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**UNITED            STATES**

**SECURITIES AND            EXCHANGE COMMISSION            WASHINGTON, D.C. 20549**

**FORM            10-K**

(Mark            One)
|   |                                                                                                                                       |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------|
| x      | **Annual Report                        Pursuant to Section 13 or 15(d) of the Securities Exchange Act of                        1934**     |
|   | For                        the fiscal year ended December 31, 2007                                                                         |
|   |                                                                                                                                       |
|   | Or                                                                                                                                         |
|   |                                                                                                                                       |
| o      | **Transition Report                        Pursuant to Section 13 or 15(d) of the Securities Exchange Act of                        1934** |
|   | For                        the transition period from __________ to __________                                                             |

**Commission            File No. 0-23047**

**SIGA            Technologies, Inc.**            (Exact name of registrant as specified in its charter)
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|----------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|
| **Delaware**                        (State or other jurisdiction of                        incorporation or organization)              | **13-3864870**                        (IRS Employer Identification. No.) |
|                                                                                                                                   |                                                                     |
| **420 Lexington                        Avenue, Suite 408                        New York, NY**(Address of principal executive offices) | **10170**                        (zip code)                              |

Registrant’s telephone            number, including area code: (212) 672-9100
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|-----------------------------------------------------------------------------------------|----------------------------------------------------------------------|
| Securities registered                        pursuant to Section 12(b) of the Act: |
| **Title of each                        class**                                          | **Name of each                        exchange on which registered** |
|                                                                                         |                                                                      |
| common stock, $.0001                        par value                                   | Nasdaq Capital                        Market                         |
|                                                                                    |                                                                 |
| Securities registered                        pursuant to Section 12(g) of the Act: |
|                                                                                    |                                                                 |
| **None**                                                                                |

Indicate by            check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of            the Securities Act Yes o No            x.

Indicate by            check mark if the registrant is not required to file reports pursuant to Section 13 or            15(d) of the Act Yes o No            x.

*Note*—Checking the box            above will not relieve any registrant required to file reports pursuant to Section 13            or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by            check mark whether the registrant (1) has filed all reports required to be filed by            Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12            months (or for such shorter period that the registrant was required to file such            reports), and (2) has been subject to such filing requirements for the past 90 days.            Yes x No            o.

Indicate by            check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is            not contained herein, and will not be contained, to the best of registrant’s            knowledge, in definitive proxy or information statements incorporated by reference in            Part III of this Form 10-K or any amendment to this Form 10-K.            x.

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Indicate by            check mark whether the registrant is a large accelerated filer, an accelerated filer,            or a non-accelerated filer. See definition of “accelerated filer and large            accelerated filer” in Rule 12b-2 of the Exchange Act. (check one):

Large            Accelerated Filer o Accelerated Filer            x Non-Accelerated Filer            o Smaller Reporting Company            o.

Indicate by            check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the            Exchange Act) Yes o No            x.

The aggregate            market value of the voting and non-voting common stock held by non-affiliates of the            registrant, based upon the closing sale price of the common stock on March 4, 2008, as            reported on the Nasdaq SmallCap Market was approximately $71,985,000**.**

As of March            4, 2008, the registrant had outstanding 33,955,215 shares of common            stock.

**DOCUMENTS            INCORPORATED BY REFERENCE**

The following            document is incorporated herein by reference:

|                                                                       |                                                     |
|----------------------------------------------------------------------------|----------------------------------------------------------|
| **Document**                                                               | **Parts Into Which                        Incorporated** |
|                                                                            |                                                          |
| Proxy                        Statement for the Company’s 2008 Annual | Part                        III                          |
| Meeting of                        Stockholders                             |                                                     |

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SIGA            Technologies, Inc.

Form            10-K

Table of            Contents

|                                |                                                                |                                                                                                                                                             |                                |
|-------------------------------------|---------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|
|                                |                                                                |                                                                                                                                                             | **Page                        No.** |
| **PART                        I**   |                                                                |                                                                                                                                                             |                                |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        1.      |                                                                | Business                                                                                                                                                         | 2                                   |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        1A.     |                                                                | Risk                        Factors                                                                                                                              | 10                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        1B.     |                                                                | Unresolved                        Staff Comments                                                                                                                 | 17                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        2.      |                                                                | Properties                                                                                                                                                       | 17                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        3.      |                                                                | Legal                        Proceedings                                                                                                                         | 17                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        4.      |                                                                | Submission                        of Matters to a Vote of Security Holders                                                                                       | 17                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| **PART                        II**  |                                                                |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        5.      |                                                                | Market                        For Registrant’s Common Equity, Related Stockholder Matters and                        Issuer Purchases of Equity Securities | 18                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        6.      |                                                                | Selected                        Financial Data                                                                                                                   | 19                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        7.      |                                                                | Management’s                        Discussion and Analysis of Financial Condition and Results of                        Operations                        | 20                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        7A.     |                                                                | Quantitative                        and Qualitative Disclosures About Market Risk                                                                                | 28                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        8.      |                                                                | Financial                        Statements and Supplementary Data                                                                                               | 29                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        9.      |                                                                | Changes                        in and Disagreements with Accountants on Accounting and Financial                        Disclosure                               | 49                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        9A.     |                                                                | Controls                        and Procedures                                                                                                                   | 49                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        9B.     |                                                                | Other                        Information                                                                                                                         | 50                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| **PART                        III** |                                                                |
|                                |                                                                |                                                                                                                                                             |
| Item                        10.     |                                                                | Directors,                        Executive Officers and Corporate Governance                                                                                    | 51                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        11.     |                                                                | Executive                        Compensation                                                                                                                    | 51                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        12.     |                                                                | Security                        Ownership of Certain Beneficial Owners and Management and Related                        Stockholder Matters                     | 51                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        13.     |                                                                | Certain                        Relationships and Related Transactions, and Director                        Independence                                          | 52                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| Item                        14.     |                                                                | Principal                        Accountant Fees and Services                                                                                                    | 52                                  |
|                                |                                                                |                                                                                                                                                             |                                |
| **PART                        IV**  |                                                                     |                                                                                                                                                             |
|                                |                                                                |                                                                                                                                                             |
| Item                        15.     | Exhibits,                        Financial Statements and Schedules | 53                                                                                                                                                               |
|                                |                                                                |
| SIGNATURES                          | 58                                                                  |

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| **Item                        1.** | **Business** |

          Certain            statements in this Annual Report on Form 10-K, including certain statements contained            in “Business” and “Management’s Discussion and Analysis of            Financial Condition and Results of Operations,” constitute “forward-looking            statements” within the meaning of Section 27A of the Securities Act of 1933, as            amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words            or phrases “can be,” “expects,” “may affect,”            “may depend,” “believes,” “estimate,”            “project” and similar words and phrases are intended to identify such            forward-looking statements. Such forward-looking statements are subject to various            known and unknown risks and uncertainties and SIGA cautions you that any            forward-looking information provided by or on behalf of SIGA is not a guarantee of            future performance. SIGA’s actual results could differ materially from those            anticipated by such forward-looking statements due to a number of factors, some of            which are beyond SIGA’s control, including (i) the risk that potential products            that appear promising to SIGA or its collaborators cannot be shown to be efficacious or            safe in subsequent pre-clinical or clinical trials, (ii) the risk that SIGA or its            collaborators will not obtain appropriate or necessary governmental approvals to market            these or other potential products, (iii) the risk that SIGA may not be able to            obtain anticipated funding for its development projects or other needed funding,            (iv) the risk that SIGA may not be able to secure funding from anticipated            government contracts and grants, (v) the risk that SIGA may not be able to secure or            enforce adequate legal protection, including patent protection for its products,            (vi) the risk that regulatory approval for SIGA’s products may require            further or additional testing that will delay or prevent approval, (vii) the volatile            and competitive nature of the biotechnology industry, (viii) changes in domestic and            foreign economic and market conditions, and (ix) the effect of federal, state and            foreign regulation on SIGA’s businesses. All such forward-looking statements are            current only as of the date on which such statements were made. SIGA does not undertake            any obligation to publicly update any forward-looking statement to reflect events or            circumstances after the date on which any such statement is made or to reflect the            occurrence of unanticipated events.

**Introduction**

          SIGA            Technologies, Inc. is referred to throughout this report as “SIGA,”            “the Company,” “we” or “us.”

          SIGA            is a biotechnology corporation incorporated in Delaware on December 28, 1995. We aim to            discover, develop and commercialize novel anti-infectives for serious infectious            diseases. The major focus of our developmental and commercialization activities is on            products for use in defense against biological warfare agents such as Smallpox and            Arenaviruses (hemorrhagic fevers). Our lead product, ST-246, is an orally administered            anti-viral drug that targets the smallpox virus. In December 2005 the Food and Drug            Administration (FDA) accepted our Investigational New Drug (IND) application for ST-246            and granted the program “Fast-Track” status. In December 2006 the FDA            granted Orphan Drug designation to ST-246 for the prevention and treatment of smallpox.            Our anti-viral programs are designed to prevent or limit the replication of the viral            pathogen. Our anti-infectives programs are aimed at the increasingly serious problem of            drug resistance. As a result of the success of our efforts to develop products for use            against agents of biological warfare, we have not spent significant resources to            further the development of our anti-infective technologies.

**Product            Candidates and Market Potential**

***          SIGA            Biological Warfare Defense Product Portfolio***

*Anti-Smallpox            Drug*: Smallpox virus is classified as a Category A agent by the Center for Disease            Control and Prevention (CDC) and is considered one of the most significant threats for            use as a biowarfare agent. While deliberate introduction of any pathogenic agent would            be devastating, we believe the one that holds the greatest potential for harming the            general U.S. population is Smallpox. At present there is no effective drug with which            to treat or prevent Smallpox infections. To address this serious risk, SIGA scientists            have identified a lead drug candidate, ST-246, which inhibits vaccinia, cowpox,            ectromelia (mousepox), monkeypox, camelpox, and variola replication in cell culture,            but not other unrelated viruses. Given the safety concerns with the current smallpox            vaccine, there should be several uses for an effective smallpox antiviral drug:            prophylactically, to protect the non-immune who are at risk to exposure;            therapeutically, to reduce mortality and morbidity in those infected with the smallpox            virus; and lastly, as an adjunct to the smallpox vaccine in order to reduce the            frequency of serious adverse

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events due to            the live virus used for vaccination. SIGA scientists are also working on several other            smallpox drug targets, including the viral proteinases, to develop additional drug            candidates for use in combination therapy if necessary. In December 2005, the FDA            approved our IND application for ST-246. In June 2006 we successfully completed the            first human clinical safety study of ST-246. The trial showed the drug to be            well-tolerated in healthy human volunteers at all tested orally administered doses. In            addition, data from blood level exposure was sufficient to support once a day dosing.            The Phase I clinical trial was performed at Advanced Biomedical Research, Inc. Clinical            Research Center in Hackensack, NJ. The study was a double-blind, randomized, placebo            controlled, and ascending single dose study. An additional Phase I clinical trial was            started in February 2007. The trial was a 21 day, escalating, multiple-dose, Phase I            safety, tolerability and pharmacokinetics study of ST-246 at three different dosages in            healthy volunteers. The trial was performed at the Orlando Clinical Research Center in            Orlando, Florida. The study was completed in December 2007 and we reported that the            preliminary results indicated that the drug is safe and well tolerated at all tests            doses. In 2006, ST-246 became the first drug ever to demonstrate 100% protection            against human smallpox virus in a primate trial conducted at the federal Centers for            Disease Control and Prevention (CDC). Later in 2006, in two non-human primate trials            the drug demonstrated 100% protection to animals injected with high doses of monkeypox            virus. One study was sponsored by the National Institute of Allergy and Infectious            Diseases (NIAID) at the National Institutes of Health (NIH). The second study was            conducted by the U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID)            and was funded by the Department of Defense’s Threat Reduction Agency. In late            2006, ST-246 received Orphan Drug designation for both the treatment and prevention of            smallpox. During 2006, SIGA received grants from the NIH totaling approximately $21            million for the continued development of the drug. In 2007, we received a grant from            the NIH for a total of approximately $600,000, to support the development of ST-246            treatment of smallpox vaccine-related adverse events.

*          Anti-Arenavirus            Drug:* Arenaviruses are hemorrhagic fever viruses that have been classified as            Category A agents by the CDC due to the great risk that they pose to public health and            national safety. Among the Category A viruses recognized by the CDC, there are four            hemorrhagic fever arenaviruses (Junin, Machupo, Guanarito and Sabia viruses) for which            there are no FDA approved treatments available. In order to meet this threat, SIGA            scientists have identified a lead drug candidate, ST-294, which has demonstrated            significant antiviral activity in cell culture assays against arenavirus pathogens. We            have also demonstrated the therapeutic efficacy of ST-294 in a preliminary animal            challenge study. SIGA also has programs against other hemorrhagic fever viruses            including Lassa virus, Dengue Fever, Rift Valley Fever, Lymphocytic choriomeningitis            virus (LCMV) and Ebola. We believe that the availability of hemorrhagic fever virus            antiviral drugs will address national and global security needs by acting as a            significant deterrent and defense against the use of arenaviruses as weapons of            bioterrorism. In 2006, SIGA received a three year grant of $6.0 million from the NIH to            support the development of antiviral drugs for Lassa fever virus.

*          Bacterial            Commensal Vectors*: Our scientists have developed methods that allow essentially any            gene sequence to be expressed in Generally Regarded As Safe (GRAS) gram-positive            bacteria, with the foreign protein being displayed on the surface of the live            recombinant organisms. Since these organisms are inexpensive to grow and are very            stable, this technology affords the possibility of rapidly producing live recombinant            vaccines against any variety of biological agents that might be encountered, such as            *Bacillus anthracis* (anthrax) or Smallpox. SIGA scientists are working to develop            an alternative vaccine with improved safety for use in preventing human disease caused            by pathogenic orthopoxviruses such as variola virus. To accomplish this goal we are            utilizing our BCV (bacterial commensal vector) technology. BCV utilizes gram-positive            commensal bacteria, such as *Streptococcus gordonii*, (S. Gordonii) to express            heterologous antigens of interest, either in secreted form or attached to its external            surface.

*          Antibiotics*:            To combat the problems associated with emerging antibiotic resistance, our scientists            are developing drugs designed to address a new target - the bacterial adhesion            organelles. Specifically, by using novel enzymes required for the transport and/or            assembly of the proteins and structures that bacteria require for adhesion or            colonization, we are developing new classes of broad spectrum antibiotics. This may            prove valuable in providing prompt treatment to individuals encountering an unknown            bacterial pathogen in the air or food supply.

***          Market            for Biological Defense Programs***

          From            2001 through 2007, the Federal Government has allocated over $16 billion in State and            local terrorism preparedness funding from the Department of Homeland Security, Health            and Human Services and

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Justice. In            2006, approximately $5.0 billion was allocated for emergency, preparedness and response            funding. A similar amount was enacted for 2007 with a slight increase projected for            2008. The Federal budget for defending against catastrophic threats funding includes            not only stockpiling countermeasures that are currently available, but funding to            develop new countermeasures for agents that currently have none, and next generation            countermeasures that are safer and more effective than those that presently exist.            Current BioShield legislation allows the Federal Government to buy critically needed            vaccines and medications as soon as experts agree that they are safe and effective            enough to be added to the Strategic National Stockpile            (http://www.whitehouse.gov/omb/budget/ fy2008/pdf/). One of the major concerns            in the field of biological warfare agents is Smallpox – although declared extinct            in 1980 by the World Health Organization (WHO), there is a threat that a rogue nation            or a terrorist group may have an illegal inventory of the virus that causes Smallpox.            The only legal inventories of the virus are held under extremely tight security at the            CDC in Atlanta, Georgia and at a laboratory in Russia. As a result of this threat, the            U.S. government has announced its intent to make significant expenditures on finding a            way to counteract the virus if turned loose by terrorists or on a battlefield. The            Congressional Budget Office (the “CBO”) reported that the DHS projects the            acquisition of 60 million doses of new Smallpox vaccines over a three year period,            commencing in 2005. Further the CBO reports that the DHS will spend an additional $1            billion to replace expired stocks in 2007-2013. The market opportunity for our            biological warfare defense products has not been quantified as yet beyond the potential            to obtain a share of the approximately $9 billion the federal government is committing            to support research in the coming year.

          The            FDA amended its regulations, effective June 30, 2002, so that certain new drug and            biological products used to reduce or prevent the toxicity of chemical, biological,            radiological, or nuclear substances may be approved for use in humans based on evidence            of effectiveness derived only from appropriate animal studies and any additional            supporting data. We believe that this change could make it possible for us to have our            products which have been proven effective in animal studies to be approved for sale            within a relatively short time.

                      ***SIGA Antivirals Product Portfolio***

          SIGA            currently has the following antiviral programs which are in various stages of            development ranging from initial research and screening to Phase I human clinical            trials: Smallpox antiviral, New World Arenavirus antiviral, Old World Arenavirus            antiviral, Filovirus (Ebola & Marburg) antivirals, Dengue Fever virus antiviral,            and Bunyavirus antivirals. Currently there are no approved antivirals available against            any of these viruses.

***          SIGA            Antibiotics Product Portfolio***

          Our            anti-infectives program is targeted principally toward drug-resistant bacteria and            hospital-acquired infections. According to estimates from the CDC, approximately two            million hospital-acquired infections occur each year in the United States. Our            anti-infectives approaches aim to block the ability of bacteria to attach to and            colonize human tissue, thereby blocking infection at the first stage in the infection            process. By comparison, antibiotics available today act by interfering with either the            structure or the metabolism of a bacterial cell, affecting its ability to survive and            to reproduce. No currently available antibiotics target the attachment of a bacterium            to its target tissue. We believe that, by preventing attachment, the bacteria should be            readily cleared by the body’s immune system. SIGA has Gram-positive,            Gram-negative and broad spectrum antibiotic technologies.

***          Market            for Anti-infective Programs***

          There            are currently approximately 160 million prescriptions written for antibiotics annually            in the U.S (Wenzel RP, Edmond MB. Managing antimicrobial resistance. *N Engl J Med            2000;343:1961-3*) and it is estimated that the worldwide market for antibiotics was            worth approximately $25.0 billion in 2005 (*Christoffersen, R.E. Antibiotics—an            investment worth making? Nature Biotechnology* - **24**, 1512 - 1514 (2006)).            Although our products are too early in development to make accurate assessments of how            well they might compete, if successfully developed and marketed against other products            currently existing or in development at this time, the successful capture of even a            relatively small global market share could lead to a large dollar volume of sales. Some            of the antivirals that SIGA is developing are for biowarfare agents and the market for            that area is currently unknown, however, there is funding available to purchase these            drugs in Project Bioshield as well as through the Department of Defense. Markets for            the other antiviral programs at SIGA vary widely depending on the virus and where they            are endemic. Each of these programs will be assessed on an individual basis as they            approach the New Drug Application stage.

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**Technology**

                      ***Antiviral Technology: Two Approaches***

          SIGA            has two approaches to the discovery and development of new antiviral compounds:            rational drug design and high-throughput screening (HTS). For rational drug design SIGA            applies advanced receptor structure-based Virtual Ligand Screening technology for            ligand/inhibitor discovery. The analysis of the structure reveals potentially            “drugable” pockets. The technology allows us to utilize the            three-dimensional structure of the target receptor to screen large virtual compound            collections as well as databases of commercially available compounds and prioritize            them for subsequent experimental validation. Rational drug design is also used to            develop structure activity relationships and lead optimization.

          For            HTS SIGA uses whole cell virus inhibition assays, pseudotype virus inhibition assays,            as well as validated target biochemical assays. SIGA currently has a 200,000 small            molecule compound library in-house that is utilized for screening in these various            assays. This strategy allows for both target specific and target neutral screening and            identification of novel antiviral compounds. Compounds are also screened for toxicity            in various cell lines to develop a therapeutic index (TI) which is the concentration            that the compound is toxic to 50% of the cells (CC50) divided by the concentration of            compound required to inhibit 50% of the virus (EC50) (TI= CC50/EC50). Once hits are            identified with an acceptable TI they are selected for chemical optimization and            proceed in to the antiviral drug development pipeline.

**Collaborative            Research and Licenses**

          We            have entered into the following license agreements, collaborative research arrangements            and contracts:

                      **National Institutes of Health**. In October and August 2006, the NIH awarded us a            $16.5 million, 3 year contract and a $4.8 million, 3-year grant, respectively, both to            advance the development of our lead drug candidate, ST-246. In September 2007, we            received a two-year, $600,000 grant supporting the development of ST-246 treatment of            smallpox vaccine-related adverse events. In July 2007, the NIH awarded us a two-year            grant for a total of $530,000 to support our strep program. In September 2006, the NIH            awarded us a $6.0 million, 3-year grant for the continued development of our arena            viruses drug candidates. In August 2004, we were awarded four grants totaling            approximately $11.1 million to support our work on Smallpox and Arenaviruses. The 2004            grants were acquired as part of our acquisition of certain assets from ViroPharma            Incorporated (“Viropharma”). For the years ending December 31, 2007, 2006,            and 2005, we have recognized revenue from the grants of $2,568,000, $3,723,000, and            $6,596,000, respectively. In 2007 and 2006, we recognized $2,210,000 and $171,000,            respectively, in revenue from our October 2006 contract with the NIH.

          SIGA            receives cash payments from the NIH under its grants on monthly and semi-monthly            bases, and under its contract on a monthly basis, as the work is performed and the            related revenue is recognized. SIGA’s current NIH grants and contract do not            include milestone payments. The agreements can be cancelled for non-performance and if            cancelled, the Company will not receive additional funds under the            agreements.

          As            part of our operational strategy we routinely submit grants to the NIH. However, there            is no assurance that we will receive additional grants.

**          United            States Army Medical Research and Material Command.** In September 2005, we entered            into a $3.2 million, one year contract with the United States Army Medical Research and            Material Command (USAMRMC) for the rapid identification and treatment of anti-viral            diseases. SIGA completed its work under the contract under-budget and as a result will            refund approximately $91,000 to the USAF, which was not recognized as revenue by the            Company.

**          United            States Air Force.** In November 2006, we received a $1.4 million, one year contract            with the Air Force Medical Service for the development of counter-measures against            Dengue viruses and other water-related viral agents. In November 2006 we also received            a one-year, $900,000 contract to aid the USAF Special Operations

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Command            (USAFSOC) in its development of specific anti-viral agents. For the years ended            December 31, 2007 and 2006 we recognized revenues of $1,921,000 and $247,000,            respectively, from these contracts. SIGA receives cash payments from the USAF on a            monthly basis, as the work is performed and the related revenue is recognized.            SIGA’s current contracts with the USAF do not include milestone            payments.

**          United            States Army Medical Research Acquisition Activity.** In December 2002, we entered            into a four year contract with the U.S. Army Medical Research Acquisition Activity            (USAMRAA) to develop a drug to treat Smallpox. The contract start date was January 1,            2003 for the total amount of $1.6 million. Annual payments over the term of the            agreement were approximately $400,000. In the years ended December 31, 2006, 2005, and            2004 we recognized revenue of $412,000, $427,000, and $425,000, respectively. SIGA            received cash payments from USAMRAA under this contract on a monthly basis, as the work            was performed and the related revenue was recognized.

**          Saint            Louis University.** On September 1, 2005, we entered into an agreement with Saint            Louis University for the continued development of one of our Smallpox drugs. The            agreement is funded through the NIH. Under the agreement, SIGA received $1.0 million            during the term of September 1, 2005 to February 28, 2006. Revenues were recognized as            services were performed. In 2006 and 2005, we recognized revenues of $225,000 and            $775,000 from the agreement.

**          TransTech            Pharma, Inc.** In October 2002, we entered into a drug discovery collaboration            agreement with TransTech Pharma, Inc., a related party (“TransTech            Pharma”). Under the agreement, SIGA and TransTech Pharma collaborate on the            discovery, optimization and development of lead compounds to certain therapeutic            agents. No revenues were recognized in 2006, 2005, and 2004 from this collaboration.            SIGA does not expect receipt or disbursement of funds under the agreement with            TransTech Pharma for the next three to five years.

**Intellectual            Property and Proprietary Rights**

          Our            commercial success will depend in part on our and our collaborators’ ability to            obtain and maintain patent protection for our proprietary technologies, drug targets            and potential products and to effectively preserve our trade secrets. Because of the            substantial length of time and expense associated with bringing potential products            through the development and regulatory clearance processes to reach the marketplace,            the pharmaceutical industry places considerable importance on obtaining patent and            trade secret protection. The patent positions of pharmaceutical and biotechnology            companies can be highly uncertain and involve complex legal and factual questions. No            consistent policy regarding the breadth of claims allowed in biotechnology patents has            emerged to date. Accordingly, we cannot predict the type and breadth of claims allowed            in these patents.

          We            have licensed the rights to eight issued U.S. patents and three issued European            patents. These patents have varying lives and they are related to the technology            licensed from Rockefeller for the strep and Gram-positive products. We have one            additional patent application in the U.S. and one application in Europe relating to            this technology. We are joint owner with Washington University of seven issued patents            in the U.S. and one in Europe. In addition, there are four co-owned U.S. patent            applications. These patents are for the technology used for the Gram-negative product            opportunities. We are also exclusive owner of two U.S. patent and two U.S. utility            patent applications. One of these U.S. utility applications relates to our DegP product            opportunities. We are also exclusive owner of three U.S. provisional patent            applications.

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The following are our patent            positions as of December 31, 2007.

