AKARI THERAPEUTICS, PLC
ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2023
Registered in England and Wales, number: 05252842
AKARI THERAPEUTICS PLC
CONSOLIDATED ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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
Notes to the report and financial statements
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42
AKARI THERAPEUTICS PLC
OFFICERS AND PROFESSIONAL ADVISERS
FOR THE YEAR ENDED 31 DECEMBER 2023
Directors
R Prudo-Chlebosz
M Hashad
D Williams
M Grissinger
S Patel
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
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 of the Company (“Directors”) present their report and the audited financial statements for the year ended 31
December 2023.
1
AKARI THERAPEUTICS PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The Company has chosen, in accordance with section 414C(11) of the Companies Act 2006, to include in its strategic report
the following matters that would otherwise be required to be disclosed in this Directors’ report: information on material
financial instruments; information on research and development activities; and an indication of likely future developments in
the business of the Company.
PRINCIPAL ACTIVITY
The principal activity of the Group is developing advanced therapies for autoimmune and inflammatory diseases involving
the complement (C5) and leukotriene (LTB4) 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. The Group’s activities since
inception have consisted of performing research and development activities and raising capital.
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
M Hashad (Appointed on 30 June 2023)
D Williams
M Grissinger
R Jacques (Resigned on 7 May 2024)
D Byrne (Resigned on 30 June 2023)
J Hill (Resigned on 30 June 2023)
S Ungar (Resigned on 30 June 2023)
S Patel (Appointed 29 November 2023)
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 2023
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 itself consumed 40,000 kWh of energy or less
during the year ended 31 December 2023. 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 2023 the following shareholders held an interest of 3% or more of the ordinary share capital of the
Company:
Ray Prudo, M.D. (1)
PranaBio Investments, LLC (2)
Ordinary shares of $0.0001 % of issued share capital
24.0%
15.8%
3,171,056,800
2,085,237,500
(1) Represents the entire holdings of RPC Pharma Limited, Praxis Trustees Limited As trustee of The Sonic Healthcare Holding
Company and Dr. Ray Prudo as reported on the Amendment No. 7 Schedule 13D filed with the U.S. Securities and Exchange
Commission (“SEC”) on January 4, 2024. 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 shared 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 holdings of Pranabio Investments, LLC as reported on Form 4 filed with the SEC on January 2, 2024. Pranabio
Investments, LLC is a Texas limited liability company. Samir R. Patel, M.D., is the managing member and has sole voting and
investment power with respect to the shares.
As at 31 December 2023 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 2023
CORPORATE GOVERNANCE
The Group is not required to implement the provisions of the UK Corporate Governance Code (the “Code”).
Regular Board of Directors meetings are held. The Board of Directors meets regularly and is responsible for overseeing
management, formulating strategy and monitoring the Group’s performance.
GOING CONCERN
The Group meets its day-to-day working capital requirements through funding. In assessing the Group’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.
As of 31 December 2023, the Group’s cash balance was $3.8 million. To date, the Group has incurred substantial losses
and negative cash flows since inception and had an accumulated deficit of $203.6 million as of 31 December 2023.
The Group anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product
candidates currently in development. The Group is subject to a number of risks and uncertainties similar to those of other
companies of the same size within the biotechnology industry, such as uncertainty of clinical trial outcomes, uncertainty
of additional funding, and history of operating losses. Substantial additional financing will be needed by the Group to fund
its operations and to commercially develop its product candidates and there can be no assurance that additional funds will
be available when the Group need them on terms that are acceptable to it, or at all. As of May 31, 2024, the Group’s cash
balance of $5.9 million, which includes net proceeds received from the May 2024 Private Placement (see note 19 of the
notes to financial statements), is not sufficient to fund its operations for the one-year period after the date these consolidated
financial statements are issued.
Management is currently evaluating different strategies to obtain the required funding for future operations. These
strategies may include, but are not limited to: product development financing, private placements and/or public offerings
of equity and/or debt securities, and strategic research and development collaborations and/or similar arrangements.
Further, closing of the Group’s proposed merger with Peak Bio, Inc. as contemplated in the associated Merger Agreement
is contingent on the PIPE Investment (as defined in the Merger Agreement) which shall have been consummated
simultaneously with, and conditioned only upon, the occurrence of the closing, and shall result in net proceeds to the Group
of least $10 million. Management also expects that further sources of funding will also be made available for the Group to
draw on (if required) as a result of the merger.
While management is confident in the Company’s ability to obtain future funding, there can be no assurance that these
future funding efforts, including the PIPE Investment (as defined in the Merger Agreement), will be successful.
Based on the requirement for Group to raise additional capital to finance future operations and for it to manage its working
capital position, particularly in relation to accounts payable balances, until further such capital can be raised, management
has concluded that these outcomes represent material uncertainties that cast significant doubt regarding the Group’s ability
to continue as a going concern within one year after the date that these consolidated financial statements are issued.
Notwithstanding these uncertainties, the accompanying consolidated financial statements have been prepared assuming
that we will continue as a going concern, which contemplates the realisation of assets and the satisfaction of liabilities in
the normal course of business. As such, the accompanying consolidated financial statements do not reflect any adjustments
relating to the recoverability and classification of recorded assets and liabilities that might be necessary if the Group is
unable to continue as a going concern.
SUBSEQUENT EVENTS
Events occurring after the year end and required to be disclosed are detailed in note 19 of the notes to the financial
statements.
4
AKARI THERAPEUTICS PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
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.
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 relevant
audit information and to establish that the Company’s auditors are aware of that information.
This report was approved by the board on 3 June 2024 and signed on its behalf.
Samir R. Patel
Samir R. Patel
Director and Interim Chief Executive Officer
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AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
REVIEW OF BUSINESS
The Group is a clinical-stage biotechnology company focused on developing advanced therapies for autoimmune and
inflammatory diseases involving the complement (“C5”) and leukotriene (“LTB4”) pathways. Each of these pathways has
scientifically well-supported causative roles in the diseases the Group is targeting. Management believes that blocking
early mediators of inflammation will prevent initiation and continual amplification of the processes that cause certain
diseases. The Group’s activities since inception have consisted of performing research and development activities and
raising capital.
The Group’s lead product candidate, nomacopan, is a recombinant small protein (16,769 Da) derived from a protein
originally discovered in the saliva of the Ornithodoros moubata tick, which modulates the host immune system to allow
the parasite to feed without alerting the host to its presence or provoking an immune response. Nomacopan is a second-
generation complement inhibitor which acts on complement C5, preventing release of C5a and formation of C5b–9 (also
known as the membrane attack complex (“MAC”)), and also independently and specifically inhibit LTB4 activity, both
elements that are often co-located as part of the immune/inflammatory response. Management believes the importance of
nomacopan’s therapeutic potential is twofold. First, its dual inhibitory action may be able to prevent inflammatory and
prothrombotic activities of two key pathways, and second, nomacopan’s bio-physical properties may allow it to be used in
a variety of formulations and routes of administration, including subcutaneous, intravenous, topical to eye, inhaled and
intravitreous.
Up until May 2024, the Group was conducting a clinical trial of subcutaneous nomacopan for the treatment of
hematopoietic stem cell transplant-related thrombotic microangiopathy (“HSCT-TMA”) in pediatrics. Following
completion of a portfolio prioritization review, the Group announced that its HSCT-TMA program will be suspended, as
more fully described below. The Group is currently investigating long-acting PASylated-nomacopan (“PAS-nomacopan”)
for treatment of Geographic Atrophy (“GA”) secondary to dry age-related macular degeneration (“dry AMD”) in
preclinical studies and expect to hold a pre-investigational new drug application meeting in the third quarter of 2024.
The U.S. Food and Drug Administration (“FDA”) has granted Rare Pediatric Disease, Orphan Drug, and Fast Track
designations to nomacopan for the treatment of pediatric HSCT-TMA. Additionally, nomacopan has been granted Orphan
Drug designation by the European Commission as a treatment for hematopoietic stem cell transplantation (“HSCT”).
Merger Agreement and Pipeline Prioritization
On March 5, 2024, Akari announced that it entered into an Agreement and Plan of Merger (the “Merger Agreement”) with
Peak Bio, Inc. (“Peak Bio”) and Pegasus Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Akari
(“Merger Sub”), pursuant to which, upon the terms and subject to the conditions thereof, Merger Sub will be merged with
and into Peak Bio (the “Merger”), with Peak Bio surviving the Merger as a wholly-owned subsidiary of Akari.
On May 1, 2024, the Group announced the completion of a joint portfolio prioritization review pursuant to which the
anticipated combined entity, following completion of the previously announced Merger (as defined below), will focus on
Peak Bio’s antibody drug conjugate (“ADC”) platform technology and the Group’s PAS-nomacopan GA program. As a
result, the Group’s HSCT-TMA program will be suspended, with enrollment in its currently active pediatric clinical study
discontinued due to cost and timeline. Following closing of the Merger, management plans to work closely with the FDA
to define the best path for this technology and consider the opportunity for partnership and licensing, specifically as it
relates to the potential eligibility for a priority review voucher in connection with future marketing applications for
nomacopan, including as a treatment for pediatric HSCT-TMA.
Also on May 1, 2024, management began to implement a reduction-in-force of approximately 67% of the Group’s total
workforce, as a result of the recently announced program prioritization under which the Group’s HSCT-TMA program was
suspended. The reduction-in-force is part of an operational restructuring plan and includes the elimination of certain senior
management positions. The purpose of the restructuring plan, including the reduction-in-force, is to reduce HSCT-TMA
related operating costs, while supporting the execution of our long-term strategic plan.
6
AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
RESULTS AND DIVIDENDS
Research and development expenses for the year ended 31 December 2023 were approximately $9,083,000 (2022:
$10,816,000). The decrease was the result of the net impact of multiple factors. The Group’s research and development
expenses decreased primarily due to decreases in clinical trial costs resulting from the Group’s decision to close the bullous
pemphigoid (“BP”) trial in August 2022 and decreases in nompacopan manufacturing costs due to timing of manufacturing;
partially offset by increases in personnel costs due to changes in our organizational structure, including a shift to U.S.-
based employees and consultants, and increases in external HSCT-TMA costs as a result of the prioritization of the HSCT-
TMA program in 2023.
Administrative expenses for the year ended 31 December 2023 were approximately $11,358,000 (2022: $13,075,000). The
decrease was the result of the net impact of multiple factors. The Group’s administrative expenses decreased primarily
due to decreases in (i) financing-related costs of approximately $1,700,000 as a result of costs incurred during the 2023
period being classified in shareholders' equity, (ii) directors' and officers' insurance premiums of approximately $600,000,
and (iii) personnel costs (including directors and consultants) of approximately $1,500,000. These decreases were partially
offset by increases in other expenses, including legal and professional fees of approximately $1,400,000, of which
approximately $800,000 are costs incurred related to the proposed Merger.
Net cash used in operating activities for the year ended 31 December 2023 was approximately $17,440,000 (2022:
$21,504,000). Net cash flow used in operating activities was primarily attributed to ongoing research activities to support
nomacopan and PAS-nomacopan, including manufacturing, clinical trial and preclinical activities, as well as administrative
expenses and the change in fair value of the warrants issued in 2022, which have been classified as liabilities.
Net cash generated from financing activities was approximately $6,967,000 (2022: $25,288,000).
Cash and cash equivalents decreased to approximately $3,845,000 at 31 December 2023 (2022: $13,250,000).
The Group made a loss of approximately $12,240,000 (2022: $17,011,000). 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 (2022: $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 favorable 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, 2023, 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 through equity or debt financings or other sources, such as strategic partnerships,
alliance and/or licensing arrangements and government grants. 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 a 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
provide or maintain sufficient resources required for operations in the development and introduction of its products. It is
not unusual that clinical development stage companies fail to achieve their business plans 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.
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AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
PRINCIPAL RISKS AND UNCERTAINTIES (continued)
Up until May 2024, the Group was conducting a clinical trial of subcutaneous nomacopan for the treatment of HSCT-TMA
in pediatrics. Following completion of a portfolio prioritization review, the Group announced that its HSCT-TMA program
will be suspended. The Group is currently investigating long-acting PASylated-nomacopan (“PAS-nomacopan”) for
treatment of GA secondary to dry AMD in preclinical studies.
Drug development
The Group’s drug development activities are complex, and all of the product candidates are in clinical development with a
significant 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 assays for the products for formulations 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 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 in a
timely fashion to make product candidates, or manufacture clinical trial drug supplies.
Departure of and search for executive officers
The Group’s success depends upon the continued service and performance of our senior management and other key
personnel. The loss of the services of these personnel could delay or prevent the successful completion of our planned
clinical trials or the commercialization of our therapeutic candidates or otherwise affect our ability to manage our company
effectively and to carry out our business plan. The Group does not maintain key-man life insurance. Although the Group
has entered into employment agreements with all the members of its senior management team, members of its senior
management team may resign at any time. High demand exists for senior management and other key personnel in the
biopharmaceutical industry. There can be no assurance that the Group will be able to continue to attract and retain such
personnel.
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 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 selected in a
significant patient population.
8
AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
PRINCIPAL RISKS AND UNCERTAINTIES (continued)
Intense competition from larger 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.
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 INDICATOR
The Directors consider the key performance indicator to be the Group’s cash position. This allows the Directors to manage
the on-going activities and strategies for further development of the Group.
The key performance indicator is measured and reviewed on a regular basis at Board meetings and enable the Directors to
communicate the performance of the Group against predetermined targets.
9
AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Key performance indicator:
Operational key performance indicators relate to R&D activities and are discussed in the preceding elements of this report.
Financially, the Group's key performance indicator is cash and utilisation thereof. As at the year ended 31 December 2023,
the Group’s cash position was $3,845,000 (2022: $13,250,000). Further analysis of changes in the year is provided in the
Group Statement of Cash Flows.
EMPLOYEES
As at 31 December 2023, we had 12 full-time employees. The table shows the number of staff of each gender employed at
the Company and their level of seniority.
Directors
Senior Managers
Employees
Male
5
2
3
Female
1
1*
5
Total
6
3
8
* Excludes our President, Chief Executive Officer and director as of 31 December 2023, who is reflected in the Directors
level.
SECTION 172 STATEMENT
When making decisions, the Directors 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 the goal to develop new therapeutic medicines, the business touches the lives of many people. The
Group exists in a complex and evolving regulatory and scientific environment and as a result has a number of key
stakeholder groups. Considering the interests of its 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 its
stakeholders, and help to ensure that these considerations are made not only at Board level, but throughout the entire
organization.
Post the reporting period end, the Directors of the Company 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.
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AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Stakeholder
Why Akari engages
How Akari engages
Investors
Employees
Management maintains a regular and
constructive dialogue with existing and
potential investors to communicate the
Company’s strategy and performance to
promote investor confidence and ensure
continued access to capital.
Akari employees are key to the
Company’s success and to the
achievement of business objectives.
Akari aims to be a responsible employer
in our approach to employee
engagement, development, performance
and rewards. The health, safety and
well-being of the Group’s employees is
one of Akari’s primary considerations
in the way the Company does business.
Employee engagement is led primarily
by the CEO (or interim CEO) and the
Executive Team.
• Annual General Meetings
• Financial reports filed with the SEC
• One-to-one meetings by
Management with analysts and
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
coaching, on-the-job learning,
external conferences and training
opportunities
• Communication channels between
the Board, Executive Team and
Akari employees
Regulatory bodies
Akari is subject to a wide range of laws,
regulations, and listing requirements
including the regulatory framework
from FDA, EMA and other regulatory
agencies, the SEC, data protection,
employment, tax, environmental and
health and safety legislation.
• Company website
• SEC filings
• Annual Report
• Direct contact and
communications with regulators
• Compliance updates at Board
Meetings
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AKARI THERAPEUTICS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
Stakeholder
Why Akari engages
How Akari engages
Suppliers
Akari has several key suppliers
with whom the Company has built
strong relationships. Akari has
established communication
channels to ensure its working
relationship remains collaborative
and forward – focused, and to
create a successful and fair
collaboration.
• 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 3 June 2024 and signed on its behalf.
Samir R. Patel
Samir R. Patel, M.D.
Director and Interim Chief Executive Officer
12
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
PART I - ANNUAL REPORT ON REMUNERATION
Single Total Figure of Remuneration for Each Director
The following table shows the compensation paid or accrued during the fiscal year ended 31 December 2023.
Name of
Director
Salary
and/or Fees
($)
Other
compensati
on ($)
Bonus ($)
RSU
Awards
($)(1)
Option
Awards
($)(2)
Pension
Benefits
($)(3)
2023 Total
($)
2023
Total
Fixed ($)
2023
Total
variable
($)
Executive Director
615,750
Rachelle
Jacques
Non-Executive Director
Ray Prudo,
M.D.(4)
Michael
Grissinger
Samir Patel,
M.D(5)
Mohamed
Wa’el
Ahmed
Hashad(6)
Donald
Williams
James Hill,
M.D.(7)
Stuart
Ungar,
M.D.(7)
David
Byrne(7)
100,000
60,350
3,704
28,684
65,280
29,343
23,645
49,170
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
729,393
198,498
16,500
1,560,141
615,750
945,391
-
-
-
-
-
-
-
-
13,000
6,500
6,103
6,500
6,500
-
-
-
-
-
-
-
-
-
-
-
113,000
100,000
13,000
66,850
60,350
6,500
9,807
3,704
6,103
35,184
28,684
6,500
71,780
65,280
6,500
29,343
29,343
-
23,645
23,645
-
49,170
49,170
-
(1) Represents the aggregate grant date fair value of time-based restricted stock units (“RSUs”) issued under our 2014 Equity Incentive Plan (the “2014
Plan”) and/or 2023 Equity Incentive Plan (the “2023 Plan”) in accordance with IFRS 2, Share-based payment.
(2) Represents the aggregate grant date fair value of options to purchase ordinary shares issued under our 2014 Plan and/or 2023 Plan in accordance with
IFRS 2, Share-based payment.
(3) Consists of company contributions to U.K. pension scheme or the U.S. 401k Plan.
(4) Dr. Prudo served as our Executive Chairman from September 2015 through December 2022. Effective January 1, 2023. Dr. Prudo began serving as
the Chairman of our board of directors with a renumeration package of $100,000 per annum, paid in equal monthly installments.
(5) Dr. Patel was appointed to our board of directors effective November 29, 2023. Dr. Patel has served as a member of our compensation committee
since January 30, 2024.
(6) Mr. Hashad was appointed to our board of directors effective June 30, 2023, at our 2023 annual general meeting. Mr. Hashad has served as a member
of our audit committee and nominating and corporate governance committee since June 30, 2023.
(7) Served as a director until our 2023 annual general meeting on June 30, 2023.
13
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
The following table shows the compensation paid or accrued during the fiscal year ended 31 December 2022.
Name of
Director
Salary
and/or
Fees ($)
Other
Compensa
tion ($)
Bonus
($)(6)
Long-term
Incentive
($)
Option
Awards
($)(1)
Pension
Benefits
($) (4)
2022 Total
($)
2022 Total
Fixed ($)
2022
Total
variable
($)
Executive Director
Ray Prudo,
M.D. (2)
Rachelle
Jacques
(3)
Clive
Richardson (7)
412,000
458,333
-
-
206,000
875,000
118,195
14,595
657,764
(7)
(5)
(7)
Non-Executive Director
James Hill,
M.D.
Stuart Ungar,
M.D.
61,502
49,064
David Byrne
58,332
Donald
Williams
Peter
Feldschreiber
(8)
Michael
Grissinger
56,838
24,974
41,505
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
618,000
412,000
206,000
2,799,224
15,250
4,147,808
3,922,808
225,000
-
11,819
802,373
144,609
657,764
20,278
20,278
20,278
20,278
-
20,278
-
-
-
-
-
-
81,780
81,780
69,342
69,342
78,610
78,610
77,116
77,116
24,974
24,974
61,783
61,783
-
-
-
-
-
-
(1) These amounts represent the aggregate grant date fair value for option awards for fiscal year 2022 computed in accordance with IFRS 2, Share-based
payment. A discussion of the assumptions used in determining grant date fair value may be found in note 16 to the Financial Statements. In addition to
her stock option awards, Ms. Jacques received a restricted stock award whose grant date fair value was $253,410.
(2) Dr. Prudo served as Executive Chairman of Akari’s Board of Directors from September 2015 until December 2022 and assumed the role of non-
executive Chairman of the Board effective January 1, 2023.
(3) Ms. Jacques was appointed our President and Chief Executive Officer in March 2022. Ms. Jacques received a sign-on bonus in the amount of $650,000.
(4) Consists of company contributions to U.K. pension scheme or the U.S. 401k Plan.
(5) Consists of company contributions to health benefits of $11,897 and life insurance premiums of $2,698.
(6) Bonuses are awarded on the basis of an assessment of the overall performance of the executive director concerned, rather than specific measures or
targets. In respect of 2022, the annual bonus payment for Mr. Prudo reflects his strong personal performance at a critical time for the business. The 2022
annual bonus payment for Ms. Jacques was based on the Company’s performance against Company objectives agreed by the Board. Ray Prudo and
Rachelle Jacques both received annual bonus payments of 100% of their target cash bonuses respectively, of which 100% was paid in the first quarter of
2023. None of the awards is attributable to share price appreciation and no discretion was exercised because of share price appreciation or depreciation.
Non-executive directors are not eligible to receive bonuses.
(7) Mr. Richardson resigned as Chief Executive Officer and Chief Operating Officer in March 2022. Prior to his resignation, Mr. Richardson received
three months of salary in the amount of $118,000. After his resignation, Mr. Richardson received a cash termination payment of approximately $658,000.
In addition, Mr. Richardson entered into a consulting agreement with the Company in which Mr. Richardson earned approximately $305,000.
(8) Mr. Feldschreiber resigned from the Board, effective 3 June 2022.
15
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
Incentive Plan Awards
Akari has two compensation plans under which our equity securities are authorized for issuance (the 2014 Equity
Incentive Plan and the 2023 Equity Incentive Plan) under which directors receive options to acquire ordinary shares in
Akari. Upon effectiveness of the 2023 Plan Incentive Plan in June 2023, no further awards are available to be issued
under the 2014 Plan. As of December 31, 2023, the Company had 789,393,500 ordinary shares underlying outstanding
equity awards under the 2014 Plan, consisting of stock options and restricted stock units.
Options and restricted stock units granted during the fiscal year ended 31 December 2023 are as follows:
Name of Director
Award
Type
Number of
Awards (1)
Grant Date
Exercise
Price ($)
Face Value
($) (2)
Vesting
Date
Expiry
Date
Rachelle Jacques
RSU
189,787,200
28/03/2023
N/A
358,698
(3)
28/03/2033
Option
152,690,700
01/06/2023
0.0016
245,832
(4)
01/06/2033
RSU
190,798,825
30/06/2023
N/A
324,358
(5)
30/06/2033
Ray Prudo, M.D.
Option
10,000,000
30/06/2023
0.0017
17,000
(6)
30/06/2033
Michael Grissinger
Option
5,000,000
30/06/2023
0.0017
8,500
(6)
30/06/2033
Samir Patel, M.D.
Option
5,000,000
29/12/2023
0.0016
7,800
(6)
29/12/2033
Mohamed Wa’el
Ahmed Hashad
Option
5,000,000
30/06/2023
0.0017
8,500
(6)
30/06/2033
Donald Williams
Option
5,000,000
30/06/2023
0.0017
8,500
(6)
30/06/2033
James Hill, M.D.
N/A
Stuart Ungar, M.D.
N/A
David Byrne
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(1) Option and restricted stock unit awards are subject to time-based vesting conditions without performance measures or targets other than continued
service until the date of vesting.
(2) These amounts represent the face value for options 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.
(3) The restricted stock unit award vests 50% on the first anniversary date of the date of grant, or 28 March 2024, with the remainder vesting in twelve
equal monthly installments thereafter, subject to continued service.
(4) The stock option award vests and becomes exercisable ratably on a semiannual basis over a four-year period commencing on 01 June 2023, subject
to continued service.
(5) The stock restricted stock award vests and becomes exercisable ratably on a semiannual basis over a four-year period commencing on 30 June 2023,
subject to continued service.
(6) The stock option award’s vests and becomes exercisable on the date of our 2024 Annual General Meeting, or by 30 June 2024.
15
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
Directors’ shareholdings
The table below shows, for each director, the total number of ordinary shares owned (by the director and connected
persons), the total number of unvested restricted stock units held, the total number shares issuable upon exercise of
outstanding warrants, and the total number of share options that were held and the number of share options vested as at 31
December 2023. All unvested restricted stock units and 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 or
warrants during the year ended 31 December 2023.
Ordinary Shares
Owned(1)
Unvested
Restricted Stock
Units
Share
Warrants
Share Options
Vested Share
Options
Name of Director
Executive Director
Ray Prudo, M.D.(2)
3,171,056,800
-
313,901,100
10,000,000
-
Rachelle Jacques
152,502,975
385,954,925
Non-Executive Director
Michael Grissinger
20,000,000
Samir Patel, M.D.(3)
2,085,237,500
Mohamed Wa’el
Ahmed Hashad
-
Donald Williams
20,000,000
James Hill, M.D
Stuart Ungar, M.D.
David Byrne
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
390,087,400
108,110,100
16,500,000
11,500,000
521,774,000
5,000,000
5,000,000
-
-
19,850,000
14,850,000
-
-
-
-
-
-
(1) Our shareholders, named executive officers and directors may hold ordinary shares, ADS or a combination of both. This column shows each holder’s
ownership assuming all shares were held as ordinary shares, which may not be the case. Our ADSs are listed on The Nasdaq Capital Market under the
trading symbol “AKTX.” Ordinary shares are convertible to ADSs at a 2,000 to one ratio.
(2) Amounts include holdings of RPC Pharma Limited (“RPC”), together with Ray Prudo, M.D. and Praxis Trustees Limited as trustee of The Sonic
Healthcare Holding Company (“Praxis,” and together with Ray Prudo and RPC, “Ray Prudo and Affiliates”). In his individual capacity, Dr. Prudo
beneficially owns the 3,484,957,900 Ordinary Shares (inclusive of 304,690,600 and 9,210,500 Ordinary Shares issuable upon exercise of warrants held
by Dr. Prudo and RPC Pharma, respectively). RPC beneficially owns 809,977,100 Ordinary Shares (inclusive of 9,210,500 Ordinary Shares issuable
upon exercise of warrants). Praxis beneficially owns 38,709,600 Ordinary Shares. Voting and investment decisions with respect to shares owned by
RPC and Praxis are controlled by Dr. Prudo.
(3) Dr. Patel is principal of PranaBio Investments, LLC. Share warrants held by PranaBio Investments, LLC consists of (i) prefunded warrants exercisable
to purchase 96,774,000 ordinary shares (represented by 48,387 ADSs) at an exercise price of $0.0001 per ordinary share (or $0.20 per ADS), and (ii)
warrants exercisable to purchase 425,000,000 ordinary shares (represented by 212,500 ADSs) at exercise prices ranging from $0.0016 to $0.03 per
ordinary share (or $17.00 to $60.00 per ADS).
16
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
Illustration of Total Shareholder Return
The following graph compares the cumulative total shareholder return on Akari’s ADSs, each representing 2,000 ordinary
shares, with that of the NASDAQ Biotech Index (^NBI) from the period that Akari’s ADSs were publicly traded on The
Nasdaq Capital Market through 31 December 2023. Akari selected the NASDAQ Biotech Index because Akari’s ADSs
trade on The NASDAQ Capital Market and Akari believes this indicates its relative performance against a group consisting
of more similarly situated companies.
17
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
Chief Executive Total Remuneration History
The table below sets out total remuneration details for the Chief Executive Officer.
Period
2023 Rachelle Jacques
2022 Rachelle Jacques (3)
2022 Clive Richardson (5)
2021 Clive Richardson
2020 Clive Richardson
2019 Clive Richardson (6)
2018 (David Solomon) (7)
2017 (Gur Roshwalb and
David Solomon) (7)
2016 (Gur Roshwalb)
2015 (Gur Roshwalb)
2014 (Gur Roshwalb)
2013 (Gur Roshwalb) (8)
Single total
figure of
remuneration
($)
615,750
4,147,808
802,373
612,047
503,941
432,408
173,611
1,338,253
581,250
7,306,951
410,564
576,389
Short-term
incentive payout
against
maximum (1)
-
-
-
-
-
-
100% (10)
125% (11)
100% (12)
-
-
Option and
restricted stock
awards ($)
927,891 (13)
2,799,224 (4)
-
-
-
-
-
-
-
6,863,034
60,564
173,396
Bonus ($)
-
875,000 (3)
657,764 (5)
206,826
214,960
177,028
-
119,041 (9)
187,500
86,625
-
-
Option
Awards
against
maximum (2)
-
-
-
-
-
-
-
-
-
-
-
(1) All cash bonuses to Rachelle Jacques and Clive Richardson were awarded on a discretionary annual basis, except Ms. Jacques’s sign-on bonus.
(2) All options were awarded on a discretionary basis.
(3) Rachelle Jacques was appointed as Akari’s Chief Executive Officer on 28 March 2022. Ms. Jacques’s bonus includes a $650,000 sign-on bonus.
(4)
In addition to Ms. Jacques’s stock option awards granted during 2022, Ms. Jacques received a restricted stock award whose grant date fair value
was $253,410.
(5) Mr. Richardson resigned as Akari’s Chief Executive Officer and Chief Operating Officer in March 2022. Mr. Richardson received a termination
payment of $657,746.
(6) Clive Richardson was appointed Interim Chief Executive on 8 May 2018 and Chief Executive Officer on 18 July 2019.
(7) 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.
(8) Dr. Roshwalb was appointed as Akari’s Chief Executive Officer on 4 March 2013.
(9)
Includes a $50,000 signing bonus.
(10) Bonus was awarded in 2017 but calculated from Dr. Solomon’s appointment on 28 August 2017.
(11) 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.
(12) 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.
(13) In addition to Ms. Jacques’s stock option awards granted during 2023, Ms. Jacques received a restricted stock awards with a grant date fair value
of $729,393 in the aggregate.
18
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
Directors’ Remuneration Compared to Other Employees
The table below shows the percentage change in remuneration of each director and the parent company’s non-executive
directors on a full-time equivalent basis between the year ended 31 December 2022 and the year ended 31 December
2023.
Change in Remuneration in year ended 31 December 2022 compared with
remuneration in the year ended 31 December 2023
Salary and/or Fees
Taxable Benefits
Annual Bonus
Executive Director
Ray Prudo, M.D.
Rachelle Jacques
Non-Executive Director
James Hill, M.D.
Stuart Ungar, M.D.
David Byrne
Donald Williams
Mohamed Wa’el Ahmed Hashad
Michael Grissinger
Samir Patel, M.D.
Other Employees
-76%(1)
34%(2)
-52%(3)
-52%(3)
-16%(3)
15%(4)
-
45%(5)
-
1%
-
-
-
-
-
-
-
-
-
-
-100%
-100%
-
-
-
-
-
-
-
-100%
(1) Dr. Prudo served as our executive chairman from 2015 September through 2022 December. Effective 1 January 2023, Dr. Prudo began serving as the
Chairman of our board of directors with a renumeration package of $100,000 per annum, paid in equal monthly installments.
(2) Rachelle Jacques was appointed as Akari’s Chief Executive Officer on 28 March 2022. Accordingly, the increase is primarily due to renumeration
during the year ended 31 December 2023 being for twelve months versus nine months for the year ended 31 December 2022.
(3) Served as a director until our 2023 annual general meeting on 30 June 2023. Accordingly, the decrease is primarily due to a partial year of service for
the year ended 31 December 2023.
(4) Mr. Williams was appointed chairman of the compensation committee on 30 June 2023 which increased his annual retainer.
(5) Mr. Grissinger was appointed to the compensation and audit committees on 1 November 2022 and our as chairman of the nominating and governance
committee on 30 June 2023 which increased his annual retainer.
19
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
Directors’ Remuneration Compared to Other Employees (continued)
The table below shows the percentage change in remuneration of each director and the parent company’s non-executive
directors on a full-time equivalent basis between the year ended 31 December 2021 and the year ended 31 December
2022.
Executive Director
Ray Prudo, M.D.
Rachelle Jacques
Clive Richardson
Non-Executive 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 2022
Salary and/or Fees
Taxable Benefits
Annual Bonus
0%
(1)
-78% (2)
-
-
-
-
-
-
2%
-
(1)
-3%
-
-
-
-
-
-
76%
0%
(1)
-100% (2)
-
-
-
-
-
-
-34%
(1) Rachelle Jacques was appointed as Akari’s Chief Executive Officer on 28 March 2022; there is no comparison.
(2) Mr. Richardson resigned as Akari’s Chief Executive Officer and Chief Operating Officer in March 2022. Mr. Richardson received three months of
salary in 2022; he did not receive a 2022 bonus.
The table below shows the percentage change in remuneration of each director and the parent company’s non-executive
directors on a full-time equivalent basis between the year ended 31 December 2020 and the year ended 31 December 2021.
Change in Remuneration in year ended 31 December 2020 compared with
remuneration in the year ended 31 December 2021
Salary and/or Fees
Taxable Benefits
Annual Bonus
Executive Director
Ray Prudo, M.D.
Clive Richardson
Non-Executive Director
James Hill, M.D.
Stuart Ungar, M.D.
David Byrne
Donald Williams
Peter Feldschreiber
Michael Grissinger
Other Employees
-
5%
-
-
-
-
-
-
44%
0%
-4%
-
-
-
-
-
-
25%
0%
4%
-
-
-
-
-
-
11%
20
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
Directors’ Remuneration Compared to Other Employees (continued)
The table below shows the percentage change in remuneration of each director and the parent company’s non-executive
directors on a full-time equivalent basis between the year ended 31 December 2019 and the year ended 31 December 2020.
Executive Director
Ray Prudo, M.D.
Clive Richardson
Non-Executive 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 2019 compared with
remuneration in the year ended 31 December 2020
Salary and/or Fees
Taxable Benefits
Annual Bonus
3%
17%
-
-
-
-
-
-
23%
-
19%
-
-
-
-
-
-
-9%
3%
21%
-
-
-
-
-
-
8%
Relative Importance of Cash Position
The following table sets forth the cash amounts as at 31 December 2023 and 31 December 2022.
Period
Cash
31 December 2023
($)
3,845,000
31 December 2022
($)
13,250,000
Change
(%)
(71%)
Implementation of remuneration policy for year ending 31 December 2023
Our director remuneration, comprised of annual cash retainers and equity grants, is administered by our board of directors
with the assistance of the compensation committee. The compensation committee conducts an annual review of director
remuneration and makes recommendations to the board with respect thereto.
The shareholders approved our Directors Remuneration Policy on June 30, 2023 to provide a framework for the Directors’
remuneration packages. In addition, the Company has a non-executive director remuneration 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. On February 1, 2023, our board resolved that the annual cash retainers would be
increased by 5%, as compared to 2022. As a result, our non-executive directors were compensated for service on our board
of directors as follows in 2023:
an annual retainer for service on the board of directors of $41,305;
an annual retainer for service as a member of the compensation committee and nominating and
governance committee of $5,570;
an annual retainer for service as a member of the audit committee of $7,875;
for the chairman of the compensation committee, and nominating and governance committee, an annual
retainer of $11,139;
for the chairperson of the audit committee, an annual retainer of $18,375;
21
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
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 2023 presented as comparative information):
31 December
2022
31 December
2023
Increase/
(Decrease)
%(1)
31 December
2023
31 December
2024(2)
Increase/
(Decrease)
%(3)
$412,000
$100,000
(76%)
$100,000
$100,000
0%
$118,195
-
N/A
N/A
N/A
N/A
$458,333
$615,750
34%
$615,750
$615,750
0%
Director
Executive Director
Ray Prudo,
M.D. (4)
Clive
Richardson(5)
Rachelle
Jacques(6)
Non-Executive Director
Michael
Grissinger
Samir R. Patel,
M.D(7)
Mohamed Wa’el
Ahmed Hashad
Donald
Williams
$49,947
$60,350
21%
$60,350
$65,889
9%
-
-
$3,704
N/A
$3,704
$46,875(8)
1,166%
$28,684
N/A
$28,684
$57,055
99%
$56,838
$65,280
15%
$65,280
$70,819
85%
James Hill
$61,502
$29,343
Stuart Ungar
$49,064
$23,645
David Byrne
$58,332
$49,170
Peter
Feldschreiber
$24,974
-
(52%)
(52%)
(16%)
N/A
$29,343
$23,645
$49,170
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(1) On February 1, 2023, the Compensation Committee approved a 5% annual retainer increase for our non-executive directors, effective as of January
1, 2023. All directors are eligible to receive reimbursement for reasonable out-of-pocket expenses incurred in connection with attendance at meetings
of our board of directors, and our non-executive directors are also eligible to receive reimbursement, upon approval of the board of directors or a
committee thereof, for reasonable out-of-pocket expenses incurred in connection with attendance at various conferences or meetings with our
management.
(2) All figures are estimates. Additional discretionary bonuses may be awarded in accordance with contractual entitlement and the remuneration policy.
(3) There were no changes to annual retainers for our executive and non-executive directors in 2024. Changes represent the timing of appointment or
termination of service on our board, or sub-committee thereof.
(4) Dr. Prudo served as our executive chairman from September 2015 through December 2022. Effective January 1, 2023, Dr. Prudo began serving as
the Chairman of our board of directors with a renumeration package of $100,000 per annum, paid in equal monthly installments.
(5) Mr. Richardson resigned as Chief Executive Officer and Chief Operating Officer in March 2022. His annual base compensation of £382,306 was
pro-rated during 2022.
(6) Ms. Jacques was appointed as our Chief Executive Officer in March 2022. Her annual base compensation of $458,333 for this role was pro-rated
during 2022. Ms. Jacques received an annual base salary of $615,750 until her departure, effective May 1, 2024.
(7) All figures represent annual board and committee retainers. Dr. Patel was appointed as a non-executive director on 29 November 2023 and
eligible for compensation in accordance with our non-executive director remuneration policy. Dr. Patel will also be compensated for his services
as Interim President and Chief Executive Officer monthly in the form of restricted stock units (“RSUs”) with a fair market value of $50,000.
22
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
Compensation Committee Approach to Remuneration Matters
Our board of directors and compensation committee review compensation annually for our executives. In setting executive
base salaries and bonuses and granting equity incentive awards, we consider compensation for comparable positions in the
market, the historical compensation of our executives, individual performance as compared to our expectations and
objectives, our desire to motivate our employees to achieve short- and long-term results that are in the best interests of our
shareholders, and a long-term commitment to our Company.
Our compensation committee is primarily responsible for determining the compensation for our executive officers. Our
compensation committee typically reviews and discusses management’s proposed compensation with our Chief Executive
Officer for all executives other than the Chief Executive Officer. Based on those discussions and its discretion, taking into
account the factors noted above, the compensation committee then sets the compensation for each executive officer other
than the Chief Executive Officer and recommends the compensation for the Chief Executive Officer to our board of
directors for approval. Our board of directors discusses the compensation committee’s recommendation and ultimately
approves the compensation of our Chief Executive Officer without members of management present.
In 2023, our compensation committee utilized the services of Amplify Strategy & Consulting LLC (“Amplify”), an
independent compensation consultant. During 2023, Amplify did not provide material services to us other than the services
to our compensation committee. Based on its evaluation, our compensation committee has determined that Amplify’s work
has not raised any conflict of interests.
23
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
PART II - DIRECTORS’ REMUNERATION POLICY
This section provides information about the Directors’ Remuneration Policy (the “Policy”) of Akari. The Policy was
approved at the 2023 Annual General Meeting of Shareholders (“AGM”) and will remain in effect for a period of three
years thereafter, unless changes to the Policy are required earlier and a new Policy is put to shareholder vote.
The Policy seeks to provide compensation packages which will attract, motivate, reward and retain an executive team with
the right caliber 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
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 the Policy for its Executive Directors and seeks to explain how each element
of the compensation package operates:
Policy Table – Executive Directors
Element
Purpose and
Link to Strategy
Operation
Maximum Opportunity
Performance Metrics
and Recovery Provisions
Support the
recruitment and
retention of
Executive
Officers
Base Salary
Encourages and
enables
executives to
build savings for
their retirement
Pension and
other
retirement
plans
• Base salary levels
are set taking into
account the role,
responsibilities
and individual’s
experience in the
position,
performance of
the individual and
Akari. Market
competitiveness
within the
Company’s peer
benchmarks are
utilized to “price”
a job.
• Base salaries are
typically
reviewed
annually.
• Akari typically
makes
contributions to
pension plans (or
retirement
savings plans) to
match prevailing
local market
practices.
24
• There is no
• 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.
prescribed maximum
increase nor any
requirement to
increase salary at any
time. The Company
uses established
salary ranges for
annual merit
increases
• 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.
• Currently up to 10%
of salary per annum.
• None.
• No provisions for
recovery or
withholding of sums
as this is not
performance-related.
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
Element
Purpose and
Link to Strategy
Operation
Maximum Opportunity
Performance Metrics
and Recovery Provisions
Other
Benefits
Bonus
Provide market
competitive
benefits in a cost-
effective way
• Provisions
• 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.
•
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.
To reward the
delivery of annual
targets as well as
to recognise
individual
contributions
towards our key
strategic
achievements
• Any bonus is paid
• The maximum
annual bonus payable
for any financial year
is 100% of target
bonus, although the
Compensation
Committee reserves
the right to vary this
amount in
exceptional
circumstances and
based on assessment
of Company and
individual
performance and
goals achievement.
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
25
• 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
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
Element
Purpose and
Link to Strategy
Operation
Maximum Opportunity
• There is no 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 Metrics
and Recovery Provisions
measures are
considered adequate.
• Where 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.
• Grant value of
• None.
£30,000 or local
market rules as
amended from time
to time.
• No provisions for
recovery or
withholding of sums
as this is not
performance-related.
To motivate and
reward long-term
performance in
alignment with
the shareholder
interests and
value- creation
Equity
Incentive
Plan (2014
Equity
Incentive
Plan & 2023
Equity
Incentive
Plan )
CSOP (UK
resident
employees
and directors
only)
Compensation
Committee.
• Awards may be
made periodically
to Executive
Officers in the
form of options
or in shares
including stock
appreciation
rights, phantom
stock awards or
restricted stock
units.
• Awards typically
vest over two or
four years and
may be subject to
incremental
vesting.
• Executives are
eligible to
participate in the
all- employee
CSOP Plan under
the same
conditions as all
other employees.
26
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
Policy Table – Non-Executive Directors
Akari’s non-executive compensation policy is administered by its Board of Directors (the “Board”) with the assistance of
the Compensation Committee. The Compensation committee periodically reviews the non-executive 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-executive 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.
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
• None.
• There is no prescribed
maximum increase nor
any requirement to
increase salary at any
time.
Support the
recruitment and
retention of Non-
Executive
Directors
Annual
Cash
Retainer
Fee
• 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-Executive
Director may
elect to receive
annual cash
payments in the
form of fully-
27
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
Element
Purpose and
Link to Strategy
Operation
Maximum Opportunity
Performance Metrics
• None.
• Normal initial grant
and annual grant of
share options will be
equal to 5,000,000 (or
equivalent value of
ADS) but the
Committee reserves
the discretion to
review and amend this
amount.
Strengthens the
alignment to
shareholders’
interests through
share ownership
Share
Options
vested ordinary
shares.
• Directors
typically receive
an annual grant
of options in the
form of market
value options
under the
Company’s
Equity Incentive
Plan then in
effect.
• 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-executive 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 nonemployee 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 Officers are eligible, nor do they typically receive any other performance related payment.
28
AKARI THERAPEUTICS, PLC
DIRECTORS’ REMUNERATION REPORT (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
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.
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 Policy.
The Compensation Committee also considers shareholder feedback, so far as it relates to compensation, when reviewing
the appropriateness of the 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 3 June 2024 and signed on its behalf.
Samir R. Patel
Samir R. Patel, M.D.
Director and Interim Chief Executive Officer
29
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF
AKARI THERAPEUTICS PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
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 2023 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 2023 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 2023. 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.
30
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF
AKARI THERAPEUTICS PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
Key Audit Matter
Valuation of Parent Company investment
in subsidiaries and amounts due from
group undertakings
How our scope addressed this matter
Our audit work included, but was not restricted to, the
following:
• Review of management’s impairment assessment in
The Parent Company recognises investments
in subsidiaries with a carrying value of
$18,339k. The Group has yet to record
revenue or recognise an intangible asset in
association with research and development
costs. During the year, there was a material
decline in the market capitalisation of the
Group which under IAS 36 is considered an
example of a significant impairment
indicator. During the year, the Parent
Company recognised impairment charges of
$5,758k against investments in subsidiaries
and amounts owed from group undertakings.
There is risk these assets may be materially
overstated.
relation to Parent Company investments in
subsidiaries and amounts due from group
undertakings.
• Consideration of management’s assessment of the
fair value of the equity of subsidiary undertakings,
which was made with reference to appraisal of what
the implied enterprise value of the Group is
attributable to, and valuation reports prepared for the
Group.
• Consideration of contradictory evidence suggesting
that carrying values associated with these assets as at
31 December 2023 may be materially overstated.
• Review of disclosures made in respect of these assets
to ensure adequate information is provided to
highlight the basis on which accounting estimates
have been made and the degree of uncertainty
associated with them.
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 and Parent Company financial statements
as a whole to be US$350,000 being 1.7% of R&D and administrative 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 $263,000.
We agreed with management that we would report to the Audit Committee all audit differences in excess of US$17,500
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
are reliant on additional funding, which is largely contingent on the completion of a proposed merger transaction, to
meet their liabilities as they fall due, together with management of liquidity and working capital positions prior this.
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 which is mostly dependent on the merger going ahead, will be successful. Future
fundraising could be delayed and the amounts arising from future fundraises are uncertain. A significant delay in the
31
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF
AKARI THERAPEUTICS PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
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 financial position (including cash) as at the date of approval of
the financial statements.
- We considered for reasonableness management’s commentary around the Group’s management of its working
capital positions, including accounts receivable and payable, and its implications for cash availability and the
quantum and timing of anticipated fundraising.
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 5, 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
32
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF
AKARI THERAPEUTICS PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
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:
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
noncompliance 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.
33
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF
AKARI THERAPEUTICS PLC
FOR THE YEAR ENDED 31 DECEMBER 2023
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
4 June 2024
10 Queen Street Place
London
EC4R 1AG
34
AKARI THERAPEUTICS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
FOR THE YEAR ENDED 31 DECEMBER 2023
Research and development expenses
Administrative expenses
Notes
2023
$000
(9,083)
(11,358)
2022
$000
(10,816)
(13,075)
OPERATING LOSS
3
(20,441)
(23,891)
Excess of consideration over fair value
Fair value movement on liability related to warrants
Net finance income / (cost)
LOSS BEFORE INCOME TAX
Income tax credit
LOSS FOR THE YEAR
Other Comprehensive Loss:
Currency translation differences
15
4
5
-
6,599
413
(1,963)
6,946
(575)
(13,429)
(19,483)
1,189
2,472
(12,240)
(17,011)
(269)
(230)
COMPREHENSIVE LOSS FOR THE YEAR
(12,509)
(17,241)
Loss per share attributable to the ordinary equity holder of the
parent:
Basic and diluted (cents)
7
(0.00)
(0.00)
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 6 for the results of the parent company.
The notes on pages 42 to 63 form an integral part of the consolidated financial statements.
35
AKARI THERAPEUTICS PLC
COMPANY NUMBER: 05252842
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
ASSETS
Non-current assets
Intangible assets
Current assets
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY
Share capital
Share premium
Capital redemption reserve
Other reserves
Merger reserve
Share based payment reserve
Reverse acquisition reserve
Retained losses
TOTAL EQUITY
LIABILITIES
Current liabilities
Trade and other payables
Warrant liability
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Notes
8
11
13
14
14
14
14
16
14
14
12
15
2023
$000
14
14
1,713
3,845
5,559
5,572
1,324
144,797
52,194
(1,079)
9,128
19,187
(20,983)
(203,580)
988
3,331
1,253
4,584
5,572
2022
$000
17
17
2,951
13,250
16,201
16,218
744
138,269
52,194
(810)
9,128
18,037
(20,983)
(191,340)
5,239
3,127
7,852
10,979
16,218
The financial statements were approved and authorised for issue by the Board of Directors on 3 June 2024 and were signed
below on its behalf by:
Samir R. Patel
Samir R. Patel, M.D.
Director and Interim Chief Executive Officer
The notes on pages 42 to 63 form an integral part of the consolidated financial statements.
36
AKARI THERAPEUTICS PLC
COMPANY NUMBER: 05252842
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
ASSETS
Non-current assets
Investment in subsidiaries
Current assets
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY
Share capital
Share premium
Capital redemption reserve
Merger reserve
Share based payment reserve
Retained losses
TOTAL EQUITY
LIABILITIES
Current liabilities
Trade and other payables
Warrant liability
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Notes
10
11
13
14
14
14
16
14
12
15
2023
$000
18,339
18,339
1,726
3,745
5,471
23,810
1,324
144,797
52,194
9,128
19,187
(207,126)
19,504
3,053
1,253
4,306
23,810
2022
$000
20,339
20,339
6,717
13,217
19,934
40,273
744
138,269
52,194
9,128
18,037
(188,871)
29,501
2,920
7,852
10,772
40,273
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 $18,255,410
(2022: loss of $17,280,833 ).
The financial statements were approved and authorised for issue by the Board of Directors on 3 June 2024 and were
signed below on its behalf by:
Samir R. Patel
Samir R. Patel, M.D.
Director and Interim Chief Executive Officer
The notes on pages 42 to 63 form an integral part of the consolidated financial statements.
37
AKARI THERAPEUTICS PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
At 1 January 2022
Loss for the year
Total comprehensive loss for the year
Share based payments
Shares issued, net of transaction cost
Total transactions with owners
At 31 December 2022
Loss for the year
Total comprehensive loss for the year
Share based payments
Shares issued, net of transaction cost
Issue of shares for vendor services
Proceeds from employee vesting of restricted shares
Total transactions with owners
Share
premium
Other
reserves
Merger
reserve
Share
based
payment
reserve
Reverse
acquisition
reserve
Capital
redemption
reserve
$000
$000
$000
$000
$000
$000
Share
capital
$000
Retained
losses
$000
Total
equity
$000
476
125,059
(580)
9,128
17,302
(20,983)
52,194
(174,329)
8,267
-
-
-
-
-
-
268
268
13,210
13,210
(230)
(230)
-
-
-
-
-
-
-
-
-
-
735
-
735
-
-
-
-
-
-
-
-
-
-
(17,011)
(17,241)
(17,011)
(17,241)
-
-
-
735
13,478
14,213
744
138,269
(810)
9,128
18,037
(20,983)
52,194
(191,340)
5,239
-
-
-
-
-
-
568
6,394
8
4
134
-
580
6,528
(269)
(269)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,150
-
-
-
1,150
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(12,240)
(12,509)
(12,240)
(12,509)
-
-
-
-
-
1,150
6,962
142
4
8,258
At 31 December 2023
1,324
144,797
(1,079)
9,128
19,187
(20,983)
52,194
(203,580)
988
The notes on pages 42 to 63 form an integral part of the consolidated financial statements.
38
AKARI THERAPEUTICS PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
At 1 January 2022
Loss for the year
Total comprehensive loss for the year
Share based payments
Shares Issued, net of transaction costs
Total transactions with owners
Share
capital
$000
Share
premium
Merger
reserve
$000
$000
Share based
payment
reserve
$000
Capital
redemption
reserve
$000
Retained
losses
Total
equity
$000
$000
476
125,059
9,128
17,302
52,194
(171,590)
32,569
-
-
-
268
268
-
-
-
13,210
13,210
-
-
-
-
-
-
-
735
-
735
-
-
-
-
-
(17,281)
(17,281)
(17,281)
(17,281)
-
-
-
735
13,478
14,213
At 31 December 2022
744
138,269
9,128
18,037
52,194
(188,871)
29,501
Loss for the year
Total comprehensive loss for the year
Share based payments
Shares issued, net of transaction costs
Issue of shares for vendor services
Proceeds from employee vesting of restricted shares
Total transactions with owners
-
-
-
568
8
4
580
-
-
-
6,394
134
-
6,528
-
-
-
-
-
-
-
-
-
1,150
-
-
-
1,150
-
-
-
-
-
-
-
(18,255)
(18,255)
(18,255)
(18,255)
-
-
-
-
-
1,150
6,962
142
4
8,258
At 31 December 2023
1,324
144,797
9,128
19,187
52,194
(207,126)
19,504
The notes on pages 42 to 63 form an integral part of the consolidated financial statements.
39
AKARI THERAPEUTICS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Cash flows from operating activities
Loss before income tax
Adjustments for:
Excess of consideration over fair value
Changes in fair value of warrants
Share-based payment
Expenses settled in shares
Foreign currency exchange (loss)/gains
Amortization
Decrease in trade and other receivables
Increase /(decrease) 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
Issue costs
Proceeds for future exercises of warrants to purchase shares
Other
Note
2023
$000
2022
$000
(13,429)
(19,483)
15
16
13
15
-
(6,599)
1,150
142
(468)
4
124
127
2,571
(16,378)
7,972
(1,010)
-
4
1,963
(6,946)
735
-
142
4
1,699
(1,936)
2,318
(21,504)
26,942
(1,748)
94
-
Cash generated from financing activities
6,966
25,288
Exchange losses on cash and cash equivalents
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
7
(9,405)
13,250
3,845
105
3,889
9,361
13,250
The notes on pages 42 to 63 form an integral part of the consolidated financial statements.
40
AKARI THERAPEUTICS PLC
PARENT COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Cash flows from operating activities
Loss before income tax
Adjustments for:
Excess of consideration over fair value
Expenses settled in shares
Changes in fair value of warrants
Share based payments
Impairment on investment
Impairment on intercompany balance
Decrease in trade and other receivables
Increase / (decrease) in trade and other payables
Taxation received
Exchange rate differences
Notes
2023
$000
2022
$000
(19,444)
(19,753)
15
16
10
-
142
(6,599)
1,150
2,000
3,757
48
133
2,571
(214)
1,963
-
(6,946)
735
-
-
1,782
(1,966)
2,318
385
Net cash flows used in operating activities
(16,457)
(21,482)
Cash flows from investing activities
Movement in intercompany
Net cash generated by investing activities
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Issue costs
Proceeds for future exercises of warrants to purchase shares
Other
18
18
7,972
(1,010)
-
4
-
-
26,942
(1,748)
94
-
13
15
Net cash generated from financing activities
6,967
25,288
Exchange gains on cash and cash equivalents
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
-
(9,472)
13,217
3,745
92
3,898
9,319
13,217
The notes on pages 42 to 63 form an integral part of the consolidated financial statements.
41
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1.
GENERAL INFORMATION
Akari Therapeutics, Plc is a public company limited by shares registered in England and Wales under number 5252482, with
its registered office at Highdown House, Yeoman Way, Worthing, West Sussex, BN99 3HH.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
2.
ACCOUNTING POLICIES
Basis of preparation
(a)
These consolidated financial statements of Akari Therapeutics, Plc have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the UK and IFRIC interpretations issued and effective or issued and early
adopted as at the time of preparing these statements and with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS.
The consolidated and Company financial statements are presented in USD (“$”) the functional and presentations currency of
the Company.
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).
Basis of consolidation
(b)
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”).
Going Concern
(c)
The Group meets its day-to-day working capital requirements through funding. In assessing the Group’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.
As of 31 December 2023, the Group’s cash balance was $3.8 million. To date, the Group has incurred substantial losses
and negative cash flows since inception and had an accumulated deficit of $203.6 million as of 31 December 2023.
The Group anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product
candidates currently in development. The Group is subject to a number of risks and uncertainties similar to those of other
companies of the same size within the biotechnology industry, such as uncertainty of clinical trial outcomes, uncertainty
of additional funding, and history of operating losses. Substantial additional financing will be needed by the Group to fund
its operations and to commercially develop its product candidates and there can be no assurance that additional funds will
be available when the Group need them on terms that are acceptable to it, or at all. As of May 31, 2024, the Group’s cash
balance of $5.9 million, which includes net proceeds received from the May 2024 Private Placement (see note 19 of the
notes to financial statements), is not sufficient to fund its operations for the one-year period after the date these consolidated
financial statements are issued.
42
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2. ACCOUNTING POLICIES (continued)
(c) Going Concern (continued)
Management is currently evaluating different strategies to obtain the required funding for future operations. These
strategies may include, but are not limited to: product development financing, private placements and/or public offerings
of equity and/or debt securities, and strategic research and development collaborations and/or similar arrangements.
Further, closing of the Group’s proposed merger with Peak Bio, Inc. as contemplated in the associated Merger Agreement
is contingent on the PIPE Investment (as defined in the Merger Agreement) which shall have been consummated
simultaneously with, and conditioned only upon, the occurrence of the closing, and shall result in net proceeds to the Group
of least $10 million. Management also expects that further sources of funding will also be made available for the Group to
draw on (if required) as a result of the merger.
While management is confident in the Company’s ability to obtain future funding, there can be no assurance that these
future funding efforts, including the PIPE Investment (as defined in the Merger Agreement), will be successful.
Based on the requirement for Group to raise additional capital to finance future operations and for it to manage its working
capital position, particularly in relation to accounts payable balances, until further such capital can be raised, management
has concluded that these outcomes represent material uncertainties that cast significant doubt regarding the Group’s ability
to continue as a going concern within one year after the date that these consolidated financial statements are issued.
Notwithstanding these uncertainties, the accompanying consolidated financial statements have been prepared assuming
that we will continue as a going concern, which contemplates the realisation of assets and the satisfaction of liabilities in
the normal course of business. As such, the accompanying consolidated financial statements do not reflect any adjustments
relating to the recoverability and classification of recorded assets and liabilities that might be necessary if the Group is
unable to continue as a going concern.
Standards and interpretations adopted during the year
(d)
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 2023,
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 2022. 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.
The Directors intends to adopt new and amended standards and interpretations, if applicable, when they become effective. At
the date of approval of these financial statements, the following standards and interpretations which have not been applied in
these financial statements were in issue for the period beginning 1 January 2024 but not yet effective:
•
•
•
IFRS 16 Leases (Amendment – Liability in a Sale and Leaseback)
IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as Current or Non-current)
IAS 1 Presentation of Financial Statements (Amendment – Non-current Liabilities with Covenants)
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.
43
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2. ACCOUNTING POLICIES (continued)
Foreign currency translation
(e)
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)
b)
c)
assets and liabilities at the balance sheet date are translated at the closing rate as at that balance sheet date;
income and expenses for each income statement are translated at average exchange rates; and
all resulting exchange differences are recognised in other comprehensive income.
(f)
Cash and cash equivalents include cash in hand and deposits held at call with banks.
Cash and cash equivalents
Trade and other payables
(g)
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.
Trade and other receivables
(h)
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.
Financial liabilities
(i)
All financial liabilities are recognised in the statement of financial position when the Group becomes a party to the contractual
provision of the instrument.
Financial liabilities measured at amortised cost
The Group’s financial liabilities measured at amortised cost comprise trade payables and other payables and bank and other
borrowings.
These financial liabilities are initially measured at fair value net of any transaction costs directly attributable to the issue of
the instrument and are subsequently measured at amortised cost using the effective interest rate method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments
(including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the financial liability to the amortised cost of a financial liability.
Financial liabilities measured at fair value through profit or loss
Financial liabilities held at fair value through the profit or loss comprise warrants on initial recognition. The warrants are
initially measured at fair value and are carried in the statement of financial position at fair value. Subsequent to the initial
recognition, the warrants are remeasured to fair value at each financial period end date. The changes in fair value are
recognised in the statement of comprehensive income.
44
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2. ACCOUNTING POLICIES (continued)
(i) Financial liabilities (continued)
All instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, which consists
of the following 3 levels:
•
•
Quoted prices (unadjusted), in active markets for identical assets or liabilities (level 1);
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or
indirectly (level 2);
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs), (level 3).
•
Derivative instruments
Derivative liabilities are carried in the consolidated statement of financial position at fair value with changes in fair value
recognised in the profit and loss. The Group does not hold or issue derivative instruments for speculative or hedging purposes.
Other than these derivative financial instruments, the Group does not have any liabilities held for trading nor has it designated
any financial liabilities as being at fair value through profit or loss. The fair value of derivatives is determined appropriate
valuation techniques, including pricing models, and observable market inputs.
Transaction costs associated with hybrid instruments are allocated to their equity and liability components on the basis of their
fair values at initial recognition. Transaction costs associated with derivative liabilities classified as fair value through the
profit and loss are recognised immediately in the profit and loss, transaction costs associated with equity are treated as a
deduction in equity.
Share capital
(j)
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.
Research and development expenditure
(k)
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.
Property, plant and equipment
(l)
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.
45
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2. ACCOUNTING POLICIES (continued)
Intangible assets
(m)
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
(n)
Investments in subsidiary undertakings are stated at cost less provisions for impairment. Investments are assessed for the
presence of impairment indicators, if any indicators are present then an impairment review is conducted. See note 10 for
additional details on the Parent’s impairment assessment.
Share-based payments and warrants
(o)
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.
Finance income and expenses
(p)
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.
Deferred taxation
(q)
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.
46
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2. ACCOUNTING POLICIES (continued)
Critical accounting estimates and judgements
(r)
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.
Key accounting judgements
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. Difficulties can arise at determining the stage of a project. No costs have been capitalised in the year ended
31 December 2023 given the absence of any regulatory approval which the directors considered relevant in determining
any probably future economic benefits.
Classification of warrants: The Directors consider the September 2022 warrants to represent a derivative liability due to
the potential modification of the exercise price under certain conditions that the Directors believe are possible to occur.
This modification results in the warrants failing the ‘fixed for fixed’ test, as outlined in IAS 32 para 16, which is required
to recognise the warrants as equity instruments. This test requires the Company to provide a fixed number of shares for a
fixed amount of cash on exercise of the warrants which would not be the case should the exercise price be modified.
Accordingly, the September 2022 warrants are recognised as derivative liabilities, whereby the fair value must be assessed
at each balance sheet date with a review of the underlying inputs undertaken.
Key accounting estimates and assumptions
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. See note 10 for further information of assumptions and estimates made.
47
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
3. EXPENSES BY NATURE
The operating loss is stated after charging/(crediting):
Employee benefit expense (see below)
Amortisation – intangibles
Exchange loss
Auditors’ remuneration
- fees for the audit of the Group and Parent Company financial
statements
Employee benefit expense
Wages and salaries
Employer taxes
Share-based payments
Total employee benefit expense
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
2023
$000
5,818
4
384
65
2023
$000
4,261
407
1,150
5,818
2022
$000
7,002
4
453
45
2022
$000
5,747
520
735
7,002
18
17
1,555
3,054
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 beginning on
page 13.
4.
NET FINANCE INCOME/(LOSS)
Interest income
Interest expense
Other
5.
INCOME TAX CREDIT
Current tax:
Research and development tax credit receivable for current year
Current tax on losses for the year
Adjustment in respect of prior years
Overseas current tax
Deferred tax:
Origination and reversal of temporary differences
Tax on loss on ordinary activities
48
2023
$000
82
(1)
330
413
2023
$000
(1,200)
-
(28)
39
(1,189)
-
(1,189)
2022
$000
46
(25)
(596)
(575)
2022
$000
-
(2,865)
393
-
(2,472)
-
(2,472)
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
5.
INCOME TAX CREDIT (continued)
The tax assessed in the year is different from the standard rate of corporation tax in the UK of 23.52% in 2023
(2022:19%). From 1 April 2023 the UK Government increased the corporation tax rate to 25% on profits above
$318,300 (£250,000). Companies with profits of $63,660 (£50,000) or less will be taxed at 19% and companies
with profits between $63,660 (£50,000) and $318,300 (£250,000) will pay tax at 25% that is reduced by marginal
relief on a sliding scale.
The differences are explained below:
Loss before tax
(13,429)
(19,483)
Loss on ordinary activities before tax multiplied by the standard
companies’ rate of tax in the UK
(3,158)
(3,702)
Effects of:
Difference in overseas tax rates
Deferred tax asset on losses not recognised
Expenses not deductible for tax purposes
Enhanced research and development relief
Surrender of tax losses for R&D
Adjustment in respect of prior years
Tax credit
(26)
3,308
(2,664)
2,569
(1,189)
(29)
(1,189)
-
1,724
570
1,408
(2,472)
-
(2,472)
The group has accumulated losses available to carry forward against future trading profits of $122,751,392 (2022:
$109,535,630). No deferred tax asset has been recognized in respect of tax losses since it is uncertain at the
balance sheet date as to whether future profits will be available against which the unused tax losses can be
utilized. The estimated value of the deferred tax asset not recognized, measured at a standard rate of 25% is
$30,720,305 (2022: $27,426,425).
6.
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 $18,255,410
(2022: $17,280,833 ).
7.
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
$12,239,823 (2022: $17,010,978) and a weighted average number of Ordinary Shares outstanding during the year
ended 31 December 2023 of 9,788,980,193 (2022: 6,243,462,410) 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.
Loss attributable to ordinary shareholders
2023
$000
12,240
2022
$000
17,011
49
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
7.
BASIC AND DILUTED LOSS PER SHARE (Continued)
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
2023
Number
2022
Number
7,444,917,123
2,344,063,070
9,788,980,193
4,292,112,667
1,951,349,743
6,243,462,410
8.
INTANGIBLE ASSETS
GROUP:
Patent acquisition costs
Cost
At 1 January
At 31 December
Amortisation
At 1 January
Charge for the year
Exchange rate difference
At 31 December
Net Book Value
At 31 December
9.
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
50
2023
$000
95
95
(78)
(4)
1
(81)
2022
$000
95
95
(72)
(4)
(2)
(78)
14
17
2023
$000
172
-
172
(172)
-
(172)
2022
$000
172
-
172
(172)
-
(172)
-
-
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
10.
INVESTMENTS IN SUBSIDIARIES
COMPANY:
Cost
At 1 January 2022
At 31 December 2022
Impairment
At 1 January 2022
At 31 December 2022
Cost
At 1 January 2023
At 31 December 2023
Impairment
At 1 January 2023
Charge
At 31 December 2023
Net book value
At 31 December 2023
At 31 December 2022
Investments in
Subsidiary
Undertakings
$000
20,339
20,339
-
-
20,339
20,339
-
2,000
2,000
18,339
20,339
Impairment assessment on Investments
As at 31 December 2023, the Group assessed whether there were any indicators of impairment of the investment
and intercompany receivable balance relating to Volution Immuno Pharmaceuticals SA (“Volution”) recognized
in the Parent Company’s balance sheet.
On 29 December 2023, the last trading day of the year, Akari Therapeutics Plc had 6,600,922 ADSs outstanding
that traded at $3.12, resulting in a market capitalization of $20.6m. Management compared the market
capitalization against the total net assets of the Parent Company and concluded that the carrying values of the net
assets were higher, which was deemed to be an indicator of impairment of these balances.
Further to this, management considered the significant changes in market conditions with an emphasis on the
biotech industry as whole, which has experienced declining stocks prices, along with fundraising challenges.
Factors contributing to the downturn including rising interest rates and cost of capital, difficulty developing
profitable products, political tensions and the uncertainties around the Inflation Reduction Act.
Lastly, management considered the Group’s competition with respect to their ongoing trials and research and
development activities, as well as any evidence of obsolescence in certain elements of IP.
Management concluded that of the above matters, those associated with the Group’s market capitalization
represented indicators that prompted the requirement to undertake an impairment review of the investment and
intercompany receivable balances.
Given that Volution is the IP holder for the Group, which is not generating revenue due to its early-stage status of
being a research and development company, management determined its recoverable value by assessing the fair
value less the costs of disposal (FVLCD) of the entity, rather than perform a discounted cash flow analysis, given
that any projection of future cash flows from pre-clinical development activities would be speculative and an
unreliable measure of value.
51
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
As part of the Company’s proposed merger with Peak Bio, Inc. (see note 19), the Company engaged with an
independent global investment bank to provide a fairness opinion on the transaction, which included an enterprise
value of the Group. The Directors consider that the enterprise value of the Group is inherently driven by the value
of its accumulated intellectual property (which is owned by Volution) and therefore an implied range of fair values
for its investment in Volution was derived from this.
Based on management’s experience and judgement, while making reference to the valuation implied by the
aforementioned valuation subject to a fairness opinion and the constraining factors implied by the Group’s
overall market capitalization, it was determined that it was appropriate to recognise impairment charge totalling
$5.7m as at 31 December 2023 to reduce the carrying value of the intercompany receivable to $nil and the
investment in Volution to $18.3m.
Investments
The Company directly owns 100% of the issued share capital of the following subsidiaries, which have been
included in the consolidated financial statements:
Subsidiary
Volution Immuno
Pharmaceuticals SA
Celsus Therapeutics Inc.
Morria Biopharma Ltd.
Akari Malta Limited
Principal activity
Development of
pharmaceutical drugs
Dormant
Dormant
Regulatory
compliance
Country of
incorporation
Switzerland
United States
Israel
Malta
Holdings
Ordinary
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: 189 Marina Suites, Marina Street, Pieta, Malta PTA9041
11.
TRADE AND OTHER RECEIVABLES
Due from a related party
Prepayments and accrued income
Income tax receivable
Other receivables
Group
2023
$000
2022
$000
Company
2023
$000
2022
$000
-
299
1,217
197
1,713
-
465
2,386
100
2,951
-
294
1,217
215
1,726
3,774
459
2,386
98
6,717
During the period, it was determined that the intercompany balance with Volution recognized in the
Company’s financial statements was to be written off in full. At 31 December 2023, a total balance of $3.7m
was written off and recognized in the Company’s Statement of Comprehensive Income. Further details on the
impairment can be found in note 10.
52
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
12.
TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Other payables
Group
2023
$000
2022
$000
1,671
1,566
94
3,331
947
2,086
94
3,127
Company
2023
$000
2022
$000
1,417
1,542
94
3,053
756
2,070
94
2,920
The directors consider that the carrying value of trade and other payables approximates their fair value. Included
within other payables is an amount of $94,118 (2022: $94,118) that relates to pre-funded cashless exercise price
of warrants received.
13.
CALLED UP SHARE CAPTIAL
Issued and fully paid
Akari Therapeutics, Plc
As at 1 January 2023
Issuance of ordinary shares
Pending issuance of ordinary shares underlying vested
restricted stock units
As at 31 December 2023
2023
No. of Shares
7,444,917,123
5,761,246,400
28,151,775
Share
Capital
($)
744,492
576,125
2,815
13,234,315,298
1,323,432
ADS Ratio Change
The Parent’s ordinary shares, $0.0001 par value per share, in the form of American Depositary Shares (“ADSs”),
currently trade on the Nasdaq Capital Market under the symbol “AKTX”. Effective August 17, 2023, the Parent
changed the ratio of its ADSs to ordinary shares, par value $0.0001 per share, from one ADS representing 100
ordinary shares to a new ratio of one ADS representing 2,000 ordinary shares (the “ADS Ratio Change”). All
ADS and per ADS amounts in the accompanying financial statements and notes thereto have been retroactively
adjusted for all periods presented to reflect the ADS Ratio Change.
Issue of shares
In December 2023, the Parent entered into purchase agreements to sell in a private placement to existing investors,
Dr. Prudo, the Parent’s Chairman, and Dr. Patel, Parent director, (the “December 2023 Private Placement”) an
aggregate of 947,868 ADSs (equivalent to 1,895,736,000 ordinary shares) at $2.11 per ADS, for aggregate gross
proceeds of approximately $2.0 million. Net proceeds from the December 2023 Private Placement was
approximately $1.8 million after deducting placement agent fees and other expenses.
In September 2023, the Parent entered into purchase agreements to sell in a private placement to existing investors,
including Dr. Ray Prudo, the Parent’s Chairman, and Ms. Rachelle Jacques, the Parent’s then President and CEO
(the “September 2023 Private Placement”) an aggregate of 551,816 ADSs (equivalent to 1,103,632,000 ordinary
shares) at $3.30 per ADS, and pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 48,387 ADSs
(equivalent to 96,774,000 ordinary shares) at a purchase price per Pre-Funded Warrant of $3.10, for aggregate
gross proceeds of approximately $2.0 million. The Pre-Funded Warrants are exercisable at an exercise price of
$0.20 per ADS and will not expire until exercised in full. The September 2023 Private Placement closed in
October 2023 resulting in net proceeds of approximately $1.7 million after deducting placement agent fees and
other expenses.
53
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
13.
CALLED UP SHARE CAPITAL (Continued)
At close of the September 2023 Private Placement, the Parent issued to Paulson Investment Company, LLC
("Paulson"), as placement agent for the September 2023 Private Placement, warrants to purchase 42,550 ADSs
(equivalent to 85,100,000 ordinary shares) at an exercise price of $4.13 per ADS (representing 125% of the price
per ADS in the September 2023 Private Placement) and a term expiring on October 6, 2028 (the “October 2023
Placement Agent Warrants”). The estimated fair value of the October 2023 Placement Agent Warrants on the
issuance date was approximately $0.1 million. The Parent determined that the Pre-Funded Warrants and October
2023 Placement Agent Warrants met all of the criteria for equity classification. Accordingly, upon closing of the
September 2023 Private Placement, each of the Pre-Funded Warrants and October 2023 Placement Agent
Warrants were recorded as a component of shareholders’ equity.
On March 31, 2023, the Parent entered into securities purchase agreements with certain accredited and
institutional investors, including Dr. Ray Prudo, the Parent’s Chairman, (the “March Registered Direct Offering”)
providing for the issuance of an aggregate of 1,333,333 ADSs (equivalent to 2,666,666,700 ordinary shares) in a
registered direct offering at $3.00 per ADS, resulting in gross proceeds of approximately $4.0 million. Net
proceeds from the March Registered Direct Offering was approximately $3.5 million after deducting placement
agent fees and expenses.
See note 19 for details around the issuance of share capital post 31 December 2023.
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 2023 offset in share premium were $6,529,000 (31 December 2022: $1,747,975 ).
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.
15.
WARRANTS
On September 14, 2022, the Company’s sale of ADSs to accredited and institutional investors also included the issuance
of series A and series B warrants. The series A warrants allow the investors to purchase an aggregate of 755,000 ADSs at
$17.00 per ADS (“Series A warrants”). The Series A warrants are immediately exercisable and expire two years from
issuance (September 14, 2024). The series B warrants allow the investors to purchase an aggregate of 755,000 ADSs at
$17.00 per ADS (“Series B warrants”). The Series B warrants are immediately exercisable and expire seven years from
issuance (September 14, 2029). The Series A warrants and the Series B warrants may be exercised on a cashless basis if
six months after issuance there is no effective registration statement registering the ADSs underlying the warrants. Pursuant
to the cashless exercise provision, the warrant holder must make an additional payment to the Company equal to the
nominal value of an ADS (i.e., $0.0001) per warrant ADS to be issued pursuant to the cashless exercise.
54
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
15.
WARRANTS (Continued)
The fair value of the Series A and Series B warrants was determined using the Black-Scholes Option Pricing Model, which
uses various assumptions, including (i) fair value of the Company’s ADSs, (ii) exercise price of the warrant, (iii) expected
term of the warrant, (iv) expected volatility and (v) expected risk-free interest rate.
Below are the assumptions used for the fair value calculations of warrants, adjusted where applicable to reflect the change
in ADS ratio at the year ended 31 December 2023 and 31 December 2022:
31 December 2023
31 December 2022
Stock price
Exercise price
Expected term (in
years)
Volatility
Risk-free rate
Series A
$3.12
$17.00
0.7
85%
5.1%
Series B
$3.12
$17.00
5.7
95%
3.9%
Series A
$9.40
$17.00
1.7
80%
4.37%
Series B
$9.40
$17.00
6.7
120%
3.96%
The following table summarizes the activity in the warrant liability during the year ended 31 December 2023:
Fair value at 1 January 2023
Issuance of warrant
Change in fair value of liability
Fair value at 31 December 2023
Series A
($000)
1,812
-
(1,797)
15
Series B
($000)
6,040
-
(4,082)
1,238
Total
($000)
7,852
-
(6,599)
1,253
The following table summarizes the activity in the warrant liability during the year ended 31 December 2022:
Fair value at 1 January 2022
Issuance of warrant
Change in fair value
Fair value at 31 December 2022
Series A
($000)
-
5,285
(3,473)
1,812
Series B
($000)
-
9,513
(3,473)
6,040
Total
($000)
-
14,798
(6,946)
7,852
The Company is accounting for the warrants in accordance with IAS 32 Financial Instruments: Presentation. IAS 32
provides that the Company’s financial instruments shall be classified on initial recognition in accordance with the substance
of the contractual arrangement and the definitions of a financial liability or an equity instrument.
The Company determined that the Series A and Series B warrants (collectively, the “September 2022 Warrants”) represent
freestanding financial instruments because based on the warrant term their volatility input would preclude an option
contract from being considered indexed to an entity’s own stock.
The grant date fair value of the September 2022 Warrants totaled $14,798,000, which exceeded the $12,835,000 proceeds
received from the sale of ADSs. The Company concluded that the September 2022 Registered Direct Offering was
conducted on an arm’s length basis and it used an external subject matter valuation expert to determine the fair value of
the warrants. The excess fair value over the proceeds received of $1,963,000 at grant date was recognized as a non-operating
expense in the consolidated statement of operations and comprehensive loss.
55
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
In connection with the September 2022 Registered Direct Offering, the Company expensed $1.7 million of issuance costs
associated with the September 2022 Warrants during the year ended December 31, 2023, which have been recognized as
general and administrative expense in the consolidated statement of operations and comprehensive loss.
At December 31, 2023, the fair value of the September 2022 Warrants was $1,253,000.
The following table summarises the Company’s outstanding warrants as at 31 December 2023 and 2022:
2023
2022
Number
of ADS
Warrants
2,077,673
90,937
2,168,610
Weighted
Average
Exercise Price
$
22.85
2.04
21.97
Number
of ADS
Warrants
250,281
2,059,401
2,077,673
Weighted
Average
Exercise Price
$
49.06
18.31
22.85
Outstanding at 1 January 2023
Granted during the year
Outstanding at 31 December 2023
16.
SHARE-BASED EQUITY AWARDS
2023 Equity Incentive Plan
On June 30, 2023, the Company’s shareholders approved the 2023 Equity Incentive Plan (the “2023 Plan”), which provides
for the grant of stock options, both incentive stock options and nonqualified stock options, stock, with and without vesting
restrictions, restricted stock units and stock appreciation rights, to be granted to employees, directors and consultants. The
Company is permitted to grant up to 980,000,000 ordinary share incentive awards under the 2023 Plan.
All outstanding ordinary shares under the 2014 Equity Incentive Plan (the “2014 Plan”) relating to stock options and
restricted stock units may be issued under the 2023 Plan if such awards are forfeited, cancelled or expire unexercised. As
of June 30, 2023, the Company had 855,637,300 ordinary shares underlying outstanding equity awards under the 2014
Plan, consisting of stock options and restricted stock units. Accordingly, the total number of ordinary shares that may
ultimately be issued under rights granted under the 2023 Plan, including shares subject to outstanding grants under the
2014 Plan, shall not exceed 1,835,637,300 ordinary shares. In addition, if an award issued under the 2023 Plan is terminated
or results in any shares not being issued, the unissued or reacquired shares shall again be available for issuance under the
2023 Plan. As of December 31, 2023, the Company had 247,798,825 ordinary shares underlying outstanding equity awards
under the 2023 Plan and 765,819,200 ordinary shares were available for future issuance under the 2023 Plan.
The 2023 and 2014 Plans provide that they be administered by the compensation committee of the board of directors. The
exercise price for stock option awards may not be less than 100% of the fair market value of the Company’s ordinary shares
on the date of grant and the term of awards may not be greater than ten years. The Company determines the fair value of
its ordinary shares based on the quoted market price of its ADSs. Vesting periods are determined at the discretion of the
compensation committee. Awards granted to employees typically vest over two to four years and directors over one year.
2014 Equity Incentive Plan
Under the 2014 Plan the Company was authorized to grant stock options, restricted stock units and other awards, to
employees, members of the board of directors and consultants. Upon effectiveness of the 2023 Plan no further awards were
available to be issued under the 2014 Plan. As of December 31, 2023, the Company had 789,393,500 ordinary shares
underlying outstanding equity awards under the 2014 Plan, consisting of stock options and restricted stock units.
56
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
16.
SHARE-BASED EQUITY AWARDS (Continued)
Share Options
The following is a summary of the Company’s stock option activity under the 2014 Plan and the 2023 Plan for the year
ended December 31, 2023:
2023
2022
Outstanding at 1 January 2023
Granted during the year
Forfeited/expired during the year
Outstanding at 31 December 2023
Number
513,673,885
223,690,700
(86,127,185)
651,237,400
Exercisable (Vested) at 31 December 2023
212,510,100
Weighted
Average
Exercise Price
$
0.02
0.00
0.03
0.01
0.02
Number
142,949,035
409,396,700
(38,671,850)
513,673,885
128,451,772
Weighted
Average
Exercise Price
$
0.07
0.01
0.15
0.02
0.04
The weighted average remaining contractual life of the options is 8.5 years (2022: 8.7 years ).
The following is a summary of the Group's share options granted separated into ranges of exercise price:
Exercise
price
(range) ($)
>0.01
0.01-0.018
0.02-0.05
0.12-0.32
Options
outstanding
at 31
December
2023
307,090,700
291,596,700
46,700,000
5,850,000
651,237,400
Weighted
average
remaining
contractual
life (years)
9.3
8.4
-
-
Weighted
average
exercise
price ($)
0.01
0.01
0.02
0.16
Options
exercisable
at
December
31, 2023
50,986,338
108,973,763
46,700,000
5,850,000
212,510,100
Exercise
price
(range) ($)
<0.01
0.01
0.02-0.05
0.12-0.32
Options
outstanding
at 31
December
2022
106,500,000
286,896,700
102,000,000
18,227,185
513,673,885
Weighted
average
remaining
contractual
life (years)
9.8
9.3
6.8
3.3
Weighted
average
exercise
price ($)
0.01
0.01
0.02
0.16
Options
exercisable
at
December
31, 2022
-
29,674,587
80,500,000
18,277,185
128,451,772
Remaining
contractual
life for
exercisable
options
(years)
9.1
7.9
4.9
2.2
Weighted
average
exercise
price for
exercisable
options ($)
-
0.01
0.02
0.16
Remaining
contractual
life for
exercisable
options
(years)
-
9.2
6.3
3.3
Weighted
average
exercise
price for
exercisable
options ($)
-
0.01
0.02
0.16
57
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
16.
SHARE-BASED EQUITY AWARDS (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 weighted-average assumptions used for the options granted in the year ended 31 December 2023:
Expected dividend yield
Expected volatility
Risk-free interest
Expected life
2023
0%
98.7%
3.8%
6.0 years
Below are the assumptions used for the options granted in the year ended 31 December 2022:
Expected dividend yield
Expected volatility
Risk-free interest
Expected life
2022
0%
72.8%-120.0%
1.46%-4.34%
5.5-6.25 years
Restricted Stock Units
The 2014 Plan provided, and the 2023 Plan provides, for the award of restricted stock units (“RSUs”). RSUs are granted
to employees that are subject to time-based vesting conditions that lapse between one year and four years from date of
grant, assuming continued employment. Compensation cost for time-based RSUs, which vest only on continued service,
is recognized on a straight-line basis over the requisite service period based on the grant date fair of the RSU's, which is
derived from the closing price of the Company's ADS's on the date of grant.
58
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
16.
SHARE-BASED EQUITY AWARDS (Continued)
The following table summarizes the Company’s restricted stock activity for the year ended December 31, 2023:
2023
2022
Weighted
Average
Grant Date
Fair Value
$
0.01
0.00
0.01
0.00
Number
21,475,400
407,843,000
(43,363,475)
385,954,925
Number
-
21,475,400
-
21,475,400
Weighted
Average
Grant Date
Fair Value
$
-
0.01
-
0.01
Nonvested shares at 1 January 2023
Granted during the year
Vested during the year
Nonvested shares at 31 December 2023
The fair value of time-based RSUs that vested during the year ended December 31, 2023 was approximately $0.2 million.
No time-based RSUs vested during the year ended December 31, 2022.
As of December 31, 2023, 28,151,775 ordinary shares underlying vested time-based RSUs were pending issuance due to
administrative reasons.
Share-based Compensation Expense
During the year ended 31 December 23 the Group recognized $1,150,000 (2022: $735,000 ) in share-based compensation
expenses for employees and directors. At 31 December 2023, there was approximately $1.7 million and $0.6 million of
unrecognized compensation cost related to unvested stock options and time-based RSUs, respectively.
17.
FINANCIAL INSTRUMENTS
The Group’s activities expose it to financial risks: foreign current risk and credit risk and also non-financial risks: market
risk. The Group’s overall risk management program focuses on unpredictability and seeks to minimised the potential
adverse effects on the Group’s financial performance. The Board, on a regular basis, reviews key risks and, where
appropriate, actions are taken to mitigate the key risks identified.
The fair value measurement of the Group’s financial and non-financial assets and liabilities utilities market observable inputs
and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on
how observable the inputs used in the valuation technique utilised are (the “fair value hierarchy”):
Level 1: Quoted prices in active markets for identical items;
Level 2: Observable direct or indirect inputs other than Level 1 inputs; and
Level 3: Unobservable inputs, thus not derived from market data.
The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect
on the fair value measurement of the item. There have been no transfers between levels during the period.
59
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
17.
FINANCIAL INSTRUMENTS (Continued)
The Group has the following categories of financial instruments as at 31 December 2023:
Financial assets measured at amortised cost:
Other receivables
Financial liabilities measured at amortised cost:
Trade payables and other payables
Financial liabilities measured at FVPL
Warrant liability (Note 15)
2023
$000
198
2022
$000
-
3,331
3,127
1,253
7,852
There is no significant difference between the fair value and the carrying value of financial instruments.
All financial instruments are classified as current assets and current liabilities. There are no non-current financial instruments
as at 31 December 2023.
For details of valuation techniques and significant unobservable inputs related to determining the fair value of the warrant
liability, which is classified in level 3 of the fair value hierarchy, refer to Note 15.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate
risk limits and controls, and to monitor risks and adherence limits. Risk management policies and systems are reviewed
regularly to reflect changes in market conditions and the Group’s activities.
Financial risks factors:
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.
Foreign currency risk:
1.
The Group is exposed to foreign currency risk arising on cash and cash equivalents and receivables denominated in a
currency other than the respective functional currencies of the Group. The currencies in which these transactions primarily
are denominated are GBP Sterling (GBP). Swiss Franc (CHF) and Euro (EUR).
The following balances held in foreign currency at the reporting date are:
GBP
CHF
EUR
Total net exposure
Group
Company
31 December
2023
$000
31 December
2022
$000
31 December
2023
$000
31 December
2022
$000
954
-
1,471
2,425
152
10
41
203
954
-
1,471
2,425
152
10
41
203
60
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
17.
FINANCIAL INSTRUMENTS (Continued)
Sensitivity analysis
A 10 percent strengthening of USD against the respective currencies at 31 December 2023 would have decreased equity
and profit and loss by the amounts shown below:
Group:
GBP
CHF
EUR
Total net exposure
Company:
GBP
CHF
EUR
Total net exposure
Profit and loss
Equity
31 December
2023
$
31 December
2022
$
31 December
2023
$
31 December
2022
$
(95)
-
(147)
(242)
(15)
(4)
(1)
(20)
(95)
-
(147)
(242)
(15)
(4)
(1)
(20)
Profit and loss
Equity
31 December
2023
$
31 December
2022
$
31 December
2023
$
31 December
2022
$
(95)
-
(147)
(242)
(15)
(4)
(1)
(20)
(95)
-
(147)
(242)
(15)
(4)
(1)
(20)
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.
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.
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.
During the period the Group issued to investors Series A and Series B Warrants, exercisable to purchase in the aggregate
up to 755,000 ADSs at an exercise price of $17.00 per ADS each. On initial recognition both the Series A and Series B
Warrant instruments met the definition of a derivative instrument and was subsequently recognized as such. As at 31
December 2023 the Group has sufficient cash to cover the Warrant liability and as such the Directors do not consider this
to be a significant risk.
61
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
18. RELATED PARTY TRANSACTIONS
The following transactions were carried out with related parties:
The Doctors Laboratory
The Company leases its offices in London from The Doctors Laboratory (“TDL”) and has incurred expenses of
approximately $148,000 plus VAT during the year ended 31 December 2023 (2022: $129,000). David Byrne, a former
non-employee director of the Company, is also the Chief Executive Officer of TDL and Dr. Ray Prudo, the Company’s
Chairman, is Non-Executive Chairman of the Board of Directors of TDL.
Company received laboratory testing services for its clinical trials provided by TDL, including certain administrative
services, and has incurred expenses of approximately $122,000 plus VAT during the year ended 31 December 2023 (2022:
$89,000).
The Company recorded payable balances to TDL of approximately $70,000 plus VAT as of December 31, 2023 (2022:
$23,000).
Other
A non-employee director of the Company began providing business development consulting services in January 2018. The
consulting agreement was terminated in November 2022. The Company has incurred expenses of $Nil during the year
ended December 31, 2023 (2022: $92,000), relating to these consulting services.
19. POST BALANCE SHEET EVENTS
On March 4, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Peak
Bio, Inc. (“Peak Bio”) and Pegasus Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Akari
(“Merger Sub"), pursuant to which, upon the terms and subject to the conditions thereof, Merger Sub will be merged with
and into Peak Bio (the “Merger”), with Peak Bio surviving the Merger as a wholly-owned subsidiary of Akari.
On March 26, 2024, the Company entered into an amended and restated definitive purchase agreement with certain
existing investors, pursuant to which the Company sold and issued in a private placement an aggregate of 1,320,614
ADSs (equivalent to 2,641,228,000 ordinary shares) at $1.48 per ADS, for aggregate gross proceeds of approximately
$2.0 million (the “March 2024 Private Placement”). The March 2024 Private Placement closed on March 28, 2024. Net
proceeds from the March 2024 Private Placement was approximately $1.7 million after deducting placement agent fees
and other expenses.
On May 1, 2024, the Company began to implement a reduction-in-force of approximately 67% of its total workforce as a
result of the recently announced program prioritization under which the Company’s HSCT-TMA program was
suspended. The reduction-in-force is part of an operational restructuring plan and includes the elimination of certain
senior management positions. The purpose of the restructuring plan, including the reduction-in-force, is to reduce HSCT-
TMA related operating costs, while supporting the execution of the Company’s long-term strategic plan. The Company
currently expects expenses related to the reduction-in-force, consisting primarily of cash severance and termination
benefits and related costs, to be in the range of approximately $3.1 million to $3.2 million, which includes approximately
$1.6 million of non-cash expenses related to vesting of equity awards. The Company expects these costs to be payable
through the fourth quarter of 2024. These estimates are subject to a number of assumptions, and actual results may differ.
The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or
that are associated with, the operational restructuring plan, including the reduction-in-force.
On May 10, 2024, the Company entered into convertible promissory notes with existing investors and directors, Dr.
Prudo and Dr. Patel (the “May 2024 Notes”) for an aggregate of $1.0 million in gross proceeds. The May 2024 Notes
bear interest at 15% per annum, which may be increased to 17% upon the occurrence of certain events of default as
described therein, and the principal and all accrued but unpaid interest is due on the date that is the earlier of (a) ten (10)
business days following the Company’s receipt of a U.K. research and development tax credit from HM Revenue and
Customs, and (b) November 10, 2024. Provided, however, at any time or times from the date of the note and until the
tenth business day prior to closing of the Merger, the note holders are entitled to convert any portion of the outstanding
and unpaid amount, including principal and accrued interest, into Company ADSs at a fixed conversion price equal to
$1.59, subject to certain restrictions.
62
AKARI THERAPEUTICS PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
19. POST BALANCE SHEET EVENTS (Continued)
On May 29, 2024, the Company entered into a definitive agreement (the “May 2024 Purchase Agreement”) with certain
investors, Dr. Ray Prudo and Dr. Patel, pursuant to which the Company agreed to sell and issue in a private placement (the
“May 2024 Private Placement”) an aggregate of 4,029,754 unregistered ADSs, and Series C Warrants (the “Series C
Warrants”) to purchase up to 4,029,754 ADSs, at a per unit price of $1.885 per ADS and Series C Warrant. The May 2024
Purchase Agreement also contains representations, warranties, indemnification and other provisions customary for
transactions of this nature. The May 2024 Private Placement closed on May 31, 2024. Upon the closing of the Private
Placement, the Company issued and sold 3,817,553 ADSs and Series C Warrants to purchase up to 3,817,553 ADSs
pursuant to the May 2024 Purchase Agreement, and the remaining 212,201 ADSs and Series C Warrants to purchase up to
212,201 ADSs will be issued and sold by the Company at a later date upon the receipt of the proceeds related thereto. Net
proceeds from the May 2024 Private Placement is expected to be approximately $6.6 million after deducting placement
agent fees and other expenses.
20. ULTIMATE CONTROLLING PARTY
The directors do not believe that there is an ultimate controlling party of the Group.
63