SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to S 240.14a-11(c) or S 240.14a-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)(4) 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 transactions:
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.
SIMULATIONS PLUS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held March 11, 2004
The Annual Meeting of Shareholders of Simulations Plus, Inc. (the "Company"),
will be held on March 11, 2004, at 2:00 p.m., Pacific Time, at 1220 W. Avenue J,
Lancaster, California, for the following purposes:
1. To elect to the Board of Directors four (4) directors, to
serve until the next Annual Meeting of Stockholders of the
Company or until their successors are elected and qualify,
subject to prior death, resignation or removal.
2. To ratify the appointment of Singer, Lewak, Greenbaum &
Goldstein LLP as Independent public accountants for the
Company for the year ending August 31, 2004.
3. 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 January 23, 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, 1220 W. Avenue J, 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
February 11, 2004
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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.
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SIMULATIONS PLUS, INC.
1220 W. AVENUE J
LANCASTER, CALIFORNIA 93534-2902
(661) 723-7723
________________________
PROXY STATEMENT
_________________________
This proxy statement is furnished to the stockholders of Simulations Plus, Inc.,
a California corporation (the "Company"), in connection with the Annual Meeting
of Stockholders (the "Meeting") to be held at the Company's Offices located at
1220 W. Avenue J, Lancaster, California 93534-2902, on March 11, 2004, at 2:00
p.m. local time.
The Meeting will be held to consider and vote on the following proposals:
PURPOSE OF MEETING
1. To elect to the Board of Directors four (4) directors, to serve
until the next Annual Meeting of Stockholders of the Company or until their
successors are elected and qualify, subject to their prior death, resignation or
removal.
2. To ratify the appointment of Singer, Lewak, Greenbaum & Goldstein
LLP as independent public accountants for the Company for the year ending August
31, 2004.
3. To transact such other business as may properly come before the
Meeting and any adjournments thereof.
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, 1220 W. Avenue
J, 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, to the attention of
Simulations Plus, Inc., Walt Woltosz, Chief Executive Officer, 1220 W. Avenue J,
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 Chicago Regional Office, 500 West
Madison Street, Suite 1400, Chicago Illinois 60661-2511, 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
stockholders 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 2003 Annual Report on Form 10-KSB including
financial statements for the years ended August 31, 2003 and 2002, 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 stockholders to explain the
use of this Proxy Statement for this Meeting:
RECORD DATE
Only stockholders of record at the close of business on January 23,
2004 are entitled to vote at the Meeting. The Company's Common Stock is its only
class of voting securities. As of January 23, 2004, the Company had issued and
outstanding 3,478,960 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 HIM 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 Stockholders is
expected to come before the Meeting. Should any other matter requiring a vote of
stockholders 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 January 23, 2004 the approximate
number of shareholders of record of its common stock was 600 and that there were
approximately 70 beneficial owners. This includes shares held in nominee or
"street" accounts.
Only shareholders of record at the close of business on January 23,
2004, will be entitled to vote at the meeting. On January 23, 2004, there were
3,478,960 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 3,478,960 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 stockholders 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.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be
presented by such stockholders at the Company's next Annual Meeting of
Stockholders for the fiscal year ending August 31, 2004 must be received by the
Company no later than August 20, 2004, 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, 2003 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).
[graph of table below here]
The graph above was plotted using the following data:
Stock Performance: 8/31/03
--------------------------------------------------------------------------------
DATE Russell 2000 S&P 600 Simulations Plus, Inc.
--------------------------------------------------------------------------------
6/30/97 396.370 100.000 161.550 100.000 5.000 100.000
8/31/97 423.430 106.827 175.810 108.827 5.250 105.000
8/31/98 337.950 85.261 142.560 88.245 1.500 30.000
8/31/99 427.83 107.937 175.57 108.678 1.516 30.320
8/31/00 537.89 135.704 223.49 138.341 2.500 50.000
8/31/01 468.56 118.213 223.04 138.063 1.200 24.000
8/31/02 391.57 98.789 200.255 123.959 1.520 30.400
8/31/03 508.87 128.383 243.425 150.681 2.550 51.000
--------------------------------------------------------------------------------
INFORMATION RELATING TO VARIOUS PROPOSALS
PROPOSALS FOR VOTING
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 judgement. The Board of Directors has
not received any recommended nominations from any of the Company's stockholders
in connection with this Annual Meeting.