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|                                    |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |                                                                                                                                        |
| **PATENTS**                        | **Number                        Exclusively                        Licensed                        from                        Rockefeller                        Univ.** | **Number                        Co-                        Exclusively                        Licensed                        with                        Washington                        Univ.** | **Number                        Exclusively                        Licensed                        from                        Oregon                        State                        University** | **Number                        Exclusively                        Licensed                        from UCLA** | **Number                        Owned by                        SIGA** | **Patent Expiration                        Dates**                                                                                     |
|                                    |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |                                                                                                                                        |
| U.S.                               | 8                                                                                                                                                                         | 7                                                                                                                                                                                                   | 1                                                                                                                                                                                                      |                                                                                                           | 2                                                                      | 2008,                        2013(2), 2014 (6),                        2015 (2), 2016 (2), 2017,                        2019, 2020 (2) |
|                                    |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |                                                                                                                                        |
| Australia                          | 5                                                                                                                                                                         | 2                                                                                                                                                                                                   | 1                                                                                                                                                                                                      |                                                                                                           |                                                                   | 2009,                        2013, 2014 (2),                        2015, 2016, 2019,2020                                              |
|                                    |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |                                                                                                                                        |
| Canada                             | 2                                                                                                                                                                         |                                                                                                                                                                                                |                                                                                                                                                                                                   |                                                                                                           |                                                                   | 2010,                        2019                                                                                                      |
|                                    |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |                                                                                                                                        |
| Europe                             | 3                                                                                                                                                                         | 1                                                                                                                                                                                                   | 1                                                                                                                                                                                                      |                                                                                                           |                                                                   | 2009,                        2010, 2013, 2019,                        2020                                                             |
|                                    |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |                                                                                                                                        |
| Hungary                            | 1                                                                                                                                                                         |                                                                                                                                                                                                |                                                                                                                                                                                                   |                                                                                                           |                                                                   | 2013                                                                                                                                   |
|                                    |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |                                                                                                                                        |
| Japan                              | 2                                                                                                                                                                         |                                                                                                                                                                                                |                                                                                                                                                                                                   |                                                                                                           |                                                                   | 2010,                        2012                                                                                                      |
|                                    |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |                                                                                                                                        |
| Mexico                             | 1                                                                                                                                                                         |                                                                                                                                                                                                |                                                                                                                                                                                                   |                                                                                                           |                                                                   | 2016                                                                                                                                   |
|                                    |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |                                                                                                                                        |
| New                        Zealand | 1                                                                                                                                                                         |                                                                                                                                                                                                |                                                                                                                                                                                                   |                                                                                                           |                                                                   | 2016                                                                                                                                   |
|                                    |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |                                                                                                                                        |
| China                              | 1                                                                                                                                                                         |                                                                                                                                                                                                |                                                                                                                                                                                                   |                                                                                                           |                                                                   | 2016                                                                                                                                   |

|                                     |                                                                                                                                                                      |                                                                                                                                                                                                |                                                                                                                                                                                                   |                                                                                                           |                                                                   |
|------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------|
|                                          |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |
| **APPLICATIONS**                         | **Number                        Exclusively                        Licensed                        from                        Rockefeller                        Univ.** | **Number                        Co-                        Exclusively                        Licensed                        with                        Washington                        Univ.** | **Number                        Exclusively                        Licensed                        from                        Oregon                        State                        University** | **Number                        Exclusively                        Licensed                        from UCLA** | **Number                        Owned by                        SIGA** |
|                                          |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |
| U.S.                        applications | 1                                                                                                                                                                         | 4                                                                                                                                                                                                   |                                                                                                                                                                                                   | 2                                                                                                              | 6                                                                      |
|                                          |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |
| U.S.                        provisionals |                                                                                                                                                                      |                                                                                                                                                                                                |                                                                                                                                                                                                   |                                                                                                           | 3                                                                      |
|                                          |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |
| PCT                                      |                                                                                                                                                                      |                                                                                                                                                                                                |                                                                                                                                                                                                   |                                                                                                           | 5                                                                      |
|                                          |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |
| Australia                                |                                                                                                                                                                      |                                                                                                                                                                                                | 1                                                                                                                                                                                                      | 1                                                                                                              | 3                                                                      |
|                                          |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |
| Canada                                   | 3                                                                                                                                                                         | 2                                                                                                                                                                                                   | 2                                                                                                                                                                                                      | 1                                                                                                              | 3                                                                      |
|                                          |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |
| Europe                                   | 1                                                                                                                                                                         | 1                                                                                                                                                                                                   | 1                                                                                                                                                                                                      | 1                                                                                                              | 4                                                                      |
|                                          |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |
| Finland                                  | 1                                                                                                                                                                         |                                                                                                                                                                                                |                                                                                                                                                                                                   |                                                                                                           |                                                                   |
|                                          |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |
| Japan                                    | 3                                                                                                                                                                         | 2                                                                                                                                                                                                   | 1                                                                                                                                                                                                      | 1                                                                                                              | 4                                                                      |
|                                          |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |
| Hungary                                  | 1                                                                                                                                                                         |                                                                                                                                                                                                |                                                                                                                                                                                                   |                                                                                                           |                                                                   |
|                                          |                                                                                                                                                                           |                                                                                                                                                                                                     |                                                                                                                                                                                                        |                                                                                                                |                                                                        |

          We            also rely upon trade secret protection for our confidential and proprietary            information. No assurance can be given that other companies will not independently            develop substantially equivalent proprietary information and techniques or otherwise            gain access to our trade secrets or that we can meaningfully protect our trade            secrets.

**Government            Regulation**

          Regulation            by governmental authorities in the United States and other countries will be a            significant factor in the production and marketing of any biopharmaceutical products            that we may develop. The nature and the extent to which such regulations may apply to            us will vary depending on the nature of any such products. Virtually all of our            potential biopharmaceutical products will require regulatory approval by governmental            agencies prior to commercialization. In particular, human therapeutic products are            subject to rigorous pre-clinical and clinical testing and other approval procedures by            the FDA and similar health authorities in foreign countries. Various federal

7

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statutes and            regulations also govern or influence the manufacturing, safety, labeling, storage,            record keeping and marketing of such products. The process of obtaining these approvals            and the subsequent compliance with appropriate federal and foreign statutes and            regulations requires the expenditure of substantial resources.

          In            order to test clinically, produce and market products for diagnostic or therapeutic            use, a company must comply with mandatory procedures and safety standards established            by the FDA and comparable agencies in foreign countries. Before beginning human            clinical testing of a potential new drug in the United States, a company must file an            IND and receive clearance from the FDA. This application is a summary of the            pre-clinical studies that were conducted to characterize the drug, including toxicity            and safety studies, as well as an in-depth discussion of the human clinical studies            that are being proposed.

          The            pre-marketing program required for approval by the FDA of a new drug typically involves            a time-consuming and costly three-phase process. In Phase I, trials are conducted with            a small number of healthy patients to determine the early safety profile, the pattern            of drug distribution and metabolism. In Phase II, trials are conducted with small            groups of patients afflicted with a target disease in order to determine preliminary            efficacy, optimal dosages and expanded evidence of safety. In Phase III, large scale,            multi-center comparative trials are conducted with patients afflicted with a target            disease in order to provide enough data for statistical proof of efficacy and safety            required by the FDA and others.

          The            FDA amended its regulations, effective June 30, 2002, so that certain new drug and            biological products used to reduce or prevent the toxicity of chemical, biological,            radiological, or nuclear substances may be approved for use in humans based on evidence            of effectiveness derived only from appropriate animal studies and any additional            supporting data.

          The            FDA closely monitors the progress of each of the three phases of clinical testing and            may, in its discretion, reevaluate, alter, suspend or terminate the testing based on            the data that have been accumulated to that point and its assessment of the            risk/benefit ratio to the patient. Estimates of the total time required for carrying            out such clinical testing vary between two and ten years. Upon completion of such            clinical testing, a company typically submits a New Drug Application            (“NDA”) or Product License Application (“PLA”) to the FDA that            summarizes the results and observations of the drug during the clinical testing. Based            on its review of the NDA or PLA, the FDA will decide whether to approve the drug. This            review process can be quite lengthy, and approval for the production and marketing of a            new pharmaceutical product can require a number of years and substantial funding; there            can be no assurance that any approvals will be granted on a timely basis, if at all. A            very similar regulatory approval process is in place in Europe, under the authority of            the European Medicines Agency (EMEA), and this pathway will have to be pursued            independently to obtain regulatory approvals in the member countries.

          Once            the product is approved for sale, FDA regulations govern the production process and            marketing activities, and a post-marketing testing and surveillance program may be            required to monitor continuously a product’s usage and its effects. Product            approvals may be withdrawn if compliance with regulatory standards is not maintained.            Other countries in which any products developed by us may be marketed could impose a            similar regulatory process.

            An alternative regulatory mechanism is also available. The Emergency Use Authorization            (EUA) authority recently granted by Congress allows the FDA Commissioner to strengthen            the public health protections against biological, chemical, radiological, and nuclear            agents that may be used to attack the American people or the U.S. armed forces. Under            this recent legislation, the FDA Commissioner may allow medical countermeasures to be            used in an emergency to diagnose, treat, or prevent serious or life-threatening            diseases or conditions caused by such agents, when there are no adequate, approved, and            available alternatives. This authority delineates the intent of the 108th Congress            which passed the Project BioShield Act of 2004 (S. 15) and of President Bush who signed            it into law on July 21, 2004 (P.L. 108-276). The main provisions of this law include            (1) relaxing procedures for bioterrorism-related procurement, hiring, and awarding of            research grants; (2) guaranteeing a federal government market for new biomedical            countermeasures; and (3) permitting emergency use of unapproved countermeasures.            Project BioShield countermeasure procurement is funded by the Department of Homeland            Security Appropriations Act, 2004 (P.L. 108-90), which advance-appropriated $5.593            billion for FY2004 to FY2013.

**Competition**

          The            biotechnology and pharmaceutical industries are characterized by rapidly evolving            technology and intense competition. Our competitors include most of the major            pharmaceutical companies, which have financial, technical and marketing resources            significantly greater than ours. Biotechnology and other pharmaceutical competitors            include Acambis, Achillion Pharmaceuticals, Arrow Therapeutics,            Avant Immuno-therapeutics, Inc., Bavarian Nordic AS, Chimerix Inc., Bioport,            Emergent and BioSolutions. Academic institutions, governmental agencies and other            public and private research organizations are also conducting research activities and            seeking patent protection and may commercialize products on their own or through joint            venture. There is a possibility that our competitors will succeed in developing            products that are more effective or less costly than any which are being developed by            us or which would render our technology and future products obsolete and            noncompetitive.

**Human            Resources and Facilities**

          As            of February 29, 2008, we had 38 full-time employees. None of our employees are covered            by a collective bargaining agreement and we consider our employee relations to be            good.

8

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**Availability            of Reports and Other Information**

          We            file annual, quarterly, and current reports, proxy statements, and other documents with            the Securities and Exchange Commission (“SEC”) under the Securities            Exchange Act of 1934 (the “Exchange Act”). The public may read and copy any            materials that we file with the SEC at the SEC’s Public Reference Room at 450            Fifth Street, NW, Washington, DC 20549. The public may obtain information on the            operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Also, the            SEC maintains an Internet website that contains reports, proxy and information            statements, and other information regarding issuers, including us, that file            electronically with the SEC. The public can obtain any documents that we file with the            SEC at http://www.sec.gov.

          In            addition, our company website can be found on the Internet at www.siga.com. The website            contains information about us and our operations. Copies of each of our filings with            the SEC on Form 10-K, Form 10-KSB, Form 10-Q, Form 10-QSB and Form 8-K, and all            amendments to those reports, can be viewed and downloaded free of charge as soon as            reasonably practicable after the reports and amendments are electronically filed with            or furnished to the SEC. To view the reports, access www.siga.com, click on            “Investor Relations” and “SEC Filing”.

          The            following corporate governance related documents are also available on our            website:

|   |   |                                                                                           |
|--------|--------|------------------------------------------------------------------------------------------------|
|   | • | Code                        of Ethics and Business Conduct                                     |
|   |   |                                                                                           |
|   | • | Amended and Restated                        Audit Committee Charter                            |
|   |   |                                                                                           |
|   | • | Compensation Committee                        Charter                                          |
|   |   |                                                                                           |
|   | • | Nominating and                        Corporate Governance Committee Charter                   |
|   |   |                                                                                           |
|   | • | Procedure for Sending                        Communications to the Board of Directors          |
|   |   |                                                                                           |
|   | • | Procedures for Security                        Holder Submission of Nominating Recommendations |
|   |   |                                                                                           |
|   | • | 2004                        Policy on Confidentiality of Information and Securities Trading    |

To review these            documents, access www.siga.com and click on “Corporate            Governance.”

Any of the above            documents can also be obtained in print by any shareholder upon request to the            Secretary, SIGA Technologies, Inc., 420 Lexington Avenue, Suite 408, New York, New York            10170.

9

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|                                |                                    |
|-------------------------------------|-----------------------------------------|
| **Item                        1A.** | **Risk                        Factors** |

          This            report contains forward-looking statements and other prospective information relating            to future events. These forward-looking statements and other information are subject to            risks and uncertainties that could cause our actual results to differ materially from            our historical results or currently anticipated results including the            following:

***We have            incurred operating losses since our inception and expect to incur net losses and            negative cash flow for the foreseeable future.***

          We            incurred net losses of approximately $5.6 million, $9.9 million, and $2.3 million, for            the years ended December 31, 2007, 2006, and 2005, respectively. As of December 31,            2007, 2006, and 2005, our accumulated deficit was approximately $62.0 million, $56.4            million, and $46.5 million, respectively. We expect to continue to incur significant            operating expenditures. We will need to generate significant revenues to achieve and            maintain profitability.

          We            cannot guarantee that we will achieve sufficient revenues for profitability. Even if we            do achieve profitability, we cannot guarantee that we can sustain or increase            profitability on a quarterly or annual basis in the future. If revenues grow slower            than we anticipate, or if operating expenses exceed our expectations or cannot be            adjusted accordingly, then our business, results of operations, financial condition and            cash flows will be materially and adversely affected. Because our strategy might            include acquisitions of other businesses, acquisition expenses and any cash used to            make these acquisitions will reduce our available cash.

***Our            business will suffer if we are unable to raise additional equity            funding.***

          We            continue to be dependent on our ability to raise money in the equity markets. There is            no guarantee that we will continue to be successful in raising such funds. If we are            unable to raise additional equity funds, we may be forced to discontinue or cease            certain operations. We currently have sufficient operating capital to finance our            operations beyond the next twelve months. Our annual operating needs vary from year to            year depending upon the amount of revenue generated through grants, contracts and            licenses and the amount of projects we undertake, as well as the amount of resources we            expend, in connection with acquisitions all of which may materially differ from year to            year and may adversely affect our business.

***Our stock            price is, and we expect it to remain, volatile, which could limit investors’            ability to sell stock at a profit.***

          The            volatile price of our stock makes it difficult for investors to predict the value of            their investment, to sell shares at a profit at any given time, or to plan purchases            and sales in advance. A variety of factors may affect the market price of our common            stock. These include, but are not limited to:

|   |                                                                                                                                                                                           |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | publicity regarding                        actual or potential clinical results relating to products under development                        by our competitors or us;                        |
|   |                                                                                                                                                                                           |
| • | delay or failure in                        initiating, completing or analyzing pre-clinical or clinical trials or the                        unsatisfactory design or results of these trials; |
|   |                                                                                                                                                                                           |
| • | achievement or                        rejection of regulatory approvals by our competitors or us;                                                                                              |
|   |                                                                                                                                                                                           |
| • | announcements of                        technological innovations or new commercial products by our competitors or                        us;                                                  |
|   |                                                                                                                                                                                           |
| • | developments concerning                        proprietary rights, including patents;                                                                                                          |
|   |                                                                                                                                                                                           |
| • | developments concerning                        our collaborations;                                                                                                                             |
|   |                                                                                                                                                                                           |
| • | regulatory developments                        in the United States and foreign countries;                                                                                                     |
|   |                                                                                                                                                                                           |
| • | economic or other                        crises and other external factors;                                                                                                                    |
|   |                                                                                                                                                                                           |
| • | period-to-period                        fluctuations in our revenues and other results of operations;                        and                                                               |

10

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|   |                                                                          |
|--------|-------------------------------------------------------------------------------|
| • | changes in financial                        estimates by securities analysts. |

          Additionally,            because there is not a high volume of trading in our stock, any information about SIGA            in the media may result in significant volatility in our stock price.

          We            will not be able to control many of these factors, and we believe that period-to-period            comparisons of our financial results will not necessarily be indicative of our future            performance.

          In            addition, the stock market in general, and the market for biotechnology companies in            particular, has experienced extreme price and volume fluctuations that may have been            unrelated or disproportionate to the operating performance of individual companies.            These broad market and industry factors may seriously harm the market price of our            common stock, regardless of our operating performance.

***We are in various stages            of product development and there can be no assurance of successful            commercialization.***

          In            general, our research and development programs are at an early stage of development. To            obtain FDA approval for our biological warfare defense products we will be required to            perform at least one animal efficacy model and provide animal and human safety            data. Our other products will be subject to the approval guidelines under FDA            regulatory requirements which include a number of phases of testing in            humans.

          The            FDA has not approved any of our biopharmaceutical product candidates. Any drug            candidates developed by us will require significant additional research and development            efforts, including extensive pre-clinical and clinical testing and regulatory approval,            prior to commercial sale. We cannot be sure our approach to drug discovery will be            effective or will result in the development of any drug. We            cannot predict with certainty whether any drugs resulting from our            research and development efforts will be commercially available within the next            several years, or if they will be available at all.

          Even            if we receive initially positive pre-clinical or clinical results, such results do not            mean that similar results will be obtained in the later stages of drug development,            such as additional pre-clinical testing or human clinical trials. All of our potential            drug candidates are prone to the risks of failure inherent in pharmaceutical product            development, including the possibility that none of our drug candidates will or            can:

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
|   | • | be                        safe, non-toxic and effective;                              |
|   |   |                                                                                  |
|   | • | otherwise meet                        applicable regulatory standards;                |
|   |   |                                                                                  |
|   | • | receive the necessary                        regulatory approvals;                    |
|   |   |                                                                                  |
|   | • | develop into                        commercially viable drugs;                        |
|   |   |                                                                                  |
|   | • | be                        manufactured or produced economically and on a large scale; |
|   |   |                                                                                  |
|   | • | be                        successfully marketed;                                      |
|   |   |                                                                                  |
|   | • | be                        reimbursed by government and private insurers; and          |
|   |   |                                                                                  |
|   | • | achieve customer                        acceptance.                                   |

          In            addition, third parties may preclude us from marketing our drugs through enforcement of            their proprietary rights that we are not aware of, or third parties may succeed in            marketing equivalent or superior drug products. Our failure to develop safe,            commercially viable drugs would have a material adverse effect on our business,            financial condition and results of operations.

11

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***Most of our immediately            foreseeable future revenues are contingent upon grants and contracts from the United            States government and collaborative and license agreements and we may not achieve            sufficient revenues from these agreements to attain profitability.***

          Until            and unless we successfully achieve commercial approval for any of our products,            our ability to generate revenues will largely depend on our ability to enter into            additional research grants, collaborative agreements, strategic alliances, contracts            and license agreements with third parties or maintain the agreements we currently            have in place. Substantially all of our revenues for the years ended December 31, 2007,            2006, and 2005, respectively, were derived from grants, contracts and license            agreements. Our current revenue is derived from contract work being performed for the            NIH under two major grants and a contract which are scheduled to expire in September            2009 and contracts with the U.S. Air Force which expire in January and April 2008.            These agreements are for specific work to be performed under the agreements and could            only be canceled by the counter-party for non-performance. We may not earn            significant milestone payments under our existing collaborative agreements until our            collaborators have advanced products into clinical testing, which may not occur for            many years, if at all.

|   |                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | We                        have material agreements with the following collaborators: |
|   |                                                                                 |
|   | •                                                                               | National Institutes of                        Health. In September 2007, the NIH awarded us a two-year,                        $600,000 grant supporting the development of ST-246 treatment of                        smallpox vaccine-related adverse events. In July 2007, the NIH awarded us a                        two-year grant for a total of $530,000 to support our strep program.                        In October 2006 we received a 3-year, $16.5 million contract from the NIH                        to advance the development of ST-246. In September 2006, we received a $6.0                        million, 3-year grant from the NIH to develop antiviral drugs for the Lassa                        fever virus. In August 2006, the NIH awarded us a 3-year grant for $4.8                        million to continue the development of ST-246. In 2004, we have received                        grants totaling approximately $11.1 million which expired in 2006. SIGA                        receives cash payments from the NIH on a monthly or semi-monthly basis, as                        the work is performed and the related revenue is recognized. SIGA’s                        current NIH contract and  grants do not include milestone payments.                        For the years ended December 31, 2007 and 2006 we recognized revenues of                        $4.8 million and $3.9 million, respectively, from these grants and                        contracts for work it had performed. The agreements can be cancelled for                        non-performance and if cancelled, the Company will not receive additional                        funds under the agreements. |
|   |                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | •                                                                               | United States Air                        Force. In November 2006, we received a $1.4 million, one year contract with                        the Air Force Medical Service for the development of counter-measures                        against Dengue viruses and other water-related viral agents. In November                        2006 we also received a one-year, $900,000 contract to aid the USAF Special                        Operations Command (USAFSOC) in its development of specific anti-viral                        agents. For the years ended December 31, 2007 and 2006 we recognized                        revenues of $1.9 million and $247,000, respectively, from these contracts.                        SIGA receives cash payments from the USAF on a monthly basis, as the work                        is performed and the related revenue is recognized. SIGA’s current                        contracts with the USAF do not include milestone payments. The agreements                        can be cancelled for non-performance and if cancelled, the Company will not                        receive additional funds under the agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | •                                                                               | TransTech Pharma, Inc.                        Under our collaborative agreement with TransTech Pharma, a related party,                        TransTech Pharma is collaborating with us on the discovery, optimization                        and development of lead compounds to certain therapeutic agents. We and                        TransTech Pharma have agreed to share the costs of development and revenues                        generated from licensing and profits from any commercialized products                        sales. The agreement will be in effect until terminated by the parties or                        upon cessation of research or sales of all products developed under the                        agreement. SIGA does not expect receipt or disbursement of funds under the                        agreement with TransTech Pharma for the next three to five                        years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

***The            biopharmaceutical market in which we compete and will compete is highly            competitive.***

          The            biopharmaceutical industry is characterized by rapid and significant technological            change. Our success will depend on our ability to develop and apply our technologies in            the design and development of our product

12

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candidates and            to establish and maintain a market for our product candidates. There also are many            companies, both public and private, including major pharmaceutical and chemical            companies, specialized biotechnology firms, universities and other research            institutions engaged in developing pharmaceutical and biotechnology products. Many of            these companies have substantially greater financial, technical, research and            development resources, and human resources than us. Competitors may develop products or            other technologies that are more effective than any that are being developed by us or            may obtain FDA approval for products more rapidly than us. If we commence commercial            sales of products, we still must compete in the manufacturing and marketing of such            products, areas in which we have no experience. Many of these companies also have            manufacturing facilities and established marketing capabilities that would enable such            companies to market competing products through existing channels of distribution. Two            companies with similar profiles are VaxGen, Inc., which is developing vaccines against            anthrax, Smallpox and HIV/AIDS; and Avant Immunotherapeutics, Inc., which has vaccine            programs for agents of biological warfare.

***Because we            must obtain regulatory clearance to test and market our products in the United States,            we cannot predict whether or when we will be permitted to commercialize our            products.***

         A            pharmaceutical product cannot generally be marketed in the U.S. until it has completed            rigorous pre-clinical testing and clinical trials and an extensive regulatory clearance            process implemented by the FDA. Pharmaceutical products typically take many years to            satisfy regulatory requirements and require the expenditure of substantial resources            depending on the type, complexity and novelty of the product and its intended            use.

         Before            commencing clinical trials in humans, we must submit and receive clearance from the FDA            by means of an IND application. Institutional review boards and the FDA oversee            clinical trials and such trials:

|   |   |                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | must                        be conducted in conformance with the FDA regulations;                                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                       |
|   | • | must                        meet requirements for institutional review board oversight;                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                       |
|   | • | must                        meet requirements for informed consent;                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                       |
|   | • | must                        meet requirements for good clinical and manufacturing practices;                                                                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                       |
|   | • | are                        subject to continuing FDA oversight;                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                       |
|   | • | may                        require large numbers of test subjects; and                                                                                                                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                       |
|   | • | may                        be suspended by us or the FDA at any time if it is believed that the                        subjects participating in these trials are being exposed to unacceptable                        health risks or if the FDA finds deficiencies in any of the Company’s                        IND applications or the conduct of these trials. |

         Before            receiving FDA clearance to market a product in the absence of a medical or public            health emergency, we must demonstrate that the product is safe and effective on the            patient population that will be treated. Data we obtain from preclinical and clinical            activities are susceptible to varying interpretations that could delay, limit or            prevent regulatory clearances. Additionally, we have limited experience in conducting            and managing the clinical trials and manufacturing processes necessary to obtain            regulatory clearance.

         If            full regulatory clearance of a product is granted, this clearance will be limited            only to those states and conditions for which the product is demonstrated through            clinical trials to be safe and efficacious. We cannot ensure that any compound            developed by us, alone or with others, will prove to be safe and efficacious in            clinical trials and will meet all of the applicable regulatory requirements needed to            receive full marketing clearance.

***If our technologies or            those of our collaborators are alleged or found to infringe the patents or proprietary            rights of others, we may be sued or have to license those rights from others on            unfavorable terms.***

         Our            commercial success will depend significantly on our ability to operate without            infringing the patents and proprietary rights of third parties. Our technologies, along            with our licensors’ and our collaborators’

13

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technologies,            may infringe the patents or proprietary rights of others. If there is an adverse            outcome in litigation or an interference to determine priority or other proceeding in a            court or patent office, then we, or our collaborators and licensors, could be subjected            to significant liabilities, required to license disputed rights from or to other            parties and/or required to cease using a technology necessary to carry out research,            development and commercialization. At present we are unaware of any or potential            infringement claims against our patent portfolio.

          The            costs to establish the validity of patents, to defend against patent infringement            claims of others and to assert infringement claims against others can be expensive and            time consuming, even if the outcome is favorable. An outcome of any patent prosecution            or litigation that is unfavorable to us or one of our licensors or collaborators may            have a material adverse effect on us. We could incur substantial costs if we are            required to defend ourselves in patent suits brought by third parties, if we            participate in patent suits brought against or initiated by our licensors or            collaborators or if we initiate such suits. We may not have sufficient funds or            resources in the event of litigation. Additionally, we may not prevail in any such            action.

