UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC  20549





FORM
10-K/A


(Amendment
No. 1)








x
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended August 31, 2009oro
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the transition period from _________ to
  _________




Commission
file number:  001-32046





Simulations
Plus, Inc.


(Exact
name of registrant as specified in its charter)





California
              (State
      or other jurisdiction of incorporation or organization)
            95-4595609
              (I.R.S.
      Employer Identification No.)42505
      Tenth Street West
              Lancaster,
      CA 93534-7059
              (Address
      of principal executive offices including zip code)
            (661)
      723-7723
              (Registrant’s
      telephone number, including area
code)





SECURITIES
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:





Title of Each
      Class
              Common
      Stock, par value $0.001 per share
            Name of Each Exchange
      on Which Registered
              NASDAQ
      Stock Market LLC





COMMON
STOCK, PAR VALUE $0.001 PER SHARE





SECURITIES
REGISTERED UNDER SECTION 12(G) OF THE ACT:  NONE





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o  No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o  No x





Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filings requirements for
the past 90 days. Yes x  No o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o  No o





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405)  is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act (Check one):




o Large
      accelerated filer
            o Accelerated
      filero Non-accelerated
      filer (Do not check if a smaller reporting company)
            x  Smaller
      reporting company




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o  No x




The
aggregate market value of the registrant's common stock held by non-affiliates
of the registrant as of November 17, 2009, based upon the closing price of the
common stock as reported by The Nasdaq on such date, was approximately
$12,000,000. This calculation does not reflect a determination that persons are
affiliates for any other purposes.




As of
November 17, 2009, 15,596,093 shares of the registrant’s common stock, par value
$0.001 per share were outstanding, and no shares of preferred stock were
outstanding.




Documents
incorporated by reference:  None.










Explanatory Note





Simulations
Plus, Inc. (“we,” “us,” “our,” “Simulations” or the “Company”) is filing this
amendment (this “Amendment”) to our Annual Report on Form 10-K for the fiscal
year ended August 31, 2009 (our “Annual Report”) to voluntarily revise our
disclosures in response to comments received from the staff (the “Staff”) of the
Securities and Exchange Commission (the “SEC”) in connection with the Staff’s
review of our Annual Report. We are only filing the items of our Annual Report
that have been revised in response to the Staff’s comments and all other
information in our Annual Report remains unchanged, except for the correction of
certain typographical errors. Accordingly, this Amendment should be read in
conjunction with our Annual Report. Unless otherwise provided, all information
contained in this Amendment is as of November 30, 2009, the original filing date
of our Annual Report. This Amendment does not reflect events that have occurred
after the filing of the Annual Report and does not modify or update the
disclosure therein in any way other than as required to reflect the matters set
forth herein.




The only
changes to our Annual Report are in Item 7, Part III:  Item 10
through Item 14 and Item 15.  In Item 7, the changes are to discuss
and quantify sources of material changes.  In Part III, we have
included information which was previously omitted from the Annual Report in
reliance on General Instruction G(3) to Form 10-K.  Because our Proxy
Statement was not filed within 120 days after our last fiscal year end, we are
filing the information here.  In Item 15, we have removed several
expired Exhibits, and added 2 exhibits without confidentiality
clauses.




Pursuant
to the Rule 12b-15 of the Securities Exchange Act of 1934, currently dated
certifications from our principal executive and principal financial officer, as
required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, are
filed or furnished herewith, as applicable.





Forward-Looking
Statements




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




The
forward-looking statements are based on the beliefs of our management, as well
as assumptions made by and information currently available to our management.
Frequently, but not always, forward-looking statements are identified by the use
of the future tense and by words such as “believes,” expects,” “anticipates,”
“intends,” “will,” “may,” “could,” “would,” “projects,” “continues,” “estimates”
or similar expressions. Forward-looking statements are not guarantees of future
performance and actual results could differ materially from those indicated by
the forward-looking statements. Forward-looking statements involve known and
unknown risks, uncertainties, and other factors that may cause our or our
industry’s actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by the forward-looking
statements.




The
forward-looking statements contained or incorporated by reference in this
document 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.




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 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 document are made as
of the date of this document and we do not undertake any obligation to update
forward-looking statements to reflect new information, subsequent events or
otherwise.




2





Simulations
Plus, Inc.


FORM
10-K/A


For
the Fiscal Year Ended August 31, 2009





Table of
Contents








PagePART
    IIItem
      7
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            4Item 9A(T)
            Controls and
      Procedures
            12PART
    IIIItem 10
            Directors, Executive
      Officers and Corporate Governance
            13Item 11
            Executive
      Compensation
            16Item 12
            Security Ownership
      of Certain Beneficial Owners and Management and Related
      Stockholder Matters
            22Item 13
            Certain
      Relationships and Related Transactions, and Director
Independence
            23Item 14
            Principal Accounting
      Fees and Services
            24PART
    IVItem 15
            Exhibits, Financial
      Statement Schedules
            26Signatures
            27




3




PART
II





ITEM
7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS





The
following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and related notes included in our Annual
Report.




Results
of Operations




The
following sets forth selected items from our statements of operations (in
thousands) and the percentages that such items bear to net sales for the fiscal
years ended August 31, 2009 (“FY09”) and August 31, 2008 (“FY08”).




FY09
            
            
            FY08Net
      sales
            
            $
            9,143
            
            
            
            100.0
            %
            
            $
            8,968
            
            
            
            100.0
            %Cost
      of sales
            
            
            2,321
            
            
            
            25.4
            
            
            
            2,100
            
            
            
            23.4Gross
      profit
            
            
            6,822
            
            
            
            74.6
            
            
            
            6,868
            
            
            
            76.6Selling,
      general, and administrative
            
            
            3,896
            
            
            
            42.6
            
            
            
            3,699
            
            
            
            41.3Research
      and development
            
            
            1,114
            
            
            
            12.2
            
            
            
            991
            
            
            
            11.1Total
      operating expenses
            
            
            5,010
            
            
            
            54.8
            
            
            
            4,690
            
            
            
            52.3Income
      from operations
            
            
            1,812
            
            
            
            19.9
            
            
            
            2,178
            
            
            
            24.3Interest
      income
            
            
            94
            
            
            
            1.0
            
            
            
            185
            
            
            
            2.1Miscellaneous
      Income
            
            
            1
            
            
            
            0.0
            
            
            
            -
            
            
            
            -Gain
      on sale of assets
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Gain
      on currency exchange
            
            
            120
            
            
            
            1.3
            
            
            
            83
            
            
            
            0.9Total
      other income
            
            
            215
            
            
            
            2.4
            
            
            
            268
            
            
            
            3.0Net
      income before taxes
            
            
            2,027
            
            
            
            22.2
            
            
            
            2,446
            
            
            
            27.3Provision
      for income taxes
            
            
            (615
            )
            
            
            (6.7
            )
            
            
            (721
            )
            
            
            (8.0
            )Net
      income
            
            
            1,412
            
            
            
            15.4
            %
            
            
            1,725
            
            
            
            19.2
            %




FY09 COMPARED WITH
FY08





Net
Sales


Consolidated
net sales increased $175,000, or 2.0%, to $9,143,000 in FY09 from $8,968,000 in
FY08.  Sales from pharmaceutical software and services increased
approximately $246,000, or 4.1%; however, our Words+, Inc. subsidiary’s sales
decreased approximately $71,000, or 2.4%, for the year. The revenue from
non-software such as contract studies and collaborations increased by
$444,000.  However, this increase was offset by a decline in revenues
from software licenses by $343,000.





We
attribute the decrease in Words+ sales due to decreases in sales of “Freedom”
and “TuffTalker Plus”, which were discontinued in FY08, and hardware products
such as MessageMates and other input devices.  The decline in revenue
from those products by $242,000 outweighed an increase in revenue by $218,000
from the sales of our “Say-it SAM!” and “Conversa” products.




4


Cost of
Sales


Consolidated
cost of sales increased $221,000, or 10.5%, to $2,321,000 in FY09 from
$2,100,000 in FY08, and as a percentage of revenue, cost of sales increased
2.4%.  For pharmaceutical software and services, cost of sales
increased $275,000, or 34.4%, and as a percentage of revenue, cost of sales
increased to 17.0% in FY09 from 13.2% in FY08.  A significant portion
of cost of sales for pharmaceutical software products is the systematic
amortization of capitalized software development costs, which is an independent
fixed cost rather than a variable cost related to sales.  This
amortization cost increased approximately $50,000, or 11.7%, in FY09 compared
with FY08.  Royalty expense, another significant portion of cost of
sales, increased approximately $38,000, or 10.1%, in FY09 compared with
FY08.  We pay a royalty on GastroPlus basic software sales but not on
its modules or other software sales.  We also pay royalties on the
Enslein Metabolism Module in our ADMET Predictor software in accordance with our
agreement with Enslein Research, Inc.  The cost of contract studies,
which are mainly salaries for scientists, increased as our revenue from study
contracts increased, because these activities are not capitalizable software
development activities.





