SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, For Use of the
[_] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
Simulations Plus, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
________________________________________________________________________________
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held February 29, 2008
The Annual Meeting of Shareholders of Simulations Plus, Inc. (the "Company"),
will be held on February 29, 2008, at 2:00 p.m., Pacific Time, at 42505 10th
Street West, Lancaster, California, for the following purposes:
1. To elect to the Board of Directors five (5) directors, to serve until the
next Annual Meeting of Shareholders of the Company or until their successors are
elected and qualified, subject to prior death, resignation or removal.
2. To ratify the appointment of Rose, Snyder and Jacobs as Independent public
accountants for the Company for the fiscal year ending August 31, 2008.
3. To amend and restate the Company's certificate of incorporation to increase
the number of authorized shares of common stock from 20,000,000 shares to
50,000,000 shares.
4. To transact such other business as may properly come before the Meeting or
any adjournments or postponements thereof.
All shareholders are cordially invited to attend the meeting, although only
shareholders of record at the close of business on December 20, 2007, will be
entitled to notice of and to vote at the meeting. A list of shareholders
entitled to vote at the Annual Meeting will be open to inspection by the
shareholders at the Company's principal office, 42505 10th Street West,
Lancaster, California, for a period of 10 days prior to the Annual Meeting and
at the Annual Meeting itself.
Shares can be voted at the meeting only if the holder is present in person or
represented by proxy. We urge you to date and sign the enclosed proxy and return
it in the accompanying envelope promptly so that your shares may be voted in
accordance with your wishes and the presence of a quorum may be assured. We
encourage you to do so even if you plan to attend the meeting in person. The
prompt return of your signed proxy, regardless of the number of shares you hold,
will aid the Company in reducing the expense of additional proxy solicitation.
The giving of such proxy does not affect your right to vote in person in the
event you attend the meeting.
By Order of the Board of Directors
Virginia Woltosz
Secretary
Lancaster, California
January 22, 2008
1
YOUR PROXY
PLEASE SIGN AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED POSTPAID ENVELOPE.
SHOULD YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON EVEN THOUGH YOU HAVE GIVEN
A PROXY. THE PROMPT RETURN OF YOUR PROXY WILL BE OF GREAT HELP IN PREPARATION
FOR THE MEETING.
SIMULATIONS PLUS, INC.
42505 10th STREET WEST, LANCASTER, CALIFORNIA 93534-7059 (661) 723-7723
2
PROXY STATEMENT
The enclosed proxy is furnished to the shareholders of Simulations Plus, Inc., a
California corporation (the "Company"), in connection with the Annual Meeting of
Shareholders (the "Meeting") to be held at the Company's Offices located at
42505 10th Street West, Lancaster, California 93534-7059, on February 29, 2008,
at 2:00 p.m. local time.
A list of shareholders entitled to vote at the Annual Meeting will be open to
inspection by the shareholders at the Company's principal office, 42505 10th
Street West, Lancaster, California, for a period of 10 days prior to the Annual
Meeting and at the Annual Meeting itself.
Requests should be addressed to the Company, Simulations Plus, Inc., to the
attention of Ms. Renee Bouche, Investor Relations, 42505 10th Street West,
Lancaster, California 93534, (661) 723-7723.
INCORPORATION BY REFERENCE
Simulations Plus, Inc., a California corporation (the "Company") is currently
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and, in accordance therewith, files reports, proxy
and Proxy Statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy and Proxy Statements and
other information may be inspected and copied at the public reference facilities
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington D.C. 20549; at its Northeast Regional Office, 233 Broadway, New York,
NY 10279; and at its Midwest Regional Office, 175 West Jackson Blvd., Suite 900,
Chicago, Illinois 60604, and copies of such materials can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington
D.C. 20549 at prescribed rates. In addition, such materials may be accessed
electronically at the Commission's site on the World Wide Web, located at
http://www.sec.gov. The Company intends to furnish its shareholders with annual
reports containing audited financial statements and such other periodic reports
as the Company may determine to be appropriate or as may be required by law.
A copy of the Company's 2007 Annual Report on Form 10-KSB including financial
statements for the years ended August 31, 2007 and 2006, is being mailed to all
shareholders herewith. Except for any portion of the Form 10-KSB which is
specifically incorporated by reference into this Proxy Statement, the Form
10-KSB is not to be regarded as proxy solicitation material or as a
communication by means of which any solicitation is being made. THE COMPANY WILL
PROVIDE ANY SHAREHOLDER WITH A COPY OF ANY EXHIBIT TO THE FORM 10-KSB/A PURSUANT
TO THE REQUEST PROCEDURE DESCRIBED IN THE FORM 10 KSB.
