UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

 

June 2021

 

Commission file number: 001-36288

 

Akari Therapeutics, Plc

(Translation of registrant's name into English)

 

75/76 Wimpole Street

London W1G 9RT

United Kingdom

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F  x       Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulations S-T Rule 101(b)(1):                       

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulations S-T Rule 101(b)(7):                       

 

 

 

 

 

 

 

CONTENTS

 

On June 5, 2021, Akari Therapeutics, Plc (the “Company”) informed its shareholders that it will hold its Annual General Meeting of Shareholders on June 30, 2021. In connection with the meeting, the Company furnished the following documents:

 

  1. Notice of Annual General Meeting of Shareholders and Proxy Statement dated June 5, 2021

 

  2. Form of Proxy Card

 

  3. Statutory Accounts for the year ended December 31, 2020

 

The information contained in this report (including the exhibits hereto) is hereby incorporated by reference into all effective registration statements filed by the Company under the Securities Act of 1933.

 

Exhibit No.

 

99.1

Notice of Annual General Meeting of Shareholders and Proxy Statement dated June 5, 2021 

99.2

Form of Proxy Card 

99.3

Statutory Accounts for the year ended December 31, 2020 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Akari Therapeutics, Plc
  (Registrant)
     
     
  By: /s/ Clive Richardson
  Name: Clive Richardson
  Title: Chief Executive Officer and Chief Operating Officer

 

Date: June 7, 2021

 

 

 

 

 

 

 

Exhibit 99.1

 

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

 

If you are in any doubt as to what action you should take, you are recommended to seek your own financial advice from your stockbroker or other independent adviser authorized under the Financial Services and Markets Act 2000 (as amended).

 

If you have recently sold or transferred all of your shares in AKARI THERAPEUTICS, PLC, please forward this document, together with the accompanying documents, as soon as possible either to the purchaser or transferee or to the person who arranged the sale or transfer so they can pass these documents to the person who now holds the shares.

 

 

AKARI THERAPEUTICS, PLC

(Registered in England & Wales, No. 05252842)
Registered office:

Highdown House

Yeoman Way

Worthing

West Sussex

BN99 3HH

 

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 30, 2021

 

Dear Shareholders of Akari Therapeutics, Plc:

 

Given the uncertainty over what laws and guidance about travel and public gatherings in connection with Covid-19 will be in place on the date of the Meeting, it may not to be possible or advisable for shareholders, or their proxies other than the chairman of the Meeting, to attend the Meeting in person. We therefore strongly encourage you to vote on all resolutions as soon as possible by appointing the chairman of the Meeting as your proxy (or, in the case of beneficial owners who hold their shares indirectly, by submitting appropriate proxy voting instructions) as described in the Proxy Statement below.

 

Notice is hereby given of the annual general meeting (the “Meeting”) of the shareholders of Akari Therapeutics, Plc, (“Akari” or the “Company”), to be held at 2.30 p.m., local time, on June 30, 2021, at 75/76 Wimpole Street, London, W1G 9RT for the purpose of considering and, if thought fit, passing the following resolutions. Resolutions 1 to 15 will be proposed as ordinary resolutions; resolution 16 will be proposed as a special resolution.

 

Ordinary Resolutions

 

  1. To receive the reports of the Directors and the accounts for the year ended December 31, 2020, together with the report of the statutory auditor and the strategic report.

 

  2. To approve the Directors’ Remuneration Report (other than the part containing the directors' remuneration policy).

 

  3. To re-elect James Hill, M.D. as a director of Akari, as a Class A Director as stated in Article 18.2.1 of the Articles of Association of Akari (the “Articles”).

 

  4. To re-elect Stuart Ungar, M.D. as a director of Akari, as a Class A Director as stated in Article 18.2.1 of the Articles.

 

  5. To re-elect David Byrne as a director of Akari, as a Class A Director as stated in Article 18.2.1 of the Articles.

 

  6. To re-elect Donald Williams as a director of Akari, as a Class A Director as stated in Article 18.2.1 of the Articles.

 

   

 

 

  7. To re-elect Michael Grissinger as a director of Akari, as a Class A Director as stated in Article 18.2.1 of the Articles.

 

  8. To re-elect Peter Feldschreiber as a director of Akari, as a Class A Director as stated in Article 18.2.1 of the Articles.

 

  9. To re-elect Clive Richardson as a director of Akari, as a Class B Director as stated in Article 18.2.2 of the Articles.

 

  10. To re-elect Raymond Prudo-Chlebosz, M.D. as a director of Akari, as a Class C Director as stated in Article 18.2.3 of the Articles.

 

  11. To ratify the appointment of BDO USA, LLP as independent registered public accounting firm of Akari for the year ending December 31, 2021.

 

  12. To re-appoint Haysmacintyre as statutory auditors of Akari to hold office until the conclusion of the next annual general meeting at which accounts are laid before Akari shareholders.

 

  13. To authorize the audit committee of the Board of Directors of Akari to fix the statutory auditors’ remuneration.

 

  14. That, in accordance with section 551 of the Companies Act 2006, the directors be generally and unconditionally authorized to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal amount of USD1,500,000, provided that this authority shall, unless renewed, varied or revoked by the Company, expire on June 30, 2026, save that the Company may, before such expiry, make offers or agreements which would or might require such shares to be allotted or such rights granted after such expiry and the directors may allot such shares or grant such rights in pursuance of such offers and agreements notwithstanding that the authority conferred by this resolution has expired; and this resolution revokes and replaces all unexercised authorities previously granted to the directors to allot shares or grant rights to subscribe for or convert any security into shares, but without prejudice to any allotment of shares or grant of rights already made, offered or agreed to be made pursuant to such authorities.

 

  15. To generally and unconditionally authorize an increase in the number of shares available for the grant of awards under the Company’s 2014 Equity Incentive Plan (the “2014 Plan”) to 400,000,000 ordinary shares.

 

Special Resolution

 

  16. That, in accordance with section 570 of the Companies Act 2006, the Directors be authorized to allot equity securities (as defined in section 560 of the Companies Act 2006) for cash pursuant to the authorization granted by resolution 14 above and/or to sell ordinary shares held by the Company as treasury shares as if section 561 of the Companies Act 2006 did not apply to any such allotment or sale, provided that this authority shall, unless renewed, varied or revoked by the Company, expire on June 30, 2026, save that the Company may, before such expiry, make offers or agreements which would or might require such equity securities to be allotted or treasury shares to be sold after such expiry and the directors may allot such equity securities or sell treasury shares in pursuance of such offers and agreements notwithstanding that the authority conferred by this resolution has expired.

 

Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, as amended, the Company specifies that entitlement to attend and vote at the Meeting, and the number of votes which may be cast at the Meeting, will be determined by reference to the Company’s register of members at 6.30 p.m. (London time) on June 28, 2021 or, if the Meeting is adjourned, at 6.30 p.m. (London time) two working days before the time of the adjourned Meeting. In each case, changes to the register of members after such time will be disregarded. The accompanying Proxy Statement more fully describes the details of the business to be conducted at the Meeting. After careful consideration, our Board of Directors has unanimously approved the proposals and recommends that you vote FOR each proposal described in the accompanying Proxy Statement.

 

The Company’s principal executive offices are located at 75/76 Wimpole Street, London W1G 9RT. The registered office of Akari Therapeutics, Plc is at Highdown House, Yeoman Way, Worthing, West Sussex, BN99 3HH, United Kingdom. Except as set out in this Notice, any communication with the Company in relation to the Meeting, should be sent to the Company’s registrars, SLC Registrars, PO Box 5222, Lancing, BN99 9FG, United Kingdom. No other means of communication will be accepted. In particular, you may not use any electronic address provided within this notice or in any related documents (including the annual report and accounts for the year ended December 31, 2020 and the proxy form) to communicate with the Company except as expressly permitted.

 

You are reminded that you can update your preferences for communications by Akari at any time through SLC Registrars’ “ShareView” service at https://portfolio.shareview.co.uk/. You can contact SLC Registrars for assistance with the process at office@slcregistrars.com or on +44 (0)20 3890 2122. There is no charge for this service. Akari encourages you to agree to the use of electronic communications as it will enable you to receive information quicker and reduce the Company’s costs and environmental impact.

 

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A copy of the Statutory Accounts (including the Directors’ Remuneration Report) can be accessed by visiting the Akari website at http://investor.akaritx.com/.

 

Your vote is important. The affirmative vote (on a show of hands or a poll) of shareholders present in person or by proxy in accordance with the requisite majority set forth in the accompanying Proxy Statement is required for approval of the Resolutions. We encourage you to read the Proxy Statement carefully.

 

Please complete, date, sign and return the enclosed proxy form as promptly as possible (and in any event by 2.30 p.m. (London time) on June 28, 2021) in order to ensure your representation at the Meeting. Please note, however, that if your shares are represented by American Depositary Shares and held on deposit by Deutsche Bank Trust Company Americas, as depositary, or if your ordinary shares are held of record by a broker, bank or other nominee, and you wish to have your votes cast at the Meeting, you must obtain, complete and timely return a proxy form issued in your name from that intermediary in accordance with any instructions provided therewith.

 

By Order of the Board of Directors of
Akari Therapeutics, Plc,
 
/s/ Ray Prudo

 

Ray Prudo
Executive Chairman
June 5, 2021

 

THE AKARI BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES THAT EACH OF THE RESOLUTIONS OUTLINED ABOVE IS ADVISABLE TO, AND IN THE BEST INTERESTS OF, AKARI AND ITS SHAREHOLDERS AND HAS APPROVED EACH SUCH RESOLUTION. THE AKARI BOARD OF DIRECTORS RECOMMENDS THAT AKARI SHAREHOLDERS VOTE “FOR” EACH SUCH RESOLUTION.

 

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PROXY STATEMENT FOR
2021 ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 30, 2021
 
GENERAL INFORMATION

 

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Akari Therapeutics, Plc, a public limited company registered in England & Wales (“Akari”, the “Company” or “our”), for use at the Company’s 2021 Annual General Meeting (the “Meeting”) of shareholders to be held at 75/76 Wimpole Street, London, W1G 9RT on June 30, 2021, at 2.30 p.m. local time for the purpose of considering and, if thought fit, passing the resolutions specified in the Notice of Annual General Meeting. This Proxy Statement is being mailed to shareholders on or about June 5, 2021.

 

For a proxy form to be effective, it must be properly executed and dated and lodged (together with a duly signed and dated power of attorney or other authority (if any) under which it is executed (or a notarially certified copy of such power of attorney or other authority)) at the offices of the Company’s registrars, SLC Registrars (the “Registrars”) at PO Box 5222, Lancing, BN99 9FG, United Kingdom (or by email to proxy@slcregistrars.com) so as to be received by 2.30 p.m. local time on June 28, 2021 (or, if the Meeting is adjourned, not less than 48 hours before the time of the adjourned Meeting). Each proxy form properly tendered appointing the Chairman of the Meeting will, unless otherwise directed by the shareholder, be voted FOR the proposals subject to a binding vote, FOR the nominees described in this Proxy Statement and at the discretion of the proxy holder with regard to all other matters that may properly come before the Meeting.

 

The Company will pay all of the costs of soliciting proxies. We will provide copies of our proxy materials to the depositary for our American Depositary Shares (Deutsche Bank Trust Company Americas), brokerage firms, fiduciaries and custodians for forwarding to beneficial owners and will reimburse these persons for their costs of forwarding these materials. Our directors, officers and employees may also solicit proxies; however, we will not pay them additional compensation for any of these services. Proxies may be solicited by telephone, facsimile, or personal solicitation.

 

Special Arrangements for Attendance in the Light of Covid-19

 

It is currently uncertain what laws and guidance about travel and public gatherings in connection with Covid-19 will be in place on the date of the Meeting. It may not to be possible or advisable for shareholders, or their proxies other than the chairman of the Meeting, to attend the Meeting in person. Shareholders should inform themselves of and comply with all laws and UK Government guidance in force at the date of the Meeting. Moreover, for their own safety and that of our staff and the public, we encourage shareholders not to attend the Meeting in person. We therefore strongly encourage you to vote on all resolutions as soon as possible by appointing the chairman of the Meeting as your proxy (or, in the case of beneficial owners who hold their shares indirectly, by submitting appropriate proxy voting instructions) as described in the Proxy Statement below.

 

We expect only the Chairman and a very limited number of Company personnel to be in attendance at the Meeting to ensure a quorum. No other members of the Board will attend and social distancing and other appropriate health and safety measures will be in place in order to comply with the law and Government guidelines. Shareholders can submit questions to the Board by email to the Company’s investor relations department at peter.vozzo@westwicke.com by no later than June 28, 2021. We will consider all questions received and, if appropriate, provide a written response on the Company’s website (http://investor.akaritx.com/). The Board will keep the situation under review and may make changes to the arrangements for the Meeting, should the Covid-19 situation, applicable laws or the UK Government’s guidance change. Shareholders should therefore monitor the Company’s website and announcements for any updates.

 

Shares Outstanding and Voting Rights

 

Akari is registered in England & Wales and therefore subject to the Companies Act 2006 (the “Companies Act”), which, together with the Articles of Association of the Company (the “Articles”), governs the processes for voting at annual general meetings. There are a number of differences between English and U.S. law in relation to voting. At the Meeting, a resolution put to the vote of the Meeting will be decided on a show of hands unless a poll is demanded by (a) the chairman, (b) at least five shareholders entitled to vote at the Meeting, (c) a shareholder or shareholders representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the Meeting (excluding any voting rights attached to shares that are held as treasury shares) or (d) a shareholder or shareholders holding shares conferring a right to vote at the Meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right (excluding any shares in the Company conferring a right to vote at the Meeting that are held as treasury shares).

 

  4 

 

 

Only holders of record of our ordinary shares at 6.30 p.m. (London time) three working days before the date of this notice (being the latest practicable date before the publication of this document) are entitled to receive this notice and only those holders of record of our ordinary shares at 6.30 p.m. (London time) on June 28, 2021 or, if the Meeting is adjourned, at 6.30 p.m. (London time) two working days before the time of the adjourned Meeting (the “Record Date”) are entitled to vote at the Meeting. Therefore, if you sell or transfer your ordinary shares prior to the Record Date, your proxy form will no longer be able to be used and if submitted (whether before or after you sell or transfer your ordinary shares) will be treated as invalid. Please pass this document together with the accompanying proxy form to the person who arranged the sale or transfer for delivery to the purchaser or transferee. The purchaser or transferee will need to contact Prism Cosec Limited, Highdown House, Yeoman Way, Worthing, West Sussex, BN99 3HH, United Kingdom, Company Secretary, to request a new proxy form for its use.

 

On the ADR Record Date (as defined below), 3,964,979,023 ordinary shares were outstanding, of which approximately 3,960,514,023 were held for Deutsche Bank AG, London Branch, as custodian for Deutsche Bank Trust Company Americas (the “Depositary”), which issues Company-sponsored American Depositary Receipts (“ADRs”) evidencing American Depositary Shares (“ADSs”) which, in turn, each represent one hundred (100) ordinary shares. With respect to all matters to be voted on at the Meeting, each shareholder present has only one vote unless demand is made for a vote on a poll (in which case each shareholder gets one vote per ordinary share held). The presence, in person or by proxy, of at least two shareholders holding at least 15% of the share capital of the Company as of the Record Date will constitute a quorum for the transaction of business at the Meeting. At any adjournment of the Meeting, if a quorum is not present within fifteen minutes from the time appointed for the Meeting, one person entitled to be counted in a quorum present at the adjournment shall be a quorum.

 

Persons who hold ordinary shares directly on the Record Date (“record holders”) must return a proxy form or attend the Meeting in person in order to vote on the proposals. However, as noted above, on account of Covid-19 we strongly encourage shareholders not to attend in person this year. The Company has retained SLC Registrars to hold and maintain its register of members. SLC Registrars will take delivery of completed proxy forms posted to it in accordance with the details above. Persons who own ordinary shares indirectly on the Record Date through a brokerage firm, bank or other financial institution, including persons who own ordinary shares in the form of ADSs through the Depositary (“beneficial owners”), must return a voting instruction form to have their shares or the shares underlying their ADSs, as the case may be, voted on their behalf. Brokerage firms, banks or other financial institutions that do not receive voting instructions from beneficial owners may either vote these shares on behalf of the beneficial owners or return a proxy leaving these shares un-voted (a “broker non-vote”). ADR holders are not entitled to vote directly at the Meeting, but a deposit agreement dated as of December 7, 2012, as amended (the “Deposit Agreement”) exists between the Depositary and the holders of ADRs pursuant to which registered holders of ADRs as of June 1, 2021 (the “ADR Record Date”) are entitled to instruct the Depositary as to the exercise of voting rights pertaining to the ordinary shares so represented. The Depositary has agreed that it will endeavour, insofar as practicable, to vote (in person or by delivery to the Company of a proxy) the ordinary shares held for its custodian, Deutsche Bank AG, London Branch, in accordance with the instructions of the ADR holders. In the event that the instruction card is executed but does not specify the manner in which the ordinary shares represented are to be voted (i.e., by marking a vote “FOR”, “AGAINST” or any other option), the Depositary will vote in respect of each proposal as recommended by the Board in the Notice of Annual General Meeting. Instructions from the ADR holders must be sent to the Depositary so that the instructions are received by no later than 1:00 p.m. New York time on June 22, 2021 (the “Instruction Date”).

 

Each of Resolutions 1 to 15 is proposed as an ordinary resolution that will be approved if (i) on a show of hands, a majority of shareholders present in person or by proxy and voting on the proposal vote in favor of the resolution or (ii) on a poll, a majority of the shares present at the Meeting in person or by proxy and voting on the proposal are voted in favor of the resolution. Resolution 16 is proposed as a special resolution that will be approved if (i) on a show of hands, a majority of no less than 75% of shareholders present in person or by proxy and voting on the resolution vote in favor of the resolution or (ii) on a poll, a majority of no less than 75% of the shares present at the Meeting in person or by proxy and voting on the resolution are voted in favor of the resolution. Abstentions and broker non-votes will be counted for the purpose of determining the presence or absence of a quorum, but will not be counted for the purpose of determining the number of votes cast on a given proposal and therefore will not impact the outcomes of the items on the agenda.

 

As a result, we encourage you to vote by proxy by mailing an executed proxy form. By voting in advance of the Meeting, this ensures that your shares will be voted and reduces the likelihood that the Company will be forced to incur additional expenses soliciting proxies for the Meeting. Subject to any restrictions on personal attendance in connection with Covid-19 as noted above, any record holder of our ordinary shares may attend the Meeting in person and may revoke the enclosed proxy form at any time by voting in person at the Meeting or by executing a later-dated proxy form and delivering it to the Registrars in accordance with the details above by the applicable cut-off time for receipt of proxy forms.

 

Beneficial owners of our ordinary shares and holders of ADSs representing our ordinary shares who wish to change or revoke their voting instructions should contact their brokerage firm, bank or other financial institution or the Depositary, as applicable, for information on how to do so. Generally, however, beneficial owners of our ordinary shares and holders of ADSs representing our ordinary shares who wish to change or revoke their voting instructions may do so up until 1:00 p.m. New York Time on the Instruction Date. Beneficial owners who wish to attend the Meeting and vote in person should contact their brokerage firm, bank or other financial institution holding ordinary shares of Akari on their behalf in order to obtain a “legal proxy” which will allow them to both attend the Meeting and vote in person (subject to any restrictions on personal attendance in connection with Covid-19 as noted above). Without a legal proxy, beneficial owners cannot vote at the Meeting because their brokerage firm, bank or other financial institution may have already voted or returned a broker non-vote on their behalf. Record holders of ADSs representing our ordinary shares who wish to attend the Meeting and vote in person (subject to any restrictions on personal attendance in connection with Covid-19 as noted above) should contact the Depositary (and beneficial owners wishing to do the same should contact their brokerage firm, bank or other financial institution holding their ADSs) to cause their ADSs to be cancelled and the underlying shares to be withdrawn in accordance with the terms and conditions of the Deposit Agreement so as to be recognized by us as a record holder of our ordinary shares.

 

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MATTERS BEING SUBMITTED TO A VOTE OF AKARI SHAREHOLDERS

 

Akari Resolution No. 1: Statutory Accounts

 

As a public limited company, it is a requirement under English company law that the Board lay the report of the Company’s directors and the Company’s accounts for the year ended December 31, 2020, together with the report of the Statutory Auditor and the strategic report (the “Statutory Accounts”) before the shareholders at a general meeting. The Statutory Accounts have been prepared in accordance with the International Financial Reporting Standards. The Statutory Accounts are available for download on the Company’s website (http://investor.akaritx.com/). In addition, hard copies of the Statutory Accounts may be obtained by contacting the Registrars.

 

Resolution No. 2: Directors’ Remuneration Report

 

The Company’s annual Directors’ Remuneration Report is subject to an annual advisory vote of shareholders, by ordinary resolution. The Board considers that appropriate remuneration plays a vital part in helping to achieve the Company’s overall objectives. The full text of the Directors’ Remuneration Report is contained within the Statutory Accounts which can be found on the Company’s website (http://investor.akaritx.com/). The Directors’ Remuneration Report gives details of the remuneration paid to the Directors during the year ended December 31, 2020. The vote on the Directors’ Remuneration Report is advisory in nature in that payments made or promised to Directors will not have to be repaid, reduced or withheld in the event that Resolution 2 is not passed.

 

Resolution Nos. 3 – 10: Re-election of Directors

 

Under the Company’s Articles of Association, there are three classes of Board members (Class A, Class B and Class C) with each class having a specific office term. James Hill, M.D., Stuart Ungar, M.D., David Byrne, Donald Williams, Michael Grissinger and Peter Feldschreiber currently serve as Class A directors; Clive Richardson currently serves as a Class B director and Raymond Prudo-Chlebosz, M.D. currently serves as a Class C director. Subject to the matters described below, James Hill, M.D., Stuart Ungar, M.D., David Byrne, Donald Williams, Michael Grissinger and Peter Feldschreiber have been nominated by the Board to be re-elected as Class A directors, Clive Richardson has been nominated to be re-elected as a Class B director and Raymond Prudo-Chlebosz, M.D. has been nominated to be re-elected as a Class C director at the Meeting. A class A director re-elected at the Meeting will hold office until the 2022 Annual General Meeting, a Class B director until the 2023 Annual General Meeting and a Class C director until the 2024 Annual General Meeting, unless they resign or their seats become vacant due to death, removal, or other cause in accordance with the Articles.

 

James Hill, M.D., age 75, has served as a member of our board of directors since September 2015. Prior to joining our board of directors, Dr. Hill was a non-executive director and Chairman of Genetix Group Plc from 2001 to 2009, an AIM listed company providing scientists with intelligent solutions for cell imaging and analysis. Previously Dr. Hill was a director and Senior Vice President of Corporate Affairs with SmithKline Beecham, from 1994 to 2001, with global responsibility for Investor Relations, Government Affairs, Communication and was a member of the corporate management team which oversaw corporate strategy. Dr. Hill’s prior experience was in the field of strategic product development working closely with research and development and the global markets. Dr. Hill qualified in medicine at Guy’s Hospital and became a fellow of the Royal Colleges of Physicians in both London and Edinburgh and was earlier awarded a Hunterian Professorship by the Royal College of Surgeons in England.

 

Stuart Ungar, M.D., age 77, has served as a member of our board of directors since September 2015. After pursuing post-graduate studies in Internal Medicine and research in neuro-pharmacology at the Royal Post-Graduate Medical School, UK, Dr. Ungar was in practice as an Internist at The Princess Grace Hospital, London. Following fifteen years of practice he, jointly with Dr. Raymond Prudo, founded The Doctors Laboratory PLC, a general pathology laboratory, which provided analytical services to clinicians and pharmaceutical organizations throughout the United Kingdom and abroad. During his tenure as Chairman and Board Director, The Doctors Laboratory PLC grew from a start-up to become one of the largest pathology laboratories in the United Kingdom. It was sold to Sonic Healthcare, a quoted Australian PLC, in 2002. Dr. Ungar studied medicine and biochemistry in the University of London at the Royal Free Hospital School of Medicine. As a post-graduate he was admitted to the Royal College of Physicians of the United Kingdom. Dr. Ungar is a Life Fellow of the Royal Society of Medicine and a founder and former Vice-President of the Independent Doctors Federation. Dr. Ungar is a non-executive director of Pharmacierge Ltd., a private company providing prescription dispensing services to the public.

 

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David Byrne, age 61, has served as a member of our board of directors since April 2016. Mr. Byrne is currently Group Chief Executive Officer of Sonic Healthcare UK Group, the United Kingdom’s largest NGO clinical diagnostics organization, a position that he has held since 1997. Mr. Byrne is also the CEO of The Doctors Laboratory, which is a subsidiary of Sonic. Mr. Byrne also currently serves as a Main Board Director for CIS Healthcare Limited and served as a Main Board Finance Director for Clinisys Solutions Ltd from 2000 to 2007. He is a UK Chartered Certified Accountant with over 25 years’ experience in corporate finance and developing early stage biotechnology and medical services companies.

 

Donald Williams, age 62, has served as a member of our board of directors since June 2016 and is an “audit committee financial expert”. Mr. Williams is a 35-year veteran of the public accounting industry who retired in 2014. Mr. Williams spent 18 years as a partner at Ernst & Young and the last seven years as a partner at Grant Thornton. During the last seven years at Grant Thornton, he served as the National Leader of Grant Thornton’s Life Sciences Practice and the Managing Partner of the San Diego Office. He was the lead partner for both Ernst & Young and Grant Thornton on multiple initial public offerings, secondary offerings and private and public debt financings, as well as numerous mergers and acquisitions. Mr. Williams serves as a director of Alphatec Holdings, Inc., Forte Biosciences, Inc. and Impedimed Limited. Mr. Williams is a graduate of Southern Illinois University with a B.S. degree.

 

Michael Grissinger, age 67, has served as a member of our board of directors since January 2018. Mr. Grissinger spent 22 years at Johnson & Johnson, retiring in 2018. During his Johnson and Johnson tenure, Mr. Grissinger served in a variety of senior-level management roles including Vice President - Corporate Development, Vice President - Worldwide Business Development & Licensing and Vice President and Head - Mergers & Acquisitions for the pharmaceuticals group. Prior to Johnson & Johnson, Mr. Grissinger spent 12 years at Ciba-Geigy in finance, marketing, and business development roles. In addition to Akari, Mr. Grissinger also serves as a member of the board of directors of Atrin Pharmaceuticals. Mr. Grissinger holds a B.Sc. in Chemistry from Juniata College and an MBA from Temple University - Fox School of Business.

 

Dr. Peter Feldschreiber, age 77, has served as a member of our board of directors since January 2018. Dr. Feldschreiber is dual qualified as a physician and barrister with extensive experience both in the pharmaceutical industry and healthcare law. Since 2004, Dr. Feldschreiber has been a member of 4 New Square chambers in Lincoln’s Inn. He has over 20 years’ experience in the pharmaceutical industry including 10 years as European Medical Director at Proctor and Gamble Limited and he has held appointments as Senior Medical Assessor and Special Litigation Coordinator to the Commission on Human Medicines, a U.K. government advisory body, as well as the Committee on Safety of Devices, Medicines and Healthcare Products Regulatory Agency, part of the U.K. government’s Department of Health. Dr. Feldschreiber is General Editor of The Law and Regulation of Medicines (Oxford University Press) and Consultant Editor for the section on Medicinal Products and Drugs in the Fifth Edition of Halsbury’s Laws of England. Dr. Feldschreiber holds a B.Sc. MB.BS from Kings College Hospital Medical School, University of London, is a Fellow of the Faculty of Pharmaceutical Medicine, Royal College of Physicians and holds an LLB Hons. from Thames Valley University.

 

Clive Richardson, CEO, age 56, has served as a member of our board of directors since September 2015, as our Interim Chief Executive Officer from May 2018 until July 2019, and as our Chief Executive Officer since July 2019. Prior to that, Mr Richardson was Head of Operations for Volution, and before that he was a consultant to Volution’s predecessor company, Varleigh Immuno Pharmaceuticals, since its inception in 2008. Prior to working for Volution and Varleigh, Mr. Richardson served as a member of the board of directors for a range of international healthcare companies, including CIS Healthcare Ltd. and Clinisys Ltd. Mr. Richardson was formerly Head of Equities Research for Investec Bank, and worked as a strategy consultant for L.E.K. Consulting. Mr Richardson holds an M.A. in Zoology from Trinity College, Oxford University.

 

Raymond Prudo-Chlebosz, M.D., Executive Chairman, age 76, has served as our executive chairman since September 2015. Dr. Prudo has been an active investor and developer of healthcare companies for 25 years. Dr. Prudo was the Founder, Chairman, and Chief Executive Officer of Volution and its predecessor company, Varleigh Immuno Pharmaceuticals, since inception in 2008. He is currently a board member of several UK healthcare companies. Dr. Prudo holds an MBBS from the University of London, and an FRCP(C) from the Royal College of Physicians and Surgeons of Canada.

 

Resolution No. 11 Ratification of Appointment of Independent Registered Public Accounting Firm

 

Our Audit Committee has appointed BDO USA LLP to serve as our independent registered public accounting firm for the year ending December 31, 2021. The Audit Committee and the Board are requesting, as a matter of policy, that shareholders ratify the selection of BDO USA LLP. The Audit Committee and the Board are not required to take any action as a result of the outcome of the vote on this proposal. Even if the appointment is ratified, the Board may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders. If the appointment is not ratified, the Board will consider its options.

 

  7 

 

 

Resolution Nos. 12 and 13: Re-Appointment of Statutory Auditor and Authority to Fix Remuneration of Statutory Auditor

 

At every general meeting at which accounts are presented to shareholders, Akari is required to appoint statutory auditors to serve from the end of the meeting until the conclusion of the next general meeting at which accounts are laid before Akari shareholders. Haysmacintyre has indicated that it is willing to continue as Akari’s statutory auditor to hold office during this period. You are asked to approve their re-appointment and authorize the Audit Committee to determine their remuneration.

 

Resolution No. 14: Directors’ Authority to Allot Shares

 

Under the Companies Act, the Company’s directors may not allot shares, or grant rights to subscribe for or convert securities into shares, in the Company, unless they have been authorized by shareholders. The Board is seeking authority to allot, or grant rights to subscribe for or convert any securities into, shares in the Company up to an aggregate nominal value of USD1,500,000 in the period to June 30, 2026. This will allow up to 15,000,000,000 ordinary shares of USD0.0001 each (corresponding to 150,000,000 ADSs) to be allotted. This is to replace the authority that was granted at the Company’s annual general meeting in 2017 and is due to expire on June 28, 2022.

 

Akari, in common with other similar-sized biotechnology companies, intends to seek additional fundraisings when necessary to implement its operating plan. Failure to do so may delay research and development activities. In the light of Akari’s size and status of being a pre-revenue-generating company, the Board believes that equity financings are an appropriate method to support any potential future funding requirements. The Board believes that, in the event of an equity financing, having authorization to allot, or grant rights to subscribe for or convert securities into, Akari’s shares without needing to seek approval from shareholders at the time should allow Akari to raise funds more efficiently on the best terms available and in a timely fashion.

 

Resolution No. 15: Authority to Amend the Company’s 2014 Equity Incentive Plan

 

The Board is seeking approval of the shareholders to an increase in the number of shares available for the grant of awards to 400,000,000 ordinary shares (corresponding to 4,000,000 ADSs) under the Company’s 2014 Plan. We believe that the increase in the number of shares available for issuance under our 2014 Plan is essential to permit our management to continue to provide long-term, equity-based incentives to present and future key employees, consultants and directors. Accordingly, our Board believes approval of the amendment to increase the aggregate number of shares available for issuance under the 2014 Plan is in our best interests and those of its shareholders.

 

On June 19, 2014, the Board approved the 2014 Plan. Our shareholders approved the 2014 Plan on June 19, 2014. The 2014 Plan was most recently amended by our shareholders on June 30, 2020. The purpose of the 2014 Plan is to enable us to continue to attract and retain professional personnel for the purposes of executing our clinical development plan. The 2014 Plan is administered by our Board and grants are made pursuant thereto by the compensation committee. The aggregate number of ordinary shares that may be issued upon exercise of options under the 2014 Plan is currently 344,747,462 ordinary shares, or the equivalent of such number of ordinary shares after the administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with the 2014 Plan. Options may be granted at any time. As of June 3, 2021, options to purchase 115,649,035 of our ordinary shares were outstanding under the 2014 Plan. Unless sooner terminated, the Plan will expire on April 30, 2024.

 

Resolution No. 16 — Dis-application of Statutory Pre-emption Rights

 

Under the Companies Act, the Company’s directors may not allot equity securities (that is, ordinary shares in the Company or rights to subscribe for or to convert securities into ordinary shares in the Company) or sell treasury shares for cash without first offering them to existing shareholders in proportion to their existing holdings, unless they have been authorized by shareholders. The Board is seeking the dis-application of these pre-emption rights until June 30, 2026 in respect of shares allotted and rights granted pursuant to the authorization proposed in resolution 14 and any treasury shares the Company may hold from time to time in consequence of any share buy-back. This will replace the existing equivalent dis-application in respect of the share allotment authority granted in 2017, which is due to expire on June 28, 2022.

 

As noted in respect of resolution 14, the Board intends to seek additional fundraisings when necessary to implement its operating plan. The Board believes that, in the event of an equity financing, having authorization to allot equity securities or sell Akari’s shares without having to comply with statutory pre-emption rights should allow Akari to raise funds more efficiently on the best terms available and in a timely fashion.

 

EACH SHAREHOLDER IS URGED TO COMPLETE, DATE, SIGN AND PROMPTLY
RETURN THE ENCLOSED PROXY FORM.

 

  8 

Exhibit 99.2

 

AKARI THERAPEUTICS, PLC

 

PROXY FORM
For use at the Annual General Meeting
to be held at 75/76 Wimpole Street, London W1G 9RT at 2.30 p.m. local time on June 30, 2021.

 

I/We                                                                                                                                                                                                                                                                              
(Name in full block capitals please)
of                                                                                                                                                                                                                                                                                   
being (a) member(s) of Akari Therapeutics, Plc (the “Company) hereby appoint the Chairman of the meeting or*

                                                                                                                                                                                                                                                                                       
as my/our proxy to attend, speak and vote for me/us and on my/our behalf as identified by an “X” in the appropriate box below at the annual general meeting of the Company to be held at the above time and at any adjournment of the meeting. This form of proxy relates to the resolutions referred to below.

 

* Please see note 1 below on attendance at the meeting and appointment of proxies in the light of Covid-19.

 

I/We instruct my/our proxy to vote as follows:

 

No. Ordinary Resolutions For Against Abstain
(see
note 2
)
1. To receive the Statutory Accounts for the year ended December 31, 2020.      
2. To approve the Directors’ Remuneration Report.      
3. To re-elect James Hill, M.D. as a Class A director.      
4. To re-elect Stuart Ungar, M.D. as a Class A director.      
5. To re-elect David Byrne as a Class A director.      
6. To re-elect Donald Williams as a Class A director      
7. To re-elect Michael Grissinger as a Class A director.      
8. To re-elect Peter Feldschreiber as a Class A director.      
9. To re-elect Clive Richardson as a Class B director.      
10. To re-elect Raymond Prudo-Chlebosz as a Class C director.      
11. To ratify the appointment of BDO USA, LLP as independent registered public accounting firm.      
12. To re-appoint Haysmacintyre as Statutory Auditors.      
13. To authorize the audit committee of the board to fix the Statutory Auditors’ remuneration.      
14. To grant the directors authority to allot shares.      
15. To authorize an increase in the number of shares available for the grant of awards under the 2014 Equity Incentive Plan.      
  Special Resolution      
16. To dis-apply statutory pre-emption rights on the allotment of shares.      

 

Dated _________________  2021.  
   
Signature(s):    
   

 

Name(s):                           

 

 

 

 

Notes:

 

  1. Please indicate with an “X” in the appropriate box how you wish the proxy to vote. In the absence of any indication, the proxy will exercise his/her discretion as to whether and how he/she votes; if the Chairman of the meeting is appointed, he will exercise this discretion to vote FOR each resolution. The proxy may also vote or abstain from voting as he/she thinks fit on any other business which may properly come before the meeting. As explained in the Proxy Statement, given the uncertainty over what laws and guidance about travel and public gatherings in connection with Covid-19, it may not to be possible or advisable for shareholders, or their proxies other than the Chairman of the meeting, to attend the meeting in person. We therefore strongly encourage you to vote on all resolutions as soon as possible by appointing the Chairman of the meeting as your proxy (or, in the case of beneficial owners who hold their shares indirectly, by submitting appropriate proxy voting instructions) as described below.
     
  2. If you mark the box “abstain”, it will mean that your proxy will abstain from voting and, accordingly, your vote will not be counted either for or against the relevant resolution. It should be noted that an abstention is not a vote in law.
     
  3. This form of proxy should be signed and dated by the member or his attorney duly authorized in writing. If the appointer is a corporation this proxy should be under seal or under the hand of an officer or attorney duly authorized. Any alteration made to the form of proxy should be initialed.
     
  4. To be valid, this form of proxy, together with a duly signed and dated power of attorney or any other authority (if any) under which it is executed (or a notarially certified copy of such power of attorney or other authority) must be signed and dated and lodged at the Company’s registrars at the address below (or by email at the email address below), so as to be received by 2.30 p.m. local time on June 28, 2021 (or, if the meeting is adjourned, not less than 48 hours before the time of the adjourned meeting).
     
  5. A proxy need not be a member of the Company. A member may appoint a proxy of his/her own choice (but this year we strongly encourage the appointment of the Chairman as a proxy – see note 1 above). If you wish to appoint someone else, please delete the words “the Chairman of the meeting” and insert the name of the person whom you wish to appoint in the space provided. The Chairman of the meeting will act as your proxy, whether or not such deletion is made, if no other name is inserted. A member may appoint more than one proxy in relation to the meeting provided that each proxy is appointed to exercise rights attached to different shares.
     
  6. In the case of joint holders, signature of any one holder will be sufficient, but the names of all the joint holders should be stated. The vote of the senior holder (according to the order in which the names stand in the register of members in respect of the holding) who tenders a vote in person or by proxy will be accepted to the exclusion of the vote(s) of the other joint holder(s).
     
  7. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, as amended, the Company specifies that entitlement to attend and vote at the meeting, and the number of votes which may be cast at the meeting, will be determined by reference to the Company’s register of members at 6.30 p.m. (London time) on June 28, 2021 or, if the meeting is adjourned, at 6.30 p.m. (London time) two working days before the time of the adjourned meeting. In each case, changes to the register of members after such time will be disregarded.
     
  8. Completion and return of a form of proxy will not preclude a member from attending the meeting and voting in person.
     
  9. The Company has retained SLC Registrars to hold and maintain its register of members. SLC Registrars will take delivery of completed proxy forms posted to it in accordance with the details above. Persons who own ordinary shares through a brokerage firm, bank or other financial institution, including persons who own ordinary shares in the form of American Depositary Receipts (“ADRs”) evidencing American Depositary Shares (“ADSs”) through the Depositary, Deutsche Bank AG, London Branch, as custodian of Deutsche Bank Trust Company Americas (“Beneficial Owners”), must return a voting instruction form to have their shares or the shares underlying their ADSs, as the case may be, voted on their behalf. Brokerage firms, banks or other financial institutions that do not receive voting instructions from Beneficial Owners may vote at their discretion. ADS holders are not entitled to vote directly at the meeting, but a Deposit Agreement, as amended, exists between the Depositary and the holders of ADRs pursuant to which registered holders of ADRs as of June 1, 2021 are entitled to instruct the Depositary as to the exercise of voting rights pertaining to the Ordinary Shares so represented. The Depositary has agreed that it will endeavour, insofar as practicable, to vote (in person or by delivery to the Company of a proxy) the ordinary shares held for its custodian, Deutsche Bank AG, London Branch, in accordance with the instructions of the ADR holders. Instructions from ADR holders must be sent to the Depositary so that the instructions are received by no later than June 22, 2021, at 1.00 p.m. New York time.

 

Address for lodgment of hard-copy forms of proxy: SLC Registrars, PO Box 5222, Lancing, BN99 9FG, United Kingdom. Alternatively a completed, signed and dated copy of this form of proxy (and any accompanying evidence of authority) may be scanned and emailed to proxy@slcregistrars.com.

 

 

 

 

Exhibit 99.3

 

AKARI THERAPEUTICS PLC

 

ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS

 

FOR THE YEAR ENDED

 

31 DECEMBER 2020

 

 

 

  

Registered in England and Wales, number: 05252842

 

 

AKARI THERAPEUTICS PLC

 

CONSOLIDATED ANNUAL REPORT AND FINANCIAL STATEMENTS

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

CONTENTS  Page 
     
Officers and professional advisers   1 
      
Directors’ report   2 – 5 
      
Strategic Report   6 – 12 
      
Director’s Remuneration Report   13 – 26 
      
Independent Auditor’s report to the shareholders of Akari Therapeutics Plc   27 – 30 
      
Consolidated statement of comprehensive loss   31 
      
Consolidated statement of financial position   32 
      
Parent company statement of financial position   33 
      
Consolidated statement of changes in equity    

34

 
      
Parent company statement of changes in equity   35 
      
Consolidated statement of cash flows   36 
      
Parent company statement of cash flows   37 
      
Notes to the report and financial statements   38-56 

 

 

 

AKARI THERAPEUTICS PLC

 

OFFICERS AND PROFESSIONAL ADVISERS

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

   
Directors R Prudo-Chlebosz
  C Richardson
J Hill
  S Ungar
D Byrne
  D Williams
M Grissinger
  P Feldschreiber

 

SecretaryPrism Cosec Limited

 

Registered Office Highdown House,
Yeoman Way,
  Worthing,
West Sussex
  BN99 3HH

 

Independent Auditors Haysmacintyre LLP
  10 Queen Street Place
London
  EC4R 1AG

 

1 

 

 

AKARI THERAPEUTICS PLC

 

DIRECTORS’ REPORT

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

Unless the context otherwise requires, all references to “Akari,” “we,” “us,” “our,” the “Company”, the “Group” and similar designations refer to Akari Therapeutics, Plc and its subsidiaries. All references to “parent company” refer to Akari Therapeutics, Plc excluding its subsidiaries.

 

The directors present their report and the audited financial statements for the year ended 31 December 2020.

 

PRINCIPAL ACTIVITY

 

The principal activity of the Group is developing treatments for acute and chronic inflammation, specifically through the inhibition of the complement and leukotriene pathways. Each of these systems has scientifically well-supported causative roles in the diseases being targeted by the Company. Management believes that blocking early mediators of inflammation will prevent initiation and continual amplification of the processes that cause certain diseases.

 

DIRECTORS

 

The directors who served the Company during the year and up to the date of signing the Annual Report were as follows:

 

R Prudo-Chlebosz 

C Richardson 

J Hill 

S Ungar 

D Byrne 

D Williams 

M Grissinger 

P Feldschreiber

 

SUPPLIER PAYMENT POLICY

 

It is the Group’s policy to agree to commercial terms with its suppliers prior to purchase of goods or services. The Group negotiates favourable payment terms where possible.

 

POLITICAL/CHARITABLE DONATIONS

 

There were no political or charitable contributions made by the Group during the year ended 31 December 2020 (2019: $nil).

 

STAFF POLICY

 

The Group is committed to a policy of recruitment and promotion on the basis of aptitude and ability. Applications for employment by disabled persons are given full and fair consideration having regard to their particular aptitudes and abilities. Where existing employees become disabled, it is the Group’s policy, wherever possible, to provide continuing employment under normal terms and conditions and to provide training, career development and promotion wherever appropriate.

 

DIRECTORS INDEMNITY

 

The Company’s Articles of Association provide, subject to the provisions of UK legislation, an indemnity for directors and officers of the Company in respect of liabilities they may incur in the discharge of their duties or in the exercise of their powers, including any liabilities relating to the defence of any proceedings brought against them which relate to anything done or omitted, or alleged to have been done or omitted, by them as officers or employees of the Company.

 

Appropriate directors and officer’s liability insurance cover is in place in respect of all Company directors.

 

2 

 

 

AKARI THERAPEUTICS PLC

 

DIRECTORS’ REPORT

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

GREENHOUSE GAS EMISSIONS

 

The Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013 require quoted companies to report on the greenhouse gas emissions for which they are responsible. We are a company with a small number of employees. We have serviced offices and we currently outsource our research, development, testing and manufacturing activities. As a result, we do not emit greenhouse gases from our own activities, nor do we purchase electricity, heat or steam for our own use. (Scope 1 and scope 2 disclosures). Accordingly, there are no greenhouse gas emissions to report from the Company’s operations, nor does it have responsibility for any other emissions. Further, for the same reason, the Company considers that it is a ‘low energy user’ under the Streamlined Energy & Carbon Reporting regulations and therefore a disclosure on energy and carbon emissions is not required.

 

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 2020 the following shareholders held an interest of 3% or more of the ordinary share capital of the Company:

 

   Ordinary shares of $0.0001   % of issued share capital 
RPC Pharma Limited (1)   809,977,100    21.0%
PranaBio Investments, LLC (2)   249,238,600    6.4%
Aspire Capital Fund, LLC (3)   758,720,200    19.3%
Yasumitsu Shigeta (4)   123,006,300    3.2%

 

(1)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.

 

(2)Represents the entire holdings of Pranabio Investments, LLC and includes warrants to purchase 32,500,000 ordinary shares (equivalent to 325,000 ADSs) at an exercise price of $0.03 per share (or $3.00 per ADS) which expire on July 1, 2024 and warrants to purchase additional 30,000,000 ordinary shares (equivalent to 300,000 ADSs) at an exercise price of $0.02 per share (or $2.20 per ADS) which expire on February 21, 2025. Pranabio Investments, LLC is a Texas limited liability company. Samir R. Patel is the managing member and has sole voting and investment power with respect to the shares.

