Simulations Plus, Inc. 10-K

ITEM 9A – CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our Chief Executive Officer and our Chief Financial Officer, after evaluating our “disclosure controls and procedures” (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Report (the “Evaluation Date”), have concluded that as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, where appropriate, to allow timely decisions regarding required disclosure. Management Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP. Management assessed our internal control over financial reporting as of August 31, 2025, the end of our fiscal year. Management based its assessment on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Management’s assessment included evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment. Based on this assessment, management has concluded that our internal control over financial reporting was effective as of the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with U.S. GAAP. We reviewed the results of management’s assessment with the Audit Committee of our Board of Directors. Inherent Limitations on Effectiveness of Controls Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. 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 No change in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 43 Table of Contents ITEM 9B – OTHER INFORMATION 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. ITEM 9C – DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 44 Table of Contents PART III ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE Information required by this item is incorporated herein by reference from the Company’s definitive proxy statement, to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Report (the “Proxy Statement”). We have adopted a Code of Conduct (the "code of conduct") that applies to each of our directors and employees, including our principal executive officer, principal financial officer, controller, and all other employees performing similar functions. 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 The information required by this item is incorporated by reference to the Proxy Statement. ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this item is incorporated by reference to the Proxy Statement. ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item is incorporated by reference to the Proxy Statement. ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES Our independent registered public accounting firm is Rose, Snyder & Jacobs LLP, Encino, CA, Auditor Firm ID: 468 . The information required by this item is incorporated by reference to the Proxy Statement. 45 Table of Contents PART IV Item 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES EXHIBIT NUMBER DESCRIPTION 2.1^ Agreement and Plan of Merger, dated July 23, 2014, by and among the Company, Cognigen Corporation and the other parties thereto, incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K/A filed November 18, 2014. 2.2^ Stock Purchase Agreement by and among Simulations Plus, Inc., DILIsym Services, Inc., the Shareholders’ Representative and the Shareholders of DILIsym Services, Inc., incorporated by reference to Exhibit 10.13 to the Company’s Form 10-Q filed July 10, 2017. 2.3^ Share Purchase and Contribution Agreement Relating to Lixoft, dated March 31, 2020, incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed April 2, 2020. 2.4^ Agreement and Plan of Merger, dated June 16, 2023, by and among Simulations Plus, Inc., Insight Merger Sub, Inc., Immunetrics, Inc. and LaunchCyte LLC, incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed June 20, 2023. 2.5^+ Stock Purchase Agreement, by and among the Company, Pro-ficiency Holdings, Inc. (“Pro-ficiency”), each of the stockholders of Pro-ficiency (collectively, the “Sellers”) and WRYP Stockholders Services, LLC, solely in its capacity as the Sellers’ Representative, dated June 11, 2024, incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed June 12, 2024. 3.1 Articles of Incorporation of the Company, incorporated by reference to an Exhibit 3.1 to the Company’s Form 10-K filed November 29, 2010. 3.2 Amended and Restated Bylaws of the Company, incorporated by reference to an exhibit to the Company’s Form 10-K filed November 29, 2010. 3.3 Certificate of Amendment to the Amended and Restated Bylaws of Simulations Plus, Inc., incorporated by reference to Appendix A to the Company’s Definitive Schedule 14A Proxy Statement filed December 31, 2018. 4.1 Form of Common Stock Certificate, incorporated by reference to the Company’s Registration Statement on Form SB-2 (Registration No. 333-6680) filed March 25, 1997. 4.2 Share Exchange Agreement, incorporated by reference to the Company’s Registration Statement on Form SB-2 (Registration No. 333-6680) filed March 25, 1997. 4.3 Description of Securities, incorporated by reference to Exhibit 4.1 to the Company’s 10-K filed October 27, 2023. 10.1(†) The Company’s 2007 Stock Option Plan, as amended, incorporated by reference to Exhibit 10.3 to the Company’s Form 10-K filed April 9, 2014. 10.2 Second Amendment to Lease by and between the Company and Crest Development LLC, dated as of May 1, 2016, incorporated by reference to Exhibit 10.4(d) to the Company’s Form 10-K filed November 14, 2016. 10.3 Form of Indemnification Agreement, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed August 10, 2016. 10.4(†) 2017 Equity Incentive Plan, incorporated by reference to Appendix A to the Company’s Definitive Schedule 14A Proxy Statement filed December 29, 2016. 10.5 Third Amendment to Lease by and between the Company and Crest Development LLC, dated as of December 28, 2020 incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed January 4, 2021. 10.6(†) Simulation Plus, Inc. 2021 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed June 8, 2021. 10.7^ Confirmation for Fixed Dollar Accelerated Share Repurchase Transaction, dated as of January 11, 2023, by and between Simulations Plus, Inc. and Morgan Stanley & Co. LLC, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed January 12, 2023. 10.8 First Amendment to 2021 Equity Incentive Plan of Simulations Plus, Inc., dated February 9, 2023, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed February 13, 2023. 10.9 Fourth Amendment to Lease by and between the Company and Crest Development LLC, dated as of February 17, 2023, incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed April 7, 2023. 10.10^ Earnout Agreement by and among Simulations Plus, Inc., Insight Merger Sub, Inc., Immunetrics, Inc. and LaunchCyte LLC, dated June 16, 2023, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed June 20, 2023. 10.11(†) Amended and Restated Employment Agreement between Simulations Plus, Inc. and Shawn O’Connor, dated November 1, 2023, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed November 1, 2023. 10.12(†) Amended and Restated Employment Agreement between Simulations Plus, Inc. and Will Frederick, dated November 1, 2023, incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed November 1, 2023. 