SLP 10-K & 10-Q changes, risk factors and insider trading

You should carefully consider the risks described below, as well as the other information in this Annual Report, including our financial statements and the related notes and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before investing in our securities. The occurrence of any of the events or developments described below could harm our business, financial condition, operating results, and/or growth prospects. The risks described below are not the only ones we face. Our business is also subject to the risks that affect many other companies, such as competition, technological obsolescence, labor relations, general economic conditions, geopolitical changes, artificial intelligence growth, and international operations. We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. Additional risks not currently known to us or that we currently believe are immaterial also may impair our business operations and our liquidity. The risks described below could cause our actual results to differ materially from those contained in the forward-looking statements we have made in this Annual Report, the information incorporated herein by reference, and those forward-looking statements we may make from time to time. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider the following to be a complete discussion of all potential risks or uncertainties.

Our ability to sustain or increase revenues will depend upon our success in entering new markets, continuing to increase our customerclient base, and in deriving additional revenues from our existing customers.clients.

Our products are currently used primarily by modeling and simulation specialists in companies involved in pharmaceuticals, biotechnology, agrotechnology, and cosmetics, as well as universities, hospitals, and government research organizations. One component of our overall business strategy is to derive more revenues from our existing customersclients by expanding their use of our products and services. In addition, we seek to expand into new markets, and new areas within our existing markets, by acquiring businesses in these markets, attracting and retaining personnel knowledgeable in these markets, identifying the needs of these markets, and developing marketing programs to address these needs. If successfully implemented, these strategies would increase the usage of our software and services by pharmacologists or pharmacometricians operating within our existing pharmaceutical, biotechnology, and chemical customers,clients, as well as by new customersclients in other industries. However, if our strategies are not successfully implemented, our products and services may not achieve market acceptance or penetration in targeted new departments within our existing customersclients or in new industries. As a result, we may incur additional costs and expend additional resources without being able to sustain or increase revenue.

A decrease in, or resistance to, the acceptance of model-informed biopharmaceuticaldrug discoverydevelopment and development by regulatory authorities or academic institutions could damage our reputation or reduce the demand for our products and services.

In recent years, there has been a steady increase in the recognition by regulatory agencies and academic institutions of the role that modeling and simulation can play in the biopharmaceutical development and approval process, as demonstrated by new regulations and guidance encouraging the use of modeling and simulation in the biopharmaceuticaldrug discovery, development, testing, clinical trialdevelopment and approval process, which has positively impacted our business. Changes in government or regulatory policy, or a stagnation or reversal in the trend toward increasing the acceptance of and reliance upon use of computer modeling and simulation in the drug development and approval process, could decrease the demand for our products and services or lead our customersclients to cease use of, or to recommend against the use of, our products and services. This, in turn, could negatively impact our reputation and/or have a material adverse impact on our business prospects and results of operations.

Our pharmaceutical and biotechnology customers’clients’ demand for our products is impacted by continued demand for their products and by our customers’their research and development costs. Demand for our customers’clients’ products could decline, and prices charged by our customersclients for their products may decline, as a result of governmental regulations and/or increasing competition, including competition from companies manufacturing generic drugs. In addition, our customers’clients’ expenses could continue to increase as a result of increasing costs of complying with government regulations and other factors. A decrease in demand for our customers’clients’ products, pricing pressures associated with the sales of these products, and additional costs associated with product development, could cause our customersclients to reduce research and development expenditures. Although our products increase productivity and reduce costs in many areas, because our products and services depend on such research and development expenditures, our revenues may be significantly reduced.

The market for our modeling and simulation software products for the life science market is intensely competitive. We currently face competition from other scientific software providers, larger technology and solutions companies, in-house development by our customersclients and academic and government institutions, and the open-source community. Rapid advances in AI and ML could also enable new or existing competitors to automate aspects of modeling, simulation or data analysis reducing demand for our proprietary tools or consulting services if we do not innovate at the same pace. Additionally, our clinical pharmacology business unit often competes for business not only with other clinical research organization,organizations, but also with internal discovery and development departments within our larger clients. Some of our competitors and potential competitors have longer operating histories in certain segments of our industry than we do and could have greater financial, technical, marketing, research and development, and other resources. We also face competition from open-source software initiatives, in which developers provide software and intellectual property for free over the Internet. In addition, some of our customersclients spend significant internal resources in order to develop their own software. Moreover, we intend to leverage our scientific informatics platform in order to enable our customersclients to more effectively utilize the vast amounts of information stored in both their databases and public data sources in order to make informed scientific and business decisions during the research and development process. This strategy could lead to competition from much larger companies that provide general data storage and management software. There can be no assurance that our current or potential competitors will not develop products, services, or technologies that are comparable to, superior to, or render obsolete, the products, services, and technologies we offer. There can be no assurance that our competitors will not adapt more quickly than we to technological advances and customerclient demands, thereby increasing such competitors’ market share relative to ours. Increased competition could lead to price and other concessions that might adversely affect our operating results. Any material decrease in demand for our technologies or services may have a material adverse effect on our business, financial condition, and results of operations.

The market for modeling and simulation products for the life science industry is intensely competitive. Although the average price of our software licenses has increased or remained relatively constant for fiscal years 2025, 2024, 2023, and 2022,2023, we may experience a decline in the future. In response to increased competitioncompetition, decrease in a need for our products and services and general adverse economic conditions in this market, we may be required to modify our pricing practices. Changes in our pricing model could adversely affect our revenues and earnings.

We maintain insurance coverage for protection against many risks of liability. The extent of our insurance coverage is under continuous review and is modified as we deem it necessary. Despite this insurance, it is possible that claims or liabilities against us may have a material adverse impact on our financial position or results of operations. In addition, we may not be able to obtain any insurance coverage, or adequate insurance coverage, when our existing insurance coverage expires.expires and our premiums or coverage terms could change at renewal.

Our sales cycle is lengthy, and customersclients may delay entering into contracts or decide not to adopt our products or solutions after we have expended significant time and resources and supported evaluation by them of our technology, which could result in delays in recognizing revenue and negatively impact our results of operations.

Ongoing negotiations and evaluation projects for new products, with new customersclients or in new markets may not result in significant revenues for us if we are unable to close new engagements on terms favorable to us in a timely manner, or at all. Unexpected delays in our sales cycle could cause our revenues to fall short of expectations. Further, the timing and length of negotiations required to enter into agreements with our customersclients and the ultimate enforcement of complex negotiated contractual provisions as we intended is difficult to predict. If we do not successfully negotiate certain key complex contractual provisions, there are disputes regarding such provisions, or if they are not enforceable as we intended, our revenues and results of operations would suffer. Further, if we were to incur significant effort and then fail to enter into final contracts with prospective customers,clients, or if a contract is terminated earlier than expected, our revenues and results of operations could suffer.

