SIGA Annual Report 2017 | Quarterlytics

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549FORM 10-K(Mark One)xAnnual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2017 OroTransition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ________ to ___________Commission File No. 0-23047Table of ContentsSIGA Technologies, Inc. (Exact name of registrant as specified in its charter)Delaware13-3864870(State or other jurisdiction of(IRS Employer Identification. No.)incorporation or organization) 27 East 62nd Street10065New York, NY(zip code)(Address of principal executive offices) Registrant’s telephone number, including area code: (212) 672-9100Securities registered pursuant to Section 12(b) of the Act:Title of each className of each exchange on which registeredcommon stock, $.0001 par value Securities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes o No x. Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act Yes o No x. Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under thoseSections. 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 12months (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 o. Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost such files). Yes x No o. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. Seedefinition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (check one): Largeaccelerated filer o Accelerated filer x Non-accelerated filer o Smaller reporting company o Emerging growth company o. If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13 (a) of the Exchange Act. oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No x.Indicate by check mark whether the registrant has filed all documents and reports required by section 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to thedistribution of securities under a plan confirmed by a court. Yes x No o.The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant, based upon the closing sale price of the common stock on June 30,2017 as reported on the Over-the-Counter Market was approximately $239,883,144. As of February 28, 2018 the registrant had outstanding 79,039,000 shares of common stock. DOCUMENTS INCORPORATED BY REFERENCEThe following document is incorporated herein by reference: Table of ContentsDocumentParts Into Which IncorporatedProxy Statement for the Company’s 2018 AnnualPart IIIMeeting of Stockholders Table of ContentsSIGA TECHNOLOGIES, INC. FORM 10-KTable of Contents Page No.PART I Item 1.Business2Item 1A.Risk Factors14Item 1B.Unresolved Staff Comments30Item 2.Properties30Item 3.Legal Proceedings30Item 4.Mine Safety Disclosures30 PART II Item 5.Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities31Item 6.Selected Financial Data33Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations34Item 7A.Quantitative and Qualitative Disclosures About Market Risk42Item 8.Financial Statements and Supplementary Data43Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure70Item 9A.Controls and Procedures70Item 9B.Other Information70 PART III Item 10.Directors, Executive Officers and Corporate Governance71Item 11.Executive Compensation71Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters71Item 13.Certain Relationships and Related Transactions, and Director Independence71Item 14.Principal Accounting Fees and Services71 PART IV Item 15.Exhibits, Financial Statement Schedules72Item 16.Form 10-K Summary79 SIGNATURES 80Table of ContentsPart IForward-Looking StatementsCertain statements in this Annual Report on Form 10-K, including certain statements contained in “Business” and “Management’s Discussion andAnalysis of Financial Condition and Results of Operations,” constitute “forward-looking statements” within the meaning of Section 27A of the Securities Actof 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to the progress of SIGA’sdevelopment programs and timelines for bringing products to market and the enforceability of SIGA’s contract (as amended, modified or supplemented fromtime to time, the “BARDA Contract”) with the U.S. Biomedical Advanced Research and Development Authority (“BARDA”). 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-lookingstatements. Such forward-looking statements are subject to various known and unknown risks and uncertainties and SIGA cautions you that any forward-looking information provided by or on behalf of SIGA is not a guarantee of future performance. SIGA’s actual results could differ materially from thoseanticipated by such forward-looking statements due to a number of factors, some of which are beyond SIGA’s control, including, but not limited to, (i) therisk that potential products that appear promising to SIGA or its collaborators cannot be shown to be efficacious or safe in subsequent pre-clinical or clinicaltrials, (ii) the risk that SIGA or its collaborators will not obtain appropriate or necessary governmental approvals to market these or other potential products,(iii) the risk that SIGA may not be able to obtain anticipated funding for its development projects or other needed funding, including from anticipatedgovernmental contracts and grants (iv) the risk that SIGA may not complete performance under the BARDA Contract on schedule or in accordance withcontractual terms, (v) the risk that SIGA may not be able to secure or enforce sufficient legal rights in its products, including intellectual property protection,(vi) the risk that any challenge to SIGA’s patent and other property rights, if adversely determined, could affect SIGA’s business and, even if determinedfavorably, could be costly, (vii) the risk that regulatory requirements applicable to SIGA’s products may result in the need for further or additional testing ordocumentation that will delay or prevent seeking or obtaining needed approvals to market these products, (viii) the risk that one or more protests could befiled and upheld in whole or in part or other governmental action taken, in either case leading to a delay of performance under the BARDA Contract or othergovernmental contracts, (ix) the risk that the BARDA Contract is modified or canceled at the request or requirement of the U.S. government, (x) the risk thatthe volatile and competitive nature of the biotechnology industry may hamper SIGA’s efforts to develop or market its products, (xi) the risk that changes indomestic and foreign economic and market conditions may affect SIGA’s ability to advance its research or may affect its products adversely, (xii) the effect offederal, state, and foreign regulation, including drug regulation and international trade regulation, on SIGA’s businesses, (xiii) the risk that the U.S.government’s responses (including inaction) to the national and global economic situation may affect SIGA’s business adversely, (xiv) the risk that SIGA’sinternal controls will not be effective in detecting or preventing a misstatement in SIGA’s financial statements, and (xv) the risk that some amounts recordedas deferred revenue ultimately may not be recognized as revenue when received, as well as the risks and uncertainties included in Item 1A “Risk Factors” ofthis Form 10-K. All such forward-looking statements are current only as of the date on which such statements were made. SIGA does not undertake anyobligation to update publicly any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or toreflect the occurrence of unanticipated events. Item 1. BusinessOverview SIGA Technologies, Inc. is referred to throughout this report as “SIGA,” “the Company,” “we” or “us.” We are a commercial-stage pharmaceutical company focused on the health security market. Health security comprises countermeasures forbiological, chemical, radiological and nuclear attacks (biodefense market), vaccines and therapies for emerging infectious diseases, and health preparedness.Our lead product is TPOXX®, an orally administered antiviral drug for the treatment of human smallpox disease caused by variola virus.A new drug application (“NDA”) for TPOXX® was submitted to the United States Food & Drug Administration (“FDA”) in December 2017. InFebruary 2018, the Company received notice that the FDA granted priority review of the NDA and that the FDA's target final action date is August 8, 2018.While TPOXX® is not yet approved as safe or effective by the FDA, it is a novel small-molecule drug that is being delivered to the U.S. Strategic NationalStockpile (“Strategic Stockpile”) under the Project Bioshield Act of 2004 (“Project BioShield”). BARDA Contract-TPOXX® On May 13, 2011, the Company signed a contract with BARDA pursuant to which SIGA agreed to deliver two million courses of TPOXX® to theStrategic Stockpile. The BARDA Contract includes a base contract (“Base Contract”) as well as options (described below). The Base Contract contemplatesapproximately $472.3 million of payments, of which $409.8 million is2Table of Contentsconsideration for the manufacture and delivery of 1.7 million courses of TPOXX® and $62.5 million is available for certain development and supportiveactivities.Under the Base Contract, BARDA has agreed to buy from the Company 1.7 million courses of TPOXX®. Additionally, the Company has agreed tocontribute to BARDA 300,000 courses at no additional cost to BARDA. A total of 2.0 million courses of TPOXX® is required to be delivered to the StrategicStockpile in order for the Company to be eligible to receive a $40.9 million hold back payment (see description of hold back payment below).For courses of TPOXX® that are physically delivered to the Strategic Stockpile, the Company has replacement obligations, at no cost to BARDA, inthe event that the final version of TPOXX® approved by the FDA is different from any courses of TPOXX® that have been delivered to the StrategicStockpile or if TPOXX® does not meet any specified label claims, fails release testing or does not meet the 38-month expiry period (from time of delivery tothe Strategic Stockpile), or if TPOXX® is recalled or deemed to be recalled for any reason.As of December 31, 2017, the Company has received $368.9 million under the Base Contract related to the manufacture and physical delivery ofcourses of TPOXX®. Included in this amount are a $41.0 million advance payment in 2011 for the completion of certain planning and preparatory activitiesrelated to the Base Contract, a $12.3 million milestone payment in 2012 for the completion of the product labeling strategy for TPOXX®, an $8.2 millionmilestone payment in 2013 for the completion of the commercial validation campaign for TPOXX®, a $20.5 million milestone payment in 2016 forsubmission of documentation to BARDA indicating that data covering the first 100 subjects enrolled in the phase III pivotal safety study had been submittedto and reviewed by a Data Safety and Monitoring Board (“DSMB”) and that such DSMB had recommended continuation of the safety study, as well assubmission of the final pivotal rabbit efficacy study report to the FDA, and $286.9 million of payments for physical deliveries of TPOXX® to the StrategicStockpile beginning in 2013.As of December 31, 2017, the Company is eligible under the Base Contract to receive a $40.9 million hold back payment, which represents anapproximate 10% hold back on the $409.8 million of total payments related to the manufacture and delivery of 1.7 million courses of TPOXX® under theBase Contract. The $40.9 million hold back payment would be triggered by FDA approval of TPOXX®, as long as the Company does not have a continuingproduct replacement obligation to BARDA.As of December 31, 2017, the Company has cumulatively delivered 2.0 million courses of TPOXX® to the Strategic Stockpile. The dosage ofcourses delivered is 600 mg administered twice per day (1,200 mg per day). In February 2016, the FDA confirmed (through dose concurrence) its earlierdosage guidance of 600 mg administered twice per day (1,200 mg per day). Courses delivered to the Strategic Stockpile are subject to a product replacementobligation (as discussed above).In addition to the Base Contract, the BARDA Contract also includes remaining options that, if all were exercised by BARDA, would result inaggregate payments to the Company of $122.7 million, including: a $50.0 million payment to the Company in the event of FDA approval for extension to84-month expiry for TPOXX® (from 38-month expiry as required in the Base Contract); up to $58.3 million of funding for development and supportiveactivities such as work on a smallpox prophylaxis indication for TPOXX®; and/or $14.4 million of funding for production-related activities related to warm-base manufacturing. In 2015, BARDA exercised two options related to extending the indication of the drug to the geriatric and pediatric populations. Thestated value of these exercises was minimal. BARDA may choose in its sole discretion not to exercise any or all of the unexercised options. BARDA hasindicated that it will evaluate, after the FDA’s review and evaluation of stability data, the Company's request that BARDA exercise the option for the $50.0million payment to the Company in the event of FDA approval of 84-month expiry for TPOXX®.The BARDA Contract expires in September 2020.The Company has been actively pursuing FDA approval of TPOXX® for strategic purposes as well as for purposes of receiving the $40.9 millionhold back payment (discussed above). The Company is pursuing FDA approval under the “Animal Rule.” As such, the Company has completed multiplemonkeypox efficacy studies in non-human primates and has also completed a series of rabbitpox efficacy studies in rabbits. Additionally, a series of clinicalstudies testing the safety of TPOXX® has been completed in humans. In December of 2017, the Company submitted an NDA to the FDA for the oralformulation of TPOXX®. In February 2018, the Company received notice that the FDA granted priority review of the NDA and that the FDA's target finalaction date is August 8, 2018.Notwithstanding the above, there can be no assurance that the FDA will approve an NDA for TPOXX®. Upon FDA approval of TPOXX®, theCompany would be able to address replacement obligations, if any, relating to courses of TPOXX® that have been delivered to the Strategic Stockpile.3Table of ContentsLead Product-TPOXX®SIGA believes that TPOXX® is among the first new small-molecule drugs delivered to the Strategic Stockpile under Project BioShield. TPOXX® isan investigational product that is not currently approved by the FDA as a treatment of smallpox or any other indication. Nevertheless, the FDA hasdesignated TPOXX® for “fast-track” status and notified the Company in February 2018 that the TPOXX® NDA was granted priority review and that theFDA's target final action date is August 8, 2018.TPOXX® is a novel, patented drug that is easy to store, transport and administer. The NDA for TPOXX® was submitted to the FDA for the treatmentof human smallpox disease caused by variola virus.TPOXX®’s regulatory path, and SIGA’s development activities related to TPOXX®, have been materially guided by the results of an FDA AdvisoryCommittee (the “Advisory Committee”) meeting that was held in December 2011 (the “Meeting”). The Meeting was convened to consider proposals forusing a surrogate orthopoxvirus model and to determine what elements of the “Animal Rule” constitute “enough” evidence for approval of a drug for thetreatment of orthopox infections. The Advisory Committee’s recommendation confirmed that the monkeypox, rabbitpox and ectromelia models, especially incombination, could suitably provide appropriate evidence of efficacy. Subsequent to the Meeting, SIGA has had substantive meetings and communicationswith the FDA regarding the regulatory path of TPOXX®. Development activities for TPOXX® are based on the Advisory Committee’s recommendations, andtake into account meetings and communications with the FDA.In late 2010, TPOXX® received Orphan Drug designation for the broader indication of treatment of orthopoxvirus infections (vaccinia, variola,monkeypox and cowpox). An Investigational New Drug (“IND”) application for an intravenous (IV) formulation of TPOXX® was filed with the FDA inSeptember 2012 and SIGA received a safe to proceed letter from the FDA in November 2012 along with a letter granting fast-track status.SIGA initiated a phase I single ascending dose safety and pharmacokinetic study for the IV formulation of TPOXX® in the first quarter of 2016 andcompleted the enrollment and dosing of the final cohort of the study in March 2017. The Company is targeting the commencement of a phase I multiple dosestudy for the IV formulation of TPOXX® in 2018.Closing of Chapter 11 CaseOn April 12, 2016, the Company emerged from chapter 11 of the Bankruptcy Code when the Company's plan of reorganization (the “Plan”) becameeffective, and on December 22, 2016 the Company's chapter 11 case was closed by the Bankruptcy Court. Under the Plan, the Company fully paid all of itsclaims. The Company did not apply the provisions of fresh start accounting as ownership of existing shares of the Company's common stock remainedunaltered by the Plan.Prior to April 12, 2016, the effective date of the Plan, the Company was operating its business as a “debtor-in-possession.” The Company had filedon September 16, 2014 a voluntary petition for relief under chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United StatesBankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) chapter 11 Case Number 14-12623 (SHL). The chapter 11 case preservedthe Company's ability to satisfy its commitments under the BARDA Contract (as defined in Note 3 to the consolidated financial statements) and preserved itsoperations, which likely would have been jeopardized by the enforcement of a judgment stemming from the Company's litigation with PharmAthene, Inc(“PharmAthene”) (see “PharmAthene Litigation” below). While operating as a debtor-in-possession under chapter 11, the Company pursued an appeal of theDelaware Court of Chancery Final Order and Judgment, without having to post a bond. PharmAthene LitigationAfter several years of proceedings in litigation initiated by PharmAthene in 2006, the Delaware Court of Chancery on August 8, 2014 issued anopinion and order in which it determined, among other things, that PharmAthene was entitled to a lump sum damages award for its lost profits includinginterest and fees, based on United States government purchases of the Company’s smallpox drug allegedly anticipated as of December 2006. On September16, 2014, as a consequence of SIGA’s chapter 11 filing, the legal proceedings with PharmAthene were stayed (see Note 12 to the consolidated financialstatements), except that the parties agreed by stipulation approved by the Court on October 8, 2014 that the litigation could proceed. On January 15, 2015,the Delaware Court of Chancery entered its Final Order and Judgment (the “Final Order and Judgment”) awarding PharmAthene approximately $195.0million, including pre-judgment interest up to January 15, 2015 (the “Judgment”). On December 23, 2015 the Delaware Supreme Court affirmed theJudgment. Pursuant to the Final Order and Judgment, SIGA also was liable to PharmAthene for $30,663.89 per day in post-judgment interest. On a series ofdates up to and including a final payment on November 16, 2016, the Company paid PharmAthene an aggregate of $217.0 million to fully satisfy theJudgment, including post-judgment interest, in accordance with the bankruptcy plan of reorganization.4Table of ContentsManufacturingSIGA does not have a manufacturing infrastructure and does not intend to develop one for the manufacture of TPOXX®. SIGA relies on and usesthird parties known as Contract Manufacturing Organizations (“CMOs”) to procure commercial raw materials and supplies, and to manufacture TPOXX®.SIGA's CMOs apply methods and controls in facilities that are used for manufacturing, processing, packaging, testing, analyzing and holdingpharmaceuticals which conform to current good manufacturing practices (“cGMP”), the standard set by the FDA for manufacture of pharmaceuticals intendedfor human use.Oral Capsules of TPOXX®:For the manufacture of oral capsules of TPOXX®, under the BARDA contract, the Company uses the following CMOs: Albemarle Corporation(“Albemarle”); Powdersize, LLC (“Powdersize”), and Catalent Pharma Solutions LLC (“Catalent”).In August, 2011, SIGA entered into an agreement with Albemarle. The agreement was amended in April, 2015. Albemarle manufactures, tests andsupplies active pharmaceutical ingredient (“API”) for use in TPOXX®. SIGA agreed that, during the term of the agreement, SIGA will purchase 75% of itsinternal and external API requirements for TPOXX® from Albemarle at a fixed price per kilogram. There is no minimum amount of API kilograms that mustbe used or acquired by SIGA. The following events are excluded from the “75% API” requirement: (i) if a contract entered into by SIGA for the sale of finaldrug product (“FDP”) requires that the product used as the API for such FDP be manufactured outside the U.S. and Albemarle is unwilling or unable tosubcontract such manufacture to a party or parties that meet the terms of the agreement, (ii) if a contract entered into by SIGA for the sale of FDP in anintravenous formulation requires different specifications than those provided for under the agreement and the parties are not able to reach agreement on thenecessary changes to the specifications or on pricing, or (iii) if Albemarle fails to perform any of its obligations under the agreement and does not cure suchfailure within 30 days of written notice from SIGA. SIGA is required to pay Albemarle within 45 days of its invoice date. Albemarle is required to deliver APIthat conforms with specifications outlined in the agreement; the Company is not required to pay for API that does not meet specifications. The Company has120 days to reject any shipments that do not meet such specifications or are damaged. In addition to receiving payments for API deliveries, Albemarle is alsopaid for related services, such as stability testing. The Company’s agreement with Albemarle is currently scheduled to expire on April 23, 2018.Powdersize micronizes and tests API for use in TPOXX®. The Company’s agreement with Powdersize continues for an initial term that ends on thedate the Company has fulfilled its delivery obligations under the BARDA Contract. Thereafter, this agreement automatically renews for successive one-yearperiods unless either party provides 90 days notice of its desire to terminate the agreement prior to the expiration of the term.Catalent granulates, encapsulates, tests and packages TPOXX®. Catalent sub-contracts the packaging services to Packaging Coordinators, Inc., aCMO that purchased Catalent’s packaging business. In addition, Catalent provides services related to commercial stability testing of drug product andpreparation for tabulated stability and trend analysis for each time point. The Company’s agreement with Catalent continues for an initial term that endsupon the date the Company has fulfilled its delivery obligations under the BARDA Contract. Thereafter, this agreement automatically renews for successiveone-year periods unless either party provides six months notice of its desire to terminate the agreement prior to the expiration of the term. During the term ofthe agreement, SIGA will purchase all of its requirements for packaged product under the BARDA contract from Catalent, and 75% of any of its otherrequirements for packaged oral product.Market for Biological Defense Programs The market for biodefense countermeasures reflects continued awareness of the threat of global terror and biowarfare activity. The U.S. governmentis the largest source of development and procurement funding for academic institutions and biopharmaceutical companies conducting biodefense research ordeveloping vaccines, anti-infectives and immunotherapies directed at potential agents of bioterror or biowarfare. U.S. government spending on biodefenseprograms includes development funding awarded by the National Institute of Allergy and Infectious Diseases, BARDA and the Department of Defense(“DoD”), and procurement of countermeasures by BARDA, the Centers for Disease Control and Prevention (“CDC”) and DoD. Project BioShield, which was enacted in 2004, authorizes the procurement of countermeasures for biological, chemical, radiological and nuclearattacks for the Strategic Stockpile, which is a national repository of medical assets and countermeasures designed to provide federal, state and local publichealth agencies with medical supplies needed to treat and protect those affected by terrorist attacks, natural disasters, industrial accidents and other publichealth emergencies. Project BioShield initially provided5Table of Contentsappropriations of $5.6 billion to be expended over ten years and expired on September 30, 2013. In 2013, Congress reauthorized Project BioShield as part ofthe Pandemic and All-Hazards Preparedness Reauthorization Act of 2013. The Consolidated Appropriations Act of 2017 (also known as the 2017 omnibusspending bill) includes an annual appropriation of $1.02 billion for activities related to medical countermeasures for biological and other threats to civilianpopulations. Of this, $510 million has been set aside for procurement, and $511 million has been set aside for advanced development and administrativeexpenses. A Continuation Resolution is in effect across the Federal Government through March 23, 2018 and maintains fiscal year 2017 procurement andadvanced development funding levels.In addition to the U.S. government, we believe that potential additional markets for the sale of biodefense countermeasures include:•foreign governments, including both defense and public health agencies;•state and local governments, which may be interested in these products to protect, among others, emergency responders, such as police, fire andemergency medical personnel;•healthcare providers, including hospitals and clinics; and•non-governmental organizations and multinational companies, including transportation and security companies.The 21st Century Cures Act, H.R. 6, passed Congress and was signed by then-President Obama at the end of 2016. The legislation aims to enhancethe discovery and delivery of lifesaving biomedical research, among other important initiatives. In addition, H.R. 6 established a priority review voucher("PRV") program for medical countermeasures (MCM) to encourage the development of drugs needed in the event of a global pandemic or biological weaponattack. Specifically, the program created by the new legislation established eligibility for a PRV to be granted by the FDA for newly-approved productsdirected at mitigating material biodefense threats, including smallpox. The vouchers constitute a critical incentive to spur private sector investment andinnovation in MCM research and development with the objective of fortifying the country's defenses against the world’s deadliest biological agents. Ifawarded, PRVs may be sold on the open market. Based on this legislation, SIGA may be eligible for a PRV following FDA approval of TPOXX®. There is noassurance that TPOXX® will be approved or that the Company will be granted a PRV. SIGA will not know until final FDA review and approval of its NDA forTPOXX® whether it has been awarded a PRV under this legislation. If SIGA qualifies for a PRV, the potential sale of a PRV could generate significant cashproceeds, although no assurance can be given as to the nature and magnitude of proceeds, if any, on the sale of a PRV.Other Product Candidate Dengue fever, an acute febrile disease characterized by a sudden onset of fever and an abnormally high internal body temperature, is caused by oneof four serotypes of dengue virus of the genus Flavivirus. Dengue fever can be classified as classical dengue fever, severe dengue (which includes the lifethreatening dengue hemorrhagic fever syndrome), or dengue shock syndrome. Dengue virus may be transmitted via the bite of an infected Aedes aegyptimosquito, which is found in tropical and sub-tropical regions around the world.We have identified a lead pre-clinical drug candidate with activity against all four serotypes of virus and which has shown efficacy in a murinemodel of disease. We are seeking partners for our Dengue Antiviral drug candidate (“Dengue Candidate”) to support further development activity. If theDengue Candidate is not partnered by the second quarter of 2018, then it is likely that such program will become inactive.In May 2011, we received a five-year grant of $6.3 million from NIH to fund the development of antiviral drugs for dengue. The grant has beenextended to April 2018. Approximately $0.5 million of the grant remains as of December 31, 2017; however, the Company currently does not expect to usesignificant additional funds during the remaining term of the grant.Research Agreements and Grants The Company has an R&D program for the intravenous (IV) formulation of TPOXX®. This program is funded by a development contract withBARDA. The development contract has a period of performance that terminates on December 30, 2020. As of December 31, 2017, the development contractprovides for future aggregate research and development funding of approximately $12.9 million.For the Dengue Candidate, approximately $0.5 million remains, as of December 31, 2017, on the NIH grant described above. The Company does notexpect to use significant funds for the remaining term of the grant.6Table of ContentsContracts and grants include, among other things, options that may or may not be exercised at the U.S. Government’s discretion. Moreover, contractsand grants contain customary terms and conditions including the U.S. Government’s right to terminate or restructure a contract or grant for convenience atany time. As such, we may not be able to utilize all available funds.GeneralWe receive cash payments from NIH and BARDA on a monthly basis, as services are performed or goods are purchased. Amounts under contract andgrant agreements, including the BARDA Contract, are not guaranteed and can be canceled at any time for reasons such as non-performance or convenience ofthe U.S. government and, if canceled, we will not receive funds for additional work under the agreements.Competition The biotechnology and pharmaceutical industries are characterized by rapidly evolving technology and intense competition. Our competitorsinclude many major pharmaceutical companies, each of which has financial, technical and marketing resources significantly greater than ours.Biotechnology and other pharmaceutical competitors in the biodefense space include, but are not limited to, Emergent BioSolutions, Bavarian Nordic AS,and Chimerix Inc. Academic institutions, governmental agencies and other public and private research organizations are also conducting research activitiesand seeking patent protection and may commercialize products on their own or through joint ventures. TPOXX® faces significant competition for U.S. government funding for both development and procurement of medical countermeasures forbiological, chemical, radiological and nuclear threats, diagnostic testing systems, and other emergency preparedness countermeasures. Our commercial opportunities could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective,have fewer side effects, are more convenient or are less expensive than products that we may develop. In addition, we may not be able to compete effectivelyif our product candidates do not satisfy governmental procurement requirements, particularly requirements of the U.S. government with respect to biodefenseproducts.Human Resources and Research Facilities As of February 28, 2018, we had 37 full-time employees. None of our employees are covered by a collective bargaining agreement, and we considerour employee relations to be satisfactory. Our research and development facilities are located in Corvallis, Oregon, where we lease approximately 9,237square feet under a lease agreement that commenced on January 1, 2018 and which expires in December 2019. This lease has two successive renewal options- the first for two years and the second for three years.Intellectual Property and Proprietary RightsSIGA’s commercial success will depend in part on its ability to obtain and maintain patent protection in the U.S. and the rest of the world for itsproprietary technologies, drug targets, and potential products and to preserve its trade secrets. Because of the substantial length of time and expenseassociated with bringing potential products through the development and regulatory clearance processes to reach the marketplace, the pharmaceuticalindustry places considerable importance on obtaining patent and trade secret protection. The patent positions of pharmaceutical and biotechnologycompanies can be highly uncertain and involve complex legal and factual questions. No consistent policy regarding the breadth of claims allowed inbiotechnology patents across various jurisdictions has emerged to date. Accordingly, SIGA cannot predict the type and extent of claims that will be allowedin pending patent applications.SIGA also relies upon trade secret protection for its confidential and proprietary information. No assurance can be given that other companies willnot independently develop substantially equivalent proprietary information and techniques or otherwise gain access to SIGA’s trade secrets or that SIGA canmeaningfully protect its trade secrets.SIGA exclusively owns its key patent portfolios, which relate to its leading drug candidate TPOXX® (also known as ST-246, tecovirimat). As ofJanuary 18, 2018, the TPOXX® patent portfolio has seven patent families consisting of 14 U.S. utility patents, 43 issued foreign patents, one PatentCooperation Treaty (“PCT”) application, seven U.S. utility patent applications, and 62 foreign patent applications.7Table of ContentsThe principal and material issued patents covering TPOXX® are described in the table below.Patent NumberCountryProtection ConferredIssue DateExpiration DateUS 7737168United StatesMethod of treating orthopoxvirus infection with ST-246June 15, 2010May 3, 2027US 8039504United StatesPharmaceutical compositions and unit dosage forms containing ST-246October 18, 2011July 23, 2027US 7687641United StatesMethod of manufacturing ST-246March 30, 2010September 27, 2024US 8124643United StatesComposition of matter for the ST-246 compound andPharmaceutical compositions containing ST-246February 28, 2012June 18, 2024US 7956197United StatesMethod of manufacturing ST-246June 7, 2011June 18, 2024US 8530509United StatesPharmaceutical compositions containing a mixture of compoundsincluding ST-246September 10, 2013June 18, 2024US 8802714United StatesMethod of treating orthopoxvirus infection with a mixture ofcompounds including ST-246August 12, 2014June 18, 2024US 9045418United StatesMethod of manufacturing ST-246June 2, 2015June 18, 2024US 9233097United StatesLiquid Pharmaceutical formulations containing ST-246January 12, 2016August 2, 2031US 9339466United StatesCertain polymorph of ST-246, method of preparation of thepolymorph and pharmaceutical compositions containing thepolymorphMay 17, 2016March 23, 2033US 9546137United StatesMethods of preparing ST-246January 17, 2017August 14, 2033US 9744154United StatesPolymorphic forms of ST-246 and methods of preparationAugust 29, 2017March 23, 2031US 9862683United StatesMethods of preparing TecovirimatJanuary 9, 2018August 14, 2033US 9670158United StatesAmorphous Tecovirimat preparationJune 6, 2017July 11, 2034SG 184201SingaporeCertain polymorphs of ST-246, method of preparation of thepolymorphs and pharmaceutical compositions containing thepolymorphsJune 22, 2015March 23, 2031RU 2578606RussiaCertain polymorphs of ST-246, method of preparation of thepolymorphs and their use in treating orthopoxvirusMarch 27, 2016March 23, 2031OA 16109OAPI/AfricaCertain polymorphs of ST-246, method of preparation of thepolymorphs and their use in treating orthopoxvirusOctober 31, 2013March 23, 2031NZ 602578New ZealandCertain polymorphs of ST-246, method of preparation of thepolymorphs and their use in treating orthopoxvirusDecember 2, 2014March 23, 2031MX 326231MexicoPharmaceutical compositions containing ST-246 and one or moreadditional ingredients and dosage unit forms containing ST-246December 11, 2014April 23, 2027MX 348481MexicoCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesJune 15, 2017April 23, 2027MX 347795MexicoST-246 liquid formulations and methodsMay 15, 2017August 2, 2031JP 4884216JapanTherapeutic agent for treating orthopoxvirus including ST-246,pharmaceutical composition of matter for the ST-246 compound andmethod of manufacturing ST-246December 16, 2011June 18, 2024JP 5657489JapanMethod of manufacturing ST-246December 5, 2014June 18, 2024JP 5898196JapanLiquid Pharmaceutical formulations containing ST-246March 11, 2016August 2, 2031JP 6018041JapanCertain polymorphs of ST-246, method of preparation of thepolymorphs and pharmaceutical compositions containing thepolymorphsOctober 7, 2016March 23, 2031JP 6188802JapanMethods of preparing TecovirimatAugust 10, 2017August 14, 2033CH 2011800245893ChinaCertain polymorphs of ST-246, method of preparation of thepolymorphs and pharmaceutical compositions containing thepolymorphsAugust 26, 2015March 23, 2031CN ZL 2013800429237ChinaMethods of preparing TecovirimatJune 20, 2017August 14, 2033CA 2529761CanadaUse of ST-246 to treat orthopoxvirus infection, pharmaceuticalcompositions containing ST-246 and composition of matter for theST-246 compoundAugust 13, 2013June 18, 2024CA 2685153CanadaPharmaceutical compositions containing ST-246 and one or moreadditional ingredients and dosage unit forms containing ST-246December 16, 2014April 23, 2027CA 2866037CanadaChemicals, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesMay 16, 2017April 23, 2027AU 2004249250AustraliaMethod of treating orthopoxvirus infection, pharmaceuticalcomposition containing ST-246 and composition of matter for theST-246 compoundMarch 29, 2012June 18, 20248Table of ContentsAU 2007351866AustraliaPharmaceutical compositions containing ST-246 and one or moreadditional ingredients and dosage unit forms containing ST-246January 10, 2013June 18, 2024AU 2011232551AustraliaCertain polymorphs of ST-246, method of preparation of thepolymorphs and their use in treating orthopoxvirusFebruary 26, 2015March 23, 2031AU 2011285871AustraliaLiquid Pharmaceutical formulations containing ST-246August 6, 2015August 2, 2031AU 2012268859AustraliaPharmaceutical compositions containing ST-246 and one or moreadditional ingredients and dosage unit forms containing ST-246August 18, 2016June 18, 2024AU 2015200286AustraliaPolymorphic forms of ST-246April 27, 2017March 23, 2031AP 3221ARIPO*/AfricaCertain polymorphs of ST-246, method of preparation of thepolymorphs and their use in treating orthopoxvirusApril 3, 2015March 23, 2031ZA 2012/07141South AfricaCertain polymorphs of ST-246, method of preparation of thepolymorphs and pharmaceutical compositions containing thepolymorphsJune 29, 2016March 23, 2031ZA 2013/00930South AfricaLiquid Pharmaceutical formulations containing ST-246November 25, 2015March 23, 2031IL 201736IsraelPharmaceutical compositions containing ST-246 and one or moreadditional ingredients and dosage unit forms containing ST-246October 1, 2016April 23, 2027IL 236944IsraelMethods of preparing TecovirimatFebruary 1, 2017August 14, 2033AT 1638938AustriaCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024BE 1638938BelgiumCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024CH 1638938SwitzerlandCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024DE 1638938GermanyCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024DK 1638938DenmarkCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024EP 1638938EuropeCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024ES 1638938EstoniaCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024FI 1638938FinlandCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024FR 1638938FranceCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024GB 1638938United KingdomCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024IE 1638938IrelandCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024IT 502017000078377ItalyCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024NL 1638938NetherlandsCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024PL 1638938PolandCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024SE 1638938SwedenCompounds, compositions and methods for treatment and preventionof orthopoxvirus infections and associated diseasesApril 12, 2017June 18, 2024* ARIPO has 19 member African States as follows: Botswana, The Gambia, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Sierra Leone, Liberia,Rwanda, Sao Tome and Principe, Somalia, Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. 