What changed in this filing

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Item 9A. Controls and Procedures

2021-07-26 compared with 2020-07-28 · 332 added, 273 removed, 660 unchanged (48% of the section changed)

1 unchanged sentence

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act , our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have reviewed and evaluated our disclosure controls and procedures (as defined in the Securities Exchange Act Rule 13a-15(e)) as of April 30, 2020.

Based on that evaluation, these officers have concluded that, as of April 30, 2020, our disclosure controls and procedures were effective to achieve their stated purpose.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules, regulations, and forms.

Disclosure controls and procedures include, without limitation,

controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding disclosure.

Limitations on the Effectiveness of Controls

Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met.

Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a–15(f).

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on control criteria framework, Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations, or COSO.

Based on our evaluation, management concluded that our internal control over financial reporting was effective as of April 30, 2020 .

Management’s Report on Changes in Internal Controls

In connection with the evaluation required by Exchange Act Rule 13a-15(d), our management, including our Chief Executive Officer and Chief Financial Officer, concluded that there were no changes in our internal control over financial reporting during the quarter ended April 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Company’s management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act, as amended (the “Exchange Act”) as of April 30, 2021.

In designing and evaluating our disclosure controls and procedures.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the relationship between the benefit of desired controls and procedures and the cost of implementing new controls and procedures.

Based upon this evaluation, the Company’s management, including our Chief Executive Officer and Chief Financial Officer concluded that, as of April 30, 2021, due to the material weakness in our internal control over financial reporting described below, our disclosure controls and procedures were not effective.

Notwithstanding such material weakness in internal control over financial reporting, our management concluded that our consolidated financial statements in this Annual Report on Form 10-K present fairly, in all material respects, the Company’s financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with U.S.

generally accepted accounting principles (“U.S.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

The Company’s internal control over financial reporting is a

process designed by, or under the supervision of Company management, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with U.S.

GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of Company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management has assessed the effectiveness of our internal control over financial reporting as of April 30, 2021, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on our assessment of those criteria, we identified the following deficiencies in our internal control described below.

Our risk assessment procedures over certain of our contractual arrangements requiring the payment of royalties for the licensing of technology from third-parties did not adequately identify the risks and consider the Company’s obligations based on the recognition of oncology services revenue.

As a result, the Company had missing process level controls over the review of royalty arrangements and the timely determination and recognition of related liabilities.

Although no material misstatements were identified in our consolidated financial statements, these control deficiencies resulted in immaterial misstatements to our previously issued consolidated financial statements which have been corrected in the consolidated financial statements included in the Form 10-K for our fiscal year ended April 30, 2021.

However, the control deficiencies create a reasonable possibility that a material misstatement in the Company’s consolidated financial statements will not be prevented or detected on a timely basis and we concluded that our internal control over financial reporting as of April 30, 2021, was not effective due to a material weakness in internal control.

Remediation Plan

The Company’s management had begun to design and implement certain measures to address the above-described material weakness and enhance the Company’s internal control in order to remediate this material weakness.

As part of our remediation measures, the Company will implement plans to enhance the Company’s process and controls including ensuring adequate identification and review of royalty agreement terms and obligations.

Changes in Internal Controls

Other than the material weakness identified above, there were no other changes in the Company’s internal controls over financial reporting during the quarter ended April 30, 2021, that materially affected, or were reasonably likely to materially affect the Company’s internal control over financial reporting.

Other Information

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Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statement of Changes in Stockholders' Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm F-2

Consolidated Balance Sheets F-3

Consolidated Statements of Operations F-4

Consolidated Statement of Changes in Stockholders' Equity F-5

Consolidated Statements of Cash Flows F-6

Notes to Consolidated Financial Statements F-7

Financial Statement Schedules

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3.2 Amended and Restated Bylaws, as amended (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed May 9, 2017)

Description of Registered Securities *

4.1 Description of Registered Securities (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K filed July 28, 2020)

(incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K filed July 28, 2020)

10.1 Employment Agreement, dated November 5, 2013, between the Company and Ronnie Morris, M.D.

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32.1 Section 1350 Certifications**

XBRL Instance Document.

XBRL Taxonomy Extension Schema Document.

XBRL Taxonomy Extension Calculation Linkbase Document.

XBRL Taxonomy Extension Definition Linkbase Document.

XBRL Taxonomy Extension Label Linkbase Document.

XBRL Taxonomy Extension Presentation Linkbase Document.

101.INS* XBRL Instance Document.

101.SCH* XBRL Taxonomy Extension Schema Document.

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB* XBRL Taxonomy Extension Label Linkbase Document.

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document.

___________________________

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CHAMPIONS ONCOLOGY, INC.

July 28, 2020

/s/ RONNIE MORRIS

July 26, 2021 /s/ RONNIE MORRIS

Ronnie Morris

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

/s/ RONNIE MORRIS

Chief Executive Officer and Director

July 28, 2020

Ronnie Morris

(principal executive officer)

/s/ DAVID MILLER

Chief Financial Officer

July 28, 2020

(principal financial and accounting officer)

/s/ JOEL ACKERMAN

July 28, 2020

Joel Ackerman

Chairman of the Board of Directors

/s/ DAVID SIDRANSKY

July 28, 2020

Signature Title Date

/s/ RONNIE MORRIS Chief Executive Officer and Director July 26, 2021

Ronnie Morris (principal executive officer)

/s/ DAVID MILLER Chief Financial Officer July 26, 2021

David Miller (principal financial and accounting officer)

/s/ JOEL ACKERMAN Director, July 26, 2021

Joel Ackerman Chairman of the Board of Directors

/s/ DAVID SIDRANSKY Director July 26, 2021

David Sidransky

July 28, 2020

/s/ DANIEL MENDELSON

July 28, 2020

/s/ ROBERT BRAININ Director July 26, 2021

Robert Brainin

TOBIN Director July 26, 2021

/s/ DANIEL MENDELSON Director July 26, 2021

Daniel Mendelson

/s/ PHILIP BREITFELD

July 28, 2020

/s/ PHILIP BREITFELD Director July 26, 2021

Philip Breitfeld

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In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of April 30, 2021 and 2020, and the consolidated results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for leases in fiscal year 2020 due to the adoption of Accounting Standards Codification Topic 842, Leases.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition

As described further in Note 2 to the consolidated financial statements, revenues are primarily derived from contracts with customers to provide pharmacology services with payments based on fixed fee arrangements.

The Company recognizes revenue over time using a progress-based input method that depicts the transfer of control over the life of the performance obligation.

Revenue is recognized for the single performance obligation over time due to the Company's right to payment for work performed to date and the performance does not create an asset with an alternative use.

Customer payments may be made in advance or on a schedule in the statement of work (“SOW”) unrelated to when revenue is recognized resulting in deferred revenue.

The determination of the progress as the overall performance obligation is being completed is based on the worked performed in accordance with the SOW and requires management estimates.

Pharmacology services revenues for the year ended April 30, 2021 were approximately $39.5 million.

We identified the accounting for revenue and the related deferred revenue recognized over time as a critical audit matter due to the complexity and subjectivity of management’s estimate of the progress towards completion of its projects.

