AKARI PHARMACEUTICALS, Plc Quarterly Report For the Period Ended

AKARI PHARMACEUTICALS, Plc

Quarterly Report For the Period Ended

AKARI THERAPEUTICS, Plc

CONDENSED CONSOLIDATED BALANCE SHEETS

As of September 30, 2016 and December 31,

(in U.S. Dollars, except share data)

See notes to condensed consolidated financial

AKARI THERAPEUTICS, Plc

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

For the Three and Nine Months Ended September

30, 2016 and September 30, 2015

See notes to condensed consolidated financial

AKARI THERAPEUTICS, Plc

CONDENSED CONSOLIDATED STATEMENT OF CHANGES

IN SHAREHOLDERS' EQUITY - UNAUDITED

For The Nine Months Ended September 30,

See notes to condensed consolidated financial

AKARI THERAPEUTICS, Plc

CONDENSED CONSOLIDATED STATEMENTS OF CASH

For The Nine Months Ended September 30,

See notes to condensed consolidated financial

AKARI THERAPEUTICS, Plc

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS - UNAUDITED

(in U.S. Dollars, except share data)

Akari Pharmaceuticals, Plc, (the "Company"

or "Akari"), formerly Celsus Therapeutics Plc ("Celsus"), is incorporated in the United Kingdom. The Company

is a clinical stage biotechnology company that is focused on developing anti-complement and anti-inflammatory molecules as treatments

for a wide range of rare and orphan conditions in the autoimmune and inflammatory diseases sectors.

On September 18, 2015, Celsus Therapeutics

Plc completed its acquisition of all of the capital stock of Volution Immuno Pharmaceuticals SA ("Volution"), from

RPC Pharma Limited ("RPC"), Volution's sole shareholder, in exchange for ordinary shares, par value 0.01,

("Ordinary Shares"), of Celsus (the "Acquisition"), in accordance with the terms of the Share Exchange

Agreement, dated as of July 10, 2015 (the "Agreement"), by and among Celsus and RPC. In connection with the Acquisition,

the name of the combined company was changed to Akari Therapeutics, Plc. The Company's American Depositary Shares ("ADSs"),

each representing 100 Ordinary Shares, began trading on The NASDAQ Capital Market under the symbol "AKTX" on September

In connection with the consummation of

the Acquisition, Celsus issued an aggregate of 722,345,600 Ordinary Shares to RPC, which represented, prior to giving effect to

the Financing (as defined below), 92.85% of Celsus's outstanding Ordinary Shares following the closing of the Acquisition

(or 91.68% of Celsus Ordinary Shares on a fully diluted basis). This yielded a share exchange ratio of approximately 721:1

of Akari Ordinary Shares to RPC Ordinary Shares. The Company's earnings per share have been retrospectively adjusted in the

Condenses Statement of Comprehensive Loss to reflect this recapitalization. Since the Volution securityholders owned a majority

of the capitalization of the Company immediately following the closing of the Acquisition, Volution is considered to be the acquiring

company for accounting purposes, and the transaction has been accounted for as a reverse acquisition under the acquisition method

of accounting for business combinations in accordance with generally accepted accounting principles ("U.S. GAAP").

Accordingly, the assets and liabilities of Celsus have been recorded as of the Acquisition closing date at fair value and the condensed

consolidated financial statements reflect the historical financial statements of Volution as our historical financial statements.

The Company, as defined in the accompanying

notes to the condensed consolidated financial statements, refers to Volution prior to the Acquisition and Akari subsequent to the

completion of the Acquisition.

In addition, on September 18, 2015, the

Company completed a private placement of an aggregate of 3,958,811 restricted ADSs representing 395,881,100 Ordinary Shares for

gross proceeds of $75 million at a price of $18.945 per restricted ADS (the "Financing"), which represented approximately

33.3% of the outstanding Ordinary Shares of the Company after giving effect to the Acquisition and the Financing.

Volution was originally incorporated in

Switzerland as a private limited company and commenced business on October 9, 2013. On October 23, 2013, Varleigh Immuno Pharmaceuticals

Ltd ("Varleigh"), a UK limited company, transferred certain patent rights to Volution in exchange for a payment of

approximately $107,000 (GBP 65,000), which was the carrying value of the patents in accordance with local accounting standards.

Effective September 12, 2014, Varleigh ceased its operations and was dissolved. The transaction resulted in the transfer of the

business of Varleigh to Volution. On the date of transfer, the controlling/majority shareholders of Volution were also the controlling/majority

shareholders of Varleigh. Upon dissolution, there were no reported assets, liabilities, or accumulated comprehensive income remaining

in Varleigh, as such no gain or loss on dissolution was recognized.

On July 3, 2015, the shareholders of Volution

exchanged their shares for RPC shares with no changes in individual share ownerships. This qualified as a reorganization.

AKARI THERAPEUTICS, Plc

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS - UNAUDITED

The Company is subject to a number of risks

similar to those of clinical stage companies, including dependence on key individuals, uncertainty of product development and generation

of revenues, dependence on outside sources of capital, risks associated with clinical trials of products, dependence on third-party

collaborators for research operations, need for regulatory approval of products, risks associated with protection of intellectual

property, and competition with larger, better-capitalized companies. Successful completion of the Company's development program

and, ultimately, the attainment of profitable operations is dependent upon future events, including obtaining adequate financing

to fulfill its development activities and achieving a level of revenues adequate to support the Company's cost structure.

There are no assurances that the Company will be able to obtain additional financing on favorable terms, or at all or successfully

market its products.

Basis of Presentation

- The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim

financial information and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC). Accordingly,

they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These financial

statements have been prepared on the same basis as the Company's annual financial statements and, in the opinion of management,

reflect all adjustments, including normal and recurring adjustments, which the Company considers necessary for the fair presentation

of financial information. The results of operations and comprehensive loss for the nine months ended September 30, 2016, are not

necessarily indicative of expected results for the full fiscal year or any other period.

Principles of Consolidation -

The condensed consolidated financial statements include the accounts of the Company, Volution and Volution Immuno Pharmaceuticals

Ltd (a UK Ltd Company), its wholly-owned subsidiary, which was incorporated in London on August 22, 2014. On September 6, 2016,

Volution Immuno Pharmaceuticals Ltd was dissolved.

All intercompany transactions

have been eliminated.

Foreign Currency - The functional

currency of the Company is U.S. dollars as that is the primary economic environment in which the Company operates as well as the

currency in which it has been financed.

The reporting currency of the

Company is U.S. Dollars. The Company translated its non-U.S. operations' assets and liabilities denominated in foreign currencies