9Table of ContentsThe principal and material patent applications covering TPOXX® include patent filings in multiple jurisdictions, including the United States,Europe, Asia, Africa, Australia, and other commercially significant markets. We hold 70 patent applications currently pending with respect to variouscompositions of TPOXX®, methods of manufacturing, methods of treatment, and dosage forms. Expiration dates for pending patents, if granted, will fallbetween 2024 and 2037.FDA regulations require that patented drugs be sold under brand names that comply with various regulations. SIGA must develop and make effortsto protect these brand names for each of its products in order to avoid product piracy and to secure exclusive rights to these brand names. SIGA may expendsubstantial funds in developing and securing rights to adequate brand names for our products. SIGA currently has proprietary trademark rights in SIGA®,TPOXX® and other brands used by us in the United States and certain foreign countries, but we may have to develop additional trademark rights in order tocomply with regulatory requirements. SIGA considers securing adequate trademark rights to be important to its business.Government Regulation Regulatory Approval ProcessRegulation by governmental authorities in the United States and other countries is a significant factor in the manufacture and marketing of anybiopharmaceutical product that we may develop. The nature and the extent to which such regulations may apply to us will vary depending on the nature ofany particular product. Virtually all of our potential pharmaceutical products will require regulatory approval by governmental agencies prior to non-governmental commercialization. In particular, human therapeutic products are subject to rigorous pre-clinical and clinical testing and other approvalprocedures by the FDA and similar health authorities in foreign countries. Various federal statutes and regulations also govern or regulate the manufacturing,safety, labeling, storage, record keeping and marketing of such products. The process of obtaining these approvals and the subsequent compliance withappropriate federal and foreign statutes and regulations is complex and requires the expenditure of substantial resources. In order to test clinically, and to manufacture and market products for diagnostic or therapeutic use, a company must comply with mandatoryprocedures and safety standards established by the FDA and comparable agencies in foreign countries. Before beginning human clinical testing of a potentialnew drug in the United States, a company must file an IND application and receive clearance from the FDA. An IND application is a summary of the pre-clinical studies that were conducted to characterize the drug, including toxicity and safety studies, information on the drug’s composition and themanufacturing and quality control procedures used to produce the drug, as well as a discussion of the human clinical studies that are being proposed toevaluate the safety and efficacy of the product.The pre-marketing clinical program required for approval by the FDA for a new drug typically involves a time-consuming and costly three-phaseprocess. In Phase I, trials are conducted with a small number of healthy subjects to determine the early safety profile, the pattern of drug distribution,metabolism and elimination. In Phase II, trials are conducted with small groups of patients afflicted with a target disease in order to determine preliminaryefficacy, optimal dosages and expanded evidence of safety. In Phase III, large scale, multi-center comparative trials, which may include both controlled anduncontrolled studies, are conducted with patients afflicted with a target disease in order to provide enough data for statistical proof of efficacy and safetyrequired by the FDA and other authorities. Additional trials may be required to evaluate how a new drug interacts with other drugs as well as if the drug hasany impact on cardio-vascular or other potential risks. The FDA closely monitors the progress of each of the three phases of clinical testing and may, in its discretion, reevaluate, alter, suspend orterminate the testing based on the data that have been accumulated to that point and its assessment of the risk/benefit ratio to the patients involved in thetesting. Estimates of the total time typically required for carrying out such clinical testing vary between two and ten years. Upon completion of such clinicaltesting, a company typically submits an NDA to the FDA that summarizes the results and observations of the drug during the clinical testing. Based on itsreview of the NDA, the FDA will decide whether to approve the drug and whether to impose any marketing restrictions or require additional post approvalclinical studies. This review process can be quite lengthy, and approval for the production and marketing of a new pharmaceutical product can require anumber of years and substantial funding. There can be no assurance that any approval will be granted on a timely basis, if at all. The FDA amended its regulations, effective June 30, 2002, to include the “Animal Rule” in circumstances that would permit the typical clinicaltesting regime to approve certain new drug and biological products used to reduce or prevent the toxicity of chemical, biological, radiological, or nuclearagents not otherwise naturally present for use in humans based on evidence of10Table of Contentssafety in healthy subjects and evidence of effectiveness derived only from appropriate animal studies and any additional supporting data. The FDA hasindicated that approval for therapeutic use of TPOXX® will be determined under the “Animal Rule.” Once the product is approved for sale, FDA regulations govern the manufacturing and marketing activities, and a post-marketing testing andsurveillance program may be required to monitor a product’s usage and effects. Product approvals may be withdrawn if compliance with regulatory standardsis not maintained. Many other countries in which products developed by us may be marketed impose similar regulatory processes. FDA regulations also make available an alternative regulatory mechanism that may lead to use of the product under limited circumstances. TheEmergency Use Authorization (“EUA”) authority allows the FDA Commissioner to strengthen the public health protections against biological, chemical,radiological and nuclear agents that may be used to attack the American people or the U.S. armed forces. Under this authority, the FDA Commissioner mayallow medical countermeasures to be used in an emergency to diagnose, treat or prevent serious or life-threatening diseases or conditions caused by suchagents when appropriate findings are made concerning the nature of the emergency, the availability of adequate and approved alternatives, and the quality ofavailable data concerning the drug candidate under consideration for emergency use. We have provided data to FDA to support an EUA for TPOXX® in theevent of a smallpox attack. In November 2012, the CDC filed an IND application for use of TPOXX® in emergency situations until an EUA is in place. InDecember 2012, the CDC received a “safe to proceed” letter from the FDA for this IND. In August 2013, the CDC filed a pre-EUA request for which the FDAcurrently holds an open file. Legislation and Regulation Related to Bioterrorism Counteragents and Pandemic PreparednessBecause some of our drug candidates are intended for the treatment of diseases that may result from acts of bioterrorism or biowarfare or forpandemic preparedness, they may be subject to the specific legislation and regulation described below and elsewhere in this Annual Report on Form 10-K. Project BioShieldProject BioShield and related 2006 federal legislation provide procedures for biodefense-related procurement and awarding of research grants,making it easier for Health and Human Services (“HHS”) to commit funds to countermeasure projects. Project BioShield provides alternative proceduresunder the Federal Acquisition Regulation, the general rubric for acquisition of goods and services by the U.S. government, for procuring property or servicesused in performing, administering or supporting biomedical countermeasure research and development. In addition, if the Secretary of HHS deems that thereis a pressing need, Project BioShield authorizes the Secretary of HHS to use an expedited award process, rather than the normal peer review process, for grants,contracts and cooperative agreements related to biomedical countermeasure research and development activity.Under Project BioShield, the Secretary of HHS, with the concurrence of the Secretary of the Department of Homeland Security and upon the approvalof the President, can contract to purchase unapproved countermeasures for the Strategic National Stockpile in specified circumstances. The U.S. Congress isnotified of a recommendation for a Strategic Stockpile purchase after Presidential approval. Project BioShield specifies that a company supplying thecountermeasure to the Strategic Stockpile is paid on delivery of a substantial portion of the countermeasure. To be eligible for purchase under theseprovisions, the Secretary of HHS must determine that there are sufficient and satisfactory clinical results or research data, including data, if available, frompre-clinical and clinical trials, to support a reasonable conclusion that the countermeasure will qualify for approval or licensing within eight years. ProjectBioShield also allows the Secretary of HHS to authorize the emergency use of medical products that have not yet been approved by the FDA. To exercise thisauthority, the Secretary of HHS must conclude that:•the agent for which the countermeasure is designed can cause serious or life-threatening disease; •the product may reasonably be believed to be effective in detecting, diagnosing, treating or preventing the disease; •the known and potential benefits of the product outweigh its known and potential risks; and •there is no adequate alternative to a product that is approved and available.Although this provision permits the Secretary of HHS to circumvent FDA approval (entirely, or in part) for procurement and use, its use in thismanner would likely be limited to rare circumstances. Prior to the award of the BARDA Contract in May 2011, the Secretary of HHS concluded that TPOXX®would qualify within eight years for approval by the FDA for therapeutic use against smallpox.11Table of ContentsPublic Readiness and Emergency Preparedness ActThe Public Readiness and Emergency Preparedness Act (the "PREP Act"), provides immunity for manufacturers from claims under state or federallaw for “loss” arising out of the administration or use of a “covered countermeasure” in the United States. However, injured persons may still bring a suit for“willful misconduct” against the manufacturer under some circumstances. “Covered countermeasures” include security countermeasures and “qualifiedpandemic or epidemic products,” including products intended to diagnose or treat pandemic or epidemic disease, as well as treatments intended to addressconditions caused by such products. For these immunities to apply, the Secretary of HHS must issue a declaration in cases of public health emergency or“credible risk” of a future public health emergency. Since 2007, the Secretary of HHS has issued eight declarations under the PREP Act to protect fromliability countermeasures that are necessary to prepare the nation for potential pandemics or epidemics, including a declaration on October 10, 2008 thatprovides immunity from tort liability as it relates to smallpox. The PREP Act was amended in 2015 to extend protection for smallpox and othercountermeasures from December 31, 2015 to December 31, 2022. Foreign RegulationAs noted above, in addition to regulations in the United States, we might be subject to a variety of foreign regulations governing clinical trials andcommercial sales and distribution of our drug candidates. Even if we obtain FDA approval for a product, we may have to obtain approval of that product bythe comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The actualtime required to obtain clearance to market a product in a particular foreign jurisdiction varies substantially, based upon the type, complexity and novelty ofthe pharmaceutical drug candidate, the specific requirements of that jurisdiction, and in some countries whether the FDA has previously approved the drugfor marketing. The requirements governing the conduct of clinical trials, marketing authorization, pricing and reimbursement vary from country to country.Certain foreign jurisdictions, including the European Union, have adopted certain biodefense-specific regulations akin to that available in the United Statessuch as a procedure similar to the “Animal Rule” promulgated by the FDA for review and potential approval of biodefense products. Regulations Regarding Government ContractingThe status of an organization as a government contractor in the United States and elsewhere means that the organization is also subject to variousstatutes and regulations, including the Federal Acquisition Regulation, which governs the procurement of goods and services by agencies of the UnitedStates. These governing statutes and regulations can impose stricter penalties than those normally applicable to commercial contracts, such as criminal andcivil damages liability and suspension and debarment from future government contracting. In addition, pursuant to various statutes and regulations,government contracts can be subject to unilateral termination or modification by the government for convenience in the United States and elsewhere,detailed auditing requirements, statutorily controlled pricing, sourcing and subcontracting restrictions and statutorily mandated processes for adjudicatingcontract disputes.Availability of Reports and Other Information We file annual, quarterly, and current reports, proxy statements, and other documents with the SEC under the Securities Exchange Act of 1934. Thepublic may read and copy any material that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Thepublic may obtain information on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330. Also, the SEC maintains an Internetwebsite that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC.The public can obtain any document that we file with or furnish to the SEC at www.sec.gov. In addition, our website can be found on the internet at www.siga.com. The website contains information about us and our operations. Copies ofeach of our filings with the SEC on Form 10-K, Form 10-Q, and Form 8-K, and all amendments to those reports, can be viewed and downloaded free of chargeas soon as reasonably practicable after the reports and amendments are electronically filed with or furnished to the SEC. To view the reports, accesswww.siga.com, click on “Investor Relations” and “Financial Information.” The following corporate governance related documents are also available on our website:•Audit Committee Charter; 12Table of Contents•Compensation Committee Charter; •Nominating and Corporate Governance Committee Charter; •Code of Ethics and Business Conduct;•Procedure for Sending Communications to the Board of Directors; •Procedures for Security Holder Submission of Nominating Recommendations; •Policy on Confidentiality of Information and Securities Trading; and•Conflict of Interest Policy.To review these documents, access www.siga.com and click on “Investor Relations” and “Corporate Governance.” Any of the above documents can also be obtained in print by any shareholder upon request to the Secretary, SIGA Technologies, Inc., 27 E 62nd Street, 5thfloor, New York, New York 10065.13Table of ContentsItem 1A. Risk Factors This report contains forward-looking statements and other prospective information relating to future events. These forward-looking statements and otherinformation are subject to risks and uncertainties that could cause our actual results to differ materially from our historical results or currently anticipatedresults including the following:Risks Related to Our Dependence on U.S. Government ContractsWe currently derive substantially all our cash inflows from BARDA and we expect foreseeable future operating revenues to be concentrated on contractswith BARDA for the sale of TPOXX®. If BARDA demand for TPOXX® is reduced, our business, financial condition and operating results could bematerially harmed.The BARDA Contract does not necessarily increase the likelihood that we will secure future comparable contracts with the U.S. government. Thesuccess of our business and our operating results for the foreseeable future will be substantially dependent on the terms of TPOXX® sales to the U.S.government, including price per course, the number and size of doses in a course and the timing of deliveries.Furthermore, substantially all of our revenues for the years ended December 31, 2017, 2016 and 2015, respectively, were derived from contracts withBARDA for development of the oral or IV formulation of TPOXX®. Our current revenue is primarily derived from BARDA development contracts scheduledto substantially conclude in fiscal year 2020. There can be no assurance that we will recognize the revenue from the BARDA Contract in the time periods weanticipate or at all, or that we will be able to secure future contracts. Failure to recognize such revenue or secure such contracts or grants could have a materialadverse effect on our results of operations.Government procurement contracts are mostly set at fixed prices and such pricing is based on estimates of the time, resources and expenses required toperform these contracts. If our estimates are not accurate, we may not be able to earn an adequate return or may incur a loss under these arrangements.Our existing procurement contract with BARDA for TPOXX® is predominately fixed-price. We expect that our future contracts with the U.S.government for TPOXX® as well as contracts for other biodefense product candidates would also be fixed-price arrangements. Under a fixed-price contract,we are required to deliver our products at a fixed price regardless of the actual costs we incur and to absorb any cost in excess of the fixed price. Estimatingcosts that are related to performance in accordance with contract specifications is difficult, particularly where the period of performance is over several years.Our failure to anticipate technical problems, estimate costs accurately or control costs during performance of a fixed-price contract could reduce theprofitability of a fixed-price contract or cause a loss, which could in turn harm our operating results.Product deliveries of TPOXX® since December 31, 2014 have been at a provisional dosage of 600 mg administered twice per day (1,200 mg perday). This is a change from the provisional dosage that was in effect when product deliveries were made in 2013 and 2014 (600 mg per day). In 2013 and2014, the provisional dosage of courses delivered to the Strategic Stockpile was 600 mg administered once per day. The change in the provisional dosagewas based on FDA guidance received by the Company in 2014, subsequent to the deliveries of 1.3 million courses of TPOXX®. Based on the provisionaldosage of 600 mg administered twice per day, SIGA supplemented previously delivered courses of TPOXX®, at no additional cost to BARDA, withadditional capsules so that all of the courses previously delivered to BARDA were updated to the current provisional dosage. The Company incurredsignificant incremental costs when previously delivered courses were supplemented. The provisional dosage for TPOXX® may be subject to additionalchanges in the future based on FDA guidance.Our U.S. government contracts require ongoing funding decisions by the government. Reduced or discontinued funding of these contracts could cause ourfinancial condition and operating results, or our business development efforts, to suffer materially.Our principal customer for TPOXX® at the present time is the U.S. government. We anticipate that the U.S. government will also be the principalcustomer for any other biodefense product that we successfully develop. A U.S. government program, such as Project BioShield, may be implementedthrough the award of many different individual grants, contracts and subcontracts. The funding of government programs is subject to Congressionalappropriations, generally made on a fiscal year basis even though a program may continue for several years. Our government customers are subject topolitical considerations and stringent budgetary constraints. Our government customers are also subject to uncertainties as to continued funding of theirbudgets. Additionally, government-funded development grants and contracts typically consist of a base period of performance followed by successive optionperiods for performance of certain future activities. The value of the goods and services provided during such option periods, which are exercisable in thesole discretion of the government, may constitute the majority of the total value of the underlying14Table of Contentscontract. If levels of government expenditures and authorizations for biodefense decrease or shift to programs in areas where we do not offer products or arenot developing product candidates, our business, revenues and operating results may suffer materially.Our future business may be harmed as a result of the government contracting process, which can be a competitive bidding process that may involve risksnot present in the commercial contracting process.We expect that a significant portion of the business that we will seek in the future will be under government grants, contracts or subcontracts, whichmay be awarded through a bidding process. The bidding process for government contracts and grants presents a number of risks that are not typically presentin the commercial contracting process, which may include:•the need to devote substantial management and key employee time and attention to the preparation of bids and proposals for contracts and grantsthat may not be awarded to us;•the need to estimate the resources and cost structure that will be required over a period of several years to perform any contract or grant that we mightbe awarded;•the risk that the government will issue a request for proposal to which we would not be eligible to respond;•the risk that negotiations engaged in as part of the bidding process could result in unfavorable, or lower than expected, drug pricing•the risk that third parties may submit protests to our responses to requests for proposal that could result in delays, withdrawals or amendments ofthose requests for proposal, or other negative developments; and•the expenses that we might incur and the delays that we might suffer if our competitors protest or challenge contract awards made to us pursuant to abidding, process and the risk that any such protest or challenge could result in the resubmission of bids based on modified specifications, or intermination, reduction or modification of the awarded contract or grant.The U.S. government may choose to award future contracts for the supply of smallpox antiviral treatment and other biodefense product candidatesthat we are developing to our competitors instead of to us. If we are unable to win, or favorably price, particular contracts, we may not be able to operate inthe market for products that are provided under those contracts and grants for a number of years. If we are unable to obtain new contracts over an extendedperiod, or if we fail to anticipate all of the costs and resources that will be required to secure and fulfill such contracts and grants, our growth strategy and ourbusiness, financial condition, and operating results could be materially adversely affected.The success of our business with the U.S. government depends on our compliance with laws, regulations and obligations under our U.S. governmentcontracts and grants and various federal statutes and authorities.Our business with the U.S. government is subject to specific procurement regulations and a variety of other legal and compliance obligations. Theselaws and rules include those related to:•procurement integrity;•rates and pricing of services and goods to be reimbursed by the U.S. government;•export control;•government security regulations;•employment practices;•protection of the environment;•accuracy of records and the recording and reporting of costs; and•foreign corrupt practices.15Table of ContentsIn addition, before awarding us any contract or grant, the U.S. government could require that we respond satisfactorily to a request to substantiateour commercial viability and industrial capabilities. Compliance with these obligations increases our performance and compliance costs. A finding that wehave failed to comply with these regulations and requirements could lead to suspension or debarment, for cause, from government contracting orsubcontracting for a period of time. The termination of a government contract or grant or relationship as a result of our failure to satisfy any of theseobligations would have a material negative impact on our operations and harm our reputation and ability to procure other government contracts or grants inthe future.Unfavorable provisions in government contracts and grants, some of which may be customary, may harm our future business, financial condition andpotential operating results.Government contracts and grants customarily contain provisions that give the government substantial rights and remedies, many of which are nottypically found in commercial contracts, including (but not limited to) provisions that allow the government to:•terminate existing contracts or grants, in whole or in part, for any reason or no reason;•unilaterally reduce or modify grants, contracts or subcontracts, including through the use of equitable price adjustments;•cancel multi-year contracts or grants and related orders if funds for performance for any subsequent year become unavailable;•decline to exercise an option to renew a contract or grant;•exercise an option to purchase only the minimum amount specified in a contract or grant or not pay optional milestones in a contract or grant;•decline to exercise an option to purchase the maximum amount specified in a contract or grant;•claim rights to products, including intellectual property, developed under a contract or grant;•take actions that result in a longer development timeline or higher costs than expected;•direct the course of a development program in a manner not chosen by the government contractor;•suspend or debar the contractor from doing business with the government or a specific government agency;•pursue criminal or civil remedies under the False Claims Act and the False Statements Accountability Act; and•control or prohibit the export of products.Generally, government contracts and grants contain provisions permitting unilateral termination or modification, in whole or in part, at thegovernment’s convenience. Under general principles of government contracting law, if the government terminates a contract or grant for convenience, theterminated company may recover only its incurred or committed costs, settlement expenses and profit on work completed prior to the termination. If thegovernment terminates a contract or grant for default, the defaulting company is entitled to recover costs incurred and associated profits on accepted itemsonly and may be liable for excess costs incurred by the government in procuring undelivered items from another source. Our government contracts andgrants, including the BARDA Contract, could be terminated under these circumstances.Some government contracts and grants permit the government the right to use, for or on behalf of the U.S. government, any technologies developedby the contractor under a government contract. If we were to develop technology under a contract or grant with such a provision, we might not be able toprohibit third parties, including our competitors, from using that technology in providing products and services to the government.Changing political or social factors and opposition, including protests and potential related litigation, may delay or impair our ability to marketTPOXX® and any other biodefense product candidates and may require us to spend time and money to address these issues.Products developed to treat diseases caused by or to combat the threat of bioterrorism or biowarfare will be subject to changing political and socialenvironments. The political and social responses to bioterrorism and biowarfare have been16Table of Contentsunpredictable and much debated. Changes in the perception of the risk that military personnel or civilians could be exposed to biological agents as weaponsof bioterrorism or biowarfare may delay or cause resistance to bringing our products to market or limit pricing or purchases of our products, any of whichcould materially harm our business.In addition, substantial delays or cancellations of purchases could result from protests or challenges from third parties, including potential lawsuitsbrought against us by third parties such as activists. Even if not successful, such protests and litigation require us to spend time and money defending thevalue of our product or contracts. The need to address political and social issues may divert our management’s time, attention and resources from otherbusiness priorities.Additional lawsuits, publicity campaigns or other negative publicity may adversely affect the degree of market acceptance of, and thereby limit thedemand for, TPOXX® and our biodefense product candidates. In such event, our ability to market and sell such products may be hindered and thecommercial success of TPOXX® and other products we develop may be harmed, thereby reducing our revenues and having a material adverse impact on us.A U.S. Government shutdown could negatively impact our business and liquidityEach year, the U.S. Congress must pass all spending bills in the federal budget. If any such spending bill is not timely passed, a governmentshutdown will close many federally run operations, and halt work for federal employees unless they are considered essential or such work is separately fundedby industry. If a government shutdown were to occur, we could experience a delay in the contract approval process as well as funding decisions by thegovernment. Additionally, we