<Page>

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

 [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                 For the quarterly period ended May 31, 2008 or

 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1937

              For the transition period from _________ to _________

                        Commission file number: 001-32046


                             SIMULATIONS PLUS, INC.
                 (Name of small business issuer in its charter)

          CALIFORNIA                                             95-4595609
(State or other jurisdiction of                               (I.R.S. Employer
 Incorporation or Organization)                              identification No.)

                             42505 10TH STREET WEST
                            LANCASTER, CA 93534-7059
           (Address of principal executive offices including zip code)

                                 (661) 723-7723
                (Issuer's telephone number, including area code)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

Yes       x                No
   ---------------            --------------

The number of shares outstanding of the Issuer's common stock, par value $0.001
per share, as of July 14, 2008, was 16,231,400.




<Page>


                             SIMULATIONS PLUS, INC.
                                   FORM 10-QSB
                   FOR THE QUARTERLY PERIOD ENDED MAY 31, 2008

                                Table of Contents

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)                                   Page

     Consolidated Balance Sheet at May 31, 2008 (unaudited)                  2

     Consolidated Statements of Operations for the three months
         and nine months ended May 31, 2008 and May 31, 2007 (unaudited)     4

     Consolidated Statements of Cash Flows for the nine months
         ended May 31, 2008 and May 31, 2007 (unaudited)                     5

     Notes to Consolidated Financial Statements (unaudited)                  7

Item 2.  Management's Discussion and Analysis or Plan of Operations

     General                                                                 15

     Results of Operations                                                   20

     Liquidity and Capital Resources                                         24

Item 3.  Quantitative and Qualitative Disclosures about Market Risk          25

Item 4.  Controls and Procedures                                             25

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                   26

Item 2.  Changes in Securities                                               26

Item 3.  Defaults upon Senior Securities                                     26

Item 4.  Submission of Matters to a Vote of Security Holders                 26

Item 5.  Other Information                                                   26

Item 6.  Exhibits and Reports on Form 8-K                                    26

Signature                                                                    27
Exhibit - Certifications




<Page>

                                           SIMULATIONS PLUS, INC. AND SUBSIDIARY
                                                      CONSOLIDATED BALANCE SHEET
                                                                 at May 31, 2008
                                                                     (Unaudited)
--------------------------------------------------------------------------------

                                     ASSETS

CURRENT ASSETS
     Cash and cash equivalents                                       $ 5,986,029
     Accounts receivable, net of allowance for doubtful accounts
        and estimated contractual discounts of $182,076                2,860,769
     Inventory                                                           260,228
     Prepaid expenses and other current assets                           118,675
     Deferred income taxes                                               169,300
                                                                     -----------
           Total current assets                                        9,395,001

CAPITALIZED COMPUTER SOFTWARE DEVELOPMENT COSTS,
     net of accumulated amortization of $3,192,102                     1,788,268
PROPERTY AND EQUIPMENT,                                                  101,207
     net of accumulated amortization of $544,356 (Note 3)
CUSTOMER RELATIONSHIPS, net of accumulated amortization of $79,169        48,873
OTHER ASSETS                                                              20,527
                                                                     -----------

              TOTAL ASSETS                                           $11,353,876
                                                                     ===========





   The accompanying notes are an integral part of these financial statements.

                                       2



<Page>

                                           SIMULATIONS PLUS, INC. AND SUBSIDIARY
                                                      CONSOLIDATED BALANCE SHEET
                                                                 at May 31, 2008
                                                                     (Unaudited)
--------------------------------------------------------------------------------

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                                                $   269,724
     Accrued payroll and other expenses                                  576,031
     Accrued bonuses to officers                                          60,000
     Accrued warranty and service costs                                   32,065
     Deferred revenue                                                      3,200
                                                                     -----------

        Total current liabilities                                        941,020

DEFERRED INCOME TAXES                                                    723,300

           Total liabilities                                           1,664,320
                                                                     -----------

COMMITMENTS AND CONTINGENCIES (Note 4)                                        --

SHAREHOLDERS' EQUITY (Note 5)
     Preferred stock, $0.001 par value
        10,000,000 shares authorized
        no shares issued and outstanding                                      --
     Common stock, $0.001 par value
        50,000,000 shares authorized
        16,228,900 shares issued and outstanding                           4,700
     Additional paid-in capital                                        6,267,570
     Retained Earnings                                                 3,417,286
                                                                     -----------

           Total shareholders' equity                                  9,689,556
                                                                     -----------

              TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY             $11,353,876
                                                                     ===========



   The accompanying notes are an integral part of these financial statements.

                                       3



<Page>
<TABLE>

                                                                                            SIMULATIONS PLUS, INC. AND SUBSIDIARY
                                                                                            CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                      for the three and nine months ended May 31,
                                                                                                                      (Unaudited)
---------------------------------------------------------------------------------------------------------------------------------

                                                                    Three months ended                   Nine months ended
                                                                    ------------------                   -----------------
                                                                 2008               2007               2008               2007
                                                                 ----               ----               ----               ----
<S>                                                         <C>                <C>                <C>                <C>
NET SALES                                                   $  2,968,353       $  2,631,225       $  7,131,837       $  6,621,512

COST OF SALES                                                    623,756            550,786          1,565,209          1,549,328
                                                            ------------       ------------       ------------       ------------
GROSS PROFIT                                                   2,344,597          2,080,439          5,566,628          5,072,184
                                                            ------------       ------------       ------------       ------------

OPERATING EXPENSES
    Selling, general, and administrative                         941,982            885,352          2,704,765          2,578,243
    Research and development                                     222,241            226,749            700,086            626,808
                                                            ------------       ------------       ------------       ------------

       Total operating expenses                                1,164,223          1,112,101          3,404,851          3,205,051
                                                            ------------       ------------       ------------       ------------

INCOME (LOSS) FROM OPERATIONS                                  1,180,374            968,338          2,161,777          1,867,133
                                                            ------------       ------------       ------------       ------------

OTHER INCOME (EXPENSE)
    Interest income                                               54,492             35,377            146,715             76,186
    Miscellaneous income                                              10                 25                 35                383
    Interest expense                                                 (67)                (4)               (67)                (4)
    Gain on sale of assets                                            --                 --                 --              3,102
    Unrealized Gain (loss) on investment                         (57,925)                              (57,925)                --
    Gain on currency exchange                                     11,098               (798)            44,658              6,229
                                                            ------------       ------------       ------------       ------------

       Total other income (expense)                                7,608             34,600            133,416             85,896
                                                            ------------       ------------       ------------       ------------

INCOME BEFORE BENEFIT FROM (PROVISION FOR)
    INCOME TAXES                                               1,187,982          1,002,938          2,295,193          1,953,029

BENEFIT FROM (PROVISION FOR) INCOME TAXES
    Provision for income tax                                    (435,321)          (220,646)          (734,462)          (429,666)
                                                            ------------       ------------       ------------       ------------

       Total benefit from (provision for) income taxes          (435,321)          (220,646)          (734,462)          (429,666)
                                                            ------------       ------------       ------------       ------------

NET INCOME                                                  $    752,661       $    782,292       $  1,560,731       $  1,523,363
                                                            ============       ============       ============       ============
BASIC EARNINGS PER SHARE                                    $       0.05       $       0.05       $       0.10       $       0.10
                                                            ============       ============       ============       ============

Diluted earnings per share                                  $       0.04       $       0.04       $       0.09       $       0.09
                                                            ============       ============       ============       ============

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
    BASIC                                                     16,228,900         15,436,360         16,090,239         15,123,248
                                                            ============       ============       ============       ============

    DILUTED                                                   17,868,750         18,361,258         18,266,766         17,787,764
                                                            ============       ============       ============       ============

  *  The number of shares at May 31, 2007 have been retroactively restated to
     reflect a 2-for-1 stock split that occurred on October 1, 2007.

