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Studies may also include bioinformatics analysis that reveal the differences in the genetic signatures of the tumors that responded to a therapy as compared to the tumors that did not respond.
−Removed: Additionally, we provide computational or experimental support to identify novel therapeutic targets, select appropriate patient populations for clinical evaluation, identify potential therapeutic combination strategies, and develop
−Removed: biomarker hypothesis of sensitivity or resistance.
+Added: Additionally, we provide computational or experimental support to identify novel therapeutic targets, select appropriate patient populations for clinical evaluation, identify potential therapeutic combination strategies, and develop biomarker hypothesis of sensitivity or resistance.
These studies include the use of our in vivo, ex vivo, analytical and computational platforms.
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It will depend on many factors, and will be specific for each target or therapeutic area identified.
+Added: Any expenses associated with this part of our business are research and development and are expensed as incurred.
+Added: We regularly evaluate strategic options to create additional value from our drug discovery business, which may include, but are not limited to, potential spin-out transactions or capital raises.
Results of Operations
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General and administrative 9,117 18.6 6,512 15.9 40.0
−Removed: Goodwill Impairment — — 335 1.0 100.0
Total costs and operating expenses 48,502 98.8 40,674 99.2 19.2
−Removed: Income (loss) from operations $ 366 0.8 % $ (1,921) (6.0) % (119.1) %
+Added: Income from operations $ 607 1.2 % $ 366 0.8 % 65.8 %
Oncology Services Revenue
Oncology services revenue, which is primarily derived from research services, was $49.1 million and $41.0 million, for the years ended April 30, 2022 and 2021, respectively, an increase of $8.1 million, or 19.7%.
−Removed: The increase in revenue is due to
−Removed: increased sales, both in number and size of studies, and the expansion of both our platform and product lines.
−Removed: Additionally, customers are seeking more complex study designs and end point analysis testing, leading to larger contracts, which contributed to revenue growth.
+Added: The increase in revenue was primarily due to the expansion of both our platform and product lines creating additional demand for our services, leading to larger pharmacology study sizes in both our in-vivo and ex-vivo platforms.
Cost of Oncology Services
Cost of oncology services were $23.6 million and $21.4 million for the years ended April 30, 2022 and 2021, respectively, an increase of $2.2 million or 10.2%.
−Removed: For the years ended April 30, 2021 and 2020 , gross margins were 47.7% and 47.1%, respectively.
−Removed: The expense increase was mostly a function of an increase in variable costs in conjunction with the growth in revenue, study volume, and expansion into new services.
−Removed: The increase was primarily from the following expense categories, compensation, lab supply, and outsourced lab service expenses.
−Removed: Gross margin varies based on timing differences between expense and revenue recognition and was pressured by outsourced lab services, in addition to the increase in costs on growing study volume ahead of revenue recognition.
+Added: The increase in cost of oncology services was primarily from an increase in compensation and supply expenses resulting from the larger study sizes, and compensation expense for our SaaS platform.
+Added: These increases were offset by a decrease in outsourced lab services.
+Added: Gross margin was 52% for the twelve months ended April 30, 2022 compared to 48% for the twelve months ended April 30, 2021.
+Added: The improvement in gross margin was the direct result of decreasing the Company’s reliance on outsourcing and leveraging revenue growth over the fixed cost component of cost of sales.
Research and Development
Research and development expense was $9.4 million and $7.2 million for the years ended April 30, 2022 and 2021, respectively, an increase of $2.2 million or 30.3%.
−Removed: The increase is mainly due to the investment in new service capabilities and our discovery programs with the increase coming primarily from compensation and lab supply expenses.
−Removed: Additionally, we incurred costs stemming from our investment in adding valuable data to our platform.
+Added: The increase was primarily due to the investments in new service capabilities and our drug discovery and development programs with the increase coming primarily from compensation and lab supply expenses.
Sales and Marketing
Sales and marketing expense was $6.4 million and $5.5 million for the years ended April 30, 2022 and 2021, respectively, an increase of $0.9 million or 15.6%.
−Removed: The increase is mainly due to compensation expense driven by the continued expansion of our research services business development team and the addition of a SaaS business development team.
+Added: The increase was mainly due to compensation expense.
+Added: Additionally, travel expense increased for our business development team as Covid-19 travel related restrictions eased.
General and Administrative
−Removed: General and administrative expense was $6.5 million and $6.6 million for the years ended April 30, 2021 and 2020, respectively, a decrease of $102,000, or (1.5)%.
+Added: General and administrative expense was $9.1 million and $6.5 million for the years ended April 30, 2022 and 2021, respectively, a decrease of $2.6 million, or 40.0%.
General and administrative expenses were primarily comprised of compensation, insurance, professional fees, IT, and depreciation and amortization expenses.
−Removed: In 2020, the CEO received a one time remuneration for salary not taken in prior years, resulting in the general and administrative expenses decrease in 2021.
−Removed: Excluding the one-time payment, general and administrative expenses increased $650,000 which was used to support the overall infrastructure growth of the company.
−Removed: Goodwill Impairment
−Removed: We recognized an impairment on goodwill of zero and $335,000 for the years ended April 30, 2021 and 2020, respectively.
−Removed: As a result of our annual evaluation of goodwill impairment for the year ended April 30, 2020, the Company determined that the recording of the impairment charge was warranted.
−Removed: This charge was attributable to the expected decline in the Company's POS business operations.
+Added: The general and administrative expenses increase was primarily due to increases in non-cash expenses, compensation and IT expenses for data storage and to support the overall infrastructure growth of the company.
Other Income (Expense)
−Removed: Other income was $71,000 and other expense was $42,000 for the years ended April 30, 2021 and 2020, respectively.
−Removed: Other income for the year ended April 30, 2021 was primarily attributable to a $72,000 gain on operating lease termination.
−Removed: Other expense in the prior year resulted from foreign currency transaction losses and fees offset by a gain on disposal of equipment.
−Removed: Inflation does not have a meaningful impact on the results of our operations.
+Added: Other expense was $24,000 and other income was $71,000 for the years ended April 30, 2022 and 2021, respectively.
+Added: Other expense for the year ended April 30, 2022 resulted primarily from foreign currency transaction losses.
+Added: Other income for the year ended April 30, 2021 was primarily attributable to a $75,000 gain on operating lease termination offset by foreign currency transaction losses.
Liquidity and Capital Resources
Our liquidity needs have typically arisen from the funding of our research and development programs and the launch of new products, working capital requirements, and other strategic initiatives.
−Removed: 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
−Removed: and sales of products and services.
−Removed: For the years ended April 30, 2021 and 2020, the Company had net income of approximately $362,000 and a net loss of $2.1 million, respectively.
+Added: 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.
+Added: For the years ended April 30, 2022 and 2021, the Company had net income of approximately $548,000 and $362,000, respectively.
As of April 30, 2022, the Company had an accumulated deficit of approximately $72.0 million, working capital of $2.2 million and cash of $9.0 million.
−Removed: 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.
+Added: We believe that our cash on hand, together with expected cash flows from operations, are adequate to fund operations through at least August 2023.
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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Cash Flows from Operating Activities
−Removed: Net cash (used in) provided by operating activities was ($1.7) million and $2.9 million for the years ended April 30, 2021 and 2020, respectively.
−Removed: The decrease in cash provided of ($4.6) million relates primarily to an increase in our accounts receivable and prepaid expenses and a decrease in our accounts payable despite the increase in total expenses.
−Removed: The changes in these working capital accounts were in the course of ordinary business operating activities.
+Added: Net cash provided by (used in) operating activities was $6.5 million and ($1.7) million for the years ended April 30, 2022 and 2021, respectively.
+Added: The increase in cash provided was primarily due to improving cash based operational results and an increase in deferred revenue.
+Added: The increase in deferred revenue was primarily driven by cash received upon signing new studies, an indicator of the strength of the Company’s sales pipeline.
+Added: Changes in our working capital accounts were in the ordinary course of business operating activities.
Cash Flows from Investing Activities
Net cash used in investing activities was $2.4 million and $3.2 million for the years ended April 30, 2022 and 2021, respectively.
−Removed: The increase in cash used was for the investment in additional lab equipment and software development.
+Added: The cash used was for the investment in lab and computer equipment and software development.
Cash Flows from Financing Activities
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The preparation of the consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities.
−Removed: Significant estimates of the Company 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.
+Added: Significant estimates of the Company include, among other things, accounts receivable realization, revenue recognition (replacement of licensed tumors), valuation allowance for deferred tax assets, 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.
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Revenue Recognition
−Removed: The Company accounts for revenue under the Financial Accounting Standards Board's (FASB) Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers In accordance with ASC 606, revenue is now recognized when, or as, a customer obtains control of promised services.
+Added: The Company accounts for revenue under the Financial Accounting Standards Board's (FASB) Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers.
+Added: In accordance with ASC 606, revenue is now 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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The Company generally receives compensation based on a predetermined invoicing schedule relating to specific milestones for that contract.
−Removed: In addition, in certain instances a customer contract may include forms of variable consideration such as performance increases or other provisions that can increase or decrease the transaction price.
+Added: In addition, in certain instances a customer contract may include forms of variable consideration such as performance incentives or other provisions that can increase or decrease the transaction price.
This variable consideration is generally awarded upon achievement of certain performance metrics.
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We report cash flows resulting from tax deductions in excess of the compensation cost recognized from those options (excess tax benefits) as financing cash flows when the cash tax benefit is received.
−Removed: Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination.
−Removed: The Company evaluates the carrying value of goodwill annually in connection with the annual budgeting and forecast process and also between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit to which goodwill was allocated to below its carrying amount.
−Removed: Such circumstances could include, but are not limited to:
−Removed: (1) a significant adverse change in legal factors, market conditions, or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator.
−Removed: When evaluating goodwill for impairment, we may first perform an assessment qualitatively whether it is more likely than not that a reporting unit’s carrying amount exceeds its fair value, referred to as a “step zero” approach.
−Removed: Subsequently (if necessary after step zero), an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying value.
−Removed: Under FASB's ASU 2014-02, Topic 350, "Intangibles—Goodwill and Other" goodwill impairment is measured as the excess of the carrying amount of the reporting unit over its fair value.
−Removed: The impairment evaluation test involves comparing the current fair value of each business unit to its carrying value, including goodwill.
−Removed: Fair value is typically estimated using a discounted cash flow analysis, which requires the Company to estimate the future cash flows anticipated to be generated by the business unit being tested for impairment as well as to select a risk-adjusted discount rate to measure the present value of the anticipated cash flows.
−Removed: When determining future cash flow estimates, the Company considers historical results adjusted to reflect current and anticipated operating conditions.
−Removed: The Company estimates cash flows for the business unit over a discrete period (typically four or five years) and the terminal period (considering expected long term growth rates and trends).
−Removed: Estimating future cash flows requires significant judgment by management in such areas as future economic conditions, industry-specific conditions, product pricing, and necessary capital expenditures.
−Removed: 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.
−Removed: We have one reportable segment.
−Removed: The Company assesses goodwill impairment by business unit.
−Removed: Judgments regarding the existence of impairment indicators are based on legal factors, market conditions and operational performance of the businesses.
−Removed: 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.
−Removed: For the year ended April 30, 2021, the Company's annual assessment did not result in any impairment indicators.
−Removed: The Company recognized goodwill impairment for the years ended April 30, 2021 and 2020 of $0 and $335,000, respectively.
−Removed: As of April 30, 2021 and 2020, goodwill was $335,000.
+Added: Recoverability of Capitalized Software Development Costs
+Added: 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
+Added: in accordance and with ASC 350, Intangibles - Goodwill and Other ("ASC-350").
+Added: We capitalize certain costs in the development of our internal-use software when the preliminary project stage is completed and the software has reached the point of technological feasibility.
+Added: Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended purpose and available for sale.
+Added: Capitalized costs are then amortized using the straight-line method over an estimated useful economic life of three years.
+Added: Capitalized software development costs are stated at gross cost less accumulated amortization.
+Added: Recoverability of these capitalized costs is determined at each balance sheet date by comparing the forecasted future revenues from the related product, based on management’s best estimates using appropriate assumptions and projections at the time, to the carrying amount of the capitalized software development costs.
+Added: If the carrying value is determined not to be recoverable from future revenues, an impairment loss is recognized equal to the amount by which the carrying amount exceeds the future revenues.
Accounting for Income Taxes
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As of April 30, 2022 and 2021, we have established a full valuation allowance for all deferred tax assets.
−Removed: As of April 30, 2021 and 2020, we recognized a liability for uncertain tax positions on the balance sheet relative to foreign operations in the amount of $181,000 and $178,000, respectively.
+Added: As of April 30, 2022 and 2021, we recognized a liability for uncertain tax positions on the balance sheet relative to foreign operations in the amount of $181,000.
We do not anticipate any significant unrecognized tax benefits will be recorded during the next 12 months.
Any interest or penalties related to unrecognized tax benefits is recognized in income tax expense.
−Removed: The Company has accrued $3,000 for penalties and interest during the year ended April 30, 2021.
−Removed: In December 2019, the FASB issued ASU 2019-12, Income Taxes (ASC 740) — Simplifying the Accounting for Income Taxes.
−Removed: ASU 2019-12 which modifies ASC 740 to simplify the accounting for income taxes.
−Removed: The ASU removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods.
−Removed: 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.
−Removed: ASU 2019-12 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2020.
−Removed: 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.
+Added: The Company has not accrued penalties or interest during the year ended April 30, 2022.
Accounting Pronouncements Being Evaluated
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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.
+Added: Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (ASC 740) — Simplifying the Accounting for Income Taxes.
1 unchanged sentence
The ASU removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods.
−Removed: 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.
−Removed: ASU 2019-12 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2020.
−Removed: 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.
−Removed: Recently Adopted Accounting Pronouncements
−Removed: In February 2016, the FASB issued ASU No.
−Removed: 2016-02, "Leases", (Topic 842), which required the Company to recognize lease assets and lease liabilities (related to leases previously classified as operating under previous U.S.
−Removed: GAAP) on its consolidated balance sheet for all leases in excess of one year in duration.
−Removed: The ASU was effective for the Company on May 1, 2019.
−Removed: The Company elected to adopt ASU 2016-02 using the modified retrospective method and, therefore, have not recast comparative periods presented in its unaudited consolidated financial statements.
−Removed: As permitted under ASU 2016-02, the Company elected to account for the non-lease components together with the lease components as a single lease component.
−Removed: The Company recorded an operating lease right-of-use ("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.
−Removed: Refer to "Note 12.
−Removed: Leases" for additional information.
−Removed: In January 2017, the FASB issued ASU No.
−Removed: 2017-04, “Intangibles - Goodwill and Other” (Topic 350):
−Removed: Simplifying the Test for Goodwill Impairment (ASU 2017-04).
−Removed: This new standard simplifies how an entity is required to test goodwill for impairment by eliminating a step from the goodwill impairment test.
−Removed: 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.
−Removed: The Company adopted this guidance on May 1, 2019 and it did not have an impact on its consolidated financial statements.
−Removed: In June 2018, the FASB issued ASU 2018-07, "Compensation-Stock Compensation (Topic 718):
−Removed: Improvements to Nonemployee Share-Based Payment Accounting".
−Removed: This ASU expands the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services.
−Removed: Under the new guidance, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost.
−Removed: The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services.
−Removed: The new accounting guidance was effective for the Company on May 1, 2019.
−Removed: The Company early adopted ASU 2018-07 beginning with its financial reporting for the quarter ended January 31, 2019.
−Removed: The adoption did not have a material impact on the Company's consolidated financial statements.
−Removed: 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.
−Removed: 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.
−Removed: The update is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.
−Removed: The Company adopted this guidance on May 1, 2020 and it's impact was captured within its current year consolidated financial statements.
−Removed: 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.
−Removed: ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures.
+Added: The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax
+Added: 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.
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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.