10.13(†) Amended and Restated Employment Agreement between Simulations Plus, Inc. and John DiBella, dated November 1, 2023, incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K filed November 1, 2023. 10.14(†) Amended and Restated Employment Agreement between Simulations Plus, Inc. and Jill Fiedler-Kelly, dated November 1, 2023, incorporated by reference to Exhibit 10.5 to the Company’s Form 8-K filed November 1, 2023. 46 Table of Contents 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. Insider Trading Policy 21.1 * List of Subsidiaries. 23.1 * Consent of Independent Registered Public Accounting Firm. 24.1 * Power of Attorney (see signature page) 31.1 * Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 * Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 ** Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1 Simulations Plus, Inc. 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 101.SCH*** Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents 104*** Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 attachments). _____________________________ * Filed herewith. ** Furnished herewith. *** The XBRL related information in Exhibit 101 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document. ^ Schedules, exhibits, and similar supporting attachments or agreements are omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a supplemental copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request. † Refers to management contracts or compensatory plans or arrangements. + Portions of the exhibit, marked by brackets, have been omitted because the omitted information (i) is not material and (ii) would likely cause competitive harm if publicly disclosed. 47 Table of Contents SIGNATURES 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. December 1, 2025 SIMULATIONS PLUS, INC. By: /s/ Will Frederick Will Fredrick Executive Vice President and Chief Financial Officer (Principal financial officer) POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Will Frederick his or her true and lawful attorney-in-fact and agent, with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof. 48 Table of Contents Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title /s/ Shawn O’Connor Chief Executive Officer (Principal executive officer) Shawn O’Connor December 1, 2025 /s/ Dr. Daniel Weiner Chairman of the Board of Directors Dr. Daniel Weiner December 1, 2025 /s/ Walter S. Woltosz Director Walter S. Woltosz December 1, 2025 /s/ Dr. Lisa LaVange Director Dr. Lisa LaVange December 1, 2025 /s/ Sharlene Evans Director Sharlene Evans December 1, 2025 /s/ Dr. John K. Paglia Director Dr. John K. Paglia December 1, 2025 /s/ Will Frederick Executive Vice President and Chief Financial Officer (Principal financial officer and principal accounting officer) Will Frederick December 1, 2025 49 Table of Contents SIMULATIONS PLUS, INC. & SUBSIDIARIES CONTENTS August 31, 2025, 2024 and 2023 Page REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F- 2 FINANCIAL STATEMENTS Consolidated Balance Sheets F- 4 Consolidated Statements of Operations and Comprehensive (Loss) Income F- 5 Consolidated Statements of Shareholders’ Equity F- 6 Consolidated Statements of Cash Flows F- 7 Notes to Consolidated Financial Statements F- 8 – F- 38 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Simulations Plus, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Simulations Plus, Inc. and Subsidiaries (the Company) as of August 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended August 31, 2025, and the related notes (collectively referred to as the consolidated financial statements). 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. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. 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 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. We conducted our audits in accordance with the standards of the PCAOB. 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. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Revenue Recognition – Contract progress estimates Description of the Matter As discussed in Note 2 to the Consolidated Financial Statements, the Company earns a portion of its revenue through consulting service agreements. For performance obligations related to services that are required to be recognized over time, the Company generally measures its progress to completion using an input measure of total labor hours incurred divided by total labor hours expected to be incurred. Auditing revenue recognition is complex and highly judgmental due to the variability and uncertainty associated with the Company’s assessment of measure of progress. Changes in these estimates would have a significant effect on the amount of revenue recognized. How We Addressed the Matter in Our Audit F-2 Table of Contents 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 by testing the underlying data. Rose, Snyder & Jacobs LLP We have served as the Company’s auditor since 2004. Encino, California December 1, 2025 F-3 Table of Contents SIMULATIONS PLUS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) August 31, 2025 August 31, 2024 ASSETS Current assets Cash and cash equivalents $ 30,853 $ 10,311 Accounts receivable, net of allowance for credit losses of $ 187 and $ 149 9,717 9,136 Prepaid income taxes 1,777 2,197 Prepaid expenses and other current assets 7,702 7,753 Short-term investments 1,500 9,944 Total current assets 51,549 39,341 Long-term assets Capitalized computer software development costs, net of accumulated amortization of $ 21,863 and $ 18,727 11,117 12,499 Property and equipment, net 880 812 Operating lease right-of-use assets 407 1,027 Intellectual property, net of accumulated amortization of $ 9,021 and $ 5,490 6,197 23,130 Other intangible assets, net of accumulated amortization of $ 4,399 and $ 3,177 11,896 23,210 Goodwill 43,717 96,078 Deferred tax assets, net 4,774 — Other assets 1,399 542 Total assets $ 131,936 $ 196,639 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 470 $ 602 Accrued compensation 2,010 4,513 Accrued expenses 1,343 2,043 Contracts payable - current portion — 2,440 Operating lease liability - current portion 206 475 Deferred revenue 2,696 1,996 Total current liabilities 6,725 12,069 Long-term liabilities Deferred tax liabilities, net — 1,608 Operating lease liability - net of current portion 410 531 Total liabilities 7,135 14,208 Commitments and contingencies - Note 5 Shareholders' equity Preferred stock, $ 0.001 par value — 10,000,000 shares authorized; no shares issued and outstanding $ — $ — Common stock, $ 0.001 par value; 50,000,000 shares authorized, 20,137,480 and 20,051,134 shares issued and outstanding 20 20 Additional paid-in capital 159,416 152,308 (Accumulated deficit) retained earnings ( 34,364 ) 30,354 Accumulated other comprehensive loss ( 271 ) ( 251 ) Total shareholders' equity 124,801 182,431 Total liabilities and shareholders' equity $ 131,936 $ 196,639 The accompanying notes are an integral part of these Consolidated Financial Statements. F-4 Table of Contents SIMULATIONS PLUS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME Years ended August 31, (in thousands, except per common share amounts) 2025 2024 2023 Revenues Software $ 45,828 $ 41,024 $ 36,517 Services 33,351 28,989 23,060 Total revenues 79,179 70,013 59,577 Cost of revenues Software 9,652 6,478 3,627 Services 23,306 20,384 8,003 Total cost of revenues 32,958 26,862 11,630 Gross profit 46,221 43,151 47,947 Operating expenses Research and development 6,884 5,754 4,504 Sales and marketing 11,904 8,915 6,558 General and administrative 20,941 22,351 27,660 Impairments 77,221 — 500 Total operating expenses 116,950 37,020 39,222 (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 Diluted $ ( 3.22 ) $ 0.49 $ 0.49 Weighted-average common shares outstanding Basic 20,101 19,987 20,075 Diluted 20,101 20,301 20,465 Other comprehensive (loss) income, net of tax Foreign currency translation adjustments ( 24 ) ( 105 ) 167 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. F-5 Table of Contents SIMULATIONS PLUS, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (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 Stock-based compensation — — 4,319 — — 4,319 Shares issued to Directors for services 13,765 — 600 — — 600 Declaration of dividends — — — ( 4,809 ) — ( 4,809 ) Repurchase and retirement of common shares ( 492,041 ) — — ( 20,000 ) — ( 20,000 ) Net income — — — 9,961 — 9,961 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. F-6 Table of Contents SIMULATIONS PLUS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended August 31, (in thousands) 2025 2024 2023 Cash flows from operating activities Net (loss) income $ ( 64,718 ) $ 9,954 $ 9,961 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 8,211 5,665 3,840 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 ) Stock-based compensation 6,354 6,538 4,828 Deferred income taxes ( 5,426 ) ( 1,765 ) ( 2,095 ) Loss from disposal of assets 23 — 6 Impairments 77,221 — 500 Currency translation adjustments ( 25 ) ( 105 ) 167 (Increase) decrease in Accounts receivable ( 581 ) 3,129 4,097 Prepaid income taxes 420 ( 1,393 ) 587 Prepaid expenses and other assets 194 ( 2,143 ) ( 501 ) Increase (decrease) in Accounts payable ( 132 ) ( 477 ) ( 81 ) Other liabilities ( 3,187 ) ( 768 ) 832 Accrued income taxes — — ( 7 ) Deferred revenue 700 ( 2,560 ) 176 Net cash provided by operating activities 18,126 13,320 21,856 Cash flows from investing activities Purchases of property and equipment ( 713 ) ( 566 ) ( 453 ) Purchase of short-term investments ( 6,500 ) ( 67,159 ) ( 95,045 ) Proceeds from maturities of short-term investments 14,017 71,089 114,907 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 provided by (used in) investing activities 3,562 ( 53,967 ) 7,366 Cash flows from financing activities Payment of dividends — ( 4,796 ) ( 4,809 ) Payments on contracts payable ( 1,576 ) ( 2,500 ) — Proceeds from the exercise of stock options 430 731 1,543 Repurchase and retirement of common shares — — ( 20,000 ) Net cash used in financing activities ( 1,146 ) ( 6,565 ) ( 23,266 ) 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 Cash and cash equivalents, end of period $ 30,853 $ 10,311 $ 57,523 Supplemental disclosures of cash flow information Income taxes paid $ 1,160 $ 5,689 $ 3,204 Non-Cash Investing and Financing Activities Measurement period adjustments (See Note 2) $ 956 $ — $ — Creation of contract liabilities from acquisition of subsidiaries $ — $ — $ 5,900 Right of use assets capitalized $ 426 $ 212 $ 227 The accompanying notes are an integral part of these Consolidated Financial Statements. F-7 Table of Contents Simulations Plus, Inc. Notes to Consolidated Financial Statements For the Fiscal Year Ended August 31, 2025 NOTE 1 – DESCRIPTION OF BUSINESS 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. F-8 Table of Contents NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. 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 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 and commercialization. In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606, we determine revenue recognition through the following steps: i. Identification of the contract, or contracts, with a client ii. Identification of the performance obligations in the contract iii. Determination of the transaction price iv. Allocation of the transaction price to the performance obligations in the contract v. Recognition of revenue when, or as, we satisfy a performance obligation Components of Revenue The following is a description of principal activities from which the Company generates revenue. As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract. Standalone selling prices are determined based on the prices at which the Company separately sells its services or goods. Software Revenues: 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. F-9 Table of Contents 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. Revenue for those arrangements is accounted as Software as a Service over the life of the contract. These arrangements account for a small portion of software revenues of the Company. 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 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 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. The grant revenue is recognized over the duration of the program when the conditions attached to the grant are achieved. 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 (Loss) Income as services revenue. The Company received assistance from domestic governmental agencies to provide reimbursement for various costs incurred for research and development. These include direct grant awards and subawards. The grants awarded are currently set to expire at various dates through 2025. 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 is classified under fixed assets. Subawards due to unrelated entities are classified under accrued expenses. Remaining Performance Obligations As of August 31, 2025, remaining performance obligations were $ 12.1 million; 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 The components of revenue for the fiscal years ended August 31, 2025, 2024, and 2023 were as follows: Years ended August 31, (in thousands) 2025 2024 2023 Software licenses Point in time $ 42,792 $ 40,068 $ 35,369 Over time 3,036 956 1,148 Services Over time 33,351 28,989 23,060 Total revenues $ 79,179 $ 70,013 $ 59,577 Contract Balances F-10 Table of Contents 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 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 (Loss) Income as sales and marketing expense. Cash and Cash Equivalents 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 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 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. Accounts receivable balances will be charged off against the allowance for credit losses after all means of collection have been exhausted and the potential for recovery is considered remote. The activity in the allowance for credit losses related to our trade receivables is summarized as follows: Years ended August 31, (in thousands) 2025 2024 2023 Balance, beginning of period $ 149 $ 46 $ 12 Provision for credit losses 95 189 77 Write-offs ( 57 ) ( 86 ) ( 43 ) 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. F-11 Table of Contents 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. Investments 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 debt securities in accordance with ASC 320, Investments – Debt and Equity Securities. This statement requires debt securities to be classified into three categories: Held-to-maturity—Debt securities that the entity has the positive intent and ability to hold to maturity are measured at amortized cost and are presented at the net amount expected to be collected. Any change in the allowance for credit losses during the period is reflected in earnings. Discounts and premiums to par value of the debt securities are amortized to interest income/expense over the term of the security. Trading Securities—Debt securities that are bought and held primarily for the purpose of selling in the near term are reported at fair value, with unrealized gains and losses included in earnings. Available-for-Sale (“AFS”)—Debt securities not classified as either securities held-to-maturity or trading securities are reported at fair value. For AFS debt securities in an unrealized-loss position, we evaluate as of the balance sheet date whether the unrealized losses are attributable to a credit loss or other factors. The portion of unrealized losses related to a credit loss is recognized in earnings, and the portion of unrealized loss not related to a credit loss is recognized in other comprehensive income (loss). For AFS debt securities, the unrealized gains and losses are included in other comprehensive income until realized, at which time they are reported through net income. We classify our investments in marketable debt securities based on the facts and circumstances present at the time of purchase of the securities. 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. R&D expenditures during fiscal year 2023 were $ 7.8 million, of which $ 3.3 million was capitalized. Software development costs are capitalized in accordance with ASC 985-20. Capitalization of software development costs begins upon the establishment of technological feasibility and is discontinued when the product is available for sale. 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. 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 ). Amortization of software development costs amounted to $ 3.1 million, $ 2.1 million, and $ 1.5 million for the fiscal years ended August 31, 2025, 2024, and 2023, respectively. We expect future amortization expense to vary due to increases in capitalized computer software development costs. F-12 Table of Contents 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 Property and equipment are recorded at cost, or fair market value for property and equipment acquired in business combinations, less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives as follows: Equipment 5 years Computer equipment 3 to 7 years Furniture and fixtures 5 to 7 years Leasehold improvements Shorter of the asset life or lease term Maintenance and minor replacements are charged to expense as incurred. Gains and losses on disposals are included in the results of operations. Internal use Software 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 and Comprehensive (Loss) Income. Maintenance of and minor upgrades to internal use software are also classified as general and administrative expenses as incurred. Leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities (current and long-term) in our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the commencement date. The operating lease ROU asset also includes any lease payments made at or before the commencement date and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. 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, 2025 and 2024: (in thousands) 2025 2024 ROU assets $ 407 $ 1,027 Lease liabilities, current $ 206 $ 475 Lease liabilities, long-term $ 410 $ 531 Operating lease costs $ 475 $ 503 Weighted-average remaining lease term 6.29 years 2.42 years Weighted-average discount rate 3.98 % 5.46 % F-13 Table of Contents 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 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. Finite-lived intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. 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 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 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. F-14 Table of Contents 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 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: F-15 Table of Contents (in thousands) Amortization Period Acquisition Value Accumulated Amortization Impairment Net Book Value Trade names Indefinite $ 12,610 $ — $ 5,660 $ 6,950 Covenants not to compete Straight line 2 to 3 years 100 53 47 — Other internal use software Straight line 3 to 13 years 988 110 270 608 Customer relationships Straight line 8 to 14 years 10,540 3,693 3,873 2,974 ERP Straight line 15 years 2,528 543 621 1,364 $ 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: (in thousands) Amortization Period Acquisition Value Accumulated Amortization Net Book Value Trade names Indefinite $ 12,610 $ — $ 12,610 Covenants not to compete Straight line 2 to 3 years 100 23 77 Other internal use software Straight line 3 to 13 years 608 47 561 Customer relationships Straight line 8 to 14 years 10,540 2,726 7,814 ERP Straight line 15 years 2,529 381 2,148 $ 26,387 $ 3,177 $ 23,210 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, Amount 2026 $ 874 2027 $ 844 2028 $ 815 2029 $ 380 2030 $ 380 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. F-16 Table of Contents 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 Assets and liabilities recorded at fair value in the Consolidated Balance Sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The categories are as follows: Level Input: Input Definition: Level I Inputs that are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. Level II Inputs, other than quoted prices included in Level I, that are observable for the asset or liability through corroboration with market data at the measurement date. 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 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. 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 (in thousands) Amortized cost Unrealized gains Unrealized losses Fair value Level 1: Term deposits (due within one year) $ 3,500 $ — $ — $ 3,500 Money Market 13,159 — — 13,159 Total Level 1 16,659 — — 16,659 Level 2: — — — — Level 3: — — — — Total securities $ 16,659 $ — $ — $ 16,659 F-17 Table of Contents August 31, 2024 (in thousands) Amortized cost Unrealized gains Unrealized losses Fair value Level 1: Term deposits (due within one year) $ 1,500 $ — $ — $ 1,500 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 Level 2: — — — — Level 3: — — — — 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. 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 recorded in the Company’s Consolidated Statement of Operations and Comprehensive (Loss) Income. The following is a reconciliation of contingent consideration at fair value: (in thousands) Amount Contingent consideration at August 31, 2024 $ 640 Contingent consideration payment — Change in fair value of contingent consideration ( 640 ) Contingent consideration at August 31, 2025 $ — Business Combination The acquisition method of accounting for business combinations requires us to use significant estimates and assumptions, including fair-value estimates, as of the business combination date and to refine those estimates as necessary during the measurement period (defined as the period, not to exceed one year, in which we may adjust the provisional amounts recognized for a business combination). F-18 Table of Contents Under the acquisition method of accounting, we recognize separately from goodwill the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in an acquiree, generally at the acquisition-date fair value. 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 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. 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 consolidated financial statements. 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. We apply those measurement-period adjustments that we determine to be material retrospectively to comparative information in our financial statements, including adjustments to depreciation and amortization expense. Under the acquisition method of accounting for business combinations, if we identify changes to acquired deferred-tax asset valuation allowances or liabilities related to uncertain tax positions during the measurement period, and they relate to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement-period adjustment and we record the offset to goodwill. 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 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 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. Income Taxes 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. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. Intellectual property In June 2017, as part of the acquisition of DILIsym, the Company acquired certain developed technologies associated with drug-induced liver disease (“DILI”). These technologies were valued at $ 2.9 million and are being amortized over 9 years under the straight-line method. In September 2018, we purchased certain intellectual property rights of Entelos Holding Company. The cost of $ 0.1 million is being amortized over 10 years under the straight-line method. In April 2020, as part of the acquisition of Lixoft, the Company acquired certain developed technologies associated with the Lixoft scientific software. These technologies were valued at $ 8.0 million and are being amortized over 16 years under the straight-line method. In June 2023, we purchased certain developed technology of Immunetrics. The cost of $ 1.1 million is being amortized over 5 years under the straight-line method. F-19 Table of Contents In June 2024, we purchased certain developed technology of Pro-ficiency. The cost of $ 16.6 million is being amortized over 5 years under the straight-line method. The following table summarizes intellectual property as of August 31, 2025: (in thousands) Amortization Period Acquisition Value Accumulated Amortization Impairment Net Book Value Developed technologies–DILIsym acquisition Straight line 9 years $ 2,850 $ 2,610 $ — $ 240 Intellectual rights of Entelos Holding Company Straight line 10 years 50 36 — 14 Developed technologies–Lixoft acquisition Straight line 16 years 8,010 2,670 — 5,340 Developed technologies–Immunetrics acquisition Straight line 5 years 1,080 477 — 603 Developed technologies–Pro-ficiency acquisition Straight line 5 years 16,630 3,228 13,402 — $ 28,620 $ 9,021 $ 13,402 $ 6,197 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. 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: (in thousands) Amortization Period Acquisition Value Accumulated Amortization Net Book Value Developed technologies–DILIsym acquisition Straight line 9 years $ 2,850 $ 2,294 $ 556 Intellectual rights of Entelos Holding Company Straight line 10 years 50 30 20 Developed technologies–Lixoft acquisition Straight line 16 years 8,010 2,173 5,837 Developed technologies–Immunetrics acquisition Straight line 5 years 1,080 261 819 Developed technologies–Pro-ficiency acquisition Straight line 5 years 16,630 732 15,898 $ 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) Years Ending August 31, Amount 2026 $ 988 2027 $ 748 2028 $ 703 2029 $ 530 2030 $ 528 F-20 Table of Contents Earnings per Share 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: Years ended August 31, (in thousands) 2025 2024 2023 Numerator Net (loss) income attributable to common shareholders $ ( 64,718 ) $ 9,954 $ 9,961 Denominator Weighted-average number of common shares outstanding during the period 20,101 19,987 20,075 Dilutive effect of stock options — 314 390 Common stock and common-stock equivalents used for diluted earnings per share 20,101 20,301 20,465 Stock-Based Compensation 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, 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 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 ASC. ASU 2023-06's amendments represent clarifications to, or technical corrections of, current requirements. For SEC registrants, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. Early adoption is prohibited. 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. The amendments will be effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted. 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. F-21 Table of Contents 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 The components of other income for the fiscal years ended August 31, 2025, 2024, and 2023, were as follows: Years ended August 31, (in thousands) 2025 2024 2023 Interest income $ 722 $ 4,375 $ 4,131 Change in fair valuation of contingent consideration 640 1,639 ( 680 ) (Loss) on disposal of assets ( 23 ) — ( 6 ) Realized losses from sale of AFS securities — ( 125 ) — Realized gains from sale of AFS securities — 5 — Gain (loss) on currency exchange 13 386 ( 475 ) Total other income $ 1,352 $ 6,280 $ 2,970 NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following: (in thousands) August 31, 2025 August 31, 2024 Equipment $ 9 $ 67 Computer equipment 1,435 1,272 Furniture and fixtures 3 56 Leasehold improvements 10 20 Construction in progress — — Subtotal 1,457 1,415 Less accumulated depreciation ( 577 ) ( 603 ) Total $ 880 $ 812 Depreciation expense was $ 0.3 million, $ 0.3 million, and $ 0.2 million for the fiscal years ended August 31, 2025, 2024, and 2023, respectively. F-22 Table of Contents NOTE 5 – COMMITMENTS AND CONTINGENCIES Leases Rent expense, including common area maintenance fees, was $ 0.5 million, $ 0.5 million, and $ 0.5 million for the fiscal years ended August 31, 2025, 2024, and 2023, respectively. Lease liability maturities as of August 31, 2025, were as follows: (in thousands) Years Ending August 31, Amount 2026 $ 236 2027 89 2028 72 2029 72 2030 72 Thereafter 235 Total undiscounted liabilities 776 Less: imputed interest ( 160 ) Total operating lease liabilities (including current portion) $ 616 Employment Agreements In the normal course of business, the Company has entered into employment agreements with certain of its executive officers that may require compensation payments upon termination. Income Taxes We follow guidance issued by the FASB with regard to our accounting for uncertainty in income taxes recognized in the financial statements. Such guidance prescribes a recognition threshold of more-likely-than-not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position, and must assume that the tax position will be examined by taxing authorities. Our policy is to include interest and penalties related to income tax expense. We file income tax returns with the IRS and various state jurisdictions as well as with the countries of India and France. Our federal income tax returns for fiscal years 2021 through 2024 are open for audit, and our state tax returns for fiscal years 2019 through 2024 remain open for audit. Our review of prior-year tax positions using the criteria and provisions presented in guidance issued by FASB did not result in a material impact on our financial position or results of operations. Litigation We are not a party to any legal proceedings and are not aware of any pending or threatened legal proceedings of any kind. F-23 Table of Contents NOTE 6 – SHAREHOLDERS' EQUITY Shares Outstanding 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, (in thousands) 2025 2024 2023 Common stock outstanding, beginning of period 20,051 19,938 20,260 Common stock repurchased during the period — — ( 492 ) Common stock issued during the period 86 113 170 Common stock outstanding, end of period 20,137 20,051 19,938 Dividends 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 table: (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 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. The 2017 plan would have terminated pursuant to its terms in December 2026; however, the 2017 Plan was replaced by the Company’s 2021 Plan (as defined below), and as a result, no further issuances of shares may be made under the 2017 Plan. On April 9, 2021, the Company’s Board of Directors adopted, and on June 23, 2021, its shareholders approved, the Company’s 2021 Equity Incentive Plan (the “2021 Plan,” and together with the 2017 Plan, the “Plans”), under which a total of 1.3 million shares of common stock were initially reserved for issuance. On October 20, 2022, the Company’s Board of Directors approved, and on February 9, 2023, its shareholders approved, an amendment to the 2021 Plan to increase the number of shares of common stock authorized for issuance thereunder from 1.3 million shares to 1.55 million shares of common stock of the Company. Thereafter, on October 19, 2023, the Company’s Board of Directors approved, and on February 8, 2024, its shareholders approved, an amendment to the 2021 Plan to further increase the number of shares of common stock authorized for issuance thereunder from 1.55 million to 2.5 million shares of common stock of the Company. The 2021 Plan will terminate in 2031. 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. F-24 Table of Contents NOTE 7 – STOCK OWNERSHIP PLANS The following table summarizes information about stock options: (in thousands, except per share and weighted-average amounts) Activity for the year ended August 31, 2025 Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Outstanding, August 31, 2024 1,906 $ 37.64 6.91 years Granted 393 32.01 Exercised ( 85 ) 13.21 Canceled/Forfeited ( 290 ) 41.58 Outstanding, August 31, 2025 1,924 $ 36.98 6.52 years Vested and Exercisable, August 31, 2025 961 $ 35.51 4.84 years Vested and Expected to Vest, August 31, 2025 1,852 $ 37.04 6.43 years (in thousands, except per share and weighted-average amounts) Activity for the year ended August 31, 2024 Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Outstanding, August 31, 2023 1,478 $ 34.62 6.62 years Granted 594 40.76 Exercised ( 114 ) 12.40 Canceled/Forfeited ( 52 ) 42.95 Outstanding, August 31, 2024 1,906 $ 37.64 6.91 years Vested and Exercisable, August 31, 2024 822 $ 31.19 4.82 years Vested and Expected to Vest, August 31, 2024 1,843 $ 37.53 6.83 years (in thousands, except per share and weighted-average amounts) Activity for the year ended August 31, 2023 Number of Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life Outstanding, August 31, 2022 1,245 $ 28.61 6.14 years Granted 465 43.78 Exercised ( 170 ) 12.59 Canceled/Forfeited ( 62 ) 43.14 Outstanding, August 31, 2023 1,478 $ 34.62 6.62 years Vested and Exercisable, August 31, 2023 696 $ 24.26 4.54 years Vested and Expected to Vest, August 31, 2023 1,471 $ 34.56 6.61 years The total grant-date fair value of nonvested stock options as of August 31, 2025, was $ 18.0 million and is amortizable over a weighted-average period of 2.9 years. 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 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. F-25 Table of Contents 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 Estimated fair value of awards granted $ 6,597 $ 11,902 $ 10,067 Unvested forfeiture rate 6.29 % 5.53 % 0.22 % Weighted-average grant price $ 32.01 $ 40.76 $ 43.78 Weighted-average market price $ 32.01 $ 40.76 $ 43.78 Weighted-average volatility 47.03 % 44.63 % 46.14 % Weighted-average risk-free rate 3.95 % 4.77 % 4.29 % Weighted-average dividend yield 0.00 % 0.59 % 0.55 % Weighted-average expected life 6.61 years 6.59 years 6.55 years 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) Exercise Price Per Share Awards Outstanding Awards Exercisable Low High Quantity Weighted -Average Remaining Contractual Life Weighted-Average Exercise Price Quantity Weighted-Average Remaining Contractual Life Weighted-Average Exercise Price $ 6.85 $ 9.77 90 0.49 years $ 9.71 90 0.49 years $ 9.71 $ 9.78 $ 18.76 138 2.57 years $ 11.00 120 1.48 years $ 10.08 $ 18.77 $ 33.40 467 7.54 years $ 30.69 137 3.65 years $ 26.00 $ 33.41 $ 47.63 985 7.34 years $ 41.36 413 6.85 years $ 41.32 $ 47.64 $ 66.14 244 5.69 years $ 56.04 201 5.50 years $ 56.85 1,924 6.52 years $ 36.98 961 4.84 years $ 35.51 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 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. LLC (“Morgan Stanley”) to repurchase an aggregate of $ 20 million of our outstanding shares of common stock as part of the share repurchase program, which was settled in full in May 2023. The share repurchase program has no expiration date but may be terminated at any time at our Board of Directors’ discretion. In January 2023, we received an initial delivery of an aggregate of 408,685 shares of our common stock from Morgan Stanley pursuant to the ASR Agreement, in exchange for which we made an initial payment of $ 20 million to Morgan Stanley. These 408,685 shares were retired and are treated as authorized, unissued shares. At final settlement on May 20, 2023, based on the volume-weighted average price of our common stock during the term of the ASR Agreement, Morgan Stanley delivered an additional 83,356 shares of Company common stock to us, which shares were also retired and treated as authorized, unissued shares. After completion of the repurchases under the ASR Agreement, $ 30 million remains available for additional repurchases under our authorized repurchase program. F-26 Table of Contents NOTE 8 – INCOME TAXES We utilize ASC 740 to account for 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 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. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. The Company is subject to the Global Intangible Low-Taxed Income (“GILTI”) rules, and has an annual GILTI inclusion income and deduction. Based on our assessment, we have not recorded a liability for uncertain tax positions. 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 Current Federal $ 747 $ 3,291 $ 2,990 State ( 59 ) 742 696 Foreign 108 3 144 Total current tax expense 796 4,036 3,830 Deferred Federal ( 4,432 ) ( 1,466 ) ( 1,818 ) State ( 1,023 ) ( 113 ) ( 278 ) Total deferred federal and state ( 5,455 ) ( 1,579 ) ( 2,096 ) 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 fiscal years ended August 31, 2025, 2024, and 2023: 2025 2024 2023 Income tax computed at federal statutory tax rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit 1.1 % 3.5 % 4.7 % Meals & entertainment — % 0.1 % 0.1 % Stock-based compensation ( 0.6 ) % 3.9 % 2.1 % Other permanent differences ( 1.0 ) % ( 0.2 ) % 3.3 % Research and development credit 0.4 % ( 1.3 ) % ( 2.2 ) % 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 % F-27 Table of Contents 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: (in thousands) 2025 2024 Deferred tax assets: Accrued compensation $ 31 $ 681 Deferred revenue 30 186 Capitalized merger costs — 707 Operating lease liability 41 255 Research and development credits 60 157 Allowance for credit losses 24 67 Capitalized research & development 5,157 3,933 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 Less: Valuation allowance — — Deferred tax asset 9,656 10,998 Deferred tax liabilities: Property and equipment ( 131 ) ( 111 ) Operating lease right-of-use assets — ( 259 ) Unrealized loss ( 34 ) ( 40 ) State tax deferred ( 10 ) ( 25 ) Intellectual property ( 2,230 ) ( 9,012 ) Capitalized computer software development costs ( 2,477 ) ( 3,086 ) Prepaid expenses — ( 73 ) Total deferred tax liabilities ( 4,882 ) ( 12,606 ) Net deferred tax assets (liabilities) $ 4,774 $ ( 1,608 ) We follow ASC 740 with regard to our accounting for uncertainty in income taxes recognized in the financial statements. Such guidance prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, we determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and assume that the tax position will be examined by taxing authorities. Interest and penalties were insignificant for the fiscal years ended August 31, 2025, 2024, and 2023, respectively. We file income tax returns with the IRS and various state jurisdictions as well as with the countries of India and France. Our federal income tax returns for fiscal year 2021 through 2024 are open for audit, and our state tax returns for fiscal year 2019 through 2024 remain open for audit. Based on our assessment, we have not recorded any liability for uncertain tax positions in the consolidated financial for the fiscal years ended August 31, 2025, 2024, and 2023, respectively. The Company had no uncertain tax position for all open tax years. F-28 Table of Contents Net Operating Loss is summarized as follows: (in thousands) Amount Federal NOL as of August 31, 2025 $ 17,045 Subject to expiration 13,710 Carried forward indefinitely 3,335 Amount to expire before Section 382 limitation lifts 9,697 Pennsylvania NOL as of August 31, 2025 14,771 Subject to expiration 14,771 Carried forward indefinitely — Amount to expire before Section 382 limitation lifts 10,639 North Carolina NOL as of August 31, 2025 2,215 Subject to expiration 2,215 Carried forward indefinitely — 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 Subject to expiration — Carried forward indefinitely 44 Our review of prior-year tax positions using the criteria and provisions presented in guidance issued by FASB did not result in a material impact on our financial position or results of operations. F-29 Table of Contents NOTE 9 – CONCENTRATIONS AND UNCERTAINTIES Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents, trade accounts receivable, and short-term investments. The Company holds cash and cash equivalents with balances that exceed FDIC-insured limits. Cash maintained in excess of these limits is on deposit with a large, national bank. Accordingly, the Company does not have depository exposure to regional banks. In addition, the Company holds cash at a bank in France that is not FDIC-insured. Historically, the Company has not experienced any losses in such accounts, and management believes that the financial institutions at which its cash is held are stable; however, no assurances can be provided. While the Company may be exposed to credit losses due to the nonperformance of its counterparties, the Company does not expect the settlement of these transactions to have a material effect on its results of operations, cash flows, or financial condition. 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 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. NOTE 10 – SEGMENT REPORTING The Company applies ASC 280, Segment Reporting, in determining 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: • Software: 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. • Services: 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. No operating segments have been aggregated to form the reportable segments. 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 (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. F-30 Table of Contents 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 Less: Cost of revenue (1) 9,652 23,306 32,958 Gross Profit 36,176 10,045 46,221 Gross Margin 79 % 30 % 58 % Less: Research and Development 6,884 Sales and Marketing 11,904 General and administrative (2) 20,941 Impairments 77,221 Loss from operations ( 70,729 ) Add: 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 Less: Cost of revenue (1) 6,478 20,384 26,862 Gross Profit 34,546 8,605 43,151 Gross Margin 84 % 30 % 62 % Less: Research and Development 5,754 Sales and Marketing 8,915 General and administrative (2) 22,351 Income from operations 6,131 Add: 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. F-31 Table of Contents (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 Less: Cost of revenue (1) 3,627 8,003 11,630 Gross Profit 32,890 15,057 47,947 Gross Margin 90 % 65 % 80 % Less: Research and Development 4,504 Sales and Marketing 6,558 General and administrative (2) 27,660 Impairments 500 Income from operations 8,725 Add: 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: F-32 Table of Contents Years ended August 31, (in thousands) 2025 2024 2023 $ % of total* $ % of total $ % of total Americas $ 57,701 73 % $ 50,473 72 % $ 40,817 69 % EMEA 14,192 18 % 14,072 20 % 11,713 20 % Asia Pacific 7,286 9 % 5,468 8 % 7,047 12 % 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 We maintain a 401(k) Plan for eligible employees. We make matching contributions equal to 100 % of the employee’s elective deferral, not to exceed 4 % of the employee’s gross salary. We contributed $ 0.9 million, $ 0.8 million, and $ 0.6 million for the fiscal years ended August 31, 2025, 2024, and 2023 respectively. NOTE 12 - ACQUISITIONS On June 16, 2023, the Company completed the acquisition of Immunetrics for an estimated consideration of $ 15.3 million. 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 final purchase price for Immunetrics: F-33 Table of Contents (in thousands) Base merger consideration $ 12,000 Fair value of earnout 4,100 Cash on hand 1,247 Adjustment to purchase price for closing indebtedness ( 122 ) Net working capital adjustment ( 377 ) D&O tail insurance ( 7 ) Bonus compensation to Immunetrics staff ( 1,586 ) Total purchase price 15,255 Fair value of identifiable assets acquired: Cash 1,132 Accounts receivable 511 Security deposit 12 ROU asset 227 Deferred tax assets 799 Trade names 1,800 Customer relationships 3,780 Developed Tech 1,080 Non-competes 30 9,371 Fair value of liabilities assumed: Lease liability 227 Selling shareholders' D&O tail insurance responsibility 7 Deferred revenue 60 294 Fair value of identifiable assets acquired and liabilities assumed 9,077 Goodwill $ 6,178 The total purchase consideration related to Immunetrics 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 as customer relationships and trade name. Immunetrics is primarily attributable to the Services segment of the Company. Goodwill acquired as part of Immunetrics acquisition has been assigned to a separate reporting unit and the assets and liabilities of Immunetrics are assigned to the same reporting unit, Immunetrics. This goodwill is not expected to be deductible for income tax purposes. Intangible assets consist of indefinite-lived intangible asset trade names and definite-lived intangibles as customer relationships, developed technologies, and covenants not to compete. We amortize purchased definite-lived intangible assets on a straight-line basis over their respective useful lives. The weighted-average life of the total acquired identifiable definite-lived intangible assets is 7.5 years. The following table presents the details of intangible assets acquired. F-34 Table of Contents (in thousands) Estimated useful life Amount Indefinite-lived: Trade names Indefinite $ 1,800 Definite-lived: Customer relationships 9 years 3,780 Developed technologies 5 years 1,080 Covenants not to compete 2 years 30 Total definite-lived intangible assets 4,890 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. (“Pro-ficiency”) for estimated consideration of $ 100.2 million. The primary purpose of this acquisition was to bring together two businesses, each with complementary expertise and services that are grounded in science and focused on applying advanced technologies like AI to enhance actionable data analytics. 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 final purchase price for Pro-ficiency: F-35 Table of Contents (in thousands) Estimated fair value as previously reported (a) Measurement Period Adjustments Fair Value as adjusted Base merger consideration $ 100,000 $ — $ 100,000 Net working capital adjustment ( 85 ) — ( 85 ) Excess cash adjustment 1,731 227 1,958 Adjustment to purchase price for closing indebtedness ( 1,484 ) — ( 1,484 ) Total purchase price 100,162 227 100,389 Fair value of identifiable assets acquired: Cash 2,513 — 2,513 Accounts receivable 2,064 — 2,064 Prepaids and other current assets 1,807 — 1,807 ROU asset 212 — 212 Trade names 8,400 — 8,400 Customer relationships 2,310 — 2,310 Developed technology 16,630 — 16,630 Non-competes 70 — 70 Other non-current assets 17 — 17 34,023 — 34,023 Fair value of liabilities assumed: — Accounts payable 935 — 935 Payroll and other current liabilities 2,302 — 2,302 Deferred revenue 1,456 — 1,456 Lease liability 212 — 212 Deferred tax liabilities 4,811 ( 956 ) 3,855 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. 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. Intangible assets consist of indefinite-lived intangible asset trade names and definite-lived intangibles as customer relationships, developed technologies, and covenants not to compete. We amortize purchased definite-lived intangible assets on a straight-line basis over their respective useful lives. The weighted-average life of the total acquired identifiable definite-lived intangible assets is 5.3 years. The following table presents the details of intangible assets acquired. F-36 Table of Contents Estimated useful life Amount Indefinite-lived: Trade names Indefinite $ 8,400 Definite-lived: Customer relationships 10 years 2,310 Developed technologies 5 years 16,630 Non-competes 3 years 70 Total definite-lived intangible assets 19,010 Total intangible assets $ 27,410 The estimated future amortization of finite-lived intangible assets for the next five years is as follows: (in thousands) Amount Years ending August 31, 2026 $ 3,580 2027 $ 3,580 2028 $ 3,580 2029 $ 3,557 2030 $ 3,557 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 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. The adjustments include costs of acquisition directly attributable to Pro-ficiency of $ 2.3 million and amortization of intangibles including developed technologies acquired during the acquisition, assuming the fair-value adjustments applied on September 1, 2022, together with consequential tax effects. The adjustments also consist of acquisition costs directly attributable to Immunetrics of $ 2.9 million consisting of $ 1.6 million of bonus compensation and $ 1.3 million of other professional fees, and amortization of intangibles including developed technologies acquired during the merger, assuming the fair-value adjustments applied on September 1, 2022, together with consequential tax effects. The pro forma information in below table includes actual revenues and net loss of $ 2.3 million and $ 1.9 million, respectively for Pro-ficiency from the acquisition date of June 11, 2024 to August 31, 2024 and the revenues and net loss of $ 1.3 million and $ 0.4 million, respectively, for Immunetrics from the acquisition date of June 16, 2023 to August 31, 2023. (Pro forma) 2024 * (Pro forma) 2023 (in thousands) (unaudited) (unaudited) Revenue $ 83,243 $ 76,892 Net (loss) income $ 7,790 $ 4,547 * 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 F-37 Table of Contents 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 None. F-38