note dated April 20, 2012 issued to Georgia Georgopoulou

(14)

Code of Ethics

14.1

Code of Conduct (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 28, 2007)

(21)

Subsidiaries

21.1

Anavex Life Sciences (France) SA, incorporated under the laws of France

(31)

Section 302 Certifications

31.1*

Section 302 Certification of Harvey Lalach

(32)

Section 906 Certifications

32.1*

Section 906 Certification of Harvey Lalach

(99)

Additional Exhibits

99.1

Insider Trading Policy Adopted August 27, 2010 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 27, 2010)

(101)

XBRL

101.INS*

XBRL INSTANCE DOCUMENT

101.SCH*

XBRL TAXONOMY EXTENSION SCHEMA

101.CAL*

XBRL TAXONOMY EXTENSION CALCULATION LINKBASE

101.DEF*

XBRL TAXONOMY EXTENSION DEFINITION LINKBASE

101.LAB*

XBRL TAXONOMY EXTENSION LABEL LINKBASE

101.PRE*

XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

* Filed herewith.


23

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.

ANAVEX LIFE SCIENCES CORP.

 

/s/ Harvey Lalach                            
Harvey Lalach
President, Chief Operating Officer, Secretary, Interim Chief Financial Officer and Director
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
Date: May 15, 2012


PINX:AVXL Anavex Life Sciences Corp Quarterly Report 10-Q Filling

Anavex Life Sciences Corp PINX:AVXL Stock - Get Quarterly Report SEC Filing of Anavex Life Sciences Corp PINX:AVXL stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

PINX:AVXL Quarterly Report 10-Q Filing - 3/31/2012
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