---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

Form 10-QSB(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934 
  For the quarterly period ended December 31, 2007

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
  ACT
  For the transition period from __________to __________
  Commission file number 000-51652

ANAVEX LIFE SCIENCES
CORP.(Exact name of small business issuer as specified in its
charter)

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

14 Rue Kleberg, CH-1201 Geneva,
Switzerland(Address of principal executive offices)

011-41-2271-65-300(Issuer's telephone
number)

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

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 19,724,722
common shares issued and outstanding as of February 5, 2008

Transitional Small Business Disclosure Format (Check one): Yes [
] No [X]

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

---

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

It is the opinion of management that the interim financial
statements for the quarter ended December 31, 2007 include all adjustments
necessary in order to ensure that the interim financial statements are not
misleading.

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

---

ANAVEX LIFE SCIENCES CORP.

(A Development Stage Company)

INTERIM FINANCIAL STATEMENTS

December 31, 2007

(Stated in US Dollars)

(Unaudited)

---

|4                                       
|----------------------------------------
|ANAVEX LIFE SCIENCES CORP.              
|(A Development Stage Company)           
|INTERIM BALANCE SHEETS                  
|December 31, 2007 and September 30, 2007
|(Stated in US Dollars)                  
|(Unaudited)                             

|                                                            |   | December 31, |   |   | September 30, |  
|----------------------------------------------------------- | - | ------------ | - | - | ------------- | -
|ASSETS                                                      |   | 2007         |   |   | 2007          |  
|                                                            |   |              |   |   |               |  
|Current                                                     |   |              |   |   |               |  
|Cash                                                        | $ | 48,582       |   | $ | 25            |  
|Prepaid expense and deposit                                 |   | 10,000       |   |   | -             |  
|                                                            |   |              |   |   |               |  
|                                                            |   | 58,582       |   |   | 25            |  
|Patents  Note 3                                            |   | 72,000       |   |   | -             |  
|                                                            |   |              |   |   |               |  
|                                                            | $ | 130,582      |   | $ | 25            |  
|                                                            |   |              |   |   |               |  
|LIABILITIES                                                 |   |              |   |  
|                                                            |   |              |   |   |               |  
|Current                                                     |   |              |   |   |               |  
|Accounts payable and accrued
      liabilities  Note 5     | $ | 298,724      |   | $ | 462,529       |  
|Promissory note payable
       Note 4                      |   | 200,000      |   |   | -             |  
|                                                            |   |              |   |   |               |  
|                                                            |   | 498,724      |   |   | 462,529       |  
|                                                            |   |              |   |   |               |  
|STOCKHOLDERS DEFICIENCY                                    |   |              |   |  
|                                                            |   |              |   |   |               |  
|Capital stock  Note 6                                      |   |              |   |   |               |  
|Authorized:                                                 |   |              |   |   |               |  
|150,000,000 common
      shares, par value $0.001 per share |   |              |   |   |               |  
|Issued and outstanding:                                     |   |              |   |   |               |  
|19,724,722 common shares (September 30, 2007: 19,514,722)   |   | 19,725       |   |   | 19,515        |  
|Additional paid-in capital                                  |   | 2,240,984    |   |   | 1,229,526     |  
|Deficit accumulated during the development
      stage      |   | (2,628,851   | ) |   | (1,711,545    | )
|                                                            |   |              |   |   |               |  
|                                                            |   | (368,142     | ) |   | (462,504      | )
|                                                            |   |              |   |   |               |  
|                                                            | $ | 130,582      |   | $ | 25            |  

SEE ACCOMPANYING NOTES

---

|5                                                                                  
|-----------------------------------------------------------------------------------
|ANAVEX LIFE SCIENCES CORP.                                                         
|(A Development Stage Company)                                                      
|INTERIM STATEMENTS OF OPERATIONS                                                   
|for the three months ended December 31, 2007 and 2006 and                          
|for the period from January 23, 2004 (Date of Inception)
      to December 31, 2007
|(Stated in US Dollars)                                                             
|(Unaudited)                                                                        