For
Words+, cost of sales decreased $54,000, or 4.1%, and as a percentage of
revenue, cost of sales were almost the same with a slight decrease of 0.8% to
43.9% in FY09 from 44.7% in FY08.


­­­­­


Gross
Profit


Consolidated
gross profit decreased $46,000, or 0.7%, to $6,822,000 in FY 09 from $6,868,000
in FY08.  We attribute this decrease to the increase in cost of sales
in pharmaceutical software and services and the decrease in gross profit from
Words+ operations, which outweighed increases in revenue from pharmaceutical
software and services.





Selling, General and
Administrative Expenses


Selling,
general and administrative (“SG&A”) expenses for FY09 increased by $197,000,
or 5.3%, to $3,896,000, compared to $3,699,000 for FY08.  For
Simulations Plus, SG&A expenses increased $124,000, or 5.6%.  The
major increases in expenses were trade show and travel expenses due to attending
more trade shows, increased air fares, and increased personal vehicle mileage
allowances.  Increases in salaries and payroll-related expenses, such
as health insurance, 401(K) and payroll taxes, and consultant fees are also
added to SG&A. During FY08, we had one-time expenses such as fees paid for
tax credit research fees, valuation service fees, and fees paid to the American
Stock Exchange for stock splits, while no such expenses were incurred in FY09,
resulting in some decreases in SG&A.  However, those decreases did
not offset the increases in other expenses mentioned above.





For
Words+, expenses increased by $73,000, or 4.9%.  There was a shift in
expense from one category to another from FY08 to FY09.  In March 08,
we hired a marketing consultant who became an employed sales manager of Words+,
increasing salaries and travel expenses while reducing consultant
fees.  The other increases were website developing fees, payroll, and
payroll-related expenses, such as health insurance, 401(K) and payroll
taxes.  Those increases outweighed decreases in commissions and
depreciation.





Research and
Development


We
incurred approximately $1,975,000 of research and development (“R&D”) costs
for both companies during FY09.  Of this amount, $674,000 was
capitalized and $1,114,000 was expensed as R&D and $187,000 was expensed as
cost of sales.  During FY08 we incurred approximately $1,719,000 of
research and development costs, of which approximately $728,000 was capitalized
and approximately $991,000 was expensed.  The 14.9% increase in
research and development expenditure from FY08 to FY09 was increases in salary
expenses due to expanding the staff in the Life Sciences Department, as well as
salary increases for existing staff in both companies, which was reduced by the
amount recorded as a cost of sales for contract studies.




5


Income from
operations


During
FY09, we generated income from operations of $1,812,000, as compared to
$2,178,000 for FY08, a decrease of 16.8%.  We attribute this decrease
to increases in cost of goods sold, SG&A expenses, and R&D costs, which
outweighed the increased revenue generated by sales of pharmaceutical software
and study contract services, in addition to a decrease in income from Words+
operations. Our heavier investment in R&D and marketing and sales activities
is expected to result in increased sales in the coming quarters.





Other Income and
(Expense)


The net
of other income over other expense for FY09 decreased by $53,000, or 19.8%, to
$215,000, compared to $268,000 for FY08.  This is due to decreased
interest income on Money Market accounts, which outweighed gains on currency
exchange.





Provision for Income
Taxes


Provision
for income taxes for FY09 decreased by $106,000, or 14.7%, to $615,000, compared
to $721,000 for FY08.  In FY08, we hired a tax credit specialist
company, Tax Projects Group, to identify potential unused tax
credits.  As a result of several months of research covering the
previous 3 tax years (2006, 2005, and 2004); they discovered an additional
$276,000 of unused R&D tax credits.  This increase in R&D tax
credits allowed us to reduce our income tax provision to as low as 29% in
FY08.  In FY09, we had such a credit for the current year’s expenses
only. Details are provided in the notes to the financial statements which are
part of the Annual Report.





Net
Income


Net
income for FY09 decreased by $313,000, or 18.2%, to $1,412,000, compared to
$1,725,000 for FY08.  We attribute this decrease in net income
primarily to increased cost of goods sold, SG&A expenses, and higher R&D
costs, which outweighed the increased revenues from pharmaceutical software
sales and services.





SEASONALITY


Sales of
our pharmaceutical products (“Simulations Plus” in the table below) exhibit
minimal seasonal fluctuation, with the first fiscal quarter almost always below
average for all quarters, except FY 2005, for the last 12 years.  This
unaudited net sales information has been prepared on the same basis as the
annual information presented elsewhere in this Annual Report on Form 10-K and,
in the opinion of management, reflects all adjustments (consisting of normal
recurring entries) necessary for a fair presentation of the information
presented.  Net sales for any quarter are not necessarily indicative
of sales for any future period.




Net
      Simulations Plus Sales (in
      thousands)FY
            
            First
                Quarter
            
            Second
                Quarter
            
            Third
                Quarter
            
            Fourth
                Quarter
            
            Total2009
      . . . . . . . . . . . . . . . . . . . . . . . . . .
            
            
            1,430
            
            
            1,779
            
            
            1,985
            
            
            1,107
            
            
            6,3012008
      . . . . . . . . . . . . . . . . . . . . . . . . . .
            
            
            1,438
            
            
            1,550
            
            
            1,975
            
            
            1,092
            
            
            6,0552007
      . . . . . . . . . . . . . . . . . . . . . . . . . .
            
            
            824
            
            
            1,808
            
            
            1,659
            
            
            1,465
            
            
            5,7562006
      . . . . . . . . . . . . . . . . . . . . . . . . . .
            
            
            199
            
            
            884
            
            
            1,096
            
            
            1,007
            
            
            3,1862005
      . . . . . . . . . . . . . . . . . . . . . . . . . .
            
            
            524
            
            
            410
            
            
            662
            
            
            473
            
            
            2,0692004
      . . . . . . . . . . . . . . . . . . . . . . . . . .
            
            
            642
            
            
            742
            
            
            603
            
            
            869
            
            
            2,8562003
      . . . . . . . . . . . . . . . . . . . . . . . . . .
            
            
            507
            
            
            582
            
            
            614
            
            
            1,403
            
            
            3,1062002
      . . . . . . . . . . . . . . . . . . . . . . . . . .
            
            
            390
            
            
            554
            
            
            504
            
            
            595
            
            
            2,0432001
      . . . . . . . . . . . . . . . . . . . . . . . . . .
            
            
            221
            
            
            373
            
            
            305
            
            
            282
            
            
            1,1812000
      . . . . . . . . . . . . . . . . . . . . . . . . . .
            
            
            151
            
            
            467
            
            
            143
            
            
            174
            
            
            9351999
      . . . . . . . . . . . . . . . . . . . . . . . . . .
            
            
            87
            
            
            93
            
            
            117
            
            
            164
            
            
            4611998
      . . . . . . . . . . . . . . . . . . . . . . . . . .
            
            
            11
            
            
            11
            
            
            13
            
            
            27
            
            
            62




6


We
believe that sales of our disability products (“Words+”) to schools were
slightly seasonal, prior to FY06, with greater sales to schools during our third
and fourth fiscal quarter (March-May and June-August), as shown in the table
below.




Net
      Words+ Sales (in
      thousands)FY
              
              First
                Quarter
              
              Second
                Quarter
              
              Third
                Quarter
              
              Fourth

                Quarter
              
              Total2009
      . . . . . . . . . . . . . . . . . . . . . . . . . .
              
              
              704
              
              
              678
              
              
              728
              
              
              732
              
              
              2,8422008
      . . . . . . . . . . . . . . . . . . . . . . . . . .
              
              
              545
              
              
              630
              
              
              994
              
              
              744
              
              
              2,9132007
      . . . . . . . . . . . . . . . . . . . . . . . . . .
              
              
              632
              
              
              726
              
              
              972
              
              
              772
              
              
              3,1022006
      . . . . . . . . . . . . . . . . . . . . . . . . . .
              
              
              620
              
              
              598
              
              
              692
              
              
              759
              
              
              2,6692005
      . . . . . . . . . . . . . . . . . . . . . . . . . .
              
              
              543
              
              
              622
              
              
              762
              
              
              757
              
              
              2,6842004
      . . . . . . . . . . . . . . . . . . . . . . . . . .
              
              
              497
              
              
              626
              
              
              630
              
              
              598
              
              
              2,3512003
      . . . . . . . . . . . . . . . . . . . . . . . . . .
              