                            The accompanying notes are an integral part of these financial statements.

                                                                4



<Page>

                                                       SIMULATIONS PLUS, INC. AND SUBSIDIARY
                                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                           for the nine months ended May 31,
                                                                                 (Unaudited)
--------------------------------------------------------------------------------------------

                                                                   2008             2007
                                                               -----------       -----------
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                 $ 1,560,731       $ 1,523,363
    Adjustments to reconcile net income to net cash
       provided by operating activities
         Depreciation and amortization of property and
           equipment                                                40,460            37,588
         Amortization of customer relationships                     19,823            24,312
         Amortization of capitalized software development
           costs                                                   334,509           323,788
         Bad debt expense                                           62,947            48,000
         Stock-based compensation                                   52,540            13,248
         Contribution of Equipment at book value                        --               774
         (Gain) on sale of assets                                       --            (3,102)

         (Increase) decrease in
           Accounts receivable                                    (816,044)       (1,184,510)
           Inventory                                               (29,314)          (23,520)
           Deferred tax                                            567,400           429,666
           Other assets                                            (47,088)           34,214
         Increase (decrease) in
           Accounts payable                                         68,478          (126,680)
           Accrued payroll and other expenses                        1,666           140,949
           Accrued bonuses to officers                            (141,289)           67,196
           Accrued income taxes                                     11,453            (1,600)
           Accrued warranty and service costs                       (6,103)            4,874
           Deferred revenue                                          3,200             6,373
                                                               -----------       -----------
              Net cash provided by operating activities          1,683,369         1,314,933
                                                               -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchases of property and equipment                            (67,775)          (46,273)
    Proceeds from sale of assets                                    16,011             4,475
    Capitalized computer software development costs               (594,967)         (396,794)
                                                               -----------       -----------

              Net cash used in investing activities               (646,731)         (438,592)
                                                               -----------       -----------




             The accompanying notes are an integral part of these financial statements.

                                                 5



<Page>

                                                       SIMULATIONS PLUS, INC. AND SUBSIDIARY
                                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                           for the nine months ended May 31,
                                                                                 (Unaudited)
--------------------------------------------------------------------------------------------


CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from the exercise of stock options                    411,677           476,801
                                                               -----------       -----------

              Net cash provided by financing activities            411,677           476,801
                                                               -----------       -----------

                Net increase (decrease) in cash and cash
                  equivalents                                  $ 1,448,315       $ 1,353,142

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                     4,537,714         1,685,036
                                                               -----------       -----------

CASH AND CASH EQUIVALENTS, END OF QUARTER                      $ 5,986,029       $ 3,038,178
                                                               ===========       ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

    INTEREST PAID                                              $        67       $         4
                                                               ===========       ===========

    INCOME TAXES PAID                                          $   180,000       $     1,600
                                                               ===========       ===========


             The accompanying notes are an integral part of these financial statements.

                                                 6
</TABLE>




<Page>

                             SIMULATIONS PLUS, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1: GENERAL

This report on Form 10-QSB for the quarter ended May 31, 2008, should be read in
conjunction with the Company's annual report on Form 10-KSB for the year ended
August 31, 2007, filed with the SEC on November 26, 2007. As contemplated by the
Securities and Exchange Commission under Item 310(b) of Regulation S-B, the
accompanying financial statements and footnotes have been condensed and
therefore do not contain all disclosures required by generally accepted
accounting principles. The interim financial data are unaudited; however, in the
opinion of Simulations Plus, Inc. ("we", "our", "us"), the interim data includes
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair statement of the results for the interim periods. Results for interim
periods are not necessarily indicative of those to be expected for the full
year.

Note 2: SIGNIFICANT ACCOUNTING POLICIES

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.

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.

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 at the time of unlocking the software on the customer's
computer(s), net of estimated allowances and returns. 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 by-product of ongoing improvements and upgrades to our software, some
modifications are provided to customers, who have already licensed software, 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.

                                       7



<Page>

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 now unlock and invoice software one year
at a time for multi-year licenses. Therefore, revenue is now recognized one year
at a time.

Cash and Cash Equivalents
-------------------------
For purposes of the statements of cash flows, we consider all highly liquid
investments purchased with original maturities of three months or less to be
cash equivalents.

Accounts Receivable
-------------------
We maintain an allowance for doubtful accounts for estimated losses that may
arise if any of our customers are unable to make required payments. We
specifically analyze the age of customer balances, historical bad debt
experience, customer credit-worthiness, and changes in customer payment terms
when making estimates of the uncollectability of our trade accounts receivable
balances. If we determine that the financial conditions of any of our customers
deteriorated, whether due to customer-specific or general economic issues, an
increase in the allowance may be made. Accounts receivable are written off when
all collection attempts have failed. We also maintain an allowance for
contractual discounts with insurance companies. Each reporting period, the
estimated discounts are recorded as Sales Discounts.

Inventory
---------
Inventory is stated at the lower of cost (first-in, first-out basis) or market
and consists primarily of computers and peripheral computer equipment.

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 $334,509 and $323,788 for the nine months ended
May 31, 2008 and May 31, 2007, respectively. We expect future amortization
expense more likely to increase 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.

Property and Equipment
----------------------
Property and equipment are recorded at cost, less accumulated depreciation and
amortization. Depreciation and amortization are provided using the straight-line
method over the estimated useful lives as follows:

                                       8



<Page>

                  Equipment                                  5 years
                  Computer equipment                    3 to 7 years
                  Furniture and fixtures                5 to 7 years
                  Leasehold improvements                     5 years

Maintenance and minor replacements are charged to expense as incurred. Gains and
losses on disposals are included in the results of operations.

Fair Value of Financial Instruments
-----------------------------------
For certain of our financial instruments, including cash and cash equivalents,
accounts receivable, accounts payable, accrued payroll and other expenses,
accrued bonuses to officers, and accrued warranty and service costs, the
carrying amounts approximate fair value due to their short maturities.

Shipping and Handling
---------------------
Shipping and handling costs, recorded as cost of sales, amounted to $78,986 and
$77,565 for the nine months ended May 31, 2008 and May 31, 2007, respectively.

Research and Development Costs
------------------------------
Research and development costs are charged to expense as incurred until
technological feasibility has been established. These costs consist primarily of
salaries and direct payroll-related costs. It also includes purchased software
which was developed by other companies and incorporated into, or used in the
development of, our final products.

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

Under this method, deferred income taxes are recognized for the tax consequences
in future years of differences between the tax bases of assets and liabilities
and their financial reporting amounts at each year-end based on enacted tax laws
and statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be realized.
The provision for income taxes represents the tax payable for the period and the
change during the period in deferred tax assets and liabilities.

The evaluation of the deferred tax assets is based on our history of generating
taxable profits and our projections of future profits as well as expected future
tax rates to determine if the realization of the deferred tax asset is
more-likely-than-not. Significant judgment is required in these evaluations, and
differences in future results from our estimates could result in material
differences in the realization of these assets.

Customer Relationships
----------------------
The Company purchased customer relationships as a part of the acquisition of
certain assets of Bioreason, Inc. in November 2005. Customer relationships was
recorded at a cost of $128,042, and is being amortized over 78 months under the
sum-of-the-years'-digits method. Amortization expense for the nine months ended
and accumulated amortization as of May 31, 2008 and May 31, 2007 amounted to
$19,823 and $24,312, respectively, and $79,169 and $51,990, respectively.

