Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Aug. 31, 2016 | Nov. 14, 2016 | Feb. 28, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | SIMULATIONS PLUS INC | ||
Entity Central Index Key | 1,023,459 | ||
Document Type | 10-K | ||
Document Period End Date | Aug. 31, 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 | Accelerated Filer | ||
Entity Public Float | $ 102,975,104 | ||
Entity Common Stock, Shares Outstanding | 17,226,478 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Aug. 31, 2016 | Aug. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 8,030,284 | $ 8,551,275 |
Accounts receivable, net of allowance for doubtful accounts of $0 | 3,009,517 | 1,593,707 |
Revenues in excess of billings | 694,131 | 795,125 |
Prepaid income taxes | 555,486 | 0 |
Prepaid expenses and other current assets | 410,811 | 381,718 |
Deferred income taxes | 228,713 | 210,972 |
Total current assets | 12,928,942 | 11,532,797 |
Long-term assets | ||
Capitalized computer software development costs, net of accumulated amortization of $8,613,487 and $7,632,421 | 4,013,127 | 3,798,339 |
Property and equipment, net (note 4) | 256,381 | 413,510 |
Intellectual property, net of accumulated amortization of $1,408,750 and $801,250 | 4,666,250 | 5,273,750 |
Other intangible assets net of accumulated amortization of $295,000 and $147,500 | 1,355,000 | 1,502,500 |
Goodwill | 4,789,248 | 4,789,248 |
Other assets | 34,082 | 34,082 |
Total assets | 28,043,030 | 27,344,226 |
Current liabilities | ||
Accounts payable | 108,111 | 209,407 |
Accrued payroll and other expenses | 481,610 | 429,580 |
Accrued bonuses to officer | 121,000 | 121,000 |
Income taxes payable | 0 | 43,602 |
Other current liabilities | 8,274 | 19,859 |
Current portion - Contract payable (note 5) | 1,000,000 | 2,604,404 |
Billings in excess of revenues | 230,100 | 106,534 |
Deferred revenue | 176,422 | 78,945 |
Total current liabilities | 2,125,517 | 3,613,331 |
Long-term liabilities | ||
Deferred income taxes | 3,184,919 | 3,190,419 |
Payments due under Contracts payable (note 5) | 0 | 1,000,000 |
Other long-term liabilities | 0 | 8,274 |
Total liabilities | 5,310,436 | 7,812,024 |
Shareholders' equity (note 7) | ||
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 17,225,478 and 16,943,001 shares issued and outstanding | 7,227 | 5,414 |
Additional paid-in capital | 11,376,007 | 9,714,290 |
Retained earnings | 11,349,360 | 9,812,498 |
Total shareholders' equity | 22,732,594 | 19,532,202 |
Total liabilities and shareholders' equity | $ 28,043,030 | $ 27,344,226 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Aug. 31, 2016 | Aug. 31, 2015 |
Allowance for doubtful accounts | $ 0 | $ 0 |
Accumulated amortization of computer software development costs | 8,613,487 | 7,632,421 |
Accumulated amortization on intangible assets | $ 1,408,750 | $ 801,250 |
Preferred stock par value | $ 0.001 | $ 0.001 |
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 | $ 0.001 |
Common stock shares authorized | 50,000,000 | 50,000,000 |
Common stock shares issued | 17,225,478 | 16,943,001 |
Common stock shares outstanding | 17,225,478 | 16,943,001 |
Intellectual Property [Member] | ||
Accumulated amortization on intangible assets | $ 1,408,750 | $ 801,250 |
Other Intangible Assets | ||
Accumulated amortization on intangible assets | $ 295,000 | $ 147,500 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Income Statement [Abstract] | ||
Net revenues | $ 19,972,079 | $ 18,314,248 |
Cost of revenues | 4,601,513 | 4,315,870 |
Gross margin | 15,370,566 | 13,998,378 |
Operating expenses | ||
Selling, general, and administrative | 6,693,691 | 6,813,374 |
Research and development | 1,445,069 | 1,328,476 |
Total operating expenses | 8,138,760 | 8,141,850 |
Income from operations | 7,231,806 | 5,856,528 |
Other income (expense) | ||
Interest income | 18,014 | 17,935 |
Gain (loss) on currency exchange | (13,428) | (181,534) |
Total other income (expense) | 4,586 | (163,599) |
Income from operations before provision for income taxes | 7,236,392 | 5,692,929 |
Provision for income taxes | (2,286,256) | (1,849,968) |
Net Income | $ 4,950,136 | $ 3,842,961 |
Earnings per share | ||
Basic | $ 0.29 | $ 0.23 |
Diluted | $ 0.29 | $ 0.23 |
Weighted-average common shares outstanding | ||
Basic | 17,028,566 | 16,864,670 |
Diluted | 17,209,506 | 17,032,158 |
STATEMENTS OF SHAREHOLDERS EQUI
STATEMENTS OF SHAREHOLDERS EQUITY - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings / Accumulated Deficit [Member] | Total |
Beginning balance, shares at Aug. 31, 2014 | 16,349,955 | |||
Beginning balance, value at Aug. 31, 2014 | $ 4,821 | $ 6,085,427 | $ 9,345,103 | $ 15,435,351 |
Exercise of stock options, shares | 101,887 | |||
Exercise of stock options, amount | $ 102 | 56,941 | 57,043 | |
Stock-based compensation | 295,243 | 295,243 | ||
Issuance of stock - acquisition, shares | 491,159 | |||
Issuance of stock - acquisition, value | $ 491 | 3,276,679 | 3,277,170 | |
Declaration of dividends | (3,375,566) | (3,375,566) | ||
Net income | 3,842,961 | 3,842,961 | ||
Ending balance, shares at Aug. 31, 2015 | 16,943,001 | |||
Ending balance, value at Aug. 31, 2015 | $ 5,414 | 9,714,290 | 9,812,498 | 19,532,202 |
Exercise of stock options, shares | 112,463 | |||
Exercise of stock options, amount | $ 113 | 181,936 | 182,049 | |
Stock-based compensation | 347,077 | 347,077 | ||
Issuance of stock - acquisition, shares | 170,014 | |||
Issuance of stock - acquisition, value | $ 1,700 | 1,132,704 | 1,134,404 | |
Declaration of dividends | (3,413,274) | (3,413,274) | ||
Net income | 4,950,136 | 4,950,136 | ||
Ending balance, shares at Aug. 31, 2016 | 17,225,478 | |||
Ending balance, value at Aug. 31, 2016 | $ 7,227 | $ 11,376,007 | $ 11,349,360 | $ 22,732,594 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Cash flows from operating activities | ||
Net income | $ 4,950,136 | $ 3,842,961 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization of property and equipment | 196,250 | 211,454 |
Amortization of capitalized computer software development costs | 981,066 | 1,023,139 |
Amortization of Intellectual property | 755,000 | 755,000 |
Stock-based compensation | 347,077 | 295,243 |
Deferred income taxes | (23,241) | 55,919 |
(Increase) decrease in | ||
Accounts receivable | (1,415,810) | 1,048,969 |
Revenues in excess of billings | 100,994 | (238,502) |
Prepaid income taxes | (555,486) | 748,359 |
Prepaid expenses and other assets | (29,093) | (104,836) |
Increase (decrease) in | ||
Accounts payable | (101,296) | 19,443 |
Accrued payroll and other expenses | 52,030 | (355,567) |
Accrued Bonus | 0 | 1,000 |
Billings in excess of revenues | 123,566 | |
Accrued income taxes | (43,602) | 43,602 |
Other liabilities | (19,859) | (19,860) |
Deferred revenue | 97,477 | 48,573 |
Net cash provided by operating activities | 5,415,209 | 7,134,991 |
Cash flows from investing activities | ||
Purchases of property and equipment | (39,121) | (71,369) |
Cash used to purchase Cognigen | (720,000) | (2,080,000) |
Cash received in acquisition | 0 | 190,184 |
Capitalized computer software development costs | (1,195,854) | (1,168,937) |
Net cash (used in) investing activities | (1,954,975) | (3,130,122) |
Cash flows from financing activities | ||
Payment of dividends | (3,413,274) | (3,375,566) |
Payments on contracts payable | (750,000) | (750,000) |
Proceeds from the exercise of stock options | 182,049 | 57,043 |
Net cash (used in) financing activities of continuing operations | (3,981,225) | (4,068,523) |
Net increase (decrease) in cash and cash equivalents | (520,991) | (63,654) |
Cash and cash equivalents, beginning of year | 8,551,275 | |
Cash and cash equivalents, end of period | 8,030,284 | 8,551,275 |
Supplemental disclosures of cash flow information | ||
Income taxes paid | 2,908,587 | 961,907 |
Non-Cash Investing and Financing | ||
Stock issued for acquisition of Cognigen Corporation | 1,134,404 | 3,277,170 |
Creation of contract liability for acquisition of Cognigen Corporation | $ 0 | $ 1,854,404 |
1. ORGANIZATION AND LINES OF BU
1. ORGANIZATION AND LINES OF BUSINESS | 12 Months Ended |
Aug. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND LINES OF BUSINESS | Organization Simulations Plus, Inc. (the “Company”, “we”, “us”, “our”) was incorporated on July 17, 1996. On September 2, 2014, Simulations Plus, Inc. acquired all outstanding equity interests of Cognigen Corporation (“Cognigen”) pursuant to the terms of the Merger Agreement and Cognigen became a wholly owned subsidiary of Simulations Plus, Inc. (collectively, the "Company"). 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. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Aug. 31, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF 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. Use of Estimates Our 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 management’s 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 the FASB Accounting Standards Codification (“ASC”) 985-605, “Software – Revenue Recognition”. Software product revenue is recorded when the following conditions are met: 1) evidence of arrangement exists; 2) delivery has been made; 3) the amount is fixed; and 4) collectability is probable. Post-contract customer support (“PCS”) obligations are insignificant; therefore, revenue for PCS is recognized at the same time as the licensing fee, and the costs of providing such support services are accrued and amortized over the obligation period. As a byproduct of ongoing improvements and upgrades for the new programs and new modules of software, some modifications are provided to our 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. Certain of the Company's software products are housed and supported on the Company's computer networks. Software revenues for those products are included in income over the life of the contract. 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, the Company considers 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 Company’s trade accounts receivable balances. If we determine that the financial conditions of any of our customers have 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 computer software development costs are comprised primarily of salaries and direct payroll-related costs and the purchase of existing software to be used in the Company's software products. Amortization of capitalized computer software development costs is provided on a product-by-product basis on the straight-line method over the estimated economic life of the products not to exceed five years. Amortization of software development costs amounted to $981,066 and $1,023,139 for the years ended August 31, 2016 and 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, or fair market value for property and equipment acquired in business combinations, 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. Intangible Assets and Goodwill The Company performs valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and recognizes the assets acquired and liabilities assumed at their acquisition date fair value. Acquired intangible assets include customer relationships, software, trade name, and non-compete agreements. The Company determines the appropriate useful life by performing an analysis of expected cash flows based on historical experience of the acquired businesses. Intangible assets are amortized over their estimated useful lives using the straight-line method, which approximates the pattern in which the majority of the economic benefits are expected to be consumed. Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets. Goodwill is not amortized, instead it is tested for impairment annually or when events or circumstances change that would indicate that goodwill might be impaired. Events or circumstances that could trigger an impairment review include, but are not limited to, a significant adverse change in legal factors or in the business climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of the Company's use of the acquired assets or the strategy for the Company's overall business, significant negative industry or economic trends or significant under-performance relative to expected historical or projected future results of operations. Goodwill is tested for impairment at the reporting unit level, which is one level below or the same as an operating segment. As of August 31, 2016, the Company determined that it has two reporting units, Simulations Plus and Cognigen Corporation. When testing goodwill for impairment, the Company first performs a qualitative assessment to determine whether it is necessary to perform step one of a two-step annual goodwill impairment test for each reporting unit. The Company is required to perform step one only if it concludes that it is more likely than not that a reporting unit's fair value is less than its carrying value. Should this be the case, the first step of the two-step process is to identify whether a potential impairment exists by comparing the estimated fair values of the Company's reporting units with their respective book values, including goodwill. If the estimated fair value of the reporting unit exceeds book value, goodwill is considered not to be impaired, and no additional steps are necessary. If, however, the fair value of the reporting unit is less than book value, then the second step is performed to determine if goodwill is impaired and to measure the amount of impairment loss, if any. The amount of the impairment loss is the excess of the carrying amount of the goodwill over its implied fair value. The estimate of implied fair value of goodwill is primarily based on an estimate of the discounted cash flows expected to result from that reporting unit, but may require valuations of certain internally generated and unrecognized intangible assets such as the Company's software, technology, patents and trademarks. If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to the excess. As of August 31, 2016, the entire balance of goodwill was attributed to the Company's Cognigen Corporation reporting unit. Intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. The Company has not recognized any impairment charges during the periods ended August 31, 2016 and 2015. Reconciliation of Goodwill for the period ended August 31, 2016: Balance, August 31, 2014 $ – Addition 4,789,248 Impairments – Balance, August 31, 2015 $ 4,789,248 Addition – Impairments – Balance, August 31, 2016 $ 4,789,248 Other Intangible Assets The following table summarizes other intangible assets as of August 31, 2016: Amortization Period Acquisition Value Accumulated Amortization Net book value Customer relationships Straight line 8 years $ 1,100,000 $ 275,000 $ 825,000 Trade Name-Cognigen None 500,000 0 500,000 Covenants not to compete Straight line 5 years 50,000 20,000 30,000 $ 1,650,000 $ 295,000 $ 1,355,000 Amortization expense for the year ended August 31, 2016 and 2015 was $147,500. Future amortization for the next five years is as follows: Year ending August 31, Amount 2017 147,500 2018 147,500 2019 147,500 2020 137,500 2021 137,500 Business Acquisitions The Company accounted for the acquisition of Cognigen using the purchase method of accounting where the assets acquired and liabilities assumed are recognized based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Determining the fair value of certain acquired assets and liabilities is subjective in nature and often involves the use of significant estimates and assumptions, including, but not limited to, the selection of appropriate valuation methodology, projected revenue, expenses and cash flows, weighted average cost of capital, discount rates, estimates of advertiser and publisher turnover rates and estimates of terminal values. Business acquisitions are included in the Company's consolidated financial statements as of the date of the acquisition. Fair Value of Financial Instruments Financial assets and liabilities recorded at fair value in the Company’s Balance Sheet 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 management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. For certain of our financial instruments, including accounts receivable, accounts payable, accrued payroll and other expenses, and accrued bonuses to officers the carrying amounts are approximate fair value due to their short-term nature. Advertising The Company expenses advertising costs as incurred. Advertising costs for the years ended August 31, 2016 and 2015 were approximately $131,783 and $38,000, respectively. Research and Development Costs Research and development costs are charged to expense as incurred until technological feasibility has been established. These costs include salaries, laboratory experiment, and purchased software which was developed by other companies and incorporated into, or used in the development of, our final products. Income Taxes The Company accounts for income taxes in accordance with 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. The cost of $75,000 is being amortized over 10 years under the straight-line method. Amortization expense for each of the fiscal years ended August 31, 2016 and 2015 was $7,500. Accumulated amortization as of August 31, 2016 and 2015 was $33,750 and $26,250, respectively. On May 15, 2014, we entered into a termination and non-assertion agreement with TSRL, Inc., pursuant to which the parties agreed to terminate an exclusive software licensing agreement entered into between the parties in 1997. As a result, the company obtained a perpetual right to use certain source code and data, and TSRL relinquished any rights and claims to any GastroPlus products and to any claims to royalties or other payments under that 1997 agreement. We agreed to pay TSRL total consideration of $6,000,000, which is being amortized over 10 years under the straight-line method. Amortization for the year ended August 31, 2016 and 2015 was $600,000. Accumulated amortization as of August 31, 2016 and 2015 was $1,375,000 and $775,000, respectively. (See Note 5) Total amortization expense for intellectual property agreements for the years ended August 31, 2016 and 2015 was $607,500. Accumulated amortization as of August 31, 2016 and 2015 was $1,408,750 and $801,250, respectively. Future amortization for the next five years is as follows: Year ending August 31, TSRL Enslien Total 2017 $ 600,000 $ 7,500 $ 607,500 2018 $ 600,000 $ 7,500 $ 607,500 2019 $ 600,000 $ 7,500 $ 607,500 2020 $ 600,000 $ 7,500 $ 607,500 2021 $ 600,000 $ 7,500 $ 607,500 Earnings per Share The Company reports earnings per share in accordance with FASB ACS 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 similarly 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 years ended August 31, 2016 and 2015 were as follows: 2016 2015 Numerator Net income attributable to common shareholders $ 4,950,136 $ 3,842,961 Denominator Weighted-average number of common shares outstanding during the year 17,028,566 16,864,670 Dilutive effect of stock options 180,940 167,488 Common stock and common stock equivalents used for diluted earnings per share 17,209,506 17,032,158 Stock-Based Compensation The Company accounts for stock options using the modified prospective method in accordance with FASB ASC 718-10, “Compensation-Stock Compensation” Impairment of Long-lived Assets The Company accounts for the impairment and disposition of long-lived assets in accordance with ASC 350, “Intangibles – Goodwill and Other “Property and Equipment” Recently Issued Accounting Standards In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principles-based approach for determining revenue recognition. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. The revenue recognition standard is required to be applied retrospectively, including any combination of practical expedients as allowed in the standard. We are evaluating the impact, if any, of the adoption of ASU 2014-09 to our financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In November 2015, the FASB issued ASU No 2015-17, Income Taxes (Topic 740). The amendments in ASU 2015-17 change the requirements for the classification of deferred taxes on the balance sheet. Currently, GAAP requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. To simplify the presentation of deferred income taxes, the amendments in this ASU require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The pronouncement is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes existing guidance on accounting for leases in "Leases (Topic 840)" and generally requires all leases to be recognized in the consolidated balance sheet. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018; early adoption is permitted. The provisions of ASU 2016-02 are to be applied using a modified retrospective approach. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. This ASU affects entities that issue share-based payment awards to their employees. The ASU is designed to simplify several aspects of accounting for share-based payment award transactions which include - the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and forfeiture rate calculations. ASU 2016-09 will become effective for the Company in the first quarter of fiscal 2019. Early adoption is permitted in any interim or annual period. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In April 2016, the FASB issued AS 2016-10, Revenue from Contracts with Customers (Topic 606), which amends certain aspects of the Board's new revenue standard, ASU 2014-09, Revenue from Contracts with Customers. The standard should be adopted concurrently with adoption of ASU 2014-09 which is effective for annual and interim periods beginning after December 15, 2017. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. |
3. CONTRACTS IN PROGRESS
3. CONTRACTS IN PROGRESS | 12 Months Ended |
Aug. 31, 2016 | |
Contractors [Abstract] | |