              
              571
              
              
              538
              
              
              646
              
              
              624
              
              
              2,379





LIQUIDITY AND CAPITAL
RESOURCES


Our
principal sources of capital have been cash flows from our
operations.  We have achieved continuous positive operating cash flow
over the last seven fiscal years.  We believe that our existing
capital and anticipated funds from operations will be sufficient to meet our
anticipated cash needs for working capital and capital expenditures for the
foreseeable future.  Thereafter, if cash generated from operations is
insufficient to satisfy our capital requirements, we may open a revolving line
of credit with a bank, or we may have to sell additional equity or debt
securities or obtain expanded credit facilities.  In the event such
financing is needed in the future, there can be no assurance that such financing
will be available to us, or, if available, that it will be in amounts and on
terms acceptable to us. If cash flows from operations became insufficient to
continue operations at the current level, and if no additional financing was
obtained, then management would restructure the Company in a way to preserve its
pharmaceutical and disability businesses while maintaining expenses within
operating cash flows.





INFLATION


We have
not been affected materially by inflation during the periods presented, and no
material effect is expected in the near future.





OFF-BALANCE SHEET
ARRANGEMENTS


As of
August 31, 2009, we did not have any relationships with unconsolidated entities
or financial partnerships, such as entities often referred to as structured
finance or special purpose entities, which would have been established for the
purpose of facilitating off-blance sheet arrangements or other contractually
narrow or limited purposes.  As such, we are not materially exposed to
any financing, liquidity, market or credit risk that could arise if we had
engaged in such relationships.





We do not
have relationships or transactions with persons or entities that derive benefits
from their non-independent relationship with us or our related
parties.




7


RECENTLY ISSUED ACCOUNTING
STANDARDS


In
September 2009, the FASB issued Emerging Issues Task Force (“EITF”) 09-3,
“Applicability of AICPA Statement of Position 97-2 to Certain Arrangements That
Include Software Elements” (“EITF 09-3”).  EITF 09-3 amends Statement
of Position “SOP”) 97-2, “Software Revenue Recognition”, to exclude tangible
products containing software components and non-software components that
function together to deliver the product’s essential
functionality.  EITF 09-3 applies to revenue arrangements entered into
or materially modified in fiscal years beginning on or after June 15, 2010, with
early application permitted with EITF 08-1.  The company expects to
adopt this standard in the first quarter of fiscal 2011.  The company
is currently evaluating the impact EITF 09-3 will have on the consolidated
financial statements.





In
September 2009, the FASB issued Emerging Issues Task Force (“EITF”) 08-1,
“Revenue Arrangements with Multiple Deliverables” (“EITF 08-1”).  EITF
08-1 amends EITF 00-21, “Revenue Arrangements with Multiple Deliverables”, to
require an entity to use an estimated selling price when vendor-specific
objective evidence or acceptable third-party evidence does not exist for any
products or services included in a multiple element arrangement.  The
arrangement consideration should be allocated among the products and services
based upon their relative selling prices, thus eliminating the use of the
residual method of allocation.  EITF 08-01 also requires expanded
qualitative and quantitative disclosures regarding significant judgments made
and changes in applying the guidance.  EITF 08-1 applies to fiscal
years beginning after June 15, 2010, with early application
permitted.  The company expects to adopt the standard in the first
quarter of fiscal 2011.  The company is currently evaluating the
impact EITF 08-1 will have on the financial statements.




In June
2009, the FASB issued Statement No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles—a
replacement of FASB Statement No. 162 (“FAS 168”). This statement
provides for the FASB Accounting Standards Codification to become the single
official source of authoritative, nongovernmental generally accepted accounting
principles in the United States. FAS 168 does not change GAAP but reorganizes
the literature. This statement is effective for interim and annual periods
ending after September 15, 2009.




In May
2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS
No. 165”), which provides guidance on events that occur after the balance
sheet date but prior to the issuance of the financial statements. SFAS
No. 165 distinguishes events requiring recognition in the financial
statements and those that may require disclosure in the financial statements.
Furthermore, SFAS No. 165 requires disclosure of the date through which
subsequent events were evaluated. SFAS No. 165 is effective for interim and
annual periods after June 15, 2009. The Company adopted SFAS No. 165
for the annual reporting period ended August 31, 2009.




In April
2008, the FASB issued FSP-FAS No. 142-3, Determination of the Useful Life of
Intangible Assets (“FAS 142-3”). FAS 142-3 amends the factors that should
be considered in developing renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under SFAS No. 142,
Goodwill and Other Intangible Assets (“SFAS 142”). The objective of the Staff
Position is to improve the consistency between the useful life of a recognized
intangible asset under SFAS 142 and the period of expected cash flows used to
measure the fair value of the asset under SFAS No. 141 (Revised 2007):
Business Combinations (“SFAS 141R”) and other GAAP. FAS 142-3 is effective
for fiscal years beginning after December 15, 2008. Management is currently
evaluating the effect on the Company’s consolidated financial positions, results
of operations and cash flows.  The Company believes adoption will not
have a material impact on the Company’s consolidated financial
statements.




In April
2009, the FASB issued FSP-FAS No. 107-1 and APB 28-1, Disclosures about Fair Value of
Financial Instruments (“FAS No. 107-1/APB 28-1”). This FSP extends
to interim periods certain disclosures about fair value of financial instruments
for publicly traded companies and amends APB Opinion No. 28, Interim
Financial Reporting, to require those disclosures in summarized financial
information at interim reporting periods. This FSP is effective for interim
reporting periods ending after June 15, 2009. The Company’s adoption of FAS
No. 107-1/APB 28-1 is not expected to have a material effect on the
Company’s consolidated financial statements.




8




In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements” (“SFAS 157”), which defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. For financial assets and liabilities, SFAS 157 will be
effective for the Company in the first fiscal quarter of 2009. As permitted by
FSP-FAS 157-2, SFAS 157 is effective for nonfinancial assets and
liabilities for the Company during the first fiscal quarter of 2010. Management
believes the adoption of SFAS 157 for its financial assets and liabilities
will not have a material impact on the Company’s consolidated financial
statements and continues to evaluate the potential impact of the adoption of
SFAS 157 related to its nonfinancial assets and liabilities.




In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159
permits companies to choose to measure many financial instruments and certain
other items at fair value. SFAS 159 was effective for the Company in the
first fiscal quarter of 2009. The Company believes the adoption of SFAS 159
did not have a material impact on the Company’s consolidated financial
statements.




In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations” (“SFAS 141R”), which replaces SFAS 141. SFAS 141R
establishes principles and requirements for how an acquirer recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, any resulting goodwill, and any noncontrolling interest in
the acquiree. SFAS 141R also provides for disclosures to enable users of
the financial statements to evaluate the nature and financial effects of the
business combination. SFAS 141R will be effective for the Company in first
fiscal quarter of 2010 and must be applied prospectively to business
combinations completed on or after that date.




In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests
in Consolidated Financial Statements — an amendment of Accounting Research
Bulletin No. 51” (“SFAS 160”), which establishes accounting and
reporting standards for noncontrolling interests (“minority interests”) in
subsidiaries. SFAS 160 clarifies that a noncontrolling interest in a
subsidiary should be accounted for as a component of equity separate from the
parent’s equity. SFAS 160 will be effective for the Company in the first
fiscal quarter of 2010 and must be applied prospectively, except for the
presentation and disclosure requirements, which will apply retrospectively. The
Company is currently evaluating the potential impact that adoption of
SFAS 160 may have on its consolidated financial statements.




In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities — an amendment of FASB Statement
No. 133” (“SFAS 161”), which requires enhanced disclosures about an
entity’s derivative and hedging activities. SFAS 161 will be effective for
The Company second fiscal quarter of 2009.





CRITICAL ACCOUNTING
POLICIES


Our
consolidated financial statements and accompanying notes are prepared in
accordance with accounting principles generally accepted in the United States of
America.  Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by management’s application of accounting policies.  Critical
accounting policies for us include revenue recognition, accounting for
capitalized software development costs, and accounting for income
taxes.




9


Revenue
Recognition


We
recognize revenue related to software licenses and software maintenance in
accordance with the American Institute of Certified Public Accountants ("AICPA")
Statements of Position (SOP) No. 97-2, "Software Revenue
Recognition."  Product revenue is recorded when the following
conditions are met: 1) evidence of arrangement exists, such as signed Purchase
Orders from customers or executed contracts, 2) delivery has been made, such as
unlocking the software on the customer’s computer(s), 3) the amount is fixed,
and 4) it is collectible.  Post-contract customer support ("PCS")
obligations are insignificant; therefore, revenue for PCS is recognized at the
same time, and the costs of providing such support services are accrued and
amortized over the obligation period.





