================================================================================

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

--------------

FORM 10-Q

(Mark One)

|X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the Quarter Ended September 30, 2005

|_| 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)

A Delaware Corporation IRS Employer No. 13-3864870

420 Lexington Avenue, Suite 408, New York, NY 10170
Telephone Number (212) 672-9100

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 |_|.

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No|X|.

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

As of November 8, 2005 the registrant had 26,500,648 shares of common stock
outstanding.

================================================================================

SIGA Technologies, Inc.

Form 10-Q

Table of Contents

Page No.

PART I FINANCIAL INFORMATION

Item 1. Financial Statements................................................................................2

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..............11

Item 3. Quantitative and Qualitative Disclosure About Market Risk..........................................17

Item 4. Controls and Procedures............................................................................17

PART II OTHER INFORMATION

Item 1. Legal Proceedings..................................................................................18

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities...................18

Item 3. Defaults Upon Senior Securities....................................................................18

Item 4. Submission of Matters to Vote of Security Holders..................................................18

Item 5. Other Information..................................................................................18

Item 6. Exhibits...........................................................................................18

SIGNATURES...................................................................................................19

SIGA TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

September 30,
2005 December 31,
(Unaudited) 2004
------------ ------------

ASSETS
Current assets
Cash and cash equivalents ......................................................... $ 193,856 $ 2,020,938
Accounts receivable ............................................................... 520,717 108,904
Prepaid expenses .................................................................. 177,134 278,547
------------ ------------
Total current assets ............................................................. 891,707 2,408,389

Property, plant and equipment, net ................................................ 1,051,774 508,015
Goodwill .......................................................................... 898,334 898,334
Intangible assets, net ............................................................ 1,207,084 2,114,297
Other assets ...................................................................... 234,126 181,725
------------ ------------
Total assets ..................................................................... $ 4,283,025 $ 6,110,760
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable .................................................................. $ 1,157,868 $ 1,148,277
Accrued expenses and other ........................................................ 327,051 403,072
Note payable ...................................................................... 107,520 --
------------ ------------
Total current liabilities ........................................................ 1,592,439 1,551,349

Non-current portion of note payable .................................................. 133,586 --
Commitments and contingencies ........................................................ -- --

Stockholders' equity
Series A convertible preferred stock ($.0001 par value, 10,000,000 shares
authorized, 68,038 issued and outstanding at September 30, 2005
and December 31, 2004) .......................................................... 58,672 58,672
Common stock ($.0001 par value, 50,000,000 shares authorized,
24,500,648 issued and outstanding at September 30, 2005
and December 31, 2004) .......................................................... 2,450 2,450
Additional paid-in capital ........................................................ 48,691,350 48,679,650
Accumulated deficit ............................................................... (46,195,472) (44,181,361)
------------ ------------
Total stockholders' equity ....................................................... 2,557,000 4,559,411
------------ ------------
Total liabilities and stockholders' equity ....................................... $ 4,283,025 $ 6,110,760
============ ============

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

SIGA TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
----------- ------------ ------------ ------------

Revenues
Research and development ......................... $ 2,910,065 $ 532,724 $ 6,232,625 $ 992,478
----------- ------------ ------------ ------------

Operating expenses
Selling, general and administrative .............. 415,275 919,165 2,071,223 3,036,559
Research and development ......................... 1,764,980 826,827 5,899,371 2,872,818
Patent preparation fees .......................... 8,031 83,580 273,921 230,320
Purchased in-process research & development ...... -- 568,329 -- 568,329
Loss on impairment of intangible assets .......... -- -- -- 610,063
----------- ------------ ------------ ------------
Total operating expenses ....................... 2,188,286 2,397,901 8,244,515 7,318,089
----------- ------------ ------------ ------------

Operating income (loss) ........................ 721,779 (1,865,177) (2,011,890) (6,325,611)

Other income (loss), net ............................. 1,982 27,824 (2,221) 59,055
----------- ------------ ------------ ------------
Net income (loss) .............................. $ 723,761 $ (1,837,353) $ (2,014,111) $ (6,266,556)
=========== ============ ============ ============

