Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Feb. 29, 2016 | Apr. 13, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | SIMULATIONS PLUS INC | |
Entity Central Index Key | 1,023,459 | |
Document Type | 10-Q | |
Document Period End Date | Feb. 29, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --08-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 17,029,501 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,016 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Feb. 29, 2016 | Aug. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 7,062,993 | $ 8,551,275 |
Accounts receivable, net of allowance for doubtful accounts of $0 | 3,808,081 | 1,593,707 |
Revenues in excess of billings | 856,558 | 795,125 |
Prepaid income taxes | 240,116 | 0 |
Prepaid expenses and other current assets | 309,152 | 381,718 |
Deferred income taxes | 237,557 | 210,972 |
Total current assets | 12,514,457 | 11,532,797 |
Long-term assets | ||
Capitalized computer software development costs, net of accumulated amortization of $8,126,958 and $7,632,421 | 3,849,025 | 3,798,339 |
Property and equipment, net (note 3) | 317,019 | 413,510 |
Intellectual property, net of accumulated amortization of $1,105,000 and $801,250 | 4,970,000 | 5,273,750 |
Other intangible assets net of accumulated amortization of $221,250 and $147,500 | 1,428,750 | 1,502,500 |
Goodwill | 4,789,248 | 4,789,248 |
Other assets | 34,082 | 34,082 |
Total assets | 27,902,581 | 27,344,226 |
Current liabilities | ||
Accounts payable | 126,078 | 209,407 |
Accrued payroll and other expenses | 441,088 | 429,580 |
Accrued bonuses to officer | 60,500 | 121,000 |
Income taxes payable | 0 | 43,602 |
Other current liabilities | 18,204 | 19,859 |
Current portion - Contract payable (note 4) | 2,604,404 | 2,604,404 |
Billings in excess of revenues | 172,297 | 106,534 |
Deferred revenue | 114,631 | 78,945 |
Total current liabilities | 3,537,202 | 3,613,331 |
Long-term liabilities | ||
Deferred income taxes | 3,054,076 | 3,190,419 |
Payments due under Contracts payable (note 4) | 1,000,000 | 1,000,000 |
Other long-term liabilities | 0 | 8,274 |
Total liabilities | $ 7,591,278 | $ 7,812,024 |
Commitments and contingencies (note 5) | ||
Shareholders' equity (note 6) | ||
Preferred stock, $0.001 par value 10,000,000 shares authorized no shares issued and outstanding | $ 0 | $ 0 |
Common stock, $0.001 par value 50,000,000 shares authorized 17,018,001 and 16,943,001 shares issued and outstanding | 5,489 | 5,414 |
Additional paid-in capital | 9,942,194 | 9,714,290 |
Retained earnings | 10,363,620 | 9,812,498 |
Total shareholders' equity | 20,311,303 | 19,532,202 |
Total liabilities and shareholders' equity | $ 27,902,581 | $ 27,344,226 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Feb. 29, 2016 | Aug. 31, 2015 |
Allowance for doubtful accounts | $ 0 | $ 0 |
Accumulated amortization of computer software development costs | $ 8,126,958 | $ 7,632,421 |
Preferred stock par value | $ 0.001 | $ .001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock par value | $ 0.001 | $ .001 |
Common stock shares authorized | 50,000,000 | 50,000,000 |
Common stock shares issued | 17,018,001 | 16,943,001 |
Common stock shares outstanding | 17,018,001 | 16,943,001 |
Intellectual Property [Member] | ||
Accumulated amortization on intangible assets | $ 1,105,000 | $ 801,250 |
Other Intangible Assets [Member] | ||
Accumulated amortization on intangible assets | $ 221,250 | $ 147,500 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Income Statement [Abstract] | ||||
Net revenues | $ 5,163,726 | $ 4,574,191 | $ 10,002,346 | $ 8,660,382 |
Cost of revenues | 1,263,741 | 1,130,907 | 2,347,088 | 2,175,582 |
Gross margin | 3,899,985 | 3,443,284 | 7,655,258 | 6,484,800 |
Operating expenses | ||||
Selling, general, and administrative | 1,722,844 | 1,607,495 | 3,399,278 | 3,626,994 |
Research and development | 461,389 | 360,708 | 812,696 | 633,348 |
Total operating expenses | 2,184,233 | 1,968,203 | 4,211,974 | 4,260,342 |
Income from operations | 1,715,752 | 1,475,081 | 3,443,284 | 2,224,458 |
Other income (expense) | ||||
Interest income | 4,486 | 4,412 | 8,953 | 9,004 |
Gain (loss) on currency exchange | (28,330) | (34,684) | (43,224) | (42,475) |
Total other income (expense) | (23,844) | (30,272) | (34,271) | (33,471) |
Income from operations before provision for income taxes | 1,691,908 | 1,444,809 | 3,409,013 | 2,190,987 |
Provision for income taxes | (546,559) | (474,576) | (1,157,191) | (691,851) |
Net Income | $ 1,145,349 | $ 970,233 | $ 2,251,822 | $ 1,499,136 |
Earnings per share | ||||
Basic | $ .07 | $ .06 | $ .13 | $ .09 |
Diluted | $ .07 | $ .06 | $ .13 | $ .09 |
Weighted-average common shares outstanding | ||||
Basic | 17,005,649 | 16,848,983 | 16,985,869 | 16,839,599 |
Diluted | 17,268,144 | 17,105,412 | 17,230,099 | 17,096,357 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Cash flows from operating activities | ||
Net income | $ 2,251,822 | $ 1,499,136 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization of property and equipment | 98,992 | 112,441 |
Amortization of capitalized computer software development costs | 494,537 | 490,051 |
Amortization of Intellectual property | 377,500 | 377,500 |
Stock-based compensation | 120,249 | 150,624 |
Deferred income taxes | (162,928) | 159,968 |
(Increase) decrease in | ||
Accounts receivable | (2,214,374) | (536,612) |
Revenues in excess of billings | (61,433) | (92,310) |
Prepaid income taxes | (240,116) | 422,125 |
Prepaid expenses and other assets | 72,566 | 8,095 |
Increase (decrease) in | ||
Accounts payable | (83,329) | (69,307) |
Accrued payroll and other expenses | 11,508 | (397,090) |
Accrued bonus | (60,500) | (72,000) |
Billings in excess of revenues | 65,763 | (249,637) |
Accrued income taxes | (43,602) | 0 |
Other liabilities | (9,929) | (9,930) |
Deferred revenue | 35,686 | 14,576 |
Net cash provided by (used in) operating activities | 652,412 | 1,807,630 |
Cash flows from investing activities | ||
Purchases of property and equipment | (2,501) | (19,159) |
Cash used to purchase Cognigen | 0 | (2,080,000) |
Cash received in acquisition | 0 | 190,184 |
Capitalized computer software development costs | (545,223) | (730,855) |
Net cash provided by (used in) investing activities | (547,724) | (2,639,830) |
Cash flows from financing activities | ||
Payment of dividends | (1,700,700) | (1,684,660) |
Proceeds from the exercise of stock options | 107,730 | 4,973 |
Net cash (used in) financing activities of continuing operations | (1,592,970) | (1,679,687) |
Net increase (decrease) in cash and cash equivalents | (1,488,282) | (2,511,887) |
Cash and cash equivalents, beginning of year | 8,551,275 | 8,614,929 |
Cash and cash equivalents, end of period | 7,062,993 | 6,103,042 |
Supplemental disclosures of cash flow information | ||
Interest paid | 0 | 0 |
Income taxes paid | 1,596,000 | 76,519 |
Non-Cash Investing and Financing | ||
Stock issued for acquisition of Cognigen Corporation | 0 | 3,277,170 |
Creation of contract liability for acquisition of Cognigen Corporation | $ 0 | $ 1,854,404 |
1. GENERAL
1. GENERAL | 6 Months Ended |
Feb. 29, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND LINES OF BUSINESS | This report on Form 10-Q for the quarter ended February 29, 2016, should be read in conjunction with the Company's annual report on Form 10-K for the year ended August 31, 2015, filed with the Securities and Exchange Commission (SEC) on November 20, 2015. As contemplated by the SEC under Article 8 of Regulation S-X, the accompanying consolidated financial statements and footnotes have been condensed and therefore do not contain all disclosures required by generally accepted accounting principles. The interim financial data are unaudited; however, in the opinion of Simulations Plus, Inc. ("we", "our", "us"), the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. Results for interim periods are not necessarily indicative of those to be expected for the full year. Organization Simulations Plus, Inc. (Simulations Plus, Lancaster) was incorporated on July 17, 1996. On September 2, 2014, Simulations Plus, Inc. acquired all of the outstanding equity interests of Cognigen Corporation (Cognigen, Buffalo) and Cognigen became a wholly owned subsidiary of Simulations Plus, Inc. (collectively, Company, we, us, our), pursuant to the terms of that certain Agreement and Plan of Merger, dated as of July 23, 2014, by and between Simulations Plus and Cognigen (the Merger Agreement). Lines of Business The Company designs and develops pharmaceutical simulation software to promote cost-effective solutions to a number of problems in pharmaceutical research and in the education of pharmacy and medical students, and it provides consulting services to the pharmaceutical and chemical industries. Recently, the Company has begun to explore developing software applications for defense and for health care outside of the pharmaceutical industry. |
2. SIGNIFICANT ACCOUNTING POLIC
2. SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Feb. 29, 2016 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | Principles of Consolidation The consolidated financial statements include the accounts of Simulations Plus, Inc. and, as of September 2, 2014, its wholly owned subsidiary, Cognigen Corporation. All significant intercompany accounts and transactions are eliminated in consolidation. Estimates Our condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by managements application of accounting policies. Actual results could differ from those estimates. Significant accounting policies for us include revenue recognition, accounting for capitalized computer software development costs, valuation of stock options, and accounting for income taxes. Reclassifications Certain numbers in the prior year have been reclassified to conform to the current year's presentation. Revenue Recognition We recognize revenues related to software licenses and software maintenance in accordance with Financial Accounting Standard Board (FASB) Accounting Standard Codification (ASC) 985-605, Software - Revenue Recognition As a byproduct of ongoing improvements and upgrades for the new programs and new modules of software, some modifications are provided to customers who have already purchased software at no additional charge. Other software modifications result in new, additional-cost modules that expand the functionality of the software. These are licensed separately. We consider the modifications that are provided without charge to be minimal, as they do not significantly change the basic functionality or utility of the software, but rather add convenience, such as being able to plot some additional variable on a graph in addition to the numerous variables that had been available before, or adding some additional calculations to supplement the information provided from running the software. Such software modifications for any single product have typically occurred once or twice per year, sometimes more, sometimes less. Thus, they are infrequent. The Company provides, for a fee, additional training and service calls to its customers and recognizes revenue at the time the training or service call is provided. Generally, we enter into one-year license agreements with customers for the use of our pharmaceutical software products. We recognize revenue on these contracts when all the criteria are met. Most license agreements have a term of one year; however, from time to time, we enter into multi-year license agreements. We generally unlock and invoice software one year at a time for multi-year licenses. Therefore, revenue is recognized one year at a time. We recognize revenue from collaboration research and revenue from grants equally over their terms. For contract revenues based on actual hours incurred we recognize revenues when the work is performed. For fixed price contracts, we recognize contract study and other contract revenues using the percentage-of-completion method, depending upon how the contract studies are engaged, in accordance with ASC 605-35, Revenue Recognition Construction-Type and Production-Type Contracts Cash and Cash Equivalents For purposes of the statements of cash flows, we consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Accounts Receivable We analyze the age of customer balances, historical bad-debt experience, customer creditworthiness, and changes in customer payment terms when making estimates of the collectability of the Companys trade accounts receivable balances. If we determine that the financial conditions of any of its customers deteriorated, whether due to customer-specific or general economic issues, an increase in the allowance may be made. Accounts receivable are written off when all collection attempts have failed. Capitalized Computer Software Development Costs Software development costs are capitalized in accordance with ASC 985-20, Costs of Software to Be Sold, Leased, or Marketed The establishment of technological feasibility and the ongoing assessment for recoverability of capitalized software development costs require considerable judgment by management with respect to certain external factors including, but not limited to, technological feasibility, anticipated future gross revenues, estimated economic life, and changes in software and hardware technologies. Capitalized software development costs are comprised primarily of salaries and direct payroll-related costs and the purchase of existing software to be used in our software products. Amortization of capitalized software development costs is calculated on a product-by-product basis on the straight-line method over the estimated economic life of the products (not to exceed five years, although all of our current software products have already been on the market for 7-15 years except for our newest MedChem Designer program, and we do not foresee an end-of-life for any of them at this point). Amortization of software development costs amounted to $494,537 and $490,051 for the six months ended February 29, 2016 and February 28, 2015, respectively, and amortization of software development costs was $247,269 and $276,761 for the three months ended February 29, 2016 and February 28, 2015, respectively. We expect future amortization expense to vary due to increases in capitalized computer software development costs. We test capitalized computer software development costs for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization are provided using the straight-line method over the estimated useful lives as follows: Equipment 5 years Computer equipment 3 to 7 years Furniture and fixtures 5 to 7 years Leasehold improvements Shorter of life of asset or lease Maintenance and minor replacements are charged to expense as incurred. Gains and losses on disposals are included in the results of operations. Goodwill and indefinite-lived assets Goodwill and indefinite-lived assets are not amortized, but are evaluated for impairment annually or when indicators of a potential impairment are present. Our impairment testing of goodwill is performed separately from our impairment testing of indefinite-lived intangibles. The annual evaluation for impairment of goodwill and indefinite-lived intangibles is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. Fair Value of Financial Instruments Assets and liabilities recorded at fair value in the Condensed Balance Sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The categories, as defined by the standard are as follows: Level Input: Input Definition: Level I Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. Level II Inputs, other than quoted prices included in Level I, that are observable for the asset or liability through corroboration with market data at the measurement date. Level III Unobservable inputs that reflect managements best estimate of what market participants would use in pricing the asset or liability at the measurement date. The following table summarizes fair value measurements by level at February 29, 2016 for assets and liabilities measured at fair value on a recurring basis: Level I Level II Level III Total Cash and cash equivalents $ 7,062,993 $ $ $ 7,062,993 Total $ 7,062,993 $ $ $ 7,062,993 For certain of our financial instruments, including accounts receivable, accounts payable, accrued payroll and other expenses, accrued bonus to officer, and accrued warranty and service costs, the amounts approximate fair value due to their short maturities. Research and Development Costs Research and development costs are charged to expense as incurred until technological feasibility has been established. These costs consist primarily of salaries and direct payroll-related costs. It also includes purchased software and databases which were developed by other companies and incorporated into, or used in the development of, our final products. Income Taxes We utilize FASB ASC 740-10, Income Taxes Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. Intellectual property On February 28, 2012, we bought out the royalty agreement with Enslein Research of Rochester, New York. The cost of $75,000 is being amortized over 10 years under the straight-line method. Amortization expense for each of the six months periods ended February 29, 2016 and February 28, 2015 was $3,750 and was $1,875 for each three-month period ended February 29, 2016 and February 28, 2015. Accumulated amortization as of February 29, 2016 was $30,000. On May 15, 2014, we bought out a royalty agreement with TSRL, Inc. of Ann Arbor, Michigan. The cost of $6,000,000 is being amortized over 10 years under the straight-line method. Amortization expense for each of the six months periods ended February 29, 2016 and February 28, 2015 was $300,000 and was $150,000 for each three-month period ended February 29, 2016 and February 28, 2015. Accumulated amortization as of February 29, 2016 and August 31, 2015 was $1,075,000 and $775,000, respectively. (See Note 4.) Total amortization expense for intellectual property agreements for the three months ended February 29, 2016 and February 28, 2015 was $151,875. Accumulated amortization as of February 29, 2016 and August 31, 2015 was $1,105,000 and $801,250, respectively. Intangible assets The Company acquired certain intangible assets as part of the acquisition of Cognigen Corporation on September 2, 2014. The following table summarizes those intangible assets as of February 29, 2016: Amortization Period Acquisition Value Accumulated Amortization Net book value Customer relationships Straight line 8 years $ 1,100,000 $ 206,250 $ 893,750 Trade Name-Cognigen None 500,000 0 500,000 Covenants not to compete Straight line 5 years 50,000 15,000 35,000 $ 1,650,000 $ 221,250 $ 1,428,750 Amortization expense for each of the six months periods ended February 29, 2016 and February 28, 2015 was $73,750 and was $36,875 for each three-month periods ended February 29, 2016 and February 28, 2015. According to policy in addition to normal amortization, these assets are tested for impairment as needed. Earnings per Share We report earnings per share in accordance with FASB ASC 260-10. Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The components of basic and diluted earnings per share for the three and six months ended February 29, 2016 and February 28, 2015 were as follows: Three months ended Six months ended 02/29/2016 02/28/2015 02/29/2016 02/28/2015 Numerator: Net income attributable to common shareholders $ 1,145,349 $ 970,233 $ 2,251,822 $ 1,499,136 Denominator: Weighted-average number of common shares outstanding during the period 17,005,649 16,848,983 16,985,869 16,839,599 Dilutive effect of stock options 262,495 256,429 244,230 256,758 Common stock and common stock equivalents used for diluted earnings per share 17,268,144 17,105,412 17,230,099 17,096,357 Stock-Based Compensation Compensation costs related to stock options are determined in accordance with FASB ASC 718-10, Compensation-Stock Compensation, Recently Issued Accounting Pronouncements In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists In May 2014, FASB issued ASU No. 2014-09, Revenue from Contracts with Customers |
3. PROPERTY AND EQUIPMENT
3. PROPERTY AND EQUIPMENT | 6 Months Ended |
Feb. 29, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment as of February 29, 2016 consisted of the following: Equipment $ 192,958 Computer equipment 460,626 Furniture and fixtures 123,235 Leasehold improvements 103,599 Sub total 880,418 Less: Accumulated depreciation and amortization (563,399 ) Net Book Value $ 317,019 |
4. CONTRACTS PAYABLE
4. CONTRACTS PAYABLE | 6 Months Ended |
Feb. 29, 2016 | |
Other Liabilities Disclosure [Abstract] | |
CONTRACTS PAYABLE | TSRL Pursuant to the termination and non-assertion agreement with TSRL, the Company agreed to pay TSRL total consideration of $6.0 million. The Company paid $3.5 million on May 20, 2014, comprised of cash in the amount of $2.5 million and the issuance of $1 million worth of the Companys common stock - 164,745 shares of the Companys common stock based upon the April 25, 2014 closing price per share of $6.07 (See note 2). According to the contract, the Company paid $750,000 to TSRL in April 2015 and will pay TSRL an additional $1,750,000 within the next two-year period. The remaining payments scheduled, by year, are below. Cognigen Acquisition Liability-Related Party On September 2, 2014, the Company acquired Cognigen Corporation. As part of the above-discussed consideration payable to the former shareholders of Cognigen, the Company agreed that within three business days following the two-year anniversary of July 23, 2014 (the date of the Merger Agreement) and subject to any offsets, the Company will pay the former shareholders of Cognigen a total of $1,854,404, comprised of $720,000 of cash and the issuance of 170,014 shares of the Companys stock. The former shareholders of Cognigen are currently employed by the consolidated Company, one of whom serves as the President. Future payments under the Agreements, which are non-interest-bearing, are due as follows: As of the period ending February 28, TSRL Cognigen Acquisition Liability Total 2016 $ 750,000 $ 1,854,404 $ 2,604,404 2017 1,000,000 0 1,000,000 Total $ 1,750,000 $ 1,854,404 $ 3,604,404 Less current portion (750,000 ) (1,854,404 ) (2,604,404 ) contracts payable, net of current portion $ 1,000,000 $ 0 $ 1,000,000 |
5. COMMITMENTS AND CONTINGENCIE
5. COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Feb. 29, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Employment Agreement Effective September 1, 2014, the Company entered into an Employment Agreement with Walter S. Woltosz to serve as Chief Executive Officer of the Company (the Woltosz Employment Agreement). The Woltosz Employment Agreement had a one-year term. Under the terms of the Woltosz Employment Agreement, Mr. Woltosz was required to devote a minimum of 60% of his productive time to the position of Chief Executive Officer of the Company. He received annual compensation of $180,000, was eligible to receive stock options to purchase up to 12,000 shares of the Companys common stock under the 2007 Simulations Plus, Inc. Stock Option Plan, as determined by the Companys Board of Directors, and was to be paid an annual performance bonus of up to 5% of the Companys net income before taxes, not to exceed $36,000. A copy of the Woltosz Employment Agreement was filed as an attachment to the 8-K filed with the Securities and Exchange Commission on September 4, 2014. On July 9, 2015, the Company renewed this employment agreement for another year on the same terms as the September 2014 agreement. A copy of the agreement was filed as an attachment to the 8-K filed with the Securities and Exchange Commission on July 15, 2015. Mr. Woltosz bonuses under these agreements were paid in September following each agreements term. On September 2, 2014, Thaddeus H. Grasela, Jr., Ph.D., was appointed President of the Company, and the Company has entered into an Employment Agreement with Dr. Grasela (the Grasela Employment Agreement), which has a three-year term. Pursuant to the Grasela Employment Agreement, Dr. Grasela receives an annual base salary of $250,000, is eligible to receive stock options to purchase shares of the Companys common stock under the 2007 Simulations Plus, Inc. Stock Option Plan, as determined by the Companys Board of Directors, and is eligible to receive an annual performance bonus in an amount not to exceed 10% of base salary, to be determined by the Compensation Committee of the Companys Board of Directors. On September 1, 2015 the Compensation Committee awarded a $25,000 performance bonus to Dr. Grasela. This expense was accrued as an expense as of August 31, 2015. This bonus was paid in September 2015. License Agreement The Company executed a royalty agreement with Accelrys, Inc. (Accelrys) (the original agreement was entered into with Symyx Technologies in March 2010; Symyx Technologies later merged with Accelrys, Inc.) for access to their Metabolite Database for developing our Metabolite Module within ADMET Predictor. The module was renamed the Metabolism Module when we released ADMET Predictor version 6 on April 19, 2012. Under this agreement, we pay a royalty of 25% of revenue derived from the sale of the Metabolism/Metabolite module to Accelrys. In 2014, Dassault Systemes of France acquired Accelrys and the Company now operates under the name BIOVIA. For the Six months ended February 29, 2016 and February 28, 2015, we incurred royalty expense of $50,838 and $34,989, respectively, and for the three months ended February 29, 2016 and February 28, 2015, we incurred royalty expense of approximately $35,288 and $24,824, respectively. Income taxes We follow guidance issued by the FASB with regard to our accounting for uncertainty in income taxes recognized in the financial statements. Such guidance prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. Our policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. We file income tax returns with the IRS and various state jurisdictions and India. Our federal income tax returns for fiscal year 2012 thru 2015 are open for audit, and our state tax returns for fiscal year 2011 through 2015 remain open for audit. In addition, our California tax returns for fiscal years 2008 and 2009 remain open with regard to research and development tax credits as a result of a previous audit for which we received a letter from the California Franchise Tax Board stating that an audit will not be conducted for those years at this time; however it may be subject to future audit. In 2015 the Company was informed that the IRS will be auditing the Companys tax return for 2014. The audit was started in October 2015 and has not been completed. The Company does not believe that this examination by the IRS will result in a significant change to our financial position or results of operations. Litigation Except as described below, we are not a party to any legal proceedings and are not aware of any pending legal proceedings of any kind. In June 2014, the Company was served with a complaint in a civil action entitled Sherri Winslow v. Incredible Adventures, Inc., et al. (Los Angeles Superior Court Case No. BC545789) alleging wrongful death and seeking unspecified damages arising out of a May 18, 2012 plane crash in the State of Nevada. The Companys Chief Executive Officer owns the subject aircraft and is also a named defendant. The complaint alleged that the Company was the owner of the subject aircraft. The Company denied all material allegations against it, including that it owns or has ever owned any interest in the subject aircraft. On November 25, 2014, the plaintiff and the Company signed a stipulation of dismissal pursuant to which the plaintiff agreed to dismiss the Company without prejudice. The Company planned to prepare a dismissal with prejudice to be signed on behalf of the plaintiff in the event the plaintiff did not discover evidence during a nine-month period to and including August 31, 2015, that justified bringing the Company back into the litigation. The Company did not receive notification of any such discovery and is in the process of preparing documents for the plaintiffs final dismissal with prejudice. |