INFORMATION CONCERNING SOLICITATION AND VOTING
The following information is provided to shareholders to explain the use of this
Proxy Statement for this Meeting:
3
RECORD DATE
Only shareholders of record at the close of business on December 20, 2007 are
entitled to vote at the Meeting. The Company's Common Stock is its only class of
voting securities. As of December 20, 2007, the Company had issued and
outstanding ___________ shares of Common Stock of record.
REVOCABILITY OF PROXIES
A PROXY FOR USE AT THE MEETING IS ENCLOSED. ANY STOCKHOLDER WHO EXECUTES AND
DELIVERS A PROXY HAS THE RIGHT TO REVOKE IT AT ANY TIME BEFORE ITS EXERCISE BY
FILING WITH THE SECRETARY OF THE COMPANY AN INSTRUMENT REVOKING IT OR A DULY
EXECUTED PROXY BEARING A LATER DATE. IN ADDITION, A STOCKHOLDER MAY REVOKE A
PROXY PREVIOUSLY EXECUTED BY ATTENDING THE MEETING AND ELECTING TO VOTE IN
PERSON.
VOTING AND SOLICITATION
Proxies are being solicited by the Board of Directors of the Company. The cost
of this solicitation will be borne by the Company. Solicitation will be
primarily by mail, but may also be made by telephone, fax transmission or
personal contact by certain officers and directors of the Company, who will not
receive any compensation therefore. Shares of Common Stock represented by
properly executed proxies will, unless such proxies have been previously
revoked, be voted in accordance with the instructions indicated thereon. IN THE
ABSENCE OF SPECIFIC INSTRUCTIONS TO THE CONTRARY, PROPERLY EXECUTED PROXIES WILL
BE VOTED FOR EACH OF THE PROPOSALS DESCRIBED ABOVE. No business other than that
set forth in the accompanying Notice of Annual Meeting of Shareholders is
expected to come before the Meeting. Should any other matter requiring a vote of
shareholders properly arise, the persons named in the enclosed form of proxy
will vote such proxy in accordance with the recommendation of the Board of
Directors.
Each share of Common Stock is entitled to one vote for each share held as of
record, and there are no preemptive rights. The law of the state of California
and the Company's current Certificate of Incorporation (the "Certificate of
Incorporation") and Bylaws do provide for cumulative voting for the election of
directors or any other purpose.
The effect of cumulative voting is that the holders of a majority of the
outstanding shares of Common Stock may not be able to elect all of the Company's
directors. No shareholder will be entitled to cumulate votes for a candidate,
however, unless that candidate's name has been placed in nomination prior to the
voting and the shareholder, or any other shareholder, has given notice at the
meeting, prior to the voting, of an intention to cumulate votes. A favorable
vote consists of a simple majority of the shares entitled to vote at the
meeting. The Company believes that as of December 15, 2007, the approximate
number of shareholders of record of its common stock was _____ and that there
were approximately ____ beneficial owners. This includes shares held in nominee
or "street" accounts.
4
Only shareholders of record at the close of business on December 20, 2007, will
be entitled to vote at the meeting. On December 20, 2007, there were __________
shares of the Common Stock issued and outstanding. Shareholders are entitled to
one vote per share on all matters being submitted to shareholders at the
meeting, other than with respect to the election of directors, for which
cumulative voting is currently required under certain circumstances by
applicable provisions of California Law. Under cumulative voting, each
shareholder may give any one candidate whose name is placed in nomination prior
to the commencement of voting a number of votes equal to the number of directors
to be elected, multiplied by the number of votes to which the shareholder's
shares are normally entitled, or distribute such number of votes among as many
candidates as the shareholder sees fit.
The Board of Directors knows of only two shareholders who owned more than five
percent of the outstanding voting securities of the Company as of the record
date: Walter S. Woltosz and Virginia E. Woltosz. See "Beneficial Ownership of
Common Stock."
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Shares representing 50% of the voting power of the ____________shares of Common
Stock outstanding on the Record Date, which have voting rights, must be
represented at the Meeting to constitute a quorum for conducting business. In
the absence of a quorum, the shareholders present in person or by proxy, by
majority vote and without further notice, may adjourn the meeting from time to
time until a quorum is attained. At any reconvened meeting following such
adjournment at which a quorum shall be present, any business may be transacted
which might have been transacted at the Meeting as originally notified.
