ANAVEX LIFE SCIENCES CORP. 10-Q

ITEM 1. LEGAL PROCEEDINGS We are subject to claims and legal proceedings that arise during the course of business. We are currently subject to the following lawsuits: 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 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 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 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 occur. Derivative Lawsuits On or about 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 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 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. 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 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 On April 30, 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). Dr. 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. Dr. 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. Dr. 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. At this early stage of the proceedings, we cannot reasonably estimate any potential loss, or range of loss, that may arise from Dr. Missling’s claims. 36 On July 6, 2026, Dr. 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 Velden, Dr. 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 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. I TEM 1A. RISK FACTORS 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. The 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. 37 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. 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. 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 periods. 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 5250(c)(1). 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; 38 · 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; and · we 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. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES Not applicable.