UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

 

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2015

 

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

For the transition period from ______________ to________________

 

Commission file number: 000-51652

 

ANAVEX LIFE SCIENCES CORP.

(Exact name of registrant as specified in its charter)

 

Nevada		98-0608404
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
51 W 52nd Street, 7th Floor, New York, NY  USA		10019
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code 1-844-689-3939

 

Securities registered under Section 12(b) of the Act:

Common Stock, $0.001 par value		NASDAQ Stock Market LLC
Title of each class		Name of each exchange on which registered

    

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value

(Title of class)

 

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨ No x

 

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes ¨ No x

 

Indicate by checkmark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

 

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

¨

 

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

 

Large accelerated filer      ¨		Accelerated filer    ¨
Non-accelerated filer       ¨	(Do not check if a smaller reporting company)	Smaller reporting company   x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ¨ No x

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $12,504,130 based on a price of $0.84 per share, being the closing price of the registrant’s common stock on March 31, 2015.

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date 34,601,173 issued and outstanding as of December 29, 2015.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

None.

 

 

TABLE OF CONTENTS

 

PART I	1
ITEM 1. BUSINESS	1
ITEM 1A. RISK FACTORS	7
ITEM 1B. UNRESOLVED STAFF COMMENTS	15
ITEM 2. PROPERTIES	15
ITEM 3. LEGAL PROCEEDINGS	16
ITEM 4. MINE SAFETY DISCLOSURES	17
PART II	17
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	17
ITEM 6 SELECTED FINANCIAL DATA	19
ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	19
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	25
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL MATTERS	26
ITEM 9A. CONTROLS AND PROCEDURES	26
ITEM 9B OTHER INFORMATION	28
PART III	29
ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	29
ITEM 11. EXECUTIVE COMPENSATION	32
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	36
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	38
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES	38
PART IV	40
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	40

 

 

Forward Looking Statements.

 

This Annual Report on Form 10-K includes forward-looking statements. All statements other than statements of historical facts contained in this Annual Report on Form 10-K, including statements regarding our anticipated future clinical and regulatory milestone events, future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such forward-looking statements include, without limitation, statements regarding the anticipated start dates, durations and completion dates of our ongoing and future clinical studies, statements regarding the anticipated designs of our future clinical studies, statements regarding our anticipated future regulatory submissions and statements regarding our anticipated future cash position. We have based these forward-looking statements largely on our current expectations and projections about future events, including the responses we expect from the U.S. Food and Drug Administration, or FDA, and other regulatory authorities and financial trends that we believe may affect our financial condition, results of operations, business strategy, preclinical and clinical trials and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions including without limitation the risks described in “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. These risks are not exhaustive. Other sections of this Annual Report on Form 10-K include additional factors which could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable laws including the securities laws of the United States, we assume no obligation to update or supplement forward-looking statements.

 

As used in this Annual Report on Form 10-K, the terms “we,” “us,” “our,” and “Anavex” mean Anavex Life Sciences Corp., unless the context clearly requires otherwise.

 

 

PART I

 

ITEM 1. BUSINESS

 

We are a clinical stage biopharmaceutical company engaged in the development of differentiated therapeutics for the treatment of neurodegenerative diseases including drug candidates to treat Alzheimer’s disease, other central nervous system (CNS) diseases, pain and various types of cancer. Our lead compounds ANAVEX 2-73 and ANAVEX PLUS, a combination of ANAVEX 2-73 with donepezil (Aricept), are being developed to treat Alzheimer’s disease and potentially other central nervous system (CNS) diseases.

 

In December 2014 a Phase 2a clinical trial was initiated for ANAVEX 2-73, which is being evaluated for the treatment of Alzheimer’s disease. The randomized trial is designed to assess the safety and exploratory efficacy of ANAVEX 2-73 alone as well as in combination with donepezil (ANAVEX PLUS) in patients with mild to moderate Alzheimer’s disease. ANAVEX 2-73 targets sigma-1 and muscarinic receptors, which have been shown in preclinical studies to reduce stress levels in the brain and to reverse the pathological hallmarks observed in Alzheimer’s disease. ANAVEX 2-73 showed no serious adverse events in a previously performed Phase 1 study. In pre-clinical studies, ANAVEX 2-73 demonstrated anti-amnesic and neuroprotective properties in various animal models including the transgenic mouse model Tg2576.

 

We intend to identify and initiate discussions with potential partners in the next 12 months. Further, we may acquire or develop new intellectual property and assign, license, or otherwise transfer our intellectual property to further our goals.

 

Our Pipeline

 

Our pipeline includes one clinical drug candidate and several compounds in different stages of pre-clinical study.

 

Our proprietary SIGMACEPTOR™ Discovery Platform produced small molecule drug candidates with unique modes of action, based on our understanding of sigma receptors. Sigma receptors may be targets for therapeutics to combat many human diseases, including Alzheimer’s disease. When bound by the appropriate ligands, sigma receptors influence the functioning of multiple biochemical signals that are involved in the pathogenesis (origin or development) of disease.

 

Compounds that have been subjects of our research include the following:

 

ANAVEX 2-73

 

ANAVEX 2-73 may offer a disease-modifying approach in Alzheimer’s disease (AD) by using ligands that activate sigma-1 receptors.

 

In AD animal models, ANAVEX 2-73 has shown pharmacological, histological and behavioral evidence as a potential neuroprotective, anti-amnesic, anti-convulsive and anti-depressive therapeutic agent, due to its potent affinity to sigma-1 receptors and moderate affinities to M1-4 type muscarinic receptors. In addition, ANAVEX 2-73 has shown a potential dual mechanism which may impact both amyloid and tau pathology. In a transgenic AD animal model Tg2576 ANAVEX 2-73 induced a statistically significant neuroprotective effect against the development of oxidative stress in the mouse brain, as well as significantly increased the expression of functional and synaptic plasticity markers that is apparently amyloid-beta independent. It also statistically alleviated the learning and memory deficits developed over time in the animals, regardless of sex, both in terms of spatial working memory and long-term spatial reference memory.

 

 

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

 

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

 

In December 2014 a Phase 2a clinical trial was initiated for ANAVEX 2-73, which is being evaluated for the treatment of Alzheimer’s disease. The randomized trial is designed to assess the safety and exploratory efficacy of ANAVEX 2-73 alone as well as in combination with donepezil (ANAVEX PLUS) in patients with mild to moderate Alzheimer’s disease. ANAVEX 2-73 targets sigma-1 and muscarinic receptors, which have been shown in preclinical studies to reduce stress levels in the brain and to reverse the pathological hallmarks observed in Alzheimer’s disease. ANAVEX 2-73 showed no serious adverse events in a previously performed Phase 1 study. In pre-clinical studies ANAVEX 2-73 demonstrated anti-amnesic and neuroprotective properties in various animal models including the transgenic mouse model Tg2576.

 

Initial analysis of Phase 2a data demonstrated that the study met the primary objective of safety as ANAVEX 2-73 was well tolerated and results were consistent with prior Phase 1 clinical trial data.  The secondary objectives were also met, with ANAVEX 2-73 showing cognitive improvement across all doses in all exploratory cognitive measurements, including the Cogstate battery, Mini Mental State Examination (MMSE), event-related potentials (ERP) and P300 tests, which consistently demonstrated improvements from baseline in the completed PART A portion of the study in 32 mild-to-moderate Alzheimer’s patients.

 

As well, recent preclinical data validates ANAVEX 2-73 as a prospective platform drug for other neurodegenerative diseases beyond Alzheimer’s, most specifically epilepsy. The data demonstrates significant improvement in the reduction of seizures relative to three generations of epilepsy drugs currently on the market, as well as significant synergy with each of these drugs.

 

ANAVEX PLUS

 

ANAVEX PLUS, a combination of ANAVEX 2-73 with donepezil (Aricept®) is a potential novel combination drug for Alzheimer’s disease. Aricept® (donepezil) is now generic. ANAVEX 2-73 showed in combination with donepezil an unexpected and clear synergic effect of memory improvement by up to 80% in animal models. A patent application was filed in the US for the combination of donepezil and ANAVEX 2-73 and if granted would give patent protection at least until 2033.

 

In a humanized calibrated cortical network computer model the unexpected pre-clinical synergy between ANAVEX 2-73 and donepezil was confirmed and ANAVEX PLUS showed an anticipated ADAS-Cog response of 7 points at 12 weeks and 5.5 points at 26 weeks, which represents more than 2x the ADAS-Cog of donepezil alone.

 

 

ANAVEX 3-71

 

ANAVEX 3-71, previously named AF710B is a preclinical drug candidate with a novel mechanism of action via sigma-1 receptor activation and M1 muscarinic allosteric modulation, which has shown to enhance neuroprotection and cognition in Alzheimer's disease. ANAVEX 3-71 is a CNS-penetrable mono-therapy that bridges treatment of both cognitive impairments with disease modifications. It is highly effective in very small doses against the major Alzheimer's hallmarks in transgenic (3xTg-AD) mice, including cognitive deficits, amyloid and tau pathologies, and also has beneficial effects on inflammation and mitochondrial dysfunctions. ANAVEX 3-71 indicates extensive therapeutic advantages in Alzheimer's and other protein-aggregation-related diseases given its ability to enhance neuroprotection and cognition via sigma-1 receptor activation and M1 muscarinic allosteric modulation.

 

ANAVEX 1-41

 

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

 

ANAVEX 1037

 

ANAVEX 1037 is designed for the treatment of prostate cancer. It is a low molecular weight, synthetic compound exhibiting high affinity for sigma-1 receptors at nanomolar levels and moderate affinity for sigma-2 receptors and sodium channels at micromolar levels. In advanced pre-clinical studies, this compound revealed antitumor potential with no toxic side effects. It has also been shown to selectively kill human cancer cells without affecting normal/healthy cells and also to significantly suppress tumor growth in immune-deficient mice models. Scientific publications describe sigma receptor ligands positively, highlighting the possibility that these ligands may stop tumor growth and induce selective cell death in various tumor cell lines. Sigma receptors are highly expressed in different tumor cell types. Binding by appropriate sigma-1 and/or sigma-2 ligands can induce selective apoptosis. In addition, through tumor cell membrane reorganization and interactions with ion channels, our drug candidates may play an important role in inhibiting the processes of metastasis (spreading of cancer cells from the original site to other parts of the body), angiogenesis (the formation of new blood vessels) and tumor cell proliferation.

 

Our compounds are in the pre-clinical and clinical testing stages of development, and there is no guarantee that the activity demonstrated in pre-clinical models will be shown in human testing.

 

Our Target Indications

 

We have developed compounds with potential application to two broad categories and several specific indications. The two categories are diseases of the central nervous system, and cancer. Specific indications include:

 

·

Alzheimer’s disease - In 2014, an estimated 5.2 million Americans are suffering from Alzheimer’s disease. The Alzheimer’s Association® reports that by 2025, 7.1 million Americans will be afflicted by the disease, a 40 percent increase from currently affected patients. Medications on the market today treat only the symptoms of AD and do not have the ability to stop its onset or its progression. There is an urgent and unmet need for both a disease modifying cure for Alzheimer’s disease as well as for better symptomatic treatments.

 

·

Depression - Depression is a major cause of morbidity worldwide according to the World Health Organization (WHO). Pharmaceutical treatment for depression is dominated by blockbuster brands, with the leading nine brands accounting for approximately 75% of total sales. However, the dominance of the leading brands is waning, largely due to the effects of patent expiration and generic competition. Our market research leads us to believe that the worldwide market for pharmaceutical treatment of depression exceeds $11 billion annually.

 

 

·

Epilepsy - Epilepsy is a common chronic neurological disorder characterized by recurrent unprovoked seizures. These seizures are transient signs and/or symptoms of abnormal, excessive or synchronous neuronal activity in the brain. According to the Centers for Disease Control and Prevention, epilepsy affects 2.2 million Americans. Today, epilepsy is often controlled, but not cured, with medication that is categorized as older traditional anti-epileptic drugs and second generation anti epileptic drugs. Because epilepsy afflicts sufferers in different ways, there is a need for drugs used in combination with both traditional anti-epileptic drugs and second generation anti-epileptic drugs. Decision Resources, one of the world’s leading research and advisory firms for pharmaceutical and healthcare issues, finds that the epilepsy market will increase from $2.9 billion in 2011 to nearly $3.7 billion in 2016.

 

·

Neuropathic Pain – We define neuralgia, or neuropathic pain, as pain that is not related to activation of pain receptor cells in any part of the body. Neuralgia is more difficult to treat than some other types of pain because it does not respond well to normal pain medications. Special medications have become more specific to neuralgia and typically fall under the category of membrane stabilizing drugs or antidepressants. Our market research leads us to believe the worldwide market for pharmaceutical treatment of neuropathic pain exceeds $5 billion annually.

 

·

Malignant Melanoma - Predominantly a skin cancer, malignant melanoma can also occur in melanocytes found in the bowel and the eye. Malignant melanoma accounts for 75% of all deaths associated with skin cancer. The treatment includes surgical removal of the tumor, adjuvant treatment, chemo and immunotherapy, or radiation therapy. According to IMS Health the worldwide Malignant Melanoma market is expected to grow from about $900 million in 2012 to $4.4 billion by 2022.

 

·

Prostate Cancer – Specific to men, prostate cancer is a form of cancer that develops in the prostate, a gland in the male reproductive system. The cancer cells may metastasize from the prostate to other parts of the body, particularly the bones and lymph nodes. Drug therapeutics for Prostate Cancer are expected to increase from $8.1 billion in 2012 to nearly $18.6 billion in 2017 according to BCC Research.

 

·

Pancreatic Cancer - Pancreatic cancer is a malignant neoplasm of the pancreas. In the United States approximately 45,000 new cases of pancreatic cancer will be diagnosed this year and approximately 38,000 patients will die as a result of their cancer. Our market research leads us to believe that the market for the pharmaceutical treatment of pancreatic cancer will exceed $1.2 billion in 2015.

 

Competition

 

The pharmaceutical industry is intensely competitive.

 

At this time, we view our competition as biomedical development companies that are trying to discover and develop compounds to be used in the treatment of Alzheimer’s disease, and those companies already doing so. Those companies include Prana Biotechnology Ltd. (NASDAQ:PRAN), Axovant Sciences Ltd. (NYSE: AXON), Perrigo Company PLC (NYSE:PRGO), Pfizer Inc. (NYSE:PFE), Actavis Plc. (NYSE:ACT), Novartis AG (NYSE:NVS), GlaxoSmithKline PLC (NYSE:GSK), Merck & Co. Inc. (NYSE:MRK), Eli Lilly & Co. (NYSE: LLY), Johnson & Johnson (NYSE:JNJ) and Roche Holding AG (VTX:ROG).

 

Each of our 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 will 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 acquire funding for our research and development. To continue to acquire funding for our research and development, we will likely have to show progress toward our goals and we will eventually be expected to develop a compound that may result in a transaction with another pharmaceutical company.

 

 

Patents, Trademarks and Intellectual Property

 

Anavex holds three issued U.S. patent and six U.S. patent applications with various international counterpart applications. The most recent U.S. patent application was filed in July of 2015. We regard patents and other intellectual property rights as corporate assets. Accordingly, we attempt to optimize the value of intellectual property in developing our business strategy including the selective development, protection, and exploitation of our intellectual property rights.

 

In addition to filings made with intellectual property organizations, we protect our intellectual property and confidential information by means of carefully considered processes of communication and the sharing of information, and by the use of confidentiality and non-disclosure agreements and provisions for the same in contractor’s agreements. While no agreement offers absolute protection, such agreements provide some form of recourse in the event of disclosure, or anticipated disclosure.

 

Our intellectual property position, like that of many biomedical companies, is uncertain and involves complex legal and technical questions for which important legal principles are unresolved. We may file additional patent applications in the United States, or in other jurisdictions for further inventions. We may not be successful in obtaining critical claims or in protecting our potential drug compounds or processes. Even if we do obtain patents, they may not adequately protect the technology we own or have licensed. In addition, others may challenge, seek to invalidate, infringe or circumvent any patents we own or license, and rights we receive under those patents may not provide competitive advantages to us. Further, the manufacture, use or sale of our potential drug compounds may infringe the patent rights of others.

 

Our success will also depend in part on our ability to commercialize our compounds without infringing the proprietary rights of others. We have not conducted extensive freedom of use patent searches and no assurance can be given that patents do not exist or could not be filed which would have an adverse effect on our ability to market our technology or maintain our competitive position with respect to our technology. If our compounds or other subject matter are claimed under other existing United States or other patents or are otherwise protected by third party proprietary rights, we may be subject to infringement actions. In such event, we may challenge the validity of such patents or other proprietary rights or we may be required to obtain licenses from such companies in order to develop, manufacture or market our technology. There can be no assurances that we would be able to obtain such licenses or that such licenses, if available, could be obtained on commercially reasonable terms. Furthermore, the failure to either develop a commercially viable alternative or obtain such licenses could result in delays in marketing all of our potential drug compounds based on our drug technology or the inability to proceed with the development, manufacture or sale of potential drug compounds requiring such licenses, which could have a material adverse effect on our business, financial condition and results of operations. If we defend ourselves against charges of patent infringement or to protect our proprietary rights against third parties, substantial costs will be incurred regardless of whether we are successful. Such proceedings are typically protracted with no certainty of success. An adverse outcome could subject us to significant liabilities to third parties and force us to curtail or cease our research and development of our technology.

 

Government Approval

 

Regulation by governmental authorities in the United States and foreign countries is a significant factor in the development, manufacture, and expected marketing of our potential drug compounds and in potential future research and development activities. The nature and extent to which such regulation will apply to us will vary depending on the nature of any potential drug compounds developed. We anticipate that all of our potential drug compounds will require regulatory approval by governmental agencies prior to commercialization.