|                                              |   |                    |   |   |               |   |   | January 23, |  
|--------------------------------------------- | - | ------------------ | - | - | ------------- | - | - | ----------- | -
|                                              |   |                    |   |   |               |   |   | 2004        |  
|                                              |   |                    |   |   |               |   |   | (Date of    |  
|                                              |   | Three months ended |   |   | Inception) to |  
|                                              |   | December 31,       |   |   | December 31,  |  
|                                              |   | 2007               |   |   | 2006          |   |   | 2007        |  
|                                              |   |                    |   |   |               |   |   |             |  
|                                              |   |                    |   |   |               |   |   |             |  
|Expenses                                      |   |                    |   |   |               |   |   |             |  
|Accounting and audit fees                     | $ | 2,150              |   | $ | 5,419         |   | $ | 51,781      |  
|Bank charges and interest                     |   | 1,542              |   |   | 127           |   |   | 5,174       |  
|Consulting fees  Note 5                      |   | 370,700            |   |   | -             |   |   | 811,623     |  
|Legal fees                                    |   | 14,040             |   |   | 3,798         |   |   | 101,824     |  
|Management fees  Note 5                      |   | -                  |   |   | -             |   |   | 14,625      |  
|Office and miscellaneous                      |   | 22,877             |   |   | 398           |   |   | 65,212      |  
|Registration and filing fees                  |   | 3,897              |   |   | 2,597         |   |   | 20,710      |  
|Rent  Note 5                                 |   | 30,000             |   |   | -             |   |   | 103,750     |  
|Research and development                      |   | 223,150            |   |   | -             |   |   | 1,182,848   |  
|Stock-based compensation  Note 6             |   | 248,668            |   |   | -             |   |   | 248,668     |  
|Website design and maintenance                |   | -                  |   |   | -             |   |   | 23,846      |  
|                                              |   |                    |   |   |               |   |   |             |  
|Loss before other item                        |   | (917,024           | ) |   | (12,295       | ) |   | (2,630,061  | )
|                                              |   |                    |   |   |               |   |   |             |  
|Other income (expense)                        |   | (282               | ) |   | 44            |   |   | 1,210       |  
|                                              |   |                    |   |   |               |   |   |             |  
|Net loss for the period                       | $ | (917,306           | ) | $ | (12,295       | ) | $ | (2,628,851  | )
|                                              |   |                    |   |   |               |   |   |             |  
|Basic and diluted loss per share              | $ | (0.05              | ) | $ | (0.00         | ) |   |             |  
|                                              |   |                    |   |   |               |   |   |             |  
|Weighted average number of shares outstanding |   | 19,525,639         |   |   | 19,200,000    |   |   |             |  

SEE ACCOMPANYING NOTES

---

|6                                                                                  
|-----------------------------------------------------------------------------------
|ANAVEX LIFE SCIENCES CORP.                                                         
|(A Development Stage Company)                                                      
|INTERIM STATEMENTS OF CASH FLOWS                                                   
|for the three months ended December 31, 2007 and 2006 and                          
|for the period from January 23, 2004 (Date of Inception)
      to December 31, 2007
|(Stated in US Dollars)                                                             
|(Unaudited)                                                                        

|                                                         |   |                    |   |   |               |   |   | January 23, |  
|-------------------------------------------------------- | - | ------------------ | - | - | ------------- | - | - | ----------- | -
|                                                         |   |                    |   |   |               |   |   | 2004        |  
|                                                         |   |                    |   |   |               |   |   | (Date of    |  
|                                                         |   | Three months ended |   |   | Inception) to |  
|                                                         |   | December 31,       |   |   | December 31,  |  
|                                                         |   | 2007               |   |   | 2006          |   |   | 2007        |  
|                                                         |   |                    |   |   |               |   |   |             |  
|Cash Flows used in Operating Activities                  |   |                    |   |   |               |   |   |             |  
|Net loss for the period                                  | $ | (917,306           | ) | $ | (12,295       | ) | $ | (2,628,851  | )
|Add items not involving cash:                            |   |                    |   |   |               |   |   |             |  
|Stock-based compensation                                 |   | 248,668            |   |   | -             |   |   | 248,668     |  
|Common shares
      issued for consulting services       |   | 193,000            |   |   | -             |   |   | 193,000     |  
|Common shares issued for research and                    |   |                    |   |   |               |   |   |             |  
|development
      expenses                               |   | -                  |   |   | -             |   |   | 800,000     |  
|Management fees contributed                              |   | -                  |   |   | -             |   |   | 14,625      |  
|Rent contributed                                         |   | -                  |   |   | -             |   |   | 3,750       |  
|Adjustments to
      reconcile net loss to net cash used |   |                    |   |   |               |   |   |             |  
|in operating activities:                                 |   |                    |   |   |               |   |   |             |  
|Prepaid expense and deposit                              |   | (10,000            | ) |   | 220           |   |   | (10,000     | )
|Accounts payable
      and accrued liabilities           |   | (118,805           | ) |   | 4,316         |   |   | 345,725     |  
|                                                         |   |                    |   |   |               |   |   |             |  
|Net cash used in operating activities                    |   | (604,443           | ) |   | (7,749        | ) |   | (1,035,083  | )
|                                                         |   |                    |   |   |               |   |   |             |  
|Cash Flows used in Investing Activity                    |   |                    |   |   |               |   |   |             |  
|Acquisition of patents                                   |   | (72,000            | ) |   | -             |   |   | (72,000     | )
|                                                         |   |                    |   |   |               |   |   |             |  
|Cash Flows from Financing Activities                     |   |                    |   |   |               |   |   |             |  
|Promissory note                                          |   | 200,000            |   |   | -             |   |   | 200,000     |  
|Due to related parties                                   |   | -                  |   |   | -             |   |   | 33,665      |  
|Issuance of common shares for cash                       |   | 525,000            |   |   | -             |   |   | 589,000     |  
|Shareholder advances                                     |   | -                  |   |   | -             |   |   | 333,000     |  
|                                                         |   |                    |   |   |               |   |   |             |  
|Net cash provided by financing activities                |   | 725,000            |   |   | -             |   |   | 1,155,665   |  
|                                                         |   |                    |   |   |               |   |   |             |  
|Increase (decrease) in cash during the
      period      |   | 48,557             |   |   | (7,759        | ) |   | 48,582      |  
|                                                         |   |                    |   |   |               |   |   |             |  
|Cash, beginning of period                                |   | 25                 |   |   | 12,275        |   |   | -           |  
|                                                         |   |                    |   |   |               |   |   |             |  
|Cash, end of period                                      | $ | 48,582             |   | $ | 4,516         |   | $ | 48,582      |  
|                                                         |   |                    |   |   |               |   |   |             |  
|Non-cash Transaction  Note 7                            |   |                    |   |   |               |   |   |             |  

