Walt Woltosz - Chairman & Chief Executive Officer Ted Grasela - President John Kneisel - Chief Financial Officer John DiBella - Vice President of Marketing & Sales.

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Good afternoon. It is Tuesday, November 25, 2014 and on behalf of Simulations Plus, I welcome you to our fourth quarter and fiscal year 2014 financial results conference call. Chairman and Chief Executive Officer, Walt Woltosz; and President Ted Grasela will be presenting this afternoon.

Joining then as panelists are Chief Financial Officer, John Kneisel; and Vice President of Marketing and Sales, John DiBella. An opportunity to ask questions will follow the presentation.

You may send your written question using the questions pane on your control panel or if you’d like to ask your question directly, please simply use the hand-raising icon on your control panel. If you are using a telephone 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. It’s now my pleasure to turn the presentation over to Walt Woltosz..

Thank you Renee and welcome everyone to the last of our conference calls with only Simulations Plus. The next conference call will be a combined Simulations Plus and Cognigen quarterly report. We will have Ted talking on a few slides today about the acquisition of Cognigen and the impact of that we see going forward.

We were nearly through our first quarter of the combined companies, but we don’t have any numbers that we can release to the pubic just yet. We will have preliminary revenues after November 30, as we can consolidate all of the estimates for consulting projects. So as usual, I’ll read the safe harbor statement, got to keep the attorneys happy.

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. So to begin with the fourth quarter, which is June, July, August for us, to sum -- it’s our slowest quarter each year because it’s the second quarter.

Comparing 4Q ’14 to 4Q ’13 ’14 was our 28th consecutive profitable quarter and a new record fourth quarter. Our revenues just missed $2 million, so $1.997 million that was a 27.4% increase, $430,000 from $1.568 million.

Now that’s a little higher than the preliminary revenue announcement we made at the end of August, because as we went through the final annual review of deferred revenues on multi-unit sales, we ended up recognizing $190,000 revenues during the fourth quarter. Without this adjustment, revenues would have still went up approximately 15%.

Gross profit, a little over $1.5 million in 4Q’14 versus about $1.3 million in 4Q’13, up 22.1%, primarily because software-licensing revenues increased. In 4Q’14 we did advertise $150,000 to the expense, the buyout of a formal TSRL agreement. That’s going to be the same number going forward every quarter until its completed. It’s $150,000 per quarter.

The fourth quarter being the slowest quarter, if you compare that to last year in 4Q’13, the royalty payout was $80,000. However if you look at it on an average across the fiscal year, FY’14 royalties, going to be a formal agreement would have averaged approximately $171,000 per quarter. Well that will no longer happen now.

We’ll just have the flat amount of $150,000 per quarter that we will amortize. Thankfully when that’s paid off there will be no amortization and we will have the benefit of not paying any royalties or amortization.

Our SG&A did increase about 23.4%, but as a percent of revenues it decreased to $53.1 million from $54.8 million in 4Q ‘13 and 85% of the increase was due to one-time costs associated with the Cognigen acquisition, so this was an extensive [ph] due-diligence process, a lot legal work.

Since we didn’t acquire assets, we actually acquired the corporation, it requires quite a bit more due-diligence and payments layers and audience and so on to get it with [income rate] [ph].

R&D expense increased just over 20% to $202,000 from $168,000, primarily because of the expanded staff and of course [indiscernible] related sales and benefits were up a little bit too. Continuing operating income increased $45,000 or 18.3% to $288,000 in 4Q’14. Income tax increased $67,000.

In 4Q’13 we actually had a credit of $2,000 for our taxes rather than the payout and that was based on some year-end tax adjustments we had I guess overpaid a little bit earlier in the year and so when we got to the fourth quarter we ended up with a credit.

Our net income decreased 8.9%, and again the expenses from the acquisition of Cognigen, as well as the amortization of $150,000 in the fourth quarter being higher than the previous year’s $80,000 in royalties will contribute to that.

Diluted earnings per share, about $1.03, a decrease from $1.05 for the same reason and we did distribute our dividend of $0.05 a share during 4Q’14 and of course we distributed another one just earlier this month in fiscal year ’15.