This in turn led to a high degree of auditor judgement and subjectivity and significant audit effort was required in performing procedures to evaluate management’s determination of the project completion progress, related costs incurred and deferred revenue.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

We obtained an understanding and evaluated the design of controls relating to the Company's revenue recognition and deferred revenue.

Our audit procedures related to the recognition of revenue over time and deferred revenue included the following procedures, among others, (i) testing the Company’s estimates of project progress by evaluating the appropriate SOW and customer acceptance documentation, (ii) testing the significant assumptions used to develop the estimates of project progress pursuant to the SOW and (iii) testing completeness and accuracy of the underlying data.

/s/ EisnerAmper LLP

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Current assets:

Cash $ 4,687 $ 8,342

Accounts receivable, net 6,986 4,770

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Other long term assets 15 128

Goodwill 335 335

Total assets $ 27,591 $ 20,751

AND STOCKHOLDERS' EQUITY

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Total current liabilities 11,199 12,304

Deferred rent

Non-current portion operating lease liabilities 8,783 3,170

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200,000,000 shares authorized;

12,726,728 and 11,619,538 shares issued and 12,726,728 and 11,619,538 shares outstanding as of April 30, 2020 and April 30, 2019, respectively

13,414,066 and 12,726,728 shares issued and outstanding at April 30, 2021 and 2020, respectively

Additional paid-in capital 79,945 77,978

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Other expense:

Other expense

Other income (expense) 71 ( 42 )

Income (loss) before income tax expense 437 ( 1,963 )

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Net income (loss) per common share outstanding

basic $ 0.03 $ ( 0.18 )

and diluted $ 0.02 $ ( 0.18 )

Weighted average common shares outstanding

basic 13,138,995 11,843,463

and diluted 14,573,561 11,843,463

The accompanying notes are an integral part of these Consolidated Financial Statements.

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(In Thousands except for shares)

Treasury Stock

Common Stock Treasury Stock Additional

Capital Accumulated

Deficit Total

Stockholders'

Balance, April 30, 2018

Stock-based compensation and modification expense

Issuance of common stock for services

Shares Amount Shares Amount

Balance, April 30, 2019, as reported 11,619,538 $ 12 — $ 72,924 $ ( 70,698 ) $ 2,238

Impact of immaterial error correction — — — ( 101 ) $ ( 101 )

Balance, April 30, 2019, as restated 11,619,538 $ 12 $ 72,924 $ ( 70,799 ) $ 2,137

Stock-based compensation expense — — — — 600 — 600

Issuance of common stock on exercise of stock options and warrants 1,107,190 1 — — 4,454 — 4,455

Net loss — — — — — ( 2,093 ) ( 2,093 )

Balance, April 30, 2020 12,726,728 $ 13 — $ — $ 77,978 $ ( 72,892 ) $ 5,099

Stock-based compensation

Issuance of common stock on exercise of stock options and warrants

Stock-based compensation expense — — — — 598 — 598

Issuance of common stock on exercise of stock options 687,338 — — — 1,369 — 1,369

Net income — — — — — 362 362

Balance, April 30, 2021 13,414,066 $ 13 — $ — $ 79,945 $ ( 72,530 ) $ 7,428

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Operating lease right-of-use assets 398 403

Deferred rent

Goodwill impairment — 335

Gain on termination of operating lease ( 75 ) —

Allowance for doubtful accounts 49 277

Issuance of common stock for services

Changes in operating assets and liabilities:

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Prepaid expenses and other current assets ( 572 ) ( 77 )

Other long term assets

Accounts payable ( 1,246 ) 333

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Deferred revenue 441 1,792

Net cash provided by operating activities

Net cash (used in) provided by operating activities ( 1,681 ) 2,905

Investing activities:

Purchase of property and equipment ( 3,281 ) ( 2,220 )

Refund of security deposit 112 —

Net cash used in investing activities ( 3,169 ) ( 2,220 )

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Net cash provided by financing activities 1,195 4,420

Increase in cash

Increase (decrease) in cash ( 3,655 ) 5,105

Cash, beginning of year 8,342 3,237

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Champions Oncology, Inc.

(the “Company”), is engaged in an end-to-end range of research and development technology solutions and services to improve the development and use of oncology drugs.

(the “Company”), is engaged in transforming drug discovery and development through data-driven research strategies and innovative pharmacology, biomarker and data platforms.

The Company’s TumorGraft Technology Platform is a novel approach to personalizing cancer care based upon the implantation of human tumors in immune-deficient mice.

The Company uses this technology, in conjunction with related services, to offer solutions for two consumer groups:

Translational Oncology Solutions (“TOS”) and Personalized Oncology Solutions (“POS”).

The Company’s TOS business offers a technology platform to pharmaceutical and biotechnology companies using proprietary TumorGraft studies, which the Company believes may be predictive of how drugs may perform in clinical settings.

POS assists physicians in developing personalized treatment options for their cancer patients through tumor specific data obtained from drug panels and related personalized oncology services.

The Company provides a technology platform to pharmaceutical and biotechnology companies using proprietary TumorGraft studies, which the Company believes may be predictive of how drugs may perform in clinical settings.

Utilizing the TumorGraft Technology Platform (the "Platform"), a comprehensive Bank of unique, well characterized "Patient Derived XenoGrafts" (PDX) models, the Company offers multiple services to pharmaceutical and biotechnology companies seeking personalized approaches to drug development.

By performing studies to predict the efficacy of oncology drugs, our Platform facilitates drug discovery with lower costs and increased speed of drug development as well as increased adoption of existing drugs.

The Company has two operating subsidiaries:

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The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant estimates include, among other things, accounts receivable realization, revenue recognition (replacement of licensed tumors), valuation allowance for deferred tax assets, valuation of goodwill, and stock-based compensation and warrant assumptions.

Significant estimates include, among other things, accounts receivable realization, revenue recognition, valuation allowance for deferred tax assets, valuation of goodwill, recoverability of capitalized software development costs, and stock-based compensation and warrant assumptions.

We base our estimates on historical experience, our observance of trends in particular areas and information or valuations and various other assumptions that we believe to be reasonable under the circumstances and which form the basis for making judgments about the carrying value of assets and liabilities that may not be readily apparent from other sources.

Actual amounts could differ significantly from amounts previously estimated.

Correction of Immaterial Errors

During the preparation of its annual consolidated financial statements as of and for the year ended April 30, 2021, management determined that an adjustment was needed to correct its previously issued consolidated financial statements due to an immaterial accounting error.

Specifically, the Company did not accrue for its obligation to remit royalty payments based on oncology service revenue earned in prior periods to third-parties pursuant to contractual arrangements.

CHAMPIONS ONCOLOGY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As a result, the accompanying consolidated financial statements and the related Note 7 - Commitments and Contingencies, have been revised to correct the immaterial accounting error for the affected periods.

Correction of this immaterial error resulted in an increase in accrued liabilities of approximately $ 101,000 with a corresponding reduction in retained earnings as of May 1, 2019, to adjust for the cumulative impact of the error as of the beginning of the earliest period presented in the accompanying consolidated financial statements.