 

In particular, human therapeutic products are subject to rigorous non-clinical and clinical testing and other approval procedures of the FDA and similar regulatory authorities in other countries. Various federal statutes and regulations also govern or influence testing, manufacturing, safety, labeling, storage, and record-keeping related to such products and their marketing. The process of obtaining these approvals and the subsequent compliance with the appropriate federal statutes and regulations requires substantial time and financial resources. Any failure by us or our collaborators to obtain, or any delay in obtaining, regulatory approval could adversely affect the marketing of any potential drug compounds developed by us, our ability to receive product revenues, and our liquidity and capital resources.

 

 

The steps ordinarily required before a new drug may be marketed in the United States, which are similar to steps required in most other countries, include:

 

·

non-clinical laboratory tests, non-clinical studies in animals, formulation studies and the submission to the FDA of an investigational new drug application;

·

adequate and well-controlled clinical trials to establish the safety and efficacy of the drug;

·

the submission of a new drug application or biologic license application to the FDA; and

·

FDA review and approval of the new drug application or biologics license application.

 

Non-clinical tests include laboratory evaluation of potential drug compound chemistry, formulation and toxicity, as well as animal studies. The results of non-clinical testing are submitted to the FDA as part of an investigational new drug application. A 30-day waiting period after the filing of each investigational new drug application is required prior to commencement of clinical testing in humans. At any time during the 30-day period or at any time thereafter, the FDA may halt proposed or ongoing clinical trials until the FDA authorizes trials under specified terms. The investigational new drug application process may be extremely costly and substantially delay the development of our potential drug compounds. Moreover, positive results of non-clinical tests will not necessarily indicate positive results in subsequent clinical trials. The FDA may require additional animal testing after an initial investigational new drug application is approved and prior to Phase III trials.

 

Clinical trials to support new drug applications are typically conducted in three sequential phases, although the phases may overlap. During Phase I, clinical trials are conducted with a small number of subjects to assess metabolism, pharmacokinetics, and pharmacological actions and safety, including side effects associated with increasing doses. Phase II usually involves studies in a limited patient population to assess the efficacy of the drug in specific, targeted indications; assess dosage tolerance and optimal dosage; and identify possible adverse effects and safety risks.

 

If a compound is found to be potentially effective and to have an acceptable safety profile in Phase I and II evaluations, Phase III trials are undertaken to further demonstrate clinical efficacy and to further test for safety within an expanded patient population at geographically dispersed clinical trial sites.

 

After successful completion of the required clinical trials, a new drug application is generally submitted. The FDA may request additional information before accepting the new drug application for filing, in which case the new drug application must be resubmitted with the additional information. Once the submission has been accepted for filing, the FDA reviews the new drug application and responds to the applicant. The FDA’s requests for additional information or clarification often significantly extends the review process. The FDA may refer the new drug application to an appropriate advisory committee for review, evaluation, and recommendation as to whether the new drug application should be approved, although the FDA is not bound by the recommendation of an advisory committee.

 

Sales outside the United States of potential drug compounds we develop will also be subject to foreign regulatory requirements governing human clinical trials and marketing for drugs. The requirements vary widely from country to country, but typically the registration and approval process takes several years and requires significant resources. In most cases, if the FDA has not approved a potential drug compound for sale in the United States, the potential drug compound may be exported for sale outside of the United States, only if it has been approved in any one of the following: the European Union, Canada, Australia, New Zealand, Japan, Israel, Switzerland and South Africa. There are specific FDA regulations that govern this process.

 

 

Research and Development Expenses

 

Historically, a significant portion of our operating expenses has related to research and development. See “Financial Statements and Supplementary Data” of this Annual Report for costs and expenses related to research and development, and other financial information for fiscal years 2015 and 2014.

 

Scientific Advisors

 

We are advised by scientists and physicians with experience relevant to our Company and our product candidates. In the past twelve months, our advisors included Dr. Harald Hampel, Ph.D., Dr. Jacqueline French, Dr. Michael Gold, John Harrison, Ph.D., Dr, Ottavio Arancio, Dr. Norman Relkin, Ph.D., Corinne Lasmezas, Ph.D., Tangui Nicolas Maurice, Ph.D., Abraham Fisher, Ph.D., Dr. Paul Aisen, and Dr. Jeffrey Cummings.

 

Officers

 

One of our directors is engaged as an officer-employee of the Company serving in the capacity of Chief Executive Officer, president, secretary, and treasurer.

 

Employees

 

We currently have seven (7) full-time employees, and we retain several independent contractors on an as-needed basis. We believe that we have good relations with our employees.

 

ITEM 1A. RISK FACTORS

 

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

 

Risks Related to our Company

 

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

 

Since inception on January 23, 2004 through September 30, 2015, we have an accumulated deficit of $63,281,455. We can offer no assurance that we will ever operate profitably or that we will generate positive cash flow in the future. To date, we have not generated any revenues from our operations. Our history of losses and no revenues raise substantial doubt about our ability to continue as a going concern. As a result, our management expects the business to continue to experience negative cash flow for the foreseeable future and cannot predict when, if ever, our business might become profitable. We will need to raise additional funds, and such funds may not be available on commercially acceptable terms, if at all. If we are unable to raise funds on acceptable terms, we may not be able to execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements. This may seriously harm our business, financial condition and results of operations.

 

 

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

 

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

 

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

 

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

 

Risks Related to our Business

 

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

 

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

 

·

the possibility that non-clinical testing or clinical trials may show that our potential drug compounds are ineffective and/or cause harmful side effects;

·

our potential drug compounds may prove to be too expensive to manufacture or administer to patients;

·

our potential drug compounds may fail to receive necessary regulatory approvals from the United States Food and Drug Administration or foreign regulatory authorities in a timely manner, or at all;

·

even if our potential drug compounds are approved, we may not be able to produce them in commercial quantities or at reasonable costs;

·

even if our potential drug compounds are approved, they may not achieve commercial acceptance;

·

regulatory or governmental authorities may apply restrictions to any of our potential drug compounds, which could adversely affect their commercial success; and

·

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

 

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

 

 

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

 

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

 

·

conduct research, non-clinical testing and human studies;

·

establish pilot scale and commercial scale manufacturing processes and facilities; and

·

establish and develop quality control, regulatory, marketing, sales, finance and administrative capabilities to support these programs.

 

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

 

·

the pace of scientific progress in our research and development programs and the magnitude of these programs;

·

the scope and results of pre-clinical testing and human studies;

·

the time and costs involved in obtaining regulatory approvals;

·

the time and costs involved in preparing, filing, prosecuting, securing, maintaining and enforcing patents;

·

competing technological and market developments;

·

our ability to establish additional collaborations;

·

changes in our existing collaborations;

·

the cost of manufacturing scale-up; and

·

the effectiveness of our commercialization activities.

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

·

efficacy or safety concerns with the potential drug compounds, even if not justified;

·

manufacturing difficulties or concerns;

·

regulatory proceedings subjecting the potential drug compounds to potential recall;

·

publicity affecting doctor prescription or patient use of the potential drug compounds;

·

pressure from competitive products; or

·

introduction of more effective treatments.

 

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

 

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

 

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

 

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

 

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

 

·

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

·

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

·

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

 

If this happens, our business will be adversely affected.

 

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

The patent positions of biopharmaceutical products and processes 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 hold ownership rights to three issued U.S. patent and six U.S. patent applications with various international counterpart applications, all of which relate to drug candidates. Neither patents nor patent applications ensure the protection of our intellectual property for a number of reasons, including the following:

 

1.

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

2.

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

 

 

3.

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

4.

Our primary patent applications for ANAVEX 2-73 and the combination of ANAVEX 2-73 with donepezil are pending only in the United States Patent and Trademark Office. The lack of patent protection in global markets may inhibit our ability to advance our compounds and may make Anavex less attractive to potential partners.

5.

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

6.

If a court decides that our drug compound, its method of manufacture or use, infringes on the competitor’s patent, we may have to pay substantial damages for infringement.

7.

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

8.

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 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 unable or unwilling to grant us exclusive rights to technology or products derived from these collaborations prior to entering into the relationship.

 

If we do not obtain required intellectual property 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 rights or 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.

 

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

 

As of September 30, 2015, we had total liabilities of $2,660,910 and accumulated deficit of $63,281,455. Our substantial indebtedness and other current financial obligations and any that we may become a party to in the future could:

 

·

impair our ability to obtain financing in the future for working capital, capital expenditures, or general corporate purposes;

·

have a material adverse effect on us if we fail to comply with financial and affirmative and restrictive covenants in debt agreements and an event of default occurs as a result of a failure that is not cured or waived;

·

require us to dedicate a substantial portion of our cash flow for interest payments on our indebtedness and other financial obligations, thereby reducing the availability of our cash flow to fund working capital and capital expenditures;

·

limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

·

place us at a competitive disadvantage compared to our competitors that have proportionally less debt.

 

 

 

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

 

In the past we have experienced material weaknesses in our internal control over financial reporting, which if continued, could impair our financial condition.

 

As reported here in this Annual Report on Form 10-K, our management concluded that our internal control over financial reporting was not effective as of September 30, 2015. Such ineffectiveness was due to material weaknesses regarding our control environment (an insufficient segregation of duties in our finance and accounting functions due to limited personnel) and a lack of monitoring controls to determine the adequacy or our internal control over financial reporting and related policies. Due to our size and nature, segregation of all conflicting duties has not always been possible and may not be economically feasible. We endeavor to take appropriate and reasonable steps to make improvements to remediate these deficiencies, and intend to consider the results of our remediation efforts and related testing as part of our year-end 2016 assessment of the effectiveness of our internal control over financial reporting in light of our strategic plan and make any changes that our management deems appropriate. If we have continued material weaknesses in our internal financial reporting, our financial condition could be impaired.

 

Risks Related to our Common Stock

 

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

 

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

 

·

actual or anticipated variations in our quarterly operating results;

·

announcements of new services, products, acquisitions or strategic relationships by us or our competitors;

·

changes in accounting treatments or principles;

·

changes in earnings estimates by securities analysts and in analyst recommendations; and

·

general political, economic, regulatory and market conditions.

 

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

 

 

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

 

Our articles of incorporation authorize the issuance of 100,000,000 shares of common stock. Our board of directors has the authority to issue additional shares of common stock up to the authorized capital stated in the articles of incorporation. Our board of directors may choose to issue some or all of such shares of common stock to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares of common stock will result in a reduction of the book value or market price of the outstanding shares of our common stock. If we do issue any such additional shares of common stock, such issuance also will cause a reduction in the proportionate ownership and voting power of all other stockholders. Further, any such issuance may result in a change of control of our corporation.

 

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

 

There is currently a limited market for our common stock and the volume of our common stock traded on any day may vary significantly from one period to another. Trading in our stock is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. The availability of buyers and sellers represented by this volatility could lead to a market price for our common stock that is unrelated to operating performance. There is no assurance that a sufficient market will develop in the stock, in which case it could be difficult for our stockholders to resell their stock.

 

The sale or issuance of our common stock to Lincoln Park may cause dilution and the sale of the shares of common stock acquired by Lincoln Park, or the perception that such sales may occur, could cause the price of our common stock to fall.

 

On October 21, 2015, we entered into a Purchase Agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park committed to purchase up to $50,000,000 of our common stock. Concurrently with the execution of the Purchase Agreement, we agreed to issue 179,598 shares of our common stock to Lincoln Park as a commitment fee and shall issue up to 89,799 shares pro rata, when and if, Lincoln Park purchases at the Company’s discretion the $50,000,000 aggregate commitment. The purchase shares that may be sold pursuant to the Purchase Agreement may be sold by us to Lincoln Park at our discretion from time to time over a 36-month period commencing after the SEC declared effective the related registration statement. The purchase price for the shares that we may sell to Lincoln Park under the Purchase Agreement will fluctuate based on the price of our common stock. Depending on market liquidity at the time, sales of such shares may cause the trading price of our common stock to fall.

 

We generally have the right to control the timing and amount of any sales of our shares to Lincoln Park, except that, pursuant to the terms of our agreements with Lincoln Park, we would be unable to sell shares to Lincoln Park if and when the closing sale price of our common stock is below $3.00 per share, subject to adjustment as set forth in the Purchase Agreement. Additional sales of our common stock, if any, to Lincoln Park will depend upon market conditions and other factors to be determined by us. Lincoln Park may ultimately purchase all of the shares of our common stock that may be sold pursuant to the Purchase Agreement and, after it has acquired shares, Lincoln Park may sell all, some or none of those shares. Therefore, sales to Lincoln Park by us could result in substantial dilution to the interests of other holders of our common stock. Additionally, the sale of a substantial number of shares of our common stock to Lincoln Park, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

Not Applicable.

 

ITEM 2. PROPERTIES

 

We do not own any real property. We maintain several offices of which the office at 7th Floor, 51 West 52nd Street, New York, NY, USA is our main office. Our lease costs are $9,500 per month. We believe our offices are suitable and adequate to operate our business from at this time as they and provide us with sufficient space to conduct our operations. We fully utilize our current premises.

 

 

ITEM 3. LEGAL PROCEEDINGS

 

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

 

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Market information

 

Our common stock is quoted on the NASDAQ Stock Market LLC (“NASDAQ”) under the symbol “AVXL.” Prior to October 28, 2015 and during the fiscal year ended September 30, 2015, our common stock was quoted on the OTC Markets - OTCQX under the trading symbol “AVXL”.

 

The following table shows the quarterly range of high and low bid information for our common stock over the fiscal quarters for the last two fiscal years as quoted on OTCQX. We obtained the following high and low bid information from the OTC-Markets. These over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions. Investors should not rely on historical prices of our common stock as an indication of its future price performance. On December 28, 2015, the closing price of our common stock as reported by NASDAQ was $7.03 per share.

 

Quarter Ended		High				Low
September 30, 2015		$	6.52			$	1.80
June 30, 2015		$	1.88			$	0.91
March 31, 2015		$	0.91			$	0.64
December 31, 2014		$	0.83			$	0.64
September 30, 2014		$	1.40			$	0.72
June 30, 2014		$	1.84			$	1.08
March 31, 2014		$	2.12			$	1.00
December 31, 2013		$	2.60			$	1.00

 

Transfer Agent

 

Shares of our common stock are issued in registered form. The Nevada Agency and Trust Company, 50 West Liberty Street, Reno, Nevada (Telephone: (775) 322-0626; Facsimile: (775) 322-5623) is the registrar and transfer agent for shares of our common stock.

 

Holders of Common Stock

 

As of December 29, 2015, there were approximately 71 holders of record of our common stock. As of such date, 34,601,173 shares of our common stock were issued and outstanding.

 

 

Dividends

 

We have not paid any cash dividends on our common stock and have no intention of paying any dividends on the shares of our common stock. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our board of directors.

 

Securities Authorized for Issuance under Equity Compensation Plans or Individual Compensation Arrangements

 

The following table summarizes certain information regarding our equity compensation plan or individual compensation arrangements as at September 30, 2015:

 

Equity Compensation Plan Information
Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants and rights  (a)				Weighted-average exercise price of outstanding options, warrants and rights (b)				Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders			792,500				1.96				Nil
Equity compensation plans not approved by security holders			6,050,553				5.04				5,771,803
Total			6,843,053								5,771,803

 

Stock Option Plan

 

On September 18, 2015, our board of directors approved a 2015 Omnibus Incentive Plan (the “2015 Plan”), which provides for the grant of stock options and restricted stock awards to directors, officers, employees and consultants of the Company.

 

The maximum number of our common shares reserved for issue under the plan is 6,050,553 shares subject to adjustment in the event of a change of the Company’s capitalization. As a result of the adoption of the 2015 Plan, no further option awards will be granted under any previously existing stock option plan. Stock option awards previously granted under previously existing stock option plans remain outstanding in accordance with their terms.

 

The purpose of the 2015 Plan is to retain the services of valued key employees and consultants of our company and such other persons as will be select in accordance with the 2015 Plan, and to encourage such persons to acquire a greater proprietary interest in our company, thereby strengthening their incentive to achieve the objectives of the shareholders of our company, and to serve as an aid and inducement in the hiring of new employees and to provide an equity incentive to consultants.

 

The 2015 Plan is administered by the board of directors, except that it may, in its discretion, delegate such responsibility to a committee of such board. The exercise price will be determined by the board of directors at the time of grant but in no event will be less than 110% of fair market value of the Company’s shares of common stock on the grant date. Stock options may be granted under the 2015 Plan for an exercise period of up to ten years from the date of grant of the option or such lesser periods as may be determined by the board, subject to earlier termination in accordance with the terms of the 2015 Plan.

 

 

Recent Sales of Unregistered Securities

 

Since the beginning of our fiscal year ended September 30, 2015, we have not sold any equity securities that were not registered under the Securities Act of 1933 that were not previously reported in a quarterly report on Form 10-Q or in a current report on Form 8-K.

 

Purchases of Equity Securities by Our Company and Affiliated Purchasers

 

None.

 

ITEM 6 SELECTED FINANCIAL DATA

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item. 

 

ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

The following discussion should be read in conjunction with our audited consolidated financial statements and notes thereto for the fiscal year ended September 30, 2015, included elsewhere in this Annual Report on Form 10-K. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains “forward-looking statements”. Forward-looking statements are generally written in the future tense and/or are preceded by words such as “may,” “should,” “forecast,” “could,” “expect,” “suggest,” “believe,” “anticipate,” “intend,” “plan,” or other similar words. The forward-looking statements contained in this Annual Report on Form 10-K involve a number of risks and uncertainties, many of which are outside of our control. Factors that could cause actual results to differ materially from projected results include, but are not limited to, those discussed in “Risk Factors” elsewhere in this Annual Report on Form 10-K. Readers are expressly advised to review and consider those Risk Factors, which include risks associated with (1) our ability to successfully conduct clinical and preclinical trials for our product candidates, (2) our ability to obtain required regulatory approvals to develop and market our product candidates, (3) our ability to raise additional capital on favorable terms, (4) our ability to execute our development plan on time and on budget, (5) our ability to obtain commercial partners, (6) our ability, whether alone or with commercial partners, to successfully commercialize any of our product candidates that may be approved for sale, and (7) our ability to identify and obtain additional product candidates. Although we believe that the assumptions underlying the forward-looking statements contained in this Annual Report on Form 10-K are reasonable, any of the assumptions could be inaccurate, and therefore there can be no assurance that such statements will be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. Furthermore, past performance in operations and share price is not necessarily indicative of future performance. Except as required by applicable laws including the securities laws of the United States, we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Our Business

 

We are a clinical stage biopharmaceutical company engaged in the development of drug candidates to treat Alzheimer’s disease, other central nervous system (CNS) diseases, pain and various types of cancer. Our lead compounds ANAVEX 2-73 and ANAVEX PLUS, a combination of ANAVEX 2-73 with donepezil (Ariceptâ) are being developed to treat Alzheimer’s disease and potentially other central nervous system (CNS) diseases.

