Overview

You should read the following discussion of our financial condition and results of operations together with the audited financial statements and the notes to audited financial statements included elsewhere in this filing prepared in accordance with accounting principles generally accepted in the United States. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those anticipated in these forward-looking statements.

Plan of Operations

Our operating expenses consist mostly of research and development costs. The amount incurred by our company for the year ended September 30, 2007 was $959,698, of which $800,000 was paid by way of common shares of our company to Eurogenet Labs S.A.

We anticipate that we will require up to $6,595,000 for the 12 months ending September 30, 2008 to implement our plan of operation of researching and developing our three patents and one patent application, the related compounds and any further intellectual property we may acquire. The majority of our capital resources requirement is needed to enter some our current compounds into clinical trials.

Purchase of Significant Equipment

We plan to conduct further research and development on our three patents, one patent application and the related compounds over the next 12 months. We plan to conduct research and development activities through engaging research individuals and organizations on a contractual basis.

Oncology - to date we have tested approximately 250 compounds. Several of them have shown moderate activity in the in vitro screen; at least 50 of them have exhibited growth inhibiting activity at a low micromolar and two of them even lower at a nanomolar range concentration. Two of them are currently tested in xenografts according to preliminary data coming out from the in vitro screen. The two types of the disease tested in xenografts are now colon cancer and NSCL cancer. Preliminary results for one of the lead compounds have been scheduled for a poster presentation in October, 2007 Furthermore, pharmacokinetic/metabolism and pharmacodynamic studies are ongoing.

Neuroscience - Data on Anavex's sigma-ligands ANAVEX 1-41 and ANAVEX 2-73 was presented in a poster at the 8th Colloque de la Societe des Neurosciences meeting that was held in Montpellier, France (Abstract D.30) in May of 2007. According to in vivo pre-clinical data ANAVEX lead compounds ANAVEX 1-41 and ANAVEX 2-73 showed highly potent anti-amnesic and neuroprotective activity against Amyloid Beta (25-35)peptide toxicity in Alzheimers's disease (AD) animal models.

We will also incur costs for innovative new drug applications to regulatory bodies, patent legal fees and consulting and collaborating fees. We anticipate our research and development costs for the next 12 months will be approximately $5,200,000.

Personnel Plan

We currently employ three executive officers including a president, a chief executive officer and a chief scientific officer. Additionally we have four employees to assist in product research, strategic planning and business development. We anticipate we may spend up to approximately $400,000 in officer and employee compensation during the next 12 months.

General Administration

We anticipate spending approximately $700,000 on general and administration costs in the next 12 months. These costs will consist primarily of rent and facility support expenses as well as finance and administrative support compensation but excluding legal fees and auditor's fees.

Off-Balance Sheet Arrangements

There are 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 is material to investors.

Our principal capital resources have been through the subscription and issuance of common stock, although we have also used stockholder loans and advances from related parties.

Financial Condition, Liquidity and Capital Resources

Our principal capital resources have been through the issuance of common stock, although we may use shareholder loans, advances from related parties, or borrowing in the future.

At September 30, 2007, we had a working capital deficit of $462,504 compared to working capital deficit of $15,511 at September 30, 2006.

At September 30, 2007, our total current assets were $25 compared to total current assets of $12,495 as at September 30, 2006.

At September 30, 2007, our total current liabilities were $462,529 compared to total current liabilities of $28,006 as at September 30, 2006.

At September 30, 2007, we had cash on hand of $25 compared to $12,275 as at September 30, 2006.

For the year ended September 30, 2007, we posted a net loss of $1,579,993 compared to a net loss of $25,532 for the year ended September 30, 2006.

For the year ended September 30, 2007, we incurred operating expenses of $1,581,230 compared to $25,591 for the year ended September 30, 2006.

Cash Requirements

We anticipate that we will require up to $6,595,000 for the 12 months ending September 30, 2008 to implement our plan of operation of researching and developing our three patents and one patent application, the related compounds and any further intellectual property we may acquire. The majority of our capital resources requirement is needed to enter some our current compounds into clinical trials. Specifically, we estimate our operating expenses and working capital requirements for the next 12 months to be as follows:

We will require additional funds to plan of operation of researching and developing our three patents and one patent application, the related compounds and any further intellectual property we may acquire. The majority of our capital resources requirement is needed to enter some our current compounds into clinical trials. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. Further, we may continue to be unprofitable.

Specifically, we estimate our operating expenses and working capital requirements for the next 12 months to be as follows:

Estimated Funding Required During the Twelve Month Period Ending September

     30, 2008
        Research and Development Activities                          $   5,200,000
        Officer and Employee Compensation                                  400,000
        Sales and Marketing                                                175,000
        Legal, Accounting and Professional Fees                            120,000
        General and Administrative                                         700,000
        Total                                                        $   6,595,000

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 scale down or perhaps even cease the operation of our business.

Going Concern

We have historically incurred losses and have incurred a loss of $1,597,993 for the year ended September 30, 2007. Because of these historical losses, we will require additional working capital to develop our business operations. We intend to raise additional working capital through private placements, public offerings, bank financing and/or advances from related parties or shareholder loans.

The continuation of our business is dependent upon obtaining further financing and achieving a break even or profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current or future stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to either (i) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (ii) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support our working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to us. If adequate working capital is not available we may not increase our operations.

These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern.

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 financials.

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.