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.
Vote Required
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 four 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 four.
Walter S. Woltosz, Virginia E. Woltosz, Dr. David Z. D'Argenio, and Dr.
Richard R. Weiss, 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:
NAME AGE POSITION WITH THE COMPANY DIRECTOR SINCE
---- --- ------------------------- --------------
DIRECTORS AND DIRECTOR NOMINEES:
Walter S. Woltosz 58 Chairman of the Board, Chief 1996
Executive Officer and President
of the Company and Words+.
Virginia E. Woltosz 52 Secretary and Director of the 1996
Company
Dr. David Z. D'Argenio 54 Director and Consultant to the 1997
Company
Dr. Richard R. Weiss 70 Director 1997
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 has served as its Chief Executive Officer and President since its
incorporation in 1981.
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 has served as
its Vice President, Secretary and Treasurer since its incorporation in 1981
until January 31, 2003. Mrs. Woltosz has 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 and Chairman 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.
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS:
NAME AGE POSITION WITH THE COMPANY OFFICER SINCE
---- --- ------------------------- -------------
Ronald F. Creeley 52 Vice President, Marketing and 1997
Sales of the Company and Words+
Momoko A. Beran 51 Chief Financial Officer of the 1996
Company and Words+
Jeffrey A. Dahlen 42 Vice President, Research and 2003
Development of Words+, Inc.
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. In February 1999,
Mrs. Beran assumed the additional temporary duties of Vice President,
Operations, for Words+, Inc. The Board of Directors approved this position on a
permanent basis at its meeting on November 18, 1999.
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. He is a graduate of
Stanford University in Electrical Engineering and has 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+.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
paid or accrued for the fiscal years ended August 2003, 2002, and 2001 by the
Company to or for the benefit of the Company's President, Chief Financial
Officer, and Vice President, Sales and Marketing. No other executive officers of
the Company received total annual compensation for the fiscal year ended August
31, 2003, 2002, and 2001 that exceeded $100,000.
Summary Compensation Table
--------------------------------------------------------------------------------------------------------------------
Name and Principal Accrued 401(k) Match Fiscal
Position Paid Salary Salary Bonus Company Paid Year
------------------------------ ------------------ -------------- --------------- ---------------- -----------
Walter S. Woltosz $355,583 (1) -0- $73,538 (2) -0- 2003
President and Chief $153,500 (1) -0- $27,028 (2) -0- 2002
Executive Officer $126,500 $23,499 -0- $4,060 2001
Ronald F. Creeley $135,519 (1) -0- $4,700 $2,944 2003
Vice President, Sales $117,980 (1) -0- -0- $2,359 2002
and Marketing *** *** *** *** 2001
Momoko A. Beran $134,913 (1) -0- $3,130 $3,208 2003
Chief Financial Officer *** *** *** *** 2002
*** *** *** *** 2001
--------------------------------------------------------------------------------------------------------------------
(1) Includes deferred salary from previous years paid during this year.
(2) Accrued bonus due and payable within 10 days after the filing of the
annual report.
*** Total compensation less than $100,000.
EMPLOYMENT AND OTHER COMPENSATION AGREEMENTS
The Board of Directors renewed an employment agreement with Walter Woltosz
commencing September 1, 2002 for three years. The agreement provided for an
annual salary of $165,000. Pursuant to such agreement, Mr. Woltosz was entitled
to such health insurance and other benefits that are not inconsistent with that
which the Company customarily provides to its 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 the Company may terminate the agreement upon 30 days written
notice if termination is without cause and that the Company's 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 the Company
may terminate the agreement for cause (as defined) and that the Company's 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. 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 the
Company's 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 the Company's net annual income before
taxes. For FY03, the net income before tax was $1,391,545, therefore, the
Company accrued bonuses in the total amount of $133,538, for Walter Woltosz and
Virginia Woltosz. These bonuses are due and payable within 10 days after the
filing of this annual report.