The income statement, you will see side-by-side the numbers here, gross profit margin in ’14, 76.9% compared to about 80% last year. On the higher sales, again the amortization of $150,000 would have had an impact on there.

SG&A, we see the increase there at R&D, total operating expenses and one related to the bottom line; net income of $223,000 in the fourth quarter versus $245,000 last year.

Looking at the entire fiscal year, comparing FY’14 to FY’13 sales increased by $1.4 million or 13.8% to $11.5 million from $10.1 million and of course this is the new first fully year record.

The cost of sales as a percentage of sales decreased 1.3% or $17,000 to 14.2% from 16.3% in last year’s full fiscal year, and this was attributable to a reduction in royalty expenses, basically due to the buyout of the TSRL agreement. Gross profit increased 16.7% to $9.8 million from $8.4 million.

Gross margin increased to almost 86% from just under 84%. SG&A increased 25% to $4.4 million from $3.5 million as the percent of revenues increased to 38.7% from 35.2%. Again, marketing and travel [indiscernible] one time consulting and professional fees that’s related to the Cognigen acquisition accounted for a very large part of the increase.

Continuing with the fiscal year comparison, R&D expense increased 18.7% to just under $1 million from about $800,000 in the prior year. Again, we increased the staffing in life sciences and we’ve also included some R&D expenditures for our second NCE project targeting COX-2 and COX-1 and that was about $50,000.

Our net income increased 4.8%, about $130,000 to $3 million in fiscal ’14 from $2.7 million at fiscal ’13. I think that percent doesn’t look right. We went to $3 million from $2.7 million, that’s an increase of $300,000. John K, can you double check that while I continue. That should be about a 11% increase.

Our diluted earnings per share was $18.44, an increase of 0.75% from $17.69 in fiscal ’13. We do have more shares this year than we had last year as well. And all together during the fiscal year we distributed cash dividends of $0.19 a share for the entire fiscal year.

Looking at the income statement for FY ‘14 versus FY ‘13, we used the same numbers I’ve just been through. I’ll give you a second to look at it side-by-side. It’s a little easier at least for me to see it in this way than lines of text.

John K, did you have anything on that?.

No, it look like number looks – percentage looks correct Walt..

Well, if we go from $2.7 million to $3 million, that’s an increase of $300,000, that’s more than 10% of $2.7 million. .

It was $2.886 million last year and it was $3.025 million this year for net income..

Okay, so that $2.7 million – that should be at $2.9 million..

That should be a $2.9 million that’s correct..

Okay, looking at revenues by quarter, a very steady climb quarter-over-quarter. In the normal accounting instance, its a little higher rate of increase in the last two quarters compared to the same quarters of the previous fiscal year. Gross profit by fiscal quarter, again a very similar trend. EBITDA by fiscal quarter jumps up and down a little bit.

Just a variety of expenses, R&D, tax credits and things like that. Well, that wouldn’t affect that. Probably there we are looking at variations in capitalized software developments cost as we shift staff between marketing and sales activities, which are expensed and development in new software capabilities, which can be capitalized.

And those do vary on as we – yes..

The amortization of the TSRL agreement is also in there this year..

Oh, thank you, you are right. And then net income by quarter that was definitely impacted by the tax change from last year, where we had a credit last year and this year we had to pay some taxes. New customers by quarter, this is especially encouraging. If you look at the total for this year, we are what, 37, 57, 77, 85 new customers this year.

This means a new company or a completely different department in a very large organization, but essentiality it is a new customer and a very nice increase in the number of new customers that it tells us we are still along ways from saturating the market.

We believe that the pharmaceutical industry is still very far behind aerospace and automotive and other industries in the use of Simulation and modeling and that the future is going to be very bright and now with the addition of Cognigen we have a broader set of offerings that incorporates Simulation model.

Our balance sheet items; cash as of August 31, $8.6 million and I forgot to change the footnote here, cash as of today is $5.6 million, because since that footnote was made we paid out over $2 million towards the Cognigen acquisition and about $800,000 in dividends and you will see that on the slides coming up.

