What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-03 compared with 2021-03-04 · 391 added, 288 removed, 754 unchanged (47% of the section changed)

1 unchanged sentence

Index to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Balance Sheets

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To the Board of Directors and Stockholders of SIGA Technologies, Inc.

Opinion on the Financial Statements

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of SIGA Technologies, Inc.

and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations and comprehensive income (loss), of changes in stockholders’

equity/(deficiency) and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. 

and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive income (loss), of changes in stockholders' equity/(deficiency) and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2021, 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 of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which it accounts for revenues from contracts with customers in 2018.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control 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 financial statements, 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 used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such 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 Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could 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 any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

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Revenue Recognition –

Estimated Costs to Complete the Research and Development Services (“R&D”) Performance Obligations for the 19C BARDA and IV Formulation R&D Contracts

Estimated Costs to Complete the Research and Development Services ( “

) Performance Obligations for the 19C BARDA and PEP Label Expansion R&D Contracts

As discussed in Notes 2 and 3 to the consolidated financial statements, all of the Company’s revenue for the year ended December 31, 2021 was generated from long-term contracts.

For these contracts, all revenue associated with R&D performance obligations for the 19C BARDA and IV Formulation R&D Contracts, which totaled approximately $7.5 million and $1.4 million respectively, is recognized over time, because the customer simultaneously receives and consumes the benefits provided by the services as the Company performs these services.

Management recognizes revenue based on the progress toward complete satisfaction of the performance obligation and measures this progress under an input method, which is based on the Company’s costs incurred relative to total estimated costs.

For these contracts, all revenue associated with current research and development performance obligations for the 19C BARDA and PEP Label Expansion R&D Contracts, which totaled approximately $4.8 million and $2.5 million respectively, is recognized over time, because the customer simultaneously receives and consumes the benefits provided by the services as the Company performs these services.

The Company recognizes revenue related to these services based on the progress toward complete satisfaction of the performance obligation and measures this progress under an input method, which is based on the Company’s costs incurred relative to total estimated costs.

Under this method, progress is measured based on the cost of resources consumed compared to the total estimated costs to completely satisfy the performance obligation.

As disclosed by management, due to the nature of the work required to be performed on many of the performance obligations, management’s estimation of total revenue and costs to satisfy the obligations is complex, subject to many variables, and requires significant judgment.

The incurred and estimated costs used in the measure of progress include third-party services performed, direct labor hours, and material consumed.

As disclosed by management, due to the nature of the work required to be performed on many of the performance obligations, management’s estimation of total revenue and costs to satisfy the obligations is complex, subject to many variables, and requires significant judgment.

The incurred and estimated costs used in the measure of progress include third-party services performed, direct labor hours, and material consumed.  

The principal considerations for our determination that performing procedures relating to revenue recognition –

estimated costs to complete the R&D performance obligations for the 19C BARDA and IV Formulation R&D Contracts is a critical audit matter are the significant judgment by management when determining the estimated costs to completely satisfy the performance obligations.

This in turn led to significant auditor judgment, subjectivity and effort in performing procedures and in evaluating the estimates of the costs to complete related to management’s estimates of total forecasted costs.

estimated costs to complete the R&D performance obligations for the 19C BARDA and PEP Label Expansion R&D Contracts is a critical audit matter are the significant judgments by management when determining the estimated costs to completely satisfy the performance obligations.

This in turn led to significant auditor judgment, subjectivity and effort in performing procedures and in evaluating the estimates of the costs to complete related to management’s estimates of total forecasted costs.   

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others, evaluating and testing management’s process for determining the estimated costs to completely satisfy each performance obligation for the 19C BARDA and IV Formulation R&D Contracts, which included evaluating the reasonableness of management’s estimates of total forecasted costs.

Evaluating the reasonableness of management’s estimates of total forecasted costs involved assessing management’s ability to reasonably estimate costs to complete the performance obligation by (i) comparing, on a test basis, the underlying cost estimates to approved contracts or modifications;

These procedures included, among others, evaluating and testing management’s process for determining the estimated costs to completely satisfy each performance obligation for the 19C BARDA and PEP Label Expansion R&D Contracts, which included evaluating the reasonableness of management’s estimates of total forecasted costs.

Evaluating the reasonableness of management’s estimates of total forecasted costs involved assessing management’s ability to reasonably estimate costs to complete the performance obligation by (i) comparing, on a test basis, the underlying cost estimates to approved contracts or modifications;

(ii) comparing, on a test basis, the underlying transaction price to original contracts or modifications;

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$ 117,890,240  

Restricted cash and cash equivalents, short-term

95,737,862  

Accounts receivable

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8,285,738  

Term debt, current

Income tax payable

19,207,042  

919,555  

Total current liabilities

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Product sales and supportive services

$ 126,802,536  

$ 115,471,071  

$ 11,190,064  

Research and development

6,867,918  

9,488,233  

15,552,021  

Total revenues

133,670,454  

124,959,304  

26,742,085  

Operating expenses

Cost of sales and supportive services

16,601,880  

14,797,419  

1,782,838  

Selling, general and administrative

17,323,429  

14,003,184  

13,252,136  

Research and development

9,942,194  

10,938,930  

13,303,149  

Patent expenses

710,152  

719,141  

726,105  

Total operating expenses

44,577,655  

40,458,674  

29,064,228  

Operating income (loss)

(Loss) gain from change in fair value of warrant liability

89,092,799  

84,500,630  

( 2,322,143 )

Gain (loss) from change in fair value of warrant liability

117,770  

( 3,525,846 )  

5,091,256  

Loss on extinguishment of Term Loan

( 4,981,461 )  

Interest expense

( 3,016,817 )  

( 15,769,768 )

Other income, net

101,172  

532,085  

2,822,232  

Income (loss) before income taxes

89,311,741  

73,508,591  

( 10,178,423 )

(Provision) benefit for income taxes

( 19,860,975 )  

( 17,166,581 )  

2,937,276  

Net and comprehensive income (loss)

$ 69,450,766  

$ 56,342,010  

$ ( 7,241,147 )

Basic earnings (loss) per share

$ 0.92  

$ 0.71  

Diluted earnings (loss) per share

$ 0.91  

$ 0.71  

Weighted average shares outstanding:

75,322,194  

79,259,000  

81,031,254  

Weighted average shares outstanding:

76,402,716  

79,437,306  

82,175,023  

The accompanying notes are an integral part of these financial statements.

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Balances, December 31, 2018

( 537,375,776

80,763,350  

$ 8,076  

$ 218,697,872  

$ ( 115,791,261 )  

$ 102,914,687  

( 7,241,147 )  

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Issuance of common stock upon vesting of RSUs and exercise of stock-settled appreciation rights

515,888  

( 52 )  

Issuance of common stock to employees

53,332  

Issuance of common stock upon exercise of warrants

159,782  

1,172,785  

1,172,801  

Payment of common stock tendered for employee stock-based compensation tax obligations

Cumulative effect of accounting change

( 232,253 )  

( 23 )  

( 1,176,556 )  

( 1,176,579 )

Stock-based compensation

2,113,994  

Balances, December 31, 2019

81,269,868  

$ 8,127  

$ 220,808,037  

$ ( 123,032,408 )  

$ 97,783,756  

56,342,010  

Repurchase of common stock

( 4,628,473 )  

( 463 )  

( 28,502,483 )  

( 28,502,946 )

Issuance of common stock upon exercise of stock options

Issuance of common stock upon vesting of RSUs and exercise of stock-settled appreciation rights

Issuance of common stock to employees

11,822  

Issuance of common stock upon vesting of RSUs

177,876  

( 18 )  

Issuance of common stock upon exercise of warrants

393,646  

3,003,477  

3,003,517  

Payment of common stock tendered for employee stock-based compensation tax obligations

( 29,035 )  

( 184,013 )  

Stock-based compensation

1,350,948  

Balances, December 31, 2020

( 123,032,408

77,195,704  

$ 7,720  

$ 224,978,430  

$ ( 95,192,881 )  

$ 129,793,269  

69,450,766  

Repurchase of common stock

Issuance of common stock upon exercise of stock options

( 3,787,683 )  

( 379 )  

( 26,021,140 )  

( 26,021,519 )

Issuance of common stock upon vesting of RSUs

Issuance of common stock upon exercise of warrants

162,876  

( 16 )  

Payment of common stock tendered for employee stock-based compensation tax obligations

( 27,295 )  

( 173,915 )  

Stock-based compensation

1,265,809  

Balances, December 31, 2021

73,543,602  

$ 7,354  

$ 226,070,308  

$ ( 51,763,255 )  

$ 174,314,407  

The accompanying notes are an integral part of these financial statements.

