AKARI THERAPEUTICS, PLC
ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2021
Registered in England and Wales, number: 05252842
1
AKARI THERAPEUTICS PLC
CONSOLIDATED ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTENTS
Officers and professional advisers
Directors’ report
Strategic Report
Director’s Remuneration Report
Independent Auditor’s report to the shareholders of Akari Therapeutics Plc
Consolidated statement of comprehensive loss
Consolidated statement of financial position
Parent company statement of financial position
Consolidated statement of changes in equity
Parent company statement of changes in equity
Consolidated statement of cash flows
Parent company statement of cash flows
Page
1
2 – 5
6 – 12
13 – 26
27 – 30
31
32
33
34
35
36
37
Notes to the report and financial statements
38-55
AKARI THERAPEUTICS PLC
OFFICERS AND PROFESSIONAL ADVISERS
FOR THE YEAR ENDED 31 DECEMBER 2021
Directors
R Prudo-Chlebosz
J Hill
S Ungar
D Byrne
D Williams
M Grissinger
P Feldschreiber
R Jacques
Secretary
Prism Cosec Limited
Registered Office
Independent Auditors
Highdown House,
Yeoman Way,
Worthing,
West Sussex
BN99 3HH
Haysmacintyre LLP
10 Queen Street Place
London
EC4R 1AG
1
AKARI THERAPEUTICS PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
Unless the context otherwise requires, all references to “Akari,” “we,” “us,” “our,” the “Company”, the “Group” and similar
designations refer to Akari Therapeutics, Plc and its subsidiaries. All references to “parent company” refer to Akari
Therapeutics, Plc excluding its subsidiaries.
The directors present their report and the audited financial statements for the year ended 31 December 2021.
PRINCIPAL ACTIVITY
The principal activity of the Group is developing advanced therapies for autoimmune and inflammatory diseases,
specifically through the inhibition of the complement and leukotriene pathways. Each of these systems has scientifically
well-supported causative roles in the diseases the Company is targeting. Management believes that blocking early
mediators of inflammation will prevent initiation and continual amplification of the processes that cause certain diseases.
DIRECTORS
The directors who served the Company during the year and up to the date of signing the Annual Report were as follows:
R Prudo-Chlebosz
C Richardson (resigned in March 22)
J Hill
S Ungar
D Byrne
D Williams
M Grissinger
P Feldschreiber
R Jacques (appointed 28 March 22)
SUPPLIER PAYMENT POLICY
It is the Group’s policy to agree to commercial terms with its suppliers prior to purchase of goods or services. The Group
negotiates favourable payment terms where possible.
POLITICAL/CHARITABLE DONATIONS
There were no political or charitable contributions made by the Group during the year ended 31 December 2021 (2020:
$nil).
STAFF POLICY
The Group is committed to a policy of recruitment and promotion on the basis of aptitude and ability. Applications for
employment by disabled persons are given full and fair consideration having regard to their particular aptitudes and
abilities. Where existing employees become disabled, it is the Group’s policy, wherever possible, to provide continuing
employment under normal terms and conditions and to provide training, career development and promotion wherever
appropriate.
DIRECTORS’ INDEMNITY
The Company’s Articles of Association provide, subject to the provisions of UK legislation, an indemnity for directors and
officers of the Company in respect of liabilities they may incur in the discharge of their duties or in the exercise of their
powers, including any liabilities relating to the defence of any proceedings brought against them which relate to anything
done or omitted, or alleged to have been done or omitted, by them as officers or employees of the Company.
Appropriate directors and officer’s liability insurance cover is in place in respect of all Company directors.
2
AKARI THERAPEUTICS PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
ENVIRONMENTAL DISCLOSURES
We are a group with a small number of employees. We have serviced offices and we currently outsource our research,
development, testing and manufacturing activities. As a result, the group consumed 40,000 kWh of energy or less during
the year ended 31 December 2021. For this reason, no disclosures concerning greenhouse gas emissions, energy
consumption and energy efficiency action are made under the Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008.
AUDITORS
Haysmacintyre LLP have indicated their willingness to continue in office as auditor for another year. In accordance with
section 489 of the Companies Act 2006, a resolution proposing that Haysmacintyre LLP be reappointed as auditors of the
Company will be put to the Annual General Meeting.
SUBSTANTIAL SHAREHOLDERS
On 31 December 2021 the following shareholders held an interest of 3% or more of the ordinary share capital of the
Company:
Ray Prudo (1)
PranaBio Investments, LLC (2)
Aspire Capital Fund, LLC (3)
Ordinary shares of $0.0001 % of issued share capital
18.2%
6.8%
21.0%
871,186,700
330,308,700
1,044,753,900
(1) Represents the entire holdings of RPC Pharma Limited, Praxis Trustees Limited As trustee of The Sonic Healthcare Holding
Company and Dr. Ray Prudo and includes warrants to purchase 9,210,500 ordinary shares (equivalent to 92,105 ADSs) at an exercise
price of $0.03 per share (or $3.00 per ADS) which expire on July 1, 2024 and warrants to purchase 7,500,000 ordinary shares
(equivalent to 75,000 ADSs) at an exercise price of $0.02 per share (or $2.20 per ADS) which expire on February 21, 2025. The
principal business office of RPC Pharma Limited is c/o Landmark Fiduciare (Suisse) SA, 6 Place des Eaux-Vives, P.O. Box 3461,
Geneva, V8 1211, Switzerland. Dr. Ray Prudo has voting and dispositive control over the ordinary shares held by RPC Pharma
Limited and owns approximately 67.8% of RPC’s outstanding shares (including option grants), including 10.6% of RPC’s
outstanding shares held in trust for Dr. Ungar. Dr. Prudo disclaims beneficial ownership except to the extent of his actual pecuniary
interest in such shares.
(2) Represents the entire holdings of Pranabio Investments, LLC and includes warrants to purchase 32,500,000 ordinary shares
(equivalent to 325,000 ADSs) at an exercise price of $0.03 per share (or $3.00 per ADS) which expire on July 1, 2024 and warrants
to purchase additional 30,000,000 ordinary shares (equivalent to 300,000 ADSs) at an exercise price of $0.02 per share (or $2.20
per ADS) which expire on February 21, 2025. Pranabio Investments, LLC is a Texas limited liability company. Samir R. Patel is
the managing member and has sole voting and investment power with respect to the shares.
(3) Represents the holdings of Aspire Capital Fund, LLC and includes warrants to purchase 26,315,800 ordinary shares (equivalent to
263,158 ADSs) at an exercise price of $0.03 per share (or $3.00 per ADS) which expire on July 1, 2024 and warrants to purchase
additional 58,823,500 ordinary shares (equivalent to 588,235 ADSs) at an exercise price of $0.02 per share (or $2.20 per ADS)
which expire on March 3, 2025. Aspire Capital Partners LLC (“Aspire Partners”) is the Managing Member of Aspire Capital Fund,
LLC (“Aspire Fund”). SGM Holdings Corp (“SGM”) is the Managing Member of Aspire Partners. Mr. Steven G. Martin (“Mr.
Martin”) is the president and sole shareholder of SGM, as well as a principal of Aspire Partners. Mr. Erik J. Brown (“Mr. Brown”)
is the president and sole shareholder of Red Cedar Capital Corp (“Red Cedar”), which is a principal of Aspire Partners. Mr. Christos
Komissopoulos (“Mr. Komissopoulos”) is president and sole shareholder of Chrisko Investors Inc. (“Chrisko”), which is a principal
of Aspire Partners. Mr. William F. Blank, III (“Mr. Blank”) is president and sole shareholder of WML Ventures Corp. (“WML
Ventures”), which is a principal of Aspire Partners. Each of Aspire Partners, SGM, Red Cedar, Chrisko, WML Ventures, Mr. Martin,
Mr. Brown, Mr. Komissopoulos and Mr. Blank may be deemed to be a beneficial owner of ADSs by Aspire Fund. The principal
business office of Aspire Partners is 155 North Wacker Drive, Suite 1600, Chicago IL 60606. Each of Aspire Partners, SGM, Red
Cedar, Chrisko, WML Ventures, Mr. Martin, Mr. Brown, Mr. Komissopoulos and Mr. Blank disclaims beneficial ownership of the
ADSs held by Aspire Fund.
As at 31 December 2021 no other person had reported an interest of 3% or more in the Company’s ordinary shares.
3
AKARI THERAPEUTICS PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
CORPORATE GOVERNANCE
The Group is not required to implement the provisions of the UK Corporate Governance Code (the “Code”).
Regular board meetings are held and the Executive Directors are heavily involved in the day to day running of the business.
The Board of Directors meets regularly and is responsible for overseeing management, formulating strategy and
monitoring financial performance.
GOING CONCERN
The Group meets its day-to-day working capital requirements through funding. In assessing the Company’s ability to
continue as a going concern, Management has prepared financial forecasts covering at least the next twelve months from
the date of approval of the financial statements.
The Group’s forecast and projections, show that at present, the Group has insufficient working capital to fulfil its current
business plan without the Group raising additional capital.
We plan to raise additional funds from external sources and/or from Aspire Capital with which the Group has approximately
$22.0 million remaining of the total $30.0 million commitment to drawdown in the form of equity funding as of 4 June
2022. In our assessment, the remaining availability of funds under the Aspire facility, together with our expectation of the
Group’s ability to raise capital from other fundraising sources could extend the Group’s ability to fund operations into
December 2023 without any subsequent adjustment to the preliminary forecast. The Group currently intends to pursue
other external fundraising sources within the fiscal year 2021, although securing such fundraising is subject to uncertainty.
Therefore, based on the availability of funds under the Aspire facility, and ability to reduce both R&D and other
administrative expenditure costs significantly if so required, management believes the Group’s financial prospects are
sufficient to fund future operations for at least the next twelve months.
Ultimately, the Group will require additional capital in order to develop and commercialise our current product candidates
or any product candidates that we acquire, if any, particularly for the period beyond the next twelve months. There can be
no assurance that additional funds will be available when we need them on terms that are acceptable to us, or at all. If
adequate funds are not available on a timely basis, we may be required to terminate or delay development for one or more
of our product candidates.
These matters indicate the existence of conditions that give rise to a material uncertainty (specifically, the reliance on
fundraising, which is not guaranteed, to facilitate the Group's operating activities) which may cast significant doubt on the
Group's ability to continue as a going concern. Notwithstanding these uncertainties, the Directors have concluded that there
is a reasonable expectation that the Group has the ability to continue to raise such funding and therefore consider it
appropriate to prepare the financial statements on a going concern basis. The financial statements do not include any
adjustments to the carrying amounts and classifications of assets and liabilities that would result if the Group was unable
to continue as a going concern.
SUBSEQUENT EVENTS
Events occurring after the year end and required to be disclosed are detailed in note 20 of the notes to the financial
statements.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable
laws and regulations.
Company law requires the directors to prepare Group and Parent company financial statements for each financial year. Under
that law the directors have elected to prepare the Group and Parent company financial statements in accordance with
International Financial Reporting Standards (“IFRS”) as adopted by the United Kingdom. Under company law the directors
must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of
the Group and the Company and their profit or loss for that period.
The financial statements are required by law and IFRS as adopted by the United Kingdom to present fairly the financial
position and performance of the Group.
4
AKARI THERAPEUTICS PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
In preparing these financial statements the directors are required to:
•
•
•
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether they have been prepared in accordance with IFRS as adopted by the United Kingdom subject to any
material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and
the parent company will continue in business.
•
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time
the financial position of the Group and Parent company and to enable them to ensure that the financial statements comply
with the Companies Act 2006 and Article 4 of the IAS Regulation. They have general responsibility for taking such steps
as are reasonably open to safeguard the assets of the Group and Parent company and to prevent and detect fraud and
other irregularities.
The directors consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s performance, business model and strategy.
DISCLOSURE OF INFORMATION TO AUDITORS
Each of the directors at the time the report is approved confirms that, as at that time:
• so far as the director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and
•
the director has taken all steps that they ought to have taken as a director to make themselves aware of any relevantaudit
information and to establish that the Company’s auditors are aware of that information
This report was approved by the board on 5 June 2022 and signed on its behalf.
Rachelle Jacques
Director and Chief Executive Officer
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AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
REVIEW OF BUSINESS
We are a clinical-stage biopharmaceutical company focused on developing advanced therapies for autoimmune and
inflammatory diseases, specifically through the inhibition of the complement and leukotriene pathways. Each of these
systems has scientifically well-supported causative roles in the diseases we are targeting. We believe that blocking early
mediators of inflammation will prevent initiation and continual amplification of the processes that cause certain diseases.
Ticks have undergone 300 million years of natural selection to produce inhibitors that bind tightly to key highly-conserved
inflammatory mediators, are generally well tolerated in humans, and remain fully functional when a host is repeatedly
exposed to the molecule. Our molecules are derived from these inhibitors.
Our lead product candidate, nomacopan inhibits both terminal complement activation and leukotriene B4, or LTB4. It
inhibits terminal complement activation by tightly binding to C5 and preventing its cleavage and activation by complement.
It inhibits LTB4 by capturing the fatty acid within the body of the nomacopan protein. By preventing C5 activation of
complement nomacopan can stop formation of the anaphylatoxin C5a which activates cells, including granulocytes and T
and B cells, via two G protein coupled receptors, or GPCRs, and also prevents formation of the membrane attack complex,
or MAC which activates cells including endothelial cells. C5a and the MAC cause and maintain a proinflammatory and
prothrombotic state. LTB4 also activates cells via two separate GPCRs and can independently cause and maintain a
proinflammatory state. The importance of nomacopan’s dual inhibitory action is therefore twofold. First, it can prevent
inflammatory and prothrombotic activities of two key pathways, and second, the pathways can be independently activated,
for example terminal complement activation can be induced by IgG, IgM, carbohydrates and damage associated molecular
patterns and LTB4 synthesis can be induced by engagement of Fc gamma receptors, cytokines, toll-like receptors, C5a and
MAC.
Nomacopan is a recombinant small protein (16,769 Da) derived from a protein originally discovered in the saliva of the
Ornithodoros moubata tick, where it modulates the host immune system to allow the parasite to feed without alerting the
host to its presence or provoking an immune response.
Nomacopan has received orphan drug designation from the U.S. Food and Drug Administration, or the FDA, for
paroxysmal nocturnal hemoglobinuria, or PNH, high-risk hematopoietic stem cell transplant-associated thrombotic
microangiopathy, or HSCT-TMA, and bullous pemphigoid, or BP and from the European Medicines Agency, or the EMA,
for PNH, Guillain Barré Syndrome, or GBS and BP. Orphan drug designation provides us with certain benefits and
incentives, including a period of marketing exclusivity if marketing authorization of the drug is ultimately received for the
designated indication. The receipt of orphan drug designation status does not change the regulatory requirements or process
for obtaining marketing approval and the designation does not mean that marketing approval will be received. We intend
to apply in the future for orphan drug designation in additional indications we deem appropriate.
We have received Fast Track designation from the FDA for the investigation of nomacopan for the treatment of pediatric
HSCT-TMA and for the treatment of PNH in patients who have polymorphisms conferring Soliris® (eculizumab)
resistance and the treatment of BP. The Fast Track program was created by the FDA to facilitate the development and
expedite the review of new drugs which show promise in treating a serious or life-threatening disease and address an unmet
medical need. Drugs that receive this designation benefit from more frequent communications and meetings with the FDA
to review the drug’s development plan including the design of the proposed clinical trials, use of biomarkers and the extent
of data needed for approval. Drugs with Fast Track designation may also qualify for priority review to expedite the FDA
review process, if relevant criteria are met.
Our clinical targets for nomacopan are inflammatory diseases where the inhibition of both C5 and LTB4 are implicated,
including BP, pediatric HSCT-TMA, and as well as both orphan and mass market inflammatory conditions in the eye and
lung.
6
AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
RESULTS AND DIVIDENDS
Research and development expenses for the year ended 31 December 2021 were approximately $12,200,000 (2020:
$12,192,000). This represents an increase in research and development expenses of $8,000 reflecting similar research and
development expenditures to the prior year.
Administrative expenses for the year ended 31 December 2021 were approximately $8,274,000 (2020: $7,910,000). This
$364,000 increase was primarily due to unfavorable foreign currency movements.
Net cash used in operating activities for the year ended 31 December 2021 was approximately $18,847,000 (2020:
$16,951,000). Net cash flow used in operating activities was primarily attributed to our ongoing research activities to
support nomacopan, including manufacturing, clinical trial and preclinical activities.
Net cash provided by financing activities was approximately $14,293,000 (2020: $25,074,000).
Cash and cash equivalents increased to approximately $9,361,000 at 31 December 2021 (2020: $14,056,000).
The Group made a loss of approximately $17,702,000 (2020: $17,597,000). The loss for the Group is in line with the
expected performance and the Directors are satisfied with the results for the year.
No dividends were paid during the year (2020: $Nil) and the directors do not propose a final dividend.
PRINCIPAL RISKS AND UNCERTAINTIES
Financing
The Group requires additional funding to continue its future operations and planned research and development activities.
The directors recognise that the Group may not be able to obtain financing on favourable terms and the terms of the Group’s
finance arrangements may be dilutive. The Group may also seek additional funding through partnership arrangements with
collaborators and other third parties. These types of arrangements may require the Group to relinquish rights to internally
developed technology, product candidates or products. If the Group is unable to obtain additional funding on a timely basis,
the Group may be required to curtail or terminate some or all of its research or development programs, including some or
all of its product candidates. Additionally, the report of the Group’s statutory audit firm on its financial statements for the
period ended December 31, 2021, includes an explanatory paragraph raising substantial doubt about its ability to continue
as a going concern as a result of recurring losses from operations and net capital deficiency. The Group’s future is dependent
upon its ability to obtain financing in the future. This opinion could materially limit the Group’s ability to raise funds.
The Group plans to raise additional funds from external sources and/or from Aspire Capital. As of 4 June 2022, $22.0
million was available for drawdown under the Company’s equity line with Aspire Capital. The availability of funds under
the Aspire facility could extend the Company’s ability to fund operations into December 2023 without any subsequent
adjustment to the preliminary forecast. Furthermore, the Company currently intends to pursue other external fundraising
sources within the fiscal year 2022. There can be no assurance that additional funds will be available when the Group needs
them on terms that are acceptable, or at all.
Clinical development stage
The Company is an clinical development stage Group with limited history of trading on which future projections can be
based. There is no guarantee that the Group will succeed in growing its current business or that the Group will be able to
provideor maintain sufficient resources required for operations in the development and introduction of its products. Many
clinical development stage companies fail to achieve their business plans mainly due to lack of being able to estimate the
speed of new market entrants and the costs associated with entering markets and obtaining market share.
7
AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
PRINCIPAL RISKS AND UNCERTAINTIES (continued)
Drug development
The Group’s drug development activities are complex and all of the product candidates are in clinical development with a
high risk of failure. It is impossible to predict when or if any of the product candidates will prove effective or safe in
humans and/or will receive regulatory approval.
Further common challenges for similar companies and the Group is to:
• Find a stable active product or formulation without extensive clinical trials and substantial additional
costs or create adequate assay for the products for formulation or clinical testing purposes;
• Manufacture, and/or formulate sufficient amounts of its product candidates or upscale or optimise such
synthesis so as to enable efficient production of scale;
• Find safe and effective doses and dose ratios for its product candidates without extensive clinical trials
and substantial additional costs;
• Obtain sufficient supply or quality of product candidates supply or materials to produce product
candidates or other materials necessary to conduct clinical trials; and
• Establish manufacturing capabilities or enter into agreements with third parties to supply materials to
make product candidates, or manufacture clinical trial drug supplies.
Departure of and search for executive officers
The Group’s success depends on its ability to hire and retain the services of its current executive officers, directors, principal
consultants and others. In addition, the Group has established relationships with universities and research institutions which
have historically provided, and continue to provide, us with access to research laboratories, clinical trials, facilities and
patients. The loss of the services of any of these individuals or institutions has had and could have a material adverse effect
on the Group’s business. Dr. Torsten Hombeck was appointed to serve as the Company’s Chief Financial Officer in June
2020. Rachelle Jacques was appointed President and Chief Executive Officer and member of the Company’s board on
March 28, 2022 and, in a planned transition, replaced Clive Richardson who was appointed to serve as the Company’s
Chief Executive Officer in May 2018.
Retention of key management staff is an underlying risk of the business.
Market acceptance
The Group is not guaranteed that any of its product candidates will gain market acceptance amongst physicians, patients,
healthcare providers, pharmaceutical companies or other customers.
The Group’s clinical trials in humans may show that the doses or dose ratios selected based on screening, animal testing
or clinical trials do not achieve the desired therapeutic result in humans, or achieve these results only in a small part of the
population. The U.S. Food and Drug Administration (“FDA”) or other regulatory agencies in the United States and foreign
jurisdictions may determine that these clinical trials do not support the Group’s conclusion. The Group may be required
to conduct additional clinical studies and provide more evidence substantiating the safety and efficacy of the doses or dose
ratios selected in a significant patient population.
8
AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
PRINCIPAL RISKS AND UNCERTAINTIES (continued)
Intense competition from powerful competitors
Many companies, universities and research organisations developing product candidates have greater resources and
significantly greater experience in financial, research and development, manufacturing, marketing, sales, distribution and
technical regulatory matters than the Group has. These competitors could commence and complete clinical testing of their
products, obtain regulatory approval, and begin commercial-scale manufacturing of their products faster than the Group is
able to, thus resulting in a situation whereby the Group may not be able to commercialise its product candidates or achieve
a competitive position in the market.
Product liability exposure
The Group faces exposure to product liability and other claims if its product candidates, products or processes are alleged
to have caused harm. These risks are inherent in testing, manufacturing, and marketing human therapeutic products. If the
Group is sued for any injury caused by its products, product candidates or processes, the Group’s liability could exceed its
product liability insurance coverage and its total assets. Claims against the Group, regardless of their merit or potential
outcome, may also generate negative publicity or damage the Group’s ability to obtain physician endorsement of its
products or expand its business.
Intellectual Property
The Group may be unable to protect the intellectual property relating to its product candidates, or if it infringes the rights
of others, its ability to successfully commercialise its product candidates may be harmed. The Group owns or hold licenses
to a number of issued patents (foreign and foreign counterparts) and pending patent applications. The Group’s success
depends in part on its ability to obtain patent protection both in the United States and in other territories for its product
candidates, as well as the methods for treating patients in the product indications using these product candidates. The
Group’s ability to protect its product candidates from unauthorised or infringing use by third parties depends in substantial
part on its ability to obtain and maintain valid and enforceable patents. Due to evolving legal standards relating to the
patentability, validity and enforceability of patents covering pharmaceutical inventions and the scope of claims made under
these patents, the Group’s ability to obtain, maintain and enforce patents is uncertain and involves complex legal and factual
questions. Even if the Group’s product candidates, as well as methods for treating patients for prescribed indications using
these product candidates are covered by valid and enforceable patents and have claims with sufficient scope, disclosure
and support in the specification, the patents will provide protection only for a limited amount of time. Accordingly, rights
under any issued patents may not provide the Group with sufficient protection for a commercial advantage against
competitive products or processes
Impact of Coronavirus Outbreak
The situation surrounding the COVID-19 pandemic, including the mutation of variants, continues to remain fluid globally
and we continue to manage ongoing challenges associated with the pandemic as they relate to operations. The potential for
a material impact on our business, financial condition and results of operation remains a risk. We cannot reasonably
estimate with any degree of certainty any future impact of COVID-19. Pandemics such as this can adversely impact our
business as a result of disruptions, such as travel bans, quarantines, staffing shortages, and interruptions to access the trial
sites and supply chains, which could result in material delays and complications with respect to our research and
development programs and clinical trials.
Moreover, as a result of COVID-19, there is a general unease of conducting certain non-critical activities in medical centers.
For example, while now open for enrollment, our clinical trials have previously been halted or delayed due to COVID-19.
The extent to which COVID-19 impacts operations will depend on future developments, including the scope of any new
virus mutations and outbreaks, the nature of government public health guidelines and the public’s adherence to those
guidelines, the rate of individuals becoming fully vaccinated and the public’s adherence to guidelines to receive booster
vaccinations, and the extent to which new lockdowns may be needed or are required in particular countries, including
China. In particular, the continued spread of COVID-19 globally could adversely impact our operations and workforce,
including research and clinical trials and the ability to raise capital, could affect the operations of key governmental
agencies, such as the FDA, which may delay the development of our product candidates, and could result in the inability
of suppliers to deliver components or raw materials, including drug product and drug substance, on a timely basis or at all,
each of which in turn could have an adverse impact on our business, financial condition and results of operation.
9
AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
FINANCIAL INSTRUMENTS
The Group finances its operations using cash generated by the sale of equity instruments in the Group. The cash flow of
the Group is monitored on a regular basis to ensure the Group has sufficient funding to meet its capital and operational
requirements.
RESEARCH AND DEVELOPMENT
The Group is a clinical-stage biopharmaceutical company focused on developing advanced therapies for autoimmune and
inflammatory diseases, specifically through the inhibition of the complement and leukotriene pathways. Each of these
systems has scientifically well-supported causative roles in the diseases the Group is targeting.
KEY PERFORMANCE INDICATORS
The directors consider the key performance indicators to be the research and development spend. This allows the Directors
to manage the on-going activities and strategies for further development of the Group.
The key performance indicators are measured and reviewed on a regular basis at Board meetings and enable the Directors
to communicate the performance of the Group against predetermined targets.
Key financial performance indicators:
Research and Development spend – 2021: $12,200,000 (2020: $12,192,000)
Cash and cash equivalents position – 2021: $9,361,000 (2020: $14,056,000)
SECTION 172 STATEMENT
When making decisions, the Directors of Akari Therapeutics, Plc (“Akari” or the “Company”) act in the way they consider
is most likely to promote the success of the Company, for the benefit of its members as a whole, while also considering the
broad range of stakeholders who interact with the business.
Our strategy is to develop and commercialize advanced therapies for autoimmune and inflammatory diseases.
In striving to achieve our goal to develop new therapeutic medicines, our business touches the lives of many people. We
exist in a complex and evolving regulatory and scientific environment and as a result we have a number of key stakeholder
groups. Considering the interests of our stakeholders is fundamental to the way in which the Company operates. Our Values
and Code of Ethics empower employees to make the best decisions in the interest of the Company and our stakeholders,
and help to ensure that these considerations are made not only at Board level, but throughout our organization.
Post the reporting period end, the directors of the Company (“Directors”) have continued to take into account the
Company’s stakeholders, including the potential impact of its future activities on the community, the environment and the
Company’s reputation when making decisions. The Directors also continue to take all necessary measures to ensure the
Company is acting in good faith and fairly between members and is promoting the success of the Company for its members
in the long term.
The table below serves as our Section 172 statement by setting out the key stakeholder groups, their interests and how the
Company engages with them. Akari’s key stakeholders include its investors, employees, regulatory bodies and suppliers.
10
AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
Stakeholder
Our Investors
Our Employees
Regulatory bodies
Why we engage
How we engage
The Board
and management
maintain a regular and constructive
dialogue with existing and potential
the
investors
Company’s
and
performance to promote investor
confidence and ensure continued
access to capital.
to communicate
strategy
Akari employees are key to the
Company’s success and to the
achievement of business objectives.
responsible
to be a
We aim
to
employer
in our approach
engagement,
employee
development, performance
and
rewards. The health, safety and
well-being of our employees is one
of our primary considerations in the
way we do business. Employee
engagement is led primarily by the
CEO, Executive Team
and
Chairman.
regulations,
and
including
Akari is subject to a wide range of
listing
laws,
requirements
the
regulatory framework from FDA,
EMA
regulatory
agencies, the SEC, data protection,
employment,
tax, environmental
and health and safety legislation.
other
and
• Annual General Meetings
• Quarterly financial results
• One-to-one meetings by
Management with analysts and
institutional investors
• Investor outreach programs
including attending virtual and
in-person conferences, events
and roadshows
• Press releases
• Company website
• Social media (e.g. LinkedIn,
Twitter)
• Market competitive
compensation and benefits
aligned with role and overall
performance
• Individual development
through external conferences
and training opportunities
• Communication channels
between the Board, Executive
Team and Akari employees
• Company website
• EDGAR announcements
• Annual Report
• Direct contact and
communications with
regulators
• Compliance updates at Board
Meetings
11
AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
Stakeholder
Our Suppliers
Why we engage
How we engage
We have several key suppliers with
strong
whom we have built
relationships. We
establish
communication channels to ensure
our working relationship remains
collaborative
–
and
focused, and to create a successful
and fair collaboration.
forward
• Building strong working
relationships with suppliers
through open two-way
discussions and regular
meetings.
• Executing contracts that guide
expectations of both Akari and
the suppliers
This report was approved by the Board on 5 June 2022 and signed on its behalf.
Rachelle Jacques
Director and Chief Executive Officer
12
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
PART I - ANNUAL REPORT ON REMUNERATION
Information provided in this section of the Directors’ Remuneration report is subject to audit.
Single Total Figure of Remuneration for Each Director (subject to audit)
The following table shows the compensation paid or accrued during the fiscal year ended 31 December 2021.
Name of
Director
Salary
and/or
Fees ($)
Taxable
Benefits
($)
Annual
Bonus
($)(4)
Long-
term
Incentive
($)
Option
Awards
($)(1)
Pension
Benefits
($)
2021
Total
2021
Total
Fixed
2021
Total
variable
Executive Director
Ray Prudo
412,000
-
206,000
-
-
-
618,000 412,000
206,000
Clive Richardson
(5)
525,981
12,218
(3)
206,826
52,598
(2)
797,623 590,797
206.826
Non-Employee Director
James Hill, M.D.
62,752
Stuart Ungar,
M.D.
49,947
David Byrne
52,143
Donald Williams
56,838
Peter
Feldchreiber
Michael
Grissinger
49,947
39,338
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,547
13,547
13,547
13,547
13,547
13,547
-
-
-
-
-
-
76,298
76,298
63,494
63,494
65,689
65,689
70,385
70,385
63,494
63,494
52,885
52,885
-
-
-
-
-
-
(1) These amounts represent the aggregate grant date fair value for option awards for fiscal year 2021 computed in accordance with FASB ASC Topic
718. A discussion of the assumptions used in determining grant date fair value may be found in note 16 to our Financial Statements.
(2) Consists of company contributions to pension scheme.
(3) Consists of company contributions to health benefits of $8,030 and life insurance premiums of $4,188
(4) Bonuses are awarded on the basis of an assessment of the overall performance of the director concerned, rather than specific measures or targets. In
respect of 2021, the annual bonus payments for the Executive Directors reflect their strong personal performance at a critical time for the business. Ray
Prudo and Clive Richardson both received annual bonus payments of 100% of the maximum available respectively, of which 100% was paid in the first
quarter of 2022. None of the awards is attributable to share price appreciation and no discretion was exercised as a result of share price appreciation or
depreciation.
(5) Mr. Richardson resigned as Chief Executive Officer and Chief Operating Officer in March 2022.
13
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
The following table shows the compensation paid or accrued during the fiscal year ended 31 December 2020.
Name of
Director
Salary
and/or
Fees ($)
Taxable
Benefits
($)
Annual
Bonus
($)(4)
Long-
term
Incentive
($)
Option
Awards
($)(1)
Pension
Benefits
($)
2019
Total
2019
Total
Fixed
2019
Total
variable
Executive Director
Ray Prudo
412,000
-
206,000
Clive
Richardson
503,941
11,648
(3)
214,960
Non-Employee Director
James Hill,
M.D.
62,752
Stuart Ungar,
M.D.
49,947
David Byrne
52,143
Donald
Williams
Peter
Feldchreiber
Michael
Grissinger
56,838
49,947
39,338
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
618,000
412,000
206,000
50,394
(2)
780,942
565,983
214,960
19,611
19,611
19,611
19,611
19,611
19,611
-
-
-
-
-
-
82,363
82,363
69,558
69,558
71,754
71,754
76,499
76,449
69,558
69,558
58,949
58,944
-
-
-
-
-
-
(1) These amounts represent the aggregate grant date fair value for option awards for fiscal year 2020 computed in accordance with FASB ASC Topic
718. A discussion of the assumptions used in determining grant date fair value may be found in note 16 to our Financial Statements.
(2) Consists of company contributions to pension scheme.
(3) Consists of company contributions to health benefits of $7,288 and life insurance premiums of $4,360.
(4) Bonuses are awarded on the basis of an assessment of the overall performance of the director concerned, rather than specific measures or targets. In
respect of 2020, the annual bonus payments for the Executive Directors reflect their strong personal performance at a critical time for the business. Ray
Prudo and Clive Richardson both received annual bonus payments of 100% of the maximum available respectively, of which 100% was paid in the first
quarter of 2021. None of the awards is attributable to share price appreciation and no discretion was exercised as a result of share price appreciation or
depreciation.
.
14
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
Incentive Plan Awards (subject to audit)
Akari operates an equity incentive plan (the 2014 Equity Incentive Plan, or 2014 Plan) under which directors receive
options to acquire ordinary shares in Akari. Options awards granted during the fiscal year ended 31 December 2021 are
as follows:
Name of Director Option
Grant Date
Awards (1)
Exercise
Price
Face Value
($) (2)
Option
Vesting Date
Option
Expiry Date
James Hill
1,300,000
30/06/21
$0.0173
$22,490
30/06/22
30/06/31
Stuart Ungar
1,300,000
30/06/21
$0.0173
$22,490
30/06/22
30/06/31
David Byrne
1,300,000
30/06/21
$0.0173
$22,490
30/06/22
30/06/31
Donald Williams
1,300,000
30/06/21
$0.0173
$22,490
30/06/22
30/06/31
Michael Grissinger
1,300,000
30/06/21
$0.0173
$22,490
30/06/22
30/06/31
Peter Feldschreiber
1,300,000
30/06/21
$0.0173
$22,490
30/06/22
30/06/31
(1) Option awards are subject to time-based vesting without performance measures or targets other than continued service until the date of vesting.
(2) These amounts represent the face value for option awards, calculated as the number of shares awarded (assuming full vesting) multiplied by the price
per share implied by the market price per ADS, which is equal to the stated exercise price.
Director’s shareholdings (subject to audit)
The table below shows, for each director, the total number of ordinary shares owned (by the director and connected
persons), the total number of those share options that were held and the number of share options vested as at 31 December
2021. All share options are subject to time-based vesting without performance measures or targets other than continued
service until the date of vesting. No director exercised any share options during the year ended 31 December 2021.
Name of Director
Ordinary Shares Owned
Share Options
Vested Share Options (1)
Executive Director
Ray Prudo (2)
Clive Richardson
Non-Employee Director
James Hill
Stuart Ungar
David Byrne
Donald Williams
Michael Grissinger
Peter Feldschreiber
871,186,700
-
-
40,771,850
35,771,850
9,100,000
9,100,000
9,100,000
9,850,000
6,500,000
6,500,000
7,800,000
7,800,000
7,800,000
8,550,000
4,875,000
4,875,000
10
-
20
-
-
-
-
15
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
(1) All share options that were outstanding as at 31 December 2021 use time-based vesting and are not subject to performance targets other than continued
service until the date of vesting. None of the options have been exercised.
(2) Represents the entire holdings of RPC Pharma Limited, Praxis Trustees Limited As trustee of The Sonic Healthcare Holding Company and Dr. Ray
Prudo and includes warrants to purchase 9,210,500 ordinary shares (equivalent to 92,105 ADSs) at an exercise price of $0.03 per share (or $3.00 per
ADS) which expire on July 1, 2024 and warrants to purchase 7,500,000 ordinary shares (equivalent to 75,000 ADSs) at an exercise price of $0.02 per
share (or $2.20 per ADS) which expire on February 21, 2025. Dr. Prudo has voting and dispositive control over the ordinary shares held by RPC Pharma
Limited and owns approximately 67.8% of RPC’s outstanding shares (including option grants), including 10.6% of RPC’s outstanding shares held in
trust for Dr. Ungar. Dr. Prudo disclaims beneficial ownership except to the extent of his actual pecuniary interest in such shares.
The remainder of this Directors’ Remuneration Report is not subject to audit.
Illustration of Total Shareholder Return
The following graph compares the cumulative total shareholder return on Akari’s ADSs, each representing 100 ordinary
shares, with that of the Nasdaq Biotech Index from the period that Akari’s ADSs were publicly traded on The Nasdaq
Capital Market through 31 December 2021. Akari selected the Nasdaq Biotech Index because Akari’s ADSs trade on The
NASDAQ Capital Market and Akari believes this indicates its relative performance against a group consisting of more
similarly situated companies.
16
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
Chief Executive Total Remuneration History
The table below sets out total remuneration details for the Chief Executive Officer.
Period
Annual Bonus
($)
Single total
figure of
remuneration
($)
Short-term
incentive
payout against
maximum (1)
Option Award
($)
2021 Clive Richardson (3)
2020 Clive Richardson
2019 Clive Richardson (4)
2018 (David Solomon) (5)
2017 (Gur Roshwalb and
David Solomon) (5)
2016 (Gur Roshwalb)
2015 (Gur Roshwalb)
2014 (Gur Roshwalb)
2013 (Gur Roshwalb) (6)
2012 (7)
525,981
503,941
432,408
173,611
1,338,253
581,250
7,306,951
410,564
576,389
-
208,826
214,960
177,028
-
119,041 (8)
187,500
86,625
-
-
-
-
-
-
-
100% (9)
125% (10)
100% (11)
-
-
-
-
-
-
-
-
-
6,863,034
60,564
173,396
-
Option
Awards
against
maximum (2)
-
-
-
-
-
-
-
-
-
-
(1) All cash bonuses to Clive Richardson were awarded on a discretionary annual basis.
(2) All options were awarded on a discretionary basis.
(3) Clive Richardson resigned as Chief Executive Officer and Chief Operating Officer in March 2022.
(4) Clive Richardson was appointed Interim Chief Executive on 8 May 2018 and Chief Executive Officer on 18 July 2019.
(5) Dr. Roshwalb resigned as Akari’s Chief Executive Officer on 29 May 2017 and David Solomon was appointed as Akari’s Chief Executive Officer
on 28 August 2017 and resigned 8 May 2018.
(6) Dr. Roshwalb was appointed as Akari’s Chief Executive Officer on 4 March 2013.
(7) Akari was not a quoted company in 2012.
(8)
Includes a $50,000 signing bonus.
(9) Bonus was awarded in 2017 but calculated from Dr. Solomon’s appointment on 28 August 2017.
(10) Bonus was awarded in 2016 but calculated for a 15-month period from the date of the acquisition of Volution Immuno Pharmaceutical SA on 18
September 2015.
(11) Bonus was awarded in 2015 but calculated for a 9-month period until the date of the acquisition of Volution Immuno Pharmaceutical SA on 18
September 2015.
Directors’s Remuneration Compared to Other Employees
The table below shows the percentage change in remuneration of each director and the parent company’s non-director
employees on a full-time equivalent basis between the year ended 31 December 2020 and the year ended 31 December
2021.
Executive Director
Ray Prudo
Clive Richardson
Non-employee Director
James Hill, M.D.
Stuart Ungar, M.D.
David Byrne
Donald Williams
Peter Feldschreiber
Michael Grissinger
Other Employees
Change in Remuneration in year ended 31 December 2021 compared with
remuneration in the year ended 31 December 2020
Salary and/or Fees
Taxable Benefits
Annual Bonus
0%
4%
-
-
-
-
-
-
11%
17
5%
-
-
-
-
-
-
44%
0%
-4%
-
-
-
-
-
-
25%
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
Relative Importance of Spend on Pay
The following table sets forth the total amounts spent by the Company on remuneration for the year ended 31 December
2021 and the year ended 31 December 2020. Given that Akari remains in the early phases of its business life cycle, the
comparator chosen to reflect the relative importance of Akari’s spend on pay is Akari’s research and development costs
for the year ended 31 December 2021.
Period
Total spend on remuneration
Shareholder distributions
Research and development costs
Year Ended
31 December 2021
($)
3,852,268
-
12,198,000
Year Ended
31 December 2020
($)
3,505,737
-
12,241,000
Implementation of remuneration policy for year ending 31 December 2021
Our director compensation program is administered by our board of directors with the assistance of the compensation
committee. The compensation committee conducts an annual review of director compensation and makes recommendations
to the board with respect thereto.
The shareholders approved our Directors Remuneration Policy on June 30, 2021 to provide a framework for the Directors’
compensation packages. In addition, the Company has a non-employee director compensation policy, which was amended
and restated on November 19, 2015 and was subsequently amended on June 29, 2016, January 26, 2017, January 23, 2018,
January 8, 2019 and on January 9, 2020. The Company does not intend to make any significant changes in the way that the
Directors Remuneration Policy will be implemented in 2022 compared to how it was implemented in 2021 and does not
expect any deviations from the procedure for the implementation of the Directors Remuneration Policy set out in the policy.
On December 7, 2020, our Compensation Committee resolved that the cash compensation and committee membership fees
for the fiscal year 2021 would remain the same as they were for 2020. As a result, our non-employee directors will be
compensated for service on our board of directors as follows in 2021:
an annual retainer for service on the board of directors of $39,338;
an annual retainer for service as a member of the compensation committee and nominating and
governance committee of $5,305;
an annual retainer for service as a member of the audit committee of $7,500;
for the chairman of the compensation committee, and nominating and governance committee, an annual
retainer of $10,609;
for the chairperson of the audit committee, an annual retainer of $17,500;
The following table presents the increases in compensation (board fees and/or salaries) agreed for the upcoming fiscal year
(with the agreed increases for the year ended 31 December 2021 presented as comparative information)
18
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
Director
Executive Director
31
December
2020
31
December
2021
Increase %
31
December
2021
31
December
2022(1)
Increase %
Ray Prudo
$412,000
$412,000
Clive Richardson(2)
£382,306
£382,306
Rachelle Jacques(3)
Non-Employee Director
James Hill, M.D.
$62,752
$62,752
Stuart Ungar, M.D.
$49,947
$49,947
David Byrne
$52,143
$52,143
Donald Williams
$56,838
$56,838
Peter Feldschreiber
$39,338
$39,338
Michael Grissinger
$49,947
$49,947
0%
0%
0%
0%
0%
0%
0%
0%
$412,000
$412,000
£382,306
£382,306
$600,000
$62,752
$62,752
$49,947
$49,947
$52,143
$52,143
$56,838
$56,838
$39,338
$39,338
$49,947
$49,947
0%
0%
0%
0%
0%
0%
0%
0%
(1) All figures are estimates. Additional discretionary bonuses may be awarded in accordance with contractual entitlement and the remuneration policy.
(2) Mr. Richardson resigned as Chief Executive Officer and Chief Operating Officer in March 2022. His annual base compensation of £382,306 will
be pro-rated.
(3) Ms. Jacques was appointed as our Chief Executive Officer in March 2022. Her annual base compensation of $600,000 will be pro-rated.
Compensation Committee Approach to Remuneration Matters
The Compensation Committee is comprised of Dr. James Hill (Chairman), Dr. Stuart Ungar, and Mr. David Byrne. Dr.
James Hill, as Chairman of our Compensation Committee, reports, in respect of 2021, that the annual bonus payments for
the Executive Directors reflect their strong personal performance at a critical time for the business. Ray Prudo and Clive
Richardson both received annual bonus payments of 100% of the maximum available respectively, of which 100% was
paid in the first quarter 2022. For the year ending 31 December 2021, our Compensation Committee resolved that the cash
compensation and committee membership fees of Non-Executive Directors would remain the same as they were for 2020
to reflect the developmental stage of the Company. All members have continued to serve until the date of this Directors’
Remuneration Report. The charter of the Committee is set forth on Akari’s website at http://www.akaritx.com. No person
other than a member of the Compensation Committee provided to the Committee advice, or services, that materially
assisted the Committee in their consideration of matters relating to the directors’ remuneration for 2021 or remuneration
issues during the consideration of an individual’s nomination as a director.
Akari is committed to ongoing shareholder dialogue and the Compensation Committee takes an active interest in
shareholder views and voting outcomes.
In respect of the last resolution to approve the Directors’ Remuneration Report at the 2020 AGM, of the 1,055,203,832
votes cast in respect of the above resolution 1,023,958,776 votes were in favour of this resolution, 12,885,200 votes were
against and 18,359,856 votes abstained.
In respect of the last resolution to approve the Directors’ Remuneration Policy at the 2020 AGM, of the 1,055,203,832
votes cast in respect of the above resolution 955,625,587 votes were in favour of this resolution, 18,166,700 votes were
against and 81,411,545 votes abstained.
19
AKARI THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
PART II - DIRECTORS’ REMUNERATION POLICY
INFORMATION PROVIDED IN THIS SECTION OF THE DIRECTORS’ REMUNERATION REPORT IS
NOT SUBJECT TO AUDIT.
This section sets out the Directors’ Remuneration Policy (“Policy”) of Akari Therapeutics, Plc (“Akari”), which was
approved by shareholders at the 20 20 Annual General Meeting of Shareholders (“AGM”). The Policy provides Akari’s
compensation framework from the date of its approval at the AGM and for a period of three years thereafter, unless changes
to the Policy are required earlier and a new Policy is put to shareholder vote.
For the avoidance of doubt, in approving the Directors’ remuneration policy, authority is given to Akari to honour any
commitments entered into with current or former Directors (such as the payment of a pension, fees or the vesting/exercise
of past share option awards) for the periods for which they apply.
Akari’s remuneration policy seeks to provide compensation packages which will attract, motivate, reward and retain an
executive team with the right calibre of talent, experience, and skills to lead a successful future for Akari. Akari’s
compensation framework is designed to provide a competitive package in comparison to companies of similar size,
complexity, maturity profile and geographic presence. Elements of compensation packages which are subject to
performance conditions as noted in the Group’s remuneration policy may include key performance indicators (KPIs), both
financial and non-financial, which are an important component of the information needed to explain a company’s progress
towards its stated goals. Other elements which are not subject to performance measures are considered an important
component of attracting and retaining UK resident employees, including Executive Directors.
The table below sets out the main elements of Akari’s remuneration policy for its Executive Directors and seeks to explain
how each element of the compensation package operates:
Policy table – Executive Directors
Element
Base salary
Purpose and link
to strategy
Support the
recruitment and
retention of
Executive officers
Pension
Encourages
and
enables executives
to build savings for
their retirement
Operation
Maximum opportunity
• Base salary levels are
set taking into
account the role,
responsibilities and
individuals
experience in the
position, performance
of the individual and
Akari.
• Base salaries are
typically reviewed
annually
• There is no prescribed
maximum increase nor
any requirement to
increase salary at any
time.
• By exception, higher
increases may be made
to reflect individual
circumstances. These
may include significant
changes in the job size
or complexity and/or
promotion.
Performance metrics
and
recovery
provisions
• None, although
overall performance
of the individual is
considered when
setting and reviewing
salaries.
• No provisions for
recovery or
withholding of sums
as this is not
performance-related.
• Akari typically
• Currently up to 10% of
• None.
salary per annum.
makes contributions
to pension plans (or
retirement savings
plans) to match
prevailing local
market practices.
• No provisions for
recovery or
withholding of sums
as this is not
performance-related.
20
AKARI THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
Other Benefits
market
Provide
competitive
benefits in a cost-
effective way
Bonus
To
the
reward
delivery of annual
targets as well as to
recognise
the
individual
contributions
towards our key
strategic
achievements
• No prescribed
• None.
maximum. The cost of
benefits will vary from
year to year in
accordance with the
cost of insuring such
benefits.
• No provisions for
recovery or
withholding of sums
as this is not
performance-related.
The maximum annual
bonus payable for any
financial year is capped at
100% of salary, although
the Compensation
Committee reserves the
right to vary this amount
in exceptional
circumstances.
• Where performance
conditions are
attached to a bonus
payment, targets are
either fixed
contractually or
selected by the
Compensation
Committee and set
annually and can
include key financial,
operational and/or
individual objectives.
All assessments of
performance against
target is made by the
Compensation
Committee in its sole
discretion.
• No provisions for
recovery or
withholding of sums
as the performance
measures are
considered adequate.
• Provisions include
medical insurance,
life assurance,
permanent health
insurance, etc.
• In exceptional
circumstances, such
as the relocation of
an executive or for a
new hire, additional
benefits may be
provided in the form
of relocation
allowance and
benefits.
• Other benefits may
be offered if
considered
appropriate and
reasonable by the
Compensation
Committee.
• Any bonus is paid in
cash typically within
60 days after the end
of the financial year
to which it relates.
• Performance
objectives and targets
are either fixed
contractually or set
annually and actual
payout levels are
determined after the
year end, based on
performance against
targets subject to
overriding discretion
of the Compensation
Committee.
21
AKARI THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
Equity incentive plan
(2014 Equity Incentive
Plan)
To motivate and
reward long-term
performance in
alignment with the
shareholder interests
and value-creation
• Awards may be
• There is no
• Where
made periodically
to Executive
Officers in the
form of options or
in shares including
stock appreciation
rights, phantom
stock awards or
stock units.
• Awards typically
vest over three or
four years and
may be subject to
phased vesting.
specific maximum
set for annual
equity awards.
When making
awards, the
Compensation
Committee will take
into account internal
grant guidelines,
which have been set
in reference to local
market norms.
performance
conditions are
attached to an
award, these
typically include
key financial,
operational and/or
individual
objectives subject
to overall
Compensation
Committee
discretion.
• No provisions for
recovery or
withholding of
sums as the
performance
measures are
considered
adequate.
CSOP (UK resident
employees
and
directors only)
• Executives are
• Grant value of
• None.
£30,000 or local
market rules as
amended from
time to time.
eligible to
participate in the
all-employee
CSOP Plan under
the same
conditions as all
other employees.
• No provisions for
recovery or
withholding of
sums as this is not
performance-
related.
Policy table – Non-Executive Directors
Akari’s non-employee compensation policy is administered by its board of directors with the assistance of the
Compensation Committee. The Compensation Committee periodically reviews non-employee director compensation
policy and makes recommendations to the board.
Non-Executive Directors typically receive an annual retainer paid in cash for their service (depending on their additional
membership and chairman responsibilities) and an annual grant of stock options but do not participate in the bonus plan to
which Executive Officers are eligible, nor do they typically receive any other performance related payment. There are no
elements of the non-employee director compensation policy which are subject to performance conditions given the
necessity to maintain directors’ independence and board effectiveness in corporate governance, and accordingly there are
no provisions for recovery or withholding of sums.
22
AKARI THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
The table below sets out some of the features of Akari’s current non-employee director compensation policy:
Element
Purpose and link to
strategy
Operation
Maximum
opportunity
Performance
metrics
Annual
Retainer Fee
Cash
Support the
recruitment and
retention of Non-
Executive Directors
• None.
• There is no
prescribed
maximum increase
nor any
requirement to
increase board fees
at any time.
• Each Non-
Executive Director
serving on the
Board receives an
annual cash
retainer, with
additional amounts
payable for acting
as a chairman or a
member of various
committees.
• In addition, the
Chairman receive
an additional cash
retainer.
• Annual cash
retainers are
typically payable
on a quarterly
basis with the
exception of the
Executive
Chairman who is
paid monthly.
• A Non-Employee
Director may elect
to receive annual
cash payments in
the form of fully-
vested ordinary
shares.
23
AKARI THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
Share Options
Strengthens the
alignment to
shareholders’
interests through
share ownership
• Normal initial
• None.
grant and annual
grant of share
options will be
equal to 1,300,000
(or equivalent
value of ADS) but
the Committee
reserves the
discretion to
review and amend
this amount.
• Directors typically
receive an annual
grant of options in
the form of market
value options
under the 2014
Equity Incentive
Plan.
• These awards
typically vest in
full on the date of
the next AGM
following the date
of grant, subject to
the Non-Executive
Director’s
continued service
on the Board, have
a term of 10 years
from date of grant,
and vesting
accelerates in the
case of a change of
control.
The foregoing is qualified in its entirety by Akari’s current non-employee director compensation policy, as may be amended
from time to time.
Approach to recruitment compensation
Akari’s policy is to pay a fair remuneration package for the role being undertaken and the experience of the individual to
be appointed.
Akari expects remuneration packages for Executive Directors to include base salary, targeted level of annual cash incentive,
initial and ongoing equity-based awards, standard benefits and special provisions tailored to the recruiting situation, such
as: sign-on bonus, reasonable relocation support and make-whole awards for remuneration forfeited from a prior employer
(whether on account of cash bonuses, share awards, pension benefits or other forfeited items). The Compensation
Committee retains the discretion to provide additional cash, share based payment, benefits and other remuneration where
necessary or useful to recruit new Executive Directors or to secure the ongoing service of existing Executive Directors.
The remuneration package for any new Non-Executive Director will be set in accordance with the terms of Akari’s non-
employee director compensation policy then in effect. Akari expects remuneration packages for Non-Executive Directors
to include an annual retainer paid in cash for their service (depending on their additional membership and chairman
responsibilities) and an annual grant of stock options. Non-Executive Directors do not participate in the bonus plan to
which Executive Directors are eligible, nor do they typically receive any other performance related payment.
24
AKARI THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
Director’s service contracts
Akari’s board of directors is divided into three classes for purposes of election (Class A Directors, who serve a one year
term before being subject to re-election at Akari’s annual general meeting; Class B Directors, who serve a two year term
before being subject to re-election at the annual general meeting; and Class C Directors who serve a three year term before
being subject to re-election at the annual general meeting, provided also that in any two year period, a majority of the board
must stand for re-election).
It is the Company’s policy that Executive Directors should have contracts with an indefinite term. Directors’ notice periods
are set by the compensation committee, having regard to the need to attract and retain talent, ensure an orderly succession
and enable the Company to manage its personnel while avoiding excessive costs. Service contracts are available for
inspection at Akari’s registered office or 75/76 Wimpole Street London W1G 9RT.
Policy on Payments for Loss of Office
Akari’s approach to payments to Executive Directors in the event of termination is to take account of the individual
circumstances including the reason for termination, individual performance, contractual obligations and the terms of any
option award.
Generally, Akari employment arrangements for Executive Directors include a notice provision and continuing payment
obligations as per the individual Executive Director service contracts following termination by Akari of an Executive
Director without cause or termination by the Executive Director for good reason or change of control. Payment obligations,
if any, include base salary, benefits, and all or some portion of target annual cash remuneration. Akari may offer payment
in lieu of notice if it is considered to be in the best interests of Akari.
Treatment of unvested outstanding equity awards will be determined according to the specific nature of termination,
individual contracts, and plan rules.
The Compensation Committee reserves the right to make payments it considers reasonable under a compromise or
settlement agreement, including payment or reimbursement of reasonable legal and professional fees, and any payment or
compensation (in whatever form) in respect of statutory rights under employment law in the US, UK or other jurisdictions.
Payment or reimbursement (in whatever forms) of reasonable outplacement fees may also be provided.
25
AKARI THERAPEUTICS PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
Other relevant information considered
As appropriate, the Compensation Committee considers the pay and conditions of the broader employee workforce, as well
as the Consumer Price Index and Retail Price Index, when making compensation related decisions for the Directors. The
Compensation Committee does not consult employees, other than Executive Directors, when drafting the Directors’
remuneration policy.
The Compensation Committee also considers shareholder feedback, so far as it relates to compensation, when reviewing
of the appropriateness of its Policy. In addition, the Compensation Committee considers potential conflicts of interest and
directors do not have sole discretion over their own remuneration.
This report was approved by the board on 5 June 2022 and signed on its behalf.
Rachelle Jacques
Director and Chief Executive Officer
26
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF
AKARI THERAPEUTICS PLC
FOR THE YEAR ENDED 31 DECEMBER 2021
Opinion
We have audited the financial statements of Akari Therapeutics, Plc (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 31 December 2021 which comprise the consolidated statement of comprehensive loss, the
consolidated statement of financial position, the parent company statement of financial position, the consolidated statement
of changing in equity, the parent company statement of changes in equity, the consolidated statement of cash flows, the
parent company statement of cash flows and notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK
adopted international accounting standards.
In our opinion, the financial statements:
• give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2021 and of
the group’s loss for the year then ended;
• have been properly prepared in accordance with UK adopted international accounting standards; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the group in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we considered areas where subjective judgement was exercised by the directors and management,
for example in respect of significant accounting estimates that involved making assumptions and considering future events
that are inherently uncertain. We also assessed the risk of management override of controls, including evaluating whether
there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. We tailored the
scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial statements as
a whole, taking into account the structure of the group and the parent company, the accounting processes and controls, and
the industry in which they operate.
Our audit scope included the statutory audit of the parent company for the year ended 31 December 2021. It excludes the
parent company’s non-UK registered subsidiaries which were audited to component materiality for the purposes of the
group audit.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Key Audit Matter
Securities Purchase Agreement
Included in the Group Statement of Financial Position
are share application funds in advance of $1,120,000.
These funds relate to monies received in advance of
the issuance of ADS warrants through a Securities
Purchase Agreement.
Management performed an assessment of the date at
which the funds received and instruments issued
should be recognised as equity within the Statement
of Financial Position. The assessment was made with
reference to the substance of the legal agreement
between the investors and the Group.
How our scope addressed this matter
Our audit work included, but was not restricted to, the
following:
•
should
Review of management’s assessment of how
funds received in advance of the issuance of
ADS warrants through a Securities Purchase
classified
be
Agreement
in
accordance with
32: Financial
IAS
Instruments: Presentation;
Review of audit evidence to corroborate
management’s assessment; and
Review of disclosures made in the financial
treatment of
statements
to ensure
the
•
•
27
INDEPENDENT AUDITOR’S REPORT TO THE
SHAREHOLDERS OF AKARI THERAPEUTICS PLC (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
There is a risk that the interpretation of this agreement
is not correct and that the ADS warrants issues are not
recognised as equity in the correct period.
advanced subscription proceeds received are
appropriately outlined.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements
on our audit and on the financial statements. For the purposes of determining whether the financial statements are free from
material misstatement we define materiality as the magnitude of misstatement that makes it probable that the economic
decisions of a reasonably knowledgeable person, relying on the financial statements, would be changed or influenced. We
determined overall materiality for the Group financial statements as a whole to be US$355,000 being 1.7% of expenditure
for the year. We considered it appropriate to determine our materiality based on expenditure as we consider this to be the
key metric in assessing the financial performance and position of the Group given its primary purpose is to undertake
research and development activities. On the basis of our risk assessments, together with our assessment of the overall
control environment, we apply a different level of materiality, performance materiality, to determine the extent of our
testing and this was set at 75% of the overall audit financial statements’ materiality, being $266,250.
We agreed with management that we would report to the Audit Committee all audit differences in excess of US$17,750 as
well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the
Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial
statements.
Material uncertainty in relation to going concern
We draw attention to note 1(c) in the financial statements, which outlines considerations relating to the group’s and parent
company’s ability to continue as a going concern. The disclosure indicates that the group and parent company is reliant on
additional funding to meet their liabilities as they fall due. These circumstances indicate the existence of a material
uncertainty which may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. They have concluded that there is a material uncertainty which
could cast significant doubt over the going concern status of the Group due to the impact of the requirement for additional
fundraising, and we agree that this is adequately disclosed in the Directors’ Report and the accounting policies.
The key risk identified was uncertainty around the ability of the Group and Parent Company to raise funds in order to
continue operations. While the Group and Parent Company have a history of raising funds as required, past history is no
guarantee that further fundraising will be successful. Future fundraising could be delayed and the amounts arising from
future fundraises are uncertain. A significant delay in the ability to raise funds would negatively impact the group’s ability
to generate cash to meet its liabilities as and when they fall due.
Our evaluation of the directors’ assessment of the entity’s ability to continue to adopt the going concern basis of accounting
included an assessment of the inherent risks to the Group’s business model and how such risks may impact the ability to
continue operations over the going concern assessment period. We also undertook the following procedures:
- We reviewed trading and fundraising activities after the reporting date and considered management’s assessment
of the Group’s and Parent Company’s prospects regarding further fundraising.
- We reviewed cash flow forecasts prepared by management and assessed their adequacy, and also challenged the
assumptions and judgements inherent within them.
- We assessed the Group’s and Parent Company’s ability to scale back operations and reduce costs as a means of
preserving cash in the twelve months from approval of the financial statements.
- We have corroborated cash levels after the reporting date to consider whether they are in line with forecasts and
investigated the reasons for any significant discrepancies.
- We reviewed prior period budgets and forecasts against actual performance to consider management’s ability to
accurately forecast and budget.
28
INDEPENDENT AUDITOR’S REPORT TO THE
SHAREHOLDERS OF AKARI THERAPEUTICS PLC (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Other information
The directors are responsible for the other information. The other information comprises the information included in the
annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 4, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The
extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
29
INDEPENDENT AUDITOR’S REPORT TO THE
SHAREHOLDERS OF AKARI THERAPEUTICS PLC (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with
laws and regulations related to regulatory requirements for the company. We considered the extent to which non-
compliance might have a material effect on the financial statements. We also considered those laws and regulations that
have a direct impact on the preparation of the financial statements such as the Companies Act 2006, income tax and payroll
taxes.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including
the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries
to areas subject to significant judgement and management bias through accounting estimates. Audit procedures performed
by the engagement team included:
Inspecting filings with regulators;
-
- Discussions with management including consideration of known or suspected instances of non-compliance with
laws and regulation and fraud;
Evaluating management’s controls designed to prevent and detect irregularities;
Identifying and testing journals, in particular journal entries posted with key words, by individuals who do not
usually make journals, posted around the end of the period, posted with certain keywords, and journals posted at
unusual dates or times, and;
Challenging assumptions and judgements made by management in their critical accounting estimates.
-
-
-
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those
leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the
more that compliance with a law or regulation is removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding
irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion,
omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are
required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit
work, for this report, or for the opinions we have formed.
Christopher Cork
(Senior Statutory Auditor)
For and on behalf of Haysmacintyre LLP, Statutory Auditors
5 June 2022
10 Queen Street Place
London
EC4R 1AG
30
AKARI THERAPEUTICS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
FOR THE YEAR ENDED 31 DECEMBER 2021
Research and development expenses
Administrative expenses
Notes
2021
$000
(12,200)
(8,274)
2020
$000
(12,192)
(7,910)
OPERATING LOSS
2
(20,474)
(20,102)
Fair value movement on liability related to options
Net finance cost
15
3
-
(17)
557
(909)
LOSS BEFORE INCOME TAX
(20,491)
(20,454)
Income Tax Credit
LOSS FOR THE YEAR
Other Comprehensive Loss:
Currency translation differences
4
2,789
2,857
(17,702)
(17,597)
(107)
(300)
COMPREHENSIVE LOSS FOR THE YEAR
(17,595)
(17,897)
Loss per share attributable to the ordinary equity holder
of the parent:
Basic and diluted (cents)
5
(0.41)
(0.56)
All losses are derived from continuing activities for the current and previous financial year.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent
company income statement. Refer note 5 for the results of the parent company.
The notes on pages 38 to 55 form an integral part of the consolidated financial statements.
31
AKARI THERAPEUTICS PLC
COMPANY NUMBER: 05252842
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
ASSETS
Non-current assets
Property, plant and equipment
Intangible Assets
Current assets
Trade and Other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY
Capital and reserves attributable to the
Company’s equity shareholders
Called up share capital
Share premium
Capital redemption reserve
Other reserves
Merger reserve
Share based payment reserve
Reverse Acquisition reserve
Retained earnings
TOTAL EQUITY
LIABILITIES
Current liabilities
Trade and other payables
TOTAL LIABILITIES
Notes
8
7
10
13
14
14
14
14
14
14
14
11
2021
$000
-
23
23
4,976
9,361
14,337
2020
(restated)
$000
-
27
27
3,512
14,056
17,568
14,360
17,595
476
125,059
52,194
(580)
9,128
17,302
(20,983)
(174,329)
8,267
385
111,978
52,194
(687)
9,128
16,987
(20,983)
(156,627)
12,375
6,093
6,093
5,220
5,220
TOTAL EQUITY AND LIABILITIES
14,360
17,595
The financial statements were approved and authorised for issue by the Board of Directors on 5 June 2022 and were signed
below on its behalf by:
Rachelle Jacques
Director and Chief Executive Officer
The notes on pages 38 to 55 form an integral part of these consolidated financial statements.
32
AKARI THERAPEUTICS PLC
COMPANY NUMBER: 05252842
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
ASSETS
Non-current assets
Property, plant and equipment
Investment in subsidiaries
Current assets
Trade and Other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY
Capital and reserves attributable to the
Company’s equity shareholders
Called up share capital
Share premium
Capital redemption reserve
Merger reserve
Share based payment reserve
Retained earnings
TOTAL EQUITY
LIABILITIES
Current liabilities
Trade and other payables
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Notes
8
9
10
13
14
14
14
14
14
11
2021
$000
-
20,339
20,339
8,826
9,319
18,145
38,484
476
125,059
52,194
9,128
17,302
(171,590)
32,569
2020
(restated)
$000
-
20,339
20,339
7,401
14,014
21,415
41,754
385
111,978
52,194
9,128
16,987
(153,976)
36,696
5,915
5,915
5,058
5,058
38,484
41,754
As permitted by Section 408 of the Companies Act 2006, the income statement of the parent Company is not
presented as part of these financial statements. The parent Company’s loss for the financial year was $17,614,000
(2020: loss of $17,909,000).
The financial statements were approved and authorised for issue by the Board of Directors on 5 June 2022 and were
signed below on its behalf by:
Rachelle Jacques
Director and Chief Executive Officer
The notes on pages 38 to 55 form an integral part of these consolidated financial statements.
33
AKARI THERAPEUTICS PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
Share
Capital
Premium
Share
Based
Payment
Reverse
Acquis-
ition
Capital
Redemption
Retained
Other Merger
Reserve
s
$000
$000
$000
$000
$000
$000
$000
$000
Reserve Reserve
Reserve
Reserve
Earnings
Total
$000
At 1 January 2020
31,987
109,337
(387)
9,128
13,462
(20,983)
Comprehensive gain/ (loss) for the year
Share based payments
Shares Issued
Share Buyback
Effect of redenomination (note 18)
Shares issued on exercise of warrants
Reclassification of warrants to shareholder equity (note 15)
-
-
-
-
20,576
2,629
(50,593)
(1,601)
16
-
-
12
-
(300)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
325
-
-
-
-
3,200
-
-
-
-
-
-
-
-
-
-
-
50,593
1,601
-
-
(139,030)
3,514
(17,597)
(17,897)
-
-
-
-
-
-
325
23,205
-
-
28
3,200
Restated total equity at 31 December 2020
385
111,978
(687)
9,128
16,987
(20,983)
52,194
(156,627)
12,375
Comprehensive gain/ (loss) for the year
Share based payments
Shares Issued
At 31 December 2021
-
-
91
476
-
-
13,081
125,059
107
-
-
-
-
-
-
315
-
-
-
-
-
-
-
580
9,128
17,302
(20,983)
52,194
(174,329)
(17,702)
(17,595)
-
-
315
13,172
8,267
The notes on pages 38 to 55 form an integral part of these consolidated financial statements.
34
AKARI THERAPEUTICS PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
Share
Capital
$000
Share
Premium
$000
Merger
Reserve
$000
Share
Based
Payment
Reserve
$000
Capital
Redemption
Reserve
$000
Retained
Earnings
$000
Total
$000
At 1 January 2020
31,987
109,337
9,128
13,462
-
(136,067)
27,847
Total comprehensive loss for the year
Share based payments
Shares Issued
Share buyback
Effect of redenomination (note 18)
Shares issued on exercise of warrants
Reclassification of warrants to shareholder equity (note 15)
Restated total equity at 31 December 2020
-
-
20,576
(50,593)
(1,601)
16
-
-
-
2,629
-
-
12
-
-
-
-
-
-
-
-
-
325
-
-
-
-
3,200
-
-
-
50,593
1,601
-
-
(17,909)
-
-
-
-
-
-
(17,909)
325
23,205
-
-
28
3,200
385
111,978
9,128
16,987
52,194
(153,976)
36,696
Total comprehensive loss for the year
Share based payments
Shares Issued
At 31 December 2021
-
91
476
-
13,081
125,059
-
-
9,128
315
-
17,302
(17,614)
(17,614)
-
-
52,194
-
-
(171,590)
315
13,172
32,569
The notes on pages 38 to 55 form an integral part of these consolidated financial statements.
35
AKARI THERAPEUTICS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
Cash flows from operating activities
Loss before income tax
Adjustments for:
Changes in fair value of warrants
Finance costs (fees settled in shares)
Share-based payment
Foreign currency exchange gains
Depreciation and amortization
(Decrease)/increase in trade and other receivables
Decrease/(increase) in trade and other payables
Tax received
Net cash flows used in operating activities
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Proceeds from ordinary shares to be issued
Issue costs
Proceeds from warrant exercise
Cash generated from financing activities
Exchange losses on cash and cash equivalents
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Note
16
12
12
2021
$000
2020
$000
(20,491)
(20,454)
-
-
315
243
4
(1,742)
(243)
3,067
(18,847)
13,330
1,120
(157)
-
14,293
(141)
(4,695)
(557)
900
325
(491)
8
192
(246)
3,372
(16,951)
25,914
-
(868)
28
25,074
201
8,324
14,056
5,732
9,361
14,056
The notes on pages 38 to 55 form an integral part of these consolidated financial statements.
36
AKARI THERAPEUTICS PLC
PARENT COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
Cash flows from operating activities
Loss before income tax
Adjustments for:
Changes in fair value of warrants
Share based payments
Finance costs (fees settled in shares)
Depreciation
Increase in trade and other receivables
(Increase)/decrease in trade and other payables
Taxation received
Exchange rate differences
Notes
16
2021
$000
2020
$000
(20,404)
(20,766)
-
315
-
-
(1,703)
(263)
3,067
143
(557)
325
900
5
236
(291)
3,372
(175)
Net cash flows used in operating activities
(18,845)
(16,951)
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Proceeds from ordinary shares yet to be issued
Issue costs
Proceeds from issue of shares on warrant exercise
Cash generated from financing activities
Exchange gains on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
12
12
13,330
1,120
(157)
-
25,914
-
(868)
28
14,293
25,074
(143)
175
(4,695)
14,014
8,298
5,716
9,319
14,014
The notes on pages 38 to 55 form an integral part of these consolidated financial statements.
37
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1.
(a)
ACCOUNTING POLICIES
Akari Therapeutics, Plc is a public company limited by shares registered in England and Wales under number
5252482, with its registered office at Highdown House, Yeoman Way, Worthing, West Sussex, BN99 3HH.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These consolidated financial statements of Akari Therapeutics, Plc have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the UK and IFRIC interpretations issued and
effective or issued and early adopted as at the time of preparing these statements and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements are
prepared on a historical cost conversion modified for fair value measurement as required by IFRS 9. A summary of
the significant accounting policies is set out below.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates
are significant to the consolidated financial statements are disclosed in note 1(n).
(b)
Basis of consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. The subsidiaries are fully consolidated from the date on
which control is transferred to the Group and deconsolidated from the date that control ceases.
The financial statements of the subsidiaries are prepared for the same financial year as the parent company,
applying consistent accounting policies throughout the Group. Inter-company balances and transactions,
including unrealised profits are eliminated on consolidation.
The Group financial statements consolidate the Company’s financial statements of Akari Therapeutics, Plc and
its subsidiaries (the “Group”).
(c)
Going Concern
The Group meets its day-to-day working capital requirements through funding. In assessing the Company’s ability
to continue as a going concern, Management has prepared financial forecasts covering at least the next twelve
months from the date of approval of the financial statements.
The Group’s forecast and projections, show that at present, the Group has insufficient working capital to fulfil its
current business plan without the Group raising additional capital.
We currently plan to raise additional funds from external sources and/or from Aspire Capital with which the Group
has approximately $22,000,000 remaining of the total $30,000,000 commitment to drawdown in the form of equity
funding as of 4 June, 2022. In our assessment, the remaining availability of funds under the Aspire facility, together
with our expectation of the Group’s ability to raise capital from other fundraising sources could extend the Group’s
ability to fund operations into December 2023 without any subsequent adjustment to the preliminary forecast. The
Group currently intends to pursue other external fundraising sources within the fiscal years 2022 and/or 2023,
although securing such fundraising is subject to uncertainty.
Therefore, based on the availability of funds under the Aspire facility, and ability to reduce both R&D and other
administrative expenditure costs significantly if so required, management believes the Group’s financial prospects
are sufficient to fund future operations for at least the next twelve months.
Ultimately, the Group will require additional capital in order to develop and commercialise its current product
candidates or any product candidates that the Group acquires, if any, particularly for the period beyond the next
twelve months. There can be no assurance that additional funds will be available when the Group needs them on
terms that are acceptable, or at all. If adequate funds are not available on a timely basis, the Group may be required
to terminate or delay development for one or more of our product candidates.
38
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(c)
Going Concern (continued)
These matters indicate the existence of conditions that give rise to a material uncertainty (specifically, the reliance
on fundraising, which is not guaranteed, to facilitate the Group's operating activities) which may cast significant
doubt on the Group's ability to continue as a going concern. Notwithstanding these uncertainties, the Directors
have concluded that there is a reasonable expectation that the Group has the ability to continue to raise such
funding and therefore consider it appropriate to prepare the financial statements on a going concern basis. The
financial statements do not include any adjustments to the carrying amounts and classifications of assets and
liabilities that would result if the Group was unable to continue as a going concern.
(d)
Standards and interpretations adopted during the year
The accounting policies adopted in the preparation of these Consolidated Financial Statements are consistent with
those followed in the preparation of the Group’s audited consolidated financial statements for the year ended 31
December 2021, which were prepared in accordance with the International Financial Reporting Standards
(“IFRS”), as adopted by the United Kingdom, updated to adopt those standards which became effective for periods
starting on or before 1 January 2020. None of the new standards have had a material impact on the Group.
Standards issued, but not yet effective
The following standards are issued, but not yet effective. The Group intends to adopt these standards, if applicable,
when they become effective. It is not expected that these standards will have a material impact on the Group.
Standard
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to
IAS 16);
Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1,
IFRS 9, IFRS 16 and IAS 41);
Amendments to IFRS 3: References to Conceptual Framework;
Amendments to IAS 1 Presentation of Financial Statements: Classification of
Liabilities as Current or Non-current
Disclosure of accounting policies (Amendments to IAS 1)
Definition of accounting estimates (Amendments to IAS 8)
Amendments to IFRS 17 Insurance contracts
Amendments to IAS 12 Income Taxes: Deferred tax related to assets and
liabilities arising from a similar transaction
Effective date
1 January 2022
1 January 2022
1 January 2022
1 January 2022
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2023
The directors of the Company (the “Directors”) anticipate that the application of all new and amendments to IFRS
will have no material impact on the future results of the Company in the foreseeable future.
39
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
1. ACCOUNTING POLICIES (continued)
(e)
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the “functional currency”). The functional currency
of Akari Therapeutics, Plc is U.S. dollars. The Group and Parent Company financial statements are presented in
U.S Dollars which is considered to the Group’s presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the
date of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in the income statement.
Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary
economy) that have a functional currency different from the presentation currency are translated as follows:
a) assets and liabilities at the balance sheet date are translated at the closing rate as at that balance sheet date;
b)
c) all resulting exchange differences are recognised in other comprehensive income.
income and expenses for each income statement are translated at average exchange rates; and
40
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
1. ACCOUNTING POLICIES (continued)
(f)
Financial instruments
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with banks.
Trade and other receivables
Trade and other receivables are recognised at fair value less a provision for impairment. Bad debts are written off
through the income statement when identified. If collection is expected in one year or less, they are classified as
current assets. If not, they are presented as non-current assets.
Trade and other payables
Trade payables are obligations to pay for goods or services received that have been acquired in the ordinary course
of the business from suppliers. Trade payables are classified as current liabilities if payment is due within one year
or less. If not, they are presented as non-current liabilities. Executory contracts are recognised when both parties
to the contract met their respective obligations. Trade and other payable are unsecured, non-interest bearing and
are stated at cost.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
(g)
Research and development expenditure
Research costs are expensed through the income statement as they are incurred. Research and development
expenses include, among other costs, costs incurred by outside laboratories and other accredited facilities in
connection with clinical trials and preclinical studies.
Under IAS 38, development costs are only capitalised after technical and commercial feasibility of the asset for
sale or use have been established. The company must intend and be able to complete the asset and either use it or
sell it and be able to demonstrate how the asset will generate future economic benefit. If the company cannot
distinguish between the research and the development phase, then all costs are expensed as research costs.
(h)
Property, plant and equipment:
Property, plant and equipment are measured at cost, including directly attributable costs, less accumulated
depreciation and excluding day-to-day servicing expenses. The assets residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of each reporting period.
Depreciation is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:
Computers, peripheral and scientific equipment
Office furniture and equipment
33%
33%
The Group reviews all long-lived assets for impairment whenever events or circumstances indicate the carrying
amount of such assets may not be recoverable. Recoverability of assets to be held or used is measured by
comparison of the carrying value of the asset to the future undiscounted net cash flows expected to be generated
by the asset. If such asset is considered to be impaired, the impairment recognised is measured by the amount by
which the carrying value of the asset exceeds the discounted future cash flows expected to be generated by the
asset.
41
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
1. ACCOUNTING POLICIES (continued)
(i)
Intangible assets
(j)
(k)
Patent acquisition costs and related capitalised legal fees are recognised at historical cost. Patents have a finite
useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line
basis method and are amortised over the shorter of the legal or useful life. The estimated useful life for current
patents is twenty two years.
The Group expenses costs associated with maintaining and defending patents subsequent to their issuance in the
period the costs are incurred.
Investments
Investments in subsidiary undertakings are stated at cost less provisions for impairment.
Share-based payments and warrants
Where share options or warrants are awarded to directors and employees, the fair value of the options or warrants
at the grant date is charged to the consolidated income statement over the vesting period. Non-market vesting
conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance
sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number
of options that eventually vest. Market vesting conditions are factored into the fair value of the options and
warrants granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether
the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market
vesting condition.
Where the terms and conditions of options and warrants are modified before they vest, the increase in the fair
value of the options and warrants, measured immediately before and after the modification, is also charged to the
consolidated income statement over the remaining vesting period.
When the options and warrants are exercised, the company issues new shares. The proceeds received net of any
directly attributable transaction costs are credited to share capital (nominal value) and share premium when the
options and warrants are exercised.
When share options and warrants lapse, any amounts credited to the share-based payments reserve are released to
the retained earnings reserve.
Where warrants and options issued with settlement criteria that outside fixed for fixed criteria as outlined by IAS
32 (i.e. fixed number of shares for fixed amount of cash) the resulting fair value of the instruments issued will be
classified in financial liabilities.
(l)
Finance income and expenses
Interest income and expenses are recognised using the effective interest method. It mainly comprises of changes
in the fair value of financial assets and liabilities that are measured at fair value through the income statement and
exchange gains and losses which is reported on a net basis in the statement of comprehensive loss.
42
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
1. ACCOUNTING POLICIES (continued)
(m) Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying values in the financial statements. The deferred tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the
time of the transaction does not affect either the accounting or taxable profit or loss. Deferred tax is determined using
tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to
apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against
which temporary differences can be utilised.
(n) Critical accounting estimates and judgements:
The Group makes estimates and assumptions concerning the future. The preparation of financial statements
requires management and the Board of Directors to make estimates and judgments that affect reported amounts
of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These
estimates are based on historical experience and various other assumptions that management and the Board believe
are reasonable under the circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions, significantly impacting earnings and financial
position.
Management believes that the following areas, all of which are discussed and separately marked in the respective
sections of Note 1 “Accounting Policies,” comprise the most difficult, subjective or complex judgments it has to
make in the preparation of the financial statements: Assessment of the capitalisation of research and development
expenditure, calculation and classification of share based payments and the assessment of the carrying value of
the subsidiary for impairment.
Research and Development: Under IAS 38: Intangible Assets, the Group must determine whether to recognise
research costs incurred as an expense or asset. Depending on the development stage of a project determines
whether an expense can be capitalised. Difficultly can arise at determining the stage of a project. No costs have
been capitalised in the year ended 31 December 2021.
Share based payments: The Group issues share options and warrants to employees, service providers and investors.
Where share options and warrants are issued in return for services, appropriate valuation methods are used to
recognise an appropriate expense is recognised in the financial statements. These valuation methods are subject to
significant estimation as outlined in note 16. Where warrants issued to investors are classified as free-standing
liabilities, they are remeasured to fair value at each reporting date for which both judgement and estimation is
required in relation based on unobservable valuation input assumptions, resulting in a higher degree of estimation
uncertainty.
Investment in subsidiary: The Parent must continually assess the carrying value of investments in subsidiaries for
indications of impairment. Indications of impairment are considered with reference to the Group’s market
capitalisation, internal assessment of the ongoing contribution of intellectual property and any other indications of
obsolescence and progress in line with the Group’s business plan.
43
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
EXPENSES BY NATURE
The operating loss is stated after charging/(crediting):
Employee benefit expense (see below)
Depreciation
Amortisation
Commitment fees
Exchange (loss)/ gain
Auditors’ remuneration
- fees for the audit of the Group and Parent Company financial statements
Employee benefit expense
Wages and salaries
Social security costs
Retirement benefits
2021
$000
4,249
-
4
-
193
44
2021
$000
3,852
397
189
4,438
2020
$000
4,061
5
3
900
351
41
2020
$000
3,506
378
177
4,061
The average number of persons (including directors)
employed by the group during the year was as follows:
Office and administration
Key management remuneration
Wages and salaries
16
17
1,694
1,678
The key management is considered to be the directors and senior management team. Details of directors’
remuneration and share based compensation can be seen within the Directors’ Remuneration Report on pages 13 to
26.
44
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
3.
NET FINANCE INCOME/(LOSS)
Commitment fees
Interest Income
Other
4.
INCOME TAX CREDIT
Current tax:
Current tax on losses for the year
Adjustment in respect of prior years
2021
$000
-
11
(27)
(16)
2021
$000
(2,752)
(37)
(2,789)
2020
$000
(900)
13
(22)
(909)
2020
$000
(2,812)
(45)
(2,857)
The tax assessed in the year is different from the standard rate of
corporation tax in the UK of 19% in 2021 (2020: 19%)
The differences are explained below:
Loss before tax
(20,491)
(20,454)
Loss on ordinary activities before tax multiplied by the standard
companies’ rate of tax in the UK
(3,893)
(3,886)
Effects of:
Deferred tax asset on losses not recognised
Expenses not deductible for tax purposes
Surrender of tax loses for R&D tax credit refund
Additional deduction for R&D tax credit
Adjustment in respect of prior years
Tax credit
2,215
110
1,568
(2,752)
(37)
(2,789)
2,044
241
1,601
(2,812)
(45)
(2,857)
5.
LOSS ATTRIBUTABLE TO THE PARENT COMPANY
The parent Company has taken advantage of section 408 of the Companies Act 2006 and has not included its own
profit and loss account in these financial statements. The parent Company had a loss for the year of $17,614,000
(2020: $17,909,000).
45
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
6.
BASIC AND DILUTED LOSS PER SHARE
The calculation of basic and diluted loss per share is based on the loss attributable to ordinary shareholders of
$17,702,000 (2020: $17,597,000) and a weighted average number of Ordinary Shares outstanding during the year
ended 31 December 2021 of 4,292,112,667 (2020: 3,159,037,588) calculated below. As a loss making group,
outstanding share options are considered antidilutive and therefore basic and diluted loss per share are considered
to be equal.
2021
$000
2020
$000
Loss attributable to ordinary shareholders
17,702
17,597
Weighted average number of ordinary shares
Number of shares in issue at the beginning of the year
Effect of shares issued during year
Weighted average number of ordinary shares in issue for the year
2021
Number
2020
Number
3,847,331,923
444,780,744
4,292,112,667
2,245,865,913
913,171,675
3,159,037,588
7.
INTANGIBLE ASSETS
GROUP
Patent acquisition costs
Cost
At 1 January
Additions
At 31 December
Amortisation
At 1 January
Charge for the year
At 31 December
Net Book Value
At 31 December
2021
$000
95
-
95
(68)
(4)
(72)
2020
$000
95
-
95
(65)
(3)
(68)
23
27
46
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
8.
PROPERTY PLANT AND EQUIPMENT
GROUP & COMPANY
Office furniture and equipment
Cost
At 1 January
Additions
At 31 December
Depreciation
At 1 January
Charge for the year
At 31 December
Net Book Value
At 31 December
2021
$000
172
-
172
(172)
-
(172)
2020
$000
172
-
172
(167)
(5)
(172)
-
-
47
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
9.
INVESTMENTS IN SUBSIDIARIES
Company
At 1 January 2020
Additions
At 31 December 2020
At 1 January 2021
Additions
At 31 December 2021
Investments in
Subsidiary
Undertakings
$000
20,339
-
20,339
20,339
-
20,339
The Company directly owns 100% of the issued share capital of the following subsidiaries, which have been
included in the consolidated financial statements:
Volution Immuno
Pharmaceuticals SA
Celsus Therapeutics Inc.
Morria Biopharma Ltd.
Akari Malta Limited
Principal activity
Country of
incorporation
Holdings
Development of
pharmaceutical drugs
Dormant
Dormant
Regulatory
compliance
Switzerland
Ordinary
United States
Israel
Malta
Ordinary
Ordinary
Ordinary
%
100
100
100
100
Registered office addresses of subsidiaries:
Volution Immuno Pharmaceuticals SA : Place Des Eaux-Vives 6, 1207 Geneva, Switzerland
Celsus Therapeutics Inc: 1209 Orange Street, Wilmington, DE 19801
Morria Biopharma Ltd: 1209 Orange Street, Wilmington, DE 19801
Akari Malta Limited: Gasan Centre, Level 3, Mriehel By Pass, Mriehel, BKR 3000, Malta
10. TRADE AND OTHER
RECEIVABLES
Group
Company
2021
$000
2020
$000
2021
$000
2020
$000
Due from a related party
Prepayments and accrued income
Income tax receivable
-
2,264
2,712
4,976
-
521
2,991
3,512
3,856
2,258
2,712
8,826
3,897
513
2,991
7,401
48
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
11. TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Share application funds received in advance
Group
2021
$000
2020
$000
Company
2021
$000
2020
$000
1,788
3,185
1,120
6,093
3,380
1,840
-
5,220
1,627
3,168
1,120
5,915
3,232
1,826
-
5,058
12. CALLED UP SHARE CAPTIAL
Issued and fully paid
Akari Therapeutics, Plc
As at 1 January 2021
Issuance of ordinary shares
Exercise of warrants
2021
No. of Shares
Share
Capital
($)
3,847,331,923
384,733
912,400,000
91,240
As at 31 December 2021
4,759,731,923
475,973
Issue of shares
In May 2021, the Company sold to Aspire Capital LLC a total of 117,647,100 ordinary shares of the Company for total
gross proceeds of $2,000,001 under the Purchase Agreement.
In July 2021, we sold to certain accredited and institutional investors, led by some of our existing investors, including
Praxis Trustees Limited as trustee of Sonic Healthcare Holding Company EFRBS (“Praxis Trustees Limited”) which is
beneficially owned by Dr. Ray Prudo, the Company’s Chairman, an aggregate of 7,947,529 ADSs in a private placement
at $1.55 per ADS for aggregate gross proceeds of approximately $12.3 million. We also entered into a letter agreement
with Paulson Investment Company, LLC, or the Placement Agent, to serve as our placement agent in connection with this
offering. In connection with the offering, we issued to the Placement Agent unregistered warrants to purchase 398,384
ADSs at $2.32 per ADS. As at the 31 December 21, all of the 398,384 warrants were outstanding.
In December 2021, the Company entered into securities purchase agreements with certain accredited and institutional
investors, including Dr. Ray Prudo, the Company’s Chairman, providing for the issuance of an aggregate of 4,311,019
ADSs in a registered direct placement at $1.40 per ADS for aggregate gross proceeds of approximately $6.0 million which
closed on January 5, 2022. As of December 31, 2021, the Company received approximately $1,120,000 gross proceeds
from investors which were classified as Current liabilities in the financial statements due to termination rights by investors
prior to closing of the 2021 Registered Direct which occurred on January 4 and 5, 2022. The Company also entered into a
letter agreement with Paulson Investment Company, LLC to serve as the placement agent for the Company in connection
with this offering. In connection with the offering, on January 4 and 5, 2022, the Company issued to the investors registered
warrants to purchase a total of 2,155,507 ADSs at $1.65 per ADS. The Company paid an aggregate of $542,835 in
placement agent fees and expenses and issued registered placement agent warrants to the Placement Agent to purchase an
aggregate of 172,441 ADS on January 4, 2022 at $1.75 per ADS.
49
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
14.
RESERVES
The following describes the nature and purpose of each reserve within equity:
Share premium - Accumulated amounts subscribed for share capital in excess of the nominal value of the share
capital issued. Costs relating to the issue of shares are offset against share premium. Issue costs incurred in the
year ended 31 December 2021 offset in share premium were $157,000 (31 December 2020: $868,000).
Retained earnings – Includes all current and prior period losses
Other reserves - Accounts for all other gains and losses reported by the group and not recognised elsewhere.
Includes accumulated gains and losses arising from the retranslation of the net assets of overseas entities.
Share based payment reserve – This includes all movement for share options granted during the period.
Merger reserve – Merger reserve represents the premium on the shares issued to acquire Volution Immuno
Pharmaceuticals SA in accordance with the provisions of S612 of the Companies Act 2006.
Reverse acquisition reserve – The reverse acquisition reserve relates to the reverse acquisition between Celsus
Therapeutics PLC and Volution Immuno Pharmaceuticals SA on 18 September 2015.
Capital redemption reserve – Amounts transferred from share capital on redemption of issued shares.
50
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
15.
WARRANTS
There is no warrant liability recognised in the year ended 31 December 2021.
In the prior year the Group accounted for the liability warrants issued in accordance with IAS 39, “Financial
Instruments: Recognition and Measurement” as a freestanding liability instrument that is measured at fair value
at each reporting date, based on its fair value, with changes in the fair values being recognised in the Group's
consolidated statement of comprehensive loss as financing income or expense. The fair value of warrants granted
was measured using the Binomial method of valuation.
Issuance of 2020 Paulson warrants
Reclassification of warrant to equity on exercise
Change in fair value of warrant liability
Transfer to equity following redenomination of share capital
As at 31 December 2020
Fair value of
warrant
liability
$000
2,750
(8)
(557)
(3,200)
-
The share capital of the Company was redenominated on 8 December 2020 from £0.01 shares to $0.01325 shares.
As a result of this redenomination, the inputs resulting in the recognition of the derivative liability associated with
placing warrants now meet the fixed for fixed criteria to be recognised in equity. At this point the fair value of the
liability of $3.2m was transferred to share based payments reserve from liabilities.
51
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
16.
SHARE OPTIONS
In accordance with the Company’s 2014 Equity Incentive Plan (the “Plan”), the number of shares that may be issued
upon exercise of options under the Plan shall not exceed 400,000,000 Ordinary Shares. (31 December 2020
344,747,462). At 31 December 2021, 257,050,965 Ordinary Shares are available for future issuance under the Plan
(31 December 2020 232,098,427). The option plan is administered by the Company’s board of directors and grants
are made pursuant thereto by the compensation committee. The per share exercise price for the shares to be issued
pursuant to the exercise of an option shall be such price equal to the fair market value of the Company’s Ordinary
Shares on the grant date and set forth in the individual option agreement. Options expire ten years after the grant
date and typically vest over one to four years.
Outstanding at the beginning of the
year
Granted during the year
Forfeited/waived during the year
Exercised during the year
Total outstanding
Total exercisable (Vested)
Number
112,649,035
30,300,000
-
-
142,949,035
97,499,035
2021
Weighted Average
Exercise Price
$
Number
2020
Weighted Average
Exercise Price
$
0.09
0.02
-
-
0.07
0.10
94,349,035
20,800,000
(2,500,000)
-
112,649,035
77,667,785
0.10
0.02
0.02
-
0.09
0.12
The following is a summary of the Group's share options granted separated into ranges of exercise price:
Exercise
price
(range) ($)
Options
outstanding
at 31
December
2021
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise
price ($)
Options
exercisable
at
December
31, 2021
Remaining
contractual
life for
exercisable
options
(years)
Weighted
average
exercise
price for
exercisable
options ($)
0.02-0.05
0.12-0.19
0.32
107,900,000
18,334,629
16,714,406
142,949,035
7.7
4.3
3.7
0.02
0.15
0.32
62,450,000
18,334,629
16,714,406
97,499,035
6.9
4.3
3.7
0.02
0.15
0.32
Exercise
price
(range)
($)
Options
outstanding
at 31
December
2020
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise
price ($)
Options
exercisable
at 31
December
2020
Remaining
contractual
life (years for
exercisable
options)
Weighted
average
exercise
price ($)
0.02-0.05
0.12-0.19
0.32
77,600,000
18,334,629
16,714,406
112,649,035
8.03
5.30
4.73
0.02
0.15
0.32
42,712,500
18,240,879
16,714,406
77,667,785
7.60
5.30
4.73
0.03
0.15
0.32
52
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
16.
SHARE OPTIONS (continued)
The Company measures compensation cost for all share-based awards at fair value on the date of grant and
recognizes compensation expense in general administrative and research and development expenses within its
Consolidated Statements of Comprehensive Loss using the straight-line method over the service period over which
it expects the awards to vest.
The Company estimates the fair value of all time-vested options as of the date of grant using the Black-Scholes
option valuation model, which was developed for use in estimating the fair value of traded options that have no
vesting restrictions and are fully transferable. Option valuation models require the input of highly subjective
assumptions, including the expected share price volatility, which is calculated based on the historical volatility of
peer companies. The Company uses a risk-free interest rate, based on the U.S. Treasury instruments in effect at the
time of the grant, for the period comparable to the expected term of the option. Given its limited history with share
option grants and exercises, the Company uses the “simplified” method in estimating the expected term, the period
of time that options granted are expected to be outstanding, for its grants.
The Company classifies its stock-based payments which are settled in ordinary shares as equity-classified awards.
The Company measures equity-classified awards at their grant date fair value and does not subsequently re-measure
them. Compensation costs related to equity-classified awards generally are equal to the grant-date fair value of the
award amortized over the vesting period of the award.
Below are the assumptions used for the options granted in the year ended 31 December 2021:
Expected dividend yield
Expected volatility
Risk-free interest
Expected life
2021
0%
70.7%-83.2%
0.64%-1.25%
5.5-6.25 years
Below are the assumptions used for the options granted in the year ended 31 December 2020:
Expected dividend yield
Expected volatility
Risk-free interest
Expected life
2020
0%
83.88-86.85%
0.38%-0.49%
5.5-6.25 years
During the year ended 31 December 21 the Group recognized $314,000 (2020: $325,000) in share-based
compensation expenses for employees and directors. At 31 December 2021, there was approximately $423,000 of
unrecognized compensation cost related to unvested share-based compensation arrangements granted under the
Group’s share option plans which the company expects to recognize over 2.6 years.
53
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
17.
FINANCIAL INSTRUMENTS
a.
Classification of financial assets and liabilities:
The financial assets and financial liabilities in the statement of financial position are classified by groups of financial
instruments pursuant to IFRS 9 are:
Financial assets:
Other receivables
Financial liabilities:
Trade payables, share funds received in advance and other payables
Financial risks factors:
2021
$000
-
2020
$000
-
5,994
5,139
The Group's activities are exposed to foreign exchange risk. The Group's comprehensive risk management plan focuses
on activities and strategies that reduce adverse effects on the financial performance of the Group to a minimum.
1.
Foreign currency risk:
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates. The Group's exposure to the risk of changes in foreign exchange rates relates
primarily to the Group's operating activities when expenses are denominated in a different currency from the Group's
functional currency. The Group believes that no reasonable change in foreign currency exchange rates would have a
material impact on the income statement or statement of changes in equity. The Group manages its foreign currency
risk by managing bank accounts that are denominated in a currency other than its respective functional currency,
primarily the Great British Pound (GBP).
2.
Credit risk:
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or supplier contract,
leading to a financial loss. Financial instruments that potentially subject the Group to concentrations of credit risk
consist principally of cash and cash equivalents. Cash and cash equivalents and short-term deposits are deposited with
major banks in Europe and the United States, and invested mostly in U.S. dollars and Great British Pounds. Such
redeemed upon demand and therefore bear low risk.
3.
Market risk:
The Group's financial instruments comprise equity investments, cash and various items such as trade debtors and
trade creditors that arise directly from its operations. The main risk arising from the Groups financial instruments is
liquidity risk. The Group has previously entered into derivatives with respect of the warrant liability, this liability
has been settled in the previous year.
54
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
18. RESTATEMENT
On the 8 December 2020, Company accounted for a redenomination of share capital from £0.01 to $0.01325 with
the resultingcurrency retranslation effect of $1.6m being included as non-distributable redenomination reserve. In
the year ended 31 December 2021 the Directors have re-appraised the nature of the redenomination, which included
the subdivision of existing shares into ordinary and deferred shares, followed by the cancellation of the deferred
shares, and have concluded that a more appropriate presentation of the currency translation difference should be
inclusion within the capital redemption reserve which arose at the same date. The effect of the restatement in the
prior year is to increase the capital redemption reserve $1.6m and remove the redenomination reserve. There was
no impact on net assets or other comprehensive loss in any of the years presented.
19. RELATED PARTY TRANSACTIONS
The following transactions were carried out with related parties:
Shares Issued - The Company has issued 387,096 ADSs at $1.55 per ADS to Praxis Trustees Limited in connection
with a placing for cash during the year ended 31 December 21. Praxis Trustees Limited is a trustee of Sonic
Healthcare Limited ERSB, a Company in which Ray Prudo, the Company’s Chairman, is beneficially interested.
Office Lease - The Company leases its offices in London from The Doctors Laboratory (“TDL”) and has incurred
expenses of approximately $146,000 plus VAT during the year ended 31 December 2021 (2020: $133,000). David
Byrne, a non-employee director of the Company, is also the Chief Executive Officer of TDL and Dr. Ray Prudo, the
Company’s Executive Chairman, is also Non-Executive Chairman of the Board of Directors of TDL.
Laboratory Testing Services - The Company has received laboratory testing services for its clinical trials provided
by TDL and has incurred expenses of approximately $102,000 plus VAT during the year ended 31 December 2021
(2020: $234,000). The Company recorded payable balances to TDL of approximately $32,000 plus VAT as of
December 31, 2021 (2020: $100,000).
Consulting - A non-employee director of the Company began providing business development consulting services
in January 2018. The Company has incurred expenses of approximately $100,000 during the year ended
December 31, 2021 (2020: $100,000), relating to these consulting services.
20. POST BALANCE SHEET EVENTS
In connection with the offering entered into on the 29 December 2021, on January 4 and 5, 2022, the Company
issued to the investors registered warrants to purchase a total of 2,155,507 ADSs at $1.65 per ADS. The Company
paid an aggregate of $542,835 in placement agent fees and expenses and issued registered placement agent warrants
to the Placement Agent to purchase an aggregate of 172,441 ADS on January 4, 2022 at $1.75 per ADS. The
warrants issued to investors and the placement agent will expire five years from issuance and are immediately
exercisable.
On March 8, 2022, the Company entered into securities purchase agreements with certain accredited and
institutional investors, including Dr. Ray Prudo, the Company’s Chairman, providing for the issuance of an
aggregate of 7,440,833 ADSs in a registered direct offering at $1.20 per ADS, resulting in gross proceeds of
approximately $8.9 million. In addition, the Company issued to the investors registered warrants to purchase an
aggregate of 3,720,409 ADSs. The warrants are immediately exercisable and will expire five years from issuance
at an exercise price of $1.40 per ADS, subject to adjustment as set forth therein. The Company paid an aggregate
of approximately $774,321 in placement agent fees and expenses and issued unregistered placement agent warrants
to purchase an aggregate of 297,633 ADS on the same terms as the warrants, except that the placement agent
warrants are exercisable at $1.50 per ADS.
21. ULTIMATE CONTROLLING PARTY
The directors do not believe that there is an ultimate controlling party of the Group.
55