 

 

In December 2014 a Phase 2a clinical trial was initiated for ANAVEX 2-73, which is being evaluated for the treatment of Alzheimer’s disease. The randomized trial is designed to assess the safety and exploratory efficacy of ANAVEX 2-73 alone as well as in combination with donepezil (ANAVEX PLUS) in patients with mild to moderate Alzheimer’s disease. ANAVEX 2-73 targets sigma-1 and muscarinic receptors, which have been shown in preclinical studies to reduce stress levels in the brain and to reverse the pathological hallmarks observed in Alzheimer’s disease. ANAVEX 2-73 showed no serious adverse events in a previously performed Phase 1 study. In pre-clinical studies ANAVEX 2-73 demonstrated anti-amnesic and neuroprotective properties in various animal models including the transgenic mouse model Tg2576.

 

Initial analysis of Phase 2a data demonstrated that the study met the primary objective of safety as ANAVEX 2-73 was well tolerated and results were consistent with prior Phase 1 clinical trial data.  The secondary objectives were also met, with ANAVEX 2-73 showing cognitive improvement across all doses in all exploratory cognitive measurements, including the Cogstate battery, Mini Mental State Examination (MMSE), event-related potentials (ERP) and P300 tests, which consistently demonstrated improvements from baseline in the completed PART A portion of the study in 32 mild-to-moderate Alzheimer’s patients.

 

We intend to identify and initiate discussions with potential partners in the next 12 months. Further, we may acquire or develop new intellectual property and assign, license, or otherwise transfer our intellectual property to further our goals.

 

Recent Corporate Developments

 

Since the commencement of our fourth quarter ended September 30, 2015, we have experienced the following significant corporate developments:

 

 

·

On August 10, 2015, our Company announced that it has been awarded a research grant from The Michael J. Fox Foundation for Parkinson’s Research (MJFF) to develop ANAVEX 2-73 for the treatment of Parkinson’s disease. The MJFF grant is expected to fully fund a preclinical study worth $286,455 on the effect of ANAVEX 2-73 in a Parkinson’s disease animal model. The study may also provide further evidence for the involvement of sigma-1 receptors in potentially disease-modifying therapies for Parkinson’s disease.

 

·

On August 12, 2015, our Company announced that it has received a Notice of Allowance from the U.S. Patent and Trademark Office (USPTO) for U.S. Pat. App. No. 14/205,637 related to ANAVEX 2-73. Upon issuance, the patent will provide intellectual property (IP) protection until at least 2030.

 

·

Effective October 1, 2015, the board of directors appointed Sandra Boenisch, to serve as the Company’s Principal Financial Officer until the earlier of a successor’s appointment or her resignation.

 

·

On October 7, 2015, we effected a 1-for-4 reverse split of our common stock.

 

·

On October 28, 2015, we announced that our shares of common stock began trading on NASDAQ under the symbol “AVXL.”

 

·

On November 7, 2015 we presented positive safety and cognitive efficacy data for Phase 2a of our ANAVEX 2-73 clinical trial at the international CTAD 2015 conference in Barcelona, Spain. Initial analysis of Phase 2a data demonstrated that the study met the primary objective of safety as ANAVEX 2-73 was well tolerated and results were consistent with prior Phase 1 clinical trial data.

 

The secondary objectives were also met, with ANAVEX 2-73 showing cognitive improvement across all doses in all exploratory cognitive measurements, including the Cogstate battery, Mini Mental State Examination (MMSE), event-related potentials (ERP) and P300 tests, which consistently demonstrated improvements from baseline in the completed PART A portion of the study in 32 mild-to-moderate Alzheimer’s patients.

 

 

Results of Operations

 

Revenue

 

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

 

Operating Expenses

 

Our operating expenses for the year ended September 30, 2015 were $7,108,714, which represents an increase of $4,139,739 compared to $2,968,975 for the year ended September 30, 2014. The increase was mainly attributable to an increase in research and development expenses related to our Phase 2a clinical trial for ANAVEX 2-73, which commenced in December, 2014. We expect our research and development expenses will continue to increase as a result of this clinical trial and other auxiliary research and development activities. We continue to target potential research partners to further advance our pipeline compounds. In addition, the increase was attributable to compensation charges associated with the vesting of restricted stock awards to our CEO, in connection with the achievement of certain performance milestones. During the year ended September 30, 2015 we also incurred an increase in consulting fees relating to several consultants engaged to assist the Company with business development and scientific review, and legal fees relating to an increase in financing related activities.

 

Other income (expenses)

 

The aggregate amount in the other income (expense) for the year ended September 30, 2015, amounted to $(4,999,416) as compared to $(8,399,378) for the comparable year ended September 30, 2014. The largest single decrease in this loss was as a result of certain non-cash, non-operational accounting charges related to amendments to the Debentures in the comparative period which resulted in a non-cash accounting charge being recorded on the statement of operations in that period. Other net expenses in the current year consist primarily of accretion charges associated with the early conversion of a majority of the remaining principal balances owing under the Debentures during the year ended September 30, 2015.

 

Income tax expense (benefit)

 

The Company did not have any income tax expense during the year ended September 30, 2015. During the year ended September 30, 2014, the Company recognized a deferred income tax benefit of $1,400,000 in connection with the issuance of Convertible Debentures and a related beneficial conversion feature for accounting purposes, which effectively created a temporary difference for tax purposes. The temporary difference for tax purposes was recognized as a deferred income tax liability, which in turn resulted in the Company being able to reduce its existing valuation allowance against deferred income tax assets available to offset such liability.

 

Liquidity and Capital Resources

 

Working Capital

 

		2015				2014
Current Assets		$	15,468,661				7,351,255
Current Liabilities			2,660,578				1,441,149
Working Capital		$	12,808,083				5,910,106

 

As of September 30, 2015, we had $15,290,976 in cash, an increase of $8,028,838 from September 30, 2014. The principal reason for this increase is due to cash received pursuant to the exercise of outstanding share purchase warrants of the Company, and the issuance of common stock to Lincoln Park under a $10 Million equity purchase agreement. This increase was partially offset by cash used in operations and for the advancement of clinical trial work. We intend to use the majority of our capital resources to complete the next clinical trial for ANAVEX 2-73 and to perform work necessary to prepare for further clinical development.

 

Cash Flows

		2015				2014
Cash flows used in operating activities		$	(4,227,006	)		$	(2,659,379	)
Cash flows used in investing activities			-				(3,015	)
Cash flows provided by financing activities			12,255,844				9,579,458
Increase in cash		$	8,028,838			$	6,917,064

 

 

Cash flow used in operating activities

 

Our cash used in operating activities for the year ended September 30, 2015 was $4,227,006 compared to $2,659,379 used in operating activities for the comparative year ended September 30, 2014. The increase in cash used in operating activities was primarily as a result of the increased research and development activities as a result of the commencement of clinical trial work.

 

Cash used in investing activities

 

Cash used in investing activities was $Nil in the current period ended September 30, 2015 compared to $3,015 in the comparative period. This is as a result of a small equipment purchase in the comparative period.

 

Cash flow provided by financing activities

 

Our cash provided by financing activities for the year ended September 30, 2015 was $12,255,844, mostly attributable to cash received pursuant to the exercise of outstanding share purchase warrants and cash from the issuance of common shares under the Purchase Agreement with Lincoln Park (described under Future Financing below).

 

In the comparative year ended September 30, 2014, we had cash inflows of $9,579,458 primarily from the issuance of Senior Secured Convertible debentures in the comparative period.

 

Other Financings

 

$10 Million Lincoln Park Purchase Agreement

 

On July 5, 2013, the Company entered into a Purchase Agreement (the “$10 Million Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”). Pursuant to the $10 Million Purchase Agreement, Lincoln Park initially purchased 250,000 shares of the Company’s common stock for $100,000 and the Company had the right, in its sole discretion over a 25-month period, to sell to Lincoln Park up to the additional aggregate commitment of $9.9 Million of shares of common stock. There were no upper limits on the per share price that Lincoln Park could be required to pay to purchase such common stock. Furthermore, the Company controlled the timing and amount of sales of shares of common stock to Lincoln Park except that, pursuant to the terms of the $10 Million Purchase Agreement, we were unable to sell shares to Lincoln Park if and when the closing sale price of our common stock was below $2 per share, subject to adjustment as set forth in the $10 Million Purchase Agreement. Lincoln Park had no right to require any sales and was obligated to purchase common stock as directed by the Company.

 

During the year ended September 30, 2015, we issued an aggregate of 1,852,144 shares of common stock under the $10 Million Purchase Agreement, including 1,825,000 shares of common stock for an aggregate purchase price of $8,127,265 and 27,144 commitment shares. Subsequent to September 30, 2015, we issued to Lincoln Park an aggregate of 296,104 shares of common stock under the $10 Million Purchase Agreement, including 290,523 shares of common stock for an aggregate purchase price of $1,684,565 and 5,581 commitment shares, representing all remaining purchase amounts due under the $10 Million Purchase Agreement.

 

 

$50 Million Lincoln Park Purchase Agreement

 

On October 21, 2015, the Company entered into a second Purchase Agreement (the “$50 Million Purchase Agreement”) with Lincoln Park. Pursuant to the $50 Million Purchase Agreement, the Company has the right, in its sole discretion over a 36-month period, to sell to Lincoln Park up to an aggregate of $50 Million of shares of its common stock. There are no upper limits on the per share price that Lincoln Park may pay to purchase such common stock. Furthermore, the Company controls the timing and amount of any future sales, if any, of shares of common stock to Lincoln Park except that, pursuant to the terms of the $50 Million Purchase Agreement, we will be unable to sell shares to Lincoln Park if and when the closing sale price of our common stock is below $3 per share, subject to adjustment as set forth in the $50 Million Purchase Agreement. Lincoln Park has no right to require any sales and is obligated to purchase common stock as directed by the Company.

 

Other than our rights related to the Lincoln Park financing, which can only be exercised subject to certain trading price conditions described above, there can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to delay or scale down some or all of our research and development activities or perhaps even cease the operation of our business.

 

We expect that we will be able to fund our operations for the next 12 months through existing cash on hand and through equity and debt financings in the future. If we raise additional financing by issuing equity securities, our existing stockholders’ ownership will be diluted. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

 

Off-Balance Sheet Arrangements

 

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

 

Application of Critical Accounting Policies

 

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

 

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

 

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

 

Research and Development Expenses

 

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

 

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

 

 

Stock-based Compensation

 

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

 

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

 

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

 

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

 

Derivative Liabilities

 

From time to time, we may issue warrants and convertible promissory notes with embedded conversion options which, dependent on their specific contractual terms or other conditions, may be required to be accounted for as separate derivative liabilities. These liabilities are required to be measured at fair value. These instruments are then adjusted to reflect fair value at each period end. Any increase or decrease in the fair value is recorded in results of operations as change in fair value of derivative liabilities. In determining the appropriate fair value, we use the binomial pricing model because these instruments are not quoted on an active market.

 

Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in assumptions can materially affect the fair value estimate and therefore the binomial model does not necessarily provide a reliable single measure of the fair value of these instruments.

 

Recent Accounting Pronouncements

 

In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period ("ASU 2014-12"). ASU 2014-12 requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. We are currently evaluating the impact this guidance on our financial condition, results of operations and cash flows.

 

 

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 will explicitly require management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016. We are currently evaluating the impact this guidance on our financial condition, results of operations and cash flows.

 

On May 28, 2014, the FASB and the International Accounting Standards Board (IASB) issued a converged standard on revenue recognition from contracts with customers, ASU 2014-09 (Topic 606 and IFRS 15). This standard will supersede nearly all existing revenue recognition guidance. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. We are currently evaluating the impact this guidance will have on our financial condition, results of operations and cash flows.

 

In April 2015, the Financial Accounting Standards Board (FASB), issued the Accounting Standards Update 2015-03, Interest - Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs, that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the debt liability rather than as an asset. For public business entities, the final guidance will be effective for fiscal years beginning after 15 December 2015, however, early adoption (including in interim periods) is permitted. Upon adoption, an entity must apply the new guidance retrospectively to all prior periods presented in the financial statements. An entity is also required in the year of adoption to provide certain disclosures about the change in accounting principle, including the nature of and reason for the change, the transition method, a description of the prior-period information that has been retrospectively adjusted and the effect of the change on the financial statement line items (that is, debt issuance cost asset and the debt liability). The Company plans to adopt this standard beginning October 1, 2016. We are currently evaluating the impact this guidance will have on our financial condition, results of operations and cash flows.

 

Other than noted above, we do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

 

ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item. 

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

 

ANAVEX LIFE SCIENCES CORP.

 

CONSOLIDATED FINANCIAL STATEMENTS

 

September 30, 2015 and 2014

 

(Stated in US Dollars)

 

 

Tel: 212-885-8000 Fax: 212-697-1299 www.bdo.com

100 Park Avenue New York, NY 10017

 

Report of Independent Registered Public Accounting Firm

 

Board of Directors and Stockholders

Anavex Life Sciences Corp.

New York, NY

 

We have audited the accompanying consolidated balance sheets of Anavex Life Sciences Corp. as of September 30, 2015 and 2014 and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended September 30, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Anavex Life Sciences Corp. at September 30, 2015 and 2014, and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2015, in conformity with accounting principles generally accepted in the United States of America.

 

/s/ BDO USA, LLP

 

December 29, 2015

 

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

 

BDO is the brand name for the BDO network and for each of the BDO Member Firms.

 

 

ANAVEX LIFE SCIENCES CORP.

CONSOLIDATED BALANCE SHEETS

September 30, 2015 and 2014

 

		2015				2014
						(As Restated)
ASSETS
Current
Cash		$	15,290,976			$	7,262,138
GST Recoverable			76,840				-
Prepaid expenses			100,845				89,117
			15,468,661				7,351,255
Equipment			1,252				2,247
		$	15,469,913			$	7,353,502
LIABILITIES
Current
Accounts payable and accrued liabilities		$	2,503,726			$	1,249,084
Deferred grant income			71,614				-
Promissory notes payable			85,238				192,065
			2,660,578				1,441,149
Non-interest bearing liabilities			332				5,719,727
			2,660,910				7,160,876
STOCKHOLDERS' EQUITY
Capital stock
Authorized:
100,000,000 common shares, par value $0.001 per share
Issued and outstanding:
32,044,213 common shares (September 30, 2014 - 11,800,063)			32,044				11,800
Additional paid-in capital			74,060,999				50,714,151
Common stock to be issued			1,997,415				640,000
Accumulated deficit			(63,281,455	)			(51,173,325	)
			12,809,003				192,626
		$	15,469,913			$	7,353,502

 

See Accompany Notes

 

 

ANAVEX LIFE SCIENCES CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

for the years ended September 30, 2015 and 2014

 

		2015				2014
						(As Restated)
Operating expenses
General and administrative		$	4,836,978			$	2,236,580
Research and development			2,271,736				732,395
Total operating expenses			(7,108,714	)			(2,968,975	)
Other income (expenses)
Interest and finance expenses, net			(71,825	)			(7,089	)
Gain on settlement of accounts payable			-				199,655
Financing related charges and adjustments			(4,998,145	)			(8,624,986	)
Foreign exchange gain			70,554				33,042
Total other expenses, net			(4,999,416	)			(8,399,378	)
Net loss before provision for income taxes			(12,108,130	)			(11,368,353	)
Income tax expense (benefit) - deferred			-				(1,400,000	)
Net loss and comprehensive loss for the period		$	(12,108,130	)		$	(9,968,353	)
Loss per share
Basic		$	(0.65	)		$	(1.02	)
Diluted		$	(0.65	)		$	(1.02	)
Weighted average number of shares outstanding
Basic			18,584,820				9,804,539
Diluted			18,584,820				9,804,539

 

See Accompanying Notes

 

 

ANAVEX LIFE SCIENCES CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the years ended September 30, 2015 and 2014

 

		2015				2014
						(As Restated)
Cash Flows used in Operating Activities
Net loss for the period		$	(12,108,130	)		$	(9,968,353	)
Adjustments to reconcile net loss to net cash used in operations:
Amortization and depreciation			995				768
Accretion of debt discount			4,515,987				1,917,615
Stock-based compensation			1,633,979				637,925
Amortization of deferred financing charge			-				1,123,612
Non-cash financing related charges			29,000				-
Deferred income tax expense (benefit)			-				(1,400,000	)
Change in fair value of derivative financial instruments			567,000				(2,956,000	)
Gain on settlement of accounts payable			-				(199,655	)
(Gain)/loss on extinguishment of debt			(84,842	)			8,539,759
Other			(18,683	)			(18,798	)
Changes in non-cash working capital balances related to operations:
GST recoverable			(76,840	)			-
Prepaid expenses			(67,692	)			(33,234	)
Accounts payable and accrued liabilities			1,310,606				(303,018	)
Deferred grant income			71,614				-
Net cash used in operating activities			(4,227,006	)			(2,659,379	)
Cash Flows used in Investing Activities
Acquisition of equipment			-				(3,015	)
Net cash used in investing activities			-				(3,015	)
Cash Flows provided by Financing Activities
Issuance of common shares, net of share issue costs			12,343,988				368,170
Financing fees paid			-				(788,712	)
Repayment of promissory note			(88,144	)			-
Proceeds from the issuance of convertible debentures			-				10,000,000
Net cash provided by financing activities			12,255,844				9,579,458
Increase in cash during the period			8,028,838				6,917,064
Cash, beginning of period			7,262,138				345,074
Cash, end of period		$	15,290,976			$	7,262,138