SEE ACCOMPANYING NOTES

---

|7                                                                             
|------------------------------------------------------------------------------
|ANAVEX LIFE SCIENCES CORP.                                                    
|(A Development Stage Company)                                                 
|INTERIM STATEMENT OF STOCKHOLDERS EQUITY (DEFICIENCY)                        
|for the period January 23, 2004 (Date of Inception) to
      December 31, 2007
|(Stated in US Dollars)                                                        
|(Unaudited)                                                                   

|                                                                    |              |  |   |            |  |   |              |  |   |            |  |         | Deficit     |   |         |            |  
|------------------------------------------------------------------- | ------------ |  | - | ---------- |  | - | ------------ |  | - | ---------- |  | ------- | ----------- | - | ------- | ---------- | -
|                                                                    |              |  |   |            |  |   | Common Stock |  |   |            |  |         | Accumulated |   |         |            |  
|                                                                    |              |  |   |            |  |   |              |  |   | Additional |  |         | During the  |   |         |            |  
|                                                                    |              |  |   |            |  |   |              |  |   | Paid-in    |  |         | Development |   |         |            |  
|                                                                    |              |  |   | Shares     |  |   | Par Value    |  |   | Capital    |  |         | Stage       |   |         | Total      |  
|                                                                    |              |  |   |            |  |   |              |  |   |            |  |         |             |   |         |            |  
|Capital stock issued for cash on January 23,
      2004             | - at $0.0033 |  |   | 12,000,000 |  | $ | 12,000       |  | $ | 28,000     |  | $       | -           |   | $       | 40,000     |  
|Net loss from January 23, 2004 to September 30,
      2004          |              |  | - |            |  | - |              |  | - |            |  | (14,395 | )           |   | (14,395 | )         
|                                                                    |              |  |   |            |  |   |              |  |   |            |  |         |             |   |         |            |  
|Balance, September 30, 2004                                         |              |  |   | 12,000,000 |  |   | 12,000       |  |   | 28,000     |  |         | (14,395     | ) |         | 25,605     |  
|Capital stock issued for cash                                       | - 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  Note 3                                |              |  |   | -          |  |   | -            |  |   | 1,625      |  |         | -           |   |         | 1,625      |  
|Rent contributed  Note 3                                           |              |  |   | -          |  |   | -            |  |   | 750        |  |         | -           |   |         | 750        |  
|Debt forgiven by directors  Note 3                                 |              |  |   | -          |  |   | -            |  |   | 33,666     |  |         | -           |   |         | 33,666     |  
|Net (loss) for the period                                           |              |  |   | -          |  |   | -            |  |   | -          |  |         | (25,532     | ) |         | (25,532    | )
|                                                                    |              |  |   |            |  |   |              |  |   |            |  |         |             |   |         |            |  
|Balance, September 30, 2006                                         |              |  |   | 19,200,000 |  | $ | 19,200       |  | $ | 96,841     |  | $       | (131,552    | ) | $       | (15,511    | )
|Capital stock issued for research
      and development services on |              |  |   |            |  |   |              |  |   |            |  |         |             |   |         |           
|September 24, 2007                                                  | - at $3.60   |  |   | 222,222    |  |   | 222          |  |   | 799,778    |  |         | -           |   |         | 800,000    |  
|Capital stock issued for research and development
      services    |              |  |   |            |  |   |              |  |   |            |  |         |             |   |         |            |  
|on September 25, 2007                                               | - at $3.60   |  |   | 92,500     |  |   | 93           |  |   | 332,907    |  |         | -           |   |         | 333,000    |  
|Net loss for the period                                             |              |  |   | -          |  |   | -            |  |   | -          |  |         | (1,579,993  | ) |         | (1,579,993 | )

/contd

SEE ACCOMPANYING NOTES

---

|8                                                                             
|------------------------------------------------------------------------------
|Continued                                                                     
|ANAVEX LIFE SCIENCES CORP.                                                    
|(A Development Stage Company)                                                 
|INTERIM STATEMENT OF STOCKHOLDERS EQUITY (DEFICIENCY)                        
|for the period January 23, 2004 (Date of Inception) to
      December 31, 2007
|(Stated in US Dollars)                                                        
|(Unaudited)                                                                   

