Good afternoon. It’s Tuesday, July 10, 2018. On behalf of Simulations Plus, I welcome you to our Third Quarter Fiscal Year 2018 Financial Results Conference Call and Webinar. Presenting this afternoon will be Chairman of the Board, Walt Woltosz; Chief Financial Officer, John Kneisel; and President of DILIsym Services Division, Brett Howell; and will also be joined by our new Chief Executive Officer, Shawn O’Connor. An opportunity to ask questions will follow today’s presentations. You may send your written questions using the questions pane on your control panel or you may use the hand-raising icon on the control panel to ask your question directly. Please be sure to enter unique audio PIN displayed when you join the call. This call is being recorded for playback at our Web site, simulations-plus.com. Before we get started with the presentation, we’ll begin by reading the 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 on a timely fashion, the company's ability to continue to attract and retain skilled personnel, and the company's ability to sustain or improve the current levels of productivity. Further information of 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 Walt Woltosz, Chairman of Simulations Plus. Walt?

Thank you, Cameron and thanks to everyone who joined the call today. This was another strong quarter for Simulations Plus. We’ve had 26.7% revenue growth compared to last year's third quarter, and a 15.7% improvement to our net income. We continue to benefit from outsourcing trends in the industries we serve, and our three divisions are working well together. More importantly though, just after the conclusion of the quarter, we made a milestone announcement naming Shawn O’Connor as our new Chief Executive Officer effective June 25. Shawn becomes only the second CEO in our history as most of you know, I’ve been reducing my time allocation to Simulations Plus for about four years, and with it my compensation initially starting with our acquisition of Cognigen division in 2014. I’ve been asked about our succession plan a number of times, that’s been a topic of increased importance, and in my opinion and in an unanimous opinion of Board of Directors, the nominating committee has emphatically answered this question with this announcement. Shawn is a proven executive. He brings more than three decades of experience in the pharmaceutical software industry to Simulations Plus, including as both the public company CEO and CFO. He joins us from Entelos, a provider of unique quantitative systems pharmacology or QSP, modeling and simulation software similar to the genre with our DILIsym division works and services to the pharmaceutical drug development market, where as President, CEO, and the Director he designed and executed an asset repurchase strategy to secure intellectual property and other assets; recruited and directed new management team, established a new strategic direction and secured privacy. Prior to Entelos, Shawn served as Chairman, President, and Chief Executive Officer of Pharsight Corporation, a developer and marketer of software products and services that help pharmaceutical and biotech…

Thank you, Shawn. Next slide please. So I will give a quick overview and then I will turn it over to John Kneisel for more detail from our CFO. So third quarter, a nice --very nice quarter, revenues up $1.8 million or 26.7% to a total of $8.6 million. Income from operations, up 10.4%, $323,000 to $3.4 million. Our net income, up 15.7%, $327,000 to $2.4 million. Our diluted earnings per share increased to $0.13, up $0.01. Our software renewal rates continue to be very nice, 90% based on a number of accounts and 97% based on the actual fees received. We added 20 new software clients during the third quarter. For the first nine months, revenues were up 28.6% to $23.0 million, up $5.1 million. Our income from operations, up $1.6 million or 23.2% to $8.4 million. Net income, up $3 million or 63.8% to $7.6 million. That includes a one-time, non-cash $1.5 million deferred tax adjustment that was booked in the second quarter. That still would have been up $1.5 million or some 37% even without that. Diluted earnings per share increased to $0.43 a share, up $0.16 and software renewal rates 87% based on accounts and 93% based on fees received, and we added 56 new software clients during the first nine months. Also our consulting pipeline resulted in a significant increase in revenues and consulting continues to grow. Next slide please. So now I will turn it over to John Kneisel, our Chief Financial Officer for a little more detail on the financials. John?

All right. Thanks, Walt, and thanks Shawn. I'll go to the first slide. The sales, we go to the first quarter -- this last quarter. The -- our consolidated net revenues were up 26.7% like Walt said, about $1.8 million to $8.6 million for the third quarter compared to last year. Lancaster was up $706,000, about 14%, had a good growth this quarter. Buffalo was up $141,000, about 8% increase and DILIsym was about $1,000,957 actually and this was the end of their first year with us and so it's been a good year for them. Consolidated software and software related sales are up $830,000, about 17.4% and analytical study revenues are up 974,000 or 49%. Moving on to our cost of revenues, we are up about $578,000 labor increases. We account for most of that. It's a combination of increased labor count, salaries and bonuses that were occurring as we were going along, including 167,000 of that expense coming from DILIsym being their first time with us in this quarter. Other significant increases are also contract costs that we are incurring for testing that division. Those costs come in on certain contracts, so they will pop in from some quarters, some quarters we don't have much in way of those costs, this quarter there were. We also seen an increase in our software amortization in this quarter as well as amortization expense associated with the technologies that we acquired during the acquisition last year. Our cost of revenues as a percentage of revenue increased by about 2% -- little over 2% this quarter in comparison with the prior year and most of that comes from the higher salaries and direct cost of the contract studies. Our gross profit increased about $1.2 million overall, by about 23% and $600,000 of…

Okay. Thank you, John. And as he mentioned, John DiBella is in Korea doing the training workshops. So it fell to me. I’m hoping that -- expect Shawn to take over this just yet, having only being on the job for a couple of weeks. So I want you to do this. So software product wise, Lancaster division, we released version 9.6 GastroPlus in May. This enhanced couple of add-on modules for special population physiologies and improvements all of our mechanistic absorption models, oral, ocular, dermal and so on, formal drip. ADMET Predictor we released version 9 in June 2018. Both of these were many, many months and in the works significant improvements, a lot of testing. Our Q&A -- our QA testing which has become quite, quite extensive for all the different versions of operating systems and languages, German, Japanese, French and so on. And so every time we change anything, we’ve got quite a bit of testing to do on these, finally made it to the government and has been released. We expect to release version 6 of DDDPlus this summer and here we will be releasing the long-acting injectable microsphere model where these are typically injected into muscle. So this added our intramuscular capability and GastroPlus actually that’s part of the changes there. And this was all funded from one of our FDA funded grants and this will expand our user base we believe. Also adds new precipitation assays in two phase -- biphasic dissolution models. MembranePlus, we released version 2 in September 2017. Very stable product at this point. We do have some new models that were released back that allows us to test -- to stimulate testing in liver cells or hepatocytes and also improved our integration with the ADMET Predictor module so that we…

All right. Thank you, Walt. So I’m going to give a little bit of background information on reflecting the quarter that we just closed and John Kneisel discussed earlier. Just for a reminder, for those of you not familiar with DILIsym Services in our division, we do detailed or more mechanistic call it modeling in simulation in the area of both pharmacodynamics or the efficacy of drugs and also in area of toxicology or the safety of drugs we used two primary platforms right now, NAFLDsym and DILIsym. DILIsym focuses on drug-induced liver injury and NAFLDsym focuses on the treatment of nonalcoholic fatty liver disease or NASH nonalcoholic steatohepatitis. So these are our two primary areas of focus currently in terms of building products and using those products for consulting along with the DILIsym work comes from in vitro assay design and outsourcing as John alluded to prior in the financial discussion. In addition, I will talk about a third product that we envision briefly here today. In terms of our fiscal Q3 sales review, some quick highlights. The breakdown shown in the left shows was about 60% coming from the DILIsym consulting, about a quarter of it coming from NAFLDsym consulting and then the remainder of 15% or so coming from licensing DILIsym software. We've got 13 projects active during that period. We earned revenue on. We have a good reason to believe that the pipeline is solid and the DILIsym consulting projects are looking good for the future in terms of projects lined up currently in various stages, whether it would be working towards signature or starting a proposal and filling it out. So we’ve got good leads there.

On the NAFLDsym side, we continue to work on a few larger projects. One primary project that focuses on expanding the capabilities of the software which is very important for us to be able to cover the various most important areas of the disease. So once we complete that towards the end of this year, calendar year, NAFLDsym will be equipped to do even more in the area of evaluating targets and compounds. And on the consortium or DILIsym software licensing front. We have non-active licenses, We have some leads for additional ones and we also are working towards integration with GastroPlus, so that we can expand our user base as well. The news that we announced this quarter in that regard regarding the DILIsym software licensing that the FDA has now acquired licenses and we put out a press release on that a while back during this quarter. Next slide please. In terms of product news, DILIsym we continue to move forward with the existing code base and adding new features and capabilities, largely that is determined by the consortium members that we have in the DILIsym initiative and licenses software but they also get an opportunity to vote. Currently we have the voting ballot outstanding waiting on to be returned from the company in the consortium, so they will help determine what goes into the next version of the software. In parallel, we have a large refactoring and recoding effort in progress to redesign the software to be much more nimble, much more modern quicker, in terms of competition resources but also very synergistically GastroPlus and ADMET Predictor. On the NAFLDsym side, the specific areas where we're doing a lot of work now is in fibrosis and inflammation and as I mentioned where getting near the end of…

Thank you. We will go into the question-and-answer session now. [Operator Instructions] We will start off with few of the written questions from Howard Halpern with Taglich Brothers. First question Mr. O’Connor, let me congratulate you on your appointment as CEO. What drew you to SLP? Shawn O’Connor: This is Shawn O’Connor. Howard, thanks for the question. That’s interesting. My visibility to the company has not been a short time frame. I’ve followed the company for many years now, I believe that’s close to 10 years that Walt and I’ve known each other, but from a vantage point, both at Entelos as well as at Pharsight we have operated in a similar space, not significant in terms of direct competition over the years, relatively complementary, but I’ve known the company for a long time. I guess there's both sides of the business in terms of its software products as well as its service capabilities have always impressed me. The installed base of custom software, it sits in, is large, healthy and quite frankly, quite happy with the functionality that Simulations Plus provides to them and that provides a tremendous foundation upon which to grow the business over the years in terms of expanding services, the functionality of our software that we can deliver to those clients. Always easier to sell more to a happy customer than to go out and acquire a new customer. Both are required, but that installed base is a tremendous asset for a company like Simulations Plus. On the service side of the business, the company has a wealth of scientific capability, knowledge, and skillset that shows up both in the software functionality and new releases that are periodically delivered on a very consistent and frequent basis compared to many other companies out there. But also…

Great. Next question also from Howard is what type of traction are your Simulation software products seeing in Korea and India?

Okay. I will take that one. John DiBella is really the person to give you the most insightful answer to that, but Brett can you go back to slide 20, please. Thank you. So as you can see of the Asia 27%, India is now 20% of that 27% and China is 16% of that 27%. A few years ago, Japan was pretty well the only thing going there. Japan has been a great market for us, continues to sustain and grow, but the untapped potential in India and China has realized over the last few years, and I know John DiBella has spent significant number of trips over there in support of the dealers, so we now have dealers in all four of those countries that are helping us to reach the markets there.

Great. Next question is what is your penetration into nonpharmaceutical customer stand and how do you anticipate future growth in that space?

I will take a cut at that. John Kneisel may be able to help me, because he sees where the checks are coming from sometimes and so we have sold to cosmetics, we have sold to food companies and general chemical companies, agrotech companies. I cannot give you percentages or dollar amounts. I just don't have those in my head, John Kneisel, do you have any more information on that?

I can't be too precise of the percentages right now Walt that John seen some recent good activity in that area for them. So what he mentioned in some of these slides there, this time. So just leave it at that for now without going too granular.

Moving on to additional question. From Howard where does the sales pipeline -- with this the sales pipeline look for -- look like for PKPlus and when might they ramp and orders occur?

Oh boy, that’s another John DiBella question. Maybe we should have woken up at 4 o'clock in the morning in Korea to be on this call. I don't know the answer to that John Kneisel do you have any information?

Not that I think I can share right now, Walt. I would rather relate that and deal with that on the next call with John I think.

Okay.

The next question, what is the long-term goal for KIWI? And could it eventually become an industry standard?

Cindy, you want to take and crack at that one?

Hi. Yes, absolutely. This is Cynthia Walawander. I would happy to answer it. We are actually in the beginning of a third year of a 5-year contract to develop KIWI, and we’re on track with that contract, hoping to expand it. And we are also on track for being, I mean the modeling and simulation platform or communication of pharmacometric results. And collaboration among drug companies that are using our modeling form to approach to their drug development program, we’re continuing to have an interest in KIWI. For licensing, we are expanding into academic department and we do anticipate an increase in sales of the foundation of our platform continues to be solidified.

Great. Thank you.

Thank you. Next question, how many outgoing consulting proposals are outstanding for the Lancaster California division as you enter the fourth quarter of 2018.

I have no idea. John Kneisel, you.

I don't know what the actual number of outstanding proposals are. John tells several going, but they usually closes and then they become projects as they go. So although it keeps an outstanding list on it that’s usually just become proposals just they hit or become projects they hit. One final one from Howard Halpern. What -- just want to thank you for all the hard work in building the company with regard to the special projects in AI. Do you see other opportunities beyond AEROModeler and MRIModeler?

Well, the AI is such as general purpose tool. That the capability that we built over nearly 20 years, we’ve applied in a number of defense-related applications and in the magnetic resonance imaging application that MRI modeler addresses. Right now we are focusing on those two areas, trying to break through to some of the DoD organizations, Department of Defense organizations that we have some connection with either through the aerospace engineering at Auburn University or right out close to Lancaster office at Edwards Air Force Base where I use to work many, many years ago. So we are focusing right now on those two. Big Data Analytics is a big thing. It's a big thing where the best work seem to be done by small teams as opposed to necessarily a Googler or Microsoft or IBM. In fact, I think IBM just announced a cut back in that area. So I think there is a lot of small startups. We’ve talked to a few of them in the Bay Area, a lot of people are getting venture capital money for relatively small operations, no bigger than what we have. We have nearly 20 years experience in the area and I think there are opportunities here, I’m excited about it and we will see where it goes from here.

And the next question from Scott [indiscernible] kind of piggybacks on the previous question, but just as the company as a whole, the business development pipeline look like as well as M&A strategy going forward, if there is a formal or just an opportunistic focus on that standpoint, M&A.

Yes, I would say our strategy has not changed over the years. We have always been shopping, we have no debt, we got for our size we got on adequate supply of cash, investment bankers are constantly giving us opportunities to borrow money if we needed to, needed to. But we are constantly looking, we probably look at oh and when I guess, well over a dozen companies a year. Most of them don't meet our criteria, which is fairly conservative. We want immediately accretive to both revenues and earnings. We want technology that is synergistic with what we do, that can be merged in businesswise. Customer support lies, marketing lies. We want your personal chemistry between the teams and the price is going to be right. So those four criteria, it's pretty easy to get two or three out of four of it -- getting four out of four is not so easy. We did Cognigen in 2014, that was nine years after our previous acquisitions in 2005. We did DILIsym last year only three years after Cognigen and I'm hoping to reduce the time in between DILIsym in the next acquisition, So that’s a very active area for this. We are constantly meeting with folks, talking with folks, assessing technologies, assessing finances, assessing people. And so I can't comment any further in that. But we are always shopping and I see you going through slides, if you go to the summary slide, I will do the summary after we finish the Q&A here. Thank you.

We have one follow-up from Scott [indiscernible]. Is the software or the consulting, is there a preference on M&A side.

Say that again.

On the M&A side, is there a preference for either software or consulting business?

Well I like software. The margins are really nice. But the truth is consulting is in such high demand that bolstering our current staff by adding consulting scientists who are already experienced, could be a valuable thing for us to do when we hire new scientists almost all of them are pretty well right out of school and it takes them a while to get up to speed, but if we could acquire an operation that had Scientists that are in the group and able to turn around studies of high-quality, back to our customers and that’s certainly would be attracted to. But software is -- it's definitely a better play in terms of the margins, but consulting eventually sell software. So I'd say we're opened to both.

Two final questions from Donald Bossier [ph]. The first one is there any concern for a software piracy especially in the Asian markets?

We’ve been concerned about it. We haven't had an issue. We use what we believe is the best security software on the market called Flexera. It's very commonly used in the pharmaceutical industry. Some years ago we discovered a Chinese Web site with how to crack through various pieces of software and we were not one of them that they could crack. So we feel pretty confident, we are doing the best that can be done in today's world and certainly if someone had the resources of an NSA or equivalent, they would probably get around it. But we haven't seen that a real problem with it as of now.

Great. Well, our final question for you can finalize the summary sidewalk. What the status of monetizing the software in the MRI and missile guidance markets?

Well, we continue to probe different DoD agencies. We write white papers and submit them and typically the way these agencies work. They either have a broad agency announcement, BAA, they call it, where they got a whole bunch of different things that they’re going to fund over the next months or year. And you try to find a slot to fit into their and contact the people or you just submit a white paper which could be 5 to 10 pages typically describing what it is you think you could give for them and then solicit interest. And so we are doing those things. There's nothing public yet, so I probably shouldn't go any further than that, but it is something that I have very keen interest in myself and will stay remaining on a project basis without being paid as an employee just kind of volunteering my time to promote that. I do have the aerospace engineering background and experience with 00 many years experience with proposals and DoD contracts. That’s something that I’m very interested in. The MRI, I’ve worked -- we’ve been working. I’m sitting right now in Auburn, Alabama, right next to Auburn University. We have a state-of-the-art MRI facility with both 3T7T for machine and a significant amount of research is done there. And that's where we partnered originally to do the MRI work. We pulled off our folks to work on PKPlus and now on the conversion of GastroPlus to C++ in large part. So our resources on the AI side have been less than what they were, but I intend to try to step up and support that area going forward. I think it's the scenario where the time still good to get in. Lot of startups as I mentioned are trying to get in now. We have a significant amount of experience. We got the best-in-class AI engine for the pharmaceutical industry and the types of predictions that we do for molecular properties. That stands down and that's not us saying that’s a comparison studies. So we need to not just sit on our laurels, we need to make sure we stay ahead of the game and do what we can to provide this capability not only to pharmaceutical, but other industries.

That was -- go ahead, there is no more questions. If you want to go ahead and finalize the wrap up slide.

Yes, okay. So, Shawn O’Connor, very, very pleased that he is on board. My wife is too. She's been asking me when I was going to retire for the last seven years or so. But this is not -- this was not sudden. It may have appeared to be sudden from the outside world but this is something that was a many months in the works with the search committee searching, with me saying you are really would like to retire by the end of the fiscal year beginning of August. And thank goodness, John was available Ron was available and we found him like I don’t think we could have found anyone with better credentials to take over running a public company in the pharmaceutical software and consulting services business, I will remain as chairman and I will remain involved the project basis on the side. Again/ the compensated for that work with compensation as a director will be like all the other upside directions. Our third quarter again great quarter. Revenues up 26.7%, income from operations a little over 10%, and net income up almost 16%. And for the nine months revenues up 28.6%, income from operations 23.2%; net income almost 64% which includes the year one-time $1.5 million deferred tax adjustment. but even though without that it would be up $1.5 million that should be in the 30% range. Diluted earnings per share increased $0.43 a share, up $o.16 that would've been increased to $0.35 a share without the deferred tax over $0.27 last year. So again the substantial increase in diluted earnings per share. The Board did declare a $0.06 share quarterly dividend payable on August 2. I think shareholders of record, I believe the July 26, our three divisions California, Buffalo, New York and RTP North Carolina all performing well for realizing the synergies that we expected from these divisions. We are addressing regulatory agency focus on PBPK modeling of the clinical pharmacology and safety research and new guidance documents that have been issued by the FDA and the European medicines agency have been helping to drive interest. I think they’re driving not only interest in the software, but the considerable amount of increase in consulting demand that we've been seeing in the industry. The industry knows that modeling at simulation are going away. They are the highest productivity tools available. We generate tons of data in the pharmaceutical industry in our labs and animal studies in human and the only way to integrate that data and make sense out of it is through Simulation model. We just can't do it by humans doing it databases and spreadsheets and reports. So we believe that we continue to lead the trend toward greater use of modeling in simulation, in research and development, in pharmaceutical also now in cosmetics, through agrotech and general chemicals. And we thank you for your attendance today. And I will turn it back to Cameron to wrap it up.