As a
byproduct of ongoing improvements and upgrades to our software, some
modifications are provided to customers who have already licensed software
during their license term at no additional charge.  We consider these
modifications to be minimal, as they are not changing the basic functionality or
utility of the software, but rather adding convenience, such as being able to
plot some additional variable on a graph in addition to the numerous variables
that had been available before. Such software modifications for any single
product have been typically once or twice per year, sometimes more, sometimes
less. Thus, they are infrequent.  We provide, for a fee, additional
training and service calls to our customers and recognize revenue at the time
the training or service call is provided.





We enter
into one-year license agreements with most of our customers for the use of our
pharmaceutical software products.  However, from time to time, we
enter into multi-year license agreements.  We unlock and invoice
software one year at a time for multi-year licenses. Therefore, revenue is
recognized one year at a time.





We
recognize contract study revenue either equally over the term of the contract or
using the percentage of completion method, depending upon how the contract
studies are engaged, in accordance with AICPA SOP 81-1.  To recognize
revenue using the percentage of completion method, we must determine whether we
meet the following criteria:  1) there is a long-term, legally
enforceable contract and 2) it is possible to reasonably estimate the total
project costs, and 3) it is possible to reasonably estimate the extent of
progress toward completion.





Capitalized Computer
Software Development Costs


Software
development costs are capitalized in accordance with SFAS No. 86, "Accounting
for the Cost of Computer Software to be Sold, Leased, or otherwise
Marketed."  Capitalization of software development costs begins upon
the establishment of technological feasibility and is discontinued when the
product is available for sale.





The
establishment of technological feasibility and the ongoing assessment for
recoverability of capitalized software development costs require considerable
judgment by management with respect to certain external factors including, but
not limited to, technological feasibility, anticipated future gross revenues,
estimated economic life, and changes in software and hardware technologies.
Capitalized software development costs are comprised primarily of salaries and
direct payroll-related costs and the purchase of existing software to be used in
our software products.





Amortization
of capitalized software development costs is provided on a product-by-product
basis on the straight-line method over the estimated economic life of the
products (not to exceed five years).  Amortization of software
development costs amounted to $519,415 and $466,735 for the fiscal years ended
August 31, 2009 and 2008, respectively.  We expect future amortization
expense to vary due to increases in capitalized computer software development
costs.





We test
capitalized computer software costs for recoverability whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable within a reasonable time.




10


Income
Taxes


We
utilize SFAS No. 109, "Accounting for Income Taxes," which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns.





The
objectives of accounting for income taxes are to recognize the amount of taxes
payable or refundable for the current year and deferred tax liabilities and
assets for the future tax consequences of events that have been recognized in an
entity’s financial statements or tax returns.  Judgment is required in
assessing the future tax consequences of events that have been recognized in our
financial statements or tax returns.  Fluctuations in the actual
outcome of these future tax consequences could materially impact our financial
position or our results of operations.





The
Company has adopted Financial Accounting Standards Board (“FASB”) Interpretation
No. 48 (“FIN 48”), - “Accounting for Uncertainty in Income Taxes – an
interpretation of FASB Statement No. 109”.  FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in an enterprise’s
financial statements in accordance with FASB statement 109, “Accounting for
Income Taxes”, and prescribes a recognition threshold of more likely than not
and a measurement process for financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return.  In
making this assessment, a company must determine whether it is more likely than
not that a tax position will be sustained upon examination, based solely on the
technical merits of the position and must assume that the tax position will be
examined by taxing authorities.  Our review of prior year tax
positions using the criteria and provisions presented in FIN 48 did not result
in a material impact on the Company’s financial position or results of
operations.





Stock-Based
Compensation


The
Company accounts for stock options using the modified prospective method in
accordance with SFAS No. 123R.  Under this method, compensation costs
includes: (1) compensation cost for all share-based payments granted prior to,
but not yet vested as of September 1, 2006, based on the grant date fair value
estimated in accordance with the original provisions of SFAS No. 123 amortized
over the options’ vesting period, and (2) compensation cost for all share-based
payments granted subsequent to September 1, 2006, based on the grant-date fair
value estimated in accordance with the provisions of SFAS No. 123R, amortized on
a straight-line basis over the options’ vesting period.





Principles of
Consolidation


The
consolidated financial statements include the accounts of Simulations Plus, Inc.
and its wholly owned subsidiary, Words+, Inc.  All significant
intercompany accounts and transactions are eliminated in
consolidation.





Estimates


Our
consolidated financial statements and accompanying notes are prepared in
accordance with accounting principles generally accepted in the United States of
America.  Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses.  These estimates and assumptions
are affected by management’s application of accounting
policies.  Actual results could differ from those
estimates.  Significant accounting policies for us include revenue
recognition, accounting for capitalized software development costs, and
accounting for income taxes.




11


ITEM
9A(T) – CONTROLS AND PROCEDURES





We are
responsible for maintaining disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). Disclosure controls and procedures are controls
and other procedures designed to ensure that the information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified
in the Securities and Exchange Commission’s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is accumulated and communicated to our
management, including our principal executive officer and principal financial
officer, as appropriate to allow timely decisions regarding required
disclosure.  In designing and evaluating disclosure controls and
procedures, management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management is required to apply
its judgment in evaluating the cost-benefit relationship of possible controls
and procedures.





Based on
our management’s evaluation (with the participation of our principal executive
officer and principal financial officer) of our disclosure controls and
procedures as required by Rule 13a-15 under the Exchange Act, our principal
executive officer and principal financial officer have concluded that our
disclosure controls and procedures were effective at the reasonable assurance
level as of August 31, 2009, the end of the fiscal year covered by this
report.





Management's Report on
Internal Control over Financial Reporting


Our
management is responsible for establishing and maintaining adequate internal
controls over financial reporting, as defined in Exchange Act Rule 13a-15(f).
Our internal controls over financial reporting are designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of consolidated financial statements for external purposes in
accordance with generally accepted accounting principles.





Under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we conducted an evaluation of the
effectiveness of our internal controls over financial reporting based on the
framework established by the Committee of Sponsoring Organizations for the
Treadway Commission. Based on our evaluation under the framework, including the
completion and review of internal review assessment forms and the completion and
review of financial reporting information systems and controls checklists in the
framework, our management concluded that our internal control over financial
reporting was effective as of August 31, 2009.





This
annual report does not include an attestation report of our independent
registered public accounting firm regarding internal controls over financial
reporting. Our management's report was not subject to attestation by our
independent registered public accounting firm pursuant to temporary rules of the
SEC that permit us to provide only management's report in this annual
report.





No
changes were made in our internal controls over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recent
fiscal quarter that have materially affected or are reasonably likely to
materially affect, our internal controls over financial reporting.





Our
management, including our CEO and CFO, does not expect that our disclosure
controls or internal controls over financial reporting will prevent all errors
or all instances of fraud. A control system, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance that the control
system's objectives will be met. Further, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within our company have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple errors or mistakes. Controls can also be
circumvented by the individual acts of some persons, by collusion of two or more
people, or by management override of the controls. The design of any system of
controls is based in part upon certain assumptions about the likelihood of
future events, and any design may not succeed in achieving its stated goals
under all potential future conditions. Over time, controls may become inadequate
because of changes in conditions or deterioration in the degree of compliance
with policies or procedures. Because of the inherent limitation of a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected.





12





PART
III




ITEM
10 – DRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





Nomination of Directors


The
Governance and Nominating Committee is charged with making recommendations to
the Board regarding qualified candidates to serve as directors. The committee’s
goal is to assemble a Board with the skills and characteristics that, taken as a
whole, will assure a strong Board with experience and expertise in all aspects
of corporate governance. Accordingly, the Governance and Nominating Committee
believes that candidates for director should have certain minimum
qualifications, including personal integrity, strength of character, an
inquiring and independent mind, practical wisdom and mature judgment. In
evaluating director nominees, the Governance and Nominating Committee considers
the following factors:




(1)
            The
      appropriate size of the Board,


(2)
            Our
      needs with respect to the particular talents and experience of its
      directors, and


(3)
            The
      knowledge, skills and experience of nominees, including experience in
      technology, business, finance, administration or public
      service.





Other
than the foregoing, there are no stated minimum criteria for director nominees,
although the Governance and Nominating Committee may also consider such other
factors as it deems to be in our best interests and those of our stockholders.
The Governance and Nominating Committee does, however, believe it appropriate
for at least one members of the Board to meet the criteria for an “audit
committee financial expert” as defined by SEC rules, and for a majority of the
members of the Board to meet the definition of an “independent director” under
NASDAQ listing standards. The Governance and Nominating Committee also believes
it is appropriate for our Chief Executive Officer and our Corporate Secretary to
participate as members of the Board.





The
Governance and Nominating Committee identifies nominees by first evaluating the
current members of the Board willing to continue in service. Current members of
the Board with skills and experience that are relevant to our business and who
are willing to continue in service are considered for re-nomination, but the
committee at all times seeks to balance the value of continuity of service by
existing members of the Board with that of obtaining a new perspective. If any
member of the Board does not wish to continue in service, the Governance and
Nominating Committee’s policy is not to re-nominate a member for
re-election.  The Governance and Nominating Committee identifies the
desired skills and experience of a new nominee for the criteria above, and then
uses its network of contacts to compile a list of candidates.





We do not
have a formal policy concerning stockholder recommendations of director
candidates to the Governance and Nominating Committee. The absence of such a
policy does not mean, however, that such recommendations will not be considered.
To date, we have not received any recommendations from stockholders requesting
the Governance and Nominating Committee to consider a candidate for inclusion
among the committee’s slate of nominees in our proxy statement. Stockholders
wishing to make such a recommendation of a director candidate may do so by
sending a written notice to the Governance and Nominating Committee, Attn:
Chairman, Simulations Plus, Inc., 42505 10th
Street West, Lancaster, CA 93534, naming the proposed candidate and providing
detailed biographical and contact information for such proposed
candidate.





13




NAME
            AGE
            POSITION WITH THE
      COMPANY
            ELECTED
      DIRECTOR SINCEWalter S.
      Woltosz
            64
            Chairman of the
      Board, Chief Executive Officer and President of the Company
            1996Virginia E.
      Woltosz
            58
            Secretary and
      Director of the Company
            1996Dr. David Z.
      D'Argenio
            60
            Director
            1997Dr. Richard R.
      Weiss
            76
            Director
            1997Wayne
      Rosenberger
            69
            Director
            2007




WALTER S.
WOLTOSZ is a co-founder of the Company and has served as its Chief Executive
Officer and President and as Chairman of the Board of Directors since its
incorporation in July 1996. Mr. Woltosz is also a co-founder of Words+ and
served as its Chief Executive Officer and President from its incorporation in
1981 until the appointment of Jeffrey Dahlen as President of Words+ in
2004.





VIRGINIA
E. WOLTOSZ is a co-founder of the Company and has served as its Senior Vice
President and Secretary since its incorporation in July 1996 until January 31,
2003. Mrs. Woltosz is also a co-founder of Words+ and served as its Vice
President, Secretary and Treasurer from its incorporation in 1981 until January
31, 2003. Mrs. Woltosz retired from the position of Senior Vice President as of
January 31, 2003, but remains as Secretary and Treasurer of Simulations
Plus.  Virginia E. Woltosz is the wife of Walter S.
Woltosz.





DR. DAVID
Z. D'ARGENIO has served as a Director of the Company since June
1997.  He is currently Professor of Biomedical Engineering at the
University of Southern California ("USC"), and has been on the faculty at USC
since 1979. He also serves as the Co-Director of the Biomedical Simulations
Resource Project at USC, a project funded by the National Institutes of Health
since 1985.





DR.
RICHARD R. WEISS has served as a Director of the Company since June
1997.  From October 1994 to the present, Dr. Weiss has acted as a
consultant to a number of aerospace companies through his own consulting entity,
Richard R. Weiss Consulting Services. From June 1993 through July 1994, Dr.
Weiss was employed by the U.S. Department of Defense as its Deputy Director,
Space Launch & Technology.





H. WAYNE
ROSENBERGER has served as a Director of the Company since November 2007. Mr.
Rosenberger has been a career banker, holding various senior and executive
positions in banking since 1963. From August 1997 to present, Mr. Rosenberger
has been Senior Regional Vice President of American Security
Bank.  Prior to becoming an independent Director of the Company, Mr.
Rosenberger had acted as a member of the audit committee for the Antelope Valley
Hospital.





AUDIT
COMMITTEE




The
Company has an audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act, currently comprised of: Mr. H. Wayne
Rosenberger, Dr. Richard R. Weiss and Dr. David Z. D'Argenio. Each member of the
Audit Committee of the Company (the “Audit Committee”) is independent as defined
under the applicable rules of the SEC and NASDAQ Stock Market LLC (“NASDAQ”)
listing standards.  The responsibilities of the Audit Committee,
include selecting the Company's independent auditors, reviewing the Company's
internal audit procedures, reviewing quarterly and annual financial statements
independently and with the Company's independent auditors, reviewing the results
of the annual audit and implementing and monitoring the Company's cash
investment policy. In addition, the Audit Committee assists the Board in its
oversight of corporate accounting and internal controls, reporting practices and
the quality and integrity of the financial reports of the
Company.  During the fiscal year ended August 31, 2009, the Audit
Committee held a total of three meetings. The Board of Directors has determined
that Mr. H. Wayne Rosenberger, who serves on the Audit Committee, is an “audit
committee financial expert” as defined in applicable SEC rules





14





BUSINESS
EXPERIENCE OF EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS:


NAME
              AGE
              POSITION WITH THE
      COMPANY
              OFFICERSINCEMomoko A.
      Beran
              57
              Chief Financial
      Officer of the Company, and
      Words+, Inc.
              1996Jeffrey A.
      Dahlen
              48
              President of Words+,
      Inc.
              2003


MOMOKO A.
BERAN joined Words+ in June 1993 as Director of Accounting and was named the
Company's Chief Financial Officer in July 1996. Prior to joining Words+, Ms.
Beran had been Financial Controller for AB Component Systems Inc., which had its
headquarters in the U.K. Since February 1, 2003, Ms. Beran has also been the
Company's Director of Human Resources and Director of Facilities and
Equipment.





JEFFREY
A. DAHLEN rejoined the Company in April 2003 as Vice President of Research and
Development for Words+ after five years with iAT, a software consulting firm he
founded based in Pasadena, California. Mr. Dahlen was promoted to President of
Words+, Inc. in April 2004. He is a graduate of Stanford University in
Electrical Engineering and has 24 years' experience in both software and
hardware design, which includes development of extremely high speed processing
hardware with the Jet Propulsion Laboratory at the California Institute of
Technology, and over 10 years of software and hardware design and development at
Words+.





COMPANY
CODE OF ETHICS





Our Code
of Ethics is posted on our web site: www.simulations-plus.com.





SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE




Section
16(a) of the Exchange Act requires our officers, directors, and any persons who
own more than 10% of common stock, to file reports of ownership of, and
transactions in, our common stock with the SEC and furnish copies of such
reports to us. Based solely on our review of the copies of such forms and
amendments thereto furnished to us and on written representations from our
officers, directors, and any person whom we understand owns more than 10% of our
common stock, we found that during our fiscal year ended August 31, 2009: (i)
Virginia Woltosz, one of our directors, officers and 10% shareholders, failed to
timely file one Form 4 report with the SEC to report one transaction and change
in beneficial ownership; (ii) Ronald Creeley, one of our officers, failed to
timely file three Form 4 reports with the SEC to report three transactions and
changes in beneficial ownership; (iii) David D’Argenio, one of our directors,
failed to timely file one Form 4 report with the SEC to report three
transactions and changes in beneficial ownership; (iv) Momoko Beran, one of our
officers, failed to timely file two Form 4 reports with the SEC to report five
transactions and changes in beneficial ownership; (v)  Richard Weiss,
one of our directors, failed to timely file two Form 4 reports with the SEC to
report two transactions and changes in beneficial ownership; and (vi) Wayne
Rosenberg, one of our directors, failed to timely file one Form 4 report with
the SEC to report one transaction and change in beneficial ownership. All such
transactions have since been reported on Form 4 reports.




15





ITEM
11 – EXECUTIVE COMPENSATION





COMPENSATION
DISCUSSION AND ANALYSIS





The
purpose of the Company's compensation program is to attract and retain talented
and dedicated professionals to manage and execute the Company's strategic plans
and tactical operations. Although the Company's salaries have been and remain
significantly lower than those of similar public companies, management and the
board of directors believe that the award of options has fairly rewarded loyal,
long-term employees who have contributed to the Company's growth and financial
success.





The goal
of our named executive officer compensation program is the same as our goal for
operating the Company - to create long-term value for our
shareholders.  Toward this goal, we have designed and implemented our
compensation programs for our named executives to reward them for sustained
financial and operating performance and leadership excellence, to align their
interests with those of our shareholders and to encourage them to remain with
the Company for long and productive careers. Most of our compensation elements
simultaneously fulfill one or more of our performance, alignment and retention
objectives. These elements consist of salary and annual bonus, equity incentive
compensation, and 401(k) matching retirement benefits. In deciding on the type
and amount of compensation for each executive, we focus on both current pay and
the opportunity for future compensation. We combine the compensation elements
for each executive in a manner we believe optimizes the executive's contribution
to the Company.