As of August 31, 2003, the accrued compensation due to the Company's President
was zero, and bonus payable, 5% of net income before the tax based on the
underwriting agreement, subject to a maximum of $150,000, was $73,538. Neither
amount accrues interest.
As of August 31, 2003, the accrued compensation due to the Company's
Secretary-Treasurer was zero, and bonus payable, 5% of net income before the tax
based on the underwriting agreement, subject to a maximum of $60,000, was
$60,000. Neither amount accrues interest.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of August 31, 2003 by (i) each person
who is known to own beneficially more than 5% of the outstanding shares of the
Company's Common Stock, (ii) each of the Company's directors and executive
officers, and (iii) all directors and executive officers of the Company as a
group:
-----------------------------------------------------------------------------------------------------
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER (1)(2) BENEFICIAL OWNERSHIP OF CLASS
----------------------------------------- ----------------------- -----------
Walter S. and Virginia E. Woltosz (3) 2,091,000 56.15%
Momoko Beran (4) 144,300 3.88%
Ronald F. Creeley (5) 144,200 3.87%
Dr. David Z. D'Argenio (6) 3,653 *
Dr. Richard R. Weiss (7) 3,653 *
Jeffrey A. Dahlen 0 *
All directors and officers as a group 2,386,806 64.10%
-----------------------------------------------------------------------------------------------------
* 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, 1220 W. Avenue J, Lancaster, California 93534.
(3) Own an aggregate of 2,071,000 plus 20,000 shares of common stock underlying
an option exercisable within the next 60 days of the date of this Annual
Report. Does not include additional stock options for 30,000 shares, which
are not exercisable within the next 60 days of the date of this Annual
Report.
(4) Owns 1,300 shares of common stock exercised from options granted under the
1996 Stock Option plan, plus 143,000 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 57,500 shares, which are not
exercisable within the next 60 days of the date of this Annual Report.
(5) Owns 1,000 shares of common stock, plus 143,200 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 56,800 shares, which
are not exercisable within the next 60 days of the date of this Annual
Report.
(6) Owns 1,000 shares of common stock, plus 2,653 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 950 shares, which
are not exercisable within the next 60 days of the date of this Annual
Report.
(7) Owns 1,000 shares of common stock, plus 2,653 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 950 shares, which
are not exercisable within the next 60 days of the date of this Annual
Report.
OPTION GRANTS/EXERCISES
The following table discloses certain information regarding the options held at
August 31, 2003 by the Chief Executive Officer and each other named executive
officer.
------------------------------------------------------------------------------------------------------------
Number of Options at August 31, Value of Options at August 31,
2003 2003 (1)
--------------------------------- --------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Walter S. Woltosz 10,000 15,000 $10,100* $15,150*
Virginia E. Woltosz 10,000 15,000 $10,100* $14,150*
Momoko Beran 143,000 57,500 $104,928 $37,010
Ronald F. Creeley 143,200 56,800 $107,260 $37,190
Dr. David Z. D'Argenio 2,653 950 $1,746 $512
Dr. Richard R. Weiss 2,653 950 $1,746 $512
Jeffrey Dahlen 0 0 - -
------------------------------------------------------------------------------------------------------------
(1) Based on a per share price of $2.55 at August 31, 2003 less applicable
option exercise prices.
* Granted at $1.54, 110% of market price of the issue date
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended August 31, 2003, the Board of Directors held
one meeting. The Board has an Audit Committee and a Compensation Committee.