 

Supplemental Cash Flow Information - Note 12

 

See Accompanying Notes

 

  

ANAVEX LIFE SCIENCES CORP.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

for the years ended September 30, 2015 and 2014

 

		Common Stock
										Additional				Common
										Paid-in				Shares to be				Accumulated
		Shares				Par Value				Capital				Issued				Deficit				Total
Balance, October 1, 2013			9,309,400			$	9,309			$	38,672,452			$	60,000			$	(41,204,972	)		$	(2,463,211	)
Equity units issued under Purchase Agreement			100,000				100.00				188,070				-				-				188,170
Commitment shares issued under terms of Purchase Agreement			628				1				(1	)			-				-				-
Capital stock issued for cash - at $2.00			30,000				30				59,970				(60,000	)							-
Capital stock issued for cash - at $1.20			125,000				125				149,875				30,000								180,000
Share issue costs, net of recovery			-				-				(2,452	)			-				-				(2,452	)
Issuance of detachable warrants			-				-				5,989,900				-				-				5,989,900
Agent's warrants issued in connection with convertible debentures			-				-				334,900				-				-				334,900
Beneficial conversion feature on convertible debentures issued, net of deferred income tax			-				-				2,610,100				-				-				2,610,100
Reclassification of derivative financial instruments upon modification of warrant terms			-				-				221,000				-				-				221,000
Capital stock issued pursuant to debt conversions - at $1.20			1,594,607				1,595				1,911,932				-				-				1,913,527
Capital stock issued pursuant to debt conversions - at $1.00			640,428				640				550,480				-				-				551,120
Stock based compensation			-				-				27,925				610,000				-				637,925
Net loss for the period			-				-				-				-				(9,968,353	)			(9,968,353	)
Balance, September 30, 2014 (as restated)			11,800,063			$	11,800			$	50,714,151			$	640,000			$	(51,173,325	)		$	192,626
Equity units issued under Purchase Agreement			1,825,000				1,825				8,125,440				-				-				8,127,265
Commitment shares issued under terms of Purchase Agreement			27,144				27				(27	)			-				-				-
Capital stock issued pursuant to debt conversions - at $1.00			7,272,487				7,272				6,587,850				167,415				-				6,762,537
Capital stock issued for cash - at $1.00			500,000				500				1,500				-				-				2,000
Capital stock issued pursuant to subscriptions received - at $1.20			25,000				25				29,975				(30,000	)							-
Shares issued pursuant to the exercise of warrants - at $1.20			3,097,275				3,097				3,713,629				-				-				3,716,726
Shares issued pursuant to the exercise of warrants - cashless			6,838,632				6,839				(6,839	)			-				-				-
Shares issued pursuant to favored nations provision			658,612				659				(659	)			-				-				-
Reclassification of derivative liability			-				-				4,482,000				-				-				4,482,000
Stock based compensation			-				-				413,979				1,220,000				-				1,633,979
Net loss for the period			-				-				-				-				(12,108,130	)			(12,108,130	)
Balance, September 30, 2015			32,044,213			$	32,044			$	74,060,999			$	1,997,415			$	(63,281,455	)		$	12,809,003

 

See Accompanying Notes

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars)

 

Note 1

Business Description and Basis of Presentation

 

Business

 

Anavex Life Sciences Corp. (the “Company”) is a clinical stage biopharmaceutical company engaged in the development of differentiated therapeutics for the treatment of neurodegenerative diseases including drug candidates to treat Alzheimer’s disease, other central nervous system (CNS) diseases, pain and various types of cancer. The Company’s lead compounds ANAVEX 2-73 and ANAVEX PLUS, a combination of ANAVEX 2-73 with donepezil (Aricept), are being developed to treat Alzheimer’s disease and potentially other central nervous system (CNS) diseases.

 

In December 2014 a Phase 2a clinical trial was initiated for ANAVEX 2-73, which is being evaluated for the treatment of Alzheimer’s disease. The randomized trial is designed to assess the safety and exploratory efficacy of ANAVEX 2-73 alone as well as in combination with donepezil (ANAVEX PLUS) in patients with mild to moderate Alzheimer’s disease. ANAVEX 2-73 targets sigma-1 and muscarinic receptors, which have been shown in preclinical studies to reduce stress levels in the brain and to reverse the pathological hallmarks observed in Alzheimer’s disease. ANAVEX 2-73 showed no serious adverse events in a previously performed Phase 1 study. In pre-clinical studies, ANAVEX 2-73 demonstrated anti-amnesic and neuroprotective properties in various animal models including the transgenic mouse model Tg2576.

 

Effective October 7, 2015, the Company effected a reverse stock split on the basis of 1:4. As such, the Company’s authorized capital was decreased from 400,000,000 shares of common stock, par value $0.001 to 100,000,000 shares of common stock, par value $0.001 and all shares of common stock issued and outstanding were decreased on the basis of one new share for each four old shares. These financial statements give retroactive effect to such reverse split and all share and per share amounts have been adjusted accordingly.

 

Basis of Presentation

 

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

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 8

 

Note 2

Summary of Significant Accounting Policies – (cont’d)

 

a)

Use of Estimates

 

The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuations, asset impairment, conversion features embedded in convertible notes payable, derivative valuations, stock based compensation and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

b)

Principles of Consolidation

 

These consolidated financial statements include the accounts of Anavex Life Sciences Corp. and its wholly-owned subsidiaries, Anavex Life Sciences (France) SA, a company incorporated under the laws of France and Anavex Australia Pty Limited, a company incorporated under the laws of Australia. All inter-company transactions and balances have been eliminated.

 

c)

Equipment

 

Equipment is recorded at cost and is depreciated at 33% per annum on the straight-line basis.

 

d)

Impairment of Long-Lived Assets

 

The Company reviews the recoverability of its long-lived assets whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The estimated future cash flows are based upon, among other things, assumptions about future operating performance, and may differ from actual cash flows. Long-lived assets evaluated for impairment are grouped with other assets to the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows (excluding interest) is less than the carrying value of the assets, the assets will be written down to the estimated fair value in the period in which the determination is made.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 9

 

Note 2

Summary of Significant Accounting Policies – (cont’d)

 

e)

Financial Instruments

 

The carrying value of the Company’s financial instruments, consisting of cash and accounts payable and accrued liabilities approximate their fair value due to the short-term maturity of such instruments. Based on borrowing rates currently available to the Company for similar terms and based on the short term duration of the debt instruments, the carrying value of the promissory notes payable approximate their fair value. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

 

f)

Foreign Currency Translation

 

The functional currency of the Company is the US dollar. Monetary items denominated in a foreign currency are translated into US dollars at exchange rates prevailing at the balance sheet date and non-monetary items are translated at exchange rates prevailing when the assets were acquired or obligations incurred. Foreign currency denominated expense items are translated at exchange rates prevailing at the transaction date. Unrealized gains or losses arising from the translations are credited or charged to income in the period in which they occur.

 

g)

Research and Development Expenses

 

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

 

In addition, the Company incurs expenses in respect of the acquisition of intellectual property relating to patents and trademarks. The probability of success and length of time to develop commercial applications of the drugs subject to the acquired patents and trademarks is difficult to determine and numerous risks and uncertainties exist with respect to the timely completion of the development projects. There is no assurance the acquired patents and trademarks will ever be successfully commercialized. Due to these risks and uncertainties, the acquisition of patents and trademarks does not meet the definition of an asset and thus are expensed as incurred.

 

The Company is eligible to obtain a research and development tax credit from the Australian Tax Authority (ATO) for certain research and development activities undertaken in Australia. The tax incentive is available on the basis of specific criteria with which the Company must comply. Although the tax incentive is administered through the ATO, the Company has accounted for the tax incentive outside of the scope of ASC Topic 740, Income Taxes since the incentive is not linked to the Company’s income tax liability and can be realized regardless of whether the Company has generated taxable income in Australia.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 10

 

Note 2

Summary of Significant Accounting Policies – (cont’d)

 

h)

Grant Income

 

Research and development incentive income is recognized when the research and development activities have been undertaken and the Company has completed its assessment of whether such activities meet the relevant qualifying criteria. The Company recognizes such income at the fair value of the grant when it is received and all substantive conditions have been satisfied. Grants received from government and other agencies in advance of the specific research and development costs to which they relate are deferred and recognized in the consolidated statement of operations in the period they are earned and when the related research and development costs are incurred.

 

i)

Income Taxes

 

The Company has adopted the provisions of FASB ASC 740 "Income Taxes" (“ASC 740”) which requires the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

 

The Company follows the provisions of ASC 740 regarding accounting for uncertainty in income taxes. The Company initially recognizes tax positions in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant facts. Application requires numerous estimates based on available information. The Company considers many factors when evaluating and estimating our tax positions and tax benefits, and our recognized tax positions and tax benefits may not accurately anticipate actual outcomes. As additional information is obtained, there may be a need to periodically adjust the recognized tax positions and tax benefits. These periodic adjustments may have a material impact on the consolidated statements of operations.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 11

 

Note 2

Summary of Significant Accounting Policies – (cont’d)

 

j)

Basic and Diluted Loss per Share

 

The basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Additionally, the numerator is also adjusted for changes in fair value of the derivative financial instruments where it is presumed they will be share settled.

 

For the year ended September 30, 2015, loss per share excludes 6,101,534 (2014 – 26,967,454) potentially dilutive common shares related to outstanding options, warrants, and convertible debentures as their effect was anti-dilutive.

 

k)

Stock-based Compensation

 

The Company accounts for all stock-based payments and awards under the fair value method.

 

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

 

The Company accounts for the granting of share purchase options to employees using the fair value method whereby all awards to employees will be recorded at fair value on the date of the grant. The fair value of all share purchase options are expensed over their vesting period with a corresponding increase to additional paid-in capital.

 

The Company uses the Black-Scholes option valuation model to calculate the fair value of share purchase options at the date of the grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimates.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 12

 

Note 2

Summary of Significant Accounting Policies – (cont’d)

 

l)

Fair Value Measurements

 

The fair value hierarchy under GAAP is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

 

Level 1 -  quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

Level 2 -  observable inputs other than Level I, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

 

Level 3 -  assets and liabilities whose significant value drivers are unobservable by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The book value of cash and accounts payable and accrued liabilities approximate their fair values due to the short term maturity of those instruments. Based on borrowing rates currently available to the Company under similar terms, the book value of promissory notes payable approximates their fair values. The Company’s promissory notes payable are based on Level 2 inputs in the ASC 820 fair value hierarchy.

 

At September 30, 2015, the Company did not have any Level 3 liabilities. During the year ended September 30, 2015 and at September 30, 2014, the Company had Level 3 liabilities consisting of embedded conversion features and warrants that were required to be accounted for as liabilities pursuant to ASC 815 because the Company did not have sufficient authorized and unissued shares available to settle fully certain conversion features of such instruments. During the year ended September 30, 2015, the Company took measures to increase the Company’s authorized common stock such that the instruments were no longer required to be accounted for as liabilities. Therefore pursuant to the guidance of ASC 815, the Company reclassified the fair value of these instruments on the date of this triggering event into equity.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 13

 

Note 2

Summary of Significant Accounting Policies – (cont’d)

 

l)

Fair Value Measurements – (cont’d)

 

The Company calculated the fair value at the inception of those instruments, at September 30, 2014, and at the date of reclassification of the instruments into equity using the binomial option pricing model to determine the fair value. The following assumptions were used for the respective instruments:

 

						September 30,				Reclassification
Embedded conversion option		At Inception				2014				Date
Risk-free interest rate			3.13	%			3.21	%			1.47	%
Expected life of options (years)			29.58				29.48				29.00
Annualized volatility			100.71	%			100.07	%			102.14	%
Stock price		$	1.04			$	0.72			$	0.84
Dividend rate			0.00	%			0.00	%			0.00	%

 

						Reclassification
Warrants		At Inception				Date
Risk-free interest rate			1.46	%			1.47	%
Expected life of options (years)			5.00				4.81
Annualized volatility			100.21	%			102.14	%
Stock price		$	0.79			$	0.84
Dividend rate			0.00	%			0.00	%

 

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). There were no assets or liabilities measured at fair value on a nonrecurring basis during the periods ended September 30, 2015 and 2014.

 

  

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 14

 

Note 2

Summary of Significant Accounting Policies – (cont’d)

 

m)

Derivative Liabilities

 

The Company evaluates its financial instruments and other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815. The result of this accounting treatment is that the fair value of the embedded derivative is marked- to-market at each balance sheet date and recorded as a liability and the change in fair value is recorded in the consolidated statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.

 

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instruments that become subject to reclassification are reclassified at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not settlement of the derivative instrument is expected within 12 months of the balance sheet date.

 

From time to time, certain of the Company’s embedded conversion features on debt and outstanding warrants have been treated as derivative liabilities for accounting purposes under ASC 815 due to insufficient authorized shares to fully settle conversion features of the instruments if exercised. In this case, the Company utilized the latest inception date sequencing method to reclassify outstanding instruments as derivative instruments. These contracts were recognized at fair value with changes in fair value recognized in earnings until such time as the conditions giving rise to such derivative liability classification were settled.

 

These derivative instruments do not trade in an active securities market. The Company uses the binomial option pricing model to value derivative liabilities. This model uses Level 3 inputs in the fair value hierarchy established by ASC 820 Fair Value Measurement.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 15

 

Note 2

Summary of Significant Accounting Policies – (cont’d)

 

n)

Recent Accounting Pronouncements

 

Recent Accounting Pronouncements Not Yet Adopted

 

In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period ("ASU 2014-12"). ASU 2014-12 requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The Company is currently evaluating the impact this guidance will have on its financial condition, results of operations and cash flows.

 

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 will explicitly require management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016. The Company is currently evaluating the impact this guidance will have on its financial condition, results of operations and cash flows.

 

In May, 2014, the FASB and the International Accounting Standards Board (IASB) issued a converged standard on revenue recognition from contracts with customers, ASU 2014-09 (Topic 606 and IFRS 15). This standard will supersede nearly all existing revenue recognition guidance. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company is currently evaluating the impact this guidance will have on its financial condition, results of operations and cash flows.

 

In April 2015, the Financial Accounting Standards Board (FASB), issued the Accounting Standards Update 2015-03, Interest - Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs, that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the debt liability rather than as an asset. For public business entities, the final guidance will be effective for fiscal years beginning after December 15, 2015, however, early adoption (including in interim periods) is permitted. Upon adoption, an entity must apply the new guidance retrospectively to all prior periods presented in the financial statements. An entity is also required in the year of adoption to provide certain disclosures about the change in accounting principle, including the nature of and reason for the change, the transition method, a description of the prior-period information that has been retrospectively adjusted and the effect of the change on the financial statement line items (that is, debt issuance cost asset and the debt liability). The Company plans to adopt this standard beginning October 1, 2016. The Company is currently evaluating the impact this guidance will have on its financial condition, results of operations and cash flows.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 16

 

Note 2

Recent Accounting Pronouncements – (cont’d)

 

Other than noted above, the Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.

 

o)

Restatement of prior year

 

Our Form 10-K for the comparative period ended September 30, 2014 contained an error relating to the accounting for Convertible Debentures issued on March 13, 2014 (the “Convertible Debentures”), which contained a beneficial conversion feature.

 

In connection with the issuance of Convertible Debentures, under the guidance of ASC 740-10, the recognition of a beneficial conversion feature for accounting purposes, which is initially recognized in equity at the inception of the related contract, effectively creates a temporary difference for tax purposes which must be recognized as a deferred income tax liability, with an offsetting adjustment to additional paid-in capital. Further, based on the fact that the reversal of the deferred tax liability would be viewed as a source of income pursuant to ASC 740, the Company was able to reduce its existing valuation allowance against deferred income tax assets available to offset such liability. As such, the net effect of such accounting would result in a reduction in additional paid-in capital and a corresponding recognition of a deferred income tax benefit on the consolidated statement of operations.

 

We believe that the errors in the Form 10-K for the year ended September 30, 2014 do not cause the financial statements included therein to be misleading, and therefore such financial statements can still be relied upon. However, we have corrected such errors, including any related disclosures, in this Form 10-K. The impact for the year ended September 30, 2014, was an increase in deferred income tax recovery of $1.4 million, and decrease in additional paid in capital of $1.4 million.

 

Note 3

Equipment

 

		September 30, 2015
						Accumulated
		Cost				Depreciation				Net
Computer equipment		$	3,015			$	1,763			$	1,252

 

		September 30, 2014
						Accumulated
		Cost				Depreciation				Net
Computer equipment		$	3,015			$	768			$	2,247

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 17

 

Note 4

Promissory Notes Payable

 

		2015				2014
Promissory note dated December 31, 2012 with a principal balance of CDN$100,000 bearing interest at 12% per annum, due on September 30, 2014		$	-			$	89,618
Promissory note dated January 9, 2013 with a principal balance of CDN$86,677, bearing interest at 12% per annum, secured by all the present and future assets of the Company; due on demand			64,630				77,679
Promissory note dated January 9, 2013 with a principal balance of CDN$27,639, bearing interest at 12% per annum, secured by all the present and future assets of the Company; due on demand			20,608				24,768
		$	85,238			$	192,065

 

On December 31, 2012, the Company issued a promissory note having a principal balance of $89,618 (CDN$100,000) with terms that included interest at 12% per annum and matured on June 30, 2013, in exchange for an accounts payable owing with respect to unpaid consulting fees. This note was not repaid on June 30, 2013 and the maturity date was extended to September 30, 2014. During the year ended September 30, 2014, the Company repaid this note.

 

On January 9, 2013, the Company issued two (2) promissory notes (the “Secured Notes”);

 

a)

The Company issued a promissory note in the amount of $64,630 (CDN$86,677) to the former President, Secretary, Treasurer, CFO and director of the Company (the “President”) in exchange for unpaid consulting fees owing to the President. The note is bearing interest at 12% per annum and was due June 30, 2013.

