EX-99.1 2 simulations_8k-ex9901.htm INVESTOR PRESENTATION simulations_8k-ex9901.htm
Exhibit 99.1
 
Investor Relations
3QFY08 Conference Call
July 15, 2008
 
 

 
 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; the Company’s ability to identify, evaluate,
 and close suitable acquisitions; 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.
Safe Harbor Statement Under the
Private Securities Litigation Reform Act
of 1995
 
 

 
Introduction and Welcome
 Introduction and Welcome
 Agenda
  Third Fiscal Quarter FY 2008 summary
  Strategy Going Forward
  Questions and Answers
 
 

 
Third Fiscal Quarter 2008 Summary
 Gross revenues = $2.97 MM (increase of 12.8% from 3Q07)
  Pharmaceutical software and services = $1.97 MM (up 19.0% from 3Q07)
  Record high quarter
  Words+ subsidiary = $993,000 (up 2.2% from 3Q07)
  Record high quarter
  Shipments of Say it! SAM products going well, PDA shipments more than 80%
 higher than last year’s first three quarters
 SG&A = $942,000 (31.7% of sales, down from 33.6% in 3Q07)
 R&D Expense = $222,000 (down 2.0% from $227,000 from 3Q07), but total R&D
 expenditures up 19.9% including capitalized software development costs
 Income Before Income Taxes = $1.19 MM, an increase of 18.5% from $1.00 MM in
 3Q07
 Tax rate of 37% used for the quarter to bring ytd to 32%
 Net Income = $753,000 ($0.042/FD share) a decrease of 3.8% from $782,000 or
 ($0.043/FD share) in 3Q07.
 Cash = $5.99 MM (up 97.0% from $3.04 MM in 3Q07 and up 31.9% in the first 3
 quarters)
 Shareholders’ Equity = $9.69 MM (up 26.4% from $7.67 MM at the beginning of the
 fiscal year)
 
 

 
Nine Months 2008 Summary
 Gross revenues = $7.13 MM (increase of 7.7% from 3Q07)
  Pharmaceutical software and services = $4.96 MM (up 15.7% from 3Q07)
  GastroPlus and ADMET Predictor are the major contributors to the increase.
  Words+ subsidiary = $2.17 MM (down 6.9% from 3Q07)
  Say-it! SAM PDA shipments have accelerated to over 80% greater than last year
 SG&A = $2.71 MM (37.9% of sales, down from 38.9% in 3Q07)
 R&D Expense = $700,000 (up 11.7% from $627,000 in 3Q07)
 Income Before Income Taxes = $2.3 MM, an increase of 17.5% from $1.95
 MM in 3Q07
 Net Income = $1.56 MM ($0.085/FD share) an increase of 2.5% from $1.52
 MM or ($0.086/FD share) in 3Q07
.
 Cash = $5.99 MM (up 31.9% in the first 3 quarters) and cash today is over $6.7
 MM, up 47.6% year-to-date
 Shareholders’ Equity = $9.69 MM (up 26.4% from the beginning of the fiscal
 year)
 
 

 
Income Tax Discussion
 After the tax issues we had last year, we hired two different
 tax expert companies to analyze our taxes:
  A company to work on our deferred tax analysis every quarterly report
 and to prepare our income tax returns
  A tax credit specialist company to find potential unused tax credits
  At the last conference call we had an estimate from this consultant of about
 $360,000 in R&D tax credits. After a couple of additional months of work,
 the final number turned out to be about $270,000, or about $90,000 less
 than the initial estimate. Estimates are just that - estimates. In this case, it
 was a bit high.
 Our increased profitability results in a smaller relative percent
 contribution to reducing our taxes for the credits we have
 The net result is we had to use a tax rate of 37% for this
 quarter in order to bring the average for the first 9 months to
 32%, which is what we expect for the full year.
 
 

 
Guidance
 Revenue guidance provided during last quarter’s conference
 call was for an additional $1 million in consolidated revenues
 As of the end of the 3rd quarter, we are $510,000 ahead of last
 year
 Although we are working hard to achieve the additional
 $490,000 we would need in the 4
th quarter, the low first two
 quarters our Words+ subsidiary experienced are making that
 difficult.
 We expect the 4th quarter to exceed last year’s 4th quarter, but
 we will not provide a specific target at this time.
 We believe the excellent growth in shareholders’ equity and
 cash demonstrate the strength of our product line and business
 strategies, and we expect both to continue the growth trend
 with annual rates exceeding 30-40%.
 
 

 
Progress
 ADMET Predictor/ADMET Modeler
  Version 3.0 released in June
  More than 50 new quantum charge-related descriptors added from the
 work we did under our Phase I SBIR project last year, and subsequent
 work funded internally
  All existing property models retrained with the new descriptors, resulting
 in improved accuracy, fewer numbers of descriptors required, or both
  14 new models added in metabolism and toxicity
  Ability to see various charges on individual atoms in a molecule drawing
 provides tremendous insight for chemists
  Added powerful new state-of-the-art graphics package that lets users
 visualize relationships in many dimensions
  Recent e-mail communications from industry and academia affirm
 ADMET Predictor’s #1 position in predictive accuracy in competitive
 comparison studies
  U.S. Environmental Protection Agency has now licensed ADMET
 Predictor
 
 

 
Progress - 2
 ClassPharmer
  Version 4.5 released in June
  Pair SAR (structure-activity relationship) feature allows rapid
 detection of small changes in molecular structure that result in large
 changes in properties
  Full integration with ADMET Predictor provides powerful new
 molecule design tool with unique capabilities
 DDDPlus
  Incremental improvements this quarter
  Growing user base for this new technology
  Collaboration with a major pharmaceutical company will expand
 types of experiments
 
 

 
Progress - 3
 GastroPlus
  Version 6.0 released in June
  Additional improvements to our new IVIVCPlus™ Module - important
 capability for generic and innovator companies
  PKPlus™ Module - pharmacokinetics for oral and iv doses
  PDPlus™ Module - pharmacodynamic (response) modeling
  Pfizer poster presented at Shanghai conference in May reported
 results of a two-year study comparing the four commercially available
 simulation programs with physiologically based pharmacokinetics
 (PBPK) capabilities. Ratings were based on the programs’ ability to
 predict human results from only laboratory and animal data for either
 intravenous or oral doses. GastroPlus placed #1 in both categories. No
 other program was consistently in the top 4.
  FDA now has multiple licenses
  Consulting contracts continue coming in to assist pharmaceutical
 companies worldwide in analyzing preclinical and clinical data with
 GastroPlus
 
 

 
Progress - 4
 Words+ subsidiary
  Third quarter set new record for revenues. We expect
 Words+ to continue to make a positive contribution going
 forward
  New Say-it! SAM PDA-based communication system is
 selling very well - shipments this fiscal year are more than
 80% ahead of last year
  Major new product will be released shortly - 12” touch
 tablet-based system with excellent sound quality
  Improved sales results also due in part to new full-time
 national sales manager who is improving marketing and
 sales activities and dealer relationships
 
 

 
Strategy Going Forward
 Expand product line and services, marketing and sales efforts
  Pharmaceutical software and services
  Hiring new scientists to expand Life Sciences team
  Continue to enhance current products
  Develop new products and services
  Continue to seek accretive acquisitions with growing cash reserves
  Resubmit Phase II SBIR proposal ($750,000) in August
  Expand marketing and sales team to handle growing interest in modeling and
 simulation tools in the pharmaceutical industry and other industries
  Redesigned web site online as of June
  Expand Simulation Technologies team to handle growing demand for
 consulting services
  Words+ subsidiary
  New 12” tablet-based product nearing release
  National sales manager continuing efforts to grow sales force
  New web site design underway
  Potential acquisition is on hold to assess an alternative opportunity
 Continue to forge collaborative relationships within academia,
 government, and industry organizations
 
 

 
Summary
 Company is financially very strong with steadily growing cash position and
 no debt
 Growing, dedicated and extremely talented workforce
 Marketing and sales efforts are being expanded in both businesses
 Acquisitions are a major part of our growth strategy and we continue to be
 on the hunt for complementary products and businesses
 Market potential on the pharmaceutical side of the business is in three
 areas: chemistry, preclinical/clinical analysis, and training. We believe
 there are many hundreds of companies that can productively use our
 products and services in this area, as well as additional growth potential
 within the pharmaceutical giants
 Market potential on the disability side of the business is also large. For
 example, our newest solutions address communication needs for autism,
 which is a growing part of the assistive technology market. Also, the new
 12” tablet will fill a hole in our product line that was created last year when
 we discontinued our super rugged product of this size. The previous unit
 was quite expensive, where the new unit will be priced within the Medicare
 allowables.
 These slides available by e-mail on request through info@simulations-
 plus.com
 
 

 
Questions?