          Any            conflicts resulting from third-party patent applications and patents could            significantly reduce the coverage of the patents owned, optioned by or licensed to us            or our collaborators and limit our ability or that of our collaborators to obtain            meaningful patent protection. If patents are issued to third parties that contain            competitive or conflicting claims, we, our licensors or our collaborators may be            legally prohibited from researching, developing or commercializing of potential            products or be required to obtain licenses to these patents or to develop or obtain            alternative technology. We, our licensors and/or our collaborators may be legally            prohibited from using patented technology, may not be able to obtain any license to the            patents and technologies of third parties on acceptable terms, if at all, or may not be            able to obtain or develop alternative technologies.

            PharmAthene, Inc., has filed a lawsuit against the Company seeking among other things,            a license to ST-246. While we believe that we have meritorious defenses to the claim,            there can be no assurance concerning the outcome. If PharmAthene were successful in            obtaining a license through this litigation, the license may be on terms that are not            favorable to the Company.

          In            addition, like many biopharmaceutical companies, we may from time to time hire            scientific personnel formerly employed by other companies involved in one or more areas            similar to the activities conducted by us. We and/or these individuals may be subject            to allegations of trade secret misappropriation or other similar claims as a result of            their prior affiliations.

***Our            ability to compete may decrease if we do not adequately protect our intellectual            property rights.***

          Our            commercial success will depend in part on our and our collaborators’ ability to            obtain and maintain patent protection for our proprietary technologies, drug targets            and potential products and to effectively preserve our trade secrets. Because of the            substantial length of time and expense associated with bringing potential products            through the development and regulatory clearance processes to reach the marketplace,            the pharmaceutical industry places considerable importance on obtaining patent and            trade secret protection. The patent positions of pharmaceutical and biotechnology            companies can be highly uncertain and involve complex legal and factual questions. No            consistent policy regarding the breadth of claims allowed in biotechnology patents has            emerged to date. Accordingly, we cannot predict the type and breadth of claims allowed            in these patents.

          We            have licensed the rights to eight issued U.S. patents and three issued European            patents. These patents have varying lives and they are related to the technology            licensed from Rockefeller University for the Strep and Gram-positive products. We have            one additional patent application in the U.S. and one application in Europe relating to            this technology. We are joint owner with Washington University of seven issued patents            in the U.S. and one in Europe. In addition, there are four co-owned U.S. patent            applications. These patents are for the technology used for the Gram-negative product            opportunities. We are also exclusive owner of one U.S. patent and three U.S. patent            applications. One of these U.S. patent applications relates to our DegP product            opportunities.

          We            included a summary of our patent positions as of December 31, 2007 in Part I, Item 1 of            this document.

          We            also rely on copyright protection, trade secrets, know-how, continuing technological            innovation and licensing opportunities. In an effort to maintain the confidentiality            and ownership of trade secrets and proprietary information, we require our employees,            consultants and some collaborators to execute confidentiality and invention assignment            agreements upon commencement of a relationship with us. These agreements may not            provide meaningful protection for our trade secrets, confidential information or            inventions in the event of unauthorized use or disclosure of such information, and            adequate remedies may not exist in the event of such unauthorized use or            disclosure.

14

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***We may            have difficulty managing our growth.***

          We            might experience growth in the number of our employees and the scope of our operations.            This potential future growth could place a significant strain on our management and            operations. Our ability to manage this potential growth will depend upon our ability to            broaden our management team and our ability to attract, hire and retain skilled            employees. Our success will also depend on the ability of our officers and key            employees to continue to implement and improve our operational and other systems and to            hire, train and manage our employees.

***Our            activities involve hazardous materials and may subject us to environmental regulatory            liabilities.***

          Our            biopharmaceutical research and development involves the controlled use of hazardous and            radioactive materials and biological waste. We are subject to federal, state and local            laws and regulations governing the use, manufacture, storage, handling and disposal of            these materials and certain waste products. Although we believe that our safety            procedures for handling and disposing of these materials comply with legally prescribed            standards, the risk of accidental contamination or injury from these materials cannot            be completely eliminated. In the event of an accident, we could be held liable for            damages, and this liability could exceed our resources. The research and development            activities of our company do not produce any unusual hazardous products. We do use            small amounts of radioactive isotopes commonly used in pharmaceutical research, which            are stored, used and disposed of in accordance with Nuclear Regulatory Commission             regulations. We maintain liability insurance in the amount of approximately $3,000,000,            and we believe this should be sufficient to cover any contingent losses.

          We            believe that we are in compliance in all material respects with applicable            environmental laws and regulations and currently do not expect to make material            additional capital expenditures for environmental control facilities in the near term.            However, we may have to incur significant costs to comply with current or future            environmental laws and regulations.

***Our potential products may            not be acceptable in the market or eligible for third-party reimbursement resulting in            a negative impact on our future financial results.***

          Any            products successfully developed by us or our collaborative partners may not achieve            market acceptance. The antibiotic products which we are attempting to develop will            compete with a number of well-established traditional antibiotic drugs manufactured and            marketed by major pharmaceutical companies. The degree of market acceptance of any of            our products will depend on a number of factors, including:

|   |   |                                                                                                                                                             |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | the                        establishment and demonstration in the medical community of the clinical                        efficacy and safety of such products, |
|   |   |                                                                                                                                                             |
|   | • | the                        potential advantage of such products over existing treatment methods,                        and                                      |
|   |   |                                                                                                                                                             |
|   | • | reimbursement policies                        of government and third-party payors.                                                                              |

          Physicians,            patients or the medical community in general may not accept or utilize any products            that we or our collaborative partners may develop. Our ability to receive revenues and            income with respect to drugs, if any, developed through the use of our technology will            depend, in part, upon the extent to which reimbursement for the cost of such drugs will            be available from third-party payors, such as government health administration            authorities, private health care insurers, health maintenance organizations, pharmacy            benefits management companies and other organizations. Third-party payors are            increasingly disputing the prices charged for pharmaceutical products. If third-party            reimbursement was not available or sufficient to allow profitable price levels to be            maintained for drugs developed by us or our collaborative partners, it could adversely            affect our business.

***If our products harm            people, we may experience product liability claims that may not be covered by            insurance.***

          We            face an inherent business risk of exposure to potential product liability claims in the            event that drugs we develop are alleged to cause adverse effects on patients. Such risk            exists for products being tested in human clinical trials, as well as products that            receive regulatory approval for commercial sale. We may seek to obtain

15

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product            liability insurance with respect to drugs we and/or our collaborative partners develop.            However, we may not be able to obtain such insurance. Even if such insurance is            obtainable, it may not be available at a reasonable cost or in a sufficient amount to            protect us against liability.

***We may be required to            perform additional clinical trials or change the labeling of our products if we or            others identify side effects after our products are on the market, which could harm            sales of the affected products.***

          If            we or others identify side effects after any of our products are on the market, or if            manufacturing problems occur:

|   |   |                                                                                                                                                          |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | regulatory approval may                        be withdrawn;                                                                                                  |
|   |   |                                                                                                                                                          |
|   | • | reformulation of our                        products, additional clinical trials, changes in labeling of our products                        may be required; |
|   |   |                                                                                                                                                          |
|   | • | changes to or                        re-approvals of our manufacturing facilities may be required;                                                            |
|   |   |                                                                                                                                                          |
|   | • | sales of the affected                        products may drop significantly;                                                                                 |
|   |   |                                                                                                                                                          |
|   | • | our                        reputation in the marketplace may suffer; and                                                                                      |
|   |   |                                                                                                                                                          |
|   | • | lawsuits, including                        class action suits, may be brought against us.                                                                     |

          Any            of the above occurrences could harm or prevent sales of the affected products or could            increase the costs and expenses of commercializing and marketing these            products.

***The manufacture of            biotechnology products can be a time-consuming and complex process which may delay or            prevent commercialization of our products, or may prevent our ability to produce an            adequate volume for the successful commercialization of our            products.***

          Our            management believes that we have the ability to acquire or produce quantities of            products sufficient to support our present needs for research and our projected needs            for our initial clinical development programs. The manufacturer of all of our products            will be subject to current Good Manufacturing Practices (GMP) requirements prescribed            by the FDA or other standards prescribed by the appropriate regulatory agency in the            country of use. There can be no assurance that we will be able to manufacture products,            or have products manufactured for us, in a timely fashion at acceptable quality and            prices, that we or third party manufacturers can comply with GMP, or that we or third            party manufacturers will be able to manufacture an adequate supply of            product.

***Healthcare            reform and controls on healthcare spending may limit the price we charge for any            products and the amounts thereof that we can sell.***

          The            U.S. federal government and private insurers have considered ways to change, and have            changed, the manner in which healthcare services are provided in the U.S. Potential            approaches and changes in recent years include controls on healthcare spending and the            creation of large purchasing groups. In the future, the U.S. government may institute            further controls and limits on Medicare and Medicaid spending. These controls and            limits might affect the payments we could collect from sales of any products.            Uncertainties regarding future healthcare reform and private market practices could            adversely affect our ability to sell any products profitably in the U.S. At present, we            do not foresee any changes in FDA regulatory policies that would adversely affect our            development programs.

***The future issuance of            preferred stock may adversely affect the rights of the holders of our common            stock.***

          Our            certificate of incorporation allows our Board of Directors to issue up to 10,000,000            shares of preferred stock and to fix the voting powers, designations, preferences,            rights and qualifications, limitations or restrictions of

16

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these shares            without any further vote or action by the stockholders. The rights of the holders of            common stock will be subject to, and could be adversely affected by, the rights of the            holders of any preferred stock that we may issue in the future. The issuance of            preferred stock, while providing desirable flexibility in connection with possible            acquisitions and other corporate purposes, could have the effect of making it more            difficult for a third party to acquire a majority of our outstanding voting stock,            thereby delaying, deferring or preventing a change in control.

***Concentration of ownership of            our capital stock could delay or prevent change of control.***

          Our            directors, executive officers and principal stockholders beneficially own a significant            percentage of our common stock. They also have, through the exercise or conversion of            certain securities, the right to acquire additional common stock. As a result, these            stockholders, if acting together, have the ability to significantly influence the            outcome of corporate actions requiring shareholder approval. Additionally, this            concentration of ownership may have the effect of delaying or preventing a change in            control of SIGA. At December 31, 2007, Directors, Officers and principal stockholders            beneficially owned approximately 36.1% of our stock.

|                                |                                                 |
|-------------------------------------|------------------------------------------------------|
| **Item                        1B.** | **Unresolved Staff                        Comments** |
|                                |                                                 |
|                                | **Not                        applicable.**           |
|                                |                                                 |
| **Item                        2.**  | **Properties**                                       |

          Our            headquarters are located in New York City and our research and development facilities            are located in Corvallis, Oregon. In New York, we lease approximately 3,000 square feet            under a lease that expires on February 28, 2010. In Corvallis, we lease approximately            18,100 square feet under an amended lease agreement signed in January 2007, which            expires in December 2011. Our facility in Oregon has been improved to meet the special            requirements necessary for the operation of our research and development activities. In            the opinion of the management, these facilities are sufficient to meet the current and            anticipated future requirements of SIGA.

|                               |                                         |
|------------------------------------|----------------------------------------------|
| **Item                        3.** | **Legal                        Proceedings** |

          On            December 20, 2006, PharmAthene, Inc. (“PharmAthene”) filed an action            against us in the Court of Chancery in the State of Delaware, captioned *PharmAthene,            Inc. v. SIGA Technologies, Inc*., C.A. No. 2627-N. In its Complaint, PharmAthene            asks the Court to order the Company to enter into a license agreement with PharmAthene            with respect to SIGA-246, as well as issue a declaration that we are obliged to execute            such a license agreement, and award damages resulting from our supposed breach of that            obligation. PharmAthene also alleges that we breached an obligation to negotiate such a            license agreement in good faith, as well as seeks damages for promissory estoppel and            unjust enrichment based on supposed information, capital and assistance that            PharmAthene allegedly provided to us during the negotiation process. On January 9,            2007, we filed a motion to dismiss the Complaint in its entirety for failure to state a            claim upon which relief can be granted. The Company moved to stay discovery on January            26, 2007 and this motion was granted on March 8, 2007. On January 16, 2008, the Court            of Chancery denied our motion to dismiss and lifted the stay of discovery. Both parties            to the litigation have outstanding document requests and discovery is proceeding. The            Company filed its answer to the Complaint on January 31, 2008. SIGA plans to defend            itself vigorously.

|                               |                                                                           |
|------------------------------------|--------------------------------------------------------------------------------|
| **Item                        4.** | **Submission of                        Matters to a Vote of Security Holders** |

          None.

17

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**PART            II**

|                               |                                                                                                                                                                 |
|------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Item                        5.** | **Market for                        Registrant’s Common Equity, Related Stockholder Matters and Issuer                        Purchases of Equity Securities** |

**Price Range            of Common Stock**

          Our            common stock has been traded on the Nasdaq Capital Market since September 9, 1997 and            trades under the symbol “SIGA.” Prior to that time there was no public            market for our common stock. The following table sets forth, for the periods indicated,            the high and low sales prices for the common stock, as reported on the Nasdaq Capital            Market.

**Price            Range**

|                                  |   |     |   |    |   |   |   |
|---------------------------------------|--------|----------|--------|---------|--------|--------|--------|
| ***2006***                            |   | **High** |   | **Low** |   |
| First                        Quarter  |   |     | $      | 1.64    |   |   |   | $ | 0.87 |   |   |
| Second                        Quarter |   |     | $      | 1.81    |   |   |   | $ | 1.16 |   |   |
| Third                        Quarter  |   |     | $      | 2.33    |   |   |   | $ | 1.00 |   |   |
| Fourth                        Quarter |   |     | $      | 5.50    |   |   |   | $ | 1.40 |   |   |

|                                  |   |     |   |    |   |   |   |
|---------------------------------------|--------|----------|--------|---------|--------|--------|--------|
| ***2007***                            |   | **High** |   | **Low** |   |
| First                        Quarter  |   |     | $      | 6.04    |   |   |   | $ | 3.36 |   |   |
| Second                        Quarter |   |     | $      | 5.94    |   |   |   | $ | 3.21 |   |   |
| Third                        Quarter  |   |     | $      | 4.70    |   |   |   | $ | 2.52 |   |   |
| Fourth                        Quarter |   |     | $      | 4.50    |   |   |   | $ | 2.95 |   |   |

          The            following line graph compares the cumulative total stockholder return through December            31, 2007, assuming reinvestment of dividends, by an investor who invested $100 on            December 31, 2001 in each of (i) the Common Stock, (ii) the NASDAQ National Market-US;            and (iii) the NASDAQ Pharmaceutical Index.

|                                                  |   |     |   |     |   |     |   |     |   |     |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Value of Initial                        Investment    |   | 12/31/02 |   | 12/31/03 |   | 12/31/04 |   | 12/31/05 |   | 12/31/06 |   | 12/31/07 |   |
|                                                       |   |          |   |          |   |          |   |          |   |          |   |          |   |
| SIGA                        Technologies, Inc.        |   |     | $      | 100.00   |   |     |   | $        | 160.14 |     |   |     | $      | 116.08 |   |   |   | $      | 66.43  |   |   |   | $      | 262.24 |   |   |   | $      | 215.38 |   |   |
| NASDAQ Composite                        Index         |   |     | $      | 100.00   |   |     |   | $        | 150.01 |     |   |     | $      | 162.89 |   |   |   | $      | 165.13 |   |   |   | $      | 180.85 |   |   |   | $      | 198.60 |   |   |
| NASDAQ Biotech                        Composite Index |   |     | $      | 100.00   |   |     |   | $        | 145.75 |     |   |     | $      | 154.68 |   |   |   | $      | 159.06 |   |   |   | $      | 160.69 |   |   |   | $      | 168.05 |   |   |

18

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As of March 4,            2008, the closing bid price of our common stock was $2.12 per share. There were 67            holders of record as of March 4, 2008. We believe that the number of beneficial owners            of our common stock is substantially greater than the number of record holders, because            a large portion of common stock is held in broker “street            names.”

          We            have paid no dividends on our common stock and we do not expect to pay cash dividends            in the foreseeable future. We are not under any restriction as to our present or future            ability to pay dividends. We currently intend to retain any future earnings to finance            the growth and development of our business.

|                               |                                                                                               |
|------------------------------------|----------------------------------------------------------------------------------------------------|
| **Item                        6.** | **Selected Financial                        Data (in thousands, except share and per share data)** |

The following            table sets forth selected financial information derived from our audited consolidated            financial statements as of and for the years ended December 31, 2007, 2006, 2005, 2004,            and 2003.

|                                                   |   |         |   |                                                                                    |   |                            |   |                                                                      |   |                                                                                  |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |    |   |   |
|--------------------------------------------------------|--------|--------------|--------|-----------------------------------------------------------------------------------------|--------|---------------------------------|--------|---------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|---------|--------|--------|
| **The year ended                        December 31,** |   | **Revenues** |   | **Selling,                        general &                        administrative** |   | **Research and****development** |   | **Patent                        preparation                        fees** |   | **In-process                        research and                        development** |   | **Impairment of                        intangible                        assets** |   |
|                                                        |   |              |   |                                                                                         |   |                                 |   |                                                                           |   |                                                                                       |   |                                                                                        |   |
| 2007                                                   |   |         | $      | 6,699                                                                                   |   |                            |   | $                                                                         | 3,704  |                                                                                  |   |                                                                                   | $      | 9,943  |   |   |   | $      | 515    |   |   |   | $      | — |   |   |   | $      | — |   |   |
| 2006                                                   |   |         | $      | 7,258                                                                                   |   |                            |   | $                                                                         | 4,624  |                                                                                  |   |                                                                                   | $      | 9,149  |   |   |   | $      | 295    |   |   |   | $      | — |   |   |   | $      | — |   |   |
| 2005                                                   |   |         | $      | 8,477                                                                                   |   |                            |   | $                                                                         | 2,481  |                                                                                  |   |                                                                                   | $      | 8,295  |   |   |   | $      | 232    |   |   |   | $      | — |   |   |   | $      | — |   |   |
| 2004                                                   |   |         | $      | 1,839                                                                                   |   |                            |   | $                                                                         | 4,042  |                                                                                  |   |                                                                                   | $      | 4,166  |   |   |   | $      | 393    |   |   |   | $      | 568     |   |   |   | $      | 2,118   |   |   |
| 2003                                                   |   |         | $      | 732                                                                                     |   |                            |   | $                                                                         | 2,646  |                                                                                  |   |                                                                                   | $      | 2,943  |   |   |   | $      | 300    |   |   |   | $      | — |   |   |   | $      | 137     |   |   |

|                                                   |   |                                      |   |                                |   |                                                                                      |   |                                                                                                                            |   |   |   |   |   |   |   |   |   |   |       |   |   |
|--------------------------------------------------------|--------|-------------------------------------------|--------|-------------------------------------|--------|-------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|
| **The year ended                        December 31,** |   | **Operating                        loss** |   | **Net                        loss** |   | **Net loss per                        share: basic &                        diluted** |   | **Weighted average                        shares                        outstanding:                        basic and diluted** |   |
|                                                   |   |                                           |   |                                     |   |                                                                                           |   |                                                                                                                                 |   |
| 2007                                                   |   |                                      | $      | (7,463                              | )      |                                                                                      |   | $                                                                                                                               | (5,639 | )      |   |   | $      | (0.17  | )      |   |   |   | 33,330,814 |   |   |
| 2006                                                   |   |                                      | $      | (6,810                              | )      |                                                                                      |   | $                                                                                                                               | (9,899 | )      |   |   | $      | (0.35  | )      |   |   |   | 28,200,130 |   |   |
| 2005                                                   |   |                                      | $      | (2,532                              | )      |                                                                                      |   | $                                                                                                                               | (2,288 | )      |   |   | $      | (0.09  | )      |   |   |   | 24,824,824 |   |   |
| 2004                                                   |   |                                      | $      | (9,448                              | )      |                                                                                      |   | $                                                                                                                               | (9,373 | )      |   |   | $      | (0.40  | )      |   |   |   | 23,724,026 |   |   |
| 2003                                                   |   |                                      | $      | (5,296                              | )      |                                                                                      |   | $                                                                                                                               | (5,277 | )      |   |   | $      | (0.34  | )      |   |   |   | 15,717,138 |   |   |

|                                                                                                               |   |                                    |   |                                                      |   |                         |   |                                                                               |   |                                                                                    |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|-----------------------------------------------------------|--------|------------------------------|--------|------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| **As                        of and for the                        year ended                        December 31,** |   | **Total                        assets** |   | **Cash &                        cash****equivalents** |   | **Long term****obligations** |   | **Total                        stockholders’                        equity** |   | **Net cash used in                        operating                        activities** |   |
|                                                                                                               |   |                                         |   |                                                           |   |                              |   |                                                                                    |   |                                                                                         |   |
| 2007                                                                                                               |   |                                    | $      | 10,589                                                    |   |                         |   | $                                                                                  | 6,832  |                                                                                    |   |   | $      | 3,243   |   |   |   | $      | 5,228  |   |   |   | $      | (5,448 | )      |   |
| 2006                                                                                                               |   |                                    | $      | 14,028                                                    |   |                         |   | $                                                                                  | 10,640 |                                                                                    |   |   | $      | 4,696   |   |   |   | $      | 7,282  |   |   |   | $      | (4,438 | )      |   |
| 2005                                                                                                               |   |                                    | $      | 6,132                                                     |   |                         |   | $                                                                                  | 1,772  |                                                                                    |   |   | $      | 642     |   |   |   | $      | 3,231  |   |   |   | $      | (1,392 | )      |   |
| 2004                                                                                                               |   |                                    | $      | 6,111                                                     |   |                         |   | $                                                                                  | 2,021  |                                                                                    |   |   | $      | — |   |   |   | $      | 4,559  |   |   |   | $      | (4,890 | )      |   |
| 2003                                                                                                               |   |                                    | $      | 6,100                                                     |   |                         |   | $                                                                                  | 1,441  |                                                                                    |   |   | $      | — |   |   |   | $      | 5,551  |   |   |   | $      | (5,332 | )      |   |

19

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|                               |                                                                                                                                          |
|------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|
| **Item                        7.** | **Management’s                        Discussion and Analysis of Financial Condition and Results of                        Operations** |

*          The            following discussion should be read in conjunction with our consolidated financial            statements and notes to those statements and other financial information appearing            elsewhere in this Annual Report. In addition to historical information, the following            discussion and other parts of this Annual Report contain forward-looking information            that involves risks and uncertainties*.

**Overview**

          Since            our inception in December 1995, SIGA has pursued the research and development of novel            products for the prevention and treatment of serious infectious diseases, including            products for use in the defense against biological warfare agents such as Smallpox and            Arenaviruses. In September 2007, we received a two-year  grant from the NIH for a            total of approximately $600,000, to support the development of ST-246 treatment of            smallpox vaccine-related adverse events. During the third quarter of 2006 we were            awarded a 3-year, $16.5 million contract from the NIH and an additional 3-year, $4.8            million Phase II continuation grant from the NIH. Both awards support the            continuing development of our smallpox drug candidate, ST-246. Our efforts to develop            ST-246 were also supported by previous  grants from the NIH totaling $5.8 million,            a $1.0 million agreement with Saint Louis University, and a $1.6 million contract with            the U.S. Army. Our initiative to advance SIGA’s Arenavirus programs is supported            by a 3-year, $6.0 million grant from the NIH, received in September 2006 and previous            grants from the NIH totaling $6.3 million.

          Our            anti-viral programs are designed to prevent or limit the replication of the viral            pathogen. Our anti-infectives programs are aimed at the increasingly serious problem of            drug resistance. These programs are designed to block the ability of bacteria to attach            to human tissue, the first step in the infection process.

          We            do not have commercial products, and we cannot predict with certainty when our products            will be able to be sold in substantial quantities. We will need additional funds to            complete the development of our  products. Our plans with regard to these matters            include continued development of our products as well as seeking additional research            support funds and financial arrangements. Although we continue to pursue these plans,            there is no assurance that we will be successful in obtaining future financing on terms            acceptable to us. Management believes that its existing cash balances combined with            cash flows primarily from continuing government grants and contracts, anticipated new            government grants and contracts or reduction of certain operating expenses will be            sufficient to support SIGA’s operations beyond the next twelve months, and that            sufficient cash flows will be available to meet the Company’s business objectives            during that period.

          Our            technical operations are based in our research facility in Corvallis, Oregon. We            continue to seek to fund a major portion of our ongoing antiviral, antibiotic and            vaccine programs through a combination of government grants, contracts and strategic            alliances. While we have had success in obtaining strategic alliances, contracts and            grants, there is no assurance that we will continue to be successful in obtaining funds            from these sources. Until additional relationships are established, we expect to            continue to incur significant research and development costs and costs associated with            the manufacturing of product for use in clinical trials and pre-clinical testing. It is            expected that general and administrative costs, including patent and regulatory costs,            necessary to support clinical trials and research and development will continue to be            significant in the future. We expect to incur operating losses for the foreseeable            future and there can be no assurance that we will ever achieve profitable            operations.

**Critical            Accounting Estimates**

          The            methods, estimates and judgments we use in applying our accounting policies have a            significant impact on the results we report in our consolidated financial statements,            which we discuss under the heading “Results of Operations” following this            section of our Management’s Discussion and Analysis. Some of our accounting            policies

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require us to            make difficult and subjective judgments, often as a result of the need to make            estimates of matters that are inherently uncertain. Our most critical accounting            estimates include the assessment of recoverability of goodwill, which could impact            goodwill impairments; the assessment of recoverability of long-lived assets, which            primarily impacts operating income if impairment exists. Below, we discuss these            policies further, as well as the estimates and judgments involved. Other key accounting            policies, including revenue recognition, are less subjective and involve a far lower            degree of estimates and judgment.