                                       9



<Page>

Earnings per Share
------------------
The Company reports earnings per share in accordance with SFAS No. 128,
"Earnings per Share." Basic earnings per share is computed by dividing income
available to common shareholders by the weighted-average number of common shares
available. Diluted earnings per share is computed similar to basic earnings per
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
The components of basic and diluted earnings per share for the nine months ended
May 31, 2008 and May 31, 2007 were as follows (the number of shares at
05/31/2007 reflects the effect of a 2-for-1 stock split on October 1, 2007 for
comparison purposes):

<TABLE>
                                                            05/31/2008     05/31/2007
                                                            ----------     ----------
<S>                                                        <C>             <C>
Numerator
          Net income (loss) attributable to common
                    shareholders                           $ 1,560,731     $ 1,523,363

Denominator
          Weighted-average number of common shares
                    outstanding during the year             16,090,239      15,123,248
          Dilutive effect of stock options                   2,176,527       2,664,516

Common stock and common stock
          equivalents used for diluted earning per share    18,266,766      17,625,312
</TABLE>

Stock-Based Compensation
------------------------
The Company accounts for Stock-Based compensation in accordance with SFAS No.
123R using the modified prospective method. Under this method, compensation cost
recognized during the nine months ended May 31, 2008 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. Our stock-based compensation expenses
were $52,540 and $13,248 for the nine months ended May 31, 2008 and May 31,
2007, respectively, and are included in the condensed consolidated statements of
operations as Salaries and Wages, Consulting, and Research and Development
expense.

Concentrations and Uncertainties
--------------------------------
International sales accounted for 40% and 38% of net sales for the nine months
ended May 31, 2008 and May 31, 2007, respectively. For Simulations Plus, Inc.,
two customers accounted for 15% and 9% of net sales during the nine months ended
May 31, 2008, compared with two customers accounting for 14% and 9% of net sales
during the same period in FY07. For Words+, Inc., one government agency
accounted for 22%, and one customer accounted for 15% of net sales during the
nine months ended May 31, 2008, compared with one government agency accounting
for 23%, and one customer accounting for 14% of net sales during the same period
in FY07.

The Company operates in the computer software industry, which is highly
competitive and changes rapidly. The Company's operating results could be
significantly affected by its ability to develop new products and find new
distribution channels for new and existing products.

                                       10



<Page>

For Simulations Plus, three customers comprised 22%, 19%, and 17% of its
accounts receivable at May 31, 2008, and three customers comprised 18%, 16%, and
15% of accounts receivable at May 31, 2007. For Words+, one government agency
comprised 35% and 37% of its accounts receivable at May 31, 2008 and 2007,
respectively.

The Company's subsidiary, Words+, Inc., purchases components for its main
computer products from three manufacturers. Words+, Inc. also uses a number of
pictographic symbols that are used in its software products which are licensed
from a third party. The inability of the Company to obtain computers used in its
products or to renew its licensing agreement to use pictographic symbols could
negatively impact the Company's financial position, results of operations, and
cash flows.

Recently Issued Accounting Pronouncements
-----------------------------------------
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
Interpretation of FASB Statement No. 109" ("FIN 48"), which clarifies the
accounting for uncertainty in income tax positions. The provisions of FIN 48
were effective for the Company on September 1, 2007. The adoption of FIN 48 did
not have a material impact on our consolidated financial statements.

Note 3:  PROPERTY AND EQUIPMENT

Furniture and equipment as of May 31, 2008 consisted of the following:

         Equipment                                                 $ 173,793
         Computer equipment                                          334,605
         Furniture and fixtures                                       61,498
         Automobile                                                   21,769
         Leasehold improvements                                       53,898
                                                                 ------------
              Sub total                                              645,563
         Less: Accumulated depreciation and amortization           (544,356)
                                                                 ------------
              Net Book Value                                         101,207
                                                                 ============

Note 4:  COMMITMENTS AND CONTINGENCIES

Employee Agreement
------------------
On August 9, 2007, the Company entered into an employment agreement with its
President/Chief Executive Officer that expires in August 2009. The employment
agreement provides for an annual salary of $250,000. At the CEO's request, this
new agreement does not include an annual bonus, which has ranged up to $150,000
in all previous agreements. Thus, a savings to the Company of up to $75,000 per
year may be realized as a result of this new agreement. The agreement also
provides that the Company may terminate the agreement upon 30 days' written
notice if termination is without cause. The Company's only obligation would be
to pay its President the greater of a) 12 months salary or b) the remainder of
the term of the employment agreement from the date of notice of termination.

Litigation
----------
On April 6, 2006 we received notice from a liquidator for the former French
subsidiary of Bioreason (Bioreason SARL), saying that the liquidator had
initiated legal action against Simulations Plus in the French courts with
respect to ClassPharmer distribution rights to European customers, and is
claiming commissions and legal fees with respect to European customers. We filed
a counterclaim for our rights and lost sales against Bioreason SARL's assets by
sending a debt recovery declaration to the liquidator on June 15, 2006.

                                       11



<Page>

On April 9, 2008, we have received the approval of the settlement agreement from
the commercial division of French Ordinary Court. This means that the settlement
agreement is now enforceable, and this case is finally closed. Both parties
dropped all claims and we are not liable for any amounts.

Note 5: STOCKHOLDERS' EQUITY

Stock Option Plan
-----------------
In September 1996, the Board of Directors adopted and the shareholders approved
the 1996 Stock Option Plan (the "Option Plan") under which a total of 250,000
shares of common stock had been reserved for issuance. In March 1999, the
shareholders approved an increase in the number of shares that may be granted
under the Option Plan to 500,000. In February 2000, the shareholders approved an
increase in the number of shares that may be granted under the Option Plan to
1,000,000. In December 2000, the shareholders approved an increase in the number
of shares that may be granted under the Option Plan to 1,250,000. Furthermore,
in February 2005, the shareholders approved an additional 250,000 shares,
resulting to the total number of shares that may be granted under the Option
Plan to 1,500,000. All of the preceding numbers of options are based on numbers
of options prior to the two-for-one stock split on August 14, 2006. The 1996
Stock Option Plan terminated in September 2006 at the end of its term.

On February 23, 2007, the Board of Directors adopted and the shareholders
approved the 2007 Stock Options Plan under which a total of 500,000 shares of
common stock had been reserved for issuance.

The following table summarizes the stock option transactions. All of the numbers
of options reflect a 2-for-1 stock split on August 14, 2006 and another 2-for-1
stock split on October 1, 2007.

<TABLE>
                                                                                     Weighted-Average
                                                               Number of              Exercise Price
                                                                Options                  Per Share
                                                         ---------------------     ---------------------
<S>                                                                 <C>                  <C>
      Outstanding, August 31, 2007                                  3,209,736            $         0.69
                         Granted                                      287,000            $         3.03
                         Exercised                                  (467,500)            $         0.88
                         Expired/Cancelled                          (245,700)            $         0.64

      Outstanding, May 31, 2008                                     2,783,536            $         0.90
                                                         ---------------------     ---------------------

      Exercisable, May 31, 2008                                     2,369,036            $         0.65
                                                         =====================     =====================

                                                                                  Weighted Average
                                                Number Outstanding                Fair Market Price*
                                                ------------------                ------------------

     Non Vested before 9/1/2007                                 170,000                          $  0.86
          Granted                                               287,000                          $  3.03
          Vested                                               (42,000)                          $  0.86
          Cancelled                                               (500)                          $  3.02
                                            ----------------------------      ---------------------------
     Non Vested at 05/31/2008                                   414,500                          $  2.36
                                            ----------------------------      ---------------------------
</TABLE>

                                       12



<Page>

*Weighted Average Fair Market Price was calculated by using the Black-Scholes
option valuation model, which was developed for use in estimating the fair value
of traded options and do not have vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

The weighted-average remaining contractual life of options outstanding issued
under the Plan was 4.04 years at May 31, 2008. The exercise prices for the
options outstanding at May 31, 2008 ranged from $0.26 to $3.03, and the
information relating to these options is as follows:

<TABLE>
                                                               Weighted-Average      Weighted-Average    Weighted-Average
                                                                   Remaining             Exercise            Exercise
                           Stock               Stock           Contractual Life          Price of            Price of
     Exercise             Options            Options              of Options             Options             Options
      Price             Outstanding         Exercisable           Outstanding          Outstanding         Exercisable
------------------    ----------------    ----------------    --------------------    ---------------     ---------------
<S>                         <C>                 <C>               <C>                        <C>                 <C>
$0.26 - 0.50                1,003,936           1,003,936         2.28 years                 $  0.37             $  0.37
$0.51 - 0.75                  814,000             814,000         1.70 years                 $  0.66             $  0.66
$0.76 - 1.25                  679,100             551,100         7.05 years                 $  1.09             $  1.14
$1.26 - 3.03                  286,500                   0         9.71 years                 $  3.03                 n/a
                      ----------------    ----------------
                            2,783,536           2,369,036
                      ================    ================

Other Stock Options
-------------------
As of May 31, 2008, the independent members of the Board of Directors hold
options to purchase 52,824 shares of common stock at exercise prices ranging
from $0.30 to $6.68, which options were granted on or before May 31, 2008.