The required quorum for the transaction of business at the Meeting is a majority
of the votes eligible to be cast by holders of shares of Common Stock issued and
outstanding on the Record Date. Shares that are voted "FOR" or "AGAINST" a
matter are treated as being present at the Meeting for purposes of establishing
a quorum and are also treated as shares entitled to vote at the Meeting (the
"Votes Cast") with respect to such matter.
The Company will count abstentions for purposes of determining both: (i) the
presence or absence of a quorum for the transaction of business, and (ii) the
total number of Votes Cast with respect to a proposal (other than the election
of directors). Accordingly, abstentions will have the same effect as a vote
against the proposal.
Further, the Company intends to count broker non-votes for the purpose of
determining the presence or absence of a quorum for the transaction of business,
although broker non-votes will not be counted for purposes of determining the
number of Votes Cast with respect to the particular proposal on which the broker
has expressly not voted. Thus, a broker non-vote will not affect the outcome of
the voting on a proposal.
5
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company that are intended to be presented by
such shareholders at the Company's next Annual Meeting of Shareholders for the
fiscal year ending August 31, 2008, must be received by the Company no later
than August 20, 2008, in order to be considered for inclusion in the proxy
statement and form of proxy relating to that meeting.
COMPANY STOCK PRICE PERFORMANCE
The stock price performance graph below is required by the SEC and shall not be
deemed to be incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933,
as amended, or under the Securities Exchange Act of 1934, as amended, except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed soliciting material or filed under
such Acts.
The graph below compares the cumulative total shareholder return on the Common
Stock of the Company from the last day of the first month of trading of the
Company's Common Stock upon the Company's initial public offering (June 30,
1997) to August 31, 2007 with the cumulative total return on the Russell 2000
Index, and the S&P 600 Small Cap Index (assuming the investment of $100 in the
Company's Common Stock and in each of the indices on June 30, 1997, and
reinvestment of all dividends).
[STOCK PRICE PERFORMANCE HERE]
The graph above was plotted using the following data:
Stock Performance: 8/31/07
Russell 2000 S&P 600 Simulations Plus, Inc.
----------------- ------------------ ----------------------
Aug-00 537.89 100 223.49 100 0.62 100
Aug-01 468.56 87.1107 223.04 99.7986 0.3 48.3871
Aug-02 390.96 72.684 200.255 89.6036 0.38 61.2903
Aug-03 497.42 92.4762 243.425 108.92 0.64 103.226
Aug-04 547.93 101.867 277.222 124.042 0.82 132.258
Aug-05 661.51 122.982 347.42 155.452 0.85 137.097
Aug-06 720.53 133.955 368.82 165.028 1.1 177.419
Aug-07 792.86 147.402 417.61 186.858 6.68 1077.42
INFORMATION RELATING TO VARIOUS PROPOSALS
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors acts as a whole in determining the persons to be
nominated as members of the Board of Directors. The Board of Directors
identifies, screens and reviews potential directors for nominees for election to
the Board at the Annual Meeting and candidates to fill any vacancies on the
Board. When considering a potential candidate for membership on the Company's
Board, the Board of Directors considers relevant business and industry
experience and demonstrated character and judgment. The Board of Directors has
not received any recommended nominations from any of the Company's shareholders
in connection with this Annual Meeting.
INFORMATION REGARDING NOMINEES
The Board of Directors has nominated the persons named below for election as
directors of the Company to serve until the next Annual Meeting of Shareholders
and until their successors are duly elected and qualified.
In order to be elected as a director, a nominee will have to receive a majority
of the votes cast for that nominee, assuming a quorum (which consists of a
majority of the shares entitled to vote at the meeting) is present at the
meeting. See "Voting," above.
At the time of the Annual Meeting, the Board of Directors will consist of five
incumbent members who are seeking to be elected at the meeting to hold office
until the next meeting of shareholders and until their successors are elected
and qualified. The Company's Bylaws presently provide for a Board of no less
than three and no more than five directors, with the number of directors
currently fixed at five.
Walter S. Woltosz, Virginia E. Woltosz, Dr. David Z. D'Argenio, Dr. Richard R.
Weiss, and H. Wayne Rosenberger, all of whom are incumbent directors, have been
nominated by the Board of Directors for election as directors of the Company.
All of the nominees have informed the Company that they are willing to serve, if
elected, and management has no reason to believe that any of the nominees will
be unavailable. In the event a nominee for director should become unavailable
for election, the persons named in the proxy will vote for the election of any
other person who may be recommended and nominated by the Board for the office of
director. Information regarding director nominees and directors is set forth
below:
6
NAME
DIRECTOR SINCE AGE POSITION WITH THE COMPANY
-------------- --- -------------------------
DIRECTORS AND DIRECTOR NOMINEES:
Walter S. Woltosz 62 Chairman of the Board, Chief Executive
1996 Officer and President of the Company
and Words+.