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Net income (loss)

$ 69,450,766  

$ 56,342,010  

$ ( 7,241,147 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and other amortization

Loss (gain) on change in fair value of warrant liability

Stock-based compensation

Net realization of deferred revenue and costs due to FDA approval

522,368  

529,814  

526,997  

(Gain) loss on change in fair value of warrant liability

( 117,770 )  

3,525,846  

( 5,091,256 )

Stock-based compensation

1,265,809  

1,350,948  

2,113,994  

Write down of inventory, net

618,771  

Deferred income taxes provision (benefit)

121,446  

11,606,949  

( 2,417,617 )

Loss on extinguishment of Term Loan

4,981,461  

Non-cash interest expense

Gain on sale of priority review voucher

887,132  

4,497,271  

Changes in assets and liabilities:

Accounts receivable

( 80,310,187 )  

827,733  

( 2,208,863 )

136,369  

( 8,009,992 )  

( 6,744,644 )

Prepaid expenses and other assets

48,963  

699,102  

Accounts payable, accrued expenses and other liabilities

986,865  

( 3,116,843 )  

936,839  

Income tax payable

18,287,487  

912,462  

Deferred revenue

483,749  

982,606  

( 1,861,605 )

Net cash provided by (used in) operating activities

11,494,636  

71,519,228  

( 18,204,303 )

Cash flows from investing activities:

Capital expenditures

Net proceeds from sale of priority review voucher

Net cash (used in) provided by investing activities

( 50,620 )  

( 15,501 )  

Cash used in investing activities

( 50,620 )  

( 15,501 )  

Cash flows from financing activities:

Net proceeds from exercise of stock options

Payment of employee tax obligations for common stock tendered

( 173,918 )  

( 184,016 )  

( 1,176,579 )

Repurchase of common stock

( 26,021,519 )  

( 28,502,946 )  

Repayment of Term Loan

Net cash used in financing activities

( 85,913,459 )  

Cash used in financing activities

( 26,195,437 )  

( 114,600,421 )  

( 1,176,579 )

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

( 14,751,421 )  

( 43,096,694 )  

( 19,409,976 )

Cash, cash equivalents and restricted cash at the beginning of period

117,890,240  

160,986,934  

180,396,910  

Cash, cash equivalents and restricted cash at end of period

Supplemental disclosure of cash inflows information:

$ 103,138,819  

$ 117,890,240  

$ 160,986,934  

Supplemental disclosure of cash flows information:

Non-cash lease right-of-use asset and associated liability (net of deferred rent in 2019)

$ 733,715  

$ 2,944,932  

Conversion of warrant to common stock

$ 3,003,517  

$ 1,172,801  

Issuance of common stock upon cashless exercise

$ 97,250  

$ 118,500  

Cash income taxes paid (refund), net

$ 1,063,744  

$ 3,718,581  

$ ( 1,276,129 )

The accompanying notes are an integral part of these financial statements

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The Company's lead product, TPOXX®

(“oral TPOXX®”) is a United States Food & Drug Administration-approved oral formulation antiviral drug for the treatment of human smallpox disease caused by variola virus.

(“oral TPOXX®”) is a United States Food & Drug Administration ("FDA")-approved oral formulation antiviral drug for the treatment of human smallpox disease caused by variola virus.

On July 13, 2018, the FDA approved oral TPOXX®.

Oral TPOXX®

is a novel, patented drug that is easy to store, transport and administer. Oral TPOXX®

labeling, approved by the FDA, limits sales of oral TPOXX®

to those for the U.S.

Strategic National Stockpile ("Strategic Stockpile").

The Company has been delivering oral TPOXX®

to the Strategic Stockpile since 2013.

On December 1, 2021, the Company announced that Health Canada approved oral tecovirimat as an extraordinary use drug.

On January 10, 2022, a Marketing Authorisation Application ("MAA") with the European Medicines Agency ("EMA") for oral tecovirimat was approved. The MAA was filed under the centralized application process, which authorized the sale of oral tecovirimat in European Union member states, as well as Norway (which granted separate follow-on approval), Iceland, and Liechtenstein.

The EMA approved label indication covers the treatment of smallpox, monkeypox, cowpox, and vaccinia complications following vaccination against smallpox.

With respect to the regulatory approvals by Health Canada and the EMA, oral tecovirimat represents the same formulation that was approved by the FDA in 

July 2018 

under the brand name TPOXX®.

Summary of Significant Accounting Policies

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Restricted Cash and Cash Equivalents

Under the terms of the Loan Agreement (as defined below), net cash proceeds from the Company's Priority Review Voucher ("PRV") sale on October 31, 2018 ( see Note 4 ) were restricted and were held in a reserve account.

Cash and cash equivalents held in the reserve account were available to pay interest, fees and principal related to the Term Loan (see Note 8 for additional information).

Prior to the second quarter of 2020 , there was also a reserve account for certain proceeds of the Loan Agreement.

This account was also restricted.

Amounts in this reserve account were primarily used to pay interest on the Loan Agreement.

This reserve account was closed in the second quarter of 2020 .

Cash and cash equivalents held in restricted accounts were available to pay interest, fees and principal related to the Term Loan (see Note 7  for additional information).

As this Term Loan was repaid on March 13, 2020, the restricted accounts were closed in the second quarter of 2020.

There was no restricted cash or cash equivalents as of December 31, 2021 or 

The following table reconciles cash, cash equivalents and restricted cash per the consolidated statements of cash flows to the consolidated balance sheet for each respective period:

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$ 100,652,809  

$ 19,857,833  

Restricted cash - short-term

1 unchanged sentence

11,452,078  

10,701,305  

Restricted cash - long-term

68,292,023  

6,542,448  

Cash, cash equivalents and restricted cash

1 unchanged sentence

$ 180,396,910  

$ 37,101,586  

Concentration of Credit Risk

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Accounts receivable are recorded net of provisions for doubtful accounts.

At December 31, 2020 and 2019 , 100 % of accounts receivable represented receivables from the U.S.

At December 31, 2021 and 2020 , 98 % and 100 %, respectively, of accounts receivable represented receivables from the U.S.

An allowance for doubtful accounts is based on specific analysis of the receivables.

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Inventory is stated at the lower of cost or net realizable value.

The cost is determined using the first -in, first -out (FIFO) method.

The Company capitalizes inventory costs associated with the Company’s products when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized;

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Property, plant and equipment are stated at cost, net of accumulated depreciation.

Depreciation is provided on a straight-line method over the estimated useful lives of the various asset classes.

Depreciation and amortization are provided on a straight-line method over the estimated useful lives of the various asset classes.

The estimated useful lives are as follows:

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The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”

Adoption of ASC 606 .

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018. 

The cumulative impact of adopting ASC 606 as of January 1, 2018 was a decrease to deferred revenue of approximately $ 1.8 million;

a decrease to deferred costs of approximately $ 2.1 million;

an increase to receivables of approximately $ 0.1 million and a net increase to opening accumulated deficit of $ 0.2 million, net of tax.

For the year ended December 31, 2018, the impact to revenues as a result of applying ASC 606 was an increase of approximately $ 1.0 million.

Performance Obligations . A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606.

 A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. As of December 31, 2021 , the Company's active performance obligations, for the contracts outlined in Note 3 , consist of the following:

six  performance obligations relate to research and development services;

one relates to manufacture and delivery of product;

five  performance obligations relate to research and development services;

two  relate to manufacture and delivery of product;

and one is associated with storage of product.

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The incurred and estimated costs used in the measure of progress include third -party services performed, direct labor hours, and material consumed.

Revenue connected with the performance obligations related to the delivery of oral TPOXX®

Strategic National Stockpile ("Strategic Stockpile") ("Delivery Performance Obligation") is recognized at a point in time.

The Delivery Performance Obligation under the 2011 BARDA Contract ( Note 3 ) has been completed.

With respect to this performance obligation, revenue was recognized when the U.S.

Biomedical Advanced Research and Development Authority ("BARDA") obtained control of the asset, which was upon delivery to and acceptance by the customer and at the point in time when the constraint on the consideration was resolved due to FDA approval of oral TPOXX®.

The consideration, which was variable consideration, was constrained until the FDA approved oral TPOXX®

for the treatment of smallpox on July 13, 2018.

Prior to FDA approval, consideration had been constrained because the FDA Approval Replacement Obligation (as defined in Note 3 ) had not been quantified or specified.

Following FDA approval, the possibility of having to replace product pursuant to the FDA Approval Replacement Obligation was essentially eliminated and deemed to be remote since there was no difference between the approved product and the courses of oral TPOXX®

that had been delivered to the Strategic Stockpile.

Contract Estimates . Accounting for long-term contracts and grants involves the use of various techniques to estimate total contract revenue and costs.

Contract estimates are based on various assumptions to project the outcome of future events that often span multiple years. These assumptions include labor productivity;

Contract estimates are based on various assumptions to project the outcome of future events that often span multiple years. These assumptions include:

labor productivity;

the complexity of the work to be performed;

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Under this method, the impact of the adjustment on revenues, research and development expenses and cost of sales and supportive services recorded to date on a contract is recognized in the period the adjustment is identified.

As discussed in Note 3, during the year ended December 31, 2019, the Company recognized a cumulative catch-up adjustment to revenue of approximately $ 3.3 million related to the negotiation with representatives of the U.S.

Government for a change in the application of certain reimbursement rates under the IV Formulation R&D Contract (defined in Note 3 ).

Contract Balances . The timing of revenue recognition, billings and cash collections may result in billed accounts receivable, unbilled receivables (contract assets) and customer advances and deposits (contract liabilities) in the consolidated balance sheets.

Generally, amounts are billed as work progresses in accordance with agreed-upon contractual terms either at periodic intervals (monthly) or upon achievement of contractual milestones;

as of December 31, 2020 , the accounts receivable balance in the balance sheet includes approximately $ 1.3  million of unbilled receivables.

as of December 31, 2021 , the accounts receivable balance in the balance sheet includes approximately $ 2.2 million of unbilled receivables.

Under typical payment terms of fixed price arrangements, the customer pays the Company either performance-based payments or progress payments.

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As of December 31, 2021 , the aggregate amount of transaction price allocated to remaining performance obligations was $ 61.8 million.

The Company expects to recognize this amount as revenue within the next five years as the specific timing for satisfying the performance obligations is subjective and outside the Company’s control.

The Company expects to recognize this amount as revenue within the next three years as the specific timing for satisfying the performance obligations is subjective and outside the Company’s control.

The Company accounts for leases in accordance with ASC 842, Leases (“ASC 842”

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Leases with an initial term less than one year are not recorded on the balance sheet and the lease costs are recorded as an expense on a straight-line basis over the lease term.

Operating leases with terms greater than one year result in a lease liability recorded in other liabilities with a corresponding ROU asset recorded in property, plant and equipment.

Operating leases with terms greater than one year result in a lease liability recorded in other liabilities with a corresponding right-of-use ("ROU") asset recorded in property, plant and equipment.

Operating lease liabilities are recognized at the commencement date based on the present value of future minimum lease payments over the lease term.

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Research and Development

Research and development expenses include costs directly and indirectly attributable to the conduct of research and development programs, and performance pursuant to the BARDA contracts, including employee related costs, materials, supplies, depreciation on and maintenance of equipment, the cost of services provided by outside contractors, including services related to the Company’s clinical trials and facility costs, such as rent, utilities, and general support services.

Research and development expenses include costs directly and indirectly attributable to the conduct of research and development programs, and performance pursuant to certain customer contracts, including employee related costs, materials, supplies, depreciation on and maintenance of equipment, the cost of services provided by outside contractors, including services related to the Company’s clinical trials and facility costs, such as rent, utilities, and general support services.

All costs associated with research and development are expensed as incurred.

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Stock-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.

for option awards, fair value was estimated using the Black-Scholes model.

These compensation costs are recognized net of an estimated forfeiture rate over the requisite service periods of the awards.

Forfeitures are estimated on the date of the respective grant and revised if actual or expected forfeiture activity differs from original estimates.

The fair value of cash-settled restricted stock unit ("RSU") awards is determined by the value of our common stock and is recognized based on the portion of the requisite service period satisfied as of each valuation date.

The fair valuation of the cash-settled awards changes based on changes in our common stock price.

The portion of cash-settled RSUs that is recognized based on service period is reflected in accrued expenses and other current liabilities in our consolidated balance sheet.

Increases (or decreases) in accrued expenses result in adjustments to earnings for the associated valuation updates.

The Company recognizes income taxes utilizing the asset and liability method of accounting for income taxes.

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The excess of the purchase price above par value of repurchased shares that are retired is presented as an increase to accumulated deficit (or a reduction of retained earnings, if any).

(Loss) Earnings per Share

Basic earnings per share is computed by dividing net (loss) income by the weighted-average number of common shares outstanding during the period.

Diluted earnings per share is computed by dividing net (loss) income by the weighted-average number of common shares outstanding during the period, assuming potentially dilutive common shares from option exercises, SSARs, RSUs, warrants and other incentives had been issued and any proceeds received in respect thereof were used to repurchase common stock at the average market price during the period.

The assumed proceeds used to repurchase common stock is the sum of the amount to be paid to the Company upon exercise of options and the amount of compensation cost attributed to future services not yet recognized.

Earnings (Loss) per Share

Basic earnings per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period.

Diluted earnings per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period, assuming potentially dilutive common shares from option exercises, RSUs, warrants and other incentives had been issued and any proceeds received in respect thereof were used to repurchase common stock at the average market price during the period.

The assumed proceeds used to repurchase common stock is the sum of the amount to be paid to the Company upon exercise of options and warrants and the amount of compensation cost attributed to future services not yet recognized.

Fair Value of Financial Instruments

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The Company uses model-derived valuations where certain inputs are unobservable to third parties to determine the fair value of common stock warrants on a recurring basis and classifies the liability-classified warrant as Level 3.

The Company used a discounted cash 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 2021 or 2020 .

As of December 31, 2020 , the Company had approximately $ 0.1 million of cash and cash equivalents classified as Level 1 financial instruments. There were no Level 2 financial instruments as of December 31, 2020 .

As of December 31, 2019 , the Company had approximately $ 5.6 million and $ 90.0 million of restricted cash and cash equivalents classified as Level 1 and Level 2 financial instruments, respectively.

As of December 31, 2021  and 

December 31, 2020 , the Company had approximately $ 0.1 million and $ 0.1 million, respectively, of cash and cash equivalents classified as Level 1 financial instruments. There were no Level 2 financial instruments as of December 31, 2021  or December 31, 2020 . 

The following table presents changes in the liability-classified warrant measured at fair value using Level 3 inputs:

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$ 6,639,211  

Increase in fair value of warrant liability

3,525,846  

Decrease in fair value of warrant liability

Exercise of warrants

( 3,003,517 )

Warrant liability at December 31, 2021

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Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No.

2016 - 13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments ("ASU 2016 - 13" ).

ASU 2016 - 13 requires an entity to measure and recognize expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred.

The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.

The adoption of this standard had no impact on the consolidated financial statements.

In December 2019, the FASB issued ASU No.

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The amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods therein.

Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued.

