---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: March 31, 2010

or

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

For the transition period from _____ to _____

Commission File Number: 000-51652

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

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

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

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

Not Applicable(Former name, former
address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
Yes [   ]    No [   ]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

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

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the ).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:
21,155,431 shares of common stock outstanding as of May 17,
2010.

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2

TABLE OF CONTENTS

|PART
      I - FINANCIAL INFORMATION                                                                       | 3 
|---------------------------------------------------------------------------------------------------------- | --
|Item
      1. Financial Statements.                                                                        | 3 
|Item
      2. Managements Discussion and Analysis of Financial Condition and Results
      of Operations. | 4 
|Item
      3. Quantitative and Qualitative Disclosures about Market Risks.                                 | 10
|Item
      4T. Controls and Procedures.                                                                    | 10
|PART
      II - OTHER INFORMATION                                                                          | 11
|Item
      1. Legal Proceedings.                                                                           | 11
|Item
      1A. Risk Factors.                                                                               | 11
|Item
      2. Unregistered Sales of Equity Securities and Use of Proceeds.                                 | 19
|Item
      3. Defaults Upon Senior Securities.                                                             | 20
|Item
      4. (Removed and Reserved).                                                                      | 20
|Item
      5. Other Information.                                                                           | 20
|Item
      6. Exhibits.                                                                                    | 20
|SIGNATURES                                                                                                 | 23

---

3

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

---







ANAVEX LIFE SCIENCES CORP.

(A Development Stage Company)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(Stated in US Dollars)

(Unaudited)

---

ANAVEX LIFE SCIENCES CORP.
  (A Development Stage
  Company) 
  INTERIM CONSOLIDATED BALANCE SHEETS 
  March 31, 2010 and
  September 30, 2009 
  (Stated in US Dollars) 
  (Unaudited)

|                                                                                                            |   | March 31,   |   |   | September 30, |  
|----------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ------------- | -
|ASSETS                                                                                                      |   | 2010        |   |   | 2009          |  
|                                                                                                            |   |             |   |   |               |  
|Current                                                                                                     |   |             |   |   |               |  
|Cash                                                                                                        | $ | 144,510     |   | $ | 350,994       |  
|Deferred financing
      charges                                                                            |   | 83,108      |   |   | 55,777        |  
|Prepaid expenses                                                                                            |   | 168         |   |   | 181           |  
|                                                                                                            |   |             |   |   |               |  
|                                                                                                            |   | 227,786     |   |   | 406,952       |  
|                                                                                                            |   |             |   |   |               |  
|Equipment                                                                                                   |   | 1,311       |   |   | 1,691         |  
|                                                                                                            |   |             |   |   |               |  
|                                                                                                            | $ | 229,097     |   | $ | 408,643       |  
|                                                                                                            |   |             |   |   |               |  
|LIABILITIES                                                                                                 |   |             |   |   |               |  
|                                                                                                            |   |             |   |   |               |  
|                                                                                                            |   |             |   |   |               |  
|Current                                                                                                     |   |             |   |   |               |  
|Accounts payable and accrued
      liabilities  Note 7                                                     | $ | 1,746,061   |   | $ | 1,591,940     |  
|Derivative liabilities
       Notes 3 and 4                                                                |   | 521,332     |   |   | -             |  
|Promissory notes payable  Note 5                                                                           |   | 2,425,059   |   |   | 2,506,526     |  
|                                                                                                            |   |             |   |   |               |  
|                                                                                                            |   | 4,692,452   |   |   | 4,098,466     |  
|                                                                                                            |   |             |   |   |               |  
|Promissory notes payable  Note 5                                                                           |   | 1,155,430   |   |   | 168,000       |  
|                                                                                                            |   |             |   |   |               |  
|                                                                                                            |   | 5,847,882   |   |   | 4,266,466     |  
|                                                                                                            |   |             |   |   |               |  
|STOCKHOLDERS
      DEFICIENCY                                                                              |   |             |   |   |               |  
|                                                                                                            |   |             |   |   |               |  
|Capital stock  Note 6                                                                                      |   |             |   |   |               |  
|Authorized: 
                   150,000,000
    common shares, par value $0.001 per share                   |   |             |   |   |               |  
|Issued and outstanding: 
                   21,062,932
      common shares (September 30, 2009: 20,746,761) |   | 21,063      |   |   | 20,747        |  
|Share subscriptions received                                                                                |   | 149,470     |   |   | 300,000       |  
|Additional paid-in capital                                                                                  |   | 9,191,534   |   |   | 8,383,633     |  
|Deficit accumulated during the development
      stage                                                      |   | (14,980,852 | ) |   | (12,562,233   | )
|                                                                                                            |   |             |   |   |               |  
|                                                                                                            |   | (5,618,785  | ) |   | (3,857,823    | )
|                                                                                                            |   |             |   |   |               |  
|                                                                                                            | $ | 229,097     |   | $ | 408,643       |  

SEE ACCOMPANYING NOTES

---

ANAVEX LIFE SCIENCES CORP.
  (A Development Stage
  Company) 
  INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS 
  for the three and
  six months ended March 31, 2010 and 2009 
  and from January 23, 2004 (Date of
  Inception) to March 31, 2010 
  (Stated in US Dollars) 
  (Unaudited)

|                                                                             |   |                    |   |   |                  |   |   |               |   |   |            |   |   | January 23,   |  
|---------------------------------------------------------------------------- | - | ------------------ | - | - | ---------------- | - | - | ------------- | - | - | ---------- | - | - | ------------- | -
|                                                                             |   |                    |   |   |                  |   |   |               |   |   |            |   |   | 2004 (Date of |  
|                                                                             |   | Three Months Ended |   |   | Six Months Ended |   |   | Inception) to |  
|                                                                             |   | March 31,          |   |   | March 31,        |   |   | March 31,     |  
|                                                                             |   | 2010               |   |   | 2009             |   |   | 2010          |   |   | 2009       |   |   | 2010          |  
|                                                                             |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Expenses                                                                     |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Accounting and audit fees                                                    | $ | 66,936             |   | $ | 3,000            |   | $ | 88,795        |   | $ | 34,260     |   | $ | 301,913       |  
|Amortization                                                                 |   | 190                |   |   | 90               |   |   | 380           |   |   | 180        |   |   | 1,010         |  
|Bank charges and interest                                                    |   | 1,275              |   |   | 918              |   |   | 2,990         |   |   | 1,794      |   |   | 23,766        |  
|Consulting  Note 7                                                          |   | 568,816            |   |   | 430,964          |   |   | 1,022,890     |   |   | 971,531    |   |   | 6,770,892     |  
|Investor relations                                                           |   | 27,482             |   |   | -                |   |   | 81,993        |   |   | -          |   |   | 485,536       |  
|Legal fees                                                                   |   | 17,775             |   |   | 1,911            |   |   | 45,683        |   |   | 5,521      |   |   | 258,803       |  
|Management fees                                                              |   | -                  |   |   | -                |   |   | -             |   |   | -          |   |   | 14,625        |  
|Office and miscellaneous                                                     |   | 17,403             |   |   | 4,716            |   |   | 102,131       |   |   | 45,356     |   |   | 426,668       |  
|Registration and filing fees                                                 |   | 3,320              |   |   | 469              |   |   | 9,453         |   |   | 6,045      |   |   | 50,504        |  
|Rent                                                                         |   | -                  |   |   | -                |   |   | -             |   |   | -          |   |   | 148,750       |  
|Research and development                                                     |   | 815,609            |   |   | 328,859          |   |   | 1,027,088     |   |   | 612,963    |   |   | 5,606,062     |  
|Website design and maintenance                                               |   | -                  |   |   | -                |   |   | -             |   |   | -          |   |   | 26,725        |  
|                                                                             |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Loss before other items                                                      |   | (1,518,806         | ) |   | (770,927         | ) |   | (2,381,403    | ) |   | (1,677,650 | ) |   | (14,115,254   | )
|Other income (loss)                                                          |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|                                                                             |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Interest on long  term debt                                                 |   | (33,157            | ) |   | (5,000           | ) |   | (55,959       | ) |   | (35,491    | ) |   | (168,434      | )
|Accretion                                                                    |   | (99,397            | ) |   | (7,781           | ) |   | (319,807      | ) |   | (7,781     | ) |   | (489,972      | )
|Change in fair value of derivative 
                liability 
      Note 4 |   | (88,824            | ) |   | -                |   |   | 560,214       |   |   | -          |   |   | 560,214       |  
|Loss on extinguishment
      of promissory 
               
      notes      |   | -                  |   |   | (487,469         | ) |   | -             |   |   | (487,469   | ) |   | (487,469      | )
|Foreign exchange gain (loss)                                                 |   | 26,042             |   |   | 29,821           |   |   | 34,312        |   |   | 38,993     |   |   | (23,961       | )
|                                                                             |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Net loss for the period                                                      | $ | (1,714,142         | ) | $ | (1,241,356       | ) | $ | (2,162,643    | ) | $ | (2,169,398 | ) | $ | (14,724,876   | )
|                                                                             |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Basic and diluted loss per share                                             | $ | (0.08              | ) | $ | (0.06            | ) | $ | (0.10         | ) | $ | (0.11      | ) |   |               |  
|                                                                             |   |                    |   |   |                  |   |   |               |   |   |            |   |   |               |  
|Weighted average shares outstanding                                          |   | 21,044,780         |   |   | 20,019,642       |   |   | 21,026,001    |   |   | 19,992,173 |   |   |               |  

SEE ACCOMPANYING NOTES

---

ANAVEX LIFE SCIENCES CORP.
  (A Development Stage
  Company) 
  INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS 
  for the six
  months ended March 31, 2010 and 
  for the period from January 23, 2004 (Date
  of Inception) to March 31, 2010 
  (Stated in US Dollars) 
  (Unaudited)