|                                         |            |  |  |            |  |   |              |  |   |            |  |   | Deficit     |   |   |          |  
|---------------------------------------- | ---------- |  |  | ---------- |  | - | ------------ |  | - | ---------- |  | - | ----------- | - | - | -------- | -
|                                         |            |  |  |            |  |   | Common Stock |  |   |            |  |   | Accumulated |   |   |          |  
|                                         |            |  |  |            |  |   |              |  |   | Additional |  |   | During the  |   |   |          |  
|                                         |            |  |  |            |  |   |              |  |   | Paid-in    |  |   | Development |   |   |          |  
|                                         |            |  |  | Shares     |  |   | Par Value    |  |   | Capital    |  |   | Stage       |   |   | Total    |  
|                                         |            |  |  |            |  |   |              |  |   |            |  |   |             |   |   |          |  
|Balance, September 30, 2007              |            |  |  | 19,514,722 |  |   | 19,515       |  |   | 1,229,526  |  |   | (1,711,545  | ) |   | (462,504 | )
|                                         |            |  |  |            |  |   |              |  |   |            |  |   |             |   |   |          |  
|Capital stock issued for cash            | - at $3.50 |  |  | 150,000    |  |   | 150          |  |   | 524,850    |  |   | -           |   |   | 525,000  |  
|Capital stock issued for consulting      | - at $3.86 |  |  | 50,000     |  |   | 50           |  |   | 192,950    |  |   | -           |   |   | 193,000  |  
|Capital stock issued for debt settlement | - at $4.50 |  |  | 10,000     |  |   | 10           |  |   | 44,990     |  |   | -           |   |   | 45,000   |  
|Stock-based compensation                 |            |  |  | -          |  |   | -            |  |   | 248,668    |  |   | -           |   |   | 248,668  |  
|Net loss for the period                  |            |  |  | -          |  |   | -            |  |   | -          |  |   | (917,306    | ) |   | (917,306 | )
|                                         |            |  |  |            |  |   |              |  |   |            |  |   |             |   |   |          |  
|Balance, December 31, 2007               |            |  |  | 19,724,722 |  | $ | 19,725       |  | $ | 2,240,984  |  | $ | (2,628,851  | ) | $ | (368,142 | )

SEE ACCOMPANYING NOTES

---

|Anavex Life Sciences Corp.       
|---------------------------------
|(A Development Stage Company)    
|Notes to the Financial Statements
|December 31, 2007                
|(Stated in US Dollars)           
|(Unaudited)  Page 9             

|ANAVEX LIFE SCIENCES CORP.       
|---------------------------------
|(A Development Stage Company)    
|NOTES TO THE FINANCIAL STATEMENTS
|December 31, 2007                
|(Stated in US Dollars)           
|(Unaudited)                      

|Note 1 | Interim Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | The accompanying unaudited financial statements have been
      prepared by the Company pursuant to the rules and regulations of the
      United States Securities and Exchange Commission. Certain information and
      disclosures normally included in annual financial statements prepared in
      accordance with accounting principles generally accepted in the United
      States of America have been condensed or omitted pursuant to such rules
      and regulations. In the opinion of management, all adjustments and
      disclosures necessary for a fair presentation of these financial
      statements have been included. Such adjustments consist of normal
      recurring adjustments. These interim financial statements should be read
      in conjunction with the Companys September 30, 2007 audited
      financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Operating results for the three month period ended
      December 31, 2007 are not necessarily indicative of the results that may
      be expected for the year ended September 30, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Note 2 | Continuance of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | The interim financial statements have been prepared using
      generally accepted accounting principles in the United States of America
      applicable for a going concern which assumes that the Company will realize
      its assets and discharge its liabilities in the ordinary course of
      business. As at December 31, 2007, the Company has a working capital
      deficiency of $476,752, has not yet attained profitable operations and has
      accumulated losses of $2,665,461 since its inception. Its ability to
      continue as a going concern is dependent upon the ability of the Company
      to generate profitable operations in the future and/or to obtain the
      necessary financing to meet its obligations and pay its liabilities
      arising from normal business operations when they come due. Realization
      values may be substantially different from carrying values as shown in
      these financial statements should the Company be unable to continue as a
      going concern. The outcome of these matters cannot be predicted with any
      certainty at this time and raise substantial doubt that the Company will
      be able to continue as a going concern. The financial statements do not
      include any adjustments relating to the recoverability and classification
      of recorded assets, or the amount of and classification of liabilities
      that might be necessary in the event the Company cannot continue in
      existence.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Note 3 | Significant Accounting Policy                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Patents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Patents are recorded at cost and are amortized on a
      straight-line basis over their
life.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

---

|Anavex Life Sciences Corp.       
|---------------------------------
|(A Development Stage Company)    
|Notes to the Financial Statements
|December 31, 2007                
|(Stated in US Dollars)           
|(Unaudited)  Page 10            

|Note 4 | Promissory Note Payable                                                                                                      
|------ | -----------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                              
|       | The promissory note payable bears interest at 10% per
      annum, is unsecured and is repayable on or before March 13, 2008.
|       |                                                                                                                              
|Note 5 | Related Party Transactions                                                                                                   
|       |                                                                                                                              
|       | The following amounts were donated to the Company by the
      directors:                                                    

| |                            |   | Three months ended |  |   | January 23,   | 
| | -------------------------- | - | ------------------ |  | - | ------------- | 
| |                            |   | December 31,       |  |   | 2004 (Date of | 
| |                            |   |                    |  |   |               | 
| |                            |   |                    |  |   |               | 
| |                            |   | 2007               |  |   | 2006          | 
| |                            |   |                    |  |   |               | 
| | Management fees            | $ | -                  |  | $ | -             | 
| | Rent                       |   | -                  |  |   | -             | 
| | Debt forgiven by directors |   | -                  |  |   | -             | 
| |                            |   |                    |  |   |               | 
| |                            | $ | -                  |  | $ | -             | 