6. SHAREHOLDERS' EQUITY
6. SHAREHOLDERS' EQUITY | 6 Months Ended |
Feb. 29, 2016 | |
Equity [Abstract] | |
SHAREHOLDERS' EQUITY | Dividend The Companys Board of Directors declared cash dividends during fiscal years 2016 and 2015. The details of the dividends paid are in the following tables: FY2015 Record Date Distribution Date Number of Shares Outstanding on Record Date Dividend per Share Total Amount 11/7/2014 11/14/2014 16,841,114 $ 0.05 $ 842,056 1/26/2015 2/2/2015 16,852,117 $ 0.05 $ 842,606 5/11/2015 5/18/2015 16,875,117 $ 0.05 $ 843,754 7/23/2015 7/30/2015 16,943,001 $ 0.05 $ 847,150 Total $ 3,375,566 FY2016 Record Date Distribution Date Number of Shares Outstanding on Record Date Dividend per Share Total Amount 11/09/2015 11/16/2015 16,996,001 $ 0.05 $ 849,800 1/29/2016 02/05/2016 17,018,001 $ 0.05 $ 850,900 Total $ 1,700,700 Stock Option Plan In September 1996, the Board of Directors adopted, and the shareholders approved, the 1996 Stock Option Plan (the "Option Plan") under which a total of 1,000,000 shares of common stock had been reserved for issuance. In March 1999, the shareholders approved an increase in the number of shares that may be granted under the Option Plan to 2,000,000. In February 2000, the shareholders approved an increase in the number of shares that may be granted under the Option Plan to 4,000,000. In December 2000, the shareholders approved an increase in the number of shares that may be granted under the Option Plan to 5,000,000. Furthermore, in February 2005, the shareholders approved an additional 1,000,000 shares, resulting in the total number of shares that may be granted under the Option Plan to 6,000,000. The 1996 Stock Option Plan terminated in September 2006 by its term. On February 23, 2007, the Board of Directors adopted and the shareholders approved the 2007 Stock Option Plan under which a total of 1,000,000 shares of common stock had been reserved for issuance. On February 25, 2014 the shareholders approved an additional 1,000,000 shares increasing the total number of shares that may be granted under the Option Plan to 2,000,000. Qualified Incentive Stock Options (Qualified ISO) As of February 29, 2016, employees hold Qualified ISO to purchase 950,900 shares of common stock at exercise prices ranging from $1.00 to $9.71, which were granted prior to February 29, 2016. Transactions in FY16 Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life Outstanding, August 31, 2015 621,000 $ 5.01 6.10 Granted 412,100 $ 9.71 Exercised (75,000 ) $ 1.44 Cancelled/Forfeited (7,200 ) $ 6.85 Outstanding, February 29, 2016 950,900 $ 7.32 7.97 Exercisable, February 29, 2016 230,160 $ 3.80 4.34 Non-Qualified Stock Options (Non-Qualified ISO) As of February 29, 2016, the outside members of the Board of Directors hold options to purchase 49,350 shares of common stock at exercise prices ranging from $1.67 to $6.75, which were granted prior to February 29, 2016. Transactions in FY16 Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life Outstanding, August 31, 2015 49,350 $ 5.52 7.78 Granted 0 $ 0.00 Exercised 0 $ 0.00 Outstanding, February 29, 2016 49,350 $ 5.52 7.25 Exercisable, February 29, 2016 27,200 $ 4.70 5.81 The weighted-average remaining contractual life of options outstanding issued under the Plan, both Qualified ISO and Non-Qualified SO, was 7.93 years at February 29, 2016. The exercise prices for the options outstanding at February 29, 2016 ranged from $1.00 to $9.82, and the information relating to these options is as follows: Exercise Price Awards Outstanding Awards Exercisable Low High Quantity Weighted Average Remaining Contractual Life Weighted Average Exercise Price Quantity Weighted Average Remaining Contractual Life Weighted Average Exercise Price $ 1.00 $ 1.50 100,500 2.34 years $ 1.04 100,500 2.34 years $ 1.04 $ 1.51 $ 3.00 3,600 4.19 years $ 2.20 3,600 4.19 years $ 2.20 $ 3.01 $ 4.50 29,000 3.35 years $ 3.33 29,000 3.35 years $ 3.35 $ 4.51 $ 6.00 74,000 3.16 years $ 5.48 41,600 3.21 years $ 5.42 $ 6.01 $ 7.50 381,050 8.48 years $ 6.85 82,660 8.19 years $ 6.86 $ 7.50 $ 9.82 412,100 10.00 years $ 9.71 0 1,000,250 7.93 years $ 7.23 257,360 4.49 years $ 3.89 |
7. RELATED PARTY TRANSACTIONS
7. RELATED PARTY TRANSACTIONS | 6 Months Ended |
Feb. 29, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | As of February 28, 2016, included in bonus expenses to officers was $60,500, of which $30,000 was accrued bonus representing an estimated quarterly amount of bonus payable to the Corporate Secretary, Virginia Woltosz, as part of the terms of the sale of Words+ to Simulations Plus in 1996, and $18,000 accrued bonus representing an estimated amount of bonus payable to our Chief Executive Officer, Walter Woltosz as part of his current employment agreement, and $12,500 accrued bonus representing as estimated amount of bonus payable to our President, Thaddeus Grasela as part of his current employment agreement. |
8. CONCENTRATIONS AND UNCERTAIN
8. CONCENTRATIONS AND UNCERTAINTIES | 6 Months Ended |
Feb. 29, 2016 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS AND UNCERTAINTIES | Revenue concentration shows that international sales accounted for 42.6% and 39.8% of net sales for the six months ended February 29, 2016 and February 28, 2015, respectively. Three customers accounted for 10% (a dealer account in Japan representing various customers), 6%, and 6% of sales for the six months ended February 26, 2016. Two customers accounted for 10% (a dealer account in Japan representing various customers) and 8% of sales for the six months ended February 28, 2015. Accounts receivable concentrations shows that two customers comprised 12% (a dealer account in Japan representing various customers) and 11% of accounts receivable at February 29, 2016 compared to one customer (a dealer account in Japan representing various customers) that comprised 13% of accounts receivable at February 28, 2015. We operate in the computer software industry, which is highly competitive and changes rapidly. Our operating results could be significantly affected by our ability to develop new products and find new distribution channels for new and existing products. The majority of our customers are in the pharmaceutical industry. Consolidation and downsizing in the pharmaceutical industry could have an impact on our revenues and earnings going forward. |
9. SEGMENT AND GEOGRAPHIC REPOR
9. SEGMENT AND GEOGRAPHIC REPORTING | 6 Months Ended |
Feb. 29, 2016 | |
Segments, Geographical Areas [Abstract] | |
SEGMENT AND GEOGRAPHIC REPORTING | We account for segments and geographic revenues in accordance with guidance issued by the FASB. Our reportable segments are strategic business units that offer different products and services. Results for each segment and consolidated results are as follows for the three and six months ended February 29, 2016 and February 28, 2015 (in thousands): Three months ended February 29, 2016 Lancaster Buffalo Eliminations Total Net revenues $ 3,648 1,516 $ 5,164 Income (loss) from operations 1,470 246 1,716 Identifiable assets 25,854 9,267 $ (7,238 ) 27,903 Capital expenditures 0 1 1 Capitalized software costs 233 45 278 Depreciation and amortization 394 90 484 Three months ended February 28, 2015 Lancaster Buffalo Eliminations Total Net Revenues $ 3,303 $ 1,271 $ 4,574 Income (loss) from operations $ 1,288 $ 187 $ 1,475 Total assets $ 25,974 $ 8,327 $ (7,238 ) $ 27,063 Capital expenditures $ 0 $ 0 $ 0 Capitalized software costs $ 393 $ 39 $ 432 Depreciation and Amortization $ 431 $ 91 $ 458 Six months ended February 29, 2016 Lancaster Buffalo Eliminations Total Net Revenues $ 7,058 $ 2,944 $ 10,002 Income (loss) from operations $ 2,894 $ 549 $ 3,443 Total assets $ 25,854 $ 9,267 $ (7,238 ) $ 27,903 Capital expenditures $ 1 $ 1 $ 2 Capitalized software costs $ 455 $ 90 $ 545 Depreciation and Amortization $ 789 $ 182 $ 971 Six months ended February 28, 2015 Lancaster Buffalo Eliminations Total Net Revenues $ 6,254 $ 2,406 $ 8,660 Income (loss) from operations 1,975 249 $ 2,224 Total assets $ 25,974 $ 8,327 $ (7,238 ) $ 27,063 Capital expenditures $ 17 $ 3 $ 20 Capitalized software costs $ 667 $ 64 $ 730 Depreciation and Amortization $ 798 $ 182 $ 980 In addition, the Company allocates revenues to geographic areas based on the locations of its customers. Geographical revenues for the three months and six months ended February 29, 2016 and February 28, 2015 were as follows (in thousands): Three months ended February 29, 2016 North America Europe Asia South America Total Lancaster $ 1,331 $ 1,490 $ 827 $ 0 $ 3,648 Buffalo $ 1,516 $ 0 $ 0 $ 0 $ 1,516 Total $ 2,847 $ 1,490 $ 827 $ 0 $ 5,164 Three months ended February 28, 2015 North America Europe Asia South America Total Lancaster $ 1,459 $ 1,265 $ 578 $ 1 $ 3,303 Buffalo $ 1,271 $ 0 $ 0 $ 0 $ 1,271 Total $ 2,730 $ 1,265 $ 578 $ 1 $ 4,574 Six months ended February 29, 2016 North America Europe Asia South America Total Lancaster $ 2,793 $ 2,404 $ 1,860 $ 1 $ 7,058 Buffalo $ 2,944 $ 2,944 Total $ 5,737 $ 2,404 $ 1,860 $ 1 $ 10,002 Six months ended February 28, 2015 North America Europe Asia South America Total Lancaster $ 2,805 $ 1,905 $ 1,543 $ 1 $ 6,254 Buffalo $ 2,406 $ 2,406 Total $ 5,211 $ 1,905 $ 1,543 $ 1 $ 8,660 |
10. EMPLOYEE BENEFIT PLAN
10. EMPLOYEE BENEFIT PLAN | 6 Months Ended |
Feb. 29, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
EMPLOYEE BENEFIT PLAN | We maintain a 401(K) Plan for all eligible employees, and we make matching contributions equal to 100% of the employees elective deferral, not to exceed 4% of total employee compensation. We can also elect to make a profit-sharing contribution. Our contributions to this Plan amounted to $107,075 and $122,846 for the six months ended February 29, 2016 and February 28, 2015, respectively, and $51,737 and $65,519 for the three months ended February 29, 2016 and February 28, 2015, respectively. |
2. SIGNIFICANT ACCOUNTING POL16
2. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Feb. 29, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Simulations Plus, Inc. and, as of September 2, 2014, its wholly owned subsidiary, Cognigen Corporation. All significant intercompany accounts and transactions are eliminated in consolidation. |
Estimates | Estimates Our condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by managements application of accounting policies. Actual results could differ from those estimates. Significant accounting policies for us include revenue recognition, accounting for capitalized computer software development costs, valuation of stock options, and accounting for income taxes. |
Reclassifications | Reclassifications Certain numbers in the prior year have been reclassified to conform to the current year's presentation. |
Revenue Recognition | Revenue Recognition We recognize revenues related to software licenses and software maintenance in accordance with Financial Accounting Standard Board (FASB) Accounting Standard Codification (ASC) 985-605, Software - Revenue Recognition As a byproduct of ongoing improvements and upgrades for the new programs and new modules of software, some modifications are provided to customers who have already purchased software at no additional charge. Other software modifications result in new, additional-cost modules that expand the functionality of the software. These are licensed separately. We consider the modifications that are provided without charge to be minimal, as they do not significantly change the basic functionality or utility of the software, but rather add convenience, such as being able to plot some additional variable on a graph in addition to the numerous variables that had been available before, or adding some additional calculations to supplement the information provided from running the software. Such software modifications for any single product have typically occurred once or twice per year, sometimes more, sometimes less. Thus, they are infrequent. The Company provides, for a fee, additional training and service calls to its customers and recognizes revenue at the time the training or service call is provided. Generally, we enter into one-year license agreements with customers for the use of our pharmaceutical software products. We recognize revenue on these contracts when all the criteria are met. Most license agreements have a term of one year; however, from time to time, we enter into multi-year license agreements. We generally unlock and invoice software one year at a time for multi-year licenses. Therefore, revenue is recognized one year at a time. We recognize revenue from collaboration research and revenue from grants equally over their terms. For contract revenues based on actual hours incurred we recognize revenues when the work is performed. For fixed price contracts, we recognize contract study and other contract revenues using the percentage-of-completion method, depending upon how the contract studies are engaged, in accordance with ASC 605-35, Revenue Recognition Construction-Type and Production-Type Contracts |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the statements of cash flows, we consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. |
Accounts Receivable | Accounts Receivable We analyze the age of customer balances, historical bad-debt experience, customer creditworthiness, and changes in customer payment terms when making estimates of the collectability of the Companys trade accounts receivable balances. If we determine that the financial conditions of any of its customers deteriorated, whether due to customer-specific or general economic issues, an increase in the allowance may be made. Accounts receivable are written off when all collection attempts have failed. |
Capitalized Computer Software Development Costs | Capitalized Computer Software Development Costs Software development costs are capitalized in accordance with ASC 985-20, Costs of Software to Be Sold, Leased, or Marketed The establishment of technological feasibility and the ongoing assessment for recoverability of capitalized software development costs require considerable judgment by management with respect to certain external factors including, but not limited to, technological feasibility, anticipated future gross revenues, estimated economic life, and changes in software and hardware technologies. Capitalized software development costs are comprised primarily of salaries and direct payroll-related costs and the purchase of existing software to be used in our software products. Amortization of capitalized software development costs is calculated on a product-by-product basis on the straight-line method over the estimated economic life of the products (not to exceed five years, although all of our current software products have already been on the market for 7-15 years except for our newest MedChem Designer program, and we do not foresee an end-of-life for any of them at this point). Amortization of software development costs amounted to $494,537 and $490,051 for the six months ended February 29, 2016 and February 28, 2015, respectively, and amortization of software development costs was $247,269 and $276,761 for the three months ended February 29, 2016 and February 28, 2015, respectively. We expect future amortization expense to vary due to increases in capitalized computer software development costs. We test capitalized computer software development costs for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization are provided using the straight-line method over the estimated useful lives as follows: Equipment 5 years Computer equipment 3 to 7 years Furniture and fixtures 5 to 7 years Leasehold improvements Shorter of life of asset or lease Maintenance and minor replacements are charged to expense as incurred. Gains and losses on disposals are included in the results of operations. |
Goodwill and indefinite-lived assets | Goodwill and indefinite-lived assets Goodwill and indefinite-lived assets are not amortized, but are evaluated for impairment annually or when indicators of a potential impairment are present. Our impairment testing of goodwill is performed separately from our impairment testing of indefinite-lived intangibles. The annual evaluation for impairment of goodwill and indefinite-lived intangibles is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Assets and liabilities recorded at fair value in the Condensed Balance Sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The categories, as defined by the standard are as follows: Level Input: Input Definition: Level I Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. Level II Inputs, other than quoted prices included in Level I, that are observable for the asset or liability through corroboration with market data at the measurement date. Level III Unobservable inputs that reflect managements best estimate of what market participants would use in pricing the asset or liability at the measurement date. The following table summarizes fair value measurements by level at February 29, 2016 for assets and liabilities measured at fair value on a recurring basis: Level I Level II Level III Total Cash and cash equivalents $ 7,062,993 $ $ $ 7,062,993 Total $ 7,062,993 $ $ $ 7,062,993 For certain of our financial instruments, including accounts receivable, accounts payable, accrued payroll and other expenses, accrued bonus to officer, and accrued warranty and service costs, the amounts approximate fair value due to their short maturities. |
Research and Development Costs | Research and Development Costs Research and development costs are charged to expense as incurred until technological feasibility has been established. These costs consist primarily of salaries and direct payroll-related costs. It also includes purchased software and databases which were developed by other companies and incorporated into, or used in the development of, our final products. |
Income Taxes | Income Taxes We utilize FASB ASC 740-10, Income Taxes Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. |
Intellectual property | Intellectual property On February 28, 2012, we bought out the royalty agreement with Enslein Research of Rochester, New York. The cost of $75,000 is being amortized over 10 years under the straight-line method. Amortization expense for each of the six months periods ended February 29, 2016 and February 28, 2015 was $3,750 and was $1,875 for each three-month period ended February 29, 2016 and February 28, 2015. Accumulated amortization as of February 29, 2016 was $30,000. On May 15, 2014, we bought out a royalty agreement with TSRL, Inc. of Ann Arbor, Michigan. The cost of $6,000,000 is being amortized over 10 years under the straight-line method. Amortization expense for each of the six months periods ended February 29, 2016 and February 28, 2015 was $300,000 and was $150,000 for each three-month period ended February 29, 2016 and February 28, 2015. Accumulated amortization as of February 29, 2016 and August 31, 2015 was $1,075,000 and $775,000, respectively. (See Note 4.) Total amortization expense for intellectual property agreements for the three months ended February 29, 2016 and February 28, 2015 was $151,875. Accumulated amortization as of February 29, 2016 and August 31, 2015 was $1,105,000 and $801,250, respectively. |
Intangible Assets | Intangible assets The Company acquired certain intangible assets as part of the acquisition of Cognigen Corporation on September 2, 2014. The following table summarizes those intangible assets as of February 29, 2016: Amortization Period Acquisition Value Accumulated Amortization Net book value Customer relationships Straight line 8 years $ 1,100,000 $ 206,250 $ 893,750 Trade Name-Cognigen None 500,000 0 500,000 Covenants not to compete Straight line 5 years 50,000 15,000 35,000 $ 1,650,000 $ 221,250 $ 1,428,750 Amortization expense for each of the six months periods ended February 29, 2016 and February 28, 2015 was $73,750 and was $36,875 for each three-month periods ended February 29, 2016 and February 28, 2015. According to policy in addition to normal amortization, these assets are tested for impairment as needed. |
Earnings per Share | Earnings per Share We report earnings per share in accordance with FASB ASC 260-10. Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The components of basic and diluted earnings per share for the three and six months ended February 29, 2016 and February 28, 2015 were as follows: Three months ended Six months ended 02/29/2016 02/28/2015 02/29/2016 02/28/2015 Numerator: Net income attributable to common shareholders $ 1,145,349 $ 970,233 $ 2,251,822 $ 1,499,136 Denominator: Weighted-average number of common shares outstanding during the period 17,005,649 16,848,983 16,985,869 16,839,599 Dilutive effect of stock options 262,495 256,429 244,230 256,758 Common stock and common stock equivalents used for diluted earnings per share 17,268,144 17,105,412 17,230,099 17,096,357 |
Stock-Based Compensation | Stock-Based Compensation Compensation costs related to stock options are determined in accordance with FASB ASC 718-10, Compensation-Stock Compensation, |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists In May 2014, FASB issued ASU No. 2014-09, Revenue from Contracts with Customers |
2. SIGNIFICANT ACCOUNTING POL17
2. SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Feb. 29, 2016 | |
Accounting Policies [Abstract] | |
Property and Equipment estimated useful lives | Equipment 5 years Computer equipment 3 to 7 years Furniture and fixtures 5 to 7 years Leasehold improvements Shorter of life of asset or lease |
Fair value measurements | Level I Level II Level III Total Cash and cash equivalents $ 7,062,993 $ $ $ 7,062,993 Total $ 7,062,993 $ $ $ 7,062,993 |
Schedule of intangible assets | Amortization Period Acquisition Value Accumulated Amortization Net book value Customer relationships Straight line 8 years $ 1,100,000 $ 206,250 $ 893,750 Trade Name-Cognigen None 500,000 0 500,000 Covenants not to compete Straight line 5 years 50,000 15,000 35,000 $ 1,650,000 $ 221,250 $ 1,428,750 |
Earnings per share | Three months ended Six months ended 02/29/2016 02/28/2015 02/29/2016 02/28/2015 Numerator: Net income attributable to common shareholders $ 1,145,349 $ 970,233 $ 2,251,822 $ 1,499,136 Denominator: Weighted-average number of common shares outstanding during the period 17,005,649 16,848,983 16,985,869 16,839,599 Dilutive effect of stock options 262,495 256,429 244,230 256,758 Common stock and common stock equivalents used for diluted earnings per share 17,268,144 17,105,412 17,230,099 17,096,357 |
3. PROPERTY AND EQUIPMENT (Tabl
3. PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Feb. 29, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Property and equipment as of February 29, 2016 consisted of the following: Equipment $ 192,958 Computer equipment 460,626 Furniture and fixtures 123,235 Leasehold improvements 103,599 Sub total 880,418 Less: Accumulated depreciation and amortization (563,399 ) Net Book Value $ 317,019 |
4. CONTRACTS PAYABLE (Tables)
4. CONTRACTS PAYABLE (Tables) | 6 Months Ended |
Feb. 29, 2016 | |
Other Liabilities Disclosure [Abstract] | |
Future payments under the agreement | As of the period ending February 28, TSRL Cognigen Acquisition Liability Total 2016 $ 750,000 $ 1,854,404 $ 2,604,404 2017 1,000,000 0 1,000,000 Total $ 1,750,000 $ 1,854,404 $ 3,604,404 Less current portion (750,000 ) (1,854,404 ) (2,604,404 ) contracts payable, net of current portion $ 1,000,000 $ 0 $ 1,000,000 |
6. SHAREHOLDERS' EQUITY (Tables
6. SHAREHOLDERS' EQUITY (Tables) | 6 Months Ended |
Feb. 29, 2016 | |
Schedule of dividends declared and paid | FY2015 Record Date Distribution Date Number of Shares Outstanding on Record Date Dividend per Share Total Amount 11/7/2014 11/14/2014 16,841,114 $ 0.05 $ 842,056 1/26/2015 2/2/2015 16,852,117 $ 0.05 $ 842,606 5/11/2015 5/18/2015 16,875,117 $ 0.05 $ 843,754 7/23/2015 7/30/2015 16,943,001 $ 0.05 $ 847,150 Total $ 3,375,566 FY2016 Record Date Distribution Date Number of Shares Outstanding on Record Date Dividend per Share Total Amount 11/09/2015 11/16/2015 16,996,001 $ 0.05 $ 849,800 1/29/2016 02/05/2016 17,018,001 $ 0.05 $ 850,900 Total $ 1,700,700 |
Schedule of options by exercise price range | Exercise Price Awards Outstanding Awards Exercisable Low High Quantity Weighted Average Remaining Contractual Life Weighted Average Exercise Price Quantity Weighted Average Remaining Contractual Life Weighted Average Exercise Price $ 1.00 $ 1.50 100,500 2.34 years $ 1.04 100,500 2.34 years $ 1.04 $ 1.51 $ 3.00 3,600 4.19 years $ 2.20 3,600 4.19 years $ 2.20 $ 3.01 $ 4.50 29,000 3.35 years $ 3.33 29,000 3.35 years $ 3.35 $ 4.51 $ 6.00 74,000 3.16 years $ 5.48 41,600 3.21 years $ 5.42 $ 6.01 $ 7.50 381,050 8.48 years $ 6.85 82,660 8.19 years $ 6.86 $ 7.50 $ 9.82 412,100 10.00 years $ 9.71 0 1,000,250 7.93 years $ 7.23 257,360 4.49 years $ 3.89 |
Incentive Stock Options (ISOs) [Member] | |
Schedule of stock option activity | Transactions in FY16 Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life Outstanding, August 31, 2015 621,000 $ 5.01 6.10 Granted 412,100 $ 9.71 Exercised (75,000 ) $ 1.44 Cancelled/Forfeited (7,200 ) $ 6.85 Outstanding, February 29, 2016 950,900 $ 7.32 7.97 Exercisable, February 29, 2016 230,160 $ 3.80 4.34 |
Non-Qualified Stock Options (NQSOs) [Member] | |
Schedule of stock option activity | Transactions in FY16 Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life Outstanding, August 31, 2015 49,350 $ 5.52 7.78 Granted 0 $ 0.00 Exercised 0 $ 0.00 Outstanding, February 29, 2016 49,350 $ 5.52 7.25 Exercisable, February 29, 2016 27,200 $ 4.70 5.81 |
9. SEGMENT AND GEOGRAPHIC REP21
9. SEGMENT AND GEOGRAPHIC REPORTING (Tables) | 6 Months Ended |
Feb. 29, 2016 | |
Segments, Geographical Areas [Abstract] | |
Schedule of consolidated results from reportable segments | Three months ended February 29, 2016 Lancaster Buffalo Eliminations Total Net revenues $ 3,648 1,516 $ 5,164 Income (loss) from operations 1,470 246 1,716 Identifiable assets 25,854 9,267 $ (7,238 ) 27,903 Capital expenditures 0 1 1 Capitalized software costs 233 45 278 Depreciation and amortization 394 90 484 Three months ended February 28, 2015 Lancaster Buffalo Eliminations Total Net Revenues $ 3,303 $ 1,271 $ 4,574 Income (loss) from operations $ 1,288 $ 187 $ 1,475 Total assets $ 25,974 $ 8,327 $ (7,238 ) $ 27,063 Capital expenditures $ 0 $ 0 $ 0 Capitalized software costs $ 393 $ 39 $ 432 Depreciation and Amortization $ 431 $ 91 $ 458 Six months ended February 29, 2016 Lancaster Buffalo Eliminations Total Net Revenues $ 7,058 $ 2,944 $ 10,002 Income (loss) from operations $ 2,894 $ 549 $ 3,443 Total assets $ 25,854 $ 9,267 $ (7,238 ) $ 27,903 Capital expenditures $ 1 $ 1 $ 2 Capitalized software costs $ 455 $ 90 $ 545 Depreciation and Amortization $ 789 $ 182 $ 971 Six months ended February 28, 2015 Lancaster Buffalo Eliminations Total Net Revenues $ 6,254 $ 2,406 $ 8,660 Income (loss) from operations 1,975 249 $ 2,224 Total assets $ 25,974 $ 8,327 $ (7,238 ) $ 27,063 Capital expenditures $ 17 $ 3 $ 20 Capitalized software costs $ 667 $ 64 $ 730 Depreciation and Amortization $ 798 $ 182 $ 980 |
Schedule of geographical revenues | Three months ended February 29, 2016 North America Europe Asia South America Total Lancaster $ 1,331 $ 1,490 $ 827 $ 0 $ 3,648 Buffalo $ 1,516 $ 0 $ 0 $ 0 $ 1,516 Total $ 2,847 $ 1,490 $ 827 $ 0 $ 5,164 Three months ended February 28, 2015 North America Europe Asia South America Total Lancaster $ 1,459 $ 1,265 $ 578 $ 1 $ 3,303 Buffalo $ 1,271 $ 0 $ 0 $ 0 $ 1,271 Total $ 2,730 $ 1,265 $ 578 $ 1 $ 4,574 Six months ended February 29, 2016 North America Europe Asia South America Total Lancaster $ 2,793 $ 2,404 $ 1,860 $ 1 $ 7,058 Buffalo $ 2,944 $ 2,944 Total $ 5,737 $ 2,404 $ 1,860 $ 1 $ 10,002 Six months ended February 28, 2015 North America Europe Asia South America Total Lancaster $ 2,805 $ 1,905 $ 1,543 $ 1 $ 6,254 Buffalo $ 2,406 $ 2,406 Total $ 5,211 $ 1,905 $ 1,543 $ 1 $ 8,660 |
2. SIGNIFICANT ACCOUNTING POL22
2. SIGNIFICANT ACCOUNTING POLICIES (Details - Estimated useful lives) | 6 Months Ended |
Feb. 29, 2016 | |
Equipment [Member] | |
Estimated useful lives | 5 years |
Computer equipment [Member] | |
Estimated useful lives | 3 to 7 years |
Furniture and fixtures [Member] | |
Estimated useful lives | 5 to 7 years |
Leasehold improvements [Member] | |
Estimated useful lives | Shorter of life of asset or lease |
2. SIGNIFICANT ACCOUNTING POL23
2. SIGNIFICANT ACCOUNTING POLICIES (Details - Fair value) | Feb. 29, 2016USD ($) |
Cash and cash equivalents | $ 7,062,993 |
Total assets and liabilities measured at fair value | 7,062,993 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | |
Cash and cash equivalents | 7,062,993 |
Total assets and liabilities measured at fair value | 7,062,993 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | |
Cash and cash equivalents | 0 |
Total assets and liabilities measured at fair value | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | |
Cash and cash equivalents | 0 |
Total assets and liabilities measured at fair value | $ 0 |
2. SIGNIFICANT ACCOUNTING POL24
2. SIGNIFICANT ACCOUNTING POLICIES (Details - Intangible Assets) - USD ($) | 6 Months Ended | |
Feb. 29, 2016 | Aug. 31, 2015 | |
Net book value | $ 1,428,750 | $ 1,502,500 |
Finite-Lived Intangible Assets [Member] | ||
Acquisition value | 1,650,000 | |
Accumulated amortization | 221,250 | |
Net book value | $ 1,428,750 | |
Customer Relationships [Member] | ||
Amortization period | Straight line 8 years | |
Acquisition value | $ 1,100,000 | |
Accumulated amortization | 206,250 | |
Net book value | $ 893,750 | |
Trade name [Member] | ||
Amortization period | None | |
Acquisition value | $ 500,000 | |
Accumulated amortization | 0 | |
Net book value | $ 500,000 | |
Covenants not to compete [Member] | ||
Amortization period | Straight line 5 years | |
Acquisition value | $ 50,000 | |
Accumulated amortization | 15,000 | |
Net book value | $ 35,000 |
2. SIGNIFICANT ACCOUNTING POL25
2. SIGNIFICANT ACCOUNTING POLICIES (Details - Earnings per share) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Numerator | ||||
Net income attributable to common shareholders | $ 1,145,349 | $ 970,233 | $ 2,251,822 | $ 1,499,136 |
Denominator | ||||
Weighted-average number of common shares outstanding during the period | 17,005,649 | 16,848,983 | 16,985,869 | 16,839,599 |
Dilutive effect of stock options | 262,495 | 256,429 | 244,230 | 256,758 |
Common stock and common stock equivalents used for diluted earnings per share | 17,268,144 | 17,105,412 | 17,230,099 | 17,096,357 |
2. SIGNIFICANT ACCOUNTING POL26
2. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | Aug. 31, 2015 | |
Amortization of software development | $ 247,269 | $ 276,761 | $ 494,537 | $ 490,051 | |
Amortization of intangible assets | 151,875 | 151,875 | 377,500 | 377,500 | |
Stock-based compensation | 56,287 | 84,525 | 120,249 | 150,624 | |
Intellectual Property [Member] | |||||
Accumulated amortization of intangible assets | 1,105,000 | 1,105,000 | $ 801,250 | ||
Intellectual Property [Member] | Enslein Research [Member] | |||||
Amortization of intangible assets | 1,875 | 1,875 | 3,750 | 3,750 | |
Accumulated amortization of intangible assets | 30,000 | 30,000 | |||
Intellectual Property [Member] | TSRL [Member] | |||||
Amortization of intangible assets | 150,000 | 150,000 | 300,000 | 300,000 | |
Accumulated amortization of intangible assets | 1,075,000 | 1,075,000 | $ 775,000 | ||
Finite-Lived Intangible Assets [Member] | |||||
Accumulated amortization of intangible assets | 221,250 | 221,250 | |||
Finite-Lived Intangible Assets [Member] | Cognigen [Member] | |||||
Amortization of intangible assets | $ 36,875 | $ 36,875 | $ 73,750 | $ 73,750 |
3. PROPERTY AND EQUIPMENT (Deta
3. PROPERTY AND EQUIPMENT (Details) - USD ($) | Feb. 29, 2016 | Aug. 31, 2015 |
Property and equipment, gross | $ 880,418 | |
Less accumulated depreciation and amortization | (563,399) | |
Net Book Value | 317,019 | $ 413,510 |
Equipment [Member] | ||
Property and equipment, gross | 192,958 | |
Computer equipment [Member] | ||
Property and equipment, gross | 460,626 | |
Furniture and fixtures [Member] | ||
Property and equipment, gross | 123,235 | |
Leasehold improvements [Member] | ||
Property and equipment, gross | $ 103,599 |
4. CONTRACTS PAYABLE (Details)
4. CONTRACTS PAYABLE (Details) - USD ($) | Feb. 29, 2016 | Aug. 31, 2015 |
Future payments due 2016 | $ 2,604,404 | |
Future payments due 2017 | 1,000,000 | |
Total cash consideration | 3,604,404 | |
Less: current portion | (2,604,404) | $ (2,604,404) |
Contract payable, net of current portion | 1,000,000 | $ 1,000,000 |
Cognigen [Member] | ||
Future payments due 2016 | 1,854,404 | |
Future payments due 2017 | 0 | |
Total cash consideration | 1,854,404 | |
Less: current portion | (1,854,404) | |
Contract payable, net of current portion | 0 | |
Termination and Non-Assertion Agreement | TSRL [Member] | ||
Future payments due 2016 | 750,000 | |
Future payments due 2017 | 1,000,000 | |
Total cash consideration | 1,750,000 | |
Less: current portion | (750,000) | |
Contract payable, net of current portion | $ 1,000,000 |
4. CONTRACT PAYABLE (Details Na
4. CONTRACT PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Aug. 31, 2015 | Aug. 31, 2014 | |
Cognigen [Member] | ||
Cash to be paid for acquisition | $ 720,000 | |
Shares to be issued for acquisition, shares | 170,014 | |
Termination and Non-Assertion Agreement | TSRL [Member] | ||
Total consideration paid for contract termination and non-assertion agreement | $ 6,000,000 | |
Payment on termination agreement | 2,500,000 | |
Stock issued for acquisition, value | $ 1,000,000 | |
Stock issued for acquisition, shares | 164,745 |
5. COMMITMENTS AND CONTINGENC30
5. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Accelrys [Member] | ||||
Royalty expense | $ 35,288 | $ 24,824 | $ 50,838 | $ 34,989 |
6. SHAREHOLDERS EQUITY (Details
6. SHAREHOLDERS EQUITY (Details - Dividends) - USD ($) | 6 Months Ended | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | Aug. 31, 2015 | |
Total Amount | $ 1,700,700 | $ 1,684,660 | $ 3,375,566 |
FY 2016 1st Qtr [Member] | |||
Record Date | Nov. 9, 2015 | ||
Distribution Date | Nov. 16, 2015 | ||
Number of Shares Outstanding on Record Date | 16,996,001 | ||
Dividend per Share | $ .05 | ||
Total Amount | $ 849,800 | ||
FY 2016 2nd Qtr [Member] | |||
Record Date | Jan. 29, 2016 | ||
Distribution Date | Feb. 5, 2016 | ||
Number of Shares Outstanding on Record Date | 17,018,001 | ||
Dividend per Share | $ .05 | ||
Total Amount | $ 850,900 | ||
FY 2015 1st Qtr [Member] | |||
Record Date | Nov. 7, 2014 | ||
Distribution Date | Nov. 14, 2014 | ||
Number of Shares Outstanding on Record Date | 16,841,114 | ||
Dividend per Share | $ .05 | ||
Total Amount | $ 842,056 | ||
FY 2015 2nd Qtr [Member] | |||
Record Date | Jan. 26, 2015 | ||
Distribution Date | Feb. 2, 2015 | ||
Number of Shares Outstanding on Record Date | 18,852,117 | ||
Dividend per Share | $ .05 | ||
Total Amount | $ 842,606 | ||
FY 2015 3rd Qtr [Member] | |||
Record Date | May 11, 2015 | ||
Distribution Date | May 18, 2015 | ||
Number of Shares Outstanding on Record Date | 16,875,117 | ||
Dividend per Share | $ .05 | ||
Total Amount | $ 843,754 | ||
FY 2015 4th Qtr [Member] | |||
Record Date | Jul. 23, 2015 | ||
Distribution Date | Jul. 30, 2015 | ||
Number of Shares Outstanding on Record Date | 16,943,001 | ||
Dividend per Share | $ .05 | ||
Total Amount | $ 847,150 |
6. SHAREHOLDERS EQUITY (Detai32
6. SHAREHOLDERS EQUITY (Details - Option activity) | 6 Months Ended |
Feb. 29, 2016$ / sharesshares | |
Number of Options | |
Awards Outstanding, ending balance | shares | 1,000,250 |
Vested and Exercisable, end of period | shares | 257,360 |
Weighted-Average Exercise Price Per Share | |
Outstanding | $ 7.23 |
Vested and Exercisable, end of period | $ 3.89 |
Incentive Stock Options (ISOs) [Member] | |
Number of Options | |
Awards Outstanding, beginning balance | shares | 621,000 |
Granted | shares | 412,100 |
Exercised | shares | (75,000) |
Canceled/Forfeited | shares | (7,200) |
Awards Outstanding, ending balance | shares | 950,900 |
Vested and Exercisable, end of period | shares | 230,160 |
Weighted-Average Exercise Price Per Share | |
Outstanding | $ 5.01 |
Granted | 9.71 |
Exercised | 1.44 |
Canceled/Forfeited | 6.85 |
Outstanding | 7.32 |
Vested and Exercisable, end of period | $ 3.80 |
Weighted-Average Remaining Contractual Life | |
Outstanding, beginning of period | 6 years 1 month 6 days |
Outstanding, end of period | 7 years 11 months 19 days |
Vested and Exercisable | 4 years 4 months 2 days |
Non-Qualified Stock Options (NQSOs) [Member] | |
Number of Options | |
Awards Outstanding, beginning balance | shares | 49,350 |
Granted | shares | 0 |
Exercised | shares | 0 |
Awards Outstanding, ending balance | shares | 49,350 |
Vested and Exercisable, end of period | shares | 27,200 |
Weighted-Average Exercise Price Per Share | |
Outstanding | $ 5.52 |
Granted | 0 |
Exercised | 0 |
Canceled/Forfeited | 0 |
Outstanding | 5.52 |
Vested and Exercisable, end of period | $ 4.70 |
Weighted-Average Remaining Contractual Life | |
Outstanding, beginning of period | 7 years 9 months 11 days |
Outstanding, end of period | 7 years 3 months |
Vested and Exercisable | 5 years 9 months 22 days |
6. SHAREHOLDERS EQUITY (Detai33
6. SHAREHOLDERS EQUITY (Details - Options outstanding and exercisable) | 6 Months Ended |
Feb. 29, 2016$ / sharesshares | |
Awards outstanding | shares | 1,000,250 |
Awards outstanding weighted average remaining contractual life | 7 years 11 months 5 days |
Awards outstanding weighted average exercise price | $ 7.23 |
Awards exercisable | shares | 257,360 |
Awards exercisable weighted average remaining contractual life | 4 years 5 months 27 days |
Awards exercisable weighted average exercise price | $ 3.89 |
$1.00 to $1.50 [Member] | |
Exercise price low | 1 |
Exercise price high | $ 1.50 |
Awards outstanding | shares | 100,500 |
Awards outstanding weighted average remaining contractual life | 2 years 4 months 2 days |
Awards outstanding weighted average exercise price | $ 1.04 |
Awards exercisable | shares | 100,500 |
Awards exercisable weighted average remaining contractual life | 2 years 4 months 2 days |
Awards exercisable weighted average exercise price | $ 1.04 |
$1.51 to $3.00 [Member] | |
Exercise price low | 1.51 |
Exercise price high | $ 3 |
Awards outstanding | shares | 3,600 |
Awards outstanding weighted average remaining contractual life | 4 years 2 months 9 days |
Awards outstanding weighted average exercise price | $ 2.20 |
Awards exercisable | shares | 3,600 |
Awards exercisable weighted average remaining contractual life | 4 years 2 months 9 days |
Awards exercisable weighted average exercise price | $ 2.20 |
$3.01 to $4.50 [Member] | |
Exercise price low | 3.01 |
Exercise price high | $ 4.50 |
Awards outstanding | shares | 29,000 |
Awards outstanding weighted average remaining contractual life | 3 years 4 months 6 days |
Awards outstanding weighted average exercise price | $ 3.33 |
Awards exercisable | shares | 29,000 |
Awards exercisable weighted average remaining contractual life | 3 years 4 months 6 days |
Awards exercisable weighted average exercise price | $ 3.35 |
$4.51 to $6.00 [Member] | |
Exercise price low | 4.51 |
Exercise price high | $ 6 |
Awards outstanding | shares | 74,000 |
Awards outstanding weighted average remaining contractual life | 3 years 1 month 28 days |
Awards outstanding weighted average exercise price | $ 5.48 |
Awards exercisable | shares | 41,600 |
Awards exercisable weighted average remaining contractual life | 3 years 1 month 28 days |
Awards exercisable weighted average exercise price | $ 5.42 |
$6.01 to $7.10 [Member] | |
Exercise price low | 6.01 |
Exercise price high | $ 7.10 |
Awards outstanding | shares | 381,050 |
Awards outstanding weighted average remaining contractual life | 8 years 5 months 23 days |
Awards outstanding weighted average exercise price | $ 6.85 |
Awards exercisable | shares | 82,660 |
Awards exercisable weighted average remaining contractual life | 8 years 5 months 23 days |
Awards exercisable weighted average exercise price | $ 6.86 |
$7.50 to $9.82 [Member] | |
Exercise price low | 7.50 |
Exercise price high | $ 9.82 |
Awards outstanding | shares | 412,100 |
Awards outstanding weighted average remaining contractual life | 10 years |
Awards outstanding weighted average exercise price | $ 9.71 |
Awards exercisable | shares | 0 |
Awards exercisable weighted average exercise price | $ 0 |
7. RELATED PARTY TRANSACTIONS (
7. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Feb. 29, 2016 | Aug. 31, 2015 |
Accrued bonus | $ 60,500 | $ 121,000 |
Virginia Woltosz [Member] | ||
Accrued bonus | 30,000 | |
Walt Woltosz [Member] | ||
Accrued bonus | 18,000 | |
Thaddeus Grasela [Member] | ||
Accrued bonus | $ 12,500 |
8. CONCENTRATIONS AND UNCERTA35
8. CONCENTRATIONS AND UNCERTAINTIES (Details Narrative) | 6 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Net Sales [Member] | International Sales [Member] | ||
Net sales concentration percentage | 42.60% | 39.80% |
Net Sales [Member] | Customer 1 [Member] | ||
Net sales concentration percentage | 10.00% | 10.00% |
Net Sales [Member] | Customer 2 [Member] | ||
Net sales concentration percentage | 6.00% | 8.00% |
Net Sales [Member] | Customer 3 [Member] | ||
Net sales concentration percentage | 6.00% | |
Accounts Receivable [Member] | Customer 1 [Member] | ||
Net sales concentration percentage | 12.00% | 13.00% |
Accounts Receivable [Member] | Customer 2 [Member] | ||
Net sales concentration percentage | 11.00% |
9. SEGMENT AND GEOGRAPHIC REP36
9. SEGMENT AND GEOGRAPHIC REPORTING (Details - Segment reporting) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | Aug. 31, 2015 | |
Net Revenues | $ 5,163,726 | $ 4,574,191 | $ 10,002,346 | $ 8,660,382 | |
Income (loss) from operations before income taxes | 1,715,752 | 1,475,081 | 3,443,284 | 2,224,458 | |
Identifiable assets | 27,902,581 | 27,063,000 | 27,902,581 | 27,063,000 | $ 27,344,226 |
Capital expenditures | 1,000 | 0 | 2,000 | 20,000 | |
Capitalized software costs | 278,000 | 432,000 | 278,000 | 432,000 | |
Depreciation and Amortization | 484,000 | 458,000 | 971,000 | 980,000 | |
Eliminations [Member] | |||||
Identifiable assets | (7,238,000) | (7,238,000) | (7,238,000) | (7,238,000) | |
Lancaster [Member] | |||||
Net Revenues | 3,648,000 | 3,303,000 | 7,058,000 | 6,254,000 | |
Income (loss) from operations before income taxes | 1,470,000 | 1,288,000 | 2,894,000 | 1,975,000 | |
Identifiable assets | 25,854,000 | 25,974,000 | 25,854,000 | 25,974,000 | |
Capital expenditures | 0 | 0 | 1,000 | 17,000 | |
Capitalized software costs | 233,000 | 393,000 | 233,000 | 393,000 | |
Depreciation and Amortization | 394,000 | 431,000 | 789,000 | 798,000 | |
Buffalo [Member] | |||||
Net Revenues | 1,516,000 | 1,271,000 | 2,944,000 | 2,406,000 | |
Income (loss) from operations before income taxes | 246,000 | 187,000 | 549,000 | 249,000 | |
Identifiable assets | 9,267,000 | 8,327,000 | 9,267,000 | 8,327,000 | |
Capital expenditures | 1,000 | 0 | 1,000 | 3,000 | |
Capitalized software costs | 45,000 | 39,000 | 45,000 | 39,000 | |
Depreciation and Amortization | $ 90,000 | $ 91,000 | $ 182,000 | $ 182,000 |
9. SEGMENT AND GEOGRAPHIC REP37
9. SEGMENT AND GEOGRAPHIC REPORTING (Details - geographic) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Revenues | $ 5,163,726 | $ 4,574,191 | $ 10,002,346 | $ 8,660,382 |
Lancaster [Member] | ||||
Revenues | 3,648,000 | 3,303,000 | 7,058,000 | 6,254,000 |
Buffalo [Member] | ||||
Revenues | 1,516,000 | 1,271,000 | 2,944,000 | 2,406,000 |
North America [Member] | ||||
Revenues | 2,847,000 | 2,730,000 | 5,737,000 | 5,211,000 |
North America [Member] | Lancaster [Member] | ||||
Revenues | 1,331,000 | 1,459,000 | 2,793,000 | 2,805,000 |
North America [Member] | Buffalo [Member] | ||||
Revenues | 1,516,000 | 1,271,000 | 2,944,000 | 2,406,000 |
Europe [Member] | ||||
Revenues | 1,490,000 | 1,265,000 | 2,404,000 | 1,905,000 |
Europe [Member] | Lancaster [Member] | ||||
Revenues | 1,490,000 | 1,265,000 | 2,404,000 | 1,905,000 |
Europe [Member] | Buffalo [Member] | ||||
Revenues | 0 | 0 | 0 | 0 |
Asia [Member] | ||||
Revenues | 827,000 | 578,000 | 1,860,000 | 1,543,000 |
Asia [Member] | Lancaster [Member] | ||||
Revenues | 827,000 | 578,000 | 1,860,000 | 1,543,000 |
Asia [Member] | Buffalo [Member] | ||||
Revenues | 0 | 0 | 0 | 0 |
South America [Member] | ||||
Revenues | 0 | 1,000 | 1,000 | 1,000 |
South America [Member] | Lancaster [Member] | ||||
Revenues | 0 | 1,000 | 1,000 | 1,000 |
South America [Member] | Buffalo [Member] | ||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 |
10. EMPLOYEE BENEFIT PLAN (Deta
10. EMPLOYEE BENEFIT PLAN (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Compensation and Retirement Disclosure [Abstract] | ||||
Plan contributions by company | $ 51,737 | $ 65,519 | $ 107,075 | $ 122,846 |