|                                                                                                    |   |                  |   |   |               |   |   | January 23, |  
|--------------------------------------------------------------------------------------------------- | - | ---------------- | - | - | ------------- | - | - | ----------- | -
|                                                                                                    |   |                  |   |   |               |   |   | 2004        |  
|                                                                                                    |   |                  |   |   |               |   |   | (Date of    |  
|                                                                                                    |   | Six months ended |   |   | Inception) to |  
|                                                                                                    |   | March 31,        |   |   | March 31,     |  
|                                                                                                    |   | 2010             |   |   | 2009          |   |   | 2010        |  
|Cash Flows from Operating Activities                                                                |   |                  |   |   |               |   |   |             |  
|Net loss for the period                                                                             | $ | (2,162,643       | ) | $ | (2,169,398    | ) | $ | (14,724,876 | )
|Add Items not involving cash:                                                                       |   |                  |   |   |               |   |   |             |  
|Amortization                                                                                        |   | 380              |   |   | 180           |   |   | 1,010       |  
|Accretion of debt discount                                                                          |   | 319,807          |   |   | 7,781         |   |   | 489,971     |  
|Stock based
      compensation                                                                      |   | 397,023          |   |   | 353,943       |   |   | 2,894,145   |  
|Amortization of deferred
      financing costs                                                      |   | 12,669           |   |   | -             |   |   | 12,669      |  
|Change in
      fair value of derivative liability                                                  |   | (560,214         | ) |   | -             |   |   | (560,214    | )
|Consulting
      expense recorded in exchange for shares to be issued                               |   |                  |   |   | 159,850       |   |   | 236,337     |  
|Common shares
      issued for consulting expense                                                   |   | -                |   |   | -             |   |   | 390,510     |  
|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      |  
|Loss on extinguishment of
      debt                                                                |   | -                |   |   | 487,469       |   |   | 487,469     |  
|Rent contributed                                                                                    |   | -                |   |   | -             |   |   | 3,750       |  
|Adjustments to reconcile net loss to net cash used in 
                 operating
      activities: |   |                  |   |   |               |   |   |             |  
|Prepaid Expenses                                                                                    |   | 13               |   |   |               |   |   | (168        | )
|Accounts payable and accrued
      liabilities                                                      |   | 162,011          |   |   | 518,248       |   |   | 2,012,370   |  
|                                                                                                    |   |                  |   |   |               |   |   |             |  
|Net cash used in operating activities                                                               |   | (1,830,954       | ) |   | (641,927      | ) |   | (7,530,302  | )
|                                                                                                    |   |                  |   |   |               |   |   |             |  
|Cash Flows from Financing Activities                                                                |   |                  |   |   |               |   |   |             |  
|Proceeds from promissory
      notes                                                                |   | 1,175,000        |   |   | 469,416       |   |   | 3,827,500   |  
|Share subscriptions received                                                                        |   | 149,470          |   |   | -             |   |   | 449,470     |  
|Repayment of promissory
      notes                                                                 |   | -                |   |   | -             |   |   | (100,000    | )
|Issuance of common shares                                                                           |   | 300,000          |   |   | 224,881       |   |   | 3,133,498   |  
|Due to related parties                                                                              |   | -                |   |   | -             |   |   | 33,665      |  
|Loan payable to shareholder                                                                         |   | -                |   |   | 20,000        |   |   | 333,000     |  
|                                                                                                    |   |                  |   |   |               |   |   |             |  
|Net cash provided by financing activities                                                           |   | 1,624,470        |   |   | 714,299       |   |   | 7,677,133   |  
|                                                                                                    |   |                  |   |   |               |   |   |             |  
|Cash Flows from Investing Activities                                                                |   |                  |   |   |               |   |   |             |  
|Acquisition of equipment                                                                            |   | -                |   |   | -             |   |   | (2,321      | )
|                                                                                                    |   |                  |   |   |               |   |   |             |  
|Increase (decrease) in cash during the period                                                       |   | (206,484         | ) |   | 72,372        |   |   | 144,510     |  
|                                                                                                    |   |                  |   |   |               |   |   |             |  
|Cash, beginning of period                                                                           |   | 350,994          |   |   | 6,357         |   |   | -           |  
|                                                                                                    |   |                  |   |   |               |   |   |             |  
|Cash, end of period                                                                                 | $ | 144,510          |   | $ | 78,729        |   | $ | 144,510     |  

Supplemental Cash Flow Information  Note 8

SEE ACCOMPANYING NOTES

---

ANAVEXLIFESCIENCESCORP.
  (A Development Stage Company) 
  INTERIM CONSOLIDATED STATEMENT OF
  STOCKHOLDERS EQUITY (DEFICIENCY) 
  for the period January 23, 2004 (Date of
  Inception) to March 31, 2010 
  (Stated in US Dollars) 
  (Unaudited )

|                                                                                                             |  |                    |  |   |             |  |   |            |  |  |           |  |   | Deficit     |   |   |             |  
|------------------------------------------------------------------------------------------------------------ |  | ------------------ |  | - | ----------- |  | - | ---------- |  |  | --------- |  | - | ----------- | - | - | ----------- | -
|                                                                                                             |  | Common
      Stock |  |   | Accumulated |  |   |            | 
|                                                                                                             |  |                    |  |   |             |  |   | Additional |  |  | Common    |  |   | During the  |   |   |             |  
|                                                                                                             |  |                    |  |   |             |  |   | Paid-in    |  |  | Shares to |  |   | Development |   |   |             |  
|                                                                                                             |  | Shares             |  |   | Par Value   |  |   | Capital    |  |  | be Issued |  |   | Stage       |   |   | Total       |  
|                                                                                                             |  |                    |  |   |             |  |   |            |  |  |           |  |   |             |   |   |             |  
|Capital stock issued for cash - at $0.0033                                                                   |  | 12,000,000         |  | $ | 12,000      |  | $ | 28,000     |  |  | -         |  | $ | -           |   | $ | 40,000      |  
|Net loss from January 23, 2004 to September 30,
      2004                                                   |  | -                  |  |   | -           |  |   | -          |  |  | -         |  |   | (14,395     | ) |   | (14,395     | )
|                                                                                                             |  |                    |  |   |             |  |   |            |  |  |           |  |   |             |   |   |             |  
|Balance, September 30, 2004                                                                                  |  | 12,000,000         |  |   | 12,000      |  |   | 28,000     |  |  | -         |  |   | (14,395     | ) |   | 25,605      |  
|Capital stock issued for cash - at $0.0033                                                                   |  | 7,200,000          |  |   | 7,200       |  |   | 16,800     |  |  | -         |  |   | -           |   |   | 24,000      |  
|Management fees contributed                                                                                  |  | -                  |  |   | -           |  |   | 13,000     |  |  | -         |  |   | -           |   |   | 13,000      |  
|Rent contributed                                                                                             |  | -                  |  |   | -           |  |   | 3,000      |  |  | -         |  |   | -           |   |   | 3,000       |  
|Net loss for the year                                                                                        |  | -                  |  |   | -           |  |   | -          |  |  | -         |  |   | (91,625     | ) |   | (91,625     | )
|                                                                                                             |  |                    |  |   |             |  |   |            |  |  |           |  |   |             |   |   |             |  
|Balance, September 30, 2005                                                                                  |  | 19,200,000         |  |   | 19,200      |  |   | 60,800     |  |  | -         |  |   | (106,020    | ) |   | (26,020     | )
|Management fees contributed                                                                                  |  | -                  |  |   | -           |  |   | 1,625      |  |  | -         |  |   | -           |   |   | 1,625       |  
|Rent contributed                                                                                             |  | -                  |  |   | -           |  |   | 750        |  |  | -         |  |   | -           |   |   | 750         |  
|Debt forgiven by directors                                                                                   |  | -                  |  |   | -           |  |   | 33,666     |  |  | -         |  |   | -           |   |   | 33,666      |  
|Net (loss) for the year                                                                                      |  | -                  |  |   | -           |  |   | -          |  |  | -         |  |   | (25,532     | ) |   | (25,532     | )
|                                                                                                             |  |                    |  |   |             |  |   |            |  |  |           |  |   |             |   |   |             |  
|Balance, September 30, 2006                                                                                  |  | 19,200,000         |  |   | 19,200      |  |   | 96,841     |  |  | -         |  |   | (131,552    | ) |   | (15,511     | )
|Capital stock issued for research and development 
         services, on September 24, 2007  at $3.60       |  | 222,222            |  |   | 222         |  |   | 799,788    |  |  | -         |  |   | -           |   |   | 800,000     |  
|Capital stock issued for research and development 
        
      services, on September 25, 2007  at $3.60 |  | 92,500             |  |   | 93          |  |   | 332,907    |  |  | -         |  |   | -           |   |   | 333,000     |  
|Net loss for the year                                                                                        |  | -                  |  |   | -           |  |   | -          |  |  | -         |  |   | (1,579,993  | ) |   | (1,5779,993 | )
|                                                                                                             |  |                    |  |   |             |  |   |            |  |  |           |  |   |             |   |   |             |  
|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) 
  INTERIM CONSOLIDATED STATEMENT OF
  STOCKHOLDERS EQUITY (DEFICIENCY) 
  for the period January 23, 2004 (Date of
  Inception) to March 31, 2010 
  (Stated in US Dollars) 
  (Unaudited )

|                                                                                              |  |                    |  |   |             |  |   |            |  |   |           |   |   | Deficit     |   |   |            |  
|--------------------------------------------------------------------------------------------- |  | ------------------ |  | - | ----------- |  | - | ---------- |  | - | --------- | - | - | ----------- | - | - | ---------- | -
|                                                                                              |  | Common
      Stock |  |   | Accumulated |  |   |            | 
|                                                                                              |  |                    |  |   |             |  |   | Additional |  |   | Common    |   |   | During the  |   |   |            |  
|                                                                                              |  |                    |  |   |             |  |   | Paid-in    |  |   | Shares to |   |   | Development |   |   |            |  
|                                                                                              |  | Shares*            |  |   | Par Value*  |  |   | Capital*   |  |   | be Issued |   |   | Stage       |   |   | Total      |  
|                                                                                              |  |                    |  |   |             |  |   |            |  |   |           |   |   |             |   |   |            |  
|Balance, September 30, 2007  brought
      forward                                           |  | 19,514,722         |  | $ | 19,515      |  | $ | 1,229,526  |  | $ | -         |   | $ | (1,711,545  | ) | $ | (462,504   | )
|Capital stock issued for cash on December 10,
      2007- at $3.50                            |  | 150,000            |  |   | 150         |  |   | 524,850    |  |   | -         |   |   | -           |   |   | 525,000    |  
|Capital stock issued for consulting
      services on 
           December 18,2007 - at $3.86 |  | 50,000             |  |   | 50          |  |   | 192,950    |  |   | -         |   |   | -           |   |   | 193,000    |  
|Capital stock issued debt settlement of debt on 
           December 18, 2007- at $4.50       |  | 10,000             |  |   | 10          |  |   | 44,990     |  |   | -         |   |   | -           |   |   | 45,000     |  
|Stock-based compensation for shares
      issued at a discount                                |  | -                  |  |   | -           |  |   | 65,000     |  |   | -         |   |   |             |   |   | 65,000     |  
|Capital stock issued for severance on May 15,
      2008 - at $5.24                           |  | 65,000             |  |   | 65          |  |   | 340,535    |  |   | -         |   |   |             |   |   | 340,600    |  
|Common stock to be issued for
      consulting services                                       |  | -                  |  |   | -           |  |   | -          |  |   | 252,599   |   |   |             |   |   | 252,599    |  
|Capital stock issued for consulting services on 
           August 19, 2008 - at $5.00        |  | 25,000             |  |   | 25          |  |   | 126,725    |  |   | (126,750  | ) |   |             |   |   | -          |  
|Capital stock issued for cash
      on August 19,2008 - at $4.25                              |  | 145,698            |  |   | 142         |  |   | 606,325    |  |   | -         |   |   |             |   |   | 604,467    |  
|Stock-based compensation                                                                      |  | -                  |  |   | -           |  |   | 1,493,937  |  |   | -         |   |   | -           |   |   | 1,493,937  |  
|Net loss for the year                                                                         |  | -                  |  |   | -           |  |   | -          |  |   | -         |   |   | (5,351,269  | ) |   | (5,351,269 | )
|                                                                                              |  |                    |  |   |             |  |   |            |  |   |           |   |   |             |   |   |            |  
|Balance, September 30, 2008                                                                   |  | 19,957,420         |  | $ | 19,957      |  | $ | 4,624,838  |  |   | 125,849   |   | $ | (7,062,814  | ) | $ | (2,292,170 | )