 

b)

The Company issued a promissory note in the amount of $20,608 (CDN$27,639) to a former director of the Company (the “Director”) in exchange for unpaid consulting fees owing to the Director. The note is bearing interest at 12% per annum and was due June 30, 2013.

 

The Secured Notes are secured by a right to delay the transfer of any or all of the Company’s assets until the obligations of the Secured Notes are satisfied, including a restriction on the transfer of cash by the Company and a security interest over the intellectual property of the Company. The security interests of the Secured Notes is ranked senior to any and all security interests granted prior to the issuance of the notes and to all subsequent security interests granted, unless the holders agree in writing to other terms.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 18

 

Note 4

Promissory Notes Payable – (cont’d)

 

In addition, the Secured Notes contain a provision whereby if they are not repaid within 10 days of their maturity dates, they shall bear late fees in addition to interest accruing, at a rate of $100 per day per note. In an event of default by the Company, under the terms of the Secured Notes, the notes shall bear additional late fees of $500 per day per note.

 

Subsequent to the issuance of these Secured Notes, the former President resigned as President, Secretary, Treasurer, CFO and director of the Company and the former Director resigned as director of the Company.

 

The Company did not repay the notes on June 30, 2013. The Company has disputed the issuance and enforceability of the Secured Notes and should there be an attempt to enforce the Secured Notes or collection on them, the Company will consider a legal remedy. The Company has not accrued any late fees in connection with these Secured Notes as of September 30, 2015 or 2014, as the Company does not consider these amounts to be legally enforceable.

 

Note 5

Deferred Grant Income

 

During the year ended September 30, 2015, the Company was awarded grant funding in the amount of $286,455, of which the Company received $71,614 during the year ended September 30, 2015 and the remainder will be received in equal semi-annual instalments over the 24 month commitment. The grant was received in exchange for a commitment to provide research and development for preclinical validation of sigma-1 receptor agonist ANAVEX 2-73 as potential treatment for Parkinson’s disease.

 

The grant income was deferred and is being amortized as an increase to other income over a two year period using the straight line method over the grant term.

 

  

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 19

 

Note 6

Non-interest Bearing Liabilities

 

Non-interest bearing liabilities consists of the following:

 

		2015				2014
Senior Convertible Debentures		$	332			$	263,727
Derivative Financial Instruments			-				5,456,000
		$	332			$	5,719,727

 

Senior Convertible Debentures		2015				2014
Senior Convertible Debentures, non-interest bearing, unsecured, due March 18, 2044			6,144				7,446,044
Less: Debt Discount			(5,812	)			(7,182,317	)
Total carrying value			332				263,727
Less: current portion			-				-
Long term liability		$	332			$	263,727

 

On March 13, 2014, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers (the “Purchasers”) pursuant to which the Company issued senior convertible debentures in the aggregate principal amount of $10,000,000 (the “Debentures”).

 

In connection with the issuance of the Debentures, the Company issued an aggregate of 16,916,666 share purchase warrants as follows:

 

						Non-
		Purchasers				purchasers				Total
Series A Warrants			8,333,333				125,000				8,458,333
Series B Warrants			8,333,333				125,000				8,458,333
			16,666,666				250,000				16,916,666

 

Each Series A warrant was exercisable into one common share of the Company at $1.20 per share until March 18, 2019.

 

Each Series B warrant was exercisable into one common share of the Company at $1.68 per share until March 18, 2019

 

The Debentures are unsecured, non-interest bearing and are due on March 18, 2044. The Debentures were convertible, in whole or in part, at the option of the holder into common shares of the Company at $1.20 per share (“the Conversion Price”). The Conversion Price of the debenture will be adjusted in the event of common stock dividend, split or consolidation. The Conversion Price was later amended to $1.00 per share, as set forth below.

  

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 20

 

Note 6

Non-interest Bearing Liabilities – (cont’d)

 

Senior Convertible Debentures – (cont’d)

 

Pursuant to the guidance of ASC 470-20 Debt with Conversion and Other Options, the Company allocated the proceeds from the issuance of the Debentures between the Debentures and the detachable Purchaser warrants using the relative fair value method. The fair value of the Purchaser warrants of $22,326,200 at issuance resulted in a debt discount at issuance of $5,989,900.

 

The Company recorded a beneficial conversion feature discount of $4,010,100 in respect of the Debentures issued, based on the intrinsic value of the conversion feature limited to a maximum of the total proceeds of the Debentures allocated to the Debentures. The recognition of the beneficial conversion feature also gave rise to the recognition of a deferred income tax liability of $1,400,000, relating to the temporary difference for tax purposes of the book basis of the related Debentures. This deferred income tax liability was immediately offset by the recognition of previously unrecognized future income tax assets available to reduce such liability. The reduction of the valuation allowance against deferred income tax assets was recognized through a deferred income tax benefit recognized on the statement of operations in the period in which the Debentures were issued.

 

The total debt discount at issuance of $10,000,000 was being amortized using the effective interest method over the term of the Debentures.

 

In consideration for the Debentures issued, the Company issued an aggregate of 250,000 share purchase warrants to non-lenders as described above. The fair value of the Non-Purchaser Warrants of $334,900, along with finder’s fees and other financing costs directly associated with the issuance of the Debentures in the amount of $788,712, was recorded as a deferred financing charge and is being amortized to income over the term of the Debentures using the effective interest method.

 

The fair value of the Purchaser and Non-Purchaser warrants at issuance was determined using the Black Scholes option pricing model with the following weighted average assumptions:

 

Risk-free interest rate			1.56	%
Expected life (years)			5.00
Expected volatility			97.16	%
Stock price		$	1.76
Dividend yields			0.00	%

 

In connection with the Purchase Agreement, the Company also entered into a registration rights agreement with each Purchaser (the “RRA”) whereby the Company agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”) covering the resale of the shares of the Company’s common stock issuable upon conversion of the Debentures and upon exercise of the Purchaser warrants.

 

On July 23, 2014, the registration statement was declared effective by the SEC.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 21

 

Note 6

Non-interest Bearing Liabilities – (cont’d)

 

Senior Convertible Debentures – (cont’d)

 

Amendment Agreements

 

On August 25, 2014, the Company entered into amendment agreements with each Purchaser, pursuant to which all provisions regarding liquidating damages and the accrual of damages with respect to the obligations for, and rights enforceable against, the Company, were eliminated from the RRAs. As consideration for entering into the amendment agreements and for the Purchasers agreeing to forego an amount of $459,912 in liquidating damages that had accrued and were accruing pursuant to the terms of the original RRAs, the Company agreed to adjust the fixed conversion price of the remaining outstanding debentures from $1.20 per share to $1.00 per share (the “Debenture Amendment”).

 

The Company assessed the guidance under ASC 470-60 Troubled Debt Restructurings and determined that this guidance did not apply to the Debenture Amendment. The Debenture Amendment was considered a substantial change in the terms of the debentures pursuant to ASC 470-50 Modifications and Extinguishments and accordingly, the Company was required to apply debt extinguishment accounting. Consequently, the Company calculated a net non-cash loss on extinguishment of debt of $8,099,137 as the premium of the aggregate fair value of the amended debentures over their aggregate carrying values of $906 immediately prior to the Debenture Amendment and the gain from the forgiveness of accrued liquidating damages of $459,912. This amount is included in other financing related charges and adjustments on the consolidated statement of operations for the year ended September 30, 2014.

 

The Company calculated the fair value of the amended Debentures by discounting future cash flows using rates representative of current borrowing rates for debt instruments without a conversion feature and by using the binomial option pricing model to determine the fair value of the conversion features, using the following assumptions:

 

Risk-free interest rate			3.13	%
Expected life (years)			29.58
Expected volatility			100.71	%
Stock Price		$	1.028
Dividend yields			0.00	%

 

The net loss was recorded as part of financing related charges and adjustments in the consolidated statement of operations during the year ended September 30, 2014. In addition, in accordance with debt extinguishment accounting, remaining unamortized financing costs of $1,110,568 associated with the original Debentures were immediately amortized through earnings upon entering into the amendments. This amount was also included in other financing related charges and adjustments in the consolidated statement of operations for the year ended September 30, 2014.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 22

 

Note 6

Non-interest Bearing Liabilities – (cont’d)

 

Senior Convertible Debentures – (cont’d)

 

During the year ended September 30, 2015, the Company issued an aggregate of 7,272,487 shares of common stock and an additional 167,415 shares of common stock were to be issued based on a conversion price of $1.00 per share pursuant to the conversion of $7,439,900 in outstanding principal amounts due under the Debentures.

 

As a result of the bifurcation of the embedded conversion option subsequent to the Debenture Amendments as discussed above, for accounting purposes, two instruments were considered outstanding and, upon exercise of the contractual conversion option, extinguishment accounting was applied. Consequently, the embedded conversion feature was adjusted to fair value at the conversion date and the shares issued pursuant to conversion were recorded at their fair value on the date of issuance, determined with reference to the quoted market price of the Company’s shares on the issuance date. The resulting difference was recorded as a gain or loss on the consolidated statement of operations. During the year ended September 30, 2015, the Company recorded $84,842 (2014: $Nil) in respect of net gains on these conversion of the Debentures. This amount is included in financing and related charges and adjustments on the consolidated statement of operations.

 

During the year ended September 30, 2015 the Company recorded accretion expense of $4,515,987 (2014: $1,917,615) in accretion of discounts on these debentures.

 

Effective March 26, 2015 and upon a change in triggering events, the embedded conversion option is no longer required to be bifurcated and conversion accounting has been applied to all conversions subsequent to the change in triggering events.

 

Embedded conversion options and warrants

 

At September 30, 2014, the Company had outstanding embedded conversion options associated with the Senior Convertible Debentures and outstanding warrants being accounted for as derivative liabilities.

 

These derivative financial instruments arise as a result of applying ASC 815 Derivatives and Hedging (“ASC 815”), which requires the Company to make a determination whether an equity-linked financial instrument, or embedded feature, is indexed to the entity’s own stock. This guidance applies to any freestanding financial instrument or embedded features that have the characteristics of a derivative, and to any freestanding financial instruments that are potentially settled in an entity’s own stock.

 

During the year ended September 30, 2014, the Company issued debentures with fixed price embedded conversion features and, subsequent to certain amendments as discussed above, the Company did not, at the date of issuance of these instruments, have a sufficient number of authorized and available shares of common stock to fully settle the conversion feature of such instruments if exercised. As such, the Company was required to account for these instruments as derivative financial instruments. On the amendment date of the related convertible debentures, the Company recorded a debt discount to the extent of the fair value of the embedded conversion features required to be accounted for as liabilities under ASC 815.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 23

 

Note 6

Non-interest Bearing Liabilities – (cont’d)

 

Embedded conversion options and warrants – (cont’d)

 

During the year ended September 30, 2015, the Company issued units consisting of shares of common stock and share purchase warrants and since the Company did not, at the date of issuance of these instruments, have a sufficient number of authorized and available shares of common stock to fully settle the exercise of these warrants if exercised, due to the outstanding embedded conversion features discussed above, the Company was required to account for these instruments as derivative financial instruments. On the commitment date of the related warrants, the Company allocated the proceeds from the issuance of units first to the derivative liability at its fair value, with any remaining proceeds allocated to the common stock.

 

On March 26, 2015, the Company received stockholder approval to approve an amendment to the Company’s articles of incorporation to increase the Company’s authorized common stock from 37,500,000 to 100,000,000 shares, which is now sufficient to fully settle all the outstanding equity contracts. Consequently, these instruments previously accounted for as liabilities under ASC 815 are no longer required to be accounted for as liabilities. Pursuant to the guidance of ASC 815, the Company reclassified the fair value of these instruments on the date of this triggering event into equity, with the change in fair value up to the date of modification being recorded on the consolidated statement of operations as other income.

 

During the year ended September 30, 2013, the Company issued an aggregate of 1,612,242 common stock purchase warrants that were required to be accounted for as liabilities pursuant to ASC 815 as a result of certain features embedded in those instruments. During the year ended September 30, 2014, the Company amended the terms of these common stock purchase warrants. As of the modification date, these warrants were no longer required to be accounted for as liabilities. Pursuant to the guidance of ASC 815, the Company reclassified the fair value of these instruments on the date of modification into equity, with the change in fair value up to the date of modification being recorded on the consolidated statements of operations as other income.

 

As a result of the application of ASC 815, the Company has recorded these liabilities at their fair values as follows:

 

		September 30,
		2014				2013
Balance, beginning of the period		$	904,000			$	-
Fair value at issuance			8,277,000				919,000
Change in fair value during the year			(2,956,000	)			(15,000	)
Reclassification to equity upon change in triggering events			(221,000	)			-
Transfer to equity upon exercise			(548,000	)			-
Balance, end of the period		$	5,456,000			$	904,000

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 24

 

Note 6

Non-interest Bearing Liabilities – (cont’d)

 

Embedded conversion options and warrants – (cont’d)

 

The embedded conversion features and warrants accounted for as derivative financial instruments have no observable market and the Company estimated their fair values at their reclassification dates and September 30, 2014 using the binomial option pricing model based on the following weighted average management assumptions:

 

		Reclassification Date				September 30, 2014
Risk-free interest rate			1.47	%			3.21	%
Expected life (years)			24.75				29.48
Expected volatility			102.14	%			100.07	%
Stock price		$	0.84			$	0.736
Dividend yields			0.00	%			0.00	%

 

Note 7

Capital Stock

 

Authorized

 

On March 26, 2015, the Company received stockholder approval to approve an amendment to the Company’s articles of incorporation to increase the Company’s authorized common stock from 37,500,000 to 100,000,000 shares.

 

Equity Transactions

 

Year ended September 30, 2015

 

On October 22, 2014, the Company entered into a Securities Purchase Agreement (the “10/14 Purchase Agreement”) with one investor for an equity investment of $500,000 at a price of $1.00 per unit. Pursuant to the terms of the 10/14 Purchase Agreement, the Company agreed to sell, and the Investor agreed to purchase, 500,000 shares of common stock. In addition, the Company agreed to issue an aggregate of 1,000,000 stock purchase warrants, of which 500,000 were exercisable at $1.20 per share and 500,000 were exercisable at $1.68 per share, each for a period of five years, subject to normal adjustment for stock splits, combinations, and reclassification events.

 

As discussed in Note 5, the warrants issued were required to be accounted for as derivative liabilities at their date of issuance, pursuant to the guidance of ASC 815. Consequently, the Company allocated the proceeds from the issuance of the units first to the warrants, at their fair value of $527,000 with an amount of $2,000 being allocated to equity at par value on the date of the transaction. The $29,000 excess of the sum of fair value and par value over the proceeds received of $500,000 was recorded as a component of financing related charges and adjustments on the statement of operations during the year ended September 30, 2015. The fair value of the warrants was determined based on the binomial option pricing model using the following weighted average assumptions: risk-free interest rate: 1.46%, expected life: 5 years, expected volatility: 100.21%, dividend yield: 0%.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 25

 

Note 7

Capital Stock

 

Equity Transactions – (cont’d)

 

The Company paid a finder’s fee of $50,000 in connection with the 10/14 Purchase Agreement. This amount was expensed as a component of financing related charges and adjustments during the year ended September 30, 2015.

 

On March 16, 2015, pursuant to an anti-dilution provision contained in private placement subscription agreements dated May 31, 2012, the Company adjusted the price of 658,612 shares of common stock from $2.00 to $1.00 per share. Consequently, the Company issued 658,612 shares of common stock for no additional consideration.

 

Year ended September 30, 2014

 

On February 24, 2014, the Company issued 30,000 units at $2.00 per unit for gross proceeds of $60,000, which was received during the year ended September 30, 2013. Each unit consisted of one common share and one common share purchase warrant entitling the holder to purchase additional common shares at $4.00 per share for a period of five years from the date of issuance.

 

On February 24, 2014, the Company issued 125,000 units at $1.20 per unit for gross proceeds of $150,000. Each unit consisted of one common share and one common share purchase warrant entitling the holder to purchase additional common shares at $3.00 per share for a period of five years from the date of issuance.

 

On February 28, 2014, the Company received $30,000 in share subscriptions in respect of the issuance of 25,000 units at $1.20 per unit. Each unit consisted of one common share and one common share purchase warrant entitling the holder to purchase additional common shares at $3.00 per share for a period of five years from the date of issuance. These shares were issued during the year ended September 30, 2015.

 

Common stock to be issued

 

Included in common stock to be issued at September 30, 2015 is an amount of $1,830,000 (2014: $610,000) related to 750,000 (2014: 250,000) shares of common stock issuable to a director and officer of the Company pursuant to the terms of an employment agreement with that director and officer (Note 9).

 

Also included in common stock to be issued at September 30, 2015 is an amount of $167,415 (2014: Nil) related to the application of an incorrect conversion price to conversion notices received during the year ended September 30, 2015. These shares were issued subsequent to September 30, 2015.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 26

 

Note 8

Lincoln Park Purchase Agreement

 

On July 5, 2013, the Company entered into a $10,000,000 purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC, (“Lincoln Park”) an Illinois limited liability company (the “Financing”) pursuant to which the Company may sell and issue to Lincoln Park, and Lincoln Park is obligated to purchase, up to $10,000,000 in value of its shares of common stock from time to time over a 25 month period. In connection with the Financing, the Company also entered into a registration rights agreement with Lincoln Park whereby the Company agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”) covering the shares of the Company’s common stock that may be issued to Lincoln Park under the Purchase Agreement.

 

The Company would determine, at its own discretion, the timing and amount of its sales of common stock, subject to certain conditions and limitations. The purchase price of the shares that may be sold to Lincoln Park under the Purchase Agreement will be based on the market price of the Company’s shares of common stock immediately preceding the time of sale without any fixed discount, provided that in no event will such shares be sold to Lincoln Park when the closing sale price is less than $2.00 per share. There are no upper limits on the per share price that Lincoln Park may pay to purchase such common stock. The purchase price will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split or similar transaction occurring during the business days used to compute such price.