The correction of this immaterial error also required an adjustment to the consolidated financial statements for fiscal year 2020, resulting in an increase in cost of sales and net loss and an increase in accrued liabilities and reduction in retained earnings of approximately $ 118,000 .

Management initially recorded the effect of this immaterial error of approximately $ 219,000 in the unaudited consolidated financial statements as of and for the three and nine month periods ended January 31, 2021.

Subsequently, management determined that the correction of the immaterial error should have been reflected in the periods in which the error originated, following the approach described above.

Accordingly, the following tables summarize the effects of the immaterial error correction to the Company's consolidated financial statements as of and for the year ended April 30, 2020, and the unaudited consolidated financial statements as of and for the three and nine month periods ended January 31, 2021.

(in thousands):

April 30, 2020

As Previously Reported Impact of adjustment As Revised

Consolidated Balance Sheet

Accrued liabilities $ 2,502 $ 219 $ 2,721

Total current liabilities $ 12,085 $ 219 $ 12,304

Total liabilities $ 15,433 $ 219 $ 15,652

Accumulated deficit $ ( 72,673 ) $ ( 219 ) $ ( 72,892 )

Total stockholders' equity $ 5,318 $ ( 219 ) $ 5,099

For the year ended

April 30, 2020

As Previously Reported Impact of Adjustment Revised as

Consolidated Income Statement

Cost of oncology services $ 16,882 $ 118 $ 17,000

Total costs and operating expenses $ 33,926 $ 118 $ 34,044

Loss from operations $ ( 1,803 ) $ ( 118 ) $ ( 1,921 )

Net loss $ ( 1,975 ) $ ( 118 ) $ ( 2,093 )

Basic and diluted EPS $ ( 0.17 ) $ ( 0.01 ) $ ( 0.18 )

CHAMPIONS ONCOLOGY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 31, 2021

3 Months Ended 9 Months Ended

(unaudited) (unaudited)

As Reported Impact of

Adjustment As Revised As Reported Impact of

Adjustment As Revised

Consolidated Income Statement

Cost of oncology services $ 4,842 $ ( 219 ) $ 4,623 $ 15,822 $ ( 219 ) $ 15,603

Total costs and operating expenses $ 10,049 $ ( 219 ) $ 9,830 $ 29,681 $ ( 219 ) $ 29,462

Income from operations $ 763 $ 219 $ 982 $ 795 $ 219 $ 1,014

Net income $ 740 $ 219 $ 959 $ 816 $ 219 $ 1,035

Basic EPS $ 0.06 $ 0.01 $ 0.07 $ 0.06 $ 0.02 $ 0.08

Diluted EPS $ 0.05 $ 0.02 $ 0.07 $ 0.06 $ 0.01 $ 0.07

Consolidated Balance Sheet

Accrued liabilities $ 2,426 $ ( 219 ) $ 2,207 $ 2,426 $ ( 219 ) $ 2,207

Total current liabilities $ 11,414 $ ( 219 ) $ 11,195 $ 11,414 $ ( 219 ) $ 11,195

Total liabilities $ 17,393 $ ( 219 ) $ 17,174 $ 17,393 $ ( 219 ) $ 17,174

Accumulated deficit $ ( 71,857 ) $ 219 $ ( 71,638 ) $ ( 71,857 ) $ 219 $ ( 71,638 )

Total stockholders' equity $ 7,867 $ 219 $ 8,086 $ 7,867 $ 219 $ 8,086

Cash and Cash Equivalents

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In the past, we have met these cash requirements through our cash on hand, working capital management, proceeds from certain private placements and public offerings of our securities, and sales of products and services.

For the year ended April 30, 2020 , the Company had a net loss of approximately $2.0 million , an accumulated deficit of approximately $72.7 million , working capital of $1.4 million and cash and cash equivalents of $8.3 million .

We believe that our cash on hand, together with continued improved cash flows from operations, are adequate to fund operations through at least August 2021.

For the year ended April 30, 2021, the Company had net income of approximately $ 362,000 , an accumulated deficit of approximately $ 72.5 million, working capital of $ 1.4 million and cash of $ 4.7 million.

We believe that our cash on hand, together with future improved cash flows from operations, are adequate to fund operations through at least August 2022.

Should the Company be required to raise additional capital, there can be no assurance that management would be successful in raising such capital on terms acceptable to us, if at all.

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The Company evaluates its hierarchy disclosures each quarter.

The Company has no assets that are measured at fair value on a recurring basis and there were no assets or liabilities measured at fair value on a non-recurring basis during the years ended April 30, 2020 and 2019.

The Company has no assets or liabilities that are measured at fair value on a recurring and/or non-recurring during the years ended April 30, 2021 and 2020.

CHAMPIONS ONCOLOGY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Property and Equipment

Property and equipment is recorded at cost and primarily consists of laboratory equipment, furniture and fixtures, and computer hardware and software.

Property and equipment is recorded at cost and primarily consists of laboratory equipment, furniture and fixtures, computer hardware and software, and internally developed software.

Assets in progress include equipment or software not yet placed in service.

Depreciation and amortization is calculated on a straight-line basis over the estimated useful lives of the various assets ranging from three to nine years .

Effective May 1, 2019, the Company accounts for its leases under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 842, Leases ("ASC 842").

Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate.

Refer to Footnote 4, "Property and Equipment" for a detailed discussion.

The Company accounts for its leases under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 842, Leases ("ASC 842").

Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right-of-use asset ("ROU") and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate.

As the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

1 unchanged sentence

For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term.

The Company continues to account for leases in the prior period financial statements in accordance with ASC Topic 840.

Impairment of Long-Lived Assets

3 unchanged sentences

These estimates only include the net cash flows directly associated with, and that are expected to arise as a direct result of, the use and eventual disposition of the asset or asset group.

CHAMPIONS ONCOLOGY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Company has no t recognized any impairment losses for the Company’s long-lived assets for the years ending April 30, 2020 and 2019 .

The Company has no t recognized any impairment losses for the Company’s long-lived assets for the years ending April 30, 2021 and 2020.

Other long term assets

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The use of different assumptions or estimates for future cash flows or significant changes in risk-adjusted discount rates due to changes in market conditions could produce substantially different estimates of the fair value of the business unit.

We have one reportable segment.

The Company evaluated its TOS and POS business operations (or business units) and determined that the POS operations no longer qualified as a separate reportable segment primarily due to its revenue representing approximately 2.5% of total revenue.

The Company assesses goodwill by business unit, which are also reporting units.

Judgments regarding the existence of impairment indicators are based on legal factors, market conditions and operational performance of the acquired businesses.

CHAMPIONS ONCOLOGY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has one reportable segment.

The Company assesses goodwill impairment by business unit.

Judgments regarding the existence of impairment indicators are based on legal factors, market conditions and operational performance of the businesses.

Future events, including but not limited to continued declines in economic activity, loss of contracts or a significant number of customers, or a rapid increase in costs or capital expenditures, could cause us to conclude that impairment indicators exist and that goodwill is impaired.

As a result of its annual assessment, which included an estimation of the future cash flows of the POS operations as described above, the Company determined that, under a discounted cash flow model, the fair value of the POS business/reporting unit was below its carrying amount as of April 30, 2020.

