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Item 1. Legal Proceedings

2026-08-28 compared with 2026-02-09 · 177 added, 42 removed, 14 unchanged (94% of the section changed)

LEGAL PROCEEDINGS

The Company is subject to claims and legal proceedings

that arise during the course of business.

The Company is currently subject to the following lawsuits:

2024, a shareholder class action complaint was filed in the United States District Court for the Southern District of New York, and it

named the Company and an officer of the Company as Defendants.

We are subject to claims and legal proceedings that

arise during the course of business.

We are currently subject to the following lawsuits:

2024, a shareholder class action complaint was filed in the U.S.

District Court for the Southern District of New York, and it named us

and one of our officers 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 United States District

Court for the Southern District of New York on June 18, 2025.

The complaint alleged

violations of the Exchange Act 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 oral argument has been scheduled to occur on February 12, 2026.

No decision has been entered.

amount has been recorded in these 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.

On May 8, 2024,

a similar complaint was filed in the same court by Kenneth Downing, a purported shareholder of the Company, against the same defendants.

The Company believed that this lawsuit was without merit and filed a motion to dismiss the complaint.

Plaintiff Downing voluntarily dismissed

this complaint subsequent to the filing of the motion to dismiss.

May 13, 2024, a derivative lawsuit was filed against the Company (as nominal defendant), an officer of the Company, and members of the

Company’s Board of Directors in the U.S.

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 condensed consolidated interim

financial statements for any loss contingencies associated with this lawsuit as we believe that it is not probable that any loss will

May 13, 2024, a derivative lawsuit was filed against us (as nominal defendant), one of our officers, and members of our 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.

Court for the Southern District of New York.

The stay has been extended throughout the appeal.

No amount has been recorded in these

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.

The complaint asserts various common law claims (including

breach of fiduciary duty) and violation of Section 14(a) of the 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.

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.

stay was later extended throughout 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.

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 Company’s Board of Directors

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

No amount has been recorded in these 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.

was filed against us (as nominal defendant), one of our officers, and members of our 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 the Former CEO

2026, the Special Committee terminated the employment of Christopher Missling, Ph.D., as our CEO, for Cause (as defined in the Former

CEO Employment Agreement).

Missling remains a member of our Board after his termination of employment.

In June 2026,

we received a Demand for Arbitration (the “Demand”) filed by Dr.

Missling with the American Arbitration Association (“AAA”).

In the Demand, Dr.

Missling asserts he was wrongfully terminated for Cause under the Former CEO Employment Agreement and seeks relief

for alleged breach of contract, declaratory relief, and defamation.

Missling seeks severance and other compensation allegedly owed

under the Former CEO 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.

Missling subsequently served and attempted to file an amended demand removing certain allegations, but otherwise maintaining

all previously asserted causes of action.

We categorically deny any wrongdoing and intend to vigorously defend against the claims.

this early stage of the proceedings, we cannot reasonably estimate any potential loss, or range of loss, that may arise from Dr.

On July 6, 2026,

Missling filed a Summons With Notice in his individual capacity and derivatively on behalf of our 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

Peter Donhauser and Dr.

Axel Paeger, who are independent directors on our Board, seeking money damages.

We anticipate being

named as a nominal defendant in this lawsuit.

We believe that this lawsuit is without merit and intend 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

4 unchanged sentences

of such persons, is an adverse party or has a material interest adverse to our or our subsidiaries’ interest.

There have been no material changes to the risk factors

discussed in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025,

filed with the SEC on November 25, 2025.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Except as otherwise provided herein, there have been

no material changes to the risk factors discussed in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K

for the fiscal year ended September 30, 2025, filed with the SEC on November 25, 2025.

The termination of our former CEO’s employment

for Cause, the related review by the Special Committee and other matters reviewed in connection therewith have resulted in, and could

continue to result in litigation, inquiries, investigations or other proceedings, and could adversely affect our reputation, business,

financial condition and results of operations, prospects, and the market price of our common stock.

As previously disclosed, on April 30, 2026, the Special

Committee terminated the employment of Christopher Missling, Ph.D.

as our former CEO for Cause (as defined in the Former

CEO Employment Agreement ), effective immediately.

The termination was based on, among other matters, conduct that the Special

Committee determined was inconsistent with Company policy.

conduct of our former CEO and other matters reviewed in connection therewith have resulted

in, and could continue to result in, litigation, inquiries, investigations or enforcement

actions by the FDA, the SEC, Nasdaq or other governmental or regulatory authorities, significant

costs, diversion of management’s attention, reputational harm and a loss of confidence

among investors, clinical investigators, patients, business partners, shareholders and other

stakeholders.

Any of these consequences could materially and adversely affect our reputation,

business, financial condition, results of operations, prospects and the market price of our

common stock.

For example, in June 2026, our former CEO filed a Demand for Arbitration with

the AAA against us asserting wrongful termination and in July 2026 our former CEO filed a

Summons with Notice with the New York Supreme Court against four of our independent directors

for alleging “breach of fiduciary duty as independent board members”.

For additional

information, see Part II, Item 1 “Legal Proceedings” of this Quarterly Report

on Form 10-Q.

As of certain prior period ends, we have identified

a material weakness in our internal control over financial reporting and determined that our disclosure controls and procedures were

not effective, and we cannot assure you that our remediation measures will operate as intended, fully remediate the material weakness

or enable us to maintain effective disclosure controls and procedures and internal control over financial reporting in the future.

As further described in Part II, Item 4 “Controls and Procedures”

of this Quarterly Report on Form 10-Q, and Item 9A of the 2025 Form 10-K/A, management has concluded that there was a material weakness

in our internal control over financial reporting that existed at September 30, 2025, December 31, 2025, March 31, 2026 and June 30, 2026.

Accordingly, our internal control over financial reporting as of such dates was not effective.

In addition, our disclosure controls and

procedures were not effective as of such dates, due to the material weakness in internal control over financial reporting.

A material weakness is a deficiency, or a combination

of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement

of our annual or interim financial statements will not be prevented or detected on a timely basis.

We may identify additional control

deficiencies, including additional material weaknesses, in the future.

We have begun implementing certain remediation and

enhancement efforts designed to remediate the material weakness and strengthen our disclosure controls and procedures, internal control

over financial reporting, control environment and information and communication processes.

These measures must operate for

a sufficient period and be tested before management can conclude that the material weakness has been remediated.

The remediation process

has been and continues to be time-consuming, requires significant management attention and results in substantial costs.

cannot assure you that our remediation measures will operate as intended, fully remediate the material weakness or enable us

to maintain effective disclosure controls and procedures and internal control over financial reporting.

If our remediation efforts are unsuccessful or untimely,

we may be unable to prevent or detect a material misstatement of our annual or interim financial statements on a timely basis, and information

required to be disclosed in our SEC reports may not be recorded, processed, summarized and reported accurately or within required time

This could result in material misstatements, inaccurate or incomplete disclosures, additional delayed filings, amendments to

or restatements of previously filed financial statements or reports, an inability of our officers to provide required certifications,

or noncompliance with SEC or Nasdaq requirements.

These consequences could subject us to litigation, investigations or regulatory action,

increase our costs, divert management and Board attention, harm our reputation, impair our ability to raise capital, reduce investor confidence

in the accuracy and timeliness of our financial reporting and adversely affect the market price of our common stock.

We face risks related to previously being delinquent

in filing this Quarterly Report on Form 10-Q and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026.

Due to the circumstances

described in our Form 12b-25 filed with the SEC on August 10, 2026 (the “Q3 Form 12b-25”), this Quarterly Report on Form 10-Q

was delinquent and, due to the circumstances described in our Form 12b-25 filed with the SEC on May 11, 2026 (the “Q2 Form 12b-25”),

our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, was delinquent.

Additionally, as previously disclosed,

on May 20, 2026, we received a deficiency notification letter from the Nasdaq Staff indicating that, as a result of our inability to timely

file the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, we are not in compliance with Nasdaq Listing Rule

We expect to continue to face many of the risks and

challenges related to previously being delinquent in our SEC reporting obligations, including the following:

· we have incurred, and expect to continue to incur, significant expenses related to the circumstances described

in the Q2 Form 12b-25 and the Q3 Form 12b-25;

· failure to timely file this Quarterly Report on Form 10-Q and our Quarterly Report on Form 10-Q for the

quarterly period ended March 31, 2026, and make our current financial information available has placed downward pressure on our stock

price, which has adversely affected, and may continue to, adversely affect, among other things, hiring and employee retention;

· a broad range of potential actions could be taken against us, including litigation and other claims as

well as regulatory examinations, investigations, proceedings, orders or other actions by the SEC, Nasdaq or other regulators arising out

of our failure to file this Quarterly Report on Form 10-Q and our Quarterly Report on Form 10-Q for the quarterly period ended March 31,

2026, on a timely basis, including the reasons and causes for such failure to file, and such potential actions would divert management

attention and resources from the operation of our business;

· we will be unable to utilize our effective Form S-3 registration statement or to file a new Form S-3 registration

statement after we file our next Annual Report on Form 10-K and will be unable to regain eligibility to use Form S-3 until we have timely

filed all reports specified under General Instruction I.A.3.

of Form S-3 for the preceding 12 calendar months;

may not be able to recapture lost opportunities such as potential strategic collaborations

due to ongoing reputational harm.

The continued occurrence of any of the foregoing

could harm our reputation, business, financial condition and results of operations, prospects and the market price of our common stock.

The un-timely filing of this Quarterly Report on Form 10-Q and our Quarterly

Report on Form 10-Q for the quarterly period ended March 31, 2026 will make us ineligible to utilize our effective Form S-3 registration

statement or to file a new Form S-3 registration statement after we file our next Annual Report on Form 10-K.

We will be unable to regain

eligibility to use Form S-3 until we have timely filed all reports specified under General Instruction I.A.3.

of Form S-3 for the preceding

12 calendar months, which will adversely affect our ability to raise future capital.

As a result of the un-timely filing of this Quarterly Report on Form 10-Q

and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026 with the SEC, we will be ineligible to utilize our

effective Form S-3 registration statement, including in connection with our ATM program under the 2025 Sales Agreement, or to file a new

Form S-3 registration statement after we file our next Annual Report on Form 10-K.

We will be unable to regain eligibility to use Form

S-3 until we have timely filed all reports specified under Form S-3 for the preceding 12 calendar months.

Should we wish to offer and

sell our securities to the public prior to the time we become eligible to use Form S-3, both the transaction costs and the amount of time

required to complete such transactions could increase, making it more difficult to execute any such transactions successfully and potentially

having a material adverse effect on our business and financial condition.

UNREGISTERED SALES OF EQUITY SECURITIES

AND USE OF PROCEEDS

DEFAULTS UPON SENIOR SECURITIES

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Legal Proceedings