What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-12-01 compared with 2024-10-30 · 442 added, 316 removed, 865 unchanged (47% of the section changed)

17 unchanged sentences

Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Auditor's Attestation Report Not Included

This annual report does not include an attestation report of our registered independent public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by our registered independent public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company, as a smaller reporting company, to provide only Management’s report in this annual report.

Changes in Internal Control over Financial Reporting

1 unchanged sentence

ITEM 9B – OTHER INFORMATION

Rule 10b5-1 Trading Plans

The adoption or termination of contracts, instructions or written plans for the purchase or sale of our securities by our Section 16 officers and directors for the quarter ended August 31, 2024, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (“Rule 10b5-1 Plan”), were as follows:

Name Title Action Date Adopted Expiration Date Aggregate # of Securities to be Purchased/Sold

John DiBella (1)

Business Unit President Adoption 07/24/2024 10/25/2025 69,689

Jill-Fiedler-Kelly (2)

Business Unit President Adoption 08/08/2024 10/25/2025 20,000

Brett Howell (3)

Business Unit President Termination 01/09/2023 07/31/2024 28,875

John Paglia (4)

Director Termination 08/09/2023 07/31/2024 13,000

(1) On July 24, 2024, John DiBella , entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1, which provides for (i) the potential exercise of vested stock options and the associated sale of up to 26,889 shares of Company common stock underlying such options, and (ii) the potential sale of up to an additional 42,800 shares of Company common stock.

The plan expires on October 25, 2025, or upon the earlier completion of all authorized transactions under the plan.

(2) On July 24, 2024, Jill Fiedler-Kelly , entered into a pre-arranged stock trading plan pursuant to Rule 10b5-1, which provides for the potential exercise of vested stock options and the associated sale of up to 20,000 shares of Company common stock underlying such options.

The plan expires on October 25, 2025, or upon the earlier completion of all authorized transactions under the plan.

(3) On July 31, 2024 , the pre-arranged stock trading plan pursuant to Rule 10b5-1, adopted by Brett Howell on January 9, 2023, automatically terminated pursuant to its terms.

The expired plan provided for the potential sale of up to 28,875 shares of Company common stock until July 31, 2024.

(4) On July 31, 2024 , the pre-arranged stock trading plan pursuant to Rule 10b5-1, adopted by John Paglia on August 9, 2023, automatically terminated pursuant to its terms.

The expired plan provided for (i) the potential exercise of vested stock options and the associated sale of up to 11,000 shares of Company common stock underlying such options, and (ii) the potential sale of up to an additional 2,000 shares of Company common stock until July 31, 2024.

Other than those disclosed above, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” in each case as defined in Item 408 of Regulation S-K.

During the quarter ended August 31, 2025, none of our directors or officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” in each case as defined in Item 408 of Regulation S-K.

Please refer to the information included in Part II, Item 5 under the heading “Repurchases” for information regarding the Company’s effective share repurchase program.

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The code of conduct is publicly available on our website in the “Investors” section of our corporate website at www.simulations-plus.com under “Investors – Shareholder Information.” If we make any substantive amendments to the code of conduct or grant any waiver, including any implicit waiver, from a provision of the code of conduct, we will disclose the nature of the amendment or waiver on our website or in a Current Report on Form 8-K.

In November 2025, the Company adopted an updated Insider Trading Policy applicable to directors, officers, employees, and consultants.

The policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K.

The contents of our website are not incorporated by reference into, and should not be considered part of, this Annual Report on Form 10-K.

ITEM 11 – EXECUTIVE COMPENSATION

7 unchanged sentences

The information required by this item is incorporated by reference to the Proxy Statement.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

EXHIBITS, FINANCIAL STATEMENTS SCHEDULES

EXHIBIT NUMBER DESCRIPTION

37 unchanged sentences

10.15(†) Second Amendment to 2021 Equity Incentive Plan, of Simulations Plus, Inc., dated February 8, 2024, incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed February 12, 2024.

16.1 Letter from Rose, Snyder & Jacobs, LLC, dated April 16, 2025, incorporated by reference to Exhibit 16.1 to the Company’s Form 8-K filed April 18, 2025

16.2 Letter from Grant Thornton LLP, dated July 14, 2025, incorporated by reference to Exhibit 16.1 to the Company’s Form 8-K filed July 15, 2025

19.1 * Simulations Plus, Inc.

8 unchanged sentences

97.1 Simulations Plus, Inc.

Compensation Recovery Policy

Compensation Recovery Policy dated October 19, 2023 (incorporated by reference to Exhibit 97 to Simulation s Pl us's Form 10-K for the year e nded August 31, 2024.

101.INS*** Inline XBRL Instance Document

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

October 30, 2024

December 1, 2025

SIMULATIONS PLUS, INC.

1 unchanged sentence

Will Fredrick

Chief Financial Officer & Chief Operating Officer (Principal financial officer)

Executive Vice President and Chief Financial Officer

(Principal financial officer)

POWER OF ATTORNEY

4 unchanged sentences

Shawn O’Connor

October 30, 2024

December 1, 2025

Daniel Weiner Chairman of the Board of Directors

Daniel Weiner

December 1, 2025

/s/ Walter S.

Woltosz Chairman of the Board of Directors

October 30, 2024

Woltosz Director

December 1, 2025

Lisa LaVange Director

October 30, 2024

Daniel Weiner Director

Daniel Weiner

October 30, 2024

December 1, 2025

/s/ Sharlene Evans Director

Sharlene Evans

October 30, 2024

December 1, 2025

Paglia Director

October 30, 2024

/s/ Will Frederick Chief Financial Officer & Chief Operating Officer (Principal financial

officer and principal accounting officer)

December 1, 2025

/s/ Will Frederick Executive Vice President and Chief Financial Officer (Principal financial officer and principal accounting officer)

Will Frederick

October 30, 2024

December 1, 2025

SIMULATIONS PLUS, INC.

4 unchanged sentences

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Income

Consolidated Statements of Operations and Comprehensive (Loss) Income

Consolidated Statements of Shareholders’ Equity

8 unchanged sentences

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended August 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of August 31, 2024, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated October 30, 2024, expressed an unqualified opinion.

Basis for Opinion

1 unchanged sentence

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

1 unchanged sentence

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risk of material misstatement of consulting services revenue including those associated with estimated labor hours expected to be incurred.

We tested controls over management’s process to collect, review, and approve the data used in assessing revenue recognized over time.

To test the measures of progress used for performance obligations related to services that are required to be recognized over time, our audit procedures included, among others, evaluating the appropriateness of the Company’s accounting policy for each type of arrangement, testing the identified measure of performance by reading contracts with customers, including all amendments, and reviewing the contract analyses prepared by management.

We obtained an understanding and evaluated the design of controls that address the risk of material misstatement of consulting services revenue including those associated with estimated labor hours expected to be incurred.

We obtained an understanding and evaluate the design of controls over management’s process to collect, review, and approve the data used in assessing revenue recognized over time.

To test the measures of progress used for performance obligations related to services that are required to be recognized over time, our audit procedures included, among others, evaluating the appropriateness of the Company’s accounting policy for each type of arrangement, testing the identified measure of performance by reading contracts with clients, including all amendments, and reviewing the contract analyses prepared by management.

We evaluated whether the selected measures of progress towards satisfaction of performance obligations were applied consistently.

We also tested the completeness and accuracy of the underlying data used for the measure of progress.

We also tested the completeness and accuracy of the underlying data used for the measure of progress by testing the underlying data.

Rose, Snyder & Jacobs LLP

1 unchanged sentence

Encino, California

October 30, 2024

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Simulations Plus, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Simulations Plus, Inc.

and Subsidiaries (the Company’s) internal control over financial reporting as of August 31, 2024, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2024, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet and the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for the Company, and our report dated October 30, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Rose, Snyder & Jacobs LLP

October 30, 2024

December 1, 2025

SIMULATIONS PLUS, INC.

17 unchanged sentences

Goodwill 43,717 96,078

Deferred tax assets — 1,438

Deferred tax assets, net 4,774 —

Other assets 1,399 542

10 unchanged sentences

Long-term liabilities

Deferred income taxes, net 1,608 —

Deferred tax liabilities, net — 1,608

Operating lease liability - net of current portion 410 531

Contracts payable - net of current portion — 3,330

Total liabilities 7,135 14,208

Commitments and contingencies — —

Commitments and contingencies - Note 5

Shareholders' equity

1 unchanged sentence

no shares issued and outstanding

Common stock, $ 0.001 par value and additional paid-in capital — 50,000,000 shares authorized;

20,051,134 and 19,937,961 shares issued and outstanding

152,328 144,974

Retained earnings 30,354 25,196

Common stock, $ 0.001 par value;

50,000,000 shares authorized, 20,137,480 and 20,051,134 shares issued and outstanding

Additional paid-in capital 159,416 152,308

(Accumulated deficit) retained earnings ( 34,364 ) 30,354

Accumulated other comprehensive loss ( 271 ) ( 251 )

3 unchanged sentences

SIMULATIONS PLUS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

Years ended August 31,

12 unchanged sentences

General and administrative 20,941 22,351 27,660

Impairments 77,221 — 500

Total operating expenses 116,950 37,020 39,222

Income from operations 6,131 8,725 14,911

Other income 6,280 2,970 204

Income before income taxes 12,411 11,695 15,115

Provision for income taxes ( 2,457 ) ( 1,734 ) ( 2,632 )

Net income $ 9,954 $ 9,961 $ 12,483

Earnings per share

(Loss) income from operations ( 70,729 ) 6,131 8,725

Other income, net 1,352 6,280 2,970

(Loss) income before income taxes ( 69,377 ) 12,411 11,695

Income tax benefit (expense) 4,659 ( 2,457 ) ( 1,734 )