The Company is currently evaluating the effect, if any, that the ASU will have on its consolidated financial statements.

Procurement Contract and Research Agreements

The adoption of this standard in the first quarter of 2021 had no impact on the consolidated financial statements.

Procurement Contracts and Research Agreements

19C BARDA Contract

On September 10, 2018, the Company entered into a contract with BARDA pursuant to which SIGA agreed to deliver up to 

On September 10, 2018, the Company entered into a contract with the U.S.

Biomedical Advanced Research and Development Authority ("BARDA") pursuant to which SIGA agreed to deliver up to 

1,488,000 courses of oral TPOXX®

to the Strategic Stockpile, and to manufacture and deliver to the Strategic Stockpile, or store as vendor-managed inventory, up to 

Strategic National Stockpile ("Strategic Stockpile"), and to manufacture and deliver to the Strategic Stockpile, or store as vendor-managed inventory, up to 

212,000 courses of the intravenous (IV) formulation of TPOXX®

(“IV TPOXX®”).

Additionally, the contract includes funding from BARDA for advanced development of IV TPOXX®, post-marketing activities for oral and IV TPOXX®, and procurement activities.

Additionally, the contract includes funding from BARDA for a range of activities, including:

advanced development of IV TPOXX®, post-marketing activities for oral and IV TPOXX®, and procurement activities.

As of December 31, 2021 , the contract with BARDA (as amended, modified, or supplemented from time to time, the "19C BARDA Contract") contemplates up to approximately $ 602.5 million of payments, of which approximately $ 51.7 million of payments are included within the base period of performance of five years, approximately $ 239.7 million of payments are related to exercised options and up to approximately $ 311.1 million of payments are currently specified as unexercised options.

The $239.7 million of payments related to exercised options includes an option exercised on September 7, 2021 for the manufacture and delivery of approximately $ 112.6 million of oral TPOXX®.

BARDA may choose in its sole discretion when, or whether, to exercise any of the unexercised options.

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and payments of approximately $ 0.6 million for supportive procurement activities.

As of December 31, 2020, 

the Company had received or billed for $ 11.1 million for the successful delivery of approximately 

As of December 31, 2021 , the Company has received $ 11.1 million for the successful delivery of approximately 

35,700 courses of oral TPOXX®

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20,000 courses of IV FDP.

The $ 3.2 million received for the manufacture of IV BDS has been recorded as deferred revenue as of 

The $ 3.2 million received for the completed manufacture of IV BDS has been recorded as deferred revenue as of 

December 31, 2021 and December 31, 2020 ;

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There are exercised options for the following activities:

payments up to $ 11.2 million for the procurement of raw materials to be used in the manufacture of at least 

363,070 courses of oral TPOXX®, payments up to $ 101.3 million for the delivery of up to 

363,070 courses of oral TPOXX®;

and, payments of up to $ 14.6 million for funding of post-marketing activities for oral TPOXX®.

As of December 31, 2020, the Company has received the following payments in connection with exercised options:

$ 11.2 million was received for the procurement of raw materials and such amount was initially recorded as deferred revenue and was recognized as revenue during the year ended December 31, 2020, with deliveries of approximately 

363,000 courses, in the aggregate, of oral TPOXX®;

$ 101.3 million was received in connection with the June, September and October deliveries, in total, of approximately 

payments up to $ 11.2 million for the procurement of raw materials used in the 2020 manufacture of certain courses of oral TPOXX®; payments up to $ 213.9 million for the delivery of up to 

726,140 courses of oral TPOXX®;

and $ 5.4 million has been received or billed for in connection with post-marketing activities for oral TPOXX®.

and payments of up to $ 14.6 million for funding of post-marketing activities for oral TPOXX®.

As of December 31, 2021 , the Company has delivered approximately $ 225.1  million (including the value of raw materials) of oral TPOXX®

to the Strategic Stockpile, of which approximately $ 112.5 million was delivered in 2021 (including approximately $ 79.7 million of oral TPOXX®

that was delivered and invoiced in December 2021, for which full payment was received in January 2022);

and $ 7.3 million has been received or billed for in connection with post-marketing activities for oral TPOXX®. 

Unexercised options specify potential payments up to approximately $ 311.1 million in total (if all such options are exercised).

There are options for the following activities:

payments of up to $ 337.7 million for the delivery of up to approximately 

1,089,000 courses of oral TPOXX®

payments of up to $ 225.1 million for the delivery of oral TPOXX®

to the Strategic Stockpile;

payments of up to $ 76.8 million for the manufacture of up to 

192,000 courses of IV FDP, of which up to $ 30.7 million of payments would be paid upon the manufacture of IV BDS to be used in the manufacture of IV FDP;

payments of up to $ 76.8 million for the manufacture of courses of IV FDP, of which up to $ 30.7 million of payments would be paid upon the manufacture of IV BDS to be used in the manufacture of IV FDP;

payments of up to approximately $ 3.6 million to fund post-marketing activities for IV TPOXX®;

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Revenue from other performance obligations under the 19C BARDA Contract are recognized over time using an input method using costs incurred to date relative to total estimated costs at completion.

For the years ended December 31, 2020 and 2019 , the Company recognized revenues of $ 7.5  million and $ 7.4 million, respectively, on an over time basis.

For the years ended December 31, 2021 and 2020 , the Company recognized revenues of $ 4.8 million and $ 7.5  million, respectively, on an over time basis.

In contrast, revenue recognized for product delivery and therefore at a point in time for the years ended December 31, 2021 and 2020 , was $ 112.5 million and $ 112.6 million, respectively. 

2011 BARDA Contract

On May 13, 2011, the Company signed a contract with BARDA pursuant to which BARDA agreed to buy from the Company 1.7 million courses of oral TPOXX®.

Additionally, the Company agreed to contribute to BARDA 300,000 courses at no additional cost to BARDA.

The contract with BARDA (as amended, modified, or supplemented from time to time the "2011 BARDA Contract") includes a base contract, as modified, ( "2011 Base Contract") as well as options.

The 2011 Base Contract specifies approximately $ 508.4 million of payments (including exercised options), of which, as of December 31, 2020 , $ 459.8 million has been received by the Company for the manufacture and delivery of 1.7 million courses of oral TPOXX®

and $ 45.6 million has been received for certain reimbursements in connection with development and supportive activities.

1C BARDA Contract ( 2011 BARDA Contract)

On May 13, 2011, the Company signed a contract with BARDA ( "1C BARDA Contract" or "2011 BARDA Contract") pursuant to which BARDA agreed to buy from the Company 1.7 million courses of oral TPOXX®, as well as provide development funding for certain activities.

The 1C  BARDA Contract specifies approximately $ 508.4 million of payments, of which, as of December 31, 2021 , $ 459.8 million had been received by the Company for the manufacture and delivery of oral TPOXX®

and $ 45.9 million had been received for certain reimbursements in connection with development and supportive activities.

Approximately $ 2.7 million remains eligible to be received in the future for reimbursements of development and supportive activities.

For courses of oral TPOXX®

that have been physically delivered to the Strategic Stockpile under the 2011 BARDA Contract, there are product replacement obligations, including:

(i) a product replacement obligation in the event that the final version of oral TPOXX®

approved by the FDA was different from any courses of oral TPOXX®

that had been delivered to the Strategic Stockpile (the “FDA Approval Replacement Obligation”);

(ii) a product replacement obligation, at no cost to BARDA, in the event that oral TPOXX®

is recalled or deemed to be recalled for any reason;

and (iii) a product replacement obligation in the event that oral TPOXX®

does not meet any specified label claims.

On July 13, 2018, the FDA approved oral TPOXX®

for the treatment of smallpox and there is no difference between the approved product and courses in the Strategic Stockpile.

As such, the possibility of the FDA Approval Replacement Obligation resulting in any future replacements of product within the Strategic Stockpile is remote.

The 2011 BARDA Contract includes options.

On July 30, 2018, the 2011 BARDA Contract was modified and BARDA exercised its option relating to FDA approval of the aforementioned 84 -month expiry for oral TPOXX®

for which the Company was paid $ 50.0 million in August 2018.

With the option exercise, the 2011 BARDA Contract was modified so that the 2011 Base Contract increased by $ 50.0 million.

Remaining options, if all were exercised by BARDA, would result in aggregate payments to the Company of $ 72.7 million, including up to $ 58.3 million of funding for development and supportive activities such as work on a post-exposure prophylaxis ("PEP") indication for TPOXX®

and/or $ 14.4 million of funding for production-related activities related to warm-base manufacturing.

BARDA may choose, in its sole discretion not to exercise any or all of the unexercised options.

In 2015, BARDA exercised two options related to extending the indication of the drug to the geriatric and pediatric populations.

The stated value of those exercises was immaterial.

The 2011 BARDA Contract expires in December 2024.

As described in Note 2, cash inflows related to delivery of courses under the 2011 BARDA Contract had been recorded as deferred revenue prior to FDA approval of oral TPOXX®, which occurred in the third quarter 2018.

The deferral was due to the constraint on the consideration received related to the FDA Approval Replacement Obligation.

During the third quarter 2018, the constraint was satisfied with FDA approval of oral TPOXX®.

As such, $ 375.6 million associated with cash consideration received in prior periods under the 2011 BARDA Contract was recognized as revenue for the year ended December 31, 2018.

Separately, as discussed above, $ 90.9 million of revenues were recognized in the third quarter of 2018  in connection with a $ 40.9 million holdback payment (under the 2011 BARDA Contract) and a $ 50.0 million payment for achieving 84 -month expiry for oral TPOXX®

(under the 2011 BARDA Contract).

Direct costs incurred by the Company to manufacture and fulfill the delivery of courses had also been deferred.

As of December 

31, 2017, deferred direct costs under the 2011 BARDA Contract were approximately $ 96.5 million.

In connection with the FDA approval of oral TPOXX®, all related deferred costs were recognized in the consolidated statement of operations during the third quarter of 2018.

Revenues in connection with the 2011 BARDA Contract are recognized either over time or at a point in time.

Performance obligations related to product delivery generate revenue at a point in time.

Remaining performance obligations under the 2011 BARDA Contract generate revenue over time.

For the years ended December 31, 2020 and 2019 , the Company recognized revenue of $ 0.2 million and $ 0.3 million, respectively, on an over time basis.

In contrast, revenue recognized for product delivery and supportive services and therefore at a point in time for the years ended December 31, 2020 and 2019 , were $ 0.4  million and $ 0.1 million, respectively.

The 1C  BARDA Contract expires in December 2024.

Remaining performance obligations under the 1C  BARDA Contract generate revenue over time.

For the years ended December 31, 2021  and 

2020 , the Company recognized revenue of $ 0.2  million and $ 0.2 million, respectively, on an over time basis.

In contrast, no revenue was recognized for product delivery and supportive services and therefore at a point in time for the year ended December 31, 2021. 

Revenue recognized for product delivery and supportive services and therefore at a point in time for the year ended December 31, 2020, was $ 0.4 million.

International Procurement Contracts

On January 13, 2021, the Public Health Agency of Canada ("PHAC") awarded a contract to Meridian Medical Technologies, Inc. (“Meridian,” a Pfizer Company) (the “Contract”) for the purchase of up to approximately $ 33 million of oral TPOXX® (tecovirimat) within five years. The Contract specifies firm commitments for the purchase of approximately $ 3.4 million of oral TPOXX®

to occur by March 31, 2021 and a cumulative purchase of approximately $ 17 million of oral TPOXX®

On January 13, 2021, the Public Health Agency of Canada ("PHAC") awarded a contract to Meridian Medical Technologies, Inc. (“Meridian”) (the “Contract”) for the purchase of up to approximately $ 33  million of oral TPOXX® (tecovirimat) within five years. In January 2022, PHAC published a proposed amendment in which total procurement of oral TPOXX®

under the Contract would be increased to an amount of up to $ 38 million, with firm commitments for the cumulative purchase of approximately $ 23  million of oral TPOXX®

by March 31, 2023;

the remaining courses under the Contract are targeted for delivery after March 31, 2023 and are subject to option exercise by PHAC.

To date, SIGA has not finalized any deliveries yet in connection with this contract.

As of December 31, 2021, approximately $ 10 million of oral TPOXX®

courses had been delivered to and accepted by PHAC.

Such courses were delivered in the first six months of 2021.

On April 3, 2020, the Company announced that the Canadian Department of National Defence (“CDND”) awarded a contract (the "Canadian Military Contract") to Meridian, pursuant to which the CDND will purchase up to approximately $ 14 million of oral TPOXX®

over four years.

In the second quarter 2020, CDND purchased $ 2.3 million of oral TPOXX®.

The remaining purchases are at the option of the CDND, and are expected to occur after regulatory approval of oral TPOXX®

In the second quarter 2020, CDND purchased approximately $ 2  million of oral TPOXX®.

In the third quarter of 2021, CDND purchased another approximately $ 2 million of oral TPOXX®

The remaining purchases are at the option of the CDND.

Meridian is the CDND's counterparty under the Canadian Military Contract, and SIGA is responsible for manufacture and delivery of any oral TPOXX®

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in a field of use specified in the International Promotion Agreement in all geographic regions except for the United States (the “Territory”), and Meridian has agreed not to commercialize any competing product, as defined in the International Promotion Agreement, in the specified field of use in the Territory.

SIGA will retain ownership, intellectual property, distribution and supply rights and regulatory responsibilities in connection with TPOXX®, and, in the United States market, will also retain sales and marketing rights with respect to oral TPOXX®.

SIGA’s consent shall be required for the entry into any sales arrangement pursuant to the International Promotion Agreement.

The fee Meridian retains pursuant to the International Promotion Agreement will be a specified percentage of the collected proceeds of sales of oral TPOXX®

SIGA retains ownership, intellectual property, distribution and supply rights and regulatory responsibilities in connection with TPOXX®, and, in the United States market, also retains sales and marketing rights with respect to oral TPOXX®.

SIGA’s consent is required for the entry into any sales arrangement pursuant to the International Promotion Agreement.

The fee Meridian retains pursuant to the International Promotion Agreement is a specified percentage of the collected proceeds of sales of oral TPOXX®

net of certain expenses, for years in which customer invoiced amounts net of such expenses are less than or equal to a specified threshold, and a higher specified percentage of such collected net proceeds for years in which such net invoiced amounts exceed the specified threshold.

Revenue in connection with international procurement contracts for the delivery of product are recognized at a point in time.

During the year ended December 31, 2020 , the Company recognized $ 2.3 million of revenue for delivery to CDND. 

Revenue in connection with international procurement contracts for the delivery of product are recognized at a point in time on a gross basis, as the Company acts as the principal in the transaction.

During the year ended December 31, 2021 , the Company recognized $ 12.7 million of revenue for deliveries to PHAC and CDND.

During the year ended 

December 31, 2020 , the Company recognized $ 2.3 million of revenue for delivery to CDND. 

Research Agreements and Grants

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The IV Formulation R&D Contract has a period of performance that terminates in February 2024.

As of December 31, 2020 , the IV Formulation R&D Contract provides for future aggregate research and development funding of up to approximately $ 2.1 million.

As of December 31, 2021 , the IV Formulation R&D Contract provided for future aggregate research and development funding of up to approximately $ 0.5 million.

Revenues in connection with the IV Formulation R&D Contract are recognized over time.

For the years ended December 31, 2021 and 2020 , the Company recognized revenue of $ 0.8  million and $ 1.4 million, respectively, under this contract.

During the year ended December 31, 2019, the Company completed its negotiation with representatives of the U.S.

Government for a change in the application of certain reimbursement rates in the contract.

The change in the application of those reimbursement rates increased the overall transaction price of the IV Formulation R&D Contract, but did not change the estimate of costs to complete under the input method calculation.

As a result, the Company accounted for this as a change in the transaction price and recognized a cumulative catch-up adjustment to revenue of approximately $ 3.3 million representing the impact of the change in the application of those reimbursement rates from January 2016 through March 2019.

In July 2019, the Company was awarded a multi-year research contract valued at a total of $ 19.5 million, with an initial award of $ 12.4 million, from the Department of Defense ("DoD") to support work in pursuit of a potential label expansion for oral TPOXX®

that would include post-exposure prophylaxis ("PEP") of smallpox (such work known as the "PEP Label Expansion Program" and the contract referred to as the "PEP Label Expansion R&D Contract"). In May 2020, the DoD increased the scope and the contract value to a total of $ 26 million with current available funding of $ 23 million.

As of December 31, 2020 , the PEP Label Expansion R&D Contract provides for future aggregate research and development funding under the award, as modified, of up to approximately $ 22.4 million.

The period of performance for this contract, as modified, terminates on July 31, 2025.

For the years ended December 31, 2020 and 2019 , the Company, under the PEP Label Expansion R&D Contract, recognized revenue of $ 0.3 million and $ 0.3 million, respectively, on an over time basis.

In July 2019, the Company was awarded a multi-year research contract valued at a total of $ 19.5 million, with an initial award of $ 12.4 million, from the U.S.

Department of Defense ("DoD") to support work in pursuit of a potential label expansion for oral TPOXX®

that would include post-exposure prophylaxis ("PEP") of smallpox (such work known as the "PEP Label Expansion Program" and the contract referred to as the "PEP Label Expansion R&D Contract"). In subsequent modifications, the DoD increased the scope and the available funding under the PEP Label Expansion R&D Contract to approximately $ 26 million.

The period of performance for this contract, as modified, terminates on April 30, 2024.

As of December 31, 2021 , the PEP Label Expansion R&D Contract provided for future aggregate research and development funding under the award, as modified, of up to $ 23.3 million. For the years ended December 31, 2021 and 2020 , the Company, under the PEP Label Expansion R&D Contract, recognized revenue of $ 2.5 million and $ 0.3 million, respectively, on an over time basis.

Contracts and grants include, among other things, options that may or may not be exercised at the U.S.

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As such, the Company may not be eligible to receive all available funds.

Sale of Priority Review Voucher

Concurrent with the approval of oral TPOXX®, the FDA granted the Company's request for a Priority Review Voucher (“PRV”).

A PRV is a voucher that may be used to obtain an accelerated FDA review of a product candidate.

On October 31, 2018 the Company sold its PRV for cash consideration of $ 80 million which was recognized as other income.

Inventory consisted of the following:

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December 31, 2020

Raw materials  

$ 22,047  

$ 2,628,153  

Work in-process

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$ 20,265,519  

For the year ended December 31, 2021, cost of goods sold included a net inventory-related loss of $ 0.6  million.

This loss related to a $ 0.9 million inventory write-down, partially offset by credits received from contract manufacturing organizations ("CMOs") in connection with the inventory write-down.

Property, Plant and Equipment

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$ 2,103,990  

Depreciation and amortization expense on property, plant, and equipment was $ 529,814 , $ 526,997 , and $ 69,630  for the years ended December 31, 2020 , 2019 , and 2018 , respectively. 

Depreciation and amortization expense on property, plant, and equipment was $ 0.5  million for each of the years ended December 31, 2021 , 2020 , and 2019 . 

Accrued Expenses

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2,933,738  

Lease liability, current portion

558,362  

486,158  

643,570  

Professional fees

527,026  

251,824  

Research and development vendor costs

488,081  

150,349  

Professional fees

Lease liability, current portion

466,830  

449,940  

Inventory  

379,720  

405,176  

Interest payable

Research and development vendor costs

256,397  

Income tax payable  

327,606  

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$ 8,285,738  

On March 13, 2020, the Company voluntarily prepaid the Loan Agreement in an approximate aggregate amount of $ 87.2 million.

On March 13, 2020, the Company voluntarily prepaid the Loan Agreement (as defined below) in an approximate aggregate amount of $ 87.2 million.

The prepayment was made from restricted cash, including $ 80.0 million in respect of outstanding principal of the Term Loan, $ 4.0 million that was payable upon the repayment of the Loan Agreement, approximately $ 1.2 million of accrued interest, and a prepayment premium amount of approximately $ 1.9 million.

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Upon such prepayment and release, the Loan Agreement was terminated.

For the year ended 

December 31, 2020 , the Company recognized approximately $ 5.0 million of a loss on the extinguishment of the Term Loan related to the remaining unamortized discount and the prepayment premium.

For the year ended December 31, 2020, the Company recognized approximately $ 5.0 million of a loss on the extinguishment of the Term Loan related to the remaining unamortized discount and the prepayment premium.

On September 2, 2016, the Company entered into a loan and security agreement (as amended from time to time, the “Loan Agreement”) with OCM Strategic Credit SIGTEC Holdings, LLC (“Lender”), pursuant to which the Company received $ 80.0 million (the "Term Loan") (less fees and other items) on November 16, 2016 having satisfied certain pre-conditions.

Such $ 80.0 million had been placed in an escrow account on September 30, 2016 ( the “Escrow Funding Date”).

Prior to the Escrow Release Date ( November 16, 2016), the Company did not have access to, or any ownership interest in, the escrow account.

Until the Escrow Release Date occurred, the Company did not have an obligation to make any payments under the Loan Agreement, no security was granted under the Loan Agreement and no affirmative or negative covenants or events of default were effective under the Loan Agreement.

Amounts were held in the escrow account until the satisfaction of certain conditions including the closing of the Rights Offering on November 16, 2016.

As part of the satisfaction of a litigation claim, funds were released from the escrow account (the date on which such transfer occurred, the “Escrow Release Date”).

Interest on the Term Loan was at a per annum rate equal to the Adjusted LIBOR rate plus 11.5 %, subject to adjustments as set forth in the Loan Agreement.

The Term Loan had a maturity date on the earliest to occur of (i) the four -year anniversary of the Escrow Release Date, and (ii) the acceleration of certain obligations pursuant to the Loan Agreement.

Through the three and one -half year anniversary ( May 17, 2020) of the Escrow Release Date, any prepayment of the Term Loan was subject to a makewhole provision in which interest payments related to the prepaid amount were due (subject to a discount of treasury rate plus 0.50 %).

Upon repayment of the Term Loan, an additional $ 4.0 million payment was required.

Such payment had been accreting to the Term Loan balance since the Escrow Release Date.

In connection with the issuance of the Loan Agreement, the Company incurred $ 8.2 million of costs (including interest on amounts held in the escrow account between September 30, 2016 and November 15, 2016).

Furthermore, an additional $4.0 million was payable upon repayment of Term Loan principal.

As part of the Company's entry into the Loan Agreement, the Company issued the Warrant (see Note 10 ) with a fair market value of $ 5.8 million.

The fair value of the 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 amounts were being amortized on a straight-line basis over the life of the related Term Loan.

The Company compared the amortization under the effective interest method with the straight-line basis and determined the results were not materially different.

Per Share Data

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The objective of diluted EPS is consistent with that of basic EPS, except that it also gives effect to all potentially dilutive common shares outstanding during the period.

The following is a reconciliation of the basic and diluted (loss) earnings per share computation:

The following is a reconciliation of the basic and diluted earnings (loss) per share computation:

Year Ended December 31,

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$ 56,342,010  

$ 421,807,828  

$ ( 7,241,147 )

Change in fair value of warrants

117,770  

( 6,922,624 )

Net income (loss), adjusted for change in fair value of warrants for diluted earnings per share

5,091,256  

Net income (loss), adjusted for change in fair value of warrants for diluted earnings per share

$ 69,332,996  

$ 56,342,010  

$ ( 12,332,403 )

Weighted-average shares

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$ 0.71  

$ 5.28  

Earnings (loss) per share:

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$ 0.71  

$ 5.18  

For the year ended December 31, 2020 , diluted shares outstanding include the dilutive effect of in-the-money options, unvested restricted stock and unreleased restricted stock units.

For the year ended December 31, 2021, the diluted earnings per share calculation reflects the effect of the assumed exercise of outstanding warrants and any corresponding elimination of the impact included in operating results from the change in fair value of the warrants.

Weighted-average diluted shares include the dilutive effect of in-the-money options and warrants, unvested restricted stock and unreleased RSUs.

The dilutive effect of warrants and options is calculated based on the average share price for each fiscal period using the treasury stock method.

Under the treasury stock method, the amount the employee must pay for exercising stock options, the average amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible, are collectively assumed to be used to repurchase shares.

Cash-settled RSUs were presumed to be cash-settled and therefore excluded from the diluted earnings per share calculations for the year ended December 31, 2021 because the net effect of their inclusion, including the elimination of the impact in the operating results of the change in fair value of the warrants, would have been anti-dilutive.

For the year ended December 31, 2021, the weighted average number of shares under the cash-settled RSUs excluded from the calculation of diluted earnings per share was 

For the year ended December 31, 2020, diluted shares outstanding include the dilutive effect of in-the-money options, unvested restricted stock and unreleased RSUs.

The dilutive effect of options is calculated based on the average share price for each fiscal period using the treasury stock method.

Warrants were presumed to be cash-settled and therefore excluded from the diluted earnings per share calculations for the year ended 

December 31, 2020 because the net effect of their inclusion, including the elimination of the impact in the operating results of the change in fair value of the warrants, would have been anti-dilutive.

For the year ended December 31, 2020 , the weighted average number of shares under the warrant excluded from the calculation of diluted earnings per share was 

The Company incurred losses for the twelve months ended December 31, 2019  and as a result, for such year the equity instruments listed below are excluded from the calculation of diluted earnings (loss) per share as the effect of the exercise, conversion or vesting of such instruments would be anti-dilutive.

Warrants were presumed to be cash-settled and therefore excluded from the diluted earnings per share calculations for the year ended December 31, 2020 because the net effect of their inclusion, including the elimination of the impact in the operating results of the change in fair value of the warrants, would have been anti-dilutive.

For the year ended December 31, 2020, the weighted average number of shares under the warrant excluded from the calculation of diluted earnings per share was 1,124,585 .

The Company incurred losses for the year ended December 31, 2019 

and as a result, for such year the equity instruments listed below were excluded from the calculation of diluted earnings (loss) per share as the effect of the exercise, conversion or vesting of such instruments would have been anti-dilutive.

The weighted average number of equity instruments excluded consisted of:

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Financial Instruments

On September 2, 2016, in connection with the entry into the Loan Agreement (see Note 8 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 share and (ii) the subscription price paid in connection with the Rights Offering (as defined in Note 11 ).

On 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 share and (ii) the subscription price paid in connection with the Rights Offering completed on November 16, 2016.

The subscription price paid was $ 1.50 in connection with the Rights Offering;

accordingly, the exercise price of the Warrant was set at $ 1.50 per share, and there were 2.7 million shares underlying the Warrant.

During the year ended December 31, 2021 , no shares on the warrant were exercised.

During the year ended December 31, 2020, 0.5  million shares on the warrant were exercised.

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As of December 31, 2021 and 2020 , no preferred shares were outstanding or issued.

On March 5, 2020, the Company announced that the Board of Directors had authorized a share repurchase program under which the Company may repurchase, from time to time, up to an aggregate of $ 50 million of the Company's common stock through December 31, 2021.

On March 5, 2020, the Company announced that the Board of Directors authorized a share repurchase program under which the Company may repurchase, from time to time, up to an aggregate of $ 50 million of the Company’s common stock through December 31, 2021.

During the year ended December 31, 2021, the Company repurchased 3.2  million shares of common stock for approximately $ 21.5 million under this program.

This program has been fulfilled with the maximum amount being used to repurchase shares.

On August 2, 2021, the Company's Board of Directors authorized an additional share repurchase program ("New Repurchase Authorization") under which the Company may repurchase up to $ 50 million of the Company's common stock through December 31, 2023.

The Company started repurchasing shares under this program in the fourth quarter of 2021.

 Repurchases under the New Repurchase Authorization may be made from time to time at the Company's discretion in open market transactions, through block trades, in privately negotiated transactions and pursuant to any trading plan that may be adopted by the Company's management in accordance with Rule 10b5 - 1 under the Exchange Act or otherwise.

The timing and actual number of shares repurchased will depend on a variety of factors, including:

exercise of procurement options under government contracts;

timing of exercise of procurement options under government contracts;

alternative opportunities for strategic uses of cash;

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and other corporate liquidity requirements and priorities.

Repurchases under the program may be made from time to time at the Company’s discretion in open market transactions, through block trades, in privately negotiated transactions, and pursuant to any trading plan that may be adopted by the Company’s management in accordance with Rule 10b5 - 1 of the Securities Exchange Act of 1934, as amended, or otherwise.

During the year ended December 31, 2020 , the Company repurchased 4.6  million shares of common stock, respectively, for approximately $ 28.5 million.

During the year ended 

December 31, 2021 , 

0.6 million shares of common stock have been repurchased under the New Repurchase Authorization for approximately $ 4.5 million.

Stock Compensation Plans

1 unchanged sentence

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 and outside directors of the Company.

On May 17, 2011, the 2010 Plan was amended to provide for the issuance of restricted stock units (“RSUs”) and on February 2, 2012, the 2010 Plan was amended to provide for the issuance of stock-settled stock appreciation rights ("SSARs").

On May 17, 2011, the 2010 Plan was amended to provide for the issuance of RSUs and on February 2, 2012, the 2010 Plan was amended to provide for the issuance of stock-settled stock appreciation rights ("SSARs").

Effective April 25, 2012 and May 23, 2017, the 2010 Plan was amended to 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.

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may not be exercisable more than ten years after the date of grant as the maximum term of equity awards issued under the 2010 Plan is ten years.

For the years ended December 31, 2020, 2019 and 2018 , the Company recorded stock-based compensation expense, including stock options and RSUs, of approximately $ 1.4 million, $ 2.1  million and $ 2.3 million, respectively.

For the years ended December 31, 2021, 2020 and 2019 , the Company recorded stock-based compensation expense, including stock options and RSUs, of approximately $ 1.3  million, $ 1.4  million and $ 2.1 million, respectively.

Stock Options

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50,000  

( 25,000 )  

Canceled/Expired

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As of December 31, 2021 , there is no remaining unrecognized stock-based compensation cost related to stock options expected to be recognized.

The total fair value of stock options which vested during the years ended December 31, 2020 and 2019 was approximately $ 383,000 and $ 120,000 , respectively.

For the year ended December 31, 2019 there were no stock options that vested.

The total intrinsic value of stock options exercised was approximately $ 87,000 , $ 76,000 and $ 2,900,000 for the years ended December 31, 2020, 2019 and 2018 , respectively.

The total fair value of stock options which vested during the years ended December 31, 2021 and 2020 was approximately $ 258,000  and $ 383,000 , respectively.

There were no stock options exercised during the year ended December 31, 2021.

The total intrinsic value of stock options exercised was approximately $ 87,000 and $ 76,000  for the years ended December 31, 2020 and December 31, 2019, respectively.

The intrinsic value represents the amount by which the market price of the underlying stock exceeds the exercise price of an option.

8 unchanged sentences

( 162,876 )  

Canceled/Expired  

( 30,000 )  

Canceled/Expired

Outstanding at December 31, 2021 (1)

1 unchanged sentence

$ 6.95  

( 1 )  includes 54,792 awards which are expected to be settled in cash.

As of December 31, 2021 , $ 1.4  million of total remaining unrecognized stock-based compensation cost related to RSUs is expected to be recognized over the weighted-average remaining requisite service period of 0.9  years.

