Simulations Plus (SLP) risk factors, FY2025 10-K

Simulations Plus's FY2025 10-K, filed Dec 01, 2025, lists 42 risk factors in 3 groups. Against the prior year's 42: 4 new, 4 dropped, 12 substantially reworded.

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Risk factors listed
423 groups
New this year
4vs 42 last year
Dropped
4since the prior 10-K
Substantially reworded
12of those kept
Section length
11k wordsItem 1A

What the changes say

  • The company added explicit risk disclosures regarding artificial intelligence utilization, evolving data privacy laws, and U.S. government grant interruptions under DOGE.
  • Terminology shifted consistently from customers to clients across multiple existing risk factors.

What changed since the prior 10-K

New

  • New

    data privacy laws are still evolving, which provides some uncertainty

    Evolving EU and UK GDPR requirements and potential penalties create compliance uncertainty for processing personal and health data.

  • NewRisks Relating to Artificial Intelligence and Machine Learning

    The use of AI in our products and services may result in reputational harm and competitive harm

    Using AI and machine learning in modeling and simulation software could cause reputational and competitive harm if algorithms or training datasets are flawed.

  • NewRisks Relating to Artificial Intelligence and Machine Learning

    Our use of artificial intelligence and machine learning may result in legal and regulatory risks

    Uncertain intellectual property protections and potential litigation regarding AI-generated content and tools could expose the company to legal claims or loss of proprietary advantages.

  • NewRisks Relating to Government Regulation

    We receive government assistance in the form of cash grants. The interruption of or termination or failure to fund one or more of these grants, or other actions taken by Department of Government Efficiency (“DOGE”) could have an adverse impact on our business, financial condition, results of operations and cash flows

    Interruption or termination of research and development cash grants due to federal spending cuts and initiatives pursued by DOGE could adversely impact financial results.

Dropped

  • Dropped

    Certain Risks Related to Our Marketplace and Environment

    Certain Risks Related to Our Marketplace and Environment.

  • Dropped

    Cash expenditures associated with our recent acquisitions may create certain liquidity and cash flow risks for us

  • Dropped

    The Pro-ficiency business we acquired may not perform as we or the market expects, which could have an adverse effect on the price of our common stock

  • Dropped

    The obligations and liabilities of Pro-ficiency, some of which may be unanticipated or unknown, may be greater than we have anticipated, which may diminish the value of Pro-ficiency to us

Reworded

  • 74% rewritten

    We rely upon a single internal hosting facility and Amazon Web Services to deliver certain solutions to our clients 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

    Updated facility references from Cognigen and Buffalo, New York to a New York colocation facility and generalized Service and Consulting solutions.

    Was: We rely upon a single internal hosting facility and Amazon Web Services to deliver certain solutions to our customers 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

  • 54% rewritten

    Changes in and/or failure to comply with applicable data privacy laws, regulations, and interpretations of such laws and regulations could materially adversely affect our reputation, market position, or our business and financial performance

    Retained the extensive scope of HIPAA, HITECH, EU GDPR, UK GDPR, and PIPL compliance while maintaining general phrasing on data privacy laws.

  • 37% rewritten

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

    Added a new sentence noting no guarantee that the share repurchase program will be fully consummated or enhance long-term value.

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

  • 35% rewritten

    We are subject to price pressures in the markets we serve

    Expanded pricing pressure triggers to include a decrease in the need for products and services alongside fiscal year references.

  • 34% rewritten

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

    Substituted the word 'customer' with 'client' throughout the product liability and indemnification risk factor.

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

  • 33% rewritten

    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, client satisfaction and our reputation could be harmed, and client contracts may be terminated

    Replaced 'customer' with 'client' regarding data storage requirements, service-level agreements, and contract terminations.

    Was: 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, customer satisfaction and our reputation could be harmed, and customer contracts may be terminated

  • 30% rewritten

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

    Changed references from 'customers' to 'clients' regarding the adoption of model-informed drug development.

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

  • 28% rewritten

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

    Replaced 'customer' references with 'client' concerning contract cancellations and clinical trial delays.

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

  • 28% rewritten

    We face strong competition in the life science market for modeling and simulation software and for cheminformatics products

  • 27% rewritten

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

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

  • 22% rewritten

    Our insurance coverage may not be sufficient to avoid material impact on our financial position or results of operations resulting from claims or liabilities against us, and we may not be able to obtain insurance coverage in the future

  • 21% rewritten

    Our quarterly and annual operating results fluctuate and may continue to fluctuate in the future, and if we fail to meet the expectations of analysts or investors, our stock price and the value of your investment could decline substantially

All 42 risk factors

Headings as the filing states them, in filing order.