 

Pursuant to the Purchase Agreement, Lincoln Park initially purchased 62,500 shares of the Company’s common stock for $100,000. In consideration for entering into the Purchase Agreement, the Company issued to Lincoln Park 85,465 shares of common stock as a commitment fee and was to issue up to 33,352 shares pro rata, when and if, Lincoln Park purchased, at the Company’s discretion, the remaining $10,000,000 aggregate commitment. The Purchase Agreement could be terminated by the Company at any time at its discretion without any cost to the Company.

 

The Company incurred a net $73,787 in direct expenses in connection with the Purchase Agreement and registration statement. These were recorded as share issuance costs as a charge against additional paid in capital in the period incurred.

 

During the year ended September 30, 2015, the Company issued to Lincoln Park an aggregate of 1,852,144 (2014: 100,628) shares of common stock under the Purchase Agreement, including 1,825,000 (2014: 100,000) shares of common stock for an aggregate purchase price of $8,127,265 (2014: $188,170) and 27,144 (2014: 628) commitment shares. Subsequent to September 30, 2015, the Company issued to Lincoln Park an aggregate of 296,104 shares of common stock under the Purchase Agreement, including 290,523 shares of common stock for an aggregate purchase price of $1,684,565 and 5,581 commitment shares, representing all remaining purchase amounts due under the Purchase Agreement.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 27

 

Note 9

Related Party Transactions

 

During the year ended September 30, 2015, the Company was charged general and administrative expenses totaling $2,690,659 in respect of directors fees and share and stock option based compensation charges paid or accrued to directors and officers of the Company (2014: $1,041,140 in respect of directors fees, management bonuses and stock option based compensation charges), inclusive of amounts noted below. Of the total, $331,095 related to non-cash stock option compensation charges, and $2,348,064 was related to stock compensation charges associated with the vesting of restricted stock awards to a director and officer of the Company, in connection with the achievement of certain performance milestones, inclusive of and as further described below.

 

As at September 30, 2015, included in accounts payable and accrued liabilities was $33,000 (2014: $28,232) owing to directors and officers of the Company for director fees and reimbursable expenses, and a former director and officer of the Company for unpaid fees.

 

During the year ended September 30, 2013, pursuant to an employment agreement with the President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer, and Director, of the Company, the Company:

 

i)

granted 500,000 fully vested share purchase options exercisable at $1.60 per share until July 5, 2023. The Company recognized stock based compensation expense of $1,002,500 during the year ended September 30, 2013 in connection with these options.

 

ii)

issued 1,000,000 shares of restricted common stock that vest as follows:

 

·

25% upon the Company starting a Phase Ib/IIb human study (vested during the year ended September 30, 2015 at a value of $610,000 and included in shares to be issued at September 30, 2015)

·

25% upon the Company in-licensing additional assets in clinical or pre-clinical stage (vested during the year ended September 30, 2014 at a value of $610,000 and included in shares to be issued at September 30, 2015)

·

25% upon the Company securing additional non-dilutive equity funding in 2013 of at least $5,000,000 with a share price higher than the previous funding (vested during the year ended September 30, 2015 at a value of $610,000 and included in shares to be issued at September 30, 2015)

·

25% upon the Company obtaining a listing on a major stock exchange (vested subsequent to September 30, 2015)

 

Included in operating results for the year ended September 30, 2015 are non-cash stock compensation charges of $1,220,000 (2014: $610,000) relating to the vesting of 500,000 (2014: 250,000) shares of restricted common stock upon the achievement of certain performance conditions, and $1,128,064 (2014: $Nil) in additional compensation obligations associated with the vesting. The fair value of $2.44 per share for non-cash stock compensation charges was determined with reference to the quoted market price of the Company’s shares on the commitment date. This amount has been included in common stock to be issued at September 30, 2015.

 

Subsequent to September 30, 2015, the Company obtained a listing on NASDAQ and consequently, an additional 250,000 shares of common stock vested.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 28

 

Note 10

Commitments

 

a)

Share Purchase Warrants

 

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

 

						Weighted
						Average
		Number of Shares				Exercise Price
Balance, October 1, 2013			2,287,371			$	3.00
Expired			(675,128	)		$	3.00
Issued			17,116,667			$	1.44
Balance, September 30, 2014			18,728,910			$	1.59
Expired			(62,500	)		$	1.40
Exercised			(15,468,520	)		$	1.43
Issued			1,075,000			$	0.76
Balance, September 30, 2015			4,272,890			$	2.11

 

During the year ended September 30, 2015, the Company issued 6,838,632 shares of common stock pursuant to the exercise of 12,371,245 warrants on a cashless basis.

 

At September 30, 2015, the Company has 4,272,890 currently exercisable share purchase warrants outstanding as follows:

 

Number				Exercise Price				Expiry Date
	1,612,242			$	3.00			July 5, 2018
	30,000			$	4.00			February 24, 2019
	700,994			$	1.20			March 13, 2019
	1,872,154			$	1.68			March 13, 2019
	12,500			$	1.24			May 31, 2019
	45,000			$	1.00			July 31, 2019
	4,272,890

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 29

 

Note 10

Commitments – (cont’d)

 

a)

Share Purchase Warrants – (cont’d)

 

During the year ended September 30, 2015, the Company issued an aggregate of 12,500 warrants to a consultant of the Company for services to be provided. The fair value of these warrants at issuance was calculated to be $17,800 based on the Black-Scholes option pricing model using the following assumptions: expected term 3.9 years, expected volatility 106.7%, expected dividend yield 0.00%, risk free interest rate 1.83%. Stock based compensation is being recorded in the financial statements over the vesting term of three years from the date of grant. The Company recognized stock based compensation expense of $19,182 during the year ended September 30, 2015 (2014: $Nil) in connection with the warrants.

 

All of the 1,612,242 warrants expiring on July 5, 2018 contain a contingent call provision whereby the Company may have the option to call for cancellation of all or any portion of the warrants for consideration equal to $0.001 per share, provided the quoted market price of the Company’s common stock exceeds $6.00 for a period of twenty consecutive trading days, subject to certain minimum volume restrictions and other restrictions as provided in the warrant agreements.

 

b)

Stock–based Compensation Plan

 

2015 Stock Option Plan

 

On September 18, 2015, the Company’s board of directors approved a 2015 Omnibus Incentive Plan (the “2015 Plan”), which provides for the grant of stock options and restricted stock awards to directors, officers, employees and consultants of the Company.

 

The maximum number of our common shares reserved for issue under the plan is 6,050,553 shares subject to adjustment in the event of a change of the Company’s capitalization. As a result of the adoption of the 2015 Plan, no further option awards will be granted under any previously existing stock option plan. Stock option awards previously granted under previously existing stock option plans remain outstanding in accordance with their terms.

 

The 2015 Plan is administered by the board of directors, except that it may, in its discretion, delegate such responsibility to a committee of such board. The exercise price will be determined by the board of directors at the time of grant but in no event will be less than 110% of fair market value of the Company’s shares of common stock on the grant date. Stock options may be granted under the 2015 Plan for an exercise period of up to ten years from the date of grant of the option or such lesser periods as may be determined by the board, subject to earlier termination in accordance with the terms of the 2015 Plan.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 30

 

Note 10

Commitments – (cont’d)

 

b)

Stock–based Compensation Plan – (cont’d)

 

A summary of the status of Company’s outstanding stock purchase options for the years ended September 30, 2015 and 2014 is presented below:

 

						Weighted				Weighted Average
		Number of				Average				Grant Date fair
		Shares				Exercise Price				value
Outstanding at October 1, 2013			768,750			$	5.04
Expired			(176,250	)		$	10.80
Granted			200,000			$	1.28			$	1.00
Outstanding at September 30, 2014			792,500			$	2.82
Forfeited			(67,500	)		$	12.00
Granted			1,097,500			$	2.02			$	1.66
Outstanding at September 30, 2015			1,822,500			$	2.00
Exercisable at September 30, 2015			825,002			$	1.78
Exercisable at September 30, 2014			525,000			$	2.22

 

At September 30, 2015, the following stock options were outstanding:

 

Number of Shares														Aggregate				Remaining
				Number				Exercise						Intrinsic				Contractual
Total				Vested				Price				Expiry Date		Value				Life (yrs)
	25,000	(1)			25,000			$	14.68			March 30, 2016		$	-				0.50
	500,000	(2)			500,000			$	1.60			July 5, 2023			2,020,000				7.77
	75,000	(3)			25,000			$	1.20			May 7, 2024			333,000				8.61
	125,000	(4)			31,250			$	1.32			May 8, 2024			540,000				8.61
	718,750	(5)			239,585			$	0.92			April 2, 2025			3,392,500				9.51
	50,000	(6)			4,167			$	1.44			June 8, 2025			210,000				9.70
	50,000	(7)			-			$	1.68			June 15, 2025			194,000				9.72
	278,750	(8)			-			$	5.04			September 18, 2025			167,250				9.98
	1,822,500				825,002									$	6,856,750

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 31

 

Note 10

Commitments – (cont’d)

 

b)

Stock–based Compensation Plan – (cont’d)

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted market price of the Company’s stock for the options that were in-the-money at September 30, 2015.

 

(1)

As of September 30, 2015 and 2014, these options had fully vested. These options were granted during the year ended September 30, 2011 and vested over a period of one year from the date of grant. The fair value of these options at issuance was calculated to be $267,000. The Company did not recognize any stock-based compensation during the year ended September 30, 2015 (2014: $Nil).

 

(2)

As of September 30, 2015 and 2014 these options had fully vested. These options were granted during the year ended September 30, 2013 and vested immediately upon granting. The Company did not recognize any stock-based compensation during the year ended September 30, 2015 (2014: $Nil) in connection with these options.

 

(3)

As of September 30, 2015 and 2014, 25,000 of these options had vested. These options were issued during the year ended September 30, 2014 and vest annually over a three year period commencing on the first anniversary of the date of the grant. The Company recognized stock based compensation expense of $23,132 during the year ended September 30, 2015 (2014: $9,252) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

(4)

As of September 30, 2015 and 2014, 31,250 of these options had vested. These options were issued during the year ended September 30, 2014 and vest annually over a four year period commencing on the first anniversary of the date of the grant. The Company recognized stock based compensation expense of $31,950 during the year ended September 30, 2015 (2014: $16,905) in connection with these options.

 

(5)

As of September 30, 2015, 239,585 of these options had vested (2014: None of these options had vested). These options were issued during the year ended September 30, 2015 and vest in three equal installments on April 2, 2015, April 2, 2016 and April 2, 2017. The Company recognized stock based compensation expense of $255,747 during the year ended September 30, 2015 (2014: $Nil) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations

 

(6)

As of September 30, 2015, 4,167 of these options had vested. These options were issued during the year ended September 30, 2015 and vest quarterly over a three year period commencing on September 8, 2015. The Company recognized stock based compensation expense of $5,981 during the year ended September 30, 2015 (2014: $Nil) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 32

 

Note 10

Commitments – (cont’d)

 

b)

Stock–based Compensation Plan – (cont’d)

 

(7)

As of September 30, 2015 and 2014, none of these options had vested. These options were issued during the year ended September 30, 2015 and vest over a three year period from the date of grant. The Company recognized stock based compensation expense of $6,863 during the year ended September 30, 2015 (2014: $Nil) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

(8)

As of September 30, 2015 and 2014, none of these options had vested. These options were issued during the year ended September 30, 2015 and vest over a three year period from the date of grant. The Company recognized stock based compensation expense of $17,899 during the year ended September 30, 2015 (2014: $Nil) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

Note 11

Income Taxes

 

The tax effects of the temporary differences that give rise to the Company’s estimated deferred tax assets and liabilities are as follows:

 

		2015				2014
						(As restated)
Tax rate			34	%			34	%
Net operating loss carryforwards		$	9,177,000			$	8,270,000
Research and development tax credits			794,000				745,000
Foreign exchange			(10,000	)			(23,000	)
Unpaid charges			832,000				170,000
Intangible asset costs			64,000				70,000
Stock-based compensation			581,000				441,000
Valuation allowance for deferred tax assets			(11,438,000	)			(9,673,000	)
Net deferred tax assets		$	-			$	-

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 33

 

Note 11

Income Taxes – (cont’d)

 

The provision for income taxes differ from the amount established using the statutory income tax rate as follows:

 

		2015				2014
						(As Restated)
Income benefit at statutory rate of 34%		$	(4,117,000	)		$	(3,865,000	)
Foreign income taxed at other rates			80,000				13,000
Permanent differences
Effect of stock based compensation			-				202,000
Debt extinguishment			(29,000	)			2,736,000
Mark-to-market deriative liability adjustment			193,000				(994,000	)
Non-deductible finance and accretion expenses			1,511,000				808,000
Other permanent differences			(5,000	)			(16,000	)
Research and development tax credit			502,000				(26,000	)
Adjustment and true up to prior years' tax provision			100,000				14,000
Change in valuation allowance related to current year provision			1,765,000				2,528,000
Income Tax Recovery		$	-			$	1,400,000

 

As of September 30, 2015, the Company had net operating loss carry-forwards of approximately $25,000,000 (2014: $24,000,000) in the United States available to offset future taxable income. The carry-forwards will begin to expire in 2027 unless utilized in earlier years.

 

The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and this causes a change in management’s judgment about the recoverability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current income. Because management of the Company does not currently believe that it is more likely than not that the Company will receive the benefit of these assets, a valuation allowance equal to the deferred tax asset has been established at both September 30, 2015 and 2014.

 

Uncertain Tax Positions

 

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company’s tax returns are subject to tax examinations by U.S. federal and state tax authorities, or examinations by foreign tax authorities until the respective statutes of limitation expire. The Company is subject to tax examinations by tax authorities for all taxation years commencing on or after 2007.

 

 

Anavex Life Sciences Corp.

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

(Stated in US Dollars) – Page 34

 

Note 12

Supplemental Cash Flow Information

 

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

 

During the year ended September 30, 2015;

 

i)

the Company issued 7,272,487 shares of common stock and an additional 167,415 shares of common stock are issuable upon conversion of $7,439,900 in principal amount of convertible debentures at a conversion price of $1.00 per share;

 

ii)

the Company reclassified an amount of $4,482,000 into equity upon modification of the terms of certain derivative instruments.

 

During the year ended September 30, 2014;

 

a)

the Company reclassified an amount of $221,000 into equity upon modification of the terms of certain derivative instruments.

 

b)

the Company issued 1,594,607 shares of common stock of the Company pursuant to the conversion of $1,913,528 face value of convertible debentures at $1.20 per share;

 

c)

the Company issued 640,428 shares of common stock of the Company at a fair value of $551,120 pursuant to the conversion of convertible debentures at a conversion price of $1.00 per share.

 

Note 13

Subsequent Events

 

i)

On October 21, 2015, the Company entered into a $50,000,000 purchase agreement (the “Purchase Agreement”) with Lincoln Park pursuant to which the Company may sell and issue to Lincoln Park, and Lincoln Park is obligated to purchase, up to $50,000,000 in value of its shares of common stock from time to time over a 36 month period. In connection with the Purchase Agreement, the Company also entered into a registration rights agreement with Lincoln Park whereby the Company agreed to file a registration statement with the SEC covering the shares of the Company’s common stock that may be issued to Lincoln Park under the Purchase Agreement.

 

The Company may direct Lincoln Park, at its sole discretion, and subject to certain conditions, to purchase up to 50,000 shares of common stock on any business day, provided that at least one business day has passed since the most recent purchase. The amount of a purchase may be increased under certain circumstances provided, however that Lincoln Park’s committed obligation under any single purchase shall not exceed $2,000,000. The purchase price of shares of common stock related to the future funding will be based on the then prevailing market prices of such shares at the time of sales as described in the Purchase Agreement.

 

In consideration for entering into the Purchase Agreement, the Company issued to Lincoln Park 179,598 shares of common stock as a commitment fee and shall issue up to 89,799 shares pro rata, when and if, Lincoln Park purchases at the Company’s discretion the $50,000,000 aggregate commitment. 

 

ii)

On December 22, 2015, the Company received a subpoena from the Securities and Exchange Commission (SEC) which indicates that the agency is conducting a formal investigation. The Company believes the subpoena and investigation relate to the recent unusual activity in the market for the Company’s shares. The Company is fully cooperating with the SEC in this investigation and is unable to predict when this matter will be resolved or what further action, if any, the SEC may take in connection with it.

 

 

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL MATTERS

 

Not Applicable

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934, our management, with the participation of our principal executive officer and principal financial officer, evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this Annual Report on Form 10-K.

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to our principal executive officer and principal financial officer to allow timely decisions regarding required disclosure.

 

Based on its evaluation, our management, with the participation of our principal executive officer and principal financial officer, concluded that as of the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedures were not effective. The ineffectiveness of our disclosure controls and procedures was due to internal control weaknesses further described below in Management’s Report on Internal Control over Financial Reporting.

 

Management’s Annual Report on Internal Control over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over our financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, our management, with the participation of our principal executive officer and our principal financial officer have conducted an assessment, including testing, using the criteria in Internal Control — Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

 

Our management believes that because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

 

Based on our evaluation under the framework in COSO, our management concluded that our internal control over financial reporting was ineffective as of September 30, 2015. The ineffectiveness of our internal control over financial reporting was due to the existence of material weaknesses. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Our management identified the following material weaknesses:

 

 

(i)

We had an insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the fiscal year ended September 30, 2015, we had limited staff that performed nearly all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. This creates certain incompatible duties and a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the Securities and Exchange Commission. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected;

 

(ii)

We did not maintain a sufficient compliment of personnel with an appropriate level of tax and complex accounting knowledge and training commensurate with our financial reporting requirements and business environment. This weakness resulted in material post closing adjustments which were reflected in our financial statements for the year ended September 30, 2015 and 2014;

 

(iii)

we did not maintain effective monitoring controls to determine the adequacy of our internal control over financial reporting and related policies and procedures because our policies and procedures with respect to the review, supervision and monitoring of our accounting operations throughout the organization were either not designed and in place or not operating effectively.