DETERMINING
COMPENSATION





We rely
on our judgment in making compensation decisions, after reviewing the
performance of the Company and carefully evaluating an executive's performance
during the year against established goals, leadership qualities, operational
performance, business responsibilities, and career with the Company, current
compensation arrangements and long-term potential to enhance shareholder
value.




The CEO's
compensation is determined by the Compensation Committee as described below
under Employment and Other Compensation Agreements. The salaries of all other
officers are determined by the CEO and the Compensation Committee together.
Option grants are recommended by the CEO and CFO and approved by the board of
directors.





The CEO's
bonus had been determined from the original employment agreement at the time of
our initial public offering in 1997 and carried forward in subsequent employment
agreements through the end of fiscal year 2007. Beginning on September 1, 2007
(fiscal year 2008) the CEO's employment contract was renewed for a period of two
years without an annual bonus, at his request and with the agreement of the
Compensation Committee.  Effective September 1, 2009, the CEO’s
employment contract was renewed for another two years by the Compensation
Committee with an annual bonus of up to 10% of his annual salary, and is
included in the Company’s 10K as an exhibit.




16




Bonuses
for all other employees are determined through a calculation of two factors, one
for longevity and one for performance, with the greater emphasis on performance.
Supervisors provide an evaluation of each employee in five areas: attendance,
attitude, productivity, skill level with respect to the position they occupy,
and contribution to the Company's profitability. A scoring system is used and
bonuses are awarded based on this system and the total budget for bonuses as
determined by the CEO and CFO with the approval of the board of
directors.





The
Company provides 401(k) matching up to 4% of employees' salaries or wages up to
the IRS maximum allowable, regardless of their position within the
Company.





The
Company provides cell phones to the Named Executive Officers and other employees
for business communication purpose.  However, the Company allows the
personal use of cell phone usage as long as it does not exceed the Company’s
allowable minutes and text messages.  In the event the personal usage
exceeds over the allowable, the employees are financially responsible for the
excess.  There are no other perquisites or other benefits of any kind
for any officer or any other employee or director of the Company.





EMPLOYMENT
AND OTHER COMPENSATION AGREEMENTS





The Board
of Directors renewed its employment agreement with Walter Woltosz commencing
September 1, 2007 for two years. That agreement provided for an annual salary of
$250,000. Pursuant to such agreement, Mr. Woltosz was entitled to such health
insurance and other benefits that are not inconsistent with that which we
customarily provide to our other management employees and to reimbursement of
customary, ordinary and necessary business expenses incurred in connection with
the rendering of services to the Company. The agreement also provided that we
could terminate the agreement without cause upon 30 days written notice, and
that our only obligation to Mr. Woltosz would be for a payment equal to the
greater of (i) 12 months of salary or (ii) the remainder of the term of the
employment agreement from the date of notice of termination. Further, the
agreement provided that we could terminate the agreement for cause (as defined)
and that our only obligation to Mr. Woltosz would be limited to the payment of
Mr. Woltosz' salary and benefits through and until the effective date of any
such termination.





As part
of the agreement with the original underwriter and as partial compensation for
the sale of Words+ to Simulations Plus in 1996, commencing with our fiscal year
ending 1997 and for each fiscal year thereafter, Walter and Virginia Woltosz
were entitled to receive bonuses not to exceed $150,000 and $60,000,
respectively, equal to 5% of our net annual income before
taxes.  However, under the two-year employment agreement effective as
of September 1, 2007, and at his request, Walter Woltosz elected to received no
bonus. The bonus to Virginia Woltosz remained the same. The Company's net income
before taxes for FY08 was $2,446,177, thus we accrued a bonus in the total
amount of $60,000 for Virginia Woltosz.  This bonus was due and
payable within 10 days after the filing of the annual report, and was paid on
December 13, 2009.





The
Compensation Committee renewed its employment agreement with Walter Woltosz
commencing September 1, 2009 for two years. The agreement provided for; 1) a
base salary of $275,000 per year, 2) options to purchase 50 shares of Common
Stock for each $1,000 of net income before taxes at the end of each fiscal year
(up to a maximum of 120,000 options – to be adjusted for stock split or reverse
split) over the term of agreement, and 3) Bonus not to exceed 10% of salary, or
$27,500 per year.  The specific amount of the bonus will be determined
by the Compensation Committee.





17





SUMMARY
TABLE OF NAMED EXECUTIVE COMPENSATION





The
following table sets forth certain information concerning compensation paid or
accrued for the fiscal years ended August 31, 2009 and 2008 by the Company to or
for the benefit of the Company's CEO/President, Chief Financial Officer, Vice
President, Sales and Marketing, and President of our Words+, Inc. -subsidiary
(the "named executive officers"). No other executive officers of the Company
received total annual compensation for the fiscal year ended August 31, 2009 or
2008 that exceeded $100,000.





Name
      and Principal
              Position
            Fiscal
              Year
            Salary
              ($)
            Bonus
              ($)
            Option
              Awards
              ($)
            All
      other
              compensation
              ($)
            Total
              ($)(a)
            (b)
            (c)
            (d)
            (f)
            (i)
            (j)Walter
      S. Woltosz
            2009
            250,000
            0
            0
            0
            250,000Chief
      Executive Officer
            2008
            250,000
            0
            0
            0
            250,000Momoko
      A. Beran
            2009
            135,000
            15,147
            6,199
            5,400
            161,746Chief
      Financial Officer
            2008
            125,000
            14,308
            22,727
            5,000
            162,035Ronald
      F. Creeley (1)
            2009
            121,995
            3,434
            2,381
            4,880
            132,690Vice
      President, Sales
            2008
            120,793
            6,331
            15,220
            4,832
            147,176and
      MarketingJeffrey
      A. Dahlen
            2009
            100,000
            1,132
            2,326
            4,000
            107,458President,
      Words+, Inc.
            2008
            100,000
            1,700
            15,220
            4,000
            120,920subsidiary






(1)
            Mr Ronald Creeley
      left the Company on December 25, 2009.(d)
            Amount represents
      bonus earned during the applicable year.(f)
            Amount represents
      the stock-based compensation expense recorded by us in fiscal 2009
      measured using the Black-Scholes option pricing model at the grant date
      based on the fair value of the option award.(i)
            Amount represents
      Company matching for 401(k) Plan.




18




SUMMARY
TABLE OF DIRECTORS’ COMPENSATION





The
Directors’ stipends are currently $5,000 and 4,000 shares of stock options per
person per year for their services.  In addition to their stipends,
the Company pays $1000 per person per meeting.  Mileage expense to
attend those meeting is reimbursed at the rate Internal Revenue Service defines
for business use, except for the Directors who are local residents.




Name
      of Directors
            Fiscal
              Year
            Fees
      earned or
              paid
      in cash
              ($)
            Option
              Awards
              ($)
            All
      other
              compensation
              ($)
            Total
              ($)(a)
            (b)
            (c)
            (d)
            (e)
            (g)Dr.
      David Z. D’Argenio
            2009
            11,000
            5,895
            243
            17,1382008
            8,000
            4,913
            230
            13,143Dr.
      Richard R. Weiss
            2009
            10,000
            5,895
            0
            15,8952008
            8,000
            4,913
            0
            12,913Harold
      W. Rosenberger
            2009
            11,000
            1,634
            0
            12,6342008
            6,750*
            0
            0
            6,750




(c)
            The
      Directors’ stipends are $5,000 per year for fiscal years 2009 and 2008,
      and $1,000 per meeting.(d)
            Amount
      represents the stock-based compensation expense recorded by us in fiscal
      2009 and 2008 measured using the Black-Scholes option pricing model at the
      grant date based on the fair value of the option
awards.(e)
            Mileage
      expense to attend meeting is reimbursed at the rate set by Internal
      Revenue Service for business use, except for the Directors who are local
      residents.*
            Prorated by the
      service performed.





GRANTS
OF PLAN-BASED AWARDS


FOR
FISCAL YEAR ENDED


AUGUST
31, 2009





The
following table discloses information about option grants to the Named Executive
Officers during the year ended August 31, 2009, including hypothetical gains or
"option spreads" for the options at the end of their respective ten-year terms,
as calculated in accordance with the rules of the SEC. Each gain is based on an
arbitrarily assumed annualized rate of compound appreciation of the market price
at the date of the grant of 1% and 4% from the date the option was granted to
the end of the option term. Actual gains, if any, on option exercises are
dependent on the future performance of our common stock, overall market
conditions and continued employment.