Weighted average shares outstanding:
Basic and diluted 24,500,648 23,443,881 24,500,648 23,462,307
=========== ============ ============ ============
Net income (loss) per share: basic and diluted $ 0.03 $ (0.08) $ (0.08) $ (0.27)
=========== ============ ============ ============

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

SIGA TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended
September 30,
2005 2004
------------ ------------

Cash flows from operating activities:
Net loss ................................................................................ $ (2,014,111) $ (6,266,556)
Adjustments to reconcile net loss to net
cash used in operating activities:
Purchase in-process research & development ............................................ -- 568,329
Loss on impairment of intangible assets ............................................... -- 610,063
Loss on impairment of investments ..................................................... 15,000 --
Loss on write-off of prepaid expenses ................................................. 91,083 --
Depreciation .......................................................................... 111,294 269,455
Amortization of intangible assets ..................................................... 907,213 473,564
Stock based compensation .............................................................. -- 47,400
Issuance of stock options to non-employee directors ................................... 11,700 --
Changes in assets and liabilities:
Accounts receivable .................................................................. (411,813) (2,719)
Prepaid expenses ..................................................................... 10,330 (38,760)
Other assets ......................................................................... (67,401) (27,977)
Accounts payable and accrued expenses ................................................ (66,430) 331,776
------------ ------------
Net cash used in operating activities ................................................ (1,413,135) (4,035,425)
------------ ------------
Cash flows from investing activities:
Acquisition of intangible assets ....................................................... -- (1,033,022)
Capital expenditures ................................................................... (655,053) (49,932)
------------ ------------
Net cash used in investing activities ................................................ (655,053) (1,082,954)
------------ ------------
Cash flows from financing activities:
Proceeds from note payable .............................................................. 276,435 --
Repayment of note payable ............................................................... (35,329) --
Net proceeds from issuance of common stock .............................................. -- 6,784,607
Proceeds from exercise of options and warrants .......................................... -- 69,375
------------ ------------
Net cash provided from financing activities ........................................... 241,106 6,853,982
------------ ------------
Net increase (decrease) in cash and cash equivalents ..................................... (1,827,082) 1,735,603
Cash and cash equivalents at beginning of period ......................................... 2,020,938 1,440,724
------------ ------------
Cash and cash equivalents at end of period ............................................... $ 193,856 $ 3,176,327
============ ============

Non-cash supplemental information:
Conversion of preferred stock to common stock ........................................... $ -- $ 13,994
Transfer of intangible assets for investment in Pecos Labs, Inc. ........................ $ -- $ 15,000
Shares issued for acquisition of assets from ViroPharma Incorporated .................... $ -- $ 1,480,000
Shares issued for services .............................................................. $ -- $ 47,400

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

Notes to the September 30, 2005 Financial Statements (Unaudited)

1. Basis of Presentation

The financial statements of SIGA Technologies, Inc. (the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the rules of the Securities and Exchange Commission
(the "SEC") for quarterly reports on Forms 10-Q and do not include all of the
information and footnote disclosures required by generally accepted accounting
principles for complete financial statements. These statements should be read in
conjunction with the Company's audited financial statements and notes thereto
for the year ended December 31, 2004, included in the 2004 Form 10-K. In the
opinion of management, all adjustments (consisting of normal and recurring
adjustments) considered necessary for a fair presentation of the results of the
interim periods presented have been included. The results of operations for the
three and nine months ended September 30, 2005 are not necessarily indicative of
the results expected for the full year.

The accompanying 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 financial arrangements. Although management continues
to pursue these plans, there is no assurance that the Company will be successful
in obtaining sufficient financing on commercially reasonable terms. Management
believes that its anticipated cash flows, including receipt of funding from
government contracts and grants, are sufficient to support its operations
through the third quarter of 2006 and that sufficient cash flows will be
available to meet the Company's business objectives. In the event that
sufficient funds are not available, the Company will need to postpone or
discontinue some or all of its planned operations and projects. 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.

