Item 2.01 Completion of Acquisition or Disposition
of Assets
As previously reported on that certain Current
Report on Form 8-K filed by Simulations Plus, Inc., a California corporation (the “Company”), with the Securities and
Exchange Commission (the “SEC”) on May 1, 2017 (the “May Form 8-K”), on May 1, 2017, Simulations Plus,
Inc., a California corporation (the “Company”), entered into a Stock Purchase Agreement (the “Agreement”)
with DILIsym Services, Inc., a North Carolina corporation (“DILIsym”), the shareholders of DILIsym (the “DILIsym
Shareholders”) and Brett A. Howell, the representative of the DILIsym Shareholders (the “DILIsym Shareholders Representative”),
each, a “Party,” and collectively, the “Parties.”
On June 1, 2017, the Company consummated the
acquisition of all outstanding capital stock of DILIsym pursuant to the terms of the Agreement and DILIsym became a wholly owned
subsidiary of the Company (the “Acquisition”). Under the terms of the Agreement, the Company: (1) paid to the DILIsym
Shareholders Five Million Dollars ($5,000,000) payable at the closing of the Acquisition (the “Closing”) subject to
certain adjustments and holdbacks as provided in the Agreement and as more fully described below; and (2) will pay to the DILIsym
Shareholders certain earn-out payments, to be measured by the earnings of DILIsym before income taxes, payable following the Closing,
as more particularly described in the Agreement and as more fully described below (the “Earn-out Payments”):
On June 1, 2017, the Company paid
the DILIsym Shareholders total cash consideration of $4,515,982; which such amount included $515,982 in working capital left in
DILIsym’s accounts in excess of the amount required under the Agreement,
At the holdback release date, eighteen
months from the Closing and subject to any offsets, the Company will pay $1,000,000 of holdback consideration; and
In addition, the Company may pay
up to an additional $5,000,000 in Earn-out Payments over the 3 years following the Closing if and when such Earn-out Payments become
due and payable, and subject to certain offsets as provided in the Agreement, according to the Agreement.
As previously reported on the May Form 8-K,
on May 1, 2017, Dr. Daniel Weiner was appointed as a member of the Board of Directors of the Company and Dr. Weiner also serves
on the Board of Directors of DILIsym. Immediately prior to the Closing, Dr. Weiner owned 5,000 shares of DILIsym’s common
stock (less than one percent of DILIsym’s outstanding shares). At the closing of the Acquisition, Dr. Weiner received approximately
$29,000 in cash consideration of the sale of his shares of DILIsym to the Company and may receive up to an additional $35,000 upon
any payment of the holdback consideration and/or Earn-out Payments. The consideration for the purchase of the capital stock of
DILIsym was determined by arms’-length negotiations between the Company and DILIsym prior to Dr. Weiner’s appointment
to the Board of Directors of the Company.