Name
            Grant
              Date
            No.
      of Securities Underlying
              Options
      Granted
            Percent
      of Total Options Granted to Employees in FY09
            Exercise
      Price
              Per
      Share
            Potential
      Realizable Value at
              AssumedAnnual
      Rated of Stock
              PriceAppreciation
      for Option Term1%
            4%Momoko
      A. Beran
            4/7/2009
            30,000
            12.4%
            $
      1.00
            $
      3,139
            $14,407Ronald
      F. Creeley (1)
            4/7/2009
            2,000
            0.8%
            $
      1.00
            $    209
            $     960Jeffrey
      A. Dahlen
            4/7/2009
            1,000
            0.4%
            $
      1.00
            $    105
            $     480


(1)
              Mr Ronald Creeley
      left the Company on December 25, 2009.
  19





OUTSTANDING
EQUITY AWARDS


AT
FISCAL YEAR END


AUGUST
31, 2009





The
following table provides a summary of all outstanding equity awards for named
officers at the end of fiscal year 2009.





Name
              (a)
            Number
      of securities
              underlying
              unexercised
      options
              (#)
              Exercisable
              (b)
            Number
      of
              securities
      underlying
              unexercised
      options
              (#)
              Unexercisable  (c)
            Option
              exerciseprice
              ($)
              (e)
            Option
              expiration
      date
              (f)Walter
      Woltosz
            30,000
            -0-
            1.2375
            07/20/2011Virginia
      Woltosz
            30,000
            -0-
            1.2375
            07/20/2011Momoko
      Beran
            160,000
            -0-
            0.5625
            11/23/2009160,000
            -0-
            0.7500
            04/17/201040,000
            -0-
            0.4075
            08/09/201060,000
            -0-
            0.4075
            12/01/2010140,000
            -0-
            0.3500
            05/03/201120,000
            -0-*
            1.1050
            06/22/201540,000
            -0-*
            1.1250
            07/20/201610,000
            8,000
            3.0200
            01/21/201830,000
            30,000
            1.0000
            04/07/2019Ronald
      Creeley (1)
            172,000
            -0-
            0.5625
            11/23/2009160,000
            -0-
            0.7500
            04/17/201040,000
            -0-
            0.4075
            08/09/201060,000
            -0-
            0.4075
            12/01/2010140,000
            -0-
            0.3500
            05/03/201120,000
            -0-*
            1.1050
            06/22/201540,000
            -0-*
            1.1250
            07/20/20165,000
            4,000
            3.0200
            01/21/20182,000
            2,000
            1.0000
            04/07/2019Jeffrey
      Dahlen
            65,000
            -0-
            1.1500
            04/16/20145,000
            4,000
            3.0200
            01/21/20181,000
            1,000
            1.0000
            04/07/2019






(b)
            Stock
      options are vested over 5 years – 20% vesting on each anniversaries of the
      date of grant.(c)
            *Options
      granted prior to September 1, 2006 were vested in full effective as of
      August 31, 2006 when we adopted SFAS No. 123R “Accounting for Stock-Based
      Compensation.”(1)
            Mr Ronald Creeley
      left the Company on December 25, 2009.




20





OPTION
EXERCISES AND STOCK VESTED


FOR
FISCAL YEAR ENDED


AUGUST
31, 2009





The
following table discloses certain information regarding the options held at
August 31, 2009 by the Chief Executive Officer and each other named executive
officer.





Shares
      Acquired
              on
      Exercise
            Value
      Realized
              (b)
            Number
      of Options
              at
      August 31, 2009
            Value
      of Options at
              August
      31, 2009 (a)Exercisable
            Unexercisable
            Exercisable
            UnexercisableWalter
      S. Woltosz
            -0-
            -0-
            30,000
            -0-
            $
      16,875*
            $
      -0-Virginia
      E. Woltosz
            -0-
            -0-
            30,000
            -0-
            $
      16,875*
            $
      -0-Momoko
      Beran
            67,000
            $63,900
            592,000
            38,000
            $707,375
            $24,000Ronald
      F. Creeley (1)
            88,000
            $76,880
            633,000
            6,000
            $764,000
            $4,000Jeffrey
      A. Dahlen
            -0-
            -0-
            66,000
            5,000
            $42,250
            $1,600




(a)
            Based on a per share
      price of $1.80 at August 31, 2009 less applicable option exercise
      prices.(b)
            The value realized
      represents the difference between the aggregate closing price of the
      shares on the date of exercise less the aggregate exercise price
      paid.(1)
            Mr Ronald Creeley
      left the Company on December 25, 2009.*
            Granted at $1.2375,
      110% of market price of the issue date.







COMPENSATION
COMMITTEE REPORT





The
Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis provided above.  Based on its
review and discussions, the Compensation Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in this
Amended 10K.






Compensation
      Committee
              
              David
      D’Argenio (Chair)
              Richard
      Weiss
              Harold
      Rosenberger






COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION





During
fiscal year 2009, the Compensation Committee consisted of David D’Argenio,
Richard Weiss, and Harold Rosenberger.  All members of the
Compensation Committee were independent directors, and no member was an employee
or former employee.  During Fiscal year 2009, none of our executive
officers served on the compensation committee or board of directors of another
entity whose executive offer served on our Compensation Committee.





21





ITEM
12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS





EQUITY
COMPENSATION PLAN INFORMATION





The
following table provides a summary of Equity Compensation Plan
Information.




Equity
      Compensation Plan Information (1)Plan
      category
            Number
      of securities to
              be
      issued upon exercise
              of
      outstanding options,
              warrants
      and rights
            Weighted-average
              exercise
      price of
              outstanding
      options,
              warrants
      and rights
            Number
      of securities
              remainingavailable
      for
              future
      issuance under
              equity
      compensation plans
              (excluding
      securities
              reflected
      in column (a))(a)
            (b)
            (c)Equity
      compensation plans approved by security holders
            2,714,536
            $   0.91
            306,000Equity
      compensation plans not approved by security holders
            0
            0
            0Total
            2,714,536
            
            306,000




(1)
            The
      Company is authorized to issue stock options under the following
      compensation arrangement:a.
            4,000
      shares per year per person to Directors as a part of their annual
      stipends.b.
            50
      shares for each $1,000 of net income before taxes at the end of each
      fiscal year (up to a maximum of 120,000 options) to CEO over the term of
      the current employment agreement.




The
following table sets forth certain information regarding beneficial ownership of
our Common Stock as of August 31, 2009 by (i) each person who is known to own
beneficially more than 5% of the outstanding shares of our Common Stock, (ii)
each of our directors and executive officers, and (iii) all directors and
executive officers of the Company as a group:




Beneficial
      owner (1), (2)
            Amount
      and Nature of Beneficial ownership
            Percent
      of ClassWalter S. and
      Virginia E. Woltosz (3)
            7,035,847
            41.21%Momoko Beran
      (4)
            866,752
            5.08%Ronald F. Creeley
      (5)
            694,595
            4.07%Jeffrey A. Dahlen
      (6)
            261,000
            1.53%Dr. David Z.
      D'Argenio (7)
            39,012
            *Dr. Richard R. Weiss
      (8)
            30,012
            *H. Wayne Rosenberger
      (9)
            2,100
            *All directors and
      officers as a group
            8,929,318
            52.30%





*     Less
than 1%




22





(1)Such persons have sole
voting and investment power with respect to all Shares of Common Stock shown as
being beneficially owned by them, subject to community property laws, where
applicable, and the information contained in the footnotes to this
table.





(2)The address of each
director and executive officer named is c/o the Company, 42505 Tenth Street
West, Lancaster, California 93534-7059.





(3)Own an aggregate of
6,975,847 plus 60,000 shares of common stock underlying an option exercisable
within the 60 days of August 31, 2009.





(4)Owns 274,752 shares of
common stock acquired from the exercise of options granted under the 1996 and
2007 Stock Option plans, plus 592,000 shares of common stock underlying an
option exercisable within the 60 days of the date of August 31,
2009.





(5)Owns 61,595 shares of
common stock, plus 633,000 shares of common stock underlying an option
exercisable within the 60 days of August 31, 2009.  Mr Ronald Creeley
left the Company on December 25, 2009.





(6)Owns 195,000 shares of
common stock, plus 66,000 shares of common stock underlying an option
exercisable within the 60 days of August 31, 2009.





(7)Owns 19,412 shares of
common stock, plus 19,600 shares of common stock underlying an option
exercisable within the 60 days of the date of the original Annual
Report.





(8)Owns 10,412 shares of
common stock, plus 19,600 shares of common stock underlying an option
exercisable within the 60 days of August 31, 2009.





(9)Owns 2,100 shares of
common stock underlying an option exercisable within the next 60 days of August
31, 2009..





Section
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
requires the Company's directors and executive officers and beneficial holders
of more than 10% of the Company's Common Stock to file with the Commission
initial reports of ownership and reports of changes in ownership of the
Company's equity securities.





ITEM
13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE





Transactions
with Related Persons


There are
no existing or proposed transactions in which the Company was or is to be a
participant that would be required to be disclosed pursuant to Item 404(d) or
Regulation S-K.




Independence
of the Board of Directors


Our
common stock is traded on NASDAQ.  The Board of Directors has
determined that a majority of the members of the Board of Directors qualify as
“independent,” as defined by the listing standards of
NASDAQ.  Consistent with these considerations, after review of all
relevant transactions and relationships between each director and nominee, or
any of his or her family members, and the Company, its senior executive
management and its independent auditors, the Board of Directors has determined
further that all of our directors are independent under the listing standards of
NASDAQ, except for Walter Woltosz, and Virginia Woltosz.  In making
this determination, the Board of Directors considered that there were no new
transactions or relationships between its current independent directors and the
Company, its senior management and its independent auditors since last making
this determination.




23





Audit
Committee.  The Audit Committee is currently comprised of: Mr.
H. Wayne Rosenberger, Dr. Richard R. Weiss and Dr. David Z. D'Argenio. Each
member of the Audit Committee is independent as defined under the applicable
rules of the SEC and NASDAQ listing standards.




Compensation
Committee.  Our compensation committee is currently comprised
of the following, each of whom is independent as defined under the applicable
rules of the SEC and NASDAQ listing standards: Mr. H. Wayne Rosenberger, Dr.
Richard R. Weiss and Dr. David Z. D'Argenio.




ITEM
14 – PRINCIPAL ACCOUNTING FEES AND SERVICES





The firm
of Rose, Snyder & Jacobs, CPAs served as the Company’s independent public
accountants for the fiscal year ended August 31, 2009 and have been selected by
the Audit Committee to serve again for the fiscal year to end August 31,
2010.




Under the
procedures established by the Audit Committee, all auditing services and all
non-audit services performed by Rose, Snyder & Jacobs are to be pre-approved
by the Audit Committee, subject to the de minimus exception provided under
Section 202 of the Sarbanes-Oxley Act.  All of the services provided
by Rose, Snyder & Jacobs were pre-approved by the Audit
Committee.




Audit
Fees




Aggregate
fees, including out-of-pocket expenses, for professional services rendered by
the full time employees of Rose, Snyder & Jacobs in connection with the
audit of the Company’s consolidated financial statements as of and for the year
ended August 31, 2008 and for reviews of the interim consolidated financial
statements during the year ended August 31, 2008 were $79,270.




Aggregate
fees, including out-of-pocket expenses, for professional services rendered by
the full time employees of Rose, Snyder & Jacobs in connection with the
audit of the Company’s consolidated financial statements as of and for the year
ended August 31, 2008 and for reviews of the interim consolidated financial
statements during the year ended August 31, 2008 were $74,010.




Audit-Related
Fees




Aggregate
fees, including out-of-pocket expenses, for professional services rendered by
Rose, Snyder & Jacobs for audit-related services for the year ended August
31, 2009 were $0.




Aggregate
fees, including out-of-pocket expenses, for professional services rendered by
Rose, Snyder & Jacobs for audit-related services for the year ended August
31, 2008 were $0.




Tax
Fees




Aggregate
fees, including out-of-pocket expenses, for professional services rendered by
Rose, Snyder & Jacobs in connection with tax compliance, tax advice and
corporate tax planning for the year ended August 31, 2009 were $0.




24




Aggregate
fees, including out-of-pocket expenses, for professional services rendered by
Rose, Snyder & Jacobs in connection with tax compliance, tax advice and
corporate tax planning for the year ended August 31, 2008 were
$15,880.




All
Other Fees




Rose,
Snyder & Jacobs received no additional fees for services for the year ended
August 31, 2009. During the year ended August 31, 2008, Rose, Snyder &
Jacobs received no additional fees




Audit
Committee Pre-Approval Policies and Procedures




The Audit
Committee has considered whether the provision of services covered in the
preceding paragraphs is compatible with maintaining Rose, Snyder & Jacobs’s
independence. At their regularly scheduled and special meetings, the Audit
Committee considers and pre-approves any audit and non-audit services to be
performed for the Company by its independent registered public accounting firm.
For the fiscal year ended August 31, 2009, those pre-approved audit,
audit-related and tax services represented approximately 94%, 6% and 0%,
respectively.




25


PART
IV





ITEM
15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES





(a)
(1)Financial
Statements. The consolidated financial statements were included in the Annual
Report.




(2)Financial Statement
Schedules. All financial statement schedules have been omitted since the
information is either not applicable or required or was included in the
financial statements or notes included in the Annual Report.




(3)List of Exhibits required
by Item 601 of Regulation S-K.  See part (b) below.




(b)Exhibits.  The
following exhibits are filed as part of this report.  Those exhibits
marked with a (†) refer to management contracts or compensatory plans or
arrangements.




EXHIBIT
              NUMBER
            DESCRIPTION3.1
            Articles
      of Incorporation of Simulations Plus, Inc. (1)3.2
            Amended
      and Restated Bylaws of Simulations Plus, Inc. (1)4.1
            Articles
      of Incorporation of Simulations Plus, Inc. (incorporated by reference to
      Exhibit 3.1 hereof) and Bylaws of Simulations Plus, Inc. (incorporated by
      reference to Exhibit 3.2 hereof)4.2
            Form
      of Common Stock Certificate (1)4.3
            Share
      Exchange Agreement (1)10.1
            Simulations
      Plus, Inc. 1996 Stock Option Plan (the “Option Plan”) and forms of
      agreements relating thereto (1)(†)10.24
            Exclusive
      License Software Agreement by and between Simulations Plus, Inc. and
      Therapeutic Systems Research Laboratories dated June 30, 1997.
      (2)10.34
            OEM/Remarketing
      Agreement between Words+, Inc. and Eloquent Technology, Inc.
  (7)10.41
            Technology Transfer
      Agreement with Sam Communications, LLC. (7)10.43
            Lease Agreement by
      and between Simulations Plus, Inc. and Venture Freeway, LLC.
  (4)10.45
            Employment Agreement
      by and between the Company and Walter S. Woltosz (5)(†)10.46
            Simulations Plus,
      Inc. 2007 Stock Option Plan (the “2007 Option Plan”) (6)(†)21.1
            List of Subsidiaries
      (7)31.1
            Rule
      13a-14(a)/15d-14(a) – Certification of Chief Executive Officer (CEO).
      (7)31.2
            Rule
      13a-14(a)/15d-14(a) – Certification of Chief Financial Officer (CFO).
      (7)32
            Section 1350 –
      Certification of CEO and CFO. (7)









(1)
            Incorporated
      by reference to the Company’s Registration Statement on Form SB-2
      (Registration No. 333-6680) filed on March 25, 1997.(2)
            Incorporated
      by reference to the Company’s Form 10-KSB for the fiscal year ended August
      31, 1997.(3)
            Incorporated
      by reference to the Company’s Registration Statement on Form S-8
      (Registration No. 333-91592) filed on June 28, 2002.(4)
            Incorporated
      by reference to the Company’s Form 10-KSB for the fiscal year ended August
      31, 2006.(5)
            Incorporated by
      reference to the Company’s Form 10-K for the fiscal year ended August 31,
      2009.(6)
            Incorporated
      by reference to the Company’s Form 10-Q for the fiscal quarter ended
      November 30, 2009.(7)
            Filed
      herewith.(c)
            Financial
      Statement Schedule.
              
              See Item 15(a)(2) above.




26




SIGNATURES





In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Lancaster, State of California, on
March
1, 2010.






SIMULATIONS
      PLUS, INC.By
              /s/ Momoko A. BeranMomoko
      A. BeranChief
      Financial Officer





In
accordance with Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities
indicated on.










Signature
            
            Title/s/ Walter S. Woltosz
            
            Chairman of the
      Board of Directors and Chief Executive OfficerWalter S.
      Woltosz
            
            (Principal executive
      officer)/s/ Virginia E. Woltosz
            
            Secretary and
      Director of the CompanyVirginia E.
      Woltosz/s/ Dr. David Z. D’Argenio
            
            DirectorDr. David Z.
      D’Argenio/s/ Dr. Richard R. Weiss
            
            DirectorDr. Richard R.
      Weiss/s/ Harold W. Rosenberger
            
            DirectorHarold W.
      Rosenberger/s/ Momoko A. Beran
            
            Chief Financial
      Officer of the CompanyMomoko A.
      Beran
            
            (Principal financial
      officer and principal accounting
      officer)







27