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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended Commission File No. 0-23047
March 31, 2000
SIGA Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3864870
(State or other jurisdiction of (IRS Employer Id. No.)
incorporation or organization)
420 Lexington Avenue, Suite 620
New York, NY 10170
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (212) 672-9100
Securities registered pursuant to Section 12(b) of the Act:
None
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0001 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|.
As of May 11, 2000 the registrant had outstanding 7,274,837 shares of Common
Stock.
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Part I
Financial Statements
Item 1. Financial Statements
SIGA TECHNOLOGIES, INC.
(A development stage company)
BALANCE SHEET
March 31, December 31,
2000 1999
------------ ------------
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents .................................................. $ 5,088,189 $ 1,758,541
Accounts receivable ........................................................ 26,266 47,570
Prepaid expenses ........................................................... 29,176 38,279
------------ ------------
Total current assets ...................................................... 5,143,631 1,844,390
Equipment, net ............................................................. 1,283,173 1,366,362
Other assets ............................................................... 147,002 147,002
------------ ------------
Total assets .............................................................. $ 6,573,806 $ 3,357,754
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable ........................................................... 136,629 248,962
Accrued expenses ........................................................... 206,396 104,096
Deferred revenue ........................................................... 35,000 --
Capital lease obligations .................................................. 288,992 280,092
------------ ------------
Total current liabilities ................................................. 667,017 633,150
------------ ------------
Convertible debt, net of discount .......................................... 289,545 --
Accrued interest ........................................................... 15,000 --
Capital lease obligations, net of current portion .......................... 444,749 520,424
------------ ------------
Total noncurrent liabilities .............................................. 749,294 520,424
------------ ------------
Commitments and contingencies .............................................. -- --
Stockholders' equity
Preferred stock ($.0001 par value, 10,000,000 shares authorized,
none issued and outstanding) ............................................. -- --
Common stock ($.0001 par value, 50,000,000 and 25,000,000 shares authorized,
7,254,837 and 6,602,712 issued and outstanding at March 31, 2000
and December 31, 1999, respectively) ..................................... 725 661
Additional paid-in capital ................................................. 21,590,932 16,855,499
Unearned compensation ...................................................... (144,250) --
Deficit accumulated during the development stage............................ (16,289,912) (14,651,980)
------------ ------------
Total stockholders' equity ................................................ 5,157,495 2,204,180
------------ ------------
Total liabilities and stockholders' equity ................................ $ 6,573,806 $ 3,357,754
============ ============
Balance sheet data at December 31, 1999 was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles.
The accompanying notes are an integral part of these financial statements
SIGA TECHNOLOGIES, INC.
(A development stage company)
STATEMENT OF OPERATIONS
For The Period
December 28,
1995 (Date of
Three months ended Inception) to
March 31, March 31,
2000 1999 2000
---------------------------- ------------
(unaudited) (unaudited) (unaudited)
Revenues - Research and development
contracts $ 80,800 $ 112,500 $ 1,725,361
---------------------------- ------------
Operating expenses
General and administrative (inclusive of non-cash compensation 811,232 525,085 8,674,738
of $159,072, $14,620, and $912,220 for the three months ended March 31, 2000 and
1999, and for the period December 28, 1995 to March 31, 2000, respectively)
Research and development (inclusive of non-cash compensation 762,927 553,704 8,429,908
of $223,000, $0, and $254,250 for the three months ended March 31, 2000 and
1999, and for the period December 28, 1995 to March 31, 2000, respectively)
(including amounts to related parties of $18,750 for each of the three months
ended March 31, 2000 and 1999)
Patent preparation fees 26,337 61,939 1,157,181
Settlement of litigation -- -- 97,969
---------------------------- ------------
Total operating expenses 1,600,496 1,140,728 18,359,796
---------------------------- ------------
Operating loss (1,519,696) (1,028,228) (16,634,435)
---------------------------- ------------
Interest income/(expense) (118,236) 56,848 277,863
Net gain on sale of securities -- 24,090 66,660
---------------------------- ------------
Net loss $ (1,637,932) $ (947,290) $(16,289,912)
---------------------------- ------------
Other comprehensive income
Unrealized gains on available for sale securities -- 19,636 --
---------------------------- ------------
Comprehensive income/(loss) $ (1,637,932) $ (927,654) $(16,289,912)
Basic and diluted loss per share $ (0.25) $ (0.14)
============================
Weighted average common shares outstanding used
for basic and diluted loss per share 6,649,290 6,577,712
============================
The accompanying notes are an integral part of these financial statements
SIGA TECHNOLOGIES, INC.