The Audit Committee consists of Dr. D'Argenio, Dr. Weiss and Mr. Woltosz.
The Audit Committee, which meets periodically with management and the Company's
independent auditors, reviews the internal accounting procedures of the Company
and reviews the services provided by the Company's independent auditors. The
Audit Committee did not meet during fiscal 2003.
The Compensation Committee consists of Dr. D'Argenio and Dr. Weiss. The
Compensation Committee did not meet during fiscal 2003.
During fiscal 2003, each Board member attended 75% or more of the
aggregate of the meetings of the Board and of the committees on which he served,
held during the period for which he was a director or committee member,
respectively.
DIRECTOR COMPENSATION
In accordance with the Company's bylaws, outside directors receive compensation
of $2500.00 per year plus $500 per meeting. In addition, each outside director
receives options for 500 shares per year at the fair value of the shares on the
date of grant.
PROPOSAL 2: TO RATIFY THE SELECTION OF SINGER, LEWAK, GREENBAUM & GOLDSTEIN LLP
AS THE COMPANY'S INDEPENDENT ACCOUNTANTS
The Board has selected Singer, Lewak, Greenbaum & Goldstein LLP,
independent public accountants, as independent auditors for the Company for
2004. 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 Singer, Lewak, Greenbaum & Goldstein LLP as the Company's
independent public accountants, the Company believes such ratification to be
appropriate. If the shareholders do not ratify the selection of Singer, Lewak,
Greenbaum & Goldstein LLP, the selection of independent public accountants will
be reconsidered by the Board; however, the Board may select Singer, Lewak,
Greenbaum & Goldstein LLP, notwithstanding the failure of the shareholders to
ratify its selection.
The Board expects that a representative of Singer, Lewak, Greenbaum &
Goldstein LLP will be present at the meeting, will have an opportunity to make a
statement if he or she so desires, and will be available to respond to
appropriate questions.
Singer, Lewak, Greenbaum & Goldstein LLP has been the Company's
independent public accountants since 1996. For the fiscal year ended August 31,
2003, Singer, Lewak, Greenbaum & Goldstein LLP performed audit and other
services for the Company including consultations during the year on matters
related to accounting, financial reporting and the review of financial and
related information that was included in filings with the Securities and
Exchange Commission.
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.
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.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 as amended (the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of its Common Stock to file reports of ownership and
changes of ownership with the Securities and Exchange Commission and NASDAQ.
Such persons are also required to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on the Company's review of the copies of those forms received
by the Company, or written representations from such persons the Company
believes that one Form 5 was filed, and that all Section 16(a) filing
requirements for the fiscal year ended August 31, 2003 were met, except that the
Company's directors Richard R. Weiss and David Z. D'Argenio inadvertently failed
to file a Form 4 on a timely basis with respect to the grant of options to
purchase shares of Common Stock representing one transaction.
By Order of the Board of Directors
Virginia E. Woltosz
Secretary
Dated: January 23, 2004
APPENDIX 1: AUDIT COMMITTEE CHARTER
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 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.
APPENDIX 2: FORM OF PROXY CARD
Exhibit to Proxy Statement for the 2004 Annual Meeting of Shareholders
Simulations Plus, Inc.
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF PROXY
SIMULATIONS PLUS, INC.
ANNUAL MEETING OF SHAREHOLDERS - MARCH 11, 2004
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
January 23, 2004, at the Annual Meeting of the Shareholders to be held at 1220
W. Avenue J, Lancaster, California at 2:00 p.m. Pacific Standard Time on March
11, 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
and 2 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 and 2.
1. Election of Directors
Nominees: Walter S. Woltosz, Virginia E. Woltosz, Dr. David Z. D'Argenio
and Dr. Richard R. Weiss
FOR [ ] WITHHELD [ ]
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FOR all nominees except as stated on line above
2 Ratification of Selection of Singer, Lewak, Greenbaum & Goldstein LLP as
Auditors
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:
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Signature:
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Signature if held jointly: