AKARI THERAPEUTICS PLC CONSOLIDATED ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 Registered Number: 05252842 AKARI THERAPEUTICS PLC CONSOLIDATED ANNUAL REPORT AND FINANCIAL STATEMENTS FOR TH

AKARI THERAPEUTICS PLC

CONSOLIDATED ANNUAL REPORT AND FINANCIAL

Registered Number: 05252842

AKARI THERAPEUTICS PLC

CONSOLIDATED ANNUAL REPORT AND FINANCIAL

FOR THE YEAR ENDED 31 DECEMBER 2018

AKARI THERAPEUTICS PLC

OFFICERS AND PROFESSIONAL ADVISERS

FOR THE YEAR ENDED 31 DECEMBER 2018

AKARI THERAPEUTICS PLC

FOR THE YEAR ENDED 31 DECEMBER 2018

Unless the context otherwise requires, all

references to "Akari," "we," "us," "our," the "Company", the "Group"

and similar designations refer to Akari Therapeutics, Plc and its subsidiaries. All references to "parent company"

refer to Akari Therapeutics, Plc excluding its subsidiaries.

The directors present their report and the

audited financial statements for the year ended 31 December 2018.

The principal activity of the Group is developing

inhibitors of acute and chronic inflammation, specifically the complement system, the eicosanoid or leukotriene system and the

bioamine system for the treatment of rare and orphan diseases.

The directors who served the company during

the year and up to the date of signing the Annual Report were as follows:

R Ward (resigned 19 September 2018)

D Solomon (resigned 8 May 2018)

SUPPLIER PAYMENT POLICY

It is the Group's policy to agree to

commercial terms with its suppliers prior to purchase of goods or services. The Group negotiates favourable payment terms where

CORPORATE GOVERNANCE

The Group is not required to implement the

provisions of the UK Corporate Governance Code (the "Code").

Regular board meetings are held and the Executive

Directors are heavily involved in the day to day running of the business. The Board of Directors meets regularly and is responsible

for formulating strategy, monitoring financial performance and approving material items of expenditure.

The Group meets its day-to-day working capital

requirements through funding. The Group's forecast and projections, show that at present, the Group has insufficient working

capital to fulfil its current business plan for the next twelve months from the date of approval of the financial statements without

the Group raising additional capital. However, the Group also has the option to revise its plan including reducing the scale of

its operations and pace of development, to reduce discretionary costs to ensure its cost and liabilities are met from existing

working capital resources. Therefore, having reviewed the Group's forecast and projections, and having made appropriate enquiries,

the Directors have a reasonable expectation that the Group has sufficient funding and adequate resources to continue operationally

for at least 12 months from the date of this Annual Report. The Group therefore continues to adopt the going concern basis

for the preparation of the consolidated financial statements.

AKARI THERAPEUTICS PLC

DIRECTORS' REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2018

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing

the Annual Report and the financial statements in accordance with applicable laws and regulations.

Company law requires the directors to prepare

Group and Parent company financial statements for each financial year. Under that law the directors have elected to prepare the

Group and Parent company financial statements in accordance with International Financial Reporting Standards ("IFRS")

as adopted by the EU. Under company law the directors must not approve the financial statements unless they are satisfied that

they give a true and fair view of the state of affairs of the Group and the Company and the profit or loss of the Group for that

The Group financial statements are required

by law and IFRS as adopted by the EU to present fairly the financial position and performance of the Group; the Companies Act 2006

provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving

a true and fair view are references to their achieving a fair presentation. The Parent company financial statements are required

by law to give a true and fair view of the state of affairs of the Parent company.

In preparing these financial statements the

directors are required to:

The directors are responsible for keeping proper

accounting records which disclose with reasonable accuracy at any time the financial position of the Group and Parent company and

to enable them to ensure that the financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation.

They have general responsibility for taking such steps as are reasonably open to safeguard the assets of the Group and Parent company

and to prevent and detect fraud and

other irregularities.

The directors consider that the Annual Report,

taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's

performance, business model and strategy.

DISCLOSURE OF INFORMATION TO AUDITORS

So far as each of the directors is aware at

the time the report is approved:

This report was approved by the board on 30

May 2019 and signed on its behalf.

/s/ Clive Richardson

AKARI THERAPEUTICS PLC

FOR THE YEAR ENDED 31 DECEMBER 2018

We are a clinical-stage biopharmaceutical company

focused on developing inhibitors of acute and chronic inflammation, specifically the complement system, the eicosanoid or leukotriene

system and the bioamine system for the treatment of rare and orphan diseases. Each of these systems has scientifically well-supported

causative roles in the diseases being targeted by us. We believe that blocking early mediators of inflammation will prevent initiation

and continual amplification of the processes that cause certain diseases.

Ticks have undergone 300 million years of natural

selection to produce inhibitors that bind tightly to key highly-conserved inflammatory mediators, are generally well tolerated

in humans, and remain fully functional when a host is repeatedly exposed to the molecule. Our molecules are derived from these

Our lead product candidate, nomacopan (Coversin),

which is a second-generation complement inhibitor, acts on complement component-C5, preventing release of C5a and formation of

C5b-9 (also known as the membrane attack complex, or MAC), and independently also inhibits leukotriene B4, or LTB4, activity,

both elements that are co-located as part of the immune/inflammatory response. Nomacopan (Coversin) is a recombinant small protein

(16,740 Da) derived from a protein originally discovered in the saliva of the Ornithodoros moubata tick, where it modulates the

host immune system to allow the parasite to feed without alerting the host to its presence or provoking an immune response.

Nomacopan (Coversin) has received orphan drug

status from the U.S. Food and Drug Administration, or the FDA, and the European Medicines Agency, or the EMA, for paroxysmal nocturnal

haemoglobinuria, or PNH, and Guillain Barr Syndrome, or GBS. Orphan drug designation provides us with certain benefits

and incentives, including a period of marketing exclusivity if regulatory approval of the drug is ultimately received for the designated

indication. The receipt of orphan drug designation status does not change the regulatory requirements or process for obtaining

marketing approval and the designation does not mean that marketing approval will be received. We intend to apply in the future

for orphan drug designation in additional indications we deem appropriate.