(A development stage company)
STATEMENT OF CASH FLOWS
For The Period
December 28,
1995 (Date of
Three Months Ended Inception) to
March 31, March 31, March 31,
2000 1999 2000
--------------------------------------------
(unaudited) (unaudited) (unaudited)
Cash flows from operating activities:
Net loss $ (1,637,932) $ (947,290) $(16,289,912)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 90,282 92,459 685,079
Stock, options & warrant compensation 357,072 14,620 1,141,470
Loss on write-off of capital equipment -- -- 97,969
Amortization of debt discount 110,041 -- 243,041
Write-off of in-process research and development -- 1,457,458
Realized gain on sale of marketable securities -- (24,090) (66,660)
Changes in assets and liabilities:
Accounts receivable 21,304 -- (26,266)
Prepaid expenses and other current assets 9,103 21,943 (29,176)
Other assets -- -- (147,002)
Accounts payable and accrued expenses (127,033) (64,877) 226,025
Deferred revenue 35,000 -- 35,000
Accrued interest 15,000 -- 15,000
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Net cash used in operating activities (1,127,163) (907,235) (12,657,974)
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Cash flows from investing activities:
Capital expenditures (7,093) (54,584) (2,066,221)
Sale (purchase) of minority interest -- -- 66,660
Proceeds from sale of securities -- 84,747 --
--------------------------------------------
Net cash flow used in investing activities (7,093) 30,163 (1,999,561)
--------------------------------------------
Cash flows from financing activities:
Net proceeds from issuance of common stock 3,000,000 -- 17,480,056
Receipts of stock subscriptions outstanding -- -- 1,248
Gross proceeds from sale of convertible debentures 1,500,000 -- 1,500,000
Proceeds from exercise of stock options 31,005 -- 31,005
Net proceeds from sale of warrants 52,174 -- 52,174
Convertible debentures and warrants issuance costs (52,500) -- (52,500)
Proceeds from bridge notes -- -- 1,000,000
Repayment of bridge notes -- -- (1,000,000)
Proceeds from sale and leaseback of equipment -- -- 1,139,085
Principal payments on capital lease obligations (66,775) (74,992) (405,344)
--------------------------------------------
Net cash provided from financing activities 4,463,904 (74,992) 19,745,724
--------------------------------------------
Net increase in cash and cash equivalents 3,329,648 (952,064) 5,088,189
Cash and cash equivalents at beginning of period 1,758,541 4,966,873 --
--------------------------------------------
Cash and cash equivalents at end of period $ 5,088,189 $ 4,014,809 $ 5,088,189
============================================
The accompanying notes are an integral part of these financial statements
SIGA Technologies, Inc.
NOTES TO THE MARCH 31, 2000 FINANCIAL STATEMENTS
1. Basis of Presentation
The financial statements of Siga Technologies, Inc. (the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the rules of the Securities and Exchange Commission
(the "SEC") for quarterly reports on form 10-QSB and do not include all of the
information and footnote disclosures required by generally accepted accounting
principles for complete financial statements. These statements should be read in
conjunction with the Company's audited financial statements and notes thereto
for the year ended December 31, 1999, included in the 1999 Form 10-KSB/A.
In the opinion of management, the accompanying unaudited financial statements
include all adjustments, consisting of normal adjustments, necessary for a fair
presentation of results of operations for the interim periods. The results of
operations for the three months ended March 31, 2000 are not necessarily
indicative of the results of operations to be expected for the full year ending
December 31, 2000.
