Note 1 - Business and Liquidity

We are a biodefense company engaged in developing two next generation anthrax vaccines. The next generation vaccines are intended to have more rapid time to protection, fewer doses for protection and less stringent requirements for temperature controlled storage and handling than the currently used vaccine.

Since 2006, we have been engaged in legal proceedings with SIGA Technologies, Inc. (“SIGA”). On December 23, 2015, the Delaware Supreme Court affirmed the Delaware Court of Chancery's judgment against SIGA which provides an estimated total award of approximately $208 million as of March 31, 2016 plus additional interest. On April 8, 2016, the Bankruptcy Court entered an order confirming SIGA’s third amended Reorganization Plan (the “Plan”) effective April 12, 2016 which provides for SIGA to emerge from bankruptcy and provides various alternatives for the final resolution of our litigation claim against SIGA during 2016. Under the Plan, we received an initial payment of $5 million from SIGA during April 2016 and during May 2016, received approximately $0.9 million, calculated by SIGA as interest on the judgment for the period of April 12, 2016 through April 30, 2016.

During the first half of 2015, we narrowed the scope of our product development programs, reduced our employee headcount and executed other cost reductions. These actions have allowed us to have sufficient cash to recognize the benefit of the SIGA award and advance our Anthrax vaccine programs without the need to raise additional capital. During the second half of 2015, we focused our efforts on creating alternatives for settling the SIGA litigation claim and developing business plans around possible outcomes.

During 2016, we will continue to develop our plans to create shareholder value from the alternative SIGA litigation outcomes and will commence execution of those plans.

On September 9, 2014, we signed a contract with the National Institutes of Allergy and Infectious Diseases (“NIAID") for the development of a next generation lyophilized anthrax vaccine based on our proprietary technology platform which contributes the recombinant protective antigen (“rPA”) bulk drug substance that is used in the liquid SparVax^® formulation. The contract is incrementally funded. Over the base period of the contract, we were awarded initial funding of approximately $5.2 million, which includes a cost reimbursement component and a fixed fee component payable upon achievement of certain milestones. NIAID exercised the first and second options under this agreement in September 2015 and December 2015, respectively. The exercised options provide additional funding of approximately $4.9 million and an extension of the period of performance through April 30, 2017. The contract has a total value of up to approximately $28.1 million, if all technical milestones are met and all eight contract options are exercised by NIAID. If NIAID exercises all options, the contract would last approximately five years. If NIAID does not exercise any additional options, the contract would expire by its terms on April 30, 2017.

As of March 31, 2016, our cash balance was $14.2 million, our accounts receivable (billed and unbilled) balance was $1.4 million, and our current liabilities were $2.6 million. We believe, based on the operating cash requirements and capital expenditures expected for 2016, the Company’s cash on hand at March 31, 2016 plus the $5 million initial payment received from SIGA during April 2016 and approximately $0.9 million, calculated by SIGA as interest, and received from SIGA during May 2016, is adequate to fund operations for at least the next twelve months.