SEE ACCOMPANYING NOTES

---

ANAVEXLIFESCIENCESCORP.
  (A Development Stage Company) 
  INTERIM CONSOLIDATED STATEMENT OF
  STOCKHOLDERS EQUITY (DEFICIENCY) 
  for the period January 23, 2004 (Date of
  Inception) to March 31, 2010 
  (Stated in US Dollars) 
  (Unaudited)

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

SEE ACCOMPANYING NOTES

---

ANAVEXLIFESCIENCESCORP.
  (A Development Stage Company) 
  INTERIM CONSOLIDATED STATEMENT OF
  STOCKHOLDERS EQUITY (DEFICIENCY) 
  for the period January 23, 2004 (Date of
  Inception) to March 31, 2010 
  (Stated in US Dollars) 
  (Unaudited)

|                                                                                                              |  |                    |  |   |             |  |   |            |   |   |              |   |   | Deficit     |   |   |            |  
|------------------------------------------------------------------------------------------------------------- |  | ------------------ |  | - | ----------- |  | - | ---------- | - | - | ------------ | - | - | ----------- | - | - | ---------- | -
|                                                                                                              |  | Common
      Stock |  |   | Accumulated |  |   |            |  
|                                                                                                              |  |                    |  |   |             |  |   | Additional |   |   | Common       |   |   | During the  |   |   |            |  
|                                                                                                              |  |                    |  |   |             |  |   | Paid-in    |   |   | Shares to be |   |   | Development |   |   |            |  
|                                                                                                              |  | Shares             |  |   | Par Value   |  |   | Capital    |   |   | Issued       |   |   | Stage       |   |   | Total      |  
|                                                                                                              |  |                    |  |   |             |  |   |            |   |   |              |   |   |             |   |   |            |  
|Balance, September 30, 2009  brought
      forward                                                           |  | 20,746,761         |  | $ | 20,747      |  | $ | 8,383,663  |   | $ | 300,000      |   | $ | (12,562,233 | ) | $ | (3,857,823 | )
|                                                                                                              |  |                    |  |   |             |  |   |            |   |   |              |   |   |             |   |   |            |  
|Cumulative effect of accounting
      changes  Note 3                                                        |  | -                  |  |   | -           |  |   | (333,056   | ) |   | -            |   |   | (255,976    | ) |   | (589,032   | )
|                                                                                                              |  |                    |  |   |             |  |   |            |   |   |              |   |   |             |   |   |            |  
|Capital stock issued for cash
      on October 2, 
            2009  at $2.25                                |  | 266,666            |  |   | 267         |  |   | 599,733    |   |   | (300,000     | ) |   | -           |   |   | 300,000    |  
|                                                                                                              |  |                    |  |   |             |  |   |            |   |   |              |   |   |             |   |   |            |  
|Capital stock issued in settlement
      of promissory 
            note on February 2, 2010
       at $2.02 |  | 49,505             |  |   | 49          |  |   | 99,951     |   |   | -            |   |   | -           |   |   | 100,000    |  
|                                                                                                              |  |                    |  |   |             |  |   |            |   |   |              |   |   |             |   |   |            |  
|Share subscriptions received  Note 6                                                                         |  | -                  |  |   | -           |  |   | -          |   |   | 149,470      |   |   | -           |   |   | 149,470    |  
|                                                                                                              |  |                    |  |   |             |  |   |            |   |   |              |   |   |             |   |   |            |  
|Stock-based compensation - Note 6                                                                             |  | -                  |  |   | -           |  |   | 397,023    |   |   | -            |   |   | -           |   |   | 397,023    |  
|                                                                                                              |  |                    |  |   |             |  |   |            |   |   |              |   |   |             |   |   |            |  
|Equity component of convertible promissory
            note  Note 5                                          |  |                    |  |   |             |  |   | 44,220     |   |   |              |   |   |             |   |   | 44,220     |  
|                                                                                                              |  |                    |  |   |             |  |   |            |   |   |              |   |   |             |   |   |            |  
|Net loss for the period                                                                                       |  | -                  |  |   | -           |  |   | -          |   |   | -            |   |   | (2,162,643  | ) |   | (2,162,643 | )
|                                                                                                              |  |                    |  |   |             |  |   |            |   |   |              |   |   |             |   |   |            |  
|Balance, March 31, 2010                                                                                       |  | 21,062,932         |  | $ | 21,063      |  | $ | 9,191,534  |   | $ | 149,470      |   | $ | (14,980,852 | ) | $ | (5,618,785 | )

SEE ACCOMPANYING NOTES

---

ANAVEX LIFE SCIENCES CORP.
  (A Development Stage
  Company) 
  NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS 
  March
  31, 2010 
  (Stated in US Dollars) 
  (Unaudited)

|Note 1 | Nature of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | The Company is in the development stage and has not yet
      realized any revenues from its planned operations. The Company is seeking
      to develop and market proprietary drug targets for the treatment of cancer
      and diseases of the central nervous system                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | These financial statements have been prepared in
      accordance with generally accepted accounting principles in the United
      States of America on a going concern basis, which assumes that the Company
      will continue to realize its assets and discharge its obligations and
      commitments in the normal course of operations. Realization values may be
      substantially different from carrying values as shown and these financial
      statements do not give effect to adjustments that would be necessary to
      the carrying values and classification of assets and liabilities should
      the Company be unable to continue as a going concern. At March 31, 2009,
      the Company had a working capital deficiency and an accumulated deficit of
      $14,980,852 (September 30, 2009 - $12,562,233) 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 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 unaudited interim financial statements reflect all
      adjustments, consisting of normal recurring adjustments, which in the
      opinion of management are necessary for the 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, 2009. The
      interim results are not necessarily indicative of the operating results
      expected for the fiscal year ending on September 30, 2010. 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 Interim Financial Statements 
  March 31, 2010 
  (Stated in
  US Dollars) 
  (Unaudited)  Page 2

|Note 2 | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | In December 2007, FASB issued guidance included in ASC
      805 Business Combinations and ASC 810 Accounting and
        Reporting of Non-controlling Interests in Consolidated Financial
        Statementswhich requires companies to: (i) recognize, with certain
      exceptions, 100% of the fair values of assets acquired, liabilities
      assumed, and non-controlling interests in acquisitions of less than a 100%
      controlling interest when the acquisition constitutes a change in control
      of the acquired entity; (ii) measure acquirer shares issued in
      consideration for a business combination at fair value on the acquisition
      date; (iii) recognize contingent consideration arrangements at their
      acquisition-date fair values, with subsequent changes in fair value
      generally reflected in earnings; (iv) with certain exceptions, recognize
      pre-acquisition loss and gain contingencies at their acquisition-date fair
      values; (v) capitalize in-process research and development (IPR&D)
      assets acquired; (vi) expense, as incurred, acquisition-related
      transaction costs; (vii) capitalize acquisition-related restructuring
      costs only if certain criteria are met as of the acquisition date; and
      (viii) recognize changes that result from a business combination
      transaction in an acquirers existing income tax valuation allowances and
      tax uncertainty accruals as adjustments to income tax expense. The impact
      of ASC 805 and ASC 810 on the Companys financial position or results of
      operations is dependent on whether the Company undertakes any future
      business combinations.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | In October 2009, the FASB issued ASU No. 2009-13,
      Multiple-Deliverable Revenue Arrangements, or ASU 2009-13, which
      amends existing revenue recognition accounting pronouncements that are
      currently within the scope of ASC 605. This guidance eliminates the
      requirement to establish the fair value of undelivered products and
      services and instead provides for separate revenue recognition based upon
      managements estimate of the selling price for an undelivered item when
      there is no other means to determine the fair value of that undelivered
      item. ASU 2009-13 is effective prospectively for revenue arrangements
      entered into or materially modified in fiscal years beginning on or after
      June 15, 2010. The Company is currently evaluating the impact, if any,
      that the adoption of this amendment will have on its consolidated
      financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Note 3 | Adoption of New Accounting Policy                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | In June 2008, the Financial Accounting Standards Board
      (FASB) issued Emerging Issues Task Force (EITF) Issue 07-5 (EITF
      07-5), Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entitys Own Stockwhich is now included in the FASB
      Accounting Standards Codification at ASC 815-40-15. This guidance requires
      entities to evaluate whether an equity-linked financial instrument (or
      embedded feature) is indexed to its own stock by assessing the
      instruments contingent exercise provisions and settlement provisions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | Instruments not indexed to their own stock fail to meet
      the scope exception of Statement of Financial Accounting Standards No.
      133, Accounting for Derivative Instruments and Hedging Activities,
      paragraph 11(a), now included in the FASB Codification at ASC
      815-10-15-74(a), and should be classified as a liability and
      marked-to-market. ASC 815-40-15 was effective for fiscal years beginning
      after December 15, 2008 and thus, upon its adoption on October 1, 2009,
      was applied to the Companys outstanding promissory notes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Interim Financial Statements 
  March 31, 2010 
  (Stated in
  US Dollars) 
  (Unaudited)  Page 3

|Note 3 | Adoption of New Accounting Policy  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | The Companys outstanding promissory notes, as described
      in Note 5, include embedded conversion options that, prior to the adoption
      of this accounting policy, were not accounted for as derivative
      liabilities. Effective October 1, 2009, these conversion options met the
      criteria of a derivative instrument liability because the terms of the
      promissory notes require that the conversion price be adjusted in certain
      circumstances that do not meet the fixed- for-fixed criteria in ASC
      815-40-15-5. As a result, the Company is now required to separately
      account for the embedded conversion option as a derivative instrument
      liability, carried at fair value and marked-to-market each period, with
      changes in the fair value each period charged or credited to income. The
      discount resulting from separating the embedded conversion feature is
      accreted via a charge to income using the effective yield method over the
      term of the debt.                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | The transition provisions of ASC 815-40-15 require
      cumulative effect adjustments as of October 1, 2009 to reflect the amounts
      that would have been recognized if derivative fair value accounting had
      been applied from the original issuance date of an equity-linked financial
      instrument through the implementation date of the revised guidance. Thus,
      the Company calculated the value of the derivative liabilities associated
      with the embedded conversion features as at the date of their issuances,
      recorded the accretion expense applicable to the debt discount arising
      upon the bifurcation of the derivative liabilities and recorded the change
      in the fair value of the derivative liabilities from the date of the
      issuance of the promissory notes up to October 1, 2009. Additionally, in
      conjunction with the foregoing, the previously calculated amounts in
      respect of the beneficial conversion features and the accretion expense on
      the beneficial conversion debt discounts were reversed.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | The cumulative effect of this change in accounting
      principle of $589,032 has been recognized as an increase of the opening
      balance of the accumulated deficit of $255,976 and a decrease in the
      opening balance of additional paid-in capital of $333,056 as of October 1,
      2009, with corresponding adjustments at October 1, 2009 to decrease the
      carrying value of the Convertible Debentures by $492,514 and the
      recognition of a derivative liability of $1,081,546.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Note 4 | Derivative Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | Derivative liabilities, consisting of the embedded
      conversion features in the Companys convertible promissory notes, are
      accounted for as separate liabilities measured at their respective fair
      values as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| | Balance, October 1, 2009                       | $ | 1,081,547 |  
| | ---------------------------------------------- | - | --------- | -
| | Change in fair value of derivative liabilities |   | (560,214  | )
| | Balance, March 31, 2010                        | $ | 521,333   |  