                                   Number of Options        Weighted average exercise price
                                   -----------------        -------------------------------

       Options Outstanding                    52,824                  $ 1.55
       Options exercisable                    40,024                  $ 0.58


Note 6:  SEGMENT AND GEOGRAPHIC REPORTING

We account for segments and geographic revenues in accordance with SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information." Our
reportable segments are strategic business units that offer different products
and services. Results for each segment and consolidated results are as follows
for the nine months ended May 31, 2008 and May 31, 2007:

                                       13



<Page>

                                                May 31, 2008
--------------------------------------------------------------------------------------------------------------
                                                Simulations
                                                 Plus, Inc     Words +, Inc.    Eliminations        Total
--------------------------------------------- ---------------- -------------- ---------------- ---------------
Net Sales                                           4,962,725      2,169,112                        7,131,837
--------------------------------------------- ---------------- -------------- ---------------- ---------------
Income (loss) from operations                       2,054,325        107,452                        2,161,777
--------------------------------------------- ---------------- -------------- ---------------- ---------------
Identifiable assets                                10,824,788      2,211,834      (1,682,746)      11,353,876
--------------------------------------------- ---------------- -------------- ---------------- ---------------
Capital expenditures                                        0         67,775                           67,775
--------------------------------------------- ---------------- -------------- ---------------- ---------------
Depreciation and Amortization                          13,235         27,225                           40,460
--------------------------------------------- ---------------- -------------- ---------------- ---------------

                                                May 31, 2007
--------------------------------------------------------------------------------------------------------------
                                                Simulations
                                                 Plus, Inc     Words +, Inc.    Eliminations        Total
--------------------------------------------- ---------------- -------------- ---------------- ---------------
Net Sales                                           4,291,027      2,330,485                        6,621,512
--------------------------------------------- ---------------- -------------- ---------------- ---------------
Income (loss) from operations                       1,731,961        135,172                        1,867,133
--------------------------------------------- ---------------- -------------- ---------------- ---------------
Identifiable assets                                 8,338,880      2,061,402      (1,782,297)       8,617,985
--------------------------------------------- ---------------- -------------- ---------------- ---------------
Capital expenditures                                   15,709         30,564                           46,273
--------------------------------------------- ---------------- -------------- ---------------- ---------------
Depreciation and Amortization                          15,003         23,564                           38,567
--------------------------------------------- ---------------- -------------- ---------------- ---------------


In addition, the Company allocates revenues to geographic areas based on the
locations of its customers. Geographical revenues for the nine months ended May
31, 2008 and May 31, 2007 were as follows (in thousands):

                                               May 31, 2008
------------------------------ --------------- ------------ ------------ ------------ ------------ ----------
                                   North                                                 South
                                  America        Europe        Asia        Oceania      America      Total
------------------------------ --------------- ------------ ------------ ------------ ------------ ----------
Simulations Plus, Inc.                  2,527        1,632          804          -0-          -0-      4,963
------------------------------ --------------- ------------ ------------ ------------ ------------ ----------
Words+, Inc.                            1,778          336           22           31            2      2,169
------------------------------ --------------- ------------ ------------ ------------ ------------ ----------
Total                                   4,305        1,968          826           31            2      7,132
------------------------------ =============== ============ ============ ============ ============ ==========

                                              May 31, 2007
------------------------------ --------------- ------------ ------------ ------------ ------------ ----------
                                   North                                                 South
                                  America        Europe        Asia        Oceania      America      Total
------------------------------ --------------- ------------ ------------ ------------ ------------ ----------
Simulations Plus, Inc.                  2,182        1,341          767          -0-            1      4,291
------------------------------ --------------- ------------ ------------ ------------ ------------ ----------
Words+, Inc.                            1,904          380           28           17            2      2,331
------------------------------ --------------- ------------ ------------ ------------ ------------ ----------
Total                                   4,086        1,721          795           17            3      6,622
------------------------------ =============== ============ ============ ============ ============ ==========
</TABLE>

Note 7:  EMPLOYEE BENEFIT PLAN

We maintain a 401(K) Plan for all eligible employees. We make matching
contributions equal to 100% of the employee's elective deferral, not to exceed
4% of total employee compensation. We can also elect to make a profit-sharing
contribution. Contributions by the Company to this Plan amounted to $53,059 and
$45,874 for the nine months ended May 31, 2008 and May 31, 2007, respectively.

Note 8:  SUBSEQUENT EVENT

Since June 1, 2008, an additional 2,500 stock options to purchase shares have
been exercised by employees that generated $1,400 in proceeds.

                                       14



<Page>

Item 2. Management's Discussion and Analysis or Plan of Operations
        ----------------------------------------------------------

FORWARD-LOOKING STATEMENTS
--------------------------

CERTAIN STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-QSB, OR THE "REPORT," ARE
"FORWARD-LOOKING STATEMENTS." THESE FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE
NOT LIMITED TO, STATEMENTS ABOUT THE PLANS, OBJECTIVES, EXPECTATIONS AND
INTENTIONS OF SIMULATIONS PLUS, INC., A CALIFORNIA CORPORATION (REFERRED TO IN
THIS REPORT AS THE "COMPANY") AND OTHER STATEMENTS CONTAINED IN THIS REPORT THAT
ARE NOT HISTORICAL FACTS. FORWARD-LOOKING STATEMENTS IN THIS REPORT OR HEREAFTER
INCLUDED IN OTHER PUBLICLY AVAILABLE DOCUMENTS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, OR THE "COMMISSION," REPORTS TO OUR STOCKHOLDERS AND OTHER
PUBLICLY AVAILABLE STATEMENTS ISSUED OR RELEASED BY US INVOLVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE OUR ACTUAL RESULTS,
PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS TO DIFFER FROM THE FUTURE
RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS EXPRESSED OR
IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FUTURE RESULTS ARE BASED UPON
MANAGEMENT'S BEST ESTIMATES BASED UPON CURRENT CONDITIONS AND THE MOST RECENT
RESULTS OF OPERATIONS. WHEN USED IN THIS REPORT, THE WORDS "EXPECT,"
"ANTICIPATE," "INTEND," "PLAN," "BELIEVE," "SEEK," "ESTIMATE" AND SIMILAR
EXPRESSIONS ARE GENERALLY INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS,
BECAUSE THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. THERE
ARE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS, INCLUDING OUR
PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS AND OTHER FACTORS.


GENERAL

BUSINESS
--------

Simulations Plus, Inc. (the "Company" or "Simulations Plus", or "we" or "our")
and its wholly owned subsidiary, Words+, Inc. ("Words+") produce different types
of products: (1) Simulations Plus, incorporated in 1996, develops and produces
software for use in pharmaceutical research and for education, and also provides
contract research services to the pharmaceutical industry, and (2) Words+,
founded in 1981, produces computer software and specialized hardware for use by
persons with disabilities, as well as a personal productivity software program
called Abbreviate! for the retail market. For the purposes of this document, we
sometimes refer to the two businesses as "Simulations Plus" when referring to
the business that is primarily pharmaceutical software and services, and
"Words+" when referring to the business that is primarily assistive technologies
for persons with disabilities.

