================================================================================
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
September 30, 2003
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 601
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 November 10, 2003 the registrant had outstanding 18,676,851 shares of
common stock.
================================================================================
Part I
Financial Information
Item 1. Financial Statements
SIGA TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET - UNAUDITED
September 30, December 31,
2003 2002
------------- ------------
ASSETS
Current Assets
Cash and cash equivalents ........................................................... $ 1,156,821 $ 2,069,004
Accounts receivable ................................................................. 70,065 60,151
Prepaid expenses .................................................................... 107,388 104,227
------------ ------------
Total current assets ............................................................... 1,334,274 2,233,382
Equipment, net ...................................................................... 466,460 432,442
Goodwill ............................................................................ 898,334 --
Intangible assets, net .............................................................. 3,413,320 --
Other assets ........................................................................ 171,976 164,168
------------ ------------
Total assets ....................................................................... $ 6,284,364 $ 2,829,992
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable .................................................................... $ 847,635 $ 461,146
Accrued expenses and other .......................................................... 370,168 184,554
Capital lease obligations ........................................................... -- 11,206
------------ ------------
Total liabilities .................................................................. 1,217,803 656,906
Commitments and contingencies
Stockholders' equity
Series A convertible preferred stock ($.0001 par value, 10,000,000 shares
authorized, 78,282 and 410,760 issued and outstanding at September 30, 2003
and December 31, 2002, respectively) ................................................ 72,666 443,674
Common stock ($.0001 par value, 50,000,000 shares authorized,
17,161,702 and 12,902,053 issued and outstanding at September 30, 2003
and December 31, 2002, respectively) .............................................. 1,716 1,293
Additional paid-in capital .......................................................... 38,186,787 32,051,461
Stock subscriptions outstanding ..................................................... -- (791,940)
Accumulated deficit ................................................................. (33,194,608) (29,531,402)
------------ ------------
Total stockholders' equity ......................................................... 5,066,561 2,173,086
------------ ------------
Total liabilities and stockholders' equity ......................................... $ 6,284,364 $ 2,829,992
============ ============
The accompanying notes are an integral part of these financial statements.
SIGA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS - UNAUDITED
Three months ended Nine months ended
September 30, September 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------
Revenues
Research and development contracts ................ $ 176,342 $ 89,738 $ 625,016 $ 229,057
------------- ------------- ------------- -------------
Operating expenses
General and administrative ........................ 684,223 273,280 1,993,007 1,282,040
Research and development .......................... 1,000,911 423,850 2,121,154 1,194,453
Patent preparation fees ........................... 65,003 26,918 187,109 72,332
------------- ------------- ------------- -------------
Total operating expenses ........................ 1,750,137 724,048 4,301,270 2,548,825
------------- ------------- ------------- -------------
Operating loss .................................. (1,573,795) (634,310) (3,676,254) (2,319,768)
Interest income, net ................................... 3,336 4,672 13,048 26,447
------------- ------------- ------------- -------------
Net loss ........................................ $ (1,570,459) $ (629,638) $ (3,663,206) $ (2,293,321)
============= ============= ============= =============
Weighted average shares outstanding: basic and diluted . 16,825,628 10,174,256 14,769,960 10,151,268
============= ============= ============= =============
Net loss per share: basic and diluted .................. $ (0.09) $ (0.06) $ (0.25) $ (0.23)
============= ============= ============= =============
The accompanying notes are an integral part of these financial statements.
SIGA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS - UNAUDITED
Nine months ended
September 30,
2003 2002
------------------------------
Cash flows from operating activities:
Net loss $(3,663,206) $(2,293,321)
Adjustments to reconcile net loss to net
cash used in operating activities:
Bad debt expense 14,000 --
Depreciation 262,053 236,646
Amortization of intangible assets 225,680 --
Stock, options & warrant compensation 1,375 73,677
Changes in assets and liabilities:
Accounts receivable (23,914) (36,940)
Prepaid expenses (3,161) 67,176
Other assets (7,808) 4,063
Accounts payable and accrued expenses (328,069) 59,466
------------------------------
Net cash used in operating activities (3,523,050) (1,889,233)
------------------------------
Cash flows from investing activities:
Capital expenditures (268,360) (36,701)
------------------------------
Net cash used in investing activities (268,360) (36,701)
------------------------------
Cash flows from financing activities:
Net proceeds from issuance of common stock 2,098,493 --
Receipts of stock subscriptions outstanding 791,940 --
Proceeds from exercise of options -- 562
Principal payments on capital lease obligations (11,206) (139,580)
------------------------------
Net cash provided from (used in) financing activities 2,879,227 (139,018)
------------------------------
Net decrease in cash and cash equivalents (912,183) (2,064,952)
Cash and cash equivalents at beginning of period 2,069,004 3,148,160
------------------------------
Cash and cash equivalents at end of period $ 1,156,821 $ 1,083,208
==============================
Supplemental information of business acquired:
Fair value of assets acquired:
Equipment $ 27,711
Intangible assets 3,639,000
Goodwill 898,334
Less, liabilities assumed and non-cash consideration:
Current liabilities (494,142)
Stock issued (3,409,000)
Stock options and warrants issued (255,873)
Accrued acquisition costs (406,030)
Non cash supplemental information:
Conversion of preferred stock to common stock $ 371,008
The accompanying notes are an integral part of these financial statements.
Notes to the September 30, 2003 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 Forms 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, 2002, included in the 2002 Form 10-KSB.
The Company's activities since inception have consisted primarily of sponsoring
and performing research and development, performing business and financial
planning, preparing and filing patent applications and raising capital. Prior to
June 30, 2003, the Company's financial statements were presented as a
development stage company in accordance with Financial Accounting Standards
Board ("FASB") No. 7, "Accounting and Reporting by Development Stage
Enterprises." However, since December 2002, the Company has generated
significant revenues and is no longer considered to be in the development stage
under FASB No. 7.
In the opinion of management, the accompanying unaudited financial statements
include all adjustments, consisting of normal adjustments, necessary for the
fair presentation of the balance sheet and results of operations for the interim
periods. The results of operations for the three and nine months ended September
30, 2003 are not necessarily indicative of the results of operations to be
expected for the full year ending December 31, 2003.
