AKTX US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated audited financial statements and accompanying notes appearing elsewhere in this Form 10-K. In addition to historical information, this discussion and analysis includes forward-looking statements that are subject to risks and uncertainties, including those discussed in the section titled “Risk Factors,” set forth in Part I, Item 1A of this Form 10-K, that could cause actual results to differ materially from historical results or anticipated results.

Overview

We are a clinical-stage biotechnology company focused on developing advanced therapies for autoimmune and inflammatory diseases involving the complement component 5 (“C5”) and leukotriene B4 (“LTB4”) pathways. Each of these pathways has scientifically well-supported causative roles in the diseases we are targeting. We believe that blocking early mediators of inflammation will prevent initiation and continual amplification of the processes that cause certain diseases. Our activities since inception have consisted of performing research and development activities and raising capital.

Our lead product candidate, nomacopan, is a recombinant small protein (16,769 Da) derived from a protein originally discovered in the saliva of the Ornithodoros moubata tick, which modulates the host immune system to allow the parasite to feed without alerting the host to its presence or provoking an immune response. Nomacopan is a second-generation complement inhibitor which has been shown to act on complement C5, preventing release of C5a and formation of C5b–9 (also known as the membrane attack complex (“MAC”)), and also independently and specifically inhibit LTB4 activity, both elements that are often co-located as part of the immune/inflammatory response. We believe the importance of nomacopan’s therapeutic potential is twofold. First, its dual inhibitory action may be able to prevent inflammatory and prothrombotic activities of two key pathways, and second, nomacopan’s bio-physical properties may allow it to be used in a variety of formulations and routes of administration, including subcutaneous, intravenous, topical to eye, inhaled and intravitreous.

We are currently conducting a clinical trial of subcutaneous nomacopan for the treatment of hematopoietic stem cell transplant-related thrombotic microangiopathy (“HSCT-TMA”) in pediatric patients. We are planning for potential registrational Phase 3 trials of nomacopan in adult and pediatric HSCT-TMA. We are also investigating long-acting PASylated-nomacopan (“PAS-nomacopan”) for treatment of geographic atrophy (“GA”) secondary to dry age-related macular degeneration (“dry AMD”) in preclinical studies.

Recent Developments

Merger

As previously disclosed in our Form 8-K filed with the SEC on March 11, 2024, we entered into the Merger Agreement with Peak Bio and Merger Sub, pursuant to which, upon the terms and subject to the conditions thereof, Merger Sub will be merged with and into Peak Bio (the “Merger”), with Peak Bio surviving the Merger as a wholly-owned subsidiary of Akari. See Part I, Item 1, Business for further details.

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Results of Operations

Comparison of the Years Ended December 31, 2023 and 2022

Overview

During the year ended December 31, 2023, our loss from operations totaled $16.8 million, a 27% decrease, compared to a loss from operations of $23.1 million for the year ended December 31, 2022. General and administrative expenses comprise the majority of our total operating expenses, as shown in the table below:

Year Ended December 31, Change

Operating expenses:

Research and development expenses

Our research and development expenses are charged to operations as incurred and we incur both direct and indirect expenses for each of our programs. We track direct research and development expenses by preclinical and clinical programs, which may include third-party costs such as CROs, contract laboratories, consulting, and clinical trial costs. We do not allocate indirect research and development expenses, which may include product development and manufacturing, clinical, medical, regulatory, laboratory (equipment and supplies), personnel, facility and other overhead costs, to specific programs.

During the year ended December 31, 2023, total research and development expenses decreased by approximately $4.1 million, or 43%, as compared to the year ended December 31, 2022. The following sets forth research and development expenses for the years ended December 31, 2023 and 2022 by category:

Year Ended December 31, Change

Clinical Trials:

Total research and development expenses $ 5,450 $ 9,561 $ (4,111 ) -43 %

HSCT-TMA clinical development (AK901)

These expenses include external expenses that we have incurred in connection with the development of nomacopan for the treatment of pediatric HSCT-TMA and primarily consist of payments to CROs and other vendors. The 62% increase in expenses incurred during the 2023 period, as compared to 2022, is primarily due to the prioritization of our HSCT program in 2023, as announced in the second half of 2022, and related timing of clinical activities.

BP clinical development (AK802)

These expenses include external expenses that we have incurred in connection with the development of nomacopan for the treatment of bullous pemphigoid (“BP”) and primarily consist of payments to CROs and other vendors. In 2022 we discontinued our BP clinical program and in connection with the final reconciliation of clinical trial

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close-out costs, we recorded a $1.1 million credit in 2023 and do not expect to incur material additional costs related to this program.

Chemistry, manufacturing and control

These expenses include external expenses incurred related to the development and manufacturing of nomacopan for use in clinical trials and development of PAS-nomacopan. Such expenses primarily consist of payments to CMOs and other vendors for manufacturing of drug substances (including raw materials), drug product, supplies, and validation, quality assurance and manufacturing development activities. The 31% decrease in expenses incurred during the 2023 period, as compared to 2022, is primarily due to decreases in costs incurred for manufacturing of nomacopan due to timing of manufacturing, partially offset by increased spending on the development of PAS-nomacopan.

Other external development expenses

These expenses include external expenses, such as payments to contract vendors, that may be related to preclinical development activities, other discontinued programs and unallocated expenses. The 29% increase in expenses incurred during the 2023 period, as compared to 2022, is primarily related to the investigation of PAS-nomacopan for the treatment of GA secondary to dry AMD in preclinical studies to support an IND filing.

Personnel costs

These expenses include compensation and related costs associated with employees, independent consultants and staffing firms. The 49% increase during the 2023 period, as compared to 2022, is primarily due to changes in our organizational structure, including a shift to U.S.-based employees and consultants.

Tax credits

We record receipts of U.K. tax credits in the year received as a reduction in research and development expenses. Changes in tax credits received are the result of eligible research and development expenses incurred in the previous tax year, which can fluctuate depending on timing of and location in which expenses are incurred.

The extent of our future research and development expenditures will be determined based on future funding and following the outcome of an assessment of our combined pipeline following closing of the Merger, including program prioritization.

General and administrative expenses

During the year ended December 31, 2023, total general and administrative costs decreased by approximately $2.2 million, or 16%, as compared to the year ended December 31, 2022, primarily due to decreases in (i) financing-related costs of approximately $1.7 million as a result of costs incurred during the 2023 period being classified in shareholders' equity, (ii) directors' and officers' insurance premiums of approximately $0.6 million, and (iii) personnel costs (including directors and consultants) of approximately $1.5 million. These decreases were partially offset by increases in other expenses, including legal and professional fees of approximately $1.4 million, of which $0.8 million are costs incurred related to the proposed Merger.

Interest income

During each of the years ended December 31, 2023 and 2022, interest income was less than $0.1 million and not material. The nominal increase in interest income during 2023, as compared to 2022, was primarily due to higher interest rates. Amounts may fluctuate from period to period due to changes in average cash balances and prevailing interest rates.

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Excess in fair value of warrant liability over cash proceeds

During the year ended December 31, 2022, we recorded a loss of $2.0 million for the excess in fair value of our liability-classified September 2022 Warrants issued over cash proceeds received in connection with our September 2022 Registered Offering. See Note 5 of the notes to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for further details. No such loss was recorded during the year ended December 31, 2023.

Change in fair value of warrant liability

During the years ended December 31, 2023 and 2022, we recorded a change in the fair value of warrant liability, representing a non-cash warrant revaluation gain of approximately $6.6 million and $6.9 million, respectively, related to our liability-classified September 2022 Warrants, as more fully described in Note 5 of the notes to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. Due to the nature of and inputs in the model used to assess the fair value of our outstanding September 2022 Warrants, it is not abnormal to experience significant fluctuations during each remeasurement period. These fluctuations may be due to a variety of factors, including changes in our stock price and changes in estimated stock price volatility over the remaining life of the warrants. Changes in the fair value of the warrant liability and resulting warrant revaluation gains for each of the years ended December 31, 2023 and December 31, 2022 was driven primarily by the decrease in our stock price during each of the reporting periods.

Foreign currency exchange gain, net

During the years ended December 31, 2023 and 2022, we recorded a net foreign currency exchange gain of $0.1 million and $0.5 million, respectively. Exchange gains and losses can fluctuate significantly from period to period due to changes in exchange rates as well as the volume and timing of expenditures and related payments denominated in foreign currencies.

Other expense, net

During the years ended December 31, 2023 and 2022, we recorded a net other expense of less than $0.1 million and approximately $0.1 million respectively. Such expenses are not material to our results of operations.

Net Loss Applicable to Common Shareholders

As a result of the factors discussed above, our net loss applicable to common shareholders for the years ended December 31, 2023 and 2022 was $10.0 million and $17.7 million, respectively.

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Financial Condition, Liquidity and Capital Resources

Sources of Liquidity

Since inception, we have incurred substantial losses, and we have primarily funded our operations with proceeds from the sale of equity securities, including ordinary shares, warrants and pre-funded warrants. At December 31, 2023, we had $3.8 million in cash and an accumulated deficit of $227.5 million. To date, we have not generated any revenue.

We have devoted substantially all of our efforts to research and development, including clinical trials, and we have not commercialized any products. Our research and development activities, together with our general and administrative expenses, are expected to continue to result in substantial operating losses for the foreseeable future. These losses, among other things, have had and will continue to have an adverse effect on our shareholders’ equity, total assets and working capital. Due to the numerous risks and uncertainties associated with developing drug candidates and, if approved, commercial products, we are unable to predict the extent of any future losses, whether or when any of our drug candidates will become commercially available or when we will become profitable, if at all. Our future capital requirements will depend on many factors, including:

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the progress and costs of our preclinical studies, clinical trials and other research and development activities;

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the scope, prioritization and number of our clinical trials and other research and development programs;

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the amount of revenues and contributions we receive under future licensing, development and commercialization arrangements with respect to our product candidates;

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the costs of the development and expansion of our operational infrastructure;

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the costs and timing of obtaining regulatory approval for our product candidates;

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the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights;

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the costs and timing of securing manufacturing arrangements for clinical or commercial production;

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the costs of contracting with third parties to provide sales and marketing capabilities for us;

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the magnitude of our general and administrative expenses; and

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any cost that we may incur under future in- and out-licensing arrangements relating to our product candidates.

We currently do not have any commitments for future external funding. We will need to raise additional funds, and we may decide to raise additional funds even before we need such funds if the conditions for raising capital are favorable. Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through debt or equity financings, credit facilities or by out-licensing applications of our product candidates. The sale of equity or convertible debt securities may result in dilution to our existing shareholders. The incurrence of indebtedness would result in increased fixed obligations and could also subject us to covenants that restrict our operations. We cannot be certain that additional funding, whether through grants, financings, credit facilities or out-licensing arrangements, will be available to us on acceptable terms, if at all. If sufficient funds are not available, we may be required to delay, reduce the scope of or eliminate research or development plans for, or commercialization efforts with respect to, one or more applications of our product candidates, or obtain funds through arrangements with collaborators or others that may require us to relinquish rights to certain potential products that we might otherwise seek to develop or commercialize independently.

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December 2023 Private Placement

In December 2023, we entered into purchase agreements to sell in a private placement to existing investors, Dr. Ray Prudo, our Chairman, and Dr. Samir Patel, our director, (the “December 2023 Private Placement”) an aggregate of 947,868 ADSs at $2.11 per ADS, for aggregate gross proceeds of approximately $2.0 million. Net proceeds from the December 2023 Private Placement was approximately $1.8 million after deducting placement agent fees and other expenses.

September 2023 Private Placement

In September 2023, we entered into purchase agreements to sell in a private placement to existing investors, including Dr. Ray Prudo, our Chairman, and Ms. Rachelle Jacques, our President and CEO (the “September 2023 Private Placement”) an aggregate of 551,816 ADSs at $3.30 per ADS, and pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 48,387 ADSs at a purchase price per Pre-Funded Warrant of $3.10, for aggregate gross proceeds of approximately $2.0 million. The Pre-Funded Warrants are exercisable at an exercise price of $0.20 per ADS and will not expire until exercised in full. The September 2023 Private Placement closed in October 2023 resulting in net proceeds of approximately $1.7 million after deducting placement agent fees and other expenses.

At close of the September 2023 Private Placement, the Company issued to Paulson Investment Company, LLC (“Paulson”), as placement agent for the September 2023 Private Placement, warrants to purchase 42,550 ADSs at an exercise price of $4.13 per ADS (representing 125% of the price per ADS in the September 2023 Private Placement) and a term expiring on October 6, 2028 (the “October 2023 Placement Agent Warrants”). The estimated fair value of the October 2023 Placement Agent Warrants on the issuance date was approximately $0.1 million.

March 2023 Registered Direct Offering

In March 2023, we sold to certain accredited and institutional investors, led by our existing investors, including Dr. Ray Prudo, our Chairman, an aggregate of 1,333,333 ADSs in a registered direct offering (the “March 2023 Registered Offering”), at $3.00 per ADS for aggregate gross proceeds of approximately $4.0 million. Net proceeds after deducting placement agent fees and other expenses were approximately $3.5 million.

September 2022 Registered Offering

In September 2022, we sold to certain accredited and institutional investors, including our former Executive Chairman and current Chairman of the Board of Directors, Dr. Ray Prudo, an aggregate of 755,000 ADSs in a registered direct offering (the “September 2022 Registered Offering”), at $17.00 per ADS for aggregate gross proceeds of approximately $12.8 million. In addition, we issued to the investors in a private placement (the “September 2022 Private Placement”) that closed simultaneously with the September 2022 Registered Offering (i) Series A warrants exercisable to purchase up to 755,000 ADSs at an exercise price of $17.00 per ADS and (ii) Series B warrants exercisable to purchase up to 755,000 ADSs at an exercise price of $17.00 per ADS (the Series A and B warrants collectively, the “September 2022 Warrants”). The September 2022 Warrants became exercisable immediately following the date of issuance and expire two years following issuance, in the case of the Series A warrants, and seven years following issuance, in the case of the Series B warrants. Net proceeds after deducting placement agent fees and other expenses were approximately $11.8 million.

March 2022 Registered Offering

In March 2022, we sold to certain accredited and institutional investors, led by our existing investors, including Dr. Ray Prudo, our Chairman, an aggregate of 372,042 ADSs in a registered direct offering (the “March 2022 Registered Offering”), at $24.00 per ADS for aggregate gross proceeds of approximately $8.9 million. In connection with this offering, we issued to the investors and Paulson, as placement agent for the March 2022 Registered Offering, registered warrants to purchase 186,020 ADSs at $28.00 per ADS and 14,882 ADSs at $30.00 per ADS, respectively. Net proceeds after deducting placement agent fees and other expenses were approximately $8.1 million.

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2021 Registered Offering

In December 2021, we sold to certain accredited and institutional investors, led by our existing investors, including Dr. Ray Prudo, our Chairman, an aggregate of 215,550 ADSs in a registered direct offering (the “2021 Registered Offering”) at $28.00 per ADS for aggregate gross proceeds of approximately $6.0 million, which closed on January 5, 2022. As of December 31, 2021, we had received approximately $1.1 million of gross proceeds which were classified as current liabilities on our balance sheet until closing in January 2022, which at that time the remaining $4.9 million in gross proceeds were received. In connection with the offering, we issued to the investors and Paulson, as placement agent for the 2021 Registered Offering, registered warrants to purchase 107,775 ADSs at $33.00 per ADS and 8,622 ADSs at $35.00 per ADS, respectively. Net proceeds after deducting placement agent fees and other expenses were approximately $5.4 million, of which $4.3 million was received in 2022.

Funding Requirements

As of the date of this report, we expect our existing cash, which includes gross proceeds of approximately $2.0 million received in connection with the March 2024 Private Placement (as defined below), will be sufficient to fund our operations through April 2024. While we have additional funding activities in progress to fund our operations through the anticipated closing of the Merger by the end of the second quarter of 2024, we will need to raise additional capital to continue to fund our operations and service our obligations in the future. If we are unable to raise additional capital when needed, we will not be able to continue as a going concern. We do not currently have any products approved for sale and do not generate any revenue from product sales. We are currently seeking and expect to continue to seek additional funding through financings of equity and/or debt securities. We may also engage in strategic research and development collaborations, clinical funding arrangements, the sale or license of technology assets, and/or other strategic alternatives.

Financing may not be available to us when we need it, or on favorable or acceptable terms, or at all. We could be required to seek funds through means that may require us to relinquish rights to some of our technologies, drug candidates or drugs that we would otherwise pursue on our own. In addition, if we raise additional funds by issuing equity securities, our then existing shareholders may experience dilution. The terms of any financing may adversely affect the holdings or the rights of existing shareholders. An equity financing that involves existing shareholders may cause a concentration of ownership. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, and are likely to include rights that are senior to the holders of our ordinary shares. Any additional debt or equity financing may contain terms which are not favorable to us or to our shareholders, such as liquidation and other preferences, or liens or other restrictions on our assets. As discussed in Note 9 to the consolidated financial statements included elsewhere in this Form 10-K, additional equity financings may also result in cumulative changes in ownership over a three-year period in excess of 50% which would limit the amount of net operating loss and tax credit carryforwards that we may utilize in any one year.

If we are unable to raise additional capital when required or on acceptable terms, we may be required to:

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significantly delay, scale back, or discontinue the development or commercialization of our product candidates;

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seek strategic alliances for research and development programs at an earlier stage than otherwise would be desirable or that we otherwise would have sought to develop independently, or on terms that are less favorable than might otherwise be available in the future;

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dispose of technology assets, including current product candidates, or relinquish or license on unfavorable terms, our rights to technologies or any of our product candidates that we otherwise would seek to develop or commercialize ourselves;

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pursue the sale of our company to a third party at a price that may result in a loss on investment for our shareholders; or

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file for bankruptcy or cease operations altogether.

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Any of these events could have a material adverse effect on our business, operating results, and prospects.

We believe the key factors which will affect our ability to obtain funding are:

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the receptivity of the capital markets to financings by biotechnology companies generally and companies with drug candidates and technologies similar to ours specifically;

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the receptivity of the capital markets to any in-licensing, product acquisition or other transaction we may enter into or attempt to enter into;

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our ability to successfully integrate operations with Peak Bio following the Merger and realize

anticipated benefits of the Merger;

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the results of our clinical development activities in our drug candidates we develop on the timelines anticipated;

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competitive and potentially competitive products and technologies and investors’ receptivity to our drug candidates we develop and the technology underlying them in light of competitive products and technologies;

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the cost, timing, and outcome of regulatory reviews; and

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our transition out of foreign private issuer status and compliance with Exchange Act

requirements.

In addition, increases in expenses or delays in clinical development may adversely impact our cash position and require additional funds or cost reductions.

Based on our recurring losses from operations incurred since inception, our expectation of continuing operating losses for the foreseeable future, negative operating cash flows for the foreseeable future, and the need to raise additional capital to finance its future operations, we have concluded that there is substantial doubt regarding our ability to continue as a going concern within one year after the date that our consolidated financial statements, included elsewhere in this Annual Report on Form 10-K (such consolidated financial statements, the “consolidated financial statements”) are issued. Because of these uncertainties, the accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As such, the accompanying consolidated financial statements do not reflect any adjustments relating to the recoverability and classification of recorded assets and liabilities that might be necessary if we are unable to continue as a going concern.

Cash Flows

The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):

Year Ended

December 31,

Net cash (used in) provided by:

Net cash used in operating activities $ (16,432 ) $ (21,504 )

Net cash provided by financing activities 7,020 25,288

Effect of exchange rates on cash 7 105

Net (decrease) increase in cash $ (9,405 ) $ 3,889

Operating Activities. The net cash used in operating activities for the periods presented consists primarily of our net loss adjusted for non-cash charges and changes in components of working capital. The decrease in cash used in operating activities during the year ended December 31, 2023, as compared to the 2022 period, was primarily due to a $6.3 million decrease in operating expenses, as more fully described above under the heading “Results of Operations,” and the net impact of changes in components of working capital.

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Investment Activities. There were no investing activities during the years ended December 31, 2023 and 2022.

Financing Activities. Net cash provided by financing activities primarily consisted of the following:

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For the year ended December 31, 2023, an aggregate of $7.0 million in net proceeds received from various offerings of equity securities, including (i) $3.5 million in net proceeds from the March 2023 Registered Direct Offering, (ii) $1.7 million in net proceeds from the September 2023 Private Placement, and (iii) $1.8 million in net proceeds from the December 2023 Private Placement;

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For the year ended December 31, 2022, an aggregate of $25.3 million in net proceeds received from various offerings of equity securities, including (i) $4.3 million in net proceeds from our 2021 Registered Offering received in January 2022, (ii) $8.1 million in net proceeds received from the March 2022 Registered Direct Offering, and (iii) $12.8 million in gross proceeds (issuance costs associated with our September 2022 Registered Offering were expensed as incurred).

Material Cash Requirements

Insurance Financing Obligations

In January 2024, we entered into a short-term financing arrangement with a third-party vendor to finance insurance premiums. The aggregate amount financed under this agreement was $1.1 million which is scheduled to be paid in monthly installments through November 2024.

Other

As of the filing date of this Form 10-K, we have certain non-cancellable manufacturing-related obligations, the majority of which relate to the manufacture of PAS-nomacopan. These obligations are expected to result in payments of approximately $3.5 million in the third quarter of 2024.

We enter into a variety of agreements and financial commitments in the normal course of business. The terms generally provide us the option to cancel, reschedule and adjust our requirements based on our business needs, prior to the delivery of goods or performance of services. However, it is not possible to predict the amount of future payments under these agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement.

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Critical Accounting Estimates

This management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. In doing so, we must make estimates and assumptions that affect our reported amounts of assets, liabilities and expenses, as well as related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates and judgments, including, but not limited to, those related to (i) stock-based compensation, (ii) fair value of warrants classified as liabilities, (iii) research and development prepayments, accruals and related expenses, and (iv) the valuation allowance for deferred income taxes. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be 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.

We regard an accounting estimate or assumption underlying our financial statements as a “critical accounting estimate” if:

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the nature of the estimate or assumption is material due to the level of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and

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the impact of the estimates and assumptions on financial condition or operating performance is material.

While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements appearing elsewhere in this Form 10-K, we believe the following accounting policies to be the most critical to the judgments and estimates used in the preparation of our financial statements.

Stock-based compensation

We measure all stock-based awards granted to employees, directors and non-employees based on the estimated fair value on the date of grant and recognizes compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective awards. Forfeitures are accounted for as they occur. We classify stock-based compensation expense in our consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

The fair value of each restricted ordinary share award is estimated on the date of grant based on the fair value of our ordinary shares on that same date. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model, which requires inputs based on certain assumptions, including the expected stock price volatility, the expected term of the award, the risk-free interest rate, and expected dividends. We estimate our expected stock price volatility based on the historical volatility of our ADSs, considering the expected term of the options. The expected term of our options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that we have never paid cash dividends on ordinary shares and do not expect to pay any cash dividends in the foreseeable future.

Fair value of warrants classified as liabilities

We utilize a Black-Scholes model to value our outstanding September 2022 Warrants at each reporting period, with changes in fair value recognized in the consolidated statements of operations and comprehensive loss. The estimated fair value of the warrant liability is determined using Level 3 inputs. Inherent in an options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. We estimate the expected volatility of our stock price based on historical volatility of our ADSs, considering the expected remaining life of the September 2022 Warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the valuation date for a maturity similar to the expected remaining life of the September 2022 Warrants. The expected life of the September 2022 Warrants is assumed to be equivalent to their remaining

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contractual term. The dividend rate is based on the historical rate, which we anticipate to remain at zero. Due to the nature of and inputs in the model used to assess the fair value of the warrants, it is not abnormal to experience significant fluctuations during each remeasurement period.

Research and development prepayments, accruals and related expenses

As part of the process of preparing our financial statements, we are required to estimate our accrued and prepaid expenses for research and development activities performed by third parties, including CROs and clinical investigators. These estimates are made as of the reporting date of the work completed over the life of the individual study in accordance with agreements established with CROs and clinical trial sites. Some CROs invoice on a monthly basis, while others invoice upon achievement of milestones and the expense is recorded as services are rendered. We determine the estimates of research and development activities incurred at the end of each reporting period through discussion with internal personnel and outside service providers as to the progress or stage of completion of trials or services, as of the end of each reporting period, pursuant to contracts with clinical trial centers and CROs and the agreed upon fee to be paid for such services. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary.

Valuation allowance for deferred income taxes

We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. Significant judgment is required in determining the valuation allowance. We consider projected future taxable income and ongoing tax planning strategies in assessing the need for the valuation allowance. If it is determined that we are able to realize deferred tax assets in excess of the net carrying value or to the extent we are unable to realize a deferred tax asset, we would adjust the valuation allowance in the period in which such a determination is made, with a corresponding increase or decrease to earnings.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to a variety of risks, including changes in foreign currency exchange risk and interest rates.

Currency Exchange Rate Sensitivity

The results of our operations are subject to currency transactional risk. Operating results and financial position are reported in local currencies and then translated into United States dollars at the applicable exchange rate for preparation of our consolidated financial statements. The fluctuation of the U.S. dollar in relation to the British Pound, Euro and Swiss Franc will therefore have an impact upon profitability of our operations and may also affect the value of our assets and the amount of shareholders’ equity.

Our functional currency is the United States dollar and our activities are predominantly executed using both the U.S. dollar, Euro and British Pound. We have done a limited number of financings, and we are not subject to significant operational exposures due to fluctuations in these currencies. We have not entered into any agreements, or purchased any instruments, to hedge any possible currency risks at this time.

Interest Rate Sensitivity

We currently have no short-term or long-term debt requiring interest payments, except for our short-term insurance premium financing arrangement we entered into in January 2024, as more fully described above. This does not require us to consider entering into any agreements or purchasing any instruments to hedge against possible interest rate risks at this time. Our interest-earning investments are short-term. Thus, any reductions in future income or carrying values due to future interest rate declines are believed to be immaterial.

Based on a hypothetical ten percent adverse movement in interest rates, the potential losses in future earnings, fair value of risk sensitive financial instruments, and cash flows are immaterial to our earnings, although the actual effects may differ materially from the hypothetical analysis.

Item 8. Financial Statements and Supplementary Data.

All financial statements required to be filed hereunder are filed under Item 15(a) of this Form 10-K and are incorporated herein by reference.

We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, and therefore we are permitted to provide a scaled Item 8 disclosure.

There have been no retrospective changes to our consolidated statements of operations for any of the quarters within the two years ended December 31, 2023.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

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Item 9A. Controls and Procedures.

Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2023. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applied its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2023, our disclosure controls and procedures were effective.

a)

Management’s Annual Report on Internal Control over Financial Reporting

Our management, with the participation of our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

•

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

•

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

•

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework (2013). Based on its assessment, management concluded that, as of December 31, 2023, the Company’s internal control over financial reporting was effective based on those criteria.

b)

Attestation Report of the Registered Public Accounting Firm

Not Applicable.

c)

Changes in Internal Control over Financial Reporting.

No change in our internal control over financial reporting occurred during the fourth quarter of the fiscal year ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Item 9B. Other Information.

(a) The following information is included in this Annual Report on Form 10-K pursuant to Item 1.01 “Entry into a Material Definitive Agreement” and Item 3.02 “Unregistered Sales of Equity Securities” of Form 8-K in lieu of filing a Form 8-K:

As previously disclosed in a Current Report on Form 8-K dated March 11, 2024, we entered a definitive agreement with certain existing investors, pursuant to which we agreed to sell in a private placement approximately $1.6 million of ADSs at a to be determined purchase price per ADS equal to the lower of: (i) $1.57 (the product of 0.7 and the official closing price of the ADSs on Nasdaq on March 4, 2024 and (ii) the product of 0.7 and the volume weighted average price of the ADSs on Nasdaq for the 15 calendar day period following the public announcement of entry into a definitive agreement with respect to the Merger with Peak Bio, subject to a floor price of $1.12. Subsequently, on March 26, 2024, we entered into an amended and restated definitive agreement (the “Purchase Agreement”) with certain existing investors, pursuant to which we agreed to sell in a private placement approximately $2 million of ADSs at the same pre-determined purchase price. On March 28, 2024, we closed the private placement pursuant to which we sold an aggregate of 1,320,614 ADSs at $1.48 per ADS, for aggregate gross proceeds of approximately $2.0 million (the "March 2024 Private Placement").

The Purchase Agreement also contains representations, warranties, indemnification and other provisions customary for transactions of this nature.

We paid Paulson Investment Company, LLC (“Paulson”) a cash fee equal to 10% of the aggregate purchase price for the ADSs sold in the private placement and issued to Paulson at the closing of the private placement warrants exercisable into 132,061 ADSs, which warrants have a term of 5 years expiring March 27, 2029, have cashless exercise provisions and an exercise price of $1.85 per ADS.

Pursuant to the Purchase Agreement, we agreed to prepare and file a registration statement on Form S-3 with the Securities and Exchange Commission no later March 31, 2024 to register the resale of the ADSs purchased pursuant to the Purchase Agreement.

The securities issued to the purchasers under the Purchase Agreement were offered in reliance on an exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. We relied on this exemption from registration based in part on representations made by the purchasers, including that each purchaser is an “accredited investor”, as defined in Rule 501(a) promulgated under the Securities Act.

The offer and sale of the securities pursuant to the Purchase Agreement have not been registered under the Securities Act or any state securities laws. The securities may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Neither this Annual Report on Form 10-K, nor the exhibits attached hereto, is an offer to sell or the solicitation of an offer to buy the securities described herein or therein.

(b) None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Information about our Directors

Our Articles of Association provide that our business is to be managed by the board of directors (subject to any directions made by the members of the Company by special resolution). Our 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 the Company’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).

Set forth below is information about each member of our board of directors, including (a) the year in which each director first became a director, (b) their age as of March 29, 2024, (c) their positions and offices with our Company, (d) their principal occupations and business experience during at least the past five years and (e) the names of other public companies for which they currently serve, or have served within the past five years, as a director. We have also included information about each director's specific experience, qualifications, attributes, or skills that led our board of directors to conclude that such individual should serve as one of our directors. We also believe that all of our directors have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to our Company and our board of directors.

The following table provides information about those persons who currently serve as directors of the Company.

Committee Memberships (1)

Name Age Relationship Audit Comp N&CG Class - Election Year

Ray Prudo, M.D. 79 Chair of the Board Class C Director - 2024

Michael Grissinger 68 Director X X C Class A Director - 2024

Wa’el Hashad 61 Director X X Class A Director - 2024

Rachelle Jacques 52 President, CEO and Director Class B Director - 2024

Samir R. Patel, M.D. 55 Director X Class A Director - 2024

Donald Williams 65 Director C C X Class A Director - 2024

(1) "C" indicates Chair of applicable committee.

Raymond Prudo-Chlebosz, M.D., served as our Executive Chairman from September 2015 through December 2022. Effective January 1, 2023. Dr. Prudo began serving as the Chairman of our board of directors. 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 its inception in 2008. Dr. Prudo is also the co-founder of The Doctors’ Laboratory (“TDL”), past CEO and its Chairman since 2002. Since 2015 he has also been a director of Health Services Laboratories (“HSL”). Both TDL and HSL are subsidiaries of Sonic Healthcare Limited (ASX: SHL.AX). Dr. Prudo is also currently a director of CIS Healthcare Limited, a privately-held UK healthcare company. Dr. Prudo holds an MBBS from the University of London, and an FRCP(C) from the Royal College of Physicians and Surgeons of Canada.

Michael Grissingerhas 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 and Head, Worldwide Pharmaceutical Licensing as well as Vice President and Head of Worldwide Pharmaceutical Corporate Development and M&A. 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 Aprea Therapeutics, Inc. (NASDAQ: APRE), and three privately-held biotechnology companies, Atriva Therapeutics Plc, Kira Biotech

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Pty Ltd., and Envisagenics, Inc. Mr. Grissinger holds a B.Sc. in Chemistry from Juniata College and an MBA from Temple University, Fox School of Business.

Wa’el Hashad was appointed to our board of directors in June 2023. Mr. Hashad currently serves as CEO of Longeveron, Inc. (Nasdaq: LGVN), a U.S. clinical-stage biotechnology company developing regenerative medicines for rare pediatric diseases, aging-related conditions, and unmet medical needs, a position he has held since February 2023. Previously, he was President and Chief Executive Officer at Avanir Pharmaceuticals from 2017 until 2023. Avanir was acquired by Otsuka Pharmaceutical, and Mr. Hashad led the company’s full integration into Otsuka’s United States operations. From January 2016 until June 2017, Mr. Hashad was Executive Vice President and Chief Commercial Officer at Seres Therapeutics, where he established the company’s launch and marketing strategy for microbiome-based therapies.

Mr. Hashad has held multiple leadership roles at Amgen, executing on cardiovascular, neuroscience, metabolic disorder, and nephrology product launches and was the general manager for Africa, the Middle East, and Asia. He was a Vice President at Boehringer Ingelheim leading the U.S. launch of the company’s cardiovascular and metabolic products. Earlier, Mr. Hashad spent 20 years at Eli Lilly and Company, driving the company’s marketing and commercial strategy across multiple regions and therapeutic areas. He concluded his time at Eli Lilly as the Vice President of the United States Cardiovascular Business Unit.

Mr. Hashad holds an M.B.A. in Finance and International Business from the University of Akron and a B.Sc. in Pharmacy and Pharmaceutical Sciences from the University of Cairo. Prior to 2017 he held the position of the Chairman of the Strategic Advisory Board at Morningside Biopharma, a private incubator of several pharmaceutical/bio-tech companies, for three years, and is currently a member of the Board of California Life Sciences.

Rachelle Jacques has served as our President and Chief Executive Officer and a member of our board of directors since March 2022. Before joining the Company, Ms. Jacques served, from February 2019 to March 2022, as Chief Executive Officer of Enzyvant Therapeutics Inc., a commercial-stage biotechnology company developing transformative regenerative therapies for rare diseases. Prior to Enzyvant, she served as the Senior Vice President and Global Complement Franchise Head at Alexion Pharmaceuticals, Inc., where she was responsible for global franchise strategy development and execution of the C5 complement inhibitors, eculizumab and ravulizumab, across the therapeutic areas of hematology, nephrology and neurology. She was Vice President of U.S. Hematology Marketing at Baxalta Inc. and then Shire plc, following Shire’s acquisition of Baxalta in 2016. At Baxalta, she served as Vice President of Business Operations after its spinoff from Baxter International Inc. Ms. Jacques held multiple leadership positions at Baxter, including Vice President of Finance, U.S. BioScience Business.

Earlier in her career, Ms. Jacques served in various roles at Dow Corning Corporation, including operational management positions in the U.S., Europe, and China. She serves on the boards of directors of uniQure N.V. (NASDAQ: QURE) and Corbus Pharmaceuticals (NASDAQ: CRBP) and is a founding member of the Alliance for Regenerative Medicine (ARM) Action for Equality Task Force. Ms. Jacques received her B.A. in business administration from Alma College and is currently a member of the school’s Board of Trustees.

Samir R. Patel, M.D,. has served as a member of our board of directors since November 2023. Dr. Patel is founder and, since April 2017, principal of PranaBio Investments, LLC, a firm providing consulting, strategic advisory, and investment services for small cap biotechnology companies. He is also a consultant to GE Global Research, Inc., GE’s innovation engine that is creating novel products and solutions across several sectors including biomanufacturing and biotechnology, a position which he has held since May 2019.

Dr. Patel has more than 20 years of experience in life sciences including co-founding Digital Therapeutics, LLC, a startup advancing a therapy for scleroderma and other rheumatic diseases, where he has served as CEO since August 2011 and co-founding SPEC Pharma, LLC, a company that develops and manufactures injectables used in rheumatology applications. Previously, he held multiple roles in Medical Affairs with Centocor, Inc. (now Johnson & Johnson Innovative Medicine, part of Johnson & Johnson). From April 2020 to November 2021, Dr. Patel served on the board of directors of Cytodyn, Inc. (OTCQB: CYDY). He holds multiple patents, has been an author on several publications and has been an investigator in numerous clinical research studies.

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Dr. Patel received his medical degree from the Medical College of Ohio (University of Toledo) in Toledo, Ohio, and completed his internal medicine internship and residency, as well as a rheumatology fellowship, at University of New Mexico School of Medicine Affiliated Hospitals.

Donald Williamshas 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 of his career as a partner at Ernst & Young, followed by seven years as a partner at Grant Thornton. During his time at Grant Thornton from 2007 to 2014, 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 currently serves as a director of Forte Biosciences, Inc. (NASDAQ: FBRX), Palisade Bio, Inc. (NASDAQ: PALI), and MONIA, a privately held company. Previously, Mr. Williams served as a director of Impedimed Limited (ASX: IPD) from 2017 to September 2023, Alphatec Spine (NASDAQ: ATEC) from 2015 to August 2021, and Adhera Therapeutics (OTC: ATRX) from 2014 to December 2019. Mr. Williams is a graduate of Southern Illinois University with a B.S. degree.

Information about our Executive Officers

Our currently-serving executive officers, their respective ages, positions, background and qualifications are described below. Our executive officers serve until they resign, or the board terminates their position.

Name Age Position

Rachelle Jacques* 52 President and CEO

Wendy DiCicco 56 Interim Chief Financial Officer

* Ms. Jacques is a member of our board of directors. See “Information about our Directors” above for more information about Ms. Jacques.

Wendy DiCiccohas served as our Interim Chief Financial Officer since July 2023. Ms. DiCicco has more than 25 years of experience in the life sciences industry, currently serving as a board member or as an independent financial and board advisor to companies, often in the role of interim Chief Financial Officer (CFO).

Ms. DiCicco served as CFO for Renovacor, Inc., a pre-clinical biopharmaceutical company developing a gene therapy for cardiovascular disease from September 2019 to December 2022. Initially as interim CFO, then transitioning to permanent, she led the company through its business combination with Chardan Healthcare Acquisition 2 Corp. in 2021 and sale to Rocket Pharmaceuticals in December 2022. She also served as interim CFO for FerGene, Inc., a Phase 3 urologic oncology gene therapy company, from January 2020 through May 2022. Previously, from August 2017 to October 2018, she was CFO and Chief Operating Officer (“COO”) of Centinel Spine and the President and COO of Camber Spine, from November 2014 to July 2017, both developers of best-in-class spinal implants. She has held CFO roles for several pre-IPO, private equity backed medical device and biotechnology companies, in varying stages of commercialization. Her first CFO role was with Kensey Nash Corporation, a publicly traded developer and manufacturer of biologics and medical devices in the cardiovascular and orthopedics industries, where she advanced the company from a pre-revenue IPO stage to approximately $100 million in global revenue across multiple product platforms. Her career started in public accounting at Deloitte & Touche.

Ms. DiCicco currently serves on the Board of Directors of EyePoint Pharmaceuticals, Inc., a publicly traded company, where she also serves as the Audit Committee Chair. In addition, she serves on the board of Imvax, Inc. Ms. DiCicco has also served on the boards of SWK Holdings Corp., II-VI, Inc (now Coherent Corp.), Sincerus Pharmaceuticals, Carmell Therapeutics, SynCardia Systems and CannaPharma Rx. She is currently on the Board of Directors of the Philadelphia Chapter of the National Association of Corporate Directors.

Ms. DiCicco received a B.S. in accounting from Philadelphia College of Textiles and Science and is a licensed Certified Public Accountant. She also is an appointed Board Leadership Fellow and Corporate Governance Fellow of the National Association of Corporate Directors.

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Corporate Governance

Audit Committee

Our board has established a formal standing audit committee. The current members of our audit committee are Mr. Williams (Chair), Mr. Grissinger, and Mr. Hashad. Our board has determined that Mr. Williams is an “audit committee financial expert” within the meaning of SEC rules and regulations. Each member of the audit committee is independent as defined under applicable rules of the Nasdaq, including the independence requirements contemplated by Rule 10A-3 under the Exchange Act.

The Board has adopted a written Audit Committee Charter. The composition and responsibilities of the Audit Committee and the attributes of its members, as reflected in its Charter, are intended to be in accordance with certain listing requirements of Nasdaq and the rules of the SEC for corporate audit committees. The Audit Committee Charter may be found in the “Investor Relations — Corporate Governance” section of our website, which is located at www.akaritx.com.

Compensation Committee

Our compensation committee currently consists of three members, appointed by the board of directors: Mr. Williams (Chair), Mr. Grissinger, and Dr. Patel, all of whom are independent within the meaning of SEC corporate governance rules of independence for purposes of the compensation committee.

The Board has adopted a written Compensation Committee Charter. The composition and responsibilities of the compensation committee and the attributes of its members, as reflected in its Charter, are intended to be in accordance with certain listing requirements of Nasdaq and the rules of the SEC for corporate compensation committees. The Compensation Committee Charter may be found in the “Investor Relations — Corporate Governance” section of our website, which is located at www.akaritx.com.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee currently consists of three members, appointed by our board of directors: Mr. Williams, Mr. Grissinger (Chair), and Mr. Hashad, all of whom are independent within the meaning of SEC corporate governance rules of independence for purposes of the nominating and corporate governance committee. None of our non-employee directors have any service contracts with us or any of our subsidiaries that provide for benefits upon termination of employment.

The Board has adopted a written Nominating and Corporate Governance Committee Charter. The composition and responsibilities of the nominating and corporate governance committee and the attributes of its members, as reflected in its Charter, are intended to be in accordance with certain listing requirements of Nasdaq and the rules of the SEC for corporate nominating and corporate governance committees. The Nominating and Corporate Governance Committee Charter may be found in the “Investor Relations — Corporate Governance” section of our website, which is located at www.akaritx.com.

Code of Business Conduct and Ethics

We have adopted a written code of business conduct and ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted a current copy of the Code of Business Conduct and Ethics in the “Investor Relations — Corporate Governance” section of our website, which is located at www.akaritx.com. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of our code of business conduct and ethics by posting such information on our website at www.akaritx.com.

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Item 11. Executive Compensation.

In accordance with Item 402(l) of Regulation S-K, the Company has elected to avail itself of the scaled disclosure requirements available to smaller reporting companies.

This section discusses the material components of the Company’s executive compensation program for our named executive officers (“NEOs”) for the fiscal year ended December 31, 2023:

•

Rachelle Jacques, President and Chief Executive Officer

•

Wendy DiCicco, Interim Chief Financial Officer

•

Torsten Hombeck, Former Chief Financial Officer

Summary Compensation Table

The following table sets forth information concerning the compensation of our NEOs during the fiscal years ended December 31, 2023 and 2022:

Interim Chief Financial Officer

_____________________

(1)

Ms. DiCicco was appointed as the Company’s Interim Chief Financial Officer on July 17, 2023.

(2)

Dr. Hombeck served as the Company’s Chief Financial Officer until June 15, 2023.

(3)

Represents the aggregate grant date fair value of time-based restricted stock units (“RSUs”) issued under our 2014 Equity Incentive Plan (the “2014 Plan”) and 2023 Equity Incentive Plan (the “2023 Plan”), as computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, disregarding estimated forfeitures related to service-based vesting. See Note 6 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K regarding assumptions we made in determining the fair value of RSUs.

(4)

Represents the aggregate grant date fair value of options to purchase ordinary shares issued under our 2014 Plan and 2023 Plan, as computed in accordance with FASB ASC Topic 718, disregarding estimated forfeitures related to service-based vesting. See Note 6 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K regarding assumptions we made in determining the fair value of option awards.

(5)

For 2023, all other compensation includes the following amounts:

Name Company 401(k) Plan Match Other(a) Total

Ms. DiCicco – – –

(a)

Amounts reported as “Other” in the table above represent earned and unused vacation paid to Dr. Hombeck upon termination of his employment with us.

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Narrative Disclosure to Summary Compensation Table

Employment Agreements with Our NEOs

We have entered into employment agreements with each of our NEOs (or non-employee consulting services agreements in the case of Ms. DiCicco). All employee NEOs are at-will employees.

Rachelle Jacques Employment Agreement

We are a party to an executive employment agreement, effective February 28, 2022, with Ms. Jacques, our President and Chief Executive Officer (the “Jacques Agreement”). Pursuant to the Jacques Agreement, Ms. Jacques’s initial annual base salary was $600,000, which is subject to review and increase on an annual basis and she is eligible to receive an annual cash bonus with a target of 50% of base salary based on the achievement of performance goals established by the chairman of the board of directors and the full board of directors, in consultation with Ms. Jacques. Under the terms of the Jacques Agreement, Ms. Jacques received a cash signing bonus of $650,000 in connection with her hire. Ms. Jacques was required to repay us 50% of the signing bonus if, prior to the first anniversary of her start date, her employment was terminated by us for “cause” (as defined in the Jacques Agreement”) or by her without “good reason” (as defined in the Jacques Agreement) and she is required to repays us one-third of the signing bonus if her employment is terminated by us for cause or by her without good reason after the first anniversary but prior to the second anniversary of her start date. In addition, the Jacques Agreement provides for the following RSU awards: (i) RSUs having a face value of $262,000 within 75 days of her start date, which vest 50% on the first anniversary of the start date and monthly thereafter for the following year, (ii) RSUs having a value of $446,000 on the first anniversary of her start date, which vest 50% on the second anniversary of the start date and monthly thereafter for the following year, and (iii) RSUs having a value of $446,000 on the second anniversary of her start date, which vest 50% on the third anniversary of the start date and monthly thereafter for the following year. Such RSU grants are subject to full acceleration in the event of a “change in control” (as defined in the Jacques Agreement), involuntary termination of employment without cause, resignation for good reason, or termination of employment due to death or "disability" (as defined in the Jacques Agreement). In the event that any change in control, involuntary termination of employment without cause, resignation for good reason, or termination of employment due to death or disability occurs prior to any such grant, the Company is obligated to pay Ms. Jacques a lump sum in cash equal to the face value of the ungranted RSU award. The Jacques Agreement further provides that the Company will grant Ms. Jacques an option to purchase 237,396,700 ordinary shares, subject to ratable vesting on a semiannual basis over four years from her start date. Commencing with annual long-term incentive awards to senior executives in 2023, in addition to the RSU and option awards described above, the Jacques Agreement provides that Ms. Jacques will be eligible to receive awards under the Company’s equity incentive plan not less frequently than annually with a target grant value of not less than 100% of Ms. Jacques’s annual base salary for fiscal year 2023 and thereafter otherwise commensurate with awards to executives at similarly situated companies as recommended by a reputable compensation consultant engaged by the board of directors.

Upon termination of Ms. Jacques’s employment due to Ms. Jacques’s death or disability, Ms. Jacques or her estate or beneficiaries shall be entitled to receive (i) a pro-rated portion of the annual bonus, if any, that she would have otherwise earned for the year in which the employment terminates had no termination occurred (the “Pro-Rata Bonus”).

Upon termination of Ms. Jacques’s employment by us without cause, or by Ms. Jacques for good reason, subject to her compliance with the confidentiality provisions of the Jacques Agreement and her execution and the effectiveness of a release of claims in favor of the Company and its affiliates in a form provided by the Company (the “Release”), she is entitled to receive (i) a lump sum payment equal to the sum of the annual base salary and target annual performance bonus in effect for the year in which the date of termination occurs (the “Cash Severance”), (ii) any earned but unpaid annual bonus for the previous year, (iii) the Pro-Rata Bonus, and (iv) provided she timely and properly elects COBRA coverage, reimbursement for the monthly COBRA premium paid by Ms. Jacques for her and her eligible dependents until the earliest of (x) 12 months following the date of termination, (y) the date on which she is no longer eligible to receive such coverage, and (z) the date on which Ms. Jacques becomes eligible to receive similar coverage from another employer or other source (the “COBRA Reimbursement”). In addition, if Ms. Jacques agrees in writing that the non-competition restrictions in the Jacques Agreement shall continue to apply following the termination of her employment, (i) all outstanding equity-based compensation awards that do not vest

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based on the attainment of performance goals shall fully vest, and (ii) all outstanding equity-based compensation awards that vest based on the attainment of performance goals shall remain outstanding and eligible to vest based on attainment of the applicable performance goals.

In the event of a termination of Ms. Jacques’s employment by us without cause (other than on account of death or disability), or by Ms. Jacques for good reason, in each case within 18 months following a change in control, and subject to her compliance with the cooperation, confidentiality, restrictive covenants, and proprietary rights provisions of the Jacques Agreement and her execution and the effectiveness of a Release, in lieu of the severance payments and benefits described in the preceding paragraph, she is entitled to receive (i) the Cash Severance, (ii) a lump sum payment equal to her target bonus for the year in which the date of termination occurs (or the year in which the change in control occurs, if higher) and (iii) the COBRA Reimbursement. In addition, if Ms. Jacques agrees in writing that the non-competition restrictions in the Jacques Agreement will continue to apply following the termination of her employment, (i) all outstanding unvested stock options held by her will become fully vested and will remain exercisable for the remainder of their original term and (ii) all outstanding equity-based awards other than stock options that do not vest based on the attainment of performance goals will fully vest. If the payments or benefits payable to Ms. Jacques in connection with a change in control would be subject to the excise tax on golden parachutes imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit to Ms. Jacques.

The employment agreement also contains restrictive covenants for the Company’s benefit and Ms. Jacques is required to maintain the confidentiality of our confidential information.

Wendy DiCicco Consulting Services Agreements

We are a party to a consulting services agreement, dated January 15, 2024, with an entity controlled by Ms. DiCicco (the “DiCicco Agreement”). The DiCicco Agreement provides for a $40,000 per month fee for services up to 80 hours per month, paid in two equal installments on the 15th and 30th date of each month in which services are rendered and reimbursement of certain expenses. Any time exceeding 80 hours per month requires advance approval by the CEO. The DiCicco Agreement expires on May 31, 2024, provided, however, either party may terminate the DiCicco Agreement at any time without cause on 30 days’ prior written notice or with cause on five days' prior written notice.

Prior to entering into the DiCicco Agreement, the Company was party to a consulting services agreement, dated July 17, 2023, and amended on September 1, 2023 (as amended, the “Original DiCicco Agreement”), with an entity controlled by Ms. DiCicco. The Original DiCicco Agreement had a six month term and provided for a $32,000 per month fee, which was increased to $40,000 effective September 1, 2023, a performance bonus in an amount of up to $70,000 upon achievement of certain milestones, and reimbursement of certain expenses. The Original DiCicco Agreement also provided that Ms. DiCicco would be granted an initial option to purchase 5,000,000 ordinary shares. If we terminate Ms. DiCicco’s engagement for any reason other than for cause prior to the date that such option is fully vested, the option will continue to vest through July 17, 2024 or be accelerated, at our option.

The DiCicco Agreement also contains restrictive covenants for our benefit and Ms. DiCicco is required to maintain the confidentiality of our confidential information.

Hombeck Employment Agreement

Prior to his departure in June 2023, we were party to an executive employment agreement, effective as of June 30, 2020, with Dr. Hombeck (the “Hombeck Agreement”). The Hombeck Agreement had an initial term of one year from June 30, 2020 with automatic renewals for successive one-year periods, provided that either party could have given written notice of non-renewal of the current term at least three months prior to the expiration of the then-current term.

Dr. Hombeck’s annual base salary for 2023 was $303,152 and he was eligible for an annual cash bonus with a target of 30% of base salary. The Hombeck Agreement also provided that Dr. Hombeck would be granted an initial option to purchase 7,000,000 shares and an additional option to purchase 3,000,000 shares on January 1, 2021.

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Pursuant to the Hombeck Agreement, upon termination of Dr. Hombeck’s employment without “cause” (as defined in the Hombeck Agreement), or by Dr. Hombeck for “good reason” (as defined in the Hombeck Agreement) or upon non-renewal by the Company of the term of the Hombeck Agreement, in addition to any accrued but unpaid base salary, expense reimbursements and vested and accrued benefits and subject to Dr. Hombeck’s execution and the effectiveness of a release of claims in a form acceptable to the Company, he would have been entitled to receive (i) an amount equal to the sum of (x) his annual base salary at the rate in effect as of the termination date, plus (y) other than in the case of a termination due to non-renewal of the term, an amount equal to the greater of his actual or target annual performance bonus for the year in which the employment terminated and (ii) an amount equal to the Company’s share of the premium paid by Dr. Hombeck while he was an active employee for medical insurance coverage under the Company’s health care plan (the “Healthcare Subsidy”) for 12 months following termination.

If Dr. Hombeck’s employment had been terminated by us without cause, or by him for good reason, in each case with one year following a “change in control” (as defined in the Hombeck Agreement), and subject to Dr. Hombeck’s execution and the effectiveness of a release of claims in a form acceptable to the Company, in lieu of the severance payments and benefits described in the preceding paragraph, he would have been entitled to receive (i) an amount equal to one and a half times the sum of (x) his annual base salary at the rate in effect as of the termination date, plus (y) his target annual performance bonus for the year in which the employment terminated and (ii) the Healthcare Subsidy for 18 months following termination. If the payments or benefits payable to Dr. Hombeck in connection with a change in control would have been subject to the excise tax on golden parachutes imposed under Section 4999 of the Code, those payments or benefits would have been reduced if such reduction would result in a higher net after-tax benefit to Dr. Hombeck.

Dr. Hombeck is also subject to restrictive covenants for our benefit, including a requirement to maintain the confidentiality of our confidential information.

Determining Compensation

Our board of directors and compensation committee review compensation annually for our executives. In setting executive base salaries and bonuses and granting equity incentive awards, we consider compensation for comparable positions in the market, the historical compensation of our executives, individual performance as compared to our expectations and objectives, our desire to motivate our employees to achieve short- and long-term results that are in the best interests of our shareholders, and a long-term commitment to our Company.

Our compensation committee is primarily responsible for determining the compensation for our executive officers. Our compensation committee typically reviews and discusses management’s proposed compensation with our Chief Executive Officer for all executives other than the Chief Executive Officer. Based on those discussions and its discretion, taking into account the factors noted above, the compensation committee then sets the compensation for each executive officer other than the Chief Executive Officer and recommends the compensation for the Chief Executive Officer to our board of directors for approval. Our board of directors discusses the compensation committee’s recommendation and ultimately approves the compensation of our Chief Executive Officer without members of management present.

In 2023, our compensation committee utilized the services of Amplify Strategy & Consulting LLC (“Amplify”), an independent compensation consultant. During 2023, Amplify did not provide material services to us other than the services to our compensation committee. Based on its evaluation, our compensation committee has determined that Amplify’s work has not raised any conflict of interests.

Elements of Compensation

The compensation of our NEOs generally consists of three primary components, consisting of base salary, annual cash incentive awards, and long-term incentive-based compensation in the form of stock-based awards.

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Base Salary

In 2023, Ms. Jacques received an annual salary of $615,750 and, prior to his departure in June 2023, Dr. Hombeck received an annual salary of $303,152. Ms. DiCicco is a non-employee consultant and received a monthly fee of $32,000 from July 17, 2023 through August 31, 2023 and a monthly fee of $40,000 from September 1, 2023 through December 31, 2023.

Annual Cash Incentives

Annual cash incentive awards provide an opportunity for additional compensation to employee NEOs if pre-established annual performance goals are attained. The annual cash incentive award targets are based on a target percentage of each employee NEO’s salary. The compensation committee generally links cash awards to the achievement of the annual corporate goals; however, the compensation committee may take into consideration unexpected corporate performance outside of the corporate goals and individual performance. The amount of the bonus paid, if any, may vary among the employee NEOs depending on individual performance, individual contribution to the achievement of our annual corporate goals.

Annual cash incentive awards for 2023 for employees, including our NEOs, were based on corporate goals related to financing, pipeline advancement, reputation, and strengthening our capabilities. For 2023, the annual cash incentive award for Ms. Jacques was targeted at 50% of base salary and the annual cash incentive award for Dr. Hombeck was targeted at 30% of his base salary. However, Dr. Hombeck was not eligible to receive an incentive bonus because his employment terminated in July 2023. After reviewing Company performance against the corporate goals, the compensation committee determined not to award cash bonuses to the employee NEOs for the year ended December 31, 2023.

Pursuant to the Original DiCicco Agreement, Ms. DiCicco was eligible for performance bonuses in the aggregate amount of $70,000 upon achievement of certain milestones, including (i) $25,000 upon achievement of a specified guaranteed cash flow target by August 23, 2023 (“Milestone 1”), (ii) $25,000 upon resolving NASDAQ non-compliance on minimum bid price and shareholders' equity by October 23, 2023 (“Milestone 2”), and (iii) $20,0000 upon achievement of internal finance capability improvements by December 31, 2023 (“Milestone 3”). Ms. DiCicco received total bonuses of $45,000 for 2023 in light of achievement of Milestone 2 and Milestone 3.

Equity-Based Awards

Equity grants are intended as both a reward for contributing to our long-term success and an incentive for future performance. Additionally, the vesting feature of our equity awards is intended to further our goal of executive retention by providing an incentive to our NEOs to remain in our service during the vesting period. The compensation committee typically makes initial stock option awards to our employee NEOs upon commencement of employment and annual equity awards in the form of either stock options, RSUs, or a combination of stock options and RSUs, thereafter.

In 2023, we awarded equity compensation under the 2014 Plan and/or the 2023 Plan to Ms. Jacques and Ms. DiCicco in the form of time-vesting stock options and/or time-based RSUs. We determine equity award amounts based on contractual obligations, competitive market factors in our industry, and the judgment of the compensation committee of the board of directors, taking into account information and recommendations provided by our independent compensation consultant. With respect to our NEO’s other than our Chief Executive Officer, the compensation committee also considers recommendations provided by our Chief Executive Officer. For the 2023 awards of stock options and RSUs to our NEOs, the primary consideration was the award amounts included in the applicable NEO’s employment and/or consulting services agreements.

Other Compensation and Benefits

We have established various employee benefit plans, including medical and 401(k) plans, in which employee NEOs are eligible to participate on the same basis as other employees. It is generally our policy not to extend perquisites to our executives that are not available to our employees generally.

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401(k) Plan and Defined Contribution Pension Scheme

We have adopted an employee benefit plan under Section 401(k) of the Code for our U.S.-based employees. The 401(k) plan allows employees to make salary deferral contributions up to the statutorily prescribed annual limit under the Code. We provide matching contributions to the 401(k) plan in an amount equal to 100% of each participant’s contribution up to a maximum of 5% of the participant’s annual eligible cash compensation, subject to certain other limits.

Additionally, we have adopted a defined contribution pension scheme which allows for U.K.-based employees to make salary deferral contributions and we contribute 10% of employee compensation to the pension plan, subject to U.K. law.

Clawback Policy

In November 2023, our compensation committee adopted a formal clawback policy, which applies in the event we are required to prepare an accounting restatement due to any material noncompliance with any financial reporting requirement under the U.S. federal securities laws. This policy requires us to (subject to certain limited exceptions set forth in the clawback policy and permitted under the final clawback rules) recover from any of our current or former executive officers who receive incentive-based compensation (including stock options and RSUs) after the effective date of the clawback policy and during the three-year period preceding the date on which we are required to prepare an accounting restatement, the excess of what would have been paid to such executive officer under the accounting restatement.

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Outstanding Equity Awards at Fiscal End

The following table sets forth information regarding the outstanding equity held by our NEOs as of December 31, 2023.

​ ​ Option Awards Stock Awards

​ ​ ​

​ ​ ​ ​ ​ ​

Torsten Hombeck (9)

_____________________

(1)

Market Value is calculated based on a price per ADS of $3.12 (equivalent to $0.00156 per ordinary share), which was the closing price of our ADSs on December 29, 2023, the last trading day of 2023.

(2)

Represents the unvested portion of a stock option award that vests in five equal installments of 25,954,300 ordinary shares on each of March 28, 2024, September 28, 2024, March 28, 2025, September 28, 2025, and March 28, 2026, subject to Ms. Jacques’s continued employment with us through the applicable vesting date.

(3)

Represents the unvested portion of a stock option award that vests in five equal installments of 3,720,288 ordinary shares on each of March 28, 2024, September 28, 2024, March 28, 2025, September 28, 2025, and March 28, 2026, subject to Ms. Jacques’s continued employment with us through the applicable vesting date.

(4)

Represents the unvested portion of a stock option award that vests in seven equal installments of 19,086,338 ordinary shares on each of June 1, 2024, December 1, 2024, June 1, 2025, December 1, 2025, June 1, 2026, December 1, 2026, and June 1, 2027, subject to Ms. Jacques’s continued employment with us through the applicable vesting date.

(5)

Represents the unvested portion of time-based RSUs granted on June 1, 2022 that vest in equal monthly installments over the six-month period beginning on January 1, 2024 and ending on June 1, 2024, subject to Ms. Jacques’s continued employment with us through the applicable vesting date.

(6)

Represents the unvested portion of time-based RSUs granted on March 28, 2023 that vest 50% on March 28, 2024, with the remainder vesting in 12 equal monthly installments thereafter, subject to Ms. Jacques’s continued employment with us through the applicable vesting date.

(7)

Represents the unvested portion of time-based RSUs granted on June 30, 2023 that vest in seven equal installments of 27,256,975 ordinary shares on each of June 30, 2024, December 31, 2024, June 30, 2025, December 31, 2025, June 30, 2026, December 31, 2026, and June 30, 2027, subject to Ms. Jacques’s continued employment with us through the applicable vesting date.

(8)

Represents the unvested portion of a stock option award that vests 100% on July 17, 2024, subject to Ms. DiCicco’s continued service to us through the vesting date.

(9)

All options (vested and unvested) previously held by Dr. Hombeck were either forfeited as of, or expired subsequent to, the date of Dr. Hombeck’s termination of employment with us on June 30, 2023.

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Director Compensation

Directors who are also employees are not compensated separately for serving on our board of directors or any of its committees. Each of our non-employee directors receives cash compensation for his or her services. In addition, to better align the interests of our board of directors with our shareholders, the compensation committee considers and recommends to the board of directors long-term equity compensation in the form of stock options to our non-employee directors. The compensation committee periodically conducts reviews of peer company director compensation practices, including before considering changes to our director compensation program.

Under our director compensation program, each director receives an annual cash retainer for service on the board and for service on each committee of which the director is a member. The chairperson of each committee receives a higher retainer for such service. These fees are typically paid quarterly in arrears, with the exception of the chairman of the board of directors who is paid monthly. The fees paid to non-employee directors for service on the board and for service on each committee of the board on which the director was a member during 2023 were as follows:

Member Annual Fee Chairperson Annual Fee

Nominating and Corporate Governance Committee $ 5,570 $ 11,139

A non-employee director may elect to receive annual cash payments in the form of fully-vested ordinary shares. During 2023, no director elected to receive his or her annual cash retainer in shares.

Directors typically receive an initial grant of an option to purchase 5,000,000 ordinary shares (or 10,000,000 ordinary shares for the non-executive chairman) or equivalent value of ADSs, upon being appointed to the board and on the date of each annual general meeting. The board reserves the discretion to review and amend this amount.

These awards typically vest in full on the date of the next annual general meeting following the date of grant, subject to the non-employee director’s continued service on the board of directors through such date, have a term of 10 years from date of grant, and accelerate upon a change of control.

The following table below sets forth information for the fiscal year ended December 31, 2023 regarding the compensation of our non-employee directors.

Fees Earned or Paid in Cash($)(1) Option Awards($)(2) Total($)

_____________________

(1)

Represents cash fees earned for service as a non-employee director for 2023.

(2)

Represents the aggregate grant date fair value of option awards made to each listed director in 2023, as computed in accordance with FASB ASC Topic 718, disregarding estimated forfeitures related to service-based vesting. See Note 6 to the financial statements included elsewhere in this Annual Report on Form 10-K regarding assumptions we made in determining the fair value of option awards. As of December 31, 2023, our non-employee directors held options to purchase our ordinary shares as follows: Dr. Prudo: 10,000,000 shares; Mr. Grissinger: 16,500,000 shares; Mr. Hashad: 5,000,000 shares; Dr. Patel: 5,000,000

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shares; and Mr. Williams: 19,850,000 shares. Messrs. Byrne, Hill, and Ungar did not hold any outstanding options as of December 31, 2023.

(3)

Dr. Prudo served as our Executive Chairman from September 2015 through December 2022. Effective January 1, 2023. Dr. Prudo began serving as the Chairman of our board of directors with a renumeration package of $100,000 per annum, paid in equal monthly installments.

(4)

Mr. Hashad was appointed to our board of directors effective June 30, 2023, at our 2023 annual general meeting. Mr. Hashad has served as a member of our audit committee and nominating and corporate governance committee since June 30, 2023.

(5)

Dr. Patel was appointed to our board of directors effective November 29, 2023. Dr. Patel has served as a member of our compensation committee since January 30, 2024.

(6)

This individual served as a director until our 2023 annual general meeting on June 30, 2023.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of March 29, 2024 (except as otherwise indicated below), information we know about the beneficial ownership of our ordinary shares by:

•

each person or entity, including any “group” as that term is used in Section 13(d)(3) of the Exchange Act, who is known by us to own beneficially more than 5% of the issued and outstanding shares of our common stock;

•

each of our current directors and director nominees;

•

each of our NEOs, as set forth in the Summary Compensation Table set forth Item 11 of this Annual Report on Form 10-K;

•

all of our current directors and executive officers as a group.

We have determined beneficial ownership in accordance with the rules of the SEC, and the information in the table below is not necessarily indicative of beneficial ownership for any other purpose. The SEC has defined “beneficial” ownership of a security to mean the possession, directly or indirectly, of voting power and/or investment power. In computing the percentage ownership of each person, ordinary shares subject to options, warrants, or rights held by that person that are currently exercisable, or exercisable within 60 days of March 29, 2024, are deemed to be outstanding and beneficially owned by that person. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

To our knowledge and except as indicated in the notes to this table and pursuant to applicable community property laws, each stockholder named in the table has sole voting and investment power with respect to the shares set forth opposite such shareholders' name. The percentage of ownership is based on 15,847,391,523 ordinary shares issued and outstanding on March 29, 2024. All fractional share amounts have been rounded to the nearest whole number. To our knowledge, except as noted below, no person or entity is the beneficial owner of more than 5% of the voting power of the Company’s ordinary shares.

Number of Percentage of

​ Ordinary Shares Ordinary Shares

Beneficially Beneficially

Name and Address of Beneficial Owner(1) Owned(2) Owned

​5% Shareholders:​​​​​​​​​​​​​

Named Executive Officers and Directors:​​​​​​​​​​​​​

Wendy F. DiCicco — *

Wa'el Hashad — *

_____________________

* Denotes less than 1% beneficial owner.

(1)

Except as otherwise noted, the address for each person listed above is c/o Akari Therapeutics, Plc, 22 Boston Wharf Road FL 7, Boston, MA 02210.

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(2)

Our shareholders, named executive officers and directors may hold ordinary shares, ADS or a combination of both. This column shows each holder’s beneficial ownership assuming all shares were held as ordinary shares, which may not be the case. Our ADSs are listed on The Nasdaq Capital Market under the trading symbol “AKTX.” Ordinary shares are convertible to ADSs at a 2,000 to one ratio.

(3)

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.

(4)

Based on the Amendment No. 7 Schedule 13D filed with the SEC on January 4, 2024 by RPC Pharma Limited (“RPC”), together with Ray Prudo, M.D. and Praxis Trustees Limited as trustee of The Sonic Healthcare Holding Company (“Praxis,” and together with Ray Prudo and RPC, “Ray Prudo and Affiliates”) in which Dr. Prudo reported sole voting power with respect to 2,636,271,200 shares, shared voting power with respect to 3,484,957,900 shares, sole dispositive power with respect to 2,636,271,200 shares, and shared dispositive power with respect to 3,484,957,900 shares as of January 4, 2024. In his individual capacity, Dr. Prudo beneficially owns the 3,484,957,900 Ordinary Shares (inclusive of 304,690,600 and 9,210,500 Ordinary Shares issuable upon exercise of warrants held by Dr. Prudo and RPC Pharma, respectively). RPC beneficially owns the 809,977,100 Ordinary Shares (inclusive of 9,210,500 Ordinary Shares issuable upon exercise of warrants). Praxis beneficially owns 38,709,600 Ordinary Shares. Voting and investment decisions with respect to shares owned by RPC and Praxis are controlled by Dr. Prudo.

(5)

Based on the Form 4 filed with the SEC on January 2, 2024 by Samir Patel, principal of PranaBio Investments, LLC, and information provided by Dr. Patel. Consists of (i) 2,085,237,500 ordinary shares, (ii) prefunded warrants exercisable to purchase 96,774,000 ordinary shares (represented by 48,387 ADSs) at an exercise price of $0.0001 per ordinary share (or $0.20 per ADS), and (iii) warrants exercisable to purchase 425,000,000 ordinary shares (represented by 212,500 ADSs) at exercise prices ranging from $0.0016 to $0.03 per ordinary share (or $17.00 to $60.00 per ADS).

(6)

Based on the Amendment No. 7 Schedule 13D filed with the SEC on January 4, 2024 by RPC, together with Ray Prudo, M.D. and Praxis in which RPC reported sole voting power with respect to 0 shares, shared voting power with respect to 809,977,100 shares, sole dispositive power with respect to 0 shares, and shared dispositive power with respect to 809,977,100 shares as of January 4, 2024. Voting and investment decisions with respect to shares owned by RPC are controlled by Dr. Prudo.

(7)

Consists of (i) 155,187,375 ordinary shares held by Ms. Jacques, (ii) 137,784,677 ordinary shares underlying outstanding stock options that are exercisable within 60 days of March 15, 2024, and (iii) 104,597,000 unvested time-based RSUs vesting within 60 days of March 15, 2024.

(8)

Dr. Patel is principal of PranaBio Investments, LLC. Refer to Note 5.

(9)

Refer to Note 3.

(10)

Consists of (i) 20,000,000 ordinary shares held by Mr. Grissinger, and (ii) 11,500,000 ordinary shares underlying outstanding stock options that are exercisable within 60 days of March 15, 2024.

(11)

Consists of (i) 20,000,000 ordinary shares held by Mr. Williams, and (ii) 14,850,000 ordinary shares underlying outstanding stock options that are exercisable within 60 days of March 15, 2024.

(12)

Includes (i) 164,134,688 ordinary shares underlying outstanding stock options that are exercisable within 60 days of March 15, 2024, (ii) 104,591,000 ordinary shares underlying unvested time-based RSUs stock options that vest within 60 days of March 15, 2024, (iii) prefunded warrants exercisable to purchase 96,774,000 ordinary shares, and (iv) warrants exercisable to purchase 738,901,100, which are held by our directors and NEOs as a group.

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Equity Compensation Plan Information

We have two compensation plans under which our equity securities are authorized for issuance. The 2014 Equity Incentive Plan and the 2023 Equity Incentive Plan. The following table sets forth certain information relating to these equity compensation plans as of December 31, 2023:

Number of Number of

Securities to be Weighted-Average Securities Remaining

Issued Upon Exercise Price of Available For Future

Exercise of Outstanding Issuance Under

Outstanding Options, Options, Warrants Equity Compensation

Plan Category Warrants and Rights and Rights(2) Plans

Equity compensation plans approved by shareholders(1)

Equity compensation plans not approved by shareholders N/A N/A N/A

_____________________

(1)

Consists of our 2014 Plan and 2023 Plan. As of December 31, 2023, new awards are only available for issuance under our 2023 Plan.

(2)

The calculation of the weighted-average exercise price does not consider the effect of 385,954,925 RSUs included in the number of securities reported in column (a).

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Item 13. Certain Relationships and Related Transactions, and Director Independence.

Transactions with Related Persons

Since January 1, 2022, we have not entered into or engaged in any related party transactions, as defined by the SEC, with our directors, officers, and shareholders who beneficially owned more than 5% of our outstanding ordinary shares (“5% holders”), as well as affiliates or immediate family members of those directors, officers, and 5% holders, except with respect to the transactions described below.

The Doctors Laboratory

The Company leases office space for its U.K. headquarters in London from The Doctors Laboratory (“TDL”) and has incurred expenses of approximately $0.1 million plus VAT during each of the years ended December 31, 2023 and 2022, respectively. David Byrne, a former non-employee director of the Company, is the Chief Executive Officer of TDL and Dr. Ray Prudo, the Company’s Chairman, is the non-Executive Chairman of the Board of Directors of TDL.

The Company received certain laboratory testing services for its clinical trials provided by TDL, including certain administrative services, and incurred expenses of approximately $0.1 million during each of the years ended December 31, 2023 and 2022.

Other

Mr. Grissinger began providing business development consulting services in January 2018. The consulting agreement was terminated in November 2022. The Company incurred less than $0.1 million in expenses during the year ended December 31, 2022. No such expenses were incurred during the year ended December 31, 2023.

Policies and Procedures for Related Person Transactions

Our board is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest. Accordingly, as a general matter, it is our preference to avoid related party transactions.

In accordance with our audit committee charter, members of the audit committee, all of whom are independent directors, review and approve all related party transactions for which approval is required under applicable laws or regulations, including SEC and the Nasdaq Listing Rules. Current SEC rules define a related party transaction for smaller reporting companies to include any transaction, arrangement, or relationship in which we are a participant and the amount involved is the lesser of $120,000 or 1% of total assets, and in which any of the following persons has or will have a direct or indirect interest:

•

our executive officers, directors, or director nominees;

•

any person who is known to be the beneficial owner of more than 5% of our common stock

•

any person who is an immediate family member, as defined under Item 404 of Regulation S-K, of any of our executive officers, directors, or director nominees or beneficial owners of more than 5% of our common stock; or

•

any firm, corporation, or other entity in which any of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person, together with any other of the foregoing persons, has a 5% or greater beneficial ownership interest.

Under our code of business conduct and ethics, our directors, officers, and employees are expected to avoid any relationship, influence or activity that would cause or even appear to cause a conflict of interest. Under our code of business conduct and ethics, a director is required to promptly disclose to our board any potential or actual conflict of interest involving him or her. In accordance with our code of business conduct and ethics, the board will determine an appropriate resolution on a case-by-case basis. All directors must recuse themselves from any

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discussion or decision affecting their personal, business, or professional interests. In addition, the audit committee is responsible for reviewing with our primary counsel the results of their review of the monitoring of compliance with our code of business conduct and ethics.

Director Independence

Our securities are listed on the Nasdaq Capital Market, and we use the standards of “independence” prescribed by rules set forth by Nasdaq. Under Nasdaq rules, a majority of a listed company’s board of directors must be comprised of independent directors. In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit committee and compensation committee be independent and satisfy additional independence criteria set forth in Rules 10A-3 and 10C-1, respectively, under the Exchange Act. Under the applicable Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of our board, that person does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our board determined that each of Dr. Prudo, Mr. Grissinger, Mr. Hashad, Dr. Patel, and Mr. Williams are independent as defined under applicable rules of the Nasdaq, and, in the case of all members of the audit and compensation committees, the independence requirements contemplated by Rule 10A-3 and Rule 10C-1 under the Exchange Act. Additionally, the board determined that Dr. James Hill, Dr. Stuart Ungar, and Mr. David Byrne, each of whom served on the board until our 2023 Annual Meeting in June 2023, were independent. As Ms. Jacques is our President and Chief Executive Officer, she is not independent.

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Item 14. Principal Accounting Fees and Services.

Independent Registered Public Accounting Firm Fees

Our independent public accounting firm is BDO USA, P.C., New York, New York, PCAOB Auditor ID: 243.

The following table sets forth all fees paid or accrued by us for professional services rendered by BDO USA, P.C. (previously BDO USA, LLP) during the years ended December 31, 2023 and 2022:

Audit Fees

Audit fees represent the aggregate fees for professional services rendered by our independent registered public accounting firm for: (i) the audit of our annual consolidated financial statements, (ii) review of our interim financial statements filed on Form 6-K that are customary under the standards of the Public Company Accounting Oversight Board (United States), and (iii) issuance of consents in connection with the filing of registration statements and related post-effective amendments.

Tax Fees

Tax fees consist of all services, except those services specifically related to the audit of the financial statements, performed by the independent registered public accounting firm’s tax personnel, including tax compliance and reporting. Tax fees during 2023 primarily related to the conduct of a IRS Section 382 study. No such fees were incurred during 2022.

Audit Committee Pre-Approval Policies and Procedures

Our audit committee has adopted policies and procedures relating to the approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm. This policy generally provides that we will not engage our independent registered public accounting firm to render audit or non-audit services unless the service is specifically approved in advance by the audit committee, or the engagement is entered into pursuant to the pre-approval procedures described below.

From time to time, the audit committee may pre-approve specified types of services that are expected to be provided to us by our independent registered public accounting firm during the next 12 months. Any such pre-approval is detailed as to the particular service or type of services to be provided and is also generally subject to a maximum dollar amount. All of the services described above under the headings “Audit Fees” and "Tax Fees" were pre-approved by our audit committee.

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PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a)

(1) Financial Statements.

Page number inthis Report

Consolidated Balance Sheets at December 31, 2023 and 2022 F-4

Notes to Consolidated Financial Statements F-8

(2) We are not filing any financial statement schedules as part of this Annual Report on Form 10-K because they are not applicable or the required information is included in the financial statements or notes thereto.

(3) The list of Exhibits filed as part of this Annual Report on Form 10-K is set forth on the Exhibit Index below.

(b)

The list of Exhibits filed as part of this Annual Report on Form 10-K is set forth on the Exhibit Index below.

(c)

None.

Item 16. Form 10-K Summary

Not applicable.

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Exhibit Index

ExhibitNumber Description

106

107

21.1* List of Subsidiaries.

23.1* Consent of Independent Registered Public Accounting Firm.

97* Clawback Policy.

101.SCH line XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.

* Filed herewith.

† Indicates management contract or compensatory arrangement.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Akari Therapeutics, Plc

By:

Date: March 29, 2024 /s/ Rachelle Jacques

Rachelle Jacques

President, Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Name Title Date

Rachelle Jacques (principal executive officer)

/s/ Wendy DiCicco Interim Chief Financial Officer March 29, 2024

Wendy DiCicco (principal financial officer and principal accounting officer)

/s/ Dr. Ray Prudo Chairman March 29, 2024

Dr. Ray Prudo

/s/ Donald Williams Director March 29, 2024

Donald Williams

/s/ Michael Grissinger Director March 29, 2024

Michael Grissinger

/s/ Wa’el Hashad Director March 29, 2024

Wa'el Hashad

/s/ Samir Patel Director March 29, 2024

Samir Patel

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets as of December 31, 2023 and 2022 F-4

Notes to Consolidated Financial Statements F-8

F-1

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

Akari Therapeutics, Plc

Boston, Massachusetts

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Akari Therapeutics, Plc (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, changes in shareholders’ (deficit) equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by

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communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Classification of Warrants

As described in Note 5 to the consolidated financial statements, in September 2023, the Company entered into purchase agreements to sell in a private placement to existing investors an aggregate of 551,816 American Depository Shares (“ADSs”) at $3.30 per ADS, and pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 48,387 ADSs at a purchase price per Pre-Funded Warrant of $3.10, for aggregate gross proceeds of approximately $2.0 million. The Company determined that the Pre-Funded Warrants met all of the criteria for equity classification and recorded them as a component of additional paid-in capital upon the closing of the transaction in October 2023.

We identified the evaluation of the financial statement classification for the Pre-Funded Warrants as a critical audit matter. Our principal considerations included the existence of accounting complexities related to certain provisions of the warrant agreement, including settlement provisions and derivative elements. Auditing these elements involved especially complex auditor judgment due to the terms of the applicable agreement, including the extent of specialized knowledge and skills needed.

The primary procedures we performed to address this critical audit matter included:

•

Evaluating the appropriateness of management’s conclusions through the review of: (i) the relevant terms of the warrant agreement, (ii) the completeness and accuracy of the Company’s technical accounting analysis, and (iii) the appropriateness of application of the relevant accounting literature.

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Utilizing personnel with specialized knowledge and skills in technical accounting to assist in: (i) evaluating relevant terms of the warrant agreement in relation to the appropriate accounting literature, and (ii) assessing the appropriateness of conclusions reached by the Company.

/S/ BDO USA, P.C.

We have served as the Company’s auditor since 2016.

New York, New York

March 29, 2024

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AKARI THERAPEUTICS, PLC

Consolidated Balance Sheets

as of December 31, 2023 and 2022

(in U.S. dollars)

December 31, December 31,

(In thousands, except share and per share amounts) 2023 2022

ASSETS

Current assets:

Patent acquisition costs, net 14 17

LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY

Current liabilities:

Other current liability 94 94

Commitments and contingencies (Note 8)

Shareholders’ (deficit) equity:

Share capital of $0.0001 par value