---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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, 2009

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 incorporation or
      organization) | (IRS Employer Identification No.)

27 Marathonos Ave., 15351 Athens, Greece(Address of principal executive offices) (Zip code)

30 210 603 4026(Registrants telephone number,
including area code)

N/A(Former name, former address and former
fiscal year, if changed since last report)

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

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).[ ] 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 [ ] No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date:
20,109,868 shares of common stock outstanding as of May 19,
2009.

---

- 2 -

TABLE OF CONTENTS

|PART
      I - FINANCIAL INFORMATION                                                                      | 3 
|--------------------------------------------------------------------------------------------------------- | --
|Item
      1. Financial Statements                                                                        | 3 
|Item
      2. Managements Discussion and Analysis of Financial Condition and Results
      of Operations | 22
|Item
      3. Quantitative and Qualitative Disclosures about Market Risks.                                | 28
|Item
      4T. Controls and Procedures.                                                                   | 28
|PART
      II - OTHER INFORMATION                                                                         | 29
|Item
      1. Legal Proceedings.                                                                          | 29
|Item
      1A. Risk Factors                                                                               | 29
|Item
      2. Unregistered Sales of Equity Securities and Use of Proceeds                                 | 36
|Item
      3. Defaults Upon Senior Securities.                                                            | 37
|Item
      4. Submission of Matters to a Vote of Security Holders.                                        | 37
|Item
      5. Other Information                                                                           | 38
|Item
      6. Exhibits.                                                                                   | 38
|SIGNATURES                                                                                                | 40

---

- 3 -

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

****

****

ANAVEX LIFE SCIENCES CORP.

(A Development Stage Company)

INTERIM FINANCIAL STATEMENTS

March 31, 2009

(Stated in US Dollars)

(Unaudited)

---

|- 4 -                                
|-------------------------------------
|                                     
|ANAVEX LIFE SCIENCES CORP.           
|(A Development Stage Company)        
|INTERIM BALANCE SHEETS               
|March 31, 2009 and September 30, 2008
|(Stated in US Dollars)               
|(Unaudited)                          

|                                                                |   | March 31,  |   |   | September 30, |  
|--------------------------------------------------------------- | - | ---------- | - | - | ------------- | -
|ASSETS                                                          |   | 2009       |   |   | 2008          |  
|                                                                |   |            |   |   |               |  
|Current                                                         |   |            |   |   |               |  
|Cash                                                            | $ | 78,729     |   | $ | 6,357         |  
|                                                                |   |            |   |   |               |  
|Equipment                                                       |   | 682        |   |   | 862           |  
|                                                                |   |            |   |   |               |  
|                                                                | $ | 79,411     |   | $ | 7,219         |  
|                                                                |   |            |   |   |               |  
|LIABILITIES                                                     |   |            |   |   |               |  
|                                                                |   |            |   |   |               |  
|                                                                |   |            |   |   |               |  
|Current                                                         |   |            |   |   |               |  
|Accounts payable and accrued
      liabilities  Note 6         | $ | 1,267,637  |   | $ | 749,389       |  
|Loan payable to
      shareholder  Note 3                      |   | 20,000     |   |   | -             |  
|Promissory notes payable  Note 4                               |   | 1,985,202  |   |   | 1,550,000     |  
|                                                                |   |            |   |   |               |  
|                                                                |   | 3,272,839  |   |   | 2,299,389     |  
|                                                                |   |            |   |   |               |  
|STOCKHOLDERS DEFICIENCY                                        |   |            |   |   |               |  
|                                                                |   |            |   |   |               |  
|                                                                |   |            |   |   |               |  
|Capital stock  Note 5                                          |   |            |   |   |               |  
|Authorized:                                                     |   |            |   |   |               |  
|150,000,000 common shares, par value $0.001 per share           |   |            |   |   |               |  
|Issued and outstanding:                                         |   |            |   |   |               |  
|20,109,868 common shares (September 30, 2008:
      19,957,420) |   | 20,110     |   |   | 19,957        |  
|Shares to be issued  Note 6                                    |   | 152,449    |   |   | 125,849       |  
|Additional paid-in capital                                      |   | 5,866,225  |   |   | 4,624,838     |  
|Deficit accumulated during the development stage                |   | (9,232,212 | ) |   | (7,062,814    | )
|                                                                |   |            |   |   |               |  
|                                                                |   | (3,193,428 | ) |   | (2,292,170    | )
|                                                                |   |            |   |   |               |  
|                                                                | $ | 79,411     |   | $ | 7,219         |  

The accompanying notes are an integral part of these financial
statements.

---

|- 5 -                                                                
|---------------------------------------------------------------------
|                                                                     
|ANAVEX LIFE SCIENCES CORP.                                           
|(A Development Stage Company)                                        
|INTERIM STATEMENTS OF OPERATIONS                                     
|for the three and six months ended March 31, 2009 and
      2008     
|and from January 23, 2004 (Date of Inception) to March
      31, 2009
|(Stated in US Dollars)                                               
|(Unaudited)                                                          

|                                          |   |                    |   |   |                               |   |   |               |   |   |                               |   |   | January 23,   |  
|----------------------------------------- | - | ------------------ | - | - | ----------------------------- | - | - | ------------- | - | - | ----------------------------- | - | - | ------------- | -
|                                          |   |                    |   |   |                               |   |   |               |   |   |                               |   |   | 2004 (Date of |  
|                                          |   | Three months ended |   |   | Six months ended              |   |   | Inception) to |  
|                                          |   | March 31,          |   |   | March 31,                     |   |   | March 31,     |  
|                                          |   | 2009               |   |   | 2008                          |   |   | 2009          |   |   | 2008                          |   |   | 2009          |  
|                                          |   |                    |   |   | Restated 
           Note 10 |   |   |               |   |   | Restated 
           Note 10 |   |   |               |  
|Expenses                                  |   |                    |   |   |                               |   |   |               |   |   |                               |   |   |               |  
|Accounting and audit fees                 | $ | 3,000              |   | $ | 34,579                        |   | $ | 34,260        |   | $ | 36,729                        |   | $ | 157,676       |  
|Accretion of debt discount  Note 4       |   | 7,781              |   |   | -                             |   |   | 7,781         |   |   | -                             |   |   | 7,781         |  
|Amortization                              |   | 90                 |   |   | -                             |   |   | 180           |   |   | -                             |   |   | 400           |  
|Bank charges and interest                 |   | 5,918              |   |   | 12,079                        |   |   | 37,285        |   |   | 13,621                        |   |   | 112,675       |  
|Consulting fees  Notes 6 and
          7 |   | 430,964            |   |   | 288,210                       |   |   | 971,531       |   |   | 907,578                       |   |   | 4,872,227     |  
|Legal fees                                |   | 1,911              |   |   | 42,805                        |   |   | 5,521         |   |   | 56,845                        |   |   | 123,850       |  
|Management fees  Note 6                  |   | -                  |   |   | -                             |   |   | -             |   |   | -                             |   |   | 14,625        |  
|Office and miscellaneous                  |   | 4,716              |   |   | 39,670                        |   |   | 45,356        |   |   | 62,547                        |   |   | 229,684       |  
|Registration and filing fees              |   | 469                |   |   | 822                           |   |   | 6,045         |   |   | 4,719                         |   |   | 30,375        |  
|Rent and administration                   |   | -                  |   |   | 30,000                        |   |   | -             |   |   | 60,000                        |   |   | 148,750       |  
|Research and development                  |   | 328,859            |   |   | 229,278                       |   |   | 612,963       |   |   | 524,428                       |   |   | 3,052,143     |  
|Website design and maintenance            |   | -                  |   |   | -                             |   |   | -             |   |   | -                             |   |   | 25,270        |  
|                                          |   |                    |   |   |                               |   |   |               |   |   |                               |   |   |               |  
|Loss before other items                   |   | (783,708           | ) |   | (677,443                      | ) |   | (1,720,922    | ) |   | (1,666,467                    | ) |   | (8,775,456    | )
|                                          |   |                    |   |   |                               |   |   |               |   |   |                               |   |   |               |  
|Loss on extinguishment of                 |   |                    |   |   |                               |   |   |               |   |   |                               |   |   |               |  
|promissory notes payable  Note 4         |   | (487,469           | ) |   | -                             |   |   | (487,469      | ) |   | -                             |   |   | (487,469      | )
|                                          |   |                    |   |   |                               |   |   |               |   |   |                               |   |   |               |  
|Gain (Loss) on foreign exchange           |   | 29,821             |   |   | (10,276                       | ) |   | 38,993        |   |   | (10,558                       | ) |   | 30,713        |  
|                                          |   |                    |   |   |                               |   |   |               |   |   |                               |   |   |               |  
|Net loss for the period                   | $ | (1,241,356         | ) | $ | (687,719                      | ) | $ | (2,169,398    | ) | $ | (1,677,025                    | ) | $ | (9,232,212    | )
|                                          |   |                    |   |   |                               |   |   |               |   |   |                               |   |   |               |  
|Basic and diluted loss per share          | $ | (0.06              | ) | $ | (0.03                         | ) | $ | (0.11         | ) | $ | (0.08                         | ) |   |               |  
|                                          |   |                    |   |   |                               |   |   |               |   |   |                               |   |   |               |  
|Weighted average shares outstanding       |   | 20,019,642         |   |   | 19,724,722                    |   |   | 19,992,173    |   |   | 19,640,624                    |   |   |               |  

The accompanying notes are an integral part of these financial
statements.

