10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: December 31, 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	(IRS Employer
incorporation or organization)	Identification No.)

51 West 52^nd Street, 7^th Floor, New York, NY USA 10019

(Address of principal executive offices) (Zip Code)

1-844-689-3939

(Registrant’s telephone number, including area code)

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

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

x Yes ¨ 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).

x Yes ¨ No

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

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

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

¨ Yes x No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 34,653,885 shares of common stock outstanding as of February 5, 2016.

ii

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	1
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3. Quantitative and Qualitative Disclosures about Market Risks	30
Item 4. Controls and Procedures	31
PART II – OTHER INFORMATION	31
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3. Defaults Upon Senior Securities	32
Item 4. Mine Safety Disclosures	32
Item 5. Other Information	32
Item 6. Exhibits	33
SIGNATURE	34

iii

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

1

ANAVEX LIFE SCIENCES CORP.

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015

(Unaudited)

2

ANAVEX LIFE SCIENCES CORP.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, 2015 and September 30, 2015

	December 31,			September 30,
	2015			2015
	(Unaudited)
Current
Cash	$	13,853,405		$	15,290,976
GST Recoverable		92,337			76,840
Prepaid expenses		77,215			100,845
		14,022,957			15,468,661
Equipment		1,003			1,252
	$	14,023,960		$	15,469,913
Current
Accounts payable and accrued liabilities	$	2,417,431		$	2,503,726
Deferred grant income		32,559			71,614
Promissory notes payable		82,410			85,238
		2,532,400			2,660,578
Senior Convertible Debentures		265			332
		2,532,665			2,660,910
Capital stock
Authorized:
100,000,000 common shares, par value $0.001 per share
Issued and outstanding:
34,653,885 common shares (September 30, 2015 - 32,044,213)		34,655			32,044
Additional paid-in capital		76,127,544			74,060,999
Common stock to be issued		2,565,060			1,997,415
Accumulated deficit		(67,235,964	)		(63,281,455	)
		11,491,295			12,809,003
	$	14,023,960		$	15,469,913

SEE ACCOMPANYING NOTES 

3

ANAVEX LIFE SCIENCES CORP.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

for the three months ended December 31, 2015 and 2014

(Unaudited)

	2015			2014
Operating expenses
General and administrative	$	3,861,698		$	452,053
Research and development		670,736			318,625
Total operating expenses		(4,532,434	)		(770,678	)
Other income (expenses)
Grant income		610,148			-
Interest and finance expenses, net		2,142			(77,009	)
Financing related charges and adjustments		(1,095	)		37,651
Foreign exchange (loss) gain		(15,655	)		23,318
Total other income (expenses), net		595,540			(16,040	)
Net loss before provision for income taxes		(3,936,894	)		(786,718	)
Income tax expense		17,615			-
Net loss and comprehensive loss for the period	$	(3,954,509	)	$	(786,718	)
Loss per share
Basic	$	(0.12	)	$	(0.06	)
Diluted	$	(0.12	)	$	(0.06	)
Weighted average number of shares outstanding
Basic		33,971,913			12,907,598
Diluted		33,971,913			12,907,598

SEE ACCOMPANYING NOTES 

4

ANAVEX LIFE SCIENCES CORP.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

for the three months ended December 31, 2015 and 2014

(Unaudited)

	2015			2014
Cash Flows used in Operating Activities
Net loss for the period	$	(3,954,509	)	$	(786,718	)
Adjustments to reconcile net loss to net cash used in operations:
Amortization and depreciation		249			249
Accretion of debt discount		1,095			7,120
Stock-based compensation		826,020			15,362
Non-cash financing related charges		-			29,000
Change in fair value of derivative financial instruments		-			(2,000	)
(Gain) on extinguishment of debt		-			(42,771	)
Other		(2,828	)		(5,609	)
Changes in non-cash working capital balances related to operations:
GST recoverable		(15,497	)		-
Prepaid expenses		23,630			(9,373	)
Accounts payable and accrued liabilities		(86,297	)		101,670
Deferred grant income		(39,055	)		-
Net cash used in operating activities		(3,247,192	)		(693,070	)
Cash Flows provided by Financing Activities
Issuance of common shares, net of share issue costs		1,684,561			500,000
Shares subscribed		125,060			-
Repayment of promissory note		-			(88,144	)
Net cash provided by financing activities		1,809,621			411,856
Decrease in cash during the period		(1,437,571	)		(281,214	)
Cash, beginning of period		15,290,976			7,262,138
Cash, end of period	$	13,853,405		$	6,980,924

Supplemental Cash Flow Information - Note 11

SEE ACCOMPANYING NOTES 

5

ANAVEX LIFE SCIENCES CORP.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

for the three months ended December 31, 2015

(Unaudited)

	Common Stock
					Additional			Common
					Paid-in			Shares to be			Accumulated
	Shares		Par Value		Capital			Issued			Deficit			Total
Balance, October 1, 2015		32,044,213	$	32,044	$	74,060,999		$	1,997,415		$	(63,281,455	)	$	12,809,003
Equity units issued under Purchase Agreement		290,523		291		1,684,270			-			-			1,684,561
Commitment shares issued under terms of Purchase Agreement		185,179		185		(185	)		-			-			-
Capital stock issued pursuant to debt conversions - at $1.00		168,577		169		168,406			(167,415	)		-			1,160
Shares issued pursuant to the exercise of warrants - at $3.00		-		-		-			125,060			-			125,060
Shares issued pursuant to the exercise of warrants - cashless		1,963,956		1,964		(1,964	)		-			-			-
Shares issued for rounding purposes		1,437		2		(2	)		-			-			-
Shared issued pursuant to restricted stock award		-		-		-			610,000			-			610,000
Stock based compensation		-		-		216,020			-			-			216,020
Net loss for the period		-		-		-			-			(3,954,509	)		(3,954,509	)
Balance, December 31, 2015		34,653,885	$	34,655	$	76,127,544		$	2,565,060		$	(67,235,964	)	$	11,491,295

SEE ACCOMPANYING NOTES 

6

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

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 interim condensed consolidated financial statements give retroactive effect to such reverse split and all share and per share amounts have been adjusted accordingly.

Basis of Presentation

These interim condensed consolidated financial statements have been prepared, without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in the annual financial statements in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained herein. The condensed consolidated balance sheet at September 30, 2015 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by generally accepted accounting principals. These interim condensed financial statements should be read in conjunction with the audited financial statements included in its annual report on Form 10-K for the year ended September 30, 2015. The Company follows the same accounting policies in the preparation of interim reports.

Operating results for the three months ended December 31, 2015 are not necessarily indicative of the results that may be expected for the year ending September 30, 2016.

7

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

Note 1 Business Description and Basis of Presentation – (cont’d)

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 weighted average of all potentially dilutive shares of common stock that were outstanding during the period.

As of December 31, 2015, loss per share excludes 4,731,478 (September 30, 2015 – 6,101,534) potentially dilutive common shares related to outstanding options, warrants, convertible debentures and shares to be issued, as their effect was anti-dilutive.

Note 2 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.

8

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

Note 2 Recent Accounting Pronouncements – (cont’d)

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.

In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-17 “Income Taxes: Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 eliminates the requirement to bifurcate deferred taxes between current and non-current on the balance sheet and requires that deferred tax liabilities and assets be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for public entities in fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. The amendments for ASU-2015-17 can be applied retrospectively or prospectively and early adoption is permitted. The adoption of this standard is not expected to have a material impact for any period presented.

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.

Note 3 Equipment

	December 31, 2015
			Accumulated
	Cost		Depreciation		Net
Computer equipment	$	3,015	$	2,012	$	1,003

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

9

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

Note 4 Promissory Notes Payable

	December 31,		September 30,
	2015		2015
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	$	62,486	$	64,630
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		19,924		20,608
	$	82,410	$	85,238

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 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 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.

10

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

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 their maturity. 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 December 31, 2015 or September 30, 2015, 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 agonism as potential treatment for Parkinsons disease.

The grant income was deferred and is being amortized as an increase to other income over a two-year period as the related research and development expenditures are incurred. During the three months ended December 31, 2015, the Company recognized $39,055 of this grant on its statement of operations.

During the three months ended December 31, 2015, the Company recognized other grant income of $571,093 in respect of a research and development incentive program offered by the Australian government.

11

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

Note 6 Senior Convertible Debentures

	December 31,			September 30,
Senior Convertible Debentures	2015			2015
Senior Convertible Debentures, non-interest
bearing, unsecured, due March 18, 2044	$	4,982		$	6,144
Less: Debt Discount		(4,717	)		(5,812	)
Total carrying value		265			332
Less: current portion		-			-
Long term liability	$	265		$	332

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 is exercisable into one common share of the Company at $1.20 per share until March 18, 2019.

Each Series B warrant is 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 originally 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.