Virginia E. Woltosz 56 Secretary and Director of the Company
1996
Dr. David Z. D'Argenio 58 Director
1997
Dr. Richard R. Weiss 74 Director
1997
Wayne Rosenberger 67 Director
2007
WALTER S. WOLTOSZ is a co-founder of the Company and has served as its Chief
Executive Officer and President and as Chairman of the Board of Directors since
its incorporation in July 1996. Mr. Woltosz is also a co-founder of Words+ and
served as its Chief Executive Officer and President from its incorporation in
1981 until the appointment of Jeffrey A. Dahlen as President of Words+ in 2004.
VIRGINIA E. WOLTOSZ is a co-founder of the Company and has served as its Senior
Vice President and Secretary since its incorporation in July 1996 until January
31, 2003. Mrs. Woltosz is also a co-founder of Words+ and served as its Vice
President, Secretary and Treasurer from its incorporation in 1981 until January
31, 2003. Mrs. Woltosz retired from the position of Senior Vice President as of
January 31, 2003, but remains as Secretary and Treasurer of Simulations Plus.
Virginia E. Woltosz is the wife of Walter S. Woltosz.
DR. DAVID Z. D'ARGENIO started to serve as a Director of the Company in June
1997. He is currently Professor of Biomedical Engineering at the University of
Southern California ("USC"), and has been on the faculty at USC since 1979. He
also serves as the Co-Director of the Biomedical Simulations Resource Project at
USC, a project funded by the National Institutes of Health since 1985.
DR. RICHARD R. WEISS started to serve as a Director of the Company in June 1997.
From October 1994 to the present, Dr. Weiss has acted as a consultant to a
number of aerospace companies through his own consulting entity, Richard R.
Weiss Consulting Services. From June 1993 through July 1994, Dr. Weiss was
employed by the U.S. Department of Defense as its Deputy Director, Space Launch
& Technology.
H. WAYNE ROSENBERGER STARTED TO SERVE AS a Director of the Company in November
2007. Mr. Rosenberger has been a career banker, holding various senior and
executive positions in banking since 1963. From August 1997 to present Mr.
Rosenberger has been Senior Regional Vice President of American Security Bank,
which is one of the banks used by the Company for banking services.
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VOTE REQUIRED.
Approval of Proposal 1 requires the affirmative vote of a majority of the shares
of Common Stock present and voting at a meeting if a quorum is present.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR approval of Proposal 1.
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS WHO
ARE NOT ALSO DIRECTORS:
NAME
OFFICER SINCE AGE POSITION WITH THE COMPANY
------------- --- -------------------------
Ronald F. Creeley 56 Vice President, Marketing and
1997 Sales of the Company and Words+, Inc.
Momoko A. Beran 55 Chief Financial Officer of the
1996 Company and Words+, Inc.
Jeffrey A. Dahlen 46 President of Words+, Inc.
2003
RONALD F. CREELEY joined the Company in February 1997 as its Vice President,
Marketing and Sales. Prior to joining the Company, Mr. Creeley had been
Marketing Director at Union Pen Company, Time Resources, and New England
Business Services, Inc., with experience in marketing and research.
MOMOKO A. BERAN joined Words+ in June 1993 as Director of Accounting and was
named the Company's Chief Financial Officer in July 1996. Prior to joining
Words+, Ms. Beran had been Financial Controller for AB Component Systems Inc.,
which had its headquarters in the U.K. Since February 1, 2003, Ms. Beran has
also been the Company's Director of Human Resources.
JEFFREY A. DAHLEN rejoined the Company in April 2003 as Vice President of
Research and Development for Words+ after five years with iAT, a software
consulting firm he founded based in Pasadena, California. Mr. Dahlen was
promoted to President of Words+, Inc. in April 2004. Mr. Dahlen has over 20
years' experience in both software and hardware design, which includes
development of extremely high speed processing hardware with the Jet Propulsion
Laboratory at the California Institute of Technology, and over 10 years of
software and hardware design and development at Words+.
8
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation paid
or accrued for the fiscal year ended August 2007, 2006 and 2005 by the Company
to or for the benefit of the Company's CEO, President, Chief Financial Officer,
Vice President, Sales and Marketing, and President of Words+, Inc. - subsidiary
(the "named executive officers"). For the fiscal year ended August 2007, No
other executive officers of the Company received total annual compensation for
the fiscal year ended August 31, 2007, 2006 and 2005 that exceeded $100,000.
Long-Term
Annual Compensation Compensation
------------------- ------------
Securities (# shares)
Fiscal Underlying Options
Name and Principal Position Year Salary Bonus(1) Other(2) Granted during FY
--------------------------- ---- ------ -------- -------- -----------------
Walter S. Woltosz 2007 $172,000 $146,289 $2,293 -
Chief Executive Officer 2006 $172,000 $49,887 $2,580 15,000
2005 $165,000 $19,340 - -
Ronald F. Creeley 2007 $120,000 $4,505 $4,800 -
Vice President, Sales 2006 $100,000 $2,472 $4,360 20,000
and Marketing 2005 $100,000 $4,951 $4,000 5,000
Momoko A. Beran 2007 $120,000 $6,640 $4,800 -
Chief Financial Officer 2006 $100,000 $3,332 $4,360 20,000
2005 $100,000 $6,010 $4,000 5,000
Jeffrey A. Dahlen 2007 $96,000 $1,736 $3,840
President, Words+, Inc. 2006* n/a n/a n/a
subsidiary 2005* n/a n/a n/a
(1) Amount represents bonus earned during the applicable year.
(2) Amount represents Company matching for 401(k) Plan.
* Annual compensation less than $100,000.
EMPLOYMENT AND OTHER COMPENSATION AGREEMENTS
The Board of Directors renewed its employment agreement with Walter Woltosz
commencing September 1, 2007 for two years. The agreement provided for an annual
salary of $250,000. Pursuant to such agreement, Mr. Woltosz was entitled to such
health insurance and other benefits that are not inconsistent with that which we
customarily provide to our other management employees and to reimbursement of
customary, ordinary and necessary business expenses incurred in connection with
the rendering of services to the Company. The agreement also provides that we
may terminate the agreement without cause upon 30 days written notice, and that
our only obligation to Mr. Woltosz would be for a payment equal to the greater
of (i) 12 months of salary or (ii) the remainder of the term of the employment
agreement from the date of notice of termination. Further, the agreement
provides that we may terminate the agreement for cause (as defined) and that our
only obligation to Mr. Woltosz would be limited to the payment of Mr. Woltosz'
salary and benefits through and until the effective date of any such
termination.
9
As part of the agreement with the original underwriter and as partial
compensation for the sale of Words+ to Simulations Plus in 1996, commencing with
our fiscal year ending 1997 and for each fiscal year thereafter, Walter and
Virginia Woltosz are entitled to receive bonuses not to exceed $150,000 and
$60,000, respectively, equal to 5% of our net annual income before taxes.
However, under the new agreement effective as of September 1, 2007, at his
request, Walter Woltosz will receive no bonus. The bonus to Virginia Woltosz
remains the same. The net income before tax for FY07 was $2,825,787, thus we
accrued bonuses in the total amount of $201,289: $141,289 for Walter Woltosz and
$60,000 for Virginia Woltosz. These bonuses are due and payable within 10 days
after the filing of the annual report, and were paid on November 30, 2007
accordingly.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of our Common Stock as of November 9, 2007 by (i) each person who is
known to own beneficially more than 5% of the outstanding shares of our Common
Stock, (ii) each of our directors and executive officers, and (iii) all
directors and executive officers of the Company as a group:
(The numbers in the following table reflect the 2-for-1 split on October 1,
2007)
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER (1)(2) BENEFICIAL OWNERSHIP OF CLASS
----------------------- -------------------- --------
Walter S. and Virginia E. Woltosz (3) 7,431,900 41.71%
Momoko Beran (4) 806,200 4.53%
Ronald F. Creeley (5) 798,000 4.48%
Jeffrey A. Dahlen (6) 260,000 1.46%
Dr. David Z. D'Argenio (7) 24,012 *
Dr. Richard R. Weiss (8) 24,012 *
All directors and officers as a group 9,344,124 52.45%
* Less than 1%
(1) Such persons have sole voting and investment power with respect to all
Shares of Common Stock shown as being beneficially owned by them, subject
to community property laws, where applicable, and the information contained
in the footnotes to this table.
(2) The address of each director and executive officer named is c/o the
Company, 42505 Tenth Street West, Lancaster, California 93534.
(3) Own an aggregate of 7,371,900 plus 30,000 shares of common stock underlying
an option exercisable within the next 60 days of the date of this Annual
Report.
(4) Owns 109,200 shares of common stock acquired from the exercise of options
granted under the 1996 Stock Option plan, plus 697,000 shares of common
stock underlying an option exercisable within the next 60 days of the date
of this Annual Report.
10
(5) Owns 18,000 shares of common stock, plus 780,000 shares of common stock
underlying an option exercisable within the next 60 days of the date of
this Annual Report.
(6) 260,000 shares of common stock options were granted, which are exercisable
within the next 60 days of the date of this Annual Report.
(7) Owns 4,000 shares of common stock, plus 20,012 shares of common stock
underlying an option exercisable within the next 60 days of the date of
this Annual Report. Does not include stock options for 3,200 shares, which
are not exercisable within the next 60 days of the date of this Annual
Report.
(8) Owns 4,000 shares of common stock, plus 20,012 shares of common stock
underlying an option exercisable within the next 60 days of the date of
this Annual Report. Does not include stock options for 3,200 shares, which
are not exercisable within the next 60 days of the date of this Annual
Report.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") requires the Company's directors and executive officers and beneficial
holders of more than 10% of the Company's Common Stock to file with the
Commission initial reports of ownership and reports of changes in ownership of
the Company's equity securities.
Richard R. Weiss was late in filing one report on Form 4 to report a grant of
stock options, and Ronald F. Creeley was late in filing one report on Form 4 to
report an exercise of stock options.
OPTION GRANTS/EXERCISES IN FY07
Option Grants
-------------
There were no option grants to the Named Executive Officers during the year
ended August 31, 2007.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
--------------------------------------------------------------------------------
The following table discloses certain information regarding the options held at
August 31, 2007 by the Chief Executive Officer and each other named executive
officer.
11
------------------------------- ------------ ------------- -------------------------------- -----------------------------
Number of Options at August Value of Options at August
Shares 31, 2007 31, 2007 (1)
Acquired Value --------------------------- --------------------------
on Exercise Realized (2) Exercisable Unexercisable Exercisable Unexercisable
------------------------------- ------------ ------------- ------------------ ------------- --------------- -------------
Walter S. Woltosz - - 15,000 - $163,125* $0.00*
------------------------------- ------------ ------------- ------------------ ------------- --------------- -------------
Virginia E. Woltosz - - 15,000 - $163,125* $0.00*
------------------------------- ------------ ------------- ------------------ ------------- --------------- -------------
Momoko Beran 70,900 $756,197 419,400 - $4,259,268 $0.00
------------------------------- ------------ ------------- ------------------ ------------- --------------- -------------
Ronald F. Creeley 22,000 $176,400 412,000 - $4,783,290 $0.00
------------------------------- ------------ ------------- ------------------ ------------- --------------- -------------
Dr. David Z. D'Argenio - - 10,006 3,200 $106,967 $13,380
------------------------------- ------------ ------------- ------------------ ------------- --------------- -------------
Dr. Richard R. Weiss - - 10,006 3,200 $106,967 $13,380
------------------------------- ------------ ------------- ------------------ ------------- --------------- -------------
Jeffrey Dahlen - - 130,000 - $1,438,400 $0.00
------------------------------- ------------ ------------- ------------------ ------------- --------------- -------------
(1) Based on a per share price of $13.35 at August 31, 2007 less applicable
option exercise prices.
(2) The value realized represents the difference between the aggregate
closing price of the shares on the date of exercise less the aggregate
exercise price paid.
* Granted at $2.48, 110% of market price of the issue date
OPTION PLANS
As of September 30, 2006, the un-issued portion of the 1996 Stock Option Plan is
cancelled by its Terms.
In February 2007, the Board of Directors adopted and the shareholders approved
the 2007 Stock Option Plan (the "2007 Option Plan") under which a total of
500,000 shares of common stock had been reserved for issuance.
COMPANY CODE OF ETHICS
Our Code of Ethics is posted on our web site: www.simulations-plus.com.
BOARD COMMITTEES AND MEETINGS
The Board of Directors has an Audit Committee and a Compensation Committee.
Audit Committee
---------------
The Audit Committee reviews, acts on and reports to the Board of Directors with
respect to various auditing and accounting matters, including selecting our
independent auditors, the scope of the annual audits, fees to be paid to the
auditors, the performance of our independent auditors and our accounting
practices. This committee is responsible for selecting the Company's independent
auditors, reviewing the Company's internal audit procedures, reviewing quarterly
and annual financial statements independently and with the Company's independent
auditors, reviewing the results of the annual audit and implementing and
monitoring the Company's cash investment policy. In addition, this committee
assists the Board in its oversight of corporate accounting and internal
controls, reporting practices and the quality and integrity of the financial
reports of the Company. The Audit Committee met two times during fiscal 2007.
12
Currently our three independent directors, Dr. Richard R. Weiss and Dr. David Z.
D'Argenio and Mr. H. Wayne Rosenberger, are the members of the Audit Committee.
Under the new rules of the Securities and Exchange Commission brought about by
the Sarbanes-Oxley Act, companies are required to disclose whether their audit
committees have an "audit committee financial expert" as defined in Item 401(h)
of Regulation S-B under the Exchange Act and whether that expert is
"independent" as that term is used in Item 7(d)(3)(iv) of Schedule 14A the
Exchange Act. The Board of Directors believes that the two members of the
current audit committee are qualified to read and understand financial reports,
but it recognizes that they do not meet the description of "audit committee
financial expert" as defined in the Regulation. With over forty years of
experience with financial institutions and the Senior Regional Vice President of
American Security Bank since 1997, our third director, Mr. H. Wayne Rosenberger
does satisfy the definition of "audit committee financial expert".
Compensation Committee
----------------------
The Compensation Committee reviews and approves the compensation and benefits of
our key executive officers, administers our employee benefit plans and makes
recommendations to the Board of Directors regarding such matters. Dr. Richard R.
Weiss, Dr. David Z. D'Argenio, and Mr. H. Wayne Rosenberger are members of the
Compensation Committee. The Compensation Committee met once during fiscal 2007.
DIRECTOR COMPENSATION
At the Board of Directors' meeting held on July 19, 2006, the stipend for the
outside directors increased to $5,000 per year which is the first increase since
the Company is incorporated. The payment for each meeting was increased to
$1,000 at the Board meeting held on May 10, 2007. In addition, stock options
which each outside director receives annually were increased to 2,000 shares
(4,000 shares after adjusting for the 2-for-1 split on October 2, 2007) at the
fair market value of the shares on the date of grant.
PROPOSAL 2: TO RATIFY THE SELECTION OF ROSE, SNYDER AND JACOBS CPA's AS THE
COMPANY'S INDEPENDENT ACCOUNTANTS
The Board has selected Rose, Snyder and Jacobs CPA's as its independent
registered accounting firm for the Company for fiscal year 2008. A resolution is
being submitted to shareholders at the meeting for ratification of such
selection and the accompanying proxy will be voted for such ratification, unless
instructions to the contrary are indicated therein. Although ratification by
shareholders is not a legal prerequisite to the Board's selection of Rose,
Snyder and Jacobs as the Company's independent registered accounting firm, the
Company believes such ratification to be appropriate. If the shareholders do not
ratify the selection of Rose, Snyder and Jacobs, the selection of our
independent registered accounting firm will be reconsidered by the Board;
however, the Board may select Rose, Snyder and Jacobs, notwithstanding the
failure of the shareholders to ratify its selection.
AUDIT FEES
The Company incurred the following fees to Rose, Snyder & Jacobs, CPAs for
services rendered during the fiscal year ended August 31, 2007:
Fee Category FY06 Fees FY05 Fees
---------------- --------- ---------
Audit fees $60,295 $55,803
Audit-related fees -- --
Tax fees 8,000 13,467
All other fees 1,120 --
------- -------
Total fees $69,415 $69,270
------- -------
13
AUDIT FEES - Consists of fees incurred for professional services
rendered for the audit of Simulations Plus, Inc.'s consolidated
financial statements and for reviews of the interim consolidated
financial statements included in our quarterly reports on Form 10-QSB
and consents for filings with the SEC.
AUDIT-RELATED FEES - Consists of fees billed for professional services
that are reasonably related to the performance of the audit or review
of Simulations Plus, Inc.'s consolidated financial statements, but are
not reported under "Audit fees."
TAX FEES - Consists of fees billed for professional services relating
to tax compliance, tax reporting, and tax advice.
ALL OTHER FEES - Consists of fees billed for all other services.
The appointment of auditors is approved annually by the Board.
VOTE REQUIRED
Approval of Proposal 2 requires the affirmative vote of a majority of the shares
of Common Stock present and voting at a meeting if a quorum is present.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR approval of Proposal 2.
PROPOSAL 3: TO AMEND AND RESTATE THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 20,000,000 SHARES
TO 50,000,000 SHARES
The number of shares of the Company's common stock authorized has been
20,000,000 since the date of incorporation. As a result of our two stock splits,
the total of the number of shares issued, and the number of potential shares
that could be issued underlying stock options (both issued and potentially
issued under the 2007 Stock Option Plan), is now about 19,000,000. Authorizing
additional shares will provide a cushion to allow for such events as additional
stock splits, shares issued as acquisitions, and future stock option plans.
