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Biotech / Medical : SIGA Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: caly who wrote (126)	9/29/2010 9:23:59 AM
From: caly	Read Replies (1) \| Respond to of 160

Form 8-K for SIGA TECHNOLOGIES INC 28-Sep-2010 Non-Reliance on Previous Financials, Audits or Interim Review Item 4.02(a) Non-Reliance on Previously Issued Financial Statements or Related Audit Report or Completed Interim Report. On September 28, 2010, SIGA Technologies, Inc., a Delaware corporation ("SIGA" or "the Company"), concluded, based on the recommendation of management, that the previously issued consolidated financial statements for the years ended December 31, 2009 and 2008, included in the Company's most recently filed annual report on Form 10-K, and the quarterly periods from June 30, 2008 through June 30, 2010 included in the Company's quarterly reports on Forms 10-Q (collectively, the "Affected Financial Statements"), are no longer reliable because they failed to incorporate non-cash charges resulting from required adjustments to certain outstanding warrants (the "Warrants"). These adjustments were triggered by the application of anti-dilution provisions included in the agreements governing the Warrants and, for the quarterly periods from June 30, 2008 through June 30, 2010, have resulted in the issuance of additional warrants to acquire approximately 710,000 shares of SIGA common stock. The required non-cash charges, totaling approximately $4.54 million for the period from June 30, 2008 through June 30, 2010, were not recorded in the affected accounting periods. The Company has determined that the Affected Financial Statements should be restated to reflect these non-cash charges. The Company has concluded that the only change required to its previously filed balance sheets and statements of operations will be the recording of the appropriate non-cash charges in the appropriate reporting periods and the effects therefrom. No other change to its previously filed balance sheets or statements of operations is anticipated. There is no impact on net cash flows for the 2008 and 2009 annual periods and the first two 2010 quarterly periods because the changes in the fair value of common stock warrants are recorded as non-cash charges that adjust net loss to reconcile to net cash used in operating activities on the Company's consolidated statements of cash flows. These non-cash charges arise because the Company has accounted for the Warrants under the provisions of Emerging Issues Task Force No. 00-19 (now ASC 815), which requires that free-standing derivative financial instruments that require net cash settlement be classified as assets or liabilities at the time of the transaction, and recorded at their fair value. ASC 815 also requires that any subsequent change in the fair value of the derivative instruments be reported in earnings or loss for so long as the derivative contracts are classified as assets or liabilities. The effects of these non-cash adjustments on the Company's financial statements for the years ended December 31, 2009 and 2008 and the quarters ended June 30, 2010 and March 31, 2010, are detailed below, by reporting period. The Company is currently preparing amendments to its prior filings with the Securities and Exchange Commission in order to restate its financial statements for each of the nine quarters in the period ended June 30, 2010. The Company's management has determined that there was a material weakness in the Company's internal control over financial reporting that did not allow for timely identification and recording with respect to anti-dilution provisions included in the Warrants. The Company is in the process of implementing additional accounting controls and procedures to remediate the internal control that was ineffective where contractual terms are reviewed on a quarterly basis to assess financial statements implications and is considering further enhancements to its existing internal controls and procedures. The Company's Audit Committee has discussed with the Company's independent registered public accounting firm the matters disclosed in this filing.