---

|- 6 -                                                                           
|--------------------------------------------------------------------------------
|                                                                                
|ANAVEX LIFE SCIENCES CORP.                                                      
|(A Development Stage Company)                                                   
|INTERIM STATEMENTS OF CASH FLOWS                                                
|for the six months ended March 31, 2009 and                                     
|for the period from January 23, 2004 (Date of Inception)
      to March 31, 2009
|(Stated in US Dollars)                                                          
|(Unaudited)                                                                     

|                                                         |   |                  |   |   |               |   |   | January 23, |  
|-------------------------------------------------------- | - | ---------------- | - | - | ------------- | - | - | ----------- | -
|                                                         |   |                  |   |   |               |   |   | 2004        |  
|                                                         |   |                  |   |   |               |   |   | (Date of    |  
|                                                         |   | Six months ended |   |   | Inception) to |  
|                                                         |   | March 31,        |   |   | March 31,     |  
|                                                         |   | 2009             |   |   | 2008          |   |   | 2009        |  
|                                                         |   |                  |   |   | Restated      |   |   |             |  
|                                                         |   |                  |   |   |  Note 10     |   |   |             |  
|Cash Flows used in Operating Activities                  |   |                  |   |   |               |   |   |             |  
|Net loss for the period                                  | $ | (2,169,398       | ) | $ | (1,677,025    | ) | $ | (9,232,212  | )
|Adjustments to reconcile net
      loss to net cash used |   |                  |   |   |               |   |   |             |  
|in operating activities:                                 |   |                  |   |   |               |   |   |             |  
|Amortization                                             |   | 180              |   |   | 90            |   |   | 400         |  
|Accretion of debt discount                               |   | 7,781            |   |   | -             |   |   | 7,781       |  
|Stock-based compensation  – Note 7                       |   | 353,943          |   |   | 284,000       |   |   | 2,038,729   |  
|Loss on extinguishment of
      debt                     |   | 487,469          |   |   | -             |   |   | 487,469     |  
|Common shares to be issued for consulting services       |   | 159,850          |   |   | 193,000       |   |   | 479,600     |  
|Common shares issued for
      research and development  |   | -                |   |   | -             |   |   | 800,000     |  
|expenses                                                 |   |                  |   |   |               |   |   |             |  
|Common shares issued for
      severance                 |   | -                |   |   | -             |   |   | 340,600     |  
|Promissory note issued for severance                     |   | -                |   |   | -             |   |   | 71,500      |  
|Management fees
      contributed                        |   | -                |   |   | -             |   |   | 14,625      |  
|Rent
      contributed                                   |   | -                |   |   | -             |   |   | 3,750       |  
|Changes in assets and liabilities:                       |   |                  |   |   |               |   |   |             |  
|Prepaid expenses                                         |   | -                |   |   | (5,000        | ) |   | -           |  
|Accounts
      payable and accrued liabilities           |   | 518,248          |   |   | 15,180        |   |   | 1,441,138   |  
|                                                         |   |                  |   |   |               |   |   |             |  
|Net cash used in operating activities                    |   | (641,927         | ) |   | (1,189,755    | ) |   | (3,546,620  | )
|                                                         |   |                  |   |   |               |   |   |             |  
|Cash Flows provided by Financing Activities              |   |                  |   |   |               |   |   |             |  
|Proceeds from promissory notes                           |   | 469,416          |   |   | 675,000       |   |   | 1,919,416   |  
|Repayment of promissory
      note                       |   | -                |   |   | -             |   |   | (100,000    | )
|Issuance of common shares                                |   | 224,883          |   |   | 525,000       |   |   | 1,420,350   |  
|Due to related parties                                   |   | -                |   |   | -             |   |   | 33,665      |  
|Loan payable to shareholder                              |   | 20,000           |   |   | -             |   |   | 353,000     |  
|                                                         |   |                  |   |   |               |   |   |             |  
|Net cash provided by financing activities                |   | 714,299          |   |   | 1,200,000     |   |   | 3,626,431   |  
|                                                         |   |                  |   |   |               |   |   |             |  
|Cash Flows from Investing Activities                     |   |                  |   |   |               |   |   |             |  
|Acquisition of
      equipment                           |   | -                |   |   | (1,082        | ) |   | (1,082      | )
|                                                         |   |                  |   |   |               |   |   |             |  
|Increase  in cash during the
      period                |   | 72,372           |   |   | 9,163         |   |   | 78,729      |  
|                                                         |   |                  |   |   |               |   |   |             |  
|Cash, beginning of period                                |   | 6,357            |   |   | 25            |   |   | -           |  
|                                                         |   |                  |   |   |               |   |   |             |  
|Cash, end of period                                      | $ | 78,729           |   | $ | 9,188         |   | $ | 78,729      |  

Supplemental Cash Flow Information  Note 8

The accompanying notes are an integral part of these financial
statements.

---

|- 7 -                                                                      
|---------------------------------------------------------------------------
|                                                                           
|                                                                           
|ANAVEX LIFE SCIENCES CORP.                                                 
|(A Development Stage Company)                                              
|STATEMENT OF CHANGES IN CAPITAL DEFICIT                                    
|for the period January 23, 2004 (Date of Inception) to
      March 31, 2009
|(Stated in US Dollars)                                                     
|(Unaudited)                                                                

|                                                           |  |              |  |   |                 |  |   |            |  |  |               |  |  |                 |  |   | Deficit     |   |   |            |  
|---------------------------------------------------------- |  | ------------ |  | - | --------------- |  | - | ---------- |  |  | ------------- |  |  | --------------- |  | - | ----------- | - | - | ---------- | -
|                                                           |  | Common Stock |  |   | Accumulated     |  |   |            | 
|                                                           |  |              |  |   |                 |  |   | Additional |  |  | Share         |  |  | Common          |  |   | During the  |   |   |            |  
|                                                           |  |              |  |   |                 |  |   | Paid-in    |  |  | Subscriptions |  |  | Shares to       |  |   | Development |   |   |            |  
|                                                           |  | Shares       |  |   | Par
      Value |  |   | Capital    |  |  | Received      |  |  | be
      Issued |  |   | Stage       |   |   | Total      |  
|                                                           |  |              |  |   |                 |  |   |            |  |  |               |  |  |                 |  |   |             |   |   |            |  
|Capital stock issued for cash - 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 - 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    |  | 222,222      |  |   | 222             |  |   | 799,778    |  |  | -             |  |  | -               |  |   | -           |   |   | 800,000    |  
|services, on September 24, 2007  at
      $3.60           |  |              |  |   |                 |  |   |            |  |  |               |  |  |                 |  |   |             |   |   |            |  
|Capital stock issued
      for research and development    |  | 92,500       |  |   | 93              |  |   | 332,907    |  |  | -             |  |  | -               |  |   | -           |   |   | 333,000    |  
|services, on September 25, 2007  at
      $3.60           |  |              |  |   |                 |  |   |            |  |  |               |  |  |                 |  |   |             |   |   |            |  
|Net loss for the year                                      |  | -            |  |   | -               |  |   | -          |  |  | -             |  |  | -               |  |   | (1,579,993  | ) |   | (1,579,993 | )
|Balance, September 30, 2007  carried forward              |  | 19,514,722   |  | $ | 19,515          |  | $ | 1,229,526  |  |  | -             |  |  | -               |  | $ | (1,711,545  | ) | $ | (462,504   | )

The accompanying notes are an integral part of these financial
statements.

---

|- 8 -                                                                      
|---------------------------------------------------------------------------
|                                                                           
|                                                                           
|                                                                           
|ANAVEX LIFE SCIENCES CORP.                                                 
|(A Development Stage Company)                                              
|STATEMENT OF CHANGES IN CAPITAL DEFICIT                                    
|for the period January 23, 2004 (Date of Inception) to
      March 31, 2009
|(Stated in US Dollars)                                                     
|(Unaudited)                                                                

