0001615774-16-005331.txt : 20160511 0001615774-16-005331.hdr.sgml : 20160511 20160511163849 ACCESSION NUMBER: 0001615774-16-005331 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 57 CONFORMED PERIOD OF REPORT: 20160331 FILED AS OF DATE: 20160511 DATE AS OF CHANGE: 20160511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANAVEX LIFE SCIENCES CORP. CENTRAL INDEX KEY: 0001314052 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 208365999 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37606 FILM NUMBER: 161640402 BUSINESS ADDRESS: STREET 1: 51 W 52ND STREET, STREET 2: 7TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019-6163 BUSINESS PHONE: 800-689-3939 MAIL ADDRESS: STREET 1: 51 W 52ND STREET, STREET 2: 7TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019-6163 FORMER COMPANY: FORMER CONFORMED NAME: Thrifty Printing Inc. DATE OF NAME CHANGE: 20050111 10-Q 1 s103199_10q.htm FORM 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: March 31, 2016

 

¨ 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 52nd Street, 7th 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: 35,710,862 shares of common stock outstanding as of May 11, 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 21
   
Item 3. Quantitative and Qualitative Disclosures about Market Risks 31
   
Item 4. Controls and Procedures 31
   
PART II – OTHER INFORMATION 31
   
Item 1. Legal Proceedings 31
   
Item 1A. Risk Factors 32
   
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
   
SIGNATURES 34

 

iii 

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

 

 

 

ANAVEX LIFE SCIENCES CORP.

 

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

March 31, 2016

 

(Unaudited)

 

 Page 2 

 

 

ANAVEX LIFE SCIENCES CORP.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2016 and September 30, 2015

(Unaudited)

 

   March 31   September 30, 
   2016   2015 
Current          
Cash  $11,950,847   $15,290,976 
Sales Tax Recoverable   78,670    76,840 
Prepaid expenses and deposits   84,977    100,845 
    12,114,494    15,468,661 
Equipment   755    1,252 
   $12,115,249   $15,469,913 
           
Current          
Accounts payable and accrued liabilities  $2,338,137   $2,503,726 
Deferred grant income   5,445    71,614 
Promissory notes payable   88,145    85,238 
    2,431,727    2,660,578 
           
Senior Convertible Debentures   337    332 
    2,432,064    2,660,910 
           
Capital stock          
Authorized:          
100,000,000 common shares, par value $0.001 per share          
Issued and outstanding:          
35,695,572 common shares (September 30, 2015 - 32,044,213)   35,697    32,044 
Additional paid-in capital   78,914,253    74,060,999 
Common stock to be issued   -    1,997,415 
Accumulated deficit   (69,266,765)   (63,281,455)
    9,683,185    12,809,003 
   $12,115,249   $15,469,913 

 

SEE ACCOMPANYING NOTES

 

 Page 3 

 

 

ANAVEX LIFE SCIENCES CORP.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

for the three and six months ended March 31, 2016 and 2015

(Unaudited)

 

   Three months ended March 31,   Six months ended March 31, 
   2016   2015   2016   2015 
Operating expenses                    
General and administrative  $852,775   $451,193   $4,714,473   $903,246 
Research and development   1,327,393    407,146    1,998,129    725,771 
                     
Total operating expenses   (2,180,168)   (858,339)   (6,712,602)   (1,629,017)
                     
Other income (expenses)                    
Grant income   26,879    -    637,027    - 
Interest income (expense), net   2,064    2,228    4,206    (74,781)
Gain on settlement of accounts payable   151,402    -    151,402    - 
Financing related charges and adjustments   (72)   (912,357)   (1,167)   (874,706)
Foreign exchange (loss) gain   (30,906)   43,609    (46,561)   66,927 
Total other income (expenses), net   149,367    (866,520)   744,907    (882,560)
Net loss before provision for income taxes   (2,030,801)   (1,724,859)   (5,967,695)   (2,511,577)
                     
Income tax expense   -    -    17,615    - 
                     
Net loss and comprehensive loss for the period  $(2,030,801)  $(1,724,859)  $(5,985,310)  $(2,511,577)
                     
Loss per share                    
Basic  $(0.06)  $(0.12)  $(0.17)  $(0.18)
Diluted  $(0.06)  $(0.12)  $(0.17)  $(0.18)
                     
Weighted average number of shares outstanding                    
Basic   35,214,793    14,326,945    34,589,957    13,609,473 
Diluted   35,214,793    14,326,945    34,589,957    13,609,473 

 

SEE ACCOMPANYING NOTES

 

 Page 4 

 

 

ANAVEX LIFE SCIENCES CORP.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

for the six months ended March 31, 2016 and 2015

(Unaudited)

 

   2016   2015 
         
Cash Flows used in Operating Activities          
Net loss for the period  $(5,985,310)  $(2,511,577)
Adjustments to reconcile net loss to net cash used in operations:          
Amortization and depreciation   497    498 
Accretion of debt discount   1,167    493,451 
Stock-based compensation   1,048,710    31,544 
Non-cash financing related charges   -    29,000 
Change in fair value of derivative financial instruments   -    487,000 
Gain on extinguishment of debt   -    (105,745)
Gain on settlement of accounts payable   (151,402)   - 
Unrealized foreign exchange   2,907    (13,509)
Changes in non-cash working capital balances related to operations:          
Sales tax recoverable   (1,830)   - 
Prepaid expenses and deposits   15,868    - 
Accounts payable and accrued liabilities   (14,187)   225,987 
Deferred grant income   (66,169)   - 
Net cash used in operating activities   (5,149,749)   (1,363,351)
           
Cash Flows provided by Financing Activities          
Issuance of common shares, net of share issue costs   1,809,620    500,000 
Repayment of promissory note   -    (88,144)
Net cash provided by financing activities   1,809,620    411,856 
           
Decrease in cash during the period   (3,340,129)   (951,495)
Cash, beginning of period   15,290,976    7,262,138 
Cash, end of period  $11,950,847   $6,310,643 

 

Supplemental Cash Flow Information - Note 11

 

SEE ACCOMPANYING NOTES

 

 Page 5 

 

 

ANAVEX LIFE SCIENCES CORP.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

for the six months ended March 31, 2016

(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    168,407    (167,415)   -    1,161 
Shares issued pursuant to the exercise of warrants - at $3.00   41,687    42    125,018    -    -    125,060 
Shares issued pursuant to the exercise of warrants - cashless   1,963,956    1,964    (1,964)   -    -    - 
Shares issued pursuant to employment agreement   1,000,000    1,000    2,439,000    (1,830,000)        610,000 
Shares issued for rounding in connection with 4:1 reverse stock split   1,437    2    (2)   -    -    - 
Stock option compensation   -    -    438,710    -    -    438,710 
Net loss for the period   -    -    -    -    (5,985,310)   (5,985,310)
                               
Balance, March 31, 2016   35,695,572   $35,697   $78,914,253   $-   $(69,266,765)  $9,683,185 

 

SEE ACCOMPANYING NOTES

 

 Page 6 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

(Unaudited)

 

Note 1Business 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 and neurodevelopmental 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 compound ANAVEX 2-73 is being developed to treat Alzheimer’s disease and potentially other central nervous system (CNS) diseases, including rare diseases, such as Rett syndrome.

 

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. In February 2016 the Company presented positive preclinical data for ANAVEX 2-73 in Rett syndrome, a rare neurodevelopmental disease indication. In March 2016, the Company received approval from the Ethics Committee in Australia to extend the ongoing Phase 2a clinical trial, which had been requested by the patients and their caregivers. The trial extension will allow participants who complete 52 weeks in Part B to roll-over into a new trial and continue taking ANAVEX 2-73 for an additional 104 weeks, providing an opportunity to gather extended safety data. The trial is independent of the Company’s planned larger Phase 2/3 double-blinded placebo-controlled study of ANAVEX 2-73 in Alzheimer’s disease.

 

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 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. 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 six months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending September 30, 2016.

 

 Page 7 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

(Unaudited)

 

Note 1Business 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. Additionally, the numerator is also adjusted for changes in fair value of the derivative financial instruments where it is presumed they will be share settled.

 

As of March 31, 2016, loss per share excludes 3,691,291 (September 30, 2015 – 6,101,534) potentially dilutive common shares related to outstanding options, warrants, and convertible debentures as their effect was anti-dilutive.

 

Note 2Recent 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 adoption of this standard is not expected to have a material impact for any period presented.

 

 Page 8 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

Stated in US Dollars

(Unaudited)

 

Note 2Recent 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 adoption of this standard is not expected to have a material impact for any period presented.

 

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.

 

In February 2016, FASB issued ASU 2016-02, Leases. The guidance would require lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right –of-use assets. The guidance is effective for annual and interim reporting periods beginning on or after December 15, 2018. The Company is currently evaluating the impact this guidance will have on its financial condition, results of operations and cash flows.

 

In March 2016, the FASB issued ASC 2016-09, “Compensation – Stock Compensation (Topic 718) – Improvements to Employee Share-Based Payment Accounting”. These amendments are intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. These amendments are effective for annual and interim reporting periods beginning on or after December 15, 2016. Early adoption is permitted. Entities have the option to apply the amendments on either a prospective basis or a modified retrospective basis. The Company is currently evaluating the impact this guidance will have on its financial condition, results of operations and cash flows.

 

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.

 

 Page 9 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

Stated in US Dollars

(Unaudited)

 

Note 3Equipment

 

   March 31, 2016 
       Accumulated     
   Cost   Depreciation   Net 
                
Computer equipment  $3,015   $2,260   $755 

 

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

 

Note 4Promissory Notes Payable

 

   March 31,   September 30, 
   2016   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  $66,834   $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   21,311    20,608 
   $88,145   $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.

 

 Page 10 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

Stated in US Dollars

(Unaudited)

 

Note 4Promissory Notes Payable – (continued)

 

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 March 31, 2016 or September 30, 2015, as the Company does not consider these amounts to be legally enforceable.

 

Note 5Deferred 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 and six months ended March 31, 2016, the Company recognized $26,879 and $65,934, respectively (2015: $0 and $0, respectively) of this grant on its statement of operations. 

 

During the six months ended March 31, 2016, the Company recognized other grant income of $571,093 in respect of a research and development incentive program offered by the Australian government.

 

 Page 11 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

Stated in US Dollars

(Unaudited)

 

Note 6Senior Convertible Debentures

 

   March 31,   September 30, 
Senior Convertible Debentures  2016   2015 
         
Senior Convertible Debentures, non-interest bearing, unsecured, due March 18, 2044  $4,982   $6,144 
Less: Debt Discount   (4,645)   (5,812)
Total carrying value   337    332 
Less: current portion   -    - 
Long term liability  $337   $332 

 

On March 13, 2014, the Company entered into a Securities Purchase Agreement with certain purchasers, pursuant to which the Company issued senior convertible debentures in the aggregate principal amount of $10,000,000 (the “Debentures”). At March 31, 2016, aggregate principal amounts of $4,982 (September 30, 2015: $6,144) of these Debentures remained outstanding.

 

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.

 

The Company has recorded a debt discount in connection with the issuance and amendment of the Debentures during the year ended September 30, 2014, which is being amortized using the effective interest method over the term of the Debentures. During the three and six months ended March 31, 2016, the Company recorded $72 and $1,167, respectively (2015: $486,334 and $493,451, respectively) in respect of the amortization of this discount.

 

During the six months ended March 31, 2016, the Company issued an aggregate of 1,161 shares of common stock based on a conversion price of $1.00 per share pursuant to the conversion of $1,161 in outstanding principal amounts due under the Debentures.

 

 Page 12 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

Stated in US Dollars

(Unaudited)

 

Note 7Capital Stock

 

Authorized

 

100,000,000 shares of common stock.

 

Equity Transactions

 

During the six months ended March 31, 2016, the Company issued 167,415 shares of common stock pursuant to the application of an incorrect conversion price for conversion notices received in respect of the Debentures, during the year ended September 30, 2015.

 

During the six months ended March 31, 2016, the Company issued 1,000,000 shares of common stock to a director and officer of the Company pursuant to the terms of an employment agreement with that director and officer (Note 9).

 

Note 8Lincoln 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 sold and issued to Lincoln Park, and Lincoln Park purchased $10,000,000 in value of its shares of common stock from time to time over a 25-month period. At any time, the Company would determine, at its own discretion, the timing and amount of its sales of common stock, subject to certain conditions and limitations.

 

During the six months ended March 31, 2016, the Company issued to Lincoln Park an aggregate of 296,104 shares of common stock under the 2013 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 2013 Purchase Agreement. As such, no further shares will be sold under the 2013 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 2015 Purchase Agreement, the Company also entered into a registration rights agreement with Lincoln Park whereby the Company agreed to file a registration statement with the SEC covering the shares of the Company’s common stock that may be issued to Lincoln Park under the 2015 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.

 

 Page 13 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

Stated in US Dollars

(Unaudited)

 

Note 8Lincoln Park Purchase Agreement – (continued)

 

During the six months ended March 31, 2016 and in consideration for entering into the 2015 Purchase Agreement, the Company issued to Lincoln Park 179,598 shares of common stock as an initial 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. 

 

Note 9Related Party Transactions

 

During the three and six months ended March 31, 2016, the Company accrued general and administrative expenses totaling $125,078 and $3,169,933, respectively (March 31, 2015: $16,082 and $32,465, respectively) in respect of directors fees, restricted stock compensation and stock option compensation charges paid or accrued to directors and officers of the Company. Of the total, $121,578 and $258,092, respectively (March 31, 2015: $13,582 and $27,465, respectively) related to non-cash stock option compensation charges, $0 and $610,000, respectively (March 31, 2015: $0 and $0, respectively) related to non-cash restricted stock compensation charges, and $0 and $2,290,341, respectively (March 31, 2015: $0 and $0, respectively) related to a tax payment made on behalf of a director and officer of the Company, in accordance with the terms of a 2013 employment agreement.

 

The fair value of $2.44 per share for non-cash restricted stock compensation charges was determined with reference to the quoted market price of the Company’s shares on the commitment date.

 

As at March 31, 2016, included in accounts payable and accrued liabilities was $30,500 (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.

 

 Page 14 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

Stated in US Dollars

(Unaudited)

 

Note 10Commitments

 

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, March 31, 2016   1,828,059   $2.68 

 

During the six months ended March 31, 2016, 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 March 31, 2016, 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.

 

During the years ended September 30, 2015 and 2014, the Company issued an aggregate of 57,500 warrants exercisable at a weighted average exercise price of $1.24 per share for a period of 4.58 years from the date of issuance in exchange for consulting services to be rendered. The weighted average grant date fair value of these warrants at issuance was $0.899 per warrant, based on the Black-Scholes option pricing model using the following weighted average assumptions: expected term 4.44 years, expected volatility 108.43%, expected dividend yield 0.00%, risk free interest rate 1.21%. Stock based compensation is being recorded in the financial statements over the vesting term of three years from the date of grant. During the three and six months ended March 31, 2016, the Company recorded $23,570 and $47,230, respectively (March 31, 2015: $2,378 and $3,634, respectively), in connection with the warrants granted.

 

 Page 15 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

Stated in US Dollars

(Unaudited)

 

Note 10Commitments – (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 six months ended March 31, 2016 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   60,750   $7.02   $5.75 
Expired   (25,000)  $14.68      
Outstanding at March 31, 2016   1,858,250   $1.99      
Exercisable at March 31, 2016   890,399   $1.73      
Exercisable at September 30, 2015   825,002   $1.78      

 

 Page 16 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

Stated in US Dollars

(Unaudited)

 

Note 10Commitments – (cont’d)

 

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

 

At March 31, 2016, the following stock options were outstanding:

 

Number of Shares          Aggregate   Remaining 
    Number   Exercise      Intrinsic   Contractual 
Total   Vested   Price   Expiry Date  Value   Life (yrs) 
 500,000(1)   500,000   $1.60   July 5, 2023   1,650,000    7.26 
 75,000(2)   25,000   $1.20   May 7, 2024   277,500    8.10 
 125,000(3)   31,250   $1.32   May 8, 2024   447,500    8.10 
 718,750(4)   239,585   $0.92   April 2, 2025   2,860,625    9.00 
 50,000(5)   12,500   $1.44   June 8, 2025   173,000    9.19 
 50,000(6)   -   $1.68   June 15, 2025   161,000    9.21 
 278,750(7)   69,688   $5.04   September 18, 2025   -    9.47 
 1,500(8)   1,500   $5.64   September 30, 2025   -    9.50 
 31,250(9)   5,209   $5.68   October 2, 2025   -    9.51 
 25,000(10)   4,167   $8.98   October 16, 2025   -    9.54 
 1,500(11)   1,500   $5.57   December 31, 2025   -    9.75 
 1,500(12)   -   $4.90   March 31, 2026   -    10.00 
 1,858,250    890,399           $5,569,625      

 

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 March 31, 2016.

 

(1)As of March 31, 2016 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 six months ended March 31, 2016 (March 31, 2015: $0) in connection with these options.

 

(2)As of March 31, 2016 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 $5,764 and $11,590 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $5,830 and $11,660, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

 Page 17 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

Stated in US Dollars

(Unaudited)

 

Note 10Commitments – (cont’d)

 

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

 

(3)As of March 31, 2016 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 $7,960 and $16,008 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $8,053 and $16,106, respectively) 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 March 31, 2016, 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 $42,811 and $86,093 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016, 12,500 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 $4,775 and $9,603 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016 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 $5,573 and $11,207 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016 and September 30, 2015, 69,688 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 $92,875 and $192,024 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016, all of these options had vested. These options vested on December 31, 2015. The Company recognized stock based compensation expense of $0 and $6,800 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $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 March 31, 2016, 5,209 of these options had vested. These options were issued during the six months ended March 31, 2016 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $11,456 and $23,449 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

 Page 18 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

Stated in US Dollars

(Unaudited)

 

Note 10Commitments – (cont’d)

 

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

 

(10)As of March 31, 2016, 4,167 of these options had vested. These options were issued during the six months ended March 31, 2016 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $27,906 and $27,906 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

(11)As of March 31, 2016, all of these options had vested. These options were issued during the six months ended March 31, 2016 and vested on December 31, 2015. The Company recognized stock based compensation expense of $0 and $6,800 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

(12)As of March 31, 2016, none of these options had vested. These options were issued during the six months ended March 31, 2016 and vest on December 31, 2016. The Company recognized stock based compensation expense of $0 and $0 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

The fair value of each option award is estimated on the date of grant using the Black Scholes option pricing model based on the following weighted average assumptions:

 

   March 31, 
   2016   2015 
Risk-free interest rate   1.68%   - 
Expected life of options (years)   6.76    - 
Annualized volatility   101.92%   - 
Dividend rate   0.00%   - 

 

 Page 19 

 

 

Anavex Life Sciences Corp.

Notes to the Interim Condensed Consolidated Financial Statements

March 31, 2016

Stated in US Dollars

(Unaudited)

 

Note 11Supplemental 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 six months ended March 31, 2016;

 

i)the Company issued 1,161 shares of common stock upon conversion of $1,161 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 six months ended March 31, 2015;

 

i)the Company issued 3,918,478 shares of common stock of the Company pursuant to the conversion of convertible debentures at a conversion price of $1.00 per share

 

ii)the Company reclassified an amount of $3,931,000 into equity upon modification of the terms of certain derivative instruments.

 

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

 

 Page 20 

 

 

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 I, Item 1A of our most recent Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on December 29, 2015. 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

 

Anavex Life Sciences Corp. (the “Company”) is a clinical stage biopharmaceutical company engaged in the development of differentiated therapeutics for the treatment of neurodegenerative and neurodevelopmental 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 compound ANAVEX 2-73 is being developed to treat Alzheimer’s disease and potentially other central nervous system (CNS) diseases, including rare diseases, such as Rett syndrome.

 

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. In March, 2016, we received approval from the Ethics Committee in Australia to extend the ongoing Phase 2a clinical trial, which had been requested by patients and their caregivers.  The trial extension allows participants who complete 52 weeks in PART B to roll-over into a new trial and continue taking ANAVEX 2-73 for an additional 104 weeks, providing an opportunity to gather extended safety data.  The trial is independent of the Company’s planned larger Phase 2/3 double-blinded, placebo-controlled study of ANAVEX 2-73 in Alzheimer’s disease.

 

 Page 21 

 

 

In February 2016 the Company presented positive preclinical data for ANAVEX 2-73 in Rett syndrome, a rare neurodevelopmental disease indication.

 

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.

 

Effective October 7, 2015, our Company effected a reverse stock split on the basis of 1:4. As such, our 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.

 

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, both of neurodegenerative nature, including Alzheimer’s disease, as well as of neurodevelopmental nature, like Rett syndrome, a rare 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.

 

 Page 22 

 

 

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

 

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

 

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

 

Recent preclinical data validates ANAVEX 2-73 as a prospective platform drug for other neurodegenerative diseases beyond Alzheimer’s as well as neurodevelopmental diseases, most specifically epilepsy and Rett syndrome. For epilepsy, data demonstrates both significant and dose related improvement in the reduction of seizures, as well as significant synergy with each of three generations of epilepsy drugs currently on the market. In Rett syndrome, a rare neurodevelopmental disease indication, administration of ANAVEX 2-73 resulted in both significant and dose related improvements in an array of behavioural paradigms in the MECP2 HET Rett syndrome disease model.

 

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.

 

 Page 23 

 

 

A recent preclinical study examined the response of ANAVEX 3-71 in aged transgenic animal models, and showed a significant reduction in rate of cognitive deficit, amyloid beta pathology and inflammation with the administration of ANAVEX 3-71. In April 2016 the U.S. Food and Drug Administration (FDA) has granted Orphan Drug Designation (ODD) to ANAVEX 3-71 for the treatment of Frontotemporal dementia (FTD).

 

ANAVEX 1-41

 

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

 

ANAVEX 1037

 

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

 

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

 

Our Target Indications

 

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

 

·Alzheimer’s disease - In 2014, an estimated 5.2 million Americans were 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 Alzheimer’s disease 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.

 

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·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. GBI Research estimates that the epilepsy market will increase to $4.5 billion by 2019.

 

·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 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 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 to $1.63 billion by 2017.

 

Recent Corporate Developments

 

Since January 1, 2016, we have experienced the following significant corporate developments:

 

·On January 11, 2016, our Company reported that a positive dose-response relationship had 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.

 

In addition, in March, 2016, our Company received approval from the Ethics Committee in Australia to extend the ongoing Phase 2a trial, which had been requested by patients and their caregivers. The trial extension is designed to allow participants who complete 52 weeks in PART B to roll-over into a new trial and continue taking ANAVEX 2-73 for an additional 104 weeks, providing an opportunity to gather extended safety data.  The trial is independent of our Company’s planned larger Phase 2/3 double-blinded, placebo-controlled study of ANAVEX 2-73 in Alzheimer’s disease.

 

·On February 25, 2016, our Company announced positive data of ANAVEX 2-73 in an exploratory study in a Rett syndrome model at the 2016 Epilepsy Pipeline Conference held February 25-26, 2016 in San Francisco, CA. The data demonstrated dose related and significant improvements in an array of behavioral and gait paradigms in a mouse model with a MECP2-null mutation that causes neurological symptoms that mimic Rett syndrome.

 

·On March 14, 2016, our Company announced positive preclinical data on sigma-1 agonist ANAVEX 3-71 (formerly AF710B).  The data shows a statistically significant reduction in the rate of cognitive deficit, amyloid beta pathology and inflammation with the administration of ANAVEX 3-71 in animal models.

 

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·On April 8, 2016, our Company announced that the U.S. Food and Drug Administration (FDA) has granted Orphan Drug Designation (ODD) to ANAVEX 3-71 for the treatment of Frontotemporal dementia (FTD), a clinical syndrome associated with progressive shrinking of the frontal and temporal anterior lobes of the brain.  FTD causes a decline in language and/or behavioral changes, which include inappropriate social conduct, lack of empathy, blunted emotions or agitation, neglect of personal hygiene and a decrease in energy and motivation.  To date, no treatment has been shown to slow its progression and the prognosis for people with FTD is poor.  FTD afflicts an estimated 50,000 to 60,000 patients in the United States and represents an estimated 10 to 20 percent of all dementia cases.

 

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 March 31, 2016 compared to three months ended March 31, 2015


Our operating expenses for the three months ended March 31, 2016 were $2,180,168, which represents an increase of $1,321,829 compared to $858,339 for the three-month period ended March 31, 2015. The increase was mainly attributable to (i) an increase in research and development expenditures associated with the Company’s ongoing Phase 2a clinical trial, as well as ongoing preclinical work; and (ii) an increase in salaries and wages associated with our expanded team.

 

Other income (expenses)

 

The aggregate amount in the other income (expense) for the three-month period ended March 31, 2016, amounted to $149,367 as compared to $(866,520) for the comparable three-month period ended March 31, 2015. The largest reason for the increase in other income was as a result of a gain on the settlement of outstanding accounts payable and a decrease in the amount of financing-related charges as a result of the conversion of the majority of the outstanding convertible debentures during the third and fourth quarter of fiscal 2015. During the three months ended March 31, 2016, we also recognized $26,879 of the research grant from the Michael J. Fox Foundation (“MJFF”) on our statement of operations.

 

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.

 

Six months ended March 31, 2016 compared to six months ended March 31, 2015

 

Our operating expenses for the six months ended March 31, 2016 were $6,712,602, which represents an increase of $5,083,585 compared to $1,629,017 for the six-month period ended March 31, 2015. The increase was mainly the result of (i) an increase in research and development expenditures associated with the Company’s ongoing Phase 2a clinical trial, as well as ongoing preclinical work; (ii) an increase in salaries and wages expenses associated with an expanded management team and (iii) other one-time charges incurred in accordance 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.

 

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Other income

 

The aggregate amount in the other income (expense) for the six-month period ended March 31, 2016, amounted to $744,907 as compared to $(882,560) for the comparable six-month period ended March 31, 2015. The largest reason for the increase in other income was a result of an amount of $637,027 in grant income received during the 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 MJFF to develop ANAVEX 2-73 for the treatment of Parkinson’s disease. The MJFF 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 six months ended March 31, 2016, we recognized $65,934 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

 

   March 31, 2016   September 30, 2015 
Current Assets  $12,114,494   $15,468,661 
Current Liabilities   2,431,727    2,660,578 
Working Capital  $9,682,767   $12,808,083 

 

As of March 31, 2016, we had $11,950,847 in cash, a decrease of $3,340,129 from September 30, 2015.

 

Cash Flows

 

   Six months ended March 31, 
   2016   2015 
Cash flows used in operating activities  $(5,149,749)  $(1,363,351)
Cash flows used in investing activities   -    - 
Cash flows from financing activities   1,809,620    411,856 
Decrease in cash during the period  $(3,340,129)  $(951,495)

 

Cash flow used in operating activities

 

Our cash used in operating activities for the period ended March 31, 2016 was $(5,149,749) compared to $(1,363,351) used in operating activities for the comparative period ended March 31, 2015. The increase in cash used in operating activities was primarily as a result of one-time tax payments made on behalf of a director and officer of the Company, in accordance with a 2013 employment agreement.

 

Cash flow provided by financing activities

 

Our cash provided by financing activities for the period ended March 31, 2016 was $1,809,620, 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 March 31, 2015, 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.

 

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.

 

 Page 27 

 

 

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.

 

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.

 

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

 

Stock-based Compensation

 

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

 

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

 

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

 

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

 

Derivative Liabilities

 

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

 

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

 

Recent Accounting Pronouncements

 

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

 

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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.

 

In February 2016, FASB issued ASU 2016-02, Leases. The guidance would require lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right –of-use assets. The guidance is effective for annual and interim reporting periods beginning on or after December 15, 2018. The Company is currently evaluating the impact this guidance will have on its financial condition, results of operations and cash flows.

 

In March 2016, the FASB issued ASC 2016-09, “Compensation – Stock Compensation (Topic 718) – Improvements to Employee Share-Based Payment Accounting”. These amendments are intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. These amendments are effective for annual and interim reporting periods beginning on or after December 15, 2016. Early adoption is permitted. Entities have the option to apply the amendments on either a prospective basis or a modified retrospective basis. 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.

 

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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.

 

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 described disclosed in our Annual Report on Form 10-K filed on December 29, 2015.

 

Subsequent to March 31, 2016, we took steps to make the necessary improvements to remediate these deficiencies, and we intend to continue to take additional appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies by the end of the current fiscal year.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the fiscal quarter ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

 

Subsequent to March 31, 2016, we experienced the following changes in our internal control procedures, which we believe will materially affect our internal controls over financial reporting:

 

(i)We updated written policies and procedures for our accounting and financial reporting process with respect to the requirements and application of both US GAAP and SEC guidelines; and

 

(ii)We implemented additional security protocol and limited access rights over financial assets, which will enable us to establish adequate segregation of duties and effective risk management.

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

On December 22, 2015, the Company received a subpoena from the SEC which indicated 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 common stock. 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. 

 

 Page 31 

 

 

On December 30, 2015, Kevin Cortina filed a purported class action lawsuit in the United States District Court for the Southern District of New York, Cortina v. Anaves Life Sciences Corp., et al., Case No. 1:15-cv-10162, against the Company, Christopher Missling, Sandra Boenisch, and Athanasios Skarpelos.  The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of purchasers of the Company’s stock between May 17, 2013 and December 28, 2015.  The complaint alleges that defendants made materially false and misleading statements regarding the Company’s business, operational, and compliance policies.  Among other things, the complaint alleges that the Company failed to disclose that it used a paid stock promoter to artificially inflate the Company’s share price.  The complaint does not specify an amount of damages sought.  On April 5, 2016 the court appointed Lam Truong as lead plaintiff and Levi & Korsinsky to serve as lead counsel.  On April 13, 2016, the court granted lead plaintiff thirty days to amend the complaint and set a briefing schedule.  Defendants believe this action is meritless and deny all allegations against them.  The Company intends to vigorously defend this matter.

 

On March 12, 2016, Jeffery Dhungana filed a purported shareholder derivative action in the Supreme Court of the State of New York, in the County of New York, Dhungana v. Missling, et. al., Case No. 651317-2016, against Christopher Missling and other officers and directors at the Company.  The complaint alleges that the defendants breached their fiduciary duties to the Company in connection with events alleged in the Cortina matter described above.  The complaint seeks damages of an unspecified amount, a declaration that the defendants violated their fiduciary duties, and an order directing the Company and defendants to improve its corporate governance and internal procedures.  On March 18, 2016, Mary McCambell filed an action in the United States District Court for the Southern District of New York, McCambell v. Missling, et. al., Case No. 1:16-cv-02035. The allegations in the McCambell complaint are substantively similar to those asserted in the Dhungana complaint.  Like the Dhungana complaint, the McCambell complaint seeks damages of an unspecified amount and an order directing the Company to take all necessary actions to reform and improve its corporate governance and internal procedures.

 

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.

 

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.

 

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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   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)
10.2   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.
31.2*   Section 302 Certification of Sandra Boenisch
(32)   Section 906 Certifications
32.1*   Section 906 Certification of Christopher Missling, PhD.
32.2*   Section 906 Certification of Sandra Boenisch
(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.

 

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SIGNATURES

 

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

 

ANAVEX LIFE SCIENCES CORP.  
   
/s/Christopher Missling, PhD  
   
Christopher Missling, PhD  
Chief Executive Officer  
(Principal Executive Officer)  
Date: May 11, 2016  
   
/s/Sandra Boenisch  
   
Sandra Boenisch, CPA, CGA  
Principal Financial Officer  
(Principal Financial and Accounting Officer)  
Date: May 11, 2016  

 

 Page 34 

EX-31.1 2 s103199_ex31-1.htm EXHIBIT 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 month period ended March 31, 2016 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: May 11, 2016

 

/s/Christopher Missling, PhD  
Christopher Missling, PhD  
Chief Executive Officer  
(Principal Executive Officer)  

 

 

 

EX-31.2 3 s103199_ex31-2.htm EXHIBIT 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 month period ended March 31, 2016 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: May 11, 2016

 

/s/Sandra Boenisch  
Sandra Boenisch, CPA, CGA  
Principal Financial Officer  
(Principal Financial and Accounting Officer)  

 

 

 

EX-32.1 4 s103199_ex32-1.htm EXHIBIT 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 period ended March 31, 2016 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: May 11, 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 5 s103199_ex32-2.htm EXHIBIT 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 period ended March 31, 2016 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: May 11, 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.

 

 

 

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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&#146; disease.</font></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 45pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 45pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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 and six months ended March 31, 2016, the Company recognized $26,879 and $65,934, respectively (2015: $0 and $0, respectively) of this grant on its statement of operations.&#160;</font></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 45pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 45pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During the six months ended March 31, 2016, the Company recognized other grant income of $571,093 in respect of a research and development incentive program offered by the Australian government.</font></p> As of March 31, 2016 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 six months ended March 31, 2016 (March 31, 2015: $0) in connection with these options. As of March 31, 2016 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 $5,764 and $11,590 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $5,830 and $11,660, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations. As of March 31, 2016 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 $7,960 and $16,008 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $8,053 and $16,106, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations. As of March 31, 2016, 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 $42,811 and $86,093 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations. As of March 31, 2016, 12,500 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 $4,775 and $9,603 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations. As of March 31, 2016 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 $5,573 and $11,207 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations. As of March 31, 2016 and September 30, 2015, 69,688 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 $92,875 and $192,024 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations. As of March 31, 2016, all of these options had vested. These options vested on December 31, 2015. The Company recognized stock based compensation expense of $0 and $6,800 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations. As of March 31, 2016, 5,209 of these options had vested. These options were issued during the six months ended March 31, 2016 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $11,456 and $23,449 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations. As of March 31, 2016, 4,167 of these options had vested. These options were issued during the six months ended March 31, 2016 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $27,906 and $27,906 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations. As of March 31, 2016, all of these options had vested. These options were issued during the six months ended March 31, 2016 and vested on December 31, 2015. The Company recognized stock based compensation expense of $0 and $6,800 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations. As of March 31, 2016, none of these options had vested. These options were issued during the six months ended March 31, 2016 and vest on December 31, 2016. The Company recognized stock based compensation expense of $0 and $0 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $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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Security that gives the holder the right to purchase shares of stock in accordance with the terms of the instrument, usually upon payment of a specified amount. Information related to type of legal entity. Information related to type of arrangement and non-arrangement Transactions of securities purchase agreement. Security that gives the holder the right to purchase shares of stock in accordance with the terms of the instrument, usually upon payment of a specified amount. A classification of auction market preferred securities that may have different rights to other classifications of auction market preferred securities, for example Series A. Security that gives the holder the right to purchase shares of stock in accordance with the terms of the instrument, usually upon payment of a specified amount. A classification of auction market preferred securities that may have different rights to other classifications of auction market preferred securities, for example Series B. Information related to share based compensation arrangement by share based payment award equity instruments other than options exercisable number. Information related to share based compensation arrangement by share based payment award equity instruments other than options exercisable weighted average exercise price. The number of exercised in period made during the period on other than stock (or unit) option plans (for example, phantom stock or unit plan, stock or unit appreciation rights plan, performance target plan). Information related to share based compensation arrangement by share based payment award equity instruments other than options outstanding weighted average exercise price. Information related to share based compensation arrangements by share based payment award equity instruments other than options exercised in period weighted average exercise price. Information related to share based compensation arrangements by share based payment award equity instruments other than options expirations in period weighted average exercise price. Information related to share based compensation arrangements by share based payment award equity instruments other than options grants in period weighted average exercise price. Fourth portion of share-based compensation award differentiated by a particular vesting feature, including, but not limited to, performance measure or service period. Number of stock issued pursuant to exercise of warrants during the period. The price per share of the shares issued in pursuant to warrants. Number of stock issued pursuant to cashless exercise of warrants during the period. Value of stock issued pursuant to favored nation provisionst during the period. Value of stock issued pursuant to exercise of warrants during the period. Value of stock issued pursuant to cashless exercise of warrants during the period. Number of stock issued pursuant to favored nation provisionst during the period. Number of new stock issued during the period. Number of new stock issued during the period. Number of new stock issued during the period. Number of new stock issued during the period. Value of stock issued in lieu of cash for services contributed to the entity. Value of the stock issued includes, but is not limited to, services contributed by vendors and founders. Information related to type of plan. Information related to value of shares obligated to purchase initially. Information related to type of legal entity. Number of new stock expired during the period. Information related to share based compensation arrangement by share based payment award equity instruments other than options outstanding weighted average exercise price. Information about employment agreement. An arrangement whereby an employee is entitled to receive in the future, subject to vesting and other restrictions, a number of shares in the entity at a specified price, as defined in the agreement. Although there are variations, normally, after vesting, when an option is exercised, the employee-holder pays the strike value in cash to the issuing employer-entity and receives equity shares. The equity shares can be sold into the market for cash at the current market price without restriction. Options may be used to attract, retain and incentivize employees, in addition to their regular salary and other benefits. Represents the non cash expense recognized during the period arising from equity-based compensation arrangements (for example, shares of stock, unit, stock options or other equity instruments) with employees, directors and certain consultants qualifying for treatment as employees. Amount of reclassification of derivative liability. NotesPayableOtherPayables2Member Assets, Current Assets Liabilities, Current [Abstract] Liabilities, Current Liabilities Receivable from Officers and Directors for Issuance of Capital Stock Stockholders' Equity Attributable to Parent Liabilities and Equity Operating Expenses Interest Expense Debt Related Commitment Fees and Debt Issuance Costs Nonoperating Income (Expense) Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest NoncashFinancingRelatedCharges Embedded Derivative, Gain (Loss) on Embedded Derivative, Net Gain (Loss) on Extinguishment of Debt Foreign Currency Transaction Gain (Loss), Unrealized Increase (Decrease) in Accounts Receivable Increase (Decrease) in Prepaid Expense Increase (Decrease) in Accounts Payable and Accrued Liabilities IncreaseDecreaseInGrantsPayables Net Cash Provided by (Used in) Operating Activities, Continuing Operations Payment of Financing and Stock Issuance Costs Repayments of Notes Payable Net Cash Provided by (Used in) Financing Activities, Continuing Operations Cash, Period Increase (Decrease) Property, Plant and Equipment Disclosure [Text Block] Long-term Debt [Text Block] Debt Instrument, Unamortized Discount Long-term Debt, Gross Long-term Debt Accounts Payable and Accrued Liabilities Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsOutstandingWeightedAverageExercisePrice ShareBasedCompensationArrangementsByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsExercisedInPeriodWeightedAverageExercisePrice ShareBasedCompensationArrangementsByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageExercisePrice Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price Share-based Compensation Arrangements by Share-based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price EX-101.PRE 11 avxl-20160331_pre.xml XBRL PRESENTATION FILE XML 12 R1.htm IDEA: XBRL DOCUMENT v3.4.0.3
Document and Entity Information - shares
6 Months Ended
Mar. 31, 2016
May. 11, 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 Mar. 31, 2016  
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   35,710,862
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2016  
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.4.0.3
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
Mar. 31, 2016
Sep. 30, 2015
Current    
Cash $ 11,950,847 $ 15,290,976
Sales Tax Recoverable 78,670 76,840
Prepaid expenses and deposits 84,977 100,845
Current Assets 12,114,494 15,468,661
Equipment 755 1,252
Total Assets 12,115,249 15,469,913
Current    
Accounts payable and accrued liabilities 2,338,137 2,503,726
Deferred grant income 5,445 71,614
Promissory notes payable 88,145 85,238
Current Liabilities 2,431,727 2,660,578
Senior Convertible Debentures 337 332
Total Liabilities 2,432,064 2,660,910
STOCKHOLDERS' EQUITY    
Capital stock Authorized: 100,000,000 common shares, par value $0.001 per share Issued and outstanding: 35,695,572 common shares (September 30, 2015 - 32,044,213) 35,697 32,044
Additional paid-in capital $ 78,914,253 74,060,999
Common stock to be issued 1,997,415
Accumulated deficit $ (69,266,765) (63,281,455)
Stockholders' Equity 9,683,185 12,809,003
Total Liabilities and Stockholder's Equity $ 12,115,249 $ 15,469,913
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.4.0.3
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares
Mar. 31, 2016
Sep. 30, 2015
Statement of Financial Position [Abstract]    
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, authorized 100,000,000 100,000,000
Common stock, issued 35,695,572 32,044,213
Common stock, outstanding 35,695,572 32,044,213
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.4.0.3
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Mar. 31, 2016
Mar. 31, 2015
Operating expenses        
General and administrative $ 852,775 $ 451,193 $ 4,714,473 $ 903,246
Research and development 1,327,393 407,146 1,998,129 725,771
Total operating expenses (2,180,168) $ (858,339) (6,712,602) $ (1,629,017)
Other income (expenses)        
Grant income 26,879 637,027
Interest income (expense), net 2,064 $ 2,228 4,206 $ (74,781)
Gain on settlement of accounts payable 151,402 151,402
Financing related charges and adjustments (72) $ (912,357) (1,167) $ (874,706)
Foreign exchange (loss) gain (30,906) 43,609 (46,561) 66,927
Total other income (expenses), net 149,367 (866,520) 744,907 (882,560)
Net loss before provision for income taxes $ (2,030,801) $ (1,724,859) (5,967,695) $ (2,511,577)
Income tax expense 17,615
Net loss and comprehensive loss for the period $ (2,030,801) $ (1,724,859) $ (5,985,310) $ (2,511,577)
Loss per share        
Basic (in dollars per share) $ (0.06) $ (0.12) $ (0.17) $ (0.18)
Diluted (in dollars per share) $ (0.06) $ (0.12) $ (0.17) $ (0.18)
Weighted average number of shares outstanding        
Basic (in shares) 35,214,793 14,326,945 34,589,957 13,609,473
Diluted (in shares) 35,214,793 14,326,945 34,589,957 13,609,473
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.4.0.3
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
6 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Cash Flows used in Operating Activities    
Net loss for the period $ (5,985,310) $ (2,511,577)
Adjustments to reconcile net loss to net cash used in operations:    
Amortization and depreciation 497 498
Accretion of debt discount 1,167 493,451
Stock-based compensation $ 1,048,710 31,544
Non-cash financing related charges 29,000
Change in fair value of derivative financial instruments 487,000
Gain on extinguishment of debt $ (105,745)
Gain on settlement of accounts payable $ (151,402)
Unrealized foreign exchange 2,907 $ (13,509)
Changes in non-cash working capital balances related to operations:    
Sales tax recoverable (1,830)
Prepaid expenses and deposits 15,868
Accounts payable and accrued liabilities (14,187) $ 225,987
Deferred grant income (66,169)
Net cash used in operating activities (5,149,749) $ (1,363,351)
Cash Flows provided by Financing Activities    
Issuance of common shares, net of share issue costs $ 1,809,620 500,000
Repayment of promissory note (88,144)
Net cash provided by financing activities $ 1,809,620 411,856
Decrease in cash during the period (3,340,129) (951,495)
Cash, beginning of period 15,290,976 7,262,138
Cash, end of period $ 11,950,847 $ 6,310,643
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.4.0.3
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - 6 months ended Mar. 31, 2016 - 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 $ 169 168,407 $ (167,415) $ 1,161
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 $ 42 125,018 $ 125,060
Shares issued pursuant to the exercise of warrants - at $3.00 (in shares) 41,687        
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 pursuant to employment agreement $ 1,000 2,439,000 $ (1,830,000)   $ 610,000
Shares issued pursuant to employment agreement (in shares) 1,000,000        
Shares issued for rounding in connection with 4:1 reverse stock split $ 2 (2)
Shares issued for rounding in connection with 4:1 reverse stock split (in shares) 1,437        
Stock option compensation $ 438,710 $ 438,710
Net loss for the period $ (5,985,310) (5,985,310)
Balance Ending at Mar. 31, 2016 $ 35,697 $ 78,914,253 $ (69,266,765) $ 9,683,185
Balance Ending (in shares) at Mar. 31, 2016 35,695,572       35,695,572
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.4.0.3
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical)
6 Months Ended
Mar. 31, 2016
$ / shares
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
Shares issued for rounding, reverse stock split | shares 4
XML 19 R8.htm IDEA: XBRL DOCUMENT v3.4.0.3
Business Description and Basis of Presentation
6 Months Ended
Mar. 31, 2016
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 and neurodevelopmental 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 compound ANAVEX 2-73 is being developed to treat Alzheimer’s disease and potentially other central nervous system (CNS) diseases, including rare diseases, such as Rett syndrome.

 

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. In February 2016 the Company presented positive preclinical data for ANAVEX 2-73 in Rett syndrome, a rare neurodevelopmental disease indication. In March 2016, the Company received approval from the Ethics Committee in Australia to extend the ongoing Phase 2a clinical trial, which had been requested by the patients and their caregivers. The trial extension will allow participants who complete 52 weeks in Part B to roll-over into a new trial and continue taking ANAVEX 2-73 for an additional 104 weeks, providing an opportunity to gather extended safety data. The trial is independent of the Company’s planned larger Phase 2/3 double-blinded placebo-controlled study of ANAVEX 2-73 in Alzheimer’s disease.

 

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 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. 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 six months ended March 31, 2016 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. Additionally, the numerator is also adjusted for changes in fair value of the derivative financial instruments where it is presumed they will be share settled.

 

As of March 31, 2016, loss per share excludes 3,691,291 (September 30, 2015 – 6,101,534) potentially dilutive common shares related to outstanding options, warrants, and convertible debentures as their effect was anti-dilutive.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.4.0.3
Recent Accounting Pronouncements
6 Months Ended
Mar. 31, 2016
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 adoption of this standard is not expected to have a material impact for any period presented.

 

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 adoption of this standard is not expected to have a material impact for any period presented.

 

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.

 

In February 2016, FASB issued ASU 2016-02, Leases. The guidance would require lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right –of-use assets. The guidance is effective for annual and interim reporting periods beginning on or after December 15, 2018. The Company is currently evaluating the impact this guidance will have on its financial condition, results of operations and cash flows.

 

In March 2016, the FASB issued ASC 2016-09, “Compensation – Stock Compensation (Topic 718) – Improvements to Employee Share-Based Payment Accounting”. These amendments are intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. These amendments are effective for annual and interim reporting periods beginning on or after December 15, 2016. Early adoption is permitted. Entities have the option to apply the amendments on either a prospective basis or a modified retrospective basis. The Company is currently evaluating the impact this guidance will have on its financial condition, results of operations and cash flows.

 

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.

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.4.0.3
Equipment
6 Months Ended
Mar. 31, 2016
Property, Plant and Equipment [Abstract]  
Equipment
  Note 3 Equipment

  

    March 31, 2016  
          Accumulated        
    Cost     Depreciation     Net  
                         
Computer equipment   $ 3,015     $ 2,260     $ 755  

 

    September 30, 2015  
          Accumulated        
    Cost     Depreciation     Net  
                         
Computer equipment   $ 3,015     $ 1,763     $ 1,252  
XML 22 R11.htm IDEA: XBRL DOCUMENT v3.4.0.3
Promissory Notes Payable
6 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Promissory Notes Payable
  Note 4 Promissory Notes Payable

  

    March 31,     September 30,  
    2016     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   $ 66,834     $ 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     21,311       20,608  
    $ 88,145     $ 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 March 31, 2016 or September 30, 2015, as the Company does not consider these amounts to be legally enforceable.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.4.0.3
Deferred Grant Income
6 Months Ended
Mar. 31, 2016
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 and six months ended March 31, 2016, the Company recognized $26,879 and $65,934, respectively (2015: $0 and $0, respectively) of this grant on its statement of operations. 

 

During the six months ended March 31, 2016, the Company recognized other grant income of $571,093 in respect of a research and development incentive program offered by the Australian government.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.4.0.3
Senior Convertible Debentures
6 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Senior Convertible Debentures
  Note 6 Senior Convertible Debentures

  

    March 31,     September 30,  
Senior Convertible Debentures   2016     2015  
             
Senior Convertible Debentures, non-interest bearing, unsecured, due March 18, 2044   $ 4,982     $ 6,144  
Less: Debt Discount     (4,645 )     (5,812 )
Total carrying value     337       332  
Less: current portion     -       -  
Long term liability   $ 337     $ 332  

 

On March 13, 2014, the Company entered into a Securities Purchase Agreement with certain purchasers, pursuant to which the Company issued senior convertible debentures in the aggregate principal amount of $10,000,000 (the “Debentures”). At March 31, 2016, aggregate principal amounts of $4,982 (September 30, 2015: $6,144) of these Debentures remained outstanding.

 

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.

 

The Company has recorded a debt discount in connection with the issuance and amendment of the Debentures during the year ended September 30, 2014, which is being amortized using the effective interest method over the term of the Debentures. During the three and six months ended March 31, 2016, the Company recorded $72 and $1,167, respectively (2015: $486,334 and $493,451, respectively) in respect of the amortization of this discount.

 

During the six months ended March 31, 2016, the Company issued an aggregate of 1,161 shares of common stock based on a conversion price of $1.00 per share pursuant to the conversion of $1,161 in outstanding principal amounts due under the Debentures.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.4.0.3
Capital Stock
6 Months Ended
Mar. 31, 2016
Stockholders' Equity Note [Abstract]  
Capital Stock
  Note 7 Capital Stock

 

Authorized

 

100,000,000 shares of common stock.

 

Equity Transactions

 

During the six months ended March 31, 2016, the Company issued 167,415 shares of common stock pursuant to the application of an incorrect conversion price for conversion notices received in respect of the Debentures, during the year ended September 30, 2015.

 

During the six months ended March 31, 2016, the Company issued 1,000,000 shares of common stock to a director and officer of the Company pursuant to the terms of an employment agreement with that director and officer (Note 9).

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.4.0.3
Lincoln Park Purchase Agreement
6 Months Ended
Mar. 31, 2016
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 sold and issued to Lincoln Park, and Lincoln Park purchased $10,000,000 in value of its shares of common stock from time to time over a 25-month period. At any time, the Company would determine, at its own discretion, the timing and amount of its sales of common stock, subject to certain conditions and limitations.

 

During the six months ended March 31, 2016, the Company issued to Lincoln Park an aggregate of 296,104 shares of common stock under the 2013 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 2013 Purchase Agreement. As such, no further shares will be sold under the 2013 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 2015 Purchase Agreement, the Company also entered into a registration rights agreement with Lincoln Park whereby the Company agreed to file a registration statement with the SEC covering the shares of the Company’s common stock that may be issued to Lincoln Park under the 2015 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 six months ended March 31, 2016 and in consideration for entering into the 2015 Purchase Agreement, the Company issued to Lincoln Park 179,598 shares of common stock as an initial 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. 

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.4.0.3
Related Party Transactions
6 Months Ended
Mar. 31, 2016
Related Party Transactions [Abstract]  
Related Party Transactions
Note 9 Related Party Transactions

 

During the three and six months ended March 31, 2016, the Company accrued general and administrative expenses totaling $125,078 and $3,169,933, respectively (March 31, 2015: $16,082 and $32,465, respectively) in respect of directors fees, restricted stock compensation and stock option compensation charges paid or accrued to directors and officers of the Company. Of the total, $121,578 and $258,092, respectively (March 31, 2015: $13,582 and $27,465, respectively) related to non-cash stock option compensation charges, $0 and $610,000, respectively (March 31, 2015: $0 and $0, respectively) related to non-cash restricted stock compensation charges, and $0 and $2,290,341, respectively (March 31, 2015: $0 and $0, respectively) related to a tax payment made on behalf of a director and officer of the Company, in accordance with the terms of a 2013 employment agreement.

 

The fair value of $2.44 per share for non-cash restricted stock compensation charges was determined with reference to the quoted market price of the Company’s shares on the commitment date.

 

As at March 31, 2016, included in accounts payable and accrued liabilities was $30,500 (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.

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.4.0.3
Commitments
6 Months Ended
Mar. 31, 2016
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, March 31, 2016     1,828,059     $ 2.68  

 

During the six months ended March 31, 2016, 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 March 31, 2016, 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.

 

During the years ended September 30, 2015 and 2014, the Company issued an aggregate of 57,500 warrants exercisable at a weighted average exercise price of $1.24 per share for a period of 4.58 years from the date of issuance in exchange for consulting services to be rendered. The weighted average grant date fair value of these warrants at issuance was $0.899 per warrant, based on the Black-Scholes option pricing model using the following weighted average assumptions: expected term 4.44 years, expected volatility 108.43%, expected dividend yield 0.00%, risk free interest rate 1.21%. Stock based compensation is being recorded in the financial statements over the vesting term of three years from the date of grant. During the three and six months ended March 31, 2016, the Company recorded $23,570 and $47,230, respectively (March 31, 2015: $2,378 and $3,634, respectively), in connection with the warrants granted.

 

  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 six months ended March 31, 2016 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     60,750     $ 7.02     $ 5.75  
Expired     (25,000 )   $ 14.68          
Outstanding at March 31, 2016     1,858,250     $ 1.99          
Exercisable at March 31, 2016     890,399     $ 1.73          
Exercisable at September 30, 2015     825,002     $ 1.78          

 

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

 

At March 31, 2016, the following stock options were outstanding:

  

Number of Shares               Aggregate     Remaining  
      Number     Exercise         Intrinsic     Contractual  
Total     Vested     Price     Expiry Date   Value     Life (yrs)  
  500,000 (1)     500,000     $ 1.60     July 5, 2023     1,650,000       7.26  
  75,000 (2)     25,000     $ 1.20     May 7, 2024     277,500       8.10  
  125,000 (3)     31,250     $ 1.32     May 8, 2024     447,500       8.10  
  718,750 (4)     239,585     $ 0.92     April 2, 2025     2,860,625       9.00  
  50,000 (5)     12,500     $ 1.44     June 8, 2025     173,000       9.19  
  50,000 (6)     -     $ 1.68     June 15, 2025     161,000       9.21  
  278,750 (7)     69,688     $ 5.04     September 18, 2025     -       9.47  
  1,500 (8)     1,500     $ 5.64     September 30, 2025     -       9.50  
  31,250 (9)     5,209     $ 5.68     October 2, 2025     -       9.51  
  25,000 (10)     4,167     $ 8.98     October 16, 2025     -       9.54  
  1,500 (11)     1,500     $ 5.57     December 31, 2025     -       9.75  
  1,500 (12)     -     $ 4.90     March 31, 2026     -       10.00  
  1,858,250       890,399                 $ 5,569,625          

 

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 March 31, 2016.

 

  (1) As of March 31, 2016 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 six months ended March 31, 2016 (March 31, 2015: $0) in connection with these options.

 

  (2) As of March 31, 2016 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 $5,764 and $11,590 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $5,830 and $11,660, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

  

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

 

  (3) As of March 31, 2016 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 $7,960 and $16,008 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $8,053 and $16,106, respectively) 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 March 31, 2016, 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 $42,811 and $86,093 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016, 12,500 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 $4,775 and $9,603 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016 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 $5,573 and $11,207 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016 and September 30, 2015, 69,688 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 $92,875 and $192,024 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016, all of these options had vested. These options vested on December 31, 2015. The Company recognized stock based compensation expense of $0 and $6,800 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $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 March 31, 2016, 5,209 of these options had vested. These options were issued during the six months ended March 31, 2016 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $11,456 and $23,449 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

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

 

  (10) As of March 31, 2016, 4,167 of these options had vested. These options were issued during the six months ended March 31, 2016 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $27,906 and $27,906 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

  (11) As of March 31, 2016, all of these options had vested. These options were issued during the six months ended March 31, 2016 and vested on December 31, 2015. The Company recognized stock based compensation expense of $0 and $6,800 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

  (12) As of March 31, 2016, none of these options had vested. These options were issued during the six months ended March 31, 2016 and vest on December 31, 2016. The Company recognized stock based compensation expense of $0 and $0 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

The fair value of each option award is estimated on the date of grant using the Black Scholes option pricing model based on the following weighted average assumptions:

  

    March 31,  
    2016     2015  
Risk-free interest rate     1.68 %     -  
Expected life of options (years)     6.76       -  
Annualized volatility     101.92 %     -  
Dividend rate     0.00 %     -  
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.4.0.3
Supplemental Cash Flow Information
6 Months Ended
Mar. 31, 2016
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 six months ended March 31, 2016;

 

  i) the Company issued 1,161 shares of common stock upon conversion of $1,161 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 six months ended March 31, 2015;

 

  i) the Company issued 3,918,478 shares of common stock of the Company pursuant to the conversion of convertible debentures at a conversion price of $1.00 per share

 

  ii) the Company reclassified an amount of $3,931,000 into equity upon modification of the terms of certain derivative instruments.

 

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

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.4.0.3
Recent Accounting Pronouncements (Policies)
6 Months Ended
Mar. 31, 2016
Accounting Policies [Abstract]  
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 adoption of this standard is not expected to have a material impact for any period presented.

 

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 adoption of this standard is not expected to have a material impact for any period presented.

 

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.

 

In February 2016, FASB issued ASU 2016-02, Leases. The guidance would require lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right –of-use assets. The guidance is effective for annual and interim reporting periods beginning on or after December 15, 2018. The Company is currently evaluating the impact this guidance will have on its financial condition, results of operations and cash flows.

 

In March 2016, the FASB issued ASC 2016-09, “Compensation – Stock Compensation (Topic 718) – Improvements to Employee Share-Based Payment Accounting”. These amendments are intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. These amendments are effective for annual and interim reporting periods beginning on or after December 15, 2016. Early adoption is permitted. Entities have the option to apply the amendments on either a prospective basis or a modified retrospective basis. The Company is currently evaluating the impact this guidance will have on its financial condition, results of operations and cash flows.

 

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.

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.4.0.3
Equipment (Tables)
6 Months Ended
Mar. 31, 2016
Property, Plant and Equipment [Abstract]  
Schedule of equipment

 

    March 31, 2016  
          Accumulated        
    Cost     Depreciation     Net  
                         
Computer equipment   $ 3,015     $ 2,260     $ 755  

 

    September 30, 2015  
          Accumulated        
    Cost     Depreciation     Net  
                         
Computer equipment   $ 3,015     $ 1,763     $ 1,252  
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.4.0.3
Promissory Notes Payable (Tables)
6 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Schedule of promissory notes payable
    March 31,     September 30,  
    2016     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   $ 66,834     $ 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     21,311       20,608  
    $ 88,145     $ 85,238
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.4.0.3
Senior Convertible Debentures (Tables)
6 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Schedule of senior convertible debentures

 

    March 31,     September 30,  
Senior Convertible Debentures   2016     2015  
             
Senior Convertible Debentures, non-interest bearing, unsecured, due March 18, 2044   $ 4,982     $ 6,144  
Less: Debt Discount     (4,645 )     (5,812 )
Total carrying value     337       332  
Less: current portion     -       -  
Long term liability   $ 337     $ 332  
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.4.0.3
Commitments (Tables)
6 Months Ended
Mar. 31, 2016
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, March 31, 2016     1,828,059     $ 2.68  
Schedule of exercisable share purchase warrants outstanding

At March 31, 2016, 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 six months ended March 31, 2016 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     60,750     $ 7.02     $ 5.75  
Expired     (25,000 )   $ 14.68          
Outstanding at March 31, 2016     1,858,250     $ 1.99          
Exercisable at March 31, 2016     890,399     $ 1.73          
Exercisable at September 30, 2015     825,002     $ 1.78          
Schedule stock options outstanding

At March 31, 2016, the following stock options were outstanding:

 

 

Number of Shares               Aggregate     Remaining  
      Number     Exercise         Intrinsic     Contractual  
Total     Vested     Price     Expiry Date   Value     Life (yrs)  
  500,000 (1)     500,000     $ 1.60     July 5, 2023     1,650,000       7.26  
  75,000 (2)     25,000     $ 1.20     May 7, 2024     277,500       8.10  
  125,000 (3)     31,250     $ 1.32     May 8, 2024     447,500       8.10  
  718,750 (4)     239,585     $ 0.92     April 2, 2025     2,860,625       9.00  
  50,000 (5)     12,500     $ 1.44     June 8, 2025     173,000       9.19  
  50,000 (6)     -     $ 1.68     June 15, 2025     161,000       9.21  
  278,750 (7)     69,688     $ 5.04     September 18, 2025     -       9.47  
  1,500 (8)     1,500     $ 5.64     September 30, 2025     -       9.50  
  31,250 (9)     5,209     $ 5.68     October 2, 2025     -       9.51  
  25,000 (10)     4,167     $ 8.98     October 16, 2025     -       9.54  
  1,500 (11)     1,500     $ 5.57     December 31, 2025     -       9.75  
  1,500 (12)     -     $ 4.90     March 31, 2026     -       10.00  
  1,858,250       890,399                 $ 5,569,625          

 

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 March 31, 2016.

 

  (1) As of March 31, 2016 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 six months ended March 31, 2016 (March 31, 2015: $0) in connection with these options.

 

  (2) As of March 31, 2016 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 $5,764 and $11,590 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $5,830 and $11,660, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

  (3) As of March 31, 2016 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 $7,960 and $16,008 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $8,053 and $16,106, respectively) 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 March 31, 2016, 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 $42,811 and $86,093 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016, 12,500 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 $4,775 and $9,603 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016 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 $5,573 and $11,207 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016 and September 30, 2015, 69,688 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 $92,875 and $192,024 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016, all of these options had vested. These options vested on December 31, 2015. The Company recognized stock based compensation expense of $0 and $6,800 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $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 March 31, 2016, 5,209 of these options had vested. These options were issued during the six months ended March 31, 2016 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $11,456 and $23,449 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016, 4,167 of these options had vested. These options were issued during the six months ended March 31, 2016 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $27,906 and $27,906 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

  (11) As of March 31, 2016, all of these options had vested. These options were issued during the six months ended March 31, 2016 and vested on December 31, 2015. The Company recognized stock based compensation expense of $0 and $6,800 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.

 

  (12) As of March 31, 2016, none of these options had vested. These options were issued during the six months ended March 31, 2016 and vest on December 31, 2016. The Company recognized stock based compensation expense of $0 and $0 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company’s statement of operations.
Schedule of weighted average assumptions for fair value of each option award

The fair value of each option award is estimated on the date of grant using the Black Scholes option pricing model based on the following weighted average assumptions:

  

    March 31,  
    2016     2015  
Risk-free interest rate     1.68 %     -  
Expected life of options (years)     6.76       -  
Annualized volatility     101.92 %     -  
Dividend rate     0.00 %     -  
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.4.0.3
Business Description and Basis of Presentation (Details Narrative) - $ / shares
6 Months Ended 12 Months Ended
Oct. 07, 2015
Mar. 31, 2016
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   3,691,291 6,101,534
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.4.0.3
Equipment (Details) - USD ($)
Mar. 31, 2016
Sep. 30, 2015
Property, Plant and Equipment [Line Items]    
Net $ 755 $ 1,252
Computer Equipment [Member]    
Property, Plant and Equipment [Line Items]    
Cost 3,015 3,015
Accumulated Depreciation 2,260 1,763
Net $ 755 $ 1,252
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.4.0.3
Promissory Notes Payable (Details)
6 Months Ended
Mar. 31, 2016
USD ($)
Mar. 31, 2016
CAD
Sep. 30, 2015
USD ($)
Jan. 09, 2013
CAD
Short-term Debt [Line Items]        
Total promissory notes payable $ 88,145   $ 85,238  
12% Promissory Note [Member]        
Short-term Debt [Line Items]        
Total promissory notes payable $ 66,834   64,630  
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]        
Short-term Debt [Line Items]        
Principal balance | CAD   CAD 86,677   CAD 86,677
12% Promissory Note [Member]        
Short-term Debt [Line Items]        
Total promissory notes payable $ 21,311   $ 20,608  
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]        
Short-term Debt [Line Items]        
Principal balance | CAD   CAD 27,639   CAD 27,639
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.4.0.3
Promissory Notes Payable (Details Narrative) - 12% Promissory Note [Member]
Jan. 09, 2013
USD ($)
Mar. 31, 2016
CAD
Jan. 09, 2013
CAD
Short-term Debt [Line Items]      
Maturity date Jun. 30, 2013    
Late fees, per day per note $ 100    
Additional late fees, per day per note $ 500    
Canada, Dollars [Member]      
Short-term Debt [Line Items]      
Principal balance | CAD   CAD 86,677 CAD 86,677
Maturity date Jun. 30, 2013    
Late fees, per day per note $ 100    
Additional late fees, per day per note $ 500    
Canada, Dollars [Member]      
Short-term Debt [Line Items]      
Principal balance | CAD   CAD 27,639 CAD 27,639
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.4.0.3
Deferred Grant Income (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Mar. 31, 2016
Mar. 31, 2015
Sep. 30, 2015
Deferred Revenue Disclosure [Abstract]          
Awarded grant funding amount         $ 286,455
Deferred grant income $ 5,445   $ 5,445   $ 71,614
Other grant income     571,093    
Grant income $ 26,879 $ 637,027  
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.4.0.3
Senior Convertible Debentures (Details) - Securities Purchase Agreement [Member] - Senior Convertible Debentures Due March 18, 2044 [Member] - Purchasers [Member] - USD ($)
Mar. 31, 2016
Sep. 30, 2015
Mar. 13, 2014
Senior Convertible Debentures, non-interest bearing, unsecured, due March 18, 2044 $ 4,982 $ 6,144 $ 10,000,000
Less: Debt Discount (4,645) (5,812)  
Total carrying value $ 337 $ 332  
Less: current portion  
Long term liability $ 337 $ 332  
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.4.0.3
Senior Convertible Debentures (Details Narrative)
3 Months Ended 6 Months Ended
Mar. 31, 2016
USD ($)
$ / shares
Mar. 31, 2015
USD ($)
$ / shares
Mar. 31, 2016
USD ($)
N
$ / shares
Mar. 31, 2015
USD ($)
N
$ / shares
Sep. 30, 2015
USD ($)
Mar. 13, 2014
USD ($)
$ / shares
Conversion price (in dollars per share) | $ / shares $ 1.00 $ 1.00 $ 1.00 $ 1.00    
Number of equity instrument issued upon conversion | N     1,161 3,918,478    
Debt beneficial conversion feature     $ 1,161      
Securities Purchase Agreement [Member] | Senior Convertible Debentures Due March 18, 2044 [Member] | Purchasers [Member]            
Aggregate principal amount $ 4,982   $ 4,982   $ 6,144 $ 10,000,000
Conversion price (in dollars per share) | $ / shares           $ 1.20
Amended conversion price (in dollars per share) | $ / shares $ 1.00   $ 1.00     $ 1.00
Amortization debt discount issuance $ 72 $ 486,334 $ 1,167 $ 493,451    
Number of equity instrument issued upon conversion | N     1,161      
Debt beneficial conversion feature     $ 1,161      
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.4.0.3
Capital Stock (Details Narrative) - shares
6 Months Ended 12 Months Ended
Mar. 31, 2016
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  
2013 Employment Agreement [Member] | Directors and Officers [Member] | Common Shares to be Issued [Member]      
Number of shares for common stock to be issued 1,000,000    
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.4.0.3
Lincoln Park Purchase Agreement (Details Narrative) - Lincoln Park Capital Fund, LLC [Member] - USD ($)
6 Months Ended
Oct. 21, 2015
Jul. 05, 2013
Mar. 31, 2016
2013 Purchase Agreement [Member]      
Total number of shares obligated to purchase   $ 10,000,000  
Agreement term   25 months  
Number of shares issued     296,104
Number of shares issued for aggregate purchase price     290,523
Value of shares issued for aggregate purchase price     $ 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
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.4.0.3
Related Party Transactions (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Mar. 31, 2016
Mar. 31, 2015
Sep. 30, 2015
Restricted Common Stock [Member]          
Related Party Transaction [Line Items]          
Fair value of non-cash stock compensation charges (in dollars per share)     $ 2.44    
Directors and Officers [Member]          
Related Party Transaction [Line Items]          
Accounts payable and accrued liabilities $ 30,500   $ 30,500   $ 33,000
Directors and Officers [Member] | 2013 Employment Agreement [Member]          
Related Party Transaction [Line Items]          
General and administrative expenses 125,078 $ 16,082 3,169,933 $ 32,465  
Non-cash stock option compensation charges 121,578 13,582 258,092 27,465  
Non-cash restricted stock compensation charges 0 0 610,000 0  
Tax payment $ 0 $ 0 $ 2,290,341 $ 0  
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.4.0.3
Commitments (Details) - Purchase Warrants [Member] - $ / shares
6 Months Ended 12 Months Ended
Mar. 31, 2016
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 [Rollforward]    
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 46 R35.htm IDEA: XBRL DOCUMENT v3.4.0.3
Commitments (Details 1)
6 Months Ended
Mar. 31, 2016
$ / 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 47 R36.htm IDEA: XBRL DOCUMENT v3.4.0.3
Commitments (Details 2) - 2015 Omnibus Incentive Plan [Member] - $ / shares
6 Months Ended 12 Months Ended
Mar. 31, 2016
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 60,750 1,097,500
Expired (25,000)  
Outstanding at ending 1,858,250 1,822,500
Exercisable at ending 890,399 825,002
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 $ 7.02 2.02
Expired 14.68  
Outstanding at ending 1.99 2.00
Exercisable at ending 1.73 1.78
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted Average Grant Date fair value [Abstract]    
Granted $ 5.75 $ 1.66
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.4.0.3
Commitments (Details 3) - USD ($)
6 Months Ended
Mar. 31, 2016
Sep. 30, 2015
Sep. 30, 2014
2015 Omnibus Incentive Plan [Member]      
Total Number of Shares 1,858,250 1,822,500 792,500
Number of Vested Shares 890,399    
Exercise Price $ 1.99 $ 2.00 $ 2.82
Aggregate Intrinsic Value $ 5,569,625    
First Stock Option [Member]      
Total Number of Shares [1] 500,000    
Number of Vested Shares 500,000    
Exercise Price $ 1.6    
Expiry Date Jul. 05, 2023    
Aggregate Intrinsic Value $ 1,650,000    
Remaining Contractual Life (in years) 7 years 3 months 4 days    
Second Stock Option [Member]      
Total Number of Shares [2] 75,000    
Number of Vested Shares 25,000    
Exercise Price $ 1.2    
Expiry Date May 07, 2024    
Aggregate Intrinsic Value $ 277,500    
Remaining Contractual Life (in years) 8 years 1 month 6 days    
Third Stock Option [Member]      
Total Number of Shares [3] 125,000    
Number of Vested Shares 31,250    
Exercise Price $ 1.32    
Expiry Date May 08, 2024    
Aggregate Intrinsic Value $ 447,500    
Remaining Contractual Life (in years) 8 years 1 month 6 days    
Four Stock Option [Member]      
Total Number of Shares [4] 718,750    
Number of Vested Shares 239,585    
Exercise Price $ 0.92    
Expiry Date Apr. 02, 2025    
Aggregate Intrinsic Value $ 2,860,625    
Remaining Contractual Life (in years) 9 years    
Five Stock Option [Member]      
Total Number of Shares [5] 50,000    
Number of Vested Shares 12,500    
Exercise Price $ 1.44    
Expiry Date Jun. 08, 2025    
Aggregate Intrinsic Value $ 173,000    
Remaining Contractual Life (in years) 9 years 2 months 8 days    
Six Stock Option [Member]      
Total Number of Shares [6] 50,000    
Number of Vested Shares    
Exercise Price $ 1.68    
Expiry Date Jun. 15, 2025    
Aggregate Intrinsic Value $ 161,000    
Remaining Contractual Life (in years) 9 years 2 months 16 days    
Seven Stock Option [Member]      
Total Number of Shares [7] 278,750    
Number of Vested Shares 69,688    
Exercise Price $ 5.04    
Expiry Date Sep. 18, 2025    
Aggregate Intrinsic Value    
Remaining Contractual Life (in years) 9 years 5 months 19 days    
Eight Stock Option [Member]      
Total Number of Shares [8] 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 6 months    
Nine Stock Option [Member]      
Total Number of Shares [9] 31,250    
Number of Vested Shares 5,209    
Exercise Price $ 5.68    
Expiry Date Oct. 02, 2025    
Aggregate Intrinsic Value    
Remaining Contractual Life (in years) 9 years 6 months 4 days    
Ten Stock Option [Member]      
Total Number of Shares [10] 25,000    
Number of Vested Shares 4,167    
Exercise Price $ 8.98    
Expiry Date Oct. 16, 2025    
Aggregate Intrinsic Value    
Remaining Contractual Life (in years) 9 years 6 months 14 days    
Eleven Stock Option [Member]      
Total Number of Shares [11] 1,500    
Number of Vested Shares 1,500    
Exercise Price $ 5.57    
Expiry Date Dec. 31, 2025    
Aggregate Intrinsic Value    
Remaining Contractual Life (in years) 9 years 9 months    
Twelve Stock Option [Member]      
Total Number of Shares [12] 1,500    
Number of Vested Shares    
Exercise Price $ 4.9    
Expiry Date Mar. 31, 2026    
Aggregate Intrinsic Value    
Remaining Contractual Life (in years) 10 years    
[1] As of March 31, 2016 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 six months ended March 31, 2016 (March 31, 2015: $0) in connection with these options.
[2] As of March 31, 2016 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 $5,764 and $11,590 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $5,830 and $11,660, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations.
[3] As of March 31, 2016 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 $7,960 and $16,008 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $8,053 and $16,106, respectively) 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 March 31, 2016, 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 $42,811 and $86,093 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016, 12,500 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 $4,775 and $9,603 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016 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 $5,573 and $11,207 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016 and September 30, 2015, 69,688 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 $92,875 and $192,024 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016, all of these options had vested. These options vested on December 31, 2015. The Company recognized stock based compensation expense of $0 and $6,800 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $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 March 31, 2016, 5,209 of these options had vested. These options were issued during the six months ended March 31, 2016 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $11,456 and $23,449 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) 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 March 31, 2016, 4,167 of these options had vested. These options were issued during the six months ended March 31, 2016 and vest in equal quarterly instalments over a three-year period from the date of grant. The Company recognized stock based compensation expense of $27,906 and $27,906 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0, respectively) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations.
[11] As of March 31, 2016, all of these options had vested. These options were issued during the six months ended March 31, 2016 and vested on December 31, 2015. The Company recognized stock based compensation expense of $0 and $6,800 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations.
[12] As of March 31, 2016, none of these options had vested. These options were issued during the six months ended March 31, 2016 and vest on December 31, 2016. The Company recognized stock based compensation expense of $0 and $0 during the three and six months ended March 31, 2016, respectively (March 31, 2015: $0 and $0) in connection with these options. These amounts have been included in general and administrative expenses on the Company's statement of operations.
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.4.0.3
Commitments (Details 4)
6 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Commitments and Contingencies Disclosure [Abstract]    
Risk-free interest rate 1.68%
Expected life of options (years) 6 years 9 months 3 days  
Annualized volatility 101.92%
Dividend rate 0.00%
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.4.0.3
Commitments (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Mar. 31, 2016
Mar. 31, 2015
Sep. 30, 2015
Sep. 30, 2014
Risk-free interest rate     1.68%    
Expected life (in years)     6 years 9 months 3 days      
Expected volatility     101.92%    
Dividend yields     0.00%    
Purchase Warrants [Member]            
Number of common shares called 1,963,956   1,963,956      
Number of warrant exercised 2,403,144   2,403,144      
Number of warrant exercisable 1,828,059   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.

     
Purchase Warrants [Member] | Consultant [Member]            
Number of warrant exercised         1.24 1.24
Number of warrant issued         57,500 57,500
Risk-free interest rate         1.21% 1.21%
Expected life (in years)         4 years 5 months 8 days 4 years 5 months 8 days
Weighted average grant date fair value per warrant         $ 0.899 $ 0.899
Expected volatility         108.43% 108.43%
Dividend yields         0.00% 0.00%
Vesting period     3 years   4 years 6 months 29 days 4 years 6 months 29 days
Stock based compensation expense $ 23,570 $ 2,378 $ 47,230 $ 3,634    
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.4.0.3
Commitments (Details Narrative 1) - 2015 Omnibus Incentive Plan [Member] - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Mar. 31, 2016
Mar. 31, 2015
Sep. 30, 2015
Maximum number of common shares reserved for future issuance 6,050,553   6,050,553    
Expiration period     10 years    
First Stock Option [Member]          
Stock based compensation expense       $ 0  
Second Stock Option [Member]          
Vesting period     3 years    
Fair value of options     $ 25,000   $ 25,000
Description of vesting period rights    

Vest annually over a three-year period commencing on the first anniversary of the date of the grant.

   
Second Stock Option [Member] | General and Administrative Expense [Member]          
Stock based compensation expense $ 5,764 $ 5,830 $ 11,590 11,660  
Third Stock Option [Member]          
Vesting period     4 years    
Fair value of options     $ 31,250   31,250
Stock based compensation expense 7,960 8,053 $ 16,008 16,106  
Description of vesting period rights    

Vest annually over a four-year period commencing on the first anniversary of the date of the grant.

   
Four Stock Option [Member]          
Vesting period     3 years    
Fair value of options     $ 239,585   239,585
Description of vesting period rights    

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

   
Four Stock Option [Member] | General and Administrative Expense [Member]          
Stock based compensation expense 42,811 0 $ 86,093 0  
Five Stock Option [Member]          
Vesting period     3 years    
Fair value of options     $ 12,500    
Description of vesting period rights    

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

   
Five Stock Option [Member] | General and Administrative Expense [Member]          
Stock based compensation expense 4,775 0 $ 9,603 0  
Six Stock Option [Member]          
Vesting period     3 years    
Description of vesting period rights    

Vest over a three-year period from the date of grant.

   
Six Stock Option [Member] | General and Administrative Expense [Member]          
Stock based compensation expense 5,573 0 $ 11,207 0  
Seven Stock Option [Member]          
Vesting period     3 years    
Fair value of options     $ 69,688   $ 69,688
Description of vesting period rights    

Vest over a three-year period from the date of grant.

   
Seven Stock Option [Member] | General and Administrative Expense [Member]          
Stock based compensation expense 92,875 0 $ 192,024 0  
Eight Stock Option [Member] | General and Administrative Expense [Member]          
Stock based compensation expense 0 0 $ 6,800 0  
Nine Stock Option [Member]          
Vesting period     3 years    
Fair value of options     $ 5,209    
Description of vesting period rights    

Vest in equal quarterly instalments over a three-year period from the date of grant.

   
Nine Stock Option [Member] | General and Administrative Expense [Member]          
Stock based compensation expense 11,456 0 $ 23,449 0  
Ten Stock Option [Member]          
Vesting period     3 years    
Fair value of options     $ 4,167    
Description of vesting period rights    

Vest in equal quarterly instalments over a three-year period from the date of grant.

   
Ten Stock Option [Member] | General and Administrative Expense [Member]          
Stock based compensation expense 27,906 0 $ 27,906 0  
Eleven Stock Option [Member] | General and Administrative Expense [Member]          
Stock based compensation expense 0 0 6,800 0  
Twelve Stock Option [Member] | General and Administrative Expense [Member]          
Stock based compensation expense $ 0 $ 0 $ 0 $ 0  
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.4.0.3
Supplemental Cash Flow Information (Details Narrative)
6 Months Ended 12 Months Ended
Mar. 31, 2016
USD ($)
N
$ / shares
shares
Mar. 31, 2015
USD ($)
N
$ / shares
Sep. 30, 2015
shares
Supplemental Cash Flow Elements [Abstract]      
Capital stock issued pursuant to debt conversions (in shares) | N 1,161 3,918,478  
Debt beneficial conversion feature $ 1,161    
Conversion price (in dollars per share) | $ / shares $ 1.00 $ 1.00  
Number of shares for incorrect conversion price | shares 167,415   167,415
Reclassification of derivative liability   $ 3,931,000  
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