On November 2, 2005, the Company entered into a Securities Purchase Agreement
for the issuance and sale of 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. The warrants are exercisable at 110% of the closing price on the
closing date of the transaction at any time and from time to time through and
including the seventh anniversary of the closing date. The investors are also
entitled to purchase additional shares of the Company's common stock for a gross
amount of $2,000,000 at an initial price of $1.10 per share for a period of 90
trading days following the effectiveness of a registration statement. With
respect to the transaction, the Company entered into an Exclusive Finder's
Agreement. Finders fee under the agreement include cash compensation of 7% of
the gross amount financed and a warrant to acquire 60,000 shares of the
Company's common stock at terms equal to the investors' warrants. The Company
received gross proceeds of $2,000,000 from the transaction on November 3, 2005.

2. Significant Accounting Policies

Use of Estimates

The 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 tangible and intangible assets, and
the value of options and warrants granted 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 income 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 shorter of the estimated lives or the life of the lease for 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 three month periods ended September 30, 2005 and 2004, revenues from
National Institutes of Health ("NIH") Small Business Innovation Research
("SBIR") grants approximated 92% and 83%, respectively, of total revenues
recognized by the Company. For the nine month periods ended September 30, 2005
and 2004, revenues from NIH SBIR grants approximated 93% and 70%, 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 September 30, 2005 and December 31, 2004 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.

Identified Intangible Assets

Acquisition-related intangible assets include acquired technology, customer
contracts, grants and covenants not to compete, and are amortized on a straight
line basis over periods ranging from 3.5 to 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. Changes in events or
circumstances that may affect long-lived assets include, but are not limited to,
cancellations or terminations of research contracts or pending government
grants.

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 all
of the deferred tax asset will not be realized.

Net income (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 nine months ended September 30, 2005 and
September 30, 2004 and as a result, certain equity instruments are excluded from
the calculation of diluted loss per share. At September 30, 2005 and 2004,
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 are
anti-dilutive. At September 30, 2005 and 2004, outstanding options to purchase
9,538,228 and 8,500,561 shares, respectively, of the Company's common stock with
exercise prices ranging from $1.00 to $5.50 have been excluded from the
computation of diluted loss per share as they are anti-dilutive. At September
30, 2005 and 2004, outstanding warrants to purchase 8,419,594 and 8,478,310
shares, respectively, of the Company's common stock, with exercise prices
ranging from $1.45 to $3.60 have been excluded from the computation of diluted
loss per share as they are anti-dilutive.

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.

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.

Stock compensation

The Company applies the recognition and measurement principles of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25") and related interpretations in accounting for its stock-based
compensation program. Accordingly, employees' and directors' related
compensation expense is recognized only to the extent of the intrinsic value of
the compensatory options or shares granted.

The following table illustrates the effect on net income (loss) available to
common stockholders and earnings (loss) per share as if the Company had applied
the fair value recognition provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), as amended by SFAS 148, "Accounting for
Stock-Based Compensation - Transaction and Disclosure, an amendment to FASB
Statement No. 123."

Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
------------ ------------ ----------- -----------

Net profit (loss), as reported .................................... $ 723,761 $ (1,837,353) $(2,014,111) $(6,266,556)
============ ============ =========== ===========
Add: Stock-based employee compensation expense
recorded under APB No. 25 ......................................... -- -- (11,700) --
Deduct: Total stock-based employee compensation
expense determined under fair value based method for
all awards, net of related tax effects ............................ (172,201) (816,882) (624,243) (1,084,685)
------------ ------------ ----------- -----------
Pro forma net profit (loss) applicable to common shareholders ..... $ 551,560 $ (2,654,235) $(2,650,054) $(7,351,241)
============ ============ =========== ===========
Net profit (loss) per share:
Basic and diluted -as reported .................................... $ 0.03 $ (0.08) $ (0.08) $ (0.27)
============ ============ =========== ===========
Basic and diluted -pro forma ...................................... $ 0.02 $ (0.11) $ (0.11) $ (0.31)
============ ============ =========== ===========