Net (loss) income $ ( 64,718 ) $ 9,954 $ 9,961

(Loss) Earnings per share

Basic $ ( 3.22 ) $ 0.50 $ 0.50

5 unchanged sentences

Foreign currency translation adjustments ( 24 ) ( 105 ) 167

Unrealized losses on available-for-sale securities ( 5 ) — —

Comprehensive income $ 9,844 $ 10,128 $ 12,218

Unrealized gains (losses) on available-for-sale securities 4 ( 5 ) —

Comprehensive (loss) income $ ( 64,738 ) $ 9,844 $ 10,128

The accompanying notes are an integral part of these Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Years ended August 31,

(in thousands, except per common share amounts) 2024 2023 2022

Common stock and additional paid in capital

Balance, beginning of period $ 144,974 $ 138,512 $ 133,418

(in thousands, except per common share amounts) Common Stock Additional Paid-In Capital (Accumulated Deficit) Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity

Shares Amount

Balance as of August 31, 2022 20,260,070 $ 20 $ 138,492 $ 40,044 $ ( 308 ) $ 178,248

Exercise of stock options 156,167 — 1,543 — — 1,543

1 unchanged sentence

Shares issued to Directors for services 13,765 — 600 — — 600

Shares issued - Lixoft — — 1,166

Balance, end of period 152,328 144,974 138,512

Retained earnings

Balance, beginning of period 25,196 40,044 32,407

Declaration of dividends — — — ( 4,809 ) — ( 4,809 )

1 unchanged sentence

Net income — — — 9,961 — 9,961

Balance, end of period 30,354 25,196 40,044

Accumulated other comprehensive loss

Balance, beginning of period ( 141 ) ( 308 ) ( 43 )

Other comprehensive (loss) income ( 110 ) 167 ( 265 )

Balance, end of period ( 251 ) ( 141 ) ( 308 )

Total shareholders’ equity $ 182,431 $ 170,029 $ 178,248

Cash dividends declared per common share $ 0.24 $ 0.24 $ 0.24

Other comprehensive loss — — — — 167 167

Balance as of August 31, 2023 19,937,961 20 144,954 25,196 ( 141 ) 170,029

Exercise of stock options 97,973 — 731 — — 731

Stock-based compensation — — 6,023 — — 6,023

Shares issued to Directors for services 15,200 — 600 — — 600

Declaration of dividends — — — ( 4,796 ) — ( 4,796 )

Net income — — — 9,954 — 9,954

Other comprehensive loss — — — — ( 110 ) ( 110 )

Balance as of August 31, 2024 20,051,134 20 152,308 30,354 ( 251 ) 182,431

Exercise of stock options 63,151 — 430 — — 430

Stock-based compensation — — 6,138 — — 6,138

Shares issued to Directors for services 23,195 — 540 — — 540

Net loss — — — ( 64,718 ) — ( 64,718 )

Other comprehensive loss — — — — ( 20 ) ( 20 )

Balance as of August 31, 2025 20,137,480 $ 20 $ 159,416 $ ( 34,364 ) $ ( 271 ) $ 124,801

The accompanying notes are an integral part of these Consolidated Financial Statements.

4 unchanged sentences

Cash flows from operating activities

Net income $ 9,954 $ 9,961 $ 12,483

Net (loss) income $ ( 64,718 ) $ 9,954 $ 9,961

Adjustments to reconcile net income to net cash provided by operating activities

1 unchanged sentence

Change in fair value of contingent consideration ( 640 ) ( 1,639 ) 680

Discharge of holdback obligation related to Immunetrics acquisition ( 224 ) — —

Amortization of investment discounts ( 64 ) ( 1,116 ) ( 1,134 )

2 unchanged sentences

Loss from disposal of assets 23 — 6

Impairment of other intangibles — 500 —

Impairments 77,221 — 500

Currency translation adjustments ( 25 ) ( 105 ) 167

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Proceeds from sales of investments 995 45,177 —

Issuance of promissory note ( 1,000 ) — —

Purchased intangibles ( 379 ) ( 541 ) ( 601 )

Business acquisition, net of cash acquired — ( 98,773 ) ( 8,223 )

Net working capital & excess cash settlement - Pro-ficiency acquisition ( 227 ) — —

Capitalized computer software development costs ( 2,631 ) ( 3,194 ) ( 3,219 )

Net cash (used in) provided by investing activities ( 53,967 ) 7,366 4,305

Net cash provided by (used in) investing activities 3,562 ( 53,967 ) 7,366

Cash flows from financing activities

4 unchanged sentences

Net cash used in financing activities ( 1,146 ) ( 6,565 ) ( 23,266 )

Net (decrease) increase in cash and cash equivalents ( 47,212 ) 5,956 14,583

Net increase (decrease) in cash and cash equivalents 20,542 ( 47,212 ) 5,956

Cash and cash equivalents, beginning of period $ 10,311 $ 57,523 $ 51,567

3 unchanged sentences

Non-Cash Investing and Financing Activities

Stock issued for acquisition of Lixoft $ — $ — $ 1,166

Measurement period adjustments (See Note 2) $ 956 $ — $ —

Creation of contract liabilities from acquisition of subsidiaries $ — $ — $ 5,900

5 unchanged sentences

NOTE 1 – DESCRIPTION OF BUSINESS

At the beginning of fiscal year 2024, the Company reorganized its internal structure to create a more integrated and cohesive operating platform based on key product and services offerings rather than separate divisions based on its prior acquisitions.

This business unit restructuring is engendering greater scientific collaboration and knowledge sharing within the Company that leads to identifying new opportunities that both advance the Company’s business objectives and deepen client relationships.

Continuing with our strategic plan of aligning our business units around products and services, the Pro-ficiency acquisition resulted in two new business units, Adaptive Learning & Insights and Medical Communications, giving the Company six business units that include:

• Cheminformatics (“CHEM”);

• Physiologically Based Pharmacokinetics (“PBPK”);

• Clinical Pharmacology and Pharmacometrics (“CPP”);

• Quantitative Systems Pharmacology (“QSP”);

• Adaptive Learning & Insights (“ALI”);

• Medical Communications (“MC”).

For more than 25 years, Simulations Plus has been a leading provider in the biosimulation market, offering end-to-end solutions across the drug development continuum, including guiding early drug discovery, establishing pre-clinical protocols, developing clinical programs, enabling clinical trial operations, facilitating regulatory submissions for product approval, and supporting commercial market launches.

We are a premier developer of modeling and simulation software for drug discovery and development, including the prediction of properties of molecules utilizing both artificial intelligence (“AI”) and machine learning technology.

Our software and consulting services are provided to major pharmaceutical, biotechnology, agrochemical, cosmetics, and food industry companies and academic and regulatory agencies worldwide for use in the conduct of industry-based research.

Our customers use our software programs and scientific consulting services to enhance their understanding of the properties of potential new therapies and to use emerging data to improve formulations, select and justify dosing regimens, support generic pharmaceutical product development, optimize clinical trial designs, and simulate outcomes in special populations, such as in elderly and pediatric patients.

Simulations Plus, Inc.

was incorporated in California on July 17, 1996.

The Company is a global leader and premier provider in the biopharma sector, offering advanced software and consulting services that enhance drug discovery and development, clinical trial operations, and commercialization.

The Company supports its clients across the drug development lifecycle from the early discovery through all phases of clinical research and development (“R&D”), including clinical operations, to product commercialization.

The Company serves clients as a strategic partner throughout the entire drug development lifecycle, offering solutions that integrate scientific software platforms, artificial intelligence-augmented insights, and expert consulting.

This optimizes efficiency, costs, and time-to-market for our clients and enhances our competitive position.

Effective January 1, 2025, the Company merged Pro-ficiency with and into the Company through a short-form merger (the “Merger”).

To effectuate the Merger, the Company filed Certificates of Ownership with the Secretaries of State of the states of Delaware (Pro-ficiency's state of incorporation) and California (the Company’s state of incorporation).

Consummation of the Merger was not subject to approval of the Company’s stockholders and did not impact the rights of the Company’s stockholders.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

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All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Basis of Presentation and Use of Estimates

The preparation of consolidated financial statements in conformity with U.S.

generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

Significant estimates include, among other estimates, assumptions used in the allocation of the transaction price to separate performance obligations, estimates towards the measure of progress of completion on fixed-price service contracts, the determination of fair values and useful lives of long-lived assets as well as intangible assets, goodwill, allowance for credit losses for accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue, determination of fair value of equity-based awards, and assumptions used in testing for impairment of long-lived assets.

Significant estimates include, among other estimates, assumptions used in the allocation of the transaction price to separate performance obligations, estimates towards the measure of progress of completion on fixed-price service contracts, the determination of fair values and useful lives of both long-lived assets and intangible assets, goodwill, allowance for credit losses for accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue, determination of fair value of equity-based awards, and assumptions used in testing for impairment of long-lived assets.

Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements.

Revenue Recognition

We generate revenue primarily from the sale of software licenses and by providing consulting services to the pharmaceutical industry for drug development.

In accordance with ASC 606, we determine revenue recognition through the following steps:

Identification of the contract, or contracts, with a customer

We generate revenue primarily from the sale of software licenses and by providing consulting services to the pharmaceutical industry for drug development and commercialization.

In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606, we determine revenue recognition through the following steps:

Identification of the contract, or contracts, with a client

Identification of the performance obligations in the contract

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Software Revenues:

Software revenues are generated primarily from sales of software licenses at the time the software is unlocked, and the term commences.

The license period typically is one year or less.

Along with the license, a di minimis amount of customer support is provided to assist the customer with the software.

Should the customer need more than a di minimis amount of support, they can choose to enter into a separate contract for additional training.

Most software is installed on our customers’ servers and the Company has no control of the software once the sale is made except for the licensing parameters that control numbers of users, modules, and expiration dates.

Payments are generally due upon invoicing on a net-30 basis, unless other payment terms are negotiated with the customer based on customer history.

Typical industry standards apply.