SIMULATIONS PLUS
----------------

PRODUCTS
--------
We currently offer four software products for pharmaceutical research: ADMET
Predictor(TM), ClassPharmer(TM), DDDPlus(TM), and GastroPlus(TM).

ADMET PREDICTOR
---------------
ADMET (Absorption, Distribution, Metabolism, Excretion and Toxicity) Predictor
consists of a library of statistically significant numerical models that predict
various properties of chemical compounds from just their molecular structures.
This capability means a chemist can merely draw a molecule diagram and get
estimates of these properties, even though the molecule has never existed. Drug
companies search through millions of such "virtual" molecular structures as they


                                       15



<Page>

attempt to find new drugs. The vast majority of these molecules are not suitable
as medicines for various reasons. Some have such low solubility that they will
not dissolve well, some have such low permeability through the intestinal wall
that they will not be absorbed well, some degrade so quickly that they are not
stable enough to have a useful shelf life, some bind to proteins (like albumin)
in blood to such a high extent that little unbound drug is available to reach
the target, and some will be toxic in various ways. Identification of such
properties as early as possible enables researchers to eliminate poor compounds
without spending time and money to make them and then run experiments to
identify these weaknesses. Today, many molecules can be eliminated on the basis
of computer predictions, such as those provided by ADMET Predictor.

Several studies have now been published that compare the predictive accuracy of
software programs like ADMET Predictor. In each case, out of more than a dozen
programs, ADMET Predictor has been ranked first in accuracy over all other
programs (it was ranked second in one study, but that study was later redone
with a more difficult set of test compounds and a newer version of ADMET
Predictor, and it was then ranked first). No other software product was
consistently in the top 4 in these studies. This is a remarkable accomplishment,
considering the greater size and resources of many of our competitors.

ADMET Predictor includes ADMET Modeler(TM). ADMET Modeler was first released in
July of 2003 as a separate product, and was integrated into ADMET Predictor in
2006. This powerful program automates the generation of predictive models used
in ADMET Predictor in a small fraction of the time once required to build these
models. For example, new toxicity models were developed in a matter of a few
hours once we completed the tedious effort of "cleaning up" the databases (which
often contain a significant number of errors). Prior to the availability of
ADMET Modeler, we would have needed as much as three months for each new model
after cleaning the databases to obtain similar results.

Pharmaceutical companies spend enormous amounts of money conducting a wide
variety of experiments on new molecules each year. Using such data to build
predictive models provides a second return on this investment; however, in the
past, model-building has traditionally been a tedious activity that required a
specialist. With ADMET Modeler, scientists without model-building experience can
now use their own experimental data to quickly create high quality predictive
models.

During this reporting period, improvement of ADMET Predictor/Modeler has
continued. Phase I of our NIH SBIR (Small Business Innovation Research) grant
was completed in December. Since then, we submitted our Phase II proposal on
December 5, 2007. Although our Phase I study clearly demonstrated that we were
able to generate partial atomic charges within molecules with excellent accuracy
at a rate of millions of molecules per day, compared with traditional methods
that require about one day per molecule, the proposal was returned unscored,
with one reviewer providing a favorable review and another providing an
unfavorable review. The unfavorable review included several statements that were
incorrect, including that the accuracy of the partial charges produced by this
new method and the speed with which they are generated are not innovative. This
is easily disproved, and we are working on our revised proposal, to be submitted
at the next submittal date in August.

We released ADMET Predictor version 2.4 during March 2008, which incorporates
the new Enslein Metabolism Module for the prediction of kinetic rate constants
for metabolism via hydroxylation (the most common form of metabolism) by the
five most common enzymes, which are known as CYP 450-1A2, -2C9, -2C19 and -3A4.
To our knowledge, this is the first such capability available in a commercial


                                       16



<Page>

software product, and the predictions are based on a proprietary database
developed by Enslein Research of Rochester, NY. This additional cost module was
evaluated by industry scientists prior to release and received high praise for
its utility and potential cost savings.

Version 2.4 also allows smaller companies to license separate modules when all
the capabilities of the program are not required. The total price with all
modules remains the same; however, we have received a number of requests to
provide only limited capabilities at a lower price for some companies, and this
new licensing approach is expected to increase sales by enabling smaller
companies to license only the parts of the program that they need.

ADMET Predictor is compatible with the popular Pipeline Pilot(TM) software
offered by SciTegic, a subsidiary of Accelrys. This software serves as a tool to
allow chemists to run several different software programs in series to
accomplish a set workflow for large numbers of molecules. In early discovery,
chemists often work with hundreds of thousands or millions of "virtual"
molecules - molecules that exist only in a computer. The chemist tries to decide
which few molecules from these large "libraries" should be made and tested.
Using Pipeline Pilot with ADMET Predictor (and ClassPharmer - see below),
perhaps in conjunction with other software products, the chemist can create and
screen very large libraries faster and more efficiently than running each
program by itself.

After the end of this reporting period, we announced the release of Version 3.0,
a major upgrade, on July 2, 2008. This version incorporates modifications that
provide enhanced user convenience and data analysis capabilities in both ADMET
Predictor and ADMET Modeler. A total of 14 new predictive models were also
added, including five for intrinsic clearance by the five major metabolizing
enzymes, eight for metabolic inhibition, and one new toxicity model. A powerful
new graphics capability is included that allows users to visualize results in
multiple dimensions. We added an improved genetic algorithm for automatically
selecting the best molecular descriptors for modeling a particular molecular
property. We have updated all of our models using the new partial charge
descriptors developed under last year's SBIR grant from the NIH and further
enhanced during the months since Phase I was completed. We have also obtained
additional toxicity databases that will be used to extend the number of toxicity
predictions in future versions. Tight integration with both GastroPlus and
ClassPharmer has now been achieved. Licenses of ADMET Predictor have already
been purchased by users who want the combined capabilities of GastroPlus or
ClassPharmer with ADMET Predictor, but who do not need the full capabilities of
ADMET Predictor/ADMET Modeler. The U.S. Food and Drug Administration was one of
the first organizations to order GastroPlus with the new ADMET Predictor Module.

CLASSPHARMER
------------
ClassPharmer continues to evolve into a more and more powerful tool for
medicinal and computational chemists. Coupled with ADMET Predictor, the two
provide an unmatched capability for chemists to search through huge libraries of
compounds to find the most interesting classes and molecules that are active
against a particular target. In addition, ClassPharmer with ADMET Predictor can
take an interesting molecule and generate high quality analogs (similar
molecules) using different algorithms to ensure that the new molecules are both
active and that they are also acceptable in a variety of ADMET (Absorption,
Distribution, Metabolism, Excretion and Toxicity) properties.

Improvements during the third quarter were focused on incorporating more new
features requested by our users around the world, as well as adding other new
capabilities identified in-house. ClassPharmer 4.5 was released on June 2, 2008.
This new version added an expanded molecule design capability through tighter


                                       17



<Page>

integration with ADMET Predictor, detection of Activity/Property Cliffs, more
powerful options for chemical reactions, and a number of new user convenience
features.

ClassPharmer's molecule design capabilities provide ways for chemists to rapidly
generate large numbers of novel chemical structures based on intelligence from
compounds that have already been synthesized and tested, or from basic chemical
reactions selected by the user. Export of results is available in Microsoft
Excel(TM) format as well as other convenient file formats requested by users.

DDDPLUS
-------
DDDPlus sales have continued to grow as formulation scientists recognize the
value of this one-of-a-kind simulation software in their work. Improvements have
been added to further enhance the value of this product to our customers.
Numerous user convenience features have been added, as well as more
sophisticated handling of dosage forms that incorporate multiple polymers for
controlled release. Work on the next update of DDDPlus was begun during this
quarter and is planned for release in the 4th quarter.

