UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 30, 2011


Simulations Plus, Inc.

(Exact name of registrant as specified in its charter)

California
001-32046
95-4595609
(State or other jurisdiction of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
 
42505 10th Street West, Lancaster, California 93534-7059
(Address of principal executive offices, zip code)

661-723-7723
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

 
 

 
Item 2.01 Completion of Acquisition or Disposition of Assets

On November 30, 2011, Simulations Plus, Inc., a California corporation (”we” or “our”), completed the disposition and sale of all 2,000 shares of the stock of our wholly-owned subsidiary Words+, Inc. (“Words+”), to the Prentke Romich Company of Wooster, Ohio (“PRC”), for an aggregate of $1,981,604 in cash, pursuant to a Stock Purchase Agreement dated November 15, 2011.  For more information regarding the Stock Purchase Agreement, please see the full text of such document filed as Exhibit 10.1 to our Current Report on Form 8-K filed November 16, 2011, which is incorporated herein by reference.


Item 7.01 Regulation FD Disclosure

We made the decision to sell our interest in Words+ in order to focus our attention on the higher margin pharmaceutical software and consulting services business.


Item 9.01 Financial Statements and Exhibits

(a) Financial statements of business acquired.  Not applicable

(b) Pro forma financial information.

The unaudited pro forma financial statements in the tables below have been prepared by applying pro forma adjustments to the consolidated financial statements included in Simulations Plus, Inc.’s Annual Report on Form 10-K for the year ended August 31, 2011.  The unaudited pro forma statement of operations reflects the transaction described in Item 2.01 above, assuming the transaction had been consummated as of the beginning of the fiscal period presented.  The unaudited pro form balance sheet reflects such transactions, assuming they had been consummated as of August 31, 2011.

The pro forma adjustments, as described in the notes to the unaudited pro forma financial statements, are based upon available information and certain assumptions that we believe are reasonable. The allocations are preliminary in nature and subject to change following the transaction based on refinements as actual data become available. The unaudited pro forma consolidated financial statements should be read in conjunction with the historical financial statements and the related management’s discussion and analysis of financial condition and results of operations, which are contained in our Annual Report on Form 10-K for the fiscal year ended August 31, 2011.

The unaudited pro forma financial information is for informational purposes only and does not purport to present what our results would actually have been had these transactions actually occurred on the dates presented or to project our results of operations or financial position for any future period.

 
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SIMULATIONS PLUS, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2011 - unaudited
(In thousands, except earnings per share)
 
 
   
Simulations Plus, Inc. Consolidated as reported
   
Words+, Inc. as reported in Consolidated
   
Pro forma Adjustment (a)
   
Simulations Plus, Inc. Pro Forma as adjusted
 
                         
Revenues:
  $ 11,720     $ 2,981     $ (2,981 )   $ 8,739  
                                 
Cost of sales
    2,879       1,381       (1,381 )     1,498  
                                 
Gross profit
    8,841       1,600       (1,600 )     7,241  
                                 
Operating expenses
                               
Selling, general, and administrative
    4,305       1,467       (1,383 ) a-1    2,922  
Research and development
    935       63       (63 )     872  
                                 
Total operating expenses
    5,240       1,530       (1,446 ) a-1    3,794  
                                 
Income from operations
    3,601       70       (154 ) a-1    3,447  
                                 
Other income (expense)
                               
Interest income
    91       1       (1 )     90  
Miscellaneous income
    1       1       (1 )     -  
Gain on currency exchange
    77       -       -       77  
                                 
Total other income (expense)
    169       2       (2 )     167  
                                 
Income before income taxes
                               
from continuing operations
    3,770       72       (156 ) a-1    3,614  
                                 
Provision for income taxes
                               
Deferred income taxes
    (284 )             -       (284 )
Current Income taxes
    (771 )     -       -       (771 )
                                 
Net income from continuing operations
  $ 2,715     $ 72     $ (156 ) a-1 $ 2,559  
                                 
Basic earnings per share
  $ 0.17     $ -     $ (0.01 )   $ 0.16  
                                 
Diluted earnings per share
  $ 0.17     $ -     $ (0.01 )   $ 0.16  
                                 
Weighted-average common
                               
shares outstanding
                               
                                 
Basic
    15,540,047       15,540,047       15,540,047       15,540,047  
                                 
Diluted
    16,082,454       16,082,454       16,082,454       16,082,454  

 

 
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SIMULATIONS PLUS, INC.
PRO FORMA BALANCE SHEET
AS OF AUGUST 31, 2011 - unaudited
(In thousands)

   
Simulations Plus, Inc. Consolidated as reported
   
Words+, Inc. as reported in Consolidated
   
Pro forma Adjustment (b)
   
Simulations Plus, Inc. Pro Forma as adjusted
 
ASSETS
                       
Cash and cash equivalents
  $ 10,181     $ 143     $ 1,772   b-1  $ 11,953  
Income tax refund receivable
    259       -       -       259  
Accounts receivable, net of allowance for doubtful accounts
                         
and estimated contractual discounts of $233,385
    1,774       603       (603 )     1,171  
Contracts receivable
    186       -       -       186  
Inventory
    392       392       (392 )     -  
Prepaid expenses and other current assets
    181       57       (57 )     124  
Deferred income taxes
    302       -       -       302  
Total current assets
    13,275       1,195       720       13,995  
                                 
Capitalized computer software development costs,
                               
net of accumulated amortization of $5,176,408
    2,409       220       (220 )     2,189  
Property and equipment, net
    164       121       (121 )     43  
Customer relationships, net of
                            -  
accumulated amortization of $126,172
    2       -       -       2  
Other assets
    18       -       -       18  
Total assets
  $ 15,868     $ 1,536     $ 379     $ 16,247  
                                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                               
Accounts payable
  $ 292     $ 116     $ (116 )   $ 176  
Accrued payroll and other expenses
    495       219       (152 ) b-2    343  
Accrued income taxes
    169               217   b-4    386  
Accrued warranty and service costs
    44       44       (44 )     -  
Deferred revenue
    141       -       -       141  
Total current liabilities
    1,141       379       (95 )     1,046  
                                 
Deferred income taxes
    690       -       (33 )     657  
Total liabilities
    1,831       379       (128 )     1,703  
                                 
Shareholders' equity
                               
Preferred stock
    -       -       -       -  
Common stock
    4       -       -       4  
Additional paid-in capital
    4,168       -       -       4,168  
Retained earnings (deficit)
    9,865       1,157   b-3    507   b-5    10,372  
Total shareholders' equity
    14,037       1,157       507       14,544  
Total liabilities and shareholders' equity
  $ 15,868     $ 1,536     $ 379     $ 16,247  


 


 
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SIMULATIONS PLUS, INC.
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(In thousands)


(a)
Reflects the elimination of Words+ operations
   
a-1
Reflects intra-company cost sharing adjustments.  A significant adjustment was made for Office Lease cost sharing, which we treated as if a portion was subleased to Words+.
   
(b)
Reflects the elimination of assets and liabilities of Words+, including the resulting gain on the sale, assuming the sale had been consummated on August 31, 2011:

 
Gross Proceeds from the sale of Words+
  $ 1,982  
 
Professional fees
    (210 )
 
Net Proceeds from the sale of Words+
    1,772  
  Net assets of Words+ as of August 31, 2011     (1,157
  Cash of Words+ assumed by Simulations Plus     143  
  Payroll-related liabilities assumed by Simulations Plus     (67
 
Deferred tax adjustment
    33  
 
Gain on sale
    724  

b-1
Reflects Net Proceeds from the sale of Words+
b-2
Reflects payroll-related liabilities which are assumed by Simulations Plus.
b-3
Reflects Words+ net deficit of $124k as reported plus intra company fund liability for $1,281k which Simulations Plus assumed.
b-4 Reflects an increase in accrued income tax based on estimated 30% effective tax rate on gain on sale of Words+.
b-5 Reflects gain of $724K less tax effect of $217
 
The pro forma statements of operations have not been adjusted to give effect to the gain on sale of Words+

 
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(c) Shell company transactions.  Not applicable

(d) Exhibits.

10.1  Stock Purchase Agreement dated November 15, 2011, by and among Simulations Plus, Inc., Words+, Inc., and Prentke Romich Company, incorporated by reference to Exhibit 10.1 of  Simulations Plus, Inc.’s Current Report on Form 8-K filed November 16, 2011 (Commission No. 001-32046).

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This Current Report on Form 8-K may contain forward-looking statements that are made pursuant to the safe harbor provisions of Section 21E of the Exchange Act. The forward-looking statements in this Current Report on Form 8-K are not historical facts, do not constitute guarantees of future performance and are based on numerous assumptions which, while believed to be reasonable, may not prove to be accurate.  Any forward-looking statements in this Current Report on Form 8-K do not constitute guarantees of future performance and involve a number of factors that could cause actual results to differ materially, including risks more fully described in our most recently filed Quarterly Report on Form 10-Q and Annual Report on Form 10-K. We assume no obligation to update any forward-looking information contained in this Current Report or with respect to the announcements described herein.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
SIMULATIONS PLUS, INC.
(Registrant)
Date: December 6, 2011
By:  /s/ Momoko Beran
Momoko Beran
Chief Financial Officer
 

 
 
 
 

 
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