The fair value of the derivative
  liabilities has been determined using the Black-Scholes option pricing model
  using the following weighted average assumptions:

| |                                       | March 31,  | October 1,
| | ------------------------------------- | ---------- | ----------
| |                                       | 2010       | 2009      
| |                                       |            |           
| | Risk-free interest rate               | 1.66%      | 0.65%     
| | Expected life of derivative liability | 3.43 years | 1.27 years
| | Annualized volatility                 | 63.78%     | 69.50%    
| | Dividend rate                         | 0.00%      | 0.00%     

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Interim Financial Statements 
  March 31, 2010 
  (Stated in
  US Dollars) 
  (Unaudited)  Page 4

|Note 5 | Promissory Notes Payable
|------ | ------------------------

| |                                                                                  |   | March 31,  |   |   | September 30, |  
| | -------------------------------------------------------------------------------- | - | ---------- | - | - | ------------- | -
| |                                                                                  |   | 2010       |   |   | 2009          |  
| |                                                                                  |   |            |   |   |               |  
| | Convertible non-interest bearing promissory
      notes payable                  | $ | 1,919,418  |   | $ | 1,919,418     |  
| | Convertible interest bearing promissory notes payable                            |   | 1,668,000  |   |   | 668,000       |  
| | Interest bearing promissory note                                                 |   | 372,890    |   |   | 150,000       |  
| | Non-interest bearing promissory note                                             |   | -          |   |   | 100,000       |  
| | Less: beneficial
      conversion features                                       |   | -          |   |   | (333,056      | )
| | Less: fair value
      of derivative liabilities on promissory notes on issuance |   | (1,074,570 | ) |   | -             |  
| | Less: equity
      component of convertible note                                 |   | (44,220    | ) |   | -             |  
| | Add: accumulated accretion                                                       |   | 738,971    |   |   | 170,164       |  
| |                                                                                  |   | 3,580,489  |   |   | 2,674,526     |  
| | Less: current portion                                                            |   | (2,425,059 | ) |   | (2,506,526    | )
| |                                                                                  |   |            |   |   |               |  
| |                                                                                  | $ | 1,155,430  |   |   | 168,000       |  

Convertible non-interest bearing
  promissory notes

The convertible non-interest bearing
  promissory notes are due on demand but not before January 13, 2010 as to
  $150,000, February 2, 2010 as to $1,669,418 and March 16, 2010 as to $100,000.
  The promissory notes are convertible into units at $2.25 per unit. Each unit is
  comprised of one common share and one common share purchase warrant exercisable
  at $3.00 per share for a period of two years from the conversion date. The
  embedded conversion features included in these promissory notes, recorded as
  separate derivative liabilities along with a corresponding debt discount, were
  determined to have a cumulative fair value of $683,744 at their respective
  issuance dates. During the six months ended March 31, 2010, the Company recorded
  accretion expense of $283,947 on the discounts of these notes. The Company is
  currently negotiating with the lenders holding promissory notes which have
  matured as at March 31, 2010 and expects to receive extended terms of repayment.

Convertible interest bearing
  promissory notes

The convertible interest promissory
  note in the amount of $500,000 matures on June 3, 2014 and the convertible
  interest bearing notes in the amount of $168,000 mature on June 19, 2011. These
  notes bear interest at 8% per annum. The holder of the note in the amount of
  $500,000 may demand repayment of the balance outstanding at any time. The
  promissory notes are convertible into units at $2.25 per unit. Each unit is
  comprised of one common share and one common share purchase warrant exercisable
  at $3.00 per share for a period of two years from the conversion date, as to
  $500,000 and one common share and one-half of one common share purchase warrant
  exercisable at $3.50 per share for a period of one year from the conversion
  date, as to $168,000.

The embedded conversion features
  included in these promissory notes, recorded as separate derivative liabilities
  along with a corresponding debt discount, were determined to have a cumulative
  fair value of $390,826 at their respective issuance dates.

During the six months ended March 31,
  2010, the Company recorded accretion expense of $33,664 on the discounts of
  these notes.

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Interim Financial Statements 
  March 31, 2010 
  (Stated in
  US Dollars) 
  (Unaudited)  Page 5

|Note 5 | Promissory Notes Payable 
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Convertible interest bearing promissory notes 
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | During the three months ended March 31, 2010, the Company
      issued a convertible promissory note in the amount of $1,000,000. This
      note bears interest at 20% per annum and matures on February 22, 2012. The
      Company may prepay any portion of the note and accrued interest thereon
      after it has been outstanding for a period of 12 months. Additionally, at
      any time after six months from the date of its issuance, the holder of the
      note may convert the outstanding loan into common shares of the Company at
      a rate of one common share for each $2.35 of the loan balance outstanding.
      This promissory note permits the Company, upon receiving a notice of
      conversion from the lender, to settle the conversion in cash. Therefore,
      in accordance with ASC 470-20, the Company selected the income method to
      determine the fair value of the liability component of the note with
      residual value allocated to the equity component with the result that an
      amount of $44,220 was determined to be the value of the equity component
      of the note credited to additional paid-in capital. The debt discount
      arising from bifurcating the debt and equity components of the note is
      being accreted on an effective yield basis over the life of the note.
      During the three months ended March 31, 2010, the Company recorded
      accretion expense of this debt discount in the amount of $2,197. The
      Company paid a financing fee of $40,000 on this note. The financing fee
      has been deferred and is being amortized to income over the term of the
      loan.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Interest bearing promissory notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | The Company has issued promissory notes totaling $150,000
      bearing interest at 8% and it matured on December 31, 2009. On January 1,
      2010, the Company issued a note with a principal balance of $157,890 (new
      note) in exchange for the $150,000 note plus accrued interest on the note
      which matured on December 31, 2009. The new note bears interest at 8% per
      annum and matures on December 31, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | During the six months ended March 31, 2010, the Company
      issued additional 8% interest bearing notes totaling $215,000 which mature
      on December 5, 2010 as to $50,000, December 22, 2010 as to $100,000 and
      February 17, 2011 as to $65,000 and replaced a $150,000 note which matured
      on December 31, 2009 with 8% interest rate with a $157,890 note which
      matures on December 31, 2010 with 8% interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Non-interest bearing promissory note                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Pursuant to a termination agreement the Company has
      issued one non-interest bearing promissory note to a former officer of the
      Company, in the amount of $200,000. The Company has repaid $100,000 and,
      as at December 31, 2009 and September 30, 2009, the Company was in default
      of the payment terms for the remaining $100,000 balance owing. On February
      2, 2010 the Company issued 49,505 common shares of the Company, at their
      fair value of $2.02 per share pursuant to an agreement with the former
      officer to settle the outstanding amount owed. (Note 6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Interim Financial Statements 
  March 31, 2010 
  (Stated in
  US Dollars) 
  (Unaudited)  Page 6

|Note 6 | Capital Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | On May 24, 2006, the board of directors approved a six
      (6) for one (1) forward split of the authorized issued and outstanding
      common stock. The Companys authorized capital increased from 25,000,000
      shares of common stock to 150,000,000 shares of common stock.                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | On September 24, 2007, the Company issued 222,222 common
      shares common shares at $3.60 per share for a total of $800,000 for
      research and development expenses. The common shares were recorded based
      upon the quoted market price of the Companys common stock on the
      agreement date.                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | On September 25, 2007, the Company settled a loan payable
      in the amount of $333,000 by issuing 92,500 common shares at $3.60 per
      share, being the quoted market price of the Companys common stock on the
      settlement date.                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | On December 10, 2007, the Company issued 150,000 units at
      $3.50 per unit for proceeds of $525,000. Each unit consisted of one common
      share and one common share purchase warrant entitling the holder to
      purchase an additional common share at $5.00 per share until December 10,
      2009.                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | On December 18, 2007, the Company issued 10,000 shares at
      $4.50 per share for a total of $45,000 pursuant to an agreement to settle
      a debt and issued 50,000 shares at $3.86 per share for a total of $193,000
      pursuant to a consulting agreement. The Company recorded compensation
      expense of $65,000 in respect of these issuances based on the excess of
      the fair value of these shares over the balances at which they were
      recorded by the Company.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | On May 15, 2008, the Company issued 65,000 common shares
      at $5.24 per share for a total of $340,600 to its former CEO in accordance
      with the terms of a severance agreement upon the termination of his
      services. The common shares were recorded based upon the quoted market
      price of the Companys common stock on the agreement date.                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | On August 19, 2008, the Company issued 25,000 common
      shares at $5.07 per share for a total of $ 126,750 to a director of the
      Company pursuant to an agreement to provide consulting services. The
      common shares were recorded based upon the quoted market price of the
      Companys common stock on the 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.                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | On February 20, 2009, the Company issued 25,000 common
      shares at $2.50 per share for a total of $ 62,500 to a director of the
      Company pursuant to an agreement to provide consulting services. The
      common shares were recorded based upon the quoted market price of the
      Companys common stock on the issuance date.                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | On March 6, 2009, the Company issued 89,148 units at
      $2.25 per unit for proceeds of $200,583 pursuant to private placement
      agreements. Each unit consisted of one common share and one common share
      purchase warrant entitling the holder to purchase an additional common
      share at $4.00 per share until March 6, 2010.                                                                                                                                             

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Interim Financial Statements 
  March 31, 2010 
  (Stated in
  US Dollars) 
  (Unaudited)  Page 7

|Note 6 | Capital Stock  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | On March 20, 2009, the Company issued 10,800 units at
      $2.25 per unit for proceeds of $24,300 pursuant to private placement
      agreements. Each unit consisted of one common share and one common share
      purchase warrant entitling the holder to purchase an additional common
      share at $4.00 per share until March 20, 2010.                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | On March 20, 2009, the Company issued 2,500 common shares
      at $2.00 per share for a total of $ 5,000 to a public relations consultant
      pursuant to an agreement to provide consulting services. The common shares
      were recorded based upon the quoted market price of the Companys common
      stock on the issuance date.                                                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | On May 14, 2009, the Company entered into a revised
      consulting agreement with a director whereby the consultant returned
      75,000 common shares to the Company for cancellation. The return of shares
      was recorded at their par value.                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | On June 11, 2009 the Company issued 36,000 units at $2.25
      per unit for proceeds of $81,000 pursuant to private placement agreements.
      Each unit consisted of one common share and one common share purchase
      warrant entitling the holder to purchase an additional common share at
      $4.00 per share until June 11, 2010. The Company paid finders fees in the
      amount of $8,100 in relation to this private placement.                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | On June 11, 2009 the Company issued 29,227 common shares
      at $2.25 per share for service rendered by consultants. The common shares
      were recorded based upon the quoted market price of the Companys common
      stock on the issuance date.                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | On June 19, 2009 the Company issued 495,556 units at
      $2.25 per unit for proceeds of $1,115,000 pursuant to private placement
      agreements. Each unit consisted of one common share and one and one-
      eighth common share purchase warrant entitling the holder to purchase an
      additional common share at $2.25 per share until June 19, 2011. The
      Company paid finders fees in the amount of $55,750 in relation to this
      private placement.                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | On June 26, 2009, the Company issued 22,222 common shares
      at $2.51 per share for a total value of $55,777 for finders fees related
      to the issuance of the $500,000 promissory note. The common shares were
      recorded based upon the quoted market price of the Companys common stock
      on the issuance date. Such amount has been deferred and is being amortized
      over the term of the debt.                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | On August 19, 2009, the Company issued 128,888 units at
      $2.25 per Unit for total proceeds of $290,000. Of these placements, 40,000
      Units consisted of one common share and one share purchase warrant
      entitling the holder to purchase an additional common share at $4.00 per
      share until July 10, 2010 and 88,888 Units consisted on one common share
      and one and one-eighth share purchase warrant entitling the holder to
      purchase an additional common shares at $2.25 per share until August 4,
      2011. The Company paid finders fees totaling $9,000 in respect of these
      private placements.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | On October 2, 2009 the Company issued 266,666 units at
      $2.25 per unit for proceeds of $600,000 pursuant to private placement
      agreements. Each unit consisted of one common share and one and one-
      eighth common share purchase warrant entitling the holder to purchase an
      additional common share at $2.25 per share until October 2, 2011. $300,000
      of the proceeds of this private placement was received by the Company
      during the year ended September 30, 2009.                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | On February 2, 2010 the Company issued 49,505 common
      shares of the Company, at their quoted market price of $2.02 per share
      pursuant to an agreement with a former officer to settle an outstanding
      amount owed.                                                                                                                                                                                                                                                                                                                                                                                                                

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Interim Financial Statements 
  March 31, 2010 
  (Stated in
  US Dollars) 
  (Unaudited)  Page 8

|Note 6 | Capital Stock  (contd)
|------ | ------------------------
|       |                         
|       | Commitments             

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

| |                             |  | Number of |   |  | Exercise | 
| | --------------------------- |  | --------- | - |  | -------- | 
| |                             |  | Shares    |   |  | Price    | 
| |                             |  |           |   |  |          | 
| | Balance, September 30, 2008 |  | 292,698   |   |  | $5.00    | 
| | Expired                     |  | (142,695  | ) |  | $5.00    | 
| | Issued                      |  | 833,448   |   |  | $2.62    | 
| | Balance, September 30, 2009 |  | 983,448   |   |  | $2.93    | 
| | Expired                     |  | (249,948  | ) |  | $4.60    | 
| | Issued                      |  | 299,999   |   |  | $2.25    | 
| |                             |  |           |   |  |          | 
| | Balance, March 31, 2010     |  | 1,033,499 |   |  | $2.38    | 

At March 31, 2010 the Company has
  1,033,499 currently exercisable share purchase warrants outstanding as follows:

| | Number    | Exercise Price | Expiry Date    
| | --------- | -------------- | ---------------
| |           |                |                
| | 36,000    | $ 4.00         | June 11, 2010  
| | 40,000    | $ 4.00         | July 10, 2010  
| | 99,999    | $2.25          | August 4, 2010 
| | 557,501   | $2.25          | June 19, 2011  
| | 299,999   | $2.25          | October 2, 2011
| |           |                |                
| | 1,033,499 |                |                

| | b) | Stock-based Compensation Plan                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                 
| |    | A summary of the status of the companys outstanding
      stock purchase options for the three months ended March 31, 2010 is as
      follows:

| |                                         |  |           |   |  | Weighted | 
| | --------------------------------------- |  | --------- | - |  | -------- | 
| |                                         |  |           |   |  | Average  | 
| |                                         |  | Number of |   |  | Exercise | 
| |                                         |  | Shares    |   |  | Price    | 
| | Outstanding at September 30, 2008       |  | 1,420,000 |   |  | $4.44    | 
| | Granted                                 |  | 1,775,000 |   |  | $2.51    | 
| | Outstanding at September 30, 2009       |  | 3,195,000 |   |  | $3.37    | 
| | Cancelled                               |  | (700,000  | ) |  | $2.50    | 
| | Outstanding at March 31, 2010           |  | 2,495,000 |   |  | $3.22    | 
| | Exercisable at March 31, 2010           |  | 1,455,000 |   |  | $3.42    | 
| | Exercisable at September 30,
      2009 |  | 1,330,000 |   |  | $4.38    | 

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Interim Financial Statements 
  March 31, 2010 
  (Stated in
  US Dollars) 
  (Unaudited)  Page 9

|Note 6 | Capital Stock  (contd)
|------ | ------------------------
|       |                         
|       | Commitments  (contd)  

| | b) | Stock-based Compensation Plan  (contd)                              
| | -- | ----------------------------------------------------------------------
| |    |                                                                       
| |    | At March 31, 2010, the following stock options were
      outstanding:

| |                          |      |  |           |  |          |  |  |                  |  |   |                 |  |   | Aggregate | 
| | ------------------------ | ---- |  | --------- |  | -------- |  |  | ---------------- |  | - | --------------- |  | - | --------- | 
| | Number
        of Shares |      |  |           |  |          |  |  | Aggregate        |  |   | Intrinsic Value | 
| | Total                    |      |  | Number    |  | Exercise |  |  |                  |  |   | Intrinsic       |  |   | Of Vested | 
| | Number                   |      |  | Vested    |  | Price    |  |  | Expiry Date      |  |   | Value           |  |   | Options   | 
| |                          |      |  |           |  |          |  |  |                  |  |   |                 |  |   |           | 
| | 100,000                  | (1)  |  | -         |  | $3.86    |  |  | December 1, 2010 |  | $ | -               |  | $ | -         | 
| | 400,000                  | (2)  |  | 400,000   |  | $5.25    |  |  | May 20,2011      |  |   | -               |  |   | -         | 
| | 50,000                   | (3)  |  | 50,000    |  | $3.75    |  |  | November 1, 2012 |  |   | -               |  |   | -         | 
| | 150,000                  | (4)  |  | 150,000   |  | $3.10    |  |  | December 3, 2012 |  |   | 6,000           |  |   | 6,000     | 
| | 450,000                  | (5)  |  | 450,000   |  | $3.10    |  |  | June 3, 2013     |  |   | 18,000          |  |   | 18,000    | 
| | 50,000                   | (6)  |  | 50,000    |  | $2.75    |  |  | January 14, 2014 |  |   | 19,500          |  |   | 19,500    | 
| | 5,000                    | (7)  |  | 5,000     |  | $2.50    |  |  | March 2, 2014    |  |   | 3,200           |  |   | 3,200     | 
| | 400,000                  | (8)  |  | 350,000   |  | $2.50    |  |  | May 12, 2014     |  |   | 256,000         |  |   | 224,000   | 
| | 500,000                  | (9)  |  | -         |  | $2.50    |  |  | June 11, 2014    |  |   | 320,000         |  |   | -         | 
| | 120,000                  | (10) |  | -         |  | $2.50    |  |  | July 1, 2014     |  |   | 76,800          |  |   | -         | 
| | 270,000                  | (11) |  | -         |  | $3.00    |  |  | February 8, 2017 |  |   | 37,800          |  |   | -         | 
| |                          |      |  |           |  |          |  |  |                  |  |   |                 |  |   |           | 
| | 2,495,000                |      |  | 1,455,000 |  |          |  |  |                  |  | $ | 737,300         |  | $ | 270,700   | 

| | 1. | As at March 31, 2010, 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 March 31, 2010 and September 30, 2009, these
      options have fully vested. The Company did not recognize stock-based
      compensation for these options vested in the six months ended March 31,
      2010 (2009:$34,814).                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 3. | As at March 31, 2010 and September 30, 2009, these
      options have fully vested. The Company did not recognize stock-based
      compensation for these options vested in the six months ended March 31,
      2010 (2009: $ Nil).                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 4. | As at March 31, 2010 and September 30, 2009, these
      options have fully vested. The Company did not recognize stock-based
      compensation for these options vested in the six months ended March 31,
      2010 (2009: $ 12,960). On March 26, 2010, regulatory approval was obtained
      to amend exercise price to a revised exercise price of $3.10 per common
      share. Additional stock based compensation recognized in the six-month
      period ended March 31, 2010 in relation to this re-pricing was
      $31,035.

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Interim Financial Statements 
  March 31, 2010 
  (Stated in
  US Dollars) 
  (Unaudited)  Page 10

|Note 6 | Capital Stock  (contd)
|------ | ------------------------
|       |                         
|       | Commitments  (contd)  

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

| | 5.  | As at March 31, 2010 and September 30, 2009, these
      options have fully vested. The Company did not recognize stock-based
      compensation for these options in the three months ended March 31, 2010
      (2009: $283,500). On March 26, 2010, regulatory approval was obtained to
      amend exercise price of these options to a revised exercise price of $3.10
      per common share. Additional stock based compensation recognized in the
      six-month period ended March 31, 2010 in relation to this re-pricing was
      $196,425.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 6.  | These options were granted during the year ended
      September 30, 2009 and as at March 31, 2010, these options have fully
      vested. The Company has recognized stock-based compensation in the amount
      of $10,135 (2009: $ 16,669) included with consulting fees in the financial
      statements for the six months ended March 31, 2010.                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 7.  | As at March 31, 2010 and September 30, 2009, these
      options have fully vested. The Company recognized stock-based compensation
      of $Nil (2009: $6,000) for the six months then ended.                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 8.  | As at March 31, 2010, 350,000 of these options have
      vested. The remaining 50,000 options vest as on May 14, 2010. The Company
      has recognized stock-based compensation in the amount of $86,932 (2009:
      $Nil) included with consulting fees in the financial statements for the
      six months ended March 31, 2010.                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 9.  | As at March 31, 2010 these options have not vested.
      During the period ended March 31, 2010, the vesting provisions of these
      options were changed such that there are 100,000 options vesting for each
      compound entering Phase II trials. The fair value of these options was
      calculated to be $740,000, which the Company has not yet recognized in the
      financial statements as the performance conditions have not yet been
      met.                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 10. | As at March 31, 2010 these options have not vested. The
      options vest upon completion of a minimum financing of $3,000,000
      introduced and closed by the optionee. No stock-based compensation has
      been recorded in the financial statements as the performance conditions
      have not yet been met.                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 11. | As at March 31, 2010 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.                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 12. | During the six months ended March 31, 2010, the Company
      cancelled 700,000 share purchase options on which it had recorded
      share-based compensation of $72,496 during the same
      period.                                                                                                                                                                                                                                                                                                                                                 

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Interim Financial Statements 
  March 31, 2010 
  (Stated in
  US Dollars) 
  (Unaudited)  Page 11

|Note 6 | Capital Stock  (contd)
|------ | ------------------------
|       |                         
|       | Commitments  (contd)  

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

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

| |                          | March 31, 2010 | September 30,2009
| | ------------------------ | -------------- | -----------------
| |                          |                |                  
| | Risk-free interest rate  | 1.15%          | 1.07%            
| | Expected life of options | 2.52 years     | 2.42 years       
| | Annualized volatility    | 88.54%         | 73.61%           
| | Dividend rate            | 0%             | 0%               

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.

At March 31, 2010, 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, 2009 |  | 1,865,000 |   | $ | 2.65     |  | $ | 2.93       | 
| | Cancelled                              |  | (700,000  | ) | $ | 2.50     |  | $ | 1.57       | 
| | Vested                                 |  | (125,000  | ) | $ | 1.60     |  | $ | 3.44       | 
| |                                        |  |           |   |   |          |  |   |            | 
| | Unvested options at March 31, 2010     |  | 1,040,000 |   | $ | 2.76     |  | $ | 3.01       | 

As at March 31, 2010, there was a
  total of $416,646 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 in the year ended September 30, 2010. There has been no
  stock-based compensation recognized in the financial statements for the period
  ended March 31, 2010 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.

