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COMMITMENTS AND CONTINGENCIES | 12 Months Ended
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Aug. 31, 2020
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | NOTE 7 - COMMITMENTS AND CONTINGENCIES Leases We lease approximately 13,500 square feet of space in Lancaster, California. The original lease had a five-year term with two, three-year options to extend. The initial five-year term expired in February 2011, and we extended the lease to February 2, 2014. In June 2013, the lease was amended to extend the term to February 2, 2017. The amended lease also provides for an annual base rent increase of 3% per year and two, two-year options to extend. In May 2016 the Company exercised the two, two-year options extending the term of the lease through February 2, 2021 at a fixed rate of $25,000 per month. The new extension agreement allowed the Company with 90 days’ notice to opt out of the remaining lease in the last two years of the term upon payment of a recapture payment equal to the 3% base payment increase that would have been due under the original agreement. Our Buffalo subsidiary leases approximately 12,623 square feet of space in Buffalo, New York. The initial five-year term expired in October 2018; and was renewed for a three-year option to extending it to November 2021. The new base rent is $16,147 per month. DILIsym leases approximately 2,700 square feet of space in Research Triangle Park, North Carolina. The initial three-year term was due to expire October 2020. An amendment to the initial lease became effective April 1, 2020. This amendment added 686 square feet and extended the term of the lease to September 30, 2023. The new base rent is approximately $7,500 per month with an annual 3% adjustment. In Paris, France Lixoft leases approximately 2,300 square feet of office space, which as of April 1, 2020, had minimum payments equaling $288,000. The lease is for a 9-year term, with an option to terminate every 3 years, and expires in November of 2024. The rent is $16,555 per quarter and can be adjusted each December based on a consumer price index. Rent expense, including common area maintenance fees for the years ended August 31, 2020, 2019 and 2018 was $644,000, $584,000 and $567,000, respectively. Future minimum lease payments under non-cancelable operating leases with remaining terms of one year or more at August 31, 2020 were as follows:
Future minimum lease payments |  |  |  |
Years Ending August 31, |  |  |
2021 |  | $ | 486,000 |
2022 |  |  | 217,000 |
2023 |  |  | 172,000 |
2024 |  |  | 75,000 |
2025 |  |  | 11,000 |
Future minimum lease payments |  | $ | 961,000 |
Line of Credit On March 31, 2020, Simulations Plus, Inc. entered into a Credit Agreement with Wells Fargo Bank, N.A. The Credit Agreement, has provided Simulations Plus, Inc. with a credit facility of $3,500,000 through April 15, 2022. As of August 31, 2020, there were no amounts drawn against the line of credit. Interest accrues daily at the bank’s base rate. The base rate is the rate equal to the highest of (i) the Prime Rate in effect, (ii) 1.5% above Daily One Month LIBOR, and (iii) the Federal Funds Rate plus 1.5%. The rate at August 31, 2020 was 3.25%. Under the terms of the agreement the borrower is to maintain a zero No balance under this line of credit for a period of thirty consecutive days during each 12-month period commencing March 31, 2020. The Credit Agreement is collateralized by the assets of Simulations Plus Lancaster Division and is subject to certain financial covenants. Employment Agreements In the normal course of business the Company has entered into employment agreements with certain of its key management personnel that may require compensation payments upon termination. License Agreement The Company had a royalty agreement with Dassault Systèmes Americas Corp. for access to their Metabolite Database for developing our Metabolite Module within ADMET Predictor™. The module was renamed the Metabolism Module when we released ADMET Predictor version 6 on April 19, 2012. Under this agreement, we pay a royalty of 25% of revenue derived from the sale of the Metabolism/Metabolite module. This agreement was recently renegotiated, and the Company does not bear any royalty obligations towards Dassault Systèmes Americas Corp. effective as of June 30, 2019. In addition, the license agreement terminated on September 5, 2020. Under this agreement for the years ended August 31, 2020, 2019 and 2018 we incurred royalty expense (benefit) of $(26,055), $195,828 and $175,740, respectively. The Company is in the process of replacing the database. Litigation We are not a party to any legal proceedings and are not aware of any pending legal proceedings of any kind.

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