SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

	☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended May 31, 2021

OR

	☐	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 ☒ No ☐

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 ☒ No ☐

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):

☐ Large accelerated Filer	☐ Accelerated Filer
☒ Non-accelerated Filer	☒ Smaller reporting company
☐ 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. ☐

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

The number of shares outstanding of the registrant’s common stock, par value $0.001 per share, as of July 12, 2021, was 20,132,906; no shares of preferred stock were outstanding.

Simulations Plus, Inc.

FORM 10-Q

For the Quarterly Period Ended May 31, 2021

Table of Contents

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

	Condensed Consolidated Balance Sheets at May 31, 2021 and August 31, 2020	3

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended May 31, 2021 and May 31, 2020	4

	Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended May 31, 2021 and May 31, 2020	5

	Condensed Consolidated Statements of Cash Flows for the nine months ended May 31, 2021 and May 31, 2020	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40

Item 4.	Controls and Procedures	40

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

Item 3.	Defaults upon Senior Securities	41

Item 4.	Mine Safety Disclosures	41

Item 5.	Other Information	41

Item 6.	Exhibits	42

	Signatures	43

Part I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

SIMULATIONS PLUS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)		(Audited)
	May 31,		August 31,
(in thousands, except share and per share amounts)	2021		2020
ASSETS
Current assets
Cash and cash equivalents	$	58,811	$	49,207
Accounts receivable, net of allowance for doubtful accounts of $100 and $50		12,962		7,422
Revenues in excess of billings		3,883		3,093
Prepaid income taxes		492		970
Prepaid expenses and other current assets		1,602		1,596
Short-term investments		60,948		66,804
Total current assets		138,698		129,092
Long-term assets
Capitalized computer software development costs, net of accumulated amortization of $14,616 and $13,582		7,326		6,087
Property and equipment, net		1,260		438
Operating lease right-of-use assets		1,405		927
Intellectual property, net of accumulated amortization of $6,159 and $5,087		10,826		11,898
Other intangible assets, net of accumulated amortization of $2,054 and $1,642		6,596		7,008
Goodwill		12,921		12,921
Other assets		51		51
Total assets	$	179,083	$	168,422

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	298	$	351
Accrued payroll and other expenses		2,598		2,251
Income taxes payable		16		–
Current portion - contracts payable		3,333		2,000
Billings in excess of revenues		127		141
Operating lease liability, current portion		426		463
Deferred revenue		542		300
Total current liabilities		7,340		5,506

Long-term liabilities
Deferred income taxes, net		2,270		2,354
Operating lease liability		980		463
Payments due under contracts payable		3,095		4,064
Total liabilities		13,685		12,387

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, 20,121,040 and 19,923,277 shares issued and outstanding		131,994		128,541
Retained earnings		33,310		27,436
Accumulated other comprehensive income		94		58
Total shareholders' equity		165,398		156,035
Total liabilities and shareholders' equity	$	179,083	$	168,422

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

SIMULATIONS PLUS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

For the three and nine months ended May 31, 2021 and May 31, 2020


(in thousands, except per common share amounts)	Three Months Ended						Nine Months Ended
	(Unaudited)						(Unaudited)
	2021			2020			2021			2020
Revenues	$	12,777		$	12,298		$	36,625		$	32,049
Cost of revenues		2,471			2,666			7,815			7,975
Gross margin		10,306			9,632			28,810			24,074
Operating expenses
Selling, general, and administrative		5,094			5,023			14,960			12,646
Research and development		670			752			2,771			2,026
Total operating expenses		5,764			5,775			17,731			14,672

Income from operations		4,542			3,857			11,079			9,402

Other income (expense)
Interest income		37			5			156			27
Interest expense		–			–			(22	)		–
Change in value of contingent consideration		(121	)		(81	)		(364	)		(81	)
Income/(Loss) on currency exchange		33			(1	)		61			1
Total other income (expense), net		(51	)		(

SEC Form 10-Q filed by Simulations Plus, Inc.