Good afternoon, everyone. Thank you for joining us. Hosting the call today is Simulations Plus' CEO, Shawn O'Connor; and the company's CFO, John Kneisel. Before beginning, I'd like to remind everyone that with the exception of historical information the matters discussed in this presentation are forward-looking statements that involve numerous risks and uncertainties. The actual results of the company could differ significantly from those statements. Factors that can cause or contribute to such differences include, but are not limited to, continued 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 their 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. With that said, I'd like to turn the call over to our CEO, Shawn O'Connor. Shawn?

Thank you, Cameron. Simulations Plus delivered another strong quarter with double-digit revenue growth at the high end of our historical annual organic growth range of 10% to 15%. The revenue growth was achieved along with good profitability and excellent cash flow. Of note for the second quarter, our consulting business accelerated its revenue growth pace after a relatively slow first quarter. Our Buffalo division delivered 23% year-over-year revenue growth for the second quarter, its highest growth quarter since 2017. In addition, as we discussed in our last call, we closed on several new business opportunities at the end or right after the close of our last quarter. Specifically, we received approval for Phase II of the SBIR grant for DILIsym's build of the RENAsym platform. After the end of the first quarter, DILIsym also closed on a $2.7 million agreement with a large pharma company for the build of an IPF mechanistic model. These two projects commenced in the second quarter and supported the achievement of 25% revenue growth in the RTP division. Demand for services remains high across all three divisions. We are making strategic investments in our organization to drive future growth and made good progress on these initiatives in the second quarter. We added an additional business development individual to our software business and hired a senior scientific resource into our consulting practice, with business development expertise. We experienced success in our consulting recruiting efforts in a very competitive market, increasing our consulting staff by 7% in the quarter and 15% year-over-year. Additionally, we have placed three consultants in Europe during the quarter in support of increasing our physical presence in this market. Overall, we made good progress on all key initiatives and I'm encouraged with the results and the team we have in place. With regard…

Thanks Shawn. Beginning on this slide were the consolidated net revenues for our second quarter of fiscal year 2019 were up 15.2%, approximately $1.1 million to $8.5 million compared to $7.4 million for the prior year. By division, Lancaster's revenues were 10% -- were up 10% to $5 million, Buffalo's revenues were up 22.8% to $2.3 million, and RTP in North Carolina's revenues were up 24.8% to $1.2 million. Consolidated software-related revenues were up $522,000 or 12.3% and consulting service revenues were up $593,000 or 19%. We saw modest cost of sales increase this quarter of $92,000 compared to the prior year due to growth and year-over-year employee salaries and benefits. This increase was offset by lower direct contract costs primarily CRO expenses related to contracts in our North Carolina division. The gross profit increased 19.5% to $6.3 million, representing 73.9% gross margin in the second quarter of fiscal year 2019 compared to $5.2 million or 71.2% gross margin same quarter last year. SG&A expenses were $2.8 million or 33.2% of revenue for the second quarter of this fiscal year, an increase of $470,000 or 20.1% compared to $2.3 million or 31.8% of revenue in the second quarter of fiscal year 2018. The increase in SG&A expenses comes from increased licenses and commissions on sales, wage and salary increases from stock compensation, increased cost of new and full-time CEO and increased FTEs and there are attendant insurance-related expenses as well as higher percentage of G&A allocated from scientific personnel during the period. We also incurred higher than normal recruiting expenses during this period. Our research and development during the period, we incurred approximately $1.3 million of R&D expenses of which $724,000 was expensed or 8.5% of revenue during the period, an increase of about $240,000 or about 49.5% compared to…

Thank you, John. In summary, this was a strong quarter for the company. Revenue growth overall, especially in our consulting business was strong and came in at the high end of our historical annual organic growth range. Profitability and positive cash flow were good, and we are achieving this while making investments in sales and marketing, international presence and recruiting strategies that support future accelerated growth opportunities. We are well-positioned at the midpoint of our fiscal year. We'll now open the call up to any questions that you might have.