 

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

 

Plan for Remediation of Material Weaknesses

 

The weaknesses and their related risks are not uncommon in a company of our size because of the limitations in the size and number of staff. Due to our size and nature, segregation of all conflicting duties has not always been possible.

 

Subsequent to September 30, 2015, we engaged additional staff who participate in the financial reporting process which we believe will enable us to maintain adequate segregation of duties of our finance and accounting functions going forward. In addition, we intend to take additional appropriate and reasonable steps to remediate the material weaknesses identified. In particular, we intend to update the documentation of our internal control processes, including formal risk assessment of our financial reporting processes and formal documentation of our internal controls over financial reporting and related policies and procedures.

 

We believe that the foregoing steps will remediate the deficiencies identified above, and we intend to continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate.

 

Limitations on Effectiveness of Controls

 

Our principal executive officer and principal financial officer do not expect that our disclosure controls and procedures or our internal control over financial reporting will be able to prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additional controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting. Subsequent to September 30, 2015, we engaged additional staff in the financial reporting process which we believe will enable us to maintain adequate segregation of duties of our finance and accounting functions going forward.

 

ITEM 9B OTHER INFORMATION

 

None.

 

 

PART III

 

ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Directors and Executive Officers

 

Our directors are to be elected at our annual meeting and each director elected is to hold office until his or her successor is elected and qualified. Our board of directors may remove our officers at any time.

 

Our directors and executive officers, their age, positions held, and duration of such, are as follows:

 

Name		Position		Age		Date first appointed
Christopher Missling, PhD		Director, President, Chief Executive Officer, Secretary, Treasurer		50		July 5, 2013
Athanasios Skarpelos		Director		49		January 9, 2013
Bernd Metzner, PhD		Director		45		May 7, 2014
Elliot Favus, MD		Director		40		May 7, 2014
Steffen Thomas, PhD		Director		50		June 15, 2015
Sandra Boenisch		Principal Financial Officer		34		October 1, 2015

 

Business Experience

 

The following is a brief account of the education and business experience of directors and executive officers during at least the past five years, indicating their principal occupation during the period, and the name and principal business of the organization by which they were employed.

 

Christopher Missling, PhD. Christopher Missling has over twenty (20) years of healthcare industry experience in big pharmaceutical, biotech industry and investment banking. Most recently, from March, 2007 until his appointment by our company, Mr. Missling served as the head of healthcare investment banking at Brimberg & Co. in New York, New York. Also, Mr. Missling served as the Chief Financial Officer of Curis, Inc. (NASDAQ:CRIS) and ImmunoGen, Inc. (NASDAQ:IMGN). Mr. Missling earned his MS and PhD from the University of Munich and an MBA from Northwestern University Kellogg School of Management and WHU Otto Beisheim School of Management.

 

Athanasios Skarpelos. Athanasios (Tom) Skarpelos is a self-employed investor with 18 years of experience working with private and public companies. For the past 10 years, he has been focused on biotechnology companies involved in drug discovery and drug development projects. Mr. Skarpelos was engaged as a consultant to our company for one year effective August 2, 2010. His experience has led to relationships with researchers at academic institutes in Europe and North America. Mr. Skarpelos is a founder of Anavex.

 

Bernd Metzner, PhD. Bernd Metzner has been the Chief Financial Officer of Ströer Media AG since June 2014 and serves as its Member of Management Board. Prior, Dr. Metzner served as Chief Financial Officer of the Doehler Group, a global producer and provider of technology-based natural ingredients for the food and beverage industry with sales activities in more than 130 countries. Previously, he was Chief Administration Officer and member of the Board of Management of Bayer Schering Pharma AG, the pharmaceutical division of $100+ billion market cap company Bayer AG. In this position, Dr. Metzner had worldwide financial responsibility for the Bayer Pharma Group. During his almost 10-years with Bayer AG, Dr. Metzner also held several senior international management positions in the corporate finance organization of Bayer AG, including Chief Financial Officer of Bayer S.p.A. Italy and heading the coordination of the successful spin-off of Lanxess, a specialty chemicals group. Dr. Metzner started his career at the law firm Flick Gocke Schaumburg and has a degree in business administration from the University of Siegen. After obtaining his doctorate, he became a chartered accountant.

 

 

Elliot Favus, MD. Elliot Favus is Chief Executive Officer of Favus Institutional Research, a healthcare research firm serving institutional investors. He has been a healthcare equity research analyst on Wall Street since 2006, starting at Lazard Capital Markets and subsequently at Och-Ziff Capital Management Group. Prior to working on Wall Street, Dr. Favus was an Instructor in medicine at Mount Sinai School of Medicine in New York. He attended the University of Michigan (BA, 1996), the University of Chicago Pritzker School of Medicine (MD, 2001) and the NYU-Bellevue Hospital Internal Medicine Residency Program (2004). He is board-certified in Internal Medicine (2004) and has 10 years of basic science laboratory experience working on human genetics projects at Harvard Medical School, the University of Chicago and the University of Pittsburgh.

 

Steffen Thomas, PhD Steffen Thomas, PhD, has over 15 years of experience as a European patent attorney and is currently practicing at Epping Hermann Fischer, a major intellectual property law firm in Europe. Previously, he worked for Japan-based Takeda Pharmaceutical Company, the largest pharmaceutical company in Asia and a top firm worldwide, as an in-house patent attorney. Prior to that, he worked for Nycomed Pharma, acquired by Takeda in 2011 for approximately USD $10 billion. Dr. Thomas’ legal practice covers drafting of patent applications, prosecuting patent applications before national and international patent offices, defending and challenging patents in opposition, appeal, and nullity proceedings, enforcing patents before the infringement courts, and preparing opinions on patentability and infringement in the technical field of chemistry. Dr. Thomas has particular expertise in small molecule pharmaceuticals. He holds MS and PhD degrees in Chemistry from the University of Munich.

 

Sandra Boenisch, CPA, CGA Ms. Boenisch is a Chartered Professional Accountant (CPA, CGA) with 14 years of accounting, audit, and financial reporting experience in a variety of industries, both in the United States and Canada. Ms. Boenisch has been an independent consultant, providing financial reporting services to a range of public companies in the United States and Canada since January 2012. From 2008 until 2012, Ms. Boenisch was employed at BDO Canada LLP (Vancouver, BC) where she was hired as a Senior Accountant and was later promoted to Manager, Audit Assurance. Ms. Boenisch specialized in managing assurance engagements for public companies in the United States and Canada. Prior to that, Ms. Boenisch worked for a public accounting firm beginning in 2001. As an independent consultant, Ms. Boenisch has acquired considerable experience in finance, governance, and regulatory compliance. She holds a BComm from Laurentian University.

 

Family Relationships

 

There are no family relationships between any director or executive officer.

 

Involvement in Certain Legal Proceedings

 

There are no material proceedings to which any director or executive officer or any associate of any such director or officer is a party adverse to our company or has a material interest adverse to our company.

 

No director or executive officer has been involved in any of the following events during the past ten years:

 

1.

any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

2.

any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

3.

being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;

4.

being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

5.

being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and- desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 

 

6.

being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Compliance with Section 16(a) of the Securities Exchange Act of 1934

 

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who own more than 10% of our common stock to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports that they file.

 

Based solely on the copies of such reports and amendments thereto received by us, or written representations that no filings were required, we believe that all Section 16(a) filing requirements applicable to our executive officers and directors and 10% stockholders were met for the year ended September 30, 2015, with the exception of the following:

 

Name		Number of LateReports				Number of Transactions Not Reported on a TimelyBasis				Failure to File Requested Forms
Christopher Missling			2	(1)			2			Nil
Bernd Metzner			1	(1)			1			Nil
Elliot Favus			1	(1)			1			Nil
Athanasios Skarpelos			1	(1)			1			Nil

(1)

Failure to file Form 4 – Statement of Changes in Beneficial Ownership.

 

Code of Ethics

 

We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted our policy on our website at www.anavex.com.

 

Audit Committee and Audit Committee Financial Experts

 

The members of the Audit Committee are Bernd Metzner (Chairman), Elliot Favus and Steffen Thomas. Our board of directors has determined that Bernd Metzner is an “audit committee financial expert” as defined by applicable SEC and Nasdaq rules.

 

The Audit Committee oversees and reports to our board of directors on various auditing and accounting-related matters, including, among other things, the maintenance of the integrity of our financial statements, reporting process and internal controls; the selection, evaluation, compensation and retention of our independent registered public accounting firm; legal and regulatory compliance, including our disclosure controls and procedures; and oversight over our risk management policies and procedures.

 

The Audit Committee operates under a charter that was adopted by our board of directors.

 

 

Nominating and Corporate Governance Committee

 

The members of our Nominating and Corporate Governance Committee are Bernd Metzner (Chairman) and Elliot Favus.

 

The Nominating and Corporate Governance Committee is appointed by the Board to oversee and evaluate the Board's performance and the company's compliance with corporate governance regulations, guidelines and principles, to identify individuals qualified to become Board members, to recommend to the Board proposed nominees for Board membership, and to recommend to the Board directors to serve on each standing committee.

 

Compensation Committee

 

The members of our Compensation Committee are Bernd Metzner (Chairman) and Elliot Favus.

 

The Compensation Committee assists our board of directors in discharging its responsibilities relating to compensation of our directors and executive officers. Its responsibilities include, among other things, reviewing, approving and recommending compensation programs and arrangements applicable to our officers; determining the objectives of our executive officer compensation programs; overseeing the evaluation of our senior executives; administering our incentive compensation plans and equity-based plans, including reviewing and granting equity awards to our executive officers; and reviewing and approving director compensation and benefits. The Compensation Committee can delegate to other members of our board of directors, or an officer or officers of the Company, the authority to review and grant stock-based compensation for employees who are not executive officers.

 

The Compensation Committee has the responsibilities and authority designated by Nasdaq rules. Specifically, the Compensation Committee has the sole discretion to select and receive advice from a compensation consultant, legal counsel or other adviser and is directly responsible for oversight of their work. The Compensation Committee must also determine reasonable compensation to be paid to such advisors by us.

 

Prior to the formation of our Compensation Committee, our board of directors performed the functions that would have been handled by the Compensation Committee.

 

The Compensation Committee operates under a charter that was adopted by our board of directors.

 

ITEM 11. EXECUTIVE COMPENSATION

 

Summary Compensation

 

The particulars of compensation paid to the following persons for the last two completed fiscal years:

 

a)

our principal executive officers;

b)

each of our two most highly compensated executive officers who were serving as executive officers at the end of the fiscal year ended September 30, 2015 who had total compensation exceeding $100,000; and

c)

up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the most recently completed financial year, who we will collectively refer to as the named executive officers, for our fiscal years ended September 30, 2015 and 2014, are set out in the following summary compensation table:

 

 

Name and Principal  Position

Year

Salary  ($)

Bonus  ($)

Stock  Awards  ($)

Option  Awards  ($)

Other  Annual  Compen-  sation  ($)

Total  ($)

Christopher Missling, PhD(1)

2015

240,000

1,220,000

1,151,309

1,128,064

(2)

3,739,373

President, Chief Executive Officer,

2014

240,000

400,000

(3)

Nil

127,800

Nil

767,800

Chief Financial Officer and Director

Sandra Boenisch(4)

2015

Nil

Nil

Nil

Nil

Nil

Nil

Principal Financial Officer

2014

Nil

Nil

Nil

Nil

Nil

Nil

 

(1)

Christopher Missling was appointed as director, President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer on July 5, 2013.

(2)

The compensation was recorded in connection with the Company’s payment of an income tax withholding obligation arising as a result of the vesting of restricted stock awards during the year ended September 30, 2015, in accordance with the terms of Mr. Missling’s employment agreement dated July 5, 2013.

(3)

The bonus was a result of the successful financing in March, 2014.

(4)

Sandra Boenisch’s employment became effective on October 1, 2015. Ms. Boenisch was not been paid any compensation or bonuses, or granted any stock or option awards for fiscal year end 2015 and 2014

 

Employment Agreements

 

Christopher Missling

 

In connection with Mr. Missling’s appointment as Chief Executive Officer, the Company and Mr. Missling entered into an employment agreement commencing on July 5, 2013 and ending on July 5, 2016, whereby: (a) the Company shall pay to Mr. Missling an initial monthly base salary of $20,000 with Mr. Missling being eligible for bonuses and salary increases; (b) Mr. Missling received a sign-on stock option grant; (c) Mr. Missling shall receive a restricted stock grant subject to certain vesting milestones; (d) Mr. Missling shall be able to participate in the Company’s employee benefit plans; and (e) the Company agreed to indemnify Mr. Missling in connection with his provision of services to the Company.

 

Sandra Boenisch

 

In connection with Ms. Boenisch’s appointment as Principal Financial Officer, the Company and Ms. Boenisch entered into an employment agreement, effective October 1, 2015, whereby: (a) the Company shall pay to Ms. Boenisch an annual base salary of Seventy-Eight Thousand and 00/100 Canadian Dollars ($78,000 CAD), with Ms. Boenisch being eligible for bonuses which are anticipated to be up to 25% of her annual base salary, and salary increases; (b) Ms. Boenisch shall receive a sign-on stock option grant of 100,000 shares; and (c) Ms. Boenisch shall be able to participate in the Company’s employee benefit plans.

 

 

Outstanding Equity Awards at Fiscal Year-End

 

The following table sets forth for each named executive officer and director certain information concerning the outstanding equity awards as of September 30, 2015.

 

Option Awards

Stock Awards

Name

Number of  Securities  Underlying  Exercisable Options  (#)

Number of  Securities  Underlying  Unexercisable  Options  (#)

Equity Incentive  Plan Awards:  Number of  Securities  Underlying  Unexercised  Unearned Options  (#)

Option Exercise  Price  ($)

Option  Expiration  Date

Number of  Shares of  Units of Stock  that have not  Vested  (#)

Market  Value of  Shares or  Units of  Stock that  have not  Vested  ($)

Equity  Incentive  Plan  Awards:  Number  of  Unearned  Shares,  Units or  Other  Rights  that have  not  Vested  (#)

Equity  Incentive  Plan  Awards:  Market or  Payout  Value of  Unearned  Shares,  Units or  Other  Rights that  have not  Vested  ($)

Christopher Missling

500,000

Nil

Nil

1.60

July 5, 2023

250,000

1,410,000

Nil

Nil

31,250

93,750

Nil

1.32

May 8, 2024

166,667

333,333

Nil

0.92

April 2, 2025

Nil

187,500

Nil

5.04

September 18, 2025

Athanasios Skarpelos

16,667

33,333

Nil

0.92

April 2, 2025

Nil

N/A

Nil

N/A

Bernd Metzner

16,667

33,333

Nil

0.92

April 2, 2025

Nil

N/A

Nil

N/A

Elliot Favus

16,667

33,333

Nil

0.92

April 2, 2025

Nil

N/A

Nil

N/A

Steffen Thomas

-

50,000

Nil

1.68

June 15, 2025

Nil

N/A

Nil

N/A

 

Stock Option Plan

 

Our board of directors adopted an Omnibus Incentive Plan (the “2015 Plan”), which was approved by our board on September 18, 2015. The 2015 Plan provides for the grant of stock options and restricted stock awards to directors, officers, employees and consultants of the Company.

 

The maximum number of our common shares reserved for issue under the plan is 6,050,553 shares, subject to adjustment in the event of a change of the Company’s capitalization. As a result of the adoption of the 2015 Plan, no further option awards will be granted under any previously existing stock option plan. Stock option awards previously granted under previously existing stock option plans remain outstanding in accordance with their terms.

 

 

The 2015 Plan is administered by our board of directors, except that it may, in its discretion, delegate such responsibility to a committee of such board. The exercise price is determined by the board of directors at the time of grant but in no event will be less than 110% of fair market value of the Company’s shares of common stock on the grant date. Stock options may be granted under the 2015 Plan for an exercise period of up to ten years from the date of grant of the option or such lesser periods as may be determined by the board, subject to earlier termination in accordance with the terms of the 2015 Plan.

 

Compensation of Directors

 

The table below shows the compensation of our directors who were not our named executive officers for the fiscal year ended September 30, 2015:

Name

Fees Earned or Paid in Cash ($)

Stock  Awards  ($)

Option  Awards  ($)

Non-Equity Incentive Plan Compensation ($)

Nonqualified Deferred Compensation Earnings ($)

All Other Compensation ($)

Total  ($)

Athanasios Skarpelos

Nil

Nil

35,860

Nil

Nil

Nil

35,860

Bernd Metzner

11,500

Nil

35,860

Nil

Nil

Nil

47,360

Elliot Favus

Nil

Nil

35,860

Nil

Nil

Nil

35,860

Steffen Thomas

Nil

Nil

70,300

Nil

Nil

Nil

70,300

 

We have agreed to compensate Bernd Metzner an amount of $4,000 per quarter for performing the functions of Chairman of the Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.

 

We have agreed to grant stock options to purchase an aggregate of 6,000 shares of common stock each calendar quarter to Elliot Favus as compensation for serving as a member of our Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.

 

In addition, directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award further special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.

 

Retirement or Similar Benefit Plans

 

There are no arrangements or plans in which we provide retirement or similar benefits for our directors or executive officers.

 

Resignation, Retirement, Other Termination, or Change in Control Arrangements

 

Our employment agreement with Christopher Missling, PhD contains provisions regarding our obligations to Mr. Missling upon his termination and upon a change of control. In the event of a change of control, as such term is defined in the employment agreement, all of the restricted stock granted to Mr. Missling shall vest. Depending on the nature of the termination of Mr. Missling’s services, certain of his salary, bonus and granted securities shall vest in the amounts at such time as set forth in the agreement. A copy of the employment agreement is set forth in its entirety as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2013.

 

Our employment agreement with Sandra Boenisch contains provisions regarding our obligations to Ms. Boenisch upon a change of control. In the event of a change of control, as such term is defined in the employment agreement, all of the remaining unvested option shares granted to Ms. Boenisch will immediately vest with no restrictions on purchase or sales. A copy of the employment agreement is set forth in its entirety as an exhibit hereto.

 

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth, as of December 29, 2015, certain information with respect to the beneficial ownership of our common stock by each stockholder known by us to be the beneficial owner of more than 5% of our common stock and by each of our current directors and our named executive officers and by our current directors and executive officers as a group. We have determined the number and percentage of shares beneficially owned by such person in accordance with Rule 13d-3 under the Securities Exchange Act of 1934. This information does not necessarily indicate beneficial ownership for any other purpose.

 

Title of class		Name and address of beneficial owner		Amount and nature of beneficial ownership				Percent of class (1)
Common Stock		Athanasios Skarpelos (Director) 2, Place du Port Geneva, Switzerland CH 1204			1,323,125	(2)			3.8	%
Common Stock		Christopher Missling (CEO/Director) 51 W 52nd Street, 7th floor New York, NY 10019			1,701,167	(3)			4.7	%
Common Stock		Bernd Metzner (Director) 51 W 52nd Street, 7th Floor New York, NY 10019			29,167	(4)			0.1	%
Common Stock		Elliot Favus (Director) 51 W 52nd Street, 7th Floor New York, NY 10019			29,167	(4)			0.1	%
Common Stock		Steffen Thomas (Director) 51 W 52nd Street, 7th Floor New York, NY 10019			-	(5)			-
Common Stock		Sandra Boenisch (Principal Financial Officer) 51 W 52nd Street, 7th Floor New York, NY 10019			25,046	(6)			0.1	%
Common Stock		Directors & Executive Officers as a group (6 persons)			3,107,672				8.6	%

 

 

(1)

Percentage of ownership is based on 34,601,173 shares of our common stock issued and outstanding as of December 29, 2015. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.

 

(2)

Includes options to purchase 16,667 shares of our common stock at $0.92 per share that have vested. Excludes options to purchase 33,333 shares of our common stock at $0.92 per share that do not vest within 60 days.

 

(3)

Includes options to purchase 500,000 shares of our common stock at $1.60 that have vested, options to purchase 31,250 shares of our common stock at $1.32 that have vested, options to purchase 166,667 shares of our common stock at $0.92 per share that have vested, and 1,000,000 shares of restricted common stock that have vested pursuant to the achievement of certain objectives. Excludes options to purchase 93,750 shares of our common stock at $1.32 per share, options to purchase 333,333 shares of our common stock at $0.92 per share and options to purchase 187,500 shares of our common stock at $5.04 per share that do not vest within 60 days.

 

(4)

Includes options to purchase 12,500 shares of our common stock at $1.20 per share and 16,667 shares of our common stock at $0.92 per share that have vested. Excludes options to purchase 25,000 shares of our common stock at $1.20 per share and 33,333 shares of our common stock at $0.92 per share that do not vest within 60 days.

 

(5)

Excludes options to purchase 50,000 shares of our common stock at $1.76 per share that do not vest within 60 days.

 

(6)

Includes options to purchase 2,083 shares of our common stock at $5.68 per share that have vested. Excludes options to purchase 22,917 shares of our common stock at $5.68 per share that do not vest within 60 days.

 

Change in Control

 

We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change of control of our Company.

 

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Transactions with related persons

 

There have been no other transactions, since October 1, 2014, or currently proposed transactions, in which we were or are to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which any of the following persons had or will have a direct or indirect material interest.

 

i.

any director or executive officer of our company;

 

ii.

any beneficial owner of shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock; and

 

iii.

any member of the immediate family (including spouse, parents, children, siblings and in-laws) of any of the foregoing persons.

 

Compensation of Named Executive Officers and Directors

 

For information regarding compensation of named executive officers and directors, please see “Item 11. Executive Compensation.”

 

Director Independence

 

We deem that Christopher Missling, PhD is not independent as that term is defined by NASDAQ 5605(a)(2) because Mr. Missling serves as our President, Chief Executive Officer, Secretary and Treasurer. We have also determined that Athanasios Skarpelos is not independent as that term is defined by NASDAQ 5605(a)(2).

 

We deem that Bernd Metzner, Elliot Favus and Steffen Thomas are independent as that term is defined by NASDAQ 5605(a)(2).

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

Fees Paid to Our Independent Registered Public Accounting Firm

 

The following table sets forth the aggregate fees billed or expected to be billed to our company for professional services rendered by our independent registered public accounting firm, for the fiscal years ended September 30, 2015 and 2014:

 

		2015				2014
Audit Fees		$	98,490			$	86,000
Audit Related Fees		$	22,358			$	29,125
Tax Fees			Nil				Nil
All Other Fees			Nil				Nil
Total Fees		$	120,848			$	115,125

 

Audit Fees. Consist of fees billed for professional services rendered for the audits of our financial statements, reviews of our interim financial statements included in quarterly reports, services performed in connection with regular filings with the Securities and Exchange Commission and other services that are normally provided by our independent registered public accounting firm for the fiscal years ended September 30, 2015 and 2014, in connection with statutory and regulatory filings or engagements.

 

 

Audit Related Fees. Consists of fees billed for professional services rendered in connection with the Company’s filings on form S-1 Registration Statement.

 

Tax Fees. Consist of fees billed for the preparation of corporate tax returns

 

Policy on Pre-Approval by Audit Committee of Services Performed by Independent Registered Public Accounting Firm

 

Our Audit Committee pre-approves all services provided by our independent registered public accounting firm. All of the above services and fees were reviewed and approved by our Audit Committee and board of directors before the respective services were rendered.

 

Our Audit Committee and board of directors has considered the nature and amount of fees billed or expected to be billed by BDO USA, LLP and believes that the provision of services for activities unrelated to the audit was compatible with maintaining BDO USA, LLP’s independence.

 

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

Exhibit Number		Description
(3)		Articles of Incorporation and Bylaws
3.1		Articles of Incorporation (incorporated by reference to an exhibit to our Registration Statement on Form SB-2 filed on January 13, 2005)
3.2		Bylaws (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 28, 2007)
3.3		Articles of Merger filed with the Secretary of State of Nevada on January 10, 2007 and which is effective January 25, 2007 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on January 25, 2007)
3.4*		Certificate of Change filed with the Secretary of State of Nevada on October 6, 2015 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on October 6, 2015)
(4)		Instruments defining rights of security holders, including indentures
4.1		Specimen Stock Certificate (incorporated by reference to an exhibit to our Registration Statement on Form SB-2 filed on January 13, 2005)
4.2		Form of Convertible Loan Agreement (incorporated by reference to an exhibit to our Form 8-K filed on April 3, 2009)
4.3		8% Convertible Loan Agreement dated June 3, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)
4.4		8% Convertible Loan Agreement dated June 19, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 26, 2009)
(10)		Material Contracts
10.1		Agreement between Anavex Life Sciences Corp. and Dr. Alexandre Vamvakides dated January 31, 2007 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2007)
10.2		Form of Stock Option Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 22, 2007)
10.3		Shares for Services and Subscription Agreement dated September 11, 2007 between our company and Eurogenet Labs S.A. (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 27, 2007)
10.4		2007 Stock Option Plan (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 28, 2007)
10.5		Consulting Agreement with Cameron Durrant dated May 20, 2008 (incorporated by reference to an exhibit to our Quarterly Report on Form 10-QSB filed on August 18, 2008
10.6		Form of Convertible Loan Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 3, 2009)
10.7		Consulting Agreement with Tariq Arshad dated March 2, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 3, 2009)
10.8		Consulting Agreement with Dr. Mark Smith dated January 13, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 3, 2009)
10.9		Form of Subscription Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 3, 2009)

 

 

Exhibit Number		Description
10.10		Form of Warrant Certificate (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 3, 2009)
10.11		Amended Consulting Agreement with Cameron Durrant dated May 14, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)
10.12		CEO Consulting Agreement with Dr. Herve de Kergrohen dated June 12, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)
10.13		Form of Private Placement subscription agreement dated June 15, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)
10.14		Shares for Services Agreement with Andreas Eleuthariadis dated June 10, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)
10.15		Shares for Services Agreement with Vasileios Kourafalos dated June 10, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)
10.16		Shares for Services Agreement with George Kalkanis dated June 10, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)
10.17		Stock Option Agreement with Alexandre Vamvakides dated June 11, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 23, 2009)
10.19		Form of Private Placement Subscription Agreement Convertible Loan (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 26, 2009)
10.20		Form of Private Placement Subscription Agreement for Units (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 26, 2009)
10.21		Consultant Services Agreement with NAD Ltd. dated July 1, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 24, 2009)
10.22		Form of Subscription Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 24, 2009)
10.23		Form of Warrant Certificate (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on August 12, 2009)
10.24		Stock Option Agreement with Alexander Vamvakides dated October 19, 2009 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 24, 2009)
10.25		Promissory note issued to Stonehedge Limited on January 1, 2010 (incorporated by reference to an exhibit to our Quarterly Report on Form 10-Q filed on March 31, 2010)
10.26		Second Amended Consulting Agreement with Dr. Cameron Durrant dated January 2, 2010 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 9, 2010)
10.27		Contract Lease Agreement with Euro Genet Labs SA dated February 1, 2010 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 9, 2010)
10.28		Form of Subscription Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 9, 2010)
10.29		Form of Warrant Certificate (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 9, 2010)
10.30		Form of Convertible Loan Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 9, 2010)
10.31		Form of Subscription Agreement for US subscribers (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 6, 2010)
10.32		Form of Subscription Agreement for non-US subscribers (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 6, 2010)
10.33		Form of Warrant Certificate for US warrant holders (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 6, 2010)

 

 

Exhibit Number		Description
10.34		Form of Warrant Certificate for non-US warrant holders (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 6, 2010)
10.35		Shares for Services Agreement dated July 5, 2010 with Eurogenet Labs SA (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 9, 2010)
10.36		Form of Warrant Certificate for non-US warrant holders (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 9, 2010)
10.37		Agreement for Services with Genesis Biopharma Group LLC dated August 10, 2010 (incorporated by reference to an exhibit of our Current Report on Form 8-K filed on August 18, 2010) (portions of the exhibit have been omitted pursuant to a request for confidential treatment)
10.38		Agreement for Services with ABX-CRO Advanced Pharmaceutical Services dated August 10, 2010 (incorporated by reference to an exhibit of our Current Report on Form 8-K filed on August 18, 2010) (portions of the exhibit have been omitted pursuant to a request for confidential treatment)
10.39		Form of Subscription Agreement (US Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 9, 2010)
10.40		Form of Subscription Agreement (Canadian and Offshore Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 9, 2010)
10.41		Form of Warrant Certificate (US warrant holders)(incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 9, 2010)
10.42		Form of Warrant Certificate (Canadian and Offshore warrant holders) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 9, 2010)
10.43		Consulting Agreement dated August 2, 2010 with Tom Skarpelos (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 27, 2010)
10.44		Independent Contractor Agreement dated September 1, 2010 with David Tousley (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 27, 2010)
10.45		Sublease Contract with Genesis Research LLC dated September 15, 2010 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 27, 2010)
10.46		Form of Subscription Agreement (US Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 22, 2010)
10.47		Form of Subscription Agreement (non-US Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 22, 2010)
10.48		Form of Warrant Certificate (US Warrant Holders) (US Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 22, 2010)
10.49		Form of Warrant Certificate (non-US Warrant Holders) (US Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 22, 2010)
10.50		Shares for Service and Subscription Agreement dated November 1, 2010 with Eurogenet Labs SA (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 22, 2010)
10.51		Subscription Agreement with Stonehedge Limited dated November 17, 2010 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 22, 2010)
10.52		Form of Subscription Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 30, 2010)
10.53		Form of Warrant Certificate Form of Subscription Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 30, 2010)
10.54		Shares for Services Agreement Form of Subscription Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 30, 2010)

 

 

Exhibit Number		Description
10.55		Form of Subscription Agreement (non-US Purchasers) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2011)
10.56		Form of Warrant Certificate (non-US Warrant Holders) (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2011)
10.57		Termination Agreement dated February 2, 2011 with Genesis BioPharma Group, LLC  (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2011)
10.58		Independent Contractor Agreement with Harvey Lalach dated February 1, 2011 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2011)
10.59		Independent Contractor Agreement with Dr. Angelos Stergiou dated February 1, 2011 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 7, 2011)
10.60		Amended and Restated 2007 Stock Option Plan (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 8, 2011)
10.61		Form of Advisory Board Consulting Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on February 28, 2011)
10.62		Consulting Agreement dated March 30, 2011 with Shackleton Consulting Corp. (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 13, 2011)
10.63		Form of subscription agreement for convertible debenture (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on April 26, 2011)
10.64		Form of subscription agreement for convertible debenture (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on May 9, 2011)
10.65		Form of warrant certificate (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on May 9, 2011)
10.66		Amended Stock Option Agreement dated September 16, 2011 with Cameron Durrant (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 21, 2011)
10.67		Consulting Agreement dated effective October 10, 2011, with George Tidmarsh (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on October 14, 2011)
10.68		Form of subscription agreement for services (US purchaser) (incorporated by reference to our current report on Form 8-K filed on February 10, 2012)
10.69		Form of subscription agreement for units (Offshore purchasers) (incorporated by reference to our current report on Form 8-K filed on February 10, 2012)
10.70		Unsecured Promissory Note dated April 20, 2012 issued to Georgia Georgopoulou (incorporated by reference to our quarterly report on Form 10-Q filed on May 15, 2012)
10.71		Form of subscription agreements for convertible debenture and promissory notes (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on June 7, 2012)
10.72		Promissory Note dated October 17, 2012 issued to Akira International Limited (incorporated by reference to an exhibit to our Annual Report on Form 10-K filed on December 31, 2012)
10.73		Promissory Note dated November 12, 2012 issued to Akira International Limited (incorporated by reference to an exhibit to our Annual Report on Form 10-K filed on December 31, 2012)
10.74		Form of SPA (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 8, 2013)
10.75		Form of Exchange Agreement (incorporated by reference to an exhibit to our Current Report on Form 8- K filed on July 8, 2013)
10.76		Form of Warrant (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 8, 2013)

 

 

Exhibit Number		Description
10.77		Form of Registration Rights Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 8, 2013)
10.78		Purchase Agreement, dated as of July 5, 2013, by and between the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 8, 2013)
10.79		Registration Rights Agreement, dated as of July 5, 2013, by and between the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on July 8, 2013)
10.80		Employment Agreement, dated as of July 5, 2013, by and between the Company and Christopher Missling, PhD (incorporated by reference to an exhibit to our Quarterly Report on Form 10-Q filed on August 14, 2013)
10.81		2012 Addendum to the Contract for the Transfer of a Patent Invention and Scientific Collaboration dated January 11, 2013 (incorporated by reference to an exhibit to our Annual Report on Form 10-K filed on December 30, 2013)
10.82		Appendix A to the 2012 Addendum to the Contract for the Transfer of a Patent Invention and Scientific Collaboration dated January 11, 2013 (incorporated by reference to an exhibit to our Annual Report on Form 10-K filed on December 30, 2013)
10.83		Form of Amendment No. 1 to Common Stock Securities Purchase Warrant, entered into December 21, 2013 Agreement, dated March 13, 2014, by and among the Company and the Purchasers named therein (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on March 19, 2014)
10.84		Form of Registration Rights Agreement, dated March 13, 2014, by and among the Company and the parties identified therein (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on March 19, 2014)
10.85		Form of Senior Convertible Debenture (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on March 19, 2014)
10.86		Form of Series A/B Warrant (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on March 19, 2014)
10.87		Form of Amendment No. 1 to Registration Rights Agreement (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on August 25, 2014
10.88		Securities Purchase Agreement, dated October 22, 2014, by and between the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on October 23, 2014)
10.89		Form of Series A Common Stock Purchase Warrant (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on October 23, 2014)
10.90		Form of Series B Common Stock Purchase Warrant (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on October 23, 2014)
10.91*		2015 Omnibus Incentive Plan
10.92*		Employment Agreement, dated as of October 1, 2015, by and between the Company and Sandra Boenisch
10.93		Purchase Agreement, dated as of October 21, 2015, by and between the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to our Current Report on Form 8-K filed on October 26, 2015)
10.94		Registration Rights Agreement, dated as of October 21, 2015, by and between the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to our Current Report on Form 8-K filed on October 26, 2015)

 

 

Exhibit Number		Description
(21)		Subsidiaries
21.1		Anavex Life Sciences (France) SA, incorporated under the laws of France
21.2		Anavex Australia Pty Limited, a company incorporated under the laws of Australia
(31)		Section 302 Certifications
31.1*		Section 302 Certification of Christopher Missling, PhD.
31.2*		Section 302 Certification of Sandra Boenisch
(32)		Section 906 Certifications
32.1*		Section 906 Certification of Christopher Missling, PhD and Sandra Boenisch
(99)		Additional Exhibits
99.1		Insider Trading Policy Adopted August 27, 2010 (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on September 27, 2010)
(101)		XBRL
101.INS*		XBRL INSTANCE DOCUMENT
101.SCH*		XBRL TAXONOMY EXTENSION SCHEMA
101.CAL*		XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF*		XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB*		XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE*		XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

 

* Filed herewith.

 

 

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.

 

Date: December 29, 2015	ANAVEX LIFE SCIENCES CORP.
	By:	/s/ Christopher Missling, PhD
	Name:	Christopher Missling, PhD
	Title:	Chief Executive Officer and Treasurer (Principal Executive Officer)

  

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signatures		Title(s)		Date
/s/ Christopher Missling, PhD				December 29, 2015
Christopher Missling, PhD		Chief Executive Officer and Treasurer (Principal Executive Officer)
/s/ Sandra Boenisch				December 29, 2015
Sandra Boenisch		Principal Financial Officer (Principal Accounting Officer)
/s/ Athanasios Skarpelos				December 29, 2015
Athanasios Skarpelos		Director
/s/ Bernd Metzner, PhD				December 29, 2015
Bernd Metzner, PhD		Director
/s/ Elliot Favus, MD				December 29, 2015
Elliot Favus, MD		Director
/s/ Steffen Thomas, PhD				December 29, 2015
Steffen Thomas, PhD		Director