Software revenues are primarily derived from the sale of software licenses, which are recognized at the time the software is unlocked and the license term begins.

Most licenses are for a duration of one year or less.

In addition to the software license, we provide a minimal level of client support to assist clients with software usage.

If clients require more extensive support, they may enter into a separate agreement for additional training services and maintenance.

The majority of the software is installed on clients’ servers, and the Company does not maintain control over the software post-sale, except through licensing parameters that govern the number of users, accessible modules, and license expiration dates.

The Pro-ficiency adaptive learning platform includes software customization by incorporating content tailored to specific needs.

Following customization, it generates a recurring revenue stream throughout the duration of a clinical trial.

Revenue is recognized over time.

Payments are generally due upon invoicing on a net-30 basis, unless alternative payment terms are negotiated with the client based on their payment history.

Standard industry practices apply.

For certain software arrangements, the Company hosts the licenses on servers maintained by the Company.

1 unchanged sentence

These arrangements account for a small portion of software revenues of the Company.

Consulting Contracts:

Consulting services provided to our customers are generally recognized over time as the contracts are performed and the services are rendered.

Services Revenue:

Consulting services provided to our clients are generally recognized over time as the contracts are performed and the services are rendered.

The Company measures its consulting revenue based on time expended compared to total estimated hours to complete a project.

The Company believes the method chosen for its contract revenue best depicts the transfer of benefits to the customer under the contracts.

Payments are generally due upon invoicing on a net-30 basis, unless other payment terms are negotiated with the customer based on customer history.

Typical industry standards apply.

The Company believes the method chosen for its contract revenue best depicts the transfer of benefits to the client under the contracts.

Payments are generally due upon invoicing on a net-30 basis, unless other payment terms are negotiated with the client based on client history.

Standard industry practices apply.

Grant revenue:

The Company receives government assistance in the form of cash grants which vary in size, duration, and conditions from domestic governmental agencies.

Accounting for the grant revenue does not fall under ASC 606, Revenue from Contracts with Customers.

For government assistance in which no specific US GAAP applies, the Company accounts for such transactions as revenue and by analogy to a grant model.

The Company receives government awards in the form of cash grants that vary in size, duration, and conditions from domestic governmental agencies.

Accounting for grant revenue does not fall under ASC 606, Revenue from Contracts with Clients.

For government awards in which no specific US GAAP applies, the Company accounts for such transactions as revenue and by analogy to a grant model.

The grant revenue is recognized on a gross basis.

1 unchanged sentence

If conditions are not satisfied, the grants are often subject to reduction, repayment, or termination.

The Company classifies the impact of government assistance on the accompanying Consolidated Statements of Operations and Comprehensive Income as services revenue.

The Company classifies the impact of government assistance on the accompanying Consolidated Statements of Operations and Comprehensive (Loss) Income as services revenue.

The Company received assistance from domestic governmental agencies to provide reimbursement for various costs incurred for research and development.

1 unchanged sentence

The grants awarded are currently set to expire at various dates through 2025.

The Company recognized $ 1.0 million, $ 1.1 million, and $ 0.7 million for the fiscal years ended August 31, 2024, 2023, and 2022, respectively, within Services revenues on the Consolidated Statements of Operations and Comprehensive Income related to such assistance.

The Company recognized $ 0.7 million, $ 1.0 million, and $ 1.1 million for the fiscal years ended August 31, 2025, 2024, and 2023, respectively within Services revenues on the Consolidated Statements of Operations and Comprehensive (Loss) Income related to such assistance.

Amounts that have been earned but not yet funded are included in accounts receivable.

Computer equipment allowable by the grants are classified under Fixed Assets.

Computer equipment allowable by the grants is classified under fixed assets.

Subawards due to unrelated entities are classified under accrued expenses.

1 unchanged sentence

As of August 31, 2025, remaining performance obligations were $ 12.1 million;

Ninety-seven percent of the remaining performance obligations are expected to be recognized over the next twelve months , with the remainder expected to be recognized thereafter.

95 % of the remaining performance obligations are expected to be recognized over the next twelve months , with the remainder expected to be recognized thereafter.

Disaggregation of Revenues

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Contract Balances

Contract asset excluding accounts receivable balances as of August 31, 2024, 2023, and 2022, were $ 5.9 million, $ 2.7 million, and $ 1.7 million, respectively.

During the fiscal year ended August 31, 2024, the Company recognized $ 2.9 million of revenue that was included in contract liabilities as of August 31, 2023, and during the fiscal year ended August 31, 2023, the Company recognized $ 2.6 million of revenue that was included in contract liabilities as of August 31, 2022.

Contract assets excluding accounts receivable balances as of August 31, 2025, 2024, and 2023, were $ 4.9 million, $ 5.9 million, and $ 2.7 million, respectively.

This balance is included in Prepaid and Other Current Assets on the Consolidated Balance Sheets.

During the fiscal year ended August 31, 2025 and August 31, 2024, the Company recognized $ 1.8 million and $ 2.9 million of revenue, respectively, that was included in contract liabilities as of August 31, 2024 and August 31, 2023.

Deferred Commissions

Sales commissions earned by our sales force and our commissioned sales representatives are considered incremental and recoverable costs of obtaining a contract with a customer.

Sales commissions earned by our sales force and our commissioned sales representatives are considered incremental and recoverable costs of obtaining a contract with a client.

We apply the practical expedient as described in ASC 340-40-25-4 to expense costs as incurred for sales commissions, since the amortization period of the asset that we otherwise would have recognized is one year or less.

This expense is included in the consolidated statements of operations and comprehensive income as sales and marketing expense.

This expense is included in the Consolidated Statements of Operations and Comprehensive (Loss) Income as sales and marketing expense.

Cash and Cash Equivalents

For purposes of the statements of cash flows, we consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Restricted cash that was included within cash and cash equivalents as presented within our consolidated balance sheets as of August 31, 2024 and our consolidated statements of cash flows for the fiscal year ended August 31, 2024 was $ 0.1 million.

The Company determined this to be immaterial.

The restriction required us to maintain a minimum cash deposit in the Pro-ficiency bank account to collateralize an outstanding corporate credit card balance.

The associated corporate credit card program was terminated as part of the integration of Pro-ficiency and the cash restriction was removed as of October 4, 2024.

For purposes of the Consolidated Statements of Cash Flows, we consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Accounts Receivable and Allowance for Credit Losses

The Company extends credit to its customers in the normal course of business.

The Company extends credit to its clients in the normal course of business.

The Company evaluates its allowance for credit losses based on its estimate of the collectability of its trade accounts receivable.

As part of this assessment, the Company considers various factors including the financial condition of the individual companies with which it does business, the aging of receivable balances, historical experience, changes in customer payment terms, current market conditions, and reasonable and supportable forecasts of future economic conditions.

As part of this assessment, the Company considers various factors including the financial condition of the individual companies with which it does business, the aging of receivable balances, historical experience, changes in client payment terms, current market conditions, and reasonable and supportable forecasts of future economic conditions.

In times of economic turmoil, the Company’s estimates and judgments with respect to the collectability of its receivables are subject to greater uncertainty than in more stable periods.

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Balance, end of period $ 187 $ 149 $ 46

Effective July 11, 2025, Simulations Plus, Inc.

holds a $ 1,000,000 unsecured and subordinated convertible promissory note from Nurocor, Inc., a privately held Delaware corporation.

The note bears interest at 10 % annually and matures on July 11, 2030, unless converted earlier under specified conditions.

As of August 31, 2025, principal and accrued interest income on the unsecured and subordinated convertible promissory note were $ 1,000,000 and $ 13,973 .

The note is classified as a note receivable under ASC 310 and is carried at amortized cost.

Interest income is accrued using the stated rate.

The note is subject to periodic credit risk evaluations.

As of August 31, 2025, no impairment has been recognized.

This is recorded within other long-term assets on the Consolidated Balance Sheets.

The note includes multiple conversion features:

(i) at the Company’s election into Nurocor Class B Common Stock at $ 0.15 per share, (ii) automatic conversion into securities issued in a qualified equity financing at the lower of a 20 % discount to the financing price or $ 0.15 per share, and (iii) optional conversion upon a Change of Control.

In addition, upon a Liquidation Event, the Company is entitled to repayment of principal, accrued interest, and a 50 % premium, or if greater, consideration equivalent to conversion at $ 0.15 per share.

The conversion features were evaluated under ASC 815 and determined not to meet the definition of a derivative requiring bifurcation.

The Company also holds related governance rights, including a board observer seat and access to financial statements rights, which do not affect the accounting classification but are disclosed as part of the overall investment terms.

The Company may invest excess cash balances in short-term and long-term marketable debt securities.

Investments may consist of certificates of deposit, money market accounts, government-sponsored enterprise securities, corporate bonds, and/or commercial paper within the parameters of our investment policy and guidelines.

The Company accounts for its investments in marketable securities in accordance with ASC 320, Investments – Debt and Equity Securities.

The Company accounts for its investments in marketable debt securities in accordance with ASC 320, Investments – Debt and Equity Securities.

This statement requires debt securities to be classified into three categories:

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We classify our investments in marketable debt securities based on the facts and circumstances present at the time of purchase of the securities.

We subsequently reassess the appropriateness of that classification at each reporting date.

As of August 31, 2024, all of our investments were classified as AFS, as we sold the previously classified held-to-maturity securities to fund our acquisition of Pro-ficiency.

All of our investments were classified as held-to-maturity for the fiscal year ended August 31, 2023.

Research & Development and Capitalized Software Development Costs

Research and development ("R&D") activities include both enhancement of existing products and development of new products.

Development of new products and adding functionality to existing products are capitalized in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 985-20, “Costs of Software to Be Sold, Leased, or Marketed.” R&D expenditures, which primarily relate to both capitalized and expensed salaries, R&D supplies, and R&D consulting, were $ 9.0 million during fiscal year 2024, of which $ 3.3 million was capitalized.

