Good afternoon. It is Tuesday, November 14, 2017 and on behalf of Simulations Plus, I welcome you to our Fourth Quarter Fiscal Year 2017 Financial Results Conference Call and Webinar. Presenting this afternoon will be CEO and Chairman, Walt Woltosz; Chief Financial Officer, John Kneisel; and Division President, John DiBella, Ted Grasela and Brett Howell. An opportunity to ask questions will follow today's presentation. You may send your written question using the questions pane on your control panel or you may use the hand-raising feature on your control panel to ask your question directly. Please be sure to enter the unique audio PIN displayed when you join the call. This call is being recorded for playback at our website, www.simulations-plus.com. Before we begin with today's presentation, I shall read our Safe Harbor Statement. With the exception of historical information, the matters discussed in this presentation are forward-looking statements that involve a number of risks and uncertainties. The actual 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, continuing demand for the Company's products, competitive factors, the Company's ability to finance future growth, the Company's ability to produce and market new products in a timely fashion, the Company's ability to continue to attract and retain skilled personnel and the Company's ability to sustain or improve current levels of productivity. Further information on the Company's risk factors is contained in the Company's quarterly and annual reports and filed with the Securities and Exchange Commission. Now it’s my pleasure to introduce you to Walt Woltosz, CEO and Chairman of Simulations Plus.

Thank you Renee, and thanks to everyone who's attending today. So just to give a quick overview and the details will follow from our CFO and the division presidents and then I'll wrap it up at the end. For those of you who maybe tuning in for the first time, Simulations Plus is the global provider of software and consulting services for R&D primarily in the pharmaceutical industry, but now also in food, cosmetics and general chemical industry and looking to support efforts in some other industries such as aerospace and general healthcare. On the pharmaceutical side, we have products and services ranging from all the way the very earliest discovery when a chemist first draws a molecule or uses a computer program to generate perhaps million or several million of them that never existed before. And then our tools can allow him to screen those molecules and get rid of the obvious losers right away without ever having to make them and test them. Into preclinical development where selected molecules move into laboratory test and in vitro test we call them and animal test, reviewer test, and then all the way into first to human trials in Phase 1, we also work in safety research and risk assessment and processing Phase 2 and Phase 3 clinical trial data and beyond patent life to supporting generic companies and that something with 30 or 40 generic companies now that are using our software in services. And also a major contract in our Cognigen division for integration of data for multinational R&D efforts where we have researchers around the world working on particular problem or disease and to allow them to communicate with each other efficiently and to avoid duplication of effort plus approaches in our key new software platform that's provided…

Alright thanks, Walt. We can go to the first slide well then. Alright, we'll go over the fourth quarter results then we'll cover the year-to-date. As Walt indicated, our revenues for the fourth quarter were up 58.3% or 2.31 it is our best fourth quarter ever. The 6.27 of revenues were from Lancaster which were up $219,000 which was a good fourth quarter for Lancaster. But Buffalo was up 33.6% they were up $851,000 over the prior year. DILIsym for their first quarter have $1.24 million of revenues that was a really nice fourth quarter. In comparison to our third quarter which isn't shown here, we are down about $0.5 million off our third quarter. And for those of you who follow us and will look at the quarterly information later on. This is normally our fourth quarter is one of our lower quarters and this is one of our second best quarters ever, with the advent of DILIsym coming in. So we're happy with that. For the quarter, our software revenue was up 12.2% or $300,000 and our consulting, was up almost $2 million. So consulting really helped us in this quarter. Gross profits were up 48.2%, $1.4 million. Lancaster was up about 7%, $155,000 and Cognigen was up $560,900 or 81.7% and DILIsym ended up with $683,000 for the period and ended up with 55.2% margin in the period. SG&A expenses for this period, we're up one of the big issues that created the increase was a large piece for M&A for the acquisition of DILIsym. We had $323,000 worth of one-time charges in this quarter for that acquisition. So it sort of skewed some of the numbers in the period. Overall, we were up $818,000 to $2.43 million that totaled $1.64 million over the prior period. Actually,…

Okay. Thank you, John. And hello everyone from sunny San Diego where Brett and I are attending the AAPS Annual Meeting and seeing a lot of really nice work presented on the use of our solutions to support internal R&D and regulatory interactions. Diving a little bit deeper into the products that Walt described earlier, the software development team at Lancaster is working very hard on new releases of our programs. The next version of GastroPlus, the flagship product is set to release in early 2018 and this version really has something for everyone, including new population models for clinical pharmacology departments and enhancements to our mechanistic absorption models for pharmaceutical science. So these and hopefully other enhancements should really expand the types of consulting support we can provide and also help us further penetrate into the clinical space with GastroPlus. ADMET Predictor 8.5 will be released this month. In fact we hosted a webinar last week on some of the new features that drew over 330 registrants. We have integrated some of the GastroPlus PBPK models into ADMET Predictor to really push Discovery PBPK approaches into early discovery. Getting PBPK modeling into the hands of chemist to more efficiently select lead molecules and also help with lead optimizations. We've also incorporated the full MedChem Studio capabilities now into ADMET Predictor so we've got a complete platform to support additional chemistry activities. We've released MembranePlus Version 2 in September and expect to release DDDPlus Version 6 in early spring 2018. These in vitro simulation tools as Walt mentioned earlier help inform inputs for GastroPlus PBPK models and we really expect the new features to lead to continued growth in their sales. And then finally PKPlus Version 2 is expected within the next few weeks. The new items been implemented come…

Thank you, John. I would like to take this time to explain a little bit about what’s going in Cognigen and some of the initiatives that are behind the growth in revenue that we have seen over this past year. So an awful lot of effort in the past year was gone into successfully recruiting and on boarding both software engineers that are going to be necessary to build out the KIWI modeling and communication platform as well as hiring new scientists. And we have been successful in bringing on board younger scientists but also some senior scientists who are going to be able to work with and grow the younger scientists. We have a number of new marketing initiatives and working out different business and sales models and I will explain about that in a moment. And an important part of all of this continues to be the increasing in synergies and cross-selling between the divisions, in particular between Lancaster and Cognigen. And we are really looking forward to being able to do the same thing with our colleagues at DILIsym. And as I mentioned we’re working to accelerate KIWI development and on deployment. In fiscal year 2017 we’ve had relationships 27 companies working on 41 drugs a total 74 projects. There were nine new companies in '17 that we had not worked with previously, 36 new projects that were not carryover from fiscal year '16. And as frequently happens, a number of projects that we work on as clients become aware of the value of the work that we do they expand its scope to cover additional questions and issues and that happened in 40 different projects. There were a small number of projects, three of them got into that being reduced in scope because the efficacy and…

Okay, thank you Ted. Well, obviously, the DILIsym Services are new to the Simulations Plus family. So what if I can do today is just present the couple of slides that give a general introduction of who we are and some of the things that we do at what worth mention at the beginning of the call today and then I have one slide on where we're headed with some of our current ongoing initiatives. So DILIsym is that really our flagship product. It is focused on as well said assessing the safety of drugs with respect to deliver. It's been applied a number of different important clinical decisions the companies have made or development decisions. It can be applied at various places throughout the drug development pipeline. And companies use the software to make the decisions like should they advance their drug to the next stage, should they invest a molecule versus other molecule how does their particular molecule compared to a competitors' molecule or which molecule should they pick from a handful of molecules that they're considering taking forward and investing a large amount of money in. All of these with respect to the potential liver safety of the drug. And we've been developing this software over the last seven or eight years. It's now been used in 13 different -- it has been used or is planned to being used 13 different regulatory submissions with regulatory agencies around the globe. One of one the ones I just wanted to highlight here on bullet 3 is Food And Drug Administration Advisory Committee meeting in 2016 focused on antimicrobials for the drugs solithromycin and DILIsym with the feature part of that advisory committee meeting, company works to try and get the drug approved. It’s currently used DILIsym by large,…

Okay. Thank you Brett and Ted and John and John. Just to wrap it up now summarize, so fourth quarter revenues up by 58%, net income up about 46%. For the whole fiscal year, revenues up about 21% and net income up about 17% and diluted earnings per share up about 15%, so very nice year for us. All divisions all three divisions California, Buffalo, and North Carolina are performing very well. They're realizing the synergies between California and Buffalo now for three years that we've been working together. That's work at extremely well, and now just in the last few months where we'll be beginning to see the synergies between California and North Carolina and we expect Buffalo and North Carolina will also be able to realize synergies of operations there. We are addressing the regulatory agency focus of the planned PBPK model in the clinical pharmacology and in safety research. So our PBPK capability and GastroPlus relates to both have work done in Buffalo for clinical pharmacology and for the safety research done in the research clinical part. New guidance documents coming up by the FDA and the European Medical Agency are helping to drive this interest, and we're also executing well on our five year $4.7 million contract at Cognigen with a major research renovation. And this contract offers a potential for additional similar contracts with other organizations. We'd expanded our offerings now with the DILIsym Services acquisition in systems toxicology it's an exciting new area. That becoming an area to deal and it will be very detailed interactions that happened inside of cells. We believe again the Simulation Plus continues to lead the trend towards the greater use of modeling in simulation and research and development and that something that the FDA and new FDA commissioner is very fond of and is encouraging. And so we believe that smooth sale is ahead. We'd have some links here but I want to stay on the summary slide because I find that that works better for folks that may want to ask questions. Now, I'll turn it back to Renee to moderate any questions.