GASTROPLUS
----------

GastroPlus continues to enjoy its "gold standard" status in the industry for its
class of simulation software. It is used from early drug discovery through
preclinical development and into early clinical trials. At an international
conference in Shanghai, China, in May, Pfizer presented a scientific poster that
described a two-year study in which Pfizer scientists compared all four PBPK
(physiologically based pharmacokinetics) programs on the market for their
ability to predict human pharmacokinetics from preclinical (animal and IN VITRO)
data. The study was divided into two arms: intravenous and oral dosing.
GastroPlus was ranked first in both arms. No other software was ranked
consistently second or third, and one competitor was consistently last in both
arms. This independent evaluation, which was accomplished via analysis of 21
Pfizer proprietary compounds with data all the way through human trials,
provides the strongest possible validation of the utility of GastroPlus in
pharmaceutical research and development.

The information provided through GastroPlus simulations guides project decisions
in various ways. Among the kinds of knowledge gained through such simulations
are: (1) the best "first dose in human" for a new drug prior to Phase I trials,
(2) whether a potential new drug compound is likely to be absorbed at high
enough levels to achieve the desired blood concentrations needed for effective
therapy, (3) whether the absorption process is affected by certain enzymes and
transporter proteins in the intestinal tract that may cause the amount of drug
reaching the blood to be very different from one region of the intestine to
another, (4) when certain properties of a new compound are probably adequately
estimated through computer ("IN SILICO") predictions or simple experiments
rather than through more expensive and time-consuming IN VITRO or animal
experiments, (5) what the likely variations in blood and tissue concentration
levels of a new drug would be in a large population, in different age groups or
in different ethnic groups, and (6) whether a new formulation for an existing
approved drug is likely to demonstrate "bioequivalence" (equivalent blood
concentration versus time) to the currently marketed dosage form in a human
trial.

On May 19, 2008, we announced the release of GastroPlus version 6.0 - a major
new release that includes several important improvements to the program. We
improved the PKPlus(TM) Module to enable it to fit pharmacokinetic models to
multiple data sets, including both intravenous and oral dosage forms. We made
further improvements to the new sophisticated kidney model to simulate how drugs
are cleared in urine. We added numerous convenience features requested by our
users. We also added the ability of the program to track metabolites of a parent
drug, including metabolites of metabolites, to as many levels as desired. This


                                       18



<Page>

is a significant new capability because it allows the user to predict how much
of each metabolite will be generated, and into which tissues the metabolite is
likely to partition. Some metabolites can be therapeutically active, while
others can be toxic, so knowing how much is produced and where it goes is
valuable information to assess the likelihood of both therapeutic and adverse
effects.

Our marketing intelligence and reorder history indicate that GastroPlus
continues to enjoy a dominant position in the number of users worldwide. In
addition to virtually every major pharmaceutical company, licenses include a
growing number of smaller pharmaceutical and biotech companies, generic drug
companies, and drug delivery companies (companies that design the tablet or
capsule for a drug compound that was developed by another company). Although
these companies are smaller than the pharmaceutical giants, they can also save
considerable time and money through simulation. We believe this part of the
industry, which includes many hundreds of companies, represents major growth
potential for GastroPlus. Our experience has been that the number of new
companies adopting GastroPlus has been growing steadily, adding to the base of
annual licenses each year.

CONTRACT RESEARCH AND CONSULTING SERVICES
-----------------------------------------
Our recognized expertise in oral absorption and pharmacokinetics is evidenced by
the fact that our staff members have been speakers or presenters at over 40
prestigious scientific meetings worldwide in the past three years. We frequently
conduct contracted studies for customers who prefer to have studies run by our
scientists rather than to license our software and train someone to use it. The
demand for our consulting services has been increasing steadily, and we expect
this trend to continue. Long-term collaborations and shorter-term consulting
contracts serve both to showcase our technologies and as a way to build and
strengthen customer relationships.

For example, during this reporting period we further improved our ability to
simulate absorption through the eye. This new route of administration required a
significant amount of scientific investigation, programming changes, and actual
data to validate the model equations. Scientists who work in ocular delivery at
several customer sites have told us that they had not seen such a sophisticated
capability before.

GOVERNMENT-FUNDED RESEARCH
--------------------------
We completed our Phase I SBIR effort and our proposal for a Phase II follow-on
grant on the order of $750,000. SBIR grant funds provide the ability to expand
staff and grow the product line without adversely affecting earnings, because
the expenses associated with the efforts in the studies are funded largely, if
not completely, through the grants. As noted above, our Phase II proposal was
returned unscored, and we are currently preparing to resubmit in August with
information that proves that the one unfavorable reviewer based their opinion on
incorrect assumptions.

WORDS+ SUBSIDIARY
-----------------

PRODUCTS
--------
Our wholly owned subsidiary, Words+, Inc. has been an industry pioneer and
technology leader for over 25 years in introducing and improving augmentative
and alternative communication and computer access software and devices for
disabled persons. We intend to continue to be at the forefront of the
development of new products. We will continue to enhance our major software
products, E Z Keys(TM) and Say-it! SAM(TM), as well as our growing line of
hardware products. We are also considering acquisitions of other products,
businesses and companies that are complementary to our existing augmentative and
alternative communication and computer access business lines. We purchased the
Say-it! SAM technologies from SAM Communications, LLC of San Diego in December
2003. This acquisition gave us our smallest, lightest augmentative communication


                                       19



<Page>

system, which is based on a Hewlett-Packard iPAQ personal digital assistant
(PDA). PDA-based communication devices have been very successful in the
augmentative communication market, and this technology purchase has enabled us
to move into this market segment faster and at lower cost than developing the
product ourselves. SAM-based products now account for a significant share of our
growing Words+ revenues. Since the acquisition of the Say-it! SAM technologies,
we have continued to add new functionality to the SAM software and to offer it
on additional hardware platforms.

During this reporting period, sales of our new PDA-based (personal digital
assistant based) Say-it! SAM augmentative communication device continued to be
strong, contributing nicely to the highest quarter in our history.


RESULTS OF OPERATIONS

COMPARISON OF THREE MONTHS ENDED MAY 31, 2008 AND MAY 31, 2007.

The following table sets forth our consolidated statements of operations (in
thousands) and the percentages that such items bear to net sales:

<TABLE>
                                                    ------------------------------------------------------------
                                                                        Three Months Ended
                                                    ------------------------------------------------------------
                                                              05/31/08                       05/31/07
                                                    ------------------------------ -----------------------------
<S>                                                       <C>                <C>        <C>                <C>
Net sales                                                 $   2,968          100%       $  2,631           100%
Cost of sales                                                   624          21.0            551           20.9
                                                    ---------------- ------------- -------------- --------------
Gross profit                                                  2,344          79.0          2,080           79.1
                                                    ---------------- ------------- -------------- --------------
Selling, general and administrative                             942          31.7            885           33.6
Research and development                                        222           7.5            227            8.6
                                                    ---------------- ------------- -------------- --------------
Total operating expenses                                      1,164          39.2          1,112           42.3
                                                    ---------------- ------------- -------------- --------------
Income from operations                                        1,180          39.8            968           36.8
                                                    ---------------- ------------- -------------- --------------
Other income                                                      8           0.3             35            1.3
                                                    ---------------- ------------- -------------- --------------
Net income before taxes                                       1,188          40.0          1,003           38.1
                                                    ---------------- ------------- -------------- --------------
Provision for income taxes                                    (435)         (14.7)          (221)          (8.4)
                                                    ---------------- ------------- -------------- --------------
Net income (loss)                                              $753         25.4%         $  782          29.7%
                                                    ================ ============= ============== ==============
</TABLE>

NET SALES

Both of our business units (Simulations Plus, Inc. and Words+, Inc.) reported
new record high quarterly revenues during the third fiscal quarter of 2008
(3QFY08). Consolidated net sales increased $337,000, or 12.8%, to $2,968,000 in
3QFY08 from $2,631,000 in the third fiscal quarter of 2007 (3QFY07). Sales from
our pharmaceutical and educational software increased approximately $316,000, or
19.0%; while our Words+, Inc. subsidiary's sales increased approximately
$21,000, or 2.2%, for the quarter. We attribute the increase in pharmaceutical
software sales primarily to increased licenses, both to new customers and for
new modules and additional licenses to renewal customers.