The accompanying financial statements have been prepared on a basis which
assumes that the Company will continue as a going concern and which contemplates
the realization of assets and the satisfaction of liabilities and commitments in
the normal course of business. The Company has incurred cumulative net losses
and expects to incur additional losses to perform further research and
development activities. The Company does not have commercial biomedical products
and management believes that it will need additional funds to complete the
development of its biomedical products. Management's plans with regard to these
matters include continued development of its products as well as seeking
additional research support funds and financial arrangements. Although,
management continues to pursue these plans, there is no assurance that the
Company will be successful in obtaining sufficient financing on terms acceptable
to the Company. See Note 6 for recent Private Placement Offerings.
2. Significant Accounting Policies
Revenue Recognition
The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial Statements as amended by SAB 101A and
101B ("SAB 101"). SAB 101 requires that four basic criteria must be met before
revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2)
delivery has occurred or services rendered; (3) the fee is fixed and
determinable; and (4) collectibility is reasonably assured. Under the provisions
of SAB 101, the Company recognizes revenue from government research grants,
contract research and development and progress payments as services are
performed, provided a contractual arrangement exists, the contract price is
fixed or determinable, and the collection of the resulting receivable is
probable. Milestones, which generally are related to substantial scientific or
technical achievement, are recognized as revenue when the milestone is
accomplished.
Business Combinations, Goodwill and Intangible Assets
The Company accounts for business combinations in accordance with the provisions
of Statement of Financial Accounting Standards No. 141 "Business Combinations"
("SFAS 141"). SFAS 141 requires business combinations completed after June 30,
2001 to be accounted for using the purchase method of accounting. It also
specifies the types of acquired intangible assets required to be recognized and
reported separately from goodwill.
The Company accounts for goodwill in accordance with the provisions of Statement
of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets"
("SFAS 142"). Goodwill is not subject to amortization and is tested for
impairment annually, or more frequently if events or changes in circumstances
indicate that the asset may be impaired. The impairment test consists of a
comparison of the fair value of goodwill with its carrying amount. If the
carrying amount of goodwill exceeds its fair value, an impairment loss shall be
recognized in an amount equal to that excess. After an impairment loss is
recognized, the adjusted carrying amount of goodwill is its new accounting
basis. The annual impairment testing required under SFAS 142 requires management
to make assumptions and judgments regarding the estimated fair value of the
Company's goodwill. Such assumptions include the present value discount factor
used to determine the fair value of a reporting unit, which is ultimately used
to identify potential goodwill impairment. Such estimated fair values might
produce significantly different results if other reasonable assumptions and
estimates were to be used.
The Company accounts for long-lived assets such as non-compete agreements and
research contracts in accordance with the provisions of Statement of Financial
Accounting Standards No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"). SFAS 144 requires that long-lived assets be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of the asset may not be recoverable. The Company
compares the carrying amount of the asset to the estimated undiscounted future
cash flows expected to result from the
use of the asset. If the carrying amount of the asset exceeds estimated expected
undiscounted future cash flows, the Company records an impairment charge for the
difference between the carrying amount of the asset and its fair value. Changes
in events or circumstances impacting long-lived assets include, but are not
limited to, cancellations or terminations of research contracts or pending
government research grants.
Income taxes
Income taxes are accounted for under the asset and liability method prescribed
by Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Deferred income taxes are recorded for temporary differences between
financial statement carrying amounts and the tax basis of assets and
liabilities. Deferred tax assets and liabilities reflect the tax rates expected
to be in effect for the years in which the differences are expected to reverse.
A valuation allowance is provided if it is more likely than not that some or all
of the deferred tax asset will not be realized.
Accounting for stock based compensation
The Company has elected to account for its stock-based compensation programs
according to the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"). Accordingly, compensation
expense has been recognized to the extent of employee or director services
rendered based on the intrinsic value of compensatory options or shares granted
under the plans. The Company has adopted the disclosure provisions required by
Financial Accounting Standard No. 123, "Accounting for Stock-Based Compensation"
("SFAS 123"), as amended by SFAS 148, "Accounting for Stock-Based Compensation -
Transaction and Disclosure, an amendment to FASB Statement No. 123."
Had compensation cost for stock options granted been determined based upon the
fair value at the grant date for awards, consistent with the methodology
prescribed under SFAS 123, the Company's net loss and net loss per share would
have been as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Net loss, as reported ($1,570,459) ($629,638) ($3,663,206) ($2,293,321)
=============================== ================================
Add: Stock-based employee compensation expense -- $ 12,311 -- $ 36,933
recorded under APB No. 25
Deduct: Total stock-based employee
compensation expense determined under fair
value based method for all awards (75,055) (38,471) (578,059) (115,413)
------------------------------- --------------------------------
Pro forma net loss ($1,645,514) ($655,798) ($4,241,265) ($2,371,801)
=============================== ================================
Net loss per share:
Basic and diluted -as reported $ (0.09) $ (0.06) $ (0.25) $ (0.23)
=============================== ================================
Basic and diluted -pro forma $ (0.10) $ (0.06) $ (0.29) $ (0.23)
=============================== ================================
The fair value of the options granted to employees during 2003 and 2002 ranged
from $0.60 to $2.08 on the date of the respective grant using the Black-Scholes
option-pricing model. The following weighted average assumptions were used for
2003 and 2002: no dividend yield, expected volatility of 100%, risk free
interest rates of 3.22%-4.50% and an expected term of 3 to 5 years.
