ANAVEX LIFE SCIENCES CORP. 10-Q

ITEM 1. FINANCIAL STATEMENTS ANAVEX LIFE SCIENCES CORP. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS March 31, 2026 (Unaudited) 4 Anavex Life Sciences Corp. Condensed Consolidated Interim Balance Sheets (in thousands, except share and per share amounts) March 31, September 30, 2026 2025 (Unaudited) Assets Current Cash and cash equivalents $ 127,422 $ 102,577 Incentive and tax receivables 932 809 Prepaid expenses and other current assets 412 429 Total Assets $ 128,766 $ 103,815 Liabilities and Stockholders’ Equity Current Liabilities Accounts payable $ 2,520 $ 4,249 Accrued liabilities - Note 3 3,734 3,892 Deferred grant income - Note 4 805 805 Total Liabilities $ 7,059 $ 8,946 Commitments and Contingencies - Note 6 Capital stock Authorized: 10,000,000 preferred stock, par value $ 0.001 per share 200,000,000 common stock, par value $ 0.001 per share Issued and outstanding: 92,696,842 common stock (September 30, 2025 - 86,668,521 ) 93 87 Additional paid-in capital 515,081 477,230 Accumulated deficit ( 393,467 ) ( 382,448 ) Total Stockholders’ Equity $ 121,707 $ 94,869 Total Liabilities and Stockholders’ Equity $ 128,766 $ 103,815 See Accompanying Notes to Condensed Consolidated Interim Financial Statements 5 Anavex Life Sciences Corp. Condensed Consolidated Interim Statements of Operations and Comprehensive Loss (in thousands, except share and per share amounts) (Unaudited) Three months ended March 31, Six months ended March 31, 2026 2025 2026 2025 Operating expenses General and administrative $ 2,292 $ 2,621 $ 4,417 $ 5,767 Research and development 4,192 9,892 8,849 20,338 Total operating expenses 6,484 12,513 13,266 26,105 Operating loss ( 6,484 ) ( 12,513 ) ( 13,266 ) ( 26,105 ) Other income (expense) Grant income — — — 12 Research and development incentive income 27 96 60 508 Interest income, net 1,061 1,210 2,140 2,604 Foreign exchange gain (loss) 58 11 65 ( 326 ) Total other income, net 1,146 1,317 2,265 2,798 Net loss before provision for income ( 5,338 ) $ ( 11,196 ) $ ( 11,001 ) $ ( 23,307 ) Income tax expense, current — — ( 18 ) — Net loss and comprehensive loss $ ( 5,338 ) $ ( 11,196 ) $ ( 11,019 ) $ ( 23,307 ) Net Loss per share Basic and diluted $ ( 0.06 ) $ ( 0.13 ) $ ( 0.12 ) $ ( 0.27 ) Weighted average number of shares outstanding Basic and diluted 92,675,753 85,073,769 90,832,571 84,938,400 See Accompanying Notes to Condensed Consolidated Interim Financial Statements 6 Anavex Life Sciences Corp. Condensed Consolidated Interim Statements of Cash Flows (in thousands, except share and per share amounts) (Unaudited) Six months ended March 31, 2026 2025 Cash Flows used in Operating Activities Net loss $ ( 11,019 ) $ ( 23,307 ) Adjustments to reconcile net loss to net cash used in operations: Share based compensation 1,421 3,504 Changes in working capital balances related to operations: Incentive and tax receivables ( 123 ) 1,783 Prepaid expenses and deposits 17 229 Accounts payable ( 1,729 ) ( 4,893 ) Accrued liabilities ( 158 ) 4,720 Deferred grant income — ( 12 ) Net cash used in operating activities ( 11,591 ) ( 17,976 ) Cash Flows provided by Financing Activities Issuance of common stock, net of share issuance costs 36,430 — Proceeds from exercise of stock options 6 1,560 Net cash provided by financing activities 36,436 1,560 Increase (decrease) in cash and cash equivalents during the period 24,845 ( 16,416 ) Cash and cash equivalents, beginning of period 102,577 132,187 Cash and cash equivalents, end of period $ 127,422 $ 115,771 Supplemental Cash Flow Information Cash paid for state and local franchise taxes $ 68 $ 36 Common stock issued upon cashless exercise of stock option $ — $ 460 See Accompanying Notes to Condensed Consolidated Interim Financial Statements 7 Anavex Life Sciences Corp. Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity For the three months ended March 31, 2026 and 2025 (in thousands, except share and per share amounts) (Unaudited) Common Stock Additional Accumulated Shares Par Value Paid-in Capital Deficit Total Balance, January 1, 2026 92,671,758 $ 93 $ 514,654 $ ( 388,129 ) $ 126,618 Shares issued under 2025 Sales Agreement 23,000 — 107 — 107 Shares issued pursuant to exercise of stock options 2,084 — 6 — 6 Share based compensation — — 314 — 314 Net loss — — — ( 5,338 ) ( 5,338 ) Balance, March 31, 2026 92,696,842 $ 93 $ 515,081 $ ( 393,467 ) $ 121,707 Balance, January 1, 2025 84,985,449 $ 85 $ 459,012 $ ( 348,182 ) $ 110,915 Shares issued pursuant to exercise of stock options 130,700 — 852 — 852 Shares issued pursuant to cashless exercise of stock option 500,000 1 459 — 460 Shares withheld related to cashless exercise of stock option and taxes ( 282,497 ) ( 1 ) ( 2,721 ) — ( 2,722 ) Share based compensation — — 1,449 — 1,449 Net loss — — — ( 11,196 ) ( 11,196 ) Balance, March 31, 2025 85,333,652 $ 85 $ 459,051 $ ( 359,378 ) $ 99,758 See Accompanying Notes to Condensed Consolidated Interim Financial Statements 8 Anavex Life Sciences Corp. Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity For the six months ended March 31, 2026 and 2025 (in thousands, except share and per share amounts) (Unaudited) Common Stock Additional Accumulated Shares Par Value Paid-in Capital Deficit Total Balance, October 1, 2025 86,668,521 $ 87 $ 477,230 $ ( 382,448 ) $ 94,869 Shares issued under 2025 Sales Agreement 6,026,237 6 36,424 — 36,430 Shares issued pursuant to exercise of stock options 2,084 — 6 — 6 Share based compensation — — 1,421 — 1,421 Net loss — — — ( 11,019 ) ( 11,019 ) Balance, March 31, 2026 92,696,842 $ 93 $ 515,081 $ ( 393,467 ) $ 121,707 Balance, October 1, 2024 84,795,517 $ 85 $ 456,249 $ ( 336,071 ) $ 120,263 Shares issued pursuant to exercise of stock options 320,632 — 1,560 — 1,560 Shares issued pursuant to cashless exercise of stock option 500,000 1 459 — 460 Shares withheld related to cashless exercise of stock option and taxes ( 282,497 ) ( 1 ) ( 2,721 ) — ( 2,722 ) Share based compensation — — 3,504 — 3,504 Net loss — — — ( 23,307 ) ( 23,307 ) Balance, March 31, 2025 85,333,652 $ 85 $ 459,051 $ ( 359,378 ) $ 99,758 See Accompanying Notes to Condensed Consolidated Interim Financial Statements 9 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements March 31, 2026 – Page 1 (Unaudited) Note 1 Business Description Business Anavex Life Sciences Corp. (“Anavex” or the “Company”) is a clinical stage biopharmaceutical company engaged in the development of novel therapeutics for the treatment of central nervous system (CNS) diseases with high unmet medical needs. The Company’s primary focus is on advancing its lead compound ANAVEX 2-73 (blarcamesine) in the Company’s clinical program for the treatment of mild cognitive impairment due to Alzheimer’s disease and mild Alzheimer’s disease, and for Rett syndrome and Fragile X syndrome, both of which are neurodevelopmental rare diseases. Note 2 Basis of Presentation These accompanying unaudited condensed consolidated interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim reporting. Accordingly, certain information and note disclosures normally included in the annual financial statements in accordance with U.S. GAAP 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 accompanying unaudited condensed consolidated interim financial statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained herein. The consolidated balance sheet as of September 30, 2025 was derived from the audited annual financial statements but does not include all disclosures required by U.S. GAAP. The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended September 30, 2025 filed with the SEC on November 25, 2025. The Company follows the same accounting policies in the preparation of interim reports. Operating results for the six months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending September 30, 2026. Liquidity All of the Company’s potential drug compounds are in the clinical or pre-clinical development stage and the Company cannot be certain that its research and development efforts will be successful or, if successful, that its potential drug compounds will ever be approved for commercial sale or generate revenue. To date, the Company has not generated any revenue from our operations. The Company expects the business to continue to experience negative cash flows from operations for the foreseeable future and cannot predict when, if ever, its business might become profitable. Management believes that the current working capital position will be sufficient to meet the Company’s working capital requirements beyond the next 12 months after the date that these unaudited condensed consolidated interim financial statements are issued. The process of drug development can be costly, and the timing and outcomes of clinical trials are uncertain. The assumptions upon which the Company has based its estimates are routinely evaluated and may be subject to change. The actual amount of the Company’s expenditures will vary depending upon a number of factors including but not limited to the design, timing and duration of future clinical trials, the progress of the Company’s research and development programs and the level of financial resources available. The Company has the ability to adjust its operating plan spending levels based on the timing of future clinical trials. 10 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements March 31, 2026 – Page 2 (Unaudited) Other than our rights related to the 2025 Sales Agreement (as defined below in Note 5), there can be no assurance that additional financing will be available when needed or, if available, that it can be obtained on commercially reasonable terms. If the Company is not able to obtain the additional financing on a timely basis, if and when it is needed, it will be forced to delay, scale down or shut down some or all of its research and development activities. Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to accounting for research and development costs, incentive and tax receivables, valuation and recoverability of deferred tax assets, share based compensation, and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Principles of Consolidation These unaudited condensed consolidated interim financial statements include the accounts of Anavex Life Sciences Corp. and its wholly-owned subsidiaries, Anavex Australia Pty Limited (“Anavex Australia”), a company incorporated under the laws of Australia, Anavex Germany GmbH, a company incorporated under the laws of Germany, and Anavex Canada Ltd., a company incorporated under the laws of the Province of Ontario, Canada. All inter-company transactions and balances have been eliminated. Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date; Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 - assets and liabilities whose significant value drivers are unobservable by little or no market activity and that are significant to the fair value of the assets or liabilities. At March 31, 2026 and September 30, 2025, the Company did not have any Level 2 or Level 3 assets or liabilities. 11 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements March 31, 2026 – Page 3 (Unaudited) Recent Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, “Income Taxes: Improvements to Income Tax Disclosures.” This guidance requires consistent categories and greater disaggregation of information in the rate reconciliation and disclosures of income taxes paid by jurisdiction. This amendment is effective for our fiscal year ending September 30, 2026. The Company is currently assessing the impact of this guidance on its disclosures. In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures”.  The amendments in ASU No. 2024-03 address investor requests for more detailed expense information and require additional disaggregated disclosures in the notes to the financial statements for certain categories of expenses that are included on the face of the financial statements.  The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.  The Company is currently assessing the impact of this guidance on its disclosures.  In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements”. The amendments in ASU No. 2025-11 are intended to improve the clarity and usability of interim reporting guidance by reorganizing Topic 270, clarifying when interim reporting requirements apply, and consolidating interim disclosure requirements that are currently dispersed throughout the Codification. The amendments are effective for fiscal years beginning after December 15, 2027, and for interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its interim reporting processes and disclosures. Note 3 Accrued Liabilities The principal components of accrued liabilities consist of (in thousands): Schedule of principal components of accrued liabilities March 31, September 30, 2026 2025 Accrued investigator payments $ 3 $ 96 Accrued compensation and benefits 1,500 1,562 Milestone-based contract accruals 351 523 All other accrued liabilities 1,880 1,711 Total accrued liabilities $ 3,734 $ 3,892 Note 4 Other Income Grant income As of March 31, 2026, the Company had received a $ 1.0 million (September 30, 2025: $ 1.0 million) research grant awarded by the Michael J. Fox Foundation for Parkinson’s Research (the “MJFF”). The grant was to be used to fund a clinical trial of the Company’s lead compound, ANAVEX 2-73 (blarcamesine) related to Parkinson’s disease. The grant income was deferred when received and was being amortized to other income as the related research and development expenditures were incurred. During the three and six months ended March 31, 2026, the Company did not recognized any amount (three and six months ended March 31, 2025: $ 0 and $ 12,275 respectively) of this grant on its statements of operations within grant income. At March 31, 2026, an amount of $ 0.8 million (September 30, 2025: $ 0.8 million) of this grant was recorded as deferred grant income, representing the amount of this grant which had not yet been amortized to other income. 12 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements March 31, 2026 – Page 4 (Unaudited) Subsequent to March 31, 2026, the grant was terminated and the $0.8 million deferred grant income was repaid to the MJFF. Research and development incentive income Research and development incentive income represents the income earned by Anavex Australia of the Australia R&D credit. This cash incentive is received by Anavex Australia, upon filing of a claim in connection with Anavex Australia’s annual income tax return. During the three and six months ended March 31, 2026, the Company recorded research and development incentive income of $ 0.03 (AUD 0.04 million) and $ 0.06 million (AUD 0.09 million) respectively (three and six months ended March 31, 2025: $ 0.1 million (AUD 0.2 million) and $ 0.5 million (AUD 0.8 million)) in respect of the Australia R&D credit for eligible research and development expenses incurred during the period. This amount is included within Other income (expense) on the condensed consolidated interim statements of operations and comprehensive loss. At March 31, 2026, Incentive and tax receivables includes $ 0.8 million (AUD 1.2 million) (September 30, 2025: $ 0.7 million (AUD 1.1 million)) relating to Australia R&D credits earned during the period that are expected to be reimbursed upon filing of the Company’s annual claim under this program. The Australia R&D credit program is a self-assess program whereby the Company must assess its eligibility each year to determine (i) if the entity is eligible (ii) if the specific R&D activities are eligible and (iii) if the individual R&D expenditures have nexus to such R&D activities. The Company evaluates its eligibility under the tax incentive program as of each balance sheet date based on the most current and relevant data available. Anavex Australia is able to continue to claim the R&D tax incentive for as long as it remains eligible and continues to incur eligible research and development expenditures. Although the Company believes that it has complied with all the relevant conditions of eligibility under the program for all periods claimed, the Australian Tax Office (“ATO”) has the right to review the Company’s qualifying programs and related expenditures for a period of four years. If such a review were to occur, the ATO may have different interpretations of certain eligibility requirements. If the ATO disagreed with the Company’s assessments and any related subsequent appeals, it could require adjustment to and repayment of current or previous years’ claims already received. Additionally, if the Company was unable to demonstrate a reasonably arguable position taken on such claims, the ATO could also assess penalties and interest on any such adjustments. As of March 31, 2026, the Company’s tax incentive claims from 2021 to 2025 are open to potential review by the ATO. Additionally, the period open for review is indefinite if the ATO suspects fraud. The Company has not provided any allowance for any such potential adjustments, should they occur in the future. Note 5 Equity Offerings Common Stock Shares of the Company’s common stock have voting rights and are entitled to dividends as declared at the discretion of the Company’s Board of Directors (the “Board”). 13 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements March 31, 2026 – Page 5 (Unaudited) Preferred Stock The Board has the authority to issue preferred stock in one or more series and to fix the rights, preferences, privileges, restrictions and the number of shares constituting any series or the designation of the series. 2025 Sales Agreement On July 25, 2025, the Company entered into a Sales Agreement (the “2025 Sales Agreement”) with TD Securities (USA) LLC (the “Sales Agent”). Pursuant to the 2025 Sales Agreement, the Company may offer and sell up to an aggregate offering price of $ 150 million (the “Offering”) in shares of common stock from time to time through the Sales Agent. Upon delivery of a placement notice based on the Company’s instructions and subject to the terms and conditions of the 2025 Sales Agreement, the Sales Agent may sell shares of common stock by methods deemed to be an “at the market offering”, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, or by any other method permitted by law, including negotiated transactions, subject to the Company’s prior written consent. The Company is not obligated to make any sales of shares under the 2025 Sales Agreement. The Company or the Sales Agent may suspend or terminate the Offering upon notice to the other party, subject to certain conditions. The Sales Agent will act as sales agent on a commercially reasonable efforts basis consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations and the rules of Nasdaq. The Company has agreed to pay the Sales Agent commissions for its services of up to 3.0% of the gross proceeds from the sale of shares of common stock pursuant to the Sales Agreement. The Company has also agreed to provide the Sales Agent with customary indemnification and contribution rights. During the six months ended March 31, 2026, the Company issued 6,026,237 shares of common stock for net proceeds of $36.4 million pursuant to the 2025 Sales Agreement. The Company suspended sales under the 2025 Sales Agreement following formation of the Special Committee (defined below) described in Notes 6 and 8. 2023 Purchase Agreement On February 3, 2023, the Company entered into a $ 150.0 million purchase agreement (the “2023 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which the Company had the right to sell and issue to Lincoln Park, and Lincoln Park is obligated to purchase, up to $ 150.0 million in value of shares of the Company’s common stock from time to time over a three-year period. In consideration for entering into the 2023 Purchase Agreement, the Company issued to Lincoln Park 75,000 shares of common stock as a commitment fee (the “initial commitment shares”) and agreed to issue up to an additional 75,000 shares of common stock pro rata, when and if, Lincoln Park purchased, at the Company’s discretion, the $ 150.0 million aggregate commitment. The Company determined the fair value of the initial commitment shares was $ 0.8 million with reference to the closing price of the Company’s shares on the 2023 Purchase Agreement date. In addition, the Company incurred third party expenses of $ 0.1 million in connection with entering into the 2023 Purchase Agreement. These amounts were expensed to other financing expense on the statements of operations during the year ended September 30, 2023. During the three and six months ended March 31, 2026 and year ended September 30, 2025, the Company did not issue any shares of common stock under the 2023 Purchase Agreement. The 2023 Purchase Agreement expired on February 3, 2026. 14 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements March 31, 2026 – Page 6 (Unaudited) Note 6 Commitments and Contingencies Lease The Company leases office space under an operating lease with an initial term of 12 months or less. Under the terms of the office lease, the Company is required to pay its proportionate share of operating costs. The operating lease costs were as follows (in thousands): Schedule of operating lease costs Three months ended March 31, Six months ended March 31, 2026 2025 2026 2025 Operating lease costs $ 33 $ 33 $ 69 $ 66 Employee 401(k) Benefit Plan The Company has a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code. The plan covers all United States based employees. United States based employees eligible to participate in the plan may contribute up to the current statutory limits under the Internal Revenue Service regulations. The 401(k) plan permits the Company to make additional matching contributions on behalf of contributing employees. The Company made matching contributions under the 401(k) plan as follows (in thousands): Three Months Ended March 31, Six Months ended March 31, 2026 2025 2026 2025 Contributions to 401(k) plan $ 57 $ 67 $ 82 $ 115 Litigation The Company is subject to claims and legal proceedings that arise in the ordinary course of business. Such matters are inherently uncertain, and there can be no guarantee that the outcome of any such matter will be decided favorably to the Company or that the resolution of any such matter will not have a material adverse effect upon the Company’s unaudited condensed consolidated interim financial statements. The Company does not believe that any of such pending claims and legal proceedings will have a material adverse effect on its unaudited condensed consolidated interim financial statements. Shareholder Class Action On March 13, 2024, a shareholder class action complaint was filed in the U.S. District Court for the Southern District of New York and it named the Company and an officer of the Company as Defendants. The complaint was amended on July 12, 2024 (the “Initial Action”). The complaint alleged violations of the Securities and Exchange Act of 1934 associated with disclosures and statements made with respect to certain clinical trials for ANAVEX 2-73 related to Rett syndrome. This lawsuit was dismissed by the U.S. District Court for the Southern District of New York on June 18, 2025. The plaintiff filed a notice of appeal on July 17, 2025. Briefing on the appeal concluded October 30, 2025 , and an oral argument occurred on February 12, 2026. On June 26, 2026, the Second Circuit issued an opinion affirming the district court’s dismissal, including denial of leave to further amend the complaint. Plaintiff did not petition for rehearing within the applicable deadline. The period for plaintiff to file a petition for writ of certiorari has not yet passed. No amount has been recorded in these unaudited condensed consolidated interim financial statements for any loss contingencies associated with this lawsuit as the Company believes that it is not probable that any loss will occur. 15 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements March 31, 2026 – Page 7 (Unaudited) Derivative Lawsuits On or about May 13, 2024, a derivative lawsuit was filed against the Company (as nominal defendant), an officer of the Company, and members of the Board in the U.S. District Court for the District of Nevada by another purported shareholder. The complaint asserts various common law claims (including breach of fiduciary duty) and violation of Section 14(a) of the Securities Exchange Act regarding the same or similar allegations at issue in the purported class action lawsuit related to disclosures and statements made about certain clinical trials related to Rett syndrome. On January 22, 2025, pursuant to a stipulation of the parties, the Court entered an order staying this purported derivative lawsuit until the motion to dismiss filed by defendants in the Initial Action is decided by the U.S. District Court for the Southern District of New York. The stay was later extended through the appeal. On August 17, 2026, after disposition of the appeal in the Initial Action, a stipulation of dismissal of the derivative lawsuit was approved by the judge. On February 14, 2025, another derivative lawsuit asserting state law breach of fiduciary duty and unjust enrichment claims based upon similar allegations was filed against the Company (as nominal defendant), an officer of the Company, and members of the Board in the Supreme Court for the State of New York, County of New York, by another purported shareholder. On August 18, 2025, pursuant to a stipulation of the parties, the Court entered an order staying this purported derivative lawsuit until the appeal in the Initial Action is resolved. On August 10, 2026, after disposition of the appeal in the Initial Action, a stipulation of dismissal of the derivative lawsuit was approved by the judge. Matters Relating to Former CEO On April 30, 2026, a special committee (the “Special Committee”) composed of independent members of the Board terminated the employment of Christopher Missling, PhD, as the Company’s Chief Executive Officer, for Cause (as defined in the Employment Agreement, dated as of June 27, 2013, between Dr. Missling and the Company, as amended and restated). Dr. Missling remains a member of the Board after his termination. In June 2026, the Company received a AAA Demand for Arbitration filed by Dr. Missling. In the Demand, Dr. Missling asserts he was wrongfully terminated for Cause under his Employment Agreement and seeks relief for alleged breach of contract, declaratory relief, and defamation. Dr. Missling seeks severance and other compensation allegedly owed under the Employment Agreement, including cash severance, acceleration of equity awards, accrued compensation and benefits, reimbursement and advancement of legal fees and expenses, damages for purported defamatory statements, and attorneys’ fees, costs, and interest. Dr. Missling subsequently served and attempted to file an amended demand removing certain allegations, but otherwise maintaining all previously asserted causes of action. The Company categorically denies any wrongdoing and intends to vigorously defend against the claims. At this early stage of the proceedings, the Company cannot reasonably estimate any potential loss, or range of loss, that may arise from Dr. Missling’s claims . On July 6, 2026, Dr. Missling filed a Summons With Notice in his individual capacity and derivatively on behalf of the Company in New York Supreme Court, New York County, alleging “breach of fiduciary duty as independent board members” against Dr. Jiong Ma, Dr. Claus van der Velden, Dr. Peter Donhauser and Dr. Axel Paeger, who are independent directors on the Board, seeking money damages. The Company anticipates being named as a nominal defendant in this lawsuit. The Company believes that this lawsuit is without merit and intends to vigorously defend against it. This lawsuit is in the early stages, and, at this time, no assessment can be made as to the likely outcome or whether the outcome will be material to us. We know of no other material pending legal or governmental proceedings, other than ordinary routine litigation incidental to our business, to which our Company or our subsidiaries are a party or of which any of their property is subject. There are no other proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder holding more than 5% of our shares, or any associate of such persons, is an adverse party or has a material interest adverse to our or our subsidiaries’ interest. 16 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements March 31, 2026 – Page 8 (Unaudited) Share Purchase Warrants At March 31, 2026 and September 30, 2025, the Company had 10,000 share purchase warrants outstanding exercisable at $ 12.00 per share until April 21, 2026. On April 21, 2026, these warrants expired unexercised. Share–based Compensation Plan 2015 Stock Option Plan On September 18, 2015, the Company’s Board approved a 2015 Omnibus Incentive Plan (the “2015 Plan”), which provided for the grant of stock options and restricted stock awards to directors, officers, employees and consultants of the Company. The maximum number of shares of common stock reserved for issue under the 2015 Plan was 6,050,553 shares, subject to adjustment in the event of a change of the Company’s capitalization. No additional awards will be granted under the 2015 Plan. 2019 Stock Option Plan On January 15, 2019, the Board approved the 2019 Omnibus Incentive Plan (the “2019 Plan”), which provides for the grant of stock options and restricted stock awards to directors, officers, employees, consultants and advisors of the Company. The maximum number of shares of common stock reserved for issue under the 2019 Plan was 6,000,000 shares, subject to adjustment in the event of a change of the Company’s capitalization. No additional awards will be granted under the 2019 Plan. 2022 Stock Option Plan On March 25, 2022, the Board approved the 2022 Omnibus Incentive Plan (the “2022 Plan”). The 2022 Plan was approved by stockholders on May 24, 2022. Under the terms of the 2022 Plan, 10,000,000 additional shares of common stock will be available for issuance under the 2022 Plan, in addition to the shares of common stock available under the 2019 Plan and the 2015 Plan. Any awards outstanding under a previous stock option plan will remain subject to and will be paid under such plan, and any shares subject to outstanding awards under a previous plan that subsequently cease to be subject to such awards (other than by reason of settlement of the awards in shares) will automatically become available for issuance under the 2022 Plan. The 2022 Plan provides that it may be administered by the Board, or the Board may delegate such responsibility to a committee. The exercise price will be determined by the Board at the time of grant shall be at least equal to the fair market value on such date. If the grantee is a 10% stockholder on the grant date, then the exercise price shall not 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 2022 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 2022 Plan. 17 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements March 31, 2026 – Page 9 (Unaudited) On April 17, 2025, the Board approved an amendment to the 2022 Plan (the “Amendment”). The Amendment was approved by the stockholders on June 10, 2025. The Amendment increased the number of shares of common stock reserved for issuance under the 2022 Plan by 4,000,000 shares for a total of 14,000,000 . In addition, the Amendment established a minimum vesting period of one year for all awards granted under the 2022 Plan and limited the discretion to accelerate the vesting of awards upon a separation from service, with limited exceptions permitted. Finally, the Amendment prohibited liberal share recycling provisions. As at March 31, 2026, 6,243,496 stock options were outstanding under the 2022 Plan and 8,629,678 awards were available for issue under the 2022 Plan. The following summarizes information about stock option activity during the six months ended March 31, 2026: Schedule of stock option activity Number of Options Weighted Average Exercise Price ($) Weighted Average Grant Date Fair Value ($) Aggregate intrinsic value ($) Outstanding, September 30, 2025 14,961,583 7.25 5.46 39,715,608 Granted 167,000 4.08 3.10 — Exercised ( 2,084 ) 3.17 2.40 2,772 Expired ( 125,000 ) 11.14 5.35 — Forfeited ( 641,249 ) 14.48 3.17 — Outstanding, March 31, 2026 14,360,250 6.86 5.18 836,386 Exercisable, March 31, 2026 10,750,671 5.81 4.52 836,386 The following summarizes information about stock options at March 31, 2026 by a range of exercise prices: Schedule of summarizes information about stock options Number of Weighted average Weighted Number of Weighted Range of exercises prices outstanding remaining contractual average vested average From To options life (in years) exercise price options exercise price (vested options) $ 2.30 $ 5.00 4,480,616 2.91 $ 3.06 4,270,615 $ 3.00 $ 5.01 $ 7.00 3,241,203 4.67 $ 5.61 2,647,539 $ 5.67 $ 7.01 $ 9.00 4,169,431 6.10 $ 8.08 2,612,517 $ 7.93 $ 9.01 $ 13.00 1,469,000 6.23 $ 10.20 1,015,000 $ 10.24 $ 13.01 $ 25.00 1,000,000 5.33 $ 17.96 205,000 $ 17.39 14,360,250 4.74 $ 6.86 10,750,671 $ 5.81 The weighted average per share fair value of stock options vested at March 31, 2026 was $ 4.52 (September 30, 2025: $ 4.83 ). At March 31, 2026, the weighted average contractual life of stock options outstanding was 4.74 years (September 30, 2025: 5.22 years) and for stock options exercisable was 3.94 years (September 30, 2025: 4.11 years). 18 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements March 31, 2026 – Page 10 (Unaudited) 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 common stock for the stock options that were in-the-money at March 31, 2026. The Company recognized share-based compensation expense of $ 0.3 and $ 1.4 million during the three and six months ended March 31, 2026 respectively (three and six months ended March 31, 2025: $ 1.4 and 3.5 million respectively) in connection with the issuance and vesting of stock options in exchange for services. These amounts have been included in general and administrative expenses and research and development expenses on the Company’s condensed consolidated interim statements of operations as follows (in thousands): Schedule of general and administrative expenses and research and development expenses Three months ended March 31, Six months ended March 31, 2026 2025 2026 2025 General and administrative $ 507 $ 605 $ 977 $ 1,407 Research and development (recovery) ( 193 ) 844 444 2,097 Total share-based compensation $ 314 $ 1,449 $ 1,421 $ 3,504 An amount of approximately $ 4.7 million in share-based compensation is expected to be recorded over the remaining term of such stock options through fiscal 2029. The fair value of each stock option award is estimated on the date of grant using the Black Scholes option pricing model. The fair value of share-based compensation charges recognized during the three and six months ended March 31, 2026 was determined with reference to the quoted market price of the Company’s common stock on the grant date and based on the following weighted average assumptions: Schedule of weighted average assumptions for fair value of each option award 2026 2025 Risk-free interest rate 3.68 % 3.98 % Expected life of options (years) 5.64 5.56 Annualized volatility 86.63 % 86.49 % Dividend rate 0.00 % 0.00 % The fair value of stock compensation charges recognized during the three and six months ended March 31, 2026 and 2025 was determined with reference to the quoted market price of the Company’s common stock on the grant date. Prior to October 1, 2025, the expected life was based on the estimated average life of stock options using the “simplified method”, as prescribed in FASB ASC 718, due to insufficient historical exercise activity during recent years. Starting on October 1, 2025, the expected life is based on the historical exercise activity of previously granted and exercised stock options. Note 7 Segmented Information Operating segments are defined as components of an entity for which separate financial information is available and regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s CODM at March 31, 2026 was the Chief Executive Officer. The Company has determined that it operates in a single operating segment, which consists of the development of clinical and preclinical product candidates focused on advancing novel therapeutics for CNS diseases and disorders, and related administrative activities. 