LANCASTER, CA, July 8, 2005 – Simulations Plus, Inc. 

(AMEX: SLP), the leading provider of ADMET absorption simulation and neural net structure-to-property prediction software for pharmaceutical discovery and development, announced today that, by mutual agreement, the product support obligations of SAM Communications, LLC and the royalty payments to SAM Communications, LLC have been terminated effective June 30, 2005.

Momoko Beran, chief financial officer of Simulations Plus, stated: "This was a very good quarter, setting a new record for third quarter revenues. Consolidated net sales increased $191,000, or 15.5%, to $1,424,000 for the third fiscal quarter of 2005 from $1,233,000 in the third fiscal quarter of 2004. Pharmaceutical and educational software revenues increased approximately $59,000, or 9.8%, and our Words+, Inc. subsidiary's sales increased approximately $132,000, or 20.9%, for the quarter over last year's third fiscal quarter. Earnings increased 31.1% to $173,000, or $0.04 per fully diluted share (based on 3,958,063 shares), as compared to $132,000, or $0.03 per fully diluted share (based on 4,046,223 shares) for the same period in fiscal year 2004.

Ms. Beran continued: "For the first nine months of this fiscal year, consolidated revenues were $3,523,000, a decrease of 5.8% from $3,741,000 for the first nine months of fiscal year 2004. For the pharmaceutical software and services business, total revenues for the nine-month period were $1,596,000, a decrease of 19.7%, from $1,988,000 in the first nine months of last fiscal year (which included a two-year order for just under $500,000). For the Words+ subsidiary, total revenues for the first nine months were $1,927,000, up 9.9% from $1,753,000 in the first nine months of last fiscal year. Consolidated earnings for the first nine months of this fiscal year (which includes a deferred tax asset write off of $50,000) were $205,000, a decrease of 11.3% from $231,000 in the first nine months of last fiscal year. Net income before tax (NIBT) from the pharmaceutical software and services business was $146,000 in the first nine months of this fiscal year, as compared with $548,000 for the first nine months of last fiscal year, a decrease of 73.4%. For our Words+ subsidiary, earnings for the first nine months of this fiscal year were $109,000, as compared with a net loss of $317,000 in the first nine months of last fiscal year. Shareholders' equity at the end of nine months increased 6.9% to $4,753,000, up from $4,446,000 at the end of fiscal year 2004."

Walt Woltosz, chairman and chief executive officer, said: "We're pleased to see that we've exceeded last year's third quarter in total revenues, and that NIBT was also greater than last year's for the first nine months. Sales to new customers have been good in addition to consistent renewals and upgrades from existing customers. We're also very pleased that our Words+ subsidiary has rebounded nicely and is now also contributing to earnings."

Woltosz continued: "Going forward, we expect to realize a significant savings in the Words+ subsidiary from the terminated agreement with SAM Communications, LLC that was recently announced, and we believe the ongoing improvements in our existing products and the addition of new core products will continue to fuel our growth on the pharmaceutical software and services side. Our cash position is the best it's been since our IPO eight years ago and we intend to continue to seek opportunities for sound investments to grow the Company both internally and through strategic acquisitions."

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. The Company has two other businesses, Words+, Inc. and FutureLab(TM), which are based on its proprietary software technologies. For more information, visit our Web site at

Our Lengthy Sales Cycle Makes It Difficult To Predict Our Quarterly Operating Results. We have a long sales cycle because we generally need to educate potential customers regarding the use and benefits of our products and allow prospective customers a period of weeks or months to test and evaluate our products and services. The length of our sales cycle varies depending on the size and type and complexity of the customer contemplating a purchase, whether we have conducted business with a potential customer in the past and the size of the deal. On average, our sales cycle is about 6 months. In addition, these potential customers frequently need to obtain approvals from multiple decision makers prior to making purchase decisions, a process that has been further lengthened as a result of the current market conditions surrounding technology spending. Our long sales cycle, which can range from several weeks to several months or more, makes it difficult to predict the quarter in which sales will occur and increases our dependence on existing customer contracts. Delays in sales could cause significant variability in our revenues and operating results for any particular quarterly period.

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. The actual future results of the Company could differ significantly from those statements. Factors that could cause or contribute to such differences include, but are not limited to: the ability of the Company to book revenues and earnings as it expects for the current quarter, the ability of the Company to maintain its competitive advantage, the general economics of the pharmaceutical and assistive technology industries, the ability of the Company to attract and retain sufficient scientific and technical staff to sustain its R&D and customer support functions, and a sustainable market. Further information on the Company's risk factors is contained in the Company's quarterly and annual reports as filed with the Securities and Exchange Commission.

                      CONSOLIDATED BALANCE SHEET
                            at May 31, 2005
Current assets
   Cash and cash equivalents                               $1,348,491
   Accounts receivable, net of allowance for doubtful
             of $18,884                                     1,392,912
   Inventory                                                  300,558
   Prepaid expenses and other current assets                   66,724
   Prepaid expenses and other current assets                  186,000
                      Total current assets                  3,294,685
Capitalized computer software development costs,
   net of accumulated amortization of $2,095,062              713,051
Property and equipment, net                                    88,401
Deferred tax                                                1,160,000
Other assets                                                   11,150
                                Total assets               $5,267,287
Current liabilities
   Accounts payable                                          $182,283
   Accrued payroll and other expenses                         276,937
   Accrued warranty and service costs                          28,508
   Current portion of deferred revenue                         11,416
   Other current liabilities                                    3,965
              Total current liabilities                       503,109
Deferred revenue                                               11,423
                        Total liabilities                     514,532
Commitments and contingencies                                       -
   Preferred stock, $0.001 par value
              10,000,000 shares authorized
              no shares issued and outstanding                      -
   Common stock, $0.001 par value
              20,000,000 shares authorized
              3,632,943 shares issued and outstanding           3,633
   Additional paid-in capital                               5,092,265
   Accumulated deficit                                       (343,143)
                         Total shareholders' equity         4,752,755
              Total liabilities and shareholders' equity   $5,267,287
           For the three and nine months ended May 31, 2005
                         Three months ended       Nine months ended
                       ----------------------- -----------------------
                          2005        2004        2005        2004
                       ----------- ----------- ----------- -----------
Net sales              $1,424,438  $1,233,220  $3,522,688  $3,740,703
Cost of sales             428,266     382,731   1,121,190   1,194,267
                       ----------- ----------- ----------- -----------
Gross profit              996,172     850,489   2,401,498   2,546,436
                       ----------- ----------- ----------- -----------
Operating expenses
   Selling, general,
    and administrative    644,502     622,005   1,811,889   1,961,622
   Research and
    development           134,007     117,972     378,926     415,354
                       ----------- ----------- ----------- -----------
      Total operating
       expenses           778,509     739,977   2,190,815   2,376,976
                       ----------- ----------- ----------- -----------
Income from operations    217,663     110,512     210,683     169,460
                       ----------- ----------- ----------- -----------
Other income (expense)
   Interest income          7,114      22,445      38,410      62,203
    income                  1,189           -       1,189          -
   Interest expense          (259)       (383)       (543)       (767)
   Gain (loss) on sale
    of assets               2,201           -       7,401           -
   Gain (loss) on
    currency exchange      (4,658)          -      (2,547)          -
                       ----------- ----------- ----------- -----------
      Total other
       (expense)            5,587      22,062      43,910      61,436
                       ----------- ----------- ----------- -----------
Income before benefit
 from (provision for)
   income taxes           223,250     132,574     254,593     230,896
Benefit from
 (provision for)
 income taxes
   Provision for
    income tax            (50,000)          -     (50,000)          -
      Total benefit
       from (provision
       for) income
       taxes              (50,000)          -     (50,000)          -
                       ----------- ----------- ----------- -----------
Net income               $173,250    $132,574    $204,593    $230,896
                       =========== =========== =========== ===========
Basic earnings per
 share                      $0.05       $0.04       $0.06       $0.07
                       =========== =========== =========== ===========
Diluted earnings per
 share                      $0.04       $0.03       $0.05       $0.06
                       =========== =========== =========== ===========
 common shares
   Basic                3,627,811   3,536,406   3,602,605   3,474,760
                       =========== =========== =========== ===========
   Diluted              3,958,063   4,046,223   3,958,063   4,046,223
                       =========== =========== =========== ===========

For further information:
Simulations Plus, Inc.
42505 10th Street West
Lancaster, CA
93534-7059 USA
CONTACT: investor relations:
Contact: Renee Bouche