Recent Accounting Pronouncements
In January of 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
of Variable Interest Entities" (FIN 46). This interpretation provides guidance
on the identification of, and financial reporting for, entities over which
control is achieved through means other than voting rights. Such entities have
been termed by FIN 46 as variable interest entities (VIE). Once effective, FIN
46 will be the guidance that determines (1) whether consolidation is required
under the "controlling financial interest" model of ARB Bulletin No. 51,
"Consolidated Financial Statements", or (2) whether the variable-interest model
under FIN 46 should be used to account for existing and new entities. FIN 46
includes guidance for identifying the enterprise that will consolidate a VIE,
which is the enterprise that is exposed to the majority of an entity's risks or
receives the majority of the benefits from an entity's activities. FIN 46 also
requires that the enterprises that hold a significant variable interest in a VIE
make new disclosures in their financial statements. The transitional disclosures
of FIN 46, which are effective immediately, require an enterprise to identify
the entities in which it holds a variable interest, if the enterprise believes
that those entities might be considered VIEs upon the adoption of FIN 46. The
implementation and remaining disclosure requirements of FIN 46 are effective
immediately for VIEs created after January 31, 2003, and on the first reporting
period ending after December 15, 2003 for all VIEs created before January 31,
2003. The Company does not hold any interests in VIEs that would require
consolidation or additional disclosures.
In March of 2003, the Emerging Issues Task Force (EITF) issued EITF No. 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables". EITF No. 00-21
addresses how to determine whether a contractual arrangement involving multiple
deliverables contains more than one accounting unit and how consideration should
be measured and allocated to the separate accounting units. EITF No. 00-21
applies to all deliverables within contractually binding arrangements in all
industries, except to the extent that a deliverable in a contractual arrangement
is subject to other existing higher-level authoritative literature, and is
effective for revenue arrangements entered into after July 1, 2003. The adoption
of EITF No. 00-21 did not have a material effect on the Company's consolidated
results of operations or financial position.
3. Business Acquisition
On May 23, 2003, the Company acquired substantially all of the assets of Plexus
and assumed certain liabilities in exchange for 1,950,000 shares of the
Company's common stock and 190,950 of the Company's options and warrants at an
exercise price of $1.62 per share. Plexus is a structure-based rational vaccine
design and development company directed toward the convergence of structural
biology, pharmacogenomics and molecular immunology. Plexus is employing its
technologies to formulate and test a vaccine candidate for severe acute
respiratory syndrome, or "SARS". The results of operations of Plexus from May
23, 2003 through September 30, 2003 have been included in the statement of
operations of the combined entity. The Company is unaware of any events or
changes in circumstances that would indicate the carrying amount of the assets
may not be recoverable under SFAS 142 and SFAS 144.
In determining the non-cash purchase price of Plexus, the equity consideration
has been calculated based on Emerging Issues Task Force ("EITF") No. 99-12,
"Accounting for Formula Arrangements under EITF 95-19". For this calculation,
the Company used the average market price for a few days before and after May
14, 2003. Based on EITF 99-12, the value of the common stock issued was
approximately $3,409,000. The value attributed to the options and warrants
exchanged was approximately $255,873. In addition, loans made to Plexus,
payments made on behalf of Plexus prior to the asset purchase agreement and
costs incurred for the transaction amounted to $406,030.
The preliminary allocation of the total purchase price of $4,070,903 is as
follows:
Useful life Fair Value
Purchase Price $ 4,070,903
Add:
Equipment, net 3 - 7 years (27,711)
Liabilities assumed N/A 494,142
-----------
Total Intangible Value $ 4,537,334
Less:
Acquired technology 10 years $ 2,191,000
Contracts and grants 3 1/2 years 741,000
Covenant not to compete 3 1/2 years 707,000
-----------
Goodwill Indefinite 898,334
===========
Accumulated amortization of intangible assets for the three and nine months
ended September 30, 2003 was $159,000 and $226,000, respectively.
The Company anticipates amortization expense to be approximately $390,000 for
the fiscal year ending December 31, 2003 and approximately $633,000, $633,000,
$633,000 and $219,000 for the fiscal years ending December 31, 2004, 2005, 2006
and 2007, respectively.
Selected Unaudited Pro Forma Financial Information
The Company has prepared a condensed pro forma statement of operations in
accordance with SFAS 141, for the three and nine month periods ended September
30, 2003 and 2002 as if Plexus were part of the Company as of January 1, 2003
and 2002, respectively.
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Revenues $ 176,342 $ 145,914 $ 719,798 $ 317,733
Net loss $ (1,570,459) $ (1,106,509) $ (5,971,454) $ (3,847,203)
Net loss per common share - basic and
diluted $ (0.09) $ (0.09) $ (0.38) $ (0.32)
============ ============ ============ ============
Weighted average number of common
shares outstanding 16,825,628 12,124,256 15,791,389 12,101,268
============ ============ ============ ============
4. Conversion of Preferred Shares and Earnings Per Share
During the nine months ended September 30, 2003, certain preferred shareholders
converted 353,185 Series A convertible preferred stock into 353,185 shares of
common stock.
The Company computes, presents and discloses earnings per share in accordance
with SFAS 128 "Earnings Per Share" ("EPS") which specifies the computation,
presentation and disclosure requirements for earnings per share of entities with
publicly held common stock or potential common stock. The statement defines two
earnings per share calculations, basic and diluted. The objective of basic EPS
is to measure the performance of an entity over the reporting period by dividing
income (loss) by the weighted average shares outstanding. The objective of
diluted EPS is consistent with that of basic EPS, that is to measure the
performance of an entity over the reporting period, while giving effect to all
dilutive potential common shares that were outstanding during the period. The
calculation of diluted EPS is similar to basic EPS except the denominator is
increased for the conversion of potential common shares. Due to the Company's
net loss for the three-month and nine-month periods ended September 30, 2003 and
2002, all outstanding stock options are considered to be anti-dilutive.
5. Option Modifications
During the third quarter of 2003, the Company extended 3,225,000 options held by
the Board of Directors for an additional 5 years. In accordance with Financial
Accounting Standard Board Interpretation Number 44, "Accounting for Certain
Transactions Involving Stock Compensation - An Interpretation of APB Opinion
Number 25", no compensation cost was incurred with the extension as the exercise
prices of the options were higher than the fair value of the common stock at the
date of modification.
6. Private Placement Offerings
In June 2003, the Company raised gross proceeds of $1.5 million in a private
offering for 1,250,000 shares of common stock. In connection with the offering
the Company issued warrants to purchase 625,000 shares of the Company's common
stock to placement agents. Each of the warrants are exercisable at a price of
$2.00 per share and have a term of five years.