On June 2, 2005, the Company granted each of its non-employee directors their
annual award of 10,000 options under the Company's Amended and Restated 1996
Incentive and Non-Qualified Option Plan. The options have an exercise price of
$1.22 per share, the price of the Company's common shares as of the Company's
2005 annual meeting. The difference between the exercise price and the fair
market value of the Company's common shares on the date of the grant resulted in
non-cash compensation expense of $11,700. There were no other options grants
during the nine months ended September 30, 2005. The weighted average fair value
of options granted to employees during 2004 was $1.08 using the Black-Scholes
option pricing model. The following assumptions were used for 2004: no dividend
yield, expected volatility of 100%, weighted average free interest rates of
3.89% and a weighted average expected term of 6.5 years.

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".

3. Research Agreements

On September 1, 2005, the Company entered into an agreement with Saint Louis
University for the continued development of one of the Company's leading
compounds. The agreement is funded through the National Institutes of Health.
Under the agreement, SIGA will receive approximately $1.0 million during the
term of September 1, 2005 to February 28, 2006. Revenues will be recognized as
services are performed.

On September 22, 2005, the Company entered into a $3.2 million, one year
contract with the United States Army Medical Research and Material Command
("USAMRMC"). The agreement, for the rapid identification and treatment of
anti-viral diseases, is funded through the United States Air Force ("USAF").
Advance payments under the agreement, received prior to the performance of
services, are deferred and recognized as revenue as the related services are
performed. On October 4, 2005, the Company received advance payment of $1.0
million. Three equal advance payments of $733,333 are scheduled for on or about
January 1, 2006, April 1, 2006 and July 1, 2006.

4. Intangible Assets

Amortization expense recorded for the nine months ended September 30, 2005 and
2004 was as follows:

Nine Months Ended
September 30,
2005 2004
------------ ------------

Amortization of acquired grants $ 736,010 $ 81,780
Amortization of customer contract and grants 25,070 80,987
Amortization of covenants not to compete 84,167 146,472
Amortization of acquired technology 61,966 164,325
------------ ------------
$ 907,213 $ 473,564
============ ============

5. Stockholders' Equity

At September 30, 2005, the Company's authorized share capital consisted of
60,000,000 shares, of which 50,000,000 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.

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.

6. Related Parties

During the nine months ended September 30, 2005, the Company incurred costs of
$301,600 related to work performed by Transtech Pharma, Inc., a related party,
and its affiliates in connection with one of the Company's lead product
programs. On September 30, 2005, the Company's outstanding payables included
$186,700 payable to the related party and its affiliates. Revenues for the nine
months ended September 30, 2005 included $25,400 related to services provided by
the Company to Transtech Pharma, Inc. The balance is included in the Company's
accounts receivable on September 30, 2005.

7. Note Payable

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

8. Commitments and Contingencies

As of September 30, 2005, 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,
2005 $ 114,900
2006 255,400
2007 261,800
2008 133,200
2009 135,900
2010 22,700
-----------
Total $ 923,900
===========

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

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

Overview

Since our inception in December 1995, we have been principally engaged in
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. The effort
to develop a drug for Smallpox is being aided by SBIR grants from the NIH
totaling approximately $5.3 million that were awarded in the third quarter of
2004 and a $1.6 million contract with the U.S. Army which began in January 2003.
The Arenavirus program is being supported by SBIR grants from the NIH totaling
approximately $5.8 million that were awarded in the third quarter of 2004.

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 are also developing a technology for the mucosal delivery
of our vaccines which may allow the vaccines to activate the immune system at
the mucus lined surfaces of the body -- the mouth, the nose, the lungs and the
gastrointestinal and urogenital tracts -- the sites of entry for most infectious
agents.

We do not have commercial biomedical products, and we do not expect to
have such products for one to three years, if at all. We believe that we will
need additional funds to complete the development of our biomedical 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 sufficient financing on terms acceptable
to us. The financial statements do not include any adjustments that might result
from the outcome of these uncertainties.

