simu-20221130

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


x			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended November 30, 2022

OR

o			Transmission Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ______ to ______

Commission file number: 001-32046

Simulations Plus, Inc.

(Name of registrant as specified in its charter)


California			95-4595609
(State or other jurisdiction of Incorporation or Organization)			(I.R.S. Employer identification No.)

42505 10th Street West

Lancaster, CA 93534-7059

(Address of principal executive offices including zip code)

(661) 723-7723

(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:


Title of Each Class Common Stock, par value $0.001 per share			Trading Symbol SLP			Name of Each Exchange on Which Registered NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) 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 whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

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


x	Large accelerated Filer	o	Accelerated Filer
o	Non-accelerated Filer	o	Smaller reporting company
o	Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 number of shares outstanding of the registrant’s common stock, par value $0.001 per share, as of December 27, 2022, was 20,329,529.

Table of Contents

Simulations Plus, Inc.

FORM 10-Q

For the Quarterly Period Ended November 30, 2022

Table of Contents


	PART I. FINANCIAL INFORMATION
		Page
Item 1.	Condensed Consolidated Financial Statements

	Condensed Consolidated Balance Sheets at November 30, 2022 and August 31, 2022	4

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended November 30, 2022 and 2021	5

	Condensed Consolidated Statements of Shareholders’ Equity for the three months ended November 30, 2022 and 2021	6

	Condensed Consolidated Statements of Cash Flows for the three months ended November 30, 2022 and 2021	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29

Item 4.	Controls and Procedures	29

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults upon Senior Securities	30

Item 4.	Mine Safety Disclosures	30

Item 5.	Other Information	31

Item 6.	Exhibits	31

	Signatures	32

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Table of Contents

SIMULATIONS PLUS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)		(Audited)
(in thousands, except share and per share amounts)	November 30, 2022		August 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	49,392	$	51,567
Accounts receivable, net of allowance for doubtful accounts of $12 and $12	11,699		13,787
Prepaid income taxes	992		1,391
Prepaid expenses and other current assets	4,512		3,377
Short-term investments	82,139		76,668
Total current assets	148,734		146,790
Long-term assets
Capitalized computer software development costs, net of accumulated amortization of $16,060 and $15,672	10,070		9,563
Property and equipment, net	682		632
Operating lease right-of-use assets	1,305		1,420
Intellectual property, net of accumulated amortization of $8,201 and $7,928	8,709		9,057
Other intangible assets, net of accumulated amortization of $1,691 and $2,662	7,470		7,560
Goodwill	12,921		12,921
Other assets	570		439
Total assets	$	190,461	$	188,382

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	238	$	225
Accrued compensation	2,379		3,254
Accrued expenses	1,910		931

Operating lease liability - current portion	448		461
Deferred revenue	3,064		2,864
Total current liabilities	8,039		7,735
Long-term liabilities
Deferred income taxes, net	1,456		1,456
Operating lease liability	844		943
Total liabilities	10,339		10,134
Commitments and contingencies	—		—
Shareholders' equity
Preferred stock, $0.001 par value — 10,000,000 shares authorized; no shares issued and outstanding	$	—	$	—
Common stock, $0.001 par value and additional paid-in capital —50,000,000 shares authorized; 20,313,755 and 20,260,070 shares issued and outstanding	140,306		138,512
Retained earnings	40,071		40,044
Accumulated other comprehensive loss	(255)		(308)
Total shareholders' equity	180,122		178,248
Total liabilities and shareholders' equity	$	190,461	$	188,382

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Table of Contents

SIMULATIONS PLUS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended November 30,
(in thousands, except per common share amounts)	2022		2021
Revenues
Software	$	6,074	$	7,362
Services	5,890		5,055
Total revenues	11,964		12,417
Cost of revenues
Software	885		735
Services	1,786		2,021
Total cost of revenues	2,671		2,756
Gross profit	9,293		9,661
Operating expenses
Research and development	1,166		882
Selling, general, and administrative	7,249		4,988
Total operating expenses	8,415		5,870

Income from operations	878		3,791

Other income, net	740		65

Income before income taxes	1,618		3,856
Provision for income taxes	(373)		(830)
Net income	$	1,245	$	3,026

Earnings per share
Basic	$	0.06	$	0.15
Diluted	$	0.06	$	0.15

Weighted-average common shares outstanding
Basic	20,286		20,150
Diluted	20,825		20,746

Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments	53		(237)
Comprehensive income	$	1,298	$	2,789

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Table of Contents

SIMULATIONS PLUS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)


	Three Months Ended November 30,
(in thousands, except per common share amounts)	2022		2021
Common stock and additional paid in capital
Balance, beginning of period	$	138,512	$	133,418
Exercise of stock options	758		372
Stock-based compensation	886		634
Shares issued to Directors for services	150		88


Balance, end of period	140,306		134,512

Retained earnings
Balance, beginning of period	40,044		32,407
Declaration of dividends	(1,218)		(1,209)
Net income	1,245		3,026
Balance, end of period	40,071		34,224

Accumulated other comprehensive (loss) income
Balance, beginning of period	(308)		(43)
Other comprehensive income (loss)	53		(237)
Balance, end of period	(255)		(280)
Total shareholders’ equity	$	180,122	$	168,456
Cash dividends declared per common share	$	0.06	$	0.06

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Table of Contents

SIMULATIONS PLUS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended November 30,
(in thousands)	2022		2021
Cash flows from operating activities
Net income	$	1,245	$	3,026
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	923		845
Change in value of contingent consideration	—		121
Amortization of investment (discounts) premiums	(90)		610
Stock-based compensation	1,036		722
Deferred income taxes	—		387
Currency translation adjustments	52		(237)
(Increase) decrease in
Accounts receivable	2,088		(1,972)
Prepaid income taxes	399		428
Prepaid expenses and other assets	(1,266)		1,688
Increase (decrease) in
Accounts payable	13		(368)
Other liabilities	107		(1,637)
Deferred revenue	200		(31)
Net cash provided by operating activities	4,707		3,582

Cash flows from investing activities
Purchases of property and equipment	(109)		(561)
Purchase of short-term investments	(29,518)		(12,717)
Proceeds from maturities of short-term investments	24,138		16,067
Purchased intangibles	(39)		—

Capitalized computer software development costs	(894)		(

SEC Form 10-Q filed by Simulations Plus Inc.