**Significant            Accounting Policies**

          The            following is a brief discussion of the more significant accounting policies and methods            used by us in the preparation of our consolidated financial statements. Note 2 of the            Notes to the Consolidated Financial Statements includes a summary of all of the            significant accounting policies.

***          Share-based            Compensation***

          The            Company accounts for its stock-based compensation programs under the provisions of            Statement of Financial Accounting Standards No. 123 (revised 2004),            “Share-Based Payment” (“SFAS 123(R)”), which requires the            measurement and recognition of compensation expense for all share-based payment awards            made to employees and directors including employee stock options and employee stock            purchases related to the Employee Stock Purchase Plan (“employee stock            purchases”) based on estimated fair values. SFAS 123(R) requires companies to            estimate the fair value of share-based awards on the grant date using an option pricing            model. The value of the portion of the award that is ultimately expected to vest is            recorded as expense over the requisite periods in the Company’s consolidated            statement of operations.

***          Fair            value of financial instruments***

          The            carrying value of cash and cash equivalents, accounts payable and accrued expenses            approximates fair value due to the relatively short maturity of these instruments.            Common stock rights and warrants which are classified as assets or liabilities under            the provisions of EITF 00-19 are recorded at their fair market value as of each            reporting period. The Company applies the Black-Scholes pricing model to calculate the            fair values of common stock rights and warrants using the contracted term of the            instruments and expected volatility that is calculated as a combination of the            Company’s historical volatility and the volatility of a group of comparable            companies.

                      ***Revenue Recognition***

          The            Company recognizes revenue from contract research and development and research progress            payments in accordance with SEC Staff Accounting Bulletin No. 104, *Revenue            Recognition,* (“SAB 104”). In accordance with SAB 104, revenue is            recognized when persuasive evidence of an arrangement exists, delivery has occurred,            the fee is fixed and determinable, collectibility is reasonably assured, contractual            obligations have been satisfied and title and risk of loss have been transferred to the            customer. The Company recognizes revenue from non-refundable up-front payments, not            tied to achieving a specific performance milestone, over the period which the Company            is obligated to perform services or based on the percentage of costs incurred to date,            estimated costs to complete and total expected contract revenue. Payments for            development activities are recognized as revenue is earned, over the period of effort.            Substantive at-risk milestone payments, which are based on achieving a specific            performance milestone, are recognized as revenue when the milestone is achieved and the            related payment is due, providing there is no future service obligation associated with            that milestone. In situations where the Company receives payment in advance of the            performance of services, such amounts are deferred and recognized as revenue as the            related services are performed.

                      ***Goodwill***

          Goodwill            is recorded when the purchase price paid for an acquisition exceeds the estimated fair            value of the net identified tangible and intangible assets acquired.

          The            Company evaluates goodwill for impairment annually, in the fourth quarter of each year.            In addition, the Company would test goodwill for recoverability between annual            evaluations whenever events or changes in circumstances indicate that the carrying            amounts may not be recoverable. Examples of such events could include a significant            adverse change in legal matters, liquidity or in the business climate, an adverse            action or assessment by a regulator or government organization, loss of key personnel,            or new circumstances that would cause an expectation that it is more likely than not            that we would sell or otherwise dispose of a reporting unit. Goodwill impairment            is

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determined using            a two-step approach in accordance with Statement of Financial Accounting Standards No.            142 “Goodwill and Other Intangible Assets” (“SFAS 142”). The            impairment review process compares the fair value of the reporting unit in which            goodwill resides to its carrying value. In 2007, the Company operated as one business            and one reporting unit. Therefore, the goodwill impairment analysis was performed on            the basis of the Company as a whole using the market capitalization of the Company as            an estimate of its fair value. In the past, our market capitalization has been            significantly in excess of the Company’s carrying value. It is reasonably likely            that the future market capitalization of SIGA may exceed or fall short of our current            market capitalization, in which case a different amount for potential impairment would            result. The use of the discounted expected future cash flows to evaluate the fair value            of the Company as a whole is reasonably likely to produce different results than the            Company’s market capitalization.

***          Intangible            Assets***

          Acquisition-related            intangibles include acquired technology, customer contracts, grants and covenants not            to compete, and are amortized on a straight line basis over periods ranging from 2-4            years.

          In            accordance with Statement of Financial Accounting Standards No. 144 “Accounting            for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”),            the Company performs a review of its identified intangible assets to determine if facts            and circumstances exist which indicate that the useful life is shorter than originally            estimated or that the carrying amount of assets may not be recoverable. If such facts            and circumstances do exist, the Company assesses the recoverability of identified            intangible assets by comparing the projected undiscounted net cash flows associated            with the related asset or group of assets over their remaining lives against their            respective carrying amounts. Impairment, if any, is based on the excess of the carrying            amount over the fair value of those assets. Our estimates of projected cash flows are            dependent on many factors, including general economic trends, technological            developments and projected future contracts and government grants. It is reasonably            likely that future cash flows associated with our intangible assets may exceed or fall            short of our current projections, in which case a different amount for impairment would            result. If our actual cash flows exceed our estimates of future cash flows, any            impairment charge would be greater than needed. If our actual cash flows are less than            our estimated cash flows, we may need to recognize additional impairment charges in            future periods, which would be limited to the carrying amount of the intangible            assets.

***          Recent            accounting pronouncements***

          Effective            January 1, 2007, the Company adopted FASB Interpretation No. 48, *Accounting for            Uncertainty in Income Taxes—an Interpretation of FASB Statement 109*            (“FIN 48”). FIN 48 prescribes a comprehensive model for the manner in which            a company should recognize, measure, present and disclose in its financial statements            all material uncertain tax positions that the Company has taken or expects to take on a            tax return.

          As            of the date of adoption, there were no tax positions for which it is reasonably            possible that the total amounts of unrecognized tax benefits will significantly            increase or decrease within twelve months from the date of adoption of FIN 48 or from            December 31, 2007. As of December 31, 2007, the only tax jurisdiction to which the            Company is subject is the United States. Open tax years relate to years in which unused            net operating losses were generated. Thus, upon adoption of FIN 48, the Company’s            open tax years extend back to 1995. In the event that the Company concludes that it is            subject to interest and/or penalties arising from uncertain tax positions, the Company            will present interest and penalties as a component of income taxes. No amounts of            interest or penalties were recognized in the Company’s Consolidated Statements of            Operations or Consolidated Balance Sheets upon adoption of FIN 48 or as of and for the            year ended December 31, 2007.

          In            June 2007, the FASB issued EITF Issue 07-3 “Accounting for Advance Payments for            Goods or Services to Be Used in Future Research and Development Activities” (EITF            07-3). The scope of this Issue is limited to nonrefundable advance payments for goods            and services related to research and development activities. The Issue addresses            whether such advanced payments should be expensed as incurred or capitalized. SIGA is            required to adopt EITF 07-3 effective January 1, 2008. As of December 31, 2007, the            Company does not have any arrangements that would be subject to the scope of EITF            07-3.

          In            December 2007, the FASB issued SFAS No. 141R, “Business Combinations”.            SFAS 141R requires the acquiring entity in a business combination to record all            assets acquired and liabilities assumed at their respective

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acquisition-date            fair values, changes the recognition of assets acquired and liabilities assumed arising            from contingencies, changes the recognition and measurement of contingent            consideration, and requires the expensing of acquisition-related costs as incurred.            SFAS 141R also requires additional disclosure of information surrounding a            business combination, such that users of the entity’s financial statements can            fully understand the nature and financial impact of the business combination.            SFAS 141R applies prospectively to business combinations for which the acquisition            date is on or after the beginning of the first annual reporting period beginning on or            after December 15, 2008. The provisions of SFAS 141R will only impact us if we are            party to a business combination after the pronouncement has been adopted.

          In            December 2007, the FASB also issued SFAS No. 160, *Noncontrolling Interests in            Consolidated Financial Statements - an amendment of Accounting Research Bulletin            No. 51.* SFAS 160 requires an entity to classify noncontrolling interests in            subsidiaries as a separate component of equity. Additionally, transactions between an            entity and noncontrolling interests are required to be treated as equity transactions.            We are currently evaluating the impact of this statement on our financial statements.            SFAS 160 is effective for fiscal years beginning after December 15, 2008. As of            December 31, 2007, we believe that SFAS 160 will not affect our consolidated financial            position, results of operations and cash flows.

**Results of            Operations**

The following table sets forth            certain consolidated statements of income data as a percentage of net revenue for the            periods indicated:

|                                                       |   |     |      |     |   |     |    |   |     |    |
|------------------------------------------------------------|--------|----------|-----------|----------|--------|----------|---------|--------|----------|---------|
|                                                       |   | **2007** |      | **2006** |   | **2005** |    |
|                                                       |   |          |      |          |   |          |    |
| Revenue                                                    |   |     | 100       | %        |   | 100      | %       |   | 100      | %       |
|                                                       |   |          |           |     |        |          |    |        |          |    |
| Selling, general and                        administrative |   |     | 55        | %        |   | 64       | %       |   | 29       | %       |
| Research and                        development            |   |     | 148       | %        |   | 126      | %       |   | 98       | %       |
| Patent preparation                        fees             |   |     | 8         | %        |   | 4        | %       |   | 3        | %       |
| In-process research and                        development |   |     | 0         | %        |   | 0        | %       |   | 0        | %       |
| Impairment of                        intangible assets     |   |     | 0         | %        |   | 0        | %       |   | 0        | %       |
|                                                       |   |          |           |     |        |          |    |        |          |    |
| ***Operating                        loss***                |   |     | ***111*** | ***%***  |   | ***94*** | ***%*** |   | ***30*** | ***%*** |

***Years            ended December 31, 2007, 2006, and 2005.***

          Revenues            from research and development contracts and grants for the year ended December 31, 2007            were $6.70 million, a decline of $560,000 or 7.7% from the $7.26 million in revenues            recorded for the year ended December 31, 2006. During the year ended December 31, 2007,            we recognized revenues of $4.52 million from NIH grants and an agreement with the NIH            supporting our lead programs. Revenues from NIH grants, an agreement with the NIH and            an agreement with Saint Louis University, supporting these lead programs during the            year ended December 31, 2006 were $3.7 million. Revenues recorded from our programs            with the USAF and the US Army were $1.9 million and $2.7 million for the years ended            December 31, 2007 and 2006, respectively. The decline of $800,000 in revenues generated            from our agreements with the USAF and the US Army is mainly due to revenues generated            in 2006 from a one-year agreement with the US Army, signed in September 2005 and            completed in 2006. The decline in revenues recorded for the year ended December 31,            2007 was also due to the completion of a one year, $500,000, Phase I grant from            the NIH to support the development of our Bacterial Commensal Vector technology for the            delivery of smallpox vaccine, which we completed in February 28, 2007. Revenues            recorded in connection with this grant were $82,000 and $409,000, for the years ended            December 31, 2007 and 2006, respectively. Revenues for the year ended December 31, 2006            also included $412,000 related to a four-year agreement with the US Army, supporting            our Strep program, which was completed in December 31, 2006. In July 2007, we were            awarded a two-year grant for a total of $530,000 to support of Strep program. For the            year ended December 31, 2007 we recorded $67,000 from this grant.

          Revenues            for the years ended December 31, 2006 and 2005 were $7.26 million and $8.48 million,            respectively. Revenues recorded for the year ended December 31, 2006 declined $1.2            million or 14% from the prior

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year. For the            year ended December 31, 2006 we recorded $3.7 million from an NIH contract, NIH grants            and an agreement with Saint Louis University, supporting two of our lead programs.            Revenues from NIH grants supporting these programs during the year ended December 31,            2005 were $7.2 million. The decline of $3.5 million was partially offset by a $1.8            million increase in revenues recognized from our $3.2 million, one year contract with            USAMRMC for the rapid identification and treatment of anti-viral diseases. The            agreement was signed in September 2005 and was completed in 2006. Revenue recognized in            connection with this agreement increased from $653,000 in 2005 to $2.5 million in 2006.            The decline in revenues supporting our two lead programs was also offset by $409,000            recorded in connection with a $500,000, one year, Phase I grant from the NIH to            support the development of our Bacterial Commensal Vector technology for the delivery            of smallpox vaccine, which we completed in February 2007. In November 2006, we received            a $1.4 million, one year contract with the Air Force Medical Service for the            development of counter-measures against Dengue viruses and other water-related viral            agents. In November 2006 we also received a one-year, $900,000 contract to aid the USAF            Special Operations Command (USAFSOC) in its development of specific anti-viral agents.            For the year ended December 31, 2006 we recognized revenues of $247,000 from these            contracts.

          Selling,            general and administrative expenses (“SG&A”) for the years ended            December 31, 2007 and 2006 were $3.70 million and $4.62 million, respectively. The            decline of $920,000 or 20% is mainly attributed to professional fees incurred during            2006 in connection with a business transaction and a non-cash consulting charge            recorded in 2006. During the year ended December 31, 2006 we recorded legal,            accounting, and consulting expenses of $861,000, $183,000, and $132,000, respectively,            for due diligence services, fairness opinion and legal advice related to a potential            business transaction. During the year ended December 31, 2006, we also recorded            non-cash consulting charge of $156,000 related to the issuance of warrants to advisors.            The decline in SG&A expenses was partially offset by legal expenses of $240,000            incurred in connection with our defense against an action filed against SIGA, and            accounting fees of $110,000 related to the audit of our Sarbanes-Oxley            compliance.

          SG&A            expenses for the years ended December 31, 2006 and 2005 were $4.62 million and $2.48            million, respectively. The increase of $2.14 million or 86% is mainly attributed to            $1.2 million of professional fees and $530,000 of non-cash share base compensation and            consulting charges recorded for the year ended December 31, 2006, and a credit of            $303,000 in legal expenses recorded in 2005. During the year ended December 31, 2006 we            recorded legal, accounting and consulting expenses of $861,000, $183,000 and $132,000,            respectively, for due diligence services, fairness opinion and legal advice related to            a potential business transaction. In 2006, we recorded $156,000 of non-cash consulting            charge reflecting the fair market value of 400,000 warrants issued under a February            2003 consulting agreement. For the year ended December 31, 2006, we also recorded a            $376,000 non-cash charge for share based compensation following the adoption of FAS            123(R) on January 1, 2006.

          Research            and development (“R&D”) expenses were $9.94 million and $9.15 million            for the years ended December 31, 2007 and 2006, respectively, an increase of $790,000            or 8.7% from the year ended December 31, 2006. Expenditures related to clinical and            pre-clinical testing and manufacturing of our lead drug candidates increased $1.1            million from the year ended December 31, 2006. Our payroll and related expense has            increased by $350,000 from the year ended December 31, 2006, reflecting the expansion            and change in composition of our research and development workforce. In addition,            depreciation expense for the year ended December 31, 2007 increased $294,000 from the            same period in 2006. These increases were partially offset by a decline of $602,000 in            amortization expense and a decline of $351,000 in external R&D service charges            related to our USAF and US Army contracts.

          R&D            expenses for the years ended December 31, 2006 and 2005 were $9.15 million and $8.30            million, respectively. On April 1, 2006, we completed the renovation of a new            laboratory space in Corvallis, Oregon. Depreciation expense, lab supplies expenditures            and rent expense for the year ended December 31, 2006, increased by $637,000, $354,000,            and $381,000, respectively, from the same period in 2005. During the year ended            December 31, 2006, we expanded our R&D work force from 35 full time employees to 41            full time employees. R&D payroll and related expenses increased by $743,000 as a            result of this expansion and bonuses paid in 2006 to our R&D employees. In            addition, R&D expenditures related to our contract with USAMRMC and two contracts            with the U.S. Air Force received in 2006 increased $646,000 from $249,000 in 2005 to            $895,000 in 2006. These increases were partially offset by a decline of $1.9 million in            R&D expenditures related to two of our lead programs.

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          During            the years ended December 31, 2007, 2006 and 2005, we spent $3.2 million, $2.3 million,            and $3.9 million, respectively, on the development of ST-246. For the year ended            December 31, 2007, we spent $924,000 on internal human resources and $2.24 million            mainly on manufacturing and clinical testing. For the year ended December 31, 2006, we            spent $678,000 on internal human resources and $1.6 million on clinical and            pre-clinical testing of ST-246. For the year ended December 31, 2005, we spent $708,000            on internal human resources and $3.2 million on pre-clinical testing of ST-246. From            inception of the ST-246 development program to-date, we expended a total of $9.6            million related to the program, of which $2.4 million and $7.2 million were spent on            internal human resources, and clinical and pre-clinical work, respectively. These            resources reflect SIGA’s research and development expenses directly related to            the program. They exclude additional expenditures such as the cost to acquire the            program, patent costs, allocation of indirect expenses, and the value of other services            received from the NIH and the DoD.

          During            the years ended December 31, 2007, 2006 and 2005, we spent $1.3 million, $1.3 million            and $1.6 million, respectively, to support the development of ST-193, a drug candidate            for Lassa fever virus, ST-294, a drug candidate for certain arenavirus pathogens, and            other drug candidates for hemorrhagic fevers. For the year ended December 31, 2007, we            spent $227,000 on internal human resources and $1.1 million mainly on pre-clinical            testing. For the year ended December 31, 2006, we spent $536,000 on internal human            resources and $729,000 on pre-clinical testing. For the year ended December 31, 2005,            we spent $777,000 on internal human resources and $787,000 on pre-clinical testing of            ST-294. From inception of our programs to develop ST-193, ST-294, and other drug            candidates for hemorrhagic fevers, to-date, we spent a total of $4.5 million related to            the programs, of which $1.8 million and $2.7 million were expended on internal human            resources and pre-clinical work, respectively. These resources reflect SIGA’s            research and development expenses directly related to the programs. They exclude            additional expenditures such as the cost to acquire the programs, patent costs,            allocation of indirect expenses, and the value of other services received from the NIH            and the DoD.

          For            the years ended December 31, 2007, 2006 and 2005, we spent $1.3 million, $1.6 million,            and $381,000, respectively, in expenses related to our USAF and US Army Agreements.            During the year ended December 31, 2007, we spent $910,000 on internal human resources            and $372,000 for external R&D services. During the year ended December 31, 2006, we            spent $693,000 and $910,000 on internal human resources and external R&D services,            respectively. For the year ended December 31, 2005, we spent $132,000 on internal human            resources and $249,000 for external R&D services related to the program. Costs            related to our work on the USAF Agreements from September 2005 to date were $3.2            million, of which we spent $1.7 million and $1.5 million on internal human resources            and external R&D services, respectively. These resources reflect SIGA’s            research and development expenses directly related to these agreements. They exclude            additional expenditures such as patent costs and allocation of indirect            expenses.

          Our            product programs are in the early stage of development. At this stage of development,            we cannot make reasonable estimates of the potential cost for most of our programs to            be completed or the time it will take to complete the project. Our lead product,            ST-246, is an orally administered anti-viral drug that targets the smallpox virus. In            December 2005 the FDA accepted our IND application for ST-246 and granted it Fast-Track            status. In December 2006, the FDA granted Orphan Drug designation to ST-246, for the            prevention as well as the treatment of smallpox. We expect that costs to complete the            program will approximate $15 million to $20 million, and that the project could be            completed in 24 months to 36 months. There is a high risk of non-completion of any            program, including ST-246, because of the lead time to program completion and            uncertainty of the costs. Net cash inflows from any products developed from our            programs is at least one to three years away. However, we could receive additional            grants, contracts or technology licenses in the short-term. The potential cash and            timing is not known and we cannot be certain if they will ever occur.

          The            risk of failure to complete any program is high, as each, other than our smallpox            program which successfully completed 21-day dose-escalating studies in 2007, is in the            relatively early stage of development. Products for the biological warfare defense            market, such as the ST-246 smallpox anti-viral, could generate revenues in one to three            years. We believe the products directed toward this market are on schedule. We expect            the future research and development cost of our biological warfare defense programs to            increase as the potential products enter animal studies and safety testing, including            human safety trials. Funds for future development will be partially paid for by NIH            contracts and grants, additional government funding and from future financing. If we            are unable to obtain additional federal grants and contracts or funding in the required            amounts, the development timeline for

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these products            would slow or possibly be suspended. Delay or suspension of any of our programs could            have an adverse impact on our ability to raise funds in the future, enter into            collaborations with corporate partners or obtain additional federal funding from            contracts or grants.

          Patent            preparation expenses for the years ended December 31, 2007 and 2006 were $515,000 and            $295,000, respectively. Patent preparation expenses increased $220,000, or 75%, mainly            due to new filings related to our leading drug candidates.

          Patent            preparation costs for the year ended December 31, 2006 were $295,000 compared to            $232,000 for the year ended December 31, 2005. The increase of 63,000, or 27%, is            mainly due to a refund of $83,000 received in 2005 from our patent legal            counsel.

          Total            operating loss for the years ended December 31, 2007 and 2006 was $7.5 million and $6.8            million, respectively. Our operating loss increased mainly due to a decline of $600,000            in revenues generated in 2007, and an increase in R&D and patent expenses of            $729,000 and $220,000, respectively, partially offset by a decline of $932,000 in            G&A expenses.

          Total            operating loss for the year ended December 31, 2006 was $6.8 million compared with $2.5            million for 2005. The increase of $4.2 million in operating loss relates mainly to $1.2            million of professional fees incurred in connection with a potential business            transaction, a decline of $1.2 million in revenues generated in 2006, and an increase            of $870,000 in non-cash expenses recorded for depreciation, amortization and non-cash            compensation.

          Changes            in the fair value of common stock rights and common stock warrants sold together with            common stock in October 2006 and November 2005 are recorded as gains or losses. For the            years ended December 31, 2007 and 2006, we recorded a gain of $1.4 million and a loss            of $3.1 million, respectively, reflecting changes in the fair market value of warrants            and rights to purchase common stock during the respective years. The warrants and            rights to purchase common stock of SIGA were recorded at fair market value and            classified as liabilities at the time of the transaction. For the year ended December            31, 2005, we recorded a gain of $253,000, reflecting the decline in the fair value of            the warrants and the rights to acquire additional shares of our common stock, from            October 2005 through December 31, 2005.

          Other            income for the years ended December 31, 2007, 2006, and 2005, was $394,000, $1,600, and            $9,000, respectively. Other income in 2007 represented interest income on our cash and            cash equivalents. For the year ended December 31, 2006, we recorded interest income of            $147,000 generated from higher cash balance subsequent to the October 2006 sale of SIGA            common stock and warrants. Interest income in 2006 was offset by interest charges of            $114,000 relating to loans payable in the amount of $3.0 million which we paid in full            in October 2006.

**Liquidity and            Capital Resources**

          On            December 31, 2007, we had $6.8 million in cash and cash equivalents. During the year            ended December 31, 2007, we received net proceeds of $3.0 million from exercises of            warrants and options to purchase shares of the Company’s Common stock, and repaid            the entire balance of $130,000 due on a loan payable.

          In            September 2007, we received a two-year grant for a total of approximately $600,000            supporting our development of ST-246 treatment of smallpox vaccine-related adverse            events. In July 2007, we were awarded a two-year grant for a total of $530,000 to            support our Strep program.

                      Operating activities

          Net            cash used in operations during the years ended December 31, 2007 and 2006 was $5.4            million and $4.4 million, respectively. The increase in net cash used in operations is            mainly due to the use of additional cash to support clinical and pre-clinical testing            of our leading programs and to support the increase in our R&D payroll expenses. In            addition, during the year ended December 31, 2007, our account receivable balance            increased

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$300,000,            compared with a decline of $266,000 in accounts receivable during the same period in            2006 as a result of collection of accounts receivable that were outstanding at December            31, 2005.

                      Investing activities

          Capital            expenditures during the years ended December 31, 2007 and 2006 were $1.2 million and            $884,000, respectively, and mainly supported the renovation of our research facility in            Oregon.

                      Financing activities

          Cash            provided by financing activities was $2.9 million and $14.2 million during the years            ended December 31, 2007 and 2006, respectively. During the year ended December 31, 2007            we received net proceeds of $3.0 million from exercises of options and warrants to            purchase common stock, and repaid the entire balance of $130,000 due on a loan payable            to General Electric Capital Corporation. During the year ended December 31, 2006 we            received $8.4 million from the sale of common stock and warrants to acquire common            stock, $4.3 million from the exercise of options and warrants to purchase shares of            common stock, and $1.5 million from exercises of rights to purchase 1,500,000 shares of            our common stock for $1.10 per share.

                      Other

          We            have incurred cumulative net losses and expect to incur additional losses to perform            further research and development activities. We do not have commercial products and            have limited capital resources. Our plans with regard to these matters include            continued development of our products as well as seeking additional working capital            through a combination of collaborative agreements, strategic alliances, research            grants, equity and debt financing. Although we continue to pursue these plans, there is            no assurance that we will be successful in obtaining future financing on commercially            reasonable terms or that we will be able to secure funding from anticipated government            contracts and grants.

          We            believe that our existing cash balances combined with cash flows primarily from            continuing government grants and contracts, anticipated new government grants and            contracts or reduction of certain operating expenses will be sufficient to support our            operations beyond the next twelve months, and that sufficient cash flows will be            available to meet our business objectives during that period.

          Our            working capital and capital requirements will depend upon numerous factors, including            pharmaceutical research and development programs; pre-clinical and clinical testing;            timing and cost of obtaining regulatory approvals; levels of resources that we devote            to the development of manufacturing and marketing capabilities; technological advances;            status of competitors; and our ability to establish collaborative arrangements with            other organizations.

**Contractual            Obligations, Commercial Commitments and Purchase Obligations**

          As            of December 31, 2007, our purchase obligations are not material. We lease certain            facilities and office space under operating leases. Minimum future rental commitments            under operating leases having non-cancelable lease terms in excess of one year are as            follows:

|   |                                           |   |   |      |   |
|--------|------------------------------------------------|--------|--------|-----------|--------|
|   | Year                        ended December 31, |   |
|   |                                           |   |   |      |   |
|   | 2008                                           |   |   | 576,948   |   |
|   | 2009                                           |   |   | 579,648   |   |
|   | 2010                                           |   |   | 466,448   |   |
|   | 2011                                           |   |   | 443,748   |   |
|   |                                           |   |        |           |   |
|   | Total                                          |   | $      | 2,066,792 |   |
|   |                                           |   |        |           |   |

27

----

**Off-Balance            Sheet Arrangements**

          SIGA            does not have any off-balance sheet arrangements.

|                                |                                                                                  |
|-------------------------------------|---------------------------------------------------------------------------------------|
| **Item                        7A.** | **Quantitative and                        Qualitative Disclosures About Market Risk** |
|                                |                                                                                  |
|                                | None.                                                                                 |

28

----

|                               |                                                                   |
|------------------------------------|------------------------------------------------------------------------|
| **Item                        8.** | **Financial                        Statements and Supplementary Data** |

**Index to the            Consolidated Financial Statements**

|                                                                                                                                                                |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Report of                        Independent Registered Public Accounting Firm                                                                                      | 30     |
|                                                                                                                                                                |   |
| Consolidated                        Balance Sheets as of December 31, 2007 and 2006                                                                                 | 31     |
|                                                                                                                                                                |   |
| Consolidated                        Statements of Operations for the years ended December 31, 2007, 2006, and                        2005                           | 32     |
|                                                                                                                                                                |   |
| Consolidated                        Statements of Changes in Stockholders’ Equity for the years ended                        December 31, 2007, 2006 and 2005 | 33     |
|                                                                                                                                                                |   |
| Consolidated                        Statements of Cash Flows for the years ended December 31, 2007, 2006, and                        2005                           | 35     |
|                                                                                                                                                                |   |
| Notes to                        Consolidated Financial Statements                                                                                                   | 36     |

29

----

**Report of            Independent Registered Public Accounting Firm**

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

In our opinion,            the accompanying consolidated balance sheets and the related consolidated statements of            operations, of changes in stockholders’ equity and of cash flows present fairly,            in all material respects, the financial position of SIGA Technologies, Inc. and its            subsidiary at December 31, 2007 and 2006, and the results of their operations and their            cash flows for each of the three years in the period ended December 31, 2007 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, 2007, based on            criteria established in *Internal Control - Integrated Framework* issued by the            Committee of Sponsoring Organizations of the Treadway Commission (COSO). The            Company’s management is responsible for these 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 these financial statements and on            the Company’s internal control over financial reporting based on our audits            (which was an integrated audit in 2007). We conducted our audits in accordance with the            standards of the Public Company Accounting Oversight Board (United States). Those            standards require that we plan and perform the audits to obtain reasonable assurance            about whether the financial statements are free of material misstatement and whether            effective internal control over financial reporting was maintained in all material            respects. Our audits of the financial statements included examining, on a test basis,            evidence supporting the amounts and disclosures in the financial statements, assessing            the accounting principles used and significant estimates made by management, and            evaluating the overall financial statement presentation. 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.

As discussed in            Note 2 to the consolidated financial statements, the Company changed the manner in            which it accounts for uncertain tax positions effective January 1, 2007, and changed            the manner in which it accounts for share-based compensation effective January 1,            2006.

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.

/s/ PRICEWATERHOUSECOOPERS            LLP

New York, New York            March 12, 2008

30

----

**SIGA            TECHNOLOGIES, INC.**

**CONSOLIDATED            BALANCE SHEETS**

**As of December            31, 2007 and 2006**

|                                                                                                                                                                                                                                           |   |                                         |   |                                         |   |   |   |   |        |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|----------------------------------------------|--------|--------|--------|--------|-------------|--------|--------|
|                                                                                                                                                                                                                                           |   | **December 31,                        2007** |   | **December 31,                        2006** |   |
|                                                                                                                                                                                                                                           |   |                                              |   |                                              |   |
| **ASSETS**                                                                                                                                                                                                                                     |   |                                         |   |                                         |   |   |   |   |        |   |   |
| **Current                        assets**                                                                                                                                                                                                      |   |                                         |   |                                         |   |   |   |   |        |   |   |
| Cash and cash                        equivalents                                                                                                                                                                                               |   |                                         | $      | 6,832,290                                    |   |   |   | $      | 10,639,530  |   |   |
| Accounts                        receivable                                                                                                                                                                                                     |   |                                         |   | 986,489                                      |   |   |   |   | 617,032     |   |   |
| Prepaid                        expenses                                                                                                                                                                                                        |   |                                         |   | 130,115                                      |   |   |   |   | 141,032     |   |   |
|                                                                                                                                                                                                                                           |   |                                         |        |                                              |   |   |   |        |             |   |   |
| **Total current                        assets**                                                                                                                                                                                                |   |                                         |   | 7,948,894                                    |   |   |   |   | 11,397,594  |   |   |
|                                                                                                                                                                                                                                           |   |                                         |   |                                         |   |   |   |   |        |   |   |
| Property, plant and                        equipment, net                                                                                                                                                                                      |   |                                         |   | 1,479,678                                    |   |   |   |   | 1,320,315   |   |   |
| Goodwill                                                                                                                                                                                                                                       |   |                                         |   | 898,334                                      |   |   |   |   | 898,334     |   |   |
| Intangible assets,                        net                                                                                                                                                                                                  |   |                                         |   | —                                      |   |   |   |   | 165,243     |   |   |
| Other assets                                                                                                                                                                                                                                   |   |                                         |   | 261,766                                      |   |   |   |   | 246,201     |   |   |
|                                                                                                                                                                                                                                           |   |                                         |        |                                              |   |   |   |        |             |   |   |
| **Total                        assets**                                                                                                                                                                                                        |   |                                         | $      | 10,588,672                                   |   |   |   | $      | 14,027,687  |   |   |
|                                                                                                                                                                                                                                           |   |                                         |        |                                              |   |   |   |        |             |   |   |
| **LIABILITIES AND                        STOCKHOLDERS’ EQUITY**                                                                                                                                                                          |   |                                         |   |                                         |   |   |   |   |        |   |   |
| **Current                        liabilities**                                                                                                                                                                                                 |   |                                         |   |                                         |   |   |   |   |        |   |   |
| Accounts                        payable                                                                                                                                                                                                        |   |                                         | $      | 1,321,146                                    |   |   |   | $      | 1,357,906   |   |   |
| Accrued expenses and                        other                                                                                                                                                                                              |   |                                         |   | 594,524                                      |   |   |   |   | 382,679     |   |   |
| Accrued                        bonuses                                                                                                                                                                                                         |   |                                         |   | 202,000                                      |   |   |   |   | 201,825     |   |   |
| Notes                        payable                                                                                                                                                                                                           |   |                                         |   | —                                      |   |   |   |   | 107,520     |   |   |
|                                                                                                                                                                                                                                           |   |                                         |        |                                              |   |   |   |        |             |   |   |
| **Total current                        liabilities**                                                                                                                                                                                           |   |                                         |   | 2,117,670                                    |   |   |   |   | 2,049,930   |   |   |
| Non-current portion of                        notes payable                                                                                                                                                                                    |   |                                         |   | —                                      |   |   |   |   | 22,809      |   |   |
| Common stock                        warrants                                                                                                                                                                                                   |   |                                         |   | 3,242,797                                    |   |   |   |   | 4,673,098   |   |   |
|                                                                                                                                                                                                                                           |   |                                         |        |                                              |   |   |   |        |             |   |   |
| **Total                        liabilities**                                                                                                                                                                                                   |   |                                         |   | 5,360,467                                    |   |   |   |   | 6,745,837   |   |   |
| Commitments and                        contingencies                                                                                                                                                                                           |   |                                         |   | —                                      |   |   |   |   | —     |   |   |
| **Stockholders’                        equity**                                                                                                                                                                                          |   |                                         |   |                                         |   |   |   |   |        |   |   |
| Common stock ($.0001                        par value, 100,000,000 shares authorized, 33,937,549 and 32,452,210 issued                        and outstanding at December 31, 2007 and December 31, 2006,                        respectively) |   |                                         |   | 3,394                                        |   |   |   |   | 3,245       |   |   |
| Additional paid-in                        capital                                                                                                                                                                                              |   |                                         |   | 67,230,987                                   |   |   |   |   | 63,646,224  |   |   |
| Accumulated                        deficit                                                                                                                                                                                                     |   |                                         |   | (62,006,176                                  | )      |   |   |   | (56,367,619 | )      |   |
|                                                                                                                                                                                                                                           |   |                                         |        |                                              |   |   |   |        |             |   |   |
| **Total                        stockholders’ equity**                                                                                                                                                                                    |   |                                         |   | 5,228,205                                    |   |   |   |   | 7,281,850   |   |   |
|                                                                                                                                                                                                                                           |   |                                         |        |                                              |   |   |   |        |             |   |   |
| **Total liabilities                        and stockholders’ equity**                                                                                                                                                                    |   |                                         | $      | 10,588,672                                   |   |   |   | $      | 14,027,687  |   |   |
|                                                                                                                                                                                                                                           |   |                                         |        |                                              |   |   |   |        |             |   |   |

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

31

----

**SIGA            TECHNOLOGIES, INC.**

**CONSOLIDATED            STATEMENTS OF OPERATIONS**

**For the Years            Ended December 31, 2007, 2006 and 2005**

|                                                                                                                                    |   |     |       |     |   |       |   |   |       |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|----------|------------|----------|--------|------------|--------|--------|------------|--------|
|                                                                                                                                    |   | **2007** |       | **2006** |   | **2005**   |   |
|                                                                                                                                    |   |          |       |          |   |            |   |
|                                                                                                                                    |   |     |       |     |   |       |   |   |       |   |
| Revenues                                                                                                                                |   |     |       |     |   |       |   |   |       |   |
| Research and                        development                                                                                         |   | $        | 6,698,717  |     | $      | 7,257,532  |   | $      | 8,476,741  |   |
|                                                                                                                                    |   |          |            |     |        |            |   |        |            |   |
|                                                                                                                                    |   |     |       |     |   |       |   |   |       |   |
| Operating                        expenses                                                                                               |   |     |       |     |   |       |   |   |       |   |
| Selling, general and                        administrative                                                                              |   |     | 3,704,058  |     |   | 4,623,577  |   |   | 2,481,489  |   |
| Research and                        development                                                                                         |   |     | 9,942,503  |     |   | 9,149,327  |   |   | 8,295,262  |   |
| Patent preparation                        fees                                                                                          |   |     | 515,263    |     |   | 295,006    |   |   | 232,329    |   |
|                                                                                                                                    |   |          |            |     |        |            |   |        |            |   |
| Total operating                        expenses                                                                                         |   |     | 14,161,824 |     |   | 14,067,910 |   |   | 11,009,080 |   |
|                                                                                                                                    |   |          |            |     |        |            |   |        |            |   |
|                                                                                                                                    |   |     |       |     |   |       |   |   |       |   |
| Operating                        loss                                                                                                   |   |     | (7,463,107 | )        |   | (6,810,378 | )      |   | (2,532,339 | )      |
|                                                                                                                                    |   |     |       |     |   |       |   |   |       |   |
| Decrease (increase) in                        fair market value of common stock rights and common stock                        warrants |   |     | 1,430,301  |     |   | (3,089,997 | )      |   | 235,730    |   |
| Other income (expense),                        net                                                                                      |   |     | 394,249    |     |   | 1,667      |   |   | 9,059      |   |
|                                                                                                                                    |   |          |            |     |        |            |   |        |            |   |
| Net loss                                                                                                                                |   | $        | (5,638,557 | )        | $      | (9,898,708 | )      | $      | (2,287,550 | )      |
|                                                                                                                                    |   |          |            |     |        |            |   |        |            |   |
|                                                                                                                                    |   |     |       |     |   |       |   |   |       |   |
| Weighted average shares                        outstanding: basic and diluted                                                           |   |     | 33,330,814 |     |   | 28,200,130 |   |   | 24,824,824 |   |
|                                                                                                                                    |   |          |            |     |        |            |   |        |            |   |
| Net loss per share:                        basic and diluted                                                                            |   | $        | (0.17      | )        | $      | (0.35      | )      | $      | (0.09      | )      |
|                                                                                                                                    |   |          |            |     |        |            |   |        |            |   |

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

32

----

**SIGA            TECHNOLOGIES, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY            For the Years Ended December 31, 2007, 2006 and 2005**

|                                                                                            |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|---------|-----------------------------------------|--------|------------|--------|------------|------------|--------|--------|--------|--------|--------|--------|
|                                                                                            |   | **Series A                        Convertible                        Preferred Stock** |    | **Common                        Stock** |   |
|                                                                                            |   |                                                                                        |    |                                         |   |
|                                                                                            |   | **Shares**                                                                             |    | **Amount**                              |   | **Shares** |   | **Amount** |       |
|                                                                                            |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |
| **Balance at January                        1, 2005**                                           |   |                                                                                   | 68,038  |                                    | $      | 58,672     |   |       | 24,500,648 |   |   | $      | 2,450  |   |   |
|                                                                                            |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |   |   |
| Net proceeds allocated                        to the issuance of common stock ($1.00 per share) |   |                                                                                   |    |                                    |   |       |   |       | 2,000,000  |   |   | $      | 200    |   |   |
| Stock options issued to                        members of the Board of Directors                |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |   |   |
| Net loss                                                                                        |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |   |   |
|                                                                                            |   |                                                                                        |         |                                    |        |            |   |            |            |   |   |        |        |   |   |
| **Balance at December                        31, 2005**                                         |   |                                                                                   | 68,038  |                                    | $      | 58,672     |   |       | 26,500,648 |   |   | $      | 2,650  |   |   |
|                                                                                            |   |                                                                                        |         |                                    |        |            |   |            |            |   |   |        |        |   |   |
|                                                                                            |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |   |   |
| Net proceeds allocated                        to the issuance of common stock ($4.54 per share) |   |                                                                                   |    |                                    |   |       |   |       | 2,000,000  |   |   | $      | 200    |   |   |
| Conversion of preferred                        stock for common stock                           |   |                                                                                   | (68,038 | )                                       |   | (58,672    | )      |       | 68,038     |   |   |   | 7      |   |   |
| Stock based                        compensation                                                 |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |   |   |
| Stock issued for                        services                                                |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |   |   |
| Issuance of common                        stock upon exercise of stock options and warrants     |   |                                                                                   |    |                                    |   |       |   |       | 2,383,524  |   |   |   | 238    |   |   |
| Issuance of common                        stock upon exercise of common stock rights            |   |                                                                                   |    |                                    |   |       |   |       | 1,500,000  |   |   |   | 150    |   |   |
| Fair value of exercised                        common stock rights and warrants                 |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |   |   |
| Net loss                                                                                        |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |   |   |
|                                                                                            |   |                                                                                        |         |                                    |        |            |   |            |            |   |   |        |        |   |   |
|                                                                                            |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |   |   |
| **Balance at December                        31, 2006**                                         |   |                                                                                   | — |                                    | $      | —    |   |       | 32,452,210 |   |   | $      | 3,245  |   |   |
|                                                                                            |   |                                                                                        |         |                                    |        |            |   |            |            |   |   |        |        |   |   |
|                                                                                            |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |   |   |
| Issuance of common                        stock upon exercise of stock options and warrants     |   |                                                                                   |    |                                    |   |       |   |       | 1,485,339  |   |   |   | 149    |   |   |
| Stock based                        compensation                                                 |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |   |   |
| Net loss                                                                                        |   |                                                                                   |    |                                    |   |       |   |       |       |   |   |   |   |   |   |
|                                                                                            |   |                                                                                        |         |                                    |        |            |   |            |            |   |   |        |        |   |   |
| **Balance at December                        31, 2007**                                         |   |                                                                                   | — |                                    | $      | —    |   |       | 33,937,549 |   |   | $      | 3,394  |   |   |
|                                                                                            |   |                                                                                        |         |                                    |        |            |   |            |            |   |   |        |        |   |   |

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

(Continued)

33

----

**SIGA            TECHNOLOGIES, INC.            CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY            For the Years Ended December 31, 2007, 2006 and 2005**

|                                                                                            |   |                                                  |   |                                           |   |                                                                               |   |   |        |   |   |   |   |       |   |   |
|-------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|--------|------------------------------------------------|--------|------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|--------|------------|--------|--------|
|                                                                                            |   | **Additional Paid                        in Capital** |   | **Accumulated                        Deficit** |   | **Total                        Stockholders’                        Equity** |   |
|                                                                                            |   |                                                       |   |                                                |   |                                                                                    |   |
|                                                                                            |   |                                                  |   |                                           |   |                                                                               |   |   |        |   |   |   |   |       |   |   |
| **Balance at January                        1, 2005**                                           |   |                                                  | $      | 48,679,650                                     |   |                                                                               |   | $      | (44,181,361 | )      |   |   | $      | 4,559,411  |   |   |
|                                                                                            |   |                                                  |   |                                           |   |                                                                               |   |   |        |   |   |   |   |       |   |   |
| Net proceeds allocated                        to the issuance of common stock ($1.00 per share) |   |                                                  | $      | 947,269                                        |   |                                                                               |   |   |        |   |   |   |   | 947,469    |   |   |
| Stock options issued to                        members of the Board of Directors                |   |                                                  |   | 11,700                                         |   |                                                                               |   |   |        |   |   |   |   | 11,700     |   |   |
| Net loss                                                                                        |   |                                                  |   |                                           |   |                                                                               |   |   | (2,287,550  | )      |   |   |   | (2,287,550 | )      |   |
|                                                                                            |   |                                                  |        |                                                |   |                                                                               |   |        |             |   |   |   |        |            |   |   |
| **Balance at December                        31, 2005**                                         |   |                                                  | $      | 49,638,619                                     |   |                                                                               |   | $      | (46,468,911 | )      |   |   | $      | 3,231,030  |   |   |
|                                                                                            |   |                                                  |        |                                                |   |                                                                               |   |        |             |   |   |   |        |            |   |   |
|                                                                                            |   |                                                  |   |                                           |   |                                                                               |   |   |        |   |   |   |   |       |   |   |
| Net proceeds allocated                        to the issuance of common stock ($4.54 per share) |   |                                                  | $      | 5,948,328                                      |   |                                                                               |   |   |        |   |   |   |   | 5,948,528  |   |   |
| Conversion of preferred                        stock for common stock                           |   |                                                  |   | 58,665                                         |   |                                                                               |   |   |        |   |   |   |   | —    |   |   |
| Stock based                        compensation                                                 |   |                                                  |   | 470,892                                        |   |                                                                               |   |   |        |   |   |   |   | 470,892    |   |   |
| Stock issued for                        services                                                |   |                                                  |   | 156,470                                        |   |                                                                               |   |   |        |   |   |   |   | 156,470    |   |   |
| Issuance of common                        stock upon exercise of stock options and warrants     |   |                                                  |   | 4,337,604                                      |   |                                                                               |   |   |        |   |   |   |   | 4,337,842  |   |   |
| Issuance of common                        stock upon exercise of common stock rights            |   |                                                  |   | 1,534,350                                      |   |                                                                               |   |   |        |   |   |   |   | 1,534,500  |   |   |
| Fair value of exercised                        common stock rights and warrants                 |   |                                                  |   | 1,501,296                                      |   |                                                                               |   |   |        |   |   |   |   | 1,501,296  |   |   |
| Net loss                                                                                        |   |                                                  |   |                                           |   |                                                                               |   |   | (9,898,708  | )      |   |   |   | (9,898,708 | )      |   |
|                                                                                            |   |                                                  |        |                                                |   |                                                                               |   |        |             |   |   |   |        |            |   |   |
| **Balance at December                        31, 2006**                                         |   |                                                  | $      | 63,646,224                                     |   |                                                                               |   | $      | (56,367,619 | )      |   |   | $      | 7,281,850  |   |   |
|                                                                                            |   |                                                  |        |                                                |   |                                                                               |   |        |             |   |   |   |        |            |   |   |
|                                                                                            |   |                                                  |   |                                           |   |                                                                               |   |   |        |   |   |   |   |       |   |   |
| Issuance of common                        stock upon exercise of stock options and warrants     |   |                                                  |   | 3,013,841                                      |   |                                                                               |   |   |        |   |   |   |   | 3,013,990  |   |   |
| Stock based                        compensation                                                 |   |                                                  |   | 570,922                                        |   |                                                                               |   |   |        |   |   |   |   | 570,922    |   |   |
| Net loss                                                                                        |   |                                                  |   |                                           |   |                                                                               |   |   | (5,638,557  | )      |   |   |   | (5,638,557 | )      |   |
|                                                                                            |   |                                                  |        |                                                |   |                                                                               |   |        |             |   |   |   |        |            |   |   |
| **Balance at December                        31, 2007**                                         |   |                                                  | $      | 67,230,987                                     |   |                                                                               |   | $      | (62,006,176 | )      |   |   | $      | 5,228,205  |   |   |
|                                                                                            |   |                                                  |        |                                                |   |                                                                               |   |        |             |   |   |   |        |            |   |   |

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

34

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**SIGA            TECHNOLOGIES, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS            For the Years Ended December 31, 2007, 2006 and 2005**

|                                                                                               |   |     |       |     |   |       |   |   |       |   |
|----------------------------------------------------------------------------------------------------|--------|----------|------------|----------|--------|------------|--------|--------|------------|--------|
|                                                                                               |   | **2007** |       | **2006** |   | **2005**   |   |
|                                                                                               |   |          |       |          |   |            |   |
| Cash flows from                        operating activities:                                       |   |     |       |     |   |       |   |   |       |   |
| Net loss                                                                                           |   | $        | (5,638,557 | )        | $      | (9,898,708 | )      | $      | (2,287,550 | )      |
| Adjustments to                        reconcile net loss to net cash used in operating activities: |   |     |       |     |   |       |   |   |       |   |
| Depreciation                                                                                       |   |     | 1,083,705  |     |   | 788,014    |   |   | 145,809    |   |
| Amortization of                        intangible assets                                           |   |     | 165,243    |     |   | 767,492    |   |   | 1,181,562  |   |
| (Increase) decrease in                        fair market value of rights and warrants             |   |     | (1,430,301 | )        |   | 3,089,997  |   |   | (235,730   | )      |
| Stock based                        compensation                                                    |   |     | 570,922    |     |   | 470,892    |   |   | 11,700     |   |
| Non-cash consulting                        expense                                                 |   |     | —    |     |   | 156,470    |   |   | —    |   |
| Loss on impairment of                        investments                                           |   |     | —    |     |   | —    |   |   | 15,000     |   |
| Loss on write-off of                        prepaid investments                                    |   |     | —    |     |   | —    |   |   | 116,243    |   |
| Changes in assets and                        liabilities:                                          |   |     |       |     |   |       |   |   |       |   |
| Accounts                        receivable                                                         |   |     | (369,457   | )        |   | 266,022    |   |   | (774,150   | )      |
| Prepaid                        expenses                                                            |   |     | 10,917     |     |   | 19,112     |   |   | 2,160      |   |
| Other assets                                                                                       |   |     | (15,565    | )        |   | (12,075    | )      |   | (67,401    | )      |
| Deferred                        revenue                                                            |   |     | —    |     |   | (347,319   | )      |   | 347,319    |   |
| Accounts payable and                        accrued expenses                                       |   |     | 175,260    |     |   | 262,098    |   |   | 152,587    |   |
|                                                                                               |   |          |            |     |        |            |   |        |            |   |
| Net cash used in                        operating activities                                       |   |     | (5,447,833 | )        |   | (4,438,005 | )      |   | (1,392,451 | )      |
|                                                                                               |   |          |            |     |        |            |   |        |            |   |
| Cash flows from                        investing activities:                                       |   |     |       |     |   |       |   |   |       |   |
| Capital                        expenditures                                                        |   |     | (1,243,068 | )        |   | (884,182   | )      |   | (861,941   | )      |
|                                                                                               |   |          |            |     |        |            |   |        |            |   |
| Net cash used in                        investing activities                                       |   |     | (1,243,068 | )        |   | (884,182   | )      |   | (861,941   | )      |
|                                                                                               |   |          |            |     |        |            |   |        |            |   |
| Cash flows from                        financing activities:                                       |   |     |       |     |   |       |   |   |       |   |
| Net proceeds from                        issuance of common stock and derivatives                  |   |     | —    |     |   | 8,424,406  |   |   | 1,791,718  |   |
| Proceeds from issuance                        of notes payable                                     |   |     | —    |     |   | 3,000,000  |   |   | 276,434    |   |
| Net proceeds from                        exercise of common stock rights                           |   |     | —    |     |   | 1,534,500  |   |   | —    |   |
| Net proceeds from                        exercise of warrants and options                          |   |     | 3,013,990  |     |   | 4,337,842  |   |   | —    |   |
| Repayment of notes                        payable                                                  |   |     | (130,329   | )        |   | (3,107,520 | )      |   | (62,209    | )      |
|                                                                                               |   |          |            |     |        |            |   |        |            |   |
| Net cash provided by                        financing activities                                   |   |     | 2,883,661  |     |   | 14,189,228 |   |   | 2,005,943  |   |
|                                                                                               |   |          |            |     |        |            |   |        |            |   |
| Net (decrease) increase                        in cash and cash equivalents                        |   |     | (3,807,240 | )        |   | 8,867,041  |   |   | (248,449   | )      |
| Cash and cash                        equivalents at beginning of period                            |   |     | 10,639,530 |     |   | 1,772,489  |   |   | 2,020,938  |   |
|                                                                                               |   |          |            |     |        |            |   |        |            |   |
| Cash and cash                        equivalents at end of period                                  |   | $        | 6,832,290  |     | $      | 10,639,530 |   | $      | 1,772,489  |   |
|                                                                                               |   |          |            |     |        |            |   |        |            |   |
|                                                                                               |   |     |       |     |   |       |   |   |       |   |
| Cash paid for interest                        on notes payable                                     |   | $        | 10,192     |     | $      | 135,055    |   | $      | 11,105     |   |
| Non-cash supplemental                        information:                                          |   |     |       |     |   |       |   |   |       |   |
| Conversion of preferred                        stock to common stock                               |   | $        | —    |     | $      | 58,672     |   | $      | —    |   |
| Cashless exercise of                        warrants to purchase common stock                      |   | $        | 153,804    |     | $      | —    |   | $      | —    |   |

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

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**SIGA            TECHNOLOGIES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**1. Organization and Basis of            Presentation**

***Organization***

SIGA            Technologies, Inc. (“SIGA” or the “Company”) is a bio-defense            company engaged in the discovery, development and commercialization of products for use            in defense against biological warfare agents such as Smallpox and Arenaviruses. The            Company is also engaged in the discovery and development of other novel            anti-infectives, vaccines, and antibiotics for the prevention and treatment of serious            infectious diseases. The Company’s anti-viral programs are designed to prevent or            limit the replication of viral pathogens. SIGA’s anti-infectives programs target            the increasingly serious problem of drug resistant bacteria and emerging            pathogens.

***Basis of            presentation***

The accompanying            consolidated financial statements have been prepared on a basis which assumes that the            Company will continue as a going concern and which contemplates the realization of            assets and the satisfaction of liabilities and commitments in the normal course of            business. The Company has incurred cumulative net losses and expects to incur            additional losses to perform further research and development activities. The Company            does not have commercial products and has limited capital resources. Management’s            plans with regard to these matters include continued development of its products as            well as seeking additional research support funds and future financial arrangements.            Although management will continue to pursue these plans, there is no assurance that the            Company will be successful in obtaining sufficient future financing on commercially            reasonable terms or that the Company will be able to secure funding from anticipated            government contracts and grants. Management believes that existing cash balances            combined with cash flows primarily from continuing government grants and contracts,            anticipated new government grants and contracts or reduction of certain operating            expenses will be sufficient to support its operations beyond the next twelve            months, and will fund the Company’s business objectives during that period. If            the Company is unable to raise adequate capital or achieve profitability, future            operations will need to be scaled back or discontinued. Continuance of the Company as a            going concern is dependent upon, among other things, the success of the Company’s            research and development programs and the Company’s ability to obtain adequate            financing. The financial statements do not include any adjustments relating to the            recoverability of the carrying amount of recorded assets and liabilities that might            result from the outcome of these uncertainties.

**2. Summary of Significant            Accounting Policies**

***Use of            Estimates***

The consolidated            financial statements and related disclosures are prepared in conformity with accounting            principles generally accepted in the United States of America. Management is required            to make estimates and assumptions that affect the reported amounts of assets and            liabilities, the disclosure of contingent assets and liabilities at the date of the            financial statements and revenue and expenses during the period reported. These            estimates include the realization of deferred tax assets, useful lives and impairment            of goodwill, and tangible and intangible assets, and the value of options and warrants            granted or issued by the Company. Estimates and assumptions are reviewed periodically            and the effects of revisions are reflected in the financial statements in the period            they are determined to be necessary. Actual results could differ from these            estimates.

***Cash and cash            equivalents***

Cash and cash            equivalents consist of short term, highly liquid investments, with original maturities            of less than three months when purchased and are stated at cost. Interest is accrued as            earned.

***Property, Plant and            Equipment***

Property, plant and equipment            are stated at cost less accumulated depreciation. Depreciation is provided on the            straight-line method over the estimated useful lives of the various asset classes.            Estimated lives are 5 years for laboratory equipment; 3 years for computer equipment; 7            years for furniture and fixtures; and the life of the lease for

36

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leasehold            improvements. Maintenance, repairs and minor replacements are charged to expense as            incurred. Upon retirement or disposal of assets, the cost and related accumulated            depreciation are removed from the Balance Sheet and any gain or loss is reflected in            the Statement of Operations.

***Revenue            Recognition***

The Company            recognizes revenue from contract research and development and research payments in            accordance with SEC Staff Accounting Bulletin No. 104, Revenue Recognition, (“SAB            104”). In accordance with SAB 104, revenue is recognized when persuasive evidence            of an arrangement exists, delivery has occurred, the fee is fixed or determinable,            collectibility is reasonably assured, contractual obligations have been satisfied and            title and risk of loss have been transferred to the customer. The Company recognizes            revenue from non-refundable up-front payments, not tied to achieving a specific            performance milestone, over the period which the Company is obligated to perform            services or based on the percentage of costs incurred to date, estimated costs to            complete and total expected contract revenue. Payments for development activities are            recognized as revenue as earned, over the period of effort. Substantive at-risk            milestone payments, which are based on achieving a specific performance milestone, are            recognized as revenue when the milestone is achieved and the related payment is due,            providing there is no future service obligation associated with that milestone. In            situations where the Company receives payment in advance of the performance of            services, such amounts are deferred and recognized as revenue as the related services            are performed.

For the years            ended December 31, 2007, 2006, and 2005, revenues from National Institutes of Health            (“NIH”) contracts and grants was 71%, 53%, and 87%, respectively, of total            revenues recognized by the Company.

***Accounts            Receivable***

Accounts receivable are recorded            net of provisions for doubtful accounts. An allowance for doubtful accounts is based on            specific analysis of the receivables. At December 31, 2007, 2006, and 2005, the Company            had no allowance for doubtful accounts.

***Research and            development***

Research and            development expenses include costs directly attributable to the conduct of research and            development programs, including employee related costs, materials, supplies,            depreciation on and maintenance of research equipment, the cost of services provided by            outside contractors, and facility costs, such as rent, utilities, and general support            services. All costs associated with research and development are expensed as incurred.            Costs related to the acquisition of technology rights, for which development work is            still in process, and that have no alternative future uses, are expensed as            incurred.

***Goodwill***

Goodwill is            recorded when the purchase price paid for an acquisition exceeds the estimated fair            value of the net identified tangible and intangible assets acquired.

The Company            evaluates goodwill for impairment annually, in the fourth quarter of each year. In            addition, the Company would test goodwill for recoverability between annual evaluations            whenever events or changes in circumstances indicate that the carrying amounts may not            be recoverable. Examples of such events could include a significant adverse change in            legal matters, liquidity or in the business climate, an adverse action or assessment by            a regulator or government organization, loss of key personnel, or new circumstances            that would cause an expectation that it is more likely than not that we would sell or            otherwise dispose of a reporting unit. Goodwill impairment is determined using a            two-step approach in accordance with Statement of Financial Accounting Standards No.            142 “Goodwill and Other Intangible Assets” (“SFAS 142”). The            impairment review process compares the fair value of the reporting unit in which            goodwill resides to its carrying value. In 2007 and 2006, the Company operated as one            business and one reporting unit. Therefore, the goodwill impairment analysis was            performed on the basis of the Company as a whole using the market capitalization of the            Company as an estimate of its fair value.

***Identified Intangible            Assets***

Acquisition-related intangibles            include acquired technology, customer contracts, grants and covenants not to compete,            and are amortized on a straight line basis over periods ranging from 2-4            years.

37

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In accordance            with Statement of Financial Accounting Standards No. 144 “Accounting for the            Impairment or Disposal of Long-Lived Assets” (“SFAS 144”), the            Company performs a review of its identified intangible assets to determine if facts and            circumstances exist which indicate that the useful life is shorter than originally            estimated or that the carrying amount of assets may not be recoverable. If such facts            and circumstances do exist, the Company assesses the recoverability of identified            intangible assets by comparing the projected undiscounted net cash flows associated            with the related asset or group of assets over their remaining lives against their            respective carrying amounts. Impairment, if any, is based on the excess of the carrying            amount over the fair value of those assets. Our estimates of projected cash flows are            dependent on many factors, including general economic trends, technological            developments and projected future contracts and government grants. It is reasonably            likely that future cash flows associated with our intangible assets may exceed or fall            short of our current projections, in which case a different amount for impairment would            result.

***Income            taxes***

Income taxes are            accounted for under the asset and liability method prescribed by Statement of Financial            Accounting Standards No. 109, “Accounting for Income Taxes.” Deferred            income taxes are recorded for temporary differences between financial statement            carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and            liabilities reflect the tax rates expected to be in effect for the years in which the            differences are expected to reverse. A valuation allowance is provided if it is more            likely than not that some or the entire deferred tax asset will not be            realized.

Effective            January 1, 2007, the Company adopted FASB Interpretation No. 48, *Accounting for            Uncertainty in Income Taxes—an Interpretation of FASB Statement 109*            (“FIN 48”). FIN 48 prescribes a comprehensive model for the manner in which            a company should recognize, measure, present and disclose in its financial statements            all material uncertain tax positions that the Company has taken or expects to take on a            tax return.

As of the date            of adoption, there were no tax positions for which it is reasonably possible that the            total amounts of unrecognized tax benefits will significantly increase or decrease            within twelve months from the date of adoption of FIN 48 or from December 31, 2007. As            of December 31, 2007, the only tax jurisdiction to which the Company is subject is the            United States. Open tax years relate to years in which unused net operating losses were            generated. Thus, upon adoption of FIN 48, the Company’s open tax years extend            back to 1995. In the event that the Company concludes that it is subject to interest            and/or penalties arising from uncertain tax positions, the Company will present            interest and penalties as a component of income taxes. No amounts of interest or            penalties were recognized in the Company’s Consolidated Statements of Operations            or Consolidated Balance Sheets upon adoption of FIN 48 or as of and for the year ended            December 31, 2007.

***Net loss per common            share***

The Company            computes, presents and discloses earnings per share in accordance with SFAS 128            “Earnings Per Share” (“EPS”) which specifies the computation,            presentation and disclosure requirements for earnings per share of entities with            publicly held common stock or potential common stock. The statement defines two            earnings per share calculations, basic and diluted. The objective of basic EPS is to            measure the performance of an entity over the reporting period by dividing income            (loss) by the weighted average shares outstanding. The objective of diluted EPS is            consistent with that of basic EPS, that is to measure the performance of an entity over            the reporting period, while giving effect to all dilutive potential common shares that            were outstanding during the period. The calculation of diluted EPS is similar to basic            EPS except the denominator is increased for the conversion of potential common            shares.

The Company            incurred losses for the years ended December 31, 2007, 2006 and 2005, and as a result,            certain equity instruments are excluded from the calculation of diluted loss per share.            At December 31, 2005, 68,038 shares of the Company’s Series A convertible            preferred stock have been excluded from the computation of diluted loss per share as            they were anti-dilutive. These shares were converted into shares of the Company’s            common stock in 2006. At December 31, 2007, 2006, and 2005, outstanding options to            purchase 8,159,768, 7,736,145, and 9,399,561 shares, respectively, of the            Company’s common stock with exercise prices ranging from $0.94 to $4.63 have been            excluded from the computation of diluted loss per share as they are anti-dilutive. At            December 31, 2007, 2006, and 2005, outstanding warrants to purchase 8,262,377,            9,441,915, and 9,378,794 shares, respectively, of the Company’s common stock,            with exercise prices ranging from $1.18 to $4.99 have been excluded from the            computation of diluted loss per share as they are anti-dilutive.

38

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***Fair value            of financial instruments***

The carrying            value of cash and cash equivalents, accounts payable and accrued expenses approximates            fair value due to the relatively short maturity of these instruments. Common stock            rights and warrants which are classified as assets or liabilities under the provisions            of EITF 00-19, are recorded at their fair market value as of each reporting            period.

***Concentration of credit            risk***

The Company has            cash in bank accounts that exceed the Federal Deposit Insurance Corporation insured            limits. The Company has not experienced any losses on its cash accounts. No allowance            has been provided for potential credit losses because management believes that any such            losses would be minimal.

***Share-based            Compensation***

On January 1,            2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised            2004), “Share-Based Payment” (“SFAS 123(R)”), which requires            the measurement and recognition of compensation expense for all share-based payment            awards made to employees and directors including employee stock options and employee            stock purchases related to the Employee Stock Purchase Plan (“employee stock            purchases”) based on estimated fair values. SFAS 123(R) requires companies to            estimate the fair value of share-based awards on the grant date using an option pricing            model. The value of the portion of the award that is ultimately expected to vest is            recorded as expense over the requisite periods in the Company’s consolidated            statement of operations.

The following table illustrates the            effect on net loss and net loss per share as if the Company had applied the fair value            recognition provisions of SFAS No. 123, as amended by SFAS No. 148, “Accounting            for Stock-Based Compensation – Transition and Disclosures” (“SFAS            148”) during the year ended December 31, 2005.

|                                                                                                                                      |   |     |       |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|------------|--------|--------|
|                                                                                                                                      |   | **2005** |       |
|                                                                                                                                      |   |          |       |
| Net loss available to                        common stockholders, as reported                                                             |   | $        | (2,287,550 | )      |   |
|                                                                                                                                      |   |          |            |   |   |
| Add: Stock-based                        employee compensation expense included in reported net loss                                       |   |     | 11,700     |   |   |
| Deduct: Total stock                        based compensation expense determined under the fair value based                        method |   |     | (709,285   | )      |   |
|                                                                                                                                      |   |          |            |   |   |
| Net loss available to                        common stockholders, pro forma                                                               |   | $        | (2,985,135 | )      |   |
|                                                                                                                                      |   |          |            |   |   |
| Loss per common share -                        basic and diluted:                                                                         |   |     |       |   |   |
| As reported                                                                                                                               |   | $        | (0.09      | )      |   |
| Pro forma                                                                                                                                 |   | $        | (0.12      | )      |   |

***Segment            information***

The Company is            managed and operated as one business. The entire business is managed by a single            management team that reports to the chief executive officer. The Company does not            operate separate lines of business or separate business entities with respect to any of            its product candidates. Accordingly, the Company does not prepare discrete financial            information with respect to separate product areas or by location and only has one            reportable segment as defined by SFAS No. 131, “Disclosures about Segments of an            Enterprise and Related Information”.

***Recent            accounting pronouncements***

In June 2007,            the FASB issued EITF Issue 07-3 “Accounting for Advance Payments for Goods or            Services to Be Used in Future Research and Development Activities” (EITF 07-3).            The scope of this Issue is limited to nonrefundable advance payments for goods and            services related to research and development activities. The Issue addresses whether            such advanced payments should be expensed as incurred or capitalized. SIGA is required            to adopt EITF 07-3 effective January 1, 2008. As of December 31, 2007, the Company does            not have any arrangements that would be subject to the scope of EITF 07-3.

39

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In December            2007, the FASB issued SFAS No. 141R, “Business Combinations”. SFAS 141R            requires the acquiring entity in a business combination to record all assets acquired            and liabilities assumed at their respective acquisition-date fair values, changes the            recognition of assets acquired and liabilities assumed arising from contingencies,            changes the recognition and measurement of contingent consideration, and requires the            expensing of acquisition-related costs as incurred. SFAS 141R also requires additional            disclosure of information surrounding a business combination, such that users of the            entity’s financial statements can fully understand the nature and financial            impact of the business combination. SFAS 141R applies prospectively to business            combinations for which the acquisition date is on or after the beginning of the first            annual reporting period beginning on or after December 15, 2008. The provisions of SFAS            141R will only impact us if we are party to a business combination after the            pronouncement has been adopted.

In December            2007, the FASB also issued SFAS No. 160, *Noncontrolling Interests in Consolidated            Financial Statements - an amendment of Accounting Research Bulletin No. 51.* SFAS            160 requires an entity to classify noncontrolling interests in subsidiaries as a            separate component of equity. Additionally, transactions between an entity and            noncontrolling interests are required to be treated as equity transactions. We are            currently evaluating the impact of this statement on our financial statements. SFAS 160            is effective for fiscal years beginning after December 15, 2008. As of December 31,            2007, we believe that SFAS 160 will not affect our consolidated financial position,            results of operations and cash flows.

**3.****Research Agreements**

In September            2007, we received a two-year grant for a total of approximately $600,000 supporting our            development of ST-246 treatment of smallpox vaccine-related adverse events. In July            2007, we were awarded a two-year grant for a total of $530,000 to support our Strep            program.

On August 30,            2006, the Company received a three-year, $6.0 million award from the NIH to support the            development of its antiviral drugs for the Lassa fever virus. On August 1, 2006, SIGA            received a three-year, $4.8 million Phase II continuation grant from the NIH to support            the Company’s development of its smallpox drug candidate, SIGA 246. On            September 26, 2006, the Company entered into a three-year, $16.5 million contract with            the National Institute of Allergy and Infectious Diseases of the NIH, to further            advance the development of SIGA-246, the Company’s smallpox drug candidate. In            November 2006, SIGA received a $1.4 million, one year contract with the Air Force            Medical Service for the development of counter-measures against Dengus viruses and            other water-related viral agents. In November 2006 SIGA also received a one-year,            $900,000 contract to aid the USAF Special Operations Command (USAFSOC)  in its            development of specific anti-viral agents.

**4.****Intangible Assets**

The following table presents the            components of the Company’s acquired intangible assets with finite            lives:

|                                                |   |                                                                |   |                                            |   |   |   |                                                                |      |                                            |   |   |    |   |   |   |      |   |   |   |   |      |   |   |   |    |   |
|-----------------------------------------------------|--------|---------------------------------------------------------------------|--------|-------------------------------------------------|--------|--------|--------|---------------------------------------------------------------------|-----------|-------------------------------------------------|--------|--------|---------|--------|--------|--------|-----------|--------|--------|--------|--------|-----------|--------|--------|--------|---------|--------|
|                                                |   | December 31,                        2007                            |   | December 31,                        2006        |   |
|                                                |   |                                                                     |   |                                                 |   |
|                                                |   | Gross                        Carrying                        Amount |   | Accumulated                        Amortization |   | Net    |   | Gross                        Carrying                        Amount |      | Accumulated                        Amortization |   | Net    |    |
|                                                     |   |                                                                     |   |                                                 |   |        |   |                                                                     |      |                                                 |   |        |    |
|                                                |
| Acquired                        Grants              |   |                                                                | $      | 1,962,693                                       |   |   |   | $                                                                   | 1,962,693 |                                            |   | $      | — |   |   | $      | 1,962,693 |   |   |   | $      | 1,962,693 |   |   | $      | — |   |
| Customer contract and                        grants |   |                                                                |   | 83,571                                          |   |   |   |                                                                | 83,571    |                                            |   |   | — |   |   |   | 83,571    |   |   |   |   | 83,571    |   |   |   | — |   |
| Covenants not to                        compete     |   |                                                                |   | 202,000                                         |   |   |   |                                                                | 202,000   |                                            |   |   | — |   |   |   | 202,000   |   |   |   |   | 202,000   |   |   |   | — |   |
| Acquired                        technology          |   |                                                                |   | 330,483                                         |   |   |   |                                                                | 330,483   |                                            |   |   | — |   |   |   | 330,483   |   |   |   |   | 165,240   |   |   |   | 165,243 |   |
|                                                |   |                                                                |        |                                                 |   |   |   |                                                                     |           |                                            |   |        |         |   |   |        |           |   |   |   |        |           |   |   |        |         |   |
|                                                |   |                                                                | $      | 2,578,747                                       |   |   |   | $                                                                   | 2,578,747 |                                            |   | $      | — |   |   | $      | 2,578,747 |   |   |   | $      | 2,413,504 |   |   | $      | 165,243 |   |
|                                                |   |                                                                |        |                                                 |   |   |   |                                                                     |           |                                            |   |        |         |   |   |        |           |   |   |   |        |           |   |   |        |         |   |

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Amortization expense for intangible            assets and costs included the following:

|                                                                |   |                                           |    |   |   |    |   |
|---------------------------------------------------------------------|--------|------------------------------------------------|---------|--------|--------|---------|--------|
|                                                                |   | Year                        Ended December 31, |
|                                                                |   | 2007                                           |    | 2006   |   |
|                                                                |   |                                                |    |        |   |
|                                                                |
| Amortization of                        acquired grants              |   | $                                              | — |   | $      | 654,228 |   |
| Amortization of                        customer contract and grants |   |                                           | — |   |   | 30,644  |   |
| Amortization of                        acquired technology          |   |                                           | 165,243 |   |   | 82,620  |   |
|                                                                |   |                                                |         |   |        |         |   |
|                                                                |   | $                                              | 165,243 |   | $      | 767,492 |   |
|                                                                |   |                                                |         |   |        |         |   |

At December 31,            2007, the Company’s intangible assets are fully amortized.

**5.****Stockholders’ Equity**

At December 31,            2007, the Company’s authorized share capital consisted of 110,000,000 shares, of            which 100,000,000 are designated common shares and 10,000,000 are designated preferred            shares. The Company’s Board of Directors is authorized to issue preferred shares            in series with rights, privileges and qualifications of each series determined by the            Board.

*2006            Placement*

On October 19,            2006, the Company sold 2,000,000 shares of the Company’s common stock at $4.54            per share and warrants to purchase 1,000,000 shares of the Company’s common            stock. The warrants have an initial exercise price of $4.99 per share and may be            exercised at any time and from time to time through and including the seventh            anniversary of the closing date. As of December 31, 2007, warrants to acquire 1,000,000            shares of common stock were outstanding.

The Company            accounted for the transaction under the provisions of EITF 00-19 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. EITF 00-19 also requires that any changes in the fair value of the            derivative instruments be reported in earnings or loss as long as the derivative            contracts are classified as assets or liabilities. At December 31, 2007, the fair            market value of the warrants was $1.5 million. The Company applied the Black-Scholes            model to calculate the fair values of the respective derivative instruments using the            contracted term of the warrants. Management estimates the expected volatility using a            combination of the Company’s historical volatility and the volatility of a group            of comparable companies. SIGA recorded a gain of $870,000 for the decline in the            instruments’ fair value from December 31, 2006 to December 31, 2007 and a gain of            $70,000 for the decline in fair value during 2006.

*2005            Placement*

In November            2005, the Company sold 2,000,000 shares of the Company’s common stock at $1.00            per share and warrants to purchase 1,000,000 shares of the Company’s common stock            at an initial exercise price of $1.18 per share, at any time and from time to time            through and including the seventh anniversary of the closing date. As of December 31,            2007, warrants to acquire 725,000 shares of common stock were outstanding.

The Company            accounted for the transaction under the provisions of EITF 00-19. At December 31, 2007,            the fair market value of the warrants to acquire common stock was $1.7 million. SIGA            recorded a gain of $560,000 for the decline in the instruments’ fair value from            December 31, 2006 to December 31, 2007 and a loss of $3.2 million for the increase in            fair value during 2006.

**Preferred            Stock**

Holders of the            Series A Convertible Preferred Stock are entitled to (i) cumulative dividends at an            annual rate of 6% payable when and if declared by the Company’s board of            directors; (ii) in the event of liquidation of the Company, each holder is entitled to            receive $1.4375 per share (subject to certain adjustments) plus all accrued but unpaid            dividends; (iii) convert each share of Series A to a number of fully paid and            non-assessable shares of common stock as calculated by dividing $1.4375 by the Series A            Conversion Price (shall initially be $1.4375); and (iv) vote with the holders of other            classes of shares on an as-converted basis.

During the year            ended December 31, 2006 certain preferred stockholders converted 68,038 Series A            convertible preferred stock into 68,038 shares of common stock.

On December 31,            2007, no shares of Series A Convertible Preferred Stock were outstanding.

**6.****Stock option plan and warrants**

*Amended and            Restated 1996 Incentive and Non-Qualified Stock Option Plan*

In January 1996,            the Company implemented its 1996 Incentive and Non-Qualified Stock Option Plan (the            “Plan”). The Plan as amended provides for the granting of up to 11,000,000            shares of the Company’s common

41

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stock to            employees, consultants and outside directors of the Company. The exercise period for            options granted under the Plan, except those granted to outside directors, is            determined by a committee of the Board of Directors. Stock options granted to outside            directors pursuant to the Plan must have an exercise price equal to or in excess of the            fair market value of the Company’s common stock at the date of grant.

For the years            ended December 31, 2007 and 2006, the Company recorded compensation expense of $571,000            and $471,000, respectively, related to stock options. The total fair value of options            vested during each year was $350,500 and $782,200 for 2007 and 2006, respectively. The            total compensation cost not yet recognized related to non-vested awards at December 31,            2007 is $1.4 million. The weighted average period over which total compensation cost is            expected to be recognized is 1.80 years.

SIGA calculated the fair value of            options awarded during the three years ended December 31, 2007, 2006 and 2005 using the            Black-Scholes model with the following weighted average assumptions:

|                                                |   |     |                                |     |   |     |                         |   |   |   |                                |   |   |
|-----------------------------------------------------|--------|----------|-------------------------------------|----------|--------|----------|------------------------------|--------|--------|--------|-------------------------------------|--------|--------|
| Weighted Average                        Assumptions |   | **2007** |                                | **2006** |   | **2005** |                         |
|                                                |   |          |                                |          |   |          |                         |
| Expected                        volatility          |   |     | 66.00                               | %        |   |     | 60.00                        | %      |   |   | 60% -                        75     | %      |   |
| Dividend                        Yield               |   |     | 0.00                                | %        |   |     | 0.00                         | %      |   |   | 0.00                                | %      |   |
| Risk-free interest                        rate      |   |     | 4.61%                        - 4.83 | %        |   |     | 4.49                         | %      |   |   | 3.00%                        - 4.00 | %      |   |
| Expected holding                        period      |   |     | 5                        Yrs        |     |   |     | 5                        Yrs |   |   |   | 2 - 5                        Yrs    |   |   |

The Company            calculates the expected volatility using a combination of SIGA’s historical            volatility and the volatility of a group of comparable companies. The risk-free            interest rate assumption is based upon observed interest rate appropriate for the term            of the Company’s employee stock options. The dividend yield assumption is based            on the Company’s intent not to issue a dividend in the foreseeable future. The            expected holding period assumption was estimated based on historical experience and            expectation of employee exercise behavior in the future giving consideration to the            contractual terms of the award.