14
VOTE REQUIRED
Approval of Proposal 3 requires the affirmative vote of a majority of the shares
of Common Stock present and voting at a meeting if a quorum is present.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR approval of Proposal 3.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters to be presented
at the Annual Meeting other than those described above. However, if any other
matters properly come before the meeting, it is intended that any shares voted
by proxy will be voted in the discretion of the Board of Directors.
By Order of the Board of Directors
/s/ Virginia E. Woltosz
-----------------------
Virginia E. Woltosz
Secretary
Dated: December 20, 2007
15
Appendix 1: Audit Committee Charter
ORGANIZATION:
The audit committee shall be composed of directors, the majority of whom are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the Board of Directors, would interfere
with their exercise of independent judgment as a committee member.
STATEMENT OF POLICY:
The audit committee shall provide assistance to the corporate management in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community on matters relating to corporate finances. In so doing, it
is the responsibility of the audit committee to maintain free and open means of
communication between the directors, the independent registered accounting firm
("independent auditors"), and the financial management of the corporation.
RESPONSIBILITIES:
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the corporation are in accordance with all
requirements and are of high quality.
In carrying out these responsibilities, the audit committee will:
o Review and recommend to the management the independent auditors to be selected
to audit the financial statements of the corporation and its subsidiaries.
o Review with the independent auditors, the company's management, and financial
and accounting personnel, the adequacy and effectiveness of the accounting and
financial controls of the corporation, and elicit any recommendations for the
improvement of such internal control procedures or particular areas where new or
more detailed controls or procedures are desirable. Particular emphasis should
be given to the adequacy of such internal controls to expose any payments,
transactions, or procedures that might be deemed illegal or otherwise improper.
Further, the committee periodically should review company policy.
o Review the financial statements contained in the annual report to shareholders
with management and the independent auditors to determine that the independent
auditors are satisfied with the disclosure and content of the financial
statements to be presented to the shareholders. Any changes in accounting
principles should be reviewed.
o Provide sufficient opportunity for independent auditors to meet with the
members of the audit committee without members of management present. Among the
items to be discussed in these meetings are the independent auditors' evaluation
of the corporation's financial, accounting, auditing personnel, and the
cooperation that the independent auditors received during the course of the
audit.
o Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in its
judgment, that is appropriate.
16
Appendix 2: Form of Proxy Card
APPENDIX 2: FORM OF PROXY CARD
Exhibit to Proxy Statement for the 2007 Annual Meeting of Shareholders
Simulations Plus, Inc.
Proxy
Solicited by the Board of Directors of Simulations Plus, Inc. -- Annual Meeting
of Shareholders -- February 29, 2008
The undersigned hereby appoints Walter S. Woltosz and Momoko Beran, or either of
them, attorneys and proxies for the undersigned, with full power of
substitution, for and in the name, place and stead of the undersigned, to
represent and vote, as designated below, all shares of stock of Simulations
Plus, Inc., a California Corporation, held of record by the undersigned on
December 20, 2007, at the Annual Meeting of the Shareholders to be held at 42505
10th Street West, Lancaster, California at 2:00 p.m. Pacific Standard Time on
February 29, or at any adjournment or postponement of such meeting, in
accordance with and as described in the Notice of Annual Meeting of Shareholders
and Proxy Statement. If no direction is given, this proxy will be voted FOR
Proposals 1, 2, and 3 and in the discretion of the proxy as to such other
matters as may properly come before the meeting.
[X] Please mark the votes as in this example.
The Board of Directors recommends a vote for Proposals 1, 2, and 3.
1. Election of Directors
Nominees: Walter S. Woltosz, Virginia E. Woltosz, Dr. David Z. D'Argenio, Dr.
Richard R. Weiss, and H. Wayne Rosenberger
FOR [ ] WITHHELD [ ]
FOR all nominees except as stated on line above
2 Ratification of Selection of Rose, Snyder and Jacobs CPA's as Auditors
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3 To amend and restate the Company's certificate of incorporation to increase
the number of authorized shares of common stock from 20,000,000 shares to
50,000,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies all that the proxies,
their substitutes, or any of them, may lawfully do by virtue hereof.
Please sign exactly as your name appears on the address label affixed hereto. If
acting as attorney, executor, trustee or in other representative capacity, sign
name and title.
Date:____________________
Signature:_______________
Signature if held jointly:________________________