We have intangible assets, including goodwill, capitalized computer software development costs, intellectual property, and other intangible assets, on our balanceConsolidated sheetBalance sheets due to our acquisitions of businesses. The initial identification and valuation of these intangible assets and the determination of the estimated useful lives at the time of acquisition involve use of management judgments and estimates. These estimates are based on, among other factors, input from accredited valuation consultants, reviews of projected future income cash flows, and statutory regulations. The use of alternative estimates and assumptions might have increased or decreased the estimated fair value of our goodwill and intangible assets that could potentially result in a different impact to our results of operations. If the future growth and operating results of our business are not as strong as anticipated and/or our market capitalization declines, this could impact the assumptions used in calculating the fair value of goodwill or intangibles. To the extent goodwill or intangibles are impaired, their carrying value will be written down to their implied fair value and a charge will be made to our income from continuing operations. For example, in fiscal 2025, we recorded impairment charges related to Pro-ficiency following lower-than-expected performance and market capitalization decline. Such an impairment charge could materially and adversely affect our operating results.

To achieve market acceptance, new or enhanced products or services can require long development and testing periods, which may result in delays in scheduled introduction. Any delays in the release schedule for new or enhanced products or services may delay market acceptance of these products or services and may result in delays in new customerclient orders for these new or enhanced products or services, or the loss of customerclient orders. In addition, new or enhanced products or services may contain a number of undetected errors or “bugs” when they are first released. Although we extensively test each new or enhanced software product or service before it is released to the market, there can be no assurance that significant errors will not be found in existing or future releases. As a result, in the months following the introduction of certain releases, we may need to devote significant resources to correct these errors. There can be no assurance, however, that all of these errors can be corrected.

We derive a significant portion of our total revenue from our operations in international markets. Our global business may be affected by local economic conditions, including inflation, recession, and currency-exchange-rate fluctuations. In addition, political and economic changes, including the imposition of import restrictions or tariffs, geopolitical instability, international conflicts and terrorist acts, throughout the world may interfere with our or our customers’clients’ activities in particular locations and result in a material adverse effect on our business, financial condition, and operating results. Potential trade restrictions, exchange controls, adverse tax consequences, and legal restrictions may affect the repatriation of funds into the U.S. Also, we could be subject to unexpected changes in regulatory requirements, the difficulties of compliance with a wide variety of foreign laws and regulations, potentially negative consequences from changes in or interpretations of U.S. and foreign tax laws, import and export licensing requirements, and longer accounts receivable cycles in certain foreign countries. These risks, individually or in the aggregate, could have an adverse effect on our results of operations and financial condition. While our employees, distributors, and agents are required to comply with these laws, we cannot be sure that our internal policies and procedures will always protect us from violations of these laws despite our commitment to legal compliance and corporate ethics. The occurrence or allegation of these types of risks may adversely affect our business, performance, prospects, value, financial condition, and results of operations.

As a clinical research organization (“CRO”), we face a range of potential liabilities including, without limitation, that errors or omissions in reporting of study detail in preclinical studies that may lead to inaccurate reports, which may undermine the usefulness of a study or data from the study, or which may potentially advance studies absent the necessary support or inhibit studies from proceeding to the next level of testing; and risks associated with our possible failure to properly care for our clients’ property, such as data, research models, records, work in progress, or other archived materials.

We may seek to develop and market new services and products that complement or expand our existing business or service offerings. We cannot guarantee that we will be able to identify new technologies of interest to our customers.clients. Even if we are able to identify new technologies of interest, we may not be able to negotiate license agreements on acceptable terms, or at all. If we are unable to develop new services and products and/or create demand for those newly developed services and products, our future business, results of operations, financial condition, and cash flows could be adversely affected.

Our success depends to a significant extent on the continued services of our senior management and other members of management. We have employment agreements with our CEO, CFO, and certain of our other members of our leadership team that range from one to three years. If our CEO, CFO, business unit presidents, or other members of senior management do not continue in their present positions, our business may suffer. Because of the specialized scientific nature of our business, we are highly dependent upon attracting and retaining qualified scientific and technical and managerial personnel. While we have a strong record of employee retention, there is still significant competition for qualified personnel in the software, pharmaceutical, and biotechnology fields. Therefore, we may not be able to attract and retain the qualified personnel necessary for the development of our business. The loss of the services of existing personnel, as well as the failure to recruit additional key scientific, technical, and managerial personnel in a timely manner, could harm our business.

Over the years, we have expanded our business through acquisitions. We continue to search to acquire businesses and technologies and form strategic alliances. However, businesses and technologies may not be available on terms and conditions we find acceptable. We risk spending time and money investigating and negotiating with potential acquisition or alliance partners, but not completing transactions. Even if completed, acquisitions and alliances, involve numerous risks which may include: difficulties in achieving business and continuing financial success; difficulties and expenses incurred in assimilating and integrating operations, services, products, technologies, or pre-existing relationships with our customers,clients, distributors, and suppliers; challenges with developing and operating new businesses, including those which are materially different from our existing businesses and which may require the development or acquisition of new internal capabilities and expertise; challenges of maintaining staffing at the acquired entities, including loss of key employees; potential losses resulting from undiscovered liabilities of acquired companies that are not covered by the indemnification we may obtain from the seller(s); the presence or absence of adequate internal controls and/or significant fraud in the financial systems of acquired companies; diversion of management’s attention from other business concerns; acquisitions that become dilutive to earnings, or in the event of acquisitions made through the issuance of our common stock to the shareholders of the acquired company, dilutive to the percentage of ownership of our existing shareholders; new technologies and products developed by others which cause businesses or assets we acquire to become less valuable; and risks that disagreements or disputes with prior owners of an acquired business, technology, service, or product may result in litigation expenses and dilution of our management’s attention. In the event that an acquired business or technology or an alliance does not meet our expectations, our results of operations may be adversely affected. Conversely, a sustained weakening of the U.S. dollar could adversely affect our business in certain foreign-currency markets, because while our exports may become more competitively priced abroad, revenues earned in foreign currencies would translate into fewer U.S. dollars, and costs incurred in U.S. dollars for foreign operations could rise when converted.

We believe that operating results for any particular quarter or fiscal year are not necessarily a meaningful indication of future results. Nonetheless, fluctuations in our quarterly or annual operating results could negatively affect the market price of our common stock. Our results of operations in any quarter or annual period have varied in the past and may vary from quarter to quarter or year to year. Our results of operations are influenced by various factors, many of which are out of our control, including without limitation: changes in the general global economy; the number and scope of ongoing client engagements; the commencement, postponement, delay, progress, completion, or cancellation of client contracts in the quarter; changes in customerclient budget cycles; the commencement, postponement, delay, progress, completion, or cancellation of client contracts in the quarter; changes in the mix of our products and services; competitive pricing pressures; buying patterns of our clients; the costs and effects of potential acquisitions and integration thereof into or business; the timing of new product releases by us or our competitors; general economic factors, including factors relating to disruptions in the world credit and equity markets and the related impact on our customers’clients’ access to capital; changes in tax laws, rules, regulations, and tax rates in the locations in which we operate; the financial performance of our investments; and exchange rate fluctuations.

A significant portion of our operating expenses isare relatively fixed and planned expenditures are based in part on expectations regarding future revenues.

If our customersclients cancel their contracts or terminate or delay their clinical trials, we may lose or delay revenues and our business may be adversely impacted.

Certain of our customerclient contracts are subject to cancellation by our customersclients at any time with limited notice. CustomersClients engaged in clinical trials may terminate or delay a clinical trial for various reasons, including the failure of the tested product to satisfy safety or efficacy requirements, unexpected or undesired clinical results, decisions to de-emphasize a particular product or forgo a particular clinical trial, decisions to downsize clinical development programs, insufficient patient enrollment or investigator recruitment, and production problems resulting in shortages of required clinical supplies. Any termination or delay in the clinical trials would likely result in a consequential delay or termination in those customers’clients’ service contracts. We have experienced terminations and delays of our customerclient service contracts in the past (although no such past terminations have had a significant impact on our results of operations), and we expect to experience additional terminations and delays in the future. The termination of single-study arrangements could result in decreased revenues and the delay of our customers’clients’ clinical trials could result in delayed professional services revenues, which could adversely impact our business.

If our security is breached, our business could be disrupted, our operating results could be harmed, and customersclients could be deterred from using our products and services.

Our business relies on the secure electronic transmission, storage, and hosting of sensitive information, including clinical data, financial information, and other sensitive information relating to our customers,clients, company, and workforce. As a result, we face some risk of a deliberate or unintentional incident involving unauthorized access to our computer systems (including, among other methods, cyberattacks or social engineering) that could result in misappropriation or loss of assets or sensitive information, data corruption, or other disruption of business operations. Our contracts with our clients typically contain provisions that require us to keep confidential the information generated from these studies. In the event the confidentiality of such information was compromised, we could suffer significant harm. In light of this risk, we have devoted significant resources to protecting and maintaining the confidentiality of our information, including implementing security and privacy programs and controls, training our workforce, and implementing new technology. We have no guarantee that these programs and controls will be adequate to prevent all possible security threats. We believe that any compromise of our electronic systems, including the unauthorized access, use, or disclosure of sensitive information, or a significant disruption of our computing assets and networks, would adversely affect our reputation and our ability to fulfill contractual obligations, and would require us to devote significant financial and other resources to mitigate such problems, and could increase our future cybersecurity costs. Moreover, unauthorized access, use, or disclosure of such sensitive information could result in contractual or other liability. In addition, any real or perceived compromise of our security or disclosure of sensitive information may result in lost revenues by deterring customersclients from using or purchasing our products and services in the future or prompting them to use competing service providers.

The collection, use, disclosure, storage, disposal, protection and other processing of information about individuals, in particular healthcare data and sensitive personal information, is highly regulated in the United States, EU, and other jurisdictions, including but not limited to, under the U.S. Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”) and other U.S. privacy, security and breach notification and healthcare information laws; the EU GDPR and its national implementing laws; the UK GDPR, data privacy laws in other countries around the world (e.g., China’s PIPL), as well as data privacy laws in individual states in the U.S. (e.g., the California Consumer Privacy and Protection Act (“CCPA”), the California Privacy Rights Act (“CPRA”), the New York State Personal Privacy Protection Law (“PPPL”) and the New York Privacy Act (“NYPA”)). which has been proposed and is currently pending legislative approval. Although we require our customersclients who send their clinical data to us for analyses to provide it in de-identified form within the meaning of HIPAA, in certain parts of our business, such as in conjunction with certain services we offer customers,clients, we may process personal information relating to persons who have been, are, and may in the future be involved in clinical trials. The collection, retention, use, disclosure, and other processing of such personal information is governed, by the applicable data privacy and cybersecurity laws.

While we do not consider our service offerings to generally cause us to be considered a covered entity under HIPAA, HIPAA does require the use of standard contract language in contracts with our customersclients who are covered entities under HIPAA which define our obligations to safeguard the protected health information of patients if provided by our covered-entity customers.clients. We have adopted policies, practices, procedures, and training to safeguard the receipt, maintenance, processing, retention and transmission of such personal information. In addition to the laws specifically passed to regulate the processing of personal information, the Federal Trade Commission (the “FTC”) and many state attorneys may generally interpret federal, state and local consumer protection laws to impose evolving standards for the handling and security of personal information.

As noted above, certain states have also adopted or have proposed personal data privacy laws. For example, the CCPA, CPRA, PPPL and NYPA impose obligations and restrictions on businesses regarding their collection, use, and sharing of personal information of, as well as defining certain data privacy rights to, California and New York residents, respectively. Such data privacy rights include the right to access or have deleted their personal information that is processed by businesses and the right to opt out of certain sharing or processing of their personal information. Most state data privacy laws also impose monetary penalties for violations of the respective law. The interpretation and application of the new state data privacy laws are still evolving, which provides some uncertainty.

Legal developments in Europe have created complexity and uncertainty regarding transfers of personal data from the EU to the United States. Recently, the EU or UK and the U.S. agreed to a new Data Privacy Framework which will allow businesses to transfer data from the EU to the US in a secure and compliant way. We also currently rely on the standard contractual clauses with our customersclients to transfer personal data outside the EU to the U.S., among other data transfer mechanisms pursuant to the EU GDPR or the UK GDPR. While the standard contractual clauses and the new Data Privacy Framework have been determined to be adequate personal data transfer mechanism for transfer of personal information from the EU to the U.S. by some regulatory authorities, there remains the possibility that challenges will be raised to the sufficiency of such transfer mechanisms which has created uncertainty.

In view of the trend for enactment of data privacy laws globally, we have implemented a comprehensive data privacy management program that includes physical, technological, and operational safeguards (such as policies, notices, processes, contractual provisions, and employee trainings) to help ensure that we process personal information about our employees and personal information received from our customersclients in a compliant manner. We have also appointed VeraSafe,Margaret a global leader in privacy law and data protection,Richardson as our Data Protection Officer. As data protection laws expand in number and scope with relevance to the kinds of personal information we process, we may need to modify our data privacy program and practices, and incur additional expenses, to accommodate such expansion and adjustments.

We rely upon a single internal hosting facility and Amazon Web Services to deliver certain solutions to our customersclients and any disruption of or interference with our hosting systems, operations, or use of the Amazon Web Services could harm our business and results of operations.

Substantially all of the computer hardware necessary to provide Cognigenour Service and Consulting solutions to our customersclients is located at our internal hostingcolocation facility located in Buffalo, New York. In addition to ourthe dedicated hostingcolocation facility, weSimulations utilizePlus utilizes third-party cloud computing services from Amazon Web Services ("AWS") to help us efficiently scalesupport our cloud-based solutions and provide training. Because we cannot easily switch our AWS-serviced operations to another cloud provider, any disruption of or interference with our use of AWS would impact our operations, and our business would be adversely impacted. Our systems and operations or those of AWS could suffer damage or interruption from human error, fire, flood, power loss, telecommunications failure, break-ins, terrorist attacks, acts of war, and similar events. The occurrence of a natural disaster, an act of terrorism or other unanticipated problems at ourthe colocation or AWS’ hosting facilities could result in lengthy interruptions in our service. Although weSLP and AWS maintain backup facilities and disaster recovery servicesplans in the event of a system failure, these may be insufficient or fail. Any system failure, including network, software, or hardware failure, which causes an interruption in ourthe Buffalocolocation data center or our use of AWS, or that causes a decrease in responsiveness of our cloud-based solutions, could damage our reputationreputation, and cause us to lose customers,clients, which could harm our business and results of operations. Our business may be harmed if our customersclients and potential customersclients believe our service is unreliable. Simulations Plus has developed a detailed Disaster Recovery Plan to mitigate any interruption.

Our software applications are inherently complex and may contain defects or errors, some of which may be material. Errors may result from our own technology or from the interface of our cloud-based solutions with legacy systems and data which we did not develop. The risk of errors is particularly significant when a new product is first introduced or when new versions or enhancements of existing products are released. The likelihood of errors is increased when we do more frequent releases of new products and enhancements of existing products. We have, from time to time, found defects in our solutions. Although these past defects have not resulted in any litigation against us to date, we have invested significant capital, technical, managerial, and other resources to investigate and correct these past defects and we have needed to divert these resources from other development efforts. In addition, material performance problems or defects in our solutions may arise in the future. Material defects in our cloud-based solutions could result in a reduction in revenues, delay in market acceptance of our solutions, or credits or refunds to our customers.clients. In addition, such defects may lead to the loss of existing customersclients and difficulty in attracting new customers,clients, diversion of development resources, or harm to our reputation. Correction of defects or errors could prove to be impossible or impractical. The costs incurred in correcting any defects or errors or in responding to resulting claims or liability may be substantial and could adversely affect our operating results.

If we are not able to reliably meet our data storage and management requirements, or if we experience any failure or interruption in the delivery of our services over the Internet, customerclient satisfaction and our reputation could be harmed, and customerclient contracts may be terminated.

As part of our current business model, we deliver our software over the Internet and store and manage hundreds of terabytes of data for our customers,clients, resulting in substantial information technology infrastructure and ongoing technological challenges, which we expect to continue to increase over time. If we do not reliably meet these data storage and management requirements, or if we experience any failure or interruption in the delivery of our services over the Internet, customerclient satisfaction and our reputation could be harmed, leading to reduced revenues and increased expenses. Our hosting services are subject to service-level agreements and, in the event thatif we fail to meet guaranteed service or performance levels, we could be subject to customerclient credits or termination of these customerclient contracts. If the cost of meeting these data storage and management requirements increases, our results of operations could be harmed.

Some of our software solutions utilize software covered by open-source licenses. Open-source software is typically freely accessible, usable and modifiable, and is used by our development team in an effort to reduce development costs to speed up the development process. Certain open-source software licenses require a user who intends to distribute the open-source software as a component of the user’s software to disclose publicly part or all of the source code to the user’s software. In addition, certain open-source software licenses require the user of such software to make any derivative works of the open-source code available to others on unfavorable terms or at no cost. This can subject previously proprietary software to open-source license terms. While we monitor the use of all open-source software in our products, processes, and technology and try to ensure that no open-source software is used in such a way as to require us to disclose or make available the source code to the related product or solution, such use could inadvertently occur. This could harm our intellectual property position and have a material adverse effect on our business.

Our attempts to protect our intellectual property may be challenged by others or invalidated through administrative process or litigation, and agreement terms that address noncompetition are difficult to enforce in many jurisdictions and may not be enforceable in any particular case. In addition, there remains the possibility that others will “reverse engineer” our products in order to introduce competing products, or that others will develop competing technology independently. If we resort to legal proceedings to enforce our intellectual property rights or to determine the validity and scope of the intellectual property or other proprietary rights of others, the proceedings could be burdensome and expensive, even if we were to prevail. The failure to adequately protect our intellectual property and other proprietary rights may have a material adverse effect on our business, results of operations, or financial condition.

We are subject to claims that arise in the ordinary course of business, such as claims brought by our customersclients in connection with commercial disputes and employment claims made by our current or former employees. Third parties may in the future assert intellectual property rights to technologies that are important to our business and demand back royalties or demand that we license their technology. Litigation may result in substantial costs and may divert management’s attention and resources, which may seriously harm our business, overall financial condition, and operating results. Insurance may not cover such claims, may not be sufficient for one or more such claims, and may not continue to be available on terms acceptable to us. A claim brought against us that is uninsured or underinsured could result in unanticipated costs, negatively affecting our business, results of operations, and financial condition.

We could incur substantial costs resulting from product liability claims relating to our products or services or our customers’clients’ use of our products or services.

Any failure or errors in a customer’sclient’s clinical trial caused or allegedly caused by our products or services could result in a claim for substantial damages against us by our customersclients or the clinical trial participants, regardless of our responsibility for the failure. Although we are generally entitled to indemnification under our customerclient contracts against claims brought against us by third parties arising out of our customers’clients’ use of our products, we might find ourselves entangled in lawsuits against us that, even if unsuccessful, may divert our resources and energy and adversely affect our business. Further, in the event we seek indemnification from a customer,client, a court may not enforce our indemnification right if the customerclient challenges it or the customerclient may not be able to fund any amounts for indemnification owed to us. In addition, our existing insurance coverage may not continue to be available on reasonable terms or may not be available in amounts sufficient to cover one or more large claims, or the insurer may disclaim coverage as to any future claim.

Some of our business depends on clinical trials conducted or sponsored by pharmaceutical, biotechnology, and medical device companies, CROs, and other entities. Our revenues may decline as a result of conditions affecting these industries, including general economic downturns, increased consolidation, decreased competition, or fewer products under development. Other developments that may affect these industries and harm our operating results include product liability claims, changes in government regulation, changes in governmental price controls or third-party reimbursement practices, and changes in medical practices. Disruptions in the world credit and equity markets may also result in a global downturn in spending on research and development and clinical trials and may impact our customers’clients’ access to capital and their ability to pay for our solutions. Any decrease in research and development expenditures or in the size, scope, or frequency of clinical trials could materially adversely affect our business, results of operations, or financial condition.

Our Board of Directors has determined to suspend the quarterly dividends that we have historically paid to holders of our common stock and to use those funds to invest more into our business instead. We do not expect to pay dividends to our stockholdersshareholders at any time in the foreseeable future. Accordingly, investors must rely on sales of their shares after price appreciation, which may not occur, as the only way to realize any return on their investment.

We may, but are not obligated to, provide public guidance on our expected operating and financial results for future periods. Any such guidance will be comprised of forward-looking statements subject to the risks and uncertainties described in this prospectusAnnual Report and in our other public filings and public statements. Our actual results may not always be in line with or exceed any guidance we have provided, especially in times of economic uncertainty. If, in the future, our operating or financial results for a particular period do not meet any guidance we provide or the expectations of investment analysts, or if we reduce our guidance for future periods, the market price of our common stock may decline. Even if we do issue public guidance, there can be no assurance that we will continue to do so in the future.

The price of our common stock may be volatile, and our stockholdersshareholders may not be able to resell shares of our common stock at or above the price they paid.

The trading price of our common stock may be volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. Factors that could cause volatility in the market price of our common stock include, but are not limited to: factors affecting the broader life-sciences, biotechnology, and software industries, including market sentiment toward technology-enables drug development; our operating results; delays in the release of new or enhanced products or services or undetected errors in our products or services may result in increased cost to us, delayed market acceptance of our products,products or services, and delayed or lost revenue; announcements of new products or services by us or our competitors; the success of our efforts to acquire or develop additional products and services; the loss of any of our key scientific or management personnel; changes or developments in laws or regulations applicable to our products or services; FDA or other U.S. or foreign regulatory actions affecting us or our industry; consolidation within the pharmaceutical and biotechnology industries leading to fewer potential customersclients for our products and services; trading volume of our common stock; sales of our common stock by us, our executive officers and directors, or our stockholdersshareholders in the future; and general economic and market conditions and overall fluctuations in the United States equity markets, including volatility related to the coronavirus outbreak and related health concerns and/or global political instability. In addition, differing performance trends between our Software and Services solutions, such as slower growth or lower margins in one segment may effect investor sensitivity or contribute to fluctuations in our stock price.

Broad market fluctuations may adversely affect the trading price or liquidity of our common stock. In the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the issuer. If any of our stockholdersshareholders were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit and the attention of our management would be diverted from the operation of our business, which could seriously harm our financial position. Any adverse determination in litigation could also subject us to significant liabilities.

If securities or industry analysts issue an adverse or misleading opinion regarding our stock, or our inclusion in the S&P 600 discontinues, our stock price and trading volume could decline.

The trading market for our common stock is influenced by the research and reports that industry or securities analysts publish about us or our business as well as the stock indices that our common stock is included in. If any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, or if the S&P 600 removes us from its index, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

We may raise capital through the issuance of our common stock, convertible debt, or equity-linked securities, which could result in dilution to our stockholdersshareholders or a negative impact on the price of our common stock.

We may choose to raise additional capital due to market conditions or strategic considerations. To the extent that additional capital is raised through the sale of equity, convertible debt or other equity-linked securities, the issuance of these securities could result in dilution to our stockholdersshareholders or result in downward pressure on the price of our common stock.

ManagementExecutive Overview

Comparison of fiscal years 2024ended 2025 and 20232024

General,General and administrative expenses

ProvisionIncome fortax income taxesexpense

Our principal sources of capital have been a follow-on public offering in August 2020 for $107.7 million and cash flows from our operations. We have achieved continuous positive operating cash flow over the last fourteen fiscal years. We expect existing cash, cash equivalents, short-term investments, cash generated by ongoing operations, and working capital,capital will be sufficient to fund our operating activities and cash commitments for investing and financing activities,activities and material capital expenditures,expenditures for the next 12 months and beyond.

We continue to seek opportunities for strategic acquisitions, investmentsinvestments, and partnerships. If one or more strategic opportunities are identified, a substantial portion of our cash reserves may be required to complete it.the transaction. If we identify an attractive strategic opportunity that would require more cash to complete than we are willing or able to use from our cash reserves, we may consider financing options to complete the transaction, including obtaining loans or selling our securities. Additionally, our quest for strategic opportunities could result in a significant change to our liquidity position and/or our results of operations if any such opportunitiestransactions are completed.

Except as discussed elsewhere in this Annual Report, we are not aware of any trends or demands, commitments, eventsevents, or uncertainties that are reasonably likely to result in a decrease in liquidity of our assets.

AtAs of August 31, 2024,2025, the Company had $10.3$30.9 million in cash and cash equivalents, $9.9$1.5 million in short-term investments, and net working capital of $27.3$44.8 million. Short-term investments consist of highly liquid investment-grade fixed-income securities, diversified among industries and issuers. The investments are U.S. dollar-denominatedU.S.-dollar-denominated securities. Our fixed-income investments are exposed to interest rate risk and credit risk. The settlement risk related to these investments is insignificant, given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities and can readily be converted to cash when needed.

Net cash provided by operating activities was $13.3 million for the fiscal year ended August 31, 2024. Our operating cash flows resulted in part from our net income of $10.0 million, which was generated by cash received from our customers,clients, offset by cash payments we made to third parties for their services and employee compensation. In addition, $4.2 million related to changes in balances of operating assets and liabilities was subtracted from net income and $7.6 million related to non-cash charges was added to net income to reconcile to cash flow from operations.

Please carefully consider the information set forth in this Quarterly Report and the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended August 31, 2025, which could materially affect our business, financial condition, or future results. The risks described in our Annual Report, as well as other risks and uncertainties, could materially and adversely affect our business, results of operations, and financial condition, which in turn could materially and adversely affect the trading price of shares of our common stock. ThereOther than described below, there have been no material updates or changes to the risk factors previously disclosed in our Annual Report; provided, however, additional risks not currently known or currently material to us may also harm our business.

Our clients face many challenges. Developing new therapies is time-consuming and expensive, requiring an average of 10-15 years and an average cost of approximately $2.2 billion to develop a single drug. Drug sponsors must prioritize not only efficacy and safety of the drug, but also issues like drug-drug interactions, inclusion of patients representative of the indicated population, regulatory approvals, minimization of animal testing, safety and compliance during clinical trials, and commercial success. Our clients face many macro-economicmacroeconomic issues including the current attention on global drug pricing resulting in temporary reduction in R&D spending on the part of pharmaceutical and biotech companies.

Our MIDD software and services allow clients to use modeling and simulation to accelerate drug development, reduce the costs of R&D, comply with regulatory guidance and best practices, and increase confidence in the safety and efficacy of their drugs and biologics. Our adaptive learning solutions support the success of clinical trials by accelerating recruitment of an appropriate patient population, increasing retention of participants, and by driving competency and compliance with trial protocols, while our medical communications solutions provide support in obtaining regulatory approval and commercialization of drugs.

This documentquarterly report and the documents incorporated in this documentQuarterly Report by reference contain forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact contained in this documentQuarterly Report and the materials accompanying this document are forward-looking statements.

The forward-looking statements contained or incorporated by reference in this documentQuarterly Report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. These statements include declarations regarding our plans, intentions, beliefs, or current expectations. The forward-looking statements contained primarily in this Quarterly Report include but are not limited to:

Among the important factors that could cause actual results to differ materially from those indicated by forward-looking statements are the risks and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2025, filed with the Securities and Exchange Commission (“SEC”) on December 1, 2025, as updated by Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q and elsewhere in this document and in our other filings with the SEC.

Forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this documentQuarterly Report are made as of the date of this documentfiling and we do not undertake any obligation to update forward-looking statements to reflect new information, subsequent events, or otherwise.

Comparison of Three Months Ended FebruaryMay 28,31, 2026, and FebruaryMay 28,31, 2025

Revenues increased by $1.9$1.5 million, or 8%,7%, to $24.3$21.9 million for the three months ended FebruaryMay 28,31, 2026, compared to $22.4$20.4 million for the three months ended FebruaryMay 28,31, 2025. This increase is primarily due to a $1.2$1.5 million, or 9% increase, in software-related revenue and a $0.7 million, or 8%,20%, increase in service-related revenue when compared to the three months ended FebruaryMay 28,31, 2025. The software-related revenue increasewas of $1.2 million, or 9%,flat compared to the three months ended FebruaryMay 28,31, 2025, was primarily due to a $1.2 million increase in revenue from Development solutions, $0.4 million increase in revenue from Discovery solutions, partially offset by a $0.5 million decline in revenue from Clinical Operations solutions.2025. The service-related revenue increase of $0.7$1.5 million, or 8%,20%, compared to the three months ended FebruaryMay 28,31, 2025, was primarily due to organic revenue growth of $0.8$1.5 million from Development solutions.

Cost of revenues decreased by $1.2$0.6 million, or 12%,8%, for the three months ended FebruaryMay 28,31, 2026, compared to the three months ended FebruaryMay 28,31, 2025. This decrease is primarily due to a $0.9$1.0 million, or 36%,40%, decrease in software-related costs, partially offset by a $0.2$0.5 million, or 3%,9%, increase in service-related costs.

The software-related costs decrease of $0.9$1.0 million, or 36%,40%, compared to the three months ended FebruaryMay 28,31, 2025, was primarily due to less amortization of $0.8$1.1 millionmillion, followingmainly due to the impairment of the Pro-ficiency developed technology in the third quarter of fiscal 2025.

The service-related costs increased $0.2$0.5 million, or 3%,9%, compared to the three months ended FebruaryMay 28,31, 2025; the increase was primarily due to higher fulfillment costs associated with increased client services activity. The modest increase in service-related costs relative to revenue growth also reflected improved operating efficiency from headcount reductions implemented in the third quarter of fiscal 2025, and organizational changes that shifted certain internal resources from supporting services to research and development.development, improved billable utilization, and higher average yields.

Gross profit increased $3.0$2.1 million, or 23%16%, to $16.1$15.1 million for the three months ended FebruaryMay 28,31, 2026, compared to $13.1$13.0 million for the three months ended FebruaryMay 28,31, 2025. This increase was primarily driven by higher revenues, lower software-related costs, organizational changes that shifted certain internal resources from supporting services to research and development, improved billable utilization, and higher average yields.

Software gross profit increased by $2.1$1.0 million to 89%88% gross margin compared to 81%80% gross margin for the three months ended FebruaryMay 28,31, 2025. This improvement was primarily driven by increased software-related revenue, particularly from Development and Discovery solutions, and lower software-related costs, largely reflecting reduced amortization expense followingmainly due to the impairment of the Pro-ficiency developed technology in the third quarter of fiscal 2025.

Services gross profit increased by $0.9$1.1 million to 33%43% gross margin compared to 25%38% gross margin for the three months ended FebruaryMay 28,31, 2025. The increase was primarily attributable to higher services revenue from increased client services activity within Development solutions, as well as improved operating efficiency driven by headcount reductions implemented in the third quarter of fiscal 2025, organizational changes that shifted certain internal resources from supporting services to research and development, higher billable utilization, and higher average yields.

Overall gross margin was 66%69% for the three months ended FebruaryMay 28,31, 2026, compared to 59%64% for the three months ended FebruaryMay 28,31, 2025, primarily due to higher software and services revenues,revenue, lower software amortization expense, organizational changes that shifted certain internal resources from supporting services to research and development, higher billable utilization, and higher average yields.

We incurred $4.3$4.1 million of research and development costs during the three months ended FebruaryMay 28,31, 2026. Of this amount, $0.8$0.7 million was capitalized as part of capitalized software development costs, and $3.5$3.4 million was expensed. We incurred $2.9$2.1 million of research and development costs during the three months ended FebruaryMay 28,31, 2025. Of this amount, $0.8$0.9 million was capitalized, and $2.1$1.2 million was expensed. Research and development spend increased by $1.3$2.0 million, or 46%,98%, for the three months ended FebruaryMay 28,31, 2026, compared to the three months ended FebruaryMay 28,31, 2025, representing our continued investment in innovation for future growth, including the development of an integrated, cloud-enabled modeling ecosystem that connects our validated scientific engines with AI-driven capabilities and workflow automation across the drug development lifecycle. The increase was primarily attributable to higher personnel-related costs, including organizational changes that shifted certain internal resources from supporting services to research and development, as well as increased efforts to support these development initiatives.

R&D spend as a percentage of revenue increased to 14%16% for the three months ended FebruaryMay 28,31, 2026, from 10%6% for the three months ended FebruaryMay 28,31, 2025, representing our continued investment in innovation for future growth. Total R&D cost (defined as capitalized R&D plus R&D expense) was 18%19% of revenue for the three months ended FebruaryMay 28,31, 2026, compared to 13%10% for the three months ended FebruaryMay 28,31, 2025.

Sales and marketing expenses decreased by $0.8$0.1 million, or 21%,5%, to $2.9$2.5 million for the three months ended FebruaryMay 28,31, 2026, compared to $3.7$2.7 million for the three months ended FebruaryMay 28,31, 2025. Sales and marketing as a percentage of revenue,revenue decreased to 12% for the three months ended FebruaryMay 28,31, 2026, from 17%13% for the three months ended FebruaryMay 28,31, 2025. The decrease is attributable to the headcount reduction implemented in the third quarter of fiscal 2025.

General,General and administrative expenses

G&A expenses decreased by $0.4$1.5 million, or 10%,24%, to $4.1$4.7 million for the three months ended FebruaryMay 28,31, 2026, compared to $4.6$6.1 million for the three months ended FebruaryMay 28,31, 2025. G&A as a percentage of revenuerevenue, decreased to 17%21% for the three months ended FebruaryMay 28,31, 2026, from 20%30% for the three months ended FebruaryMay 28,31, 2025. The decrease was primarily reflecteddue to lower corporate support costs and reducedlower non-recurring spending.expenses, including the absence of expenses associated with the company-wide employee summit that occurred in the prior-year period.

Total other income was $0.3 million for the three months ended FebruaryMay 28,31, 2026, compared to total other income of $0.8$0.2 million for the three months ended FebruaryMay 28,31, 2025. InterestThe incomeincrease increasedwas primarily driven by $0.1higher millioninterest income due to higher average balances of cash invested in interest-bearing accounts. For the three months ended FebruaryMay 28,31, 2025, the Company also recognized a $0.6 million gain onfrom the change in fair value of contingent consideration related to the Immunetrics holdback liability, which was subsequently settled.

The expense for income taxes was $1.4$1.2 million for the three months ended FebruaryMay 28,31, 2026, compared to $0.4income tax benefit of $6.7 million for the three months ended FebruaryMay 28,31, 2025. The Company tax rate increased to 23%26% for the three months ended FebruaryMay 28,31, 2026, compared to 12%9% for the three months ended FebruaryMay 28,31, 2025. The increase in the tax rate is primarily due to thehigher result of a favorable discrete itemincome in the priorUS, which is taxed at higher tax rate than income in France. The France effective tax rate increased from 2% to 7% due to less qualifying R&D expenditures in France which drove up the effective tax rate. The Company incurred costs with respect to the Merger Agreement. These costs are deductible for GAAP purposes. Generally, many of the costs incurred must be capitalized and are not deductible for tax purposes. The fiscal year that did not recur in the current year,had a lesssmaller favorablebenefit jurisdictional mix of earnings between the U.S. and France, increased unfavorable Global Intangible Low-Taxed Income ("GILTI") impacts driven by higher French taxable income, and a lowerfrom Foreign-Derived Intangible Income ("FDII") benefit.. In addition,the certaincurrent itemsfiscal affectingyear, the current-yearCompany effectiveis tax rate relate to acceleratedaccelerating deductions elected under the One Big Beautiful Bill Act ("OBBBA"). These deductions are expected to be favorable to cash flows as they accelerate the timing of tax benefits and reduce near-term cash tax payments.

Comparison of SixNine Months Ended FebruaryMay 28,31, 2026, and FebruaryMay 28,31, 2025

Revenues increased by $1.4$2.9 million, or 3%,5%, to $42.7$64.6 million for the sixnine months ended FebruaryMay 28,31, 2026, compared to $41.4$61.7 million for the sixnine months ended FebruaryMay 28,31, 2025. This increase is primarily due to a $2.0$3.6 million, or 12%,14%, increase in service-related revenue and a $0.7 million, or 3%,2%, decrease in software-related revenue when compared to the sixnine months ended FebruaryMay 28,31, 2025. The service-related revenue increase of $2.0$3.6 million, or 12%,14%, compared to the sixnine months ended FebruaryMay 28,31, 2025, was primarily due to organic revenue growth within Development solutions of $1.3$2.7 million and Commercialization solutions of $0.8 million. The software-related revenue decrease of $0.7 million, or 3%,2%, compared to the sixnine months ended FebruaryMay 28,31, 2025, was primarily due to Clinical Operations solutions revenue decline of $1.9$2.0 million, partially offset by revenue growth of $0.8$1.0 million and $0.5$0.4 million within Development solutions and Discovery solutions, respectively.

Cost of revenues decreased by $2.3$2.9 million, or 13%,11%, for the sixnine months ended FebruaryMay 28,31, 2026, compared to the sixnine months ended FebruaryMay 28,31, 2025. This decrease is primarily due to a $2.2$3.2 million or 41% decrease in software-related costs and a $0.2$0.3 million or 1%2% increase in service-related costs.

The software-related costs decrease of $2.2$3.2 million or 41%, compared to the sixnine months ended FebruaryMay 28,31, 2025, was mainly attributable to $1.6$3.1 million less amortization of acquired technology from the Pro-ficiency as the balances were impaired in the third quarter of fiscal 2025.

The service-related costs increase of $0.2$0.3 million or 1%,2%, compared to the sixnine months ended FebruaryMay 28,31, 2025. The increase in service-related costs was primarily due to higher fulfillment costs associated with increased client services activity. The modest increase in service-related costs relative to service-related revenue growth reflected improved operating efficiency resulting from headcount reductions implemented in the third quarter of fiscal 2025, organizational changes that shifted certain internal resources from supporting services to research and development.

Gross profit increased to $27.0$42.2 million or 63%65% gross margin for the sixnine months ended FebruaryMay 28,31, 2026, compared to $23.3$36.4 million or 56%59% gross margin for the sixnine months ended FebruaryMay 28,31, 2025. The increase was primarily attributable to higher service-related revenues, lower software-related costs, organizational changes that shifted certain internal resources from supporting services to research and development, and improved operating efficiency.

Software gross profit increased by $1.5$2.5 million, and software gross margin increased to 87% for the sixnine months ended FebruaryMay 28,31, 2026, compared to 78%79% for the sixnine months ended FebruaryMay 28,31, 2025. This improvement was primarily due to lower software-related costs, largely reflecting reduced amortization expense following the impairment of the Pro-ficiency acquired technology in the third quarter of fiscal 2025, partially offset by lower software-related revenue driven primarily by a decline in Clinical Operations solutions revenue.

Services gross profit increased by $2.2$3.3 million, and services gross margin increased to 34%37% for the sixnine months ended FebruaryMay 28,31, 2026, compared to 25%29% for the sixnine months ended FebruaryMay 28,31, 2025. This improvement was primarily due to higher service-related revenue from organic growth within Development solutions and Commercialization solutions, together with improved operating efficiency resulting from headcount reductions implemented in the third quarter of fiscal 2025 and organizational changes that shifted certain internal resources from supporting services to research and development.

Overall gross margin increased to 63%65% for the sixnine months ended FebruaryMay 28,31, 2026, compared to 56%59% for the sixnine months ended FebruaryMay 28,31, 2025, primarily due to higher service-related revenues, lower software amortization expense, organizational changes that shifted certain internal resources from supporting services to research and development, and improved operating efficiency.

We incurred $8.2$12.3 million of research and development costs during the sixnine months ended FebruaryMay 28,31, 2026. Of this amount, $1.7$2.4 million was capitalized as part of capitalized software development costs and $6.5$9.9 million was expensed. We incurred $5.5$7.6 million of research and development costs during the sixnine months ended FebruaryMay 28,31, 2025. Of this amount, $1.5$2.4 million was capitalized and $4.0$5.2 million was expensed. Research and development spend increased by $2.7$4.7 million, or 48%,62%, for the sixnine months ended FebruaryMay 28,31, 2026, compared to the sixnine months ended FebruaryMay 28,31, 2025, reflecting higher investment in product and platform development activities, including continued enhancement and expansion of our software offerings and related capabilities. The increase was primarily attributable to higher personnel-related costs, including organizational changes that shifted certain internal resources from supporting services to research and development, as well as increased efforts to support these development initiatives.

R&D spend as a percentage of revenue increased to 15% for the sixnine months ended FebruaryMay 28,31, 2026, from 10%8% for the sixnine months ended FebruaryMay 28,31, 2025, representing our continued investment in innovation for future growth, including the development of an integrated, cloud-enabled modeling ecosystem that connects our validated scientific engines with AI-driven capabilities and workflow automation across the drug development lifecycle. Total R&D cost (defined as capitalized R&D plus R&D expense) was 18%19% of revenue for the sixnine months ended FebruaryMay 28,31, 2026, compared to 13%12% for the sixnine months ended FebruaryMay 28,31, 2025.

Sales and marketing expenses decreased by $0.5$0.6 million, or 7%,6%, to $6.1$8.6 million for the sixnine months ended FebruaryMay 28,31, 2026, compared to $6.6$9.2 million for the sixnine months ended FebruaryMay 28,31, 2025. The decrease is attributable to $0.4 million lower compensation cost from the headcount reduction implemented in the third quarter of fiscal 2025, offset by $0.3 million of higher variable selling costs and customer-facing activities to support commercial execution and demand generation across our offerings.

General,General and administrative expenses

General and administrative (“G&A”) expenses decreased by $1.8$3.3 million, or 18%,20%, to $8.1$12.8 million for the sixnine months ended FebruaryMay 28,31, 2026, compared to $9.9$16.1 million for the sixnine months ended FebruaryMay 28,31, 2025. The decrease primarily reflected lower corporate support costs and reduced non-recurring spending. In addition, merger-and-acquisition-related costs decreased due to lower deal activity and associated professional fees in the current period. Facilitiesfacilities costs decreased as we continued to optimize our real estate footprint consistent with a remote-first operating model.

Total other income was $0.5$0.8 million for the sixnine months ended FebruaryMay 28,31, 2026, compared to total other income of $0.9$1.1 million for the sixnine months ended FebruaryMay 28,31, 2025. The decrease iswas primarily attributable to a $0.6 million decreasegain recognized in the prior-year period from the change in fair value of the Immunetrics earnout liability in the prior period,liability, as no earnout payment was anticipated related tofor the second earnout measurement period,period. thisThe liability was subsequently settled. This decrease was partially offset by increaseda $0.4 million increase in interest income of $0.2 million due to higher average balances of cash invested in interest-bearing accounts.

The expense for income taxes was $1.6$2.9 million for the sixnine months ended FebruaryMay 28,31, 2026, compared to $0.5an income tax benefit of $6.2 million for the sixnine months ended FebruaryMay 28,31, 2025. The Company tax rate increased to 24%25% for the sixnine months ended FebruaryMay 28,31, 2026, compared to 13%9% for the sixnine months ended FebruaryMay 28,31, 2025. The increase in the tax rate is primarily due to the result of a favorable discrete item in the prior year that did not recur in the current year, a less favorable jurisdictional mix of earnings between the U.S. and France, increased unfavorable Global Intangible Low-Taxed Income ("GILTI") impacts driven by higher French taxable income, and a lower Foreign-Derived Intangible Income ("FDII") benefit. In addition, certain items affecting the current-year effective tax rate relate to accelerated deductions elected under the One Big Beautiful Bill Act ("OBBBA"). These deductions are expected to be favorable to cash flows as they accelerate the timing of tax benefits and reduce near-term cash tax payments.

AtAs Februaryof 28,May 31, 2026, the Company had $25.7$35.3 million in cash and cash equivalents, $16.1$14.7 million in short-term investments, and net working capital of $55.2$61.6 million. Short-term investments consist of CD's,certificate of deposits, corporate bonds, and cash equivalents. The investments are U.S.-dollar-denominated securities.

Our cash flows from operating activities primarily include net income adjusted for (i) non-cash items included in net income, such as provisions (recoveries) for credit losses, depreciation and amortization, stock-based compensation, deferred taxes, and other non-cash items and (ii) changes in the balances of operating assets and liabilities. Net cash provided by operating activities was $10.6$19.4 million for the sixnine months ended FebruaryMay 28,31, 2026, compared to $4.4$12.5 million for the sixnine months ended FebruaryMay 28,31, 2025. The $6.3$6.8 million improvement was driven primarily by an increase in cash-adjusted net income, an increase in deferredother revenueliabilities and a decrease in cashdeferred outflow in other liabilities,taxes, partially offset by an increase in accounts receivable.

Net cash used in investing activities during the sixnine months ended FebruaryMay 28,31, 2026, was $16.2$15.4 million, compared to $2.5net cash provided by investing activities of $5.4 million during the sixnine months ended FebruaryMay 28,31, 2025. The increasedecrease of $13.8$20.7 million primarily reflects deployment and rebalancing of our short-term investment portfolio and capitalized software development to support product and platform enhancements. During the sixnine months ended FebruaryMay 28,31, 2026, we invested $16.0$28.2 million in short-term investments as part of our treasury strategy to prudently invest excess cash while preserving liquidity and capital, and we incurred $1.7$2.3 million of capitalized computer software development costs to support ongoing product development and technology improvements. These uses of cash were partially offset by $1.5$15.0 million of maturities of short-term investments as securities matured in the normal course of portfolio management.