            42

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Stock options            activity of the Company is summarized as follows:

|                                                            |   |                                                       |   |                                                                |    |   |
|-----------------------------------------------------------------|--------|------------------------------------------------------------|--------|---------------------------------------------------------------------|---------|--------|
|                                                                 |        | **Number                    of                    Shares** |        | **Average                    Exercise                    Price($)** |         |
|                                                                 |        |                                                       |        |                                                                |         |
| Options outstanding at                        January 1, 2005   |   | 9,767,061                                                  |   | $                                                                   | 1.99    |   |
| Granted                                                         |   | 90,000                                                     |   |                                                                | 1.22    |   |
| Forfeited                                                       |   | (452,500                                                   | )      |                                                                | 1.60    |   |
| Exercised                                                       |   | —                                                    |   |                                                                | — |   |
|                                                            |        |                                                            |   |                                                                     |         |   |
| Options outstanding at                        December 31, 2005 |   | 9,404,561                                                  |   |                                                                | 2.00    |   |
| Granted                                                         |   | 337,500                                                    |   |                                                                | 2.26    |   |
| Forfeited                                                       |   | (1,265,167                                                 | )      |                                                                | 1.30    |   |
| Expired                                                         |   | (33,334                                                    | )      |                                                                | 1.50    |   |
| Exercised                                                       |   | (897,415                                                   | )      |                                                                | 1.74    |   |
|                                                            |        |                                                            |   |                                                                     |         |   |
| Options outstanding at                        December 31, 2006 |   | 7,546,145                                                  |   |                                                                | 2.07    |   |
| Granted                                                         |   | 935,000                                                    |   |                                                                | 3.17    |   |
| Forfeited                                                       |   | (92,086                                                    | )      |                                                                | 2.29    |   |
| Expired                                                         |   | (50,393                                                    | )      |                                                                | 5.04    |   |
| Exercised                                                       |   | (368,898                                                   | )      |                                                                | 1.71    |   |
|                                                            |        |                                                            |   |                                                                     |         |   |
| Options outstanding at                        December 31, 2007 |   | 7,969,768                                                  |   | $                                                                   | 2.28    |   |
|                                                            |        |                                                            |   |                                                                     |         |   |

|                                                                                |   |                                          |      |                                                                                                            |   |   |   |   |
|-------------------------------------------------------------------------------------|--------|-----------------------------------------------|-----------|-----------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                                |   | ***Number of                        Shares*** |      | ***Weighted                        Average                        Intrinsic Value                        ($)*** |   |
| Nonvested options at                        December 31, 2006                       |   |                                          | 343,982   |                                                                                                            |   | 1.92   |   |   |
| Nonvested options at                        December 31, 2007                       |   |                                          | 972,058   |                                                                                                            |   | 0.22   |   |   |
| Options vested during                        2007                                   |   |                                          | 216,423   |                                                                                                            |   | 0.70   |   |   |
| Options available for                        future grant at December 31, 2007      |   |                                          | 1,545,962 |                                                                                                            |   |   |   |   |
| Weighted average fair                        value of options granted during 2007   |   | $                                             | 1.87      |                                                                                                            |   |   |   |   |
| Weighted average fair                        value of options granted during 2006   |   | $                                             | 1.24      |                                                                                                            |   |   |   |   |
| Weighted average fair                        value of options granted during 2005   |   | $                                             | 0.64      |                                                                                                            |   |   |   |   |
| Weighted average fair                        value of options forfeited during 2007 |   | $                                             | 1.33      |                                                                                                            |   |   |   |   |
| Weighted average fair                        value of options forfeited during 2006 |   | $                                             | 1.02      |                                                                                                            |   |   |   |   |
| Weighted average fair                        value of options forfeited during 2005 |   | $                                             | 1.04      |                                                                                                            |   |   |   |   |
| Total intrinsic value of options exercised                    during 2007           |        | $                                             | 506,000   |                                                                                                                 |        |        |        |        |
| Total intrinsic value of options exercised                    during 2006           |        | $                                             | 1,939,000 |                                                                                                                 |        |        |        |        |

             The following            table summarizes information about options outstanding at December 31, 2007:

|                                                                           |   |                                                                                                                                                 |      |                                                                                                                                                  |   |                                                                                    |   |                                                                                                                                                         |   |                                                                                                           |   |                                                                                                                      |   |   |      |   |   |   |   |   |   |   |   |      |   |   |
|--------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|
| ***Range of                        Exercise                        Price($)*** |   | ***Number of                        Options                        Outstanding at                        December 31,                        2007*** |      | ***Weighted                        Average                        Remaining                        Contractual                        Life (Years)*** |   | ***Weighted                        Average Exercise                        Price ($)*** |   | ***Number Fully                        Vested &                        Exercisable at                        December 31,                        2007*** |   | ***Weighted                        Average                        Exercise Price                        ($)*** |   | ***Aggregate                        Intrinsic Value                        at December 31,                        2007*** |   |
| 0.94 -                        1.85                                             |   |                                                                                                                                                 | 2,279,084 |                                                                                                                                                  |   |                                                                                    | 6.39   |                                                                                                                                                         |   |                                                                                                           | 1.34   |                                                                                                                      |   |   | 2,167,030 |   |   |   | 1.35   |   |   |   | $      | 3,754,728 |   |   |
| 2.00 -                        2.75                                             |   |                                                                                                                                                 | 4,412,850 |                                                                                                                                                  |   |                                                                                    | 3.41   |                                                                                                                                                         |   |                                                                                                           | 2.43   |                                                                                                                      |   |   | 4,412,850 |   |   |   | 2.43   |   |   |   |   | 2,848,796 |   |   |
| 3.10 -                        5.50                                             |   |                                                                                                                                                 | 1,277,834 |                                                                                                                                                  |   |                                                                                    | 7.72   |                                                                                                                                                         |   |                                                                                                           | 3.42   |                                                                                                                      |   |   | 417,830   |   |   |   | 4.06   |   |   |   |   | —   |   |   |
|                                                                           |   |                                                                                                                                                 |           |                                                                                                                                                  |   |                                                                                    |   |                                                                                                                                                         |   |                                                                                                           |   |                                                                                                                      |   |   |           |   |   |   |   |   |   |   |        |           |   |   |
|                                                                           |   |                                                                                                                                                 | 7,969,768 |                                                                                                                                                  |   |                                                                                    |   |                                                                                                                                                         |   |                                                                                                           |   |                                                                                                                      |   |   | 6,997,710 |   |   |   |   |   |   |   | $      | 6,603,524 |   |   |
|                                                                           |   |                                                                                                                                                 |           |                                                                                                                                                  |   |                                                                                    |   |                                                                                                                                                         |   |                                                                                                           |   |                                                                                                                      |   |   |           |   |   |   |   |   |   |   |        |           |   |   |

43

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The following            tables summarize information about warrants outstanding at December 31,            2007:

|                                                    |   |                                          |       |                                                       |   |                      |   |    |   |   |   |       |   |
|---------------------------------------------------------|--------|-----------------------------------------------|------------|------------------------------------------------------------|--------|---------------------------|--------|---------|--------|--------|--------|------------|--------|
|                                                    |   | **Number of                        Warrants** |       | **Weighted Average                        Exercise Price** |   | **Expiration Dates** |   |
|                                                    |   |                                               |       |                                                            |   |                      |   |
| Outstanding at January                        1, 2005   |   |                                          | 8,529,822  |                                                       |   |                      | $      | 2.39    |   |   |   |       |   |
| Granted                                                 |   |                                          | 1,060,000  |                                                       |   |                      |   | 1.18    |   |   |   | 11/2/2012  |   |
| Exercised                                               |   |                                          | —    |                                                       |   |                      |   | — |   |   |   |       |   |
| Canceled /                        Expired               |   |                                          | (150,800   | )                                                          |   |                      |   | 2.38    |   |   |   |       |   |
|                                                    |   |                                          |            |                                                       |   |                      |        |         |   |   |   |       |   |
| Outstanding at December                        31, 2005 |   |                                          | 9,439,022  |                                                       |   |                      | $      | 2.26    |   |   |   |       |   |
| Granted                                                 |   |                                          | 1,949,002  |                                                       |   |                      |   | 3.81    |   |   |   | 10/19/2013 |   |
| Exercised                                               |   |                                          | (1,421,109 | )                                                          |   |                      |   | 1.88    |   |   |   |       |   |
| Canceled /                        Expired               |   |                                          | (525,000   | )                                                          |   |                      |   | 3.60    |   |   |   |       |   |
|                                                    |   |                                          |            |                                                       |   |                      |        |         |   |   |   |       |   |
| Outstanding at December                        31, 2006 |   |                                          | 9,441,915  |                                                       |   |                      | $      | 2.52    |   |   |   |       |   |
| Granted                                                 |   |                                          | —    |                                                       |   |                      |   | — |   |   |   |       |   |
| Exercised                                               |   |                                          | (1,179,538 | )                                                          |   |                      |   | 2.26    |   |   |   |       |   |
| Canceled /                        Expired               |   |                                          | —    |                                                       |   |                      |   | — |   |   |   |       |   |
|                                                    |   |                                          |            |                                                       |   |                      |        |         |   |   |   |       |   |
| Outstanding at December                        31, 2007 |   |                                          | 8,262,377  |                                                       |   |                      | $      | 2.55    |   |   |   |       |   |
|                                                    |   |                                          |            |                                                       |   |                      |        |         |   |   |   |       |   |

|                                                                             |   |                                      |                               |   |   |   |
|----------------------------------------------------------------------------------|--------|-------------------------------------------|------------------------------------|--------|--------|--------|
| **Number of                        Warrants                        Outstanding** |   | **Exercise                        Price** |                               |
|                                                                             |   |                                      |                               |
| 4,864,264                                                                        |   |                                      | 1.18                        - 1.90 |   |   |
| 928,700                                                                          |   |                                      | 2.00                        - 3.00 |   |   |
| 2,469,413                                                                        |   |                                      | 3.00                        - 4.99 |   |   |
|                                                                                  |   |                                      |                               |   |   |
| ***8,262,377***                                                                  |   |                                      |                               |   |   |
|                                                                                  |   |                                      |                               |   |   |

**7.****Related Parties**

During the year            ended December 31, 2007, the Company incurred costs of $64,500 related to work            performed by a related party and its affiliate, in connection with the Company’s            lead products. On December 31, 2007, the Company’s outstanding payables included            $3,100 payable to the related party and its affiliates. There were no accounts            receivable from related parties on December 31, 2007.

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

44

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**8.****Property, Plant and Equipment**

Property, plant            and equipment consisted of the following at December 31, 2007 and 2006:

|                                                      |   |     |       |     |   |       |   |
|-----------------------------------------------------------|--------|----------|------------|----------|--------|------------|--------|
|                                                      |   | **2007** |       | **2006** |   |
|                                                      |   |          |       |          |   |
| Laboratory                        equipment               |   | $        | 1,933,072  |     | $      | 1,555,763  |   |
| Leasehold                        improvements             |   |     | 2,809,559  |     |   | 2,089,293  |   |
| Computer                        equipment                 |   |     | 178,644    |     |   | 357,949    |   |
| Furniture and                        fixtures             |   |     | 290,637    |     |   | 205,628    |   |
| Construction                        in-progress           |   |     | —    |     |   | —    |   |
|                                                      |   |          |            |     |        |            |   |
|                                                      |   |     | 5,211,912  |     |   | 4,208,633  |   |
| Less - accumulated                        depreciation    |   |     | (3,732,234 | )        |   | (2,888,318 | )      |
|                                                      |   |          |            |     |        |            |   |
| Property, plant and                        equipment, net |   | $        | 1,479,678  |     | $      | 1,320,315  |   |
|                                                      |   |          |            |     |        |            |   |

**9.****Notes Payable**

On March 20,            2006, SIGA entered into a Bridge Note Purchase Agreement (“Note Purchase            Agreement”) with a third party for the sale of three 8% Notes by SIGA, for            $1,000,000 each. The first, second and third Notes were issued on March 20, 2006, April            19, 2006, and June 19, 2006, respectively. The proceeds of the Notes were used by the            Company for (i) expenses directly related to the development of ST-246, (ii) expenses            related to a potential business transaction with the third party and (iii) corporate            overhead. On October 23, 2006, the Company paid the third party $3,114,400 in full            repayment of the three notes and interest accrued thereon.

On May 20, 2005,            the Company borrowed approximately $276,000 under a Promissory Note payable to General            Electric Capital Corporation. The note was payable in 36 monthly installments of            principal and interest of 10.31% per annum. The note was collateralized by a master            security agreement dated as of April 29, 2005 and by specific property listed under the            master security agreement. On September 2, 2007, the Company repaid the entire balance            and related interest outstanding under the Promissory Note.

**10.****Income Taxes**

The Company has incurred losses            since inception, which have generated net operating loss carryforwards of approximately            $37,383,000 at December 31, 2007 for federal and state income tax purposes. These            carryforwards are available to offset future taxable income and begin expiring in 2010            for federal income tax purposes. As a result of a previous change in stock ownership,            the annual utilization of the net operating loss carryforwards is subject to            limitation. The net operating loss carryforwards and temporary differences, arising            primarily from deferred research and development expenses and differences in the            treatment of intangible assets, result in a noncurrent deferred tax asset at December            31, 2007 and 2006 of approximately $21,621,000 and $19,057,000, respectively. In            consideration of the Company’s accumulated losses and the uncertainty of its            ability to utilize this deferred tax asset in the future, the Company has recorded a            valuation allowance of an equal amount on such date to fully offset the deferred tax            asset.

45

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At December 31,            2007 and 2006, the Company’s deferred tax assets (in thousands) are            comprised of the following:

|                                                                |   |     |    |     |   |    |   |
|---------------------------------------------------------------------|--------|----------|---------|----------|--------|---------|--------|
|                                                                |   | **2007** |    | **2006** |   |
| Net                        Operating Losses                         |   |     | 14,579  |     |   | 13,372  |   |
| Deferred Research and                        Development Costs      |   |     | 5,037   |     |   | 4,195   |   |
| Amortization of                        Acquired Assets              |   |     | 779     |     |   | 818     |   |
| Stock Based                        Compensation                     |   |     | 406     |     |   | 184     |   |
| Depreciation of                        Property Plant and Equipment |   |     | 820     |     |   | 488     |   |
|                                                                |   |          |         |     |        |         |   |
| Total Deferred Tax                        Asset                     |   |     | 21,621  |     |   | 19,057  |   |
| Valuation                        Allowance                          |   |     | (21,621 | )        |   | (19,057 | )      |
|                                                                |   |          |         |     |        |         |   |
| Net                        Deferred Tax Assets                      |   | $        | — |     | $      | — |   |
|                                                                |   |          |         |     |        |         |   |

Following is a            summary of changes in our valuation allowance for deferred tax assets as of and for the            years ended December 31, 2007, 2006, and 2005 (in thousands):

|         |   |                                                |   |                                                                                  |   |       |   |                                          |   |   |   |   |   |    |   |   |   |   |   |   |   |
|--------------|--------|-----------------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|------------|--------|-----------------------------------------------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|
| December 31, |   | Balance at                        Beginning of Year |   | Additions Charged                        to Costs and                        Expenses |   | Deductions |   | Balance at End of                        Year |   |
|         |   |                                                     |   |                                                                                       |   |            |   |                                               |   |
|         |   |                                                |   |                                                                                  |   |       |   |                                          |   |   |   |   |   |    |   |   |   |   |   |   |   |
| 2007         |   |                                                | $      | 19,057                                                                                |   |       |   | $                                             | 2,603  |   |   |   | $      | 39      |   |   |   | $      | 21,621 |   |   |
| 2006         |   |                                                | $      | 16,411                                                                                |   |       |   | $                                             | 2,646  |   |   |   | $      | — |   |   |   | $      | 19,057 |   |   |
| 2005         |   |                                                | $      | 16,090                                                                                |   |       |   | $                                             | 321    |   |   |   | $      | — |   |   |   | $      | 16,411 |   |   |

For the years            ended December 31, 2007 and 2006, the Company’s effective tax rate differs from            the federal statutory rate principally due to net operating losses and other temporary            differences for which no benefit was recorded, state taxes and other permanent            differences.

The            Company’s effective tax rate differs from the U.S. Federal Statutory income tax            rate of 34% as follows:

|                                                              |   |     |   |     |   |   |   |
|-------------------------------------------------------------------|--------|----------|--------|----------|--------|--------|--------|
|                                                              |   | **2007** |   | **2006** |   |
|                                                              |   |     |   |     |   |
| Statutory federal                        income tax rate          |   |     | -34.00 | %        |   | -34.00 | %      |
| State tax benefit, net                        of federal taxes    |   |     | -6.69  | %        |   | -3.91  | %      |
| Other                                                             |   |     | -8.62  | %        |   | 10.61  | %      |
| Valuation allowance on                        deferred tax assets |   |     | 49.31  | %        |   | 27.30  | %      |
|                                                              |   |          |        |     |        |        |   |
| Effective tax                        rate                         |   |     | 0.00   | %        |   | 0.00   | %      |
|                                                              |   |          |        |     |        |        |   |

46

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**11.****Commitments and Contingencies**

*Operating            lease commitments*

As of December            31, 2007, our purchase obligations are not material. The Company leases certain            facilities and office space under operating leases. Minimum future rental commitments            under operating leases having non-cancelable lease terms in excess of one year and            future minimum payments under notes payable are as follows:

|                                           |   |                                     |   |      |   |   |
|------------------------------------------------|--------|------------------------------------------|--------|-----------|--------|--------|
| Year                        ended December 31, |   | Lease                        obligations |   |
|                                           |   |                                     |   |      |   |   |
| 2008                                           |   |                                     |   | 576,948   |   |   |
| 2009                                           |   |                                     |   | 579,648   |   |   |
| 2010                                           |   |                                     |   | 466,448   |   |   |
| 2011                                           |   |                                     |   | 443,748   |   |   |
|                                           |   |                                     |        |           |   |   |
| Total                                          |   |                                     | $      | 2,066,792 |   |   |
|                                           |   |                                     |        |           |   |   |

*Other*

On December 20,            2006, PharmAthene, Inc. (“PharmAthene”) filed an action against SIGA in the            Court of Chancery in the State of Delaware, captioned *PharmAthene, Inc. v. SIGA            Technologies, Inc*., C.A. No. 2627-N. In its Complaint, PharmAthene asks the Court            to order the Company to enter into a license agreement with PharmAthene with respect to            SIGA-246, as well as issue a declaration that we are obliged to execute such a license            agreement, and award damages resulting from our supposed breach of that obligation.            PharmAthene also alleges that the Company breached an obligation to negotiate such a            license agreement in good faith, as well as seeks damages for promissory estoppel and            unjust enrichment based on supposed information, capital and assistance that            PharmAthene allegedly provided to SIGA during the negotiation process. On January 9,            2007, SIGA filed a motion to dismiss the Complaint in its entirety for failure to state            a claim upon which relief can be granted. The Company moved to stay discovery on            January 26, 2007 and this motion was granted on March 8, 2007. On January 16, 2008, the            Court of Chancery denied SIGA’s motion to dismiss and lifted the stay of            discovery. Both parties to the litigation have outstanding document requests and            discovery is proceeding. The Company filed its answer to the Complaint on January 31,            2008. SIGA plans to defend itself vigorously.

From time to            time, the Company is involved in disputes or legal proceedings arising in the ordinary            course of business. The Company believes that there is no other dispute or litigation            pending that could have, individually or in the aggregate, a material adverse effect on            its financial position, results of operations or cash flows.

47

----

**12.****Financial Information By Quarter (Unaudited) (in thousands, except for per share            data)**

|                                                         |   |                                 |   |                                |   |                                     |   |                                    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------|--------|--------------------------------------|--------|-------------------------------------|--------|------------------------------------------|--------|-----------------------------------------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| **2007 For The Quarter                        Ended**        |   | **March                        31,** |   | **June                        30,** |   | **September                        30,** |   | **December                        31,** |   | **Total** |   |
|                                                         |   |                                      |   |                                     |   |                                          |   |                                         |   |           |   |
|                                                         |   |                                 |   |                                |   |                                     |   |                                    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                     |   |                                 | $      | 1,867                               |   |                                     | $      | 1,460                                   |   |      | $      | 1,609  |   |   |   | $      | 1,763  |   |   | $      | 6,699  |   |
| Selling, general &                        administrative |   |                                 | $      | 877                                 |   |                                     | $      | 1,142                                   |   |      | $      | 793    |   |   |   | $      | 892    |   |   | $      | 3,704  |   |
| Research and                        development              |   |                                 | $      | 2,650                               |   |                                     | $      | 2,201                                   |   |      | $      | 2,342  |   |   |   | $      | 2,750  |   |   | $      | 9,943  |   |
| Patent preparation                        fees               |   |                                 | $      | 138                                 |   |                                     | $      | 127                                     |   |      | $      | 59     |   |   |   | $      | 191    |   |   | $      | 515    |   |
| Operating                        loss                        |   |                                 | $      | (1,797                              | )      |                                     | $      | (2,010                                  | )      |      | $      | (1,585 | )      |   |   | $      | (2,071 | )      |   | $      | (7,463 | )      |
| Net income                        (loss)                     |   |                                 | $      | (3,142                              | )      |                                     | $      | 527                                     |   |      | $      | (2,493 | )      |   |   | $      | (531   | )      |   | $      | (5,639 | )      |
| Net loss per share:                        basic and diluted |   |                                 | $      | (0.10                               | )      |                                     | $      | 0.02                                    |   |      | $      | (0.07  | )      |   |   | $      | (0.02  | )      |   | $      | (0.17  | )      |
| Market price range for                        common stock   |   |                                 |   |                                |   |                                     |   |                                    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |
| High                                                         |   |                                 | $      | 6.04                                |   |                                     | $      | 5.94                                    |   |      | $      | 4.70   |   |   |   | $      | 4.50   |   |   | $      | 5.94   |   |
| Low                                                          |   |                                 | $      | 3.36                                |   |                                     | $      | 3.21                                    |   |      | $      | 2.52   |   |   |   | $      | 2.95   |   |   | $      | 2.52   |   |

|                                                         |   |                                 |   |                                |   |                                     |   |                                    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------|--------|--------------------------------------|--------|-------------------------------------|--------|------------------------------------------|--------|-----------------------------------------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| **2006 For The Quarter                        Ended**        |   | **March                        31,** |   | **June                        30,** |   | **September                        30,** |   | **December                        31,** |   | **Total** |   |
|                                                         |   |                                      |   |                                     |   |                                          |   |                                         |   |           |   |
|                                                         |   |                                 |   |                                |   |                                     |   |                                    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                     |   |                                 | $      | 1,394                               |   |                                     | $      | 1,459                                   |   |      | $      | 2,036  |   |   |   | $      | 2,369  |   |   | $      | 7,258  |   |
| Selling, general &                        administrative |   |                                 | $      | 942                                 |   |                                     | $      | 1,493                                   |   |      | $      | 802    |   |   |   | $      | 1,387  |   |   | $      | 4,624  |   |
| Research and                        development              |   |                                 | $      | 1,658                               |   |                                     | $      | 2,431                                   |   |      | $      | 2,156  |   |   |   | $      | 2,904  |   |   | $      | 9,149  |   |
| Patent preparation                        fees               |   |                                 | $      | 109                                 |   |                                     | $      | 113                                     |   |      | $      | 36     |   |   |   | $      | 37     |   |   | $      | 295    |   |
| Operating                        loss                        |   |                                 | $      | (1,314                              | )      |                                     | $      | (2,579                                  | )      |      | $      | (960   | )      |   |   | $      | (1,957 | )      |   | $      | (6,810 | )      |
| Net loss                                                     |   |                                 | $      | (2,834                              | )      |                                     | $      | (2,157                                  | )      |      | $      | (657   | )      |   |   | $      | (4,251 | )      |   | $      | (9,899 | )      |
| Net loss per share:                        basic and diluted |   |                                 | $      | (0.11                               | )      |                                     | $      | (0.08                                   | )      |      | $      | (0.02  | )      |   |   | $      | (0.14  | )      |   | $      | (0.35  | )      |
| Market price range for                        common stock   |   |                                 |   |                                |   |                                     |   |                                    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |
| High                                                         |   |                                 | $      | 1.64                                |   |                                     | $      | 1.81                                    |   |      | $      | 2.33   |   |   |   | $      | 5.50   |   |   | $      | 5.50   |   |
| Low                                                          |   |                                 | $      | 0.87                                |   |                                     | $      | 1.16                                    |   |      | $      | 1.00   |   |   |   | $      | 1.40   |   |   | $      | 0.87   |   |

48

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|                                |                                                                                                                                   |   |
|-------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|--------|
| **Item                        9.**  | **Changes in and                        Disagreements with Accountants on Accounting and Financial                        Disclosure** |
|                                |                                                                                                                                   |   |
|                                |   None.                                                                                                                      |   |
|                                |                                                                                                                                   |   |
| **Item                        9A.** | **Controls and                        Procedures**                                                                                     |

                      **Management’s Responsibility for Financial Statements**

          Our            management is responsible for the integrity and objectivity of all information            presented in this annual report. The consolidated financial statements were prepared in            conformity with accounting principles generally accepted in the United States of            America and include amounts based on management’s best estimates and judgments.            Management believes the consolidated financial statements fairly reflect the form and            substance of transactions and that the financial statements fairly represent the            Company’s financial position and results of operations.

          The            Audit Committee of the Board of Directors, which is composed solely of independent            directors, meets regularly with the independent auditors, PricewaterhouseCoopers LLP            and representatives of management to review accounting, financial reporting, internal            control and audit matters, as well as the nature and extent of the audit effort. The            Audit Committee is responsible for the engagement of the independent auditors. The            independent auditors have free access to the Audit Committee.

                      **Disclosure Controls and Procedures**

          We            have established disclosure controls and procedures to ensure that material information            relating to the Company, including its consolidated subsidiaries, is made known to the            officers who certify the Company’s financial reports and to other members of            senior management and the Board of Directors. Based on their evaluation as of December            31, 2007, our chief executive officer and chief financial officer have            concluded that the Company’s disclosure controls and procedures (as defined in            Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended)            are effective to ensure that the information required to be disclosed by the Company in            the reports that it files or submits under the Securities Exchange Act of 1934, as            amended, is recorded, processed, summarized and reported within the time periods            specified in Securities and Exchange Commission rules and forms, and that such            information is accumulated and communicated to the Company’s management,            including its chief executive office and chief financial officer, as appropriate to            allow timely decisions regarding required disclosure.