The Company recognized goodwill impairment for the quarter and year ended April 30, 2020 of $335,000 .

As of April 30, 2020 and 2019, goodwill was $335,000 and $670,000 , respectively.

For the year ended April 30, 2021, the Company's annual assessment did not result in any impairment indicators.

The Company recognized goodwill impairment for the years ended April 30, 2021 and 2020 of $ 0 and $ 335,000 , respectively.

As of April 30, 2021 and 2020, goodwill was $ 335,000 .

Deferred Revenue

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Cost of Oncology Services

Cost of oncology services relates to our TOS and POS business units.

TOS costs consist of direct costs related to mice purchases and maintenance costs for studies completed internally and charges from Contract Research Organization's for studies handled externally.

Indirect costs include salaries for personnel directly engaged in providing TOS products.

All costs of performing studies

CHAMPIONS ONCOLOGY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

in-house are expensed as incurred.

All TOS costs of performing studies from external sources, are expensed when incurred.

POS consists of costs related to implantations, drug panels, tumor boards, and gene sequencing services, as well as indirect internal costs, such as salaries for personnel directly engaged in these products.

Direct costs associated with implantation revenues are primarily related to mice purchases and maintenance and shipping of tumor tissue.

Direct drug panel costs are primarily incurred from mice purchases and maintenance and drug purchases.

Direct tumor board costs are primarily related to physicians’ honorariums and any tumor board participation costs such as travel, lodging and meals.

Direct gene sequencing costs are primarily related to costs billed from the gene sequencing service provider.

All POS costs are expensed as incurred.

Cost of oncology services relates primarily to our TOS business unit.

TOS costs consist of direct costs related to laboratory supplies, mice purchases, and maintenance costs for studies completed internally as well as charges from Contract Research Organization's for studies handled externally.

Indirect costs include salaries and other payroll related costs of compensation for personnel directly engaged in providing TOS products and services.

All costs of performing studies in-house are expensed as incurred.

All costs of performing studies from external sources, are expensed when incurred.

Research and Development

Research and development costs represent both costs incurred internally for research and development activities, including personnel costs and mice purchases and maintenance, as well as costs incurred externally to facilitate research activities, such as tumor tissue procurement and characterization expenses.

Research and development costs represent both costs incurred internally for research and development activities, including personnel costs, mice purchases, and maintenance, as well as costs incurred externally to facilitate research activities, such as tumor tissue procurement and characterization expenses.

All research and development costs are expensed as incurred.

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These assumptions are based on historical information and management judgment.

The risk-free interest rate used is based on the United States treasury security rate with a term consistent

with the expected term of the award at the time of the grant.

The risk-free interest rate used is based on the United States treasury security rate with a term consistent with the expected term of the award at the time of the grant.

Since the Company has limited option exercise history, it has generally elected to estimate the expected life of an award based upon the Securities and Exchange Commission-approved “simplified method” noted under the provisions of Staff Accounting Bulletin No.

107 with the continued use of this method extended under the provisions of Staff Accounting Bulletin No.

Estimated volatility is based upon the historical volatility of the Company's common stock.

Estimated volatility is based

CHAMPIONS ONCOLOGY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

upon the historical volatility of the Company's common stock.

The Company does not anticipate paying a dividend, and therefore, no expected dividend yield was used.

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As of April 30, 2021 and 2020, the Company provided a valuation allowance for all net deferred tax assets, as recovery is not more likely than not based on an insufficient history of earnings.

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Tax positions are positions taken in a previously filed tax return or positions expected to be taken in a future tax return that are reflected in measuring current or deferred income tax assets and liabilities reported in the consolidated financial statements.

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The Company does not anticipate any significant unrecognized tax benefits to be recorded during the next 12 months.

For the year ended April 30, 2020 and 2019, the Company recognized a provision for income taxes of $130,000 and $103,000 , respectively, related to state and foreign taxes.

For the year ended April 30, 2021 and 2020, the Company recognized a provision for income taxes of $ 75,000 and $ 130,000 , respectively.

These amounts are mainly attributable to taxable income earned in Israel relating to transfer pricing.

Revenue Recognition

In May 2014, the FASB issued ASU 2014-19, Revenue from Contracts with Customers (Topic 606) which was added to the FASB's Accounting Standards Codification as ASC 606.

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers.

The objective of the standard is to establish a single comprehensive revenue recognition model that is designed to create greater comparability of financial statements across industries and jurisdictions.

Under new standard, companies recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services.

The Company adopted ASU 2014-09 on May 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption and by recognizing the cumulative effect of applying the standard as an adjustment to the Company’s Balance Sheet.

Under this standard, companies recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services.

All revenue is generated from contracts with customers.

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The Company records revenues net of any tax assessments by governmental authorities, such as value added taxes, that are imposed on and concurrent with specific revenue generating transactions.

Pharmacology Study, POS Services and Other Services

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Pharmacology Study and Other Services

The Company generally enters into contracts with customers to provide oncology services with payments based on fixed-fee arrangements.

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Therefore, under ASC 606, the Company elected the practical expedient to expense these costs as incurred.

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Variable Consideration

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As the contracted services are subsequently performed and the associated revenue is recognized, the deferred revenue balance is reduced by the amount of the revenue recognized during the period.

Deferred revenue is classified as a current liability on the condensed consolidated balance sheet as the Company expects to recognize the associated revenue in less than one year.

Deferred revenue is classified as a current liability on the consolidated balance sheet as the Company expects to recognize the associated revenue in less than one year.

Accounting Pronouncements Being Evaluated

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Early adoption is permitted.

We are currently assessing the impact of this update on our consolidated financial statements and do not expect a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, which amends ASC 350-40, Intangibles—Goodwill and Other—Internal-Use Software, to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement ("CCA") that is a service contract.

This update aligns the accounting for costs incurred to implement a CCA that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software.

The update is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

Early adoption of the amendments in this update is permitted, including adoption in any interim period.

We are currently assessing the impact of this update on our consolidated financial statements and do not expect a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC 820) — Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.

ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures.

ASU 2018-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019.

Early adoption is permitted.

We are currently assessing the potential impact of the amendments in this ASU on our consolidated financial statements and do not expect a material impact on our consolidated financial statements.

We are currently assessing the impact of this update on our consolidated financial statements and have not yet determined the impact on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (ASC 740) — Simplifying the Accounting for Income Taxes.

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The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

ASU 2019-12 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2020.

We are currently assessing the potential impact of this ASU on our consolidated financial statements and do not expect a material impact on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

ASU 2019-12 is effective for annual periods, including

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interim periods within those annual periods, beginning after December 15, 2020.

We are currently assessing the potential impact of this ASU on our consolidated financial statements and do not expect a material impact on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No.

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Leases" for additional information.

In August 2016, the FASB issued ASU No.

2016-15, “Statement of Cash Flows:

Classification of Certain Cash Receipts and Cash Payments”.

The new standard attempts to reduce diversity in practice in how cash receipts and cash payments are presented and classified in the statement of cash flows.

2016-15 provides guidance on eight specific cash flow issues.

The new guidance was effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years.

The Company adopted ASU 2016-15 on May 1, 2018 and it did not have a material impact on its consolidated financial statements.

In November 2016, the FASB issued ASU No.

2016-18, "Restricted Cash (a consensus of the FASB Emerging Issues Task Force)" ("ASU 2016-18"), which addresses classification and presentation of changes in restricted cash on the statement of cash flows.

ASU 2016-18 requires an entity's reconciliation of the beginning-of-period and end-of-period total amounts shown on the statement of cash flows to include in cash and cash equivalents amounts generally described as restricted cash and restricted cash equivalents.

ASU 2016-18 is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017.

The Company adopted ASU 2016-18 on May 1, 2018 and did not have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No.

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ASU 2017-04 allows for prospective application and is effective for fiscal years beginning after December 15, 2019, and interim periods therein with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

The Company adopted this guidance on May 1, 2019 and it did not have an impact on its consolidated financial statements.

The Company adopted this guidance on May 1, 2019.

The adoption did not have an impact on the Company's consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, "Compensation-Stock Compensation (Topic 718):

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The adoption did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC 820) — Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.

ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures.

ASU 2018-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019.

The Company adopted this guidance on May 1, 2020.

The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

The update is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

The Company adopted this guidance on May 1, 2020.

The adoption of this ASU did not have a material impact is reflected in the Company's current year consolidated financial statements.

Accounts Receivable, Unbilled Services and Deferred Revenue

Accounts receivable and unbilled services were as follows (in thousands):

April 30, 2020

April 30, 2019

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April 30, 2021 April 30, 2020

Accounts receivable $ 4,304 $ 2,655

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Total accounts receivable, net $ 6,986 $ 4,770

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Deferred revenue was as follows (in thousands):

April 30, 2020

April 30, 2019

April 30, 2021 April 30, 2020

Deferred revenue $ 6,256 $ 5,815

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Property and Equipment

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Property and equipment consisted of the following (in thousands):

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Laboratory equipment 6,640 4,818

Capitalized software development costs 484 —

Assets in progress 1,211 554

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Property and equipment, net $ 6,090 $ 3,993

Depreciation and amortization expense was $825,000 and $606,000 for the years ended April 30, 2020 and 2019 , respectively.

Depreciation and amortization expense was $ 1.2 million and $ 825,000 for the years ended April 30, 2021 and 2020, respectively.

Depreciation and amortization expense, excluding expense recorded under finance leases, was $ 925,000 and $ 683,000 for the twelve months ended April 30, 2021 and 2020.

As of April 30, 2020 and 2019, property, plant and equipment included gross assets held under finance leases of $343,000 and $366,000 , respectively.

As of April 30, 2021 and 2020, property, plant and equipment included gross assets held under finance leases of $ 343,000 .

Related depreciation expense for these assets was $ 124,000 and $ 142,000 for the years ended April 30, 2021 and 2020.

As of April 30, 2020, assets in progress includes approximately $300,000 of capitalized software development costs.

During the year ended April 30, 2020, specifically during the quarter ended October 31, 2019, the Company traded in and disposed of a $ 235,000 leased asset that was previously included in the laboratory equipment category.

At the time of disposal, the accumulated depreciation related to that asset was written off in the amount of $ 127,000 (see also paragraph below).

As of January 31, 2020, the remaining leased asset included in the laboratory equipment category was fully depreciated resulting in a net balance of nil.

As of January 31, 2020, the remaining leased asset included in the laboratory equipment category was fully depreciated resulting in a net balance of nil from that point forward.

Capitalized software development costs under a hosting arrangement

The Company accounts for the cost of computer software obtained or developed for internal use as well as the software development and implementation costs associated with a hosting arrangement ("internal-use software") that is a service contract in accordance and with ASC 350, Intangibles - Goodwill and Other ("ASC-350").

We capitalize certain costs in the

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development of our internal-use software when the preliminary project stage is completed and it is probable that the project itself will be completed and the software will perform as intended.

These capitalized costs include personnel and related expenses for employees and costs of third-party consultants who are directly associated with and who devote time to these internal-use software projects.

Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended purpose.

Costs incurred for significant upgrades, increased functionality, and enhancements to the Company's internal-use software solutions are also capitalized.

Costs incurred for training, maintenance, and minor modifications are expensed as incurred.

Capitalized software development costs are amortized using the straight-line method over an estimated useful economic life of three years .

During the year ended April 30, 2020, the Company began to capitalize development and implementation costs in accordance with accounting guidance for its Lumin Bioinformatics platform ("Lumin").

Lumin is the Company's new oncology data-driven software program and data tool which is classified as Software as a Service (SaaS).

These capitalized costs represent salaries, including direct payroll-related costs, certain software development consultant expenses and molecular sequencing programming costs incurred in the engineering and coding of the software development.

As of April 30, 2020, development was not yet complete and, as such, the platform was not placed into service or made available for sale.

Therefore, these costs were classified as assets in progress in the amount of $ 315,000 at April 30, 2020.

After additional development during the first quarter of fiscal 2021, the initial version of the Lumin platform was launched, at which time initial capitalization ceased and amortization commenced.

The total Lumin asset was placed into service as of July 31, 2020 in the gross amount of $ 484,000 .

Depreciation and amortization related to this asset was $ 134,000 for the year ended April 30, 2021.

During the second quarter ended October 31, 2021 and through the end of fiscal 2021, the Company continued to develop increased functionality, expand product design and usability, and add enhancements to the Lumin platform.

In accordance with accounting guidance, these costs were capitalized, and as of April 30, 2021, were not yet placed into service or made available for sale.

This developmental work does not render the initial released version to be obsolete or diminished in value but, rather, adds to the base level of the existing platform.

Total costs included in assets in progress related to these capitalized enhancements and additional functionality as of April 30, 2021 are $ 991,000 .

These developments will be placed into service and made available for sale during fiscal 2022.

Finance Lease

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The lease had costs of approximately $ 231,000 , at inception, through November 2020.

This lease expires December 2020.

The current monthly finance lease payment is approximately $19,000 .

The future minimum lease payments remaining under this finance lease at April 30, 2020 are $135,000 .

The present value of minimum future obligations is calculated based on interest rate of 4.75% .

Depreciation and amortization expense related to this finance lease was $88,500 for the year ended April 30, 2020.

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This lease expired December 2020.

Prior to expiration, the monthly finance lease payment was approximately $ 19,000 .

The future minimum lease payments remaining under this finance lease at April 30, 2021 and 2020 were zero are $ 135,000 , respectively.

The present value of minimum future obligations was calculated based on interest rate of 4.75 %.

Depreciation and amortization expense related to this finance lease was $ 124,000 and $ 88,500 for the years ended April 30, 2021 and 2020, respectively.

Revenue from Contracts with Customers

Oncology Services Revenue

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-19, Revenue from Contracts with Customers (Topic 606) which was added to the FASB's Accounting Standards Codification as ASC 606.

The Company adopted ASC 606 on May 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption.

The reported results for the twelve months ended April 30, 2020 and 2019 reflect the application of ASC 606.