The following amounts were charged to
the Company by directors and officers of the Company:

| |                 |   | Three months ended |  |   | January 23,   | 
| | --------------- | - | ------------------ |  | - | ------------- | 
| |                 |   | December 31,       |  |   | 2004 (Date of | 
| |                 |   |                    |  |   |               | 
| |                 |   |                    |  |   |               | 
| |                 |   | 2007               |  |   | 2006          | 
| |                 |   |                    |  |   |               | 
| | Consulting fees | $ | 90,000             |  | $ | -             | 

|       | Included in accounts payable and accrued liabilities at
      December 31, 2007 is $108,000 (September 30, 2007 - $167,824) owing to
      directors and officers of the Company.
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                  
|Note 6 | Commitments                                                                                                                                                                      
|       |                                                                                                                                                                                  
|       | a)                                                                                                                                                                               
|       |                                                                                                                                                                                  
|       |                                                                                                                                                                                  

| |                                 |  | Number of |  | Exercise | 
| | ------------------------------- |  | --------- |  | -------- | 
| |                                 |  | Shares    |  | Price    | 
| |                                 |  |           |  |          | 
| | Outstanding, September 30, 2007 |  | -         |  | -        | 
| | Issued                          |  | 150,000   |  | $5.00    | 
| |                                 |  |           |  |          | 
| | Balance, December 31, 2007      |  | 150,000   |  |          | 

---

|Anavex Life Sciences Corp.       
|---------------------------------
|(A Development Stage Company)    
|Notes to the Financial Statements
|December 31, 2007                
|(Stated in US Dollars)           
|(Unaudited)  Page 11            

|Note 6 | Commitments (contd)
|------ | ---------------------
|       |                      
|       | a)                   
|       |                      
|       |                      
|       |                      
|       | b)                   
|       |                      
|       |                      

| |                                 |           |  | Weighted | 
| | ------------------------------- | --------- |  | -------- | 
| |                                 |           |  | Average  | 
| |                                 | Number of |  | Exercise | 
| |                                 | Shares    |  | Price    | 
| |                                 |           |  |          | 
| | Outstanding, September 30, 2007 | 770,000   |  | $3.00    | 
| | Granted                         | 300,000   |  | $3.84    | 
| |                                 |           |  |          | 
| | Outstanding, December 31, 2007  | 1,070,000 |  | $3.23    | 
| |                                 |           |  |          | 
| | Exercisable, December 31, 2007  | 125,000   |  |          | 

The following summarizes information
about the stock options outstanding at December 31, 2007:

ExerciseNumber
    Price
    Expiry Date100,000
    $3.86
    December 1, 201050,000
    $3.75
    November 1, 2012150,000
    $3.85
    December 3, 2012770,000
    $3.00
    February 8, 20171,070,000


At December 31, 2007, the weighted
average remaining contractual life of the outstanding share purchase options is
7.86 years.

---

|Anavex Life Sciences Corp.       
|---------------------------------
|(A Development Stage Company)    
|Notes to the Financial Statements
|December 31, 2007                
|(Stated in US Dollars)           
|(Unaudited)  Page 12            

|Note 6 | Commitments (contd)
|------ | ---------------------
|       |                      
|       | b)                   
|       |                      
|       |                      
|       |                      
|       |                      

| |                         | Three months ended
| | ----------------------- | ------------------
| |                         | December 31,      
| |                         | 2007              
| |                         |                   
| | Expected dividend yield | 0.0%              
| | Expected volatility     | 82.93%            
| | Risk-free interest rate | 2.9% - 3.785%     
| | Expected terms in years | 2  2-1/2 years   

The volatility was determined based on
an index of volatility from comparable companies. The expected term of the
options granted is derived from the simplified method as prescribed by SEC Staff
Accounting Bulletin No. 107.

|Note 7 | Non-cash Transaction                                                                                                                                                                                                      
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                           
|       | During the three months ended December 31, 2007, the
      Company issued 10,000 shares at $4.50 per share for a total of $45,000
      (2006: $Nil) pursuant to an agreement to issue shares for a debt
      settlement.

---

13

Item 2. Management's Discussion and Analysis or Plan of
Operation.

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements as
that term is defined in Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as "may",
"should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors", that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.

Our interim financial statements are stated in United States
Dollars (US$) and are prepared in accordance with United States Generally
Accepted Accounting Principles. The following discussion should be read in
conjunction with our interim financial statements and the related notes that
appear elsewhere in this quarterly report. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the forward
looking statements. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below and elsewhere in this
quarterly report, particularly in the section entitled "Risk Factors" of this
quarterly report.

In this quarterly report, unless otherwise specified, all
dollar amounts are expressed in United States dollars. All references to "common
shares" refer to the common shares in our capital stock.

As used in this quarterly report, the terms "we", "us", "our"
and "Anavex" mean Anavex Life Sciences Corp., unless otherwise indicated. We
have no subsidiaries.

Corporate History

Our company was incorporated in the State of Nevada on January
24, 2004 originally under the name of Thrifty Printing, Inc. On January 25,
2007, we completed a merger with our wholly-owned subsidiary, Anavex Life
Sciences Corp. As a result, we have changed our name from Thrifty Printing,
Inc. to Anavex Life Sciences Corp. We changed the name of our company to
better reflect the new direction and business of our company.