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Interim Financial Statements 
  March 31, 2010 
  (Stated in
  US Dollars) 
  (Unaudited)  Page 12

|Note 6 | Capital Stock  (contd)
|------ | ------------------------
|       |                         
|       | Commitments  (contd)  

| | b) | Stock-Based Compensation Plan  (contd)                                                                                                                                                                       
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                
| |    | Stock-based compensation amounts, including those
      relating to shares issued for non-cash consideration during the period,
      are classified in the Companys Statement of Operations as
      follows:

| |            |   | Three months ended March 31, |  |   | Six months ended March 31, | 
| | ---------- | - | ---------------------------- |  | - | -------------------------- | 
| |            |   | 2010                         |  |   | 2009                       | 
| | Consulting | $ | 284,415                      |  | $ | 18,877                     | 

| | c) | Share Subscriptions                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | During the three months ended March 31, 2010, the Company
      received $149,470 in respect of subscriptions for 57,488 units at $2.60
      per unit. Each unit consists of one common share and one-half of one
      common share purchase warrant. One full warrant entitles the holder to
      purchase one additional common share at $3.50 per share until April 5,
      2011. These units were issued subsequent to March 31, 2010 (Note
      9)

|Note 7 | Related Party Transactions                                                                                                                                                            
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                       
|       | During the three and six months ended March 31, 2010 and
      2009, the Company was charged consulting fees from officers and a private
      company owned by a director as follows:

| |                 |   | Three months ended |  |   | Six months ended | 
| | --------------- | - | ------------------ |  | - | ---------------- | 
| |                 |   | March 31,          |  |   | March 31,        | 
| |                 |   | 2010               |  |   | 2009             | 
| | Consulting fees | $ | 188,344            |  | $ | 64,867           | 

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

| |                            |   |                |  |   |                |  |   | January 23, 2004 | 
| | -------------------------- | - | -------------- |  | - | -------------- |  | - | ---------------- | 
| |                            |   | Three and six  |  |   | Three and six  |  |   | (Date of         | 
| |                            |   | months ended   |  |   | months ended   |  |   | Inception) to    | 
| |                            |   | March 31, 2010 |  |   | March 31, 2009 |  |   | March 31, 2010   | 
| |                            |   |                |  |   |                |  |   |                  | 
| | Management fees            | $ | -              |  | $ | -              |  | $ | 14,625           | 
| | Rent                       |   | -              |  |   | -              |  |   | 3,750            | 
| | Debt forgiven by directors |   | -              |  |   | -              |  |   | 33,666           | 
| |                            | $ | -              |  | $ | -              |  | $ | 52,041           | 

As March 31, 2010, included in
  accounts payable and accrued liabilities is $74,500 (September 30, 2009:
  $57,464) owed to a director and an officer of the Company in respect of unpaid
  consulting fees.

---

Anavex Life Sciences Corp. 
  (A Development Stage Company) 
  Notes to the Interim Financial Statements 
  March 31, 2010 
  (Stated in
  US Dollars) 
  (Unaudited)  Page 13

|Note 8 | Supplemental Cash Flow
      Information                                                                                                       
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                
|       | Investing and financing activities that do not have an
      impact on current cash flows are excluded from the statements of cash
      flows.
|       |                                                                                                                                                
|       | During the period ended March 31, 2010:                                                                                                        

| | i.  | the Company issued 49,505 shares at $2.02 per share in
      settlement of a note payable in the amount of $100,000.                                                                                                                                                                                          
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                               
| | ii. | the Company renewed a promissory note in the amount of
      $150,000 that had matured by issuing a new promissory note to the lender
      in the principal amount of $157,890. The principal balance of the new note
      includes $7,890 that had been previously been included in accrued
      interest.

|       | The Company did not pay cash amounts for interest and
      income taxes during the six-month periods ended March 31, 2010 and 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Note 9 | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       | On April 5, 2010, the Company issued 92,499 units at
      $2.60 per unit for proceeds of $240,497 pursuant to a private placement.
      Each unit consists of one common share and one-half of one common share
      purchase warrant. One full warrant entitles the holder to purchase one
      additional common share at $3.50 per share until April 5, 2011. Finders
      fees equal to 10% of the offering were paid in connection with this
      private placement. The Company had received $149,470 of these proceeds
      prior to March 31, 2010 (Note 6).

---

4

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

Forward-Looking Statements

This quarterly report contains forward-looking statements. All
statements other than statements of historical facts contained in this quarterly
report, including statements regarding our anticipated future clinical and
regulatory milestone events, future financial position, business strategy and
plans and objectives of management for future operations, are forward looking
statements. These statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology such as may, should, expect, plan, anticipate, believe,
estimate, predict, potential or continue or the negative of these terms
or other comparable terminology. Such forward-looking statements include,
without limitation, statements regarding the anticipated start dates, durations
and completion dates of our ongoing and future clinical studies, statements
regarding the anticipated designs of our future clinical studies, statements
regarding our anticipated future regulatory submissions and statements regarding
our anticipated future cash position. We have based these forward-looking
statements largely on our current expectations and projections about future
events, including the responses we expect from the U.S. Food and Drug
Administration, or FDA, and other regulatory authorities and financial trends
that we believe may affect our financial condition, results of operations,
business strategy, preclinical and clinical trials and financial needs. These
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 companys 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.

Moreover, we operate in a very competitive and rapidly changing
environment. New risk factors emerge from time to time and it is not possible
for our management to predict all risk factors, nor can we assess the impact of
all factors on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements. You should not rely upon forward-looking
statements as predictions of future events. Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.

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

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

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

Our Business

We are a biopharmaceutical company engaged in the discovery and
development of novel drug targets to treat serious diseases for which there are
urgent unmet medical needs. The ANAVEX portfolio involves new sigma receptor
compounds (ligands) in the preclinical stage that target neurodegenerative
diseases and cancer. Our lead drug candidate ANAVEX 2-73, targeting Alzheimers
disease (AD), is expected to enter first Human Clinical Trials (HCT) in 2010.
Scale-up manufacturing of ANAVEX 2-73 has been completed and Forenap Pharma EURL
has completed most preclinical testing on ANAVEX 2-73 and is currently preparing
the Investigational New Drug (IND) file. In parallel, we plan to launch HCT for
another three of our compounds (melanoma, prostate cancer and epilepsy) as soon
as sufficient capital is made available. Additionally, we intend to further
develop compounds in earlier preclinical phases, which target diseases like
diabetes, depression, neuropathic pain and various types of cancer and continue
to develop and expand our Sigmaceptortmplatform.

---

5

Our proprietary SIGMACEPTOR Discovery Platform has resulted in
and continues to generate small molecule drug candidates with unique modes of
action, by making use of sigma receptors, which represent potential targets for
therapeutic developments in combating many human diseases (such as Alzheimers
disease, depression, epilepsy and cancer). When activated by the appropriate
ligands, these receptors influence the functioning of multiple biochemical
signals that are involved in the pathogenesis (origin or development) of a
disease.

With our SIGMACEPTOR-N program, we are focused on developing
disease modifying treatments for CNS diseases using sigma-1 receptor ligands.
Among our lead CNS drug candidates, we have made significant progress with
ANAVEX 2-73, our lead drug candidate to treat Alzheimers disease (AD), and
ANAVEX 19-144, another lead drug candidate to treat epilepsy. Preclinical data
reveals that these compounds exhibit significant anti-amnesic, neuroprotective
and anticonvulsant properties in a variety of in vitro systems and specialized
animal models. These activities involve sigma-1 and NMDA receptor components and
also ion channels, indicating a unique mode of action. In AD, ANAVEX 2-73 is
pharmacologically suggested as an effective neuroprotective, anti-convulsive and
anti depressive (anti-amnesic) putative therapeutic agent, due to its potent
affinity to sigma-1 receptors and moderate affinities to M1-4 types muscarinic
receptors. In epilepsy, ANAVEX 19-144 controls seizures and the epileptogenesis
process. Moreover, its neuroprotective properties prevent the process that
causes long-term damage to tissue and cells as well as biochemical and
physiological alterations to the brain from epileptic seizures.

We also have reported promising developments with ANAVEX 1-41,
which is a sigma-1 agonist and a lead compound to treat AD and depression.
Preclinical tests revealed significant neuroprotective benefits (i.e. protects
nerve cells from degeneration or death) through the prevention of oxidative
stress, which damages and destroys cells and is believed to be a primary cause
of AD. In addition, ANAVEX 1-41 prevented the expression of caspase-3, an enzyme
that plays a key role in apoptosis (programmed cell death) and in the loss of
cells in the hippocampus, the part of the brain that regulates learning, emotion
and memory. These activities involve both muscarinic and sigma-1 receptor
systems through a novel mechanism of action. Via this novel mechanism of action,
it is anticipated that ANAVEX 1-41 may offer disease-modifying options that
reverse memory and learning deficits and protect nerve cells from death through
its anti-amnesic, neuroprotective and anxiolytic actions. ANAVEX 1-41 may slow
the progression of AD and considerably improve the quality of life of those
impacted by the disease as well as their caregivers.

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

ANAVEX 7-1037, our lead drug candidate for the treatment of
prostate cancer, is a low molecular weight, synthetic compound exhibiting high
(nanomolar) affinity for sigma-1 and moderate (micromolar) affinity for sigma-2
and sodium channels. In advanced preclinical studies, this compound revealed
antitumor potential with no toxic side effects. It has also been shown to
selectively kill human cancer cells without affecting normal/healthy cells and
also to significantly suppress tumor growth in immune-deficient mice models.
Scientific publications emphasize the promise of sigma receptor ligands,
highlighting the fact that these ligands stop tumor growth and induce selective
cell death in various tumor cell lines, including leukemia, melanoma and cancers
of the colon, breast, prostate, lung, brain, ovary and kidney.

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

---

6

Results of Operations

Revenue

We have not earned any revenues since our inception on January
23, 2004. We are still in the development stage and do not anticipate earning
any revenues until we can establish an alliance with targeted companies to
market or distribute the results of our research projects.

Expenses

Our expenses for the three and six months ended March 31, 2010
and 2009 were as follows:

|                             |   | Three Months |   |   | Three Months |   |   | Six Months |   |   | Six Months |  
|---------------------------- | - | ------------ | - | - | ------------ | - | - | ---------- | - | - | ---------- | -
|                             |   | Ended        |   |   | Ended        |   |   | Ended      |   |   | Ended      |  
|                             |   | March 31     |   |   | March 31     |   |   | March 31   |   |   | March 31   |  
|                             |   | 2010         |   |   | 2009         |   |   | 2010       |   |   | 2009       |  
|Accounting and audit fees    | $ | 66,936       |   | $ | 3,000        |   | $ | 88,795     |   | $ | 34,260     |  
|Amortization                 |   | 190          |   |   | 90           |   |   | 380        |   |   | 180        |  
|Bank charges and interest    |   | 1,275        |   |   | 918          |   |   | 2,990      |   |   | 1,784      |  
|Consulting                   |   | 568,816      |   |   | 430,964      |   |   | 1,022,890  |   |   | 971,531    |  
|Investor Relations           |   | 27,482       |   |   | -            |   |   | 81,993     |   |   | -          |  
|Legal fees                   |   | 17,775       |   |   | 1,911        |   |   | 45,683     |   |   | 5,521      |  
|Management fees              |   | -            |   |   | -            |   |   | -          |   |   | -          |  
|Office and miscellaneous     |   | 17,403       |   |   | 4,716        |   |   | 102,131    |   |   | 45,356     |  
|Registration and filing fees |   | 3,320        |   |   | 469          |   |   | 9,453      |   |   | 6,045      |  
|Rent                         |   | -            |   |   | -            |   |   | -          |   |   | -          |  
|Research and development     |   | 815,609      |   |   | 328,859      |   |   | 1,027,088  |   |   | 612,963    |  
|Total expenses               | $ | (1,518,806   | ) | $ | (770,927     | ) | $ | (2,381,403 | ) | $ | (1,677,650 | )

Three Months Ended March 31, 2010 and 2009

Expenses for the three months ended March 31, 2010 increased by
$747,879 over the same period in 2009.. Consulting fees increased from $430,964
for the three months ended March 31, 2009 to $568,816 for the same period in
2010 primarily as a result of increased stock based compensation charges. Legal
fees increased to $17,775 for the three months ended March 31, 2010 from $1,911
for the same period in 2009 primarily as a result of increased patent and
corporate activity fees. Research and Development charges increased to $815,609
for the three months ended March 31, 2010 from $328,859 for the same period in
2009 resulting from increased research activities.