In accordance with ASC 606, revenue is now recognized when, or as, a customer obtains control of promised services.

The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers.

Under ASC 606, revenue is recognized when, or as, a customer obtains control of promised services.

The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services.

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A performance obligation is a promise (or a combination of promises) in a contract to transfer distinct goods or services to a customer and is the unit of accounting under ASC 606 for the purposes of revenue recognition.

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The Company accounts for amendments as a separate contract as they meet the criteria under ASC 606-10-25-12.

Other TOS revenue represents services provided to the pharmaceutical and biotechnology companies.

The Company does not consider these services part of their core product offerings.

Other TOS revenue represents additional services provided to the Company's pharmaceutical and biotechnology customers, specifically flow cytometry services and SaaS provided via our Lumin Bioinformatics software.

The following table represents disaggregated revenue for the twelve months ended April 30, 2021 and 2020:

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Total oncology services revenue $ 41,040 $ 32,123

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Contract Balances

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Significant Customers

For the year ended April 30, 2020 , none of our customers accounted for more than 10.0% of our total revenue.

For the year ended April 30, 2019 , one of our customers accounted for more than 10.0% of our total revenue in the amount of $2.9 million , or 10.7% .

The revenue from this customer is part of the TOS business and was captured in the consolidated oncology services revenue line item within the statement of operations.

For the years ended April 30, 2021 and 2020, none of our customers accounted for more than 10.0% of our total revenue.

As of April 30, 2021 and 2020, none of our customers accounted for more than 10.0% of our total accounts receivable balance.

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Commitments and Contingencies

In December 2019, a novel strain of coronavirus, COVID-19, was first identified in Wuhan, China.

This virus continues to spread globally and, as of July 2020, has spread to over 200 countries, including the United States.

The spread of COVID-19 from China to other countries has resulted in the World Health Organization declaring the outbreak of COVID-19 as a “pandemic,” or a worldwide spread of a new disease, on March 11, 2020.

Many countries around the world have imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus.

Employers are also required to increase, as much as possible, the capacity and arrangement for employees to work remotely.

In addition, on March 11, 2020, the President of the United States issued a proclamation to restrict travel to the United States from foreign nationals who have recently been in certain European and Latin American countries.

Although, to date, these restrictions have not impacted our operations, the effect on our business, from the spread of COVID-19 and the actions implemented by the governments of the the United States and elsewhere across the globe, may worsen over time.

Any outbreak of contagious diseases, or other adverse public health developments, could have a material and adverse effect on our business operations.

These could include disruptions or restrictions on our ability to travel, pursue partnerships and other business transactions, receive shipments of biologic materials, as well as be impacted by the temporary closure of the facilities of suppliers.

The spread of an infectious disease, including COVID-19, may also result in the inability of our suppliers to deliver supplies to us on a timely basis.

In addition, health professionals may reduce staffing and reduce or postpone meetings with clients in response to the spread of an infectious disease.

Though we have not yet experienced such events, if they would occur, they could result in a period of business disruption, and in reduced operations, any of which could materially affect our business, financial condition and results of operations.

However, as of the date of this Annual Report on Form 10-K, we have not experienced a material adverse effect on our business nor the need for reduction in our work force;

and, currently, and we do not expect any material impact on our long-term activity.

The extent to which COVID-19 impacts our business will depend on future developments which are highly uncertain and cannot be predicted, including, but not limited to, new information which may emerge concerning the increased severity of COVID-19, the actions to contain COVID-19, or treat its impact.

Legal Matters

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Registration Payment Arrangements

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The Company has entered into an Amended and Restated Registration Rights Agreement in connection with the March 2015 Private Placement.

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In addition, under certain agreements, for a limited period of time, the Company is subject to royalty payments if the licensed tumor models are used for sale in our TOS business, ranging from 2 % to 12.5 % of the contract price after recouping certain initiation costs.

As of April 30, 2020 , no royalties have been paid or accrued.

Some of these arrangements also set forth an annual minimum royalty due regardless of tumor models used for sale.

For the years ended April 30, 2021 and 2020, we have paid or accrued approximately $ 127,000 and $ 128,000 related to these royalty arrangements, respectively.

Stock-based Payments

Stock-based compensation in the amount of $ 598,000 and $ 600,000 was recognized for years ended April 30, 2021 and 2020, respectively.

Included in stock-based compensation expense for the twelve months ended April 30, 2020 and April 30, 2019 under "general and administrative" line item is nil and $6,000 , respectively related to the issuance of common stock as compensation for services performed.

Stock-based compensation costs were recorded as follows (in thousands):

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2008 Equity Incentive Plan

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The Company has previously granted (i) Non-statutory Stock Options;

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however, it is ultimately measured at the price of the Company’s common stock or the fair value of stock options using the Black-Scholes valuation model on the date that the commitment for performance by the non-employee consultant has been reached or performance is complete, which is generally the vesting date of the award.

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Director Compensation Plan

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Risk-free interest rates 0.1 % - 0.5 %

1.3 % - 1.8 %

Volatility 70 % - 75 %

Dividend yield — %

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The Company’s stock options activity and related information as of and for the years ended April 30, 2021 and 2020 is as follows:

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Employees Directors

Employees Total Weighted

Price Weighted

Life (Years) Aggregate

Outstanding, May 1, 2020 43,332 2,228,326 2,271,658 $ 3.23 5.0 $ 10,663,000

Granted — 135,834 135,834 9.24 7.3 $ 259,000

Exercised ( 1,160 ) ( 686,178 ) ( 687,338 ) 2.33

Canceled ( 923 ) ( 47,751 ) ( 48,674 ) 6.03

Forfeited — ( 12,000 ) ( 12,000 ) 7.48

Expired ( 5,834 ) — ( 5,834 ) 10.80

Outstanding, April 30, 2021 35,415 1,618,231 1,653,646 3.96 5.4 $ 11,384,000

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Vested as of April 30, 2021 9,584 1,323,270 1,332,854 3.34 4.8 $ 9,995,000

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Employees Directors

Employees Total Weighted

Price Weighted

Life (Years) Aggregate

Outstanding, May 1, 2019 50,000 2,373,626 2,423,626 $ 3.19 5.3 $ 14,557,000

Granted — 229,833 229,833 5.33 8.1 544,000

Exercised — ( 248,495 ) ( 248,495 ) 2.31

Canceled — ( 11,824 ) ( 11,824 ) 7.96

Forfeited — ( 44,813 ) ( 44,813 ) 7.85

Expired ( 6,668 ) ( 70,001 ) ( 76,669 ) 8.04

Outstanding, April 30, 2020 43,332 2,228,326 2,271,658 3.23 5.0 $ 10,663,000

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Vested as of April 30, 2020 17,501 1,926,117 1,943,618 2.83 4.5 $ 9,898,000

On June 30, 2017, the Board of Directors extended the expiration terms of a previous employee's vested grants to November 2018.

As a result of this modification, the Company had an additional stock option expense of $56,529 , which was expensed under the "General and Administrative" line item on the income statement for the twelve months ended April 30, 2019.