could be materially and permanently harmed by any prolonged government shutdown.Risks Related to Sales of Biodefense Products to the U.S. GovernmentOur business could be adversely affected by a negative audit by the U.S. government.U.S. government agencies such as the Defense Contract Audit Agency (the “DCAA”), routinely audit and investigate government contractors. Theseagencies review a contractor’s performance under its contracts and grants, cost structure, and compliance with applicable laws, regulations and standards.The DCAA also reviews the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’spurchasing, property, estimating, compensation and management information systems. Any cost found to be improperly allocated to a specific contract willnot be reimbursed, and such costs already reimbursed must be refunded. If an audit uncovers improper or illegal activities, we may be subject to civil andcriminal penalties and administrative sanctions, including:•termination of contracts;•forfeiture of profits;•suspension of payments;•fines; and•suspension or prohibition from doing business with the U.S. government.Such actions would also negatively affect our reputation.Laws and regulations affecting government contracts and grants might make it more costly and difficult for us to conduct our business.We must comply with numerous laws and regulations relating to the formation, administration and performance of government contracts and grants,which can make it more difficult for us to retain our rights under these contracts. These laws and regulations affect how we do business with federal, state andlocal governmental agencies. Among the most significant government contracting regulations that affect our business are:•the Federal Acquisition Regulation and other agency-specific regulations supplemental to the Federal Acquisition Regulation, whichcomprehensively regulate the procurement, formation, administration and performance of government contracts;17Table of Contents•the business ethics and public integrity obligations, which govern conflicts of interest and the hiring offormer government employees, restrict the granting of gratuities and funding of lobbying activities and incorporate other requirements such as theAnti-Kickback Act and the Foreign Corrupt Practices Act;•export and import control laws and regulations; and•laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and theexportation of certain products and technical data.Risks Related to Regulatory ApprovalsIf we are not able to obtain regulatory approvals for TPOXX® from the FDA, we will not be able to realize the full benefits of the BARDA contract andwill not be able to commercialize our drug candidates other than through sales to BARDA, and our ability to generate revenue could be materiallyimpaired.The development and full commercialization of TPOXX®, including the testing, manufacture, safety, efficacy, recordkeeping, labeling, storage,approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the UnitedStates and by comparable authorities in other countries. We have limited experience in prosecuting an application necessary to gain FDA approval and wehave relied on third-party contract research organizations and consultants to assist us in this process. We could fail to achieve FDA approval of TPOXX®, orthere could be delays in approval of TPOXX®, or the approved version of TPOXX® may differ from expectations. Failure to obtain regulatory approval forTPOXX® will prevent us from fully commercializing TPOXX® in the United States other than through sales to BARDA under Project BioShield, and delaysor alterations to the application could also have a material adverse effect on the Company.Failure to obtain regulatory approval in international jurisdictions could prevent us from marketing our products abroad.We may seek to market our products outside the United States. To market our products in the European Union and many other foreign jurisdictions,we may need to obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. The approval procedure varies amongcountries and can involve additional testing. The time required to obtain approval may differ from that required to obtain FDA approval.The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. We may not obtain foreign regulatoryapprovals on a timely basis, if at all. Approval by FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval byone foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or jurisdictions or by the FDA. We may not beable to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any market.The Fast Track designation for TPOXX® and the priority review of the NDA may not actually lead to faster FDA approval of TPOXX®, and does notguarantee that TPOXX® will ultimately be approved.We have obtained a “Fast Track” designation from FDA for TPOXX® and our NDA has priority review. However, we may not experience a fasterapproval compared to conventional FDA procedures. Our Fast Track designation and priority review designation does not guarantee that TPOXX® willultimately be approved or approved on or before the FDA action date. While we have received a target action date of August 8, 2018 from the FDA, theagency may no meet its timeline for completing review of our NDA.The Company may or may not receive a Priority Review Voucher (PRV) as part of any FDA approval of TPOXX®, and any PRV received by the Companymay or may not generate significant cash proceeds for the Company in the foreseeable future.The 21st Century Cures Act, H.R. 6, passed Congress and was signed by then-President Obama at the end of 2016. The legislation aims to enhancethe discovery and delivery of lifesaving biomedical research, among other important initiatives. In addition, H.R. 6 established a priority review voucher(PRV) program for medical countermeasures (MCM) to encourage the development of drugs needed in the event of a global pandemic or biological weaponattack. Specifically, the program created by the new legislation established eligibility for a PRV to be granted by the FDA for newly-approved productsdirected at mitigating material biodefense threats, including smallpox. The vouchers constitute a critical incentive to spur private sector investment andinnovation in MCM research and development with the objective of fortifying the country's defenses against the world’s deadliest biological agents. Ifawarded, PRVs may be sold on the open market. Based on this new legislation, SIGA may be eligible for a18Table of ContentsPRV following FDA approval of TPOXX®. There is no assurance that TPOXX® will be approved or that the Company will be granted a PRV. SIGA will notknow until final FDA review and approval of its NDA for TPOXX® whether it has been awarded a PRV under this new legislation. If SIGA qualifies for aPRV, the potential sale of a PRV could generate significant cash proceeds, although no assurance can be given as to the nature and magnitude or timing ofsuch a sale, if any, of a PRV.Risks Related to LiquidityWithout the timely receipt of payments under the BARDA Contract in connection with FDA approval of TPOXX®, or the receipt of othersubstantial operating cash inflows, the Company would be required to obtain additional sources of funding in order to continue as a going concern andprevent an event of default under its term loan.The Company is not entitled to receive any additional procurement-related payments under the current BARDA Contract (Note 3 to theconsolidated financial statements) if and until FDA approval of TPOXX® has been achieved, and there is no difference between the approved product andcourses of TPOXX® that have been delivered to the Strategic Stockpile. Upon meeting these requirements, the Company is entitled to a $41 million holdback payment under the BARDA Contract. In the event that the Company does not receive a substantial portion of the hold back payment, or othersubstantial operating cash inflows, by October of 2018, then, based on currently forecasted operating costs, the Company will require additional sources offunding to continue operations and prevent an event of default under its term loan. In this case, the Company would seek to increase cash liquidity by:raising proceeds through a financing, entering into a new contract for TPOXX® or any other product, a sale of assets, or the modification of the existingBARDA Contract; significantly reducing its operating expenses; or modifying the terms of its loan agreement. There can be no assurance that TPOXX® willreceive FDA approval on a timely basis, if at all, or that there will be no difference between the approved product and courses of TPOXX® that have beendelivered to the Strategic Stockpile. Furthermore, there can be no assurance that the Company would be able to increase cash liquidity, if needed, through afinancing, a new contract for TPOXX® or any other product, a sale of assets, the modification of the existing BARDA Contract, or a significant reduction ofits operating expenses or operations, or that the lenders would agree to modify the term loan agreement, if needed. Because of these conditions, substantialdoubt exists about our ability to continue as a going concern within one year after the financial statement issuance date.Risks Related to Commercial ActivitiesBecause we must obtain regulatory clearance or otherwise operate under strict legal requirements in order to manufacture and market our products in theU.S., we cannot predict whether or when we will be permitted to commercialize our products other than through the BARDA Contract.Except with respect to sales to BARDA under Project BioShield, TPOXX® cannot be marketed in the U.S. until FDA approval is received. If fullregulatory clearance of a product is granted, this clearance will be limited only to those conditions for which the product is demonstrated through clinicaltrials to be safe and efficacious as set forth in its approved product label. We cannot ensure that TPOXX® or any other compound developed by us, alone orwith others, will prove to be safe and efficacious in pre-clinical or clinical trials or animal efficacy studies and will meet all of the applicable regulatoryrequirements needed to receive full marketing clearance.We may be required to perform additional clinical trials or change the labeling of our products if we or others identify side effects after our products areon the market, which could harm future sales of the affected products.If we or others identify side effects after any of our products are on the market, or if manufacturing problems occur:•regulatory approval may be withdrawn;•reformulation of our products, additional clinical trials or other testing or changes in labeling of our products may be required;•changes to or re-approvals of our manufacturing facilities may be required;•sales of the affected products may drop significantly;•our reputation in the marketplace may suffer; and•lawsuits, including class action suits, may be brought against us.19Table of ContentsAny of the above occurrences could harm or prevent future sales of the affected products or could increase the costs and expenses ofcommercializing and marketing these products.Our ability to grow our business may depend significantly on our ability to achieve sales of TPOXX® to customers other than the U.S. government.An element of our business strategy is to sell TPOXX® to customers other than the U.S. government. These potential customers include foreigngovernments and state and local governments, as well as non-governmental organizations focused on global health like the World Health Organization,health care institutions like hospitals (domestic and foreign) and certain large business organizations interested in protecting their employees against globalthreats and protecting first responders in cases of emergencies.The market for sales of TPOXX® to customers other than the U.S. government is undeveloped, and we may not be successful in generatingmeaningful sales of TPOXX®, if any, to these potential customers.If we fail to increase our sales of TPOXX® to customers other than the U.S. government, our business and opportunities for growth could be limited.The biopharmaceutical market in which we compete and will compete is highly competitive.The biopharmaceutical industry is characterized by rapid and significant technological change. Our success will depend on our ability to developand apply our technologies in the design and development of our product candidates and to establish and maintain a market for our product candidates. Inaddition, there are many companies, both public and private, including major pharmaceutical and chemical companies, specialized biotechnology firms,universities and other research institutions engaged in developing pharmaceutical and biotechnology products. Many of these companies have substantiallygreater financial, technical, research and development resources, and human resources than us. Competitors may develop products or other technologies thatare more effective than any that are being developed by us or may obtain FDA approval for products more rapidly than us. If we commence commercial salesof products, we still must compete in the manufacturing and marketing of such products, areas in which it is very difficult to succeed and in which we havelimited experience and in which we are partially dependent on third parties. Many potential competitors have manufacturing facilities and establishedmarketing capabilities that would enable such companies to market competing products through existing channels of distribution which could provide asubstantial advantage.Product liability lawsuits could cause us to incur substantial liabilities and require us to limit commercialization of any products that we may develop.We face an inherent business risk related to the sale of TPOXX® and any other products that we successfully develop and the testing of our productcandidates in clinical trials.TPOXX® is currently identified as a covered countermeasure under the PREP Act declaration issued in October 2008, as amended, which providesus with substantial immunity with respect to the manufacture, administration or use of TPOXX®. Under our BARDA Contract, the U.S. government shouldindemnify us against claims by third parties for death, personal injury and other damages related to TPOXX®, including reasonable litigation and settlementcosts, to the extent that the claim or loss results from specified risks not covered by insurance or caused by our grossly negligent or criminal behavior. Thecollection process can be lengthy and complicated, and there is no guarantee that we will be able to recover these amounts from the U.S. government.If we cannot successfully defend ourselves against future claims that our product or product candidates caused injuries and we are not entitled to orable to obtain indemnity by the U.S. government with respect to such claims, or if the U.S. government does not honor its indemnification obligations, wemay incur substantial liabilities. Regardless of merit or eventual outcome, product liability claims may result in:•decreased demand for any product candidate or product that we may develop;•injury to our reputation;•withdrawal of a product from the market;•costs and management time and focus to defend the related litigation;•substantial monetary awards to trial participants or patients;20Table of Contents•loss of revenue;•harm to our reputation; and•the inability to commercialize any products that we may develop.We currently have product liability insurance with coverage up to a $10 million annual aggregate limit and a $10 million per occurrence limit. Theamount of insurance that we currently hold may not be adequate to cover all liabilities that may occur. Product liability insurance is difficult to obtain andincreasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost and we may not be able to maintain or obtain insurancecoverage that will be adequate to satisfy any liability that may arise.Additionally, a successful product liability claim or series of claims brought against us could cause our stock price to fall, could decrease ourfinancial resources and materially exhaust our existing insurance or limit our ability to obtain insurance going forward, all of which would materiallyadversely affect our business.Healthcare reform and controls on healthcare spending may limit the price we charge for our products and the amounts that we can sell.There have been a number of legislative and regulatory proposals in the United States to change the health care system in ways that could affect ourability to sell our products profitably. One enacted proposal, the Patient Protection and Affordable Care Act, as amended by the Health Care and EducationReconciliation Act of 2010 (collectively, the “Healthcare Reform Act”), substantially changed the way healthcare is financed by both governmental andprivate insurers and will have a substantial effect on the pharmaceutical industry. The Healthcare Reform Act contains a number of provisions, includingthose governing enrollment in federal healthcare programs like Medicare, reimbursement changes and rules protecting against fraud and abuse, that willchange existing healthcare programs and will result in the development of new programs, including Medicare payment for performance initiatives andimprovements to the physician quality reporting system and feedback program. If we obtain marketing approval for our products, it is possible that some ofour revenue may be derived from governmental healthcare programs, including Medicare. Furthermore, beginning in 2011, the Healthcare Reform Actimposed a non-deductible excise tax on pharmaceutical manufacturers or importers who sell “branded prescription drugs,” which includes innovator drugsand biologics (excluding orphan drugs or generics) to U.S. government programs. The Healthcare Reform Act and other healthcare reform measures that maybe adopted in the future could have an adverse effect on our industry generally and potential future sales and profitability of our products specifically.Laws and regulations governing international operations may preclude us from developing, manufacturing and selling certain product candidates outsideof the United States and require us to revise and implement costly compliance programs.If we expand our operations outside of the United States, we must comply with numerous laws and regulations relating to our business operations ineach jurisdiction in which we plan to operate. The creation and implementation of international business practices and compliance programs is costly andsuch programs can be difficult to enforce, particularly where reliance on third parties is required.The Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from paying, offering, or authorizing payment or offering ofanything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreignentity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in theUnited States to comply with certain accounting provisions requiring the Company to maintain books and records that accurately and fairly reflect alltransactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls forinternational operations. The anti-bribery provisions of the FCPA are enforced primarily by the U.S. Department of Justice. The SEC is involved withenforcement of the books and records provisions of the FCPA.Compliance with the FCPA is expensive and can be difficult, particularly in countries in which corruption is a recognized problem. In addition, theFCPA presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors andother hospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical studies and other work have been deemedto be improper payments to government officials and have led to FCPA enforcement actions. In addition, biodefense companies like SIGA often sell theirproducts directly to foreign governments.21Table of ContentsVarious laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. If we expandour presence outside of the United States, it will require us to dedicate additional resources to compliance with these laws, and these laws may preclude usfrom developing, manufacturing, or selling certain products and product candidates outside of the United States, which could limit our growth potential andincrease our development costs.The failure to comply with laws governing international business practices may result in substantial penalties, including suspension or debarmentfrom government contracting. Violation of the FCPA can result in significant civil and criminal penalties that can be levied on the Company and itsexecutives.Indictment alone under the FCPA can lead to suspension of the right to do business with the U.S. government until the pending claims are resolved.Conviction of a violation of the FCPA can result in long-term disqualification as a government contractor. The termination of a government contract orrelationship as a result of our failure to satisfy any of our obligations under laws governing international business practices would have a material negativeimpact on our operations and harm our reputation and ability to procure government contracts. The SEC also may suspend or bar issuers from tradingsecurities on United States exchanges for violations of the FCPA’s accounting provisions.Other countries such as the UK have anti-bribery laws similar to or more expansive in scope than the FCPA which may be applicable to ouroperations.If we are unable to expand our internal sales and marketing capabilities or enter into agreements with third parties, we may be unable to generate cashflows from product sales to customers other than the U.S. government.To achieve commercial success for any approved product, we may need to enhance our own sales and marketing capabilities, enter intocollaborations with third parties able to perform these services or outsource these functions to third parties.We currently employ a small, targeted group to support development and business activities related to TPOXX®. We plan to continue to do so andexpect that we will use a similar approach for sales to the U.S. government of any other biodefense product candidates that we successfully develop. If we areunable to adequately support our development and business activities, we may be unable to expand our sales of TPOXX®, which could have an adverseeffect on our growth.Risks Related to Product DevelopmentOur business depends significantly on our success in completing development and commercialization of drug candidates that are still under development.If we are unable to commercialize these drug candidates, or experience significant delays in doing so, our business will be materially harmed.We have invested a substantial majority of our efforts and financial resources in the development of our drug candidates. Our ability to generatenear-term cash-flows is primarily dependent on the success of our oral and IV smallpox antiviral drug candidate TPOXX®. The commercial success of ourcurrent and future drug candidates will depend on many factors, including:•successful development, formulation and cGMP scale-up of drug manufacturing that meets FDA requirements;•successful development of animal models;•successful completion of non-clinical development, including studies in approved animal models;•our ability to pay the expense of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights;•successful completion of clinical trials;•receipt of marketing approvals from FDA and similar foreign regulatory authorities;•establishing arrangements on reasonable terms with suppliers and contract manufacturers;•manufacturing stable commercial supplies of drug candidates, including availability of raw materials;22Table of Contents•launching commercial sales of the product, whether alone or in collaboration with others; and•acceptance of the product by potential government customers, public health experts, physicians, patients, healthcare payors and others in themedical community.We expect to rely on FDA regulations known as the “Animal Rule” to obtain approval for certain of our biodefense drug candidates. The AnimalRule permits the use of animal efficacy studies together with human clinical safety trials to support an application for marketing approval. These regulationsare relied upon only occasionally, and both we and the government have limited experience in the application of these rules to the drug candidates that weare developing. It is possible that results from these animal efficacy studies may not be predictive of the actual efficacy of our drug candidates in humans. Ifwe are not successful in completing the development and commercialization of our drug candidates, whether due to our efforts or due to concerns raised byour governmental regulators or customers, our business would be materially adversely harmed.We will not be able to fully commercialize TPOXX®, or receive significant payments under the BARDA Contract, if our clinical trials do not demonstratesafety or our clinical trials or animal studies do not demonstrate efficacy.Before obtaining regulatory approval for the sale of our drug candidates, extensive development is required. The goal of development is to useclinical studies to demonstrate the safety of our drug candidates and animal trials to demonstrate the efficacy of our drug candidates. Clinical trials andanimal studies, and related work, is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. Success inpre-clinical testing and early clinical trials does not ensure that later clinical trials or animal efficacy studies will be successful, and interim results of aclinical trial or animal efficacy study do not necessarily predict final results.A failure of one or more of our clinical trials or animal efficacy studies can occur at any stage of development. We may experience numerousunforeseen events during, or as a result of, pre-clinical testing and the clinical trial or animal efficacy study process that could delay or prevent our ability toreceive regulatory approval or commercialize our drug candidates, including:•regulators or institutional review boards may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site;•we may decide, or regulators may require us, to conduct additional pre-clinical testing or clinical trials, or we may abandon projects that we expectto be promising, if our pre-clinical tests, clinical trials or animal efficacy studies produce negative or inconclusive results;•we might have to suspend or terminate our clinical trials if the participants are being exposed to unacceptable health risks;•regulators or institutional review boards may require that we hold, suspend or terminate clinical development for various reasons, includingnoncompliance with regulatory requirements;•the cost of our clinical trials could escalate and become cost prohibitive;•our governmental regulators may impose requirements on clinical trials, pre-clinical trials or animal efficacy studies that we cannot meet or that mayprohibit or limit our ability to perform or complete the necessary testing in order to obtain regulatory approval;•any regulatory approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the product notcommercially viable;•we may not be successful in recruiting a sufficient number of qualifying subjects for our clinical trials; and•the effects of our drug candidates may not be the desired effects or may include undesirable side effects or the drug candidates may have otherunexpected characteristics.TPOXX® is currently in product development and there can be no assurance of successful commercialization beyond the BARDA contract.To obtain FDA approval for the oral and/or IV formulation of TPOXX®, we will be required to obtain adequate proof of efficacy from multipleanimal model studies and provide animal and human safety data.23Table of ContentsThe FDA has not approved any of our biopharmaceutical product candidates. We cannot be sure our approach to drug development will be effectiveor will result in the successful commercialization of any drug. We cannot predict with certainty whether any drug resulting from our research anddevelopment efforts will be commercially available within the next several years, or if they will be available at all.Even when we receive initially positive pre-clinical or clinical results, such results do not mean that similar results will be obtained in later stages ofdrug development, such as additional animal studies or human clinical trials. All of our potential drug candidates are prone to the risks of failure inherent inpharmaceutical product development, including the possibility that none of our drug candidates will or can:•be shown to be safe, non-toxic and effective;•otherwise meet applicable regulatory standards;•receive the necessary regulatory approvals;•develop into commercially viable drugs;•be manufactured or produced economically and on a large scale;•be successfully marketed;•be paid for by governmental procurers or be reimbursed by governmental or private insurers; and•achieve customer acceptance.In addition, third parties may preclude us from marketing our drugs through enforcement of their proprietary or intellectual property rights that weare not aware of, or third parties may succeed in marketing equivalent or superior drug products. Our failure to develop safe, commercially viable drugs wouldhave a material adverse effect on our business, financial condition and results of operations.Risks Related to Our Dependence on Third PartiesIf third parties on whom we rely for clinical trials do not perform as contractually required or as we expect, we may not be able to obtain regulatoryapproval for or fully commercialize our drug candidates and our business would suffer.We do not have the ability independently to conduct the clinical trials, required to obtain regulatory approval for our products. We depend onindependent investigators, contract research organizations and other third-party service providers to conduct trials of our drug candidates and expect tocontinue to do so. We rely heavily on these third parties for successful execution of our trials, but do not exercise day-to-day control over their activities. Weare responsible for ensuring that each of our trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, theFDA requires us to comply with standards, commonly referred to as Good Clinical Practices, for conducting and recording and reporting the results of clinicaltrials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected.Similarly, animal trials are required to comply with Good Laboratory Practices.We also currently rely on third-party manufacturers and service providers to produce TPOXX®. Under the BARDA Contract, we are responsible forthe performance of these third-party contracts, and our contracts with these third parties give us certain supervisory and quality control rights, but we do notexercise complete day-to-day control over their activities.Our reliance on third parties that we do not control does not relieve us of the responsibilities and requirements imposed by the BARDA Contract.Third parties may not complete activities on schedule, or may not conduct our trials in accordance with regulatory requirements or our stated protocols. Thefailure of these third parties to carry out their obligations could delay or prevent the development, approval and commercialization of our drug candidates.Risks Related to Manufacturing and Manufacturing FacilitiesProblems related to large-scale commercial manufacturing could cause us to delay product launches, increase in costs or shortages of products.24Table of ContentsManufacturing API and finished drug products, especially in large quantities, is complex. Our drug candidates require several manufacturing steps atmultiple facilities, and may involve complex techniques to assure quality and sufficient quantity, especially as the manufacturing scale increases. Ourproducts must be made consistently and in compliance with a clearly defined manufacturing process. Accordingly, it is essential to be able to validate andcontrol the manufacturing process to assure that it is reproducible. Slight deviations anywhere in the manufacturing process, including obtaining materials,filling, labeling, packaging, storage, shipping, quality control and testing, some of which all pharmaceutical companies, including SIGA, experience fromtime to time, may result in lot failures, delay in the release of lots, product recalls or spoilage. Success rates can vary dramatically at different stages of themanufacturing process, which can lower yields and increase costs. We may experience deviations in the manufacturing process that may take significant timeand resources to resolve and, if unresolved, may affect manufacturing output and/or cause us to fail to satisfy contractual commitments, lead to delays in ourclinical trials or result in litigation or regulatory action. Such actions would hinder our ability to meet contractual obligations and could cause materialadverse consequences for our business.If third parties do not manufacture our drug candidates or products in sufficient quantities and at an acceptable cost or in compliance with regulatory orcontractual requirements and specifications, the fulfillment of contractual requirements under the BARDA contract, or any other procurement contract, orthe development of our drug candidates could be delayed, prevented or impaired.We currently rely on third parties to manufacture drug candidates, including TPOXX®. Any significant delay in obtaining adequate supplies of ourdrug candidates could adversely affect our ability to develop drug candidates or perform commercial contracts. If our contract manufacturers are unable togenerate enough materials to meet commercial obligations or satisfy clinical needs, the success of drug products may be jeopardized. Our current andanticipated future dependence upon others for the manufacture of our drug candidates may adversely affect our ability to develop drug candidates andperform on commercial contracts on a timely and competitive basis. If our third party manufacturers’ production processes malfunction or contaminate ourdrug supplies during manufacturing, we may incur significant inventory loss that may not be covered by our contractual provisions or insurance policies.We currently rely on third parties to demonstrate regulatory compliance, for regulatory and science support and for quality assurance with respect tothe drug candidates manufactured for us. We intend to continue to rely on these third parties for these purposes with respect to production of commercialsupplies of drugs that we successfully develop. Manufacturers are subject to ongoing, periodic, unannounced inspection by the FDA and corresponding stateand foreign agencies or their designees to ensure strict compliance with applicable laws and regulations.We cannot be certain that our present or future manufacturers will be able to comply with these regulations and other FDA regulatory requirementsor similar regulatory requirements outside the U.S. Our contracts and grants call for compliance with all applicable legal and regulatory requirements,however, we do not control third-party manufacturers and their methods for ensuring adherence to regulatory and legal standards. If we or these third partiesfail to comply with applicable regulations, sanctions could be imposed on us which could significantly delay and adversely affect supplies of our drugcandidates.Our activities may involve hazardous materials, use of which may subject us to environmental regulatory liabilities.Our biopharmaceutical research and development sometimes involves the use of hazardous and radioactive materials and generation of biologicalwaste. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these materials andcertain waste products. Although we believe that our safety procedures for handling and disposing of these materials comply with legally prescribedstandards, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of an accident, we could be heldliable for damages, and this liability could exceed our resources. We use, for example, small amounts of radioactive isotopes commonly used inpharmaceutical research, which are stored, used and disposed of in accordance with Nuclear Regulatory Commission regulations. Our general liability policyprovides coverage up to annual aggregate limits of $2 million and coverage of $2 million per occurrence.We believe that we are in compliance in all material respects with applicable environmental laws and regulations and currently do not expect tomake material additional capital expenditures for environmental control facilities in the near term. However, we may have to incur significant costs tocomply with current or future environmental laws and regulations.Risks Related to Our BusinessThe loss of key personnel or our ability to recruit or retain qualified personnel could adversely affect our results of operations.25Table of ContentsWe rely upon the ability, expertise, judgment, discretion, integrity and good faith of our senior management team. Our success is dependent uponour personnel and our ability to recruit and train high quality employees. We must continue to recruit, retain and motivate management and other employeessufficient to maintain our current business and support our projected growth. The loss of services of any of our key management could have a materialadverse effect on our business.Our future success depends on our ability to retain our chief executive officer and other key executives and to attract, retain and motivate qualifiedpersonnel. The loss of the services of any key executive might impede the achievement of our research, development and commercial objectives. Replacingkey employees may be difficult and time-consuming because of the limited number of individuals in our industry with the skills and experiences required todevelop, gain regulatory approval of and commercialize our product candidates successfully. We generally do not maintain key person life insurance tocover the loss of any of our employees. Recruiting and retaining qualified scientific personnel, clinical personnel and business development personnel willalso be critical to our success. We may not be able to attract and retain these personnel on acceptable terms, if at all, given the competition among numerouspharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel fromother companies, universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist usin formulating our research and development, regulatory and commercialization strategy. Our consultants and advisors may be employed by employers otherthan us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.We may have difficulty managing our growth.Potential future growth could place a significant strain on our management and operations. Our ability to manage any future growth will dependupon our ability to broaden our management team and our ability to attract, hire and retain skilled employees. Our success will also depend on the ability ofour officers and key employees to continue to implement and improve our operational and other systems and to hire, train and manage our employees.Our ability to use our net operating loss carryforwards may be limited.As of December 31, 2017, we had federal net operating loss carryforwards, or NOLs, of $174.3 million to offset future taxable income. The remainingNOLs expire in various years between 2023 and 2034, if not utilized. Under the provisions of the Internal Revenue Code, substantial changes in ourownership, in certain circumstances, will limit the amount of NOLs that can be utilized annually in the future to offset taxable income. In particular, section382 of the Internal Revenue Code imposes a limitation on a company’s ability to use NOLs if the company experiences a more-than-50% ownership changeover a three-year period. If we are limited in our ability to use our NOLs in future years in which we have taxable income, we may be required to pay moretaxes than if we were able to utilize our NOLs fully. For example, as a result of a previous change in stock ownership, the annual utilization of the NOLsgenerated in tax years prior to 2004 are subject to limitation.Risks Related to Our Intellectual PropertyOur ability to compete may decrease if we do not adequately protect our intellectual property rights.Our commercial success will depend in part on our ability to obtain and maintain patent protection for our proprietary technologies, drug targets andpotential products and to preserve our trade secrets and trademark rights. Because of the substantial length of time and expense associated with bringingpotential products through the development and regulatory clearance processes to reach the marketplace, the pharmaceutical industry places considerableimportance on obtaining patent and trade secret protection. The patent positions of pharmaceutical and biotechnology companies can be highly uncertainand involve complex legal and factual questions. No consistent policy regarding the breadth of claims allowed in biotechnology patents worldwide hasemerged to date. Accordingly, we cannot predict the type and breadth of claims allowed in patents covering our products.SIGA exclusively owns its key patent portfolio, which relates to its leading drug candidate TPOXX® (ST-246). As of January 18, 2018, the TPOXX®patent portfolio has seven patent families consisting of 14 U.S. utility patents, 43 issued foreign patents, one PCT application, seven U.S. utility patentapplications, and 62 foreign patent applications.We also rely on trade secrets, know-how, continuing technological innovation and licensing opportunities. In an effort to maintain theconfidentiality and ownership of trade secrets and proprietary information, we require our employees, consultants and some collaborators to executeconfidentiality and invention assignment agreements upon commencement of a relationship with us. These agreements may not provide meaningfulprotection for our trade secrets, confidential information or inventions in the event of unauthorized use or disclosure of such information, and adequateremedies may not exist in the event of such unauthorized use or disclosure.26Table of ContentsIf our technologies are alleged or found to infringe the patents or proprietary rights of others, we may be sued, we may have to pay damages or be barredfrom pursuing a technology, or we may have to license those rights and pay royalties to or from others on unfavorable terms. If we are sued, even if weprevail, such litigation may be costly.Our commercial success will depend significantly on our ability to operate without infringing the patents or proprietary rights of third parties. Ourtechnologies, or the technologies of third parties on which we may depend, may infringe the patents or proprietary rights of others. If there is an adverseoutcome in any dispute concerning rights to these technologies, then we could be subject to significant liability, required to license disputed rights from orto other parties and/or required to cease using a technology necessary to carry out our research, development and commercialization activities.The costs to establish or defend against claims of infringement or interference with patents or other proprietary rights can be expensive and time-consuming, even if the outcome is favorable. An outcome of any patent or proprietary rights administrative proceeding or litigation that is unfavorable to usmay have a material adverse effect on us. We could incur substantial costs if we are required to defend ourselves in suits brought by third parties or if weinitiate such suits. We may not have sufficient funds or resources in the event of litigation. Additionally, we may not prevail in any such action and suchlitigation often takes years to resolve creating business uncertainty if we are not able to resolve it quickly.Any dispute resulting from claims based on patents and proprietary rights could result in a significant reduction in the coverage of the patents orproprietary rights owned, optioned by or licensed to us and limit our ability to obtain meaningful protection for our rights. If patents are issued to thirdparties that contain competitive or conflicting claims, we may be legally prohibited from researching, developing or commercializing potential products orbe required to obtain licenses to these patents that carry royalty payments or to develop or obtain alternative technology. We may be legally prohibited fromusing technology owned by others, may not be able to obtain any license to the patents or technologies of third parties on acceptable terms, if at all, or maynot be able to obtain or develop alternative technologies.Furthermore, like many biopharmaceutical companies, we may from time to time hire scientific personnel formerly employed by other companiesinvolved in one or more areas similar to the activities conducted by us. It is possible that we and/or these individuals may be subject to allegations of tradesecret misappropriation or other similar claims as a result of their prior affiliations.Risks Related to Our Financial Position and Need for Additional FinancingOur common stock was delisted by NASDAQ, which could limit the liquidity of our common stock, increase its volatility and hinder our ability to raisecapital.In March 2015, the Company’s common stock was suspended from trading on the NASDAQ Global Market and began trading on the OTC PinkSheets, an inter-dealer electronic quotation and trading system for equity securities. This delisting has limited the liquidity of our common stock, and couldincrease its volatility and hinder our ability to raise capital. Some investors may perceive our common stock to be less attractive because it is traded on theOTC Pink Sheets. In addition, as a company quoted on the OTC Pink Sheets, we do not attract the extensive analyst coverage that accompanies companieslisted on national exchanges. Further, institutional and other investors may have investment guidelines that restrict or prohibit investing in securities tradedon the OTC Pink Sheets. These factors may have an adverse impact on the trading and price of our common stock.We have incurred operating losses since our inception and may incur net losses in the future.We incurred operating losses of approximately $18.8 million and $31.0 million for the years ended December 31, 2017 and 2016, respectively. As ofDecember 31, 2017, 2016 and 2015, our accumulated deficit was approximately $537.4 million, $501.1 million and $461.4 million, respectively. We expectto continue to have significant operating expenses and will need to generate significant revenues to achieve profitability.Our ability to fund operations is substantially dependent on cash flows from the BARDA Contract. If we do not achieve positive cash flows, wecannot guarantee that we can sustain or enhance our current level of operations. We expect that cash flows will fluctuate significantly and could be delayedfrom one quarter to another based on several factors. If cash flows grow slower than we anticipate, or if operating expenses or other expenses exceed ourexpectations or cannot be adjusted accordingly, then our business, results of operations, and financial condition will be materially and adversely affected.Because of these conditions, substantial doubt exists about our ability to continue as a going concern within one year after the financial statement issuancedate.27Table of ContentsFuture acquisitions, strategic investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of management, disruptour business, dilute stockholder value and adversely affect our operating results and financial condition.We may in the future seek to acquire or invest in businesses, products or technologies that we believe could complement or expand our services,enhance our technical capabilities or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management andcause us to incur various expenses in identifying, investigating and pursuing businesses. In addition, we may not be able to find and identify desirableacquisition targets or be successful in entering into an agreement with any particular target or consummating any such agreement. Even if we do consummatean agreement, we may not be able to integrate successfully the acquired personnel, operations and technologies, or effectively manage the combined businessfollowing the acquisitions. Acquisitions could also result in dilutive issuances of equity securities or the issuance of debt, which could adversely affect ouroperating results. In addition, if an acquired business fails to meet our expectations, our operating results, business and financial condition may suffer.We may need additional funding, which may not be available to us, and which may force us to delay, reduce or eliminate any of our product developmentprograms or commercial efforts.While we have raised funds through credit facilities and the issuance of new equity or the exercise of options or warrants in the past, there is noguarantee that we will continue to be successful in raising such funds. If we are unable to raise additional funds, we could be forced to discontinue, cease orlimit certain operations and equity investors could experience significant or total losses of their investments. Our cash flows may fall short of our projectionsor be delayed, or our expenses may increase, which could result in our capital being consumed significantly faster than anticipated.We may require additional financing and we may not be able to raise additional funds. If we are able to obtain additional financing through the saleof equity or convertible debt securities, such sales may contain terms, such as liquidation and other preferences that are not favorable to us or ourstockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuablerights to our technologies or product candidates or grant licenses on terms that may not be favorable to us. Debt financing arrangements, if available, mayrequire us to pledge certain assets or enter into covenants that would restrict our business activities or our ability to incur further indebtedness and may be atinterest rates and contain other terms that are not favorable to our stockholders.Indebtedness may make it more difficult to obtain additional financing or reduce our flexibility to act in our best interests, and default on our indebtednesswould have a material adverse effect on our business, financial condition and results of operations.The level of our indebtedness under the Loan Agreement could affect us by: making it more difficult to obtain additional financing for workingcapital, capital expenditures, debt service requirements or other purposes; shortening the duration of available revolving credit because lenders may seek toavoid conflicting maturity dates; constraining our ability to react quickly in an unfavorable economic climate or to changes in our business or thepharmaceutical industry; or potentially requiring the dedication of substantial amounts to service the repayment of outstanding debt, including periodicinterest payments, thereby reducing the amount of cash available for other purposes. In addition, the Loan Agreement contains customary covenants whichcould impact our ability to obtain additional financing and restrict our flexibility in carrying out our business strategy.Under the Loan Agreement, we are obligated to make periodic interest payments on the outstanding principal amount. Any accrued and unpaidinterest or unpaid principal will be due on the maturity date of the loan (November 16, 2020). If we do not generate sufficient operating cash flows to fundthese payments or obtain additional funding from external sources at acceptable terms, we may not have sufficient funds to satisfy our principal and interestpayment obligations when those obligations are due, which would place us into default under the terms of the Loan Agreement (as further described below).The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants. These covenants, amongother things, require a minimum cash balance throughout the term of the loan under the Loan Agreement and the achievement of regulatory milestones bycertain dates, and contain certain limitations on the ability of the Company to incur unreimbursed research and development expenditures over a certainthreshold, make capital expenditures over a certain threshold, incur indebtedness, dispose of assets outside of the ordinary course of business and enter intocertain merger or consolidation transactions. These covenants could impact our ability to obtain additional financing and restrict our flexibility in carryingout our business strategy.The Loan Agreement includes customary events of default, including, among others: (i) non-payment of amounts due thereunder, (ii) the materialinaccuracy of representations or warranties made thereunder, (iii) non-compliance with covenants thereunder, (iv) non-payment of amounts due under, or theacceleration of, other material indebtedness of the Company and (v)28Table of Contentsbankruptcy or insolvency events. Such default would have a material adverse effect on our business, financial condition and results of operations. Upon theoccurrence and during the continuance of an event of default under the Loan Agreement, the interest rate may increase by 2.00% per annum above the rate ofinterest otherwise in effect, and our Lender would be entitled to accelerate the maturity of the Company’s outstanding obligations thereunder. In addition,our indebtedness under the Loan Agreement is secured by a first priority lien on all of our existing and after-acquired property, including intellectualproperty. If we default on our obligations under the Loan Agreement, our Lender could foreclose on our assets.We may issue additional debt or incur other types of indebtedness in the future, subject to compliance with the terms of the Loan Agreement, andsuch additional indebtedness may carry with it similar risks.Risks Related to Our Common StockOur stock price is, and we expect it to remain, volatile, which could limit investors’ ability to sell stock at a profit.The volatile price of our stock makes it difficult for investors to predict the value of their investments, to sell shares at a profit at any given time, orto plan purchases and sales in advance. A variety of factors may affect the market price of our common stock. These include, but are not limited to:•publicity regarding actual or potential clinical or animal test results relating to products under development by our competitors or us;•initiating, completing or analyzing, or a delay or failure in initiating, completing or analyzing, pre-clinical or clinical trials or animal trials or thedesign or results of these trials;•achievement or rejection of regulatory approvals by our competitors or us;•announcements of technological innovations or new commercial products by our competitors or us;•developments concerning our collaborations and supply chain;•regulatory developments in the United States and foreign countries;•economic or other crises and other external factors;•period-to-period fluctuations in our revenues and other results of operations;•changes in financial estimates by securities analysts;•publicity or activity involving possible future acquisitions, strategic investments, partnerships or alliances;Additionally, because the volume of trading in our stock fluctuates significantly at times, any information about us in the media may result insignificant volatility in our stock price.We will not be able to control many of these factors, and we believe that period-to-period comparisons of our financial results will not necessarily beindicative of our future performance.In addition, the stock market in general, and the market for biotechnology companies in particular, has experienced extreme price and volumefluctuations that may have been unrelated or disproportionate to the operating performance of individual companies. These broad market and industry factorsmay seriously harm the market price of our common stock, regardless of our operating performance.If securities or industry analysts publish inaccurate or unfavorable research about our business, our stock price could decline.The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or ourbusiness. If one or more of the analysts who may cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, ourcommon stock price would likely decline.A future issuance of preferred stock may adversely affect the rights of the holders of our common stock.29Table of ContentsOur certificate of incorporation allows our Board of Directors to issue up to 20,000,000 shares of preferred stock and to fix the voting powers,designations, preferences, rights and qualifications, limitations or restrictions of these shares without any further vote or action by the stockholders. Therights of the holders of common stock will be subject to, and could be adversely affected by, the rights of the holders of any preferred stock that we may issuein the future. The issuance of preferred stock, while providing desirable flexibility in connection with our future activities, could also have the effect ofmaking it more difficult for a third party to acquire a majority of our outstanding voting stock, thereby delaying, deferring or preventing a change of control.Concentration of ownership of our capital stock could delay or prevent a change of control.Our directors, executive officers and principal stockholders beneficially own a significant percentage of our common stock. As a result, thesestockholders, if acting together, have the ability to influence the outcome of corporate actions requiring stockholder approval. Additionally, thisconcentration of ownership may have the effect of delaying or preventing a change of control of SIGA. As of the most recent available information, directors,executive officers and principal stockholders beneficially owned approximately 33% of our outstanding common stock. In addition to owning commonstock of the Company, directors and executive officers have the right to acquire additional stock through the exercise or conversion of certain securities.Item 1B. Unresolved Staff Comments None.Item 2. Properties Our headquarters are located in New York, NY and our research and development facilities are located in Corvallis, Oregon. In January 2013, weentered into a sublease for approximately 6,676 square feet with a related party to sublet office space in a New York, NY location to serve as our corporateheadquarters. The sublease commenced in April 2013 and was scheduled to expire in 2020. In July 2017, we terminated this sublease. In May 2017, weentered into a new 10-year sublease with a related party to sublet 3,200 square feet in New York, NY to serve as our new corporate headquarters.In Corvallis, we lease approximately 9,237 square feet. Until its expiration on December 31, 2017, this facility was leased under an amended leaseagreement signed in January 2007, and most recently changed through an addendum in April 2015. On November 3, 2017 we entered into a new lease for thesame space which expires in December 2019. This lease has two successive renewal options; one for two years and the other for three years.Item 3. Legal ProceedingsFrom time to time, we may be involved in a variety of claims, suits, investigations and proceedings arising from the ordinary course of our business,collections claims, breach of contract claims, labor and employment claims, tax and other matters. Although such claims, suits, investigations andproceedings are inherently uncertain and their results cannot be predicted with certainty, we believe that the resolution of such current pending matters, ifany, will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flow. Regardless of the outcome,litigation can have an adverse impact on us because of legal costs, diversion of management resources and other factors (see Note 12 to the consolidatedfinancial statements).Item 4. Mine Safety DisclosuresNo disclosure is required pursuant to this item.30Table of ContentsPART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Price Range of Common StockSince March 20, 2015, the Company's common stock has been traded on the OTC Pink Sheets. The Company's common stock traded under thesymbol “SIGAQ” from March 20, 2015 until April 17, 2016, and since April 18, 2016, it has traded under the Symbol “SIGA.” From September 9, 1997through September 2, 2009, the Company's common stock was traded on the Nasdaq Capital Market and from September 3, 2009 until March 19, 2015 it wastraded on the Nasdaq Global Market under the symbol “SIGA.” Prior to September 9, 1997 there was no public market for our common stock.The following table sets forth, for the periods indicated, the high and low sales prices for our common stock, as reported on the OTC Pink Sheets:2017High LowFirst Quarter$3.40 $2.80Second Quarter3.88 3.00Third Quarter3.39 2.85Fourth Quarter5.24 3.14 2016High LowFirst Quarter$0.88 $0.35Second Quarter1.20 0.35Third Quarter3.12 0.97Fourth Quarter3.35 1.90As of February 15, 2018, the closing sale price of our common stock was $5.94 per share. There were 34 holders of record as of February 15, 2018.We believe that the number of beneficial owners of our common stock is substantially greater than the number of record holders, because a large portion ofcommon stock is held in broker “street names.”We have paid no dividends on our common stock and do not expect to pay cash dividends in the foreseeable future. We currently intend to retainany future cash flow in excess of our operating costs to finance the growth and development of our business. Dividend payments are not permitted under theLoan Agreement.31Table of ContentsPerformance Graph The following line graph compares the cumulative total stockholder return through December 31, 2017, assuming reinvestment of dividends, by aninvestor who invested $100 on December 31, 2012 in each of (i) our common stock; (ii) the Nasdaq National Market-US; and (iii) the Nasdaq PharmaceuticalIndex. 2012 2013 2014 2015 20162017SIGA Technologies, Inc. $100 $125 $55 $16 $110$185NASDAQ Composite Index $100 $138 $157 $166 $178$229NASDAQ Biotech Composite Index $100 $166 $222 $247 $194$235Securities Authorized for Issuance Under Equity Compensation Plans The information required by this item concerning securities authorized for issuance under equity compensation plans is set forth in Item 12,“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”32Table of ContentsItem 6. Selected Financial Data The selected consolidated financial operating data for the years ended December 31, 2017, 2016 and 2015 and the consolidated balance sheet dataas of December 31, 2017 and 2016 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form10-K. The selected consolidated financial operating data for the years ended December 31, 2014 and 2013 and the consolidated balance sheet data as ofDecember 31, 2015, 2014 and 2013 have been derived from applicable audited consolidated financial statements not included in this Annual Report onForm 10-K. The following table should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results ofOperations,” and the consolidated financial statements and related notes to those statements included elsewhere in this Annual Report on Form 10-K. Year Ended December 31, 2017 2016 2015 2014 2013 (in thousands, except share and per share data)Revenues$12,269 $14,988 $8,176 $3,140 $5,519Selling, general and administrative12,303 13,714 10,582 12,647 13,119Research and development16,680 19,711 13,131 10,707 13,785Patent expenses910 909 1,009 988 1,421Litigation expense— — 14,407 188,465 197Lease termination1,225 — — — —Interest on PharmAthene liability— 11,669 — — 513Loss from operations(18,849) (31,015) (30,953) (209,667) (23,516) (Increase) decrease in fair value of common stock warrants(4,739) (895) — 313 (74) Interest expense(14,758) (2,395) (267) (456) (1,207) Backstop fee— (1,764) — — — Other income, net17 102 42 1 1 Reorganization items, net— (3,717) (7,811) (2,127) —Loss before income taxes(38,329) (39,684) (38,989) (211,935) (24,796)Benefit from (provision for) income taxes2,094 (14) (462) (53,528) 7,618Net loss$(36,235) $(39,698) $(39,451) $(265,463) $(17,177)Basic and diluted earnings (loss) per common share$(0.46) $(0.69) $(0.73) $(4.97) $(0.33)Weighted average common shares outstanding: basic and diluted78,874,494 57,188,503 53,777,687 53,419,686 52,368,842Cash and cash equivalents and short-term investments$19,858 $28,702 $112,711 $99,714 $91,310Total assets144,670 160,982 185,733 160,729 193,824Long-term obligations71,891 66,801 332 405 2,438Stockholders’ (deficiency) equity(323,138) (287,418) (284,429) (246,502) 16,975Net cash (used in) provided by operating activities$(8,158) $(115,591) $11,109 $14,177 $58,43733Table of ContentsItem 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe following discussion should be read in conjunction with our consolidated financial statements and notes to those statements and otherfinancial information appearing elsewhere in this Annual Report on Form 10-K. In addition to historical information, the following discussion and otherparts of this Annual Report contain forward-looking information that involves risks and uncertainties. Overview We are a commercial-stage pharmaceutical company focused on the health security market. Health security comprises countermeasures forbiological, chemical, radiological and nuclear attacks (biodefense market), vaccines and therapies for emerging infectious diseases, and health preparedness.Our lead product is TPOXX®, an orally administered antiviral drug for the treatment of human smallpox disease caused by variola virus.A new drug application (“NDA”) for TPOXX® was submitted by the Company to the United States Food & Drug Administration (“FDA”) inDecember 2017. In February 2018, the Company received notice that the FDA granted priority review of the NDA and that the FDA's target final action dateis August 8, 2018. While TPOXX® is not yet approved as safe or effective by the FDA, it is a novel small-molecule drug that is being delivered to the U.S.Strategic National Stockpile (“Strategic Stockpile”) under the Project BioShield Act of 2004 (“Project BioShield”).Lead Product-TPOXX® On May 13, 2011, the Company signed a contract with the U.S. Biomedical Advanced Research and Development Authority (“BARDA”) pursuantto which SIGA agreed to deliver two million courses of TPOXX® to the Strategic Stockpile. The contract with BARDA (as amended, modified, orsupplemented from time to time, the “BARDA Contract”) includes a base contract (“Base Contract”) as well as options. The Base Contract contemplatesapproximately $472.3 million of payments, of which $409.8 million is consideration for the manufacture and delivery of 1.7 million courses of TPOXX® and$62.5 million is available for certain reimbursements in connection with development and supportive activities.Under the Base Contract, BARDA has agreed to buy from the Company 1.7 million courses of TPOXX®. Additionally, the Company has agreed tocontribute to BARDA 300,000 courses at no additional cost to BARDA. A total of 2.0 million courses of TPOXX® is required to be delivered to the StrategicStockpile in order for the Company to be eligible to receive a $40.9 million hold back payment.In addition to the Base Contract, the BARDA Contract also contains various remaining options that, if exercised by BARDA: would result in a $50.0million payment to us in the event of FDA approval for extension to 84-month expiry for TPOXX® (from 38-month expiry as required in the Base Contract);up to $58.3 million of funding for development and supportive activities such as work on a smallpox prophylaxis indication for TPOXX®; and/or $14.4million of funding for production-related activities related to warm-base manufacturing. In 2015, BARDA exercised two options related to extending theindication of the drug to the geriatric and pediatric populations. The stated value of these exercises was minimal. BARDA may choose in its sole discretionnot to exercise any or all of the unexercised options. BARDA has indicated that it will evaluate, after the FDA's review and evaluation of stability data, ourrequest that BARDA exercise the option for the $50.0 million payment to us in the event of FDA approval of 84-month expiry for TPOXX®.The BARDA Contract expires in September 2020.For courses of TPOXX® that are physically delivered to the Strategic Stockpile, we have replacement obligations, at no cost to BARDA, in the eventthat the final version of TPOXX® approved by the FDA is different from any courses of TPOXX® that has been delivered to the Strategic Stockpile or ifTPOXX® does not meet any specific label claims, fails release testing or does not meet the 38-month expiry period (from time of delivery to the StrategicStockpile), or if TPOXX® is recalled or deemed to be recalled for any reason.LiquidityThe accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern and contemplate therealization of assets and the satisfaction of liabilities in the normal course of business. We are not entitled to receive additional procurement-related paymentsunder the current BARDA Contract (Note 3 to the consolidated financial statements) if and until FDA approval of TPOXX® has been achieved and there is nodifference between the approved34Table of Contentsproduct and courses of TPOXX® that have been delivered to the Strategic Stockpile. Upon meeting the aforementioned requirements, a determination ofwhich is expected in the third quarter of 2018, we will be entitled to a $41 million hold back payment under the BARDA Contract.In the event that we do not receive a substantial portion of the hold back payment, or other substantial cash inflows, by October of 2018, then, basedon currently forecasted operating costs, we will require additional sources of funding to continue operations and prevent an event of default under the TermLoan Agreement (Note 7 to the consolidated financial statements). In this case, we would seek to increase cash liquidity by: raising proceeds through afinancing, entering into a new contract for TPOXX® or any other product, a sale of assets, or modification of the existing BARDA Contract; significantlyreducing operating expenses; or modifying the terms of the Term Loan Agreement. There can be no assurance that TPOXX® will receive FDA approval on atimely basis, if at all, or that there will be no difference between the approved product and courses of TPOXX® that have been delivered to the StrategicStockpile. Furthermore, there can be no assurance that we would be able to increase cash liquidity, if needed, through a financing, a new contract forTPOXX® or any other product, a sale of assets, the modification of the existing BARDA Contract, or a significant reduction of operating expenses oroperations, or that the lenders would agree to modify the Term Loan Agreement, if needed. Because of these conditions, substantial doubt exists about ourability to continue as a going concern within one year after the financial statement issuance date.Closing of Chapter 11 CaseOn April 12, 2016, we emerged from chapter 11 of the Bankruptcy Code when our plan of reorganization (the “Plan”) became effective, and onDecember 22, 2016 our chapter 11 case was closed by the Bankruptcy Court. Under the Plan, we fully paid all of our claims. We did not apply the provisionsof fresh start accounting as ownership of existing shares of our common stock remained unaltered by the Plan.Prior to April 12, 2016, the effective date of the Plan, we were operating our business as a “debtor-in-possession.” We had filed on September 16,2014 a voluntary petition for relief under chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court forthe Southern District of New York (the “Bankruptcy Court”) chapter 11 Case Number 14-12623 (SHL). The chapter 11 case preserved our ability to satisfyour commitments under the BARDA Contract (Note 3 to the consolidated financial statements) and preserved our operations, which likely would have beenjeopardized by the enforcement of a judgment stemming from our litigation with PharmAthene, Inc. (“PharmAthene”) (see “PharmAthene Litigation” below).While operating as a debtor-in-possession under chapter 11, we pursued an appeal of the Delaware Court of Chancery Final Order and Judgment, withouthaving to post a bond. PharmAthene Litigation On November 16, 2016, we satisfied the Outstanding Judgment (as defined in Note 12 to the consolidated financial statements) owed toPharmAthene in connection with our litigation with PharmAthene. In total, PharmAthene was paid $217.0 million in connection with the OutstandingJudgment. See Note 12 to the consolidated financial statements for additional details related to this litigation. Critical Accounting Estimates The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the results we report in ourconsolidated financial statements, which we discuss under the heading “Results of Operations” following this section of our Management’s Discussion andAnalysis of Financial Condition and Results of Operations. Some of our accounting policies require us to make difficult and subjective judgments, often as aresult of the need to make estimates of matters that are inherently uncertain. Our most critical accounting estimates include revenue recognition, thevaluation of warrants granted or issued by us, and income taxes (including realization of deferred tax assets).Revenue RecognitionRevenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable, collectability isreasonably assured, title and risk of loss have been transferred to the customer and there are no further contractual obligations.Certain arrangements may provide for multiple deliverables, in which there may be a combination of: up-front licenses; research, development,regulatory or other services; and delivery of product. Multiple deliverable arrangements can be divided into separate units of accounting if the deliverablesin the arrangement meet the following criteria: (i) the delivered item(s) have35Table of Contentsvalue to the customer on a standalone basis and (ii) in circumstances in which an arrangement includes a general right of return with respect to delivereditems, then performance of the remaining deliverables must be considered probable and substantially in our control. If multiple deliverables cannot bedivided into separate units of accounting then the deliverables must be combined into a single unit of accounting.Total consideration in a multiple deliverable arrangement is allocated to units of accounting on a relative fair value of selling price basis.Consideration allocated to a delivered item or unit of accounting is limited to the amount that is not contingent upon delivery of additional items.The BARDA Contract is a multiple deliverable arrangement comprising delivery of courses and covered research and development activities. TheBARDA Contract contains certain product replacement rights with respect to delivered courses. For this reason, recognition of revenue that might otherwiseoccur upon delivery of courses is expected to be deferred until our obligations related to potential replacement of delivered courses are satisfied. Accordinglywe have deferred revenue for all amounts received to date under the BARDA Contract except for revenue recognized for amounts received with respect toBARDA’s obligation to reimburse the cost of covered research and development services.Subject to the above, payments for development activities are recognized as revenue when earned, over the period of effort. Funding for theacquisition of capital assets under cost-plus-fee contracts and grants is evaluated for appropriate recognition as a reduction to the cost of the acquired asset, afinancing arrangement, or revenue, based on the specific terms of the related grant or contract.Income TaxesOur income tax expense and, deferred tax assets and liabilities reflect management’s best estimate of current and future taxes to be paid. We aresubject to US federal income tax and state income tax in numerous jurisdictions. Significant judgments and estimates are required in the determination of ourincome tax expense.Deferred income taxes arise from temporary differences between the tax basis of assets and their reported amounts in the financial statements, whichwill result in taxable or deductible amounts in the future. Each reporting period, we assess the realizability of our deferred tax assets to determine if thedeductible temporary differences will be utilized on a more-likely-than-not basis. In making this determination, we assess all available positive and negativeevidence to determine if our existing deferred tax assets are realizable on a more-likely-than-not basis. Significant weight is given to positive and negativeevidence that is objectively verifiable. We consider the reversal of existing taxable temporary differences, projected future taxable income, tax planningstrategies and recent financial operating results. The realization of a deferred tax asset is ultimately dependent on our generation of sufficient taxable incomewithin the available net operating loss carryback and/or carryforward periods to utilize the deductible temporary differences. Based on the weight ofavailable evidence including three-year cumulative pre-tax losses, the Company continues to maintain a valuation allowance against its net deferred taxassets, with the exception of minimum tax credit carry forwards as we believe these are realizable on a more likely-than-not basis because they have beenmade refundable due to the Tax Cuts and Jobs Act.The amount of deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the net operatingloss carryforward period change and/or if significant objective negative evidence is no longer present. Such changes could lead to a change in judgmentrelated to the realization of the net deferred tax asset. Future changes in the estimated amount of deferred taxes expected to be realized will be reflected in ourfinancial statements in the period the estimate is changed with a corresponding adjustment to operating results.Income tax benefits are recognized for a tax position when, in management’s judgment, it is more likely than not that the position will be sustainedupon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, the tax benefit is measured as thelargest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. As of December 31,2017 and 2016, we have no uncertain tax positions. In the event that we conclude that it is subject to interest and/or penalties arising from uncertain taxpositions, we will present interest and penalties as a component of income taxes.Warrant LiabilityWe account for warrants in accordance with the authoritative guidance which requires that free-standing derivative financial instruments withcertain cash settlement features be classified as assets or liabilities at the time of the transaction, and recorded at their fair value. Fair value is estimated usinga model-derived valuation. Determining the fair value for warrants includes the expected volatility of our stock. Any changes in the fair value of the warrantsare reported in earnings or loss as long as they are classified as assets or liabilities.36Table of ContentsRecently Issued Accounting Pronouncements For discussion regarding the impact of accounting standards that were recently issued but are not yet effective, on our consolidated financialstatements, see Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements. 37Table of ContentsResults of Operations for the Years ended December 31, 2017, 2016, and 2015 Revenues from research and development contracts and grants for the years ended December 31, 2017 and 2016, were $12.3 million and $15.0million respectively. The decrease in revenue of $2.7 million, or 18.1%, primarily relates to a decrease in revenues from our federal contracts supporting thedevelopment of TPOXX®. Revenues from federal contracts supporting the development of TPOXX® have decreased because active studies involvingTPOXX® have decreased in number and scale in comparison to prior year activity.Revenues from research and development contracts and grants for the years ended December 31, 2016 and 2015, were $15.0 million and $8.2million, respectively. The increase in revenue of $6.8 million, or 83%, reflected a $7.6 million increase in revenues from our federal contracts supporting thedevelopment of TPOXX®, partially offset by a $744,000 decrease in revenues from our grant revenues supporting research related to dengue fever. Revenuesfrom federal contracts supporting the development of TPOXX® increased because active studies involving TPOXX® increased in number and scale incomparison to prior year activity.Selling, general and administrative expenses (“SG&A”) for the years ended December 31, 2017 and 2016 were $12.3 million and $13.7 million,respectively, reflecting a decrease of $1.4 million, or (10.3)%. The decrease is primarily attributable to a $1.9 million decrease in professional service fees,partially offset by a $0.9 million increase in employee compensation expense. The decrease in professional service fees is primarily due to the final resolutionof the PharmAthene litigation and related strategic initiatives, which has resulted in a decrease in legal fees. The net increase in employee compensationexpense reflects an increase in senior management headcount, partially offset by a reduction in annual bonus expense in 2017(one-time bonuses were paid in2016 in connection with the satisfaction of the PharmAthene liability).SG&A for the years ended December 31, 2016 and 2015 were $13.7 million and $10.6 million, respectively, reflecting an increase of $3.1 million, or29.6%. The increase was primarily attributable to: a $2.2 million increase in annual bonus expense related to operating performance and performance inconnection with strategic initiatives related to satisfaction of the PharmAthene liability; an increase of $1.2 million in professional service fees in connectionwith strategic initiatives related to satisfaction of the PharmAthene liability; and $684,000 of primarily professional service fees incurred post Effective Dateof the Plan and in connection with the chapter 11 case and implementation of the reorganization plan. These factors were partially offset by a decrease inprofessional service fees in connection with PharmAthene litigation and a decrease of approximately $600,000 in stock-based compensation expense.Research and development (“R&D”) expenses were $16.7 million for the year ended December 31, 2017, a decrease of approximately $3.0 million,or (15.4)% from the $19.7 million incurred during the year ended December 31, 2016. The decrease is primarily attributable to a decrease of $2.9 million indirect vendor-related expenses supporting the development of TPOXX® (number and scale of active studies decreased) and a $0.6 million decrease in bonusexpense (one-time bonuses were paid in 2016 for the satisfaction of the PharmAthene liability). These decreases were partially offset by a $536,000 netexpense related to an inventory write-down. The $536,000 expense relates to a $686,000 inventory write-down, partially offset by contractual ContractManufacturing Organizations (“CMO”) credits received in connection with the inventory write-down.R&D expenses were $19.7 million for the year ended December 31, 2016, an increase of approximately $6.6 million, or 50% from the $13.1 millionincurred during the year ended December 31, 2015. The increase is primarily attributable to: an increase of $6.8 million in direct vendor-related expensessupporting the development of TPOXX® (number and scale of active studies increased); and a $1.0 million increase in bonus expense related to operatingperformance and performance in connection with strategic initiatives related to satisfaction of the PharmAthene liability. These factors were partially offsetby a $577,000 decrease in direct vendor-related expenses supporting the development and research of dengue fever; no leasehold write-offs in 2016 whereasthere was a $244,000 write-off in 2015; and a decrease of $210,000 in stock-based compensation expense.Patent expenses for the years ended December 31, 2017, 2016 and 2015 were $910,000, $909,000, and $1.0 million, respectively. These expensesreflect our ongoing efforts to protect our lead drug candidates in varied geographic territories.Lease termination expense for the year ended December 31, 2017 was approximately $1.2 million. This expense relates to the Old HQ SubleaseTermination Agreement. See Note 13 to the consolidated financial statements for additional information. For the year ended December 31, 2016, we recorded approximately $11.7 million of interest expense on the38Table of ContentsPharmAthene liability. This amount represents interest expense related to the post-judgment interest on the Delaware Court of Chancery Final Order andJudgment. On November 16, 2016, we fully satisfied the PharmAthene liability, and thus there was no interest expense on the PharmAthene liability for theyear ended December 31, 2017.Interest expense for the year ended December 31, 2017 was $14.8 million, an increase of approximately 12.4 million from the $2.4 million incurredduring the year ended December 31, 2016. The increase is primarily attributable to a full 12 months of interest accrued on the Term Loan in 2017; incomparison, less than two months of interest accrued in 2016. The $14.8 million of interest for the year ended December 31, 2017 includes: $10.3 million ofcash payments from restricted cash and $4.5 million of accretion of unamortized costs and fees related to the Term Loan balance. The $2.4 million of interestfor the year ended December 31, 2016 included $1.3 million of cash payments from restricted cash and $1.1 million of accretion of unamortized costs andfees related to the Term Loan balance. Interest expense for the year ended December 31, 2015 of $267,000 primarily reflected fees incurred in connectionwith the termination of the General Electric Corporation term loan in January 2015.Changes in the fair value of liability classified warrants to acquire common stock were recorded within the income statement. For the years endedDecember 31, 2017 and 2016, we recorded a loss of approximately $4.7 million and $895,000, respectively, reflecting an increase in fair value of liabilityclassified warrants. For the year-ended December 31, 2016, we incurred a non-cash backstop fee of approximately $1.8 million in connection with a rights offering andpursuant to a backstop agreement with an affiliate of MacAndrews & Forbes Inc. and other backstop parties.Reorganization expenses in connection with the chapter 11 filing for the years ended December 31, 2016 and 2015 were approximately $3.7 millionand $7.8 million, respectively. Reorganization expenses for the year-ended December 31, 2016 represents expenses incurred up to the Effective Date of thePlan.For the year ended December 31, 2017, we incurred a tax benefit of approximately $2.1 million on pre-tax losses of $38.3 million. Our effective taxrate for the year ended December 31, 2017 was 5.5%.On December 22, 2017, the U.S. government enacted comprehensive tax reform commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). UnderFASB Accounting Standards Codification (“ASC”) 740, the effects of changes in tax rates and laws are recognized in the period which the new legislation isenacted. The TCJA makes broad and complex changes to the U.S. tax code, including, but not limited to: (1) reducing the U.S. federal corporate tax rate from35% to 21%; (2) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (3)bonus depreciation that will allow for full expensing of qualified property; (4) creating a new limitation on deductible interest expense; (5) eliminating thecorporate alternative minimum tax; (6) limitation on the deductibility of executive compensation under Internal Revenue Code §162(m); and (7) new taxrules related to foreign operations.On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the taxeffects of TCJA. The purpose of SAB 118 was to address any uncertainty or diversity of view in applying ASC Topic 740, Income Taxes in the reportingperiod in which the TCJA was enacted. SAB 118 addresses situations where the accounting is incomplete for certain income tax effects of the TJCA uponissuance of a company’s financial statements for the reporting period which includes the enactment date. SAB 118 allows for a provisional amount to berecorded if it is a reasonable estimate of the impact of the TCJA. Additionally, SAB 118 allows for a measurement period to finalize the impacts of the TCJA,not to extend beyond one year from the date of enactment.In connection with the initial analysis of the impact of the TCJA, we recorded a provisional decrease in our deferred tax assets and liabilities with acorresponding adjustment to the related valuation allowance. In addition, the Company recorded an income tax benefit of $2.1 million primarily related toour Minimum Tax Credit carryforwards as such amounts will be refundable, in cash, under TCJA. As of December 31, 2017, the Company has approximately$2.7 million of minimum tax credits which are expected to be refunded no later than 2021. While we are able to make a reasonable estimate of the impact ofthe reduction in the corporate rate, such estimate is subject to further analysis, interpretation and clarification of the TCJA, which could result in changes tothis estimate during 2018.For the year ended 2016, we incurred a tax provision of $13,884 on pre-tax net losses of $39.7 million. Our effective tax rate for the year endedDecember 31, 2016 was 0.03%. Our effective tax rate was impacted by recurring items such as current operating losses with no tax benefit, federal alternativeminimum tax, state taxes, and the change in the valuation allowance for deferred tax liabilities associated with indefinite-lived intangible assets. Suchdeferred tax liabilities generally cannot be used as a source of taxable income to realize deferred tax assets with a definitive loss carryforward period.39Table of ContentsLiquidity and Capital Resources As of December 31, 2017, we had $19.9 million in cash and cash equivalents compared with $28.7 million at December 31, 2016. Additionally, as ofDecember 31, 2017, we had $17.2 million of restricted cash compared with $27.5 million at December 31, 2016. The restricted cash is utilized to pay intereston the Term Loan as it becomes due and $5.0 million of the restricted cash may be withdrawn after June 30, 2018 upon the satisfaction of certain conditions.See Note 7 to the consolidated financial statements for additional information.The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern and contemplate therealization of assets and the satisfaction of liabilities in the normal course of business. We are not entitled to receive additional procurement-related paymentsunder the current BARDA Contract (Note 3 to the consolidated financial statements) if and until FDA approval of the oral formulation of TPOXX® has beenachieved and there is no difference between the approved product and courses of TPOXX® that have been delivered to the Strategic Stockpile. Upon meetingthe aforementioned requirements, a determination of which is currently expected in the third quarter of 2018, we will be entitled to a $41 million hold backpayment under the BARDA Contract.Operating ActivitiesWe prepare our consolidated statement of cash flows using the indirect method. Under this method, we reconcile net loss to cash flows fromoperating activities by adjusting net loss for those items that impact net loss but may not result in actual cash receipts or payments during the period. Thesereconciling items include but are not limited to interest paid with restricted cash, stock-based compensation and changes in the fair value of our warrantliability; gains and losses from various transactions and changes in the consolidated balance sheet for working capital from the beginning to the end of theperiod.Net cash used in operating activities for the years ended December 31, 2017 and 2016 was $8.2 million and $115.6 million, respectively.For the year ended December 31, 2017, cash usage was primarily due to: $16.5 million of cash operating expenses (net loss adjusted for non-cashitems noted in the cash flow statement such as interest expense and change in fair value of warrants) and $4.9 million of payments to CMOs for themanufacture and related support of TPOXX®, partially offset by $8.5 million of cash received from BARDA for product deliveries of TPOXX® as well asreimbursement payments under the BARDA contract of certain vendor costs that were paid in the prior year.For the year ended December 31, 2016, cash usage was primarily attributable to $170 million of payments made to PharmAthene by the Company,which in combination with a $46.9 million payment made directly to PharmAthene by the Lender under the Term Loan, fully satisfied the PharmAtheneclaim (the $46.9 million payment by the Lender is not part of operating activities within the cash flow statement). Cash usage was also due to: operatingexpenses; costs attendant to the administration of the chapter 11 case; pre-petition claim payments (other than the PharmAthene claim); $31.4 million ofpayments to CMOs for the manufacture and related support of TPOXX®. These amounts were partially offset by $111.2 million of cash received fromBARDA for product deliveries of TPOXX® and achieving a milestone under the BARDA contract. On December 31, 2017 and 2016, our accounts receivable balance was approximately $1.8 million and $3.2 million, respectively. Our accountsreceivable balances primarily reflect reimbursable work performed during December 31, 2017 and 2016 in connection with TPOXX®.Our accounts payable, accrued expenses and other current liabilities balances were $6.8 million and $7.1 million on December 31, 2017 and 2016,respectively. Investing ActivitiesNet cash (used in) provided by investing activities for the years ended December 31, 2017 and 2016 was $(0.1) million and $1.2 million,respectively.For the year ended December 31, 2017 we purchased $100,000 of equipment in the ordinary course of business.For the year ended December 31, 2016, we received $1.2 million in connection with the return of collateral supporting a surety bond that had beenposted in 2012 in connection with the PharmAthene litigation.40Table of ContentsFinancing ActivitiesNet cash used in financing activities for the year ended December 31, 2017 was $0.6 million, whereas $30.4 million of cash was provided byfinancing activities for the year ended December 31, 2016.For the year ended December 31, 2017, cash was used to repurchase $591,000 of common stock to meet minimum statutory tax withholdingrequirements for shares issued to employees in connection with the release of restricted stock units and the exercise of stock appreciation rights and options.Additionally, we bought back $84,000 of options at intrinsic value, and we received $89,000 in connection with the exercise of options.On November 16, 2016, the Term Loan was funded and a rights offering was completed. The Rights Offering provided net proceeds ofapproximately $34.6 million through the sale of 23.5 million shares of common stock. In connection with the Term Loan, we paid $3.8 million of costs.Separately, during 2016, we repurchased $428,009 of common stock to meet minimum statutory tax withholding requirements for restricted shares issued toemployees.The Term Loan provided $46.9 million ($50 million, less fees and expenses of $3.1 million) that was paid directly by the Lender to PharmAthene aspart of the full satisfaction of the PharmAthene claim. The Term Loan placed an additional $30 million in a reserve account to be utilized primarily to payinterest on the Term Loan (such amount being recorded as restricted cash).41Table of ContentsContractual Obligations, Commercial Commitments and Purchase Obligations Future contractual obligations and commercial commitments as of December 31, 2017 are expected to be as follows: Total Less than 1 year 1 to 3 years 3 to 5 yearsOperating lease obligations (1)$2,233,090 $571,705 $943,496 $717,889Term loan obligations at maturity84,000,000 — 84,000,000 —Interest payment obligations on the Term Loan (2)30,813,895 10,701,305 20,112,590 —Purchase obligations (3)3,098,877 2,888,177 210,700 —Payments under Lease Termination Agreement886,180 318,123 568,057 —Total contractual obligations$121,032,042 $14,479,310 $105,834,843 $717,889(1)Includes facilities and office space under two operating leases expiring in 2019 and 2027, respectively. These obligations assume non-terminationof agreements and represent expected payments, which are subject to change.(2)Includes amounts to be paid with restricted cash. Assumes interest rate of 13.2% throughout the duration of the Term Loan.(3)Includes purchase orders for manufacturing and R&D activities.Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements.Item 7A. Quantitative and Qualitative Disclosures About Market Risk Our investment portfolio includes cash and cash equivalents. Our main investment objectives are the preservation of investment capital and themaximization of after-tax returns on our investment portfolio. We believe that our investment policy is conservative, both in the duration of our investmentsand the credit quality of the investments we hold. We do not utilize derivative financial instruments, derivative commodity instruments or other market risksensitive instruments, positions or transactions to manage exposure to interest rate changes. As such, we believe that, the securities we hold are subject tomarket risk, changes in the financial standing of the issuer of such securities and our interest income is sensitive to changes in the general level of U.S.interest rates. Additionally, we are also subject to the risk of rising LIBOR rates; whenever the minimum rate among one-month, two-month, three-month andsix-month LIBOR rates (“minimum LIBOR rate”) is above 1%, then the interest rate charged on the Term Loan could increase materially depending on themagnitude of any increase in LIBOR rates. For every increase of 0.50% in the minimum LIBOR rate (e.g. an increase from a LIBOR rate of 1.25% to 1.75%),annual interest payments on the Term Loan would increase by $405,556. Furthermore, we are subject to the impact of stock price fluctuations of our commonstock in that we have a liability classified warrant in which 2.7 million shares of SIGA common stock can be purchased at a strike price of $1.50. For every $1increase in the stock price of SIGA, the intrinsic value of the liability classified warrant will increase by approximately $2.7 million.42Table of ContentsItem 8. Financial Statements and Supplementary Data Index to the Consolidated Financial StatementsReport of Independent Registered Public Accounting Firm44 Consolidated Balance Sheets46 Consolidated Statements of Operations and Comprehensive Loss47 Consolidated Statements of Changes in Stockholders’ Deficiency48 Consolidated Statements of Cash Flows49 Notes to Consolidated Financial Statements5043Table of ContentsReport of Independent Registered Public Accounting FirmTo the Shareholders and Board of Directors of SIGA Technologies, Inc.Opinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of SIGA Technologies, Inc. and its subsidiary as of December 31, 2017 and 2016, and therelated consolidated statements of operations and comprehensive loss, changes in stockholders' deficiency and cash flows for each of the three years in theperiod ended December 31, 2017, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited theCompany's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all materialrespects, effective internal control over financial reporting as of December 31, 2017 , based on criteria established in Internal Control - IntegratedFramework (2013) issued by the COSO.Substantial Doubt About the Company’s Ability to Continue as a Going ConcernThe accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note1 to the consolidated financial statements, the Company has cash outflows for operating activities and has a net capital deficiency that raise substantial doubtabout its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do notinclude any adjustments that might result from the outcome of this uncertainty.Basis for OpinionsThe Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, andfor its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over FinancialReporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company'sinternal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting OversightBoard (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internalcontrol over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financialstatements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles usedand significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internalcontrol over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performingsuch other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable44Table of Contentsassurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effecton the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ PRICEWATERHOUSECOOPERS LLPFlorham Park, New JerseyMarch 6, 2018 We have served as the Company’s auditor since 1997.45Table of ContentsSIGA TECHNOLOGIES, INC.CONSOLIDATED BALANCE SHEETSAs of December 31, 2017 December 31, 2016ASSETS Current assets Cash and cash equivalents$19,857,833 $28,701,824Restricted cash, short-term10,701,305 10,138,890Accounts receivable1,802,107 3,154,370Inventory2,983,249 26,209,964Prepaid expenses and other current assets2,019,999 954,426Total current assets37,364,493 69,159,474 Property, plant and equipment, net138,640 299,477Restricted cash, long-term6,542,448 17,333,332Deferred costs96,592,334 72,649,277Deferred tax asset, net2,431,963 —Goodwill898,334 898,334Other assets702,167 642,083Total assets$144,670,379 $160,981,977LIABILITIES AND STOCKHOLDERS’ DEFICIENCY Current liabilities Accounts payable$1,328,867 $2,517,072Accrued expenses and other current liabilities5,481,579 4,584,752Total current liabilities6,810,446 7,101,824Deferred revenue377,641,485 367,483,905Warrant liability11,466,162 6,727,409Deferred income tax liability, net— 286,066Other liabilities840,253 247,989Long-term debt71,050,324 66,553,053Total liabilities467,808,670 448,400,246 Commitments and Contingencies Stockholders’ deficiency Common stock ($.0001 par value, 600,000,000 shares authorized, 79,039,000 and 78,692,612 issued and outstandingat December 31, 2017, and December 31, 2016, respectively)7,904 7,869Additional paid-in capital214,229,581 213,714,154Accumulated deficit(537,375,776) (501,140,292)Total stockholders’ deficiency(323,138,291) (287,418,269)Total liabilities and stockholders’ deficiency$144,670,379 $160,981,977The accompanying notes are an integral part of these financial statements.46Table of ContentsSIGA TECHNOLOGIES, INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSSFor the Years Ended December 31 2017 2016 2015Revenues Research and development$12,268,960 $14,987,628 $8,175,878 Operating expenses Selling, general and administrative12,303,050 13,713,635 10,582,068Research and development16,679,712 19,710,673 13,130,529Patent expenses909,946 909,376 1,009,053Litigation expense— — 14,407,494Lease termination1,225,421 — —Interest on PharmAthene liability— 11,668,900 —Total operating expenses31,118,129 46,002,584 39,129,144Operating loss(18,849,169) (31,014,956) (30,953,266) Interest expense(14,758,140) (2,395,517) (266,726)Loss from increase in fair value of warrant liability(4,738,753) (894,785) —Backstop fee— (1,764,240) —Other income, net16,788 102,324 42,202Reorganization items, net— (3,716,902) (7,811,551) Loss before income taxes(38,329,274) (39,684,076) (38,989,341)Benefit/(Provision) for income taxes2,093,790 (13,884) (461,983)Net and comprehensive loss$(36,235,484) $(39,697,960) $(39,451,324)Loss per common share: basic and diluted$(0.46) $(0.69) $(0.73)Weighted average common shares outstanding: basic and diluted78,874,494 57,188,503 53,777,687The accompanying notes are an integral part of these financial statements.47Table of ContentsSIGA TECHNOLOGIES, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCYFor the Years Ended December 31, 2017, 2016 and 2015 Accumulated Additional Other Total Common Stock Paid-In Accumulated Comprehensive Stockholders’ Shares Amount Capital Deficit Income (Loss) DeficiencyBalances, December 31, 201453,504,296 $5,351 $175,483,180 $(421,991,008) $— $(246,502,477)Net loss (39,451,324) (39,451,324)Issuance of common stock upon exercise of stockoptions and warrants610,000 60 12,140 12,200Stock-based compensation 1,528,582 1,528,582Change in excess tax benefit stock-based compensation,value (15,531) (15,531)Balances, December 31, 201554,114,296 $5,411 $177,008,371 $(461,442,332) $— $(284,428,550)Net loss (39,697,960) (39,697,960)Issuance of common stock upon exercise of RSU's483,335 48 (48) —Stock-based compensation 775,541 775,541Payment of common stock tendered for employee stock-based compensation tax obligations(136,744) (13) (427,996) (428,009)Issuance of common stock associated with rights offering23,523,195 2,352 34,594,117 34,596,469Issuance of common stock associated with backstopagreement708,530 71 1,764,169 1,764,240Balances, December 31, 201678,692,612 $7,869 $213,714,154 $(501,140,292) $— $(287,418,269)Net loss (36,235,484) (36,235,484)Issuance of common stock upon exercise of stockoptions33,870 3 89,495 89,498Issuance of common stock upon vesting of RSUs andexercise of stock-settled appreciation rights466,328 47 (47) —Payment of common stock tendered for employee stock-based compensation tax obligations(153,810) (15) (591,052) (591,067)Stock-based compensation— — 1,101,031 1,101,031Buy-back of stock options— — (84,000) (84,000)Balances, December 31, 201779,039,000 $7,904 $214,229,581 $(537,375,776) $— $(323,138,291)The accompanying notes are an integral part of these financial statements.48Table of ContentsSIGA TECHNOLOGIES, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFor the Years Ended December 31, 2017 2016 2015Cash flows from operating activities: Net loss$(36,235,484) $(39,697,960) $(39,451,324)Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and other amortization132,189 174,275 247,357Loss on change in fair value of warrant liability4,738,753 894,785 —Lease termination1,225,421 — —Stock-based compensation1,101,031 775,541 1,574,038Deferred income taxes (benefit)/provision(2,718,029) 20,423 21,103Write down of inventory, net536,000 — —Non-cash backstop fee— 1,764,240 —Loss on disposal of assets— — 243,707Non-cash interest expense4,497,271 566,779 10,052Interest expense on term loan-paid with restricted cash10,228,469 1,222,222 —Changes in assets and liabilities: Accounts receivable1,352,263 522,360 (3,185,098) Inventory22,690,715 (13,762,876) 6,597,389 Deferred costs(23,943,057) (19,712,849) (20,075,554) Prepaid expenses and other current assets(1,065,573) (330,443) 229,266 Other assets(60,084) 80,928 — Accounts payable, accrued expenses and other current liabilities(1,847,427) (177,342) 1,862,779 Liabilities subject to compromise— (160,072,170) (192,067,797) Deferred revenue11,412,898 112,225,534 255,176,572 Other liabilities(203,654) (84,228) (73,107) Net cash (used in) provided by operating activities(8,158,298) (115,590,781) 11,109,383Cash flows from investing activities: Capital expenditures(100,124) (23,927) (108,953) Return of collateral for surety bond— 1,212,591 — Restricted cash— — 4,000,000 Net cash (used in) provided by investing activities(100,124) 1,188,664 3,891,047Cash flows from financing activities: Net proceeds from exercise of warrants and options89,498 — 12,200 Net proceeds from equity rights offering-net of offering costs— 34,596,468 — Buy-back of stock options(84,000) — — Payment of employee tax obligations for common stock tendered(591,067) (428,009) — Debt issuance costs— (3,775,546) — Repayment of long-term debt— — (2,000,000) Excess tax benefit from stock-based compensation— — (15,531) Net cash (used in) provided by financing activities(585,569) 30,392,913 (2,003,331)Net decrease/increase in cash and cash equivalents(8,843,991) (84,009,204) 12,997,099Cash and cash equivalents at beginning of period28,701,824 112,711,028 99,713,929Cash and cash equivalents at end of period$19,857,833 $28,701,824 $112,711,028Supplemental disclosure of cash flows information: Portion of Term Loan paid directly to PharmAthene by the Lender in satisfaction of the PharmAthene claim; suchliability is part of the Liabilities Subject to Compromise line item$— 46,900,000 $—Cash interest paid on PharmAthene liability$— 11,668,900 $—Cash interest paid on Term Loan from restricted cash$10,288,469 $1,222,222 $—Cash income taxes paid (refund)$325,000 $500,975 $(420,029)Fair value of warrant, at issuance date, in connection with loan agreement and recorded as warrant liability$— $5,832,624 $—The accompanying notes are an integral part of these financial statements49SIGA TECHNOLOGIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Organization and Basis of Presentation Description of BusinessSIGA Technologies, Inc. (“SIGA” or the “Company”) is a commercial-stage pharmaceutical company focused on the health security market. Health securitycomprises countermeasures for biological, chemical, radiological and nuclear attacks (biodefense market), vaccines and therapies for emerging infectiousdiseases, and health preparedness. Our lead product is TPOXX®, an orally administered antiviral drug for the treatment of human smallpox disease caused byvariola virus.In December of 2017, the Company submitted a New Drug Application (“NDA”) to the U.S Food and Drug Administration (“FDA”) for TPOXX®. In February2018, the Company received notice that the FDA granted priority review of the NDA and that the FDA's target final action date is August 8, 2018.LiquidityThe accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate therealization of assets and the satisfaction of liabilities in the normal course of business. The Company is not entitled to receive additional procurement-relatedpayments under the current BARDA Contract (Note 3) if and until FDA approval of TPOXX® has been achieved, and there is no difference between theapproved product and courses of TPOXX® that have been delivered to the U.S. Strategic National Stockpile (“Strategic Stockpile”). Upon meeting theaforementioned requirements, a determination of which is currently expected in the third quarter of 2018, the Company will be entitled to a $41 million holdback payment under the BARDA Contract.In the event that the Company does not receive a substantial portion of the hold back payment, or other substantial cash inflows, by October of 2018, then,based on currently forecasted operating costs, the Company will require additional sources of funding to continue operations and prevent an event of defaultunder the term loan (Note 7). In this case, the Company would seek to increase cash liquidity by: raising proceeds through a financing, entering into a newcontract for TPOXX® or any other product, a sale of assets, or the modification of the existing BARDA Contract; significantly reducing its operatingexpenses; or modifying the terms of the Term Loan Agreement. There can be no assurance that TPOXX® will receive FDA approval on a timely basis, if at all,or that there will be no difference between the approved product and courses of TPOXX® that have been delivered to the Strategic Stockpile. Furthermore,there can be no assurance that the Company would be able to increase cash liquidity, if needed, through a financing, a new contract for TPOXX® or any otherproduct, a sale of assets, the modification of the existing BARDA Contract, or a significant reduction of its operating expenses or operations, or that thelenders would agree to modify the Term Loan Agreement, if needed. Because of these conditions, substantial doubt exists about the Company's ability tocontinue as a going concern for one year from the financial statement issuance date.Closing of Chapter 11On April 12, 2016, the Company emerged from chapter 11 of the Bankruptcy Code when the Company's plan of reorganization (the “Plan”) became effective,and on December 22, 2016 the Company's chapter 11 case was closed by the Bankruptcy Court. Under the Plan, the Company fully paid all of its claims. TheCompany did not apply the provisions of fresh start accounting as ownership of existing shares of the Company's common stock remained unaltered by thePlan.Prior to April, 12 2016, the effective date of the Plan, the Company was operating its business as a “debtor-in-possession.” The Company had filed onSeptember 16, 2014, a voluntary petition for relief under chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United StatesBankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) chapter 11 Case Number 14-12623 (SHL). The chapter 11 case preservedthe Company's ability to satisfy its commitments under the BARDA Contract (as defined in Note 3) and preserved its operations, which likely would havebeen jeopardized by the enforcement of a judgment stemming from the Company's litigation with PharmAthene, Inc. (“PharmAthene”) (see “PharmAtheneLitigation” below). While operating as a debtor-in-possession under chapter 11, the Company pursued an appeal of the Delaware Court of Chancery FinalOrder and Judgment, without having to post a bond.PharmAthene LitigationOn November 16, 2016, the Company satisfied the Judgment (as defined in Note 12) owed to PharmAthene in connection with the Company's litigation withPharmAthene. In total, PharmAthene was paid $217.0 million in connection with the Judgment. See Note 12 for additional details related to this litigation.50Table of Contents2. Summary of Significant Accounting Policies Use of EstimatesThe consolidated financial statements and related disclosures are prepared in conformity with accounting principles generally accepted in the United Statesof America. Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingentassets and liabilities at the date of the financial statements and revenue and expenses during the periods reported. The most significant estimates include thevariables used in the calculation of fair value of stock-based awards and warrants granted or issued by the Company; reported amounts of revenue; and therealization of deferred tax assets. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the financial statements inthe period they are determined to be necessary. Actual results could differ from these estimates. Basis of PresentationThe consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States of America (“USGAAP”) and reflect the consolidated financial position, results of operations and cash flows for all periods presented.Cash EquivalentsThe Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.Restricted Cash and Cash EquivalentsA portion of the Company’s cash received under the Loan Agreement is restricted. In accordance with the Loan Agreement, cash placed in the reserve accountis restricted. Except for $5 million, cash in the reserve account can only be utilized to pay interest on the Term Loan. The aforementioned $5 million in thereserve account can be withdrawn after June 30, 2018 upon the satisfaction of certain conditions. As of December 31, 2017, the restricted cash balance was$17.2 million of which $10.7 million is designated as a current asset and the remainder is designated as non-current. See Note 7 for additional information.Concentration of Credit RiskThe Company has cash in bank accounts that exceed the Federal Deposit Insurance Corporation insured limits. The Company has not experienced any losseson its cash accounts and no allowance has been provided for potential credit losses because management believes that any such losses would be minimal, ifany.Accounts ReceivableAccounts receivable are recorded net of provisions for doubtful accounts. At December 31, 2017 and 2016, 100% of accounts receivables representedreceivables from Biomedical Advanced Research and Development Authority (“BARDA”) and National Institutes of Health (“NIH”). An allowance fordoubtful accounts is based on specific analysis of the receivables. At December 31, 2017 and 2016, the Company had no allowance for doubtful accounts. InventoryInventory is stated at the lower of cost or net realizable value. The Company capitalizes inventory costs associated with the Company’s products when, basedon management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized; otherwise, suchcosts are expensed as research and development. Inventory is evaluated for impairment periodically to identify inventory that may expire prior to expectedsale or has a cost basis in excess of its net realizable value. If certain batches or units of product no longer meet quality specifications or become obsolete dueto expiration, the Company records a charge to write down such unmarketable inventory to its net realizable value. As of December 31, 2017, inventory isexpected to have a shelf life in excess of five years and is expected to be available for delivery under any new procurement contracts.Property, Plant and EquipmentProperty, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation is provided on a straight-line method over the estimateduseful lives of the various asset classes. The estimated useful lives are as follows: five years for laboratory equipment; three years for computer equipment;and seven years for furniture and fixtures. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the lease term.Maintenance, repairs and minor replacements are charged to expense as incurred.51Table of ContentsWarrant LiabilityThe Company accounts for warrants in accordance with the authoritative guidance which requires that free-standing derivative financial instruments withcertain cash settlement features be classified as assets or liabilities at the time of the transaction, and recorded at their fair value. Fair value is estimated usingmodel-derived valuations. Any changes in the fair value of the derivative instruments are reported in earnings or loss as long as the derivative contracts areclassified as assets or liabilities.Revenue RecognitionRevenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, collectability is reasonablyassured, title and risk of loss have been transferred to the customer and there are no further contractual obligations.Certain arrangements may provide for multiple deliverables, in which there may be a combination of: up-front licenses; research, development, regulatory orother services; and delivery of product. Multiple deliverable arrangements can be divided into separate units of accounting if the deliverables in thearrangement meet the following criteria: (i) the delivered item(s) have value to the customer on a standalone basis and (ii) in circumstances in which anarrangement includes a general right of return with respect to delivered items, then performance of the remaining deliverables must be considered probableand substantially in control of the Company. If multiple deliverables cannot be divided into separate units of accounting then the deliverables must becombined into a single unit of accounting.Total consideration in a multiple deliverable arrangement is allocated to units of accounting on a relative fair value of selling price basis. Considerationallocated to a delivered item or unit of accounting is limited to the amount that is not contingent upon delivery of additional items.Direct costs incurred by the Company and associated with the deferral of revenue for a unit of accounting are also deferred and are recognized as expenses inthe same period that the related deferred revenue is recognized as revenue.Subject to the above, payments for development activities are recognized as revenue when earned, over the period of effort. Funding for the acquisition ofcapital assets under cost-plus-fee contracts or grants is evaluated for appropriate recognition as a reduction to the cost of the asset, a financing arrangement, orrevenue based on the specific terms of the related grant or contract. For the years ended December 31, 2017, 2016, and 2015, revenues from BARDA and NIH were 100% of total revenues recognized by the Company. Research and DevelopmentResearch and development expenses include costs directly and indirectly attributable to the conduct of research and development programs, and performancepursuant to the BARDA Contract, including employee related costs, materials, supplies, depreciation on and maintenance of research equipment, the cost ofservices provided by outside contractors, including services related to the Company’s clinical trials and facility costs, such as rent, utilities, and generalsupport services. All costs associated with research and development are expensed as incurred. Costs related to the acquisition of technology rights, for whichdevelopment work is still in process, and that have no alternative future uses, are expensed as incurred. GoodwillThe Company evaluates goodwill for impairment at least annually or as circumstances warrant. The impairment review process compares the fair value of thereporting unit in which goodwill resides to its carrying value. The Company operates as one business and one reporting unit. Therefore, the goodwillimpairment analysis is performed on the basis of the Company as a whole, using the market capitalization of the Company as an estimate of its fair value.Share-based CompensationStock-based compensation expense for all share-based payment awards made to employees and directors is determined on the grant date; for options awards,fair value was estimated using the Black-Scholes model and for stock-settled stock appreciation rights (“SSARs”), fair value was estimated using the MonteCarlo method. The value of the portion of the award that is ultimately expected to vest is recorded as expense over the requisite service periods in theCompany’s consolidated statement of operations. These compensation costs are recognized net of an estimated forfeiture rate over the requisite service periods of the awards. Forfeitures are estimated on thedate of the respective grant and revised if actual or expected forfeiture activity differs from original estimates. Income Taxes52Table of ContentsThe Company recognizes income taxes utilizing the asset and liability method of accounting for income taxes. Under this method, deferred income taxes arerecorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities at enacted tax rates expected to bein effect for the years in which the differences are expected to reverse. A valuation allowance is established if it is more likely than not that some or the entiredeferred tax asset will not be realized. The recognition of a valuation allowance for deferred taxes requires management to make estimates and judgmentsabout the Company’s future profitability which are inherently uncertain.Net Loss per ShareThe objective of basic earnings per share (“EPS”) is to measure the performance of an entity over the reporting period by dividing income (loss) by theweighted average shares outstanding. The objective of diluted EPS is consistent with that of basic EPS, except that it also gives effect to all potentiallydilutive common shares outstanding during the period.The Company incurred losses for the years ended December 31, 2017, 2016 and 2015. For all periods presented, all equity instruments are excluded from thecalculation of diluted earnings (loss) per share as the effect of such shares is anti-dilutive. The weighted average number of equity instruments excludedconsist of: Year Ended December 31, 2017 2016 2015Stock Options1,386,176 1,789,751 2,047,083Stock-Settled Stock Appreciation Rights (“SSAR”)333,252 360,031 368,331Restricted Stock Units1,396,730 705,850 700,265Warrants2,690,950 877,303 82,192As discussed in Note 10, the appreciation of each SSAR was capped at a determined maximum value. As a result, the weighted average number shown in thetable above for stock-settled stock appreciation rights reflects the weighted average maximum number of shares that could be issued.Fair Value of Financial InstrumentsThe carrying value of cash and cash equivalents, restricted cash and cash equivalents, accounts payable and accrued expenses and other current liabilitiesapproximates fair value due to the relatively short maturity of these instruments. Common stock warrants which are classified as liabilities are recorded attheir fair market value as of each reporting period.The measurement of fair value requires the use of techniques based on observable and unobservable inputs. Observable inputs reflect market data obtainedfrom independent sources, while unobservable inputs reflect our market assumptions. The inputs create the following fair value hierarchy:•Level 1 – Quoted prices for identical instruments in active markets.•Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active;and model-derived valuations where inputs are observable or where significant value drivers are observable.•Level 3 – Instruments where significant value drivers are unobservable to third parties.The Company uses model-derived valuations where certain inputs are unobservable to third parties to determine the fair value of common stock warrants on arecurring basis and classify such liability-classified warrants in Level 3. As described in Note 8, the fair value of the liability-classified warrant was $11.5million at December 31, 2017.At December 31, 2017, the fair value of the debt was $74.1 million and the carrying value of the debt was $71.0 million. The Company used a discountedcash flow model to estimate the fair value of the debt by applying a discount rate to future payments expected to be made as set forth in the Loan Agreement. The fair value of the loan was measured using Level 3 inputs. The discount rate was determined using market participant assumptions. There were no transfers between levels of the fair value hierarchy during 2017. In addition, there were no Level 1 or Level 2 financial instruments as ofDecember 31, 2017 and 2016.The following table presents changes in the liability-classified warrant measured at fair value using Level 3 inputs:53Table of Contents Fair Value Measurements of Level 3 liability classifiedwarrantWarrant liability at December 31, 2016$6,727,409Increase in fair value of warrant liability4,738,753Warrant liability at December 31, 2017$11,466,162Loss ContingenciesThe Company is subject to certain contingencies arising in the ordinary course of business. The Company records accruals for these contingencies to theextent that a loss is both probable and reasonably estimable. If some amount within a range of loss appears to be a better estimate than any other amountwithin the range, that amount is accrued. Alternatively, when no amount within a range of loss appears to be a better estimate than any other amount, thelowest amount in the range is accrued. The Company expenses legal costs associated with loss contingencies as incurred. We record anticipated recoveriesunder existing insurance contracts when recovery is assured.Segment InformationThe Company is managed and operated as one business. The entire business is managed by a single management team that reports to the chief executiveofficer, who is the Chief Operating Decision Maker. The Company does not operate separate lines of business or separate business entities with respect to anyof its product candidates. Accordingly, the Company does not prepare discrete financial information with respect to separate product areas or by location andhas only one reportable segment.RevisionIn connection with the preparation of the consolidated financial statements for the year ended December 31, 2017, the Company identified that its warrantliability was incorrectly classified as a current liability on the December 31, 2016 balance sheet. The 2016 balance sheet has been revised to properlyclassify the warrant liability as a long-term liability. This revision does not impact the consolidated statement of operations and comprehensive loss, theconsolidated statement of cash flows or the consolidated statement of changes in stockholders’ deficiency for the year ended December 31, 2016 and is notconsidered material to the previously issued consolidated financial statements or the current consolidated financial statements for the year ended December31, 2017 as a whole. Recent Accounting PronouncementsIn July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this ASU change theclassification analysis of certain equity-linked financial instruments (or embedded features) with down round features. The amendments in Part II of this ASUrecharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception.Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this ASU are effective for fiscal years, andinterim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interimperiod. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includesthat interim period. The Company has elected to early adopt ASU No. 2017-11. which retained the liability classification of the Company's warrant and hadno impact on the Company's consolidated financial statements.On May 10, 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718)-Scope of Modification Accounting. The guidanceclarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modificationaccounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the changein terms or conditions. The standard is effective for financial statements issued for fiscal years beginning after December 13, 2017, and interim periods withinthose fiscal years. Early adoption is permitted. The Company believes the adoption of ASU No. 2017-09 will not have a significant impact on itsconsolidated financial statements.On January 26, 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. Theguidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be theamount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairmentguidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitativeimpairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carryingamounts. The revised guidance will be applied prospectively, and is effective for fiscal years beginning after December 15, 2019. Early54Table of Contentsadoption is permitted for any impairment tests performed after January 1, 2017. The Company believes the adoption of ASU No. 2017-04 will not have asignificant impact on its consolidated financial statements.On November 17, 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, a consensus of the FASB’s EmergingIssues Task Force. The new standard requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, andamounts generally described as restricted cash or restricted cash equivalents. Entities will also be required to reconcile such total to amounts on the balancesheet and disclose the nature of the restrictions. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2017,and interim periods within those fiscal years. Early adoption is permitted. The guidance requires application using a retrospective transition method. TheCompany believes the adoption of ASU No. 2016-18 will have a significant impact due to the fact the Company will reflect sources and uses of restrictedcash in the consolidated statement of cash flows and provide a reconciliation of restricted cash balances.On August 26, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), a consensus of the FASB’s Emerging Issues Task Force. Thenew guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The standard is effective forfinancial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted,provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. TheCompany believes the adoption of ASU No. 2016-15 will not have a significant impact on its consolidated financial statements.In March 2016, the FASB amended the existing accounting standards for stock-based compensation, ASU No. 2016-09, Compensation- Stock Compensation(Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments impact several aspects of accounting for share-based paymenttransactions, including the income tax consequences, expected forfeitures, classification of awards as either equity or liabilities, and classification in thestatement of cash flows. The Company adopted the amendments in the first quarter of 2017. Prior to adoption of ASU No. 2016-09, tax attributes related tostock option windfall deductions were not recorded until they resulted in a reduction of cash tax payable. As of December 31, 2016, the excluded windfalldeductions for federal and state purposes were $1.6 million. Upon adoption of ASU No. 2016-09, the Company recognized the excluded windfall deductionsas a deferred tax asset with a corresponding offset to the valuation allowance.With regard to the forfeiture policy election, we will continue to estimate the number of awards expected to be forfeited.On February 25, 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842), which relates to the accounting for leasing transactions. This standard requiresa lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than 12 months. Inaddition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. This standard will be effective for fiscalyears beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact that ASU No.2016-02 will have on its consolidated financial statements. The Company expects its real estate leases to be capitalized on its balance sheet.In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No. 2014-09 supersedes the revenue recognitionrequirements in Topic 605, Revenue Recognition, and most industry-specific revenue recognition guidance throughout the Industry Topics of theAccounting Standards Codification. Additionally, this update supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The core principle of the guidance is that an entity should recognize revenue to depict the transfer ofpromised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods orservices. It is effective for the first interim period within annual reporting periods beginning after December 15, 2017, and early adoption is permitted for thefirst interim periods beginning after December 15, 2016. The Company will adopt this standard in the first quarter of 2018 using the modified retrospectivemethod, which will not change any of the historical financial results previously reported by the Company. Any adjustment upon adoption will be recorded asan accumulated adjustment due to a change in accounting in the stockholders' deficiency section of the Company's consolidated balance sheet. TheCompany has determined that revenue connected with courses of TPOXX® delivered to BARDA and related services, milestones and advance payments(activities in combination that constitute one performance obligation) will be recognized at a point in time when the constraint on revenue (quantification,and specification, of any possible replacement obligation) has been resolved. Currently, the revenue constraint is not expected to be resolved prior toadoption of this standard. As such, the Company does not expect adoption of this standard to have an impact on the timing of revenue recognition for theabove-mentioned activities. Separately, the Company has determined that revenue for performance obligations associated with R&D activities will berecognized over time similar in manner to the Company’s historical approach. As a result, the Company believes the adoption of ASU No.2014-09 will nothave a significant impact on its consolidated financial statements.55Table of Contents3. Procurement Contract and Research Agreements Procurement ContractOn May 13, 2011, the Company signed a contract with the U.S. Biomedical Advanced Research and Development Authority (“BARDA”) pursuant to whichSIGA agreed to deliver two million courses of TPOXX® to the Strategic Stockpile. The contract with BARDA (as amended, modified, or supplemented fromtime to time, the “BARDA Contract”) includes a base contract (“Base Contract”) as well as options (described below). The Base Contract contemplatesapproximately $472.3 million of payments, of which $409.8 million is consideration for the manufacture and delivery of 1.7 million courses of TPOXX® and$62.5 million is available for certain development and supportive activities.Under the Base Contract, BARDA has agreed to buy from the Company 1.7 million courses of TPOXX®. Additionally, the Company has agreed to contributeto BARDA 300,000 courses at no additional cost to BARDA. A total of 2.0 million courses of TPOXX® is required to be delivered to the Strategic Stockpilein order for the Company to be eligible to receive a $40.9 million hold back payment (see description of hold back payment below).For courses of TPOXX® that are physically delivered to the Strategic Stockpile, the Company has replacement obligations, at no cost to BARDA, in theevent that the final version of TPOXX® approved by the FDA is different from any courses of TPOXX® that have been delivered to the Strategic Stockpile orif TPOXX® does not meet any specified label claims, fails release testing or does not meet the 38-month expiry period (from time of delivery to the StrategicStockpile), or if TPOXX® is recalled or deemed to be recalled for any reason.As of December 31, 2017, the Company has received $368.9 million under the Base Contract related to the manufacture and physical delivery of courses ofTPOXX®. Included in this amount are a $41.0 million advance payment in 2011 for the completion of certain planning and preparatory activities related tothe Base Contract, a $12.3 million milestone payment in 2012 for the completion of the product labeling strategy for TPOXX®, an $8.2 million milestonepayment in 2013 for the completion of the commercial validation campaign for TPOXX®, a $20.5 million milestone payment in 2016 for submission ofdocumentation to BARDA indicating that data covering the first 100 subjects enrolled in the phase III pivotal safety study had been submitted to andreviewed by a Data Safety and Monitoring Board (“DSMB”) and that such DSMB had recommended continuation of the safety study, as well as submissionof the final pivotal rabbit efficacy study report to the FDA, and $286.9 million of payments for physical deliveries of TPOXX® to the Strategic Stockpilebeginning in 2013.As of December 31, 2017, the Company has cumulatively delivered 2.0 million courses of TPOXX® to the Strategic Stockpile. The dosage of coursesdelivered is 600 mg administered twice per day (1,200 mg per day). In February 2016, the FDA confirmed (through dose concurrence) its earlier dosageguidance of 600 mg administered twice per day (1,200 mg per day). Courses delivered to the Strategic Stockpile are currently subject to a productreplacement obligation (as discussed above).As of December 31, 2017, the Company is eligible under the Base Contract to receive a $40.9 million hold back payment, which represents an approximate10% hold back on the $409.8 million of total payments related to the manufacture and delivery of 1.7 million courses of TPOXX® under the Base Contract.The $40.9 million hold back payment would be triggered by FDA approval of TPOXX®, as long as the Company does not have a continuing productreplacement obligation to BARDA.In addition to the Base Contract, the BARDA Contract also includes remaining options that, if all were exercised by BARDA, would result in aggregatepayments to the Company of $122.7 million, including: a $50.0 million payment to the Company in the event of FDA approval for extension to 84-monthexpiry for TPOXX® (from 38-month expiry as required in the Base Contract); up to $58.3 million of funding for development and supportive activities suchas work on a smallpox prophylaxis indication for TPOXX®; and/or $14.4 million of funding for production-related activities related to warm-basemanufacturing. In 2015, BARDA exercised two options related to extending the indication of the drug to the geriatric and pediatric populations. The statedvalue of these exercises was minimal. BARDA, in its sole discretion, may choose not to exercise unexercised options. However, BARDA has indicated that itwill evaluate, after the FDA’s review and evaluation of stability data, the Company's request that BARDA exercise the option for the $50.0 million paymentto the Company in the event of FDA approval of 84-month expiry for TPOXX®.The BARDA Contract expires in September 2020.The BARDA Contract is a multiple deliverable arrangement comprising delivery of courses and covered research and development activities. The BARDAContract provides certain product replacement rights with respect to delivered courses. For this reason, recognition of revenue that might otherwise occurupon delivery of courses is expected to be deferred until the Company’s obligations related to potential replacement of delivered courses are satisfied. TheCompany assessed the selling price for each of the aforementioned deliverables-research and development activities and drug product. The selling price ofcertain reimbursed56Table of Contentsresearch and development services was determined by reference to existing and past research and development grants and contracts between the Companyand various government agencies. The selling price of drug product was determined by reference to other companies’ sales of drug products such as antiviraltherapeutics, orphan drugs and drugs with potential life-saving impact similar to TPOXX®, including products delivered to the Strategic Stockpile.The Company has recognized revenue for reimbursement of certain BARDA Contract research and development services. Cash inflows related to delivery ofcourses are recorded as deferred revenue. In addition, direct costs incurred by the Company to fulfill the delivery of courses including the supplementing ofcourses previously delivered under the BARDA Contract are being deferred and will be recognized as expenses in the same period that the related deferredrevenue is recognized as revenue.As of December 31, 2017 and December 31, 2016, deferred direct costs under the BARDA Contract of approximately $96.5 million and $72.2 million,respectively, are included in deferred costs on the consolidated balance sheets. As of December 31, 2017, the Company recorded $377.6 million of deferredrevenue in connection with the BARDA contract. This amount has been recorded for the delivery of courses of TPOXX® to the Strategic Stockpile andcertain supportive services provided as part of the BARDA Contract. For the year ended December 31, 2017 revenue from reimbursed research anddevelopment was $9.0 million.Research Agreements and GrantsThe Company has an R&D program for the intravenous (IV) formulation of TPOXX®. This program is funded by a development contract with BARDA. Thedevelopment contract has a period of performance that terminates on December 30, 2020. As of December 31, 2017, the development contract provides forfuture aggregate research and development funding of approximately $12.9 million.Contracts and grants include, among other things, options that may or may not be exercised at the U.S. Government’s discretion. Moreover, contracts andgrants contain customary terms and conditions including the U.S. Government’s right to terminate or restructure a contract or grant for convenience at anytime. As such, we may not be able to utilize all available funds.4. InventoryDue to the deferral of revenue under the BARDA Contract (see Note 3 for additional information), amounts that would be otherwise recorded as cost of goodssold for delivered courses are recorded as deferred costs on the consolidated balance sheets. The value of inventory represents the costs incurred tomanufacture TPOXX®.Inventory consisted of the following: As of December 31, 2017 December 31, 2016Work in-process$2,025,445 $18,916,084Finished goods957,804 7,293,880Inventory$2,983,249 $26,209,964For the years ended December 31, 2017 and 2016, research and development expenses include net inventory-related losses of approximately $536,000 and$0, respectively. The $536,000 loss for the year ended December 31, 2017 relates to a $686,000 inventory write-down, partially offset by credits receivedfrom contract manufacturing organizations (“CMO”) in connection with the inventory write-down.57Table of Contents5. Property, Plant and Equipment Property, plant and equipment consisted of the following: As of December 31, 2017 December 31, 2016Leasehold improvements$2,420,028 $2,542,044Computer equipment701,762 770,479Furniture and fixtures363,588 455,220 3,485,378 3,767,743Less-accumulated depreciation(3,346,738) (3,468,266)Property, plant and equipment, net$138,640 $299,477Depreciation and amortization expense on property, plant, and equipment was $132,189, $174,275, and $247,357 for the years ended December 31, 2017,2016, and 2015, respectively. In connection with the lease termination discussed in Note 13, the Company wrote off $129,000 of leasehold improvementsand furniture and fixtures during the year ended December 31, 2017.6. Accrued Expenses Accrued expenses and other current liabilities consisted of the following: As of December 31, 2017 December 31, 2016Bonus$2,538,340 $2,357,194Deferred revenue-R&D for TPOXX® intravenous formulation1,255,318 —Professional fees381,980 481,641Vacation328,588 262,664Other977,353 1,483,253Accrued expenses and other current liabilities$5,481,579 $4,584,7527. DebtOn September 2, 2016, the Company entered into a loan and security agreement (as amended from time to time, the “Loan Agreement”) with OCM StrategicCredit SIGTEC Holdings, LLC (“Lender”), pursuant to which the Company received $80.0 million (less fees and other items) on November 16, 2016 havingsatisfied certain pre-conditions. Such $80.0 million had been placed in an escrow account on September 30, 2016 (the “Escrow Funding Date”). Prior to theEscrow Release Date (November 16, 2016), the Company did not have access to, or any ownership interest in, the escrow account. Until the Escrow ReleaseDate occurred, the Company did not have an obligation to make any payments under the Loan Agreement, no security was granted under the LoanAgreement and no affirmative or negative covenants or events of default were effective under the Loan Agreement. Amounts were held in the escrow accountuntil the satisfaction of certain conditions including the closing of the Rights Offering (see Note 9) on November 16, 2016. As part of the satisfaction of thePharmAthene claim, funds were released from the escrow account (the date on which such transfer occurred, the (“Escrow Release Date”).The Loan Agreement provides for a first-priority senior secured term loan facility in the aggregate principal amount of $80.0 million (the “Term Loan”), ofwhich (i) $25.0 million was placed in a reserve account (the “Reserve Account”) only to be utilized to pay interest on the Term Loan as it becomes due; (ii)an additional $5.0 million was also placed in the Reserve Account and up to the full amount of such $5.0 million may be withdrawn after June 30, 2018 uponthe satisfaction of certain conditions, provided that any of such amount is required to fund any interest to the extent any interest in excess of theaforementioned $25.0 million is due and owing and any of such $5.0 million remains in the Reserve Account; and (iii) $50.0 million (net of fees andexpenses then due and owing to the Lender) was paid to PharmAthene as part of the final payment to satisfy the PharmAthene claim. Interest on the TermLoan is at a per annum rate equal to the Adjusted LIBOR rate plus 11.5%, subject to adjustments as set forth in the Loan Agreement. At December 31, 2017,the effective interest rate on the Term Loan, which includes interest payments and accretion of unamortized costs and fees, was 18.8%. The Companyincurred approximately $14.8 million of interest expense58Table of Contentsduring the year-ended December 31, 2017, of which $10.3 million was paid from restricted cash and the remaining $4.5 million accreted to the Term Loanbalance.The Term Loan shall mature on the earliest to occur of (i) the four-year anniversary of the Escrow Release Date, and (ii) the acceleration of certain obligationspursuant to the Loan Agreement. At maturity, $80.0 million of principal will be repaid, and an additional $4.0 million will be paid (see below). Prior tomaturity, there are no scheduled principal payments.Through the three and one-half year anniversary of the Escrow Release Date, any prepayment of the Term Loan is subject to a make-whole provision in whichinterest payments related to the prepaid amount are due (subject to a discount of treasury rate plus 0.50%).In connection with the Term Loan, the Company has granted the Lender a lien on and security interest in all of the Company’s right, title and interest insubstantially all of the Company’s tangible and intangible assets, including all intellectual property.The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants. These covenants, among otherthings, require a minimum cash balance throughout the term of the Term Loan and the achievement of regulatory milestones by certain dates, and containcertain limitations on the ability of the Company to incur unreimbursed research and development expenditures over a certain threshold, make capitalexpenditures over a certain threshold, incur indebtedness, dispose of assets outside of the ordinary course of business and enter into certain merger orconsolidation transactions. The aforementioned minimum cash requirement was $10.0 million and reduces to $5.0 million for 2018 until the earlier of (i)December 31, 2018 and (ii) 45 days after FDA approval of TPOXX®; thereafter, the minimum cash requirement will be $20.0 million.The Loan Agreement includes customary events of default, including, among others: (i) non-payment of amounts due thereunder, (ii) the material inaccuracyof representations or warranties made thereunder, (iii) non-compliance with covenants thereunder, (iv) non-payment of amounts due under, or the accelerationof, other material indebtedness of the Company and (v) bankruptcy or insolvency events. Upon the occurrence and during the continuance of an event ofdefault under the Loan Agreement, the interest rate may increase by 2.00% per annum above the rate of interest otherwise in effect, and the Lender would beentitled to accelerate the maturity of the Company’s outstanding obligations thereunder.As of December 31, 2017, the Company is in compliance with the Loan Agreement covenants.In connection with the Loan Agreement, the Company incurred $8.2 million of costs (including interest on amounts held in the escrow account betweenSeptember 30, 2016 and November 15, 2016). Furthermore, an additional $4.0 million will become payable when principal of the Term Loan is repaid. Aspart of the Company's entry into the Loan Agreement, the Company issued the Warrant (see Note 8) with a fair market value of $5.8 million. The fair value ofthe Warrant, as well as costs related to the Term Loan issuance, were recorded as deductions to the Term Loan balance on the Balance Sheet. These amountsare being amortized using the effective interest method over the life of the related Term Loan. The $4.0 million that will be paid when principal is repaid isbeing accreted to the Term Loan balance each quarter on a per diem basis. As of December 31, 2017 the Term Loan balance is $71.1 million.8. Financial Instruments2016 WarrantOn September 2, 2016, in connection with the entry into the Loan Agreement (see Note 7 for additional information), the Company issued a warrant (the“Warrant”) to the Lender to purchase a number of shares of the Company’s common stock equal to $4.0 million divided by the lower of (i) $2.29 per shareand (ii) the subscription price paid in connection with the Rights Offering. The subscription price paid was $1.50 in connection with the Rights Offering;accordingly, the exercise price of the Warrant has been set at $1.50 per share, and there are 2.7 million shares underlying the Warrant. The Warrant providesfor weighted average anti-dilution protection and is exercisable in whole or in part for ten (10) years from the date of issuance.The Company accounted for the Warrant in accordance with the authoritative guidance which requires that free-standing derivative financial instrumentswith certain anti-dilution and cash settlement features be classified as assets or liabilities at the time of the transaction, and recorded at their fair value. Anychanges in the fair value of the derivative instruments are reported in earnings or loss as long as the derivative contracts are classified as assets or liabilities.Accordingly, the Company classified the Warrant as a liability and reports its change in fair value in the consolidated statement of operations.On September 2, 2016, the issuance date of the Warrant, the fair value of the liability-classified Warrant was $5.8 million. The Company applied a MonteCarlo Simulation-model to calculate the fair value of the Warrant using the following assumptions:59Table of Contentsrisk free interest rate of 1.60%; no dividend yield; an expected life of 10 years; and a volatility factor of 80%. The Company compared the Monte Carlosimulation model calculation to a Black-Scholes model calculation. These models generated substantially equivalent fair values for the Warrant. As such, theCompany utilized a Black-Scholes model for December 31, 2017 to determine the fair value of the Warrant.As of December 31, 2017, the fair value of the Warrant was $11.5 million. A Black Scholes model was applied to calculate the fair value of the Warrant usingthe following assumptions: risk free interest rate of 2.38%; no dividend yield; an expected life of 8.67 years; and a volatility factor of 75%.For the years ended December 31, 2017 and 2016, the Company recorded a loss of $4.7 million and $0.9 million, respectively as a result of increases in fairvalue of the liability-classified Warrant.At December 31, 2016, pursuant to the Warrant agreement, there were no conditions under which current assets would have been required to satisfy theWarrant obligation. As such, the December 31, 2016 consolidated balance sheet has been revised to reflect the Warrant as a long-term liability.9. Stockholders’ Deficiency On December 31, 2017, the Company’s authorized share capital consisted of 620,000,000 shares, of which 600,000,000 are designated common shares and20,000,000 are designated preferred shares. The Company’s Board of Directors is authorized to issue preferred shares in series with rights, privileges andqualifications of each series determined by the Board. As of December 31, 2017 and 2016, no preferred shares were outstanding or issued.Rights OfferingOn November 16, 2016, the Company completed a rights offering (the “Rights Offering”), pursuant to which it raised approximately $35.3 million in grossproceeds through the sale of 23,523,195 shares of its common stock. The Rights Offering was made pursuant to a registration statement on Form S-1 anddeclared effective by the SEC on October 21, 2016. As part of the Rights Offering, each stockholder of the Company received a subscription right for eachshare of common stock owned as of the record date of October 12, 2016. Each subscription right entitled its holder to invest $0.65 towards the purchase ofshares of the Company's common stock at a subscription price equal to the lower of $1.50 or 85% of the volume weighted average price of Company sharesduring market hours on the expiration date of the Rights Offering. The Rights Offering expired on November 8, 2016. Through basic subscriptions andoversubscriptions, the Rights Offering was fully subscribed. The subscription price was set at $1.50. The Company used the net proceeds of the RightsOffering, together with proceeds from the Term Loan and cash on hand, to fully satisfy PharmAthene's claim under the Plan.Rights Offering-Backstop AgreementOn October 13, 2016, in connection with the Rights Offering as discussed above, the Company entered into an investment agreement or “backstopagreement”, with an affiliate of MacAndrews & Forbes Incorporated (“M&F”) (see Note 13), and certain other backstop parties (the “Backstop Parties”).Under the terms of the backstop agreement, the Backstop Parties agreed to purchase, pursuant to a separate private placement, a number of shares of commonstock equal to the numbers of shares that were not subscribed for in the Rights Offering. Because the Rights Offering was fully subscribed, the BackstopParties were not required to draw on such commitment. The Company issued 708,530 shares to Backstop Parties, of which approximately 565,000 shares werereceived by M&F, in payment of the five percent backstop fee ($1,764,240) payable to the Backstop Parties in connection with the backstop agreement. Thefair value of the shares issued in satisfaction of the backstop fee was expensed in the income statement in the fourth quarter of 2016. There are no remainingpayment obligations to the Backstop Parties under the backstop agreement.60Table of Contents10. Stock Compensation Plans The Company’s 2010 Stock Incentive Plan (the “2010 Plan”) was initially adopted in May 2010. The 2010 Plan provided for the issuance of stock options,restricted stock and unrestricted stock with respect to an aggregate of 2,000,000 shares of the Company’s common stock to employees, consultants andoutside directors of the Company. On May 17, 2011, the 2010 Plan was amended to provide for the issuance of restricted stock units (“RSUs”) and onFebruary 2, 2012, the 2010 Plan was amended to provide for the issuance of SSARs. Effective April 25, 2012 and May 23, 2017, the 2010 Plan was amendedto increase the maximum number of shares of common stock available for issuance to an aggregate of 4,500,000 shares and 8,500,000 shares respectively.The vesting period for awards granted under the 2010 Plan, is determined by the Compensation Committee of the Board of Directors. The CompensationCommittee also determines the expiration date of each equity award, however, stock options and SSARs may not be exercisable more than ten years after thedate of grant as the maximum term of equity awards issued under the 2010 Plan is ten years.For the years ended December 31, 2017, 2016 and 2015, the Company recorded stock-based compensation expense, including stock options, SSARs, RSUsand certain warrant amortization, of approximately $1.1 million, $0.8 million and $1.6 million, respectively. Stock OptionsStock option awards provide holders the right to purchase shares of Common Stock at prices determined by the Compensation Committee and must have anexercise price equal to or in excess of the fair market value of the Company’s common stock at the date of grant.The fair value of options granted is estimated at the date of grant. Expected volatility has been estimated using a combination of the historical volatility ofthe Company's common stock and the historical volatility of a group of comparable companies’ common stock, both using historical periods equivalent tothe options’ expected lives. The expected dividend yield assumption is based on the Company’s intent not to issue a dividend in the foreseeable future. Therisk-free interest rate assumption is based upon observed interest rates for securities with maturities approximating the options’ expected lives. The expectedlife was estimated based on historical experience and expectation of employee exercise behavior in the future giving consideration to the contractual terms ofthe award.A summary of the Company’s stock option activity is as follows: Number ofOptions WeightedAverage ExercisePrice WeightedAverageRemaining Life(in years) AggregateIntrinsic Value(in thousands)Outstanding at January 1, 20171,709,967 $4.76 Granted25,000 3.50 Exercised(33,870) 2.64 Canceled/Expired(638,630) 3.75 Outstanding at December 31, 20171,062,467 $5.42 1.81 $1,240Vested and expected to vest at December 31, 20171,062,467 $5.42 1.81 $1,240Exercisable at December 31, 2017962,467 $5.72 1.91 $1,004As of December 31, 2017, there is no remaining unrecognized stock-based compensation cost related to stock options expected to be recognized. The totalfair value of vested stock options was approximately $73,000, $0 and $0 for the years ended December 31, 2017, 2016 and 2015, respectively.The total intrinsic value of stock options exercised was approximately $65,000, $0 and $5,900 for the years ended December 31, 2017, 2016 and 2015,respectively. The intrinsic value represents the amount by which the market price of the underlying stock exceeds the exercise price of an option. As of December 31, 2017 and 2016, 100,000 and 200,000, respectively, of the Company’s outstanding options were subject to specific performanceconditions consisting of regulatory approval of our lead drug candidate.Stock Appreciation Rights61Table of ContentsSSARs provide holders the right to purchase shares of Common Stock at prices determined by the Compensation Committee and must have an exercise priceequal to or in excess of the fair market value of the Company’s common stock at the date of grant. Upon exercise, the gain, or intrinsic value, is settled by thedelivery of SIGA stock to the employee.There were no SSARs granted during the years ended December 31, 2017 or 2016. During the year ended December 31, 2012, the Company granted 1.4million shares of SSARs at a weighted average grant-date fair value of $0.68 per share. The exercise price of a SSAR is equal to the closing market price onthe date of grant. The granted SSARs vested in equal annual installments over a period of three years and expire no later than seven years from the date ofgrant. Moreover, the appreciation of each SSAR was capped at a determined maximum value. At December 31, 2017 and 2016, due to the cap on value themaximum number of shares that could be issued in the future was 162,393 and 360,031, respectively.The fair value of granted SSARs has been estimated utilizing a Monte Carlo method. The Monte Carlo method is a statistical simulation technique used toprovide the grant-date fair value of an award. As the issued SSARs were capped at maximum values, such attribute was considered in the simulation.The Company calculates the expected volatility using a combination of historical volatility of SIGA's common stock and the volatility of a group ofcomparable companies' common stock. The expected life from grant date was estimated based on the expectation of exercise behavior in consideration of themaximum value and contractual term of the SSARs. The dividend yield assumption is based on the Company’s intent not to issue a dividend in theforeseeable future. The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected life of the SSARs.A summary of the Company’s SSAR activity is as follows: Number ofSSARs WeightedAverageExercisePrice WeightedAverageRemaining Life(in years) AggregateIntrinsic Value(in thousands)Outstanding at January 1, 20171,183,024 $3.53 Granted— — Exercised(916,874) 3.53 Canceled/Expired— — Outstanding at December 31, 2017266,150 $3.53 1.09 $351Vested and expected to vest at December 31, 2017266,150 $3.53 1.09 $351Exercisable at December 31, 2017266,150 $3.53 1.09 $351The total intrinsic value of SSARs exercised was approximately $0.9 million for the year ended December 31, 2017. For the years ended December 31, 2016and 2015 there were no SSARs exercised.Restricted Stock Awards/Restricted Stock UnitsRSUs awarded to employees vest in equal annual installments over a three-year period and RSUs awarded to directors of the Company vest over a one-yearperiod. A summary of the Company’s RSU activity is as follows: Number ofRSUs WeightedAverageGrant-DateFair ValueOutstanding at January 1, 20171,455,689 $2.36Granted289,648 3.51Vested and released(273,335) 2.21Canceled/Expired— —Outstanding at December 31, 2017 (1)1,472,002 $2.61(1) Included 394,118 restricted stock units that have vested but have not converted into common stock.As of December 31, 2017, $1.1 million of total remaining unrecognized stock-based compensation cost related to RSUs is expected to be recognized over theweighted-average remaining requisite service period of 1.77 years. The weighted average fair value at62Table of Contentsthe date of grant for restricted stock awards granted during the years ended December 31, 2017, 2016 and 2015 was $3.51, $2.24 and $2.00 per share,respectively. Based on the grant date, the total fair value of restricted stock and restricted stock units vested and released during the years endedDecember 31, 2017, 2016 and 2015 was approximately $0.6 million, $1.4 million and $1.8 million, respectively.11. Income TaxesOn December 22, 2017 the U.S. government enacted comprehensive tax reform commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). Under FASBAccounting Standards Codification (“ASC 740”), the effects of changes in tax rates and laws are recognized in the period which the new legislation isenacted. The TCJA makes broad and complex changes to the U.S. tax code, including, but not limited to: (1) reducing the U.S. federal corporate tax rate from35% to 21%; (2) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (3)bonus depreciation that will allow for full expensing of qualified property; (4) creating a new limitation on deductible interest expense; (5) eliminating thecorporate alternative minimum tax ("AMT"); (6) limitation on the deductibility of executive compensation under Internal Revenue Code §162(m); and (7)new tax rules related to foreign operations.On December 22, the SEC staff issued Staff Accounting Bulletin (“SAB”) No. 118, which provides guidance on accounting for the tax effects of TCJA. Thepurpose of SAB No. 118 was to address any uncertainty or diversity of view in applying ASC Topic 740, Income Taxes in the reporting period in which theTCJA was enacted. SAB No. 118 addresses situations where the accounting is incomplete for certain income tax effects of the TJCA upon issuance of acompany’s financial statements for the reporting period that includes the enactment date. SAB No. 118 allows for a provisional amount to be recorded if it isa reasonable estimate of the impact of the TCJA. Additionally, SAB No. 118 allows for a measurement period to finalize the impacts of the TCJA, not toextend beyond one year from the date of enactment.In connection with the initial analysis of the impact of the TCJA, the Company has recorded a provisional decrease in our deferred tax assets and liabilitieswith a corresponding adjustment to the related valuation allowance. In addition, the Company recorded an income tax benefit of $2.7 million related to theelimination of the AMT as such amounts will be refundable, in cash, under TCJA. The Company expects to collect the refund no later than 2021. Theestimated refundable AMT credit is included in deferred tax assets as of December 31, 2017. While the Company is able to make a reasonable estimate of theimpact of the reduction in the corporate rate, such estimate is subject to further analysis, interpretation and clarification of the TCJA, which could result inchanges to this estimate during 2018.The Company's (benefit) provision for income taxes comprises the following: For the year ended December 31, 2017 2016 2015Current: Federal$623,060 $(5,093) $439,934State and local1,179 (1,446) 946Total current provision (benefit)624,239 (6,539) 440,880Deferred: Federal(2,724,371) 21,252 19,006State and local6,342 (829) 2,097Total deferred (benefit) provision(2,718,029) 20,423 21,103Total (benefit) provision$(2,093,790) $13,884 $461,98363Table of ContentsThe Company’s deferred tax assets and liabilities comprise the following: As of December 31, 2017 2016Deferred income tax assets: Net operating losses$38,087,782 $72,726,440Deferred research and development costs205,527 669,602Amortization of intangible assets282,213 665,531Share-based compensation1,001,662 1,687,243Fixed assets417,085 667,008Deferred revenue84,130,212 102,520,433Alternative minimum tax credits2,652,250 2,029,190Other1,024,082 1,337,941Deferred income tax assets127,800,813 182,303,388Less: valuation allowance(102,556,657) (155,465,173)Deferred income tax assets, net of valuation allowance$25,244,156$26,838,215Deferred income tax liabilities: Amortization of goodwill(193,458) (287,729)Capitalized contract costs(21,518,646) (25,854,435)Other(1,100,089) (982,117)Deferred income tax asset (liability), net$2,431,963 $(286,066)The recognition of a valuation allowance for deferred taxes requires management to make estimates and judgments about the Company’s future profitabilitywhich is inherently uncertain. The Company assesses all available positive and negative evidence to determine if its existing deferred tax assets are realizableon a more-likely-than-not basis. In making such assessment, the Company considered the reversal of existing taxable temporary differences, projected futuretaxable income, tax planning strategies and recent financial operating results. The ultimate realization of a deferred tax asset is ultimately dependent on theCompany's generation of sufficient taxable income within the available net operating loss carryback and/or carryforward periods to utilize the deductibletemporary differences. Based on the weight of available evidence including three-year cumulative pre-tax losses, the Company continued to conclude that itsdeferred tax assets are not realizable on a more-likely-than-not basis and that a full valuation allowance is required with the exception of its alternativeminimum tax carryforward that is refundable as a result of TCJA.The valuation allowance decreased by $53.0 million from December 31, 2016. The decrease is primarily related to the re-measurement of deferred tax assetsand liabilities using the new U.S. federal statutory rate of 21%.As of December 31, 2017, the Company had $174.3 million of federal net operating loss carryforwards, which expire in 2034 to 2036, to offset future taxableincome.64Table of ContentsThe Company’s effective tax rate differs from the U.S. federal statutory income tax rate as follows: As of December 31, 2017 2016 2015Statutory federal income tax rate(35.0)% (35.0)% (35.0)%State tax benefit(3.9)% 0.6 % — %Increase in fair value of common stock warrants4.3 % 0.8 % — %Reorganization costs— % 3.3 % 7.0 %Other(1.8)% 0.2 % 1.4 %U.S. federal tax law change(5.1)% — % — %Valuation allowance on deferred tax assets36.0 % 30.1 % 27.8 %Effective tax rate(5.5)% — % 1.2 %For the year ended December 31, 2017 and December 31, 2016, the Company’s effective tax rate differs from the statutory rate principally due to operatinglosses for which no tax benefit was provided, coupled with the impact of the TCJA. For the year ended December 31, 2015, the Company's effective tax ratediffers from the statutory rate principally due to the operating losses for which no tax benefit was provided and non-deductible reorganization expenses.The Company applies the applicable authoritative guidance which prescribes a comprehensive model for the manner in which a company should recognize,measure, present and disclose in its financial statements all material uncertain tax positions that the Company has taken or expects to take on a tax return. Asof December 31, 2017 and 2016, the Company has no uncertain tax positions. There are no uncertain tax positions for which it is reasonably possible that thetotal amounts of unrecognized tax benefits will significantly increase or decrease within twelve months from December 31, 2017.The Company files federal income tax returns and income tax returns in various state and local tax jurisdictions. The open tax years for U.S. federal, state andlocal tax returns are 2013-2017; open tax years relating to any of the company’s net operating losses begin in 2001. In the event that the Company concludesthat it is subject to interest and/or penalties arising from uncertain tax positions, the Company will present interest and penalties as a component of incometaxes. No amounts of interest or penalties were recognized in the Company’s consolidated financial statements for each of the years in the three-year periodended December 31, 2017.12. Commitments and Contingencies Operating lease commitmentsThe Company leases its Corvallis, Oregon, facilities and office space under an operating lease which was signed on November 3, 2017 and commenced onJanuary 1, 2018. This lease expires December 31, 2019. The Company had a lease for the same location prior to this lease. On May 26, 2017 the Companyand M&F Incorporated entered into a ten-year office lease agreement (the “New HQ Lease”), pursuant to which the Company agreed to lease 3,200 square feetat 27 East 62nd Street, New York, New York. The Company is utilizing premises leased under the New HQ Lease as its new corporate headquarters. Rentalexpense, including charges for maintenance, utilities, real estate taxes and other operating expenses, totaled $1.0 million, $1.2 million and $1.4 million forthe years ended December 31, 2017, 2016 and 2015, respectively.Future minimum cash rental commitments under non-cancelable operating leases as of December 31, 2017 are expected to be as follows:2018$571,7052019596,2372020347,2592021349,4222022368,467Thereafter1,788,749Total$4,021,839Legal Proceedings65Table of ContentsAfter several years of proceedings in litigation initiated by PharmAthene in 2006, the Delaware Court of Chancery on August 8, 2014 issued an opinion andorder in which it determined, among other things, that PharmAthene was entitled to a lump sum damages award for its lost profits including interest and fees,based on U.S. government purchases of the Company's smallpox drug allegedly anticipated as of December 2006. On September 16, 2014, as a consequenceof SIGA’s chapter 11 filing, the legal proceedings with PharmAthene were stayed (see Note 1), except that the parties agreed by stipulation approved by theCourt on October 8, 2014 that the litigation could proceed. On January 15, 2015, the Delaware Court of Chancery entered its Final Order and Judgment (the“Final Order and Judgment”) awarding PharmAthene approximately $195.0 million, including pre-judgment interest up to January 15, 2015 (the“Judgment”). On December 23, 2015 the Delaware Supreme Court affirmed the Judgment. Pursuant to the Final Order and Judgment, SIGA also was liable toPharmAthene for $30,663.89 per day in post-judgment interest. On a series of dates up to and including a final payment on November 16, 2016, the Companypaid PharmAthene an aggregate of $217.0 million to fully satisfy the Judgment, including post-judgment interest, in accordance with the bankruptcy plan ofreorganization.From time to time, we may be involved in a variety of claims, suits, investigations and proceedings arising from the ordinary course of our business,collections claims, breach of contract claims, labor and employment claims, tax and other matters. Although such claims, suits, investigations andproceedings are inherently uncertain and their results cannot be predicted with certainty, we believe that the resolution of such current pending matters, ifany, will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flow. Regardless of the outcome,litigation can have an adverse impact on us because of legal costs, diversion of management resources and other factors.66Table of Contents13. Related Party TransactionsBoard of Directors and Outside CounselA member of the Company’s Board of Directors is a member of the Company’s outside counsel. During the years ended December 31, 2017, 2016 and 2015,the Company incurred expenses of $400,000, $1.5 million and $602,000, respectively, related to services provided by the outside counsel. On December 31,2017 the Company’s outstanding payables and accrued expenses included a $35,000 liability to the outside counsel.Rights Offering-Backstop AgreementOn October 13, 2016, in connection with the Rights Offering as discussed above, the Company entered into the Backstop Agreement with an affiliate of M&F(M&F is a principal stockholder of the Company) and the other Backstop Parties. Under the terms of the Backstop Agreement, the Backstop Parties agreed topurchase, pursuant to a separate private placement, a number of shares of common stock equal to the numbers of shares that would have not been subscribedfor in the Rights Offering. The Backstop Agreement provided that the subscription price for the Backstop Parties would be equal to the subscription priceapplicable to all shareholders under the Rights Offering. Because the Rights Offering was fully subscribed, the Backstop Parties were not required to draw onsuch commitment. The Company issued 708.530 shares to Backstop Parties, of which approximately 565,000 shares were received by M&F, in payment ofthe five percent backstop fee ($1,764,240) payable to the Backstop Parties in connection with the backstop agreement. When shares were issued to theBackstop Parties in payment of the backstop fee, the stock price of SIGA common stock was $2.49 per share (the closing price of the Company’s commonstock on November 16, 2016). The fair value of the shares issued in satisfaction of the backstop fee was expensed to the income statement in 2016. There areno remaining payment obligations to the Backstop Parties under the Backstop Agreement.Real Estate LeasesOn May 26, 2017 the Company and M&F Incorporated entered into the New HQ Lease, pursuant to which the Company agreed to lease 3,200 square feet at27 East 62nd Street, New York, New York. The Company is utilizing premises leased under the New HQ Lease as its new corporate headquarters. TheCompany's rental obligations consist of a fixed rent of $25,333, per month in the first sixty-three months of the term, subject to a rent abatement for the firstsix months of the term. From the first day of the sixty-fourth month of the term through the expiration or earlier termination of the lease, the Company's rentalobligations consist of a fixed rent of $29,333 per month. In addition to the fixed rent, the Company will pay a facility fee in consideration of the landlordmaking available certain ancillary services, commencing on the first anniversary of entry into the lease. The facility fee will be $3,333 per month for thesecond year of the term and increase by five percent each year thereafter, to $4,925 per month in the final year of the term.On July 31, 2017, the Company and M&F, entered into a Termination of Sublease Agreement (the “Old HQ Sublease Termination Agreement”), pursuant towhich the Company and M&F agreed to terminate the sublease dated January 9, 2013 for 6,676 square feet of rental square footage located at 660 MadisonAvenue, Suite 1700, New York, New York (such sublease being the “Old HQ Sublease” and the location being the “Old HQ”).Effectiveness of the Old HQ Sublease Termination Agreement was conditioned upon the commencement of a sublease for the Old HQ between M&F and anew subtenant (the “Replacement M&F Sublease”), which occurred on August 2, 2017. The Old HQ Sublease Termination Agreement obligates the Companyto pay, on a monthly basis, an amount equal to the discrepancy (the “Rent Discrepancy”) between the sum of fixed rent and Additional Rent (as definedbelow) under the Old HQ Overlease (as defined below) and the sum of fixed rent and Additional Rent under the Replacement M&F Sublease. Under the OldHQ Sublease Termination Agreement, the Company and M&F release each other from any liability under the Old HQ Sublease.Under the Old HQ Sublease, the Company was obligated to pay fixed rent of approximately $60,000 per month until August 2018 and approximately$63,400 per month thereafter until the Old HQ Sublease expiration date of August 31, 2020. Additionally, the Company was obligated to pay certainoperating expenses and taxes (“Additional Rent”), such Additional Rent being specified in the overlease between M&F and the landlord at 660 MadisonAvenue (the “Old HQ Overlease”).Under the Replacement M&F Sublease, the subtenant’s rental obligations were excused for the first two (2) months of the lease term (“Rent ConcessionPeriod”). Thereafter, the subtenant is obligated to pay fixed rent of $36,996 per month for the first twelve (12) months, $37,831 per month for the next 12months, and $38,665 per month until the scheduled expiration of the Replacement M&F Sublease on August 24, 2020. In addition to fixed rent, thesubtenant is also obligated to pay, pursuant to the Replacement M&F Sublease, a portion of the Additional Rent specified in the Old HQ Overlease.67Table of ContentsFor the time period between August 2, 2017 and August 31, 2020 (the expiration date of the Old HQ Sublease), the Company estimates that it will pay a totalof approximately $0.9 million combined in fixed rent and additional amounts payable under the New HQ Lease and a total of approximately $1.1 million inRent Discrepancy under the Old HQ Sublease Termination Agreement, for a cumulative total of $2.0 million. In contrast, fixed rent and estimated AdditionalRent under the Old HQ Sublease, for the aforementioned time period, would have been a total of approximately $2.4 million if each of the New HQ Lease,Replacement M&F Sublease and Old HQ Sublease Termination Agreement had not been entered into by each of the parties thereto. Because amounts such asoperating expenses and taxes may vary, the foregoing totals can only be estimated at this time and are subject to change.As a result of the above-mentioned transactions, the Company has discontinued usage of Old HQ in the third quarter of 2017. As such, for the year endedDecember 31, 2017 the Company recorded a loss of approximately $1.1 million in accordance with ASC 420 Exit or Disposal Obligations. This lossprimarily represented the discounted value of estimated Rent Discrepancy payments to occur in the future, and included costs related to the termination ofthe old HQ Sublease. The Company also wrote-off approximately $0.1 million of leasehold improvements and furniture and fixtures related to the Old HQ.The following table summarizes activity relating to the liability that was recorded as a result of the lease termination: Lease Termination LiabilityBalance at December 31, 2016$—Charges1,096,648Cash payments(282,026)Balance at December 31, 2017$814,62214. Reorganization Items, net:Reorganization items represent expenses in connection with the chapter 11 case. For the years ended December 31, 2016 and 2015,reorganization items consisted of the following: December 31, 2016 December 31, 2015Legal fees$1,951,381 $5,719,052Professional fees1,732,521 2,027,827Trustee fees33,000 59,000Other— $5,672Total$3,716,902 $7,811,551Subsequent to the Effective Date of the Plan, expenses directly attributable to the implementation of the Plan are reported in selling, general andadministrative expenses. During the years ended December 31, 2016 and 2015, the Company paid approximately $4.6 million and $6.7 million, respectively,for reorganization items.68Table of Contents15. Financial Information By Quarter (Unaudited) Three Months Ended2017March 31 June 30 September 30 December 31 (in thousands, except for per share data)Revenues$5,202 $4,265 $1,390 $1,412Selling, general and administrative2,870 3,058 3,094 3,281Research and development6,360 5,068 2,471 2,781Patent expenses241 197 251 221Lease termination— — 1,225 —Operating loss(4,269) (4,059) (5,651) (4,871)Net loss(8,615) (7,501) (9,816) (10,303)Loss per common share: basic and diluted$(0.11) $(0.10) $(0.12) $(0.13) Three Months Ended2016March 31 June 30 September 30 December 31 (in thousands, except for per share data)Revenues$1,270 $1,901 $4,658 $7,159Selling, general and administrative2,656 3,739 2,855 4,464Research and development2,536 2,948 6,069 8,158Patent expenses220 240 230 219Interest on PharmAthene liability2,917 4,259 3,566 927Operating loss(7,059) (9,285) (8,062) (6,609)Net loss(10,449) (9,566) (9,244) (10,439)Loss per common share: basic and diluted$(0.19) $(0.18) $(0.17) $(0.15)69Table of ContentsItem 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosurecontrols and procedures as of December 31, 2017 in accordance with the framework on Internal Control-Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission. The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934. Management recognizes that any disclosure controls and procedures no matter how well designed andoperated, can only provide reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our Chief Executive Office and Chief Financial Officer have concluded that our disclosure controls and procedures wereeffective as of December 31, 2017 at a reasonable level of assurance.Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2017 that materially affected, orare reasonably likely to materially affect, our internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) or Rule 15d-15(f) of the Securities and Exchange Act of 1934, as amended. Internal control over financial reporting is a process designed to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: a.pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the Company’s assets;b.provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations ofmanagement and the directors of the Company; andc.provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets thatcould have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate.Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2017 using theframework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based onthis evaluation using the COSO criteria, management concluded that the Company’s internal control over financial reporting was effective as ofDecember 31, 2017. The effectiveness of our internal control over financial reporting as of December 31, 2017 has been audited by PricewaterhouseCoopers LLP, anindependent registered public accounting firm, as stated in their report which appears herein. Item 9B. Other Information None.70Table of ContentsPART III Item 10. Directors, Executive Officers, and Corporate Governance Information required by this item is incorporated herein by reference to our definitive proxy statement for the 2018 Annual Meeting of Stockholders.Item 11. Executive Compensation Information required by this item is incorporated herein by reference to our definitive proxy statement for the 2018 Annual Meeting of Stockholders. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information required by this item is incorporated herein by reference to our definitive proxy statement for the 2018 Annual Meeting of Stockholders. Equity Compensation Plan InformationThe following table sets forth certain compensation plan information with respect to compensation plans as of December 31, 2017: Number of Securities to beIssued Upon Exercise ofOutstanding Options, Weighted-averageExercise Price ofOutstanding Options, Number of SecuritiesAvailable for FutureIssuance under EquityPlan CategoryWarrants, Rights and RestrictedStock Units(1) Warrants, Rights andRestricted Stock Units Compensation Plans (2)Equity compensation plans approved bysecurity holders2,696,861 $3.77 4,440,806Equity compensation plans not approved bysecurity holders— — —Total2,696,861 $3.77 4,440,806(1)Consists of the 1996 Incentive and Non-Qualified Stock Option Plan and the 2010 Stock Incentive Plan.(2)Consists of the 2010 Stock Incentive Plan.Item 13. Certain Relationships and Related Transactions, and Director Independence Information required by this item is incorporated herein by reference to our definitive proxy statement for the 2018 Annual Meeting of Stockholders. Item 14. Principal Accounting Fees and Services Information required by this item is incorporated herein by reference to our definitive proxy statement for the 2018 Annual Meeting of Stockholders.71Table of ContentsPART IV Item 15. Exhibits and Financial Statement Schedules (a) (1) and (2). Financial Statements. See Index to Financial Statements under Item 8 in Part II hereof where these documents are listed. All schedules for which provision is made in the applicableaccounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, havebeen omitted. (a) (3). Exhibits.The following is a list of exhibits:ExhibitNo. Description2.1(a) Debtor’s Chapter 11 Plan (incorporated by reference to the Current Report on Form 8-K of the Company filed on December 15,2015). 2.1(b) Findings of Fact, Conclusions of Law and Order Pursuant to Sections 1129(a) and (b) of the Bankruptcy Code and Rule 3020of the Federal Rules of Bankruptcy Procedure Confirming Debtor’s Third Amended Chapter 11 Plan (incorporated byreference to the Current Report on Form 8-K of the Company filed on April 14, 2016). 3(a) Amended and Restated Certificate of Incorporation of SIGA Technologies, Inc. (incorporated by reference to the CurrentReport on Form 8-K of the Company filed on April 14, 2016). 3(b) Amended and Restated Bylaws of SIGA Technologies, Inc. (incorporated by reference to the Current Report on Form 8-K ofthe Company filed on April 14, 2016). 3(c) Amendment to Amended and Restated Bylaws of SIGA Technologies, Inc. (incorporated by reference to the Current Report onForm 8-K of the Company filed on December 13, 2016). 4(a) Form of Common Stock Certificate (incorporated by reference to the Form SB-2 Registration Statement of the Company datedMarch 10, 1997 (No. 333-23037)). 4(b) Registration Rights Agreement, dated as of August 13, 2003, between the Company and MacAndrews & Forbes Holdings Inc.(incorporated by reference to the Current Report on Form 8-K of the Company filed on August 18, 2003). 4(c) Form of Warrant to purchase shares of common stock of the Company, issued to MacAndrews & Forbes, LLC on June 19, 2008(incorporated by reference to the Current Report on Form 8-K of the Company filed on June 23, 2008). 4(d) Form of Consideration Warrant issued to MacAndrews & Forbes, LLC on April 30, 2013 (incorporated by reference to theQuarterly Report on Form 10-Q of the Company filed on May 15, 2013). 10(a) Securities Purchase Agreement, dated as of August 13, 2003, between the Company and MacAndrews & Forbes Holdings Inc.(incorporated by reference to the Current Report on Form 8-K of the Company filed on August 18, 2003). 10(b) Letter Agreement dated October 8, 2003 among the Company, MacAndrews & Forbes Holdings Inc. and TransTech Pharma,Inc. (incorporated by reference to the Current Report on Form 8-K of the Company filed on August 18, 2003). 7210(c) Amended and Restated Employment Agreement, dated as of January 22, 2007, between the Company and Dennis E. Hruby(incorporated by reference to the Current Report on Form 8-K of the Company filed on January 22, 2007). 10(d) Amended Employment Agreement dated December 31, 2011, to January 27, 2007 Employment Agreement (as amended)between the Company and Dr. Hruby (incorporated by reference to the Current Report on Form 8-K of the Company filed onDecember 27, 2011). 10(e) Amended and Restated Employment Agreement, dated as of January 22, 2007, between the Company and Dennis E. Hruby(incorporated by reference to the Current Report on Form 8-K of the Company filed on January 22, 2007). 10(f) Amended Employment Agreement dated December 31, 2011, to January 27, 2007 Employment Agreement (as amended)between the Company and Dr. Hruby (incorporated by reference to the Current Report on Form 8-K of the Company filed onDecember 27, 2011). 10(g) Letter Agreement, dated as of June 19, 2008, between the Company and MacAndrews & Forbes, LLC (incorporated byreference to the Current Report on Form 8-K of the Company filed on June 23, 2008). 10(h) Employment Agreement, dated as of January 31, 2007, between the Company and Eric A. Rose (incorporated by reference tothe Current Report on Form 8-K of the Company filed on January 31, 2007), as amended and restated (as set forth in theCurrent Report on Form 8-K of the Company filed on November 17, 2008). 10(i) Amendment to Employment Agreement, dated March 11, 2009, between the Company and Dennis E. Hruby (incorporated byreference to the Current Report on Form 8-K of the Company filed on March 12, 2009). 10(j) Employment Agreement dated as of February 10, 2011, between SIGA and Daniel J. Luckshire (incorporated by reference tothe Current Report on Form 8-K of the Company filed on February 16, 2011). 10(k) 2010 Stock Incentive Plan dated May 13, 2010 (incorporated by reference to the Definitive Proxy Statement on Schedule 14Aof the Company filed on April 12, 2010). 10(l) Amendment to the SIGA Technologies, Inc. 2010 Stock Incentive Plan (incorporated by reference to the Current Report onForm 8-K of the Company filed on May 17, 2011). 10(m) Deferred Closing and Registration Rights Agreement, dated as of June 18, 2010, between MacAndrews & Forbes LLC and theCompany (incorporated by reference to the Current Report on Form 8-K of the Company filed on June 22, 2010). 10(n) Contract dated as of May 13, 2011, between SIGA and the Biomedical Advanced Research and Development Authority of theUnited States Department of Health and Human Services (portions of this exhibit have been omitted and separately filed withthe Securities and Exchange Commission with a request for confidential treatment) (incorporated by reference to the CurrentReport on Form 8-K of the Company filed on May 17, 2011). 10(o) Amendment of Solicitation/Modification of Contract dated as of June 24, 2011, to Agreement dated as of May 13, 2011,between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of Healthand Human Services (portions of this exhibit have been omitted and separately filed with the Securities and ExchangeCommission with a request for confidential treatment) (incorporated by reference to the Current Report on Form 8-K of theCompany filed on June 28, 2011). 7310(p) Amendment to Employment Agreement, dated January 22, 2007, between the Company and Dr. Dennis Hruby (incorporatedby reference to the Current Report on Form 8-K of the Company filed on December 27, 2011). 10(q) Amendment to Employment Agreement, dated November 17, 2008, between the Company and Dr. Eric Rose (incorporated byreference to the Current Report on Form 8-K of the Company filed on January 13, 2012). 10(r) Amendment to the SIGA 2010 Stock Incentive Plan (incorporated by reference to the Current Report on Form 8-K of theCompany filed on February 2, 2012). 10(s) Director Compensation Program, effective January 1, 2012 (incorporated by reference to the Definitive Proxy Statement onForm DEF 14A of the Company filed on April 27, 2012). 10(t) Amendment of Solicitation/Modification of Contract dated as of September 28, 2011, to Agreement dated as of May 13, 2011,between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of Healthand Human Services (portions of this exhibit have been omitted and separately filed with the Securities and ExchangeCommission with a request for confidential treatment) (incorporated by reference to the Quarterly Report on Form 10-Q of theCompany filed on May 7, 2012). 10(u) Amendment of Solicitation/Modification of Contract dated as of October 7, 2011, to Agreement dated as of May 13, 2011,between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of Healthand Human Services (portions of this exhibit have been omitted and separately filed with the Securities and ExchangeCommission with a request for confidential treatment) (incorporated by reference to the Quarterly Report on Form 10-Q of theCompany filed on May 7, 2012). 10(v) Amendment of Solicitation/Modification of Contract dated as of January 25, 2012 to Agreement, dated as of May 13, 2011,between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of Healthand Human Services (portions of this exhibit have been omitted and separately filed with the Securities and ExchangeCommission with a request for confidential treatment) (incorporated by reference to the Quarterly Report on Form 10-Q of theCompany filed on May 7, 2012). 10(w) Amendment of Solicitation/Modification of Contract dated as of February 7, 2012, to Agreement, dated as of May 13, 2011,between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of Healthand Human Services (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on May 7, 2012). 10(x) Amendment to the SIGA 2010 Stock Incentive Plan (incorporated by reference to the Current Report on Form 8-K of theCompany filed on May 25, 2012). 10(y) Employment Agreement dated as of June 4, 2012, between SIGA and William J. Haynes II (incorporated by reference to theCurrent Report on Form 8-K of the Company filed on June 4, 2012). 10(z) Loan and Security Agreement, dated as of December 31, 2012, between General Electric Capital Corporation and theCompany (incorporated by reference to the Current Report on Form 8-K of the Company filed on January 1, 2013). 10(aa) Amendment of Solicitation/Modification of Contract dated as of December 19, 2012, to Agreement, dated as of May 13, 2011,between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of Healthand Human Services (portions of this exhibit have been omitted and separately filed with the Securities and ExchangeCommission with a request for confidential treatment) (incorporated by reference to the Annual Report on Form 10-K of theCompany filed on March 6, 2013). 10(bb) Amendment of Solicitation/Modification of Contract dated as of February 28, 2013, to Agreement, dated as of May 13, 2011,between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of Healthand Human Services (incorporated by reference to the Annual Report on Form 10-K of the Company filed on March 10, 2014). 74 10(cc) Amendment of Solicitation/Modification of Contract dated as of April 9, 2013, to Agreement, dated as of May 13, 2011,between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of Healthand Human Services (incorporated by reference to the Annual Report on Form 10-K of the Company filed on March 10, 2014). 10(dd) Commercial Manufacturing Agreement, dated August 25, 2011, by and between Albemarle Corporation and SIGA (portions ofthis exhibit have been omitted and separately filed with the Securities and Exchange Commission with a request forconfidential treatment) (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on November 4,2014). 10(ee) Addendum #1 to Commercial Manufacturing Agreement, dated December 21, 2012, to Commercial ManufacturingAgreement, dated August 25, 2011, by and between Albemarle Corporation and SIGA (portions of this exhibit have beenomitted and separately filed with the Securities and Exchange Commission with a request for confidential treatment)(incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on November 4, 2014). 10(ff) Addendum #2 to Commercial Manufacturing Agreement, dated July 1, 2013, to Commercial Manufacturing Agreement, datedAugust 25, 2011, by and between Albemarle Corporation and SIGA (portions of this exhibit have been omitted and separatelyfiled with the Securities and Exchange Commission with a request for confidential treatment) (incorporated by reference to theQuarterly Report on Form 10-Q of the Company filed on November 4, 2014). 10(gg) Addendum #3 to Commercial Manufacturing Agreement, dated July 2, 2014, to Commercial Manufacturing Agreement, datedAugust 25, 2011, by and between Albemarle Corporation and SIGA (portions of this exhibit have been omitted and separatelyfiled with the Securities and Exchange Commission with a request for confidential treatment) (incorporated by reference to theQuarterly Report on Form 10-Q of the Company filed on November 4, 2014). 10(hh) Stipulation and Interim Order Regarding Use of Cash Collateral and Adequate Protection, dated September 17, 2014, by andbetween SIGA and General Electric Capital Corporation (incorporated by reference to the Current Report on Form 8-K of theCompany filed on September 18, 2014) (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filedon November 4, 2014). 10(ii) Commercial Sublease New York City, dated January 9, 2013, by and between MacAndrews & Forbes Group, LLC and SIGATechnologies, Inc. (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on November 4,2014). 10(jj) Commercial Lease, dated December 23, 1997, by and between Research Way Investments and SIGA Technologies, Inc.Second Addendum, dated January 22, 2002 by and between Research Way Investments and SIGA Technologies, Inc.; ThirdAddendum, dated July 16, 2004 by and between Research Way Investments and SIGA Technologies, Inc.; Fourth Addendum,dated October 1, 2004 by and between Research Way Investments and SIGA Technologies, Inc.; Fifth Addendum, datedJanuary 1, 2007 by and between Research Way Investments and SIGA Technologies, Inc.; Sixth Addendum, dated January 1,2008 by and between Research Way Investments and SIGA Technologies, Inc.; Seventh Addendum, dated March 1, 2010 byand between Research Way Investments and SIGA Technologies, Inc.; Eight Addendum, dated June 1, 2011 by and betweenResearch Way Investments and SIGA Technologies, Inc.; and Ninth Addendum, dated November 2, 2012 by and betweenResearch Way Investments and SIGA Technologies, Inc. (incorporated by reference to the Quarterly Report on Form 10-Q ofthe Company filed on November 4, 2014). 10(kk) Stipulation and Interim Order Regarding Use of Cash Collateral and Adequate Protection, dated September 17, 2014, by andbetween SIGA Technologies, Inc. and General Electric Capital Corporation (incorporated by reference to the Current Reporton Form 8-K of the Company filed on September 18, 2014). 10(ll) Amendment to Commercial Manufacturing Agreement, dated April 29, 2015, to Commercial Manufacturing Agreement, datedAugust 25, 2011, by and between Albemarle Corporation and SIGA (portions of this exhibit have been omitted and separatelyfiled with the Securities and Exchange Commission with a request for confidential treatment) (incorporated by reference to theQuarterly Report on Form 10-Q of the Company filed on May 6, 2015). 75 10(mm) Tenth Addendum to Commercial Lease, dated April 30, 2015, to Commercial Lease, dated December 23, 1997, by andbetween Research Way Investments and SIGA Technologies, Inc. (incorporated by reference to the Quarterly Report on Form10-Q of the Company filed on May 6, 2015). 10(nn) Amendment of Solicitation/Modification of Contract 0009, dated April 29, 2015, to Agreement, dated May 13, 2011 by andbetween SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of Healthand Human Services (portions of this exhibit have been omitted and separately filed with the Securities and ExchangeCommission with a request for confidential treatment) (incorporated by reference to the Quarterly Report on Form 10-Q of theCompany filed on May 6, 2015). 10(oo) Amendment of Solicitation/Modification of Contract 0010, dated July 1, 2015, to Agreement, dated May 13, 2011 by andbetween SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of Healthand Human Services (portions of this exhibit have been omitted and separately filed with the Securities and ExchangeCommission with a request for confidential treatment). 10(pp) Amendment of Solicitation/Modification of Contract 0011, dated December 19, 2015, to Agreement, dated May 13, 2011 byand between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department ofHealth and Human Services (portions of this exhibit have been omitted and separately filed with the Securities and ExchangeCommission with a request for confidential treatment). 10(qq) Amended and Restated Employment Agreement, dated April 12, 2016, between SIGA Technologies, Inc. and Eric A. Rose(incorporated by reference to the Current Report on Form 8-K of the Company filed on April 14, 2016). 10(rr) Amended and Restated Employment Agreement, dated April 12, 2016, between SIGA Technologies, Inc. and Daniel J.Luckshire (incorporated by reference to the Current Report on Form 8-K of the Company filed on April 14, 2016). 10(ss) Amended and Restated Employment Agreement, dated April 12, 2016, between SIGA Technologies, Inc. and Dennis E. Hruby(incorporated by reference to the Current Report on Form 8-K of the Company filed on April 14, 2016). 10(tt) Separation Agreement, dated January 5, 2016, between SIGA Technologies, Inc. and William J. Haynes (incorporated byreference to the Current Report on Form 8-K of the Company filed on April 14, 2016). 10(uu) Employment Agreement, dated April 12, 2016, between SIGA Technologies, Inc. and Robin Abrams (incorporated byreference to the Current Report on Form 8-K of the Company filed on April 14, 2016). 10(vv) Amendment of Solicitation/Modification of Contract 0013, dated June 28, 2016, to Agreement, dated May 13, 2011, betweenthe Biomedical Advanced Research and Development Authority of the United States Department of Health and HumanServices and SIGA (portions of this exhibit have been omitted and separately filed with the Securities and ExchangeCommission with a request for confidential treatment) (incorporated by reference to the Current Report on Form 8-K of theCompany filed on July 5, 2016). ExhibitNo.Description 10(ww) Amended and Restated Employment Agreement, dated August 1, 2016, between SIGA Technologies, Inc. and Robin E. Abrams(incorporated by reference to the Current Report on Form 8-K of the Company filed on August 2, 2016). 7610(xx) Loan and Security Agreement, dated as of September 2, 2016, by and among SIGA Technologies, Inc., OCM Strategic CreditSIGTEC Holdings, LLC, Cortland Capital Market Services LLC, in its capacity as administrative agent and collateral agent,OCM Strategic Credit SIGTEC Holdings, LLC, as sole lead arranger, and each of the other persons who are or thereafter becomeparties to the Loan Agreement as guarantors (incorporated by reference to the Current Report on Form 8-K of the Company filedon September 7, 2016). 10(yy) Warrant, dated as of September 2, 2016, by the Company in favor of OCM Strategic Credit SIGTEC Holdings, LLC or itsregistered assigns (incorporated by reference to the Current Report on Form 8-K of the Company filed on September 7, 2016). 10(zz) Employment Agreement, dated as of October 13, 2016, between SIGA and Phillip Louis Gomez, III (incorporated by reference tothe Current Report on Form 8-K of the Company filed on October 13, 2016). 10(aaa) Amended and Restated Employment Agreement, dated as of October 13, 2016, between SIGA and Eric A. Rose (incorporated byreference to the Current Report on Form 8-K of the Company filed October 13, 2016). 10(bbb) Investment Agreement, dated October 13, 2016, by and among SIGA Technologies, Inc., ST Holdings One LLC, BlackwellPartners LLC-Series A, Nantahala Capital Partners Limited Partnership, Nantahala Capital Partners II Limited Partnership, SilverCreek CS SAV, L.L.C. and Nantahala Capital Partners SI, LP (incorporated by reference to the Current Report on Form 8-K of theCompany filed on October 19, 2016). 10(ccc) Amendment of Solicitation/Modification of Contract 0012, dated April 22, 2016, to Agreement, dated May 13, 2011, betweenthe Biomedical Advanced Research and Development Authority of the United States Department of Health and Human Servicesand SIGA (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on May 4, 2017). 10(ddd) Amendment of Solicitation/Modification of Contract 0014, dated September 21, 2016, to Agreement, dated May 13, 2011,between the Biomedical Advanced Research and Development Authority of the United States Department of Health and HumanServices and SIGA (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on May 4, 2017). 10(eee) Office Lease, dated as of May 26, 2017, by and between SIGA Technologies, Inc. and MacAndrews & Forbes Incorporated(portions of this exhibit have been omitted and separately filed with the Securities and Exchange Commission with a request forconfidential treatment) (incorporated by reference to the Current Report on Form 8-K of the Company filed on May 30, 2017). 10(fff) Termination of Sublease, dated as of July 31, 2017 (incorporated by reference to the Quarterly Report on Form 10-Q of theCompany filed on August 3, 2017). 10(ggg) Amendment, dated August 29, 2017, to that certain Loan and Security Agreement, dated as of September 2, 2016, by and amongSIGA Technologies, Inc., OCM Strategic Credit SIGTEC Holdings, LLC, Cortland Capital Market Services LLC, in its capacityas administrative agent and collateral agent, OCM Strategic Credit SIGTEC Holdings, LLC, as sole lead arranger, and each ofthe other persons who are or thereafter become parties to the Loan Agreement as guarantors (incorporated by reference to theQuarterly Report on Form 10-Q of the Company filed on November 7, 2017). 10(hhh) Commercial Lease Agreement for Corvallis, Oregon dated November 3, 2017 (incorporated by reference to the Quarterly Reporton Form 10-Q of the Company filed on November 7, 2017). 14The Company's Code of Ethics and Business Conduct (incorporated by reference to the Annual Report on Form 10-KSB of the Company for theyear ended December 31, 2003). 23.1Consent of PRICEWATERHOUSECOOPERS LLP, Independent Registered Public Accounting Firm. 31.1Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-OxleyAct of 2002-Chief Executive Officer. 7731.2Certification pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-OxleyAct of 2002-Chief Financial Officer. 32.1Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002-Chief ExecutiveOfficer. 32.2Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002-Chief Financial Officer. 101.INSXBRL Instance Document 101.SCH Taxonomy Extension Schema Document 101.CAL Taxonomy Extension Calculation Linkbase Document 101.DEF Taxonomy Extension Definition Linkbase Document 101.LAB Taxonomy Extension Labels Linkbase Document 101.PRE Taxonomy Extension Presentation Linkbase Document78Table of ContentsItem 16. Form 10-K SummaryNone79SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed onits behalf by the undersigned, thereunto duly authorized. SIGA TECHNOLOGIES, INC. (Registrant) Date:March 6, 2018By:/s/ Phillip L. Gomez Phillip L. Gomez Chief Executive OfficerPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated.Signature Title of Capacities Date/s/ Phillip L. Gomez March 6, 2018Phillip L. Gomez Chief Executive Officer and Director /s/ Daniel J. Luckshire Daniel J. Luckshire Executive Vice President and March 6, 2018 Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) /s/ Eric A. Rose Eric A. Rose, M.D. Executive Chairman March 6, 2018 /s/ James J. Antal James J. Antal Director March 6, 2018 /s/ Michael J. Bayer Michael J. Bayer Director March 6, 2018 /s/ Thomas E. Constance Thomas E. Constance Director March 6, 2018 /s/ Jeffrey Kindler Jeffrey Kindler Director March 6, 2018 /s/ Joseph Marshall Joseph Marshall Director March 6, 2018 /s/ Michael Plansky Michael Plansky Director March 6, 2018 /s/ Paul G. Savas Paul G. Savas Director March 6, 201880CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-183101, 333-167329, 333-112935, 333-56216,333-35992, and 333-218507) of SIGA Technologies, Inc. of our report dated March 6, 2018 relating to the financial statements and the effectiveness ofinternal control over financial reporting, which appears in this Form 10-K. /s/ PRICEWATERHOUSECOOPERS LLPFlorham Park, New Jersey March 6, 2018Exhibit 31.1Certification by Chief Executive Officer Pursuant toSection 302 of the Sarbanes-Oxley Act of 2002I, Phillip L. Gomez, certify that:1.I have reviewed this annual report on Form 10-K of SIGA Technologies, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the 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 control over financial reporting which arereasonably 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 internalcontrol over financial reporting.Date: March 6, 2018 /s/ Phillip L. GomezPhillip L. GomezChairman and Chief Executive OfficerExhibit 31.2Certification by Chief Executive Officer Pursuant toSection 302 of the Sarbanes-Oxley Act of 2002I, Daniel J. Luckshire, certify that:1.I have reviewed this annual report on Form 10-K of SIGA Technologies, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the 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 control over financial reporting which arereasonably 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 internalcontrol over financial reporting.Date: March 6, 2018 /s/ Daniel J. LuckshireDaniel J. LuckshireExecutive Vice President andChief Financial OfficerExhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of SIGA Technologies, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2017 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Phillip L. Gomez, Chief Executive Officer of the Company, certify,pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:(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.A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company andfurnished to the Securities and Exchange Commission or its staff upon request./s/ Phillip L. GomezPhillip L. GomezChairman and Chief Executive OfficerMarch 6, 2018Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of SIGA Technologies, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2017 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel J. Luckshire, Executive Vice President and Chief Financial Officerof the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of myknowledge:(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.A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company andfurnished to the Securities and Exchange Commission or its staff upon request./s/ Daniel J. LuckshireDaniel J. LuckshireExecutive Vice President and Chief Financial OfficerMarch 6, 2018

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