simu-20230228

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 February 28, 2023

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 March 31, 2023, was 19,996,653.

Table of Contents

Simulations Plus, Inc.

FORM 10-Q

For the Quarterly Period Ended February 28, 2023

Table of Contents


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

	Condensed Consolidated Balance Sheets at February 28, 2023 and August 31, 2022	4

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three and six months ended February 28, 2023 and 2022	5

	Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended February 28, 2023 and 2022	6

	Condensed Consolidated Statements of Cash Flows for the six months ended February 28, 2023 and 2022	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34

Item 4.	Controls and Procedures	34

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	34

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3.	Defaults upon Senior Securities	36

Item 4.	Mine Safety Disclosures	36

Item 5.	Other Information	37

Item 6.	Exhibits	38

	Signatures	39

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)	February 28, 2023		August 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	39,292	$	51,567
Accounts receivable, net of allowance for doubtful accounts of $12 and $12	11,398		13,787
Prepaid income taxes	397		1,391
Prepaid expenses and other current assets	4,335		3,377
Short-term investments	76,052		76,668
Total current assets	131,474		146,790
Long-term assets
Capitalized computer software development costs, net of accumulated amortization of $16,455 and $15,672	10,501		9,563
Property and equipment, net	822		632
Operating lease right-of-use assets	1,190		1,420
Intellectual property, net of accumulated amortization of $8,552 and $7,928	8,358		9,057
Other intangible assets, net of accumulated amortization of $1,812 and $2,662	7,387		7,560
Goodwill	12,921		12,921
Other assets	548		439
Total assets	$	173,201	$	188,382

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	350	$	225
Accrued compensation	2,635		3,254
Accrued expenses	535		931


Operating lease liability - current portion	432		461
Deferred revenue	2,050		2,864
Total current liabilities	6,002		7,735
Long-term liabilities
Deferred income taxes, net	1,859		1,456
Operating lease liability	747		943
Total liabilities	8,608		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; 19,930,623 and 20,260,070 shares issued and outstanding	137,821		138,512
Retained earnings	27,050		40,044
Accumulated other comprehensive loss	(278)		(308)
Total shareholders' equity	164,593		178,248
Total liabilities and shareholders' equity	$	173,201	$	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

For the three and six months ended February 28, 2023 and 2022

(Unaudited)


	Three Months Ended				Six Months Ended
(in thousands, except per common share amounts)	2023		2022		2023		2022
Revenues
Software	$	10,487	$	9,758	$	16,561	$	17,120
Services	5,263		5,038		11,153		10,093
Total revenues	15,750		14,796		27,714		27,213
Cost of revenues
Software	843		780		1,728		1,515
Services	1,777		2,050		3,563		4,071
Total cost of revenues	2,620		2,830		5,291		5,586
Gross profit	13,130		11,966		22,423		21,627
Operating expenses
Research and development	1,317		902		2,483		1,784
Selling, general, and administrative	7,779		5,584		15,028		10,572
Total operating expenses	9,096		6,486		17,511		12,356

Income from operations	4,034		5,480		4,912		9,271

Other income, net	1,034		53		1,774		118

Income before income taxes	5,068		5,533		6,686		9,389
Provision for income taxes	(894)		(1,124)		(1,267)		(1,954)
Net income	$	4,174	$	4,409	$	5,419	$	7,435

Earnings per share
Basic	$	0.21	$	0.22	$	0.27	$	0.37
Diluted	$	0.20	$	0.21	$	0.26	$	0.36

Weighted-average common shares outstanding
Basic	20,112		20,177		20,200		20,164
Diluted	20,529		20,745		20,657		20,738

Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments	(23)		(38)		30		(275)
Comprehensive income	$	4,151	$	4,371	$<

SEC Form 10-Q filed by Simulations Plus Inc.