Thank you, Shawn. [Operator Instructions] We'll begin with a question by Howard Hapler. Please stand by. What are the sales and marketing initiatives designed to drive future growth? Shawn O’Connor: Well, we touched several of them during the course of the call today, business development resources on the software side, we've added a new employee into the sales side of the organization there. On the consulting side, hiring consultants, seniors, more senior consultants that have business development skills and can interact with clients in terms of identifying and pursuing new business is an important component of the way the consulting business operates, and we've had some success adding there and we're looking to add more into the future in terms of senior scientific staff. Very, very competitive market for these profiles and individuals, but they are critical to supplying the demand -- securing the demand to feel the growth on the consulting side of the business. We're establishing some presence in Europe. The opportunity to be face-to-face with clients that are located in that region is important, easing the ability to attend conferences and other networking opportunities that highlight and bring forth project opportunities and allow us to pursue them is one component of our sales and marketing initiative as well. We've completed opening up our distributor lines in Asia to the DILIsym side of our business. These are some of the examples of our marketing endeavors that we're trying to focus on. We're focused on presenting our combined skills, products, and services to our clients, and we're seeing a bit of an uptick, some examples of where some synergies are coming to reality in terms of clients that are engaging in one of our division's services and that's leading to opening the door for another division's services as well. So, looking to leverage those opportunities that have been percolating for some time there. These are examples of our investments on the sales and marketing side.

The next question is with the addition of personnel to the consulting services organization, is the structure changing or evolving? Shawn O’Connor: We've made no structural or organizational changes, if that's the question. We still operate in our three-division format. Consulting services are offered out of three -- each of the divisions. We try to work together as best we can, look for opportunities as I just referenced in terms of leveraging in the face of the client, the opportunity as we expand geographically into Europe with more staff as we bring on more consultants. Obviously, the organization needs to evolve with that in terms of its management structure and the way we operate, but I would say that at this point in time, there’s been no major structural changes -- organizational changes in that business.

And I'm not 100% clear if this was the intention of the question, but maybe just talk as far as the expectation internally as far as how the structure of software versus services that you feel the company will look like in the next 12 to 24 months. Shawn O’Connor: Well, I think, we've organized ourselves as a result of the acquisitions into three divisions and are working to identify the synergies there. I've been a believer in my past history of looking at the business not just from its divisional structure but looking at the business from its business line structure, its portfolio of products and services, and optimizing the software business and getting the synergies that exist across the entire portfolio of those products. Similarly, on the consulting side, look at the consulting business and drive towards optimizing that. And I think that's something that's new that I brought to the table here and something that we'll look to leverage as we move forward.

Thank you. Next question is, how is growth progressing in Korea, India, and China? These are all recent areas that we've added some new basically structured growth for the software sales.

We sell through to the Asian markets our software products through distributors in those regions, some of them longer term than others. Korean distributor is the newest, they have been climbing the learning curve and building a pipeline and we've had some recent success there. I referenced China, the FDA success that we had in terms of licensing more units of several of our software products into the FDA organization there, which is very leverageable in that market. China is the second largest of our markets in that region. The growth opportunity there looks very positive. Japan is the largest market. We had success during the quarter in terms of growing units in that region. That's been our strongest region historically. And on the Indian side, in the Indian market we've had success as well. I think Asia is going to continue to grow maybe at a pace greater than our overall growth and contribute to the success of the organization going forward. One of the things we'll have to look for in the future is in terms of the consulting side of the business there, that's a little bit more challenging. Historically, companies with large profile have required presence there in terms of consultants that are used locally more so than reaching out to the U.S. market, and that will be a challenge on the consulting side, but certainly the software growth in the market is moving very well.

Thank you. The next question is the Buffalo Cognigen division poised to sustain double-digit revenue growth for the second half of 2019?

Well, we certainly took a great step-up here in this quarter getting to the 23% revenue growth level. The division has typically performed in the double-digit growth range, but hasn't for a couple of quarters, the first quarter of this year and the last quarter of the last fiscal year. And I think we're challenged in terms of capacity. Our recruiting pickup here over the last six months really has contributed to providing them the resource to support growth. As I've said before, the market is very robust out there, and the demand for these types of services exists. If you can go, A, secure them, B, in the right sales and marketing position to secure that business and to have the staff to deliver the projects. And I think we're impacting both of those variables here at a positive way. Can it grow double digits going forward? I would certainly hope that that will be the case going forward. It certainly has been there -- history in the past and I think we've addressed at least partially some of the issues that have constrained them here in the last six months and allow them to return to double-digit growth going forward.

Thank you, Shawn. The next question is for the Lancaster division, what does the consulting service pipeline look like compared to the first half of 2019? I think there maybe -- okay, for the second half compared to the first half.