We reassess the appropriateness of that classification at each reporting date.

As of August 31, 2025 and 2024, all of our investments were classified as AFS.

Research & Development ("R&D") Capitalized Software Development Costs

R&D activities include both enhancement of existing products and development of new products.

Development of new products and adding functionality to existing products are capitalized in accordance with FASB ASC 985-20, “Costs of Software to Be Sold, Leased, or Marketed.” R&D expenditures, which primarily relate to both capitalized and expensed salaries, R&D supplies, and R&D consulting, were $ 9.8 million during the fiscal year ended 2025, of which $ 3.0 million was capitalized.

R&D expenditures were $ 9.0 million during fiscal year 2024, of which $ 3.3 million was capitalized.

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The establishment of technological feasibility and the ongoing assessment for recoverability of capitalized software development costs require considerable judgment by management with respect to certain external factors including, but not limited to, technological feasibility, anticipated future gross revenue, estimated economic life, and changes in software and hardware technologies.

Capitalized software development costs are comprised primarily of salaries and direct payroll-related costs and the purchase of existing software to be used in our software products.

Capitalized software development costs are comprised primarily of salaries and direct payroll-related costs.

Amortization of capitalized software development costs is calculated on a product-by-product basis on the straight-line method over the estimated economic life of the products (not to exceed five years ).

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The Company assesses capitalized computer software development costs for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

In connection with the identified triggering event mentioned below as of May 31, 2025, the Company performed, prior to the goodwill impairment test, a quantitative assessment of its long-lived assets and concluded that its long-lived assets were impaired at certain reporting units.

The Company recorded impairment charges for its capitalized computer software development costs of $ 1.2 million at the Clinical Operations reporting unit.

Such charges are recorded in impairments on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

No impairment losses were recorded during the fiscal year ended August 31, 2024.

Property and Equipment

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We have capitalized certain internal use software costs in accordance with ASC 350-40, which are included in intangible assets.

The amortization of such costs is classified as general and administrative expenses on the consolidated statements of operations.

The amortization of such costs is classified as general and administrative expenses on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Maintenance of and minor upgrades to internal use software are also classified as general and administrative expenses as incurred.

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Lease expense is recognized on a straight-line basis over the lease term.

Supplemental information related to operating leases was as follows as of August 31, 2024:

Supplemental information related to operating leases was as follows as of August 31, 2025 and 2024:

(in thousands) 2025 2024

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Operating lease costs $ 475 $ 503

Weighted-average remaining lease term 2.42 years

Weighted-average remaining lease term 6.29 years 2.42 years

Weighted-average discount rate 3.98 % 5.46 %

Business units and internal restructuring

Consistent with the reorganization of our internal structuring to move away from divisions based on our prior acquisitions to business units organized around key product and service offerings, as of August 31, 2024, our reporting units now include the following business units:

• Cheminformatics, or CHEM;

• Physiologically Based Pharmacokinetics, or PBPK;

• Quantitative Systems Pharmacology, or QSP;

• Clinical Pharmacology and Pharmacometrics, or CPP;

• Adaptive Learning & Insights, or ALI;

• Medical Communications, or MC.

As part of this reorganization, we also took the opportunity to evaluate our departmental structure with a focus on continuing to improve operational performance and profitability.

Accordingly, we moved all services personnel into cost of revenues departments, all research and development (“R&D”) personnel into R&D expense departments, all sales and marketing personnel into sales and marketing expense departments, and all overhead personnel into general and administrative expense departments.

To provide investors improved visibility to our progress, we also decided to report separately our sales and marketing expenses from our general and administrative expenses.

Intangible Assets and Goodwill

Intangible Assets, Goodwill and Impairments

We perform valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and recognize the assets acquired and liabilities assumed at their acquisition-date fair value.

Acquired intangible assets include customer relationships, software, trade names, and noncompete agreements.

We determine the appropriate useful life by performing an analysis of expected cash flows based on historical experience of the acquired businesses.

Acquired intangible assets include client relationships, software, trade names, and noncompete agreements.

We determine the appropriate useful life of intangible assets by performing an analysis of expected cash flows based on historical experience of the acquired businesses.

Finite-lived intangible assets are amortized over their estimated useful lives using the straight-line method, which approximates the pattern in which the majority of the economic benefits are expected to be consumed.

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Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets.

Goodwill and indefinite-lived intangible assets are tested for impairment annually or when events or circumstances change that would indicate that they might be impaired.

Goodwill and indefinite-lived intangible assets are tested for impairment on the last day of the fiscal year or when events or circumstances change that would indicate that they might be impaired.

Events or circumstances that could trigger an impairment review include, but are not limited to, a significant adverse change in legal factors or in the business climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, or significant underperformance relative to expected historical or projected future results of operations.

Goodwill and the other assets and liabilities acquired as part of the Immunetrics acquisition have been assigned to our QSP reporting unit.

Goodwill and the other assets and liabilities acquired as part of the Pro-ficiency acquisition have been assigned to our ALI and MC reporting units.

Goodwill and intangible assets are tested for impairment at the reporting unit level, which is either one level below or the same level as an operating segment.

Reconciliation of Goodwill for the fiscal year ended August 31, 2024:

(in thousands) CPP QSP ALI MC Total

Goodwill is tested for impairment at the reporting unit level, which is one level below or the same as an operating segment.

The company announced the reorganization of its internal structure at the end of the third quarter of fiscal 2025, and reorganized the internal structure to align products and services into integrated solution areas.

The Company changed the composition of our reporting units under ASC 350, Intangibles - Goodwill and Other as part of our Q4 2025 reorganization.

Because each former reporting unit moved in its entirety into a single new reporting unit, the related carrying amounts, including goodwill, were carried forward without reallocation.

Consistent with ASC 350, we evaluated goodwill immediately before and immediately after the change and assessed the fair value to be the same.

Prior to the reorganization, the Company had nine reporting units, Cheminformatics ("CHEM") software, Physiologically Based Pharmacokinetics ("PBPK") software, PBPK services, Clinical Pharmacology and Pharmacometrics ("CPP") software, CPP services, Quantitative Systems Pharmacology ("QSP") software, QSP Services, Adaptive Learning & Insights ("ALI") software, and Medical Communications ("MC") services.

Following the reorganization, management began to review operating performance and allocate resources based on two new reporting units, Software and Services.

The former reporting unit's goodwill and net assets directly combine into the new reporting units, and as such, the Company did not reassign goodwill to the new reporting units.

Former reporting units New reporting units

CHEM - Software Software

PBPK - Software

QSP - Software

CPP - Software

ALI - Software

PBPK - Services Services

QSP - Services

CPP - Services

MC - Services

The Company performed a qualitative assessment immediately before the reorganization and determined that indicators of impairment existed and a quantitative assessment was needed.

As detailed below, the Company recognized $ 51.6 million in impairment charges in the third quarter of fiscal 2025.

When evaluating these assets for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired, known as Step 0.

If we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, we would calculate the estimated fair value of the reporting unit using discounted cash flows or a combination of discounted cash flow and market approaches.

The Company performed a qualitative assessment immediately after the reorganization and determined that no indicators of impairment existed.

The change in reporting units did not impact the Company’s consolidated financial statements for prior periods.

However, beginning in the fourth quarter of fiscal 2025, segment results and goodwill disclosures reflect the new reporting unit structure.

During the third quarter of 2025, the Company identified the underperformance of revenue at various reporting units relative to forecasts utilized in the purchase price allocation and the significant stock price decline in relative terms and in comparison to peers as a triggering event (the "triggering event") as of May 31, 2025, indicating goodwill may be impaired.

Accordingly, the Company conducted a quantitative impairment test of its goodwill as of May 31, 2025 for all reporting units.

The Company estimated the implied fair value of its reporting units using an income and market approach.

As a result of the quantitative impairment test performed, the Company determined that goodwill was impaired for its Software and Services reporting units and recorded a goodwill impairment charge of $ 15.7 million and $ 35.9 million, respectively, during the period ended May 31, 2025.

Such charges are recorded in impairments on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

The income approach was based upon projected future cash flows that were discounted to present value.

The key underlying assumptions included forecasted revenues, gross profit and operating expenses, terminal growth rate, as well as an applicable discount rate for each reporting unit.

The key assumptions in the market approach were the earnings multiple and market participant acquisition premium.

Fair-value estimates are based on a complex series of judgments about future events and rely heavily on estimates and assumptions that have been deemed reasonable by the Company.

Changes in the estimates or assumptions used in the quantitative impairment test could materially affect the determination of fair value of the Company’s reporting units and the associated goodwill impairment assessment.

Potential events and circumstances that could have an adverse impact on our estimates and assumptions include, but are not limited to, lower than expected bookings growth, increases in costs, and other macroeconomic factors.

Below is a reconciliation of the changes in Goodwill carrying value per reportable segment:

(in thousands) Software Services Total

Balance, August 31, 2023 $ 3,598 $ 9,323 $ 12,921

Addition 34,197 48,960 83,157

Impairments — — — — —

Balance, August 31, 2024 $ 37,795 $ 58,283 $ 96,078

Addition — — —

Measurement period adjustment* ( 290 ) ( 439 ) ( 729 )

Impairments ( 15,704 ) ( 35,928 ) ( 51,632 )

Balance, August 31, 2025 $ 21,801 $ 21,916 $ 43,717

*The Company had measurement period adjustments due to additional knowledge gained since June 11, 2024.

The adjustments included a net working capital & excess cash settlement ($ 0.2 million) and deferred taxes related to the Pro-ficiency acquisition ($ 1.0 million).

These have been allocated to the Software and Services reporting units.