CONTRACTS IN PROGRESS | Cost, estimated earnings, and billings on uncompleted contracts are summarized as follows as of August 31, 2016 and 2015: 2016 2015 Revenues earned to date on uncompleted contract $ 2,557,507 $ 3,155,123 Billings to date on uncompleted contracts (2,093,476 ) (2,466,532 ) $ 464,031 $ 688,591 Contracts in progress are included in the accompanying balance sheets under the following captions: 2016 2015 Revenues in excess of billings $ 694,131 $ 795,125 Billings in excess of revenues (230,100 ) (106,534 ) $ 464,031 $ 688,591 |
4. PROPERTY AND EQUIPMENT
4. PROPERTY AND EQUIPMENT | 12 Months Ended |
Aug. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment at August 31, 2016 and 2015 consisted of the following: 2016 2015 Equipment $ 487,458 $ 460,626 Computer equipment 125,385 123,235 Furniture and fixtures 200,595 190,456 Leasehold improvements 103,599 103,599 917,037 877,916 Less accumulated depreciation and amortization 660,656 464,406 Total $ 256,381 $ 413,510 Depreciation expense was $196,250 and $211,454 for the years ended August 31, 2016 and 2015, respectively. |
5. CONTRACTS PAYABLE
5. CONTRACTS PAYABLE | 12 Months Ended |
Aug. 31, 2016 | |
Other Liabilities Disclosure [Abstract] | |
CONTRACTS PAYABLE | TSRL Pursuant to the termination and non-assertion agreement with TSRL (See note 2), the Company will pay TSRL $2,500,000 over a three-year period. The remaining payment of $1,000,000 will be made in April 2017. Cognigen Acquisition Liability-Related Party On September 2, 2014, the Company acquired Cognigen Corporation (See note 13). As part of the consideration 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 stock. The former shareholders of Cognigen are currently employed by the consolidated Company, one of whom serves as the President of Simulations Plus, Inc. and Cognigen. In July 2016 the final payment was made and the shares were issued. |
6. COMMITMENTS AND CONTINGENCIE
6. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Aug. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Leases We lease approximately 13,500 square feet of space in Lancaster, California. The original lease had a five-year term with two, three-year options to extend. The initial five-year term expired in February 2011, and we extended the lease to February 2, 2014. In June 2013, the lease was amended to extend the term to February 2, 2017. The amended lease also provides for an annual base rent increase of 3% per year and two, two-year options to extend. In May 2016 the company exercised the two, two-year options extending the term of the lease through February 2, 2021 at a fixed rate of $25,000 per month. The new extension agreement allowed the company with 90 days notice to opt out of the remaining lease in the last two years of the term upon payment of a recapture payment equal to the 3% base payment increase that would have been due under the original agreement. Our subsidiary leases approximately 12,225 square feet of space in Buffalo, New York. The initial five-year term expires in October 2018; the lease allows for a three year option to extend to October 2021. The current base rent is $15,638 per month. Rent expense, including common area maintenance fees for the years ended August 31, 2016 and 2015 was $491,800 and $488,888, respectively. Future minimum lease payments under non-cancelable operating leases with remaining terms of one year or more at August 31, 2016 were as follows: Years Ending August 31, 2017 $ 487,654 2018 498,654 2019 331,276 2020 300,000 2021 126,786 $ 1,744,370 Employment Agreement Effective September 1, 2014, the Company entered into a new Employment Agreement with Walter S. Woltosz to serve as Chief Executive Officer of the Company (the “Woltosz Employment Agreement”). The Woltosz Employment Agreement has a one-year term. Under the terms of the Woltosz Employment Agreement, Mr. Woltosz is required to devote a minimum of 60% of his productive time to the position of Chief Executive Officer of the Company. He will receive annual compensation of $180,000, be eligible to receive up to 12,000 Company stock options under the 2007 Simulations Plus, Inc. Stock Option Plan, as determined by the Company’s Board of Directors, and shall be paid an annual performance bonus of up to 5% of the Company’s 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 at 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. On August 8, 2016 the Company renewed this employment agreement for another year at 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 August 11, 2016. On September 2, 2014, Thaddeus H. Grasela, Jr., Ph.D., was appointed President of the Company and its wholly-owned subsidiary Cognigen, and the Company and Cognigen have 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 will receive an annual base salary of $250,000, will be eligible to receive Company stock options under the 2007 Simulations Plus, Inc. Stock Option Plan, as determined by the Company’s Board of Directors, and will be eligible to receive an annual performance bonus in an amount not to exceed 10% of salary to be determined by the Compensation Committee of the Company’s Board of Directors. On September, 2016 and 2015 the Compensation Committee awarded a $25,000 performance bonuses, this expense was accrued as an expense as of August 31, 2016 and 2015. License Agreement The Company executed a royalty agreement with Accelrys, Inc. (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. Under this agreement for the year ended August 31, 2016 and 2015 we incurred royalty expense of $119,620 and $77,307, respectively. 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 Company’s 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 denies 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. If the plaintiff does not discover evidence during a nine month period to and including August 31, 2015 that justifies bringing the Company back into the litigation, the Company will prepare a dismissal with prejudice to be signed on behalf of the plaintiff. The Company did not receive any notification and is in the process of further discussion with the Plaintiffs’ regarding final dismissal with prejudice. |
7. SHAREHOLDERS' EQUITY
7. SHAREHOLDERS' EQUITY | 12 Months Ended |
Aug. 31, 2016 | |
Equity [Abstract] | |
SHAREHOLDERS' EQUITY | Dividend The Company’s Board of Directors declared cash dividends during fiscal year 2016 and 2015. The details of dividend 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 5/02/2016 5/09/2016 17,029,501 $ 0.05 $ 851,475 8/11/2016 8/18/2016 17,221,978 $ 0.05 $ 861,099 Total $ 3,413,274 Although dividend distributions are currently expected to continue on a quarterly basis, the Company’s Board of Directors reserves the right to discontinue the dividend distribution any time. Stock Option Plan In September 1996, the Company’s Board of Directors adopted, and the Company’s shareholders approved, the 1996 Stock Option Plan (the "1996 Plan") under which a total of 1,000,000 shares of common stock had been reserved for issuance. The total number of shares that may be granted under the 1996 Plan was increased to 2,000,000 in March 1999, to 4,000,000 in February 2000, to 5,000,000 in December 2000 and to 6,000,000 in February 2005. All such increases were approved by the Company’s Board of Directors and the Company’s shareholders. The 1996 Plan terminated in September 2006 in accordance with its terms. On February 23, 2007, the Company’s Board of Directors adopted and the Company’s shareholders approved the 2007 Stock Option Plan (the “2007 Plan”) under which a total of 1,000,000 shares of common stock had been reserved for issuance. On February 25, 2014, the Company’s Board of Directors and the Company’s shareholders approved an increase of the total number of shares that may be granted under the 2007 Plan to 2,000,000. Incentive Stock Options (“ISOs”) As of August 31, 2016, employees hold ISOs to purchase in the aggregate 894,750 shares of the Company’s common stock at exercise prices ranging from $1.00 to $9.82 per share. Transactions in FY15 (ISOs) Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Outstanding, August 31, 2014 798,500 $ 4.59 6.27 Granted 37,000 $ 6.99 Exercised (95,384 ) $ 2.49 Canceled/Forfeited (119,116 ) $ 4.86 Outstanding, August 31, 2015 621,000 $ 5.01 6.01 Vested and Exercisable, August 31, 2015 265,700 $ 2.81 4.40 Vested and Expected to Vest, August 31, 2015 576,952 $ 4.87 6.32 Transactions in FY16 (ISOs) Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Outstanding, August 31, 2015 621,000 $ 5.01 6.01 Granted 412,100 $ 9.71 Exercised (100,863 ) $ 1.45 Canceled/Forfeited (27,487 ) $ 7.66 Expired (10,000 ) $ 1.13 Outstanding, August 31, 2016 894,750 $ 7.54 7.72 Vested and Exercisable, August 31, 2016 253,380 $ 4.85 5.26 Vested and Expected to Vest, August 31, 2016 812,458 $ 7.40 7.58 Non-Qualified Stock Options (“NQSOs”) As of August 31, 2016, the outside members of the Company’s Board of Directors hold NQSOs to purchase in the aggregate 52,750 shares of the Company’s common stock at exercise prices ranging from $1.78 to $8.62 per share. Transactions in FY15 (NQSOs) Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Outstanding, August 31, 2014 56,600 $ 4.82 7.96 Granted 13,750 $ 6.75 Exercised (6,503 ) $ 3.28 Cancelled/Forfeited (14,497 ) $ 4.97 Outstanding, August 31, 2015 49,350 $ 5.52 7.75 Exercisable, August 31, 2015 27,200 $ 4.70 6.31 Transactions in FY16 (NQSOs) Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Outstanding, August 31, 2015 49,350 $ 5.52 7.75 Granted 15,000 $ 8.62 Exercised (11,600 ) $ 3.33 Cancelled/Forfeited (0 ) $ – Outstanding, August 31, 2016 52,750 $ 6.88 8.07 Exercisable, August 31, 2016 26,500 $ 5.95 6.70 The fair value of the options, including both ISOs and NQSOs, granted during fiscal year 2016 is estimated at $1,189,730. The fair value of these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 2.32%, pre-vest forfeiture rate of 6.31%, expected volatility of 34.22%, risk-free interest rate of 1.42%, and expected life of 6.80 years. The total fair value of non-vested stock options as of August 31, 2016 was $1,366,269 and is amortizable over a weighted average period of 7.58 years. The fair value of the options, including both ISOs and NQSOs, granted during fiscal year 2015 was estimated at $113,435. The fair value of these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 3.03%, pre-vest forfeiture rate of 6.20%, expected volatility of 47.13%, risk-free interest rate of 2.09%, and expected life of 6.89 years. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which do not have vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because our stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its stock options. Intrinsic Value of options outstanding and options exercisable Intrinsic Value of Options Outstanding Intrinsic Value of Options Exercisable Intrinsic Value of Options Exercised FY15 $ 1,182,797 $ 1,109,489 $ 396,485 FY16 $ 1,500,659 $ 1,025,718 $ 853,423 The weighted-average remaining contractual life of options outstanding issued under the 1996 and 2007 Plan was 7.74 years at August 31, 2016. The exercise prices for the options outstanding at August 31, 2016 ranged from $1.00 to $9.82 per share, 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 67,000 3.0 years $ 1.00 67,000 3.0 years $1.03 $1.51 $ 3.00 – – – – – –- $3.01 $ 4.50 20,000 1.9 years $ 3.16 20,000 1.9 years $3.16 $4.51 $ 6.00 74,000 2.7 years $ 5.48 44,000 2.9 years $5.38 $6.01 $ 7.50 367,200 8.0 years $ 6.85 148,880 7.9 years $6.85 $7.51 $ 9.00 15,000 10.0 years $ 8.62 0 $9.01 $ 9.82 404,300 9.5 years $ 9.71 0 947,500 279,880 |
8. INCOME TAXES
8. INCOME TAXES | 12 Months Ended |
Aug. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
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. The components of the income tax provision for fiscal year 2016 and 2015 were as follows: 2016 2015 Current Federal $ 2,118,229 $ 1,482,798 State 171,840 236,152 Foreign 19,428 75,099 2,309,497 1,794,049 Deferred Federal 22,936 (15,036 ) State (46,177 ) 70,955 (23,241 ) 55,919 Total $ 2,286,256 $ 1,849,968 A reconciliation of the expected income tax (benefit) computed using the federal statutory income tax rate to the Company's effective income tax rate is as follows for fiscal year 2016 and 2015: 2016 2015 Income tax computed at federal statutory tax rate 34.0 % 34.0 % State taxes, net of federal benefit 3.4 5.0 Meals & Entertainment 0.1 0.1 Stock Based Compensation 1.3 0.3 Other permanent differences (0.6 ) (0.5 ) Research and development credit (6.3 ) (6.9 ) Change in prior year estimated taxes (0.3 ) 0.5 Total 31.6 % 32.5 % Significant components of the Company's deferred tax assets and liabilities for income taxes for the fiscal years ended August 31, 2016 and 2015 are as follows: 2016 2015 Deferred tax assets Accrued payroll and other expenses $ 108,769 $ 97,625 Deferred revenue 71,009 43,703 Capitalized merger costs 292,693 299,965 Intellectual property 21,205 24,221 Research and development credit 54,427 90,365 State taxes 58,426 78,089 State Tax Deferred 160,391 175,044 Total deferred tax assets 766,920 809,012 Less: Valuation allowance – – 766,920 809,012 Deferred tax liabilities Property and equipment (93,900 ) (159,980 ) State Tax Deferred (9,491 ) (8,445 ) Intellectual Property (2,004,451 ) (2,053,220 ) Capitalized computer software development costs (1,615,284 ) (1,566,815 ) Total deferred tax liabilities (3,723,126 ) (3,788,460 ) Net deferred tax liabilities $ (2,956,206 ) $ (2,979,447 ) 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. Interest and penalties totaled $ -0- and $-0- for fiscal year 2016 and 2015, respectively. We file income tax returns with the IRS and various state jurisdictions and India. Our federal income tax returns for fiscal year 2012 thru 2013 and 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 return for the fiscal year 2007 and fiscal year 2008 remains open with regard to R&D 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 was auditing the Company’s tax return for 2014. This audit was completed during FY2016; there were no changes as a result of the audit. Our review of prior year tax positions using the criteria and provisions presented in guidance issued by FASB did not result in a material impact on our financial position or results of operations. |
9. CONCENTRATIONS AND UNCERTAIN
9. CONCENTRATIONS AND UNCERTAINTIES | 12 Months Ended |
Aug. 31, 2016 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS AND UNCERTAINTIES | Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents and trade accounts receivable. The Company holds cash and cash equivalents at banks located in California, with balances that often exceed FDIC insured limits. Historically, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. However, considering the current banking environment, the Company is investigating alternative ways to minimize its exposure to such risks. While the Company may be exposed to credit losses due to the nonperformance of its counterparties, the Company does not expect the settlement of these transactions to have a material effect on its results of operations, cash flows or financial condition. Revenue concentration shows that international sales accounted for 38% and 37% of net sales for fiscal year 2016 and 2015, respectively. Three customers accounted for 10% (a dealer account in Japan representing various customers), 7% and 6% of net sales for fiscal year 2016. Three customers accounted for 10% (a dealer account in Japan representing various customers), 8% and 6% of net sales for fiscal year 2015. Accounts receivable concentration shows that three customers comprised 16% (a dealer account in Japan representing various customers), 10%, and 10% of accounts receivable at August 31, 2016, and three customers comprised 12% (a dealer account in Asia representing various customer), 11% (a dealer account in Japan representing various customers), and 11% of accounts receivable at August 31, 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. During economic downturns, we have seen consolidations in the pharmaceutical industry. Although we have not seen any significant reduction in total revenues to date, our growth rate could be effected by consolidation and downsizing in the pharmaceutical industry. |
10. SEGMENT AND GEOGRAPHIC REPO
10. SEGMENT AND GEOGRAPHIC REPORTING | 12 Months Ended |
Aug. 31, 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 years ended August 31, 2016 and 2015 (in thousands, because of rounding, numbers may not foot): Year ended August 31, 2015 Simulations Plus, Inc. Cognigen Corporation Eliminations Tota Net Revenues $ 13,086 $ 5,228 $ 18,314 Income (loss) from operations before income taxes $ 4,816 $ 1,041 $ 5,857 Total assets $ 25,549 $ 9,033 $ (7,238 ) $ 27,344 Capital expenditures $ 23 $ 14 $ 37 Capitalized software costs $ 1,019 $ 151 $ 1,170 Depreciation and Amortization $ 1,633 $ 357 $ 1,990 Year ended August 31, 2016 Simulations Plus, Inc. Cognigen Corporation Eliminations Total Net Revenues $ 14,417 5,554 $ 19,972 Income (loss) from operations before income taxes $ 6,330 $ 901 $ 7,231 Total assets $ 26,306 $ 8,975 $ (7,238 ) $ 28,043 Capital expenditures $ 6 $ 32 $ 38 Capitalized software costs $ 1,017 $ 178 $ 1,195 Depreciation and Amortization $ 1,556 $ 375 $ 1,931 In addition, the Company allocates revenues to geographic areas based on the locations of its customers. Geographical revenues for the years ended August 31, 2016 and 2015 were as follows (in thousands, because of rounding, numbers may not foot): Year ended August 31, 2015 North America Europe Asia South America Total Simulations Plus, Inc. $ 6,261 $ 3,629 $ 3,153 $ 43 $ 13,086 Cognigen Corporation 5,228 – – – 5,228 Total $ 11,489 $ 3,629 $ 3,153 $ 43 $ 18,314 Year ended August 31, 2016 North America Europe Asia South America Total Simulations Plus, Inc. $ 6,830 $ 4,022 $ 3,564 $ 2 $ 14,418 Cognigen Corporation 5,554 – – – 5,554 Total $ 12,384 $ 4,022 $ 3,564 $ 2 $ 19,972 |
11. RELATED PARTY TRANSACTIONS
11. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Aug. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | During fiscal year 2016 and 2015, included in bonus expenses to officers was $121,000, of which $60,000 was accrued bonus representing 5% of the Company’s net income before bonuses and taxes, not exceeding $60,000, paid to the Corporate Secretary, Virginia Woltosz, as an annual bonus as part of the terms of the original sale of Words+ to the Company in 1996. In addition, $36,000 was accrued under the employment agreement with Walter Woltosz, the Company’s Chief Executive Officer, and another $25,000 was expensed as a fiscal year 2014 performance bonus for Thaddeus Grasela the Company’s President. These bonuses were accrued as of August 31, 2016 and 2015, and paid in the month following the fiscal close. On September 2, 2014 the Company acquired Cognigen Corporation. The Company incurred a liability of $1,854,404 due to the former shareholders of Cognigen Corporation who are currently employees and shareholders of the Consolidated Company. (See note 5). This liability was settled in July 2016 with a cash payment of $720,000 and the balance of $1,134,404 stock issuance. |
12. EMPLOYEE BENEFIT PLAN
12. EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Aug. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
EMPLOYEE BENEFIT PLAN | We maintain a 401(k) Plan for eligible employees. We make matching contributions equal to 100% of the employee’s elective deferral, not to exceed 4% of the total employee compensation. We can also elect to make a profit-sharing contribution. We contributed $219,756 and $237,300 for fiscal year 2016 and 2015, respectively. |
13. ACQUISITION_MERGER WITH COG
13. ACQUISITION/MERGER WITH COGNIGEN CORPORATION | 12 Months Ended |
Aug. 31, 2016 | |
Business Combinations [Abstract] | |
ACQUISITION/MERGER WITH COGNIGEN CORPORATION | On July 23, 2014, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Cognigen Corporation (“Cognigen”). On September 2, 2014, the Company consummated the acquisition of all outstanding equity interests of Cognigen pursuant to the terms of the Merger Agreement, with Cognigen merging with and into a newly formed, wholly owned subsidiary of the Company. We believe the combination of Simulations Plus and Cognigen provides substantial future potential based on the complementary strengths of each of the companies. Under the terms of the Merger Agreement, as described below, the Company will pay the former shareholders of Cognigen total consideration of $7,000,000, consisting of $2,800,000 of cash and $4,200,000 worth of newly issued, unregistered shares of the Company’s common stock. On September 2, 2014, the Company paid the former shareholders of Cognigen a total of $5,200,000, comprised of cash in the amount of $2,080,000 and the issuance of 491,159 shares of the Company’s common stock valued at $3,120,000 (under the terms of the Merger Agreement a price of approximately $6.35 dollars per share was used based upon the volume-weighted average closing price of the Company’s shares of common stock for the 30-consecutive-trading-day period ending two trading days prior to September 2, 2014). The actual stock price at September 2, 2014 was $6.67, so the total value of the stock issued was approximately $3,277,000. The Merger Agreement provides for a two-year market standoff period in which the newly issued shares may not be sold by the recipients thereof. 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 $1,800,000, comprised of $720,000 of cash and the issuance of 170,014 shares of stock valued at $1,080,000 under the formula described above. The Merger Agreement provided for a targeted working capital adjustment to be made 120 days after the closing date. Under the acquisition method of accounting, the total estimated purchase price is allocated to Cognigen’s tangible and intangible assets and liabilities based on their estimated fair values at the date of the completion of the acquisition (September 2, 2014). The following table summarizes the preliminary allocation of the purchase price for Cognigen: Assets acquired, including accounts receivable of $934,000 and estimated Contracts receivable of $398,000 $ 1,524,389 Fixed assets acquired 458,351 Estimated value of software acquired 200,000 Estimated value of Intangibles acquired (Customer Lists, trade name etc.) 1,600,000 Working Capital Adjustment (26,707 ) Current Liabilities assumed (644,499 ) Goodwill 4,789,248 Estimated Deferred income taxes (662,500 ) Total Consideration $ 7,238,282 Goodwill has been provided in the transaction based on estimates of future earnings of this subsidiary including anticipated synergies associated with the positioning of the combined company as a leader in model-based drug development. Based on the structure of the transaction, the Company does not anticipate benefiting from any tax deductions in future periods for recognized goodwill. |
