Full Press Release Details
AKARI THERAPEUTICS, PLC
Quarterly Report For The Period Ended
Condensed Consolidated Financial Statements
| Page | |
| Condensed Consolidated Balance Sheets as of September 30, 2019 (Unaudited) and December 31, 2018 | 2 |
| Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2019 (Unaudited) and September 30, 2018 (Unaudited) | 3 |
| Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the Three and Nine Months Ended September 30, 2019 (Unaudited) and September 30, 2018 (Unaudited) | 4 |
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 (Unaudited) and September 30, 2018 (Unaudited) | 5 |
| Notes to Condensed Consolidated Financial Statements - Unaudited | 6-20 |
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2019 and December 31,
(in U.S. Dollars, except share data)
| September 30, 2019 | December 31, 2018 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 6,268,667 | $ | 5,446,138 | ||||
| Tax credit receivable | 2,902,987 | - | ||||||
| Prepaid expenses and other current assets | 1,058,527 | 1,423,184 | ||||||
| Deferred financing costs | 402,042 | 585,000 | ||||||
| Total Current Assets | 10,632,223 | 7,454,322 | ||||||
| Restricted cash | - | 521,829 | ||||||
| Property and equipment, net | 8,388 | 20,425 | ||||||
| Patent acquisition costs, net | 29,147 | 32,978 | ||||||
| Total Assets | $ | 10,669,758 | $ | 8,029,554 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 1,315,411 | $ | 1,586,285 | ||||
| Accrued expenses | 3,035,056 | 1,489,558 | ||||||
| Liabilities related to options and warrants | 3,068,834 | 1,842,424 | ||||||
| Total Liabilities | 7,419,301 | 4,918,267 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' Equity: | ||||||||
| Share capital of 0.01 par value | ||||||||
| Authorized: 10,000,000,000 ordinary shares; issued and outstanding: 2,100,865,913 and 1,580,693,413 at September 30, 2019 and December 31, 2018, respectively | 30,123,701 | 23,651,277 | ||||||
| Additional paid-in capital | 109,560,217 | 106,616,083 | ||||||
| Accumulated other comprehensive loss | (402,093 | ) | (352,426 | ) | ||||
| Accumulated deficit | (136,031,368 | ) | (126,803,647 | ) | ||||
| Total Shareholders' Equity | 3,250,457 | 3,111,287 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 10,669,758 | $ | 8,029,554 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
For the Three and Nine Months Ended September
30, 2019 and September 30, 2018
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2019 | September 30, 2018 | September 30, 2019 | September 30, 2018 | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| Research and development | $ | 1,763,057 | $ | 3,303,790 | $ | 3,038,038 | $ | 9,433,018 | ||||||||
| General and administrative | 1,354,263 | 2,382,153 | 6,098,767 | 8,537,191 | ||||||||||||
| Litigation settlement gain | - | (2,700,000 | ) | - | (2,700,000 | ) | ||||||||||
| Total Operating Expenses | 3,117,320 | 2,985,943 | 9,136,805 | 15,270,209 | ||||||||||||
| Loss from Operations | (3,117,320 | ) | (2,985,943 | ) | (9,136,805 | ) | (15,270,209 | ) | ||||||||
| Other Income (Expenses): | ||||||||||||||||
| Interest income | 2,057 | 66,073 | 3,792 | 198,146 | ||||||||||||
| Changes in fair value of option and warrant liabilities - gain/(loss) | 515,489 | (715,846 | ) | (12,594 | ) | 2,077,128 | ||||||||||
| Foreign currency exchange gains (losses) | 37,209 | 36,036 | (71,989 | ) | 42,481 | |||||||||||
| Other expenses | (2,788 | ) | 6,425 | (10,124 | ) | (1,572 | ) | |||||||||
| Total Other Income (Expenses) | 551,967 | (607,312 | ) | (90,915 | ) | 2,316,183 | ||||||||||
| Net Loss | (2,565,353 | ) | (3,593,255 | ) | (9,227,720 | ) | (12,954,026 | ) | ||||||||
| Other Comprehensive (Loss) Income: | ||||||||||||||||
| Foreign Currency Translation Adjustment | 3,281 | (65,848 | ) | (49,667 | ) | (60,237 | ) | |||||||||
| Comprehensive Loss | $ | (2,562,072 | ) | $ | (3,659,103 | ) | $ | (9,277,387 | ) | $ | (13,014,263 | ) | ||||
| Loss per ordinary share (basic and diluted) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||
| Weighted average ordinary shares outstanding (basic and diluted) | 1,971,025,222 | 1,528,682,540 | 1,721,098,272 | 1,526,700,724 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' (DEFICIT) EQUITY - UNAUDITED
As of and for the Three and Nine Months
Ended September 30, 2019 and 2018