In August 2003, the Company entered into a securities purchase agreement with
MacAndrews & Forbes Holdings Inc. ("MacAndrews & Forbes"), a holding company of
which the Company's Chairman of the Board of Directors is Vice Chairman and a
director, pursuant to which, among other things, the Company raised gross
proceeds of $1.0 million from MacAndrews & Forbes and certain of its employees,
in exchange for 694,444 shares of the Company's common stock at a price of $1.44
per share and warrants to purchase an additional 347,222 shares of the Company's
common stock at an exercise price of $2.00 per share. In addition, MacAndrews &
Forbes and certain of its employees were granted an option, exercisable through
October 13, 2003, to invest up to an additional $9.0 million in the Company on
the same terms.
In October 2003, MacAndrews & Forbes, certain of its employees and TransTech
Pharma, Inc., an affiliate of MacAndrews & Forbes ("TTP"), exercised their
option to invest $9.0 million in the Company, in exchange for an aggregate of
6,250,000 shares of common stock, par value $.0001 per share, of the Company's
common stock, and warrants to purchase up to an aggregate of 3,125,000 shares of
the Company's common stock at an exercise price of $2.00 per share, in
accordance with and subject to the terms and conditions of the securities
purchase agreement signed in August 2003, as amended. Immediately prior to the
exercise of such option, MacAndrews & Forbes assigned the right to invest up to
$5.0 million in the Company to TTP, a related party to the Company. The Company
and TTP are parties to a drug discovery collaboration agreement signed in
October 2002.
In accordance with and subject to the terms and conditions of the securities
purchase agreement, MacAndrews & Forbes and certain of its employees invested
$2.2 million in October 2003 in exchange for 1,499,587 shares of the Company's
common stock at a price of $1.44 per share and
received warrants to purchase up to an additional 749,794 shares of common stock
at an exercise price of $2.00 per share.
Upon approval of the Company's stockholders, (i) MacAndrews & Forbes will invest
$1.8 million in exchange for 1,278,191 shares of the Company's common stock at a
price of $1.44 per share and will receive warrants to purchase up to an
additional 639,095 shares of the Company's common stock at an exercise price of
$2.00 per share and (ii) TTP will invest $5.0 million in exchange for 3,472,222
shares of the Company's common stock and will receive warrants to purchase up to
an additional 1,736,111 shares of the Company's common stock at an exercise
price of $2.00 per share. The combined beneficial ownership interests of
MacAndrews & Forbes and TTP in the Company is expected to be approximately 38%.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with our financial
statements and notes to those statements and other financial information
appearing elsewhere in this Quarterly Report. In addition to historical
information, the following discussion and other parts of this Quarterly Report
contain forward-looking information that involves risks and uncertainties.
Overview
Since our inception in December 1995 we have been principally engaged in
the research and development of novel products for the prevention and treatment
of serious infectious diseases, including products for use in the defense
against biological warfare agents such as smallpox. The effort to develop a drug
for smallpox is being aided by a $1.6 million contract with the U.S. Army which
was entered into in December 2002.
We are developing technology for the mucosal delivery of our vaccines to
activate the immune system at the mucus lined surfaces of the body, the mouth,
the nose, the lungs and the gastrointestinal and urogenital tracts, the sites of
entry for most infectious agents. Our anti-infectives programs are aimed at the
increasingly serious problem of drug resistance, and they are designed to block
the ability of infectious agents to attach to human tissue, the first step in
the infection process. In May 2003, we acquired substantially all the assets of
Plexus Vaccine, Inc. ("Plexus"). Plexus is a bioinformatics company that
develops vaccines using its proprietary technology. The acquisition will expand
our capabilities in biological warfare defense research and allow for the
development of vaccines for smallpox, anthrax, plague, botulism and other
biological pathogens. The acquisition will also facilitate development of
vaccines for traditional human health targets. This transaction will have an
impact on our cash flows based on our ability to integrate the combined
companies.
In June 2003, we received net proceeds of $1,350,000 from the completion
of a private placement of 1,250,000 shares of our common stock. In connection
with the shares issued, we issued warrants to the investors to purchase 625,000
shares of common stock at an initial exercise price of $2.00 per share.
In August 2003, we entered into an agreement with MacAndrews & Forbes
Holdings Inc. ("MacAndrews & Forbes") whereby MacAndrews & Forbes and its
permitted assignees initially invested $1,000,000 in SIGA. On the date of the
agreement, we received gross proceeds of $1,000,000 in exchange for 694,444
shares of our common stock at a price of $1.44 per share and warrants to
purchase 347,222 shares of common stock. The warrants have an initial exercise
price of $2.00 per share and have a term of seven years. MacAndrews & Forbes and
its permitted assignees also received an option, exercisable through October 13,
2003, to invest up to an additional $9,000,000 in SIGA on the same terms.
In October 2003, MacAndrews & Forbes and its permitted assignees exercised
their option to invest an additional $9,000,000 in SIGA in accordance with and
subject to the terms and conditions of the agreement signed in August 2003, as
amended in October 2003. Upon exercise of the option, we received gross proceeds
of $2,159,405 in exchange for 1,499,587 shares of common stock at a price of
$1.44 and warrants to purchase 749,794 shares of common stock. The warrants have
an initial exercise price of $2.00 per share and a term of seven years. The sale
of the remaining 4,750,413 shares of common stock and warrants to purchase
2,375,206 shares of common stock on the same terms is subject to shareholder
approval. If the sale is approved by our shareholders, we will receive an
additional $6,840,595 of gross proceeds from the investor and its permitted
assignees. However, no assurances can be given that we will be able to obtain
the necessary approval from our shareholders.
We do not have commercial biomedical products, and we do not expect to
have such products for several years, if at all. We believe that we will need
additional funds to complete the development of our biomedical products. Our
plans with regard to these matters include continued development of our products
as well as seeking additional research support funds and financial arrangements.
Although we continue to pursue these plans, there is no assurance that we will
be successful in obtaining sufficient financing on terms acceptable to us. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. Management believes it has sufficient funds to
support operations for the next 12 months.