 

(3)Represents the holdings of Aspire Capital Fund, LLC and includes warrants to purchase 26,315,800 ordinary shares (equivalent to 263,158 ADSs) at an exercise price of $0.03 per share (or $3.00 per ADS) which expire on July 1, 2024 and warrants to purchase additional 58,823,500 ordinary shares (equivalent to 588,235 ADSs) at an exercise price of $0.02 per share (or $2.20 per ADS) which expire on March 3, 2025. Aspire Capital Partners LLC (“Aspire Partners”) is the Managing Member of Aspire Capital Fund, LLC (“Aspire Fund”). SGM Holdings Corp (“SGM”) is the Managing Member of Aspire Partners. Mr. Steven G. Martin (“Mr. Martin”) is the president and sole shareholder of SGM, as well as a principal of Aspire Partners. Mr. Erik J. Brown (“Mr. Brown”) is the president and sole shareholder of Red Cedar Capital Corp (“Red Cedar”), which is a principal of Aspire Partners. Mr. Christos Komissopoulos (“Mr. Komissopoulos”) is president and sole shareholder of Chrisko Investors Inc. (“Chrisko”), which is a principal of Aspire Partners. Mr. William F. Blank, III (“Mr. Blank”) is president and sole shareholder of WML Ventures Corp. (“WML Ventures”), which is a principal of Aspire Partners. Each of Aspire Partners, SGM, Red Cedar, Chrisko, WML Ventures, Mr. Martin, Mr. Brown, Mr. Komissopoulos and Mr. Blank may be deemed to be a beneficial owner of ADSs by Aspire Fund. The principal business office of Aspire Partners is 155 North Wacker Drive, Suite 1600, Chicago IL 60606. Each of Aspire Partners, SGM, Red Cedar, Chrisko, WML Ventures, Mr. Martin, Mr. Brown, Mr. Komissopoulos and Mr. Blank disclaims beneficial ownership of the ADSs held by Aspire Fund.

 

(4)The principal business office of Yasumitsu Shigeta is XYMAX Kamiyacho Building 8/F, 5-12-13 Toranomon, Minato-ku, Tokyo 105-0001, Japan.

 

As at 31 December 2020 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 2020

 

 

CORPORATE GOVERNANCE

 

The Group is not required to implement the provisions of the UK Corporate Governance Code (the “Code”).

 

Regular board meetings are held and the Executive Directors are heavily involved in the day to day running of the business. The Board of Directors meets regularly and is responsible for formulating strategy, monitoring financial performance and approving material items of expenditure.

 

GOING CONCERN

 

The Group meets its day-to-day working capital requirements through funding. In assessing the Company’s ability to continue as a going concern, Management has prepared financial forecasts covering at least the next twelve months from the date of approval of the financial statements.

 

The Group’s forecast and projections, show that at present, the Group has insufficient working capital to fulfil its current business plan without the Group raising additional capital.

 

We plan to raise additional funds from external sources and/or from Aspire Capital with which the Group has approximately $22,000,000 remaining of the total $30,000,000 commitment to drawdown in the form of equity funding as of 4 June 2021. In our assessment, the remaining availability of funds under the Aspire facility, together with our expectation of the Group’s ability to raise capital from other fundraising sources and generate cash in the form of R&D tax cash credit could extend the Group’s ability to fund operations into June 2022 without any subsequent adjustment to the preliminary forecast. The Group currently intends to pursue other external fundraising sources within the fiscal year 2021, although securing such fundraising is subject to uncertainty.

 

Therefore, based on the availability of funds under the Aspire facility, and ability to reduce both R&D and other administrative expenditure costs significantly if so required, management believes the Group’s financial prospects are sufficient to fund future operations for at least the next twelve months.

 

Ultimately, the Group will require additional capital in order to develop and commercialise our current product candidates or any product candidates that we acquire, if any, particularly for the period beyond the next twelve months. There can be no assurance that additional funds will be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available on a timely basis, we may be required to terminate or delay development for one or more of our product candidates.

 

These matters indicate the existence of conditions that give rise to a material uncertainty (specifically, the reliance on fundraising, which is not guaranteed, to facilitate the Group's operating activities) which may cast significant doubt on the Group's ability to continue as a going concern. Notwithstanding these uncertainties, the Directors have concluded that there is a reasonable expectation that the Group has the ability to continue to raise such funding and therefore consider it appropriate to prepare the financial statements on a going concern basis. The financial statements do not include any adjustments to the carrying amounts and classifications of assets and liabilities that would result if the Group was unable to continue as a going concern.

 

SUBSEQUENT EVENTS

 

Events occurring after the year end and required to be disclosed are detailed in note 20 of the notes to the financial statements.

 

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

 

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws and regulations.

 

Company law requires the directors to prepare Group and Parent company financial statements for each financial year. Under that law the directors have elected to prepare the Group and Parent company financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the EU. 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 the profit or loss of the Group for that period.

 

The Group financial statements are required by law and IFRS as adopted by the EU to present fairly the financial position and performance of the Group; the Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation. The Parent company financial statements are required by law to give a true and fair view of the state of affairs of the Parent company.

 

4 

 

 

AKARI THERAPEUTICS PLC

 

DIRECTORS’ REPORT

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

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 EU 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

 

So far as each of the directors is aware at the time the report is approved:

 

·there is no relevant audit information of which the Group’s auditors are unaware; and

·the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information

 

This report was approved by the board on 4 June 2021 and signed on its behalf.

 

 

 

Clive Richardson 

Director

 

5 

 

 

AKARI THERAPEUTICS PLC
 
STRATEGIC REPORT
 
FOR THE YEAR ENDED 31 DECEMBER 2020
 

 

REVIEW OF BUSINESS

 

We are a clinical-stage biopharmaceutical company focused on developing treatments for acute and chronic inflammation, specifically through the inhibition of the complement and leukotriene pathways. Each of these systems has scientifically well-supported causative roles in the diseases being targeted by us. We believe that blocking early mediators of inflammation will prevent initiation and continual amplification of the processes that cause certain diseases.

 

Ticks have undergone 300 million years of natural selection to produce inhibitors that bind tightly to key highly-conserved inflammatory mediators, are generally well tolerated in humans, and remain fully functional when a host is repeatedly exposed to the molecule. Our molecules are derived from these inhibitors.

 

Our lead product candidate, nomacopan inhibits both terminal complement activation and leukotriene B4, or LTB4. It inhibits terminal complement activation by tightly binding to C5 and preventing its cleavage and activation by complement. It inhibits LTB4 by capturing the fatty acid within the body of the nomacopan protein. By preventing C5 activation of complement nomacopan can stop formation of the anaphylatoxin C5a which activates cells, including granulocytes and T and B cells, via two G protein coupled receptors, or GPCRs, and also prevents formation of the membrane attack complex, or MAC which activates cells including endothelial cells. C5a and the MAC cause and maintain a proinflammatory and prothrombotic state. LTB4 also activates cells via two separate GPCRs and can independently cause and maintain a proinflammatory state. The importance of nomacopan’s (formerly Coversin) dual inhibitory action is therefore twofold. First, it can prevent inflammatory and prothrombotic activities of two key pathways, and second, the pathways can be independently activated, for example terminal complement activation can be induced by IgG, IgM, carbohydrates and damage associated molecular patterns and LTB4 synthesis can be induced by engagement of Fc gamma receptors, cytokines, toll-like receptors, C5a and MAC.

 

Nomacopan is a recombinant small protein (16,740 Da) derived from a protein originally discovered in the saliva of the Ornithodoros moubata tick, where it modulates the host immune system to allow the parasite to feed without alerting the host to its presence or provoking an immune response.

 

Nomacopan has received orphan drug status from the U.S. Food and Drug Administration, or the FDA, and the European Medicines Agency, or the EMA, for paroxysmal nocturnal hemoglobinuria, or PNH, Guillain Barré Syndrome, or GBS, high-risk hematopoietic stem cell transplant-associated thrombotic microangiopathy, or HSCT-TMA, and bullous pemphigoid, or BP.   Orphan drug designation provides us with certain benefits and incentives, including a period of marketing exclusivity if regulatory approval of the drug is ultimately received for the designated indication. The receipt of orphan drug designation status does not change the regulatory requirements or process for obtaining marketing approval and the designation does not mean that marketing approval will be received. We intend to apply in the future for orphan drug designation in additional indications we deem appropriate.

 

We have received Fast Track designation from the FDA for the investigation of nomacopan for the treatment of patients with moderate and severe BP, for treatment of pediatric HSCT-TMA and for the treatment of PNH in patients who have polymorphisms conferring Soliris® (eculizumab) resistance. The Fast Track program was created by the FDA to facilitate the development and expedite the review of new drugs which show promise in treating a serious or life-threatening disease and address an unmet medical need. Drugs that receive this designation benefit from more frequent communications and meetings with the FDA to review the drug’s development plan including the design of the proposed clinical trials, use of biomarkers and the extent of data needed for approval. Drugs with Fast Track designation may also qualify for priority review to expedite the FDA review process, if relevant criteria are met.

 

Our clinical targets for nomacopan are orphan inflammatory diseases where the inhibition of both C5 and LTB4 are implicated, including bullous pemphigoid, or BP, pediatric HSCT-TMA, and as well as inflammatory conditions in the eye and lung including dry eye, dry AMD and COVID-19 pneumonia. Our clinical programs are in different stages of development ranging from Phase I to Phase III.

 

6 

 

 

AKARI THERAPEUTICS PLC
 
STRATEGIC REPORT
 
FOR THE YEAR ENDED 31 DECEMBER 2020
 

 

RESULTS AND DIVIDENDS

 

Research and development expenses for the year ended 31 December 2020 were approximately $12,192,000 (2019: $16,646,000). This $4,454,000 decrease is primarily due to decreased expenditure relating to clinical trials related to the halting of the AKC study and the delay of the start of the HSCT-TMA study.

 

Administrative expenses for the year ended 31 December 2020 were approximately $7,910,000 (2019: $8,291,000). This $381,000 decrease was primarily due to favorable foreign currency movements.

 

Net cash used in operating activities for the year ended 31 December 2020 was $16,951,000 (2019: $12,257,000). Net cash flow used in operating activities was primarily attributed to our ongoing research activities to support nomacopan, including manufacturing, clinical trial and preclinical activities.

 

Net cash provided by financing activities was $25,074,000 (2019: $$11,987,000).

 

Cash and cash equivalents increased to approximately $14,056,000 at 31 December 2020 (2019: $5,732,000).

 

The Group made a loss of $17,597,000 (2019: $21,764,000). 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 (2019: $Nil) and the directors do not propose a final dividend.

 

PRINCIPAL RISKS AND UNCERTAINTIES

 

Financing

 

The Group requires additional funding to continue its future operations and planned research and development activities. The directors recognise that the Group may not be able to obtain financing on favourable terms and the terms of the Group’s finance arrangements may be dilutive. The Group may also seek additional funding through 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, 2020, 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.

 

We plan to raise additional funds from external sources and/or from Aspire Capital. As of 3 June 2020, $22.0 million was available for drawdown under the Company’s equity line with Aspire Capital. The availability of funds under the Aspire facility could extend the Company’s ability to fund operations into June 2022 without any subsequent adjustment to the preliminary forecast. Furthermore, the Company currently intends to pursue other external fundraising sources within the fiscal year 2021. There can be no assurance that additional funds will be available when we need them on terms that are acceptable to us, or at all.

 

Early stage development

 

The Group is an early stage development 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. A large majority of early stage development companies fail to achieve their business plans mainly due to lack of being able to estimate the speed of new market entrants and the costs associated with entering markets and obtaining market share.

 

7 

 

 

AKARI THERAPEUTICS PLC
 
STRATEGIC REPORT
 
FOR THE YEAR ENDED 31 DECEMBER 2020
 

 

PRINCIPAL RISKS AND UNCERTAINTIES (continued)

 

Drug development

 

The Group’s approach to drug development is complex and all of the product candidates are in an early stage of development with a high risk of failure. It is impossible to predict when or if any of the product candidates will prove effective or safe in humans or will receive regulatory approval.

 

Further common challenges for similar companies and the Group is to:

 

·Find a stable active product or formulation without extensive clinical trials and substantial additional costs or create adequate assay for the products for formulation or clinical testing purposes;
·Manufacture, and/or formulate sufficient amounts of its product candidates or upscale or optimise such synthesis so as to enable efficient production of scale;
·Find safe and effective doses and dose ratios for its product candidates without extensive clinical trials and substantial additional costs;
·Obtain sufficient supply or quality of product candidates supply or materials to produce product candidates or other materials necessary to conduct clinical trials; and
·Establish manufacturing capabilities or enter into agreements with third parties to supply materials to make product candidates, or manufacture clinical trial drug supplies.

 

Departure of and search for executive officers

 

The Group’s success depends on its ability to hire and retain the services of its current executive officers, directors, principal consultants and others. In addition, the Group has established relationships with universities and research institutions which have historically provided, and continue to provide, us with access to research laboratories, clinical trials, facilities and patients. The loss of the services of any of these individuals or institutions has had and could have a material adverse effect on the Group’s business. Dov Elefant resigned as our Chief Financial Officer in September 2019. Torsten Hombeck was appointed to serve as the Company’s Chief Financial Officer June 2020. In May 2018, David Horn Solomon resigned as Chief Executive Officer and member of the Company’s board. Clive Richardson, who was then serving as the Company’s Chief Operating Officer, was appointed to serve as the Company’s Interim Chief Executive Officer and became the Chief Executive Officer in July 2019.

 

Retention of key management staff is an underlying risk of the business.

 

Market acceptance

 

The Group is not guaranteed that any of its product candidates will gain market acceptance amongst physicians, patients, healthcare providers, pharmaceutical companies or other customers.

 

The Group’s clinical trials in humans may show that the doses or dose ratios selected based on screening, animal testing or early 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 long-term clinical studies and provide more evidence substantiating the safety and effectiveness of the doses or dose ratios selected in a significant patient population.

 

8 

 

 

AKARI THERAPEUTICS PLC
 
STRATEGIC REPORT
 
FOR THE YEAR ENDED 31 DECEMBER 2020
 

 

PRINCIPAL RISKS AND UNCERTAINTIES (continued)

 

Intense competition from powerful competitors

 

Many companies, universities and research organisations developing product candidates have greater resources and significantly greater experience in financial, research and development, manufacturing, marketing, sales, distribution and technical regulatory matters than the Group has. These competitors could commence and complete clinical testing of their products, obtain regulatory approval, and begin commercial-scale manufacturing of their products faster than the Group is able to, thus resulting in a situation whereby the Group may not be able to commercialise its product candidates or achieve a competitive position in the market.

 

Product liability exposure

 

The Group faces exposure to product liability and other claims if its product candidates, products or processes are alleged to have caused harm. These risks are inherent in testing, manufacturing, and marketing human therapeutic products. If the Group is sued for any injury caused by its products, product candidates or processes, the Group’s liability could exceed its product liability insurance coverage and its total assets. Claims against the Group, regardless of their merit or potential outcome, may also generate negative publicity or damage the Group’s ability to obtain physician endorsement of its products or expand its business.

 

Intellectual Property

 

The Group may be unable to protect the intellectual property relating to its product candidates, or if it infringes the rights of others, its ability to successfully commercialise its product candidates may be harmed. The Group owns or hold licenses to a number of issued patents (foreign and foreign counterparts) and pending patent applications. The Group’s success depends in part on its ability to obtain patent protection both in the United States and in other countries for its product candidates, as well as the methods for treating patients in the product indications using these product candidates. The Group’s ability to protect its product candidates from unauthorised or infringing use by third parties depends in substantial part on its ability to obtain and maintain valid and enforceable patents. Due to evolving legal standards relating to the patentability, validity and enforceability of patents covering pharmaceutical inventions and the scope of claims made under these patents, the Group’s ability to obtain, maintain and enforce patents is uncertain and involves complex legal and factual questions. Even if the Group’s product candidates, as well as methods for treating patients for prescribed indications using these product candidates are covered by valid and enforceable patents and have claims with sufficient scope, disclosure and support in the specification, the patents will provide protection only for a limited amount of time. Accordingly, rights under any issued patents may not provide the Group with sufficient protection for a commercial advantage against competitive products or processes

 

Impact of Coronavirus Outbreak

 

In late 2019, a novel strain of coronavirus, known as COVID-19, was reported in Wuhan, China. Epidemics such as this can adversely impact our business as a result of disruptions, such as travel bans, quarantines, and interruptions to access the trial sites and supply chains, which could result in material delays and complications with respect to our research and development programs and clinical trials. Moreover, as a result of the COVID-19, there is a general unease of conducting unnecessary activities in medical centers. For example, the Phase I/II clinical trial in patients with AKC study has been halted and the opening of sites for the Phase III clinical trial in pediatric patients with HSCT-TMA was delayed until the end of 2020. It is too early to assess the full impact of the COVID-19 outbreak on trials for nomacopan, but it has affected and is likely to continue to affect our ability to complete recruitment in our original timeframe. The extent to which the COVID-19s impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak, and the actions that may be required to contain the COVID-19 or treat its impact. In particular, the continued spread of the COVID-19 globally could adversely impact our operations and workforce, including our research and clinical trials and our ability to raise capital, could affect the operations of key governmental agencies, such as the FDA, which may delay the development of our product candidates, and could result in the inability of our suppliers to deliver components or raw materials on a timely basis or at all, each of which in turn could have an adverse impact on our business, financial condition and results of operation.

 

9 

 

 

AKARI THERAPEUTICS PLC
 
STRATEGIC REPORT
 
FOR THE YEAR ENDED 31 DECEMBER 2020
 

 

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 inhibitors of acute and chronic inflammation, specifically the complement system, the eicosanoid system or leukotriene system and the bioamine system for the treatment of rare and orphan diseases.

 

KEY PERFORMANCE INDICATORS

 

The directors consider the key performance indicators to be the research and development spend. This allows the Directors to manage the on-going activities and strategies for further development of the Group.

 

The key performance indicators are measured and reviewed on a regular basis at Board meetings and enable the Directors to communicate the performance of the Group against predetermined targets.

 

Key financial performance indicators:

 

Research and Development spend – 2020: $12,192,000 (2019: $16,646,000)

Cash and cash equivalents position – 2020: $14,056,000 (2019: $5,732,000)

 

SECTION 172 STATEMENT

 

When making decisions, the Directors of Akari Therapeutics Plc (“Akari” or the “Company”) act in the way they consider is most likely to promote the success of the Company, for the benefit of its members as a whole, while also considering the broad range of stakeholders who interact with the business.

 

Our strategy is to clinically develop new drugs for orphan inflammatory diseases.

 

In striving to achieve our goal to develop new therapeutic medicines, our business touches the lives of many people. We exist in a complex and evolving regulatory and scientific environment and as a result we have a number of key stakeholder groups. Considering the interests of our stakeholders is fundamental to the way in which the Company operates. Our Values and Code of Ethics empower employees to make the best decisions in the interest of the Company and our stakeholders, and help to ensure that these considerations are made not only at Board level, but throughout our organization.

 

Post the reporting period end, the directors of the Company (“Directors”) have continued to take into account the Company’s stakeholders, including the potential impact of its future activities on the community, the environment and the Company’s reputation when making decisions. The Directors also continue to take all necessary measures to ensure the Company is acting in good faith and fairly between members and is promoting the success of the Company for its members in the long term.

 

The table below serves as our Section 172 statement by setting out the key stakeholder groups, their interests and how the Company engages with them. Akari’s key stakeholders include its investors, employees, regulatory bodies and suppliers.

 

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AKARI THERAPEUTICS PLC
 
STRATEGIC REPORT
 
FOR THE YEAR ENDED 31 DECEMBER 2020
 

 

Stakeholder Why we engage

How we engage

 

Our Investors The Board and management maintain 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.

·   Annual General Meetings

·   Quarterly financial results

·   One-to-one meetings by Directors and Management with analysts and institutional investors

·   Investor outreach programs including attending virtual and in-person conferences and events and roadshows

·   Press releases, webcasts

·   Company website

Our Employees Akari staff are key to the Company’s success. Fully engaged staff lead to a more productive, innovative and happier workplace benefiting the performance of Akari as a whole. Our engagement seeks to address any employee concerns regarding working conditions, health & safety, training and development. Engagement with our employees is led by the CEO and the Chairman.

·   Competitive compensation and reward packages

·   Staff are encouraged to attend relevant conferences and training courses for personal & company development

·   Direct communications structure between the Board and the staff

 

 

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

·   EDGAR announcements

·   Annual Report

·   Direct contact and communications with regulators

·   Compliance updates at Board Meetings

·   Consistent risk review

 

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AKARI THERAPEUTICS PLC
 
STRATEGIC REPORT
 
FOR THE YEAR ENDED 31 DECEMBER 2020
 

 

Stakeholder Why we engage

How we engage

 

Our Suppliers

 

We have several key suppliers with whom we have built strong relationships. We establish rigorous tight communication channels to ensure our 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.

 

 

This report was approved by the Board on 4 June 2021 and signed on its behalf.

 

 

Clive Richardson

Director

 

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AKARI THERAPEUTICS, PLC

 

DIRECTORS’ REMUNERATION REPORT

 

FOR THE YEAR ENDED 31 DECEMBER 2020 

 

 

PART I - ANNUAL REPORT ON REMUNERATION

 

Information provided in this section of the Directors’ Remuneration report is subject to audit.

 

Single Total Figure of Remuneration for Each Director (subject to audit)

 

The following table shows the compensation paid or accrued during the fiscal year ended 31 December 2020.

 

Name of Director  Salary and Fees ($)   Taxable Benefits ($)   Annual Bonus ($)(4)   Long-term Incentive ($)   Option Awards ($)(1)   Pension Benefits ($)   2020 Total   2020 Total Fixed   2020 Total variable 
Executive Director                                
Ray Prudo   412,000    -    206,000    -    -    -    618,000    412,000    206,000 
Clive Richardson   503,941    11,648(3)   214,960    -    -    50,394 (2)   780,942    565,983    214,960 
Non-Employee Director                                         
James Hill, M.D.   62,752    -    -    -    19,611    -    82,363    82,363    - 
Stuart Ungar, M.D.   49,947    -    -    -    19,611    -    69,558    69,558    - 
David Byrne   52,143    -    -    -    19,611    -    71,754    71,754    - 
Donald Williams   56,838    -    -    -    19,611    -    76,499    76,449    - 
Peter Feldchreiber   49,947    -    -    -    19,611    -    69,558    69,558    - 
Michael Grissinger   39,338    -    -    -    19,611    -    58,949    58,944    - 

 

(1) These amounts represent the aggregate grant date fair value for option awards for fiscal year 2020 computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value may be found in note 16 to our Financial Statements.

 

(2) Consists of company contributions to pension scheme.

 

(3) Consists of company contributions to health benefits of $7,288 and life insurance premiums of $4,360.

 

(4)  Bonuses are awarded on the basis of an assessment of the overall performance of the director concerned, rather than specific measures or targets. In respect of 2020, the annual bonus payments for the Executive Directors reflect their strong personal performance at a critical time for the business. Ray Prudo and Clive Richardson both received annual bonus payments of 100% of the maximum available respectively, of which 100% was paid in the first quarter of 2021. None of the awards is attributable to share price appreciation and no discretion was exercised as a result of share price appreciation or depreciation.

 

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AKARI THERAPEUTICS, PLC

 

DIRECTORS’ REMUNERATION REPORT (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

The following table shows the compensation paid or accrued during the fiscal year ended 31 December 2019.

 

Name of Director  Salary and Fees ($)   Taxable Benefits ($)   Annual Bonus ($)(4)   Long-term Incentive ($)   Option Awards ($)(1)   Pension Benefits ($)   2019 Total   2019 Total Fixed   2019 Total variable 
Executive Director
Ray Prudo   400,000    -    200,000    -    -    -    600,000    400,000    200,000 
Clive Richardson   432,408    9,798(3)   177,208    -    -    43,241(2)   662,475    485,447    177,028 
Non-Employee Director
James Hill, M.D.   62,752    -    -    -    17,259    -    80,011    80,011    - 
Stuart Ungar, M.D.   49,947    -    -    -    17,259    -    67,206    67,206    - 
David Byrne   52,143    -    -    -    17,259    -    69,402    69,402    - 
Donald Williams   56,838    -    -    -    17,259    -    74,097    74,097    - 
Peter Feldchreiber   49,947    -    -    -    17,259    -    67,206    67,206    - 
Michael Grissinger   39,338    -    -    -    17,259    -    56,597    56,597    - 

 

(1) These amounts represent the aggregate grant date fair value for option awards for fiscal year 2019 computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value may be found in note 16 of our Financial Statements.

 

(2) Consists of company contributions to pension scheme.

 

(3) Consists of company contributions to health benefits of $7,401 and life insurance premiums of $2,397.

 

(4)  Bonuses are awarded on the basis of an assessment of the overall performance of the director concerned, rather than specific measures or targets. In respect of 2020, the annual bonus payments for the Executive Directors reflect their strong personal performance at a critical time for the business. Ray Prudo and Clive Richardson both received annual bonus payments of 100% of the maximum available respectively, of which 100% was deferred in cash until the completion of certain operational activities planned for fiscal year 2020. None of the awards is attributable to share price appreciation and no discretion was exercised as a result of share price appreciation or depreciation.

 

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AKARI THERAPEUTICS, PLC

 

DIRECTORS’ REMUNERATION REPORT (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

Incentive Plan Awards (subject to audit)

 

Akari operates an equity incentive plan (the 2014 Equity Incentive Plan, or 2014 Plan) under which directors receive options to acquire ordinary shares in Akari. Options awards granted during the fiscal year ended 31 December 2020 are as follows:

 

Name of Director 

Option

Awards

(1)

   Grant Date 

Exercise

Price

  

Face Value

($) (2)

  

Option

Vesting Date

 

Option

Expiry Date

James Hill   1,300,000   30/06/2020  $0.0218    19,611   30/06/2021  30/06/2030
Stuart Ungar   1,300,000   30/06/2020  $0.0218    19,611   30/06/2021  30/06/2030
David Byrne   1,300,000   30/06/2020  $0.0218    19,611   30/06/2021  30/06/2030
Donald Williams   1,300,000   30/06/2020  $0.0218    19,611   30/06/2021  30/06/2030
Michael Grissinger   1,300,000   30/06/2020  $0.0218    19,611   30/06/2021  30/06/2030
Peter Feldschreiber   1,300,000   30/06/2020  $0.0218    19,611   30/06/2021  30/06/2030

 

(1) Option awards are subject to time-based vesting without performance measures or targets other than continued service until the date of vesting.

 

(2) These amounts represent the face value for option awards, calculated as the number of shares awarded (assuming full vesting) multiplied by the price per share implied by the market price per ADS, which is equal to the stated exercise price.

 

Director’s shareholdings (subject to audit)

 

The table below shows, for each director, the total number of ordinary shares owned (by the director and connected persons), the total number of those share options that were held and the number of share options vested as at 31 December 2020. All share options are subject to time-based vesting without performance measures or targets other than continued service until the date of vesting. No director exercised any share options during the year ended 31 December 2020.

 

Name of Director  Ordinary Shares Owned   Share Options   Vest Share Options (1) 
Executive Director
Ray Prudo (2)   832,477,100    -    - 
Clive Richardson   10    40,771,850    29,646,850 
Non-Employee Director
James Hill   -    7,800,000    6,500,000 
Stuart Ungar   20    7,800,000    6,500,000 
David Byrne   -    7,800,000    6,500,000 
Donald Williams   -    8,550,000    7,250,000 
Michael Grissinger   -    5,200,000    3,250,000 
Peter Feldschreiber   -    5,200,000    3,250,000 

 

15 

 

 

AKARI THERAPEUTICS, PLC

 

DIRECTORS’ REMUNERATION REPORT (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

(1) All share options that were outstanding as at 31 December 2020 use time-based vesting and are not subject to performance targets other than continued service until the date of vesting. None of the options have been exercised.

 

(2) Represents the entire holdings of RPC Pharma Limited and Dr. Ray Prudo and includes warrants to purchase 9,210,500 ordinary shares (equivalent to 92,105 ADSs) at an exercise price of $0.03 per share (or $3.00 per ADS) which expire on July 1, 2024 and warrants to purchase additional 7,500,000 ordinary shares (equivalent to 75,000 ADSs) at an exercise price of $0.02 per share (or $2.20 per ADS) which expire on February 21, 2025. Dr. Prudo has voting and dispositive control over the ordinary shares held by RPC Pharma Limited and owns approximately 67.8% of RPC’s outstanding shares (including option grants), including 10.6% of RPC’s outstanding shares held in trust for Dr. Ungar. Dr. Prudo disclaims beneficial ownership except to the extent of his actual pecuniary interest in such shares

 

The remainder of this Directors’ Remuneration Report is not subject to audit.

 

Illustration of Total Shareholder Return

 

The following graph compares the cumulative total shareholder return on Akari’s ADSs, each representing 100 ordinary shares, with that of the Nasdaq Biotech Index from the period that Akari’s ADSs were publicly traded on The Nasdaq Capital Market through 31 December 2020. 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.

 

 

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AKARI THERAPEUTICS, PLC

 

DIRECTORS’ REMUNERATION REPORT (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

Chief Executive Total Remuneration History

 

The table below sets out total remuneration details for the Chief Executive Officer.

 

Period  Single total figure of remuneration $   Annual Bonus   Short-term incentive payout against maximum (10)   Option Award ($)   Option Awards against maximum (4) 
2020 Clive Richardson   503,941    214,960    -    -    - 
2019 Clive Richardson (9)   432,408    177,028    -    -    - 
2018 (Davids Solomon) (1)   173,611    -    -    -    - 
2017 (Gur Roshwalb and David Solomon) (1)   1,338,253    119,041(5)   100%(6)   -    - 
2016 (Gur Roshwalb)   581,250    187,500    125%(7)   -    - 
2015 (Gur Roshwalb)   7,306,951    86,625    100%(8)   6,863,034    - 
2014 (Gur Roshwalb)   410,564    -    -    60,564    - 
2013 (Gur Roshwalb) (2)   576,389    -    -    173,396    - 
2012 (3)   -    -    -    -    - 

 

(1)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.

(2)Dr. Roshwalb was appointed as Akari’s Chief Executive Officer on 4 March 2013.

(3)Akari was not a quoted company in 2012.

(4)All options were awarded on a discretionary basis on an annual basis.

(5)Includes a $50,000 signing bonus.

(6)Bonus was awarded in 2017 but calculated from Dr. Solomon’s appointment on 28 August 2017.

(7)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.

(8)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.

(9)Clive Richardson was appointed Interim Chief Executive on 8 May 2018 and Chief Executive Officer on 18 July 2019.

(10)All cash bonuses to Clive Richardson were awarded on a discretionary annual basis.

 

Directors’s Remuneration Compared to Other Employees

 

The table below shows the percentage change in remuneration of each director and the parent company’s non-director employees on a full-time equivalent basis between the year ended 31 December 2019 and the year ended 31 December 2020.

 

   Change in Remuneration in year ended 31 December 2020 compared with remuneration in the year ended 31 December 2019 
    Salary and Fees    Taxable Benefits    Annual Bonus 
Executive Director               
Ray Prudo   3%        3%
Clive Richardson   17%   19%   21%
Non-employee Director               
James Hill, M.D.   -    -    - 
Stuart Ungar, M.D.   -    -    - 
David Byrne   -    -    - 
Donald Williams   -    -    - 
Peter Feldschreiber   -    -    - 
Michael Grissinger   -    -    - 
Other Employees   23%   (9%)   8%

 

17 

 

 

AKARI THERAPEUTICS, PLC

 

DIRECTORS’ REMUNERATION REPORT (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

 

Relative Importance of Spend on Pay

 

The following table sets forth the total amounts spent by the Company on remuneration for the year ended 31 December 2020 and the year ended 31 December 2019. Given that Akari remains in the early phases of its business life cycle, the comparator chosen to reflect the relative importance of Akari’s spend on pay is Akari’s research and development costs as shown in its Annual Report on Form 20-F for the year ended 31 December 2020.

 

Period 

Year Ended

31 December 2020

$

  

Year Ended

31 December 2019

$

 
Total spend on remuneration   3,505,737    3,094,347 
Shareholder distributions   -    - 
Research and development costs   12,241,000    16,646,000 

 

Implementation of remuneration policy for year ending 31 December 2020

 

Our director compensation program is administered by our board of directors with the assistance of the compensation committee. The compensation committee conducts an annual review of director compensation and makes recommendations to the board with respect thereto.

 

The shareholders approved our Directors Remuneration Policy on June 30, 2020 to provide a framework for the Directors’ compensation packages. In addition, the Company has a non-employee director compensation policy, which was amended and restated on November 19, 2015 and was subsequently amended on June 29, 2016, January 26, 2017, January 23, 2018, January 8, 2019 and on January 9, 2020. The Company does not intend to make any significant changes in the way that the Directors Remuneration Policy will be implemented in 2021 compared to how it was implemented in 2021 and does not expect any deviations from the procedure for the implementation of the Directors Remuneration Policy set out in the policy. On December 7, 2020, our Compensation Committee resolved that the cash compensation and committee membership fees for the fiscal year 2021 would remain the same as they were for 2020. As a result, our non-employee directors will be compensated for service on our board of directors as follows in 2021:

 

  ¨ an annual retainer for service on the board of directors of $39,338;

 

  ¨ an annual retainer for service as a member of the compensation committee and nominating and governance committee of $5,305;

 

  ¨ an annual retainer for service as a member of the audit committee of $7,500;

 

  ¨ for the chairman of the compensation committee, and nominating and governance committee, an annual retainer of $10,609;

 

  ¨ for the chairperson of the audit committee, an annual retainer of $17,500;

 

The following table presents the salary increases agreed for the upcoming fiscal year (with the agreed increases for the year ended 31 December 2020 presented as comparative information)

 

18 

 

 

AKARI THERAPEUTICS, PLC

 

DIRECTORS’ REMUNERATION REPORT (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

 

Director  31
December
 2019
   31
December
 2020
   Increase %   31
December
 2020
   31
December
 2021
   Increase % 
Executive Director
Ray Prudo (2)  $400,000   $412,000    3%  $412,000   $412,000    0%
Clive Richardson (3)  £337,428   £382,306    13%  £382,306   £382,306    0%
Non-Employee Director
James Hill, M.D.  $62,752   $62,752    0%  $62,752   $62,752    0%
Stuart Ungar, M.D.  $49,947   $49,947    0%  $49,947   $49,947    0%
David Byrne  $52,143   $52,143    0%  $52,143   $52,143    0%
Donald Williams  $56,838   $56,838    0%  $56,838   $56,838    0%
Peter Feldschreiber  $39,338   $39,338    0%  $39,338   $39,338    0%
Michael Grissinger  $49,947   $49,947    0%  $49,947   $49,947    0%

 

(1)Additional discretionary bonuses may be awarded in accordance with contractual entitlement and the remuneration policy.

(2)2019-2020 increase represents an increase in line with inflation.

(3)2019-2020 increase represents an increase in line with Mr. Richardson’s increased duties as Chief Executive Officer.

 

Compensation Committee Approach to Remuneration Matters

 

The Compensation Committee is comprised of Dr. James Hill (Chairman), Dr. Stuart Ungar, and Mr. David Byrne. Dr. James Hill, as Chairman of our Compensation Committee, reports, in respect of 2020, that the annual bonus payments for the Executive Directors reflect their strong personal performance at a critical time for the business. Ray Prudo and Clive Richardson both received annual bonus payments of 100% of the maximum available respectively, of which 100% was paid in the first quarter 2021. For the year ending 31 December 2021, our Compensation Committee resolved that the cash compensation and committee membership fees of Non-Executive Directors would remain the same as they were for 2020 to reflect the developmental stage of the Company. All members have continued to serve until the date of this Directors’ Remuneration Report. The charter of the Committee is set forth on Akari’s website at http://www.akaritx.com. No person other than a member of the Compensation Committee provided to the Committee advice, or services, that materially assisted the Committee in their consideration of matters relating to the directors’ remuneration for 2020 or remuneration issues during the consideration of an individual’s nomination as a director.

 

Statement of Voting at AGM

 

Akari is committed to ongoing shareholder dialogue and the Compensation Committee takes an active interest in shareholder views and voting outcomes.

 

In respect of the last resolution to approve the Directors’ Remuneration Report at the 2020 AGM, of the 1,055,203,832 votes cast in respect of the above resolution 1,023,958,776 votes were in favour of this resolution, 12,885,200 votes were against and 18,359,856 votes abstained.

 

In respect of the last resolution to approve the Directors’ Remuneration Policy at the 2020 AGM, of the 1,055,203,832 votes cast in respect of the above resolution 955,625,587 votes were in favour of this resolution, 18,166,700 votes were against and 81,411,545 votes abstained.

 

19 

 

 

 

AKARI THERAPEUTICS PLC

 

DIRECTORS’ REMUNERATION REPORT (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

 

PART II - DIRECTORS’ REMUNERATION POLICY

 

INFORMATION PROVIDED IN THIS SECTION OF THE DIRECTORS’ REMUNERATION REPORT IS NOT SUBJECT TO AUDIT.

 

This section sets out the Directors’ Remuneration Policy (“Policy”) of Akari Therapeutics, Plc (“Akari”), which was approved by shareholders at the 2020 Annual General Meeting of Shareholders (“AGM”). The Policy provides Akari’s compensation framework from the date of its approval at the AGM and for a period of three years thereafter, unless changes to the Policy are required earlier and a new Policy is put to shareholder vote.

 

For the avoidance of doubt, in approving the Directors’ remuneration policy, authority is given to Akari to honour any commitments entered into with current or former Directors (such as the payment of a pension, fees or the vesting/exercise of past share option awards) for the periods for which they apply.

 

Akari’s remuneration policy seeks to provide compensation packages which will attract, motivate, reward and retain an executive team with the right calibre of talent, experience, and skills to lead a successful future for Akari. Akari’s compensation framework is designed to provide a competitive package in comparison to companies of similar size, complexity, maturity profile and geographic presence. Elements of compensation packages which are subject to performance conditions as noted in the Group’s remuneration policy may include key performance indicators (KPIs), both financial and non-financial, which are an important component of the information needed to explain a company’s progress towards its stated goals. Other elements which are not subject to performance measures are considered an important component of attracting and retaining UK resident employees, including Executive Directors.

 

The table below sets out the main elements of Akari’s remuneration policy for its Executive Directors and seeks to explain how each element of the compensation package operates:

 

Policy table – Executive Directors

 

Element Purpose and link to strategy Operation Maximum opportunity Performance metrics and recovery provisions
Base salary Support the recruitment and retention of Executive officers

· Base salary levels are set taking into account the role, responsibilities and individuals experience in the position, performance of the individual and Akari.

 

· Base salaries are typically reviewed annually

· There is no prescribed maximum increase nor any requirement to increase salary at any time.

 

· By exception, higher increases may be made to reflect individual circumstances. These may include significant changes in the job size or complexity and/or promotion.

· 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.

Pension

Encourages and enables executives to build savings for their retirement

· Akari typically makes contributions to pension plans (or retirement savings plans) to match prevailing local market practices. · Currently up to 10% of salary per annum.

· None.

 

· No provisions for recovery or withholding of sums as this is not performance-related.

 

20 

 

 

AKARI THERAPEUTICS PLC

 

DIRECTORS’ REMUNERATION REPORT (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

 

Other Benefits

Provide market competitive benefits in a cost-effective way

· Provisions include medical insurance, life assurance, permanent health insurance, etc.

 

· In exceptional circumstances, such as the relocation of an executive or for a new hire, additional benefits may be provided in the form of relocation allowance and benefits.

 

· Other benefits may be offered if considered appropriate and reasonable by the Compensation Committee.

· No prescribed maximum.  The cost of benefits will vary from year to year in accordance with the cost of insuring such benefits.

· None.

 

· No provisions for recovery or withholding of sums as this is not performance-related.

Bonus

To reward the delivery of annual targets as well as to recognise the individual contributions towards our key strategic achievements

· Any bonus is paid in cash typically within 60 days after the end of the financial year to which it relates.

 

· Performance objectives and targets are either fixed contractually or set annually and actual payout levels are determined after the year end, based on performance against targets subject to overriding discretion of the Compensation Committee.

The maximum annual bonus payable for any financial year is capped at 100% of salary, although the Compensation Committee reserves the right to vary this amount in exceptional circumstances.

· Where performance conditions are attached to a bonus payment, targets are either fixed contractually or selected by the Compensation Committee and set annually and can include key financial, operational and/or individual objectives. All assessments of performance against target is made by the Compensation Committee in its sole discretion.

 

· No provisions for recovery or withholding of sums as the performance measures are considered adequate.

 

21 

 

 

AKARI THERAPEUTICS PLC

 

DIRECTORS’ REMUNERATION REPORT (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

 

Equity incentive plan (2014 Equity Incentive Plan)

To motivate and reward long-term performance in alignment with the shareholder interests and value-creation

· Awards may be made periodically to Executive Officers in the form of options or in shares including stock appreciation rights, phantom stock awards or stock units.

 

· Awards typically vest over three or four years and may be subject to phased vesting.

· 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.

· 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.

CSOP (UK resident employees and directors only) · Executives are eligible to participate in the all-employee CSOP Plan under the same conditions as all other employees. · Grant value of £30,000 or local market rules as amended from time to time.

· None.

 

· No provisions for recovery or withholding of sums as this is not performance-related.

 

Policy table – Non-Executive Directors

 

Akari’s non-employee compensation policy is administered by its board of directors with the assistance of the Compensation Committee. The Compensation Committee periodically reviews non-employee director compensation policy and makes recommendations to the board.

 

Non-Executive Directors typically receive an annual retainer paid in cash for their service (depending on their additional membership and chairman responsibilities) and an annual grant of stock options but do not participate in the bonus plan to which Executive Officers are eligible, nor do they typically receive any other performance related payment. There are no elements of the non-employee director compensation policy which are subject to performance conditions given the necessity to maintain directors’ independence and board effectiveness in corporate governance, and accordingly there are no provisions for recovery or withholding of sums.

 

22 

 

 

 

AKARI THERAPEUTICS PLC

 

DIRECTORS’ REMUNERATION REPORT (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

 

The table below sets out some of the features of Akari’s current non-employee director compensation policy:

 

Element Purpose and link to strategy Operation Maximum opportunity Performance metrics
Annual Cash Retainer Fee Support the recruitment and retention of Non-Executive Directors

· Each Non-Executive Director serving on the Board receives an annual cash retainer, with additional amounts payable for acting as a chairman or a member of various committees.

· In addition, the Chairman receive an additional cash retainer.

· Annual cash retainers are typically payable on a quarterly basis with the exception of the Executive Chairman who is paid monthly.

· A Non-Employee Director may elect to receive annual cash payments in the form of fully-vested ordinary shares.

· There is no prescribed maximum increase nor any requirement to increase salary at any time. · None.

 

23 

 

 

AKARI THERAPEUTICS PLC

 

DIRECTORS’ REMUNERATION REPORT (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

 

Share Options

Strengthens the alignment to shareholders’ interests through share ownership

 

 

 

· Directors typically receive an annual grant of options in the form of market value options under the 2014 Equity Incentive Plan.

· These awards typically vest in full on the date of the next AGM following the date of grant, subject to the Non-Executive Director’s continued service on the Board, have a term of 10 years from date of grant, and vesting accelerates in the case of a change of control.

· Normal initial grant and annual grant of share options will be equal to 1,300,000 (or equivalent value of ADS) but the Committee reserves the discretion to review and amend this amount. · None.

 

The foregoing is qualified in its entirety by Akari’s current non-employee director compensation policy, as may be amended from time to time.

 

Approach to recruitment compensation

 

Akari’s policy is to pay a fair remuneration package for the role being undertaken and the experience of the individual to be appointed.

 

Akari expects remuneration packages for Executive Directors to include base salary, targeted level of annual cash incentive, initial and ongoing equity-based awards, standard benefits and special provisions tailored to the recruiting situation, such as: sign-on bonus, reasonable relocation support and make-whole awards for remuneration forfeited from a prior employer (whether on account of cash bonuses, share awards, pension benefits or other forfeited items). The Compensation Committee retains the discretion to provide additional cash, share based payment, benefits and other remuneration where necessary or useful to recruit new Executive Directors or to secure the ongoing service of existing Executive Directors.

 

The remuneration package for any new Non-Executive Director will be set in accordance with the terms of Akari’s non-employee director compensation policy then in effect. Akari expects remuneration packages for on-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.

 

24 

 

 

AKARI THERAPEUTICS PLC

 

DIRECTORS’ REMUNERATION REPORT (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

 

Director’s service contracts

 

Akari’s board of directors is divided into three classes for purposes of election (Class A Directors, who serve a one year term before being subject to re-election at Akari’s annual general meeting; Class B Directors, who serve a two year term before being subject to re-election at the annual general meeting; and Class C Directors who serve a three year term before being subject to re-election at the annual general meeting, provided also that in any two year period, a majority of the board must stand for re-election).

 

It is the Company’s policy that Executive Directors should have contracts with an indefinite term. Directors’ notice periods are set by the compensation committee, having regard to the need to attract and retain talent, ensure an orderly succession and enable the Company to manage its personnel while avoiding excessive costs. Service contracts are available for inspection at Akari’s registered office or 75/76 Wimpole Street London W1G 9RT.

 

Policy on Payments for Loss of Office

 

Akari’s approach to payments to Executive Directors in the event of termination is to take account of the individual circumstances including the reason for termination, individual performance, contractual obligations and the terms of any option award.

 

Generally, Akari employment arrangements for Executive Directors include a notice provision and continuing payment obligations as per the individual Executive Director service contracts following termination by Akari of an Executive Director without cause or termination by the Executive Director for good reason or change of control. Payment obligations, if any, include base salary, benefits, and all or some portion of target annual cash remuneration. Akari may offer payment in lieu of notice if it is considered to be in the best interests of Akari.

 

Treatment of unvested outstanding equity awards will be determined according to the specific nature of termination, individual contracts, and plan rules.

 

The Compensation Committee reserves the right to make payments it considers reasonable under a compromise or settlement agreement, including payment or reimbursement of reasonable legal and professional fees, and any payment or compensation (in whatever form) in respect of statutory rights under employment law in the US, UK or other jurisdictions. Payment or reimbursement (in whatever forms) of reasonable outplacement fees may also be provided.

 

25 

 

 

AKARI THERAPEUTICS PLC

 

DIRECTORS’ REMUNERATION REPORT (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

 

Other relevant information considered

 

As appropriate, the Compensation Committee considers the pay and conditions of the broader employee workforce, as well as the Consumer Price Index and Retail Price Index, when making compensation related decisions for the Directors. The Compensation Committee does not consult employees, other than Executive Directors, when drafting the Directors’ remuneration policy.

 

The Compensation Committee also considers shareholder feedback, so far as it relates to compensation, when reviewing of the appropriateness of its Policy. In addition, the Compensation Committee considers potential conflicts of interest and directors do not have sole discretion over their own remuneration.

 

This report was approved by the board on 4 June 2021 and signed on its behalf.

 

A insect on the ground

Description automatically generated

 

Clive Richardson

 

26 

 

 

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF

 

AKARI THERAPEUTICS PLC (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

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 2020 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 International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

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 2020 and of the group’s loss for the year then ended;

• have been properly prepared in accordance with IFRSs as adopted by the European Union; 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.

 

Material uncertainty in relation to going concern

We draw attention to note 1(c) in the financial statements, which outlines considerations relating to the group’s and parent company’s ability to continue as a going concern. The disclosure indicates that the group and parent company is reliant on additional funding to meet their liabilities as they fall due. These circumstances indicate the existence of a material uncertainty which may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. They have concluded that there is a material uncertainty which could cast significant doubt over the going concern status of the Group due to the impact of the requirement for additional fundraising, and we agree that this is adequately disclosed in the Directors’ Report and the accounting policies.

 

The key risk identified was uncertainty around the ability of the Group and Parent Company to raise funds in order to continue operations. While the Group and Parent Company have a history of raising funds as required, past history is no guarantee that further fundraising will be successful. Future fundraising could be delayed and the amounts arising from future fundraises are uncertain. A significant delay in the ability to raise funds would negatively impact the group’s ability to generate cash to meet its liabilities as and when they fall due.

 

Our evaluation of the directors’ assessment of the entity’s ability to continue to adopt the going concern basis of accounting included an assessment of the inherent risks to the Group’s business model and how such risks may impact the ability to continue operations over the going concern assessment period. We also undertook the following procedures:

 

-We reviewed trading and fundraising activities after the reporting date and considered management’s assessment of the Group’s and Parent Company’s prospects regarding further fundraising.
-We reviewed cash flow forecasts prepared by management and assessed their adequacy, and also challenged the assumptions and judgements inherent within them.
-We assessed the Group’s and Parent Company’s ability to scale back operations and reduce costs as a means of preserving cash in the twelve months from approval of the financial statements.
-We have corroborated cash levels after the reporting date to consider whether they are in line with forecasts and investigated the reasons for any significant discrepancies.
-We reviewed prior period budgets and forecasts against actual performance to consider management’s ability to accurately forecast and budget.

 

27 

 

 

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF

 

AKARI THERAPEUTICS PLC (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

 

An overview of the scope of our audit

Our audit scope included all components and was performed to component materiality. Our audit work therefore covered 100% of Group loss and total Group assets and liabilities. It was performed to the materiality levels set out below.

 

Key audit matters

Except for the matter described in the material uncertainty related to going concern section, we have determined that there are no other key audit matters to be communicated in our report.

 

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements on our audit and on the financial statements. For the purposes of determining whether the financial statements are free from material misstatement we define materiality as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably knowledgeable person, relying on the financial statements, would be changed or influenced. We determined overall materiality for the Group financial statements as a whole to be US$360,000 being 1.7% of expenditure for the year. We considered it appropriate to determine our materiality based on expenditure as we consider this to be the key metric in assessing the financial performance and position of the Group given its primary purpose is to undertake research and development activities. On the basis of our risk assessments, together with our assessment of the overall control environment, we apply a different level of materiality, performance materiality, to determine the extent of our testing and this was set at 75% of the overall audit financial statements’ materiality, being $270,000.

 

We agreed with management that we would report to the Audit Committee all audit differences in excess of US$18,000 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.

 

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.

 

28 

 

 

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF

 

AKARI THERAPEUTICS PLC (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

We have nothing to report in respect of the following matters in relation to which the Companies Act

2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

 

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

 

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

 

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

The objectives of our audit, in respect to fraud are: to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management. Audit procedures performed by the engagement team included:

 

-Inspecting correspondence with regulators, including receiving confirmation from legal service providers of no known instances of non-compliance;
-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 significant or round sum values and those that significantly impact the reported loss;
-Challenging assumptions and judgements made by management in their critical accounting estimates, and;
-We assessed whether the Group’s control environment is adequate for the size and operating model of such a Group.

 

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.

 

29 

 

 

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF

 

AKARI THERAPEUTICS PLC (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

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

04 June 2021

 

10 Queen Street Place

London

EC4R 1AG

 

30 

 

 

 

AKARI THERAPEUTICS PLC

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

       2020   2019 
    Notes   $000   $000 
Research and development expenses        (12,192)   (16,646)
Administrative expenses        (7,910)   (8,291)
                
OPERATING LOSS   2    (20,102)   (24,937)
                
Fair value movement on liability related to options   15    557    199 
Net finance cost   3    (909)   (15)
                
LOSS BEFORE INCOME TAX        (20,454)   (24,753)
                
Income Tax Credit   4    2,857    2,989 
                
loss for the YEAR        (17,597)   (21,764)
                
Other Comprehensive (Loss)/Income:               
Currency translation differences        (300)   4 
                
COMPREHENSIVE LOSS FOR THE YEAR        (17,897)   (21,760)
                
Loss per share attributable to the ordinary equity holder of the parent:               
Basic and diluted (cents)   5    (0.56)   (1.189)

 

All losses are derived from continuing activities for the current and previous financial year.

 

The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent company income statement. Refer note 5 for the results of the parent company.

 

The notes on pages 38 to 56 form an integral part of the consolidated financial statements.

 

31 

 

 

AKARI THERAPEUTICS PLC  COMPANY NUMBER: 05252842

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

AS AT 31 DECEMBER 2020

 

 

       2020  

2019

Restated*

  

1 January 
2019

Restated*

 
    Notes   $000   $000   $000 
ASSETS                    
Non-current assets                    
Property, plant and equipment   8    -    5    20 
Intangible Assets   7    27    30    33 
         27    35    53 
                     
Current assets                    
Trade and Other receivables   10    3,512    4,218    9,846 
Cash and cash equivalents        14,056    5,732    5,968 
         17,568    9,950    15,814 
                     
TOTAL ASSETS        17,595    9,985    15,867 
                     
EQUITY                    
Capital and reserves attributable to the Company’s equity shareholders                    
Called up share capital   13    385    31,987    23,651 
Share premium   14    111,978    109,337    106,239 
Capital Redemption reserve   14    50,593    -    - 
Other reserves   14    (687)   (387)   (391)
Redenomination reserve   14    1,601    -    - 
Merger reserve   14    9,128    9,128    9,128 
Share based payment reserve   14    16,987    13,462    12,413 
Reverse Acquisition reserve   14    (20,983)   (20,983)   (20,983)
Retained earnings   14    (156,627)   (139,030)   (117,266)
TOTAL EQUITY        12,375    3,514    12,791 
                     
LIABILITIES                    
Non Current Liabilities                    
Other long term liabilities   12    -    1,015    - 
Current liabilities                    
Trade and other payables   11    5,220    5,456    3,076 
TOTAL LIABILITIES        5,220    6,471    3,076 
                     
TOTAL EQUITY AND LIABILITIES        17,595    9,985    15,867 

 

(*Please refer note 18 for restatement)

 

The financial statements were approved and authorised for issue by the Board of Directors on 4 June 2021 and were signed below on its behalf by:

Clive Richardson

Director

 

The notes on pages 38 to 56 form an integral part of these consolidated financial statements.

 

32 

 

 

AKARI THERAPEUTICS PLC  COMPANY NUMBER: 05252842

 

PARENT COMPANY STATEMENT OF FINANCIAL POSITION

 

AS AT 31 DECEMBER 2020

 

 

       2020  

2019

Restated*

  

1 January 
2019

Restated*

 
    Notes   $ 000   $ 000   $ 000 
ASSETS                    
Non-current assets                    
Property, plant and equipment   8    -    5    20 
Investment in subsidiaries   9    20,339    20,339    20,339 
         20,339    20,344    20,359 
                     
Current assets                    
Trade and Other receivables   10    7,401    8,152    13,867 
Cash and cash equivalents        14,014    5,716    5,914 
         21,415    13,868    19,781 
                     
TOTAL ASSETS        41,754    34,212    40,140 
                     
EQUITY                    
Capital and reserves attributable to the Company’s equity shareholders                    
Called up share capital   13    385    31,987    23,651 
Share premium   14    111,978    109,337    106,239 
Capital redemption reserve   14    50,593    -    - 
Redenomination reserve   14    1,601    -    - 
Merger reserve   14    9,128    9,128    9,128 
Share based payment reserve   14    16,987    13,462    12,413 
Retained earnings   14    (153,976)   (136,067)   (114,278)
TOTAL EQUITY        36,696    27,847    37,153 
                     
LIABILITIES                    
Non Current Liabilities                    
Other long term liabilities   12    -    1,015    - 
Current liabilities                    
Trade and other payables   11    5,058    5,350    2,987 
TOTAL LIABILITIES        5,058    6,365    2,987 
                     
TOTAL EQUITY AND LIABILITIES        41,754    34,212    40,140 

 

(*Please refer note 18 for restatement)

 

As permitted by Section 408 of the Companies Act 2006, the income statement of the parent Company is not presented as part of these financial statements. The parent Company’s loss for the financial year was $17,909,000 (2019: loss of $21,789,000).

 

The financial statements were approved and authorised for issue by the Board of Directors on 4 June 2021 and were signed below on its behalf by:

Clive Richardson

Director

 

The notes on pages 38 to 56 form an integral part of these consolidated financial statements.

 

33 

 

 

 

AKARI THERAPEUTICS PLC

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

   Share   Share   Other   Redenomination   Merger   Share Based Payment  

Reverse

Acquis-ition

   Capital Redemption   Retained     
   Capital   Premium   Reserves   Reserve   Reserve   Reserve   Reserve   Reserve   Earnings   Total 
   $000   $000   $000   $000   $000   $000   $000   $000   $000   $000 
At 1 January 2019   23,651    106,030    (391)   -    9,128    12,413    (20,983)   -    (116,472)   13,376 
Correction of error*   -    209    -    -    -    -    -    -    (794)   (585)
Restated total equity at the beginning of the financial year   23,651    106,239    (391)   -    9,128    12,413    (20,983)   -    (117,266)   12,791 
                                                   
Comprehensive gain/ (loss) for the year   -    -    4    -    -    -    -    -    (21,764)   (21,760)
Share based payments   -    -    -    -    -    1,049    -    -    -    1,049 
Shares Issued   8,336    2,835    -    -    -    -    -    -    -    11,171 
At 31 December 2019   31,987    109,074    (387)   -    9,128    13,462    (20,983)   -    (139,030)   3,251 
                                                   
Correction of error*   -    263    -    -    -    -    -    -    -    263 
Restated total equity at 31 December 2019   31,987    109,337    (387)   -    9,128    13,462    (20,983)   -    (139,030)   3,514 
                                                   
Comprehensive gain/ (loss) for the year   -    -    (300)        -    -    -    -    (17,597)   (17,897)
Share based payments   -    -    -    -    -    325    -    -    -    325 
Shares Issued   20,576    2,629    -    -    -    -    -    -    -    23,205 
Share Buyback   (50,593)   -    -    -    -    -    -    50,593    -    - 
Effect of redenomination   (1,603)        -    1,601    -    -    -    -    -    - 
Shares issued on exercise of warrants   16    12    -    -    -    -    -    -    -    28 
Reclassification of warrants to shareholder equity (note 15)   -    -    -    -    -    3,200    -    -    -    3,200 
At 31 December 2020   385    111,978    (687)   1,601    9,128    16,987    (20,983)   50,593    (156,627)   12,375 

(*Please refer note 18 for restatement)

 

The notes on pages 38 to 56 form an integral part of these consolidated financial statements.

 

34 

 

 

AKARI THERAPEUTICS PLC

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY

 

                   Share Based  

 

Capital

         
   Share   Share   Redenomination   Merger   Payment   Redemption   Retained     
   Capital   Premium   Reserve   Reserve   Reserve   Reserve   Earnings   Total 
   $000   $000   $000   $000   $000   $000   $000   $000 
At 1 January 2019   23,651    106,030    -    9,128    12,413    -    (113,484)   37,738 
Correction of error*   -    209    -    -    -    -    (794)   (585)
Restated total equity at the beginning of the financial year   23,651    106,239    -    9,128    12,413    -    (114,278)   37,153 
                                         
Total comprehensive loss for the year   -    -    -    -    -    -    (21,789)   (21,789)
Share based payments   -    -    -    -    1,049    -    -    1,049 
Shares Issued   8,336    2,835    -    -    -    -    -    11,171 
                                         
At 31 December 2019   31,987    109,074    -    9,128    13,462    -    (136,067)   27,584 
                                         
Correction of error*   -    263    -    -    -    -    -    263 
Restated total equity at 31 December 2019   31,987    109,337    -    9,128    13,462    -    (136,067)   27,847 
                                         
Total comprehensive loss for the year   -    -    -    -    -    -    (17,909)   (17,909)
Share based payments   -    -    -    -    -    -    -    325 
Shares Issued   20,576    2,629    -    -    -    -    -    23,205 
Share buyback   (50,593)   -    -    -    -    50,593    -    - 
Effect of redenomination   (1,601)   -    1,601    -    -    -    -    - 
Shares issued on exercise of warrants   16    12    -    -    -    -    -    28 
Reclassification of warrants to shareholder equity (note 15)   -    -    -    -    3,200    -    -    3,200 
At 31 December 2020   385    111,978    1,601    9,128    16,987    50,593    (153,976)   36,696 

 

(*Please refer note 18 for restatement)

 

The notes on pages 38 to 56 form an integral part of these consolidated financial statements.

 

35 

 

 

AKARI THERAPEUTICS PLC

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

   2020  

2019

Restated*

 
   $000   $000 
Cash flows from operating activities          
Loss before income tax   (20,454)   (24,753)
Adjustments for:          
Changes in fair value of warrants   (557)   (199)
Finance costs (fees settled in shares)   900    - 
Share-based payment   325    1,049 
Foreign currency exchange gains   (491)   (30)
Depreciation and amortization   8    18 
Increase in trade and other receivables   (2,665)   (2,796)
Decrease/(increase) in trade and other payables   (246)   2,382 
Tax credit   2,857    2,988 
Tax received   3,372    8,423 
Net cash flows used in operating activities   (16,951)   (12,918)
           
           
Cash flows from financing activities          
Proceeds from issuance of ordinary shares   25,914    13,268 
Issue costs   (868)   (620)
Proceeds from warrant exercise   28    - 
Cash generated from financing activities   25,074    12,648 
           
Exchange losses on cash and cash equivalents   201    34 
Net increase / (decrease) in cash and cash equivalents   8,324    (236)
           
Cash and cash equivalents at beginning of period   5,732    5,968 
           
Cash and cash equivalents at end of period   14,056    5,732 

 

(*Please refer note 18 for restatement)

 

The notes on pages 38 to 56 form an integral part of these consolidated financial statements.

 

36 

 

 

 

AKARI THERAPEUTICS PLC

 

PARENT COMPANY STATEMENT OF CASH FLOWS

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

   2020  

2019

Restated*

 
   $000   $000 
Cash flows from operating activities          
Loss before income tax   (20,766)   (24,778)
Adjustments for:          
Changes in fair value of warrants   (557)   (199)
Share based payments   325    1,049 
Finance costs (fees settled in shares)   900    - 
Depreciation   5    15 
Increase in trade and other receivables   (2,621)   (2,707)
(Increase)/decrease in trade and other payables   (291)   2,363 
Tax credit   2,857    2,990 
Taxation received   3,372    8,423 
Exchange rate differences   (175)   (30)
           
Net cash flows used in operating activities   (16,951)   (12,874)
           
           
Cash flows from financing activities          
Proceeds from issuance of ordinary shares   25,914    13,268 
Issue costs   (868)   (620)
Proceeds from issue of shares on warrant exercise   28    - 
           
Cash generated from financing activities   25,074    12,648 
           
Exchange gains on cash and cash equivalents   175    28 
           
Net decrease in cash and cash equivalents   8,298    (198)
Cash and cash equivalents at beginning of period   5,716    5,914 
           
Cash and cash equivalents at end of period   14,014    5,716 

 

(*Please refer note 18 for restatement)

 

The notes on pages 38 to 56 form an integral part of these consolidated financial statements.

 

37 

 

 

AKARI THERAPEUTICS PLC

 

NOTES TO THE FINANCIAL STATEMENTS

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

1.ACCOUNTING POLICIES

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.

 

(a)Basis of preparation

These consolidated financial statements of Akari Therapeutics Plc have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these statements and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements are prepared on a historical cost conversion modified for fair value measurement as required by IFRS 9. A summary of the significant accounting policies is set out below.

 

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 1(n).

 

(b)Basis of consolidation

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The subsidiaries are fully consolidated from the date on which control is transferred to the Group and deconsolidated from the date that control ceases.

 

The financial statements of the subsidiaries are prepared for the same financial year as the parent company, applying consistent accounting policies throughout the Group. Inter-company balances and transactions, including unrealised profits are eliminated on consolidation.

 

The Group financial statements consolidate the Company’s financial statements of Akari Therapeutics Plc and its subsidiaries (the “Group”).

 

(c)Going Concern

The Group meets its day-to-day working capital requirements through funding. In assessing the Company’s ability to continue as a going concern, Management has prepared financial forecasts covering at least the next twelve months from the date of approval of the financial statements.

 

The Group’s forecast and projections, show that at present, the Group has insufficient working capital to fulfil its current business plan without the Group raising additional capital.

 

We plan to raise additional funds from external sources and/or from Aspire Capital with which the Group has approximately $22,000,000 remaining of the total $30,000,000 commitment to drawdown in the form of equity funding as of 4 June, 2021. In our assessment, the remaining availability of funds under the Aspire facility, together with our expectation of the Group’s ability to raise capital from other fundraising sources and generate cash in the form of R&D tax cash credit could extend the Group’s ability to fund operations into June 2022 without any subsequent adjustment to the preliminary forecast. The Group currently intends to pursue other external fundraising sources within the fiscal year 2021, although securing such fundraising is subject to uncertainty.

 

Therefore, based on the availability of funds under the Aspire facility, and ability to reduce both R&D and other administrative expenditure costs significantly if so required, management believes the Group’s financial prospects are sufficient to fund future operations for at least the next twelve months.

 

Ultimately, the Group will require additional capital in order to develop and commercialise our current product candidates or any product candidates that we acquire, if any, particularly for the period beyond the next twelve months. There can be no assurance that additional funds will be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available on a timely basis, we may be required to terminate or delay development for one or more of our product candidates.

 

38 

 

 

AKARI THERAPEUTICS PLC

 

NOTES TO THE FINANCIAL STATEMENTS

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

(c)Going Concern (continued)

These matters indicate the existence of conditions that give rise to a material uncertainty (specifically, the reliance on fundraising, which is not guaranteed, to facilitate the Group's operating activities) which may cast significant doubt on the Group's ability to continue as a going concern. Notwithstanding these uncertainties, the Directors have concluded that there is a reasonable expectation that the Group has the ability to continue to raise such funding and therefore consider it appropriate to prepare the financial statements on a going concern basis. The financial statements do not include any adjustments to the carrying amounts and classifications of assets and liabilities that would result if the Group was unable to continue as a going concern.

 

(d)Standards and interpretations adopted during the year

The Company has not early applied the following new and amendments to IFRS that have been issued but are not yet effective:

 

·Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37) (effective for periods commencing on or after 1 January 2022);

·IFRS 17: Insurance Contracts (effective for periods commencing on or after 1 January 2023);

·Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) (effective for periods commencing on or after 1 January 2022);

·Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41) (effective for periods commencing on or after 1 January 2022); and

·References to Conceptual Framework (Amendments to IFRS 3) (effective for periods commencing on or after 1 January 2022).

 

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.

 

(e)Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The functional currency of Akari Therapeutics Plc is U.S. dollars. The Group and Parent Company financial statements are presented in U.S Dollars which is considered to the Group’s presentation currency.

 

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

 

Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated as follows:

 

a)assets and liabilities at the balance sheet date are translated at the closing rate as at that balance sheet date;

b)income and expenses for each income statement are translated at average exchange rates; and

c)all resulting exchange differences are recognised in other comprehensive income.

 

39 

 

 

AKARI THERAPEUTICS PLC

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

1. ACCOUNTING POLICIES (continued)

 

(f)Financial instruments

Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held at call with banks.

 

Trade and other receivables

Trade and other receivables are recognised at fair value less a provision for impairment. Bad debts are written off through the income statement when identified. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

 

Trade and other payables

Trade payables are obligations to pay for goods or services received that have been acquired in the ordinary course of the business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Executory contracts are recognised when both parties to the contract met their respective obligations. Trade and other payable are unsecured, non-interest bearing and are stated at cost.

 

Liabilities at fair value through the profit and loss

The Group's liability related to options and warrants related to equity financing and are recognised on the balance sheet at their fair value, with changes in the fair value accounted for in the statement of comprehensive loss and included in financing income or expenses. Further detail on the treatment of liability relating to options is explained in note 15.

 

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of shares or options are shown in equity as a deduction, net of tax, from the proceeds.

 

(g)Research and development expenditure

Research costs are expensed through the income statement as they are incurred. Research and development expenses include, among other costs, costs incurred by outside laboratories and other accredited facilities in connection with clinical trials and preclinical studies.

 

Under IAS 38, development costs are only capitalised after technical and commercial feasibility of the asset for sale or use have been established. The company must intend and be able to complete the asset and either use it or sell it and be able to demonstrate how the asset will generate future economic benefit. If the company cannot distinguish between the research and the development phase, then all costs are expensed as research costs.

 

(h)Property, plant and equipment:

Property, plant and equipment are measured at cost, including directly attributable costs, less accumulated depreciation and excluding day-to-day servicing expenses. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

 

Depreciation is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:

 

Computers, peripheral and scientific equipment   -33%

Office furniture and equipment   -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.

 

40 

 

 

AKARI THERAPEUTICS PLC

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

1. ACCOUNTING POLICIES (continued)

  
(i)Intangible assets

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.

 

(j)Investments

Investments in subsidiary undertakings are stated at cost less provisions for impairment.

 

(k)Share-based payments and warrants

Where share options or warrants are awarded to directors and employees, the fair value of the options or warrants at the grant date is charged to the consolidated income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options and warrants granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

 

Where the terms and conditions of options and warrants are modified before they vest, the increase in the fair value of the options and warrants, measured immediately before and after the modification, is also charged to the consolidated income statement over the remaining vesting period.

 

When the options and warrants are exercised, the company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options and warrants are exercised.

 

When share options and warrants lapse, any amounts credited to the share-based payments reserve are released to the retained earnings reserve.

 

Where warrants and options issued with settlement criteria that outside fixed for fixed criteria as outlined by IAS 32 (i.e. fixed number of shares for fixed amount of cash) the resulting fair value of the instruments issued will be classified in financial liabilities.

 

(l)Finance income and expenses

Interest income and expenses are recognised using the effective interest method. It mainly comprises of changes in the fair value of financial assets and liabilities that are measured at fair value through the income statement and exchange gains and losses which is reported on a net basis in the statement of comprehensive loss.

 

41 

 

 

 

AKARI THERAPEUTICS PLC

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

1.    ACCOUNTING POLICIES (continued)

 

(m)      Deferred taxation

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying values in the financial statements. The deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction does not affect either the accounting or taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

 

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which temporary differences can be utilised.

 

(n)    Critical accounting estimates and judgements:

The Group makes estimates and assumptions concerning the future. The preparation of financial statements requires management and the Board of Directors to make estimates and judgments that affect reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These estimates are based on historical experience and various other assumptions that management and the Board believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, significantly impacting earnings and financial position.

 

Management believes that the following areas, all of which are discussed and separately marked in the respective sections of Note 1 “Accounting Policies,” comprise the most difficult, subjective or complex judgments it has to make in the preparation of the financial statements: Assessment of the capitalisation of research and development expenditure, calculation and classification of share based payments and the assessment of the carrying value of the subsidiary for impairment.

 

Research and Development: Under IAS 38: Intangible Assets, the Group must determine whether to recognise research costs incurred as an expense or asset. Depending on the development stage of a project determines whether an expense can be capitalised. Difficultly can arise at determining the stage of a project.

 

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.

 

42 

 

 

AKARI THERAPEUTICS PLC

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

2. EXPENSES BY NATURE  2020   2019 
  The operating loss is stated after charging/(crediting):
  $ 000   $ 000 
  Employee benefit expense (see below)   3,884    3,469 
  Depreciation   5    15 
  Amortisation   3    4 
  Commitment fees   900    - 
  Exchange (loss)/ gain   351    (67)
  Auditors’ remuneration - fees for the audit of the Group and Parent Company financial statements   41    31 

 

     2020   2019 
     $ 000   $ 000 
  Employee benefit expense          
  Wages and salaries   3,506    3,094 
  Social security costs   378    375 
             
      3,884    3,469 
  The average number of persons (including directors) employed by the group during the year was as follows: Office and administration   17    16 
             
  Key management remuneration          
  Wages and salaries   1,678    1,528 

 

The key management is considered to be the directors and senior management team. Details of directors’ remuneration and share based compensation can be seen within the Directors’ Remuneration Report on pages 13 to 26.

 

43 

 

 

AKARI THERAPEUTICS PLC

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

3. NET FINANCE INCOME/(LOSS)  2020   2019 
     $ 000   $ 000 
  Commitment fees   (900)   - 
  Interest Income   13    5 
  Other   (22)   (20)
      (909)   (15)

 

4. INCOME TAX CREDIT  2020   2019 
     $ 000   $ 000 
  Current tax:          
  Current tax on losses for the year   (2,812)   (3,505)
  Adjustment in respect of prior years   (45)   516 
      (2,857)   (2,989)
  The tax assessed in the year is different from the standard rate of corporation tax in the UK of 19% in 2020 (2019: 19%) The differences are explained below:          
             
  Loss before tax   (20,454)   (24,753)
             
  Loss on ordinary activities before tax multiplied by the standard companies’ rate of tax in the UK   (3,886)   (4,703)
             
  Effects of:          
  Deferred tax asset on losses not recognised   2,044    2,397 
  Expenses not deductible for tax purposes   241    309 
  Surrender of tax loses for R&D tax credit refund   1,601    1,997 
  Additional deduction for R&D tax credit   (2,812)   (3,505)
  Adjustment in respect of prior years   (45)   516 
  Tax credit   (2,857)   (2,989)

 

5.       LOSS ATTRIBUTABLE TO THE PARENT COMPANY

 

The parent Company has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit and loss account in these financial statements. The parent Company had a loss for the year of $17,909,000 (2019: $21,789,000).

 

44 

 

 

AKARI THERAPEUTICS PLC

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

6.       BASIC AND DILUTED LOSS PER SHARE

 

The calculation of basic and diluted loss per share is based on the loss attributable to ordinary shareholders of $17,597,000 (2019: $21,764,000 ) and a weighted average number of Ordinary Shares outstanding during the year ended 31 December 2020 of 3,159,037,588 (2019: 1,830,998,609) 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.  

 

     2020   2019 
     $ 000   $ 000 
             
  Loss attributable to ordinary shareholders   17,597    21,764 
             
      2020    2019 
            Number          Number 
  Weighted average number of ordinary shares          
  Number of shares in issue at the beginning of the year   2,245,865,913    1,580,693,413 
  Effect of shares issued during year   913,171,675    250,305,196 
  Weighted average number of ordinary shares in issue for the year   3,159,037,588    1,830,998,609 

 

7. INTANGIBLE ASSETS        
  GROUP        
     2020   2019 
  Patent acquisition costs  $ 000   $ 000 
  Cost          
  At 1 January   95    95 
  Additions   -    - 
  At 31 December   95    95 
             
  Amortisation          
  At 1 January   (65)   (62)
  Charge for the year   (3)   (3)
  At 31 December   (68)   (65)
             
  Net Book Value          
  At 31 December   27    30 

 

45 

 

 

AKARI THERAPEUTICS PLC

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

8. PROPERTY PLANT AND EQUIPMENT          
  GROUP & COMPANY          
      2020    2019 
  Office furniture and equipment  $ 000   $ 000 
  Cost          
  At 1 January   172    172 
  Additions   -    - 
  At 31 December   172    172 
             
  Depreciation          
  At 1 January   (167)   (152)
  Charge for the year   (5)   (15)
  At 31 December   (172)   (167)
             
  Net Book Value          
  At 31 December   -    5 

 

46 

 

 

AKARI THERAPEUTICS PLC

 

NOTES TO THE FINANCIAL STATEMENTS (continued)

 

FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

9. INVESTMENTS IN SUBSIDIARIES

 

   Investments in
Subsidiary
Undertakings

$000
 
Company    
     
At 1 January 2019   20,339 
Additions   - 
      
At 31 December 2019   20,339 
      
At 1 January 2020   20,339 
Additions   - 
      
At 31 December 2020   20,339 

 

The Company directly owns 100% of the issued share capital of the following subsidiaries, which have been included in the consolidated financial statements:  

 

    Principal activity   Country of
incorporation
  Holdings   %
Volution Immuno Pharmaceuticals SA   Development of pharmaceutical drugs   Switzerland   Ordinary   100
Celsus Therapeutics Inc.   Dormant   United States   Ordinary   100
Morria Biopharma Ltd.   Dormant   Israel   Ordinary   100
Akari Malta Limited   Regulatory compliance   Malta   Ordinary   100