10 unchanged sentences

143,455  

13,994  

Total current provision (benefit)

21 unchanged sentences

$ 1,293,842  

184,046  

224,656  

Reserves and accruals

741,684  

725,875  

Amortization of intangible assets

7 unchanged sentences

709,480  

Interest expense carryforward

2,617,951  

Lease liability

1 unchanged sentence

520,830  

Alternative minimum tax credits

267,050  

191,174  

1,338,046  

Deferred income tax assets

16 unchanged sentences

$ 2,544,053  

( 1 )  Certain prior year amounts were reclassed to conform with current year presentation.

The recognition of a valuation allowance for deferred taxes requires management to make estimates and judgments about the Company’s future profitability which is inherently uncertain.

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The ultimate realization of a deferred tax asset is ultimately dependent on the Company's generation of sufficient taxable income within the available net operating loss carryback and/or carryforward periods to utilize the deductible temporary differences.

As of December 31, 2020 and 2019 , the Company has a valuation allowance on certain state and local net operating losses which the Company determined were not realizable on a more-likely-than- not basis.

The Company’s valuation allowance decreased by $ 24,873 during the year ended December 31, 2020.

As of December 31, 2021 , the Company has a valuation allowance on certain state and local net operating losses which the Company determined were not realizable on a more-likely-than- not basis.

The Company's valuation allowance did not change materially from prior years. 

The benefit for income taxes differs from the expected amount calculated by applying the Company's statutory rate to the income or loss before benefit for income taxes as follows:

5 unchanged sentences

Change in fair value of common stock warrant

10.5 %  

Section 162(m) limitation

( 6.0 )%  

Valuation allowance on deferred tax assets

Effective tax rate

1 unchanged sentence

23.4 %  

For the year ended December 31, 2020 , the Company’s effective tax rate differs from the statutory rate of 21 % primarily as a result of non-deductible executive compensation under IRC Section 162 (m), state and local taxes, and a non-taxable adjustment for the fair market value of the Warrant.

For the year ended December 31, 2019 , the Company's effective tax rate differs from the statutory rate of 21 % primarily as a result of non-deductible executive compensation under IRC Section 162 (m) and a non-taxable adjustment for the fair market value of the Warrant.

For the year ended December 31, 2021 , the Company’s effective tax rate differs from the statutory rate of 21 % primarily as a result of non-deductible executive compensation under IRC Section 162 (m) and state and local taxes.

For the year ended December 31, 2020 , the Company's effective tax rate differs from the statutory rate of 21 % primarily as a result of non-deductible executive compensation under IRC Section 162 (m), a non-taxable adjustment for the fair market value of the Warrant, and state and local taxes.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:

3 unchanged sentences

$ 5,649,188  

Tax positions related to the current and prior years:

$ 5,738,964  

Tax positions related to the current and prior years:

11,000  

5 unchanged sentences

$ 5,649,188  

Included in the balance of unrecognized tax benefits as of December 31, 2020 , are potential benefits of $ 5.6 million that, if recognized, would affect the effective tax rate.

Included in the balance of unrecognized tax benefits as of December 31, 2021 , are potential benefits of $ 5.6  million that, if recognized, would affect the effective tax rate.

For the years ended 

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The federal tax years open to examination are 2018  to 2021 .

The Company's state and local tax years open to examination are 2016 - 2020 .

The Company's state and local tax years that are open to tax examination are generally 2017 to 2021 .

Commitments and Contingencies

1 unchanged sentence

The Company leases its Corvallis, Oregon, facilities and office space under an operating lease which was signed on November 3, 2017 and commenced on January 1, 2018.

This lease expires December 31, 2021.

The initial term of this lease was to expire on December 31, 2019, after which the Company had two successive renewal options;

one for two years and the other for three years.

In the second quarter of 2019, the Company exercised the first renewal option, which extended the lease expiration date to December 31, 2021.

In the second quarter of 2021, the Company exercised the second renewal option, which extended the lease expiration date to December 31, 2024.

In connection with the exercise of the second renewal option, the Company recorded an increase to operating lease right-of-use assets and operating lease liabilities of approximately $ 0.7 million in the second quarter 2021.

The Company had a lease for the same location prior to this lease.

On May 26, 2017 the Company and 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 feet at 31 East 62nd Street, New York, New York.

On May 26, 2017 the Company and MacAndrews & Forbes Incorporated ("M&F") entered into a ten -year office lease agreement (the “New HQ Lease”), pursuant to which the Company agreed to lease 3,200 square feet at 31 East 62nd Street, New York, New York.

The Company is utilizing premises leased under the New HQ Lease as its corporate headquarters.

The Company has no leases that qualify as finance leases.

Operating lease costs totaled $ 0.7 million and $ 0.6 million for the years ended December 31, 2020 and 2019 , respectively.

Operating lease costs totaled $ 0.6  million and $ 0.7  million for the years ended December 31, 2021 and 2020 , respectively.

Cash paid for amounts included in the measurement of lease liabilities from operating cash flows was $ 0.6 million and $ 0.6 million for the years ended December 31, 2021 and 2020 , respectively.

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Board of Directors and Outside Counsel

A member of the Company’s Board of Directors is a member of the Company’s outside counsel.

During the years ended December 31, 2020, 2019 and 2018 , the Company incurred expenses of approximately $ 478,000 , $ 468,000 and $ 450,000 , respectively, related to services provided by the outside counsel.

On December 31, 2020 the Company’s outstanding payables and accrued expenses included a $ 78,000 liability to the outside counsel.

Board of Directors-Consulting Agreement

On October 13, 2018, the Company, entered into a consulting agreement with Dr.

Rose, a member, and former Executive Chairman, of the Company’s Board of Directors.

Under the agreement, the consulting services included assisting the Company on expanded indications for TPOXX®

and other business development opportunities as requested by the Company.

The term of the agreement expired on October 13, 2020 and the agreement has not been renewed.

Compensation under the agreement was at an annual rate of $ 200,000 . During the year ended December 31, 2020 , the Company incurred $ 157,000  related to services under this agreement.

As of December 31, 2020 , the Company’s outstanding payables and accrued expenses included a $ 7,000 liability associated with this agreement.

A former member of the Company’s Board of Directors who did not stand for re-election at the Company's 2021 annual meeting of stockholders is a partner at a law firm used by the Company.

During the years ended December 31, 2021, 2020 and 2019 , the Company incurred expenses of approximately $ 0.1  million, $ 0.5  million and $ 0.5  million respectively, related to services provided by the outside counsel.

The Company had no outstanding payables or accrued expenses related to services performed by the outside counsel as of December 31, 2021.

Real Estate Leases

1 unchanged sentence

The Company is utilizing premises leased under the New HQ Lease as its corporate headquarters.

The Company'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 first six months of the term.

The Company'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 first six 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 rental obligations 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 landlord making available certain ancillary services, commencing on the first anniversary of entry into the lease.

The facility fee will be $ 3,333 per month for the second 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 to which 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 Madison Avenue, 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 a new subtenant (the “Replacement M&F Sublease”), which occurred on August 2, 2017.

The Old HQ Sublease Termination Agreement obligates the Company to pay, on a monthly basis, an amount equal to the discrepancy (the “Rent Discrepancy”) between the sum of fixed rent and Additional Rent (as defined below) 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 Old HQ 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 in 

September 

Additionally, the Company was obligated to pay certain operating expenses and taxes (“Additional Rent”), such Additional Rent being specified in the overlease between M&F and the landlord at 660 Madison Avenue (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 Concession Period”).

Thereafter, the subtenant was obligated to pay fixed rent of $ 36,996 per month for the first twelve ( 12 ) months, and was obligated to pay $ 37,831 per month for the next 12 months, and $ 38,665 per month until the scheduled expiration of the Replacement M&F Sublease in September, 2020.

In addition to fixed rent, the subtenant was also obligated to pay, pursuant to the Replacement M&F Sublease, a portion of the Additional Rent specified in the Old HQ Overlease.

The facility fee was $ 3,333 per month for the second year of the term and increases by five percent each year thereafter, to $ 4,925 per month in the final year of the term.

During the year ended December 31, 2021, the Company paid $ 0.3 million of expenses associated with this lease.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data