Stock Purchase Warrants

As of April 30, 2020 , the Company had zero warrants outstanding for the purchase of shares of its common stock, as all those that were exercisable as of April 30, 2019 were either exercised or expired by March 2020.

As of April 30, 2021 and 2020, the Company had zero warrants outstanding for the purchase of shares of its common stock, as all those that were exercisable as of April 30, 2019 were either exercised or expired by March 2020.

For the year ending April 30, 2020, the Company received cash proceeds related to the exercise of these warrants of approximately $ 3.9 million.

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Approximately 161,000 shares noted as exercised below were done so via a cash-less exercise basis.

Outstanding, May 1, 2019

Outstanding, April 30, 2020

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Shares Weighted

Price Weighted

Life (Years) Aggregate

Outstanding, May 1, 2019 1,671,440 $ 6.20 0.9 $ 5,730,000

Granted — — — —

Exercised ( 858,695 ) 5.62 — 10,045,000

Forfeited ( 760,601 ) 5.76 — 8,587,000

Expired ( 52,144 ) 4.85 — 700,000

Outstanding, April 30, 2020 — $ — — $ —

On June 15, 2016, the Company closed a public offering ("The June 2016 Public Offering") of 2,000,000 registered shares of its common stock at an offering price of $2.25 per share.

In addition, the underwriter exercised a partial exercise of the over-allotment option granted to the underwriter to purchase an additional 258,749 shares of its common stock at the public offering price.

All of the shares were offered by the Company.

The net proceeds from The June 2016 Public Offering, including the partial exercise of the over-allotment option, was $4.3 million , after deducting the underwriting discount and offering-related expenses of $742,000 .

The Company used the net proceeds of this offering for research and development to grow the TumorGraft platform, and the balance of the net proceeds for working capital and general corporate purposes.

For the year ended April 30, 2020 , the Company did no t issue any common stock for consulting services.

For the year ended April 30, 2019 , the Company issued a total of 5,462 shares of common stock valued at $20,600 in consideration for consulting services, approximately $14,600 of which was accrued for at April 30, 2019 .

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Provision for Income Taxes

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Year Ended April 30, 2021

Federal State Foreign Total

Current $ — $ 13 $ 62 $ 75

Total $ — $ 13 $ 62 $ 75

Year Ended April 30, 2020

Federal State Foreign Total

Current $ — $ 3 $ 127 $ 130

Total $ — $ 3 $ 127 $ 130

A reconciliation between the Company’s effective tax rate and the United States statutory tax rate for the years ended April 30, 2021 and 2020 is as follows:

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Change in valuation allowance ( 24.3 ) ( 25.2 )

Changes in tax rates

Income tax expense 17.2 % ( 6.6 ) %

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Accrued liabilities $ 232 $ 77

Right of use, net asset/liability 271 226

Depreciation and amortization ( 206 ) ( 175 )

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class life changes to qualified improvements (in general, from 39 years to 15 years);

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the ability to carry back net operating losses incurred from tax years 2018 through 2020 up to the five preceding tax years.

and the ability to carry back net operating losses incurred from tax years 2018 through 2020 up to the five preceding tax years.

The Company has evaluated the new tax provisions of the CARES Act and determined the impact to be either immaterial or not applicable.

Management has evaluated the available evidence about future tax planning strategies, taxable income, and other possible sources of realization of deferred tax assets and has established a full valuation allowance against its net deferred tax assets as of April 30, 2021 and 2020.

For the years ended April 30, 2020 and 2019, the Company recorded a valuation allowance of $15.4 million and $15.0 million , respectively.

For the years ended April 30, 2021 and 2020, the Company recorded a valuation allowance of $ 15.3 million.

As of April 30, 2021 and 2020, the Company’s estimated U.S.

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The following table indicates the changes to the Company’s uncertain tax positions for the period and years ended April 30, 2021 and 2020 in thousands:

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Year Ended April 30,

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Balance, end of year $ 181 $ 178

As of April 30, 2020 the above amount of $178,000 was included in other long-term liabilities.

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As of April 30, 2021 and 2020, the above amounts of $ 181,000 and $ 178,000 were included in other long-term liabilities.

Earnings Per Share

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The following table reflects the total potential stock-based instruments outstanding at April 30, 2021 and 2020 that could have an effect on the future computation of dilution per common share.

These figures were not included in the above calculation as, to do so, would be antidilutive:

Year Ended April 30

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Consulting Services

For both years ended April 30, 2020 and 2019 , the Company paid a member of its Board of Directors $72,000 for consulting services unrelated to his duties as a board member.

During the years ended April 30, 2020 and 2019 , the Company paid another board member $48,000 and $73,000 , respectively, for consulting services unrelated to his duties as a board member.

All of the amounts paid to these related parties have been recognized in expense in the period the services were performed.

In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases.

The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months.

Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing,

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and uncertainty of cash flows arising from leases.

For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

Effective May 1, 2019, the Company accounts for its leases under Topic 842 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption.

For both years ended April 30, 2021 and 2020, the Company paid a member of its Board of Directors $ 54,000 and $ 72,000 for consulting services unrelated to his duties as a board member.

During the years ended April 30, 2021 and 2020, the Company paid another board member $ 17,000 and $ 48,000 , respectively, for consulting services unrelated to his duties as a board member.

All of the amounts paid to these related parties have been recognized in expense in the period the services were performed.

The Company accounts for its leases under ASC 842.

Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet as both an operating lease ROU asset and operating lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate.

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The Company has determined that no material embedded leases exist.

Under Topic 842, the Company determined if an arrangement is a lease at inception.

Under ASC 842, the Company determines if an arrangement is a lease at inception.

ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term.

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The adoption of the new guidance resulted in the recognition of an operating ROU asset of $3.2 million , net of deferred rent of $900,000 and an operating lease liability of $4.1 million as of May 1, 2019.

The incremental borrowing rate based on the information available at commencement date was 7.25% .

The weighted average remaining lease term and the weighted average discount rate at the adoption date were 7.68 years and 7.25% , respectively.

The Company continues to account for leases in the prior period financial statements in accordance with ASC Topic 840.

Operating Leases

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• 1330 Piccard Drive Suite 025, Rockville, MD 20850, which consists of laboratory and office space where the Company conducts operations related to its primary service offerings.

The Company executed this lease on January 11, 2017.

The Company executed this lease (the "Original Premises") on January 11, 2017.

The operating commencement date was August 11, 2017.

This lease expires in August 2028 .

The Company recognized $604,000 of rental expense for both fiscal 2020 and 2019 .

On March 30, 2020, the Company executed the first amendment to this lease to expand the existing premises at 1330 Piccard Drive, Suite 025 ("Expansion Premises") to Suites 050 and 104.

This lease originally expired in August 2028.

◦ On March 30, 2020, the Company executed the first amendment to this lease to expand the existing premises at 1330 Piccard Drive, Suite 025 ("Expansion Premises") to add on Suites 050 and 104.

This amendment also extended the current lease term by six months.

The Expansion Premises operating lease commencement date was June 1, 2020 and the lease expires February 28, 2029.

In accordance with ASC 842, "Leases", the Company evaluated the first amendment and also performed a reassessment of the existing lease to determine the impact of the six-month term extension.