Thank you, Walt. Our first question concerns the revenue growth at Cognigen, the question is. What is driving the revenue growth at Cognigen? And can it be sustained going forward?

I'll take that, so thank you. Sorry, yes I guess several things are driving revenue growth one is we've been able to bring on additional scientists to take on additional consulting contracts which is always been the major source of revenue for Cognigen so that's one thing. Second we've picked up some consulting projects in the global health space which represents a new area for us and that's kept the number of us very busy. And the third part of this has to do with trying to figure out how to make sure that sorry there is an echo, that we can illustrate the value of KIWI as a modeling simulation and communication platform. So while we don't make predictions about the future we're continuing to put effort into securing new consulting projects and then also continuing to push KIWI as an additional source of revenue.

Thank you, Ted. Our next question I think will be for John DiBella. What does the feedback tell you about the potential for new customers purchasing the PKPlus offering once Version 2 released?

Okay, that's a good question. The feedback told us first from a positive perspective that people really like the streamlined point and click workflow, that's really easy to use. But that Version 1 it's the functionality was a bit limited. And so I think we've been able to address this by adding features that make the program stickier so to speak. Scientists using the program to do more prediction activities now to complement some of the data analysis that they were already doing with PKPlus Version 1, so I think we're going to make it also easier for users to be able to reuse some of their preferred templates that they've established for mapping certain datasets and generating certain reports which would also save time running datasets through the programs. So overall I think scientists in the preclinical development stages can now do more both from model fitting and also prediction, both in a validated and non-validated environment. So ease of use coupled with the additional functionality now that we have bought into version 2 I think can really help us push sales to the PK and toxicology study managers into preclinical stages that need to generate reports more quickly.

Thank you, John. The next question I think will be for John Kneisel. Is the SG&A expense of approximately $275,000 for DILIsym and of 2017 representative of what we can anticipate going forward?

I think it’s a fair representation there. Obviously there is some labor cost that will change as there is growth. But the unit is fairly fixed cost unit. So I think it’s a fair representation.

Okay. Don’t go away, this next one I think is for you as well. I have not seen the 10-K yet. But will your segment information section have DILIsym’s broken out separately in the K and future 10-Qs?

Yes, there is segment reporting for DILIsym in the K -- in the Q.

Okay. And the next question is. What are some of the additional synergies you see to facilitate growth at DILIsym?

So I think there are several synergies that we could point to that will help us grow and lead the growth overall. One of them is this more tight integration that I referenced between some of the existing products such as ADMET Predictor and GastroPlus with DILIsym. So part of what you have to do in DILIsym to run a simulation and to do the technical work is build models for the exposure of drugs, to predict exposure of drugs and GastroPlus and ADMET Predictor do that very well with rudimentary basic information. And so I think that will really enhance the ability to move DILIsym into the discovery space earlier in development. So that’s one of the things that we are actively working on that will help drive growth. There’s obviously some nice marketing synergies as DILIsym is a smaller company and can benefit from some other marketing initiatives as you know as well as with Cognigen doing in terms of number of odds seeing being involved in the process of knowing the products and what they can do. The other within DILIsym, I think NAFLDsym can also benefit from some of the products that are part of the Simulations Plus overall umbrella. And also as I mentioned is being enhanced with a lot of new features right now that are important to allow NAFLDsym to really expand its consulting to a lot of additional companies. NAFLD NASH is probably the number one disease target for new development in drugs right now with many, many, many billions in terms of the market size for drugs in that area. So we believe there is really big market for what we can do with steatosis fibrosis and information using NAFLDsym once we have it complete and we do have the dollars already coming in to support that project over the next 12 to 18 months. So there is some areas for growth as well as producing new products as well as some other organs, I mentioned that too. Is there other, Walt, or others have anything add to that?

Yes, I would just -- it was implied in what Brett said but just to make it more exclusive. The outputs of GastroPlus are inputs for -- part of the inputs for DILIsym and for NAFLDsym. So we already have GastroPlus to cleanly export a file that can be loaded right into DILIsym without a lot of extra work that used to be required. That’s something we’ve already got very, very far along on and then we will be in the next release of GastroPlus here in the next month or two. So that synergy is a very important one. It really streamlines the process going from the PBPK simulation which generates the concentrations in the liver for different populations over long periods of time and then goes directly into dose and to work with the other inputs that come from the lab and other places to do the drug and discovery injury NAFLDsym types simulations.

Thank you, Walt. The next question. Can you provide some additional color as to the steady growth your consulting services is having in Lancaster, John?

I'd say green.

Okay. So I'll add a little bit more color beyond that. Walt mentioned it I think and it's listed there on the summary slide that the U.S. and European regulatory agencies released the very first guidance documents that we're focused on PBPK modeling in 2016. In total now there are over 15 guidance documents that reference the use of modeling and simulation to support some form of drug development for different activities. And so on a counter of all of this, there is a big push from the regulatory side, management at company have now certainly realized the importance of modeling and simulation the real value that it provides and see real opportunities being able to engage with regulatory groups to identify ways in which modeling in simulation could potentially be utilized in lieu of certain clinical studies or at least to strengthen the case that has been made in some of the sponsor company application. The issue is that there is still a lack of trained scientists that are available to properly utilize mechanistic modeling and simulation in-house so more of this is being outsourced to our consulting teams and experts. And this includes companies both large and small. And as Walt showed at the beginning of the presentation it does cover a wide variety of application at different stages of research to really again support these regulatory interactions.

Okay. Our next question is with your stock now trading at more than 12 times trailing revenues. Has the Board considered raising cash through an opportunistic equity raise to get the Company M&A flexibility?

I guess I should that one, the number is no. We have been told that if we needed to raise cash that getting a loan for up to $20 million or $30 million are not be an issue. And that was actually several years ago before we've had the additional success with what we've had since then. So we don't really take the approach of raising cash. There is some we needed and we want to diluting our current shareholders or paying interest on loans. When we acquired DILIsym it was all cash no stock. We paid it out of the treasury and you can see from the cash chart that there get back where we were the quarter before we did the acquisition even with the $4 million to $5 million going out. So the answer is no.

Okay, Walt. Thank you. The next question what is an annual license cost for PKPlus? And what are your expectations for number of unit sales within the next year, John?

License fees are in the single digit thousands. It's always been a low cost potentially high volume product offering for us. And we hope to see a solid growth rate for the program in fiscal year 2018 I think similar to what we have seen with some of our other programs like DDDPlus over the years as new versions are release. That's the extent of what I would project today.

Thank you, John. The next question concerns the malaria and anti-inflammatory projects. Asking what is the status and are there any plans to monetize?

Okay, so those were our two new chemical entity projects. We don't plan to take those any further. The molecules that we have were able to hit all their targets. They had many good properties that to take a lead molecule like that and go all the way through all of the preclinical development clinical development would be a major investment that is way beyond what a company of our size is got to afford to do. And again those are lead molecules. Those would not be the final drug molecule. So there would be a lot of iteration that would need to be done a lot of additional testing, synthesis of new molecules. We spent a total of under $200,000 across both of those products combined. We're talking many, many millions of dollars to take it onto the next stage. And as we've I don't think that anyone would jump on and try to license those leads. We are publishing results at the work including the molecular structure so that people can see if they were to license our tools and use the internal data that they have that we did not have access to, we only have access to public domain and data which is pretty lengthy. And yet we are very successful in both projects. But the drug companies are not going to put their best step out there in the public domain. They have got significant data basis in their internal servers that they could use right off the bed and take sooner approach that we did to design the molecules. That’s really our -- it's what we do. We are providing the tools and not really trying to be a drug company.

Okay, well. Thank you. We have one last question and just in general, I am not going to make this question specific. But if members of management to sell, their large portion for shares is below what the stock is trading at. Should shareholders interpret anything from this, I don’t know if you can address that well?

Well, I have a 10b5-1 program which sells a certain number of shares every month. 10b5-1 program gives me no control whatsoever over those sales whatever the price is, neither the broker decides to sell on certain days or certain times of day, I have no influence over that. So we have 10b5-1 program work so that anything I know has no effect on those sales. They are going to happen good times and bad times, if there are bad times, luckily so far we haven’t had any. And I don’t see any one selling shares below the market. I would really -- that would surprise me. I have never seen it happen and we’d not expect that that happen.

Okay. I think that’s the last of our written question. Let me see if anybody is raising a hand. I don’t see any further questions. I think that addresses all the questions today.

Okay. Why don’t you wrap it up Renee? Thanks everybody.

Alright. Well thank you Walt. Thank you John, John, Ted and Brett at this point for a great presentations. Before we would like to go today, we have two investor conferences coming up in December that we want to tell you about. We will presenting at LD Micro’s 10th Annual Main Event at the Luxe Sunset Boulevard Hotel and our presentation is on Wednesday December 6th and we will also be at Benchmark Microcap Discovery one-on-one conference in Chicago on Thursday December 14th and we hope that some of you might be able to meet us there. So this concludes today’s conference and webinar. If you’ve missed any part of today’s presentation, a replay will be available at our website www.simulations-plus.com. Thank you all for joining us today and we wish all of you the very best in the coming holiday season.