UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K/A
(AMENDMENT NO. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) May 23, 2003
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SIGA Technologies, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-23047 13-3864870
(State or other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification Number)
420 Lexington Avenue, Suite 601
New York, New York 10170
(Address of Principal Executive Offices)
(Zip Code)
(212) 672-9100
(Registrant's telephone number, including area code)
This Amendment No. 2 to Current Report on Form 8-K/A ("Amendment") amends the
Current Report on Form 8-K filed by the Registrant on June 9, 2003, as amended
on July 22, 2003 (the "Report"). This Amendment is being filed to provide
updated financial information required by Item 7(b). Item 7(b) is hereby amended
to provide such information.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro Forma Financial Information.
Introduction to Unaudited Pro Forma Financial Statements.
Unaudited Pro Forma Statement of Operations for the six months ended
June 30, 2003.
Unaudited Pro Forma Statement of Operations for the year ended December
31, 2002.
Notes to Unaudited Pro Forma Financial Statements.
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UNAUDITED PRO FORMA FINANCIAL STATEMENTS
On May 23, 2003, SIGA Technologies, Inc. ("SIGA") acquired substantially all of
the assets of Plexus Vaccine Inc. ("Plexus") and assumed certain liabilities in
exchange for 1,950,000 shares of SIGA's common stock and 190,950 of SIGA's
options and warrants at an exercise price of $1.62 per share.
The following unaudited pro forma financial statements give effect to the asset
purchase agreement between SIGA and Plexus. The unaudited pro forma statements
of operations are based on the individual statements of operations of Siga and
Plexus appearing in SIGA's most recent annual and quarterly reports and in the
Current Report on Form 8-K/A of SIGA dated July 22, 2003, respectively, and
combine the results of operations of SIGA and Plexus for the six months ended
June 30, 2003 and for the year ended December 31, 2002 as if the transaction
occurred on January 1, 2002. For the six months ended June 30, 2003, the
historical Plexus statement of operation is for the period January 1, 2003
through May 23, 2003, as the entities were combined as of that date.
The unaudited pro forma information is presented for illustrative purposes only
and is not necessarily indicative of the financial position or operating results
that would have been achieved if the acquisition had been consummated as of the
beginning of the periods presented, nor are they necessarily indicative of
future operating results or financial position of SIGA. A preliminary allocation
of the purchase price has been made to certain identifiable tangible and
intangible assets based on information available to the management of SIGA at
the date of the preparation of the accompanying pro forma financial statements.
The pro forma financial information does not give effect to any costs savings or
incremental costs, which may result from the integration of SIGA and Plexus
operations.
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SIGA Technologies, Inc. and Subsidiaries
Unaudited Pro Forma Statement of Operations
For the Six Months Ended June 30, 2003
Historical Pro Forma
------------------------------- --------------------------------
For the period
For the six ended January 1,
months ended 2003 through
June 30, 2003 May 23, 2003
SIGA (1) Plexus (2) Adjustments (3) Combined
------------ ------------ --------------- ------------
Revenues:
Grants and research and development contracts $ 448,674 $ 94,782 $ -- $ 543,456
------------ ------------ ------------ ------------
Total revenues 448,674 94,782 -- 543,456
------------ ------------ ------------ ------------
Operating expenses:
General and administrative 1,308,784 907,308 84,167 (A) 2,300,259
Research and development 1,120,243 243,417 168,479 (B) 1,532,139
Patent preparation fees 122,106 -- -- 122,106
------------ ------------ ------------ ------------
Total operating expenses 2,551,133 1,150,725 252,646 3,954,504
------------ ------------ ------------ ------------
Operating loss (2,102,459) (1,055,943) (252,646) (3,411,048)
Interest income / (expense), net 9,712 (949,129) -- (939,417)
------------ ------------ ------------ ------------
Net loss applicable to common shareholders $ (2,092,747) $ (2,005,072) $ (252,646) $ (4,350,465)
============ ============ ============ ============
Weighted average number of common shares
outstanding 13,725,091 1,540,607 (C) 15,265,698
============ ============
Weighted average common shares outstanding used
for basic and diluted loss per share $ (0.15) $ (0.28)
============ ============
See notes to Unaudited Pro Forma Financial Statements.
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SIGA Technologies, Inc. and Subsidiaries
Unaudited Pro Forma Statement of Operations
For the Year Ended December 31, 2002
Historical Pro Forma
------------------------------ -------------------------------
SIGA (1) Plexus (2) Adjustments (3) Combined
------------ ------------ --------------- ------------
Revenues:
Research and development contracts $ 344,450 $ 172,378 $ -- $ 516,828
------------ ------------ ------------ ------------
Total revenues 344,450 172,378 -- 516,828
------------ ------------ ------------ ------------
Operating expenses:
General and administrative 1,838,470 573,836 202,000 (A) 2,614,306
Reseach and development 1,766,368 937,593 404,350 (B) 3,108,311
Patent preparation fees 104,700 -- -- 104,700
------------ ------------ ------------ ------------
Total operating expenses 3,709,538 1,511,429 606,350 5,827,317
------------ ------------ ------------ ------------
Operating loss (3,365,088) (1,339,051) (606,350) (5,310,489)
Interest income / (expense), net 34,061 (66,638) -- (32,577)
------------ ------------ ------------ ------------
Net loss (3,331,027) (1,405,689) (606,350) (5,343,066)
Deemed dividend related to beneficial conversion feature 29,200 -- -- 29,200
------------ ------------ ------------ ------------
Net loss applicable to common stockholders $ (3,360,227) $ (1,405,689) $ (606,350) $ (5,372,266)
============ ============ ============ ============
Basic and diluted loss per share $ (0.32) $ (0.43)
============ ============
Weighted average common shares outstanding used
for basic and diluted loss per share 10,450,529 1,950,000 (C) 12,400,529
============ ============
See notes to Unaudited Pro Forma Financial Statements.
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NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. These columns reflect the historical results of operations of SIGA for the
six month period ended June 30, 2003 and for the year ended December 31,
2002, respectively.
2. These columns reflect the historical results of operations of Plexus for
the period ended January 1, 2003 through May 23, 2003 and the year ended
December 31, 2002, respectively.
3. The preliminary allocation of the purchase price of approximately
$4,070,903 is as follows:
Net liabilities assumed $ (501,431)
Acquired technology 2,191,000
Contracts and grants 741,000
Covenant not to compete 707,000
Goodwill 933,334
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$ 4,070,903
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The following are the descriptions of the intangible assets acquired from
Plexus and the methodologies in valuing each intangible asset.
Acquired technology
The acquired technology from Plexus is comprised of a combination of
technology and know-how of computational platforms and in vitro and in
vivo testing capabilities for rational design of vaccines. The acquired
technology includes one patent, two patent applications, and six pending
patents supporting such technologies, as well as certain unpatented
technology. As such, the acquired technology arises from contractual or
legal rights, or can be transferred, licensed, rented or exchanged in
combination with these patents, and therefore meets the separable criteria
presented in paragraph 39 of SFAS 141.
The acquired technology was valued utilizing an income approach via a
relief from royalty methodology. This methodology is based upon the
premise that the recognition of intellectual assets by potential customers
and competitors is a valuable asset to the owner. The premise behind the
valuation of these assets is that a buyer would be willing to pay a
royalty for the right to use an established technology. Accordingly, this
methodology values the technology via the relief from the royalty that a
willing buyer would typically pay. This methodology is comprised of two
elements, the determination of an appropriate royalty rate and the
conversion of royalty savings into value. Based on a review of royalty
rates paid in third-party licensing agreements, a royalty rate of 3.0% of
revenue was used over an estimated useful life of ten years. Royalty
"savings" were then discounted to a present value utilizing a discount
rate of 28.5%.
Contracts and Grants
SIGA acquired several contracts and grants with various institutions, the
terms of which range from two and a half to four and a half years, and are
expected to generate revenue in future periods. The contracts and grants
arise from contractual rights and were recognized pursuant to paragraph 39
of SFAS 141.
The contracts and grants were valued utilizing an income approach known as
the excess earnings methodology, whereby excess earnings are computed as
the earnings remaining after deducting for the market rates of return on
the estimated value of contributory assets including working capital,
tangible and intangible assets. The excess earnings are thereby calculated
for each year of a multiyear projection period. The primary components of
this methodology consist of the determination of excess earnings and an
appropriate rate of return. The earnings were based on projected after-tax
profits over the estimated term (two and a half to four and a half years)
discounted at a rate of 26.0%.
Covenant not to compete
As part of the asset purchase, SIGA entered into a three and a half year
non-competition agreement with the president of Plexus. The covenant not
to compete arises from contractual rights and was recognized pursuant to
paragraph 39 of SFAS 141.
The covenant not to compete was valued utilizing an income approach via
the discounted cash flow methodology, which is based upon converting
expected lost earnings over the three and a half year term to present
value. This methodology calculates the present value of potential lost
earnings, by giving values to five discrete scenarios as to the timing of
when the president would compete had there not been an agreement in place.
Each scenario was then weighted, based on the probability of each scenario
occurring, to arrive at the intangible asset value.
Under this approach, lost earnings before interest and taxes was estimated
for each scenario. These earnings were then tax affected and converted
into value utilizing a discount rate of 26.0%.
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The following adjustments were made to the statement of operations for the
six months ended June 30, 2003 and for the year ended December 31, 2002 to
give effect to the transaction:
A) Amortization of the covenant not to compete based on the
contractual life of the agreement.
B) Amortization of acquired technology and contracts and grants over
the estimated useful life.
C) Weighted average shares increase based on common stock issued.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SIGA TECHNOLOGIES, INC.
By:/s/ Thomas N. Konatich
-----------------------------------
Thomas N. Konatich
Acting Chief Executive Officer and
Chief Financial Officer
Date: September 5, 2003
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