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Simulations Plus (SLP) Q3-25 10-Q highlights

Top-line: Revenue rose 9.8% year-over-year to $20.4 million, with software up 6.0% and services up 16.8%. Nine-month revenue advanced 20.2% to $61.7 million, reflecting continued adoption of newly acquired Pro-ficiency offerings.

Margins & mix: Gross margin contracted to 64% (71% prior-year) as services mix expanded to 38% of sales and cost inflation lifted software COGS. YTD gross margin slipped to 59% (71%).

Operating expense shock: A $77.2 million non-cash impairment tied to underperforming Pro-ficiency (ALI/MC) and QSP units drove operating expense to $87.3 million, swinging operating profit to a $74.2 million loss from $1.9 million income last year.

Net results: Net loss reached $67.3 million (-$3.35 EPS) versus $3.1 million (+$0.16 EPS) in Q3-24. Ex-impairment, management鈥檚 adjusted profit would have been modestly positive, but GAAP equity fell 32% to $123.8 million on impairment charges.

Cash & liquidity: Operating cash flow stayed positive at $12.5 million (up 7.6% YTD). Cash & equivalents climbed to $27.0 million from $10.3 million at FY-24 year-end, aided by investment redemptions. The balance sheet remains debt-light with total liabilities of $10.6 million; working capital is $41.6 million.

Segment view: Software contributed 62% of quarterly sales with 80% gross margin; services 38% with 38% margin. Management reports remaining performance obligations of $16.3 million (94% recognizable within 12 months), suggesting near-term revenue visibility.

Impairment rationale: A stock-price decline and revenue underperformance at ALI/MC prompted goodwill, trade-name, and developed-technology write-downs totaling $70.8 million; capitalized software at ALI/MC also impaired by $1.2 million.

Cash flow drivers YTD: strong collections (A/R up yet manageable), $6.5 million net investment inflows, and $2.1 million capitalized R&D. Financing outflows were limited to option exercises and earn-out payments; no dividends were declared in FY-25.

Risk & outlook: While core software demand remains healthy, shrinking margins, lower service profitability, and the large impairment highlight integration risks from Pro-ficiency. Investors will watch for improved ALI/MC traction, stabilization of goodwill balances, and restoration of historical mid-teens operating margins.

Wag! Group Co. (NASDAQ: PET) filed an 8-K on 8 July 2025 disclosing two material developments that underscore severe liquidity stress.

• Amendment to Financing Agreement: The company and lender Retriever LLC (assignee of Blue Torch Finance) executed Amendment No. 3 to the August 2022 Financing Agreement. The change reduces the minimum liquidity covenant (referred to as 鈥淎dditional Available Liquidity鈥�) but simultaneously limits how that incremental liquidity can be used. The amendment is included as Exhibit 10.1.
• Creation of Direct Financial Obligation: Because the amendment alters covenant terms without extinguishing the underlying debt, the filing also triggers Item 2.03 disclosure.
• Strategic Alternatives & Going-Concern Risk: The board has been evaluating 鈥渋nvestments, strategic partnerships, sale, merger, or other transactions.鈥� To date, no deal has been reached that would enable full repayment of amounts due to Retriever at maturity in August 2025. Negotiations with Retriever continue, but management warns there is no assurance of consummating a transaction before maturity.
• Potential Bankruptcy: Failure to reach an agreement would allow Retriever to exercise remedies against the company鈥檚 assets. Management explicitly states that seeking protection under bankruptcy laws is a possible outcome to maximize enterprise value.

The amendment offers near-term covenant relief, but the language reveals acute refinancing risk, looming debt maturity, and a realistic threat of insolvency if a strategic solution is not secured within the next 13 months.