LANCASTER, CA, April 10, 2012 – 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 2012 ended February 29, 2012 (2QFY12). Results below are reported for continuing operations (without the discontinued operations of the Company’s former Words+ subsidiary), except as noted.

2QFY12 highlights compared with 2QFY11:

  • Net sales increased 6.4% to new record $2.789 million from $2.622 million
  • Gross profit increased 8.3% to $2.393 million from $2.209 million
  • SG&A increased 43.7% to $0.956 million from $0.666 million
    • Final payment to our M&A consultants for the sale of Words+
    • Increased costs for health, dental, liability, and workers’ compensation insurance
    • Increased investor relations costs
    • Expanded staff, as well as increased salaries and bonuses to existing staff
    • All facility rent and related expenses charged to Simulations Plus SG&A after sale of Words+
  • As a percent of revenues, SG&A increased to 34.3% from 25.4%
  • R&D expense increased 13.1% to $265,000 from $234,000
  • Income before taxes decreased 5.9% to $1.260 million from $1.338 million
  • Net income from continuing operations decreased 3.7% to $839,000 from $871,000
  • Diluted earnings per share were equal to 2QFY11 at $0.05
  • Cash increased 51.2% to $13.241 million from $8.759 million
  • Shareholders’ equity increased 9.9% to $15.425 million from $14.037 million

For the first six months of fiscal year 2012 (6moFY12) compared to the first six months of FY2011 (6moFY11):

  • Net sales increased 7.8% to a new midyear record $5.037 million from $4.672 million
  • Gross profit increased 9.8% to $4.288 million from $3.906 million
  • SG&A increased 22.5% to $1.656 million from $1.352 million for the reasons cited above
  • As a percent of revenues, SG&A increased to 32.9% from 28.9%
  • R&D expenditures increased 18.8% to $517,000 from $435,000
  • Income before taxes increased 7.0% to $2.323 million from $2.172 million
  • Net income from continuing operations increased 10.4% to $1.594 million from $1.444 million
  • Net income including discontinued operations increased 22.7% to $1.810 million from $1.475 million
  • Total diluted earnings per share increased 25.5% to $0.11 from $0.09

Ms. Momoko Beran, chief financial officer of Simulations Plus, said: “Nonrecurring charges and other elements of the increased SG&A had a significant impact on gross profit and pretax earnings for the second quarter. SG&A increases over last year’s second quarter included a one-time charge for our M&A consultants with respect to the sale of our former Words+ subsidiary, increases in overhead staff and salaries, increased marketing and sales expenses, increased year-end bonuses, and the fact that we now accrue all building lease and facility-related expenses to SG&A, which includes the half that had previously been paid by Words+. The income we receive from Words+ for their smaller (now 20%) portion of the building and related costs is not included in SG&A, but is reported as Other Income and so does not offset SG&A. We expect that SG&A will be somewhat higher going forward by approximately $130,000 per quarter. In spite of this increase in SG&A, our earnings per share remained at $0.05 for the second quarter, and earnings per share for the first six months increased to $0.11 from $0.09. Cash at the end of the second quarter was up 51.2% from 2QFY11. Shortly after the end of the quarter we paid our first ongoing quarterly cash dividend of $0.05 per share per quarter, totaling just under $791,000. After paying out the dividend, cash as of yesterday was back up to $13.408 million.”

Walt Woltosz, chairman and chief executive officer of Simulations Plus, added: “Actual sales of software licenses and consulting services increased more than the 6.4% top-line revenue increase would indicate, because last year we had grant revenue of $65,000 during the second quarter, while this year we had none. Revenues from software licenses during 2QFY12 increased $256,000, or 10.7%, offsetting the $65,000 reduction in grant income as well as adding new business. For the first 6 months, software licenses increased $512,000, or 12.1%.”

The Company has announced an investor conference call that will be webcast live at 1:15 PDT/4:15 PM EDT today, Tuesday, April 10, 2012, which may be accessed by first registering at the following website: https://www2.gotomeeting.com/register/125724146. Upon registering, you will receive a confirmation e-mail with a unique link and instructions for joining the call. Please dial in five to ten minutes prior to the scheduled start time. For listen-only mode, you may dial (914) 339-0024, and enter access code 323-956-377.


About Simulations Plus, Inc.

Simulations Plus, Inc., is a premier developer of groundbreaking drug discovery and development simulation and modeling software, which is licensed to and used in the conduct of drug research by major pharmaceutical, biotechnology, agrochemical, and food industry companies worldwide. We also provide a productivity tool called Abbreviate! for PCs as well as an educational software series for science students in middle and high schools known as FutureLab. Simulations Plus, Inc., is headquartered in Southern California and trades on the NASDAQ Capital Market under the symbol “SLP.” For more information, visit our Web site at www.simulations-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 U.S. Securities and Exchange Commission.



Simulations Plus, Inc. Condensed Balance Sheets

At February 29, 2012 (Unaudited) and August 31, 2011 (Audited)

ASSETS

February 29,

August 31,

2012

2011

Current assets

Cash and cash equivalents

$ 13,240,930

$ 10,037,891

Income tax refund receivable

259,434

259,434

Accounts receivable, net of allowance for doubtful accounts of $0

2,175,756

1,170,861

Contracts receivable

130,827

185,816

Prepaid expenses and other current assets

140,433

123,954

Deferred income taxes

211,393

302,076

Current assets of discontinued operations

-

1,194,795

Total current assets

16,158,773

13,274,827

Long-term assets

Capitalized computer software development costs,

net of accumulated amortization of $4,720,005 and $4,416,669

2,372,145

2,188,982

Property and equipment, net (note 3)

113,090

43,010

Intellectual property, net (note 4)

75,000

-

Customer relationships, net of accumulated amortization of $127,793 and $126,172

249

1,870

Other assets

18,445

18,445

Non-current assets of discontinued operations

-

340,204

Total assets

$ 18,737,702

$ 15,867,338

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable

$ 387,848

$ 176,136

Dividends payable

790,692

-

Accrued payroll and other expenses

294,071

276,327

Accrued bonuses to officer

60,000

-

Accrued income taxes

859,834

168,897

Deferred revenue

180,932

141,191

Current liabilities of discontinued operations

-

378,567

Total current liabilities

2,573,377

1,141,118

Long-term liabilities

Deferred income taxes

738,974

656,047

Non-current liabilities of discontinued operations

-

33,558

Total liabilities

3,312,351

1,830,723

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

15,875,594 and 15,572,943 shares issued and outstanding

4,347

4,044

Additional paid-in capital

4,537,177

4,167,650

Retained earnings

10,883,827

9,864,921

Total shareholders' equity

15,425,351

14,036,615

Total liabilities and shareholders' equity

$ 18,737,702

$ 15,867,338

Simulations Plus, Inc.

Condensed Statements of Operations

For the three and six months ended February 29,

(Unaudited)

Three months ended

Six months ended

2012

2011

2012

2011

Net sales

$ 2,789,226

$ 2,621,686

$ 5,037,182

$ 4,672,120

Cost of sales

396,566

412,778

748,936

766,434

Gross profit

2,392,660

2,208,908

4,288,246

3,905,686

Operating expenses

Selling, general, and administrative

956,325

665,641

1,656,438

1,351,692

Research and development

264,581

233,894

516,516

434,648

Total operating expenses

1,220,906

899,535

2,172,954

1,786,340

Income from operations

1,171,754

1,309,373

2,115,292

2,119,346

Other income (expense)

Interest income

25,083

20,317

46,956

44,321

Interest expense

-

-

(3)

(43)

Miscellaneous income

22,656

-

22,656

-

Gain on currency exchange

40,502

8,341

138,888

8,341

Gain (loss) from sale of assets

(433)

240

(433)

240

Total other income (expense)

87,808

28,898

208,064

52,859

Income from continuing operations before provision for income taxes

1,259,562

1,338,271

2,323,356

2,172,205

Provision for income taxes

(420,985)

(467,324)

(729,680)

(728,340)

Income from continuing operations

838,577

870,947

1,593,676

1,443,865

Discontinued operations:

Gain (loss) from discontinued operations, net of tax

-

36,533

(249,898)

31,108

Gain on sale of Words+, net of tax

-

-

465,820

-

Results of discontinued operations

-

36,533

215,922

31,108

Net Income

$ 838,577

$ 907,480

$ 1,809,598

$ 1,474,973

Basic earnings per share:

Continuing operations

$ 0.05

$ 0.06

$ 0.10

$ 0.09

Discontinued operations

-

-

0.01

-

Net basic earning per share

$ 0.05

$ 0.06

$ 0.11

$ 0.09

Diluted earnings per share

Continuing operations

$ 0.05

$ 0.05

$ 0.10

$ 0.09

Discontinued operations

-

-

0.01

-

Net basic earning per share

$ 0.05

$ 0.05

$ 0.11

$ 0.09

Weighted-average common shares outstanding

Basic

15,635,898

15,472,504

15,604,420

15,581,301

Diluted

15,995,226

16,217,573

15,957,657

16,322,845



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