We attribute the increase in Words+ sales primarily to an increase in sales of
"Say-it! SAM", TuffTalker, MessageMate, and input devices. The increase in those
products outweighed decreases in sales of "TuffTalker Plus" and "Freedom"
products with EZKeys software, which is based on Windows XP. Two major AAC


                                       20



<Page>

manufacturers have introduced XP-based software in the market recently,
resulting in new stiff competition for our XP-based products.

COST OF SALES

Consolidated cost of sales increased $73,000, or 13.2%, to $624,000 in 3QFY08
from $551,000 in 3QFY07; however, as a percentage, cost of sales in 3QFY08
increased only 0.1% to 21.0% from 20.9% in 3QFY07. For Simulations Plus, cost of
sales increased $100,000, or 87.7%. As a percentage of revenue, cost of sales
increased to 10.8% in 3QFY08 from 6.9% in 3QFY07. 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 decreased
approximately $6,000, or 6.7%, in 3QFY08 compared with 3QFY07. Another
significant portion of cost of sales includes royalty payments, which increased
approximately $106,000, in 3QFY08 compared with 3QFY07.

For Words+, cost of sales decreased $27,000, or 6.1%. Cost of sales also
decreased as a percentage, by 3.6% between the third fiscal quarters of FY08 and
FY07. We attribute the percentage decrease in cost of sales for Words+ primarily
to the sales generated from products with higher margins as well as less revenue
from products with high computer costs.

GROSS PROFIT

Consolidated gross profit increased $264,000, or 12.7%, to $2,344,000 in 3QFY08
from $2,080,000 in 3QFY07. We attribute this increase to the increase in sales
of pharmaceutical software as well as Words+ products which outweighed the
increase in cost of sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Consolidated selling, general and administrative (SG&A) expenses increased
$57,000, or 6.4%, to $942,000 in 3QFY08 from $885,000 in 3QFY07. For Simulations
Plus, SG&A increased $28,000, or 5.1%. As a percentage of sales, SG&A decreased
to approximately 31.7% in 3QFY08 from approximately 33.6% in 3QFY07. The major
increases in SG&A expenses were commissions, travel expenses, professional fee
for tax credit research, and investor relations which outweighed decreases in
hiring expense, and legal fees.

For Words+, SG&A expenses increased $29,000, or 8.3%, due primarily to increases
in travels, bad debts, and contributions. These increases outweighed decreases
in marketing consulting - a consultant became an employee, thus eliminating its
fee, while sustaining payroll and payroll related expenses by consolidating some
works.

RESEARCH AND DEVELOPMENT

We incurred approximately $428,000 of research and development costs for both
companies during 3QFY08. Of this amount, $206,000 was capitalized and $222,000
was expensed. In 3QFY07, we incurred $357,000 of research and development costs,
of which $130,000 was capitalized and $227,000 was expensed. The increase of
$71,000, or 19.9%, in total research and development expenditures from 3QFY07 to
3QFY08 was due primarily to salaries of new hires for our Life Sciences
Department as well as salary increases to existing staff in both business units.

                                       21

<Page>

OTHER INCOME (EXPENSE)

Net other income (expense) in 3QFY08 decreased by $27,000, or 78.0%, to $8,000
in 3QFY08 from $35,000 in 3QFY07. This is due primarily to an unrecognized loss
incurred in Auction Rate Securities (ARS) held in our UBS Financial Services
Inc. (UBS) account. Under current market conditions, UBS, along with many firms
in the industry, are no longer considering ARS cash alternatives due to their
lack of liquidity, thus we are required to report this unrealized loss
reflecting current market conditions. Investors should note that even when an
auction fails to sell the security, issuers, mostly Municipal certificates
issuers, remain obligated to pay interest and principal when due. No actual loss
occurs unless the security is sold. The amount of unrealized loss for the 3QFY08
was $58,000, which outweighed the income derived from interest and gains on
currency exchanges.

PROVISION FOR INCOME TAXES

The provision for income taxes increased by $215,000, or 97.3%, to $435,000 in
3QFY08 from $221,000 in 3QFY07 due primarily to an increased net income and a
change in our estimated provision for income tax this year comparing with the
same period last year.

NET INCOME

Consolidated net income decreased by $29,000, or 3.8%, to $753,000 in 3QFY08
from $782,000 in 3QFY07. We attribute this decrease in profit primarily to the
increases in cost of sales, operating expenses, tax provision, and a decrease in
other income which outweighed increases in revenue from both pharmaceutical
software revenue and Words+ products.

COMPARISON OF NINE MONTHS ENDED MAY 31, 2008 AND MAY 31, 2007.

The following table sets forth our consolidated statements of operations (in
thousands) and the percentages that such items bear to net sales:

<TABLE>
                                                    ------------------------------------------------------------
                                                                         Nine months Ended
                                                    ------------------------------------------------------------
                                                               05/31/08                      05/31/07
                                                    ------------------------------- ----------------------------
<S>                                                       <C>                 <C>       <C>                <C>
Net sales                                                 $   7,132           100%      $  6,621           100%
Cost of sales                                                 1,565           21.9         1,549           23.4
                                                    ---------------- -------------- ------------- --------------
Gross profit                                                  5,567           78.1         5,072           76.6
                                                    ---------------- -------------- ------------- --------------
Selling, general and administrative                           2,705           37.9         2,578           38.9
Research and development                                        700            9.8           627            9.5
                                                    ---------------- -------------- ------------- --------------
Total operating expenses                                      3,405           47.7         3,205           48.4
                                                    ---------------- -------------- ------------- --------------
Income from operations                                        2,162           30.3         1,867           28.2
                                                    ---------------- -------------- ------------- --------------
Other income                                                    133            1.9            86            1.3
                                                    ---------------- -------------- ------------- --------------
Net income before taxes                                       2,295           32.2         1,953           29.5
                                                    ---------------- -------------- ------------- --------------
Provision for income taxes                                    (734)          (10.3)         (430)          (6.5)
                                                    ---------------- -------------- ------------- --------------
Net income                                                   $1,561          21.9%      $  1,523          23.0%
                                                    ================ ============== ============= ==============
</TABLE>

                                       22



<Page>

NET SALES

Consolidated net sales increased $511,000, or 7.7%, to $7,132,000 in the first
nine months of fiscal year 2008 (FY08) from $6,621,000 in the first nine months
of fiscal year 2007 (FY07). Our sales from pharmaceutical software and services
increased approximately $672,000, or 15.7%; however, our Words+, Inc.
subsidiary's sales decreased approximately $161,000, or 6.9%, for the first nine
months of fiscal year 2008.

We attribute the increase in pharmaceutical software sales primarily to
increased licenses, both to new customers and for new modules, additional
licenses to renewal customers, and grants revenue from SBIR Phase I. We
attribute the decrease in Words+ sales primarily to a decrease in "Freedom" and
"TuffTalker Plus" products with EZKeys software which are based on Windows XP.
The recent introduction of XP-based software to the market by two major AAC
manufacturers has resulted in stiff competition for this type of product.
Revenues from our "Say-it! SAM" products increased overall during the first nine
months of FY08 compared with FY07; however, during the first two quarters, those
increases were offset by the decline in Windows XP-based system revenues.

COST OF SALES

Consolidated cost of sales increased $16,000, or 1.0%, to $1,565,000 in the
first nine months of FY08 from $1,549,000 in the first nine months of FY07;
however, as a percentage of revenues, cost of sales decreased 1.5%. For
Simulations Plus, cost of sales increased $168,000, or 37.3%, and as a
percentage of revenue, cost of sales increased to 12.5% in the first nine months
of FY08 from 10.5% in the first nine months of FY07. 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 $39,000, or 14.7%, in the first nine months of FY08
compared with the same period in FY07. Royalty expense increased approximately
$130,000, or 69.3%, in the first nine months of FY08 compared with the same
period in FY07.

For Words+, cost of sales decreased $152,000, or 13.9%. As a percentage of
revenue, cost of sales decreased 3.5% between the first nine months of FY08 and
FY07. We attribute the percentage decrease in cost of sales for Words+ primarily
to sales from products with higher margins and less revenue from products with
high cost computers for Windows XP-based systems.

GROSS PROFIT

Consolidated gross profit increased $495,000, or 9.7%, to $5,567,000 in the
first nine months of FY08 from $5,072,000 in the first nine months of FY07. We
attribute this increase to increased sales of pharmaceutical software which
outweighed a slight decrease in gross profit from Words+ products.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Consolidated selling, general and administrative (SG&A) expenses increased
$127,000, or 4.9%, to $2,705,000 in the first nine months of FY08 from
$2,578,000 in the first nine months of FY07. For Simulations Plus, SG&A
increased $97,000, or 6.2%; however, as a percentage of sales, SG&A decreased
from approximately 36.3% in the first nine months of FY07 to approximately 33.3%
in the first nine months of FY08. The major increases in SG&A expenses were
health insurance, consultant fees for website redesign, investor relations,


                                       23



<Page>

professional fees for tax credit research, salaries, bonuses and payroll-related
expenses such as 401K, and payroll taxes which outweighed a decrease in bad
debts from one receivable from the purchased assets of Bioreason, and lower
trade show expenses.

For Words+, SG&A expenses increased $30,000, or 2.9%; and as a percentage of
sales, SG&A increased from approximately 43.8% in the first nine months of FY07
to approximately 48.4% in the first nine months of FY08. The major increases in
SG&A expenses were travel, estimated bad debts, and salaries which outweighed
decreases in consultant fees, commissions, supply, and telephone.

RESEARCH AND DEVELOPMENT

We incurred approximately $1,295,000 of research and development costs for both
companies during the first nine months of FY08. Of this amount, $595,000 was
capitalized and $700,000 was expensed. In the first nine months of FY07, we
incurred $1,023,000 of research and development costs, of which $396,000 was
capitalized and $627,000 was expensed. The increase of $272,000, or 26.6%, in
total research and development expenditures from the first nine months of FY07
to the first nine months of FY08 was due primarily to salaries for new hires in
Life Sciences and salary increases and bonuses to existing staff in both
business units.

OTHER INCOME

Net other income in the first nine months of FY08 increased by $47,000, or
55.3%, from $86,000 to $133,000. This is due primarily to increased interest
revenue from Money Market accounts and a gain on currency exchange from billing
in foreign currencies at the request of our customers. Those increases
outweighed the unrealized loss which was described above in three-month
operations results.

PROVISION FOR INCOME TAXES

The provision for income taxes increased by $304,000, or 70.9%, to $734,000 in
the first nine months of FY08 from $430,000 in the first nine months of FY07.
This increase is due primarily to a change in estimated tax rate as discussed in
the result of 3 months operation as well as increase in net income before tax.

NET INCOME (LOSS)

Consolidated net income increased by $38,000, or 2.5%, to $1,561,000 in the
first nine months of FY08 from $1,523,000 in the first nine months of FY07. We
attribute this increase in profit primarily to increases in
revenue and other income which outweighed increases in operating expenses
and the increased provision for income taxes, .


LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of capital have been cash flows from our operations. We
have achieved continuous positive operating cash flow in the last six 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


                                       24



<Page>

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.


Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our risk from exposure to financial markets is limited to foreign exchange
variances and fluctuations in interest rates. We may be subject to some foreign
exchange risks. Most of our business transactions are in U.S. dollars, although
we generate significant revenues from customers overseas. The exception is that
we were compensated in Japanese yen by some Japanese customers. As a result, we
experienced a small gain from currency exchange in the first nine months of
FY08. In the future, if foreign currency transactions increase significantly,
then we may mitigate this effect through foreign currency forward contracts
whose market-to-market gains or losses are recorded in "Other Income or expense"
at the time of the transaction. To date, exchange rate exposure has not resulted
in a material impact.

Item 4. Controls and Procedures
        -----------------------
     (a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.
         As of the end of the period covered by this report, the Company carried
         out an evaluation, under the supervision and with the participation of
         the Company's management, including the Company's Chief Executive
         Officer and Chief Financial Officer, of the effectiveness of the design
         and operation of the Company's disclosure controls and procedures
         pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the
         Chief Executive Officer and Chief Financial Officer concluded that the
         Company's disclosure controls and procedures are effective in timely
         alerting them to material information relating to the Company required
         to be included in the Company's periodic SEC filings.

     (b) CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING.
         There were no changes in the Company's internal controls over financial
         reporting during the Company's most recent fiscal quarter that have
         materially affected, or are reasonably likely to materially affect, the
         Company's internal controls over financial reporting.

                                       25



<Page>

                           PART II. OTHER INFORMATION

Item 1.           Legal Proceedings
                  -----------------

                  On April 6, 2006, we received notice from a liquidator for the
                  former French subsidiary of Bioreason (Bioreason SARL), saying
                  that the liquidator had initiated legal action against
                  Simulations Plus in the French courts with respect to
                  ClassPharmer distribution rights to European customers, and is
                  claiming commissions and legal fees with respect to European
                  customers. We have been working through our U.S. attorneys and
                  a law firm in Paris. We have filed a counterclaim for our
                  rights and lost sales against Bioreason SARL's assets by
                  sending a debt recovery declaration to the liquidator on June
                  15, 2006.

                  On May 23, 2007, we received an e-mail from our French Lawyer
                  that we had received a proposal for an amicable settlement, in
                  which we would give up our claims if Bioreason SARL would
                  agree to waive any claims against Simulations Plus. This
                  proposal was accepted by phone by the lawyer of Bioreason
                  SARL, and we signed the agreement which was submitted to the
                  French court.

                  On July 13, 2007, we received another e-mail from our French
                  Lawyer that the agent in charge of the liquidation of
                  Bioreason SARL requested the hearing to be postponed until
                  October 11, 2007, and her request was accepted by the French
                  supervisory judge.

                  On October 31, our French Lawyer informed us that the hearing
                  was again postponed until November 2007.

                  On April 9, 2008, we received the approval of the settlement
                  agreement from the commercial division of French Ordinary
                  Court. This means that the settlement agreement is now in
                  force, and this case is finally closed. Both parties dropped
                  all claims and we are not liable for any amounts.


Item 2.           Changes in Securities
                  ---------------------
                  None.

Item 3.           Defaults Upon Senior Securities
                  -------------------------------
                  None.

Item 4.           Submission of Matters to a Vote of Security Holders
                  ---------------------------------------------------
                  None.

Item 5.           Other Information
                  -----------------
                  None.

Item 6.           Exhibits and Reports on form 8-K
                  --------------------------------

                  (a)      Exhibits:

                  31.1 -2 Certification of Chief Executive Officer and Chief
                          Financial Officer

                  32      Certification pursuant to Sec. 906 of the
                          Sarbanes-Oxley Act of 2002

                                       26



<Page>


                                    SIGNATURE

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
July 14, 2008.

                                                         Simulations Plus, Inc.

Date:  July 14, 2008                        By:          /s/ MOMOKO BERAN
                                                         ----------------
                                                         Momoko Beran
                                                         Chief Financial Officer


                                       27