|                                                             |  |              |  |   |                 |  |   |            |  |  |               |  |  |                 |   |   | Deficit     |   |   |            |  
|------------------------------------------------------------ |  | ------------ |  | - | --------------- |  | - | ---------- |  |  | ------------- |  |  | --------------- | - | - | ----------- | - | - | ---------- | -
|                                                             |  | Common Stock |  |   | Accumulated     |  |   |            | 
|                                                             |  |              |  |   |                 |  |   | Additional |  |  | Share         |  |  | Common          |   |   | During the  |   |   |            |  
|                                                             |  |              |  |   |                 |  |   | Paid-in    |  |  | Subscriptions |  |  | Shares to       |   |   | Development |   |   |            |  
|                                                             |  | Shares       |  |   | Par
      Value |  |   | Capital    |  |  | Received      |  |  | be
      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 |  | 150,000      |  |   | 150             |  |   | 524,850    |  |  | -             |  |  | -               |   |   | -           |   |   | 525,000    |  
|$3.50                                                        |  |              |  |   |                 |  |   |            |  |  |               |  |  |                 |   |   | -           |   |   |            |  
|Capital stock issued for
      consulting services on        |  | 50,000       |  |   | 50              |  |   | 192,950    |  |  | -             |  |  | -               |   |   |             |   |   | 193,000    |  
|December 18,2007
      - at $3.86                            |  |              |  |   |                 |  |   |            |  |  |               |  |  |                 |   |   | -           |   |   |            |  
|Capital stock issued debt
      settlement of debt on        |  | 10,000       |  |   | 10              |  |   | 44,990     |  |  | -             |  |  | -               |   |   | -           |   |   | 45,000     |  
|December 18,
      2007- at $4.50                            |  |              |  |   |                 |  |   |            |  |  |               |  |  |                 |   |   |             |   |   |            |  
|Stock-based compensation for
      shares issued at a        |  | -            |  |   | -               |  |   | 65,000     |  |  | -             |  |  | -               |   |   |             |   |   | 65,000     |  
|discount                                                     |  |              |  |   |                 |  |   |            |  |  |               |  |  |                 |   |   |             |   |   |            |  
|Capital stock issued for
      severance on May 15, 2008 -   |  | 65,000       |  |   | 65              |  |   | 340,535    |  |  | -             |  |  | -               |   |   |             |   |   | 340,600    |  
|at $5.24                                                     |  |              |  |   |                 |  |   |            |  |  |               |  |  |                 |   |   |             |   |   |            |  
|Common stock to be issued for
      consulting services      |  | -            |  |   | -               |  |   | -          |  |  | -             |  |  | 252,599         |   |   |             |   |   | 252,599    |  
|Capital stock
      issued for consulting services on August |  | 25,000       |  |   | 25              |  |   | 126,725    |  |  | -             |  |  | (126,750        | ) |   |             |   |   | -          |  
|19, 2008 - at $5.00                                          |  |              |  |   |                 |  |   |            |  |  |               |  |  |                 |   |   |             |   |   |            |  
|Capital stock
      issued for cash on August 19, 2008 - at  |  | 142,698      |  |   | 142             |  |   | 606,325    |  |  | -             |  |  | -               |   |   |             |   |   | 606,467    |  
|$4.25                                                        |  |              |  |   |                 |  |   |            |  |  |               |  |  |                 |   |   |             |   |   |            |  
|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 | )

The accompanying notes are an integral part of these financial
statements.

---

|- 9 -                                                                      
|---------------------------------------------------------------------------
|                                                                           
|                                                                           
|ANAVEX LIFE SCIENCES CORP.                                                 
|(A Development Stage Company)                                              
|STATEMENT OF CHANGES IN CAPITAL DEFICIT                                    
|for the period January 23, 2004 (Date of Inception) to
      March 31, 2009
|(Stated in US Dollars)                                                     
|(Unaudited)                                                                

|                                                                |  |              |  |   |                 |  |   |            |  |   |               |  |   |                 |   |   | Deficit     |   |   |            |  
|--------------------------------------------------------------- |  | ------------ |  | - | --------------- |  | - | ---------- |  | - | ------------- |  | - | --------------- | - | - | ----------- | - | - | ---------- | -
|                                                                |  | Common Stock |  |   | Accumulated     |  |   |            | 
|                                                                |  |              |  |   |                 |  |   | Additional |  |   | Share         |  |   | Common          |   |   | During the  |   |   |            |  
|                                                                |  |              |  |   |                 |  |   | Paid-in    |  |   | Subscriptions |  |   | Shares to       |   |   | Development |   |   |            |  
|                                                                |  | Shares       |  |   | Par
      Value |  |   | Capital    |  |   | Received      |  |   | be
      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  Note
      7                         |  | -            |  |   | -               |  |   | 353,943    |  |   | -             |  |   | -               |   |   | -           |   |   | 353,943    |  
|Capital stock
      issued for consulting services on November  |  |              |  |   |                 |  |   |            |  |   |               |  |   |                 |   |   |             |   |   |            |  
|20, 2008  at $2.63                                             |  | 25,000       |  |   | 25              |  |   | 65,725     |  |   | -             |  |   | (65,750         | ) |   | -           |   |   | -          |  
|Capital stock
      issued for consulting services on February  |  |              |  |   |                 |  |   |            |  |   |               |  |   |                 |   |   |             |   |   |            |  
|20, 2009  at $2.50                                             |  | 25,000       |  |   | 25              |  |   | 62,475     |  |   | -             |  |   | (62,500         | ) |   | -           |   |   | -          |  
|Capital stock
      issued for consulting services on March 20, |  |              |  |   |                 |  |   |            |  |   |               |  |   |                 |   |   |             |   |   |            |  
|2009  at $2.50                                                 |  | 2,500        |  |   | 3               |  |   | 4,997      |  |   | -             |  |   | -               |   |   | -           |   |   | 5,000      |  
|Capital stock
      issued for cash on March 6, 2009  at $2.25 |  |              |  |   |                 |  |   |            |  |   |               |  |   |                 |   |   |             |   |   |            |  
|                                                                |  | 89,148       |  |   | 89              |  |   | 200,494    |  |   | -             |  |   | -               |   |   | -           |   |   | 200,583    |  
|Capital stock
      issued for cash on March 20, 2009  at      |  |              |  |   |                 |  |   |            |  |   |               |  |   |                 |   |   |             |   |   |            |  
|$2.25                                                           |  | 10,800       |  |   | 11              |  |   | 24,289     |  |   | -             |  |   | -               |   |   | -           |   |   | 24,300     |  
|Shares to be
      issued for consulting services  Note 6      |  | -            |  |   | -               |  |   | -          |  |   | -             |  |   | 154,850         |   |   | -           |   |   | 154,850    |  
|Beneficial conversion feature on
      convertible debt  Note  |  |              |  |   |                 |  |   |            |  |   |               |  |   |                 |   |   |             |   |   |            |  
|4                                                               |  | -            |  |   | -               |  |   | 41,995     |  |   | -             |  |   | -               |   |   | -           |   |   | 41,995     |  
|Extinguishment of debt  Note 4                                 |  | -            |  |   | -               |  |   | 487,469    |  |   | -             |  |   | -               |   |   | -           |   |   | 487,469    |  
|Net loss for the
      period                                   |  | -            |  |   | -               |  |   | -          |  |   | -             |  |   | -               |   |   | (2,169,398  | ) |   | (2,169,398 | )
|                                                                |  |              |  |   |                 |  |   |            |  |   |               |  |   |                 |   |   |             |   |   |            |  
|Balance, March 31, 2009                                         |  | 20,109,868   |  | $ | 20,110          |  | $ | 5,866,225  |  | $ | -             |  | $ | 152,449         |   | $ | (9,232,212  | ) | $ | (3,193,428 | )

The accompanying notes are an integral part of these financial
statements.

---

|- 10 -                                   
|-----------------------------------------
|                                         
|                                         
|ANAVEX LIFE SCIENCES CORP.               
|(A Development Stage Company)            
|NOTES TO THE INTERIM FINANCIAL STATEMENTS
|March 31, 2009                           
|(Stated in US Dollars)                   
|(Unaudited)                              

|Note 1 | Nature of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | The Company is in the development stage as defined by
      Statement of Financial Accounting Standard (SFAS) No. 7 Accounting
      and Reporting by Development Stage Enterprises and has not yet
      realized any revenues from its planned operations. The Company is seeking
      to develop and market proprietary drug targets for the treatment of cancer
      and diseases of the central nervous system.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | 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, 2009, the Company had an accumulated deficit of $9,232,212 (September 30, 2008 - $7,062,814) since its inception, has a working capital deficit of $3,194,110 (September 30, 2008 - $2,305,746) 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 concern but is considering obtaining additional funds by debt financing to the extent there is a shortfall from operations. While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds for operations.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | The Company was incorporated in the State of Nevada,
      United States of America on January 23, 2004 as Thrifty Printing Inc. On
      January 25, 2007, the Company changed its business from developing online
      photofinishing services to its current business and changed its name to
      Anavex Life Sciences Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | These 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, 2008. The interim results are not necessarily
      indicative of the operating results expected for the fiscal year ending on
      September 30, 2009. 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

---

- 11 -

|Anavex Life Sciences Corp.               
|-----------------------------------------
|(A Development Stage Company)            
|Notes to the Interim Financial Statements
|March 31, 2009                           
|(Stated in US Dollars)                   
|(Unaudited)  Page 2                     

|Note 2 | Recent Accounting Pronouncements
|------ | --------------------------------

Recently Adopted Accounting
Pronouncements

In September 2006, the FASB issued SFAS
No. 157, Fair Value Measurements. This Statement defines fair value as used in
numerous accounting pronouncements, establishes a framework for measuring fair
value in generally accepted accounting principles and expands disclosure related
to the use of fair value measures in financial statements. The Company adopted
SFAS 157 effective October 1, 2008. The adoption of SFAS 157 did not have a
material effect on the Companys financial position, results of operations or
cash flows.

In February, 2007, the FASB issued SFAS
No. 159 The Fair Value Option for Financial Assets and Financial Liabilities.
This Statement establishes presentation and disclosure requirements designed to
facilitate comparisons between companies that choose different measurement
attributes for similar types of assets and liabilities. The Company adopted SFAS
159 effective October 1, 2008. The adoption of SFAS 159 did not have a material
effect on the Companys financial position, results of operations or cash
flows.