12

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

Note 6 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. In connection with the recognition of a beneficial conversion feature for accounting purposes and, under the guidance of ASC 740-10, which requires the recognition of a deferred income tax liability in respect of the temporary difference for tax purposes relating to the beneficial conversion feature, the Company recognized a deferred income tax liability of $1,400,000, with an offsetting adjustment to additional paid-in capital. Such deferred tax liability was subsequently reversed in connection with the amendment of such Debentures during the year ended September 30, 2014.

The total debt discount at issuance of $10,000,000 was being amortized using the effective interest method over the term of the Debentures. During the year ended September 30, 2014 and in connection with certain amendment agreements, remaining unamortized financing costs of $1,110,568 associated with the Debentures were immediately amortized through earnings upon entering into the amendments.

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 was 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.

During the three months ended December 31, 2015, the Company issued an aggregate of 1,162 shares of common stock based on a conversion price of $1.00 per share pursuant to the conversion of $1,162 in outstanding principal amounts due under the Debentures.

13

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

Note 7 Capital Stock

Authorized

100,000,000 shares of common stock.

Equity Transactions

During the three months ended December 31, 2015, the Company issued 167,415 shares of common stock pursuant to the application of an incorrect conversion price for conversion notices received during the year ended September 30, 2015.

Common stock to be issued

Included in common stock to be issued at December 31, 2015 is an amount of $2,440,000 (September 30, 2015: $1,830,000) related to 1,000,000 (September 30, 2015: 750,000) 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 10).

Included in common stock to be issued at December 31, 2015 is $125,060 relating to the exercise of 41,687 warrants at an exercise price of $3.00 per share.

Note 8 Lincoln Park Purchase Agreement

2013 Purchase Agreement

On July 5, 2013, the Company entered into a $10,000,000 purchase agreement (the “2013 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.

14

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

Note 8 Lincoln Park Purchase Agreement – (cont’d)

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 2013 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.

In consideration for entering into the 2013 Purchase Agreement, the Company issued to Lincoln Park 85,465 shares of common stock as a commitment fee during the year ended September 30, 2013 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.

During the three months ended December 31, 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 $1,684,561 and 5,581 commitment shares, representing all remaining purchase amounts available under the Purchase Agreement.

2015 Purchase Agreement

On October 21, 2015, the Company entered into a $50,000,000 purchase agreement (the “2015 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 United States Securities and Exchange Commission (“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 2015 Purchase Agreement.

During the three months ended December 31, 2015 and in consideration for entering into the 2015 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. 

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Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

Note 9 Related Party Transactions

During the three months ended December 31, 2015, the Company accrued general and administrative expenses totaling $3,044,855 (2014: $16,383) in respect of directors fees and stock and stock option compensation charges paid or accrued to directors and officers of the Company, inclusive of amounts noted below. Of the total, $746,514 related to non-cash stock option and stock compensation charges, and $2,290,341 was related to additional compensation 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 December 31, 2015, included in accounts payable and accrued liabilities was $47,000 (September 30, 2015: $33,000) 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.

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 December 31, 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 December 31, 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 December 31, 2015)

· 25% upon the Company obtaining a listing on a major stock exchange (vested during the three months ended December 31, 2015 at a value of $610,000 and included in shares to be issued at December 31, 2015)

Included in operating results for the three months ended December 31, 2015 are non-cash stock compensation charges of $610,000 (2014: $0) relating to the vesting of 250,000 (2014: 0) shares of restricted common stock upon the achievement of certain performance conditions, and $2,290,341 (2014: $0) 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 December 31, 2015.

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Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

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, 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
Exercised		(2,444,831	)	$	1.68
Balance, December 31, 2015		1,828,059		$	2.68

During the three months ended December 31, 2015, the Company issued 1,963,956 shares of common stock pursuant to the exercise of 2,403,144 share purchase warrants on a cashless basis.

At December 31, 2015, the Company has 1,828,059 currently exercisable share purchase warrants outstanding as follows:

Number		Exercise Price		Expiry Date
	1,462,180	$	3.00	July 5, 2018
	30,000	$	4.00	February 24, 2019
	277,127	$	1.20	March 13, 2019
	1,252	$	1.68	March 13, 2019
	12,500	$	1.24	May 31, 2019
	45,000	$	1.00	July 31, 2019
	1,828,059

All of the 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.

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Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

Note 10 Commitments – (cont’d)

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.

A summary of the status of Company’s outstanding stock purchase options for the three months ended December 31, 2015 and for the year ended September 30, 2015 is presented below:

				Weighted		Weighted Average
	Number of			Average		Grant Date fair
	Shares			Exercise Price		value
Outstanding at October 1, 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
Forfeited		-		$	-
Granted		34,250		$	5.67	$	5.67
Outstanding at December 31, 2015		1,856,750		$	2.07
Exercisable at December 31, 2015		843,107		$	1.80
Exercisable at September 30, 2015		825,002		$	1.78

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Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

Note 10 Commitments – (cont’d)

b) Stock–based Compensation Plan – (cont’d)

At December 31, 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	$	-		0.25
	500,000	(2)		500,000	$	1.60	July 5, 2023		1,985,000		7.51
	75,000	(3)		25,000	$	1.20	May 7, 2024		327,750		8.35
	125,000	(4)		31,250	$	1.32	May 8, 2024		531,250		8.35
	718,750	(5)		239,585	$	0.92	April 2, 2025		3,342,188		9.25
	50,000	(6)		8,334	$	1.44	June 8, 2025		206,500		9.44
	50,000	(7)		8,334	$	1.68	June 15, 2025		194,500		9.46
	278,750	(8)		-	$	5.04	September 18, 2025		147,738		9.72
	1,500	(9)		1,500	$	5.64	September 30, 2025		-		9.75
	31,250	(10)		2,604	$	5.68	October 2, 2025		-		9.75
	1,500	(9)		1,500	$	5.47	December 31, 2025		150		10.00
	1,856,750			843,107				$	6,735,075

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 December 31, 2015.

⁽¹⁾ As of December 31, 2015 and September 30, 2015, 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 three months ended December 31, 2015 (2014: $0).

⁽²⁾ As of December 31, 2015 and September 30, 2015 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 three months ended December 31, 2015 (2014: $0) in connection with these options.

⁽³⁾ As of December 31, 2015 and September 30, 2015, 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 $5,826 during the three months ended December 31, 2015 (2014: $5,830) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

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Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

Note 10 Commitments – (cont’d)

b) Stock–based Compensation Plan – (cont’d)

⁽⁴⁾ As of December 31, 2015 and September 30, 2015, 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 $8,048 during the three months ended December 31, 2015 (2014: $8,053) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

⁽⁵⁾ As of December 31, 2015, 239,585 of these options had vested (September 30, 2015: 239,585 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 $43,282 during the three months ended December 31, 2015 (2014: $0) 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 December 31, 2015, 8,334 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 $4,828 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

⁽⁷⁾ As of December 31, 2015 and September 30, 2015, 8,334 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 $5,634 during the three months ended December 31, 2015 (2014: $0) 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 December 31, 2015 and September 30, 2015, 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 $99,149 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

⁽⁹⁾ As of December 31, 2015, all of these options had vested. These options were issued during the three months ended December 31, 2015 and vested on December 31, 2015. The Company recognized stock based compensation expense of $13,600 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

⁽¹⁰⁾ As of December 31, 2015, 2,604 of these options had vested. These options were issued during the three months ended December 31, 2015 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $11,993 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

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Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

December 31, 2015

(Unaudited)

Note 11 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 three months ended December 31, 2015;

i) the Company issued 1,162 shares of common stock upon conversion of $1,162 in principal amount of convertible debentures at a conversion price of $1.00 per share and 167,415 shares of common stock pursuant to the application of an incorrect conversion price for conversion notices received during the year ended September 30, 2015;

During the three months ended December 31, 2014;

i) the Company issued 1,401,167 shares of common stock of the Company pursuant to the conversion of convertible debentures at a conversion price of $1.00 per share

These transactions have been excluded from the statement of cash flows.

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, 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 II, Item 1A of this Quarterly Report on Form 10-Q. These risks are not exhaustive. Other sections of this Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” and “Anavex” mean Anavex Life Sciences Corp., unless the context clearly requires otherwise.

Our Current 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. This 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.

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Our Pipeline

Our research and development 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.

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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.

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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. Sales predictions by GlobalData forecast that the market for the pharmaceutical treatment of pancreatic cancer in the five largest European countries and the United States, will increase from $529 million in 2012 to $1.63 billion by 2017.

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Recent Corporate Developments

Since October 1, 2015, we have experienced the following significant corporate developments:

· Effective October 7, 2015, we effected a one-for-four reverse stock split of our authorized, issued and outstanding common shares and, on October 28, 2015, our stock began trading on the NASDAQ Capital Market.

· On November 7, 2015, we presented positive Part A Data and preliminary Part B data from the ongoing Phase 2a clinical trial of ANAVEX 2-73 at the Clinical Trials on Alzheimer’s Disease (CTAD) conference in Barcelona, Spain. Interim results showed that ANAVEX 2-73 is safe and well tolerated in Alzheimer's patients and also showed improved cognitive performance after drug administration in subjects with mild-to-moderate Alzheimer's disease.