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

Our principal business office is located at 14 Rue Kleberg,
CH-1201 Geneva, Switzerland. Our registered office for service in the State of
Nevada is located at 3990 Warren Way, Reno, NV 89509.

Our Current Business

We are an emerging biopharmaceutical company engaged in the
discovery and development of novel drug targets for the treatment of cancer and
neurological diseases. Our proprietary SIGMACEPTOR discovery Platform involves
the rational drug design of compounds that fulfill specific criteria based on
unmet market needs and new scientific advances.

Our SIGMACEPTOR-N program involves the development of novel
and original drug candidates, targeting neurological and neurodegenerative
diseases (Alzheimers disease, epilepsy, depression, etc.). Our lead drug
candidates exhibit high, non-exclusive affinity for sigma receptors with strong
evidence for anti-amnesic,

---

14

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

Our SIGMACEPTOR-C program involves the development of novel
and original drug candidates targeting cancer. Our lead drug candidates exhibit
high, non-exclusive affinity for sigma receptors with strong evidence for
selective pro-apoptotic, anti-metastatic and low toxicity properties in various
types of solid cancers such as colon, prostate, breast, lung, etc.

Plan of Operation

Overview

This discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those anticipated in these forward-looking statements.

Over the next 12 months, we will continue to develop our
proprietary SIGMACEPTOR Discovery Platforms to determine which compounds, if
any, are ready for the next stage of research, be it pre-clinical or clinical
trials. We will also, through the direction of or Chief Scientific Officer Dr.
Vamvakides, engage certain research institutions and laboratories for the
conduct of specific research and reports.

Capital Resource Requirements

For the next 12 months we plan to expend a total of
approximately $6,595,000 to continue the development of our proprietary
SIGMACEPTOR Discovery Platforms. The majority of our capital resources
requirement is needed to enter one or more of our current compounds into
clinical trials. Specifically, we estimate our operating expenses and working
capital requirements for the next 12 months to be as follows:

Estimated Expenses for the Next 12 MonthsResearch and Development Activities
    $
    5,200,000Officer and Employee Compensation
    
    400,000Sales and Marketing
    
    175,000Legal, Accounting and Professional Fees
    
    120,000General and Administrative
    
    700,000Total
    $
    6,595,000


Research and Development Activities

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

Considerable advancements have been made with ANAVEX 1-41. In
recent pre-clinical animal studies, the compound demonstrated significant
neuroprotective benefits through the prevention of oxidative stress, which
damages and destroys cells and is believed to be a primary cause of Alzheimer's
disease. The novel mechanism of action of ANAVEX 1-41 demonstrates that the
compound may influence the course of Alzheimer's disease and prevent or limit
the creation of plaques that destroy brain cells in the hippocampus, the part of
the brain that regulates learning, emotion and memory. Published results were
presented at the Neuroscience 2007 conference in San Diego, California. Testing
on ANAVEX 1-41 is being conducted in cooperation with Universite Montpellier in
France. Phase 1 trials of ANAVEX 1-41 on humans are scheduled to commence in
late 2008 or early 2009.

Our company has also made promising developments with ANAVEX
  2-73 and its optimized derivative ANAVEX 19-144, its lead drug candidate to
  treat epilepsy. Results from epilepsy animal models reveal that both compounds
  have significant anticonvulsant, anti-amnesic and neuroprotective properties.
  These activities involve muscarinic and sigma-1 receptor components, which is
  significant because it indicates a unique mode of action that may help control
  epilepsy and prevent the process that causes long-term damage to tissue and
  cells as well as biochemical and physiological alterations to the brain. Published
  results were presented at the Neuroscience 2007 conference in San Diego. Ongoing
  pre-clinical studies are being conducted in collaboration with Universite Montpellier
  and are scheduled for completion by the end of May 2008.

---

15

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

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

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

Officer and Employee Compensation

We currently employ three executive officers including a
president, a chief executive officer and a chief scientific officer.
Additionally we have four employees to assist in product research, strategic
planning and business development. We anticipate we may spend up to
approximately $400,000 in officer and employee compensation during the next 12
months.

General Administration

We anticipate spending approximately $700,000 on general and
administration costs in the next 12 months. These costs will consist primarily
of rent and facility support expenses as well as finance and administrative
support compensation but excluding legal fees and auditors fees.

Cash Requirements

We had cash in the amount of $48,582 as of December 31, 2007
and cash on hand as of the date of filing this quarterly report on Form 10-QSB
is not sufficient to fund our current estimates of our operating expenses and
working capital requirements for the next 12 months.

We anticipate that we will not be able to generate revenues
until we further develop our compound candidates and market them to
pharmaceutical companies, which could take up to several years or more. Our
company will not likely generate cash flow sufficient to meet our capital
expenditure requirements for many years to come, if ever. We will require
additional monies during the next 12 month period to execute our business plan.
We plan to obtain this additional money through the sale of our equity
securities or through borrowing the money from existing shareholders or third
parties.

It is possible that we may not be able to obtain funds required
for our continued operation through the sale of our equity securities or through
borrowing the money from existing shareholders or third parties. The additional
financing we seek may not 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, we will not be able to meet
our other obligations as they become due and we will be forced to scale down or
perhaps even cease the operation of our business.