Our biotechnology operations are run out of 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
contracts and grants and strategic alliances. While we have had success in
obtaining strategic alliances, contract and grants, no assurance can be given
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.

To date, we have not marketed, or generated revenues from the commercial
sale of any products. Our biopharmaceutical product candidates are not expected
to be commercially available for one to three years, if at all. Accordingly, we
expect to incur operating losses for the foreseeable future. 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 financial
statements, which we discuss under the heading "Results of Operations" following
this section of our MD&A. Some of our accounting policies 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 impacts
goodwill impairments; assessment of recoverability of long-lived assets, which
primarily impacts operating income when we impair intangible assets. Below, we
discuss these policies further, as well as the estimates and judgments involved.
We also have other policies that we consider key accounting policies, such as
for revenue recognition; however, these policies do not require us to make
estimates or judgments that are difficult or subjective.

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 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 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 performs an annual review in the fourth quarter of each year,
or more frequently if indicators of potential impairment exist, to determine if
the carrying value of the recorded goodwill is impaired. 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 2004, 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. The
estimated fair values might produce significantly different results if other
reasonable assumptions and estimates were to be used.

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 3.5-4 years.

Results of Operations

Three months ended September 30, 2005 and September 30, 2004

Revenues from grants and research and development contracts were approximately
$2.9 million for the three months ended September 30, 2005, compared to $533,000
for the three months ended September 30, 2004. The increase mainly relates to
the award of two Phase I and two Phase II SBIR grants by the NIH during the
third quarter of 2004. The Phase II grants are for a two year period ending in
the third quarter of 2006. The total award for these grants is approximately
$11.1 million. For the three months ended September 30, 2005 and 2004 we
recorded revenues of $2.7 million and $430,000, respectively, from these grants.
Approximately $1.1 million of the revenue recognized from these grants during
the three months ended September 30, 2005, related to expenditures that the
Company incurred during the quarter ended June 30, 2005, prior to approval of
the second year of these grants. We also received a one year SBIR grant from the
NIH for $252,000 in August 2004 to support our Strep vaccine program. For the
three months ended September 30, 2005 and 2004 we recorded revenue of $12,000
and $14,000, respectively, from this grant. Revenue from our contract with the
U.S. Army approximated $94,100 for the three month period ending September 30,
2005; compared to $88,000 for the same period in 2004. On September 1, 2005, the
Company entered into an agreement with Saint Louis University for the continued
development of one of the Company's leading compounds. The agreement is funded
through the National Institutes of Health. Under the agreement, SIGA will
receive approximately $1.0 million during the term of September 1, 2005 to
February 28, 2006. Revenues are recognized as services are performed. For the
three months

ended September 30, 2005, the Company recognized revenues of $50,000 from the
agreement. On September 22, 2005, the Company entered into a $3.2 million, one
year contract with USAMRMC. The agreement, for the rapid identification and
treatment of anti-viral diseases, is funded through the USAF (the "USAF
Agreement"). Advance payments under the USAF Agreement, received prior to the
performance of services, are deferred and recognized as revenue as the related
services are performed. For the three months ended September 30, 2005, the
Company recognized revenues of $73,000 from the USAF Agreement. On October 4,
2005, the Company received advance payment of $1.0 million. Three equal advance
payments of $733,333 are scheduled for on or about January1, 2006, April 1, 2006
and July 1, 2006.

Selling, general and administrative expenses ("SG&A") for the three months
ended September 30, 2005 and 2004 declined by 504,000 or 55%, to $415,000 from
$919,000, respectively. During the three months ended September 30, 2005, the
Company recorded a credit of $200,000 in legal expenses which resulted from the
re-negotiation of certain legal invoices. In addition to the credit recorded by
the Company, legal fees declined by approximately $200,000 from the three months
ended September 30, 2004 reflecting higher legal fees during the 2004 period due
to the acquisition of certain assets from ViroPharma Incorporated
("Viropharma"), the review and amendment of our corporate governance policies
and procedures to ensure compliance with Sarbanes Oxley and NASDAQ requirements.
Consulting fees for the three months ended September 30, 2005 declined $60,000
from the three months ended September 30, 2004 mainly due to certain
expenditures incurred in 2004 in connection with our efforts to secure certain
government contracts.

Research and development expenses were $1.8 million for the three months
ended September 30, 2005; an increase of approximately 113% from the $827,000 of
expenses incurred for the three months ended September 30, 2004. Approximately
$623,000 of the increase related to preclinical development work in connection
with our lead product programs. Payroll expenses for the three months ended
September 30, 2005 increased $203,000 from the same period in 2004 mainly due to
the hiring of 8 additional scientists in 2005. Amortization of intangible assets
in the amount of $274,000 and $145,000 for the three months ended September 30,
2005 and 2004, respectively, represented approximately 17% of the increase.

Patent preparation expenses for the three months ended September 30, 2005
were $8,000 compared to $84,000 for the three months ended September 30, 2004.
We incurred higher costs during the 2004 three months period for the filings of
patents in connection with the assets acquired from Plexus Vaccine Inc. and the
ViroPharma assets acquisition.

For the three months ended September 30, 2004, as a result of the
acquisition of certain assets from Viropharma, we immediately expensed $568,000
as purchased in-process research and development ("IPRD"). The amount expensed
as IPRD was attributed to certain technology that has not reached technological
feasibility and has no alternative future use.

Other income of $2,000 for the three months ended September 30, 2005
reflected interest income for the period. Other income of $27,800 for the same
period in 2004 was comprised of interest income of $12,800 and $15,000 received
by SIGA as a result of a settlement of a lawsuit against one of the Company's
founders.

All of our product programs are in the early stage of development. At this
stage of development, we cannot estimate the potential cost for any program to
be completed or the time it will take to complete the project. There is a high
risk of non-completion for any program because of the lead time to program
completion and uncertainty relating to costs. Net cash inflows from any products
developed from these 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 is in the
relatively early stage of development. Products for the biological warfare
defense market, such as the Smallpox anti-viral, could be available for sale in
one to three years. We expect the future research and development cost of this
program to increase as the potential products enter animal studies and safety
testing. Funds for future development will be partially paid for by NIH SBIR
grants, the contract we have with the U.S. Army, 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
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.

Nine months ended September 30, 2005 and September 30, 2004

Revenues from grants and research and development contracts were approximately
$6.2 million for the nine months ended September 30, 2005, compared to $992,000
for the nine months ended September 30, 2004. The increase mainly relates to the
award of two Phase I and two Phase II SBIR grants by the NIH during the third
quarter of 2004. The Phase II grants are for a two year period ending in the
third quarter of 2006. The total award for these grants is approximately $11.1
million. For the nine months ended September 30, 2005 and 2004 we recorded
revenues of $5.7 million and $430,000, respectively, from these grants. We also
received a one year SBIR grant from the NIH for $252,000 in August 2004 to
support our Strep vaccine program. For the nine months ended September 30, 2005
and 2004 we recorded revenue of $140,000 and $14,000, respectively, from this
grant. Revenue from our contract with the U.S. Army approximated $282,000 for
the nine month period ending September 30, 2005; compared to $269,000 for the
same period in 2004. On September 1, 2005, the Company entered into an agreement
with Saint Louis University for the continued development of one of the
Company's leading compounds. The agreement is funded through the National
Institutes of Health. Under the agreement, SIGA will receive approximately $1.0
million during the term of September 1, 2005 to February 28, 2006. Revenues are
recognized as services are performed. For the nine months ended September 30,
2005, the Company recognized revenues of $50,000 from the agreement. On
September 22, 2005, the Company entered into a $3.2 million, one year contract
with USAMRMC. The agreement, for the rapid identification and treatment of
anti-viral diseases, is funded through the USAF (the "USAF Agreement"). Advance
payments under the USAF Agreement, received prior to the performance of
services, are deferred and recognized as revenue as the related services are
performed. For the nine months ended September 30, 2005, the Company recognized
revenues of $73,000 from the USAF Agreement. During the nine months ending
September 30, 2004 we recognized revenue of $255,000 from an SBIR grant for our
DegP anti infective that we completed in the second quarter of 2004.