19 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements March 31, 2026 – Page 11 (Unaudited) The accounting policies of the segment are the same as those described in the summary of significant accounting policies as described in the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended September 30, 2025. The CODM evaluates performance and allocates resources based on consolidated net loss, as presented in the Company’s unaudited condensed consolidated interim statement of operations, and monitors forecast-to-actual variances for significant expense categories given their direct relationship to cash burn. The CODM also reviews the consolidated balance sheet to assess liquidity, funding capacity, and segment assets, which are reported as total consolidated assets. The CODM receives and reviews financial information on a consolidated basis and does not assess performance or allocate resources based on geographic regions. In addition, management does not internally organize or evaluate operating results by geography. Accordingly, management has determined that it is not required to present financial information disaggregated by geographic region under ASC 280. The table below summarizes the significant expense categories regularly reviewed by the CODM for the three and six months ended March 31, 2026 and 2025 (in thousands): Schedule of summarizes the significant expenses Three months ended March 31, Six months ended March 31, 2026 2025 2026 2025 Research and development costs Preclinical studies $ 31 $ 104 $ 33 $ 416 Clinical trials 612 5,896 2,645 11,027 Personnel costs 3,470 3,010 5,122 6,674 Non-cash share-based compensation (recovery) ( 193 ) 844 444 2,097 Other research and development costs (a) 272 38 605 124 Total research and development costs 4,192 9,892 8,849 20,338 General and administrative costs Personnel costs 583 371 1,040 1,146 Non-cash share-based compensation 507 605 977 1,406 Other general and administrative costs (b) 1,202 1,645 2,400 3,215 Total general and administrative costs 2,292 2,621 4,417 5,767 Other income 1,146 1,317 2,247 2,798 Net loss $ ( 5,338 ) $ ( 11,196 ) $ ( 11,019 ) $ ( 23,307 ) a. Other research and development costs include, but are not limited to, publications, sponsorships, membership fees, scientific conferences, and medical affairs strategy and branding. b. Other general and administrative expenses include, but are not limited to, office rent, public company reporting requirements including professional fees, insurance, and other general operating expenses not otherwise included in research and development expenses. 20 Anavex Life Sciences Corp. Notes to the Condensed Consolidated Interim Financial Statements March 31, 2026 – Page 12 (Unaudited) Note 8 Subsequent Events The Company evaluates subsequent events occurring between the most recent balance sheet date and the date the financial statements are available to be issued in order to determine whether the subsequent events are to be recorded and/or disclosed in the Company’s financial statements and footnotes. The financial statements are considered to be available to be issued at the time they are filed with the Securities and Exchange Commission (SEC). Chief Executive Officer Transition On April 30, 2026, a special committee (the “Special Committee”) composed of independent directors of the Board terminated the employment of Christopher Missling, PhD as the Company’s Chief Executive Officer for Cause (as defined in the Employment Agreement, dated as of June 27, 2013, between Dr. Missling and the Company, as amended and restated), effective immediately, for, among other things, conduct that the Special Committee believed was inconsistent with Company policy. The Special Committee has also requested that Dr. Missling resign as a member of the Board. On May 4, 2026, the Board appointed Terrie Kellmeyer, PhD as the Company’s Interim Chief Executive Officer. Nasdaq Non-Compliance Matters As previously disclosed, on May 20, 2026, the Company received a deficiency notification letter from the Nasdaq Listing Qualifications Department (the “Nasdaq Staff”) indicating that, as a result of the Company’s inability to timely file its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, it is not in compliance with Nasdaq Listing Rule 5250(c)(1), which requires listed companies to timely file all required periodic financial reports with the SEC. On July 20, 2026, the Company timely submitted its plan (“Compliance Plan”) to the Nasdaq Staff to regain compliance with Nasdaq Listing Rule 5250(c)(1). The Compliance Plan is currently under review by the Nasdaq Staff. The Company expects the filing of this Quarterly Report on Form 10-Q and the Quarterly Report on Form 10-Q for the period ended June 30, 2026 to cure the deficiency. However, the Nasdaq Staff will consider multiple factors when reviewing the Company’s Compliance Plan, including its past compliance history, the reasons for the late filing, other corporate events that may occur within the review period, the Company’s overall financial condition and its public disclosures. If the Compliance Plan is not accepted by the Nasdaq Staff, the Company will have an opportunity to request a hearing on the Nasdaq Staff’s determination before an independent Hearings Panel. 21