There is substantial doubt about our ability to continue as a
going concern as the continuation of our business is dependent upon obtaining
further financing and the eventual success of our research and development
program in discovering and developing a compound to the point where it can be
marketed to pharmaceutical companies. Then, we will be dependant on the market
acceptance of any product we may offer and the continuing successful development
of our product offerings and related technologies. Finally, we will be required
to achieve a profitable level of operations. However, these steps are a long way
off for our company at its present stage and we must focus for the time being on
raising funds and conducting our planned research and development. Because we
intend to raise the additional funds through the sale of our equity securities,
the issuance of additional equity securities by us could result in a significant
dilution in the equity interests of our current stockholders. Obtaining
commercial loans, assuming those loans would be available, will increase our
liabilities and future cash commitments.

---

16

Recent Share Issuances

On September 11, 2007, we issued 222,222 shares of our common
stock as payment for services rendered by Eurogenet Laboratories. The shares
were issued at a price of $3.60 per share. Eurogenet Laboratories has accepted
the shares in full consideration of the debt owed by our company.

On September 21, 2007, we issued 92,500 shares of our common
stock as payment for debt to Athanasios Skarpelos. The shares were issued at a
price of $3.60 per share. Athanasios Skarpelos has accepted the shares in full
consideration of the debt owed by our company.

On December 17, 2007 we issued 10,000 shares of our common
stock as payment to our employee George Kalkanis for services. The shares were
issued at a price of $4.50 per share.

On December 17, 2007 we issued 150,000 shares of our common
stock in conjunction with a private placement where the company sold 150,000
units of the company at a price of $3.50 per unit. Each unit consisted of one
common share and one common share purchase warrant.

On December 17, 2007 we issued 50,000 shares of our common
stock to a consultant for professional services. The shares were issued at a
price of $3.86 per share.

We issued all of the common shares to a non U.S. person (as
that term is defined in Regulation S of the Securities Act of 1933) in an
offshore transaction relying on Regulation S and/or Section 4(2) of the
Securities Act of 1933.

Off-Balance Sheet Arrangements

Our company has no outstanding derivative financial
instruments, off-balance sheet guarantees, interest rate swap transactions or
foreign currency contracts. Our company does not engage in trading activities
involving non-exchange traded contracts.

RISK FACTORS

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

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

Risks Related To Our Business

We are an early development stage biotechnology research and
development company and may never be able to successfully develop marketable
products. We have a very limited relevant operating history upon which an
evaluation of our performance and prospects can be made. There is no assurance
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

---

17

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.

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

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

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

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

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

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

---

18

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

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

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

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

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

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

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

---

19

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, including those related to, 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.

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.

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

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

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

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

Assuming that we are successful in developing our potential
drug compounds and receive 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,

---

20

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

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

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

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21

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 against, defense or payment of
liabilities could cost us significant amounts of money to defend against or pay
out, 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 three patents and one patent application related to
certain of our potential drug compounds. However, these patents and patent
application do not ensure the protection of our intellectual property for a
number of reasons, including the following:

- We do not know whether our patent application will result in an issued
  patent;
- Our patents and patent application are registered in the Greek National
  Office of Industrial Property and do not offer us protection for our patents
  and patent application outside of Europe;
- 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.

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22

- 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.
- 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.
- 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:

- Defending a lawsuit takes significant time and can
  be very expensive.
- If the court decides that our potential drug
  compound infringes on the competitors patent, we may have to pay substantial
  damages for past infringement.
- The court may prohibit us from selling or licensing
  the potential drug compound unless the patent holder licenses the patent to
  us. The patent holder is not required to grant us a license. If a license is
  available, we may have to pay substantial royalties or grant cross licenses to
  our patents.
- Redesigning our potential drug compounds so that
  they do not infringe on other patents may not be possible or could require
  substantial funds and time.

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

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

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

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

We face burdens relating to the recent trend toward stricter
corporate governance and financial reporting standards. New legislation or
regulations such as Section 404 of the Sarbanes-Oxley Act of 2002 follow the
trend of imposing stricter corporate governance and financial reporting
standards have led to an increase in our costs of compliance including increases
in consulting, auditing and legal fees. The new rules could make it more
difficult or more costly for us to obtain certain types of insurance, including
directors and officers liability insurance, and we may be forced to accept
reduced policy limits and coverage or incur substantially higher costs to obtain
the same or similar coverage. The impact of these events could also make it more
difficult for us to attract and retain qualified persons to serve on our board
of directors, our board committees or as executive officers. A failure to comply
with these new laws and regulations may impact market perception of our
financial condition and could materially harm our

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23

business. Additionally, it is unclear what additional laws or
regulations may develop, and we cannot predict the ultimate impact of any future
changes in law.

Risks Related to Our Common Stock

A decline in the price of our common stock could affect our
ability to raise further working capital and adversely impact our operations.

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

- actual or anticipated variations in our quarterly operating results;
- announcements of new services, products, acquisitions or strategic
  relationships by us or our competitors;
- changes in accounting treatments or principles;
- changes in earnings estimates by securities analysts and in analyst
  recommendations; and
- general political, economic, regulatory and market conditions.

