LANCASTER, CA, January 14, 2005 – Simulations Plus, Inc. (AMEX: SLP), the leading provider of ADME absorption simulation and neural net structure-to-property prediction software for pharmaceutical discovery and development, today reported its financial results for the first fiscal quarter of its 2005 fiscal year ended November 30, 2004.

Momoko Beran , chief financial officer of Simulations Plus, stated: “Consolidated revenues for the first quarter were $1,066,000, a decrease of 6.4% from $1,139,000 in the first quarter of fiscal year 2004. Revenues from pharmaceutical software and services were $523,000, a decrease of 18.5% from $642,000 in the first quarter of fiscal year 2004. Revenues for our Words+ subsidiary increased 9.3% to $543,000 from $497,000 in the first quarter of fiscal year 2004. Consolidated earnings were $22,000, or $0.01 per diluted share, as compared to $47,000, or $0.01 per diluted share for the first quarter of fiscal year 2004. Earnings from pharmaceutical software and services were $41,000 as compared to $155,000 for the first quarter of fiscal year 2004. The loss for the Words+ subsidiary was $19,000, as compared with $97,000 in the first quarter of fiscal year 2004. SG&A increased by 4.3% to $632,000 in the first quarter of fiscal 2005, compared to $606,000 in the first quarter of fiscal year 2004. Shareholders’ equity was $4,495,000, an increase of 33.2% as compared to $3,374,000 for the first quarter of fiscal year 2004.”

Ron Creeley , vice president of marketing and sales for Simulations Plus, added: “The first quarter is typically our slowest quarter. This year it was unusually challenging primarily due to two factors: (1) as a result of four companies slipping their renewals into the second quarter, pharmaceutical software sales, which usually account for more than 50% of each quarter’s revenues, were only about 13%, and (2) last year we had a $300,000 multi-year license in the first quarter, which means there would be no renewal from that customer this year. In spite of these factors, we were able to sustain pharmaceutical software revenues at over a half million dollars by generating new business. This included a new one-year global license with a very large pharmaceutical company. This was only for one year, and only for a portion of our software, so we expect to add additional licenses within the year for other software, and we expect that this customer will renew next year. Adding new customers builds the foundation of our compounded growth because of annual license renewals in subsequent years.”


Walt Woltosz, chairman and chief executive officer of Simulations Plus, added: “Pharmaceutical revenues were sustained at nearly the same level as last year, in spite of four renewal orders that slipped into the second quarter.We expect that these four renewal orders will be received in the second quarter, adding to our usual second quarter business. We also did not have income from study contracts in the first quarter, while last year study revenues accounted for approximately $0.01 per diluted share. The dramatically reduced loss in our Words+ subsidiary is important as well, and reflects the results of the successful restructuring we completed last year. The release of the new SAM Tablet is expected to ramp up in the coming months just as the Say-it! SAM system orders did after its introduction last year. So we view the first quarter as successful, and we continue to advise investors to expect some lumpiness because of the nature of our business.”


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™, which are based on its proprietary software technologies.Simulations Plus, Inc., is headquartered in Southern California and trades on the AMEX 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. 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 maintain its competitive advantage, the general economics of the pharmaceutical industry, the ability of the Company to finance growth, 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.


SIMULATIONS PLUS, INC. AND SUBSIDIARY

Consolidated Balance Sheet

at November 30, 2004

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents

$ 1,048,378

Accounts receivable, net of allowance for doubtful accounts

of $14,406 and present value discount of $17,135

1,390,432

Inventory

327,829

Prepaid expenses and other current assets

94,686

Deferred tax

186,000

Total current assets

3,047,325

Capitalized computer software development costs ,

net of accumulated amortization of $2,007,854

664,643

Property and equipment , net

76,504

Deferred tax

1,210,000

Other assets

11,150

Total assets

$5,009,622

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable

$135,353

Accrued payroll and other expenses

237,714

Accrued bonuses to officers

77,626

Accrued income taxes

1,600

Accrued warranty and service costs

31,197

Current portion of deferred revenue

11,416

Total current liabilities

494,906

Deferred revenue

17,131

Other long-term liabilities

2,561

Total liabilities

514,598

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

20,000,000 shares authorized

3,581,343 shares issued and outstanding

3,582

Additional paid-in capital

5,016,671

Accumulated deficit

(525,229)

Total shareholders' equity

4,495,024

Total liabilities and shareholders' equity

$5,009,622


SIMULATIONS PLUS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended at November 30,

(Unaudited)

2004

2003

Net sales

$1,066,474

$1,138,733

Cost of sales

322,128

351,746

Gross profit

744,346

786,987

Operating expenses

Selling, general, and administrative

631,945

605,823

Research and development

113,692

143,393

Total operating expenses

745,637

749,216

Income (loss) from operations

(1,291)

37,771

Other income (expense)

Interest income

16,771

20,487

Interest expense

(284)

(366)

Gain on exchange of currency

2,111

-

Gain on sale of assets

5,200

-

Total other income

23,798

20,121

Income before benefit from income taxes

22,507

57,892

Benefit from income taxes

Benefit from (provision for) income tax

-

(11,173)

Change in valuation allowance

-

-

Total provision for income taxes

-

(11,173)

Net income

$22,507

$46,719

Basic earnings per share

$0.01

$0.01

Diluted earnings per share

$0.01

$0.01

Weighted-average common shares outstanding

Basic

3,571,191

3,417,202

Diluted

4,143,687

4,128,092


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