Selling, general and administrative expenses ("SG&A") for the nine months
ended September 30, 2005 and 2004 approximated $2.1 million and $3.0 million,
respectively. The decline of $900,000 or 31% is mainly attributed to a decline
of $720,000 in legal fees, a decline of $81,000 in accounting fees and a decline
of $212,000 in consulting fees. During the nine months ended September 30, 2005,
SIGA recorded a credit of $200,000 in legal expenses which resulted from the
re-negotiation of certain legal invoices. In addition to the credit recorded by
the Company, legal fees declined by approximately $520,000 from the nine months
ended September 30, 2004 reflecting higher legal fees during the 2004 period due
to the acquisition of certain assets from ViroPharma, the review and amendment
of our corporate governance policies and procedures to ensure compliance with
Sarbanes Oxley and NASDAQ requirements. Legal expenses in the first nine months
of 2004 were also incurred in connection with the sale of certain non-core
vaccine assets and a legal action that the Company initiated against a former
founder. The higher accounting expenses during the nine months period ended
September 30, 2004 was mainly related to the acquisition of certain assets from
ViroPharma, the sale of certain non-core vaccine assets and the review of a
potential acquisition. Higher consulting expenses during the nine months ended
September 30, 2004 were incurred in connection with our efforts to secure
certain government contracts.

Research and development expenses were $5.9 million for the nine months
ended September 30, 2005; an increase of approximately 105% or $3.0 million from
the $2.9 million of expenses incurred for the nine months ended September 30,
2004. Approximately $2.4 million of the increase related to preclinical
development work in connection with our lead product programs. Payroll expenses
for the nine months ended September 30, 2005 increased $497,000 from the same
period in 2004 mainly due to the hiring of 8 additional scientists in 2005.
Amortization of intangible assets in the amount of $823,000 and $327,000 for the
nine months ended September 30, 2005 and 2004, respectively, represented
approximately 17% of the increase.

Patent preparation expenses for the nine months ended September 30, 2005
were $274,000 compared to $230,000 for the nine months ended September 30, 2004.
The increase of $40,000 is the result of increased costs arising from the Plexus
Vaccine Inc. and ViroPharma Incorporated asset acquisitions, which were incurred
in the second half of 2004 and the first half of 2005.

Loss on impairment of intangible assets of $610,000 was recorded in the
second quarter of 2004. In May 2004, we sold intangible assets from our
immunological bioinformatics technology and certain non-core vaccine development
assets to a privately-held company, Pecos Labs, Inc. ("Pecos") in exchange for
150,000 shares of Pecos' common stock. In addition, concurrent with the asset
transfer, we terminated our employment agreement with our former President and
reduced the covenants not to compete with the former President to one year from
the date of termination. As a result of that transaction, we performed an
impairment review of our intangible assets in accordance with SFAS 144 and
recorded an impairment charge of $610,000. The impairment of intangible assets
consists of $307,000 of impairment related to grants transferred to Pecos and
$303,000 of impairment related to the reduction in the covenants not to compete
to one year from the date of terminating the Presidents' employment agreement
with us.

As a result of the acquisition of certain assets from Viropharma in August
2004, we immediately expensed $568,000 as purchased in-process research and
development ("IPRD"). The amount expensed as IPRD was attributed to certain
technology that has not reached technological feasibility and has no alternative
future use.

Other loss of $2,200 for the nine months ended September 30, 2005
comprised of interest income of approximately $12,800 and loss on impairment of
our investment in Pecos' common stock of $15,000. Other income of $59,000 for
the same period in 2004 was comprised of $44,000 interest income and $15,000
received by SIGA as a result of a settlement of a lawsuit against one of the
Company's founders.

Liquidity and Capital Resources

The financial statements of SIGA Technologies 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.

As of September 30, 2005 we had approximately $194,000 in cash and cash
equivalents. We believe that these funds and our anticipated cash flows,
including receipt of funding from government contracts and grants, will be
sufficient to support our operations through the third quarter of 2006.

On November 2, 2005, the Company entered into a Securities Purchase
Agreement for the issuance and sale of 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. The warrants are exercisable at 110% of the closing
price on the closing date of the transaction at any time and from time to time
through and including the seventh anniversary of the closing date. The investors
are also entitled to purchase additional shares of the Company's common stock
for a gross amount of $2,000,000 at an initial price of $1.10 per share for a
period of 90 trading days following the effectiveness of a registration
statement. With respect to the transaction, the Company entered into an
Exclusive Finder's Agreement. Finders fee under the agreement include cash
compensation of 7% of the gross amount financed and a warrant to acquire 60,000
shares of the Company's common stock at terms equal to the investors' warrants.
The Company received gross proceeds of $2,000,000 from the transaction on
November 3, 2005.

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 sufficient financing on commercially reasonable terms.

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.

Off-Balance Sheet Arrangements

SIGA does not have any off-balance sheet arrangements.

Safe Harbor Statement

This report contains certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, as amended,
including statements regarding the efficacy of potential products, the timelines
for bringing such products to market and the availability of funding sources for
continued development of such products. Forward-looking statements are based on
management's estimates, assumptions and projections, and are subject to
uncertainties, many of which are beyond the control of SIGA. Actual results may
differ materially from those anticipated in any forward-looking statement.
Factors that may cause such differences include the risks that (a) 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, (b) SIGA
or its collaborators will not obtain appropriate or necessary governmental
approvals to market these or other potential products, (c) SIGA may not be able
to obtain anticipated funding for its development projects or other needed
funding, (d) SIGA may not be able to secure funding from anticipated government
contracts and grants, (e) SIGA may not be able to secure or enforce adequate
legal protection, including patent protection, for its products and (f)
unanticipated internal control deficiencies or weaknesses or ineffective
disclosure controls and procedures. More detailed information about SIGA and
risk factors that may affect the realization of forward-looking statements,
including the forward-looking statements in this presentation, is set forth in
SIGA's filings with the Securities and Exchange Commission, including SIGA's
Annual Report on Form 10-K for the fiscal year ended December 31, 2004, and in
other documents that SIGA has filed with the Commission. SIGA urges investors
and security holders to read those documents free of charge at the Commission's
Web site at http://www.sec.gov. Interested parties may also obtain those
documents free of charge from SIGA. Forward-looking statements speak only as of
the date they are made, and except for our ongoing obligations under the U.S.
federal securities laws, we undertake no obligation to publicly update any
forward-looking statements whether as a result of new information, future events
or otherwise.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

None

Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures. The Company's management, with the
participation of the Company's Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the Company's disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
Act) as of the end of the fiscal period covered by this Quarterly Report on Form
10-Q. Based upon such evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of such period, the
Company's disclosure controls and procedures are effective.

(b) Internal Control Over Financial Reporting. There have not been any
changes in the Company's internal control over financial reporting (as such term
is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal period covered by this Quarterly Report on Form 10-Q that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.

Part II
Other information

Item 1. Legal Proceedings - SIGA is not a party, nor is its property the subject
of, any legal proceedings other than routine litigation incidental to its
business.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds - None

Item 3. Defaults upon Senior Securities - None

Item 4. Submission of Matters to a Vote of Security Holders - None

Item 5. Other Information - None

Item 6. Exhibits

* 31.1 Certification of Chief Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.

* 31.2 Certification of Chief Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of Chief Executive Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.2 Certification of Chief Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

* Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

SIGA Technologies, Inc.
(Registrant)

Date: November 8, 2005 By: /s/ Thomas N. Konatich
---------------------------

Thomas N. Konatich
Chief Financial Officer