In June 2008, the FASB ratified EITF
Issue No. 07-05, Determining Whether an Instrument (or Embedded Feature) Is
Indexed to an Entitys Own Stock, or EITF 07-05. Equity-linked instruments (or
embedded features) that otherwise meet the definition of a derivative as
outlined in SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, or SFAS 133, are not accounted for as derivatives if certain
criteria are met, one of which is that the instrument (or embedded feature) must
be indexed to the entitys own stock. EITF 07-05 provides guidance on how to
determine if equity-linked instruments (or embedded features) such as warrants
and convertible notes are considered indexed to our stock. The Company will
adopt EITF 07-05, beginning October 1, 2009. Under EITF 07-05, equity-linked
instruments that are not indexed to the Companys own stock and thus classified
as liabilities are carried at fair value and adjusted quarterly.

Recent Accounting Pronouncements Not
Yet Adopted

In December 2007, the EITF reached a
consensus on EITF No. 07-01, Accounting for Collaborative Arrangements Related
to the Development and Commercialization of Intellectual Property (EITF
07-01). EITF 07-01 discusses the appropriate income statement presentation and
classification for the activities and payments between the participants in
arrangements related to the development and commercialization of intellectual
property. The sufficiency of disclosure related to these arrangements is also
specified. EITF 07-01 is effective for fiscal years beginning after December 15,
2008. As a result, EITF 07-01 is effective for the Company as of October 1,
2009. The Company expects that the adoption of EITF 07-01 will have minimal, if
any, impact on its financial position and results of operations. However, based
upon the nature of the Companys business, EITF 07-01 could have a material
impact on its financial position and results of operations in future years

---

- 12 -

|Anavex Life Sciences Corp.               
|-----------------------------------------
|(A Development Stage Company)            
|Notes to the Interim Financial Statements
|March 31, 2009                           
|(Stated in US Dollars)                   
|(Unaudited)  Page 3                     

|Note 2 | Recent Accounting Pronouncements 
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       | Recent Accounting Pronouncements Not Yet Adopted 
    (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       | In April 2008, the FASB issued FSP 142-3, Determination
      of the Useful Life of Intangible Assets. This FSP amends the factors that
      should be considered in developing renewal or extension assumptions used
      to determine the useful life of a recognized intangible asset under FASB
      Statement No. 142, Goodwill and Other Intangible Assets. The intent of
      this FSP is to improve the consistency between the useful life of a
      recognized intangible asset under Statement 142 and the period of expected
      cash flows used to measure the fair value of the asset under FASB
      Statement No. 141 (Revised 2007), Business Combinations, and other U.S.
      generally accepted accounting principles (GAAP). This FSP is effective for
      financial statements issued for fiscal years beginning after December 15,
      2008, and interim periods within those fiscal years. Early adoption is
      prohibited. The Company is in the process of evaluating the impact, if
    any, of FSP 142-3 on its financial statements.
    In May 2008, the FASB issued FSP No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under SFAS 133. Convertible debt instruments within the scope of FSP APB 14-1 are not addressed by the existing APB 14. FSP APB 14-1 requires that the liability and equity components of convertible debt instruments within the scope of FSP APB 14-1 be separately accounted for in a manner that reflects the entity’s nonconvertible debt borrowing rate. This requires an allocation of the convertible debt proceeds between the liability component and the embedded conversion option (i.e., the equity component). The difference between the principal amount of the debt and the amount of the proceeds allocated to the liability component will be reported as a debt discount and subsequently amortized to earnings over the instrument’s expected life using the effective interest method. FSP APB 14-1 is effective for the Company’s fiscal year beginning October 1, 2009 and will be applied retrospectively to all periods presented. The Company is currently evaluating the effects of adopting FSP APB 14-1.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Note 3 | Loan Payable to Shareholder
    During the period ended March 31, 2009, the Company received a loan of $20,000 from a shareholder. The loan is unsecured, non-interest bearing with no specific terms of repayment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Note 4 | Promissory Notes Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       | The Company has issued unsecured promissory notes totaling $1,919,418 in exchange for funds received from several parties. The promissory notes have no terms of interest and are due on demand but not before January 13, 2010 as to $150,000, February 2, 2010 as to $1,669,418 and March 16, 2010 as to $100,000.  The promissory notes are convertible into units at $2.50 per unit as to $1,819,416 of the notes and at $2.25 as to $100,000.  Each unit is comprised of one common share and one common share purchase warrant exercisable at $3.00 per share for a period of two years from the conversion date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       | The promissory note of $1,669,418 was issued in exchange
      for a promissory note of the same amount that had matured as a result of
      the Company renegotiating this debt. The Company recorded the transaction
      as a debt extinguishment in accordance with EITF 96-19, Debtors
      Accounting for a Modification or Exchange of Debt Instruments with the
      Company incurring a loss on extinguishment of $487,469 as a result of
      recording the new promissory note at its fair value of $2,156,887. The
      premium of the fair value of the note over its principal balance in the
amount of $487,469 has been recorded as additional paid-in capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

---

- 13 -

|Anavex Life Sciences Corp.               
|-----------------------------------------
|(A Development Stage Company)            
|Notes to the Interim Financial Statements
|March 31, 2009                           
|(Stated in US Dollars)                   
|(Unaudited)  Page 4                     

|Note 4 | Promissory Notes Payable  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | The Company recorded a beneficial conversion feature totaling $41,995 in respect of the promissory note issued in the amount $150,000 based on the comparison of the proceeds of the note allocated to the common stock portion of the conversion feature and the fair value of the common stock at the commitment date of the note in accordance with EITF 00-27 “Application of Issue 98-5 to Certain Convertible Instruments”. This amount is being accreted using the effective interest rate method as a charge to income and included in accretion expense in the financial statements over the term of the note. During the three months ended March 31, 2009, the Company recorded accretion expense of $7,781 (2008: $Nil) in respect of the accretion of this beneficial conversion feature.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | In addition, the Company has issued one promissory note
          to a former officer of the Company, in the amount of $200,000, pursuant to
          a termination agreement. The note is without interest and had specified
          repayment terms. The Company repaid $100,000 in accordance with the
          repayment terms. As at March 31, 2009 the Company is in default of the
          payment terms for the entire $100,000 balance owing.                                                                                                                                                                                                                                                                                                                                          

|       |              
|------ | -------------
|Note 5 | 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. (Notes 5 and 10) 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 issuance 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.

---

- 14 -

|Anavex Life Sciences Corp.               
|-----------------------------------------
|(A Development Stage Company)            
|Notes to the Interim Financial Statements
|March 31, 2009                           
|(Stated in US Dollars)                   
|(Unaudited)  Page 5                     

|Note 5 | Capital Stock (contd)                                                                                                                                                                                                                                                                                                                        
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                
|       | 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.     
|       |                                                                                                                                                                                                                                                                                                                                                
|       | 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.      
|       |                                                                                                                                                                                                                                                                                                                                                
|Note 6 | Related Party Transactions                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                
|       | During the three and six months ended March 31, 2009 and
      2008, the Company was charged consulting fees from officers and a private
company owned by a director as follows:                                                                                                                                                               

| |                 |   | Three months ended |  |   | Six months ended | 
| | --------------- | - | ------------------ |  | - | ---------------- | 
| |                 |   | March 31,          |  |   |                  | 
| |                 |   | 2009               |  |   | 2008             | 
| |                 |   |                    |  |   |                  | 
| | Consulting fees | $ | 64,867             |  | $ | 90,500           | 

The following amounts have been donated
to the Company by the directors:

| |                            |   |                    |  |   |                  |  |   |               |  |   |      |  |   | January 23,   | 
| | -------------------------- | - | ------------------ |  | - | ---------------- |  | - | ------------- |  | - | ---- |  | - | ------------- | 
| |                            |   |                    |  |   |                  |  |   |               |  |   |      |  |   | 2004 (Date of | 
| |                            |   | Three months ended |  |   | Six months ended |  |   | Inception) to | 
| |                            |   | March 31,          |  |   | March 31,        |  |   | March 31,     | 
| |                            |   | 2009               |  |   | 2008             |  |   | 2009          |  |   | 2008 |  |   | 2009          | 
| |                            |   |                    |  |   |                  |  |   |               |  |   |      |  |   |               | 
| | Management fees            | $ | -                  |  | $ | -                |  | $ | -             |  | $ | -    |  | $ | 14,625        | 
| | Rent and administration    |   | -                  |  |   | -                |  |   | -             |  |   | -    |  |   | 3,750         | 
| | Debt forgiven by directors |   | -                  |  |   | -                |  |   | -             |  |   | -    |  |   | 33,666        | 
| |                            |   |                    |  |   |                  |  |   |               |  |   |      |  |   |               | 
| |                            | $ | -                  |  | $ | -                |  | $ | -             |  | $ | -    |  | $ | 52,041        | 

---

- 15 -

|Anavex Life Sciences Corp.               
|-----------------------------------------
|(A Development Stage Company)            
|Notes to the Interim Financial Statements
|March 31, 2009                           
|(Stated in US Dollars)                   
|(Unaudited)  Page 6                     

|Note 6 | Related Party Transactions  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       | On May 20, 2008, the Company executed an agreement with a
      director of the Company to provide consulting services for consideration
      consisting of 200,000 common shares to be issued every quarter at the rate
      of 25,000 per quarter commencing August 20, 2008 and by granting 400,000
      share purchase options which vest at the rate of 100,000 per quarter
      commencing August 20, 2008. The Company calculated compensation expense
    associated with this agreement as follows:
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       | Included in accounts payable and accrued liabilities at
      March 31, 2009 is $88,192 (September 30, 2008 - $10,114) owing to
    directors and officers of the Company.                                                                                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Note 7 | Commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| |                             |  | Number of |  | Exercise | 
| | --------------------------- |  | --------- |  | -------- | 
| |                             |  | Shares    |  | Price    | 
| |                             |  |           |  |          | 
| | Balance, September 30, 2008 |  | 292,698   |  | $5.00    | 
| | Issued                      |  | 99,948    |  | $4.00    | 
| |                             |  |           |  |          | 
| | Balance, March 31, 2009     |  | 392,646   |  |          | 

---

- 16 -

|Anavex Life Sciences Corp.               
|-----------------------------------------
|(A Development Stage Company)            
|Notes to the Interim Financial Statements
|March 31, 2009                           
|(Stated in US Dollars)                   
|(Unaudited)  Page 7                     

|Note 7 | Commitments  (contd)
|------ | ----------------------

| | a) | Share Purchase Warrants  (contd)                                                                                                                                                           
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                              
| |    | At March 31, 2009, the Company has 392,646 share purchase warrants outstanding entitling the holder thereof the right to purchase one common share for each warrant held as summarized below:

| |               |  |           |  | Weighted | 
| | ------------- |  | --------- |  | -------- | 
| |               |  |           |  | Average  | 
| |               |  | Number of |  | Exercise | 
| | Expiry Date   |  | Shares    |  | Price    | 
| | August 2009   |  | 142,698   |  | $5.00    | 
| | December 2009 |  | 150,000   |  | $5.00    | 
| | March 2010    |  | 89,148    |  | $4.00    | 
| | March 2010    |  | 10,800    |  | $4.00    | 
| |               |  |           |  |          | 
| |               |  | 392,646   |  | $4.75    | 

| | b) | Stock Based Compensation Plan
| | -- | -----------------------------

At March 31, 2009 the Company has
stock purchase options outstanding entitling directors of the Company and
consultants to purchase a total of 1,475,000 common shares of the Company. A
summary of the outstanding stock purchase options is presented below:

Stock option transactions are
summarized as follows:

| |                                   |  | Number of |  | Weighted Average | 
| | --------------------------------- |  | --------- |  | ---------------- | 
| |                                   |  | Shares    |  | Exercise Price   | 
| |                                   |  |           |  |                  | 
| | Outstanding at September 30, 2008 |  | 1,420,000 |  | $4.44            | 
| | Granted                           |  | 55,000    |  | $2.73            | 
| |                                   |  |           |  |                  | 
| | Outstanding at March 31, 2009     |  | 1,475,000 |  | $4.38            | 

---

- 17 -

|Anavex Life Sciences Corp.               
|-----------------------------------------
|(A Development Stage Company)            
|Notes to the Interim Financial Statements
|March 31, 2009                           
|(Stated in US Dollars)                   
|(Unaudited)  Page 8                     

|Note 7 | Commitments (contd)
|------ | ---------------------

| | b) | Stock Based Compensation Plan  (contd)
| | -- | ----------------------------------------

At March 31, 2009, the following stock
options were outstanding and exercisable:

| | Number
    of Shares |  |         |  |          |  |                  |  |   |           | Intrinsic |  
| | -------------------- |  | ------- |  | -------- |  | ---------------- |  | - | --------- | --------- | -
| |                      |  |         |  |          |  |                  |  |   | Aggregate |           |  
| |                      |  | Number  |  | Exercise |  |                  |  |   | Intrinsic |           |  
| | Total Number         |  | Vested  |  | Price    |  | Expiry Date      |  |   | Value     |           |  
| |                      |  |         |  |          |  |                  |  |   |           |           |  
| | 100,000 (1)          |  | -       |  | $3.86    |  | December 1, 2010 |  | $ | -         |           | $
| | 400,000 (2)          |  | 300,000 |  | $5.25    |  | May 20, 2011     |  |   | -         |           |  
| | 50,000 (3)           |  | 50,000  |  | $3.75    |  | November 1, 2012 |  |   | -         |           |  
| | 150,000 (4)          |  | 150,000 |  | $3.85    |  | December 3, 2012 |  |   | -         |           |  
| | 450,000 (5)          |  | 225,000 |  | $5.00    |  | June 3, 2013     |  |   | -         |           |  
| | 50,000 (6)           |  | 25,000  |  | $2.75    |  | January 14, 2014 |  |   | -         |           |  
| | 5,000 (7)            |  | 5,000   |  | $2.50    |  | March 2, 2014    |  |   | -         |           |  
| | 270,000
      (8)    |  | -       |  | $3.00    |  | February 8, 2017 |  |   | -         |           |  
| |                      |  |         |  |          |  |                  |  |   |           |           |  
| | 1,475,000            |  | 755,000 |  |          |  |                  |  | $ | -         |           | $

| | 1. | As at March 31, 2009, 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 and 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 conditions
      have not yet been met.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 2. | As at March 31, 2009 300,000 of these options have
      vested. The remaining 100,000 shares vest on May 20, 2009. The fair value
      of the options on the grant date was calculated to be $1,031,800, of which
      the Company recognized $257,950 stock-based compensation for the options
      vested in the year ended September 30, 2008. At September 30, 2008, the
      remaining 300,000 unvested options were re-measured with their fair value
      determined to be $172,350, of which the Company recognized $62,802
      stock-based compensation in the year ended September 30, 2008. At December
      31, 2008, the remaining 200,000 unvested options were re-measured, with
      their fair value determined to be $142,000, of which the Company
      recognized $45,906 stock-based compensation. At March 31, 2009 the
      remaining 100,000 unvested options were re-measured, with their fair value
      determined to be $38,000 of which the Company reversed $11,092 stock based
      compensation recorded in previous periods and which amount is included in
      consulting fees for the three-month period ended March 31, 2009.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 3. | As at March 31, 2009 these options were fully vested. The
      fair value of these options was calculated to be $122,150 which amount has
      been recognized as stock-based compensation and included with investor
      relations expense in the financial statements for the year ended September
      30, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 4. | As at March 31, 2009 all of these options had vested (75,000 having vested during the period ended March 31, 2009). The fair value of the options on the grant date was calculated to be $269,910 of which the Company has recognized stock-based compensation in the amount $12,960 for the six month period ended March 31, 2009, included with consulting fees in the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 5. | As at March 31, 2009, 225,000 of these options have
      vested. The remaining 225,000 options vest on June 3, 2009. The fair value
      of the options on the grant date was calculated to be $1,136,025 of which
      the Company has recognized stock-based compensation in the amount of
      $141,750 for the three-month period ended December 31, 2008 and $141,750
      for the three-month period ended March 31, 2009, included with consulting
fees in the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

---

- 18 -

|Anavex Life Sciences Corp.               
|-----------------------------------------
|(A Development Stage Company)            
|Notes to the Interim Financial Statements
|March 31, 2009                           
|(Stated in US Dollars)                   
|(Unaudited)  Page 9                     

|Note 7 | Commitments (contd)
|------ | ---------------------

| | b) | Stock Based Compensation Plan  (contd)
| | -- | ----------------------------------------

| | 6. | As at March 31, 2009 25,000 of these options have vested.
      The remaining 25,000 options vest on January 13, 2010. The fair value of
      these options was calculated to be $79,000 of which the Company has
      recognized stock-based compensation in the amount of $16,669 for the
      three-month period ended March 31, 2009 included with consulting fees in
      the financial statements.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                             
| | 7. | As at March 31, 2009 all of these options had vested. The
      fair value of the options on the grant date was calculated to be $6,000 of
      which the Company has recognized stock-based compensation in that amount
      for the three-month period ended March 31, 2009, included with consulting
      fees in the financial statements.                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                             
| | 8. | As at September 30, 2008, these options have not vested.
      The options vest upon one or more compounds: entering Phase 2 Trial 
      90,000 options; entering Phase 3 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.             

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 or
re-priced during the periods:

| |                                  |  | Six months ended | 
| | -------------------------------- |  | ---------------- | 
| |                                  |  | March 31,        | 
| |                                  |  | 2009             | 
| |                                  |  |                  | 
| | Risk-free interest rate          |  | 1.05%            | 
| | Expected life of options (years) |  | 2.58             | 
| | Annualized volatility            |  | 77.82%           | 
| | Dividend rate                    |  | 0%               | 

The volatility was determined based on
an index of volatility from comparable companies. The expected term of the
options granted to employees is derived from the simplified method as prescribed
by SEC Staff Accounting Bulletin No. 110 given that the Company has no
historical experience with the exercise of options for which to base an estimate
of the expected term of options granted. The Company anticipates it will
discontinue the use of the simplified method of SAB 110 once sufficient
historical option exercise behavior becomes apparent. The expected term of
options granted to non-employees was determined to be the option term.

---

- 19 -

|Anavex Life Sciences Corp.               
|-----------------------------------------
|(A Development Stage Company)            
|Notes to the Interim Financial Statements
|March 31, 2009                           
|(Stated in US Dollars)                   
|(Unaudited)  Page 10                    

|Note 7 | Commitments (contd)
|------ | ---------------------

| | b) | Stock Based Compensation Plan
| | -- | -----------------------------

At March 31 2009, the following
summarizes the unvested stock options:

| |                                        |  |           |   |                |  | Weighted         | 
| | -------------------------------------- |  | --------- | - | -------------- |  | ---------------- | 
| |                                        |  |           |   | Weighted       |  | Average          | 
| |                                        |  | Number of |   | Average        |  | Grant-date       | 
| |                                        |  | Shares    |   | Exercise Price |  | Fair
      Value | 
| |                                        |  |           |   |                |  |                  | 
| | Unvested options at September 30, 2008 |  | 970,000   |   | $4.31          |  | $2.42            | 
| | Granted                                |  | 55,000    |   | $2.73          |  | $1.54            | 
| | Vested                                 |  | (305,000  | ) | $4.66          |  | $2.25            | 
| | Unvested options at March 31, 2009     |  | 720,000   |   | $4.68          |  | $2.48            | 

As at March 31, 2009, there was a
total of $464,447 of unrecognized compensation cost associated with unvested
share-based compensation awards that will become vested exclusive of achieving
any performance milestones. This unrecognized compensation cost is expected to
be recognized during the year ended September 30, 2009. There has been no
stock-based compensation recognized in the financial statements for the period
ended March 31, 2009 for options that 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 non-cash consideration during the
six month period, are classified in the Companys Statements of Operations and
Comprehensive Loss as follows:

| |            |   | March 31, |  |   | March 31, | 
| | ---------- | - | --------- |  | - | --------- | 
| |            |   | 2009      |  |   | 2008      | 
| | Consulting | $ | 353,943   |  | $ | 284,000   | 

|Note 8 | Supplemental Cash Flow Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | Investing and financing activities that do not have an impact on current cash flows are excluded from the statements of cash flows.  During the six months ended March 31, 2009, the Company issued 25,000 shares at $2.63 per share, 25,000 common shares at $2.50 per share and 2,500 common shares at $2.00 per share for a total of $133,250 as consideration for consulting services. As a result of re-measuring remaining shares to be issued, the Company recorded compensation expense of $154,850 as consideration for consulting services.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | During the six months ended March 31, 2009, the Company
    paid  cash interest and taxes of $nil (2008: nil).                                                                                                                                                                                                                                                                                                                                                                                                                                       

---

- 20 -

|Anavex Life Sciences Corp.               
|-----------------------------------------
|(A Development Stage Company)            
|Notes to the Interim Financial Statements
|March 31, 2009                           
|(Stated in US Dollars)                   
|(Unaudited)  Page11                     

|Note 9  | Comparative Figures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | Certain of the comparative figures have been reclassified
    to conform with the presentation in the current year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Note 10 | Prior Period Correction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | In its prior fiscal year, during the six months ended
      March 31, 2008, the Company acquired intellectual property consisting of
      patents for consideration of $77,712 at which time the Company capitalized
      these costs as an intangible asset. Subsequent to March 31, 2009, in its
      fourth quarter ended September 30, 2008, the Company changed its
      accounting policy in respect of patent costs whereby the Company
      determined to expense the costs of its acquired patents. This change was
      made because the probability of success and length of time to develop
      commercial applications of the drugs subject to the patents acquired was
      too difficult to determine and there was no assurance that the acquired
    patents would ever be successfully commercialized.
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | The effects of the change in accounting policy on the
      financial statements for the three and six months ended March 31, 2008 is
as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

| |                                                      |   | Three months |   |   | Six months |  
| | ---------------------------------------------------- | - | ------------ | - | - | ---------- | -
| |                                                      |   | ended        |   |   | ended      |  
| |                                                      |   | March 31,    |   |   | March 31,  |  
| |                                                      |   | 2008         |   |   | 2008       |  
| | Statement of operations and
      comprehensive loss |   |              |   |   |            |  
| |                                                      |   |              |   |   |            |  
| | Research and development                             |   |              |   |   |            |  
| | As previously
      reported                         | $ | 223,566      |   | $ | 446,716    |  
| | Patent costs expensed                                |   | 5,712        |   |   | 77,712     |  
| |                                                      |   |              |   |   |            |  
| | As
      restated                                    | $ | 229,278      |   | $ | 524,428    |  
| |                                                      |   |              |   |   |            |  
| | Net loss and
      comprehensive loss for the period |   |              |   |   |            |  
| | As previously
      reported                         | $ | 682,007      |   | $ | 1,599,313  |  
| | Patent costs expensed                                |   | 5,712        |   |   | 77,712     |  
| |                                                      |   |              |   |   |            |  
| | As
      restated                                    | $ | 687,719      |   | $ | 1,677,025  |  
| |                                                      |   |              |   |   |            |  
| | Basic and diluted loss
      per share               |   |              |   |   |            |  
| | As previously
      reported                         | $ | (0.03        | ) | $ | (0.08      | )
| | Patent costs expensed                                |   | (0.00        | ) |   | (0.00      | )
| |                                                      |   |              |   |   |            |  
| | As
      restated                                    | $ | (0.03        | ) | $ | (0.08      | )

---

- 21 -

|Anavex Life Sciences Corp.               
|-----------------------------------------
|(A Development Stage Company)            
|Notes to the Interim Financial Statements
|March 31, 2009                           
|(Stated in US Dollars)                   
|(Unaudited)  Page 12                    

|Note 10 | Prior Period Correction (contd)
|------- | ---------------------------------

| | Statement of cash flows                     |   |           |  
| | ------------------------------------------- | - | --------- | -
| |                                             |   |           |  
| | Net cash used in
      operating activities |   |           |  
| | As previously
      reported                | $ | 1,112,043 |  
| | Patent costs expensed                       |   | 77,712    |  
| |                                             |   |           |  
| | As
      restated                           | $ | 1,189,755 |  
| |                                             |   |           |  
| | Net cash used in
      investing activities |   |           |  
| | As previously
      reported                | $ | 77,712    |  
| | Patent costs expensed                       |   | (77,712   | )
| |                                             |   |           |  
| | As
      restated                           | $ | -         |  

---

- 22 -

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

Forward-Looking Statements

This quarterly report contains forward-looking statements.
These statements relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
may, should, expect, plan, anticipate, believe, estimate,
predict, potential or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors that may cause our or our industrys actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.

Our financial statements are stated in United States dollars
and are prepared in accordance with United States generally accepted accounting
principles.

In this quarterly report, unless otherwise specified, all
dollar amounts are expressed in United States dollars and all references to
common shares refer to the shares of our common stock.

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

Our Business

We are a biopharmaceutical company engaged in the discovery and
development of novel drug targets for the treatment of cancer and neurological
diseases. Our proprietary SIGMACEPTOR discovery Platform has resulted in and
continues to generate small molecule drug candidates with unique modes of
action. Presently we have three lead drug candidates at the late preclinical
stage and an additional 50+ compounds at various early stages of the discovery
process.

Our SIGMACEPTOR-N program involves the development of novel
and original drug candidates, targeting neurological and neurodegenerative
diseases (Alzheimers disease, epilepsy, depression, etc.). Our lead drug
candidates exhibit high, non-exclusive affinity for sigma receptors with strong
evidence for anti-amnesic, neuroprotective, anti-apoptotic, anti-oxidative,
anti-inflammatory, anti-convulsive, anti-depressant and anxiolytic properties.
We believe that oxidateive stress, not amyloid-beta, is the cause of
Alzheimers. Our two lead drug candidates modulate sigma receptors, a unique
class of receptor molecules, to guard against oxidative stress and repair cells
compromised by its effects. In preclinical studies the compounds have performed
well in well-recognized animal models of Alzheimers disease, underscoring the
promise of our new alternative approach to the disease.

Our SIGMACEPTOR-C program involves the development of novel
and original drug candidates targeting cancer. Our research leverages the unique
properties of sigma-1 and /or sigma-2 receptor ligands which allows our company
to create a potent class of drug candidates which exhibit high, non-exclusive
affinity for sigma receptors with strong evidence for selective pro-apoptotic,
anti-metastatic and low toxicity properties in various types of solid cancers
such as colon, prostate, breast, lung, etc.

We intend to begin clinical phase trials on one or more of our
most advanced compounds in late 2009 or early 2010. We also intend to continue
to work on other compounds, which are currently at different stages of early
development.

---

- 23 -

Research and Development Activities

ANAVEXs SIGMACEPTOR(TM)-N program pipeline is focused on
moving our lead drug candidates ANAVEX 2-73 and ANAVEX 1-41 to clinical
trials.

Scaleup manufacturing of ANAVEX 2-73, our lead drug candidate
for the treatment of Alzheimers disease, has been initiated by organic
chemistry services provider Syntagon AB in Sweden.

ANAVEX 2-73 is expected to to enter clinical trials in late
2009 or early 2010 for Alzheimers disease. Moreover, ANAVEX 2-73 or its
optimized derivative ANAVEX 19-144 is intended to enter clinical trials for
epilepsy treatment as early as the first quarter of 2010. Results from animal
models reveal that these compounds have significant anti-amnesic,
neuroprotective and anticonvulsant properties. These activities involve
muscarinic and sigma-1 receptor components, which is significant because it
indicates a unique synergistic mode of action that may help provide disease
modifying potential for Alzheimers and protect the neurons from oxidative
stress. Moreover, such potential can provide control for epilepsy and prevent
the process that causes long-term damage to tissue and cells as well as
biochemical and physiological alterations to the brain. Published results were
presented at the Neuroscience 2007 conference in San Diego. Ongoing pre-clinical
studies are being conducted in collaboration with Universite Montpellier.

Promising developments have also been made with ANAVEX 1-41. In
recent pre-clinical animal studies, the compound demonstrated significant
neuroprotective benefits through the prevention of oxidative stress, which
damages and destroys cells and is believed to be a primary cause of Alzheimers
disease. The novel mechanism of action of ANAVEX 1-41 demonstrates that the
compound may influence the course of Alzheimers disease and prevent or limit
the creation of plaques that destroy brain cells in the hippocampus, the part of
the brain that regulates learning, emotion and memory. Published results were
presented at the Neuroscience 2007 conference in San Diego, California. Most
recent results were presented in the ICAD 2008 conference in Chicago, where the
neuroprotective profile of the candidate drug was highlighted with accompanying
results. Testing on ANAVEX 1-41 is being conducted in cooperation with
Universite Montpellier in France. Phase 1 trials of ANAVEX 1-41 on humans are
expected to commence in 2010.

SIGMACEPTOR(TM)-C program pipeline involves the development of
novel and original drug candidates targeting cancer. To date we have identified
over 50 compounds that have exhibited growth inhibiting activity at a low
micromolar concentration and two of them even lower at a nanomolar range
concentration.

ANAVEX 7-1037, our lead drug candidate for the treatment of
colorectal cancer and other types of solid tumours, recently revealed
chemotherapeutic potential without toxic side effects in advanced pre-clinical
studies. The compound has been shown to kill human colon cancer cells and also
significantly suppress tumor growth in immune-deficient mice. Published results
were presented at the 15th Euroconference on Apoptosis in Portoroz, Slovenia.
Testing on ANAVEX 7-1037 is being conducted in cooperation with the Academy of
Athens Institute of Biomedical Research.

Published results for ANAVEX 1-41, ANAVEX 2-73 and ANAVEX
7-1037 are available at www.anavex.com/publications.html.

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 targeted companies to
market or distribute the results of our research projects.

---

- 24 -

Expenses

Our expenses for the three and six months ended March 31, 2009
and 2008 were as follows:

|                               |   | Three Months Ended March 31 |  |   | Six Months Ended March 31 | 
|------------------------------ | - | --------------------------- |  | - | ------------------------- | 
|                               |   | 2009                        |  |   | 2008                      | 
|Accounting and audit fees      | $ | 3,000                       |  | $ | 34,579                    | 
|Accretion                      |   | 7,781                       |  |   |                          | 
|Amortization                   |   | 90                          |  |   |                          | 
|Bank Charges and Interest      |   | 5,918                       |  |   | 12,079                    | 
|Consulting fees                |   | 430,964                     |  |   | 288,210                   | 
|Legal fees                     |   | 1,911                       |  |   | 42,805                    | 
|Management fees                |   |                            |  |   |                          | 
|Office and miscellaneous       |   | 4,716                       |  |   | 39,670                    | 
|Registration and filing fees   |   | 469                         |  |   | 822                       | 
|Rent and administration        |   |                            |  |   | 30,000                    | 
|Research and development       |   | 328,859                     |  |   | 229,278                   | 
|Website design and maintenance |   |                            |  |   |                          | 
|Total expenses                 | $ | 783,708                     |  | $ | 677,443                   | 

Three Months Ended March 31, 2009 and 2008

Expenses for the three months ended March 31, 2009 increased by
$106,265 over the same period in 2008. Accretion charges of $7,781 for the three
months ended March 31, 2009 increased from $0 for the same period in 2008 as a
result of the issued promissory notes. Bank charges and Interest decreased to
$5,918 for the three months ended March 31, 2009 from $12,079 for the same
period in 2008 due to the maturity of interest bearing promissory notes.
Consulting fees increased from $288,210 for the three months ended March 31,
2008 to $430,964 for the same period in 2009 mostly as a result of increased
stock based compensation charges. Legal fees decreased to $1,911 for the three
months ended March 31, 2009 from $42,805 for the same period in 2008 mostly as a
result of non reoccurring fees charged in 2008 associated with patents and
corporate fees. Research and Development charges increased to $328,859 for the
three months ended March 31, 2009 from $229,278 for the same period in 2008
resulting from increased research activity.

Six months Ended March 31, 2009 and 2008

Stock based compensation is $353,943 for the six months ended
March 31, 2009 compared to $284,000 for the same period in 2008 and are included
in consulting fees.

Liquidity and Capital Resources

Working Capital

|                          |   | March 31, 2009 |   |   | September 30, 2008 |  
|------------------------- | - | -------------- | - | - | ------------------ | -
|Cash                      | $ | 78,729         |   | $ | 6,357              |  
|Current Assets            | $ | 78,729         |   | $ | 6,357              |  
|Current Liabilities       | $ | 3,272,839      |   | $ | 2,299,389          |  
|Working Capital (Deficit) | $ | (3,194,110     | ) | $ | (2,293,032         | )

We anticipate that we will require up to $5,180,000 for the 12
months ending March 31, 2010 to implement our plan of operation of researching
and developing our four patents, the related compounds and any further
intellectual property we may acquire. The majority of our capital resources
requirement is needed to enter some of our current compounds into clinical
trials.

Consulting Agreements

On January 13, 2009, we signed a consulting agreement with an
individual to provide our company with consulting services in the field of the
advancement of drug candidates with the potential to provide disease-modifying
treatments for certain neurological diseases. In consideration, we have agreed
to pay to the consultant a consulting fee consisting of $2,000 per month, $250
per speaking engagement made on behalf of our company and grant 50,000 stock
options. The agreement is for a period of one year and either party may
terminate the agreement by

---

- 25 -

providing the other party with 30 days written notice. Pursuant
to this agreement, on January 13, 2009, we granted 50,000 stock options to the
consultant. The options may be exercised at $2.75 per share until January 14,
2014. Half of the options vested on signing of the agreement and half of the
options will vest one year after the execution of the consulting agreement.
There is no obligation to register the options.

On March 2, 2009, we signed a consulting agreement with an
individual, whereby the consultant agreed to assist our company in identifying
business opportunities and strategic development in the field of biotech. In
consideration, we have agreed to pay the consultant a fee of 5,000 stock
options. The agreement is for a period of one year and either party may
terminate the agreement by providing the other party with 30 days written
notice. Pursuant to the agreement, on March 2, 2009, we granted 5,000 stock
options to the consultant. The options may be exercised at $2.50 per share until
March 2, 2014. The options are fully vested and there is no obligation to
register the options.

Issuance of Shares for Deferral Payment

On March 20, 2009 we issued 2,500 shares of common stock to two
individuals as a deferral payment for services provided to our company. The
shares were issued as a deferral payment for us to be able to defer payment of
outstanding accounts.

Financing Activities

Loans

During the three months ended March 31, 2009, we have issued
unsecured, 0% interest convertible promissory notes in exchange for funds
received or in settlement of debt due. These promissory notes are without
interest and are due on demand on or after a specified due date. These
promissory notes are convertible into units at $2.50 per unit as to $1,819,416
of the promissory notes and at $2.25 as to a $100,000 promissory note. Each unit
is comprised of one share of our common stock and one share purchase warrant
exercisable at $3.00 per share for a period of two years from the conversion
date.

Private Placements

In March 2009, we completed non-brokered private placements for
an aggregate of 99,948 units of our company at a price of $2.25 per unit. Each
unit consists of one share of common stock and one non-transferable share
purchase warrant exercisable at $4.00 for a period of 12 months. We raised gross
proceeds of $224,883 from these private placements.

Use of Proceeds from Financing Activities

We used $1,669,418 of the loans that we obtained during the
three months ended March 31, 2009 in settlement of previously issued promissory
notes, which matured on December 31, 2008, together with interest accrued
thereon. We intend to use $150,000 of those loans towards general working
capital and $100,000 of those loans towards the scale-up production of Anavex
2-73 for Alzheimers Phase 1 trials and general working capital. We intend to
use $224,883 from private placements of the units of our company in March 2009
towards research and development and general working capital.

Going Concern

At March 31, 2009, we had an accumulated deficit of $9,232,212
since our inception and 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 year ended September 30, 2008.

---

- 26 -

Future Financing

We will require additional financing to fund our planned
operations, including researching and developing our four patents, the related
compounds and any further intellectual property that we may acquire and entering
some of our current compounds into clinical trials. 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 more particularly the market for early development stage
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 still no assurance that we will be able to maintain
operations at a level sufficient for an investor to obtain a return on his, her,
or its 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 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

---

- 27 -

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.

Stock-based Compensation

We account for all of our 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.

The summary of significant accounting policies should be read
in conjunction with our consolidated financial statements and related notes and
managements discussion and analysis of financial condition and results of
operations.

Recent accounting pronouncements

In September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements. This statement defines fair value as used in numerous accounting
pronouncements, establishes a framework for measuring fair value in generally
accepted accounting principles and expands disclosure related to the use of fair
value measures in financial statements. We adopted SFAS 157 effective October 1,
2008. The adoption of SFAS 157 did not have a material effect on our financial
position, results of operations or cash flows.

In February, 2007, the FASB issued SFAS No. 159 The Fair Value
Option for Financial Assets and Financial Liabilities. This statement
establishes presentation and disclosure requirements designed to facilitate
comparisons between companies that choose different measurement attributes for
similar types of assets and liabilities. We adopted SFAS 159 effective October
1, 2008. The adoption of SFAS 159 did not have a material effect on our
financial position, results of operations or cash flows.

In December 2007, the EITF reached a consensus on EITF No.
07-01, Accounting for Collaborative Arrangements Related to the Development and
Commercialization of Intellectual Property (EITF 07-01). EITF 07-01 discusses
the appropriate income statement presentation and classification for the
activities and payments between the participants in arrangements related to the
development and commercialization of intellectual property. The sufficiency of
disclosure related to these arrangements is also specified. EITF 07-01 is
effective for fiscal years beginning after December 15, 2008. As a result, EITF
07-01 is effective for our company as of October 1, 2009. We expect that the
adoption of EITF 07-01 will have minimal, if any, impact on our financial
position and results of operations. However, based upon the nature of our
business, EITF 07-01 could have a material impact on our financial position and
results of operations in future years

---

- 28 -

In April 2008, the FASB issued FSP 142-3, Determination of the
Useful Life of Intangible Assets. This FSP amends the factors that should be
considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under FASB Statement No. 142,
Goodwill and Other Intangible Assets. The intent of this FSP is to improve the
consistency between the useful life of a recognized intangible asset under
Statement 142 and the period of expected cash flows used to measure the fair
value of the asset under FASB Statement No. 141 (Revised 2007), Business
Combinations, and other U.S. generally accepted accounting principles (GAAP).
This FSP is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and interim periods within those fiscal years. Early
adoption is prohibited. We are in the process of evaluating the impact, if any,
of FSP 142-3 on our financial statements.

Item 3. Quantitative and Qualitative Disclosures about
Market Risks.

Not Applicable.

Item 4T. 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 and
principal financial officer, evaluated our companys 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 companys
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 companys reports filed under the
Securities Exchange Act of 1934 is accumulated and communicated to our principal
executive and principal financial officer to allow timely decisions regarding
required disclosure.

Based on that evaluation, our management, with the
participation of our principal executive 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.

Changes in Internal Control over Financial Reporting

We continue to have weaknesses as disclosed in our annual
report on Form 10-K filed on January 13, 2009. We intend to take appropriate and
reasonable steps to make the necessary improvements to remediate these
deficiencies at some time in the future. This will depend on our financial
position and the managements determination of which changes should be made and
when. We intend to consider the results of our remediation efforts and related
testing as part of our year-end 2009 assessment of the effectiveness of our
internal control over financial reporting.

We have not made any changes in our internal control over
financial reporting during the fiscal quarter ended March 31, 2009 that have
materially affected, or are reasonably likely to materially affect our internal
control over financial reporting.

Certifications

Certifications with respect to disclosure controls and
procedures and internal control over financial reporting under Rules 13a-14(a)
of the Securities Exchange Act of 1934 are attached to this quarterly report on
Form 10-Q.

---

- 29 -

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, 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.

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 $9,232,212 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. We will not be able to generate significant
revenues in the future and our management expects acquisitions and exploration
expenditures and operating expenses to increase substantially over the next 12
months. 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 biotechnology 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 and have not undergone
significant testing in non-clinical studies or in clinical trials. 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.

---

- 30 -

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 crisis and its impact on the stock markets 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 as of September 30, 2008 that we have incurred
substantial losses since inception, which raises substantial doubt abut 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.

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.

---

- 31 -

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
marketable potential drug compounds, 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.

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 and, ultimately, our ability
to commercialize our potential drug compounds and generate product revenues. In
addition, we expect that our 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.

---

- 32 -

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 product
approval can take many years and 10-12 years is not unusual.

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;
- unexpected side-effects;
- 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.

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 than our future products
  could be, if and when they are generated, impede our market penetration or
  decrease our future market share; and,
- The price for our future products, as well as pricing decisions by our
  competitors, 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

---

- 33 -

commercialize. It is possible that our potential drug compounds
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 potential drug compounds cannot be manufactured at a commercial
scale and, therefore, they may not be economical to produce. Our potential drug
compounds could also fail to achieve market acceptance or be precluded from
commercialization by proprietary rights of third parties. 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 than our own, or if scientific developments
change our understanding of the potential scope and utility of our potential
drug compounds, then our technologies and future potential drug compounds may be
rendered undesirable or obsolete.

We face significant competition from industry participants that
are pursuing technologies similar to those that we are pursuing and are
developing pharmaceutical products that are competitive with our potential drug
compounds. 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 potential drug compounds 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.

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
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 acquisitions,
joint ventures, licensing arrangements 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.

---

- 34 -

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 potential drug compounds 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 potential drug
compounds. We currently do not have any potential drug compounds in clinical
trials, however, when any of our potential drug compounds 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 critically ill when they enter a trial. 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 defense or
payment of liabilities above the amount of coverage could cost us significant
amounts of money, 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 four patents related to certain of our potential drug
compounds. However, these patents do not ensure the protection of our
intellectual property for a number of reasons, including the following:

| | 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
      on their patents and therefore cannot practice our technology 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 on our
      patent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 4. | 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:                                                                                                                                                                                                            

---

- 35 -

| | (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.

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

We face burdens relating to the recent trend toward stricter
corporate governance and financial reporting standards. New legislation or
regulations such as Section 404 of the Sarbanes-Oxley Act of 2002 follow
the trend of imposing stricter corporate governance and financial reporting
standards have led to an increase in our costs of compliance including increases
in consulting, auditing and legal fees. The 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.

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.

A prolonged decline in the price of our common stock could
result in a reduction in the liquidity of our common stock and 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 liquidity and 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

---

- 36 -

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
- 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 authorizes 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 on the OTC Bulletin Board 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. Our
common stock is quoted on the OTC Bulletin Board service of the Financial
Industry Regulatory Authority. 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. This volatility could depress the market price of our common stock
for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board
is not a stock exchange, and trading of securities on the OTC Bulletin Board is
often more sporadic than the trading of securities listed on a quotation system
like Nasdaq or a stock exchange like Amex. 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 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 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

---

- 37 -

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.

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,
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.

On February 20, 2009, we issued 25,000 shares of our common
stock to Cameron Durrant, a director of our company, pursuant to a consulting
agreement whereby Mr. Durrant provides management services to our company. We
issued those shares relying on Section 4(2) of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security
Holders.

On April 6, 2009, we held our annual meeting of stockholders.

At the annual meeting, our stockholders elected Harvey Lalach,
Alison Ayers, Cameron Durrant, and David Tousley as directors of our company
with the following votes:

|                | For        | Against | Abstain | Broker Non-Votes
|--------------- | ---------- | ------- | ------- | ----------------
|Harvey Lalach   | 10,499,610 | 4,749   | 1,549   | 0               
|Alison Ayers    | 10,499,610 | 4,749   | 1,549   | 0               
|Cameron Durrant | 10,499,610 | 4,749   | 1,549   | 0               
|David Tousley   | 10,499,610 | 4,749   | 1,549   | 0               

At the annual meeting, our stockholders ratified the
appointment of BDO Dunwoody LLP as our independent auditors with the following
votes:

For
    Against
    Abstain
    Broker Non-Votes10,500,435
    4,773
    700
    0


---

- 38 -

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit Number
    Description(3)
    Articles of Incorporation and Bylaws3.1
    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 indentures4.1
    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)(10)
    Material Contracts10.1
    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, 200810.10
    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)


---

- 39 -

Exhibit Number
      Description(14)
      Code of Ethics14.1
      Code of Conduct (incorporated by reference to
        an exhibit to our Current Report on Form 8-K filed on September 28, 2007)(31)
      Section 302 Certification31.1*
      Certification Pursuant to Section
        302 of the Sarbanes-Oxley Act of 2002(32)
      Section 1350 Certification32.1*
      Certification Pursuant to Section
        906 of the Sarbanes-Oxley Act of 2002


* Filed herewith.

---

- 40 -

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.

By:

|/s/ Harvey
      Lalach                                                                           | 
|------------------------------------------------------------------------------------------------- | 
|Harvey Lalach                                                                                     | 
|President, Chief Financial Officer, Secretary and
      Director                                 
|(Principal Executive Officer, Principal Financial
      Officer and Principal Accounting Officer)
|May 20, 2009                                                                                     

---