                      **Management’s Report on Internal Control over Financial            Reporting**

          Management            is responsible for establishing and maintaining adequate internal control over            financial reporting and for the effectiveness of internal control over financial            reporting, as such term is defined in Rule 13a-15(f) or Rule 15d-15(f) of the            Exchange Act. Our internal control over financial reporting is designed to provide            reasonable assurance regarding the reliability of financial reporting and the            preparation of financial statements prepared for external purposes in accordance with            generally accepted accounting principles. Our internal control over financial reporting            includes those policies and procedures that (a) pertain to the maintenance of            records that, in reasonable detail, accurately and fairly reflect the transactions and            disposition of assets; (b) 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 are being            made only in accordance with authorizations of management and the directors of the            Company; and (c) 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.

Management conducted an evaluation            of the effectiveness of the Company's internal control over financial reporting as of            December 31, 2007 based on the framework set forth in *Internal            Control—Integrated Framework* issued by the Committee of Sponsoring            Organizations of the Treadway Commission. Based on this evaluation, management            concluded that the Company's internal control over financial reporting was effective as            of December 31, 2007.

            The effectiveness of our internal control over financial reporting as of            December 31, 2007 has been audited by PricewaterhouseCoopers LLP, an            independent registered public accounting firm, as stated in their report which is            included in this Form 10-K.

            49

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|                                |                                         |   |
|-------------------------------------|----------------------------------------------|--------|
| **Item                        9B.** | **Other                        Information** |
|                                |                                         |   |
|                                |   None.                            |   |

**PART            III**

|                                                                                                                                                                                                                                           |                                                                                                                                             |                                                            |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------|
| **Item                        10.**                                                                                                                                                                                                            | **Directors and                        Executive Officers of the Registrant**                                                                    |
|                                                                                                                                                                                                                                           |                                                                                                                                             |                                                            |
|           Information                        required by this item is incorporated by reference from our Proxy Statement                        for the 2008 Annual Meeting of Shareholders. |
|                                                                                                                                                                                                                                           |                                                                                                                                             |                                                            |
| **Item                        11.**                                                                                                                                                                                                            | **Executive                        Compensation**                                                                                                |
|                                                                                                                                                                                                                                           |                                                                                                                                             |                                                            |
|           Information                        required by this item is incorporated by reference from our Proxy Statement                        for the 2008 Annual Meeting of Shareholders. |
|                                                                                                                                                                                                                                           |                                                                                                                                             |                                                            |
| **Item                        12.**                                                                                                                                                                                                            | **Security                        Ownership of Certain Beneficial Owners and Management and Related                        Stockholder Matters** |
|                                                                                                                                                                                                                                           |                                                                                                                                             |                                                            |
|           Information                        required by this item is incorporated by reference from our Proxy Statement                        for the 2008 Annual Meeting of Shareholders. |
|                                                                                                                                                                                                                                           |                                                                                                                                             |                                                            |
|                                                                                                                                                                                                                                           |                                                                                                                                             | **Equity Compensation                        Plan Information** |
|                                                                                                                                                                                                                                           |                                                                                                                                             |                                                            |

          The            following table sets forth certain compensation plan information with respect to both            equity compensation plans approved by security holders and equity compensation plans            not approved by security holders as of December 31, 2007:

|                                                                              |   |                                                                                                                                                                                                                                      |   |                                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                      |   |   |   |      |   |   |
|-----------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|-----------|--------|--------|
| Plan                        Category                                              |   | Number of                        securities                        to be issued upon                        exercise of                        outstanding options,                        warrants and rights                        (a) |   | Weighted-average                        exercise price of                        outstanding                        options, warrants                        and rights                        (b) |   | Number of                        securities                        remaining available for                        future issuance under                        equity compensation                        plans (excluding                        securities reflected in                        column (a))                        ( c ) |   |
|                                                                              |   |                                                                                                                                                                                                                                      |   |                                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                      |   |
| Equity compensation                        plans approved by security holders (1) |   | 7,969,768                                                                                                                                                                                                                                 |   |                                                                                                                                                                                               |   | $                                                                                                                                                                                                                                                                                                                                         | 2.28   |   |   | 1,545,962 |   |   |
|                                                                              |   |                                                                                                                                                                                                                                      |   |                                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                      |   |   |   |      |   |   |
| Equity compensation                        plans not approved by security holders |   | 190,000                                                                                                                                                                                                                                   |   |                                                                                                                                                                                               |   | $                                                                                                                                                                                                                                                                                                                                         | 2.00   |   |   | —   |   |   |
|                                                                              |   |                                                                                                                                                                                                                                      |   |                                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                      |   |   |   |      |   |   |
| Total                                                                             |   | 8,159,768                                                                                                                                                                                                                                 |   |                                                                                                                                                                                               |   | $                                                                                                                                                                                                                                                                                                                                         | 2.27   |   |   | 1,545,962 |   |   |

(1) SIGA            Technologies, Inc., Amended and Restated 1996 Incentive and Non-Qualified Stock Option            Plan.

As of December            31, 2007, options awarded outside of the Company’s equity compensation plan            included 125,000 options awarded to an employee and 65,000 options awarded to            consultants. In May 2000, the Company awarded its Chief Scientific Officer options to            acquire 125,000 shares of the Company’s common stock at an exercise price of            $2.00 per share. In July 2000, the Company entered into an agreement with a consultant            to serve as the Company’s public relations agent and awarded the consultant            options to acquire shares of the Company’s common stock. As of December            31, 2007, the consultant holds 27,500 options and 37,500 options with an exercise price            of $1.50 per share and $1.75 per share, respectively.

50

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|                                                                                                                                                                                                                                           |                                                                      |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|--------|
| **Item                        13.**                                                                                                                                                                                                            | **Certain                        Relationships and Related Transactions** |
|                                                                                                                                                                                                                                           |                                                                      |   |
|           Information                        required by this item is incorporated by reference from our Proxy Statement                        for the 2008 Annual Meeting of Shareholders. |
|                                                                                                                                                                                                                                           |                                                                      |   |
| **Item                        14.**                                                                                                                                                                                                            | **Principal Accountant                        Fees and Services**         |
|                                                                                                                                                                                                                                           |                                                                      |   |
|           Information                        required by this item is incorporated by reference from our Proxy Statement                        for the 2008 Annual Meeting of Shareholders. |

51

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**PART            IV**

|                            |                                                              |
|---------------------------------|-------------------------------------------------------------------|
| Item                        15. | Exhibits and Financial                        Statement Schedules |

**(a) (1) and            (2). Financial Statements and Financial Statements Schedule.**

See Index to            Financial Statements under Item 8 in Part II hereof where these documents are            listed.

**(a) (3).            Exhibits.**

The following is            a list of exhibits:

|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |
|-------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|
| Exhibit No. |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Description |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |             |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |
| 3(a)        |   | Restated Articles of                        Incorporation of the Company (Incorporated by reference to Form S-3                        Registration Statement of the Company dated May 10, 2000 (No.                        333-36682)).                                                                                                                                                                                                                                                                    |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |
| 3(b)        |   | Form                        of Certificate of Amendment of the Restated Certificate of Incorporation of                        SIGA Technologies, Inc., (Incorporated by reference to the Company’s                        proxy statement on Schedule 14A dated June 15, 2007).                                                                                                                                                                                                                      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |
| 3(c)        |   | Bylaws of the Company                        (Incorporated by reference to Form SB-2 Registration Statement of the                        Company dated March 10, 1997 (No. 333-23037)).                                                                                                                                                                                                                                                                                                                    |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |
| 4(a)        |   | Form                        of Common Stock Certificate (Incorporated by reference to Form SB-2                        Registration Statement of the Company dated March 10, 1997 (No.                        333-23037)).                                                                                                                                                                                                                                                                                  |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |
| 4(b)        |   | Warrant Agreement dated                        as of September 15, 1996 between the Company and Vincent A. Fischetti (1)                        (Incorporated by reference to Form SB-2 Registration Statement of the                        Company dated March 10, 1997 (No. 333-23037)).                                                                                                                                                                                                                 |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |
| 4(c)        |   | Warrant Agreement dated                        as of November 18, 1996 between the Company and David de Weese (1)                        (Incorporated by reference to Form SB-2 Registration Statement of the                        Company dated March 10, 1997 (No. 333-23037)).                                                                                                                                                                                                                        |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |
| 4(d)        |   | Warrant Agreement                        between the Company and Stefan Capital, dated September 9, 1999                        (Incorporated by reference to the Company’s Annual Report on Form                        10-KSB for the year ended December 31, 1999).                                                                                                                                                                                                                                |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |
| 4(e)        |   | Registration Rights                        Agreement, dated as of May 23, 2003, between the Company and Plexus Vaccine                        Inc. (Incorporated by reference to Form 8-K of the Company filed June 9,                        2003).                                                                                                                                                                                                                                                        |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |
| 4(f)        |   | Registration Rights                        Agreement, dated as of August 13, 2003, between the Company and MacAndrews                        & Forbes Holdings Inc. (Incorporated by reference to Form 8-K of the                        Company filed August 18, 2003).                                                                                                                                                                                                                                |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |
| 10(a)       |   | License and Research                        Support Agreement between the Company and The Rockefeller University, dated                        as of January 31, 1996; and Amendment to License and Research Support                        Agreement between the Company and The Rockefeller University, dated as of                        October 1, 1996(2) (Incorporated by reference to Form SB-2 Registration                        Statement of the Company dated March 10, 1997 (No. 333-23037)). |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |
| 10(b)       |   | Research Agreement                        between the Company and Emory University, dated as of January 31, 1996(2)                        (Incorporated by reference to Form SB-2 Registration Statement of the                        Company dated March 10, 1997 (No. 333-23037)).                                                                                                                                                                                                                      |
|        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |
| 10(c)       |   | Research Support                        Agreement between the Company and Oregon State University, dated as of                        January 31, 1996(2) (Incorporated by reference to Form SB-2 Registration                        Statement of the Company dated March                                                                                                                                                                                                                                  |

52

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|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |   | 10,                        1997 (No. 333-23037)). Letter Agreement dated as of March 5, 1999 to                        continue the Research Support Agreement (Incorporated by reference to the                        Company’s Annual Report on Form 10-KSB for the year ended December                        31, 1999).                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 10(d)  |   | Option Agreement                        between the Company and Oregon State University, dated as of November 30,                        1999 and related Amendments to the Agreement (Incorporated by reference to                        the Company’s Annual Report on Form 10-KSB for the year ended                        December 31, 1999).                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 10(h)  |   | Clinical Trials                        Agreement between the Company and National Institute of Allergy and                        Infectious Diseases, dated as of July 1, 1997 (Incorporated by reference to                        Amendment No. 1 to Form SB-2 Registration Statement of the Company dated                        July 11, 1997 (No. 333-23037)).                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 10(i)  |   | Research Agreement                        between the Company and The Research Foundation of State University of New                        York, dated as of July 1, 1997(2) (Incorporated by reference to Amendment                        No. 1 to Form SB-2 Registration Statement of the Company dated July 11,                        1997 (No. 333-23037)).                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 10(j)  |   | Collaborative Research                        and License Agreement between the Company and Wyeth, dated as of July 1,                        1997(2) (Incorporated by reference to Amendment No. 3 to Form SB-2                        Registration Statement of the Company dated September 2, 1997 (No.                        333-23037)).                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 10(k)  |   | Research Collaboration                        and License Agreement between the Company and The Washington University,                        dated as of February 6, 1998 (2) (Incorporated by reference to the                        Company’s Annual Report on Form 10-KSB for the year ended December                        31, 1997).                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 10(l)  |   | Settlement Agreement                        and Mutual Release between the Company and The Washington University, dated                        as of February 17, 2000 (Incorporated by reference to the Company’s                        Annual Report on Form 10-KSB for the year ended December 31,                        1999).                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 10(m)  |   | Technology Transfer                        Agreement between the Company and MedImmune, Inc., dated as of February 10,                        1998 (Incorporated by reference to the Company’s Annual Report on                        Form 10-KSB for the year ended December 31, 1997).                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 10(p)  |   | Option Agreement                        between the Company and Ross Products Division of Abbott Laboratories,                        dated February 28, 2000 (Incorporated by reference to the Company’s                        Annual Report on Form 10-KSB for the year ended December 31,                        1999).                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 10(q)  |   | Agreement between the                        Company and Oregon State University for the Company to provide contract                        research services to the University dated September 24, 2000 (Incorporated                        by reference to the Company’s Annual Report on Form 10-KSB for the                        year ended December 31, 2000).                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 10(r)  |   | License and Research                        Agreements between the Company and the Regents of the University of                        California dated December 6, 2000 (Incorporated by reference to the                        Company’s Annual Report on Form 10-KSB for the year ended December                        31, 2000).                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 10(s)  |   | Amended and Restated                        1996 Incentive and Non-Qualified Stock Option Plan dated August 15, 2001                        (Incorporated by reference to the Company’s Annual Report on Form                        10-KSB for the year ended December 31, 2001), as amended (as set forth in                        the Form 8-K of the Company filed May 27, 2005). |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 10(u)  |   | Research and License                        Agreement between the Company and TransTech Pharma, Inc. dated October 1,                        2002 (Filed with the Company’s Annual Report on Form 10-KSB for the                        year ended December 31, 2002 initially filed with the Securities and                        Exchange Commission on March 31, 2003).            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                         |   |
| 10(x)  |   | Contract between the                        Company and the Department of the US Army dated December 12, 2002 (Filed                        with the Company’s Annual Report on Form 10-KSB for the year ended                        December 31, 2002 initially filed with the Securities and Exchange                        Commission on March 31, 2003).                         |

53

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|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 10(y)  |   | Contract between the                        Company and Four Star Group dated February 5, 2003 (Filed with the                        Company’s Annual Report on Form 10-KSB for the year ended December                        31, 2002 initially filed with the Securities and Exchange Commission on                        March 31, 2003).              |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(aa) |   | Securities Purchase                        Agreement, dated as of August 13, 2003, between the Company and MacAndrews                        & Forbes Holdings Inc. (Incorporated by reference to Form 8-K of the                        Company filed August 18, 2003).                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(bb) |   | Letter Agreement dated                        October 8, 2003 among the Company, MacAndrews & Forbes Holdings Inc.                        and TransTech Pharma, Inc. (Incorporated by reference to Form 8-K of the                        Company filed August 18, 2003).                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(dd) |   | Non-Employee Director                        Compensation Summary Sheet (Incorporated by reference to the                        Company’s Quarterly Report on Form 10-Q for the quarter ended March                        31, 2005).                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(ee) |   | Director Compensation                        Program, effective April 21, 2005 (as set forth in the Form 8-K of the                        Company filed April 26, 2005).                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(ff) |   | Service Agreement,                        dated as of April 27, 2005, between the Company and TransTech Pharma, Inc.                        (Incorporated by reference to Form 8-K of the Company filed May 3,                        2005).                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(gg) |   | Master Security                        Agreement, dated as of April 29, 2005, between General Electric Capital                        Corporation and the Company (Incorporated by reference to Form 8-K of the                        Company filed May 3, 2005).                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(hh) |   | Letter Agreement, dated                        as of August 5, 2005, between the Company and John Odden (Incorporated by                        reference to Form 8-K of the Company filed August 11, 2005).                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(ii) |   | Agreement, dated as of                        September 14, 2005, between Saint Louis University and the Company                        (Incorporated by reference to Form 8-K of the Company filed September 20,                        2005).                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(jj) |   | Agreement, dated as of                        September 22, 2005, between the United States Army Medical Research and                        Material Command and the Company (Incorporated by reference to Form 8-K of                        the Company filed September 27, 2005).                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(kk) |   | Securities Purchase                        Agreement, dated as of November 2, 2005, between Iroquois Master Fund Ltd.,                        Cranshire Capital, L.P., Omicron Master Trust, Smithfield Fiduciary LLC and                        the Company (Incorporated by reference to Form 8-K of the Company filed                        November 4, 2005). |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(ll) |   | Exclusive                        Finder’s Agreement, dated as of November 1, 2005, between the Shemano                        Group, Inc. and the Company (Incorporated by reference to Form 8-K of the                        Company filed November 4, 2005).                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(mm) |   | Letter Agreement, dated                        as of February 1, 2006, between the Company and Thomas N. Konatich                        (Incorporated by reference to Form 8-K of the Company filed February 7,                        2006).                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(oo) |   | Bridge Note Purchase                        Agreement, dated as of March 20, 2006, between the Company and PharmAthene,                        Inc. (Incorporated by reference to Form 8-K of the Company filed March 22,                        2006).                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(pp) |   | Security Agreement,                        dated as of March 20, 2006, between the Company and PharmAthene, Inc.                        (Incorporated by reference to Form 8-K of the Company filed March 22,                        2006).                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(qq) |   | 8%                        Note, dated as of March 20, 2006, between the Company and PharmAthene, Inc.                        (Incorporated by reference to Form 8-K of the Company filed March 22,                        2006).                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |   |
| 10(rr) |   | Separation Agreement,                        dated as of March 31, 2006, between the Company and Bernard Kasten                        (Incorporated by reference to Form 8-K of the Company filed April 3,                        2006).                                                                                                                          |

54

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|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 10(ss)  |   | 8%                        Note, dated as of April 19, 2006, between the Company and PharmAthene, Inc.                        (Incorporated by reference to Form 8-K of the Company filed April 20,                        2006).                                                                                                                                                                                                         |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 10(tt)  |   | Voting Agreement, dated                        as of June 8, 2006, among the Company, TransTech Pharma, Inc., MacAndrews                        & Forbes, Inc., Howard Gittis, Donald G. Drapkin, James J. Antal,                        Thomas E. Constance, Mehmet C. Oz, Eric A. Rose and Paul G. Savas                        (Incorporated by reference to Form 8-K of the Company filed June 13,                        2006). |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 10(uu)  |   | Agreement and Plan of                        Merger, dated as of June 8, 2006, among the Company, SIGA Acquisition Corp.                        and PharmAthene, Inc. (Incorporated by reference to Form 8-K of the Company                        filed June 13, 2006).                                                                                                                                                                 |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 10(vv)  |   | 8%                        Note, dated as of June 19, 2006, between the Company and PharmAthene, Inc.                        (Incorporated by reference to Form 8-K of the Company filed June 20,                        2006).                                                                                                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 10(ww)  |   | Agreement, dated as of                        September 29, 2006, between SIGA Technologies, Inc. and the National                        Institute of Allergy and Infectious Diseases of the National Institutes for                        Health (Incorporated by reference to Form 10-Q/A of the Company filed                        November 13, 2006).                                                                            |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 10(xx)  |   | Finder’s                        Agreement, dated as of October 18, 2006, between the Company and Empire                        Financial Group, Inc. (Incorporated by reference to Form 8-K of the Company                        filed October 20, 2006).                                                                                                                                                                         |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 10(yy)  |   | Securities Purchase                        Agreement, dated as of October 18, 2006, between the Company, Iroquois                        Master Fund Ltd., Cranshire Capital, L.P., Omicron Master Trust, Rockmore                        Investment Master Fund, Ltd., and Smithfield Fiduciary LLC (Incorporated by                        reference to Form 8-K of the Company filed October 20, 2006).                               |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 10(zz)  |   | Amended and Restated                        Employment Agreement, dated as of January 22, 2007, between the Company and                        Dennis E. Hruby (Incorporated by reference to Form 8-K of the Company filed                        January 22, 2007).                                                                                                                                                                     |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 10(aaa) |   | Amended and Restated                        Employment Agreement, dated as of January 22, 2007, between the Company and                        Thomas N. Konatich (Incorporated by reference to Form 8-K of the Company                        filed January 22, 2007).                                                                                                                                                                  |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 10(bbb) |   | Amended and Restated                        Employment Agreement, dated as of January 31, 2007, between the Company and                        Eric A. Rose (Incorporated by reference to Form 8-K of the Company filed                        January 31, 2007).                                                                                                                                                                        |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 14      |   | The                        Company’s Code of Ethics and Business Conduct (Incorporated by                        reference to the Company’s Annual Report on Form 10-KSB for the year                        ended December 31, 2003).                                                                                                                                                                                       |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 21      |   | Subsidiaries of the Registrant                                                                                                                                                                                                                                                                                                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 23.1    |   | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                                                                                                                                                                |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 31.1    |   | Certification pursuant to Rules 13a-15(e) or 15d-15(e) under the Securities                        Exchange Act of 1934, as adopted pursuant to Section 302 of the                        Sarbanes-Oxley Act of 2002 – Chief Executive Officer.                                                                                                                                                                                    |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 31.2    |   | Certification pursuant to Rules 13a-15(e) or 15d-15(e) under the Securities                        Exchange Act of 1934, as adopted pursuant to Section 302 of the                        Sarbanes-Oxley Act of 2002 – Chief Financial Officer.                                                                                                                                                                                    |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 32.1    |   | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to                        Section 906 of the Sarbanes-Oxley Act of 2002 – Chief Executive                        Officer.                                                                                                                                                                                                                                    |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 32.2    |   | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to                        Section 906 of the Sarbanes-Oxley Act of 2002 – Chief Financial                        Officer.                                                                                                                                                                                                                                    |

55

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|   |                                                                                                                                                                                               |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |
| (1)    | These agreements were                        entered into prior to the reverse split of the Company’s Common Stock                        and, therefore, do not reflect such reverse split. |
|   |                                                                                                                                                                                               |
| (2)    | Confidential                        information is omitted and identified by an * and filed separately with the                        SEC with a request for Confidential Treatment.              |

56

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**SIGNATURES**

          Pursuant            to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the            registrant has duly caused this report to be signed on its behalf by the undersigned,            thereunto duly authorized.

|                                        |                                           |                                           |
|---------------------------------------------|------------------------------------------------|------------------------------------------------|
|                                        | SIGA                        TECHNOLOGIES, INC. |
|                                        | (Registrant)                                   |
|                                        |                                           |                                           |
| Date: March 13,                        2008 | By:                                            | *Eric A.                        Rose*          |
|                                        |                                           |                                                |
|                                             |                                           | Eric                        A. Rose, M.D.      |
|                                             |                                           | Chief Executive                        Officer |

          Pursuant            to the requirements of the Securities Exchange Act of 1934, this report has been signed            below by the following persons on behalf of the registrant and in the capacities and on            the dates indicated.

|                                |   |                                                                                                        |                  |                  |
|-------------------------------------|--------|-------------------------------------------------------------------------------------------------------------|-----------------------|-----------------------|
| **Signature**                       |   | **Title        of Capacities**                                                                              |                  | **Date**              |
|                                |   |                                                                                                        |                  |                  |
|                                |   | Chief        Executive Officer and        Chairman of the Board        (Principal Executive Officer)        |                  |                  |
| /s/        *Eric A. Rose, M.D*      |   |                                                                                                        |                  |
|                                     |   |                                                                                                        |                  |
| Eric        A. Rose, M.D.           |   |                                                                                                        | March        13, 2008 |
|                                |   |                                                                                                        |                  |                  |
|                                |   | Chief        Financial Officer        (Principal Financial Officer and        Principal Accounting Officer) |                  |                  |
| /s/        *Thomas N. Konatich*     |   |                                                                                                        |                  |
|                                     |   |                                                                                                        |                  |
| Thomas        N. Konatich           |   |                                                                                                        | March        13, 2008 |
|                                |   |                                                                                                        |                  |                  |
| /s/        *Steven L. Fasman*       |   |                                                                                                        |                  |                  |
|                                     |   |                                                                                                        |                  |                  |
| Steven        L. Fasman             |   | Director                                                                                                    |                  | March        13, 2008 |
|                                |   |                                                                                                        |                  |                  |
| /s/        *James J. Antal*         |   |                                                                                                        |                  |                  |
|                                     |   |                                                                                                        |                  |                  |
| James        J. Antal               |   | Director                                                                                                    |                  | March        10, 2008 |
|                                |   |                                                                                                        |                  |                  |
| /s/        *Thomas E. Constance*    |   |                                                                                                        |                  |                  |
|                                     |   |                                                                                                        |                  |                  |
| Thomas        E. Constance          |   | Director                                                                                                    |                  | March        13, 2008 |
|                                |   |                                                                                                        |                  |                  |
| /s/        *Adnan M. Mjalli, Ph.D.* |   |                                                                                                        |                  |                  |
|                                     |   |                                                                                                        |                  |                  |
| Adnan        M. Mjalli, Ph.D.       |   | Director                                                                                                    |                  | March        11, 2008 |
|                                |   |                                                                                                        |                  |                  |
| /s/        *Mehmet C. Oz, M.D.*     |   |                                                                                                        |                  |                  |
|                                     |   |                                                                                                        |                  |                  |
| Mehmet        C. Oz, M.D.           |   | Director                                                                                                    |                  | March        12, 2008 |
|                                |   |                                                                                                        |                  |                  |
| /s/        *Scott Hammer, M.D*      |   |                                                                                                        |                  |                  |
|                                     |   |                                                                                                        |                  |                  |
| Scott        Hammer, M.D.           |   | Director                                                                                                    |                  | March        13, 2008 |
|                                |   |                                                                                                        |                  |                  |
| /s/        *Paul G. Savas*          |   |                                                                                                        |                  |                  |
|                                     |   |                                                                                                        |                  |                  |
| Paul        G. Savas                |   | Director                                                                                                    |                  | March        11, 2008 |
|                                |   |                                                                                                        |                  |                  |
| */s/        Judy S. Slotkin*        |   |                                                                                                        |                  |                  |
|                                     |   |                                                                                                        |                  |                  |
| Judy        S. Slotkin              |   | Director                                                                                                    |                  | March        13, 2008 |
|                                |   |                                                                                                        |                  |                  |
| /s/        *Michael Weiner, M.D.*   |   |                                                                                                        |                  |                  |
|                                     |   |                                                                                                        |                  |                  |
| Michael        Weiner, M.D.         |   | Director                                                                                                    |                  | March        12, 2008 |

57

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