14. SUBSEQUENT EVENTS
14. SUBSEQUENT EVENTS | 12 Months Ended |
Aug. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Dividend Declared On October 31, 2016, our Board of Directors declared a quarterly cash dividend of $0.05 per share to our shareholders. The dividend will be distributed on Thursday, November 17, 2016, for shareholders of record as of Thursday, November 10, 2016. |
2. SUMMARY OF SIGNIFICANT ACC21
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Aug. 31, 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. |
Use of Estimates | Use of Estimates Our 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 management’s 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 the FASB Accounting Standards Codification (“ASC”) 985-605, “Software – Revenue Recognition”. Software product revenue is recorded when the following conditions are met: 1) evidence of arrangement exists; 2) delivery has been made; 3) the amount is fixed; and 4) collectability is probable. Post-contract customer support (“PCS”) obligations are insignificant; therefore, revenue for PCS is recognized at the same time as the licensing fee, and the costs of providing such support services are accrued and amortized over the obligation period. As a byproduct of ongoing improvements and upgrades for the new programs and new modules of software, some modifications are provided to our 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. Certain of the Company's software products are housed and supported on the Company's computer networks. Software revenues for those products are included in income over the life of the contract. 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, the Company considers 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 Company’s trade accounts receivable balances. If we determine that the financial conditions of any of our customers have 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 computer software development costs are comprised primarily of salaries and direct payroll-related costs and the purchase of existing software to be used in the Company's software products. Amortization of capitalized computer software development costs is provided on a product-by-product basis on the straight-line method over the estimated economic life of the products not to exceed five years. Amortization of software development costs amounted to $981,066 and $1,023,139 for the years ended August 31, 2016 and 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, or fair market value for property and equipment acquired in business combinations, 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. |
Intangible Assets and Goodwill | Intangible Assets and Goodwill The Company performs valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and recognizes the assets acquired and liabilities assumed at their acquisition date fair value. Acquired intangible assets include customer relationships, software, trade name, and non-compete agreements. The Company determines the appropriate useful life by performing an analysis of expected cash flows based on historical experience of the acquired businesses. Intangible assets are amortized over their estimated useful lives using the straight-line method, which approximates the pattern in which the majority of the economic benefits are expected to be consumed. Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets. Goodwill is not amortized, instead it is tested for impairment annually or when events or circumstances change that would indicate that goodwill might be impaired. Events or circumstances that could trigger an impairment review include, but are not limited to, a significant adverse change in legal factors or in the business climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of the Company's use of the acquired assets or the strategy for the Company's overall business, significant negative industry or economic trends or significant under-performance relative to expected historical or projected future results of operations. Goodwill is tested for impairment at the reporting unit level, which is one level below or the same as an operating segment. As of August 31, 2016, the Company determined that it has two reporting units, Simulations Plus and Cognigen Corporation. When testing goodwill for impairment, the Company first performs a qualitative assessment to determine whether it is necessary to perform step one of a two-step annual goodwill impairment test for each reporting unit. The Company is required to perform step one only if it concludes that it is more likely than not that a reporting unit's fair value is less than its carrying value. Should this be the case, the first step of the two-step process is to identify whether a potential impairment exists by comparing the estimated fair values of the Company's reporting units with their respective book values, including goodwill. If the estimated fair value of the reporting unit exceeds book value, goodwill is considered not to be impaired, and no additional steps are necessary. If, however, the fair value of the reporting unit is less than book value, then the second step is performed to determine if goodwill is impaired and to measure the amount of impairment loss, if any. The amount of the impairment loss is the excess of the carrying amount of the goodwill over its implied fair value. The estimate of implied fair value of goodwill is primarily based on an estimate of the discounted cash flows expected to result from that reporting unit, but may require valuations of certain internally generated and unrecognized intangible assets such as the Company's software, technology, patents and trademarks. If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to the excess. As of August 31, 2016, the entire balance of goodwill was attributed to the Company's Cognigen Corporation reporting unit. Intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. The Company has not recognized any impairment charges during the periods ended August 31, 2016 and 2015. Reconciliation of Goodwill for the period ended August 31, 2016: Balance, August 31, 2014 $ – Addition 4,789,248 Impairments – Balance, August 31, 2015 $ 4,789,248 Addition – Impairments – Balance, August 31, 2016 $ 4,789,248 |
Other Intangible Assets | Other Intangible Assets The following table summarizes other intangible assets as of August 31, 2016: Amortization Period Acquisition Value Accumulated Amortization Net book value Customer relationships Straight line 8 years $ 1,100,000 $ 275,000 $ 825,000 Trade Name-Cognigen None 500,000 0 500,000 Covenants not to compete Straight line 5 years 50,000 20,000 30,000 $ 1,650,000 $ 295,000 $ 1,355,000 Amortization expense for the year ended August 31, 2016 and 2015 was $147,500. Future amortization for the next five years is as follows: Year ending August 31, Amount 2017 147,500 2018 147,500 2019 147,500 2020 137,500 2021 137,500 |
Business Acquisitions | Business Acquisitions The Company accounted for the acquisition of Cognigen using the purchase method of accounting where the assets acquired and liabilities assumed are recognized based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Determining the fair value of certain acquired assets and liabilities is subjective in nature and often involves the use of significant estimates and assumptions, including, but not limited to, the selection of appropriate valuation methodology, projected revenue, expenses and cash flows, weighted average cost of capital, discount rates, estimates of advertiser and publisher turnover rates and estimates of terminal values. Business acquisitions are included in the Company's consolidated financial statements as of the date of the acquisition. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial assets and liabilities recorded at fair value in the Company’s Balance Sheet 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 management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. For certain of our financial instruments, including accounts receivable, accounts payable, accrued payroll and other expenses, and accrued bonuses to officers the carrying amounts are approximate fair value due to their short-term nature. |
Advertising | Advertising The Company expenses advertising costs as incurred. Advertising costs for the years ended August 31, 2016 and 2015 were approximately $131,783 and $38,000, respectively. |
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 include salaries, laboratory experiment, and purchased software which was developed by other companies and incorporated into, or used in the development of, our final products. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with 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. The cost of $75,000 is being amortized over 10 years under the straight-line method. Amortization expense for each of the fiscal years ended August 31, 2016 and 2015 was $7,500. Accumulated amortization as of August 31, 2016 and 2015 was $33,750 and $26,250, respectively. On May 15, 2014, we entered into a termination and non-assertion agreement with TSRL, Inc., pursuant to which the parties agreed to terminate an exclusive software licensing agreement entered into between the parties in 1997. As a result, the company obtained a perpetual right to use certain source code and data, and TSRL relinquished any rights and claims to any GastroPlus products and to any claims to royalties or other payments under that 1997 agreement. We agreed to pay TSRL total consideration of $6,000,000, which is being amortized over 10 years under the straight-line method. Amortization for the year ended August 31, 2016 and 2015 was $600,000. Accumulated amortization as of August 31, 2016 and 2015 was $1,375,000 and $775,000, respectively. (See Note 5) Total amortization expense for intellectual property agreements for the years ended August 31, 2016 and 2015 was $607,500. Accumulated amortization as of August 31, 2016 and 2015 was $1,408,750 and $801,250, respectively. Future amortization for the next five years is as follows: Year ending August 31, TSRL Enslien Total 2017 $ 600,000 $ 7,500 $ 607,500 2018 $ 600,000 $ 7,500 $ 607,500 2019 $ 600,000 $ 7,500 $ 607,500 2020 $ 600,000 $ 7,500 $ 607,500 2021 $ 600,000 $ 7,500 $ 607,500 |
Earnings per Share | Earnings per Share The Company reports earnings per share in accordance with FASB ACS 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 similarly 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 years ended August 31, 2016 and 2015 were as follows: 2016 2015 Numerator Net income attributable to common shareholders $ 4,950,136 $ 3,842,961 Denominator Weighted-average number of common shares outstanding during the year 17,028,566 16,864,670 Dilutive effect of stock options 180,940 167,488 Common stock and common stock equivalents used for diluted earnings per share 17,209,506 17,032,158 |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock options using the modified prospective method in accordance with FASB ASC 718-10, “Compensation-Stock Compensation” |
Impairment of Long-lived assets | Impairment of Long-lived Assets The Company accounts for the impairment and disposition of long-lived assets in accordance with ASC 350, “Intangibles – Goodwill and Other “Property and Equipment” |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principles-based approach for determining revenue recognition. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. The revenue recognition standard is required to be applied retrospectively, including any combination of practical expedients as allowed in the standard. We are evaluating the impact, if any, of the adoption of ASU 2014-09 to our financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In November 2015, the FASB issued ASU No 2015-17, Income Taxes (Topic 740). The amendments in ASU 2015-17 change the requirements for the classification of deferred taxes on the balance sheet. Currently, GAAP requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. To simplify the presentation of deferred income taxes, the amendments in this ASU require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The pronouncement is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes existing guidance on accounting for leases in "Leases (Topic 840)" and generally requires all leases to be recognized in the consolidated balance sheet. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018; early adoption is permitted. The provisions of ASU 2016-02 are to be applied using a modified retrospective approach. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. This ASU affects entities that issue share-based payment awards to their employees. The ASU is designed to simplify several aspects of accounting for share-based payment award transactions which include - the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and forfeiture rate calculations. ASU 2016-09 will become effective for the Company in the first quarter of fiscal 2019. Early adoption is permitted in any interim or annual period. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In April 2016, the FASB issued AS 2016-10, Revenue from Contracts with Customers (Topic 606), which amends certain aspects of the Board's new revenue standard, ASU 2014-09, Revenue from Contracts with Customers. The standard should be adopted concurrently with adoption of ASU 2014-09 which is effective for annual and interim periods beginning after December 15, 2017. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. |
2. SUMMARY OF SIGNIFICANT ACC22
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Aug. 31, 2016 | |
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 |
Reconciliation of Goodwill | Balance, August 31, 2014 $ – Addition 4,789,248 Impairments – Balance, August 31, 2015 $ 4,789,248 Addition – Impairments – Balance, August 31, 2016 $ 4,789,248 |
Schedule of intangible assets | Amortization Period Acquisition Value Accumulated Amortization Net book value Customer relationships Straight line 8 years $ 1,100,000 $ 275,000 $ 825,000 Trade Name-Cognigen None 500,000 0 500,000 Covenants not to compete Straight line 5 years 50,000 20,000 30,000 $ 1,650,000 $ 295,000 $ 1,355,000 |
Schedule of future amortization | Year ending August 31, Amount 2017 147,500 2018 147,500 2019 147,500 2020 137,500 2021 137,500 |
Earnings per share | 2016 2015 Numerator Net income attributable to common shareholders $ 4,950,136 $ 3,842,961 Denominator Weighted-average number of common shares outstanding during the year 17,028,566 16,864,670 Dilutive effect of stock options 180,940 167,488 Common stock and common stock equivalents used for diluted earnings per share 17,209,506 17,032,158 |
Other Intangible Assets | |
Schedule of intangible assets | Amortization Period Acquisition Value Accumulated Amortization Net book value Customer relationships Straight line 8 years $ 1,100,000 $ 275,000 $ 825,000 Trade Name-Cognigen None 500,000 0 500,000 Covenants not to compete Straight line 5 years 50,000 20,000 30,000 $ 1,650,000 $ 295,000 $ 1,355,000 |
Intellectual Property [Member] | |
Schedule of intangible assets | Year ending August 31, TSRL Enslien Total 2017 $ 600,000 $ 7,500 $ 607,500 2018 $ 600,000 $ 7,500 $ 607,500 2019 $ 600,000 $ 7,500 $ 607,500 2020 $ 600,000 $ 7,500 $ 607,500 2021 $ 600,000 $ 7,500 $ 607,500 |
4. PROPERTY AND EQUIPMENT (Tabl
4. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Aug. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | 2016 2015 Equipment $ 487,458 $ 460,626 Computer equipment 125,385 123,235 Furniture and fixtures 200,595 190,456 Leasehold improvements 103,599 103,599 917,037 877,916 Less accumulated depreciation and amortization 660,656 464,406 Total $ 256,381 $ 413,510 |
3. CONTRACTS IN PROGRESS (Table
3. CONTRACTS IN PROGRESS (Tables) | 12 Months Ended |
Aug. 31, 2016 | |
Contractors [Abstract] | |
Cost, estimated earnings and billings on uncompleted contracts | 2016 2015 Revenues earned to date on uncompleted contract $ 2,557,507 $ 3,155,123 Billings to date on uncompleted contracts (2,093,476 ) (2,466,532 ) $ 464,031 $ 688,591 |
Schedule of contracts in progress | 2016 2015 Revenues in excess of billings $ 694,131 $ 795,125 Billings in excess of revenues (230,100 ) (106,534 ) $ 464,031 $ 688,591 |
6. COMMITMENTS AND CONTINGENC25
6. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Aug. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum lease payments | Years Ending August 31, 2017 $ 487,654 2018 498,654 2019 331,276 2020 300,000 2021 126,786 $ 1,744,370 |
7. SHAREHOLDERS' EQUITY (Tables
7. SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Aug. 31, 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 5/02/2016 5/09/2016 17,029,501 $ 0.05 $ 851,475 8/11/2016 8/18/2016 17,221,978 $ 0.05 $ 861,099 Total $ 3,413,274 |
Intrinsic Value of options outstanding and options exercisable | Intrinsic Value of Options Outstanding Intrinsic Value of Options Intrinsic Value of Options Exercised FY15 $ 1,182,797 $ 1,109,489 $ 396,485 FY16 $ 1,500,659 $ 1,025,718 $ 853,423 |
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 67,000 3.0 years $ 1.00 67,000 3.0 years $1.03 $1.51 $ 3.00 – – – – – –- $3.01 $ 4.50 20,000 1.9 years $ 3.16 20,000 1.9 years $3.16 $4.51 $ 6.00 74,000 2.7 years $ 5.48 44,000 2.9 years $5.38 $6.01 $ 7.50 367,200 8.0 years $ 6.85 148,880 7.9 years $6.85 $7.51 $ 9.00 15,000 10.0 years $ 8.62 0 $9.01 $ 9.82 404,300 9.5 years $ 9.71 0 947,500 279,880 |
Incentive Stock Options (ISOs) [Member] | |
Schedule of stock option activity | Transactions in FY15 (ISOs) Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Outstanding, August 31, 2014 798,500 $ 4.59 6.27 Granted 37,000 $ 6.99 Exercised (95,384 ) $ 2.49 Canceled/Forfeited (119,116 ) $ 4.86 Outstanding, August 31, 2015 621,000 $ 5.01 6.01 Vested and Exercisable, August 31, 2015 265,700 $ 2.81 4.40 Vested and Expected to Vest, August 31, 2015 576,952 $ 4.87 6.32 Transactions in FY16 (ISOs) Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Outstanding, August 31, 2015 621,000 $ 5.01 6.01 Granted 412,100 $ 9.71 Exercised (100,863 ) $ 1.45 Canceled/Forfeited (27,487 ) $ 7.66 Expired (10,000 ) $ 1.13 Outstanding, August 31, 2016 894,750 $ 7.54 7.72 Vested and Exercisable, August 31, 2016 253,380 $ 4.85 5.26 Vested and Expected to Vest, August 31, 2016 812,458 $ 7.40 7.58 |
Non-Qualified Stock Options (NQSOs) [Member] | |
Schedule of stock option activity | Transactions in FY15 (NQSOs) Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Outstanding, August 31, 2014 56,600 $ 4.82 7.96 Granted 13,750 $ 6.75 Exercised (6,503 ) $ 3.28 Cancelled/Forfeited (14,497 ) $ 4.97 Outstanding, August 31, 2015 49,350 $ 5.52 7.75 Exercisable, August 31, 2015 27,200 $ 4.70 6.31 Transactions in FY16 (NQSOs) Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Outstanding, August 31, 2015 49,350 $ 5.52 7.75 Granted 15,000 $ 8.62 Exercised (11,600 ) $ 3.33 Cancelled/Forfeited (0 ) $ – Outstanding, August 31, 2016 52,750 $ 6.88 8.07 Exercisable, August 31, 2016 26,500 $ 5.95 6.70 |
8. INCOME TAXES (Tables)
8. INCOME TAXES (Tables) | 12 Months Ended |
Aug. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Components of the income tax provision | 2016 2015 Current Federal $ 2,118,229 $ 1,482,798 State 171,840 236,152 Foreign 19,428 75,099 2,309,497 1,794,049 Deferred Federal 22,936 (15,036 ) State (46,177 ) 70,955 (23,241 ) 55,919 Total $ 2,286,256 $ 1,849,968 |
Effective income tax rate | 2016 2015 Income tax computed at federal statutory tax rate 34.0 % 34.0 % State taxes, net of federal benefit 3.4 5.0 Meals & Entertainment 0.1 0.1 Stock Based Compensation 1.3 0.3 Other permanent differences (0.6 ) (0.5 ) Research and development credit (6.3 ) (6.9 ) Change in prior year estimated taxes (0.3 ) 0.5 Total 31.6 % 32.5 % |
Components of the Company deferred tax assets and liabilities | 2016 2015 Deferred tax assets Accrued payroll and other expenses $ 108,769 $ 97,625 Deferred revenue 71,009 43,703 Capitalized merger costs 292,693 299,965 Intellectual property 21,205 24,221 Research and development credit 54,427 90,365 State taxes 58,426 78,089 State Tax Deferred 160,391 175,044 Total deferred tax assets 766,920 809,012 Less: Valuation allowance – – 766,920 809,012 Deferred tax liabilities Property and equipment (93,900 ) (159,980 ) State Tax Deferred (9,491 ) (8,445 ) Intellectual Property (2,004,451 ) (2,053,220 ) Capitalized computer software development costs (1,615,284 ) (1,566,815 ) Total deferred tax liabilities (3,723,126 ) (3,788,460 ) Net deferred tax liabilities $ (2,956,206 ) $ (2,979,447 ) |
10. SEGMENT AND GEOGRAPHIC RE28
10. SEGMENT AND GEOGRAPHIC REPORTING (Tables) | 12 Months Ended |
Aug. 31, 2016 | |
Segments, Geographical Areas [Abstract] | |
Schedule of consolidated results from reportable segments | Year ended August 31, 2015 Simulations Plus, Inc. Cognigen Corporation Eliminations Tota Net Revenues $ 13,086 $ 5,228 $ 18,314 Income (loss) from operations before income taxes $ 4,816 $ 1,041 $ 5,857 Total assets $ 25,549 $ 9,033 $ (7,238 ) $ 27,344 Capital expenditures $ 23 $ 14 $ 37 Capitalized software costs $ 1,019 $ 151 $ 1,170 Depreciation and Amortization $ 1,633 $ 357 $ 1,990 Year ended August 31, 2016 Simulations Plus, Inc. Cognigen Corporation Eliminations Total Net Revenues $ 14,417 5,554 $ 19,972 Income (loss) from operations before income taxes $ 6,330 $ 901 $ 7,231 Total assets $ 26,306 $ 8,975 $ (7,238 ) $ 28,043 Capital expenditures $ 6 $ 32 $ 38 Capitalized software costs $ 1,017 $ 178 $ 1,195 Depreciation and Amortization $ 1,556 $ 375 $ 1,931 |
Schedule of geographical revenues | Year ended August 31, 2015 North America Europe Asia South America Total Simulations Plus, Inc. $ 6,261 $ 3,629 $ 3,153 $ 43 $ 13,086 Cognigen Corporation 5,228 – – – 5,228 Total $ 11,489 $ 3,629 $ 3,153 $ 43 $ 18,314 Year ended August 31, 2016 North America Europe Asia South America Total Simulations Plus, Inc. $ 6,830 $ 4,022 $ 3,564 $ 2 $ 14,418 Cognigen Corporation 5,554 – – – 5,554 Total $ 12,384 $ 4,022 $ 3,564 $ 2 $ 19,972 |
13. ACQUISITION_MERGER WITH C29
13. ACQUISITION/MERGER WITH COGNIGEN CORPORATION (Tables) | 12 Months Ended |
Aug. 31, 2016 | |
Business Combinations [Abstract] | |
Allocation of purchase price | Assets acquired, including accounts receivable of $934,000 and estimated Contracts receivable of $398,000 $ 1,524,389 Fixed assets acquired 458,351 Estimated value of software acquired 200,000 Estimated value of Intangibles acquired (Customer Lists, trade name etc.) 1,600,000 Working Capital Adjustment (26,707 ) Current Liabilities assumed (644,499 ) Goodwill 4,789,248 Estimated Deferred income taxes (662,500 ) Total Consideration $ 7,238,282 |
2. SUMMARY OF SIGNIFICANT ACC30
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Aug. 31, 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. SUMMARY OF SIGNIFICANT ACC31
2. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (Details Goodwill) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Accounting Policies [Abstract] | ||
Goodwill, beginning balance | $ 4,789,248 | $ 0 |
Addition | 0 | 4,789,248 |
Impairments | 0 | 0 |
Goodwill, ending balance | $ 4,789,248 | $ 4,789,248 |
2. SUMMARY OF SIGNIFICANT ACC32
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Other Intangible Assets) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Accumulated amortization | $ 1,408,750 | $ 801,250 |
Net book value | $ 1,355,000 | 1,502,500 |
Customer Relationships [Member] | ||
Amortization period | Straight line 8 years | |
Acquisition value | $ 1,100,000 | |
Accumulated amortization | 275,000 | |
Net book value | $ 825,000 | |
Trade name | ||
Amortization period | None | |
Acquisition value | $ 500,000 | |
Accumulated amortization | 0 | |
Net book value | $ 500,000 | |
Covenants not to compete | ||
Amortization period | Straight line 5 years | |
Acquisition value | $ 50,000 | |
Accumulated amortization | 20,000 | |
Net book value | 30,000 | |
Other Intangible Assets | ||
Acquisition value | 1,650,000 | |
Accumulated amortization | 295,000 | $ 147,500 |
Net book value | $ 1,355,000 |
2. SUMMARY OF SIGNIFICANT ACC33
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Amortization schedule) | Aug. 31, 2016USD ($) |
Other Intangible Assets | |
Future amortization 2017 | $ 147,500 |
Future amortization 2018 | 147,500 |
Future amortization 2019 | 147,500 |
Future amortization 2020 | 137,500 |
Future amortization 2021 | 137,500 |
Intellectual Property [Member] | |
Future amortization 2017 | 607,500 |
Future amortization 2018 | 607,500 |
Future amortization 2019 | 607,500 |
Future amortization 2020 | 607,500 |
Future amortization 2021 | 607,500 |
Intellectual Property [Member] | TSRL [Member] | |
Future amortization 2017 | 600,000 |
Future amortization 2018 | 600,000 |
Future amortization 2019 | 600,000 |
Future amortization 2020 | 600,000 |
Future amortization 2021 | 600,000 |
Intellectual Property [Member] | Enslien Research | |
Future amortization 2017 | 7,500 |
Future amortization 2018 | 7,500 |
Future amortization 2019 | 7,500 |
Future amortization 2020 | 7,500 |
Future amortization 2021 | $ 7,500 |
2. SUMMARY OF SIGNIFICANT ACC34
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Earnings per share) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Numerator | ||
Net income attributable to common shareholders | $ 4,950,136 | $ 3,842,961 |
Denominator | ||
Weighted-average number of common shares outstanding during the period | 17,028,566 | 16,864,670 |
Dilutive effect of stock options | 180,940 | 167,488 |
Common stock and common stock equivalents used for diluted earnings per share | 17,209,506 | 17,032,158 |
2. SUMMARY OF SIGNIFICANT ACC35
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Amortization of software development | $ 981,066 | $ 1,023,139 |
Amortization of intellectual property | 755,000 | 755,000 |
Advertising costs | 131,783 | 38,000 |
Accumulated amortization of intellectual property | 1,408,750 | 801,250 |
Stock-based compensation | 347,077 | 295,243 |
Impairment of long-lived assets | 0 | 0 |
Other Intangible Assets | ||
Amortization of intellectual property | 147,500 | 147,500 |
Accumulated amortization of intellectual property | 295,000 | 147,500 |
Intellectual Property [Member] | ||
Amortization of intellectual property | 607,500 | 607,500 |
Accumulated amortization of intellectual property | 1,408,750 | 801,250 |
Intellectual Property [Member] | Enslien Research | ||
Amortization of intellectual property | 7,500 | 7,500 |
Accumulated amortization of intellectual property | 33,750 | 26,250 |
Intellectual Property [Member] | TSRL [Member] | ||
Amortization of intellectual property | 600,000 | 600,000 |
Accumulated amortization of intellectual property | $ 1,375,000 | $ 775,000 |
3. CONTRACTS IN PROGRESS (Detai
3. CONTRACTS IN PROGRESS (Details - Billings to date) - USD ($) | Aug. 31, 2016 | Aug. 31, 2015 |
Contractors [Abstract] | ||
Revenues earned to date on uncompleted contracts | $ 2,557,507 | $ 3,155,123 |
Billings to date on uncompleted contracts | (2,093,476) | (2,466,532) |
Revenues over billings on uncompleted contracts | $ 464,031 | $ 688,591 |
3. CONTRACTS IN PROGRESS (Det37
3. CONTRACTS IN PROGRESS (Details - Contracts in progress) - USD ($) | Aug. 31, 2016 | Aug. 31, 2015 |
Contractors [Abstract] | ||
Revenues in excess of billings | $ 694,131 | $ 795,125 |
Billings in excess of revenues | (230,100) | (106,534) |
Revenues over billings on uncompleted contracts | $ 464,031 | $ 688,591 |
4. PROPERTY AND EQUIPMENT (Deta
4. PROPERTY AND EQUIPMENT (Details) - USD ($) | Aug. 31, 2016 | Aug. 31, 2015 |
Property and equipment, gross | $ 917,037 | $ 877,916 |
Less accumulated depreciation and amortization | 660,656 | 464,406 |
Net Book Value | 256,381 | 413,510 |
Equipment [Member] | ||
Property and equipment, gross | 487,458 | 460,626 |
Computer equipment [Member] | ||
Property and equipment, gross | 125,385 | 123,235 |
Furniture and fixtures [Member] | ||
Property and equipment, gross | 200,595 | 190,456 |
Leasehold improvements [Member] | ||
Property and equipment, gross | $ 103,599 | $ 103,599 |
4. PROPERTY AND EQUIPMENT (De39
4. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 196,250 | $ 211,454 |
5. CONTRACT PAYABLE (Details Na
5. CONTRACT PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Contract payable | $ 1,000,000 | $ 2,604,404 |
Stock issued for acquisition, value | 1,134,404 | 3,277,170 |
Termination and Non-Assertion Agreement | TSRL [Member] | ||
Contract payable | $ 1,000,000 | |
Cognigen | ||
Stock issued for acquisition, value | $ 1,854,404 | |
Stock issued for acquisition, shares | 170,014 |
6. COMMITMENTS AND CONTINGENC41
6. COMMITMENTS AND CONTINGENCIES (Details) | Aug. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 487,654 |
2,018 | 498,654 |
2,019 | 331,276 |
2,020 | 300,000 |
2,021 | 126,786 |
Future minimum lease payments | $ 1,744,370 |
6. COMMITMENTS AND CONTINGENC42
6. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Rent expense | $ 491,800 | $ 488,888 |
Bonus accrued | 121,000 | 150,000 |
Royalties expense | 119,620 | 77,307 |
Thaddeius Grasela [Member] | ||
Bonus accrued | $ 25,000 | $ 25,000 |
7. SHAREHOLDERS EQUITY (Details
7. SHAREHOLDERS EQUITY (Details - Dividends) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Total Amount | $ 3,413,274 | $ 3,375,566 |
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 | 16,852,117 | |
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 | |
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 2016 3rd Qtr [Member] | ||
Record Date | May 2, 2016 | |
Distribution Date | May 9, 2016 | |
Number of Shares Outstanding on Record Date | 17,029,501 | |
Dividend per Share | $ .05 | |
Total Amount | $ 851,475 | |
FY 2016 4th Qtr [Member] | ||
Record Date | Aug. 11, 2016 | |
Distribution Date | Aug. 18, 2016 | |
Number of Shares Outstanding on Record Date | 17,221,978 | |
Dividend per Share | $ .05 | |
Total Amount | $ 861,099 |
7. SHAREHOLDERS EQUITY (Detai44
7. SHAREHOLDERS EQUITY (Details - Option activity) - $ / shares | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Number of Options | ||
Awards Outstanding, ending balance | 947,500 | |
Vested and Exercisable, end of period | 279,880 | |
Incentive Stock Options (ISOs) [Member] | ||
Number of Options | ||
Awards Outstanding, beginning balance | 621,000 | 798,500 |
Granted | 412,100 | 37,000 |
Exercised | (100,863) | (95,384) |
Canceled/Forfeited | (27,487) | (119,116) |
Expired | (10,000) | 0 |
Awards Outstanding, ending balance | 894,750 | 621,000 |
Vested and Exercisable, end of period | 253,380 | 265,700 |
Vested and Expected to Vest, end of period | 812,458 | 576,952 |
Weighted-Average Exercise Price Per Share | ||
Outstanding | $ 5.01 | $ 4.59 |
Granted | 9.71 | 6.99 |
Exercised | 1.45 | 2.49 |
Canceled/Forfeited | 7.66 | 4.86 |
Expired | 1.13 | |
Outstanding | 7.54 | 5.01 |
Vested and Exercisable, end of period | 4.85 | 2.81 |
Vested and Expected to Vest, end of period | $ 7.40 | $ 4.87 |
Weighted-Average Remaining Contractual Life | ||
Outstanding, beginning of period | 6 years 4 days | 6 years 3 months 7 days |
Outstanding, end of period | 7 years 8 months 19 days | 6 years 4 days |
Vested and Exercisable | 5 years 3 months 4 days | 4 years 4 months 24 days |
Vested and Expected to Vest | 7 years 6 months 29 days | 6 years 3 months 26 days |
Non-Qualified Stock Options (NQSOs) [Member] | ||
Number of Options | ||
Awards Outstanding, beginning balance | 49,350 | 56,600 |
Granted | 15,000 | 13,750 |
Exercised | (11,600) | (6,503) |
Canceled/Forfeited | 0 | (14,497) |
Awards Outstanding, ending balance | 52,750 | 49,350 |
Vested and Exercisable, end of period | 26,500 | 27,200 |
Weighted-Average Exercise Price Per Share | ||
Outstanding | $ 5.52 | $ 4.82 |
Granted | 8.62 | 6.75 |
Exercised | 3.33 | 3.28 |
Canceled/Forfeited | 4.97 | |
Outstanding | 6.88 | 5.52 |
Vested and Exercisable, end of period | $ 5.95 | $ 4.70 |
7. SHAREHOLDERS EQUITY (Detai45
7. SHAREHOLDERS EQUITY (Details - Intrinsic Value) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Equity [Abstract] | ||
Intrinsic Value of Options Outstanding | $ 1,500,659 | $ 1,182,797 |
Intrinsic Value of Options Exercisable | 1,025,718 | 1,109,489 |
Intrinsic Value of Options Exercised | $ 853,423 | $ 396,485 |
7. SHAREHOLDERS EQUITY (Detai46
7. SHAREHOLDERS EQUITY (Details - Options outstanding and exercisable) | 12 Months Ended |
Aug. 31, 2016$ / sharesshares | |
Awards outstanding | shares | 947,500 |
Awards exercisable | shares | 279,880 |
$1.00 to $1.50 [Member] | |
Exercise price low | $ 1 |
Exercise price high | $ 1.50 |
Awards outstanding | shares | 67,000 |
Awards outstanding weighted average remaining contractual life | 3 years |
Awards outstanding weighted average exercise price | $ 1 |
Awards exercisable | shares | 67,000 |
Awards exercisable weighted average remaining contractual life | 3 years |
Awards exercisable weighted average exercise price | $ 1.03 |
$1.51 to $3.00 [Member] | |
Exercise price low | 1.51 |
Exercise price high | $ 3 |
Awards outstanding | shares | 0 |
Awards outstanding weighted average exercise price | |
Awards exercisable | shares | 0 |
Awards exercisable weighted average exercise price | |
$3.01 to $4.50 [Member] | |
Exercise price low | 3.01 |
Exercise price high | $ 4.50 |
Awards outstanding | shares | 20,000 |
Awards outstanding weighted average remaining contractual life | 1 year 10 months 24 days |
Awards outstanding weighted average exercise price | $ 3.16 |
Awards exercisable | shares | 20,000 |
Awards exercisable weighted average remaining contractual life | 1 year 10 months 24 days |
Awards exercisable weighted average exercise price | $ 3.16 |
$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 | 2 years 8 months 12 days |
Awards outstanding weighted average exercise price | $ 5.48 |
Awards exercisable | shares | 44,000 |
Awards exercisable weighted average remaining contractual life | 2 years 10 months 24 days |
Awards exercisable weighted average exercise price | $ 5.38 |
$6.01 to $7.50 [Member] | |
Exercise price low | 6.01 |
Exercise price high | $ 7.50 |
Awards outstanding | shares | 367,200 |
Awards outstanding weighted average remaining contractual life | 8 years |
Awards outstanding weighted average exercise price | $ 6.85 |
Awards exercisable | shares | 148,880 |
Awards exercisable weighted average remaining contractual life | 7 years 10 months 24 days |
Awards exercisable weighted average exercise price | $ 6.85 |
$7.51 to $9.00 [Member] | |
Exercise price low | 7.51 |
Exercise price high | $ 9 |
Awards outstanding | shares | 15,000 |
Awards outstanding weighted average remaining contractual life | 10 years |
Awards outstanding weighted average exercise price | $ 8.62 |
Awards exercisable | shares | 0 |
$9.01 to $9.82 [Member] | |
Exercise price low | $ 9.01 |
Exercise price high | $ 9.82 |
Awards outstanding | shares | 404,300 |
Awards outstanding weighted average remaining contractual life | 9 years 6 months |
Awards outstanding weighted average exercise price | $ 9.71 |
Awards exercisable | shares | 0 |
7. SHAREHOLDERS' EQUITY (Detail
7. SHAREHOLDERS' EQUITY (Details Narrative) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Options both ISO and NQSO [Member] | ||
Fair value of the options granted | $ 1,189,730 | $ 113,435 |
Dividend yield | 2.32% | 3.03% |
Pre-vest forfeiture rate | 6.31% | 6.20% |
Expected volatility | 34.22% | 47.13% |
Risk-free interest rate | 1.42% | 2.09% |
Expected life | 6 years 9 months 18 days | 6 years 10 months 21 days |
Fair value of non-vested stock options | $ 1,366,269 | |
Weighted average amortizable period | 7 years 6 months 29 days | |
2007 Plan [Member] | ||
Common stock reserved for issuance under the plan | 2,000,000 |
8. INCOME TAXES (Details - Inco
8. INCOME TAXES (Details - Income tax provision) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Current | ||
Federal | $ 2,118,229 | $ 1,482,798 |
State | 171,840 | 236,152 |
Foreign | 19,428 | 75,099 |
Total current tax expense (benefit) | 2,309,497 | 1,794,049 |
Deferred | ||
Federal | 22,936 | (15,036) |
State | (46,177) | 70,955 |
Total deferred federal and state | (23,241) | 55,919 |
Total Federal and State income tax expense (benefit) | $ 2,286,256 | $ 1,849,968 |
8. INCOME TAXES (Details - Reco
8. INCOME TAXES (Details - Reconciliation) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Income tax computed at federal statutory tax rate | 34.00% | 34.00% |
State taxes, net of federal benefit | 3.40% | 5.00% |
Meals & Entertainment | 0.10% | 0.10% |
Stock Based Compensation | 1.30% | 0.30% |
Other permanent differences | (0.60%) | (0.50%) |
Research and development credit | (6.30%) | (6.90%) |
Change in prior year estimated taxes | (0.30%) | 0.50% |
Total | 31.60% | 32.50% |
8. INCOME TAXES (Details - Defe
8. INCOME TAXES (Details - Deferred taxes) - USD ($) | Aug. 31, 2016 | Aug. 31, 2015 |
Deferred tax assets | ||
Accrued payroll and other expenses | $ 108,769 | $ 97,625 |
Deferred revenue | 71,009 | 43,703 |
Capitalized merger costs | 292,693 | 299,965 |
Intellectual property | 21,205 | 24,221 |
Research and development credit | 54,427 | 90,365 |
State taxes | 58,426 | 78,089 |
State Tax Deferred | 160,391 | 175,044 |
Total deferred tax assets | 766,920 | 809,012 |
Less Valuation allowance | 0 | 0 |
Deferred tax asset | 766,920 | 809,012 |
Deferred tax liabilities | ||
Property and equipment | (93,900) | (159,980) |
State Tax Deferred | (9,491) | (8,445) |
Intellectual Property | (2,004,451) | (2,053,220) |
Capitalized computer software development costs | (1,615,284) | (1,566,815) |
Total deferred tax liabilities | (3,723,126) | (3,788,460) |
Net deferred tax liabilities | $ (2,956,206) | $ (2,979,447) |
9. CONCENTRATIONS AND UNCERTA51
9. CONCENTRATIONS AND UNCERTAINTIES (Details Narrative) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Net Sales [Member] | International Sales [Member] | ||
Net sales concentration percentage | 38.00% | 37.00% |
Net Sales [Member] | Customer 1 [Member] | ||
Net sales concentration percentage | 10.00% | 10.00% |
Net Sales [Member] | Customer 2 [Member] | ||
Net sales concentration percentage | 7.00% | 8.00% |
Net Sales [Member] | Customer 3 [Member] | ||
Net sales concentration percentage | 6.00% | 6.00% |
Accounts Receivable [Member] | Customer 1 [Member] | ||
Net sales concentration percentage | 16.00% | 12.00% |
Accounts Receivable [Member] | Customer 2 [Member] | ||
Net sales concentration percentage | 10.00% | 11.00% |
Accounts Receivable [Member] | Customer 3 [Member] | ||
Net sales concentration percentage | 10.00% | 11.00% |
10. SEGMENT AND GEOGRAPHIC RE52
10. SEGMENT AND GEOGRAPHIC REPORTING (Details - Segment reporting) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Net Revenues | $ 19,972,079 | $ 18,314,248 |
Income (loss) from operations before income taxes | 7,231,806 | 5,856,528 |
Total assets | 28,043,030 | 27,344,226 |
Capital expenditures | 38,000 | 37,000 |
Capitalized software costs | 1,195,000 | 1,170,000 |
Depreciation and Amortization | 1,931,000 | 1,990,000 |
Eliminations [Member] | ||
Total assets | (7,238,000) | (7,238,000) |
Simulations Plus, Inc. [Member] | ||
Net Revenues | 14,417,000 | 13,086,000 |
Income (loss) from operations before income taxes | 6,330,000 | 4,816,000 |
Total assets | 26,306,000 | 25,549,000 |
Capital expenditures | 6,000 | 23,000 |
Capitalized software costs | 1,017,000 | 1,019,000 |
Depreciation and Amortization | 1,556,000 | 1,633,000 |
Cognigen | ||
Net Revenues | 5,554,000 | 5,228,000 |
Income (loss) from operations before income taxes | 901,000 | 1,041,000 |
Total assets | 8,975,000 | 9,033,000 |
Capital expenditures | 32,000 | 14,000 |
Capitalized software costs | 178,000 | 151,000 |
Depreciation and Amortization | $ 375,000 | $ 357,000 |
10. SEGMENT AND GEOGRAPHIC RE53
10. SEGMENT AND GEOGRAPHIC REPORTING (Details - geographic) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Revenues | $ 19,972,079 | $ 18,314,248 |
North America [Member] | ||
Revenues | 12,384,000 | 11,489,000 |
Europe [Member] | ||
Revenues | 4,022,000 | 3,629,000 |
Asia [Member] | ||
Revenues | 3,564,000 | 3,153,000 |
South America [Member] | ||
Revenues | 2,000 | 43,000 |
Simulations Plus, Inc. [Member] | ||
Revenues | 14,417,000 | 13,086,000 |
Simulations Plus, Inc. [Member] | North America [Member] | ||
Revenues | 6,830,000 | 6,261,000 |
Simulations Plus, Inc. [Member] | Europe [Member] | ||
Revenues | 4,022,000 | 3,629,000 |
Simulations Plus, Inc. [Member] | Asia [Member] | ||
Revenues | 3,564,000 | 3,153,000 |
Simulations Plus, Inc. [Member] | South America [Member] | ||
Revenues | 2,000 | 43,000 |
Cognigen | ||
Revenues | 5,554,000 | 5,228,000 |
Cognigen | North America [Member] | ||
Revenues | 5,554,000 | 5,228,000 |
Cognigen | Europe [Member] | ||
Revenues | 0 | 0 |
Cognigen | Asia [Member] | ||
Revenues | 0 | 0 |
Cognigen | South America [Member] | ||
Revenues | $ 0 | $ 0 |
11. RELATED PARTY TRANSACTIONS
11. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Aug. 31, 2016 | Aug. 31, 2015 |
Accrued bonus | $ 121,000 | $ 150,000 |
Corporate Secretary [Member] | ||
Accrued bonus | 60,000 | 60,000 |
Chief Executive Officer [Member] | ||
Accrued bonus | 36,000 | 60,000 |
President [Member] | ||
Accrued bonus | $ 25,000 | $ 25,000 |
12. EMPLOYEE BENEFIT PLAN (Deta
12. EMPLOYEE BENEFIT PLAN (Details Narrative) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | ||
Contribution by employer in benefit plan | $ 219,756 | $ 237,300 |
13. ACQUISITION_MERGER WITH C56
13. ACQUISITION/MERGER WITH COGNIGEN (Details - purchase price allocation) - USD ($) | Sep. 02, 2014 | Aug. 31, 2016 | Aug. 31, 2015 | Aug. 31, 2014 |
Goodwill | $ 4,789,248 | $ 4,789,248 | $ 0 | |
Cognigen | ||||
Assets acquired, including accounts receivable of $934,000 and estimated Contracts receivable of $398,000 | $ 1,524,389 | |||
Fixed assets acquired | 458,351 | |||
Estimated value of software acquired | 200,000 | |||
Estimated value of Intangibles acquired (Customer Lists, trade name etc.) | 1,600,000 | |||
Working Capital Adjustment | (26,707) | |||
Current Liabilities assumed | (644,499) | |||
Goodwill | 4,789,248 | |||
Estimated Deferred income taxes | (662,500) | |||
Total Consideration | $ 7,238,282 |
13. ACQUISITION_MERGER WITH C57
13. ACQUISITION/MERGER WITH COGNIGEN (Details Narrative) - USD ($) | 12 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Stock issued in acquisition, value | $ 1,134,404 | $ 3,277,170 |
Cognigen | ||
Total cash consideration to be transferred in acquisition | 2,800,000 | |
Total value of stock to be transferred in consideration of acquisition | 4,200,000 | |
Stock issued in acquisition, value | $ 1,854,404 | |
Stock issued in acquisition, shares | 170,014 | |
Cash paid for acquisition | $ 720,000 | |
Cognigen | Former shareholders of Cognigen | ||
Total cash consideration to be transferred in acquisition | $ 2,800,000 | |
Total cash paid with acquisition | 2,080,000 | |
Stock issued in acquisition, value | $ 3,277,000 | |
Stock issued in acquisition, shares | 491,159 | |
Cash to be paid for acquisition | $ 720,000 | |
Shares to be issued for acquisition, shares | 170,014 | |
Shares to be paid for acquisition, value | $ 1,080,000 |