Six Months Ended March 31, 2010 and 2009

Expenses for the six months ended March 31, 2010 increased by
$703,753 over the same period in 2009. Consulting fees increased from $971,531
for the six months ended March 31, 2009 to $1,022,890 for the same period in
2010 primarily as a result of increased stock based compensation charges. Legal
fees increased to $45,683 for the six months ended March 31, 2010 from $5,521
for the same period in 2009 primarily as a result of increased patent and
corporate activity fees. Research and Development charges increased to
$1,027,088 for the six months ended March 31, 2010 from $612,963 for the same
period in 2009 resulting from increased research activities.

Other Income and loss

Other income and (loss) for the three months ended March 31,
2010, was $(195,336) as compared to $(470,429) for the comparable three months
ended March 31, 2009. Other income and (loss) for the six months ended March 31,
2010, was $218,760 as compared to $(491,748) for the comparable six months
ended March 31, 2009.

---

7

Change in fair value of derivative liability

We recognized a loss on derivative financial instruments of
$88,824 for the three months ended March 31, 2010, as compared to $nil for the
prior years comparable period. We recognized a gain on derivative financial
instruments of $560,214 for the six months ended March 31, 2010, as compared to
$nil for the prior years comparable period.

The non-cash gain arises from adjusting the embedded conversion
feature of our convertible promissory notes payable to fair value at each
reporting period in accordance with current accounting standards. The embedded
conversion features of the convertible promissory notes are treated as
derivative liabilities because the conversion price can be adjusted in certain
circumstances.

We use the Black-Scholes option pricing model to estimate the
fair value of this derivative. Because the Black-Scholes model uses our stock
price as one of the inputs in calculating the fair value of the derivative
liabilities, changes in the stock price will result in volatility in the
earnings in future periods as we continue to reflect the derivative financial
instruments at fair value.

Liquidity and Capital Resources

*Working Capital*

| |                           |   | March 31, 2010 |   |   | September 30, 2009 |  
| | ------------------------- | - | -------------- | - | - | ------------------ | -
| | Current Assets            |   | 277,786        |   |   | 406,952            |  
| | Current Liabilities       |   | 4,692,452      |   |   | 4,098,466          |  
| | Working Capital (Deficit) | $ | (4,414,666     | ) | $ | (3,691,514         | )

As of March 31, 2010, we had $144,510 in cash, a decrease of
$206,484 from September 30, 2009. The principal component of this decrease in
cash was increased R&D expenditures. As of March 31, 2010, we had a working
capital deficit of $4,414,666, an increase of $723,152 from September 30, 2009.
The principal component of this increase in working capital deficit was from
increase accounts payables and increased Promissory notes payable.

Anticipated Expenses

We anticipate that we will require up to $10 million for the 12
months ending March 31, 2011 to implement our plan of operation of researching
and developing our patents, the related compounds and any further intellectual
property we may acquire. The majority of our capital resources requirement is
needed to enter ANAVEX 2-73, and other compounds into clinical trials. If we are
not able to secure additional financing, we will not be able to implement and
fund these trials.

Cash Flows

| |                                               |   | Six Months Ended |   |   | Six Months Ended | 
| | --------------------------------------------- | - | ---------------- | - | - | ---------------- | 
| |                                               |   | March 31         |   |   | March 31         | 
| |                                               |   | 2010             |   |   | 2009             | 
| | Cash flows used in operating
      activities | $ | 1,830,954        |   | $ | 641,927          | 
| | Cash flows from financing activities          |   | 1,624,470        |   |   | 714,299          | 
| | Cash flows from investing
      activities    |   | -                |   |   | -                | 
| | Increase (decrease) in cash                   |   | (206,484         | ) |   | 72,372           | 

Cash flow used in operating activities

Our cash used in operating activities for the six months ended
March 31, 2010 compared to our cash used in operating activities for the six
months ended March 31, 2009 increased by 185%. This change was largely due to
increased research and development activities.

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8

Cash flow provided by financing activities

Our cash provided by financing activities for the six months
ended March 31, 2010 compared to our cash provided by financing activities for
the six months ended March 31, 2009 increased by 127%. This change was largely
due to increased note subscriptions.

Cash Provided by Investing Activities

No cash was used in or provided by investing activities for the
six months ended March 31, 2010 or 2009.

Going Concern

At March 31, 2010, we had an accumulated deficit of $14,980,852
since our inception and expect to incur further losses in the development of our
business, all of which casts substantial doubt about our ability to continue as
a going concern. Our ability to continue as a going concern is dependent upon
our ability to generate future profitable operations and/or to obtain the
necessary financing to meet our obligations and repay our liabilities arising
from normal business operations when they come due. Our independent auditors
included an explanatory paragraph regarding substantial doubt about our ability
to continue as a going concern in their report on our annual financial
statements for the year ended September 30, 2009.

Future Financing

We will require additional financing to fund our planned
operations, including researching and developing our patents, the related
compounds and any further intellectual property that we may acquire and entering
some of our current compounds into clinical trials. We currently do not have
committed sources of additional financing and may not be able to obtain
additional financing, particularly, if the volatile conditions in the stock and
financial markets, and more particularly the market for early development stage
biotechnology research and development company stocks persist.

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

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

There is no assurance that we will be able to maintain
operations at a level sufficient for an investor to obtain a return on his, her,
or its investment in our common stock. Further, we may continue to be
unprofitable.

Off-Balance Sheet Arrangements

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

Application of Critical Accounting Policies

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

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9

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

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

Research and Development Expenses

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

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

Stock-based Compensation

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

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

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

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

Derivative Liabilities

We evaluate the embedded conversion features of our convertible
promissory notes to determine whether they are indexed to our stock for purposes
of determining whether are required to be bifurcated as separate derivative
liabilities. When they are determined not to be indexed to our stock, and thus
classified as derivative liabilities, they are marked-to-market each reporting
period.

We use the Black-Scholes option pricing model to calculate the
fair value of the derivative liabilities at each reporting period. The Black
Scholes pricing model requires the input of highly subjective assumptions,
including the expected price volatility. Changes in assumptions can
materially affect the fair value estimate and therefore the Black-Scholes model
does not necessarily provide a reliable single measure of the fair value of our
derivative liabilities.

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

Recent accounting pronouncements

In December 2007, FASB issued guidance included in ASC 805
Business Combinations and ASC 810 Accounting and Reporting
of Non-controlling Interests in Consolidated Financial Statements which
requires companies to: (i) recognize, with certain exceptions, 100% of the fair
values of assets acquired, liabilities assumed, and non-controlling interests in
acquisitions of less than a 100% controlling interest when the acquisition
constitutes a change in control of the acquired entity; (ii) measure acquirer
shares issued in consideration for a business combination at fair value on the
acquisition date; (iii) recognize contingent consideration arrangements at their
acquisition-date fair values, with subsequent changes in fair value generally
reflected in earnings; (iv) with certain exceptions, recognize pre-acquisition
loss and gain contingencies at their acquisition-date fair values; (v)
capitalize in-process research and development (IPR&D) assets acquired;
(vi) expense, as incurred, acquisition-related transaction costs; (vii)
capitalize acquisition-related restructuring costs only if certain criteria are
met as of the acquisition date; and (viii) recognize changes that result from a
business combination transaction in an acquirers existing income tax valuation
allowances and tax uncertainty accruals as adjustments to income tax expense.
The impact of ASC 805 and ASC 810 on the Companys financial position or results
of operations is dependent on whether the Company undertakes any business
combinations after October 1, 2009.

In October 2009, the FASB issued ASU No. 2009-13,
Multiple-Deliverable Revenue Arrangements, or ASU 2009-13, which amends
existing revenue recognition accounting pronouncements that are currently within
the scope of ASC 605. This guidance eliminates the requirement to establish the
fair value of undelivered products and services and instead provides for
separate revenue recognition based upon managements estimate of the selling
price for an undelivered item when there is no other means to determine the fair
value of that undelivered item. ASU 2009-13 is effective prospectively for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. The Company is currently evaluating the
impact, if any, that the adoption of this amendment will have on its
consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures about
Market Risks.

Not Applicable.

Item 4T. Controls and Procedures.

Disclosure Controls and Procedures

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

Based on that evaluation, our management, with the
participation of our principal executive officer and principal financial
officer, concluded that as of the end of the period covered by this quarterly
report on Form 10-Q, our disclosure controls and procedures were not effective. The
ineffectiveness of our disclosure controls and procedures was due to the
weaknesses disclosed in our annual report on Form 10-K filed on December 24,
2009.

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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 2010 assessment of the effectiveness of our internal control over
financial reporting.

Changes in Internal Control over Financial Reporting

We have not made any changes in our internal control over
financial reporting during the fiscal quarter ended March 31, 2010 that have
materially affected, or are reasonably likely to materially affect our internal
control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 1A. Risk Factors.

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

Risks Related to our Company

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

Since inception on January 23, 2004, we have an accumulated
deficit of $14,980,852 from operations. We can offer no assurance that we will
ever operate profitably or that we will generate positive cash flow in the
future. To date, we have not generated any revenues from our operations. Our
history of losses and no revenues raise substantial doubt about our ability to
continue as a going concern. We will not be able to generate significant
revenues in the future and our management expects acquisitions and exploration
expenditures and operating expenses to increase substantially over the next 12
months. As a result, our management expects the business to continue to
experience negative cash flow for the foreseeable future and cannot predict
when, if ever, our business might become profitable. We will need to raise
additional funds, and such funds may not be available on commercially acceptable
terms, if at all. If we are unable to raise funds on acceptable terms, we may
not be able to execute our business plan, take advantage of future
opportunities, or respond to competitive pressures or unanticipated
requirements. This may seriously harm our business, financial condition and
results of operations.

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

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

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

Our independent auditors have noted in their report concerning
our annual financial statements as of September 30, 2009 that we have incurred
substantial losses since inception, which raises substantial doubt abut our
ability to continue as a going concern. In the event we are not able to continue
operations you will likely suffer a complete loss of your investment in our
securities.

Risks Related to our Business

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

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

- the possibility that non-clinical testing or clinical trials may show that
  our potential drug compounds are ineffective and/or cause harmful side
  effects;
- our potential drug compounds may prove to be too expensive to manufacture
  or administer to patients;
- our potential drug compounds may fail to receive necessary regulatory
  approvals from the United States Food and Drug Administration or foreign
  regulatory authorities in a timely manner, or at all;
- even if our potential drug compounds are approved, we may not be able to
  produce them in commercial quantities or at reasonable costs;

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- even if our potential drug compounds are approved, they may not achieve
  commercial acceptance;
- regulatory or governmental authorities may apply restrictions to any of our
  potential drug compounds, which could adversely affect their commercial
  success; and
- the proprietary rights of other parties may prevent us or our potential
  collaborative partners from marketing our potential drug compounds.

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

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

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

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

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

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

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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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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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 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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17

| | 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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18

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. Any new rules could make it more
difficult or more costly for us to obtain certain types of insurance, including
directors and officers liability insurance, and we may be forced to accept
reduced policy limits and coverage or incur substantially higher costs to obtain
the same or similar coverage. The impact of these events could also make it more
difficult for us to attract and retain qualified persons to serve on our board
of directors, our board committees or as executive officers. A failure to comply
with these new laws and regulations may impact market perception of our
financial condition and could materially harm our business. Additionally, it is
unclear what additional laws or regulations may develop, and we cannot predict
the ultimate impact of any future changes in law.

Risks Related to our Common Stock

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

A prolonged decline in the price of our common stock could
result in a reduction in 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 stockholders.

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

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19

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

There is currently a limited market for our common stock. Our
common stock is quoted on the OTC Bulletin Board service of the Financial
Industry Regulatory Authority. Trading in stock quoted on the OTC Bulletin Board
is often thin and characterized by wide fluctuations in trading prices, due to
many factors that may have little to do with our operations or business
prospects. This volatility could depress the market price of our common stock
for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board
is not a stock exchange, and trading of securities on the OTC Bulletin Board is
often more sporadic than the trading of securities listed on a quotation system
like NASDAQ. There is no assurance that a sufficient market will develop in the
stock, in which case it could be difficult for our stockholders to resell their
stock.

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

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

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

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

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

None.

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20

Item 3. Defaults Upon Senior Securities.

None.

Item 4. (Removed and Reserved).

Item 5. Other Information.

On February 17, 2010, we issued an 8% interest bearing note in
the amount of $65,000, which matures on February 17, 2011.

Item 6. Exhibits.

|Number | Description                                                                                                                                                                                                                                       
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3)    | Articles of Incorporation and Bylaws                                                                                                                                                                                                              
|3.1    | Articles of Incorporation (incorporated by reference to
      an exhibit to our Registration Statement on Form SB-2 filed on January 13,
      2005)                                                                                              
|3.2    | Bylaws (incorporated by reference to an exhibit to our
      Registration Statement on Form SB-2 filed on January 13, 2005)                                                                                                                       
|3.3    | Articles of Merger filed with the Secretary of State of
      Nevada on January 10, 2007 and which is effective January 25, 2007
      (incorporated by reference to an exhibit to our Current Report on Form 8-K
      filed on January 25, 2007)
|(4)    | Instruments defining rights of security holders,
      including indentures                                                                                                                                                                       
|4.1    | Specimen Stock Certificate (incorporated by reference to
      an exhibit to our Registration Statement on Form SB-2 filed on January 13,
      2005)                                                                                             
|4.2    | Form of Convertible Loan Agreement (incorporated by
      reference to an exhibit to our Form 8-K filed on April 3, 2009)                                                                                                                         
|4.3    | 8% Convertible Loan Agreement dated June 3, 2009
      (incorporated by reference to an exhibit to our Current Report on Form 8-K
      filed on June 23, 2009)                                                                                   
|4.4    | 8% Convertible Loan Agreement dated June 19, 2009
      (incorporated by reference to an exhibit to our Current Report on Form 8-K
      filed on June 26, 2009)                                                                                  
|(10)   | Material Contracts                                                                                                                                                                                                                                
|10.1   | Agreement between Anavex Life Sciences Corp. and Dr.
      Alexandre Vamvakides dated January 31, 2007 (incorporated by reference to
      an exhibit to our Current Report on Form 8-K filed on February 7, 2007)                                
|10.2   | Abstract of Disclosure of Greek Patent Number 1002616
      (incorporated by reference to an exhibit to our Current Report on Form 8-K
      filed on February 7, 2007)                                                                           
|10.3   | Abstract of Disclosure of Greek Patent Number 1004208
      (incorporated by reference to an exhibit to our Current Report on Form 8-K
      filed on February 7, 2007)                                                                           
|10.4   | Abstract of Disclosure of Greek Patent Number 1004868
      (incorporated by reference to an exhibit to our Current Report on Form 8-K
      filed on February 7, 2007)                                                                           
|10.5   | Written description of Greek Patent Application Number
      20070100020 (incorporated by reference to an exhibit to our Current Report
      on Form 8-K filed on February 7, 2007)                                                              

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21

|Number | Description                                                                                                                                                                                                                                  
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.6   | Form of Stock Option Agreement (incorporated by reference
      to an exhibit to our Current Report on Form 8-K filed on February 22,
      2007)                                                                                            
|10.7   | Shares for Services and Subscription Agreement dated
      September 11, 2007 between our company and Eurogenet Labs S.A.
      (incorporated by reference to an exhibit to our Current Report on Form 8-K
      filed on September 27, 2007)
|10.8   | 2007 Stock Option Plan (incorporated by reference to an
      exhibit to our Current Report on Form 8-K filed on September 28, 2007)                                                                                                         
|10.9   | Consulting Agreement with Cameron Durrant dated May 20,
      2008 (incorporated by reference to an exhibit to our Quarterly Report on
      Form 10-QSB filed on August 18, 2008                                                            
|10.10  | Form of Convertible Loan Agreement (incorporated by
      reference to an exhibit to our Current Report on Form 8-K filed on April
      3, 2009)                                                                                            
|10.11  | Consulting Agreement with Tariq Arshad dated March 2,
      2009 (incorporated by reference to an exhibit to our Current Report on
      Form 8-K filed on April 3, 2009)                                                                    
|10.13  | Consulting Agreement with Dr. Mark Smith dated January
      13, 2009 (incorporated by reference to an exhibit to our Current Report on
      Form 8-K filed on April 3, 2009)                                                               
|10.14  | Form of Subscription Agreement (incorporated by reference
      to an exhibit to our Current Report on Form 8-K filed on April 3, 2009)                                                                                                      
|10.15  | Form of Warrant Certificate (incorporated by reference to
      an exhibit to our Current Report on Form 8-K filed on April 3, 2009)                                                                                                         
|10.16  | Amended Consulting Agreement with Cameron Durrant dated
      May 14, 2009 (incorporated by reference to an exhibit to our Current
      Report on Form 8-K filed on June 23, 2009)                                                          
|10.17  | CEO Consulting Agreement with Dr. Herve de Kergrohen
      dated June 12, 2009 (incorporated by reference to an exhibit to our
      Current Report on Form 8-K filed on June 23, 2009)                                                      
|10.18  | Form of Private Placement subscription agreement dated
      June 15, 2009 (incorporated by reference to an exhibit to our Current
      Report on Form 8-K filed on June 23, 2009)                                                          
|10.19  | Shares for Services Agreement with Andreas Eleuthariadis
      dated June 10, 2009 (incorporated by reference to an exhibit to our
      Current Report on Form 8-K filed on June 23, 2009)                                                  
|10.20  | Shares for Services Agreement with Vasileios Kourafalos
      dated June 10, 2009 (incorporated by reference to an exhibit to our
      Current Report on Form 8-K filed on June 23, 2009)                                                   
|10.21  | Shares for Services Agreement with George Kalkanis dated
      June 10, 2009 (incorporated by reference to an exhibit to our Current
      Report on Form 8-K filed on June 23, 2009)                                                        
|10.22  | Stock Option Agreement with Alexandre Vamvakides dated
      June 11, 2009 (incorporated by reference to an exhibit to our Current
      Report on Form 8-K filed on June 23, 2009)                                                          
|10.23  | Form of Private Placement Subscription Agreement
      Convertible Loan (incorporated by reference to an exhibit to our Current
      Report on Form 8-K filed on June 26, 2009)                                                             
|10.24  | Form of Private Placement Subscription Agreement for
      Units (incorporated by reference to an exhibit to our Current Report on
      Form 8-K filed on June 26, 2009)                                                                    

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22

|Number | Description                                                                                                                                                                                                        
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.25  | Consultant Services Agreement
          with NAD Ltd. dated July 1, 2009 (incorporated by reference to an exhibit
          to our Current Report on Form 8-K filed on November 24, 2009)                          
|10.26  | Form of Subscription Agreement
          (incorporated by reference to an exhibit to our Current Report on Form
          8-K filed on November 24, 2009)                                                          
|10.27  | Form of Warrant Certificate
          (incorporated by reference to an exhibit to our Current Report on Form
          8-K filed on August 12, 2009)                                                               
|10.28  | Stock Option Agreement with
          Alexander Vamvakides dated October 19, 2009 (incorporated by reference
          to an exhibit to our Current Report on Form 8-K filed on November 24,
          2009)       
|10.29  | Promissory note issued to
          Stonehedge Limited on January 1, 2010 (incorporated by reference to
          an exhibit to our Quarterly Report on Form 10-Q filed on March 31, 2010)                         
|10.30  | Second Amended Consulting
          Agreement with Dr. Cameron Durrant dated January 2, 2010 (incorporated
          by reference to an exhibit to our Current Report on Form 8-K filed on
          April 9, 2010)
|10.31  | Contract Lease Agreement with
          Euro Genet Labs SA dated February 1, 2010 (incorporated by reference
          to an exhibit to our Current Report on Form 8-K filed on April 9, 2010)                     
|10.32  | Form of Subscription Agreement
          (incorporated by reference to an exhibit to our Current Report on Form
          8-K filed on April 9, 2010)                                                              
|10.33  | Form of Warrant Certificate
          (incorporated by reference to an exhibit to our Current Report on Form
          8-K filed on April 9, 2010)                                                                 
|10.34  | Form of Convertible Loan Agreement
          (incorporated by reference to an exhibit to our Current Report on Form
          8-K filed on April 9, 2010)                                                          
|(14)   | Code of Ethics                                                                                                                                                                                                     
|14.1   | Code of Conduct (incorporated
          by reference to an exhibit to our Current Report on Form 8-K filed on
          September 28, 2007)                                                                        
|(21)   | Subsidiaries                                                                                                                                                                                                       
|21.1   | Anavex Life Sciences (France)
          SA, incorporated under the laws of France                                                                                                                                  
|(31)   | Section 302 Certification                                                                                                                                                                                          
|31.1*  | Section
          302 Certification of Harvey Lalach                                                                                                                                                               
|(32)   | Section 906 Certification                                                                                                                                                                                          
|32.1*  | Section
          906 Certification of Harvey Lalach                                                                                                                                                               

* Filed herewith.

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23

SIGNATURES

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

ANAVEX LIFE SCIENCES CORP.

By:

/s/ Harvey Lalach
  Harvey Lalach
President, Chief Financial Officer, Secretary and Director(Principal
Executive Officer, Principal Financial Officer and Principal Accounting
Officer)
Date: May 21, 2010

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