The Company did not recognize rental expense under this amendment during fiscal 2020 as the Expansion Premises operating lease commencement date is during fiscal 2021.

Upon the Expansion Premises operating lease commencement date, the Company will recognize an operating ROU asset and related operating lease liability of $3.8 million , each, respectively.

The Company will also recognize an operating ROU asset and related operating lease liability of approximately $118,000 and $125,000 , respectively, related to the extension of the current lease, as well as interest and amortization expense of $7,000 .

910 Clopper Road, Suites 260S and 280S, Gaithersburg, Maryland 20878, which consisted of laboratory and office space where the Company conducted operations related to its primary service offerings.

The Company executed this lease on April 1, 2018 .

The operating commencement date was May 1, 2018 .

The Company transitioned its activities from this location to the New Location, as defined below, and terminated this lease seven days after the commencement date of the New Location.

The Company recognized $0 and $41,000 of rental expense for fiscal 2020 and 2019 , respectively.

1405 Research Boulevard, Suite 125, Rockville, Maryland 20850 (“New Location”), which consists of laboratory and office space where the Company conducts operations related to its primary service offerings.

The Company executed this lease on November 1, 2018 .

The operating commencement date was January 17, 2019 .

This lease expires in April 2024 .

The Expansion Premises operating lease commencement date was June 1, 2020 and, under the amendment, both leases expire February 28, 2029.

◦ In accordance with ASC 842, the Company evaluated the first amendment and also performed a reassessment of the existing lease for Suite 025 to determine the impact of the six-month term extension.

As a result of this assessment, the Company recognized an additional operating ROU asset and related operating lease liability for Suite 025 of $ 118,000 and $ 125,000 , respectively, as well as an incremental net rent expense of $ 8,000 during the three months ended July 31, 2020.

The Company did not recognize the incremental rental expense under this amendment during fiscal 2020 as the Expansion Premises lease commencement date was during fiscal 2021.

◦ Upon the Expansion Premises operating lease commencement date (June 1, 2020), the Company recognized an operating ROU asset and related operating lease liability for Suites 050 and 104 of $ 3.8 million, each, respectively.

◦ For the leases related to the Original and Expansion Premises at Piccard Drive, the Company recognized $ 1,113,000 and $ 604,000 of rental expense for fiscal 2021 and 2020, respectively.

◦ On December 22, 2020, the Company executed the second amendment to this lease to expand the existing premises at 1330 Piccard Drive, Suites 025, 050, and 104 ("Additional Expansion Premises") and add on Suite 201.

The Additional Expansion Premises operating lease commencement date was April 1, 2021 and, under the second amendment, reaffirms that all three leases expire February 28, 2029.

The Company recognized $ 43,000 of rental expense under this lease for fiscal 2021.

CHAMPIONS ONCOLOGY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

recognized $257,000 and $86,000 of rental expense for fiscal 2020 and 2019 , respectively.

The Company terminated this lease on June 30, 2020 and transition its activities from this location to the Expansion Premises, as defined above, during the first quarter of fiscal 2021.

Upon lease termination, the Company will recognize a decrease in the related operating ROU asset and operating lease liability of approximately $850,000 and 926,000 , respectively, as well as a gain on lease termination of $76,000 .

◦ Upon the Additional Expansion Premises operating lease commencement date (April 1, 2021), the Company also recognized an operating ROU asset and related operating lease liability for Suite 201 of $ 3.3 million, each, respectively.

• 1405 Research Boulevard, Suite 125, Rockville, Maryland 20850 (“New Location”), which consisted of laboratory and office space where the Company conducted operations related to its primary service offerings.

The Company executed this lease on November 1, 2018.

The operating commencement date was January 17, 2019.

This lease was set to expire in April 2024.

The Company terminated this lease on June 30, 2020 and transitioned its activities from this location to the Expansion Premises, as defined above, during the first quarter of fiscal 2021.

Upon lease termination, the Company recognized a decrease in the related operating ROU asset and operating lease liability of approximately $ 850,000 and $ 926,000 , respectively, as well as a gain on lease termination of $ 76,000 .

The Company also recognized $ 43,000 and $ 257,000 of rental expense for fiscal 2021 and 2020, respectively.

ROU assets and lease liabilities related to our current operating leases are as follows (in thousands):

April 30, 2020

April 30, 2021 May 1, 2020

Operating lease right-of-use assets, net

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Future minimum lease payments due each fiscal year as follows (in thousands):

The following disclosure as of April 30, 2019 continues to be stated in accordance with ASC 840.

Future minimum lease payments for operating and capital leases at April 30, 2019 were as follows:

Thereafter 7,904

Total $ 21,014

Refer to Note 4, Property and Equipment, for more information on financing leases.

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Subsequent events are defined as those events or transactions that occur after the balance sheet date, but before the financial statements are filed with the Securities and Exchange Commission.

During the fourth quarter of fiscal 2020, the Company executed the first amendment to its operating lease at 1330 Piccard Drive in Rockville, Maryland.

This amendment expands the premises ("Expansion Premises") for which the Company leases laboratory and office space and extends the existing lease by six months to match the term of the Expansion Premises lease.

The Expansion Premises operating lease commencement date is June 1, 2020 and the lease expires February 28, 2029.

In accordance with ASC 842, "Leases", the Company evaluated the first amendment and also performed a reassessment of the existing lease to determine the impact of the six-month term extension.

As of the filing date of this annual report on form 10-K, there are no such subsequent events to disclose.

CHAMPIONS ONCOLOGY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company did not recognize rental expense under this amendment during fiscal 2020 as the Expansion Premises operating lease commencement date is during fiscal 2021.

Upon the Expansion Premises operating lease commencement date, the Company will recognize an operating ROU asset and related operating lease liability of $3.8 million , respectively, related to the Expansion Premises lease.

On June 30, 2020, the Company terminated its operating lease at 1405 Research Boulevard in Rockville, Maryland, where it also leased laboratory and office space, in order to transition its activities from this location to the Expansion Premises, as defined above, during the first quarter of fiscal 2021.

Upon lease termination, the Company will recognize a decrease in the related operating ROU asset and operating lease liability of approximately $850,000 and $926,000 , respectively, as well as a gain on lease termination of $76,000 .

Exhibit Index

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3.2 Amended and Restated Bylaws, as amended (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed May 9, 2017)

Description of Registered Securities *

4.1 Description of Registered Securities (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K filed July 28, 2020)

10.1 Employment Agreement, dated November 5, 2013, between the Company and Ronnie Morris, M.D.

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32.1 Section 1350 Certifications**

XBRL Instance Document.

XBRL Taxonomy Extension Schema Document.

XBRL Taxonomy Extension Calculation Linkbase Document.

XBRL Taxonomy Extension Definition Linkbase Document.

XBRL Taxonomy Extension Label Linkbase Document.

XBRL Taxonomy Extension Presentation Linkbase Document.

101.INS* XBRL Instance Document.

101.SCH* XBRL Taxonomy Extension Schema Document.

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB* XBRL Taxonomy Extension Label Linkbase Document.

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document.

XBRL Taxonomy Extension Label Linkbase Document.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures