Full Press Release Details
AKARI THERAPEUTICS, PLC
Quarterly Report For the Period Ended
Condensed Consolidated Financial Statements
| Condensed Consolidated Balance Sheets as of March 31, 2017 (Unaudited) and December 31, 2016 | 2 |
| Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2017 (Unaudited) | 3 |
| Condensed Consolidated Statement of Changes in Shareholders' Equity for the Three Months Ended March 31, 2017 (Unaudited) | 4 |
| Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2017 (Unaudited) | 5 |
| Notes to Condensed Consolidated Financial Statements - Unaudited | 6-14 |
| Management's Discussion and Analysis of Financial Condition and Results of Operations | 15-18 |
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2017 and December 31, 2016
(in U.S. Dollars, except share data)
| March 31, 2017 | December 31, 2016 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 24,919,058 | $ | 34,098,812 | ||||
| Short-term investments | 10,021,963 | 10,021,963 | ||||||
| Prepaid expenses and other current assets | 1,340,897 | 1,513,006 | ||||||
| Total Current Assets | 36,281,918 | 45,633,781 | ||||||
| Restricted cash | 142,182 | 142,168 | ||||||
| Property and equipment, net | 53,892 | 58,364 | ||||||
| Patent acquisition costs, net | 38,917 | 39,365 | ||||||
| Total Assets | $ | 36,516,909 | $ | 45,873,678 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 924,480 | $ | 2,214,313 | ||||
| Accrued expenses | 1,144,675 | 1,837,647 | ||||||
| Liabilities related to options and warrants | 11,994,549 | 7,662,808 | ||||||
| Total Current Liabilities | 14,063,704 | 11,714,768 | ||||||
| Other long-term liability | 57,198 | 56,360 | ||||||
| Total liabilities | 14,120,902 | 11,771,128 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' Equity: | ||||||||
| Share capital of GBP .01 par value | ||||||||
| Authorized: 5,000,000,000 ordinary shares; issued and outstanding: 1,177,693,383 at March 31, 2017 and December 31, 2016, respectively | 18,340,894 | 18,340,894 | ||||||
| Additional paid-in capital | 91,902,485 | 90,979,363 | ||||||
| Accumulated other comprehensive loss | (325,250 | ) | (280,097 | ) | ||||
| Accumulated deficit | (87,522,122 | ) | (74,937,610 | ) | ||||
| Total Shareholders' Equity | 22,396,007 | 34,102,550 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 36,516,909 | $ | 45,873,678 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
For the Three Months Ended March 31, 2017
| Three Months Ended | ||||||||
| March 31 , | March 31, | |||||||
| 2017 | 2016 | |||||||
| Operating Expenses: | ||||||||
| Research and development costs | $ | 6,002,700 | $ | 1,499,543 | ||||
| General and administrative expenses | 2,280,489 | 2,352,435 | ||||||
| Total Operating Expenses | 8,283,189 | 3,851,978 | ||||||
| Loss from Operations | (8,283,189 | ) | (3,851,978 | ) | ||||
| Other Income (Expense): | ||||||||
| Interest income | 38,888 | 30,804 | ||||||
| Changes in fair value of option and warrant liabilities - (loss) gains | (4,331,741 | ) | 704,335 | |||||
| Foreign currency exchange (loss) gain | (6,759 | ) | 154,431 | |||||
| Other expenses | (1,711 | ) | (22,976 | ) | ||||
| Total Other (Expense) Income | (4,301,323 | ) | 866,594 | |||||
| Net Loss | (12,584,512 | ) | (2,985,384 | ) | ||||
| Other Comprehensive Loss: | ||||||||
| Foreign Currency Translation Adjustment | (45,153 | ) | (192,944 | ) | ||||
| Comprehensive Loss | $ | (12,629,665 | ) | $ | (3,178,328 | ) | ||
| Loss per common share (basic and diluted) | $ | (0.01 | ) | $ | (0.00 | ) | ||
| Weighted average common shares (basic and diluted) | 1,177,693,383 | 1,177,693,383 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY - UNAUDITED
As of and for the Three Months Ended March
| Akari Therapeutics, Plc | Additional | Accumulated Other | ||||||||||||||||||||||
| Share Capital | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | (Loss) | Deficit | Total | |||||||||||||||||||
| Shareholders' Equity, January 1, 2017 | 1,177,693,383 | $ | 18,340,894 | $ | 90,979,363 | $ | (280,097 | ) | $ | (74,937,610 | ) | $ | 34,102,550 | |||||||||||
| Stock-based compensation | - | - | 923,122 | - | - | 923,122 | ||||||||||||||||||
| Comprehensive Loss | - | - | - | (45,153 | ) | (12,584,512 | ) | (12,629,665 | ) | |||||||||||||||
| Shareholders' Equity, March 31, 2017 | 1,177,693,383 | $ | 18,340,894 | $ | 91,902,485 | $ | (325,250 | ) | $ | (87,522,122 | ) | $ | 22,396,007 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS - UNAUDITED
For the Three Months Ended March 31, 2017
| Three Months Ended | ||||||||
| March 31, 2017 | March 31, 2016 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (12,584,512 | ) | $ | (2,985,384 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 10,839 | 8,594 | ||||||
| Stock-based compensation | 923,122 | 816,805 | ||||||
| Changes in fair value of the liability for options and warrants | 4,331,741 | (704,335 | ) | |||||