The following table summarizes other intangible assets as of August 31, 2025:

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Value Accumulated

Amortization Net Book Value

Trade names None $ 12,610 $ — $ 12,610

Amortization Impairment Net Book Value

Trade names Indefinite $ 12,610 $ — $ 5,660 $ 6,950

Covenants not to compete Straight line 2 to 3 years

Other internal use software Straight line 3 to 13 years

988 110 270 608

Customer relationships Straight line 8 to 14 years

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$ 26,766 $ 4,399 $ 10,471 $ 11,896

The Company reviews indefinite-lived intangible assets, consisting of trade names in accordance with ASC 350 Intangibles - Goodwill and other, for impairment annually or when an event occurs that may indicate potential impairment.

In connection with the identified triggering event as of May 31, 2025, the Company performed, prior to the goodwill impairment test, a quantitative assessment of its indefinite-lived assets by comparing discounted future cash flows to the net carrying value of the underlying assets, and concluded that its indefinite-lived intangible assets were impaired.

The Company recorded impairment charges for its indefinite-lived intangible assets for its Software and Services reporting units of $ 4.9 million and $ 0.8 million, respectively, during the period ended May 31, 2025.

Such charges are recorded in impairments on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

During the third quarter of fiscal 2025, the Company recognized an impairment charge of $ 77.2 million.

Subsequent to the quarter-end, the Company refined the allocation of this impairment between goodwill and indefinite-lived intangible assets as the valuation was finalized.

The total impairment charge remains unchanged.

The following table summarizes other intangible assets as of August 31, 2024:

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Amortization Net Book Value

Trade names None $ 4,210 $ — $ 4,210

Covenants not to compete Straight line 2 years

Trade names Indefinite $ 12,610 $ — $ 12,610

Covenants not to compete Straight line 2 to 3 years

Other internal use software Straight line 3 to 13 years

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$ 26,387 $ 3,177 $ 23,210

Total amortization expense for the fiscal years ended August 31, 2024, 2023, and 2022 was $ 1.1 million, $ 0.6 million, and $ 0.6 million , respectively.

Estimated future amortization of finite-lived intangible assets for the next five fiscal years are as follows:

Total amortization expense for the fiscal years ended August 31, 2025, August 31, 2024, and August 31, 2023 was $ 1.2 million, $ 1.1 million, and $ 0.6 million, respectively.

The estimated future amortization of finite-lived intangible assets for the next five fiscal years are as follows:

(in thousands)

Years Ending August 31,

The weighted-average amortization period for other internal use software is 11.2 years, customer relationships is 7.6 years, and ERP is 11.3 years.

The Company accounts for the impairment and disposition of long-lived assets in accordance with ASC 360, Property, Plant, and Equipment.

Long-lived assets to be held and used are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable.

The Company measures recoverability by comparing the carrying amount of an asset to the expected future undiscounted net cash flows generated by the asset.

If the Company determines that the asset may not be recoverable, or if the carrying amount of an asset exceeds its estimated future undiscounted cash flows, it recognizes an impairment charge to the extent of the difference between the fair value and the asset's carrying amount.

In connection with the identified triggering event as of May 31, 2025, the Company performed, prior to the goodwill impairment test, a quantitative assessment of its long-lived assets and concluded that its long-lived assets were impaired at certain reporting units.

The Company recorded impairment charges for its long-lived assets for its Software and Services reporting units of $ 15.7 million and $ 4.2 million, respectively, during the period ended May 31, 2025.

Such charges are recorded in impairments on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

No impairment losses were recorded for the fiscal year ended August 31, 2024.

Fair Value of Financial Instruments

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Level III Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

For certain of our financial instruments, including accounts receivable, accounts payable, and accrued compensation and other accrued expenses, the carrying amounts are representative of their fair values due to their short maturities.

We invest a portion of our excess cash balances in short-term debt securities.

For certain of the Company's financial instruments, including accounts receivable, accounts payable, and accrued compensation and other accrued expenses, the carrying amounts are representative of their fair values due to their short maturities.

The Company invests a portion of excess cash in short-term debt securities.

Short-term debt securities investments as of August 31, 2025 and 2024, consisted of corporate bonds and term deposits with maturities remaining of less than 12 months.

In addition, under the fair-value hierarchy, the fair market values of the Company’s cash equivalents and investments are Level I.

We may also invest excess cash balances in certificates of deposit, money market accounts, government-sponsored enterprise securities, and/or commercial paper.

We account for our investments in accordance with ASC 320, Investments – Debt and Equity Securities.

As of August 31, 2024, all investments were classified as AFS securities, as we recently sold securities previously classified as held-to-maturity to fund the acquisition that closed on June 11, 2024, as discussed in Note 12.

Unrealized losses on investments as of August 31, 2024 were insignificant and not indicative of a change in credit quality, thus no allowance for credit losses has been recorded.

Unrealized losses on investments as of August 31, 2023 were primarily caused by rising interest rates rather than changes in credit quality, thus we did not record an allowance for credit losses.

The following tables summarize our short-term investments as of August 31, 2024, and 2023:

The Company may also invest excess cash in certificates of deposit, money market accounts, government-sponsored enterprise securities, and/or commercial paper.

The Company accounts for its investments in accordance with ASC 320, Investments - Debt and Equity Securities.

As of August 31, 2025 and 2024 all investments were classified as AFS securities.

Unrealized losses on investments as of August 31, 2025, and August 31, 2024, were primarily caused by rising interest rates rather than changes in credit quality;

thus, the Company did not record an allowance for credit losses.

The following tables summarize our short-term investments and cash equivalents as of August 31, 2025 and 2024:

August 31, 2025

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Term deposits (due within one year) $ 3,500 $ — $ — $ 3,500

Corporate debt securities (due within one year) 8,448 — ( 4 ) 8,444

Money Market 13,159 — — 13,159

Total Level 1 16,659 — — 16,659

Total available-for-sale securities $ 9,948 $ — $ ( 4 ) $ 9,944

Total securities $ 16,659 $ — $ — $ 16,659

August 31, 2024

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Term deposits (due within one year) $ 1,500 $ — $ — $ 1,500

government and agency securities (due within one year) 4,453 — ( 5 ) 4,448

Commercial paper (due within one year) 9,070 — ( 9 ) 9,061

Corporate debt securities (due within one year) 8,448 — ( 4 ) 8,444

Money Market 1,975 — — 1,975

Total Level 1 11,923 — ( 4 ) 11,919

Total held-to-maturity securities $ 57,940 $ — $ ( 115 ) $ 57,825

Total securities $ 11,923 $ — $ ( 4 ) $ 11,919

During fiscal 2025, the Company completed the final payment of $ 1.6 million related to the holdback liability from the acquisition of Immunetrics, Inc.

(“Immunetrics”).

Additionally, based on earned revenue for Immunetrics during the second earnout measurement period, the Company has assessed the fair value of the earnout liability to be zero.

As of August 31, 2024 , the Company had a liability for contingent consideration related to its acquisition of Immunetrics.

The fair value measurement of the contingent consideration obligations is determined using Level 3 inputs.

The fair value of contingent consideration obligations is based on a discounted cash flow model using a probability-weighted income approach.

These fair value measurements represent Level 3 measurements as they are based on significant inputs not observable in markets.

Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period.

Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period.

Changes in the fair value of the contingent consideration obligations are presented in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income .

As of August 31, 2024 and 2023, the Company had a liability for contingent consideration related to its acquisition of Immunetrics.

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Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period.

Changes in the fair value of the contingent consideration obligations are recorded in the Company’s Consolidated Statement of Operations .

Changes in the fair value of the contingent consideration obligations are recorded in the Company’s Consolidated Statement of Operations and Comprehensive (Loss) Income.

The following is a reconciliation of contingent consideration at fair value:

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We measure goodwill as of the acquisition date as the excess of consideration transferred, which we also measure at fair value, over the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed.

Costs that we incur to complete the business combination, such as investment banking, legal, and other professional fees, are not considered part of consideration, and we recognize such costs as general and administrative expenses as they are incurred.

Under the acquisition method, we also account for acquired-company restructuring activities that we initiate separately from the business combination.

Should the initial accounting for a business combination be incomplete by the end of a reporting period that falls within the measurement period, we report provisional amounts in our financial statements.

Costs that we incur to complete the business combination, such as investment banking, legal, and other professional fees, are not considered part of the consideration, and we recognize such costs as general and administrative expenses as they are incurred.

We also account for acquired-company restructuring activities that we initiate separately from the business combination.

During the measurement period, we adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date, and we record those adjustments to our financial statements.

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We record all other changes to deferred-tax asset valuation allowances and liabilities related to uncertain tax positions in current-period income tax expense.

This accounting applies to all of our acquisitions regardless of acquisition date.

During the fiscal years ended August 31, 2024, 2023, and 2022, the Company recorded mergers and acquisitions expense of $ 2.6 million, $ 3.3 million, and $ 0.3 million, respectively.

The Company records mergers and acquisition expenses in general and administrative expenses in the consolidated statements of operations and comprehensive income.

This accounting applies to all our acquisitions regardless of acquisition date.

During the fiscal years ended August 31, 2025, 2024, and 2023, the Company recorded mergers and acquisitions expense of zero , $ 2.6 million, and $ 3.3 million, respectively.

The Company deducted $ 0.1 million from the final settlement of the holdback liability in connection with the Immunetrics acquisition.

The Company records mergers and acquisition expenses in general and administrative expenses in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Research and Development Costs

Research and development costs are charged to expense as incurred until technological feasibility has been established.

These costs include salaries, laboratory experiments, and purchased software that was developed by other companies and incorporated into, or used in the development of, our final products.

We account for income taxes in accordance with ASC 740, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.

Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.

R&D costs are charged to expense as incurred until technological feasibility has been established.

These costs include salaries used in the development of our final products.

We account for income taxes in accordance with ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns.

Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.

Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

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Intellectual property

In May 2014, we entered into a termination and non-assertion agreement with TSRL, Inc., pursuant to which the parties agreed to terminate an exclusive software licensing agreement entered into between the parties in 1997.

As a result, the Company obtained a perpetual right to use certain source code and data, and TSRL relinquished any rights and claims to any GastroPlus products and to any claims, royalties, or other payments under that 1997 agreement.

