---

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: December 31, 2008

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 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:
19,982,420common shares issued and outstanding as of February 12, 2009.

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- ii -

TABLE OF CONTENTS

|PART
      I - FINANCIAL INFORMATION                                                                       | 1 
|---------------------------------------------------------------------------------------------------------- | --
|ITEM
      1. FINANCIAL STATEMENTS.                                                                        | 1 
|ITEM
      2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS. | 3 
|ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                                  | 6 
|ITEM
      4T. CONTROLS AND PROCEDURES                                                                     | 8 
|PART
      II - OTHER INFORMATION                                                                          | 10
|ITEM
      1. LEGAL PROCEEDINGS                                                                            | 10
|ITEM
      1A. RISK FACTORS                                                                                | 10
|ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                  | 19
|ITEM
      3. DEFAULTS UPON SENIOR SECURITIES.                                                             | 19
|ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                         | 19
|ITEM
      5. OTHER INFORMATION                                                                            | 19
|ITEM
      6. EXHIBITS.                                                                                    | 20
|SIGNATURES                                                                                                 | 21

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- 1 -

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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ANAVEX LIFE SCIENCES CORP.

(A Development Stage Company)

INTERIM FINANCIAL STATEMENTS

December 31, 2008

(Stated in US Dollars)

(Unaudited)

---

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

|                                                                |   | December 31, |   |   | September 30, |  
|--------------------------------------------------------------- | - | ------------ | - | - | ------------- | -
|                                                                |   | 2008         |   |   | 2008          |  
|**ASSETS**                                                      |  
|                                                                |   |              |   |   |               |  
|Current                                                         |   |              |   |   |               |  
|Cash                                                            | $ | 614          |   | $ | 6,357         |  
|                                                                |   |              |   |   |               |  
|Equipment                                                       |   | 772          |   |   | 862           |  
|                                                                | $ | 1,386        |   | $ | 7,219         |  
|                                                                |   |              |   |   |               |  
|LIABILITIES                                                     |  
|                                                                |   |              |   |   |               |  
|Current                                                         |   |              |   |   |               |  
|Accounts payable and accrued liabilities
       Note 5         | $ | 1,073,951    |   | $ | 749,389       |  
|Promissory notes payable
       Note 3                         |   | 1,684,500    |   |   | 1,550,000     |  
|                                                                |   | 2,758,451    |   |   | 2,299,389     |  
|                                                                |   |              |   |   |               |  
|CAPITAL DEFICIT                                                 |  
|                                                                |   |              |   |   |               |  
|Capital stock  Note 4                                          |   |              |   |   |               |  
|Authorized:                                                     |   |              |   |   |               |  
|150,000,000 common
      shares, par value $0.001 per share     |   |              |   |   |               |  
|Issued and outstanding:                                         |   |              |   |   |               |  
|19,982,420
      common shares (September 30, 2008: 19,957,420) |   | 19,982       |   |   | 19,957        |  
|Shares to be issued  Note 5                                    |   | 194,549      |   |   | 125,849       |  
|Share subscriptions received  Note 8                           |   | 128,081      |   |   | -             |  
|Additional paid-in capital                                      |   | 4,891,179    |   |   | 4,624,838     |  
|Deficit accumulated during the development stage                |   | (7,990,856   | ) |   | (7,062,814    | )
|                                                                |   |              |   |   |               |  
|                                                                |   | (2,757,065   | ) |   | (2,292,170    | )
|                                                                |   |              |   |   |               |  
|                                                                | $ | 1,386        |   | $ | 7,219         |  

SEE ACCOMPANYING NOTES

---

ANAVEX LIFE SCIENCES CORP.(A Development Stage
  Company) 
  INTERIM STATEMENTS OF OPERATIONS AND COMPRENHENSIVE LOSS 
  for
  the three months ended December 31, 2008 and 2007 and 
  for the period from
  January 23, 2004 (Date of Inception) to December 31, 2008 
  (Stated in US
    Dollars) 
  (Unaudited)

|                                               |   |                    |   |   |               |   |   | January 23,   |  
|---------------------------------------------- | - | ------------------ | - | - | ------------- | - | - | ------------- | -
|                                               |   |                    |   |   |               |   |   | 2004 (Date of |  
|                                               |   | Three months ended |   |   | Inception) to |  
|                                               |   | December 31,       |   |   | December 31,  |  
|                                               |   | 2008               |   |   | 2007          |   |   | 2008          |  
|                                               |   |                    |   |   | Restated -    |   |   |               |  
|                                               |   |                    |   |   | Note 9        |   |   |               |  
|Expenses                                       |   |                    |   |   |               |   |   |               |  
|Accounting and audit fees                      | $ | 31,260             |   | $ | 2,150         |   | $ | 154,676       |  
|Amortization                                   |   | 90                 |   |   | -             |   |   | 310           |  
|Bank charges and interest                      |   | 876                |   |   | 1,542         |   |   | 15,982        |  
|Consulting fees 
      Notes 5 and 6          |   | 515,567            |   |   | 619,368       |   |   | 4,152,703     |  
|Investor relations                             |   | 25,000             |   |   | -             |   |   | 288,560       |  
|Legal fees                                     |   | 3,610              |   |   | 14,040        |   |   | 121,939       |  
|Management fees  Note 5                       |   | -                  |   |   | -             |   |   | 14,625        |  
|Office and miscellaneous                       |   | 40,640             |   |   | 22,877        |   |   | 224,968       |  
|Registration and filing fees                   |   | 5,576              |   |   | 3,897         |   |   | 29,906        |  
|Rent and administration
       Note 5         |   | -                  |   |   | 30,000        |   |   | 148,750       |  
|Research and development                       |   | 284,104            |   |   | 295,150       |   |   | 2,723,284     |  
|Website design and maintenance                 |   | -                  |   |   | -             |   |   | 25,270        |  
|                                               |   |                    |   |   |               |   |   |               |  
|Loss before other items                        |   | (906,723           | ) |   | (989,024      | ) |   | (7,900,973    | )
|Other income (loss)                            |   |                    |   |   |               |   |   |               |  
|Interest                                       |   | (30,491            | ) |   | -             |   |   | (90,775       | )
|Foreign exchange gain (loss)                   |   | 9,172              |   |   | (282          | ) |   | 892           |  
|                                               |   |                    |   |   |               |   |   |               |  
|Net loss and comprehensive loss for the period | $ | (928,042           | ) | $ | (989,306      | ) | $ | (7,990,856    | )
|                                               |   |                    |   |   |               |   |   |               |  
|Basic and diluted loss per share               | $ | (0.05              | ) | $ | (0.05         | ) |   |               |  
|                                               |   |                    |   |   |               |   |   |               |  
|Weighted average number of shares outstanding  |   | 19,965,300         |   |   | 19,525,639    |   |   |               |  

SEE ACCOMPANYING NOTES

---

ANAVEX LIFE SCIENCES CORP.(A Development Stage
  Company) 
  INTERIM STATEMENTS OF CASH FLOWS 
  for the three months ended
  December 31, 2008 and 2007 and 
  for the period from January 23, 2004 (Date of
  Inception) to December 31, 2008 
  (Stated in US Dollars) 
  (Unaudited)

|                                                            |   |                    |   |   |               |   |   | January 23,   |  
|----------------------------------------------------------- | - | ------------------ | - | - | ------------- | - | - | ------------- | -
|                                                            |   |                    |   |   |               |   |   | 2004 (Date of |  
|                                                            |   | Three months ended |   |   | Inception) to |  
|                                                            |   | December 31,       |   |   | December 31,  |  
|                                                            |   | 2008               |   |   | 2007          |   |   | 2008          |  
|                                                            |   |                    |   |   | Restated     |   |   |               |  
|                                                            |   |                    |   |   | Note 9        |   |   |               |  
|Cash Flows used in Operating Activities                     |   |                    |   |   |               |   |   |               |  
|Net loss for the period                                     | $ | (928,042           | ) | $ | (989,306      | ) | $ | (7,990,856    | )
|Add items not involving
      cash:                         |   |                    |   |   |               |   |   |               |  
|Amortization                                                |   | 90                 |   |   | -             |   |   | 310           |  
|Stock
      based compensation                              |   | 200,616            |   |   | 248,668       |   |   | 1,885,402     |  
|Common shares issued
      for consulting expenses          |   | 134,450            |   |   | 193,000       |   |   | 454,200       |  
|Promissory
      note issued for severance                  |   | -                  |   |   | -             |   |   | 71,500        |  
|Common shares issued
      for severance                    |   | -                  |   |   | -             |   |   | 340,600       |  
|Common
      shares issued for research and development     |   |                    |   |   |               |   |   |               |  
|expenses                                                    |   | -                  |   |   | -             |   |   | 800,000       |  
|Management
      fees contributed                           |   | -                  |   |   | -             |   |   | 14,625        |  
|Rent contributed                                            |   | -                  |   |   | -             |   |   | 3,750         |  
|Adjustments to reconcile
      net loss to net cash used in |   |                    |   |   |               |   |   |               |  
|operating activities:                                       |   |                    |   |   |               |   |   |               |  
|Prepaid
      expenses                                      |   | -                  |   |   | (10,000       | ) |   | -             |  
|Accounts payable and
      accrued liabilities              |   | 324,562            |   |   | (118,805      | ) |   | 1,247,452     |  
|                                                            |   |                    |   |   |               |   |   |               |  
|Net cash used in operating activities                       |   | (268,324           | ) |   | (676,443      | ) |   | (3,173,017    | )
|                                                            |   |                    |   |   |               |   |   |               |  
|Cash Flows provided by Financing Activities                 |   |                    |   |   |               |   |   |               |  
|Issuance of common shares                                   |   | -                  |   |   | 525,000       |   |   | 1,195,467     |  
|Proceeds from promissory notes                              |   | 134,500            |   |   | 200,000       |   |   | 1,584,500     |  
|Repayment of promissory
      notes                         |   | -                  |   |   | -             |   |   | (100,000      | )
|Share subscriptions received                                |   | 128,081            |   |   | -             |   |   | 128,081       |  
|Due to related parties                                      |   | -                  |   |   | -             |   |   | 33,665        |  
|Shareholder advances                                        |   | -                  |   |   | -             |   |   | 333,000       |  
|                                                            |   |                    |   |   |               |   |   |               |  
|Net cash provided by financing activities                   |   | 262,581            |   |   | 725,000       |   |   | 3,174,713     |  
|                                                            |   |                    |   |   |               |   |   |               |  
|Cash Flows used in Investing Activities                     |   |                    |   |   |               |   |   |               |  
|Acquisition of equipment                                    |   | -                  |   |   | -             |   |   | (1,082        | )
|                                                            |   |                    |   |   |               |   |   |               |  
|Increase (decrease) in cash during the period               |   | (5,743             | ) |   | 48,557        |   |   | 614           |  
|                                                            |   |                    |   |   |               |   |   |               |  
|Cash, beginning of period                                   |   | 6,357              |   |   | 25            |   |   | -             |  
|                                                            |   |                    |   |   |               |   |   |               |  
|Cash, end of period                                         | $ | 614                |   | $ | 48,582        |   | $ | 614           |  
|                                                            |   |                    |   |   |               |   |   |               |  
|Supplemental Cash Flow Information  Note
      7           |   |                    |   |   |               |   |   |               |  

SEE ACCOMPANYING NOTES

---

ANAVEXLIFESCIENCESCORP.(A Development Stage Company) 
  STATEMENT OF
  CHANGES IN CAPITAL DEFICIT 
  for the period January 23, 2004 (Date of
  Inception) to December 31, 2008 
  (Stated in US Dollars) 
  (Unaudited)

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

SEE ACCOMPANYING NOTES

---

ANAVEXLIFESCIENCESCORP.(A Development Stage Company) 
  STATEMENT OF CHANGES IN CAPITAL
  DEFICIT 
  for the period January 23, 2004 (Date of Inception) to December 31,
  2008 
  (Stated in US Dollars) 
  (Unaudited)

|                                                      |  |                    |  |   |             |  |   |            |  |  |               |  |  |              |   |   | Deficit     |   |   |            |  
|----------------------------------------------------- |  | ------------------ |  | - | ----------- |  | - | ---------- |  |  | ------------- |  |  | ------------ | - | - | ----------- | - | - | ---------- | -
|                                                      |  | Common
      Stock |  |   | Accumulated |  |   |            | 
|                                                      |  |                    |  |   |             |  |   | Additional |  |  | Share         |  |  | Common       |   |   | During the  |   |   |            |  
|                                                      |  |                    |  |   |             |  |   | Paid-in    |  |  | Subscriptions |  |  | Shares to be |   |   | Development |   |   |            |  
|                                                      |  | Shares             |  |   | Par Value   |  |   | Capital    |  |  | Received      |  |  | 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,         |  | 150,000            |  |   | 150         |  |   | 524,850    |  |  | -             |  |  | -            |   |   | -           |   |   | 525,000    |  
|2007
      - at $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 in 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,         |  | 65,000             |  |   | 65          |  |   | 340,535    |  |  | -             |  |  | -            |   |   | -           |   |   | 340,600    |  
|2008
      - at $5.24                                 |  |                    |  |   |             |  |   |            |  |  |               |  |  |              |   |   |             |   |   |            |  
|Common stock to be issued for consulting              |  | -                  |  |   | -           |  |   | -          |  |  | -             |  |  | 252,599      |   |   | -           |   |   | 252,599    |  
|services                                              |  |                    |  |   |             |  |   |            |  |  |               |  |  |              |   |   |             |   |   |            |  
|Capital stock issued for consulting services
      on |  | 25,000             |  |   | 25          |  |   | 126,725    |  |  | -             |  |  | (126,750     | ) |   | -           |   |   | -          |  
|August
      19, 2008 - at $5.00                      |  |                    |  |   |             |  |   |            |  |  |               |  |  |              |   |   |             |   |   |            |  
|Capital stock issued for cash on August 19, 2008      |  | 142,698            |  |   | 142         |  |   | 606,325    |  |  | -             |  |  | -            |   |   | -           |   |   | 606,467    |  
|                                                      |  |                    |  |   |             |  |   |            |  |  |               |  |  |              |   |   |             |   |   |            |  
|- at $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  carried
      forward   |  | 19,957,420         |  |   | 19,957      |  |   | 4,624,838  |  |  | -             |  |  | 125,849      |   |   | (7,062,814  | ) |   | (2,292,170 | )

SEE ACCOMPANYING NOTES

---

ANAVEXLIFESCIENCESCORP.(A Development Stage Company) 
  STATEMENT OF
  CHANGES IN CAPITAL DEFICIT 
  for the period January 23, 2004 (Date of
  Inception) to December 31, 2008 
  (Stated in US Dollars) 
  (Unaudited)

|                                                           |  |              |  |   |             |  |   |            |  |   |               |  |   |              |   |   | Deficit     |   |   |            |  
|---------------------------------------------------------- |  | ------------ |  | - | ----------- |  | - | ---------- |  | - | ------------- |  | - | ------------ | - | - | ----------- | - | - | ---------- | -
|                                                           |  | Common Stock |  |   | Accumulated |  |   |            | 
|                                                           |  |              |  |   |             |  |   | Additional |  |   | Share         |  |   | Common       |   |   | During the  |   |   |            |  
|                                                           |  |              |  |   |             |  |   | Paid-in    |  |   | Subscriptions |  |   | Shares to be |   |   | Development |   |   |            |  
|                                                           |  | Shares       |  |   | Par Value   |  |   | Capital    |  |   | Received      |  |   | 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 6                          |  | -            |  |   | -           |  |   | 200,616    |  |   | -             |  |   | -            |   |   | -           |   |   | 200,616    |  
|Capital stock issued for consulting
      services on      |  |              |  |   |             |  |   |            |  |   |               |  |   |              |   |   |             |   |   |            |  
|November 20, 2008 - at $2.63                               |  | 25,000       |  |   | 25          |  |   | 65,725     |  |   | -             |  |   | (65,750      | ) |   | -           |   |   | -          |  
|Shares to be issued for consulting
      services - Note 5 |  | -            |  |   | -           |  |   | -          |  |   | -             |  |   | 134,450      |   |   | -           |   |   | 134,450    |  
|Share subscriptions received                               |  | -            |  |   | -           |  |   | -          |  |   | 128,081       |  |   | -            |   |   | -           |   |   | 128,081    |  
|Net loss and comprehensive loss
      for the period       |  | -            |  |   | -           |  |   | -          |  |   | -             |  |   | -            |   |   | (928,042    | ) |   | (928,042   | )
|                                                           |  |              |  |   |             |  |   |            |  |   |               |  |   |              |   |   |             |   |   |            |  
|Balance, December 31, 2008                                 |  | 19,982,420   |  | $ | 19,982      |  | $ | 4,891,179  |  | $ | 128,081       |  | $ | 194,549      |   | $ | (7,990,856  | ) | $ | (2,757,065 | )

SEE ACCOMPANYING NOTES

---

ANAVEX LIFE SCIENCES CORP.(A Development Stage
  Company) 
  NOTES TO THE FINANCIAL STATEMENTS 
  December 31, 2008 
  (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 December 31,
      2008, the Company had an accumulated deficit of $7,990,856 (September 30,
      2008 - $7,062,814) since its inception 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 expects the
      Companys operating cash requirement over the twelve-month period ended
      December 31, 2009 to be $5,180,000. 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  December 31, 2008 
  (Stated in US
    Dollars) 
  (Unaudited  Page 2)

|Note 2 | 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. 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 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    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | 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.

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  December 31, 2008 
  (Stated in US
    Dollars) 
  (Unaudited  Page 3)

|Note 2 | Recent Accounting Pronouncements  contd                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | In May 2008, FASB issued SFAS No. 162, The Hierarchy of
      Generally Accepted Accounting Principles (SFAS 162). This standard is
      intended to improve financial reporting by identifying a consistent
      framework, or hierarchy, for selecting accounting principles to be used in
      preparing financial statements that are presented in conformity with U.S.
      GAAP for non-governmental entities. SFAS No. 162 is effective 60 days
      following the U.S. Securities and Exchange Commissions approval of the
      Public Company Accounting Oversight Board amendments to AU Section 411,
      the meaning of Present Fairly in Conformity with GAAP. The Company is in
      the process of evaluating the impact, if any, of SFAS 162 on its financial
      statements.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Note 3 | Promissory Notes Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | The Company has issued unsecured promissory notes
      totalling $1,584,500 in exchange for funds received from several parties.
      The promissory notes bear interest at 8%, and are due on December 31,
      2008. As at December 31, 2008, these notes were in default but subsequent
      to December 31, 2008, the Company successfully renegotiated this debt by
      exchanging these notes for convertible loans  (Note 8)                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | 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. $100,000 was repaid in accordance with the repayment
      terms. As at December 31, 2008 the Company is in default of the payment
      terms for the entire $100,000 balance owing.                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Note 4 | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  December 31, 2008 
  (Stated in US
    Dollars) 
  (Unaudited  Page  4)

|Note 4 | Capital Stock  contd                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | 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.                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Note 5 | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | The following amounts have been donated to the Company by
      the directors:                                                                                                                                                                                                                                                                                                                                                                                                               

| |                            |   |                    |  |   |               |  |   | January 23,   | 
| | -------------------------- | - | ------------------ |  | - | ------------- |  | - | ------------- | 
| |                            |   |                    |  |   |               |  |   | 2004 (Date of | 
| |                            |   | Three months ended |  |   | Inception) to | 
| |                            |   | December 31,       |  |   | December 31,  | 
| |                            |   | 2008               |  |   | 2007          |  |   | 2008          | 
| | Management fees            | $ | -                  |  | $ | -             |  | $ | 14,625        | 
| | Rent and administration    |   | -                  |  |   | -             |  |   | 3,750         | 
| | Debt forgiven by directors |   | -                  |  |   | -             |  |   | 33,666        | 
| |                            | $ | -                  |  |   | -             |  | $ | 52,041        | 

During the three-month period ended
  December 31, 2008, the Company was charged consulting fees totaling $67,959
  (2007: $90,000) by a director and an officer of the Company.

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  December 31, 2008 
  (Stated in US
    Dollars) 
  (Unaudited  Page 5)

|Note 5 | 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) | At September 30, 2008, the value of the shares to be
      issued under this agreement was $125,849. During the three months ended
      December 31, 2008, as a result of re-measuring the remaining shares to be
      issued, the Company recognized a compensation expense of $134,450.
      Subsequent to the issuance of 25,000 common shares on November 20, 2008
      having a fair value of $65,750, the remaining 150,000 shares to be issued
      under this agreement have a value of $194,549 on December 31,
      2008.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | b) | At December 31, 2008, the remaining 200,000 unvested
      options were re-measured with their fair value determined to be $142,000
      for which the Company recognized compensation expense of $45,906. As at
      December 31, 2008, there remains $96,094 to be recognized over the
      remaining term of the agreement.                                                                                                                                                                                                        

|       | At December 31, 2008, included in accounts payable and
      accrued liabilities is $38,976 (September 30: $10,114) owed to an officer
      of the Company in respect of unpaid consulting fees.
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                  
|Note 6 | Commitments                                                                                                                                                                                      

| | a) | Share Purchase Warrants                                                                 
| | -- | ----------------------------------------------------------------------------------------
| |    |                                                                                         
| |    | A summary of the Companys share purchase warrants
      outstanding is presented below:

| |                                                         |  | Number of |  |   | Exercise | 
| | ------------------------------------------------------- |  | --------- |  | - | -------- | 
| |                                                         |  | Shares    |  |   | Price    | 
| |                                                         |  |           |  |   |          | 
| | Balance, September 30, 2008 and December
      31, 2008 |  | 292,698   |  | $ | 5.00     | 

At December 31, 2008, the Company has
  292,698 currently exercisable share purchase warrants outstanding as follows:

Number
      Exercise Price
      Expiry Date142,698
      $5.00
      August 2009150,000
      $5.00
      December 2009292,698


---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  December 31, 2008 
  (Stated in US
    Dollars) 
  (Unaudited  Page 6)

|Note 6 | Commitments  contd
|------ | --------------------

| | b) | Stock-based Compensation Plan                                                                                                                                                                                                                                                            
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                          
| |    | At December 31, 2008 the Company has stock purchase
      options outstanding entitling directors of the Company and consultants to
      purchase a total of 1,420,000 common shares of the Company. A summary of
      the outstanding stock purchase options is presented
      below:

| |                                       |  |           |  |   | Weighted | 
| | ------------------------------------- |  | --------- |  | - | -------- | 
| |                                       |  |           |  |   | Average  | 
| |                                       |  | Number of |  |   | Exercise | 
| |                                       |  | Shares    |  |   | Price    | 
| |                                       |  |           |  |   |          | 
| | Outstanding at September 30, 2008 and |  |           |  |   |          | 
| | December 31, 2008                     |  | 1,420,000 |  | $ | 4.44     | 
| |                                       |  |           |  |   |          | 
| | Exercisable at December 31, 2008      |  | 625,000   |  | $ | 4.65     | 

At December 31, 2008, the following
  stock options were outstanding:

Number of
        Shares
      
      
      
      
      
      
      
      
      
      
      
      Aggregate
      
      
      Intrinsic ValueTotal
      
      
      Number
      
      
      Exercise
      
      
      
      
      
      Intrinsic
      
      
      Of VestedNumber
      
      
      Vested
      
      
      Price
      
      
      Expiry Date
      
      
      Value
      
      
      Options100,000
      (1)
      
      -
      
      
      $3.86
      
      
      December 1, 2010
      
      $
      -
      
      $
      -400,000
      (2)
      
      200,000
      
      
      $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
      
      
      -
      
      
      -270,000
      (6)
      
      -
      
      
      $3.00
      
      
      February 8, 2017
      
      
      -
      
      
      -1,420,000
      
      
      625,000
      
      
      
      
      
      
      
      $
      -
      
      $
      -


| | 1. | As at December 31, 2008, 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 condition has
      not yet been met.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 2. | As at December 31, 2008, 200,000 of these options have
      vested. The remaining 200,000 shares vest as follows: 100,000 on February
      20, 2009 and 100,000 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, included in consulting fees, for the three-month
      period ended December 31, 2008.

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  December 31, 2008 
  (Stated in US
    Dollars) 
  (Unaudited  Page 7)

|Note 6 | Commitments  contd
|------ | --------------------

| | b) | Stock-based Compensation Plan  contd
| | -- | --------------------------------------

| | 3. | As at December 31, 2008 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 December 31, 2008 all of these options had vested
      (75,000 having vested during the period ended December 31, 2008). 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 three-month period ended December 31, 2008, included with
      consulting fees in the financial statements.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 5. | As at December 31, 2008, 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, included with
      consulting fees in the financial statements. 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 6. | 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:

| |                          | 2008       | 2007      
| | ------------------------ | ---------- | ----------
| | Risk-free interest rate  | 1.07%      | 3.29%     
| | Expected life of options | 2.42 years | 2.16 years
| | Annualized volatility    | 77.82%     | 77.82%    
| | Dividend rate            | 0%         | 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.

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  December 31, 2008 
  (Stated in US
    Dollars) 
  (Unaudited  Page 8)

|Note 6 | Commitments  contd
|------ | --------------------

| | b) | Stock-based Compensation Plan 
      contd
| | -- | --------------------------------------------

At December 31, 2008, the following
  summarizes the unvested stock options:

| |                                        |  |           |   |   | Weighted |  |   | Weighted   | 
| | -------------------------------------- |  | --------- | - | - | -------- |  | - | ---------- | 
| |                                        |  |           |   |   | Average  |  |   | Average    | 
| |                                        |  | Number of |   |   | Exercise |  |   | Grant-date | 
| |                                        |  | Shares    |   |   | Price    |  |   | Fair value | 
| | Unvested options at September 30, 2008 |  | 970,000   |   | $ | 4.31     |  | $ | 2.42       | 
| | Vested                                 |  | (175,000  | ) | $ | 4.65     |  | $ | 2.25       | 
| | Unvested options at December 31, 2008  |  | 795,000   |   | $ | 4.24     |  | $ | 2.37       | 

As at December 31, 2008, 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 December 31, 2008 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
  three-month period, are classified in the Companys Statement of Operations as
  follows:

| |            |   | December 31, 2008 |  |   | December 31, 2007 | 
| | ---------- | - | ----------------- |  | - | ----------------- | 
| |            |   |                   |  |   |                   | 
| | Consulting | $ | 335,066           |  | $ | 248,668           | 

|Note 7 | Supplemental Cash flow
      Information                                                                                                                                                                                                                                                                                          
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                   
|       | Investing and financing activities that do not have a
      direct impact on current cash flows are excluded from the statements of
      cash flows. During the period ended December 31, 2008 the Company issued
      25,000 common shares at $2.63 per share for a total of $65,750 for
      payments of consulting services.

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  December 31, 2008 
  (Stated in US
    Dollars) 
  (Unaudited  Page 9)

|Note 8 | Subsequent Events               
|------ | --------------------------------
|       |                                 
|       | Subsequent to December 31, 2008:

| | a) | the Company issued convertible loans totaling $1,819,418,
      of which $1,669,418 was in settlement of previously issued promissory
      notes, which matured on December 31, 2008, together with interest accrued
      thereon plus $150,000 on the receipt of new loan proceeds. The loans are
      interest free, due one year from the date of issue and convertible, at the
      option of the Holder, at any time until paid. The total principal and
      accrued interest of the loans is convertible at $2.50 per Unit. Each Unit
      is comprised of one Common Share and one Warrant, exercisable at $3.00 per
      share for a period of two years from the conversion date.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | b) | the Company closed a private placement of 89,147 Units at
      a price of $2.25 per Unit for total proceeds of $200,581, of which $72,500
      was received subsequent to December 31, 2008. (the Company received
      $128,051during the three-month period ended December 31, 2008). Each Unit
      consists of one common share and one share purchase warrant entitling the
      holder to purchase an additional share at a price of $4.00 per share for a
      period of one year from the closing date of the placement.                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | c) | the Company engaged the services of a consultant to
      assist the Company in the advancement of drug candidates with the
      potential to provide disease-modifying treatments for certain neurological
      diseases. The agreement is for a period of one year and additional years
      may be negotiated.                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | In full consideration of the Consultant's Services, the
      Company shall compensate the Consultant as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|Note 9 | Prior Period Correction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | In its prior fiscal year, during the three months ended
      December 31, 2007, the Company acquired intellectual property consisting
      of patents for consideration of $72,000 at which time the Company
      capitalized these costs as an intangible asset. Subsequent to December 31,
      2007, 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.

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  December 31, 2008 
  (Stated in US
    Dollars) 
  (Unaudited  Page 10)

|Note 9 | Prior Period Correction 
      contd                                                                                                            
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                   
|       | The effects of the change in accounting policy on the
      financial statements for the three months ended December 31, 2007 is as
      follows:

| | Statement of operations
      and comprehensive loss |   |         |  
| | ---------------------------------------------------- | - | ------- | -
| |                                                      |   |         |  
| | Research
      and development                       |   |         |  
| | As
      previously reported                         | $ | 223,150 |  
| | Patent costs expensed                                |   | 72,000  |  
| |                                                      |   |         |  
| | As restated                                          | $ | 295,150 |  
| |                                                      |   |         |  
| | Net loss
      and comprehensive loss for the period |   |         |  
| | As
      previously reported                         | $ | 917,306 |  
| | Patent costs expensed                                |   | 72,000  |  
| |                                                      |   |         |  
| | As restated                                          | $ | 989,306 |  
| |                                                      |   |         |  
| | Basic and
      diluted loss per share               |   |         |  
| | As
      previously reported                         | $ | (0.05   | )
| | Patent costs expensed                                |   | (0.00   | )
| |                                                      |   |         |  
| | As restated                                          | $ | (0.05   | )
| |                                                      |   |         |  
| | Statement of cash
      flows                        |   |         |  
| |                                                      |   |         |  
| | Net cash
      used in operating activities          |   |         |  
| | As
      previously reported                         | $ | 604,443 |  
| | Patent costs expensed                                |   | 72,000  |  
| |                                                      |   |         |  
| | As restated                                          | $ | 676,443 |  
| |                                                      |   |         |  
| | Net cash
      used in investing activities          |   |         |  
| | As
      previously reported                         | $ | 72,000  |  
| | Patent costs expensed                                |   | (72,000 | )
| |                                                      |   |         |  
| | As restated                                          | $ | -       |  

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Financial Statements 
  December 31, 2008 
  (Stated in US
    Dollars) 
  (Unaudited  Page 11)

|Note 10 | Comparative Figures                                                                                                  
|------- | ---------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                      
|        | Certain of the comparative figures have been reclassified
      to conform with the presentation in the current year.

---

- 3 -

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, expects, plans, anticipates, believes, estimates,
predicts, 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
(USD) 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 common shares in our capital 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.

Corporate History

We were incorporated in the State of Nevada on January 24,
2004, originally under the name of Thrifty Printing, Inc. From inception to
January 25, 2007, we were in the business of providing on-line photofinishing
services through our website.

On January 25, 2007, we completed a merger with our
wholly-owned subsidiary, Anavex Life Sciences Corp. As a result, we have changed
our name from Thrifty Printing, Inc. to Anavex Life Sciences Corp. We
changed the name of our company to better reflect the new direction and business
of our company.

Our name change was effected with NASDAQ on January 25, 2007
and our common shares became quoted on the OTC Bulletin Board on January 25,
2007 under the new stock symbol of "AVXL".

Current Business

We are an emerging 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 involves
the rational drug design of compounds that fulfill specific criteria based on
unmet market needs and new scientific advances.

The majority of our research and development activities are
performed at Eurogenet Labs S.A., a private Greek company, in Athens, Greece.
Under the direction of our Chief Scientific Officer, Dr. Vamvakides, Eurogenet
Labs S.A. provides research facilities and personnel to carry out various
research and development functions required to further develop our compounds.

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,

---

- 4 -

neuroprotective, anti-apoptotic, anti-oxidative,
anti-inflammatory, anti-convulsive, anti-depressant and anxiolytic
properties.

Our SIGMACEPTOR-C program involves the development of novel
and original drug candidates targeting cancer. Our lead drug candidates 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 our most advanced
compounds in 2009. We also intend to continue to work on other compounds, which
are currently at different stages of early development.

.

Plan of Operations

You should read the following discussion of our financial
condition and results of operations together with the audited financial
statements and the notes to audited financial statements included elsewhere in
this filing prepared in accordance with accounting principles generally accepted
in the United States. This discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those anticipated in these forward-looking statements.

We anticipate that we will require up to $5,180,000 for the 12
months ending December 31, 2009 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.

Cash Requirements

We will require additional funds to fund our planned
operations, including the research and development of our three patents and one
patent application, the related compounds and any further intellectual property
we may acquire. The majority of our capital resources requirement is needed to
enter some our current compounds into clinical trials. These funds may be raised
through equity financing, debt financing, or other sources, which may result in
further dilution in the equity ownership of our shares. 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 investment in our common stock. Further,
we may continue to be unprofitable.

Specifically, we estimate our operating expenses and working
capital requirements for the next 12 months to be as follows:

| | Estimated Funding Required During the 12 Month Period
      Ending December 31, 2009 |   |           | 
| | ------------------------------------------------------------------------------------ | - | --------- | 
| | Research and Development
      Activities                                            | $ | 4,300,000 | 
| | Officer and Employee Compensation                                                    |   | 400,000   | 
| | Sales and Marketing                                                                  |   | 120,000   | 
| | Legal, Accounting and Professional Fees                                              |   | 120,000   | 
| | General and Administrative                                                           |   | 240,000   | 
| | Total                                                                                | $ | 5,180,000 | 

Subsequent to December 31, 2008, the Company issued convertible
loans totaling $1,819,418, of which $1,669,418 was in settlement of previously
issued promissory notes, which matured on December 31, 2008, together with
interest accrued thereon plus $150,000 on the receipt of new loan proceeds. The
loans are interest free, due one year from the date of issue and convertible, at
the option of the Holder, at any time until paid. The total principal and
accrued interest of the loans is convertible at $2.50 per Unit. Each Unit is
comprised of one Common Share and one Warrant, exercisable at $3.00 per share
for a period of two years from the conversion date.

---

- 5 -

Liquidity and Capital Resources

Our financial condition for the three months ended December 31,
2008 is summarized as follows:

Working Capital

|                                        |   | December 31, 2008 |   |  | September 30, 2008 |  
|--------------------------------------- | - | ----------------- | - |  | ------------------ | -
|Current Assets                          | $ | 614               |   |  | 6,357              |  
|Current Liabilities                     | $ | 2,758,451         |   |  | 2,299,389          |  
|Working Capital Surplus
      (Deficit) | $ | (2,757,837        | ) |  | (2,293,032         | )

Results of Operations

Revenue

We have not earned any revenues since our inception (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.

Expenses

Our expenses for the three months ended December 31, 2008 and
2007 were as follows:

|                                   |   | Three Months Ended | 
|---------------------------------- | - | ------------------ | 
|                                   |   | December 31        | 
|                                   |   | 2008               | 
|Accounting and audit fees          | $ | 31,260             | 
|Amortization                       |   | 90                 | 
|Bank Charges and Interest          |   | 876                | 
|Consulting fees                    |   | 515,567            | 
|Investor relations                 |   | 25,000             | 
|Legal fees                         |   | 3,610              | 
|Management fees                    |   | -                  | 
|Office and miscellaneous           |   | 40,640             | 
|Registration and filing
      fees |   | 5,576              | 
|Rent and administration            |   | -                  | 
|Research and development           |   | 284,104            | 
|Website design and maintenance     |   | -                  | 
|Total expenses                     | $ | 906,723            | 

Operating expenses for the quarter have declined from $989,024
for the same period in 2007 to $906,723. Accounting and audit fees increased
significantly as a result of fees related to the Companys annual audit.
Consulting fees for the quarter declined to $515,567 from $619,386 reflecting
lower compensation related expenses and Legal fees declined to $3,610 from
$14,040 as a result of non-recurring one time charges relating to our patents
and trademarks.

(1)The results of operations for the three months
ended December 31, 2007 have been restated as discussed in Note 9 of the
financial statements for the period ended December 31, 2008.

Research and Development Activities

ANAVEX's SIGMACEPTOR(TM)-N program pipeline is focused on
developing disease-modifying treatments for neurological conditions.

Considerable advancements have been made with ANAVEX 2-73 and
its optimized derivative ANAVEX 19-144. ANAVEX 2-73 is expected to be the first
compound to enter clinical trials in 2009 for Alzheimers disease. Moreover,
ANAVEX 2-73 or its optimized derivative ANAVEX 19-144 is intended

---

- 6 -

to enter clinical trials for epilepsy treatment later in 2009
or early 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's 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 late in 2009.

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, the company's 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 tumour 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.

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
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

---

- 7 -

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 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 the Company
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 the Companys share
purchase options.

. The summary of significant accounting policies should be read
in conjunction with our consolidated financial statements and related notes and
this discussion of our 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. 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.

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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 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

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, FASB issued SFAS No. 162, The Hierarchy of
Generally Accepted Accounting Principles (SFAS 162). This standard is intended
to improve financial reporting by identifying a consistent framework, or
hierarchy, for selecting accounting principles to be used in preparing financial
statements that are presented in conformity with U.S. GAAP for non-governmental
entities. SFAS No. 162 is effective 60 days following the U.S. Securities and
Exchange Commissions approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, the meaning of Present Fairly in Conformity with
GAAP. The Company is in the process of evaluating the impact, if any, of SFAS
162 on its financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.

Not Applicable.

ITEM 4T. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

As required by paragraph (b) of Rules 13a-15 and 15d-15 under
the Exchange Act, 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) and 15d-15(e) of the
Exchange Act) 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 Exchange Act 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 Exchange Act
is accumulated and communicated to our principal executive officer and principal
financial officer, as appropriate, to allow timely decisions regarding required
disclosure.

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- 9 -

Based on its 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.

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- 10 -

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
December 31, 2008 that have materially affected, or are reasonably likely to
materially affect our internal control over financial reporting.

Certificates

Certificates with respect to disclosure controls and procedures
and internal control over financial reporting under Rules 13a-14(a) or 15d-14(a)
of the Exchange Act are attached to this quarterly report on Form 10-Q.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We know of no material, existing or pending legal proceedings
against our company, nor are we involved as a plaintiff in any material
proceeding or pending litigation. There are no proceedings in which any of our
directors, officers or affiliates, or any registered or beneficial stockholder,
is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

Much of the information included in this annual report includes
or is based upon estimates, projections or other forward looking statements.
Such forward looking statements include any projections or estimates made by us
and our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.

Such estimates, projections or other forward looking
statements involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other forward looking statements. Prospective investors should consider
carefully the risk factors set out below.

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 (January 23, 2004), we have incurred aggregate
net losses of $7.900,856 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

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- 11 -

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.

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. See our auditors report on our consolidated financial statements
elsewhere in this Form 10-K.

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

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- 12 -

- the proprietary rights of other parties may prevent us or our potential
  collaborative partners from marketing our potential drug compounds.

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

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

It will take several years before we are able to develop
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.

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- 13 -

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

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.

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- 14 -

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
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.

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- 15 -

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.

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:

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| | 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:                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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.

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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.

Trends, Risks and Uncertainties.

We have sought to identify what we believe to be the most
significant risks to our business, but we cannot predict whether, or to what
extent, any such risks may be realized nor can we guarantee that we have
identified all possible risks that might arise. Investors should carefully
consider all of the risk factors before making an investment decision with
respect to our common stock.

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 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 shareholders.

Our certificate 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

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certificate 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
shareholders. Further, any such issuance may result in a change of control of
our corporation.

If a market for our shares of common stock does not develop,
shareholders may be unable to sell their shares of common stock.

There is currently a limited market for our common stock, which
trades through the Over-the-Counter Bulletin Board quotation system. Trading of
stock through the Over-the-Counter Bulletin Board is frequently thin and highly
volatile. There is no assurance that a sufficient market will develop in the
stock, in which case it could be difficult for shareholders to sell their
stock.

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.

Our common stock is quoted on the OTC Bulletin Board service of
the Financial Industry Regulatory Authority (FINRA). 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. Accordingly,
shareholders may have difficulty reselling any of the shares.

Our stock is a penny stock. Trading of our stock may be
restricted by the SECs penny stock regulations and FINRAs sales practice
requirements, 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 SEC which provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customers account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customers
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules; the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchasers written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our securities. We
believe that the penny stock rules discourage investor interest in and limit the
marketability of our common stock.

In addition to the penny stock rules promulgated by the
Securities and Exchange Commission, 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

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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. 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.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS.

Exhibits required by Item 601 of Regulation S-K:

Exhibit Number
      Description(3)
      (i) Articles of Incorporation; and (ii) Bylaws3.1
      Articles of Incorporation
          (attached as an exhibit to our Registration Statement on Form SB-2,
          filed on January 13, 2005).3.2
      Bylaws (attached as 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 (attached as 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
          (attached as an exhibit to our Registration Statement on Form SB-2,
          filed on January 13, 2005).4.2
      2007 Stock Option Plan (attached
          as an exhibit to our Current Report on Form 8-K, filed September 28,
          2007).(10)
      Material Contracts10.1
      Agreement between Anavex Life
          Sciences Corp. and Dr. Alexandre Vamvakides, dated January 31, 2007
          (attached as an exhibit to our Current Report on Form 8-K, filed February
          7, 2007).10.2
      Abstract of Disclosure of
          Greek Patent Number 1002616 (attached as an exhibit to our Current Report
          on Form 8-K, filed February 7, 2007).10.3
      Abstract of Disclosure of
          Greek Patent Number 1004208 (attached as an exhibit to our Current Report
          on Form 8-K, filed February 7, 2007).10.4
      Abstract of Disclosure of
          Greek Patent Number 1004868 (attached as an exhibit to our Current Report
          on Form 8-K, filed February 7, 2007).10.5
      Written description of Greek
          Patent Application Number 20070100020 (attached as an exhibit to our
          Current Report on Form 8-K, filed February 7, 2007).10.6
      Form of Stock Option Agreement
          (attached as an exhibit to our Current Report on Form 8-K, filed February
          22, 2007).10.7
      Shares for Services and Subscription
          Agreement dated September 11, 2007 between our company and Eurogenet
          Labs S.A. (attached as an exhibit to our Current Report on Form 8-K,
          filed September 27, 2007).10.8
      Consulting Agreement with
          Cameron Durrant dated May 20, 2008 (attached as an exhibit to our Form
          10-QSB, filed on August 18, 2008(14)
      Code of Ethics14.1
      Code of Conduct (attached as an exhibit to our Current
          Report on Form 8-K, filed September 28, 2007).(16)
      Letter re Change in Certifying Accountant16.1
      Letter from Amisano Hanson
          regarding change in certifying accountant. (attached as an exhibit to
          our Current Report on Form 8-K, filed March 4, 2008)(31)
      Rule 13a-14(a)/15d-14(a) Certifications31.1*
      Certification Pursuant to Section
          302 of the Sarbanes-Oxley Act of 2002(32)
      Section 1350 Certifications32.1*
      Certification
          Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
          of the Sarbanes- Oxley Act of 2002


* Filed herewith.

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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 LalachHarvey
Lalach
President, Chief Financial Officer, Secretary and Director

(Principal Executive Officer, Principal Financial Officer and Principal
Accounting Officer) 
February 23, 2009

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