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

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

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

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

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

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

Our common stock is quoted on the OTC Bulletin Board service of
the Financial Industry Regulatory Authority . Trading in stock quoted on the OTC
Bulletin Board is often thin and characterized by wide fluctuations in trading

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24

prices, due to many factors that may have little to do with our
operations or business prospects. This volatility could depress the market price
of our common stock for reasons unrelated to operating performance. Moreover,
the OTC Bulletin Board is not a stock exchange, and trading of securities on the
OTC Bulletin Board is often more sporadic than the trading of securities listed
on a quotation system like Nasdaq or a stock exchange like Amex. Accordingly,
shareholders may have difficulty reselling any of the shares.

Our stock is a penny stock. Trading of our stock may be
restricted by the SECs penny stock regulations and FINRAs sales practice
requirements, which may limit a stockholders ability to buy and sell our
stock.

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

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

Other Risks

Trends, Risks and Uncertainties.

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

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 financial statements as of September 30, 2007 that we have incurred
substantial losses since inception, which raises substantial doubt abut our
ability to continue as a going concern. In the event we are not able to continue
operations you will likely suffer a complete loss of your investment in our
securities. See our auditors report on our consolidated financial statements
elsewhere in this Form 10-KSB.

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25

Item 3. Controls and Procedures.

As required by Rule 13a-15 under the Exchange Act, we have
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures at December 31, 2007, which is the end of the period
covered by this report. This evaluation was carried out by our principal
executive officer and our principal financial officer. Based on this evaluation,
our principal executive officer and our principal financial officer have
concluded that the design and operation of our disclosure controls and
procedures are effective as at the end of the period covered by this report.
There were no changes in our internal control over financial reporting or in
other factors that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting in our most
recent fiscal quarter.

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
by our company in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the SEC's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by our company in the reports that we file or submit
under the Exchange Act is accumulated and communicated to our management,
including our principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

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

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

None.

Item 3. Defaults Upon Senior Securities.

None.

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

None.

Item 5. Other Information

None.

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Item 6. Exhibits.

|Exhibit |                                                                                                                                                                                                                                               
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description                                                                                                                                                                                                                                   
|(3)     | (i) Articles
        of Incorporation; and (ii) Bylaws                                                                                                                                                                                        
|3.1     | Articles of Incorporation (incorporated
        by reference from our Registration Statement on Form SB-2, filed on January
        13, 2005).                                                                                                
|3.2     | Bylaws (incorporated
        by reference from 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 from 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 from our Registration Statement on Form SB-2, filed on January
        13, 2005).                                                                                               
|4.2     | 2007 Stock Option
        Plan (incorporated by reference from our Current Report on Form 8-K, filed
        September 28, 2007).                                                                                                             
|(10)    | Material Contracts                                                                                                                                                                                                                            
|10.1    | Agreement between
        Anavex Life Sciences Corp. and Dr. Alexandre Vamvakides, dated January
        31, 2007 (incorporated by reference from our Current Report on Form 8-K,
        filed February 7, 2007).                            
|10.2    | Abstract of Disclosure of Greek
        Patent Number 1002616 (incorporated by reference from our Current Report
        on Form 8-K, filed February 7, 2007).                                                                                
|10.3    | Abstract of Disclosure
        of Greek Patent Number 1004208 (incorporated by reference from our Current
        Report on Form 8-K, filed February 7, 2007).                                                                                
|10.4    | Abstract of Disclosure of Greek
        Patent Number 1004868 (incorporated by reference from our Current Report
        on Form 8-K, filed February 7, 2007).                                                                                
|10.5    | Written description
        of Greek Patent Application Number 20070100020 (incorporated by reference
        from our Current Report on Form 8-K, filed February 7, 2007).                                                                   
|10.6    | Form of Stock Option Agreement
        (incorporated by reference from our Current Report on Form 8-K, filed
        February 22, 2007).                                                                                                      
|10.7    | Shares for Services
        and Subscription Agreement dated September 11, 2007 between our company
        and Eurogenet Labs S.A. (incorporated by reference from our Current Report
        on Form 8-K, filed September 27, 2007).        
|(14)    | Code of Ethics                                                                                                                                                                                                                                
|14.1    | Code of Conduct
        (incorporated by reference from our Current Report on Form 8-K, filed
        September 28, 2007).                                                                                                                    
|(31)    | Rule 13a-14(a)/15d-14(a) Certifications                                                                                                                                                                                                       
|31.1*   | Certification
        Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Dr. Panos
        Kontzalis                                                                                                                                
|31.2*   | Certification
        Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Harvey Lalach                                                                                                                                              
|(32)    | Section 1350
        Certifications                                                                                                                                                                                                           
|32.1*   | Certifications
        Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
        of the Sarbanes-Oxley Act of 2002                                                                                                       

* Filed herewith.

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27

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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/ Panos
      Kontzalis                                         | 
|--------------------------------------------------------------------- | 
|Dr. Panos Kontzalis, Chief Executive Officer                          | 
|(Principal Executive Officer)                                         | 
|February 14, 2008                                                     | 
|                                                                      | 
|                                                                      | 
|By: /s/ Harvey
      Lalach                                           | 
|Harvey Lalach, President, Chief Financial Officer and
      Secretary | 
|(Principal Financial Officer and Principal Accounting
      Officer)  | 
|February 14, 2008                                                     | 

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