Other

  1. 01Our ability to sustain or increase revenues will depend upon our success in entering new markets, continuing to increase our client base, and in deriving additional revenues from our existing clients
  2. 02A decrease in, or resistance to, the acceptance of model-informed drug development and development by regulatory authorities or academic institutions could damage our reputation or reduce the demand for our products and services30% rewritten
  3. 03Health care reform and restrictions on reimbursement may affect the pharmaceutical, biotechnology, and industrial chemical companies that purchase or license our products or services, which may affect our results of operations and financial condition
  4. 04We face strong competition in the life science market for modeling and simulation software and for cheminformatics products28% rewritten
  5. 05We are subject to price pressures in the markets we serve35% rewritten
  6. 06Our insurance coverage may not be sufficient to avoid material impact on our financial position or results of operations resulting from claims or liabilities against us, and we may not be able to obtain insurance coverage in the future22% rewritten
  7. 07Any negative commentaries made by any regulatory agencies or any failure by us to comply with applicable regulations and related guidance could harm our reputation and operating results, and compliance with new regulations and guidance may result in additional costs
  8. 08Many of our contracts are fixed price and may be delayed or terminated or reduced in scope for reasons beyond our control, or we may underprice or overrun cost estimates with these contracts, potentially resulting in financial losses
  9. 09Impairment of goodwill or intangible assets may adversely impact future results of operations
  10. 10Delays 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, and delayed or lost revenue
  11. 11We are subject to various risks associated with the operation of a global business
  12. 12Changes in applicable U.S. and international tax laws or regulations and the resolution of tax disputes could negatively affect our financial results
  13. 13Contract research services create a risk of liability
  14. 14The drug discovery and development industry has a history of patent and other intellectual property litigation, involvement in intellectual property lawsuits is often very costly
  15. 15We may not be able to successfully develop and market new services and products
  16. 16We depend on key personnel and may not be able to retain these employees or recruit additional qualified personnel, which could harm our business
  17. 17If we are not successful in selecting and integrating the businesses and technologies we acquire, or in managing our current and future divestitures, our business may suffer
  18. 18Our quarterly and annual operating results fluctuate and may continue to fluctuate in the future, and if we fail to meet the expectations of analysts or investors, our stock price and the value of your investment could decline substantially21% rewritten
  19. 19We conduct business outside the U.S., which exposes us to foreign currency exchange rate risk, amongst other risk, and could have a negative impact on our financial results
  20. 20A significant portion of our operating expenses are relatively fixed and planned expenditures are based in part on expectations regarding future revenues
  21. 21If our clients cancel their contracts or terminate or delay their clinical trials, we may lose or delay revenues and our business may be adversely impacted28% rewritten
  22. 22If our security is breached, our business could be disrupted, our operating results could be harmed, and clients could be deterred from using our products and services
  23. 23Changes in and/or failure to comply with applicable data privacy laws, regulations, and interpretations of such laws and regulations could materially adversely affect our reputation, market position, or our business and financial performance54% rewritten
  24. 24data privacy laws are still evolving, which provides some uncertaintyNew
  25. 25We rely upon a single internal hosting facility and Amazon Web Services to deliver certain solutions to our clients 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 operations74% rewritten
  26. 26Defects or errors in our software applications could harm our reputation, result in significant cost to us and impair our ability to market our solutions
  27. 27If 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, client satisfaction and our reputation could be harmed, and client contracts may be terminated33% rewritten
  28. 28Some of our software solutions and services utilize open-source software, and any failure to comply with the terms of one or more of these open-source licenses could adversely affect our business
  29. 29We may be unable to adequately enforce or defend our ownership and use of our intellectual property and other proprietary rights
  30. 30Current and future litigation against us, which may arise in the ordinary course of our business, could be costly and time-consuming to defend
  31. 31We could incur substantial costs resulting from product liability claims relating to our products or services or our clients’ use of our products or services34% rewritten
  32. 32Our business depends on the clinical trial market, and a downturn in this market could cause our revenues to decrease
  33. 33We have discontinued the quarterly dividends on shares of our common stock and do not expect to pay any cash dividends for the foreseeable future
  34. 34If our operating and financial performance in any given period does not meet any guidance that we provide to the public, the market price of our common stock may decline
  35. 35The price of our common stock may be volatile, and our shareholders may not be able to resell shares of our common stock at or above the price they paid27% rewritten
  36. 36If securities or industry analysts issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline
  37. 37We may raise capital through the issuance of our common stock, convertible debt, or equity-linked securities, which could result in dilution to our shareholders or a negative impact on the price of our common stock37% rewritten
  38. 38shareholder value, and share repurchases could increase the volatility of the price of our common stock

Risks Relating to Artificial Intelligence and Machine Learning

  1. 39The use of AI in our products and services may result in reputational harm and competitive harmNew
  2. 40Our use of artificial intelligence and machine learning may result in legal and regulatory risksNew

Risks Relating to Government Regulation

  1. 41We receive government assistance in the form of cash grants. The interruption of or termination or failure to fund one or more of these grants, or other actions taken by Department of Government Efficiency (“DOGE”) could have an adverse impact on our business, financial condition, results of operations and cash flowsNew

Risk Relating to a Federal Government Shutdown

  1. 42Changes in government regulation, funding or in practices relating to the pharmaceutical or biotechnology industries, including potential health care reform, could decrease the need for the services we provide

Other Simulations Plus 10-Ks

  • FY2024 10-K risk factors
    42 risks

    Simulations Plus faces key risks from pharmaceutical R&D spending trends and drug development regulation. Software defects, hosting failures, and integration issues from the Pro-ficiency and Immunetrics acquisitions threaten results. Heavy reliance on fixed-price contracts and international markets introduces cost overruns and currency exposure.

    Filed Oct 30, 2024

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.