The pipeline is -- the opportunities in terms of the consultants to work in that area exists and we're looking for more resources Lanc and our Buffalo division to add to the team there to increase our capacity. The other dynamic that exists there is that we are utilizing some of those resources on the internal project called refactoring, which is a major project we've undertaken to rewrite the GastroPlus platform. And so, we're balancing the two demands there. The pipeline exists. I believe that their growth in the back half the year will be positive, unlike the step down that we took in the second quarter. Third and fourth quarter pipeline should support positive year-over-year growth in the second half of the year and that's where we stand.

Thank you. Next question is, are you looking to improve the consulting services gross margin in Cognigen over the next year?

Well, they improved here in the second quarter and stepped up quite nicely. I think the margin in the consulting businesses is, all are I'm sure aware, is going to be less than the software revenue margins that we enjoy. But consulting margins can typically be run in the 60% gross margin level and that would be our target going forward. When you are accelerating your recruiting you encounter some additional costs as those new recruits come on board. A, have a ramp-up period in which they integrate themselves into the practice and become or achieve the billability targets that you're looking in the long run, there's a ramp-up timeframe there. Two, it's a marketplace in which the resources are scarce. And so, we'll get the added expense of not just some recruiting expense, but also the fact that it's a dynamic market in terms of compensation. So there's a number of pressures there that make the margin -- and pressures on the margin in the consulting side of the business. But once you climbed up and are recruiting at a steady state on an ongoing basis, those tend to be very manageable and allow you to achieve that 60% gross margin level. I'd expect that in the long run, we will be able to achieve that.

Thank you. The next question is what is the status of software applications in the missile guidance, in the MRI and other opportunities that we have discussed in the past?

Yes, not a primary focus for the company right now. We're still looking for ways in which to acquire our data mining, our AI capabilities going forward. But in this past quarter, I would say that our progress in that regard has been minimal. We are still looking for an opportunity to leverage our capabilities, but no progress to report at this point.

Okay. In conjunction with that question, there's question as far as, could you please elaborate a bit on the AI machine-learning capabilities developed by SLP?

Well, we've developed these techniques and capabilities, and they're embedded in our ADMET Predictor capabilities and elsewhere in the software products. AI and data mining is a hot buzzword today, but it's been something that has been technically worked for many, many years before it gave these labels and the excitements. And in many regards, we are one of the more realistic leaders in that field in the pharmaceutical industry. There's a lot of focus, a lot of investment, a lot of effort underway in that space. And we're looking for the right opportunity to leverage what we do in a commercial way that can lead to real business revenues and margin and profit going forward. And I expect that we will at some point identify and move forward on that, but we're being cautious in terms of where we place our investment dollars right now.

Thank you. Next question. Could you comment on the competitive environment and any changes that you're seeing there?

No new news to report there in terms of any new players. We certainly on the software side have the field of small niche players that are competitors out there. The competition that's provided from the larger players Certara in terms of their Simcyp application, nothing new to report there. On the consulting side, it's a very dynamic market, and we -- from a competitive point of view, certainly there are multiple bidders in terms of each opportunity that exists out there, but it's a market that there is plenty of opportunity for all of us to play in. And I think we really stand out today. We need to leverage it and do a better job of leveraging it going forward. We stand out in the context of the breadth of our capabilities that run from PK/PD modeling through to mechanistic modeling and PBPK modeling capabilities out there. And so from a competitive point of view, I feel very confident in terms of our ability to line up against any potential competitor in this space.

Thank you. The next question is what is the status of PKPLus at this point?

PKPLus is still growing. We're adding licenses on a quarterly basis at a -- I think, a good quarter in comparison to our previous quarters, but it's growing off of a very small base. And so it'll find its footprint out there, and it's slowly growing. Not a significant or material contributor to revenue at this point, but we continue to see it grow.

Thank you, Shawn. At this point, it looks like there is no further questions.

Very good. Well I appreciate everyone's attention. It's been a great quarter for Simulations Plus; look forward to reporting progress at the end of the next quarter. Thanks, everyone.

And this is the final comment. Before we close, the company will be presenting at the Investor conference of B. Riley on May 22 and 23 in Beverly Hills, and this concludes today's conference call and webinar. If you missed any part of today's presentation, the replay will be available at our website, www.simulations-plus.com. Thank you for joining us today.