Simulations Plus Reports Second Quarter FY2010 Financial Results

LANCASTER, Calif.--(BUSINESS WIRE)-- Simulations Plus, Inc. (NASDAQ:SLP), a leading provider of simulation and modeling software for pharmaceutical discovery and development, today reported financial results for its second quarter of fiscal year 2010 ended February 28, 2010 (2QFY10).

2QFY10 highlights compared with 2QFY09:

• Consolidated revenues increased 20.1% to record $2.95 million from $2.46 million
• Pharmaceutical software and services revenues up 25.2% to $2.23 million from $1.78 million
• Words+ subsidiary revenues up 6.6% to $723,000 from $678,000
• R&D expense decreased 11.9% to $252,000 from $286,000
• SG&A increased 5.0% to $1.09 million from $1.04 million
• Gross profit up 22.9% to $2.25 million from $1.83 million
• Income before income taxes up 74.3% to $974,000 from $559,000
• Net income up 74.1% to $641,000 from $368,000
• Diluted earnings per share $0.04, an increase of 79.9% from $0.02

First six months FY10 (6moFY10) highlights compared with 6moFY09:

• Consolidated revenues increased 17.4% to record $5.39 million from $4.59 million
• Pharmaceutical software and services revenues up 23.5% to $3.96 million from $3.21 million
• Words+ subsidiary revenues up 3.2% to $1.43 million from $1.38 million
• R&D expense decreased 7.3% to $513,000 from $554,000
• SG&A increased 7.9% to $2.09 million from $1.94 million
• Gross profit up 19.9% to $4.08 million from $3.40 million
• Income before income taxes up 61.6% to $1.64 million from $1.01 million
• Net income up 57.5% to $1.07 million from $680,000
• Diluted earnings per share $0.06, an increase of 65.5% from $0.04
• Cash increased to $8.64 million from $7.47 million at the beginning of the fiscal year

Walt Woltosz, chairman and chief executive officer of Simulations Plus, said: “These results represent a new record second quarter and first six months for both revenues and earnings. Shareholder equity grew once again, to $11.5 million from $10.6 million at the beginning of the fiscal year. Cash flow remains strong with no debt. We continue seeking accretive acquisitions. We think that the aggressive marketing and sales program we began last year is bearing fruit and gathering momentum as more and more of the pharmaceutical industry adopts simulation and modeling tools to increase productivity. We believe there is a fundamental change underway in how drugs are designed and developed, with greater reliance on computer modeling that keeps getting better in a variety of areas. GastroPlus™ Version 7.0 will be released very soon, adding three very important new capabilities in drug-drug interaction, ocular drug delivery, and nasal/pulmonary drug delivery, expanding our markets and our capabilities within existing customer sites. Coming improvements in ADMET Predictor™, ClassPharmer™, and DDDPlus™, along with the continued strong growth we’ve experienced for our consulting services, gives FY2010 a bright outlook.”

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
Condensed Consolidated Balance Sheets
February 28, 2010 (Unaudited) and August 31, 2009 (Audited)
ASSETS
						February 28, 2010							August 31, 2009
Current assets
Cash and cash equivalents						$	8,641,289						$	7,473,485
Accounts receivable, net of allowance for doubtful accounts
and estimated contractual discounts of $369,897 and $447,073							1,646,851							1,888,904
Contracts receivable							383,111							79,565
Inventory							336,177							325,926
Prepaid expenses and other current assets							110,743							158,738
Deferred income taxes							329,573							338,516
Total current assets							11,447,744							10,265,134
Capitalized computer software development costs,
net of accumulated amortization of $4,160,046 and $3,843,743							2,082,671							1,942,893
Property and equipment, net							48,191							53,220
Customer relationships, net of accumulated amortization of $112,332 and $104,728							15,709							23,314
Other assets							18,445							18,445
Total assets						$	13,612,760						$	12,303,006
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable						$	301,637						$	199,218
Accrued payroll and other expenses							613,921							552,431
Accrued bonuses to officers							60,000							60,000
Accrued warranty and service costs							30,670							43,236
Accrued income taxes							168,438							-
Deferred revenue							119,751							82,190
Total current liabilities							1,294,417							937,075
Long-Term liabilities
Deferred income taxes							857,104							795,140
Total liabilities							2,151,521							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
16,054,176 and 15,700,382 shares issued and outstanding on February 28, 2010 and August 31, 2009, respectively.							4,526							4,172
Additional paid-in capital							5,391,840							5,572,411
Retained earnings							6,064,873							4,994,208
Total shareholders' equity							11,461,239							10,570,791
Total liabilities and shareholders' equity						$	13,612,760						$	12,303,006

Simulations Plus, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
For the Three and Six Months Ended February 28,
(Unaudited)
					Three months ended														Six months ended
					2010							2009							2010							2009
Net sales					$	2,949,719						$	2,456,762						$	5,386,771						$	4,590,012
Cost of sales						700,475							627,124							1,307,364							1,187,096
Gross profit						2,249,244							1,829,638							4,079,407							3,402,916
Operating expenses
Selling, general, and administrative						1,088,819							1,036,724							2,093,092							1,940,414
Research and development						252,098							286,115							513,423							553,954
Total operating expenses						1,340,917							1,322,839							2,606,515							2,494,368
Income from operations						908,327							506,799							1,472,892							908,548
Other income (expense)
Interest income						23,560							19,606							46,046							52,993
Interest expense						(1	)						-							(303	)						-
Miscellaneous income						-							-							231							43
Gain on sales of property and equipment						-							-							1,024							-
Gain on currency exchange						41,962							32,340							115,194							50,216
Total other income (expense)						65,521							51,946							162,192							103,252
Income before provision for income taxes						973,848							558,745							1,635,084							1,011,800
Provision for income taxes						(332,985	)						(190,673	)						(564,418	)						(332,006	)
Net income					$	640,863						$	368,072						$	1,070,666						$	679,794
Basic earnings per share					$	0.04						$	0.02						$	0.07						$	0.04
Diluted earnings per share					$	0.04						$	0.02						$	0.06						$	0.04
Weighted-average common shares outstanding
Basic						15,826,030							16,268,583							15,735,400							16,309,683
Diluted						16,558,423							17,108,322							16,479,033							17,312,242