Our shareholders equity per share, a nice increase from $0.87 a share to $0.94 and of course the shareholders equity itself increasing from $4.2 million to $15.4 million. Current ratio remains very healthy at about [8.3] [ph] and returning cash to shareholders. So you will see the $8.8 million there and then you see the decrease, net of $5.9 million.

We used $2.1 million for the Cognigen acquisitions that was paid out so far and you can also see about $820,000, down around the bar and the line that was paid out after the close of the fiscal year in dividends. Our product and services remain essentially the same with two changes from last time around. One MembranePlus has now been released.

We used to have those stocks rated out. It’s now right up there with the other, so we do have a new software product that has just come on line in the past few weeks. And also in our consulting services and collaborations we now include Cognigen for consulting services in clinical pharmacology, which is the vast majority of their business.

As far as our software products, we did release Version 8.6, just a month there, I believe it was September or October. We added population simulations to drug-drug interaction predictions. So you can now see how the interactions might behave across the population of subjects.

We added some new animal models for our physiologically based pharmacokinetics and we have a little tighter integration with the predictive models and our ADMET Predictor programs.

Some of that sciences can import as structured drawing and using the ADMET Predictive property predictions, automatically create a GastroPlus database with almost every property that you would need to run a simulation, including the metabolism by the major shift enzymes, a particular class of enzymes that seems to be the dominant ones in metabolizing the in most drugs.

For ADMET Predictor we released Version 7 in March of the fiscal year and then 7.1 in July. This included a very important enhancement to our pKa model.

This is a model that helps predict how molecules ionize has pH changes if you are in the more acidic environment or more basic environment and that’s quite important, especially for oil absorption, where you have an acid environment in your stomach and that more basic environment in the intestines.

It can make a big difference in how the simulation behaves. If you get that right, then you are able to get a lot of the other properties predicted more accurately. So we did have some effect to retrain all the property models, so that the ionization effects from the new pKa model could be reflected in those other models.

We’ve got some new models for different transport of proteins, some new toxicity models and we significantly improved and expanded the database that we used to predict the metabolism and so that metabolism predictions now are significantly better than the previous version that has smaller training sets.

The MedChem Designer Version 4 and MedChem Designer 3 were both released this year. I’m sorry, it should be MedChem Studio Version 4 and MedChem Designer Version 3 that were released in May.

There’s are new feature now where a chemist or a scientist can capture a drawing of a molecule from a document, from a published document or another power point file or something like that, and this optical structural or recognition feature will turn that drawing into a computer representation of the actual molecule.

That’s a very significant time savings in the past and scientists will typically have to redraw the molecule and this could be very tedious if your doing very many of them, the analysis basically take a picture and the program converts that for you. It’s a very unique capability.

There are few others out there, but this one appears to be doing the best job of the ones that we know about. We do have some ultra-fast screening methods where we have large molecular libraries and now we do 64 bit versions that allows the program to hit an even much larger libraries than the earlier 32 bit versions.

DDDPlus Version 4, we added virtual trails, so that we have – its almost like a population simulation in GastroPlus where we simulate a bunch of human subjects. Well, in DDDPlus we are simulating, repeating the experiment.

We know that when we run dissolution experiments over and over you don’t get exactly the same result each time, because certain things will vary and so this allows the scientists to anticipate what kind of variance they are likely to find in actual dissolution experiments.

We are adding the ADMET Predictor module as we have in GastroPlus, so that we can use predictive properties or some of the properties used in DDDPlus and we continue to see a growing customer base for DDDPlus. Including the FDA who I think has the largest number of DDDPlus licenses of any single organization.

MembranePlus was released this quarter shortly after the close of the fiscal year ’14 and this allows us to simulate permeability experiments in the lab. So this is somewhat similar to DDDPlus, expect in DDDPlus there is biology involved.

In MembranePlus we have a layer of cells typically that we are simulating and how the drug will permeate through the cells and how it will be affected in different ways by the experimental set up or via transporter proteins or enzymes in the cells.

In here, are using this tool along with GastroPlus, we expect to be able to more accurately predict the in vitro - in vivo extrapolation and we decided we’ll take the lab results and use that to predict what’s going to go on in a human subject or laboratory animal for absorption of drugs.