2. Change of Name
In January 2000, at the Annual Meeting of the Company's stockholders, the
stockholders of the Company approved the change of the Company's name from Siga
Pharmaceuticals, Inc., to Siga Technologies, Inc.
3. New Accounting Pronouncements
On December 6, 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101, Revenue Recognition ("SAB 101"), which provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements filed with the SEC. SAB 101 outlines the basic criteria that must be
met to recognize revenue and provides guidance for disclosures related to
revenue recognition policies. Management is in the process of evaluating the
future effect of SAB 101 on the Company's financial statements.
4. License and Research Support Agreements
In February of 1998, the Company entered into a research collaboration and
license agreement with Washington University (the "University"), under which the
Company was granted an exclusive world-wide license to make, use and sell
products derived from the licensed technology, in exchange for royalty
payments and certain milestone payments. In 1999, a dispute arose between the
Company, the University and a consultant of the University regarding, among
other things, the performance of the parties under the agreements. In February
of 2000 the parties reached a settlement agreement
and mutual release of their obligations under the research collaboration and
licensing agreement entered into in February of 1998. Further, all personal
consulting agreements between the Company and Washington University faculty
members and employees were terminated. Under the terms of the settlement
agreement any payments owed by the Company under the research collaboration and
licensing agreement and any consulting agreements with the University faculty
members were cancelled
In March 2000 the Company entered into an agreement with the Ross Products
Division of Abbott Laboratories (Ross), under which the Company granted Ross an
exclusive option to negotiate an exclusive license to certain Company technology
and patents, in addition to certain research development services. In exchange
for the research services and the option, Ross is obligated to pay the Company
$120,000 in three installments of $40,000. The first payment of $40,000 was
received during the quarter ended March 31, 2000. The remaining installments are
contingent upon meeting certain milestones under the agreement. In the quarter
ended March 31, 2000, the Company recognized revenue of $5,000 and deferred the
remaining $35,000.
5. Stockholders' Equity
In January 2000 the stockholders of the Company approved an increase in the
number of authorized shares from 25,000,000 to 50,000,000.
In January 2000 the Company completed a private placement of 6% convertible
debentures at an aggregate principal amount of $1,500,000 and 1,043,478 warrants
to purchase shares of the Company's common stock. The Company received net
proceeds of $1,499,674 from the total $1,552,174 gross proceeds raised. The
debentures are convertible into common stock at $1.4375 per share. Interest at
the rate of 6% per annum is payable on the principal of each convertible
debenture in cash or shares of the Company's common stock, at the discretion of
the Company upon conversion or at maturity. The warrants have a term of five
years and are exercisable at $3.4059 per share. The Company has the right to
require the holder to exercise the warrants within five days under the following
circumstances: (i) a registration statement is effective; and (ii) the closing
bid price for the Company's common stock, for each of any 15 consecutive trading
days is at least 200% of the exercise price of such warrants. If the holder does
not exercise the warrants after notice is given, the unexercised warrants will
expire. In connection with the placement of the debentures and warrants, the
Company recorded debt discount of approximately $1.0 million. Such amount
represents the value of the warrants calculated using the Black-Scholes
valuation model. The discount is amortized over the term of the debentures.
In connection with this transaction, the Company issued warrants to purchase a
total of 275,000 shares of common stock to the placement agent and the
investors' counsel (or their respective designees). These warrants have a term
of five years and are exercisable at $1.45 per share. In connection with the
issuance of such warrants, the Company recorded a deferred charge of $280,653,
which is amortized over the term of the debentures.
In March 2000 the Company raised gross proceeds of $3,000,000 in a private
offering of common stock and warrants to purchase shares of the Company's common
stock. The Company sold 600,000 shares of common stock and 450,000 warrants.
210,000, 120,000 and 120,000 of the warrants are exercisable at $5.00, $6.375
and $6.90, respectively. The warrants have a term of three years and are
redeemable at $0.01 each by the Company upon meeting certain conditions.
Offering expenses of $117,000 were paid in April 2000.
6. Employment Agreements
In January 2000, the Company entered into new employment agreements with its
Chief Executive Officer and its Chairman (the "EVPs"), expiring in January 2005.
The new agreements provide for a base salary of $250,000, with annual increases
of at least 5%. In addition, both of the EVPs were granted fully-vested options
to purchase 500,000 shares of the Company's common stock at $2.00 per share.
Under the provisions of the agreements the EVPs would each receive a cash
payment equal to 1.5% of the total consideration received by the Company in a
transaction resulting in a greater than 50% change in ownership of the
outstanding common stock of the Company.
In January 2000, the Company and its Chief Financial Officer ("CFO") entered
into an amendment to the CFO's employment agreement, extending his employment
until April 2002. Under this amendment, the CFO received options to purchase
100,000 shares of the Company's common stock at $2.00 per share. The options
vest ratably over two years and expire in January 2010.
7. Consulting Agreements
In January 2000 the Company entered into a one year consulting agreement with a
member of its Board of Directors. In exchange for the consulting services, the
Company granted the member of the Board warrants to purchase 50,000 shares of
common stock at an exercise price of $1.00. The warrants vested immediately and
will become exercisable on January 19, 2001. During the quarter ended March 31,
2000, the Company recorded a non-cash charge associated with such warrants in
the amount of $17,000.
In September 1999 the Company entered into a consulting agreement with one of
its directors under which the director provides the Company with business
valuation services in exchange for warrants to purchase 100,000 shares of the
Company's common stock at an exercise price of $1.00 per share. Of these
warrants, 50,000 vested on the date of the grant and the remaining 50,000 will
vest on the first anniversary of the agreement. The Company recognized non-cash
compensation expense of $127,452 in the quarter ended March 30, 2000 related to
such warrants.
8. Product Development Agreement
In March 2000, the Company entered into an agreement with Open-i Media, Inc., a
software and web development company (the "Development Company") for creative
and technical services, and for business strategy consulting. In exchange, the
Company will pay the Development Company $280,000 and grant it 13,605 shares,
each payable in three installments. In the quarter ended March 31, 2000, the
Company paid $140,000 in
cash, and recorded an additional charge of $25,000 in connection with shares of
common stock to be issued under the agreement.
9. Segments
For the period ended March 31, 2000, the Company's operations were principally
managed in two business segments: pharmaceutical research and development, and
an Internet initiative. For this period, the Internet segment had no revenue,
and generated operating expenses of approximately $538,000. The Internet segment
had identifiable assets of approximately $88,000 at March 31, 2000.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
We have included in this filing certain "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
if should be of. Section 21E of the Securities Exchange Act of 1934, as amended.
The words or phrases "can be", "expects", "may affect", "may depend",
"believes", "estimate", "project", and similar words and phrases are intended to
identify such forward-looking statements. Such forward-looking statements are
subject to various known and unknown risks and uncertanties and we caution you
that any forward-looking information provided by or on behalf of Siga is not a
guarantee of future performance. Our actual results could differ materially from
those anticipated by such forward-looking statements due to a number of factors,
some of which are beyond our control, in addition to those risks discussed below
and in our other public filings, press releases, and statements by our
management, including (i) the volatile and competitive nature of the
biotechnology and Internet industries, (ii) changes in domestic and foreign
economic and market conditions, and (iii) the effect of federal, state and
foreign regulation on our businesses. All such forward-looking statements are
current as of the date on which such statements were made. We do not undertake
any obligation to publicly update any forward-looking statement to reflect
events or circumstances after the date on which any such statement is made or to
reflect the occurance of unanticipated events.
Overview
We are a development stage technology company, whose primary focus is in
biopharmaceutical product development. Since inception in December 1995 our
efforts have been principally devoted to research and development, securing
patent protection, obtaining corporate relationships and raising capital. In
October of 1999, we began the development of a strategic alternative outside the
biotechnology area with an agreement with Open-i Media, Inc. ("Open-i"), a New
York based software and web developer to develop an instant messenger product to
be used over the Internet. Since inception through March 31, 2000, we have
sustained cumulative net losses of $16,289,912, including non-cash charges in
the amount of $1,457,458 for the write-off of research and development expenses
associated with the acquisition of certain technology rights from a third party
in exchange for our common stock. In addition, non-cash charges of $1,166,470
have been incurred for stock option and warrant compensation expense. Our losses
have resulted primarily from expenditures incurred in connection with research
and development, patent preparation and prosecution and general and
administrative expenses. From inception through March 31, 2000, research and
development expenses amounted to $8,429,908, patent preparation and prosecution
expenses totaled $1,157,181 and general and administration expenses amounted to
$8,674,738 From inception through March 31, 2000 revenues from research and
development agreements and government grants totaled $1,725,361.
In October of 1999, we entered into an agreement with Open-i for the
development and acquisition of the source code for a client/server chat and
instant messaging application. In March 2000, we entered into a second agreement
whereby Open-i will provide certain consulting and management services
associated with the development of our instant messenger product. Through March
31, 2000, we have paid Open-i $300,000 in cash for development work on an
instant messenger product. In addition they have received 62,500 shares of Siga
common stock under the terms of our development agreements with them. Through
March 31, 2000 we have incurred cash expenses of approximately $631,972,
including payments to Open-i, for the development of our instant messenger
product. In addition we have incurred non-cash expenses of approximately
$254,000 for shares issued to Open-i in connection with our development
agreements with them. We expect to continue to incur substantial costs in the
future associated with the development and marketing of our Internet product.
General and administrative expenses needed to support the product development
and marketing effort are also expected to be substantial.
At the time we announced our decision to develop our instant messenger
product, we also announced that we would consolidate our biotechnology assets
and operations in our research facility in Corvallis Oregon. Our goal is to fund
our ongoing vaccine and antibiotic programs through a combination of government
grants, corporate partnerships and strategic alliances. No assurance can be
given that we will be successful in obtaining funds from these sources. Until
such relationships are established, we expect to continue to incur significant
research and development costs and cost associated with the manufacturing of
product for use in clinical trials and pre-clinical testing. It is expected that
general and administrative costs, including patent and regulatory costs,
necessary to support clinical trials and research and development will continue
to be significant in the future.
To date, we have not marketed, or generated revenues from the commercial
sale of any products. Our biopharmaceutical product candidates are not expected
to be commercially available for several years if at all. Accordingly, we expect
to incur operating losses for the foreseeable future. There can be no assurance
that we will ever achieve profitable operations.
Results of Operations
Three months ended March 31, 2000 to the three months ended March 31, 1999
Revenues from grants and research and development contracts were $80,800
for the three months ended March 31, 2000 compared to $112,500 for the same
three month period of 1999. The decline in revenues from the 1999 three month
period was approximately 28.2%. Revenue in the three months ended March 31, 1999
were the result of an agreement entered into in July of 1997 with Wyeth-Ayerst,
under which we received certain payments for research and development activities
sponsored by Wyeth-Ayerst. In the three months ended March 31, 2000 no payments
were received under the Wyeth-Ayerst agreement. Revenues in this period were
from a Phase I Small Business Innovation research (SBIR) grant from the National
Institutes of Health (NIH) and an option agreement with the Ross Products
Division of Abbott Laboratories.
Research and development expenses increased to $762,927 for the three
months ended March 31, 2000 from $553,704 for the same period in 1999. The
approximate 37.8% increase in spending from the three months ended March 31,
1999 was due to activity associated with expenses incurred in association with
the development of an instant messenger product. During the three months ended
March 31, 2000, we incurred expenses of approximately $423,000 for instant
messenger product development including non-cash charges of $223,000 for common
stock issued to Open-i Media under our agreements with them. We incurred no such
expenses for the three months ended March 31, 1999. Research and development
expenses on our biopharmaceutical business segment were $339,927 for the three
months ended March 31, 2000, a 38.6% reduction from the $553,704 incurred in the
three months ended March 31, 1999. The reduction is the result of the reduced
use of universities and other third parties in our research efforts.
General and administrative expenses increased approximately 54.5% for the
three months ended March 31, 2000 to $811,232 from $525,085 for the three months
ended March 31, 1999. The increase in spending is the result of the addition of
personnel to manage our instant messenger product development activity combined
with non-cash charges of $144,452 for warrant expense associated with consulting
agreements with two of our directors. Excluding the non-cash charges, general
and administrative expenses increased approximately 27% in the three months
ended March 31, 2000 compared to the prior year.
Patent preparation expense of $26,337 for the three months ended March 31,
2000 was approximately 57.5% lower than the $61,939 incurred for the three
months ending March 31, 1999. The decline in spending reflects the continuance
of the trend to reduce patent costs by focusing on our core biopharmaceutical
technologies, eliminating programs that we feel have less commercial value, and
not acquiring new technologies.
Total operating loss for the three months ended March 31, 2000 was
$1,519,696, an approximate 47.8% increase from the $1,028,228 loss incurred for
the three months ended March 31, 1999. The increase in the operating loss is the
result of increased research and development spending associated with our
instant messenger product development and higher general and administrative cost
for the management of this business initiative. The loss for the three months
ended March 31, 2000 include approximately $367,452 of non-cash expenses as
described above. We incurred no such non-cash expenses in the three months ended
March 31, 1999.
Net interest expense for the three months ended March 31, 2000 was
$118,236 compared to interest income of $56,848 for the three months ended March
31, 1999. The increase in interest expense is due to the accrual of interest
associated with our sale of $1,500,000 of 6% convertible debentures in January
of 2000. Further, the lower level of net interest income is the result of the
decrease in the cash available for investment in the current year period as the
funds raised in our September 1997 initial public offering (IPO) were expended
in accordance with our development plan.
We recorded a net gain of $24,090 for the three months ended March 31,
1999 from the sale of certain securities held for investment purposes. No such
income was received in the three months ended March 31, 2000.
Net loss per common share of $.25 for the three months ended March 31,
2000 was approximately 79% greater than the $.14 loss per share for the three
months ended March 31, 1999. The increase in the loss per share is the result of
higher general and administrative and research and development expenses
associated with our development of our instant messenger product. The increase
in the loss per share was also due to the interest expense incurred in
connection with the sale of $1,500,000 of 6% convertible debentures.
Liquidity and Capital Resources
As of March 31, 2000 we had $5,088,189 in cash and cash equivalents. In
July, August and September of 1998 we sold certain laboratory equipment,
computer equipment and furniture to a third party, for $493,329, $385,422 and
$260,333, respectively, under sale/leaseback arrangements. The leases have a
term of 42 months and require minimum monthly payments of $13,171, $10,290 and
$6,950, respectively. We have an option to purchase the equipment for Fair
Market Value (defined in the agreement as 15% of original cost) at the end of
the lease. In July of 1997 we entered into a collaborative research and license
agreement with Wyeth-Ayerst. Under the terms of the agreement, we have granted
Wyeth-Ayerst an exclusive worldwide license to develop, make, use and sell
products derived from specified technologies. If certain milestones are met, the
agreement requires Wyeth-Ayerst to sponsor further research by us for the
development of the licensed technologies for a period of two years from the
effective date of the agreement, in return for payments to Siga. Through March
31, 2000 we have received a total of $1,462,500 from Wyeth-Ayerst. In July and
October of 1999 we were awarded SBIR grants from the NIH. The grant received in
July was for a six month program for a total of $109,072. As of March 31, 2000
we had received all $109,072. The October grant is a twelve month program for a
total of $293,466, of which $122,253 was received at March 31, 2000. The
remaining $170,943 due under the grants is expected be received during the
twelve months ending December 31, 2000.
In January of 2000 we sold an aggregate principal amount of $1,500,000 6%
convertible debentures due January 2002 with warrants to purchase 1,043,478
shares of common stock. We received net proceeds of $1,499,674 from the total
$1,552,174 gross proceeds. The interest on the debentures is payable in either
cash or stock at our discretion. The debentures are convertible into common
stock at $1.44 per share. The warrants have a term of five years and are
exercisable at $3.41 per share. We can require the holders to exercise the
warrants under certain circumstances.
In February of 2000 we entered into an Option Agreement with the Ross
Products Division of Abbott Laboratories (Ross). The Agreement grants Ross an
exclusive option to negotiate an exclusive license to certain Siga technology
and patents in addition to certain research development services. In exchange
for research services and the Option, Ross is obligated to pay us $120,000 in
three installments of $40,000. The first payment of $40,000 was received during
the quarter ended March 31, 2000. The remaining installments are contingent upon
certain milestones under the agreement. In the quarter ended March 31, 2000, we
recognized revenue of $5,000 and deferred the remaining $35,000.
On March 28, 2000 we completed a private placement of an aggregate of
600,000 shares of common stock and 450,000 warrants. We received net proceeds of
$2,883,000 from the total gross proceeds of $3,000,000. The warrants have a term
of three years; 210,000 warrants are exercisable at $5.00 per share, 120,000 are
exercisable at $6.375 per share and 120,000 are exercisable at $6.90 per share.
In April 2000 we received $225,000 from Wyeth-Ayerst to further support
our research and development on the programs begun under our July 1997 agreement
with Wyeth-Ayerst.
We anticipate that our current resources will be sufficient to finance our
currently anticipated needs for operating and capital expenditures approximately
through the end of the second quarter of 2001. In addition, we will attempt to
generate additional working capital through a combination of collaborative
agreements, strategic alliances, research grants, equity and debt financings.
However, no assurance can be provided that additional capital will be obtained
through these sources or, if obtained, on commercially reasonable terms. If we
are unable to raise additional capital when needed, we may be forced to curtail
certain activities and programs or possibly cease operations altogether.
Our working capital and capital requirements will depend upon numerous
factors, including progress of the development of our instant messenger product
and the success of the product in the market, pharmaceutical research and
development programs; pre-clinical and clinical testing; timing and cost of
obtaining regulatory approvals; levels of resources that we devote to the
development of manufacturing and marketing capabilities; technological advances;
status of competitors; and our ability to establish collaborative arrangements
with other organizations.
The Year 2000
To date, we have not experienced any disruptions in our operations as a
result of the impact of the year 2000 on the ability of our computerized
information systems to accurately process information that may be date
sensitive. In addition, there has not been any impact on our operations from
disruptions that may have occurred at third parties due to the year 2000.
Part II
Other Information
Item 1. Legal Proceedings
In February of 1998, we entered into a research collaboration and license
agreement with Washington University. Under the terms of the agreement, we were
granted an exclusive world-wide license to make, use and sell products derived
from the licensed technology, in exchange for royalty payments equal to a
certain percentage of net sales of products incorporating the licensed
technology, and certain milestone payments. In addition, we agreed to sponsor
further research by the University for the development of the licensed
technology. In July 1997, we entered into a separate consulting agreement with a
faculty member of the University. A dispute arose between Siga and the
University and the consultant regarding, among other things, the performance of
the parties under the agreements. In May 1999, the University sent us notice of
intent to terminate the agreement in 90 days claiming certain payments were not
made. It was our position that, among other things, such payments are not owed
due to the University's failure to perform. Under the arbitration clause of the
agreement, the University, in July 1999, commenced an arbitration seeking an
award in the amount of $230,000. We also commenced an arbitration seeking a
determination that such amount is not owed the University and seeking our own
award of $5 million. In February 2000 the parties reached a settlement agreement
and mutual release of their obligations under the research collaboration and
licensing agreement entered into in February of 1998. Further, all personal
consulting agreements between Siga and Washington University faculty members and
employees were also terminated. Under the terms of the settlement agreement any
payments owed by Siga under the research collaboration and licensing agreement
are cancelled. In addition, all payments owed faculty members under consulting
agreements are also cancelled. The University will reimburse Siga $37,037 for
certain patent expenses incurred under the research collaboration. We have
disclaimed any rights to patents licensed under the February 1998 agreement.
however, if the University successfully commercializes any of the patents, they
agree to pay Siga licensing revenue arising from products commercialized. As
part of the settlement agreement and mutual release Siga and the University
entered into a non-exclusive license of certain patents that were part of the
research collaboration
Item 2. Changes in Securities and Use of Proceeds.
In January 2000 we sold an aggregate principal amount of $1,500,000 6%
convertible debentures and 1,043,478 warrants. We received net proceeds of
$1,499,674 from the total $1,552,174 gross proceeds. The debentures are
convertible into common stock at any time prior to January 31, 2002 at $1.4375
per share. The warrants are exercisable at any time prior to January 31, 2005 at
an exercise price of
$3.4059 per share. In connection with this transaction, we issued warrants to
purchase a total of 275,000 shares of common stock to the placement agent and
investors' counsel. These warrants are exercisable at any time prior to January
31, 2005 at an exercise price of $1.45 per share.
On March 28, 2000 we sold an aggregate of 600,000 shares of common stock
and 450,000 warrants. We received net proceeds of $2,883,000 from the total
gross proceeds of $3,000,000. The warrants are exercisable at any time until
March 28, 2003. The 210,000 Class B warrants are exercisable at $5.00 per share,
the 120,000 Class C warrants are exercisable at $6.375 per share and the 120,000
Class D warrants are exercisable at $6.90 per share.
Exemption from registration for the transactions described above was
claimed pursuant to Section 4(2) of the Securities Act of 1933, as amended,
regarding transactions by the issuer not involving a public offering, in that
these transactions were made, without general solicitation or advertising to
accredited investors.
Item 3. Defaults upon Senior Securities None
Item 4. Submission of Matters to a Vote of Security Holders
At our Annual Meeting of Stockholders held on January 17, 2000, the following
matters were voted upon:
The following nominees were elected to the Board of Directors:
Nominee For Number of Votes Against Abstained
------- --- ----------------------- ---------
Joshua D. Schein 3,458,664 2,800 0
Judson A. Cooper 3,458,664 2,800 0
Jeffrey Rubin 3,458,664 2,800 0
Scott Eagle 3,458,664 2,800 0
Thomas Lanier 3,458,664 2,800 0
The stockholder's voted to amend the 1996 Incentive and Non-Qualified
Stock Plan authorizing the issuance of an additional 666,667 shares under
the Plan.
Votes For Votes Against Abstained
--------- ------------- ---------
3,436,764 17,200 7,500
The stockholder's voted to amend the Certificate of Incorporation to
change the corporate name to Siga Technologies, Inc.
Votes For Votes Against Abstained
--------- ------------- ---------
3,458,264 3,200 0
The stockholder's voted to amend the Certificate of Incorporation to
increase the authorized capital by 25,000,000 shares to 50,000,000 shares
of common stock.
Votes For Votes Against Abstained
--------- ------------- ---------
3,439,814 21,450 200
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on it's behalf by the
undersigned, thereunto duly authorized.
SIGA Technologies, Inc.
(Registrant)
Date: May 15, 2000 By: /s/ Thomas N. Konatich
---------------------------
Thomas N. Konatich
Chief Financial Officer
(Principal Accounting and
Financial Officer and Vice
President, Finance)
5
3-MOS
DEC-31-2000
JAN-01-2000
MAR-31-2000
5,088,189
0
26,266
0
0
5,143,631
1,928,735
645,562
6,573,806
667,017
0
0
0
725
5,156,770
6,573,806
0
80,800
0
0
1,600,496
0
118,236
(1,637,932)
0
(1,637,932)
0
0
0
(1,637,932)
(0.25)
(0.25)
