Simulations Plus (SLP) Reports First Quarter FY2010 Financial Results

LANCASTER, Calif.–(BUSINESS WIRE)–Simulations Plus, Inc. (NASDAQ:SLP – News), a leading provider of simulation and modeling software for pharmaceutical discovery and development, today reported financial results for its first quarter of fiscal year 2010 ended November 30, 2009 (1QFY10).

Ms. Momoko Beran, chief financial officer of Simulations Plus, stated: “I’m pleased to report that our consolidated net sales increased 14.2% to $2,437,000 in 1QFY10 from $2,133,000 in the first fiscal quarter of fiscal 2009 (1QFY09). Sales for our pharmaceutical software and services business increased 21.3%, or $305,000, for 1QFY10 over 1QFY09. Revenues from our Words+ subsidiary were essentially flat, with a 0.1% decrease over 1QFY09.”

Ms. Beran continued: “For 1QFY10, consolidated gross profit increased 16.2% to $1,830,000 from $1,574,000 in 1QFY09. R&D expense decreased 2.9% to $261,000 in 1QFY10 from $269,000 in 1QFY09 due to more staff hours being spent on consulting studies in 1QFY10. Total R&D expenditures, which include capitalized software development costs, decreased by 1.9% to $462,000 from $471,000. Consolidated SG&A increased $100,000, or 11.1% to $1,004,000 in 1QFY10, compared to $904,000 in 1QFY09. As a percentage of sales, SG&A decreased to 41.2% in 1QFY10 from 42.4% in 1QFY09. Expanded travel and trade show expenses accounted for a significant portion of the increase as we have increased our marketing and sales efforts substantially over last year. For 1QFY10, net income before taxes increased 46.0%, or $208,000, to $661,000 compared with $453,000 in 1QFY09. Our provision for income taxes increased by 63.7%, or $90,000, to $231,000 (estimated tax rate of 35.0%) for 1QFY10 from $141,000 (tax rate of 31.2%) in 1QFY09. Using our best estimates for the remainder of the year, we anticipate a tax rate for the year to be in the range of 33-37%; however, this will depend on the tax credits we obtain from Non-qualified Incentive Stock Option events and the amount of R&D tax credits generated during the current fiscal year.

“Consolidated net earnings for 1QFY10 were $430,000, or $0.03 per fully diluted share, an increase of 38.0% from $312,000, or $0.02 per diluted share in 1QFY09. We attribute this to our increased revenues from pharmaceutical software licenses and consulting services, which offset the increase in our investment in marketing and sales. Our cash continues to grow, with cash at the end of 1QFY10 of $7,973,000, up 31.5% from $6,064,000 at the end of 1QFY09. Shareholders’ equity increased 4.8% from $10,315,004 on November 30, 2008, to $10,811,665 on November 30, 2009. Note that this was after we spent just over $1 million for share repurchases during the past year.”

Walt Woltosz, chairman and chief executive officer of Simulations Plus, said: “These results represent a new record first quarter for both revenues and earnings. We believe much of the growth is the result of the aggressive marketing and sales program we began early in 2009, wherein we have attended approximately three times as many scientific meetings and trade shows compared to what we had typically done in previous years. The recognition we’ve received through scientific presentations by our industry and government customers at many of these scientific meetings has also undoubtedly contributed to our success. With the upcoming release of GastroPlus™ Version 7.0, which will add three very important new capabilities in drug-drug interaction, ocular drug delivery, and nasal/pulmonary drug delivery, and coming improvements in ADMET Predictor™, ClassPharmer™, and DDDPlus™, combined with the continued strong demand for our consulting services, we expect 2010 to continue to be a very good year.”

About Simulations Plus, Inc.

Simulations Plus, Inc., is a premier developer of groundbreaking drug discovery and development simulation software, which is licensed to and used in the conduct of drug research by major pharmaceutical and biotechnology companies worldwide. We have two other businesses that are based on our proprietary technologies: a wholly owned subsidiary, Words+, Inc., which provides assistive technologies to persons with disabilities as well as a personal productivity tool for the mass market called Abbreviate! ^™; and an educational software series for science students in middle and high schools known as FutureLab^™. For more information, visit our Web sites at www.simulations-plus.com and www.words-plus.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 – With the exception of historical information, the matters discussed in this press release are forward-looking statements that involve a number of risks and uncertainties. Words like “believe,” “expect” and “anticipate” mean that these are our best estimates as of this writing, but that there can be no assurances that expected or anticipated results or events will actually take place, so our actual future results could differ significantly from those statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to maintain our competitive advantages, acceptance of new software and improved versions of our existing software by our customers, the general economics of the pharmaceutical industry, our ability to finance growth, our ability to continue to attract and retain highly qualified technical staff, our ability to identify and close acquisitions on terms favorable to the Company, and a sustainable market. Further information on our risk factors is contained in our quarterly and annual reports as filed with the Securities and Exchange Commission.

SIMULATIONS PLUS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
November 30, 2009 (Unaudited ) and August 31, 2009 (Audited)
ASSETS
										November 30, 2009			August 31, 2009
Current assets
	Cash and cash equivalents									$	7,973,340		$	7,473,485
	Accounts receivable, net of allowance for doubtful accounts and estimated contractual discounts of $387,149 and $447,073										1,831,307			1,888,904
	Contracts receivable										177,259			79,565
	Inventory										370,691			325,926
	Prepaid expenses and other current assets										58,870			158,738
	Deferred income taxes										338,516			338,516
			Total current assets								10,749,983			10,265,134
Capitalized computer software development costs, net of accumulated amortization of $3,994,139 and $3,843,743											1,993,035			1,942,893
Property and equipment, net											47,644			53,220
Customer relationships, net of accumulated amortization of $108,717 and $104,728											19,325			23,314
Other assets											18,445			18,445
				Total assets						$	12,828,432		$	12,303,006
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
	Accounts payable									$	299,502		$	199,218
	Accrued payroll and other expenses										576,874			552,431
	Accrued bonuses to officer										123,749			60,000
	Accrued warranty and service costs										35,101			43,236
	Accrued income tax										36,591			–
	Deferred revenue										149,810			82,190
		Total current liabilities									1,221,627			937,075
Long-Term liabilities
	Deferred income taxes										795,140			795,140
			Total liabilities								2,016,767			1,732,215
Commitments and contingencies
Shareholders’ equity
	Preferred stock, $0.001 par value 10,000,000 shares authorized no shares issued and outstanding										–			–
	Common stock, $0.001 par value
		50,000,000 shares authorized
		15,684,046 and 15,700,382 shares issued and outstanding									4,155			4,172
	Additional paid-in capital										5,383,499			5,572,411
	Retained Earnings										5,424,011			4,994,208
			Total shareholders’ equity								10,811,665			10,570,791
					Total liabilities and shareholders’ equity					$	12,828,432		$	12,303,006

SIMULATIONS PLUS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three months ended November 30,
(Unaudited)
						2009				2008
Net sales						$	2,437,052			$	2,133,250
Cost of sales							606,889				558,726
Gross profit							1,830,163				1,574,524
Operating expenses
	Selling, general, and administrative						1,004,273				903,690
	Research and development						261,325				269,085
		Total operating expenses					1,265,598				1,172,775
Income from operations							564,565				401,749
Other income (expense)
	Interest income						22,486				33,387
	interest expense						(302	)			–
	Miscellaneous income						231				43
	Gain on sales of assets						1,024				–
	Gain on currency exchange						73,232				17,876
		Total other income (expense)					96,671				51,306
Income before income taxes							661,236				453,055
Provision for income taxes							(231,433	)			(141,333	)
Net income						$	429,803			$	311,722
Basic earnings per share						$	0.03			$	0.02
Diluted earnings per share						$	0.03			$	0.02
Weighted-average common shares outstanding
	Basic						15,648,630				16,348,818
	Diluted						16,775,287				17,516,583