And this was validated with a very nice data set of 44 compounds from our friends at Absorption Systems in Exton Pennsylvania, widely recognized as the standard for a certain type of cell culture called Caco-2. That would be one of the primary types of experiments we would stimulate with MembranePlus.

I’m going to ask Ted to cover the next few slides and give you a little overview here of Cognigen Corporation. Ted..

Thank you, Walt. As Walt just indicated, we focus on clinical pharmacology cliental, mostly as our clinical development after the compound was first introduced in demand, all the way up until the time that a new drug is submitted to the FDA for consideration for approval.

We are actually the first contract research organization to offer pharmacokinetic and pharmacodynamic modeling simulation services to that clinical pharmacology community.

We have been business since 1992 and currently have 35 employees; about third of them are scientist, about a third will be the programmers and about a third our administrating support and my group in here are IT professionals who are responsible for keeping our systems up and running. Next slide please. Can you switch the – thank you Walt. .

I did. It took about five seconds to change..

Yes. So just giving you an idea of the scope of our activities, we provide various kinds of modeling and simulation support for about 30 to 40 drugs per year and we work on a total of over a hundred different compounds over the last five years.

We like to explain that number, because it demonstrates the depth and breadth of our experience and the variety of different kinds of clients and situations that we’ve worked in. We do in fact crossed all of the stages of development, a little bit of pre-clinical work, but mostly during the clinical phases, Phase I through IV of clinical development.

One of the reasons why clients like to work with us is because of the well-established quality management system that we’ve put in place.

We are audited regularly by our clients, both new clients who want to make sure that we’ll deliver a quality product, as well as clients that we worked on in the past, who are simply checking to make sure that we follow our procedures.

We’ve had 44 of these client audits over the last 10 years and in all of them we passed very successfully with no findings. All this adds-up to a track record of successfully supporting regulatory filings from pharmaceutical companies and we worked on more than 25 of these regulatory submissions over the last five years alone.

This slide is just in attendance to give you an overview of the different kinds of therapeutic areas that we’ve worked in. Really, quite a broad range; everything from neurology to oncology, cardiology, infectious disease and most recently we’ve been working on a very large project with a Fortune 100 company to help get a new drug for osteoporosis.

Next slide. I just wanted to give you an idea of the kinds of systems that we have in place. We recently made a significant investment in our great engine, the oxys [ph] to the right, and that’s the basis for all of the heavy-duty computing and modeling simulation activities that we do.

We have developed a product we call KIWI, which is the way that our scientists access that grid, submit complicated modeling runs, receive that date and then organize it and present it to our clients.

This has been very successful and a very valuable tool to us internally and we are now beginning to explore some of that to the modeling simulation community on the outside..

Okay, thank you Ted..

Thanks Walt. .

I just realized with Ted there that when I make the slide change here, I can take as much of seven or eight seconds before you even see it in time, I try to allow for that. Marketing and sales, John D would you like to talk about this one, John DiBella..

Sure, I’d be happy to. We’ve continued to be aggressive with our marketing programs over fiscal year 2014, both through our attendance at conferences and also through online initiatives.

In fiscal year 2014 we averaged approximately four conferences per month around the globe, with an even split between those focused on discovery research, which would be the cheminformatics software program we offer and also the development research activities, which would be more focused on a simulation tools.

At those conferences our scientist presented 30 posters or podium presentations on different applications of the products, which is certainly helpful for marketing efforts, and we are also excited to say that we begun to attend conferences focused on the new extensions of some of our products, namely the aerospace and MRI Modeling initiatives that I think Walt will talk a little bit more about coming up.

We’ve identified the importance of educating and training scientist as a key driver for greater adoption of our modeling and simulation technology and because of this we’ve decided to increase the number of onsite trainings at client sites and also the workshops that we host at various locations around the globe.

The workshops in Europe and North America which we hosted in 2014 were at full capacity and we also saw overflow crowds at our Asian courses, and we just finalized a full slate of workshops which are going to be scheduled for calendar year 2015.