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Share Capital | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | Income (Loss) | Deficit | Total | |||||||||||||||||||
| Balance, December 31, 2018 | 1,580,693,413 | $ | 23,651,277 | $ | 106,616,083 | $ | (352,426 | ) | $ | (126,803,647 | ) | $ | 3,111,287 | |||||||||||
| Stock-based compensation | - | - | 394,439 | - | - | 394,439 | ||||||||||||||||||
| Issuance of share capital related to financing, net of issuance costs | 5,000,000 | 65,598 | 86,955 | - | - | 152,553 | ||||||||||||||||||
| Comprehensive income (loss) | - | - | - | 107,168 | (2,545,283 | ) | (2,438,115 | ) | ||||||||||||||||
| Balance, March 31, 2019 | 1,585,693,413 | 23,716,875 | 107,097,477 | (245,258 | ) | (129,348,930 | ) | 1,220,164 | ||||||||||||||||
| Stock-based compensation | - | - | 409,622 | - | - | 409,622 | ||||||||||||||||||
| Issuance of share capital related to financing, net of issuance costs | 65,000,000 | 821,262 | 453,737 | - | - | 1,274,999 | ||||||||||||||||||
| Comprehensive loss | (160,116 | ) | (4,117,084 | ) | (4,277,200 | ) | ||||||||||||||||||
| Balance, June 30, 2019 | 1,650,693,413 | 24,538,137 | 107,960,836 | (405,374 | ) | (133,466,014 | ) | (1,372,415 | ) | |||||||||||||||
| Stock-based compensation | - | - | 137,385 | - | - | 137,385 | ||||||||||||||||||
| Issuance of share capital related to financing, net of issuance costs | 450,172,500 | 5,585,564 | 1,461,996 | - | - | 7,047,560 | ||||||||||||||||||
| Comprehensive income (loss) | - | - | - | 3,281 | (2,565,354 | ) | (2,562,073 | ) | ||||||||||||||||
| Balance, September 30, 2019 | 2,100,865,913 | $ | 30,123,701 | $ | 109,560,217 | $ | (402,093 | ) | $ | (136,031,368 | ) | $ | 3,250,457 |
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Share Capital | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | Income (Loss) | Deficit | Total | |||||||||||||||||||
| Balance, December 31, 2017 | 1,525,693,393 | $ | 22,927,534 | $ | 104,799,550 | $ | (236,246 | ) | $ | (110,336,867 | ) | $ | 17,153,971 | |||||||||||
| Stock-based compensation | - | - | 475,958 | - | - | 475,958 | ||||||||||||||||||
| Comprehensive income (loss) | - | - | - | 32,799 | (1,338,575 | ) | (1,305,776 | ) | ||||||||||||||||
| Balance, March 31, 2018 | 1,525,693,393 | 22,927,534 | 105,275,508 | (203,447 | ) | (111,675,442 | ) | 16,324,153 | ||||||||||||||||
| Stock-based compensation | - | - | 351,981 | - | - | 351,981 | ||||||||||||||||||
| Comprehensive loss | - | (27,188 | ) | (8,022,196 | ) | (8,049,384 | ) | |||||||||||||||||
| Balance, June 30, 2018 | 1,525,693,393 | 22,927,534 | 105,627,489 | (230,635 | ) | (119,697,638 | ) | 8,626,750 | ||||||||||||||||
| Stock-based compensation | - | - | 403,769 | - | - | 403,769 | ||||||||||||||||||
| Issuance of share capital to directors | 20 | - | - | - | - | - | ||||||||||||||||||
| Issuance of share capital related to financing, net of issuance costs | 55,000,000 | 723,743 | 207,829 | - | - | 931,572 | ||||||||||||||||||
| Comprehensive loss | - | - | - | (65,848 | ) | (3,593,255 | ) | (3,659,103 | ) | |||||||||||||||
| Balance, September 30, 2018 | 1,580,693,413 | $ | 23,651,277 | $ | 106,239,087 | $ | (296,483 | ) | $ | (123,290,893 | ) | $ | 6,302,988 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS - UNAUDITED
For the Nine Months Ended September 30,
| Nine Months Ended | ||||||||
| September 30, 2019 | September 30, 2018 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (9,227,720 | ) | $ | (12,954,026 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 14,892 | 28,230 | ||||||
| Stock-based compensation | 941,446 | 1,231,708 | ||||||
| Changes in fair value of option and warrant liabilities and warrants- losses (gains) | 12,594 | (2,077,128 | ) | |||||
| Foreign currency exchange losses (gains) | 67,922 | (71,500 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Tax credit receivable | (2,902,987 | ) | - | |||||
| Prepaid expenses and other current assets | 364,594 | (676,120 | ) | |||||
| Accounts payable and accrued expenses | 1,275,245 | (3,650,919 | ) | |||||
| Other liabilities | - | 156,844 | ||||||
| Total adjustments | (226,294 | ) | (5,058,885 | ) | ||||
| Net Cash Used in Operating Activities | (9,454,014 | ) | (18,012,911 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of letter of credit | - | (379,075 | ) | |||||
| Net Cash Used in Investing Activities | - | (379,075 | ) | |||||
| Cash Flows from Financing Activities: | ||||||||
| Net proceeds from issuance of shares | 9,871,886 | 346,572 | ||||||
| Net Cash Provided by Financing Activities | 9,871,886 | 346,572 | ||||||
| Effect of Exchange Rates on Cash and Restricted Cash | (117,172 | ) | 12,088 | |||||
| Net Increase (Decrease) in Cash and Restricted Cash | 300,700 | (18,033,326 | ) | |||||
| Cash and Restricted Cash, beginning of period | 5,967,967 | 28,106,671 | ||||||
| Cash and Restricted Cash, end of period | $ | 6,268,667 | $ | 10,073,345 | ||||
| Supplemental Disclosures of Non-Cash Financing Activities: | ||||||||
| Deferred financing costs | $ | 182,958 | $ | 585,000 |
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 or leukotriene system
and the bioamine system for the treatment of rare and orphan diseases. The Company's activities since inception have consisted
of raising capital and performing research and development activities.
To fund its capital needs, the Company
plans to raise funds through equity or debt financings or other sources, such as strategic partnerships and alliance and licensing
arrangements, and in the long term, proceeds from sales of commercial product. As of September 30, 2019, the Company has an accumulated
deficit of $136,031,368 and cash of $6,268,667. On September 26, 2018, the Company entered into a securities purchase agreement
(the "Purchase Agreement") with Aspire Capital Fund, LLC ("Aspire Capital") which provides that, upon the
terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate
of $20.0 million of the Company's ADSs over the 30-month term of the Purchase Agreement (See Note 4). As of September 30,
2019, $13,401,405 remains available under the facility.
The Company believes its current capital
resources are sufficient to support its operations through the end of 2019 without giving effect to the sale of additional shares
to Aspire Capital under the Purchase Agreement. However, funds may not be available when the Company needs them, on terms that
are acceptable to it, or at all. These matters raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments to the carrying amounts and classifications of assets and liabilities
that would result if the Company was unable to continue as a going concern.
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. To fully execute its business plan, the Company
will need, among other things, to complete its research and development efforts and clinical and regulatory activities. These
activities may take several years and will require significant operating and capital expenditures in the foreseeable future. For
the three and nine months ended September 30, 2019, the Company reported a net loss of $2,565,353 and $9,227,720, respectively,
and expects to continue to incur substantial losses over the next several years during its development phase. There can be no
assurance that the Company's activities will be successful. In addition, the Company is subject to risks related to an active
U.S. Securities and Exchange Commission ("SEC") investigation. If the Company is not successful in these activities
or there is not a favorable resolution of the SEC investigation, it could delay, limit, reduce or terminate preclinical studies,
clinical trials or other research and development activities.
AKARI THERAPEUTICS, Plc
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS - UNAUDITED
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 SEC and assumes that the Company will continue to operate as a going concern. 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 and nine months ended September 30, 2019
and September 30, 2018, 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, 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 income (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, 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, restricted cash, tax credit receivable, prepaid expenses
and other current assets, deferred financing costs, accounts payable and accrued expenses approximate fair value due to their short-term
The Company's liabilities related
to options and warrants relate to RPC Pharma Limited ("RPC"), Akari's largest shareholder, and unregistered warrants
issued to investors and a placement agent in connection with the July 3, 2019 registered direct offering.