Our biotechnology operations are run out of our research facility in
Corvallis, Oregon and our bioinformatics activities are carried out at our
office in San Diego, California. We continue to seek to fund a major portion of
our ongoing vaccine and antibiotic programs through a combination of government
grants and strategic alliances. While we have had success in obtaining strategic
alliances and grants, no assurance can be given that we will continue to be
successful in obtaining funds from these sources. Until additional relationships
are established, we expect to
continue to incur significant research and development costs and costs
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.
Significant Accounting Policies
Financial Reporting Release No. 60, requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. Note 2 of the Notes to the Financial Statements includes a
summary of the significant accounting policies and methods used in the
preparation of our Financial Statements. The following is a brief discussion of
the more significant accounting policies and methods used by us. In addition,
Financial Reporting Release No. 61 was recently released by the SEC to require
all companies to include a discussion to address, among other things, liquidity,
off-balance sheet arrangements, contractual obligations and commercial
commitments.
Revenue Recognition
The Company recognizes revenue in accordance with SEC Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements, as amended by SAB
101A and 101B ("SAB 101"). SAB 101 requires that four basic criteria must be met
before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and
determinable; and (4) collectibility is reasonably assured. Under the provisions
of SAB 101, the Company recognizes revenue from government research grants,
contract research and development and progress payments as services are
performed, provided a contractual arrangement exists, the contract price is
fixed or determinable, and the collection of the resulting receivable is
probable. Milestones, which generally are related to substantial scientific or
technical achievement, are recognized as revenue when the milestone is
accomplished.
Income taxes
Income taxes are accounted for under the asset and liability method
prescribed by Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Deferred income taxes are recorded for temporary differences
between financial statement carrying amounts and the tax basis of assets and
liabilities. Deferred tax assets and liabilities reflect the tax rates expected
to be in effect for the years in which the differences are expected to reverse.
A valuation allowance is provided if it is more likely than not that some or all
of the deferred tax asset will not be realized.
Business Combinations, Goodwill and Intangible Assets
We account for business combinations in accordance with the provisions of
Statement of Financial Accounting Standards No. 141, "Business Combinations"
("SFAS 141"). SFAS 141 requires business combinations completed after June 30,
2001 to be accounted for using the purchase method of accounting. It also
specifies the types of acquired intangible assets required to be recognized and
reported separately from goodwill.
We account for goodwill in accordance with the provisions of Statement of
Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets"
("SFAS 142"). Goodwill is not subject to amortization and is tested for
impairment annually, or more frequently if events or changes in circumstances
indicate that the asset may be impaired. The impairment test consists of a
comparison of the fair value of goodwill with its carrying amount. If the
carrying amount of goodwill exceeds its fair value, an impairment loss shall be
recognized in an amount equal to that excess. After an impairment loss is
recognized, the adjusted carrying amount of goodwill is its new accounting
basis. The annual impairment testing required under SFAS 142 requires management
to make assumptions and judgments regarding the estimated fair value of the
Company's goodwill. Such assumptions include the present value discount factor
used to determine the fair value of a reporting unit, which is ultimately used
to identify
potential goodwill impairment. Such estimated fair values might produce
significantly different results if other reasonable assumptions and estimates
were to be used.
We account for long-lived assets such as non-compete agreements and
research contracts in accordance with the provisions of Statement of Financial
Accounting Standards No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"). SFAS 144 requires that long-lived assets be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of the asset may not be recoverable. The Company
compares the carrying amount of the asset to the estimated undiscounted future
cash flows expected to result from the use of the asset. If the carrying amount
of the asset exceeds estimated expected undiscounted future cash flows, the
Company records an impairment charge for the difference between the carrying
amount of the asset to its fair value. Changes in events or circumstances to
long-lived assets include cancellations or terminations of research contracts or
pending government research grants.
Off-Balance Sheet Arrangements
SIGA does not have any off-balance sheet arrangements.
Contractual obligations and commercial commitments
The Company leases certain facilities and office space under operating
leases. Minimum future rental commitments under operating leases having
noncancelable lease terms in excess of one year are as follows:
Year ended December 31,
2003 $ 45,883
2004 193,237
2005 86,398
2006 87,737
2007 94,921
Thereafter 19,416
-----------
Total $ 527,592
===========
Recent Accounting Pronouncements
In January of 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
of Variable Interest Entities" (FIN 46). This interpretation provides guidance
on the identification of, and financial reporting for, entities over which
control is achieved through means other than voting rights. Such entities have
been termed by FIN 46 as variable interest entities (VIE). Once effective, FIN
46 will be the guidance that determines (1) whether consolidation is required
under the "controlling financial interest" model of ARB Bulletin No. 51,
"Consolidated Financial Statements", or (2) whether the variable-interest model
under FIN 46 should be used to account for existing and new entities. FIN 46
includes guidance for identifying the enterprise that will consolidate a VIE,
which is the enterprise that is exposed to the majority of an entity's risks or
receives the majority of the benefits from an entity's activities. FIN 46 also
requires that the enterprises that hold a significant variable interest in a VIE
make new disclosures in their financial statements. The transitional disclosures
of FIN 46, which are effective immediately, require an enterprise to identify
the entities in which it holds a variable interest, if the enterprise believes
that those entities might be considered VIEs upon the adoption of FIN 46. The
implementation and remaining disclosure requirements of FIN 46 are effective
immediately for VIEs created after January 31, 2003, and on the first reporting
period ending after December 15, 2003 for all VIEs created before January 31,
2003. The Company does not hold any interests in VIEs that would require
consolidation or additional disclosures.
In March of 2003, the Emerging Issues Task Force (EITF) issued EITF No. 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables". EITF No. 00-21
addresses how to determine whether a contractual arrangement involving multiple
deliverables contains more than one accounting unit and how consideration should
be measured and allocated to the separate accounting units. EITF No. 00-21
applies to all deliverables within contractually binding arrangements in all
industries, except to the extent that a deliverable in a contractual arrangement
is subject to other existing higher-level authoritative literature, and is
effective for revenue arrangements entered into after July 1, 2003. The adoption
of EITF No. 00-21 did not have a material effect on the Company's consolidated
results of operations or financial position.
Results of Operations
Three Months ended September 30, 2003 and September 30, 2002.
Revenues from grants and research and development contracts were $176,342
for the three months ended September 30, 2003 compared to $89,738 for the three
months ended September 30, 2002, a 97% increase. The revenue for the three
months ended September 30, 2002 was comprised of funds received under a grant
from a Small Business Innovation Research (SBIR) grant from the National
Institutes of Health (NIH). In addition to $59,000 in payments received under
the SBIR grant, revenue in the current year three month period also included a
payment of $40,000 under a subcontract with Oregon State University and revenue
of $77,342 for work performed under a contract with the U.S. Army to develop a
drug for smallpox. The four year contract for $1.6 million began in January
2003.
General and administrative expenses for the three months ended September
30, 2003 were $684,223, an increase of approximately 150% from an expense of
$273,280 for the three months ended September 30, 2002. Approximately 50% of the
increase was the result of higher investor and public relations costs associated
with the most recent investment agreement, completion of the integration of
Plexus and the cost of report filings with the SEC and other filings. In
addition, there were higher payroll costs for the addition of Plexus personnel,
amortization of certain intangible assets acquired in the Plexus transaction.
For the three months ended September 30, 2002, we had no similar expenses.
Furthermore, there were additional consulting expenses associated with our
ongoing effort to market our product development programs to agencies of the
federal government.
Research and development expenses increased approximately 136% to
$1,000,911 for the three months ended September 30, 2003 from $423,850 for the
same period in 2002. The increase was primarily the result of the Plexus
transaction and increased research and development activity in association with
the U.S. Army grant and other product programs. Payroll increased approximately
115% to $431,560 for the three months ended September 30, 2003 from $201,202 for
the prior year period. Lab supply expenses increased by approximately 100% to
$105,852 for the three months ended September 30, 2003 from $52,858 for the
three months ended September 30, 2002, as a result of work on the SBIR grant and
U.S. Army contract. Sponsored research increased approximately $91,000 for
support of former Plexus programs in universities in Denmark. Travel expenses
were approximately $45,000 higher in the period ended September 30, 2003 as a
result of travel associated with administering our agreement with TransTech
Pharma, Inc. ("TransTech") and integration costs associated with the Plexus
transaction. For the three months ended September 30, 2003 there was a non-cash
charge of $108,104 for amortization of certain intangible assets acquired from
Plexus. No such costs were incurred in the prior year period.
All of our product programs are in the early stage of development except
for the strep vaccine which is in Phase I clinical trials. At this stage of
development, we can not make estimates of the potential cost for any program to
be completed or the time it will take to complete the project. For the three
months ended September 30, 2003, excluding non-cash and other charges, we
estimate that approximately $320,000, or 40% of the research and development
effort was for the smallpox antiviral. Approximately $200,000 (25%) was spent on
the DegP anti-infective, approximately $120,000, (15%) on the smallpox vaccine,
approximately $80,000 (10%) on the SARS vaccine and approximately $80,000 on all
other programs. For the three months ended September 30, 2002 we spent
approximately $124,000 on the Strep vaccine which represents approximately 35%
of the cost incurred for the period, approximately $70,000 (20%) was spent in
connection on the DegP anti-infective, approximately $70,000 (20%) on the
smallpox antiviral, approximately $53,000 (15%) on other vaccines and the
remaining $35,000 on other anti-infectives. Additionally, a number of our
research programs are being developed in collaboration with TransTech under the
agreement signed with them in October 2002. Currently we are working with
TransTech on our smallpox and SARS anti-viral products and our DegP broad
spectrum antibiotic. There is a high risk of non-completion of any program
because of the lead time to program completion and uncertainty of the costs. Net
cash inflows from any products developed from these programs is at least two to
three years away. However, we could receive additional grants, contracts or
technology licenses in the short-term. The potential cash and timing is not
known and we cannot be certain if they will ever occur.
Patent preparation fees for the three months ended September 30, 2003 were
$65,003 compared to $26,918 for the three months ended September 30, 2002. The
approximate 141% increase was the result of additional patent expenses of Plexus
and increased costs related to maintaining patents in certain foreign countries.
Total operating loss for the three months ended September 30, 2003 was
$1,573,795 an approximate 148% increase from the $634,310 loss incurred for the
three months ended September 30, 2002. The increase in the loss is the result of
higher operating expenses as presented in more detail above, partially offset by
increased revenue.
Interest income, net was $3,336 for the three months ended September 30,
2003 compared to income of $4,672 for the three months ended September 30, 2002.
The decrease was the result of lower cash balances in the current year period.
Nine Months ended September 30, 2003 and September 30, 2002.
Revenues from grants and research and development contracts were $625,016
for the nine months ended September 30, 2003 compared to $229,057 for the nine
months ended September 30, 2002, an approximate 173% increase. Revenues for the
nine months ended September 30, 2003 included revenue of $351,433 under the SBIR
grant from the NIH as well as $226,804 of revenue received for work performed
under a contract with the U.S. Army to develop a drug for smallpox. The four
year contract for $1.6 million began in January 2003. For the nine months ended
September 30, 2002 the principal sources of revenue were $149,057 from the SBIR
grant that we received from the NIH and $75,000 from work performed under a
sub-contract with Oregon State University.
General and administrative expenses for the nine months ended September
30, 2003 were $1,993,007, an increase of approximately 55% from the prior year
period expense of $1,282,040. The increase was the result of incurring
approximately $105,000 in non-cash expenses for the amortization of certain
intangible assets associated with the acquisition of substantially all the
assets of Plexus, approximately $200,000 in consulting expenses associated with
our ongoing effort to market our product development programs to agencies of the
federal government and approximately $160,000 in expenses associated with the
cost of integration of the Plexus operation
including the addition of certain Plexus employees to our payroll. We also
incurred higher costs for various filings with the SEC.
Research and development expenses increased approximately 78% to
$2,121,154 for the nine months ended September 30, 2003 from $1,194,453 for the
same period in 2002. Payroll increased from $541,527 for the first nine months
of 2002 to $1,010,585 for the nine month period of the current year, an increase
of approximately 86%. The increase was the result of the addition of certain
former Plexus employees to our staff, as well as an increase staffing to service
the SBIR grant and the U.S. Army contract. The current nine month period
included approximately $133,000 in non-cash charges for the amortization of
certain intangible assets acquired in the Plexus transaction. No such charge was
incurred in the prior year period. Lab supply expenses increased by
approximately 91% from $152,559 for the nine months ended September 30, 2002 to
$291,004 for the nine months ended September 30, 2003 as a result of the
increased activity associated with the SBIR grant and the U.S. Army contract as
well as expenses associated with Plexus. Travel expenses were approximately
$92,000 higher in the nine month period ended September 30, 2003 as the result
of travel costs associated with administering our agreement with TransTech and
the integration costs associated with the Plexus transaction. Sponsored research
expense increased by approximately $72,000 for the nine months ended September
30, 2003 compared to the prior year period as a result of payments made to
universities in connection with the continuation of former Plexus research and
development programs.
All of our product programs are in the early stage of development except
for the strep vaccine which is in Phase I clinical trials. At this stage of
development, we can not make estimates of the potential cost for any program to
be completed or the time it will take to complete the project. For the nine
months ended September 30, 2003, excluding non-cash and other charges, we
estimate that we spent approximately $510,000 for the development of the
smallpox antiviral, approximately $375,000 on the strep vaccine, approximately
$390,000 on the DegP anti-infective, approximately $260,000 on other vaccines,
approximately one half of which was for the smallpox vaccine and $80,000 on the
SARS antiviral. For the nine months ended September 30, 2002 we estimate that we
incurred expenses, excluding non-cash and other charges of approximately
$340,000 for the strep vaccine program, approximately $146,000 for both the
smallpox antiviral and the DegP anti-infective, approximately $145,000 on all
other vaccine programs and approximately $95,000 on all other anti-infective
programs. A number of our research programs are being developed in collaboration
with TransTech under an agreement signed with them in October 2002. Currently we
are working with TransTech on our smallpox and SARS anti-viral products and our
DegP broad spectrum anti-biotic. There is a high risk of non-completion of any
program because of the lead time to program completion and uncertainty of the
costs. Net cash inflows from any products developed from these programs is at
least two to three years away. However, we could receive additional grants,
contracts or technology licenses in the short-term. The potential cash and
timing is not known and we can not be certain if they will ever occur.
Patent preparation fees for the nine months ended September 30, 2003 were
$187,109 compared to $72,332 for the nine months ended September 30, 2002. The
approximate 159% increase was the result of additional patent expenses of Plexus
and increased costs related to maintaining patents in certain foreign countries.
Total operating loss for the nine months ended September 30, 2003 was
$3,676,254 an approximate 58% increase from the $2,319,768 loss incurred for the
nine months ended September 30, 2002. The increase in the loss is the result of
higher operating expenses as presented in more detail above, partially offset by
increased revenue.
Interest income, net was $13,048 for the nine months ended September 30,
2003 compared to income of $26,447 for the nine months ended September 30, 2002.
The decrease was the result of lower cash balances in the current year period.
Liquidity and Capital Resources
As of September 30, 2003, we had $1,156,821 in cash and cash equivalents.
In January 2003 we received net proceeds of $791,940 from the completion
of a private placement that had begun in December 2002. In total, we sold
1,700,000 shares of common stock in this offering. In December 2002 we received
net proceeds from the offering of $891,000. In connection with the offering we
issued 171,216 warrants to purchase shares of our common stock to consultants.
The warrants are initially exercisable at a price of $1.65 per share and have a
term of five years. The fair value of the warrants on the date of grant was
approximately $188,970.
In May 2003, we acquired substantially all of the assets of Plexus in
exchange for 1,950,000 shares of our common stock and the assumption of certain
liabilities, including promissory notes for loans we previously made to Plexus
for $50,000 and $20,000.
In June 2003, the Company raised gross proceeds of $1.5 million in a
private offering of 1,250,000 shares of common stock. In connection with the
offering the Company issued warrants to purchase 625,000 shares of the Company's
common stock to placement agents. The warrants are exercisable at a price of
$2.00 per share and have a term of five years.
In August 2003, we entered into an agreement with MacAndrews & Forbes
whereby MacAndrews & Forbes and its permitted assignees initially invested
$1,000,000 in SIGA. On the date of the agreement, we received gross proceeds of
$1,000,000 in exchange for 694,444 shares of our common stock at a price of
$1.44 per share and warrants to purchase 347,222 shares of common stock. The
warrants have an initial exercise price of $2.00 per share and have a term of
seven years. MacAndrews & Forbes and its permitted assignees also received an
option, exercisable through October 13, 2003, to invest up to an additional
$9,000,000 in SIGA on the same terms.
In October 2003, MacAndrews & Forbes and its permitted assignees exercised
their option to invest an additional $9,000,000 in SIGA under the terms of the
agreement signed in August, as amended in October 2003. Upon exercise of the
option we received gross proceeds of $2,159,405 in exchange for 1,499,587 shares
of common stock at a price of $1.44 and warrants to purchase 749,794 shares of
common stock. The warrants have an initial exercise price of $2.00 per share and
a term of seven years. The sale of the remaining 4,750,413 shares of common
stock and warrants to purchase 2,375,206 shares of common stock on the same
terms is subject to shareholder approval. If the sale is approved by our
shareholders, we will receive an additional $6,840,595 of gross proceeds from
the investor. However, no assurances can be given that we will be able to obtain
the necessary approval from our shareholders.
We have incurred cumulative net losses and expect to incur additional
losses to perform further research and development activities. We do not have
commercial biomedical products and management believes that we will need
additional funds to complete the development of our biomedical products.
Management's plans with regard to these matters include continued development of
our products as well as seeking additional research support funds and financial
arrangements. Although, management continues to pursue these plans, there is no
assurance that we will be successful in obtaining sufficient financing on terms
acceptable to us.
We anticipate that our current resources will be sufficient to finance our
currently anticipated needs for operating and capital expenditures for the next
12 months. Capital expenditures for the next nine months are expected to not be
material. In addition, we will attempt to generate additional working capital
through a combination of collaborative agreements, strategic alliances, research
grants, equity and debt financing. However, no assurance can be provided that
additional capital will be obtained through these sources or, if obtained, will
be on commercially reasonable terms.
Our working capital and capital requirements will depend upon numerous
factors, including 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.
Item 3. Controls and Procedures
As of the end of the fiscal quarter ended September 30, 2003, the
Company's management, including the Acting Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of the design and operation of
the Company's disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15(d)-15(e) of the Securities Exchange Act of 1934, as amended). Based on
that evaluation, the Acting Chief Executive Officer and Chief Financial Officer
concluded that such disclosure controls and procedures were effective for
recording, processing, summarizing and reporting information that the Company is
required to disclose in reports filed under the Securities and Exchange Act of
1934, as amended.
There have been no significant changes in the Company's internal controls
over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the
Securities Exchange Act, as amended) or in other factors during the fiscal
quarter ended September 30, 2003, that materially affected, or are reasonably
likely to materially affect, the Company's internal controls over financial
reporting.
Part II
Other information
Item 1. Legal Proceedings - SIGA is not a party, nor is its property the subject
of, any legal proceedings other than routine litigation incidental to its
business.
Item 2. Changes in Securities and Use of Proceeds - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4(k) Form of Warrant, dated as of August 13, 2003, between the
Company and MacAndrews & Forbes Holdings Inc. ("MacAndrews &
Forbes") (filed as Exhibit 4(k) to the Company's Current Report
on Form 8-K filed on August 18, 2003, and incorporated herein by
reference).
4(l) Registration Rights Agreement, dated as of August 13, 2003,
between the Company and MacAndrews & Forbes (filed as Exhibit
4(l) to the Company's Current Report on Form 8-K filed on August
18, 2003, and incorporated herein by reference).
10(fff) Securities Purchase Agreement, dated as of August 13, 2003,
between the Company and MacAndrews & Forbes (filed as Exhibit
4(k) to the Company's Current Report on Form 8-K filed on August
18, 2003, and incorporated herein by reference).
31 Certification of Acting Chief Executive Officer and Chief
Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
32 Certification of Acting Chief Executive Officer and Chief
Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
(b) Reports on Form 8-K
(1) On July 10, 2003, the Company filed a Current Report on Form
8-K, dated May 14, 2003, pursuant to which the Company (i)
reported under Item 5, the consummation of its acquisition of
substantially all of the assets of Plexus Vaccine Inc.
("Plexus") and its private placement of 1,250,000 shares of
common stock and warrants to purchase 625,000 shares of common
stock, and (ii) provided under Item 7 an unaudited pro forma
balance sheet to illustrate such acquisition and private
placement as if they occurred on May 31, 2003.
(2) On July 11, 2003, the Company filed a Current Report on Form
8-K, dated July 10, 2003, pursuant to which the Company reported
under Item 5 that the Company issued a press release announcing
its receipt, on July 10, 2003, of a proposal for an investment
in SIGA of up to an aggregate amount of $10 million from
MacAndrews & Forbes.
(3) On July 22, 2003, the Company filed Amendment No. 1 to Current
Report on Form 8-K/A, dated May 23, 2003, pursuant to which the
Company provided under Item 7 the following financial
information: (i) Consolidated Balance Sheets of Plexus as of
March 31, 2003 (unaudited), December 31, 2002 and December 31,
2001, (ii) Consolidated Statements of Operations of Plexus for
the three months ended March 31, 2003 (unaudited) and March 31,
2002 (unaudited), for the year ended December 31, 2002 and for
the period from April 27, 2001 (inception) to December 31, 2001,
(iii) Consolidated Statements of Stockholders' (Deficit) Equity
of Plexus as of March 31, 2003 (unaudited), December 31, 2002
and December 31, 2001 and (iv) Consolidated Statements of Cash
Flows of Plexus for the three months ended March 31, 2003
(unaudited) and March 31, 2002 (unaudited), for the year ended
December 31, 2002 and for the period from April 27, 2001
(inception) to December 31, 2001.
(4) On August 18, 2003, the Company filed a Current Report on Form
8-K, dated August 13, 2003, pursuant to which the Company
reported under Item 5 that on August 13, 2003, the Company
entered into a definitive purchase agreement with MacAndrews &
Forbes, pursuant to which MacAndrews & Forbes (i) invested
$1,000,000 in the Company in exchange for an aggregate of
694,444 shares of common stock and warrants to purchase an
additional 347,222 shares of common stock and (ii) was granted
an option, exercisable through October 13, 2003, and, if
required, subject to shareholder approval, to make additional
investments in the Company of up to $9,000,000 in exchange for
up to an additional 6,250,000 shares of common stock and
warrants to purchase up to an additional 3,125,000 shares of
common stock.
(5) On September 5, 2003, the Company filed Amendment No. 2 to
Current Report on Form 8-K/A, dated May 23, 2003, pursuant to
which the Company provided under Item 7 the following financial
information: (i) Unaudited Pro Forma Statement of Operations for
the Company and Plexus for the six months ended June 30, 2003,
and (ii) Unaudited Pro Forma Statement of Operations for the
Company and Plexus for the year ended December 31, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has fully caused the report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SIGA Technologies, Inc.
(Registrant)
Date: November 14, 2003 By: /s/ Thomas N. Konatich
----------------------
Thomas N. Konatich
Chief Financial Officer
(Principal Accounting Officer and
Financial Officer and Vice
President, Finance)
Exhibit 31
I, Thomas Konatich, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of SIGA
Technologies, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under my supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report, based on such evaluation; and
c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting;
5. I have disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions);
a) all significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls over
financial reporting.
Date: November 14, 2003
By /s/ Thomas N. Konatich
----------------------------------------
Thomas N. Konatich
Acting Chief Executive Officer and
Chief Financial Officer
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of SIGA Technologies, Inc. (the
"Company") on Form 10-QSB for the period ending September 30, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Thomas Konatich, Acting Chief Executive Officer and Chief Financial Officer of
the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to
ss.906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
November 14, 2003
/S/ Thomas N. Konatich
----------------------------------------
Thomas Konatich
Acting Chief Executive Officer
and Chief Financial Officer
A signed original of this written statement required by Section 906 of the
Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained
by the Company and furnished to the Securities and Exchange Commission or its
staff upon request.