We see the majority of evaluation requests for our software directly coming from the webinar series that we, and also our friends at the GastroPlus user group had started over the past two years. In fiscal year 2014 we hosted together seven webinars and had over 1,100 scientists register.

And we also continue to be very active on social media, which has helped us with our messaging efforts and various outreach programs. We continue to form and cultivate strong relationships with regulatory agencies around the world, and in particular the U.S. FDA.

We now have actively three separate collaboration projects, which we are working on with the FDA. One of those focused on building toxicity models with the Center for Food Safety and Applied Nutrition and that one I believe is entering year three of a five-year collaboration.

A second one that we announced back in March is focused on the validation of Mechanistic Absorption and PBPK modeling, Physiologically Based Pharmacokinetics Modeling to assist with formulation design efforts and so this one is going to be very helpful for those companies focused on generic product development, also companies or departments at companies focused on product development research.

And then finally, we have a new funded collaboration on the use of Ocular modeling to assist with the design of products for delivery to the eye.

We are specially excited by this last opportunity as of course its funded and then also its going to help with our expansion into the alternative delivery routes and being able to model those, whether its Ocular.

We continue to work on our own and through collaborations with pharma companies on pulmonary, dermal, oral cavity delivery models, and once we have these finalized, it should help us with our penetration into new markets. The consulting services division at the company continues to stay busy.

We have five active projects right now and four more in the proposal stage, and these active projects cover different applications of the products and include both large and small pharmaceutical companies. So we are able to reach a vast audience with the consulting services that we offer.

And finally, we believe that there is a fundamental shift which is continuing and we are continuing to be excited by the growth opportunities as more and more companies, both inside and outside the pharmaceutical space make greater use of our modeling and simulation technology.

The GastroPlus user group, which was formed at the beginning of 2013 by users at 17 different companies, now has over 560 members linked in at their user group site.

And the user group just last week hosted a webinar with FDA scientists as the speakers and there were over 450 scientists who registered to hear how the FDA is applying this kind of technology to assist for some of their internal research. So that was a really big webinar for us.

In calendar year 2014 there also have been over 50 peer reviewed articles from our clients that cite different applications of our software which have been published, plus our clients do a really nice job of presenting at different conferences as well. So they are very good mouthpiece for us as they become more and more familiar with the software.

So through the user group, through this fundamental shift in general as Walt mentioned in an early slide, we’ve seen a significant increase in the number of new customers licensing our software, with meaningful growth seen in all territories around the world and especially over in Asia. Walt.

Thank you, John. Thank you very much. Allowing a few seconds for the slides to catch up on the other end of the wire here. Additional growth opportunities, MembranePlus we mentioned was just released just after the end of the recording period, the recording months for fiscal ’14.

So our first new software product in about 10 years, we have many enhancements of our existing products over the 10 years, a tremendous number, but as a completely new product this is the first one, so we are very excited about that.

We’ve had quite a few enhancements of our current products, especially in GastroPlus we have funded collaborations from two different large pharma companies, one for dermal and one for improving the oral cavity dosing. So on top of the tongue or under the tongue or patches that attach to the inside of your cheek, they call it the buckle patch.

Those collaborations were actually funded by those companies recognizing that once they are done and released, they are available to other companies to license as well.

We are finishing up the addition of biologics or antibodies to GastroPlus as these are a completely new area, the biotech area, monoclonal antibodies or the term, quite a strong presence in the pharmaceutical industry.

Stimulating how they behave in the bodies is very different from how they stimulate the behavior of small molecules that we’ve been doing traditional amounts that [indiscernible]. And we see another growth area as the addition of larger animals such as horses, swine, cows for example.

Even I’ve been told there is an interest in not only the behavior of drugs in these new animals. If you have a sick elephant, which can happen, how do you know how much of a certain medication to give that thing. So these are potential growth areas.

Also in the penetration of clinical pharmacology departments, we have seen a few clinical pharmacology departments, including with the FDA beginning to look at more detailed mechanistic modeling, such as we do in the GastroPlus and the acquisition of Cognigen leads right into this very nicely.

We had a meeting with the FDA earlier this year; another one with the NHRA in England and all this focus is specifically on this topic; how to get physiological base pharmacometric modeling used more in clinical pharmacology for clinical trial data in that.

In cloud offering, Ted mentioned that Cognigen has its own grid where you can call it a cloud as well. A different terminology, but basically the same capability. So we are also using the Amazon cloud to offer our software and services, and especially for training its turned out to be a very nice environment.

So its easier to setup a group of 30 or 40 people on a cloud and then make sure that all the files that they need are there in one place than to try to get everything loaded on 30 or 40 individual machines. AEROModeler is a prototype that we’ve developed.

It’s a new software product that predicts aerodynamic force coefficients for missiles that remain mach number and angles of attack. Our set seen below – I ended up pulling out a slide for that. It just got to be a little bit too detailed for this type of call, but I’d be happy if anyone wants any technical information on that.

We did present a scientific poster about this product and the results we are getting at a conference in Huntsville, Alabama back in June. We’ve had quite a bit of interest there. There are some other aerospace opportunities, again see below, I should have taken it off.

This basically relates to different ways of applying the artificial neuro network engine that we’ve had for a number of years in the ADMET Predictor. We sub-programmed that ADMET Modeling within ADMET Predictor. Its really a modeling engine.

It doesn’t care if you are taking about biochemistry or missile aerodynamics or magnetic resonance data or perhaps even the stock market, maybe that’s where we should apply it.

But this engine has been shown to be very, very powerful at ringing out good mathematical models for a wider variety of problems and the Aero Modeler and the MRI Modeler are two that we are putting the most emphasis on right now. We see a significant promise in both of those areas for potential new products.

So in summary, for fiscal year I see a profitable trend. In fact I think in the last 11 or 12 years we only had one quarter that had a little bit red ink, but everything else has been profitable. Again, record revenues in earnings, the buy out of the royalty agreement that is expected to reduce expenses going forward.

You can see for fiscal year ’14 the difference between $150,000 a quarter and $171,000 a quarter over the years, about $80,000-some difference and we expect that difference to growth. So that’s going to significantly help reduce expenses as we go forward.

We paid out cash up-front, bought some stock, set the tradeoff where it’s investing now for the future and we continue to be very optimistic about the future. We are continuing to grow. We added staff both in Simulations Plus and then added the entire 32 employee staff of Cognigen.

There was no person who lost their job as our measure, because we needed everybody. Both of the businesses continue to be busy and we expect both businesses to grow as we move forward. We are continuing to seek and interview additional scientists and engineers.

We have the philosophy that we got money in the bank and we’ll find someone who is smart, fits in, then we’ll find something for them to do. We’ll always have more to do than we can get around to. So we continue to look.

The life sciences teams and computing, the technologies teams continue to support marketing and sales and the marketing and sales staff is relatively small, because they have everyone else, who are scientists and engineers available to support them at the different conferences and workshops and the customers like that.

I’ve always believed in that, that the customers want to talk to the people who are developing the software and the ones who use it everyday and are quite expert at it and they would rather talk to someone like that than a sales person who maybe cannot answer all of the deeper technical questions through a pad.

We will continue our attendance to the conference and tradeshow and workshop schedule as John mentioned. We mentioned the workshops we have scheduled for 2015. This cash position continues to be strong and we are returning cash to shareholders in the form on dividends.

Its something we expect to continue, but it’s always subject to the Board of Directors approval at each quarter. Okay, that completes our formal presentation. We’ll now take a look at the questions here and lets see if I can go down the list here..

From Howard Hoffman, will FY ’15 revenue be broken out into two line items? I’m guessing software and consulting service. If so, what should we look at as the percentage breakdown? Ballpark, we are going to do the same thing we did when we had our Awards Plus subsidiary.

We going to break out both divisions, so that you can see how each division is performing and what they do.

So I’m expecting the Simulations Plus side to continue to look like you have seen in the past and that you will now see an additional reporting element for Cognigen, and of course we will report everything that is consolidated, our revenues, earnings and so on, so that you can see the breakdown between the two divisions.

I will make that very clear for everyone. Percentage breakdown, well Simulations Plus is mostly software and so that’s about two-thirds of the revenues, but a much higher percentage of the earnings because the margins are so high on software.

I would say the consulting part is probably going to be about one-third of revenues moving forward with lower margins and I can’t tell you what those margins are going to be yet. I think we’ll have to get few quarters under our belt here to see how that all works out. We do see some synergies between the two companies.

I know we can help each other, cross selling essentially from our customers to Cognigen and vise versa and so we are very optimistic about how things look going forward.

What should we look at for gross margins from software versus consulting services and for the combined company? I can tell you, for software again you saw our margins this past quarter were around 86%. I think that you know the low to mid 80’s is probably consistent for Simulations Plus. I’m not going to hazard a guess for Cognigen just yet.

I think we ought to wait and see how things work out after a couple of quarters and get a good feel for that number before making a guess.

Another question from Howard, what are the cross selling opportunities between existing offerings and the potential for new software or consulting services in the future? Well, we do have a lot of common customers, but very often our common customers are the same company name, but completely different departments.

So we do see as I mentioned, clinical pharamacologists now becoming interested in PBPK modeling, which is what Simulation Plus does and we see that some of them are not yet interested, but should be and so Ted and I made a trip to Japan here a few weeks back and visited a couple of his customers and then about six or seven I think of our customers.

We talked to them about the use of PBPK in clinical pharmacology and I can see that there will be opportunities there that we will have access to, that might have been very difficult to get through the door in both directions; Cognigen talking with our customers which is large, and there is also us talking with theirs. Some new software and services.

Well Ted did mention the KIWI software that they have developed and they have licensed that to at least one or two pharmaceutical companies, so that there is a possibility of that becoming a more significant part of Cognigen revenues in the future.

I won’t hazard a guess again as to how rapidly that might grow or maybe those earnings out of that portion, but there is a software element to Cognigen as well as the consulting. Another question from Howard. Have you migrated the patterns in this cloud network and what are the overall benefits? We have not yet.

We are in the process of working on that cloud. The Cognigen cloud network is a very secure network. As you can imagine, it has to be.

When Cognigen receives blinded clinical trial data, they are the first ones to unblind it and see what the likely result is over there, of a clinical trial that’s being conducted, even before the sponsor company would know and you know just how sensitive that type of information is.

So for us to be able to run a new Cloud, you got to be able to basically carve out a portion of the cloud that’s completely fire walled from anything else and be able to demonstrate to our users that we are not going to end up with information being accessed by someone that should not.

So its something – it’s a work in progress, its something we really would like to do, but we haven’t got it up and running yet. Donald [Indiscernible], a question sent to Renee several days ago. Your comment on recent Bill Gates announcement to increase substantially their investment for the malaria cure.

Gates’ approach has really not won so far – and when I say Gates, I’d consider the Gates Foundation approach and we have had contact with them a number of times and Ted has had contact with them too from Cognigen. We have not seen any enthusiasm for the molecule discovery type of activities that we demonstrated with our malaria NCE project.

Ted looked at them more as a potential source of work for the clinical pharmacology area as they get into that area.

Ted, you want to comment on that at all?.

Yes, we talked with them quite a bit about setting off a network for them. They have a lot of scientists who work around the world in different environments and we are talking about setting up a cloud application for them and this we are looking to see if we can help support various modeling and some simulation services that they require..

Thank you, Ted. Walter, as of September 1, 2014 after the merger, what was the value of shareholders equity? I did show the shareholders equity in earlier slides. See if anyone is there to back us there….

Walt, Walt….

Yes..

The amount of equity will increase about $3.3 million to $3.5 million the day after the date of the acquisition..

Okay. So we’re at what now? As of August 31 we were at 15.4, so we’re up to about 18 or 19..

Yes..

Okay, thank you. Another question from Walter Ramsey.

What was the software license renewal rate for the year? John DiBella, do you know that one?.

Yes. We were definitely within our historical norms. In terms of accounts, the renewal rate was around 91% for the year. In terms of fees it was a little bit higher, around 94%, 95%. So that means that most of the non-renewals were of the university non-profit type license. So renewals were very strong as they historically are..

Thank you. Again from Walter Ramsey, the company added 75 customers during the fiscal year.

What was the grand total number of customers? John DiBella, what’s our total number of customers?.

Well, remember when we say we added 75 customers that is new companies and then new departments at existing companies. So using that definition we are well over 200 now customers that license technology. I think we are probably close to approaching 250..

And that would be counting companies or departments, but without actual users, software users, where we gather are multiple users in most of these.

Any estimate there of the total number of users of Simulations Plus software?.

Well, if we want to think in terms of license, there are approximately 700 or 800 licenses that have been purchased by companies in fiscal year 2014. And so for use, I like to use as an average maybe three users per license. So we are probably looking at well over 2,000 people who have access to the software..

Thank you John. Don [Indiscernible] asks what is the status of the COX-1 and COX-2 molecular project. Are you talking to any companies interested in pursuing it? Again, these NCE projects were not intended to sell molecules, to sell our molecule designs.

They were intended to show what our software can do when you apply it to a situation where you have a certain amount of seed data which you can begin with, where you can build activity models for some existing molecules against a particular target or for COX-1 and COX-2 different targets and then design new molecules from what you learned from the old ones.

This is how the industry worked. Your constantly building on what you learnt last time around. So we have not been really actively seeking anyone to turn to the COX-1 and COX-2 molecules further and develop that. We go out and present and we talk about what we do and we don’t have any activity pursuing selling the modules at source.

Rob Ray [ph], how many more quarters will $150,000 agreement expense with the TSRL incurred.

John K?.

That’s a 10-year amortization period, so 10 years less one quarter basically..

Okay, thank you. One from Ramsay, will software prices increase during the fiscal year. Are there plans to raise them in the current year? John D, are you making any comment on that? I don’t think you we said anything publicly..

Well, I think we certainly mentioned that we’ve decided to evaluate software license fees every other year and so we did evaluate the software fees starting around the beginning of calendar year 2014. So about one to two quarters into our fiscal year and we did identify some changes to those prices.

I don’t expect us to reevaluate those in fiscal year 2015. The next period would be the beginning of the calendar year 2016..

Thank you.

What percentage of sales were international from Walter Ramsey?.

Yes, I can give an estimate. The international sales were greater than the sales in North America. So I think North America is somewhere around the 45% level.

I think we are getting close now to an even split in terms of the revenue seen between Europe and Asia and by Asia we are going to be lumping in Japan, India, China and Korea as the four major countries there.

But it’s about close to 50% for North America and then evenly split between Europe and Asia and that’s a big jump for Asia over the last couple of years..

Thank you. Then the last question I see right now, Walter Ramsey. Are the new software customers mainly purchasing through the cloud and is cloud pricing the same? No, they are not really purchasing from the cloud. I don’t know that anyone yet has purchased. We have been using the cloud for evaluations and training.

John, you want to comment on that, John D?.

The new customers have still been purchasing the standard server licenses or stand alone licenses, but we have now had two existing customers make the switch over to the cloud. So we have identified a pricing plan to offer the software on the cloud. Right now its still through Amazon web services.

We’ll have some discussions internally about what we can do with the Cognigen cloud. The pricing for the licenses are the same and then there are additional fees that are tagged on for providing services from our end to host and manage that server..

Great. Okay, that’s the end of the question list I should say that I see, and so I want to thank everyone for attending today. Our next conference call will be in January for first quarter Q1 of FY15. And we look forward to talking to you again then. The slides will be posted with an 8-K here probably later today. Renee..

Thank you Walt. Before we conclude, we’d like to mention a few upcoming investor conferences. We’ll be presenting at LD MICRO in Los Angeles on December 3.

On December 11 we’ll be attending The Benchmark Micro Cap Discovery one-on-one conference in Chicago and on January 12, 2015 we’ll be presenting at Sidoti’s Emerging Growth Institutional Investor Forum in New York City. So with that we conclude today’s conference call.

If you missed any part of today’s presentation the playback will be available at our website www.simulations-plus.com. Thank you for joining us today and may all of you have a very Happy Thanksgiving..