| Foreign currency exchange gains | (38,785 | ) | (178,699 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease (increase) in assets: | ||||||||
| Prepaid expenses and other current assets | 172,515 | (524,087 | ) | |||||
| Decrease in liabilities: | ||||||||
| Accounts payable and accrued expenses | (1,984,223 | ) | (3,876,501 | ) | ||||
| Other liabilities | 838 | 3,031 | ||||||
| Total adjustments | 3,416,047 | (4,455,192 | ) | |||||
| Net Cash Used in Operating Activities | (9,168,465 | ) | (7,440,576 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of property and equipment | (5,620 | ) | (42,083 | ) | ||||
| Net Cash Used by Investing Activities | (5,620 | ) | (42,083 | ) | ||||
| Effect of Exchange Rates on Cash and Cash Equivalents | (5,669 | ) | (7,285 | ) | ||||
| Net Decrease in Cash and Cash Equivalents | (9,179,754 | ) | (7,490,484 | ) | ||||
| Cash and Cash Equivalents, beginning of period | 34,098,812 | 68,919,995 | ||||||
| Cash and Cash Equivalents, end of period | $ | 24,919,058 | $ | 61,429,511 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS - UNAUDITED
Akari Therapeutics, Plc, (the "Company"
or "Akari"), is incorporated in the United Kingdom. The Company is a clinical-stage biopharmaceutical company focused
on developing inhibitors of acute and chronic inflammation, specifically the complement system, the eicosanoid system and the bioamine
system for the treatment of rare and orphan diseases.
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 three months ended March 31, 2017, 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 and Volution Immuno Pharmaceuticals SA, a private
Swiss company, ("Volution"), its wholly-owned subsidiary.
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
into U.S. dollars at current rates of exchange as of the balance sheet date and income and expense items at the average exchange
rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded as foreign currency
translation adjustments, a component of accumulated other comprehensive loss. Gains or losses from foreign currency transactions
are included in foreign currency exchange gains (losses).
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that may
affect the reported amounts of assets, liabilities, equity, revenue, expenses and related disclosure of contingent assets and liabilities.
Management's estimates and judgments include assumptions used in the evaluation of impairment and useful lives of intangible
assets (patents), accrued liabilities, deferred income taxes, liabilities related to stock options and warrants, stock-based compensation
and various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those
estimates under different assumptions or conditions.
Fair Value Measurements
- The carrying amounts of financial instruments, including cash and cash equivalents, short-term investments, restricted
cash and accounts payable approximate fair value due to their short-term maturities.
The Company's liabilities
related to options and warrants relate to equity and debt financing rounds and options related to RPC Pharma Limited ("RPC"),
Akari's majority shareholder, and are recognized on the balance sheet at their fair value, with changes in the fair value
accounted for in the Statements of Comprehensive Loss and included in changes in fair value of option/warrant liabilities.
Cash and Cash Equivalents -
The Company considers all highly-liquid investments with original maturities of 90 days or less at the time of acquisition to be
cash equivalents. The Company had no cash equivalents as of March 31, 2017 and December 31, 2016.
AKARI THERAPEUTICS, Plc
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS - UNAUDITED
Short-term investments - Short-term investments consist
of certificates of deposit that are expected to be converted into cash within one year.
Restricted cash is collateral for a letter of credit related to the Company's office lease.
Prepaid Expenses and Other
Current Assets - Prepaid expenses and other current assets consist principally of VAT receivables and prepaid expenses.
Property and equipment, net -
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line
method over the estimated useful lives of the assets at the following annual rates:
| Years | ||||
| Computers, peripheral, and scientific equipment | 3 | |||
| Office furniture and equipment | 3 |
Depreciation expense for the
three months ended March 31, 2017 and 2016 was $10,092 and $7,839, respectively.
The Company reviews all long-lived assets for impairment whenever events or circumstances indicate the carrying amount of such
assets may not be recoverable. Recoverability of assets to be held or used is measured by comparison of the carrying value of the
asset to the future undiscounted net cash flows expected to be generated by the asset. If such asset is considered to be impaired,
the impairment recognized is measured by the amount by which the carrying value of the asset exceeds the discounted future cash
flows expected to be generated by the asset.