We agreed to pay TSRL total consideration of $ 6.0 million, which was amortized over 10 years under the straight-line method and is fully amortized as of August 31, 2024.

In June 2017, as part of the acquisition of DILIsym, the Company acquired certain developed technologies associated with drug-induced liver disease (“DILI”).

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Value Accumulated

Amortization Net Book

Amortization Impairment Net Book

Developed technologies–DILIsym acquisition Straight line 9 years

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$ 28,620 $ 9,021 $ 13,402 $ 6,197

We measure recoverability by comparing the carrying amount of an asset to the expected future undiscounted net cash flows generated by the asset.

If we determine that the asset may not be recoverable, or if the carrying amount of an asset exceeds its estimated future undiscounted cash flows, we recognize an impairment charge to the extent of the difference between the fair value and the asset's carrying amount.

Developed technologies related to the Pro-ficiency acquisition were determined to be impaired.

Such charges of $ 13.4 million are recorded in impairments on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

The following table summarizes intellectual property as of August 31, 2024:

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Amortization Net Book

Termination/nonassertion agreement-TSRL Inc.

Straight line 10 years

$ 6,000 $ 5,575 $ 425

Developed technologies–DILIsym acquisition Straight line 9 years

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1,080 261 819

Developed technologies–Pro-ficiency acquisition Straight line 5 years

16,630 732 15,898

Total amortization expense for intellectual property agreements was $ 2.2 million, $ 1.4 million, and $ 1.4 million for the fiscal years ended August 31, 2024, 2023, and, 2022 , respectively.

Estimated future amortization of intellectual property for the next five fiscal years are as follows:

$ 28,620 $ 5,490 $ 23,130

Total amortization expense for intellectual property agreements was $ 3.5 million, $ 2.2 million, and $ 1.4 million for the fiscal years ended August 31, 2025, August 31, 2024, and August 31, 2023, respectively.

The Company records these in Cost of revenues - software on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

The estimated future amortization of intellectual property for the next five fiscal years is as follows:

(in thousands)

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Earnings per Share

We report earnings per share in accordance with ASC 260.

We report earnings per share in accordance with ASC 260, Earnings Per Share.

Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding.

Diluted earnings per share is computed similarly to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

However, potential dilutive securities are not reflected in the diluted loss per share because such shares are anti-dilutive.

The components of basic and diluted earnings per share for the fiscal years ended August 31, 2025, 2024, and 2023 were as follows:

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(in thousands) 2025 2024 2023

Net income attributable to common shareholders $ 9,954 $ 9,961 $ 12,483

Net (loss) income attributable to common shareholders $ ( 64,718 ) $ 9,954 $ 9,961

Weighted-average number of common shares outstanding during the period 20,101 19,987 20,075

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Stock-Based Compensation

Compensation costs related to stock options are determined in accordance with ASC 718.

Compensation costs related to stock options are determined in accordance with ASC 718, Compensation - Stock Compensation.

Compensation cost is calculated based on the grant-date fair value estimated using the Black-Scholes pricing model and then amortized on a straight-line basis over the requisite service period.

Stock-based compensation costs related to stock options, not including shares issued to directors for services, was $ 6.0 million, $ 4.3 million, and $ 2.7 million for the fiscal years ended August 31, 2024, 2023, and 2022, respectively.

Impairment of Long-lived Assets

We account for the impairment and disposition of long-lived assets in accordance with ASC 360.

Long-lived assets to be held and used are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable.

We measure recoverability by comparing the carrying amount of an asset to the expected future undiscounted net cash flows generated by the asset.

No impairment losses were recorded for the fiscal year ended August 31, 2024.

As of August 31, 2023, we recognized a $ 0.5 million impairment charge related to the Cognigen trade name, and it is included in G&A expenses .

The Cognigen trade name fair valuation was measured during the acquisition of Cognigen.

Management determined to no longer use the Cognigen trade name and to instead focus our marketing strategy on promoting the Simulations Plus brand and our portfolio of products and services.

As the Company's other acquired trade names relate to marketed products actively sold to customers, and following management's assessment of other possible triggering events that could indicate a risk of impairment, management concluded that no impairment of other intangible assets or goodwill was necessary.

No impairment losses were recorded for the fiscal year ended August 31, 2022.

Stock-based compensation costs related to stock options, not including shares issued to directors for services, were $ 6.1 million, $ 6.0 million, and $ 4.3 million for the fiscal years ended August 31, 2025, 2024, and 2023, respectively.

For the fiscal year ended August 31, 2025, 1,736,277 shares were not considered in the computation of diluted earnings per common share because the Company recorded net losses.

For the fiscal years ended August 31, 2024 and 2023, 175,780 and 21,304 shares were not considered in the computation of diluted earnings per common share because their inclusion would result in an anti-dilutive effect on per-share amounts.

Recently Issued Accounting Standards

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06 - Disclosure Improvements:

In October 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-06 - Disclosure Improvements:

Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative (“ASU 2023-06”).

ASU 2023-06 incorporates 14 of the 27 disclosure requirements published in SEC Release No.

33-10532 - Disclosure Update and Simplification into various topics within the Accounting Standards Codification (“ASC”).

33-10532 - Disclosure Update and Simplification into various topics within the ASC.

ASU 2023-06's amendments represent clarifications to, or technical corrections of, current requirements.

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Early adoption is prohibited.

The Company does not expect ASU 2023-06 to have a material effect on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.

In December 2023, the FASB issued a new standard to improve income tax disclosures.

The Company does not expect ASU 2023-06 to have a material effect on its consolidated financial statements as the updates are incremental to existing disclosures.

In December 2023, the FASB issued a new standard (ASU 2023-09) to improve income tax disclosures.

The guidance requires disclosure of disaggregated income taxes paid, prescribes standardized categories for the components of the effective tax rate reconciliation, and modifies other income-tax-related disclosures.

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Retrospective application is permitted.

The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.

The Company does not expect ASU 2023-09 to have a material effect on its consolidated financial statements as the additional incremental disclosures information is available to the Company.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires companies to disclose additional information about the types of expenses in commonly presented expense captions.

The new standard requires tabular disclosure of specified natural expenses in certain expense captions, a qualitative description of amounts that are not separately disaggregated, and disclosure of the Company's definition and total amount of selling expenses.

The ASU should be applied prospectively for annual reporting periods beginning after December 15, 2026, with retrospective application and early adoption permitted.

The Company is currently evaluating the impacts of this guidance on the Company's consolidated financial statements.

Recently Adopted Accounting Standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires companies to enhance the disclosures about segment expenses.

The new standard requires the disclosure of the Company’s Chief Operating Decision Maker (CODM), expanded incremental line-item disclosures of significant segment expenses used by the CODM for decision-making, and the inclusion of previous annual-only segment disclosure requirements on a quarterly basis.

This ASU should be applied retrospectively for fiscal years beginning after December 15, 2023, and early adoption is permitted.

The Company adopted this guidance for annual disclosures for the year ended August 31, 2025.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements .

NOTE 3 – OTHER INCOME

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Change in fair valuation of contingent consideration 640 1,639 ( 680 )

(Loss) gain on disposal of assets — ( 6 ) 1

(Loss) on disposal of assets ( 23 ) — ( 6 )

Realized losses from sale of AFS securities — ( 125 ) —

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(in thousands) Years Ending August 31, Amount

Thereafter 235

Total undiscounted liabilities 776

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Shares Outstanding

Shares of Company's common stock outstanding for the fiscal years ended August 31, 2024, 2023, and 2022 were as follows:

Shares of the Company's common stock outstanding for the fiscal years ended August 31, 2025, 2024, and 2023 were as follows:

Years ended August 31,

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Common stock outstanding, end of period 20,137 20,051 19,938

The Company’s Board of Directors declared cash dividends during the fiscal years ended August 31, 2024 and 2023.

The Company’s Board of Directors declared cash dividends during the fiscal years ended August 31, 2024.

The Board of Directors determined to discontinue the Company’s quarterly cash dividend after the dividend distribution on August 5, 2024.

The details of dividends paid are in the following tables:

(in thousands, except dividend per share) For The Year Ended August 31, 2024

Record Date Distribution Date Number of Shares

Outstanding on

Record Date Dividend per

Share Total Amount

10/30/2023 11/06/2023 19,939 $ 0.06 $ 1,196

1/29/2024 2/05/2024 19,973 $ 0.06 1,198

4/29/2024 5/06/2024 19,998 $ 0.06 1,200

7/29/2024 8/05/2024 20,046 $ 0.06 1,202

Total $ 4,796

The details of dividends paid are in the following table:

(in thousands, except dividend per share) For The Year Ended August 31, 2024

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Total $ 4,796

Stock Option Plans

Stock Option and Equity Incentive Plans

On December 23, 2016, the Company’s Board of Directors adopted, and on February 23, 2017, its shareholders approved, the Company’s 2017 Equity Incentive Plan (the “2017 Plan”), under which a total of 1.0 million shares of common stock were initially reserved for issuance.

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As of August 31, 2025, employees and directors of the Company held Qualified Incentive Stock Options (“ISOs”) and Non-Qualified Stock Options (“NQSOs”) to purchase an aggregate of 1.9 million shares of common stock at exercise prices ranging from $ 6.85 to $ 66.14 per share.

NOTE 7 – STOCK OWNERSHIP PLANS

The following table summarizes information about stock options:

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The fair value of these options was estimated at the date of grant using the Black-Scholes option-pricing model.

The Black-Scholes option-valuation model was developed for use in estimating the fair value of traded options, which do not have vesting restrictions and are fully transferable.

The Black-Scholes option-valuation model was developed for use in estimating the fair value of stock options, which do not have vesting restrictions and are fully transferable.

In addition, option-valuation models require the input of highly subjective assumptions, including the expected stock price volatility.

The following table summarizes the fair value of the options, including both ISOs and NQSOs, granted during the fiscal years ended August 31, 2024, 2023, and 2022:

The following table summarizes the fair value of the options, including both ISOs and NQSOs, granted during the years ended August 31, 2025, 2024, and 2023:

(in thousands, except weighted-average amounts) 2025 2024 2023

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Weighted-average expected life 6.61 years 6.59 years 6.55 years

The exercise prices for the options outstanding at August 31, 2024, ranged from $ 6.85 to $ 66.14 per share, and the information relating to these options is as follows:

The exercise prices for the options outstanding as of August 31, 2025, ranged from $ 6.85 to $ 66.14 per share, and the information relating to these options is as follows:

(in thousands except prices and weighted-average amounts)

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1,924 6.52 years $ 36.98 961 4.84 years $ 35.51

During the fiscal years ended August 31, 2024, 2023, and 2022, we issued 15,200 , 13,765 , and 7,120 shares of stock valued at $ 0.6 million, $ 0.6 million , and $ 0.4 million, respectively, to our nonmanagement directors as compensation for board-related duties.

The Company's par-value common stock and additional paid-in capital as of August 31, 2024, were $ 11 thousand and $ 152.3 million, respectively.

During the years ended August 31, 2025, 2024, and 2023 we issued 23,195 , 15,200 , and 13,765 shares of stock valued at $ 0.5 million, $ 0.6 million, and $ 0.6 million respectively, to our nonmanagement directors as compensation for board-related duties.

Share Repurchases

No share repurchases were made during the fiscal year ended August 31, 2024.

No share repurchases were made during the fiscal years ended August 31, 2025 and 2024.

On December 29, 2022, our Board of Directors authorized and approved a share repurchase program for up to $ 50 million of the outstanding shares of our common stock, and on January 11, 2023, we entered into an accelerated share repurchase agreement (the “ASR Agreement”) with Morgan Stanley & Co.

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Based on our assessment, we have not recorded a liability for uncertain tax positions.

The components of the income tax provision for the years ended August 31, 2024, 2023, and 2022 were as follows:

Management has considered that the accounting guidance under ASC 740-10-55-7 requires entities to assess deferred tax assets (DTAs) for realization and to record a valuation allowance if the DTA is not fully realizable.

The objective of the valuation allowance is to reduce the deferred tax asset to the amount that is more likely than not to be realized.

After completing the analysis, management determined the deferred tax asset is realizable and no valuation allowance is required.

The components of the income tax (benefit) expense for the fiscal years ended August 31, 2025, 2024, and 2023 were as follows:

(in thousands) 2025 2024 2023

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Total $ ( 4,659 ) $ 2,457 $ 1,734

A reconciliation of the expected income tax computed using the federal statutory income tax rate to the Company's effective income tax rate is as follows for the years ended August 31, 2024, 2023, and 2022:

A reconciliation of the expected income tax computed using the federal statutory income tax rate to the Company's effective income tax rate is as follows for the fiscal years ended August 31, 2025, 2024, and 2023:

2025 2024 2023

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Foreign-tax-related differences 1.4 % ( 7.0 ) % ( 8.2 ) %

Goodwill Impairment ( 15.7 ) % — % — %

Change in prior year estimated taxes 0.4 % ( 0.2 ) % ( 6.0 ) %

Non-deductible expenses ( 0.3 ) % — % — %

Total 6.7 % 19.8 % 14.8 %

The book impairment of $ 77.2 million had zero tax basis.

The goodwill component of the impairment resulted in a permanent item in the amount of $ 51.9 million ($ 10.9 million tax effected).

The other intangibles component of impairment in the amount of $ 25.3 million ($ 6.4 million tax effected) release of an existing deferred tax liability.

Significant components of the Company's deferred tax assets and liabilities for income taxes for the fiscal years ended August 31, 2025, and 2024 are as follows:

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Research and development credits 60 157

State taxes — ( 19 )

Allowance for credit losses 24 67

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Share-based compensation 2,297 1,676

Capital loss carryforward 25 —

Accrued sales tax 67 —

Net operating loss carryforward 1,923 3,336

Charitable contributions 1 —

Total deferred tax assets 9,656 10,998

Valuation allowance — —

Deferred tax asset 9,656 10,998

Deferred tax liabilities:

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Amount to expire before Section 382 limitation lifts —

Oregon NOL as of August 31, 2025 166

Subject to expiration 166

Carried forward indefinitely —

Amount to expire before Section 382 limitation lifts —

California R&D Credit as of August 31, 2025 44

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Revenue concentration shows that international sales accounted for 27 %, 28 %, and 31 % of revenue for the fiscal years ended August 31, 2025, 2024, and 2023, respectively.

Our four largest customers in terms of revenue accounted for 7 %, 3 %, 3 %, and 2 % of revenue, respectively, for the fiscal year ended August 31, 2024.

Our three largest customers in terms of revenue accounted for 6 %, 4 %, and 3 % of revenue, respectively, for the fiscal year ended August 31, 2023.

Our three largest customers in terms of revenue accounted for 5 %, 3 %, and 3 % of revenue, respectively, for the fiscal year ended August 31, 2022.

Accounts-receivable concentrations show that our six largest customers in terms of accounts receivable each comprised between 3 % and 9 % of accounts receivable as of August 31, 2024;

our three largest customers in terms of accounts receivable comprised between 4 % and 6 % of accounts receivable as of August 31, 2023.

We operate in the biosimulation market, which is highly competitive and changes rapidly.

Our three largest clients in terms of revenue accounted for 7 %, 3 %, and 3 % of total revenues, respectively, for the fiscal year ended August 31, 2025.

Our four largest clients in terms of revenue accounted for 7 %, 3 %, 3 %, and 2 % of total revenues, respectively, for the fiscal year ended August 31, 2024.

Our three largest clients in terms of revenue accounted for 6 %, 4 %, and 3 % of total revenues, respectively, for the fiscal year ended August 31, 2023.

Accounts receivable concentrations show that our three largest clients in terms of accounts receivable each comprised between 6 % and 9 % of accounts receivable as of August 31, 2025;

our six largest clients in terms of accounts receivable comprised between 3 % and 9 % of accounts receivable as of August 31, 2024.

As of the filing date of this report, our largest client, which represented 9 % of accounts receivable as of August 31, 2025, was current on all outstanding invoices, except for a de minimis amount.

We operate in biosimulation, simulation-enabled performance and intelligence solutions, and medical communications to the biopharma industry, which is highly competitive and changes rapidly.

Our operating results could be significantly affected by our ability to develop new products and find new distribution channels for new and existing products.

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The Company applies ASC 280, Segment Reporting, in determining reportable segments.

The Company has two reportable segments:

Software and Services.

Segment information is presented in the same manner that the chief operating decision maker (“CODM”) reviews certain financial information based on these reportable segments.

The CODM reviews revenue and gross profit for both of the reportable segments.

We define our reportable segments based on the way the chief operating decision maker (“CODM”), which is our Chief Executive Officer, manages the operations for purposes of allocating resources and assessing segment performance.

Our reportable segments include the following:

Supports pharmaceutical research, development, and commercialization through simulation, modeling, and AI-driven prediction.

Its main products include GastroPlus®, ADMET Predictor®, and MonolixSuite™, along with tools like DDDPlus™, MembranePlus™, DILIsym®, and others for disease modeling and training.

The company also advances partnerships with institutions like the FDA, NIEHS, PAS, and SACF to drive innovation in virtual drug testing, chemical safety, and AI-enabled discovery.

Advanced consulting services across the drug development lifecycle.

Its scientists and engineers specialize in pharmacokinetics, pharmacodynamics, drug modeling, and regulatory strategy, supporting clients from discovery through clinical development.

The CODM reviews revenue and gross profit to evaluate current-period performance versus budget and prior periods at each reportable segment and assesses management performance for purposes of annual incentive compensation.

Gross profit is defined as revenue less cost of revenue incurred by the segment.

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The Company does not allocate assets at the reportable segment level, as these are managed on an entity-wide group basis and, accordingly, the Company does not report asset information by segment.

The Company does not allocate operating expenses that are managed on an entity-wide group basis and, accordingly, the Company does not allocate and report operating expenses at a segment level.

There are no internal revenue transactions between the Company’s segments.

The following tables summarize the results for each segment for the fiscal years ended August 31, 2024, 2023, and 2022:

(in thousands) Year ended August 31, 2024

Software Services Total

Revenues $ 41,024 $ 28,989 $ 70,013

Cost of revenues 6,478 20,384 26,862

The Company does not allocate operating expenses (R&D, S&M, and G&A) that are managed on an entity-wide group basis and, accordingly, the Company does not allocate and report operating expenses at a segment level.

There are no intersegment revenue transactions between the Company’s segments.

Other segment items for each segment primarily include depreciation, income tax expense, and other income not reviewed by the CODM at the segment level.

These are not allocated to segments and are presented below segment gross profit.

There are no differences in measurement between the segment profit measure used by CODM and consolidated (loss) income before income taxes.

The following schedule reconciles the total of reportable segments’ gross profit and significant expenses to consolidated income (loss) before income taxes.

Year ended August 31, 2025

(in thousands) Software Services Total

Revenue $ 45,828 $ 33,351 $ 79,179

Cost of revenue (1) 9,652 23,306 32,958

Gross Profit 36,176 10,045 46,221

Gross Margin 79 % 30 % 58 %

Our software business and services business represented 59 % and 41 % of total revenue, respectively, for the fiscal year ended August 31, 2024.

(in thousands) Year ended August 31, 2023

Software Services Total

Revenues $ 36,517 $ 23,060 $ 59,577

Cost of revenues 3,627 8,003 11,630

Research and Development 6,884

Sales and Marketing 11,904

General and administrative (2) 20,941

Impairments 77,221

Loss from operations ( 70,729 )

Interest income and other, net 722

Change in value of contingent consideration 640

Gain (loss) on disposal of fixed assets ( 23 )

Income (loss) on currency exchange 13

Income (loss) before income taxes ( 69,377 )

(1) Cost of revenue includes $ 6.7 million of amortization within our Software reportable segment.

(2) General and administrative includes $ 0.3 million of depreciation and $ 1.2 million of amortization, respectively.

Year ended August 31, 2024

(in thousands) Software Services Total

Revenue $ 41,024 $ 28,989 $ 70,013

Cost of revenue (1) 6,478 20,384 26,862

Gross Profit 34,546 8,605 43,151

Gross Margin 84 % 30 % 62 %

Our software business and services business represented 61 % and 39 % of total revenue, respectively, for the fiscal year ended August 31, 2023.

(in thousands) Year ended August 31, 2022

Software Services Total

Revenues $ 32,642 $ 21,264 $ 53,906

Cost of revenues 3,060 7,762 10,822

Research and Development 5,754

Sales and Marketing 8,915

General and administrative (2) 22,351

Income from operations 6,131

Interest income and other, net 4,375

Change in value of contingent consideration 1,639

Gain (loss) on disposal of fixed assets ( 120 )

Income (loss) on currency exchange 386

Income before income taxes 12,411

(1) Cost of revenue includes $ 4.5 million of amortization within our Software reportable segment.

(2) General and administrative includes $ 0.3 million of depreciation and $ 0.9 million of amortization, respectively.

Year ended August 31, 2023

(in thousands) Software Services Total

Revenue $ 36,517 $ 23,060 $ 59,577

Cost of revenue (1) 3,627 8,003 11,630

Gross Profit 32,890 15,057 47,947

Gross Margin 90 % 65 % 80 %

Our software business and services business represented 61 % and 39 % of total revenue, respectively, for the fiscal year ended August 31, 2022.

The Company allocates revenues to geographic areas based on the locations of its customers.

Research and Development 4,504

Sales and Marketing 6,558

General and administrative (2) 27,660

Impairments 500

Income from operations 8,725

Interest income and other, net 4,131

Change in value of contingent consideration ( 680 )

Gain (loss) on disposal of fixed assets ( 6 )

Income (loss) on currency exchange ( 475 )

Income before income taxes 11,695

(1) Cost of revenue includes $ 3.0 million of amortization within our Software reportable segment.

(2) General and administrative includes $ 0.3 million of depreciation and $ 0.6 million of amortization, respectively.

Revenue, classified by significant product and service offerings, was as follows:

(in thousands) August 31, 2025 August 31, 2024 August 31, 2023

GastroPlus $ 22,091 $ 21,828 $ 20,786

MonolixSuite TM 9,361 8,242 6,895

ADMET Predictor 7,716 7,357 6,970

Other Software 6,660 3,597 1,866

Total Software 45,828 41,024 36,517

PKPD Services 13,049 12,422 10,463

Medical Communications 8,116 1,124 —

QSP/QST Services 6,536 8,892 5,677

PBPK Services 5,650 6,551 6,920

Total Services 33,351 28,989 23,060

Total $ 79,179 $ 70,013 $ 59,577

The Company allocates revenues to geographic areas based on the locations of its clients.

Geographical revenues for the fiscal years ended August 31, 2025, 2024, and 2023, were as follows:

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Total $ 79,179 100 % $ 70,013 100 % $ 59,577 100 %

*Percentages may not add due to rounding

As of August 31, 2025 and 2024, substantially all of the Company’s long-lived assets were located in the United States;

long-lived assets located in any individual foreign country were not material.

NOTE 11 – EMPLOYEE BENEFIT PLAN

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On June 16, 2023, the Company completed the acquisition of Immunetrics for an estimated consideration of $ 15.3 million.

The Company has a remaining obligation for the Immunetrics acquisition for up to $ 5.5 million and $ 1.8 million hold back liability.

The Company made the first cash earnout payments in the aggregate amount of $ 2.5 million to the former equity holders and employees of Immunetrics in March 2024.

During fiscal year ended August 31, 2025, the Company determined the second earnout measurement period's fair value to be zero based on earned revenues.

During the fiscal year ended August 31, 2025, the Company completed the final payment of $ 1.6 million related to the holdback liability of Immunetrics.

The primary purpose of this acquisition is to be able to capitalize on a tremendous growth opportunity by providing support for quantitative systems pharmacology (“QSP”) in a greater range of therapeutic areas, including oncology.

Under the acquisition method of accounting, the total purchase price reflects Immunetrics’ tangible and intangible assets and liabilities based on their estimated fair values at the date of the completion of the acquisition (June 16, 2023).

The following table summarizes the allocation of the preliminary purchase price for Immunetrics:

The following table summarizes the allocation of the final purchase price for Immunetrics:

(in thousands)

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Total intangible assets $ 6,690

During the third quarter of fiscal year 2025, we recorded $ 3.9 million of goodwill, intangible, and fixed asset impairment charges attributable to the Immunetrics acquisition.

The impairment charges relate to the triggering event.

These costs are included in Impairment on our consolidated statement of operations.

See Note 2 – Significant Accounting Policies for additional details.

On June 11, 2024, the Company entered into a stock purchase agreement, pursuant to which it acquired Pro-ficiency Holdings, Inc.

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Under the acquisition method of accounting, the total purchase price reflects Pro-ficiency’s tangible and intangible assets and liabilities based on their estimated fair values at the date of the completion of the acquisition (June 11, 2024).

The following table summarizes the allocation of the preliminary purchase price for Pro-ficiency:

(in thousands)

The following table summarizes the allocation of the final purchase price for Pro-ficiency:

(in thousands) Estimated fair value as previously reported (a)

Measurement Period Adjustments Fair Value as adjusted

Base merger consideration $ 100,000 $ — $ 100,000

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Fair value of identifiable assets acquired:

Cash 2,513 — 2,513

Accounts receivable 2,064 — 2,064

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Other non-current assets 17 — 17

34,023 — 34,023

Fair value of liabilities assumed:

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Other liabilities 1,124 — 1,124

10,840 ( 956 ) 9,884

Fair value of identifiable assets acquired and liabilities assumed 23,183 24,139

Goodwill $ 76,979 $ 76,250

(a) As previously reported in the Company's Annual Report on Form 10-K for the year ended August 31, 2024.

The Company had two measurement period adjustments due to additional knowledge gained since June 11, 2024.

The adjustments include a net working capital & excess cash settlement of $ 0.2 million and deferred taxes of $ 1.0 million.

The total purchase consideration related to the Pro-ficiency acquisition consisted of cash consideration.

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributed to the developed technologies and other intangibles such as customer relationships and trade names.

Proficiency is structured into two business units:

ALI primarily contributes to the software segment and MC primarily contributes to the services segment of the Company.

Goodwill acquired as part of the Pro-ficiency acquisition has been assigned to the ALI and MC reporting units and the assets and liabilities of Pro-ficiency are assigned to the same reporting units.

Pro-ficiency is structured into two functions:

Clinical Operations and Commercialization.

Clinical Operations primarily contributes to the software segment and Commercialization primarily contributes to the services segment of the Company.

Goodwill acquired as part of the Pro-ficiency acquisition has been assigned to the Clinical Operations and Commercialization reporting units and the assets and liabilities of Pro-ficiency are assigned to the same reporting units.

This goodwill is not expected to be deductible for income tax purposes.

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Total intangible assets $ 27,410

Estimated future amortization of finite-lived intangible assets for the next five years is as follows:

(in thousands)

Years ending August 31, Amount

The estimated future amortization of finite-lived intangible assets for the next five years is as follows:

(in thousands) Amount

Years ending August 31,

During the third quarter of fiscal year 2025, we recorded $ 72.2 million of goodwill, intangible, and fixed asset impairment charges attributable to the Pro-ficiency acquisition.

The impairment charges relate to the triggering event.

These costs are included in Impairment on our consolidated statement of operations.

See Note 2 – Significant Accounting Policies for additional details.

Consolidated Supplemental Pro Forma Information

The following unaudited consolidated supplemental pro forma information assumes that the acquisition of Pro-ficiency took place on September 1, 2022 for the income statement years ended August 31, 2024.

The following unaudited consolidated supplemental pro forma information assumes that the acquisition of Pro-ficiency took place on September 1, 2022 for the fiscal year ended August 31, 2024.

These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Pro-ficiency to reflect the same expenses in the fiscal years ended August 31, 2024 and 2023.

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* Balances include actual results from acquisition date of June 16, 2023 through August 31, 2023 for Immunetrics and from acquisition date of June 11, 2024 through August 31, 2024 for Pro-ficiency business.

NOTE 13 - RESTRUCTURING

At the end of the quarter ended May 31, 2025, the Company executed a restructuring plan to reduce its workforce by approximately 10 % to enhance its operational efficiency and reduce operating expenses (the "2025 Restructuring Plan").

Communication to employees and actions associated with the 2025 restructuring plan were completed by the end of the quarter ended May 31, 2025.

The Company estimates that it incurred a one-time expense of approximately $ 0.7 million in charges in connection with the 2025 Restructuring Plan, consisting of involuntary severance payments, employee benefits, and related costs, substantially all of which the Company incurred in the fiscal year ending August 31, 2025.

These costs are recorded within General and Administrative expenses on the Consolidated Statements of Operations and Comprehensive (loss) income.

The restructuring was driven by macroeconomic factors negatively impacting the pharmaceutical and biotechnology markets.

The reduction in workforce and cost reductions being implemented are expected to reduce operating expenses by approximately $ 4.3 million on an annualized basis.

As of August 31, 2025, the Company has recorded total severance charges of $ 0.7 million related to the 2025 Restructuring Plan reflected in General and Administrative expenses.

Also, as of August 31, 2025, the Company had no remaining accrued severance charges.

The Company does not expect to incur further material severance charges related to the 2025 Restructuring Plan in future periods.

NOTE 14 - SUBSEQUENT EVENTS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures