Simulations Plus Reports Third Quarter FY2020 Financial Results

Third Quarter and 9MoFY20 Revenues Grow 24%

Board of Directors Announces Quarterly Dividend of $0.06 per Share
Company Files Shelf Registration Statement

Simulations Plus, Inc. (Nasdaq: SLP), the leading provider of modeling and simulation solutions for the
pharmaceutical, biotechnology, chemicals, and consumer goods industries, today reported financial results for its
third quarter of fiscal year 2020 (3QFY20) and the first nine months of fiscal year 2020 (9moFY20), the period
ended May 31, 2020.

3QFY20 highlights compared with 3QFY19:

Net revenues increased 23.8% to $12.3 million, an increase of $2.4 million over $9.9 million
Gross profit was up 26.5% to $9.6 million, an increase of $2.0 million over $7.6 million
SG&A was $5.0 million, an increase of 62.6% or $1.9 million over $3.1 million
SG&A as a percentage of revenues increased to 40.9% from 31.1%, inclusive of $1.1 million in one-time
transaction costs related to the Lixoft acquisition
Total R&D expenditures were $1,359,000, an increase of $293,000, or 27.5% over $1,066,000
In 3QFY20, $606,000 was capitalized and $753,000 was expensed
In 3QFY19, $422,000 was capitalized and $643,000 was expensed
Income before taxes remained flat at $3.8 million
Net income increased 1.6% to $2.9 million, an increase of $47,000 over $2.9 million
Diluted earnings per share remained unchanged at $0.16. One-time transaction costs related to the Lixoft
acquisition of $1.1 million (approx. $837,000 net of tax) effected a decrease of $0.04 diluted earnings per
share for the quarter

9moFY20 highlights compared with 9moFY19:

Net revenues increased 23.5% to $32.0 million, an increase of $6.1 million over $25.9 million
Gross profit was up 25.3% to $24.1 million, an increase of $4.9 million over $19.2 million
SG&A was $12.6 million, an increase of $4.0 million, or 46.8%, over $8.6 million
SG&A as a percentage of revenues increased to 39.5% from 33.2%, inclusive of $1.4 million in one-time
transaction costs related to the Lixoft acquisition
Total R&D expenditures were $3.8 million, an increase of $500,000, or 15.4% over $3.3 million
For 9moFY20, $1.7 million was capitalized and $2.0 million was expensed
For 9moFY19, $1.4 million was capitalized and $1.9 million was expensed
Income before taxes increased 9.1% to $9.4 million, an increase of $779.000 over $8.6 million
Net income increased 9.5% to $7.1 million, an increase of $620,000 over $6.5 million
Diluted earnings per share increased 7.6% to $0.39 from $0.36. One-time transaction costs related to the
Lixoft acquisition of $1.4 million (approx. $1.1 million net of tax) effected a $0.06 decrease in 9moFY20
diluted earnings per share

Shawn O’Connor, chief executive officer of Simulations Plus, said: “Keeping with historical seasonality trends,
the third quarter was again a strong quarter with revenue increasing 24% year-over-year to $12.3 million,
demonstrating the significant progress we have made to accelerate growth. A solid base of recurring revenue and
a large backlog of project-based service business have minimized the impact from current economic conditions
resulting from the effects of the COVID-19 pandemic. While certain new customer software license and service
projects were delayed in recent months, we continue to believe opportunities have been delayed, but not lost.
Our backlog remains healthy, and we are encouraged by the pickup of new software license closures and
consulting contracts at the end of the quarter. We expect double-digit, year-over-year revenue growth in the
fiscal fourth quarter, despite the impact of seasonality on a sequential basis.”
“The integration of Lixoft is going well and initial feedback from the marketplace has been positive as
customers acknowledge the strengthening of our offerings with the Monolix Suite,” Mr. O’Connor continued.
“We are collaborating across the enterprise to fully integrate our sales and marketing efforts and leverage our
existing infrastructure to extract maximum synergies and present a unified approach to our customers.”

John Kneisel, chief financial officer of Simulations Plus, added: “The dependable cash flow generation of our
business was further enhanced with the immediately accretive acquisition of Lixoft in the third quarter.
Following this cash investment, our financial position remains strong with a solid balance sheet that includes $7
million in unrestricted cash and no outstanding borrowed debt at the end of the third quarter and access to
additional capital via a new, undrawn $3.5 million line of credit. Through a steady approach to growth and the
prudent allocation of capital, we are able to maintain the economic engine of our business, invest for future
growth, and return capital to shareholders in the form of quarterly cash dividends.”

In addition, the Company today filed with the Securities and Exchange Commission (the “Commission”) a
Registration Statement on Form S-3 (the “Registration Statement”) filed pursuant to the Securities Act of 1933,
as amended (the “Securities Act”). The Registration Statement was filed as a “well-known seasoned issuer” as
defined in Rule 405 under the Securities Act of 1933, as amended, or the Securities Act, using an automatic
“shelf” registration process and, thus, was immediately effective. No securities were sold in connection with its
filing, but, by using a shelf registration statement, the Company may sell securities from time to time in the
future and as described in a subsequently filed prospectus supplement.

Shawn O’Connor, chief executive officer of Simulations Plus, said: “The Company’s filing of its shelf
registration provides the company the flexibility required to support any future need to issue securities for any
working capital, mergers and acquisitions, or general corporate purposes in the future. Our recent qualification
under the well-known seasoned issuer standard made this undertaking timely and efficient.”

Quarterly Dividend Declared

The Company’s Board of Directors has declared a cash dividend of $0.06 per share of the Company’s common
stock payable on August 3, 2020, to shareholders of record as of July 27, 2020. The declaration of any future
dividends will be determined by the Board of Directors each quarter and will depend on earnings, financial
condition, capital requirements, and other factors.

Investor Conference Call

The Company invites all interested persons to attend its conference call at 4:15 p.m. Eastern Time on July 9,
2020. The live webcast/teleconference will be accessible by registering here. A live, listen-only teleconference
will also be available by dialing (562) 247-8422. Please dial in five to ten minutes prior to the scheduled start
time. A replay of the webcast will be available at the Investors section of the Simulations Plus website following
the call.

About Simulations Plus, Inc.

Simulations Plus, Inc., is a premier developer of drug discovery and development software as well as a leading
provider of both preclinical and clinical pharmacometric consulting services for regulatory submissions and
quantitative systems pharmacology/toxicology models for drug-induced liver injury and nonalcoholic fatty liver
disease. The company is a global leader focused on improving the ways scientists use knowledge and data to
predict the properties and outcomes of pharmaceutical, biotechnology, and chemical agents. Our software is
licensed to and used in the conduct of research by major pharmaceutical, biotechnology, chemical, consumer
goods companies, and regulatory agencies worldwide. Our innovations in integrating new and existing science
in medicinal chemistry, computational chemistry, artificial intelligence, pharmaceutical science, biology, and
physiology into our software have made us the leading software provider for molecular property prediction from
structure and physiologically based pharmacokinetic modeling and simulation. For more information, visit our
website 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 and filed with the U.S. Securities and Exchange Commission.

Disclaimer

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such state or jurisdiction.

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SIMULATIONS PLUS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited)
May 31 August 31,
ASSETS
2020 2019
Current assets
Cash and cash equivalents $ 7,354,496 $11,435,499
Accounts receivable, net of allowance for doubtful accounts of $25,000 and $0 10,853,452 5,026,558
Revenues in excess of billings 2,838,072 3,233,659
Prepaid income taxes 392,099 765,110
Prepaid expenses and other current assets 745,468 704,316
Total current assets 22,183,587 21,165,142
Long-term assets
Capitalized computer software development costs,
net of accumulated amortization of $13,293,943 and $12,356,055 5,754,971 4,959,736
Property and equipment, net 356,784 341,145
Operating lease right of use asset 1,019,408 -
Intellectual property, net of accumulated amortization of $4,729,270 and $3,948,750 12,275,730 5,026,249
Other intangible assets net of accumulated amortization of $1,503,481 and $1,210,000 7,146,519 3,280,000
Goodwill 12,792,171 10,387,198
Other assets 49,957 37,227
Total assets $ 61,579,127 $45,196,697

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Accounts payable $ 663,337 $ 204,075
Accrued payroll and other expenses 2,137,383 1,639,038
Current portion - Contracts payable 3,761,028 1,761,028
Billings in excess of revenues 269,232 798,549
Operating lease liability, current portion 525,454 -
Deferred revenue 428,611 380,787
Total current liabilities 7,785,045 4,783,477

Long-term liabilities
Deferred income taxes, net 2,775,398 2,731,616
Operating Lease Liability 489,463 -
Payments due under Contracts payable 3,942,333 -
Total liabilities 14,992,239 7,515,093

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
17,788,498 and 17,591,834 shares issued and outstanding 7,791 7,595
Additional paid-in capital 20,231,443 15,319,474
Accumulated Translation Adjustment 30,460 -
Retained earnings 26,317,194 22,354,535
Total shareholders' equity $ 46,586,888 $37,681,604

Total liabilities and shareholders' equity $ 61,579,127 $45,196,697

SIMULATIONS PLUS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended May 31, 2020 and 2019
Three months ended Nine months ended
(Unaudited) (Unaudited)
2020 2019 2020 2019

Revenues $12,298,036 $ 9,936,921 $32,049,003 $25,944,545

Cost of revenues 2,665,405 2,324,188 7,974,702 6,734,890
Gross margin 9,632,630 7,612,733 24,074,301 19,209,655
Operating expenses
Selling, general, and administrative 5,023,132 3,087,445 12,646,512 8,613,788
Research and development 752,719 643,255 2,026,684 1,896,926
Total operating expenses 5,775,851 3,730,700 14,673,197 10,510,714

Income from operations 3,856,779 3,882,033 9,401,104 8,698,941

Other income (expense)

Interest income 4,465 11,050 27,814 20,296
Interest expense - (32,702) - (109,078)
Change in value of contingent consideration (81,000) - (81,000) -
(Loss) income on currency exchange (602) (7,941) 1,283 (40,467)
Total other income (expense) (77,137) (29,593) (51,902) (129,249)
Income before provision for income taxes 3,779,642 3,852,440 9,349,202 8,569,692
Provision for income taxes (844,073) (963,734) (2,205,276) (2,045,590)
Net Income $ 2,935,569 $ 2,888,706 $ 7,143,925 $ 6,524,102

Earnings per share

Basic $ 0.17 $ 0.16 $ 0.40 $ 0.37
Diluted $ 0.16 $ 0.16 $ 0.39 $ 0.36

Weighted-average common shares outstanding

Basic 17,735,354 17,519,849 17,661,189 17,472,922
Diluted 18,426,872 18,096,195 18,333,596 18,008,336

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Simulations Plus Investor Relations

Ms. Renee Bouche
661-723-7723
[email protected]

Hayden IR
Mr. Cameron Donahue
651-653-1854
[email protected]