· We expanded our management team with the addition of Kristina M. Capiak, CCRP as the Company’s Vice President of Regulatory Affairs and the appointment of Ulrich Elben, PhD as Vice President of Preclinical Operations.

· On December 7, 2015, we presented preclinical epilepsy data for ANAVEX 2-73 at the American Epilepsy Society Annual Meeting. ANAVEX 2-73 demonstrated convincing data in three well-established and predictive preclinical anti-seizure models with a potentially more favorable side effect profile than currently marketed epilepsy drugs.

· On January 8, 2016, our Company reported that a positive dose-response relationship has been observed in Alzheimer's patients. Cognition scores improved with ANAVEX 2-73 dose in a pre-planned interim analysis of data from the ongoing Phase 2a trial of ANAVEX 2-73 for treatment of mild to moderate Alzheimer’s disease.

Results of Operations

Revenue

We have not earned any revenues since our inception on January 23, 2004. We 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

Three months ended December 31, 2015 compared to three months ended December 31, 2014

Our operating expenses for the three months ended December 31, 2015 were $4,532,434, which represents an increase of $3,761,756 compared to $770,678 for the three-month period ended December 31, 2014. The increase was mainly attributable to an increase in salaries and wages expenses in the current period, which is attributed to (i) the addition of an expanded management team and (ii) a one-time non-cash compensation charge of $610,000 plus other one-time charges of $2,290,341 relating to the vesting of the fourth and final tranche of restricted stock granted to our President and CEO in connection with a 2013 employment agreement. We also incurred a one-time increase in registration and filing fees in connection with the listing of our common stock on the NASDAQ Capital Market.

26

Other income (expenses)

The aggregate amount in the other income (expense) for the three-month period ended December 31, 2015, amounted to $595,540 as compared to $(16,040) for the comparable three-month period ended December 31, 2014. The largest reason for the increase in other income was a result of an amount of $610,148 in grant income received during current period. We received a grant in the amount of $571,093 as part of a research and development incentive program offered by the Australian government, in connection with eligible expenditures on our Phase 2a clinical trial, which was conducted in Australia. In addition, we received a research grant from the Michael J. Fox Foundation to develop ANAVEX 2-73 for the treatment of Parkinson’s disease. The research grant is being received over a period of two years and is being recognized into income as the related expenditures are incurred. During the three months ended December 31, 2015, we recognized $39,055 of this grant on our statement of operations. In addition, there was a decrease in financing-related charges as a result of the conversion of a majority of the remaining principal balance on outstanding convertible debentures during the third and fourth quarter of fiscal 2015.

These increases in other income were partially offset by an increase in foreign exchange loss in the current period as a result of the rise of the Australian dollar against the US dollar, as the Company incurred many expenditures in Australia dollars in connection with our clinical trials being conducted in Australia.

Liquidity and Capital Resources

Working Capital

	December 31, 2015		September 30, 2015
Current Assets	$	14,022,957	$	15,468,661
Current Liabilities		2,532,400		2,660,578
Working Capital	$	11,490,557	$	12,808,083

As of December 31, 2015, we had $13,853,405 in cash, a decrease of $1,437,571 from September 30, 2015. The principal reason for this decrease is due to one time charges associated with the vesting of the fourth and final tranche of restricted stock granted to our President and CEO in connection with a 2013 employment agreement.

Cash Flows

	Three months ended December 31,
	2015			2014
Cash flows used in operating activities	$	(3,247,192	)	$	(693,070	)
Cash flows used in investing activities		-			-
Cash flows from financing activities		1,809,621			411,856
Decrease in cash during the period	$	(1,437,571	)	$	(281,214	)

Cash flow used in operating activities

Our cash used in operating activities for the period ended December 31, 2015 was $(3,247,192) compared to $(693,070) used in operating activities for the comparative period ended December 31, 2014. The increase in cash used in operating activities was primarily as a result of one time charges associated with the vesting of the fourth and final tranche of restricted stock granted to our President and CEO in connection with a 2013 employment agreement, as described above.

Cash flow provided by financing activities

Our cash provided by financing activities for the period ended December 31, 2015 was $1,809,621, mostly attributable to cash received pursuant to the exercise of outstanding share purchase warrants, and cash received from the issuance of common shares under the 2013 Purchase Agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”).

In the comparative period ended December 31, 2014, we had cash inflows of $411,856 mostly attributable to cash received from the issuance of common shares under the 2013 Purchase Agreement with Lincoln Park.

27

Other Financing

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 issued 179,598 shares of our common stock to Lincoln Park as a fee for its commitment to purchase shares of our common stock under the Purchase Agreement. 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 declares effective the related registration statement.

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 2015 Purchase Agreement.

Other than our rights related to the Lincoln Park financing, 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 continue to fund our operations through existing cash on hand and through equity and debt financing 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 are 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.

28

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 derivativeliabilities. 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.

29

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 February 1, 2016. We are currently evaluating the impact this guidance will have on our financial condition, results of operations and cash flows.

In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-17 “Income Taxes: Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 eliminates the requirement to bifurcate deferred taxes between current and non-current on the balance sheet and requires that deferred tax liabilities and assets be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for public entities in fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. The amendments for ASU-2015-17 can be applied retrospectively or prospectively and early adoption is permitted. 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 3. Quantitative and Qualitative Disclosures about Market Risks.

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

30

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

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

Based on that evaluation, our management, with the participation of our principal executive officer and principal financial officer, concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective. The ineffectiveness of our disclosure controls and procedures was due to the material weaknesses disclosed in our Annual Report on Form 10-K filed on December 29, 2015.

We intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies.

Changes in Internal Control over Financial Reporting

During the three months ended December 31, 2015, we engaged additional staff who participate in the financial reporting process. This change had a material effect on our internal control over financial reporting as it has enabled us to maintain adequate segregation of duties of our finance and accounting functions.

Other than the above changes, there were no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

On December 22, 2015, the Company received a subpoena from the 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. 

We are aware of press releases issued by plaintiffs’ lawyers announcing the filing of one or more lawsuits against the Company.  At this time, based on a review of federal court dockets, we are aware of only one case that has actually been filed.  We have reviewed the complaint in that case and believe the claim has no merit and the probability of a loss resulting from such claim is remote. 

Other than as disclosed under this Item 1, we know of no material, existing or pending legal proceedings to which we or our subsidiary are a party or of which any of our properties is the subject.  

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide information under this item. However, current and prospective investors are encouraged to review the risks set forth in Part I, Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission on December 29, 2015.

31

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

During the period covered by this Quarterly Report on Form 10-Q, we have not sold any equity securities that were not registered under the Securities Act of 1933 that were not previously reported in a Current Report on Form 8-K.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

32

Item 6. Exhibits.

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 Amendment to the Articles of Incorporation (incorporated by reference to an exhibit to our Current Report on Form 8-K filed on March 30, 2015)
3.5	Certificate of Change to the Articles of Incorporation (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	2015 Omnibus Incentive Plan (incorporated by reference to an exhibit to our Annual Report on Form 10-K filed on December 29, 2015)
10.2	Employment Agreement, dated as of October 1, 2015, by and between the Company and Sandra Boenisch (incorporated by reference to an exhibit to our Annual Report on Form 10-K filed on December 29, 2015)
10.3	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)
10.4	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)
(31)	Section 302 Certifications
31.1*	Section 302 Certification of Christopher Missling, PhD.
(32)	Section 906 Certifications
32.1*	Section 906 Certification of Christopher Missling, PhD.
(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.

33

SIGNATURES

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

ANAVEX LIFE SCIENCES CORP.

/s/Christopher Missling, PhD

Christopher Missling, PhD

Chief Executive Officer

(Principal Executive Officer)

Date: February 8, 2016

/s/Sandra Boenisch

Sandra Boenisch, CPA, CGA

Principal Financial Officer

(Principal Financial and Accounting Officer)

Date: February 8, 2016

34

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Christopher Missling, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the three months ended December 31, 2015 of Anavex Life Sciences Corp. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 8, 2016

/s/Christopher Missling, PhD

Christopher Missling, PhD

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Sandra Boenisch, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the three months ended December 31, 2015 of Anavex Life Sciences Corp. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 8, 2016

/s/Sandra Boenisch

Sandra Boenisch, CPA, CGA

Principal Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Anavex Life Sciences Corp. (the “Company”) on Form 10-Q for the three months ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 8, 2016	/s/Christopher Missling, PhD
	Christopher Missling, PhD
	Chief Executive Officer
	(Principal Executive Officer)

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Anavex Life Sciences Corp. (the “Company”) on Form 10-Q for the three months ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to her knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 8, 2016	/s/Sandra Boenisch
	Sandra Boenisch, CPA, CGA
	Principal Financial Officer
	(Principal Financial and Accounting Officer)

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. 

XML

Document and Entity Information - shares	3 Months Ended
	Dec. 31, 2015	Feb. 05, 2016
Document And Entity Information
Entity Registrant Name	ANAVEX LIFE SCIENCES CORP.
Entity Central Index Key	0001314052
Document Type	10-Q
Trading Symbol	AVXL
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		34,653,885
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2016

XML

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Dec. 31, 2015	Sep. 30, 2015
Current
Cash	$ 13,853,405	$ 15,290,976
GST Recoverable	92,337	76,840
Prepaid expenses	77,215	100,845
Current assets	14,022,957	15,468,661
Equipment	1,003	1,252
Total Assets	14,023,960	15,469,913
Current
Accounts payable and accrued liabilities	2,417,431	2,503,726
Deferred grant income	32,559	71,614
Promissory notes payable	82,410	85,238
Current liabilities	2,532,400	2,660,578
Senior Convertible Debentures	265	332
Total Liabilities	2,532,665	2,660,910
STOCKHOLDERS' EQUITY
Capital stock Authorized: 100,000,000 common shares, par value $0.001 per share Issued and outstanding: 34,653,885 common shares (September 30, 2015 - 32,044,213)	34,655	32,044
Additional paid-in capital	76,127,544	74,060,999
Common stock to be issued	2,565,060	1,997,415
Accumulated deficit	(67,235,964)	(63,281,455)
Stockholders' Equity	11,491,295	12,809,003
Total Liabilities and Stockholder's Equity	$ 14,023,960	$ 15,469,913

XML

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Dec. 31, 2015	Sep. 30, 2015
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	34,653,885	32,044,213
Common stock, shares outstanding	34,653,885	32,044,213

XML

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Operating expenses
General and administrative	$ 3,861,698	$ 452,053
Research and development	670,736	318,625
Total operating expenses	(4,532,434)	$ (770,678)
Other income (expenses)
Grant income	610,148
Interest and finance expenses, net	2,142	$ (77,009)
Financing related charges and adjustments	(1,095)	37,651
Foreign exchange (loss) gain	(15,655)	23,318
Total other income (expenses), net	595,540	(16,040)
Net loss before provision for income taxes	(3,936,894)	$ (786,718)
Income tax expense	17,615
Net loss and comprehensive loss for the period	$ (3,954,509)	$ (786,718)
Loss per share
Basic (in dollars per share)	$ (0.12)	$ (0.06)
Diluted (in dollars per share)	$ (0.12)	$ (0.06)
Weighted average number of shares outstanding
Basic (in shares)	33,971,913	12,907,598
Diluted (in shares)	33,971,913	12,907,598

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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash Flows used in Operating Activities
Net loss for the period	$ (3,954,509)	$ (786,718)
Adjustments to reconcile net loss to net cash used in operations:
Amortization and depreciation	249	249
Accretion of debt discount	1,095	7,120
Stock-based compensation	$ 826,020	15,362
Non-cash financing related charges		29,000
Change in fair value of derivative financial instruments		(2,000)
(Gain) on extinguishment of debt		(42,771)
Other	$ (2,828)	$ (5,609)
Changes in non-cash working capital balances related to operations:
GST recoverable	(15,497)
Prepaid expenses	23,630	$ (9,373)
Accounts payable and accrued liabilities	(86,297)	101,670
Deferred grant income	(39,055)
Net cash used in operating activities	(3,247,192)	(693,070)
Cash Flows provided by Financing Activities
Issuance of common shares, net of share issue costs	1,684,561	$ 500,000
Shares subscribed	$ 125,060
Repayment of promissory note		$ (88,144)
Net cash provided by financing activities	$ 1,809,621	411,856
Decrease in cash during the period	(1,437,571)	(281,214)
Cash, beginning of period	15,290,976	7,262,138
Cash, end of period	$ 13,853,405	$ 6,980,924

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INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - 3 months ended Dec. 31, 2015 - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Common Shares to be Issued [Member]	Accumulated Deficit [Member]	Total
Balance Beginning at Sep. 30, 2015	$ 32,044	$ 74,060,999	$ 1,997,415	$ (63,281,455)	$ 12,809,003
Balance Beginning (in shares) at Sep. 30, 2015	32,044,213				32,044,213
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity units issued under Purchase Agreement	$ 291	1,684,270			$ 1,684,561
Equity units issued under Purchase Agreement (in shares)	290,523
Commitment shares issued under terms of Purchase Agreement	$ 185	(185)
Commitment shares issued under terms of Purchase Agreement (in shares)	185,179
Capital stock issued pursuant to debt conversions - at $1.00	$ 169	$ 168,406	$ (167,415)		$ 1,160
Capital stock issued pursuant to debt conversions - at $1.00 (in shares)	168,577
Shares issued pursuant to the exercise of warrants - at $3.00			$ 125,060		$ 125,060
Shares issued pursuant to the exercise of warrants - cashless	$ 1,964	$ (1,964)
Shares issued pursuant to the exercise of warrants - cashless (in shares)	1,963,956
Shares issued for rounding purposes	$ 2	$ (2)
Shares issued for rounding purposes (in shares)	1,437
Shared issued pursuant to restricted stock award			$ 610,000		$ 610,000
Stock based compensation		$ 216,020			216,020
Net loss for the period				$ (3,954,509)	(3,954,509)
Balance Ending at Dec. 31, 2015	$ 34,655	$ 76,127,544	$ 2,565,060	$ (67,235,964)	$ 11,491,295
Balance Ending (in shares) at Dec. 31, 2015	34,653,885				34,653,885

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INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical)	Dec. 31, 2015 $ / shares
Statement of Stockholders' Equity [Abstract]
Debt conversions,share price (in dollars per share)	$ 1.00
Warrants exercised,share price (in dollars per share)	$ 3.00

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Business Description and Basis of Presentation

3 Months Ended

Dec. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business Description and Basis of Presentation

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 interim condensed consolidated financial statements give retroactive effect to such reverse split and all share and per share amounts have been adjusted accordingly.

Basis of Presentation

These interim condensed consolidated financial statements have been prepared, without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in the annual financial statements in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained herein. The condensed consolidated balance sheet at September 30, 2015 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by generally accepted accounting principals. These interim condensed financial statements should be read in conjunction with the audited financial statements included in its annual report on Form 10-K for the year ended September 30, 2015. The Company follows the same accounting policies in the preparation of interim reports.

Operating results for the three months ended December 31, 2015 are not necessarily indicative of the results that may be expected for the year ending September 30, 2016.

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 weighted average of all potentially dilutive shares of common stock that were outstanding during the period.

As of December 31, 2015, loss per share excludes 4,731,478 (September 30, 2015 – 6,101,534) potentially dilutive common shares related to outstanding options, warrants, convertible debentures and shares to be issued, as their effect was anti-dilutive.

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Recent Accounting Pronouncements

3 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Recent Accounting Pronouncements

Note 2 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.

In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-17 “Income Taxes: Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 eliminates the requirement to bifurcate deferred taxes between current and non-current on the balance sheet and requires that deferred tax liabilities and assets be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for public entities in fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. The amendments for ASU-2015-17 can be applied retrospectively or prospectively and early adoption is permitted. The adoption of this standard is not expected to have a material impact for any period presented.

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.

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Equipment

3 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

Equipment

Note 3 Equipment

	December 31, 2015
			Accumulated
	Cost		Depreciation		Net
Computer equipment	$	3,015	$	2,012	$	1,003

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

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Promissory Notes Payable

3 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Promissory Notes Payable

Note 4 Promissory Notes Payable

	December 31,		September 30,
	2015		2015
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	$	62,486	$	64,630
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		19,924		20,608
	$	82,410	$	85,238

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 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 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.

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 their maturity. 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 December 31, 2015 or September 30, 2015, as the Company does not consider these amounts to be legally enforceable.

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Deferred Grant Income

3 Months Ended

Dec. 31, 2015

Deferred Revenue Disclosure [Abstract]

Deferred Grant Income

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 agonism as potential treatment for Parkinsons disease.

The grant income was deferred and is being amortized as an increase to other income over a two-year period as the related research and development expenditures are incurred. During the three months ended December 31, 2015, the Company recognized $39,055 of this grant on its statement of operations.

During the three months ended December 31, 2015, the Company recognized other grant income of $571,093 in respect of a research and development incentive program offered by the Australian government.

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Senior Convertible Debentures

3 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Senior Convertible Debentures

Note 6 Senior Convertible Debentures

	December 31,			September 30,
Senior Convertible Debentures	2015			2015
Senior Convertible Debentures, non-interest
bearing, unsecured, due March 18, 2044	$	4,982		$	6,144
Less: Debt Discount		(4,717	)		(5,812	)
Total carrying value		265			332
Less: current portion		-			-
Long term liability	$	265		$	332

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 is exercisable into one common share of the Company at $1.20 per share until March 18, 2019.

Each Series B warrant is 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 originally 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.

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. In connection with the recognition of a beneficial conversion feature for accounting purposes and, under the guidance of ASC 740-10, which requires the recognition of a deferred income tax liability in respect of the temporary difference for tax purposes relating to the beneficial conversion feature, the Company recognized a deferred income tax liability of $1,400,000, with an offsetting adjustment to additional paid-in capital. Such deferred tax liability was subsequently reversed in connection with the amendment of such Debentures during the year ended September 30, 2014.

The total debt discount at issuance of $10,000,000 was being amortized using the effective interest method over the term of the Debentures. During the year ended September 30, 2014 and in connection with certain amendment agreements, remaining unamortized financing costs of $1,110,568 associated with the Debentures were immediately amortized through earnings upon entering into the amendments.

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 was 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.

During the three months ended December 31, 2015, the Company issued an aggregate of 1,162 shares of common stock based on a conversion price of $1.00 per share pursuant to the conversion of $1,162 in outstanding principal amounts due under the Debentures.

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Capital Stock

3 Months Ended

Dec. 31, 2015

Stockholders' Equity Note [Abstract]

Capital Stock

Note 7 Capital Stock

Authorized

100,000,000 shares of common stock.

Equity Transactions

During the three months ended December 31, 2015, the Company issued 167,415 shares of common stock pursuant to the application of an incorrect conversion price for conversion notices received during the year ended September 30, 2015.

Common stock to be issued

Included in common stock to be issued at December 31, 2015 is an amount of $2,440,000 (September 30, 2015: $1,830,000) related to 1,000,000 (September 30, 2015: 750,000) 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 10).

Included in common stock to be issued at December 31, 2015 is $125,060 relating to the exercise of 41,687 warrants at an exercise price of $3.00 per share.

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Lincoln Park Purchase Agreement

3 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Lincoln Park Purchase Agreement

Note 8 Lincoln Park Purchase Agreement

2013 Purchase Agreement

On July 5, 2013, the Company entered into a $10,000,000 purchase agreement (the “2013 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 2013 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.

In consideration for entering into the 2013 Purchase Agreement, the Company issued to Lincoln Park 85,465 shares of common stock as a commitment fee during the year ended September 30, 2013 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.

During the three months ended December 31, 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 $1,684,561 and 5,581 commitment shares, representing all remaining purchase amounts available under the Purchase Agreement.

2015 Purchase Agreement

On October 21, 2015, the Company entered into a $50,000,000 purchase agreement (the “2015 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 United States Securities and Exchange Commission (“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 2015 Purchase Agreement.

During the three months ended December 31, 2015 and in consideration for entering into the 2015 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. 

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Related Party Transactions

3 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions

Note 9 Related Party Transactions

During the three months ended December 31, 2015, the Company accrued general and administrative expenses totaling $3,044,855 (2014: $16,383) in respect of directors fees and stock and stock option compensation charges paid or accrued to directors and officers of the Company, inclusive of amounts noted below. Of the total, $746,514 related to non-cash stock option and stock compensation charges, and $2,290,341 was related to additional compensation 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 December 31, 2015, included in accounts payable and accrued liabilities was $47,000 (September 30, 2015: $33,000) 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.

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 December 31, 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 December 31, 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 December 31, 2015)

• 25% upon the Company obtaining a listing on a major stock exchange (vested during the three months ended December 31, 2015 at a value of $610,000 and included in shares to be issued at December 31, 2015)

Included in operating results for the three months ended December 31, 2015 are non-cash stock compensation charges of $610,000 (2014: $0) relating to the vesting of 250,000 (2014: 0) shares of restricted common stock upon the achievement of certain performance conditions, and $2,290,341 (2014: $0) 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 December 31, 2015.

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Commitments

3 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments

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, 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
Exercised		(2,444,831	)	$	1.68
Balance, December 31, 2015		1,828,059		$	2.68

During the three months ended December 31, 2015, the Company issued 1,963,956 shares of common stock pursuant to the exercise of 2,403,144 share purchase warrants on a cashless basis.

At December 31, 2015, the Company has 1,828,059 currently exercisable share purchase warrants outstanding as follows:

Number		Exercise Price		Expiry Date
	1,462,180	$	3.00	July 5, 2018
	30,000	$	4.00	February 24, 2019
	277,127	$	1.20	March 13, 2019
	1,252	$	1.68	March 13, 2019
	12,500	$	1.24	May 31, 2019
	45,000	$	1.00	July 31, 2019
	1,828,059

All of the 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.

A summary of the status of Company’s outstanding stock purchase options for the three months ended December 31, 2015 and for the year ended September 30, 2015 is presented below:

				Weighted		Weighted Average
	Number of			Average		Grant Date fair
	Shares			Exercise Price		value
Outstanding at October 1, 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
Forfeited		-		$	-
Granted		34,250		$	5.67	$	5.67
Outstanding at December 31, 2015		1,856,750		$	2.07
Exercisable at December 31, 2015		843,107		$	1.80
Exercisable at September 30, 2015		825,002		$	1.78

At December 31, 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	$	-		0.25
	500,000	(2)		500,000	$	1.60	July 5, 2023		1,985,000		7.51
	75,000	(3)		25,000	$	1.20	May 7, 2024		327,750		8.35
	125,000	(4)		31,250	$	1.32	May 8, 2024		531,250		8.35
	718,750	(5)		239,585	$	0.92	April 2, 2025		3,342,188		9.25
	50,000	(6)		8,334	$	1.44	June 8, 2025		206,500		9.44
	50,000	(7)		8,334	$	1.68	June 15, 2025		194,500		9.46
	278,750	(8)		-	$	5.04	September 18, 2025		147,738		9.72
	1,500	(9)		1,500	$	5.64	September 30, 2025		-		9.75
	31,250	(10)		2,604	$	5.68	October 2, 2025		-		9.75
	1,500	(9)		1,500	$	5.47	December 31, 2025		150		10.00
	1,856,750			843,107				$	6,735,075

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 December 31, 2015.

⁽¹⁾ As of December 31, 2015 and September 30, 2015, 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 three months ended December 31, 2015 (2014: $0).

⁽²⁾ As of December 31, 2015 and September 30, 2015 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 three months ended December 31, 2015 (2014: $0) in connection with these options.

⁽³⁾ As of December 31, 2015 and September 30, 2015, 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 $5,826 during the three months ended December 31, 2015 (2014: $5,830) 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 December 31, 2015 and September 30, 2015, 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 $8,048 during the three months ended December 31, 2015 (2014: $8,053) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

⁽⁵⁾ As of December 31, 2015, 239,585 of these options had vested (September 30, 2015: 239,585 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 $43,282 during the three months ended December 31, 2015 (2014: $0) 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 December 31, 2015, 8,334 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 $4,828 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

⁽⁷⁾ As of December 31, 2015 and September 30, 2015, 8,334 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 $5,634 during the three months ended December 31, 2015 (2014: $0) 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 December 31, 2015 and September 30, 2015, 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 $99,149 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

⁽⁹⁾ As of December 31, 2015, all of these options had vested. These options were issued during the three months ended December 31, 2015 and vested on December 31, 2015. The Company recognized stock based compensation expense of $13,600 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

⁽¹⁰⁾ As of December 31, 2015, 2,604 of these options had vested. These options were issued during the three months ended December 31, 2015 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $11,993 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

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Supplemental Cash Flow Information

3 Months Ended

Dec. 31, 2015

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

Note 11 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 three months ended December 31, 2015;

i) the Company issued 1,162 shares of common stock upon conversion of $1,162 in principal amount of convertible debentures at a conversion price of $1.00 per share and 167,415 shares of common stock pursuant to the application of an incorrect conversion price for conversion notices received during the year ended September 30, 2015;

During the three months ended December 31, 2014;

i) the Company issued 1,401,167 shares of common stock of the Company pursuant to the conversion of convertible debentures at a conversion price of $1.00 per share

These transactions have been excluded from the statement of cash flows.

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Recent Accounting Pronouncements (Policies)

3 Months Ended

Dec. 31, 2015

Recent Accounting Pronouncements Policies

Recent Accounting Pronouncements Not Yet Adopted

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.

In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-17 “Income Taxes: Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 eliminates the requirement to bifurcate deferred taxes between current and non-current on the balance sheet and requires that deferred tax liabilities and assets be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for public entities in fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. The amendments for ASU-2015-17 can be applied retrospectively or prospectively and early adoption is permitted. The adoption of this standard is not expected to have a material impact for any period presented.

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.

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Equipment (Tables)

3 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

Schedule of equipment

	December 31, 2015
			Accumulated
	Cost		Depreciation		Net
Computer equipment	$	3,015	$	2,012	$	1,003

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

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Promissory Notes Payable (Tables)

3 Months Ended

Dec. 31, 2015

Promissory Notes Payable Tables

Schedule of promissory notes payable

	December 31,		September 30,
	2015		2015
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	$	62,486	$	64,630
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		19,924		20,608
	$	82,410	$	85,238

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Senior Convertible Debentures (Tables)

3 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Schedule of senior convertible debentures

	December 31,			September 30,
Senior Convertible Debentures	2015			2015
Senior Convertible Debentures, non-interest
bearing, unsecured, due March 18, 2044	$	4,982		$	6,144
Less: Debt Discount		(4,717	)		(5,812	)
Total carrying value		265			332
Less: current portion		-			-
Long term liability	$	265		$	332

Schedule of issuance of 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

Schedule of fair value of the purchaser and non-purchaser warrants

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	%

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Commitments (Tables)

3 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of purchase warrants outstanding

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

				Weighted
				Average
	Number of Shares			Exercise Price
Balance, October 1, 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
Exercised		(2,444,831	)	$	1.68
Balance, December 31, 2015		1,828,059		$	2.68

Schedule of exercisable share purchase warrants outstanding

At December 31, 2015, the Company has 1,828,059 currently exercisable share purchase warrants outstanding as follows:

Number		Exercise Price		Expiry Date
	1,462,180	$	3.00	July 5, 2018
	30,000	$	4.00	February 24, 2019
	277,127	$	1.20	March 13, 2019
	1,252	$	1.68	March 13, 2019
	12,500	$	1.24	May 31, 2019
	45,000	$	1.00	July 31, 2019
	1,828,059

Schedule of outstanding stock purchase options

A summary of the status of Company’s outstanding stock purchase options for the three months ended December 31, 2015 and for the year ended September 30, 2015 is presented below:

				Weighted		Weighted Average
	Number of			Average		Grant Date fair
	Shares			Exercise Price		value
Outstanding at October 1, 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
Forfeited		-		$	-
Granted		34,250		$	5.67	$	5.67
Outstanding at December 31, 2015		1,856,750		$	2.07
Exercisable at December 31, 2015		843,107		$	1.80
Exercisable at September 30, 2015		825,002		$	1.78

Schedule stock options outstanding

At December 31, 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	$	-		0.25
	500,000	(2)		500,000	$	1.60	July 5, 2023		1,985,000		7.51
	75,000	(3)		25,000	$	1.20	May 7, 2024		327,750		8.35
	125,000	(4)		31,250	$	1.32	May 8, 2024		531,250		8.35
	718,750	(5)		239,585	$	0.92	April 2, 2025		3,342,188		9.25
	50,000	(6)		8,334	$	1.44	June 8, 2025		206,500		9.44
	50,000	(7)		8,334	$	1.68	June 15, 2025		194,500		9.46
	278,750	(8)		-	$	5.04	September 18, 2025		147,738		9.72
	1,500	(9)		1,500	$	5.64	September 30, 2025		-		9.75
	31,250	(10)		2,604	$	5.68	October 2, 2025		-		9.75
	1,500	(9)		1,500	$	5.47	December 31, 2025		150		10.00
	1,856,750			843,107				$	6,735,075

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 December 31, 2015.

⁽¹⁾ As of December 31, 2015 and September 30, 2015, 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 three months ended December 31, 2015 (2014: $0).

⁽²⁾ As of December 31, 2015 and September 30, 2015 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 three months ended December 31, 2015 (2014: $0) in connection with these options.

⁽³⁾ As of December 31, 2015 and September 30, 2015, 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 $5,826 during the three months ended December 31, 2015 (2014: $5,830) 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 December 31, 2015 and September 30, 2015, 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 $8,048 during the three months ended December 31, 2015 (2014: $8,053) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

⁽⁵⁾ As of December 31, 2015, 239,585 of these options had vested (September 30, 2015: 239,585 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 $43,282 during the three months ended December 31, 2015 (2014: $0) 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 December 31, 2015, 8,334 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 $4,828 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

⁽⁷⁾ As of December 31, 2015 and September 30, 2015, 8,334 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 $5,634 during the three months ended December 31, 2015 (2014: $0) 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 December 31, 2015 and September 30, 2015, 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 $99,149 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

⁽⁹⁾ As of December 31, 2015, all of these options had vested. These options were issued during the three months ended December 31, 2015 and vested on December 31, 2015. The Company recognized stock based compensation expense of $13,600 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

⁽¹⁰⁾ As of December 31, 2015, 2,604 of these options had vested. These options were issued during the three months ended December 31, 2015 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $11,993 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

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Business Description and Basis of Presentation (Details Narrative) - $ / shares

3 Months Ended

12 Months Ended

Oct. 07, 2015

Dec. 31, 2015

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Reverse stock split

1:4

Common stock, shares authorized

400,000,000

100,000,000

100,000,000

Common stock, par value (in dollars per share)

$ 0.001

$ 0.001

$ 0.001

Potentially dilutive common shares related to outstanding options, warrants, and convertible debentures and shares to be issued

4,731,478

6,101,534

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Equipment (Details) - USD ($)	Dec. 31, 2015	Sep. 30, 2015
Property, Plant and Equipment [Line Items]
Net	$ 1,003	$ 1,252
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	3,015	3,015
Accumulated Depreciation	2,012	1,763
Net	$ 1,003	$ 1,252

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Promissory Notes Payable (Details)

12 Months Ended

Sep. 30, 2015

USD ($)

Dec. 31, 2015

USD ($)

Sep. 30, 2015

CAD

Jan. 09, 2013

CAD

Total promissory notes payable

$ 85,238

$ 82,410

Principal balance

6,144

4,982

12% Promissory Note [Member]

Total promissory notes payable

$ 64,630

62,486

Debt instrument, issuance date

Jan. 09, 2013

Description of collateral

Secured by all the present and future assets of the Company; due on demand.

12% Promissory Note [Member] | Canada, Dollars [Member]

Principal balance | CAD

CAD 86,677

CAD 86,677

12% Promissory Note [Member]

Total promissory notes payable

$ 20,608

$ 19,924

Debt instrument, issuance date

Jan. 09, 2013

Description of collateral

Secured by all the present and future assets of the Company; due on demand.

12% Promissory Note [Member] | Canada, Dollars [Member]

Principal balance | CAD

CAD 27,639

CAD 27,639

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Promissory Notes Payable (Details Narrative)		3 Months Ended	12 Months Ended
	Jan. 09, 2013 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2015 CAD	Jan. 09, 2013 CAD
Principal balance		$ 4,982	$ 6,144
Maturity date		Mar. 18, 2044	Mar. 18, 2044
12% Promissory Note [Member]
Maturity date	Jun. 30, 2013
Late fees, per day per note	$ 100
Additional late fees, per day per note	$ 500
12% Promissory Note [Member] | Canada, Dollars [Member]
Principal balance | CAD				CAD 86,677	CAD 86,677
12% Promissory Note [Member]
Maturity date	Jun. 30, 2013
Late fees, per day per note	$ 100
Additional late fees, per day per note	$ 500
12% Promissory Note [Member] | Canada, Dollars [Member]
Principal balance | CAD				CAD 27,639	CAD 27,639

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Deferred Grant Income (Details Narrative) - USD ($)	3 Months Ended	12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015
Deferred Revenue Disclosure [Abstract]
Awarded grant funding amount		$ 286,455
Deferred grant income	$ 39,055	$ 71,614
Other grant income	$ 571,093

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Senior Convertible Debentures (Details) - USD ($)	3 Months Ended	12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015
Debt Disclosure [Abstract]
Senior Convertible Debentures, non-interest bearing, unsecured, due March 18, 2044	$ 4,982	$ 6,144
Less: Debt Discount	(4,717)	(5,812)
Total carrying value	$ 265	$ 332
Less: current portion
Long term liability	$ 265	$ 332
Maturity date	Mar. 18, 2044	Mar. 18, 2044

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Senior Convertible Debentures (Details 1) - Securities Purchase Agreement [Member] - Senior Convertible Debentures Due March 18, 2044 [Member]	Mar. 13, 2014 shares
Series A Warrant [Member]
Number of warrant issued	8,458,333
Series B Warrant [Member]
Number of warrant issued	8,458,333
Warrant [Member]
Number of warrant issued	16,916,666
Purchasers [Member] | Series A Warrant [Member]
Number of warrant issued	8,333,333
Purchasers [Member] | Series B Warrant [Member]
Number of warrant issued	8,333,333
Purchasers [Member] | Warrant [Member]
Number of warrant issued	16,666,666
Non - Purchasers [Member] | Series A Warrant [Member]
Number of warrant issued	125,000
Non - Purchasers [Member] | Series B Warrant [Member]
Number of warrant issued	125,000
Non - Purchasers [Member] | Warrant [Member]
Number of warrant issued	250,000

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Senior Convertible Debentures (Details 2) - Securities Purchase Agreement [Member] - Senior Convertible Debentures Due March 18, 2044 [Member] - Warrant [Member]	Mar. 13, 2014 $ / shares
Risk-free interest rate	1.56%
Expected life (years)	5 years
Expected volatility	97.16%
Stock price	$ 1.76
Dividend yields	0.00%

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Senior Convertible Debentures (Details Narrative)

3 Months Ended

Mar. 13, 2014

USD ($)

$ / shares

shares

Dec. 31, 2015

USD ($)

N

$ / shares

Dec. 31, 2014

N

$ / shares

Sep. 30, 2015

USD ($)

Sep. 30, 2014

USD ($)

Aug. 25, 2014

$ / shares

Aggregate principal amount

$ 4,982

$ 6,144

Conversion price (in dollars per share) | $ / shares

$ 1.00

$ 1.00

Debt discount issuance

$ 4,717

$ 5,812

Number of equity instrument issued upon conversion | N

1,162

1,401,167

Debt beneficial conversion feature

$ 1,162

Securities Purchase Agreement [Member] | Senior Convertible Debentures Due March 18, 2044 [Member]

Remaining unamortized financing costs

$ 1,110,568

Securities Purchase Agreement [Member] | Senior Convertible Debentures Due March 18, 2044 [Member] | Purchasers [Member]

Aggregate principal amount

$ 10,000,000

Description of conversion terms

Convertible, in whole or in part, at the option of the holder into common shares of the Company.

Conversion price (in dollars per share) | $ / shares

$ 1.20

Amended conversion price (in dollars per share) | $ / shares

$ 1.00

Debt discount issuance

$ 5,989,900

Debt beneficial conversion feature discount

4,010,100

Deferred income tax liability

$ 1,400,000

Total debt discount issuance (effective interest method)

10,000,000

Finder's fees and other financing costs

$ 788,712

Securities Purchase Agreement [Member] | Senior Convertible Debentures Due March 18, 2044 [Member] | Warrant [Member]

Number of warrant issued | shares

16,916,666

Securities Purchase Agreement [Member] | Senior Convertible Debentures Due March 18, 2044 [Member] | Warrant [Member] | Purchasers [Member]

Number of warrant issued | shares

16,666,666

Fair value

$ 22,326,200

Securities Purchase Agreement [Member] | Senior Convertible Debentures Due March 18, 2044 [Member] | Warrant [Member] | Non - Purchasers [Member]

Number of warrant issued | shares

250,000

Fair value

$ 334,900

Securities Purchase Agreement [Member] | Senior Convertible Debentures Due March 18, 2044 [Member] | Series A Warrant [Member]

Number of warrant issued | shares

8,458,333

Number of common shares called by each | shares

1

Exercise price (in dollars per shares) | $ / shares

$ 1.20

Exercisable date

Mar. 18, 2019

Securities Purchase Agreement [Member] | Senior Convertible Debentures Due March 18, 2044 [Member] | Series A Warrant [Member] | Purchasers [Member]

Number of warrant issued | shares

8,333,333

Securities Purchase Agreement [Member] | Senior Convertible Debentures Due March 18, 2044 [Member] | Series A Warrant [Member] | Non - Purchasers [Member]

Number of warrant issued | shares

125,000

Securities Purchase Agreement [Member] | Senior Convertible Debentures Due March 18, 2044 [Member] | Series B Warrant [Member]

Number of warrant issued | shares

8,458,333

Number of common shares called by each | shares

1

Exercise price (in dollars per shares) | $ / shares

$ 1.68

Exercisable date

Mar. 18, 2019

Securities Purchase Agreement [Member] | Senior Convertible Debentures Due March 18, 2044 [Member] | Series B Warrant [Member] | Purchasers [Member]

Number of warrant issued | shares

8,333,333

Securities Purchase Agreement [Member] | Senior Convertible Debentures Due March 18, 2044 [Member] | Series B Warrant [Member] | Non - Purchasers [Member]

Number of warrant issued | shares

125,000

Amended Registration Rights Agreement ( the Debenture Amendment) [Member] | Amended Senior Convertible Debentures Due March 18, 2044 [Member]

Amended conversion price (in dollars per share) | $ / shares

$ 1.00

$ 1.00

Number of equity instrument issued upon conversion | N

1,162

Debt beneficial conversion feature

$ 1,162

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Capital Stock (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 2015	Oct. 07, 2015
Common stock, authorized	100,000,000		100,000,000	400,000,000
Number of shares for incorrect conversion price	167,415	167,415
Common Shares to be Issued [Member] | Directors and Officers [Member]
Value of shares for common stock to be issued	$ 2,440,000		$ 1,830,000
Number of shares for common stock to be issued	1,000,000		750,000
Warrant [Member] | Common Shares to be Issued [Member]
Value of shares for common stock to be issued	$ 125,060
Number of shares for common stock to be issued	41,687
Number of warrant exercisable	3.00

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Lincoln Park Purchase Agreementt (Details Narrative) - Lincoln Park Capital Fund, LLC [Member] - USD ($)

3 Months Ended

12 Months Ended

Oct. 21, 2015

Jul. 05, 2013

Dec. 31, 2015

Sep. 30, 2013

2013 Purchase Agreement [Member]

Total number of shares obligated to purchase

$ 10,000,000

Agreement term

25 months

Description of purchases price

The purchase price of the shares that may be sold to Lincoln Park under the 2013 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.

Number of shares issued

296,104

85,465

Pro rata basic number of shares obligated to purchase

33,352

Number of shares issued for aggregate purchase price

290,523

Number of shares issued for aggregate purchase price, value

$ 1,684,561

Number of shares issued for commitment

5,581

2015 Purchase Agreement [Member]

Total number of shares obligated to purchase

$ 50,000,000

Agreement term

36 months

Description of purchases price

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 2015 Purchase Agreement.

Number of shares issued

179,598

Pro rata basic number of shares obligated to purchase

89,799

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Related Party Transactions (Details Narrative) - USD ($)

3 Months Ended

12 Months Ended

Dec. 31, 2015

Dec. 31, 2014

Sep. 30, 2013

Sep. 30, 2015

General and administrative expenses

$ 3,044,855

$ 16,383

Second Stock Option [Member]

Number of vested shares

500,000

Exercise price

$ 1.60

Expiry date

Jul. 05, 2023

Restricted Common Stock [Member]

Non-cash stock option and stock compensation charges

610,000

0

Common stock vested awards

250,000

0

Additional compensation obligations associated with vesting

$ 2,290,341

$ 0

Fair value of non-cash stock compensation charges per share

$ 2.44

Common shares to be issued

$ 1,000,000

Directors and Officers [Member]

Non-cash stock option and stock compensation charges

746,514

Recognized stock based compensation expense

2,290,341

Accounts payable and accrued liabilities

$ 47,000

$ 33,000

Directors and Officers [Member] | Restricted Common Stock [Member] | Share-based Compensation Award, Tranche One [Member]

Stock based compensation award vesting in percentage

25.00%

Description stock based compensation award vesting

Company starting a Phase Ib/IIb human study.

Common shares to be issued

$ 610,000

Directors and Officers [Member] | Restricted Common Stock [Member] | Share-based Compensation Award, Tranche Two [Member]

Stock based compensation award vesting in percentage

25.00%

Description stock based compensation award vesting

Company in-licensing additional assets in clinical or pre-clinical stage.

Common shares to be issued

$ 610,000

Directors and Officers [Member] | Restricted Common Stock [Member] | Share-based Compensation Award, Tranche Three [Member]

Stock based compensation award vesting in percentage

25.00%

Description stock based compensation award vesting

Company securing additional non-dilutive equity funding in 2013 of at least $5,000,000 with a share price higher than the previous funding.

Common shares to be issued

$ 610,000

Directors and Officers [Member] | Restricted Common Stock [Member] | Share-based Compensation Award, Tranche Four [Member]

Stock based compensation award vesting in percentage

25.00%

Description stock based compensation award vesting

Company obtaining a listing on a major stock exchange.

Common shares to be issued

$ 610,000

XML

Commitments (Details) - Purchase Warrants [Member] - $ / shares	3 Months Ended	12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Balance, at beginning	4,272,890	18,728,910
Expired		(62,500)
Exercised	(2,444,831)	(15,468,520)
Issued		1,075,000
Balance, at end	1,828,059	4,272,890
Share based Compensation Arrangement by Share Based Payment Award Equity Instruments Other than Options Outstanding, Weighted Average Exercise Price [Roll Forward]
Balance, at beginning	$ 2.11	$ 1.59
Expired		1.40
Exercised	1.68	1.43
Issued		0.76
Balance, at end	$ 2.68	$ 2.11

XML

Commitments (Details 1)	3 Months Ended
	Dec. 31, 2015 $ / shares shares
First Purchase Warrants [Member]
Number	1,462,180
Exercise Price | $ / shares	$ 3.00
Expiry Date	Jul. 05, 2018
Second Purchase Warrants [Member]
Number	30,000
Exercise Price | $ / shares	$ 4.00
Expiry Date	Feb. 24, 2019
Third Purchase Warrants [Member]
Number	277,127
Exercise Price | $ / shares	$ 1.20
Expiry Date	Mar. 13, 2019
Four Purchase Warrants [Member]
Number	1,252
Exercise Price | $ / shares	$ 1.68
Expiry Date	Mar. 13, 2019
Five Purchase Warrants [Member]
Number	12,500
Exercise Price | $ / shares	$ 1.24
Expiry Date	May 31, 2019
Six Purchase Warrants [Member]
Number	45,000
Exercise Price | $ / shares	$ 1.00
Expiry Date	Jul. 31, 2019
Purchase Warrants [Member]
Number	1,828,059

XML

Commitments (Details 2) - 2015 Omnibus Incentive Plan [Member] - $ / shares	3 Months Ended	12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning	1,822,500	792,500
Forfeited		(67,500)
Granted	34,250	1,097,500
Outstanding at ending	1,856,750	1,822,500
Exercisable at ending	843,107	825,002
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Outstanding at beginning	$ 2.00	$ 2.82
Forfeited		12.00
Granted	$ 5.67	2.02
Outstanding at ending	2.07	2.00
Exercisable at ending	1.80	1.78
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Granted	$ 5.67	$ 1.66

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Commitments (Details 3) - USD ($)		3 Months Ended	12 Months Ended
		Dec. 31, 2015	Sep. 30, 2013	Sep. 30, 2015	Sep. 30, 2014
First Stock Option [Member]
Total Number of Shares	[1]	25,000
Number of Vested Shares		25,000
Exercise Price		$ 14.68
Expiry Date		Mar. 30, 2016
Aggregate Intrinsic Value
Remaining Contractual Life (in years)		3 months
Second Stock Option [Member]
Total Number of Shares	[2]	500,000
Number of Vested Shares			500,000
Exercise Price			$ 1.60
Expiry Date			Jul. 05, 2023
Aggregate Intrinsic Value		$ 1,985,000
Remaining Contractual Life (in years)		7 years 6 months 4 days
Third Stock Option [Member]
Total Number of Shares	[3]	75,000
Number of Vested Shares		25,000
Exercise Price		$ 1.20
Expiry Date		May 07, 2024
Aggregate Intrinsic Value		$ 327,750
Remaining Contractual Life (in years)		8 years 4 months 6 days
Four Stock Option [Member]
Total Number of Shares	[4]	125,000
Number of Vested Shares		31,250
Exercise Price		$ 1.32
Expiry Date		May 08, 2024
Aggregate Intrinsic Value		$ 531,250
Remaining Contractual Life (in years)		8 years 4 months 6 days
Five Stock Option [Member]
Total Number of Shares	[5]	718,750
Number of Vested Shares		239,585
Exercise Price		$ 0.92
Expiry Date		Apr. 02, 2025
Aggregate Intrinsic Value		$ 3,342,188
Remaining Contractual Life (in years)		9 years 3 months
Six Stock Option [Member]
Total Number of Shares	[6]	50,000
Number of Vested Shares		8,334
Exercise Price		$ 1.44
Expiry Date		Jun. 08, 2025
Aggregate Intrinsic Value		$ 206,500
Remaining Contractual Life (in years)		9 years 5 months 8 days
Seven Stock Option [Member]
Total Number of Shares	[7]	50,000
Number of Vested Shares		8,334
Exercise Price		$ 1.68
Expiry Date		Jun. 15, 2025
Aggregate Intrinsic Value		$ 194,500
Remaining Contractual Life (in years)		9 years 5 months 16 days
Eight Stock Option [Member]
Total Number of Shares	[8]	278,750
Number of Vested Shares
Exercise Price		$ 5.04
Expiry Date		Sep. 18, 2025
Aggregate Intrinsic Value		$ 147,738
Remaining Contractual Life (in years)		9 years 8 months 19 days
Nine Stock Option [Member]
Total Number of Shares	[9]	1,500
Number of Vested Shares		1,500
Exercise Price		$ 5.64
Expiry Date		Sep. 30, 2025
Aggregate Intrinsic Value
Remaining Contractual Life (in years)		9 years 9 months
Ten Stock Option [Member]
Total Number of Shares	[10]	31,250
Number of Vested Shares		2,604
Exercise Price		$ 5.68
Expiry Date		Oct. 02, 2025
Aggregate Intrinsic Value
Remaining Contractual Life (in years)		9 years 9 months
Eleven Stock Option [Member]
Total Number of Shares	[9]	1,500
Number of Vested Shares		1,500
Exercise Price		$ 5.47
Expiry Date		Dec. 31, 2025
Aggregate Intrinsic Value		$ 150
Remaining Contractual Life (in years)		10 years
2015 Omnibus Incentive Plan [Member]
Total Number of Shares		1,856,750		1,822,500	792,500
Number of Vested Shares		843,107
Exercise Price		$ 2.07		$ 2.00	$ 2.82
Aggregate Intrinsic Value		$ 6,735,075

[1] As of December 31, 2015 and September 30, 2015, 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 three months ended December 31, 2015 (2014: $0).

[2] As of December 31, 2015 and September 30, 2015 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 three months ended December 31, 2015 (2014: $0) in connection with these options.

[3] As of December 31, 2015 and September 30, 2015, 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 $5,826 during the three months ended December 31, 2015 (2014: $5,830) 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 December 31, 2015 and September 30, 2015, 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 $8,048 during the three months ended December 31, 2015 (2014: $8,053) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations.

[5] As of December 31, 2015, 239,585 of these options had vested (September 30, 2015: 239,585 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 $43,282 during the three months ended December 31, 2015 (2014: $0) 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 December 31, 2015, 8,334 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 $4,828 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations.

[7] As of December 31, 2015 and September 30, 2015, 8,334 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 $5,634 during the three months ended December 31, 2015 (2014: $0) 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 December 31, 2015 and September 30, 2015, 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 $99,149 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations.

[9] As of December 31, 2015, all of these options had vested. These options were issued during the three months ended December 31, 2015 and vested on December 31, 2015. The Company recognized stock based compensation expense of $13,600 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations.

[10] As of December 31, 2015, 2,604 of these options had vested. These options were issued during the three months ended December 31, 2015 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $11,993 during the three months ended December 31, 2015 (2014: $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations.

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Commitments (Details Narrative) - Purchase Warrants [Member]

3 Months Ended

Dec. 31, 2015

shares

Number of common shares called

1,963,956

Number of warrant exercised

2,403,144

Number of warrant exercisable

1,828,059

Expiration date

Jul. 05, 2018

Description of cancellation policy

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.

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Commitments (Details Narrative 1) - 2015 Omnibus Incentive Plan [Member] - USD ($)

3 Months Ended

Dec. 31, 2015

Dec. 31, 2014

Maximum number of common shares reserved for future issuance

6,050,553

First Stock Option [Member]

Vesting period

1 year

Fair value of options

$ 267,000

Stock based compensation expense

$ 0

Third Stock Option [Member]

Vesting period

3 years

Third Stock Option [Member] | General and Administrative Expense [Member]

Stock based compensation expense

$ 5,826

5,830

Four Stock Option [Member]

Vesting period

4 years

Stock based compensation expense

$ 8,048

8,053

Five Stock Option [Member]

Vesting period

3 years

Description of vesting period rights

Vest in three equal installments on April 2, 2015, April 2, 2016 and April 2, 2017.

Five Stock Option [Member] | General and Administrative Expense [Member]

Stock based compensation expense

$ 43,282

0

Six Stock Option [Member]

Vesting period

3 years

Description of vesting period rights

Vest quarterly over a three year period commencing on September 8, 2015.

Six Stock Option [Member] | General and Administrative Expense [Member]

Stock based compensation expense

$ 4,828

0

Seven Stock Option [Member]

Vesting period

3 years

Seven Stock Option [Member] | General and Administrative Expense [Member]

Stock based compensation expense

$ 5,634

0

Eight Stock Option [Member]

Vesting period

3 years

Eight Stock Option [Member] | General and Administrative Expense [Member]

Stock based compensation expense

$ 99,149

0

Second Stock Option [Member]

Stock based compensation expense

0

Nine Stock Option [Member] | General and Administrative Expense [Member]

Stock based compensation expense

$ 13,600

0

Ten Stock Option [Member]

Vesting period

3 years

Ten Stock Option [Member] | General and Administrative Expense [Member]

Stock based compensation expense

$ 11,993

$ 0

XML

Supplemental Cash Flow Information (Details Narrative)	3 Months Ended
	Dec. 31, 2015 USD ($) N $ / shares shares	Dec. 31, 2014 N $ / shares shares
Supplemental Cash Flow Elements [Abstract]
Capital stock issued pursuant to debt conversions (in shares) | N	1,162	1,401,167
Debt beneficial conversion feature | $	$ 1,162
Conversion price (in dollars per share) | $ / shares	$ 1.00	$ 1.00
Number of shares for incorrect conversion price | shares	167,415	167,415