What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-09-12 compared with 2022-03-15 · 130 added, 187 removed, 291 unchanged (52% of the section changed)

28 unchanged sentences

200,000,000 shares authorized;

13,517,941 and 13,414,066 shares issued and outstanding as of January 31, 2022 and April 30, 2021, respectively

13,522,441 shares issued and outstanding as of July 31, 2022 and April 30, 2022, respectively

Additional paid-in capital 81,270 81,064

7 unchanged sentences

Three Months Ended

January 31, Nine Months Ended

2022 2021 2022 2021

Oncology services revenue $ 13,745 $ 11,253

5 unchanged sentences

Total costs and operating expenses 14,029 11,428

Income from operations 830 982 918 1,014

Other income (expense), net ( 32 ) ( 8 ) 11 64

Income before provision for income taxes 798 974 929 1,078

Loss from operations ( 284 ) ( 175 )

Other income (loss) ( 18 ) 17

Loss before provision for income taxes ( 302 ) ( 158 )

Provision for income taxes 17 14

Net income $ 787 $ 959 $ 892 $ 1,035

Net income per common share outstanding

Net loss $ ( 319 ) $ ( 172 )

Net loss per common share outstanding

basic $ ( 0.02 ) $ ( 0.01 )

14 unchanged sentences

Stock-based compensation — — 206 — 206

Issuance of common stock on exercise of stock options 1,000 — 2 — 2

Net loss — — — ( 319 ) ( 319 )

Balance July 31, 2022 13,522,441 $ 14 $ 81,270 $ ( 72,301 ) $ 8,983

Stock-based compensation — — 134 — 134

Issuance of common stock on exercise of stock options 81,078 1 121 — 122

Net income — — — 277 277

Balance October 31, 2021 13,496,144 $ 14 $ 80,482 $ ( 72,425 ) $ 8,071

Stock-based compensation — — 310 — 310

Issuance of common stock on exercise of stock options 21,797 — 68 — 68

Net income — — — 787 787

Balance January 31, 2022 13,517,941 $ 14 $ 80,860 $ ( 71,638 ) $ 9,236

Common Stock Additional

6 unchanged sentences

Issuance of common stock on exercise of stock options 1,000 — 2 — 2

Net income — — — 75 75

Net loss — — — ( 172 ) ( 172 )

Balance July 31, 2021 13,415,066 $ 13 $ 80,227 $ ( 72,702 ) $ 7,538

Stock-based compensation — — 85 — 85

Issuance of common stock on exercise of stock options 640,657 — 1,294 — 1,294

Net income — — — 1 1

Balance October 31, 2020 13,368,545 $ 13 $ 79,477 $ ( 72,597 ) $ 6,893

Stock-based compensation — — 232 — 232

Issuance of common stock on exercise of stock options 21,627 — 2 — 2

Net income — — — 959 959

Balance January 31, 2021 13,390,172 $ 13 $ 79,711 $ ( 71,638 ) $ 8,086

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

2 unchanged sentences

(Dollars in Thousands)

Nine Months Ended

Three Months Ended

Operating activities:

Net income $ 892 $ 1,035

Adjustments to reconcile net income to net cash provided by operating activities:

Net loss $ ( 319 ) $ ( 172 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Stock-based compensation 206 280

1 unchanged sentence

Net gain on disposal of equipment — ( 4 )

Gain on termination of operating lease — ( 75 )

Operating lease right-of use assets 269 245

3 unchanged sentences

Prepaid expenses and other current assets 186 93

Other long term assets — ( 70 )

Accounts payable ( 331 ) 1,372

4 unchanged sentences

Deferred revenue ( 186 ) ( 775 )

Net cash provided by operating activities 5,701 299

Net cash (used in) provided by operating activities ( 195 ) 216

Investing activities:

Purchase of property and equipment ( 754 ) ( 907 )

Refund of security deposit — 92

Net cash used in investing activities ( 754 ) ( 907 )

1 unchanged sentence

Proceeds from exercise of options — 2

Finance lease payments — ( 173 )

Net cash provided by financing activities — 2

Increase (decrease) in cash 4,014 ( 913 )

Decrease in cash ( 949 ) ( 689 )

Cash at beginning of period 9,007 4,687

Cash at end of period $ 8,058 $ 3,998

Non-cash investing activities:

Right-of-use assets obtained in exchange for operating lease liabilities $ 205 $ 3,872

Equipment acquired in accounts payable 79 —

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

2 unchanged sentences

Organization, Use of Estimates and Basis of Presentation

Champions Oncology, Inc.

(the “Company”) is engaged in creating transformative technology solutions to be utilized in oncology drug discovery and development.

This technology includes proprietary in-vivo, ex-vivo and biomarker platforms, unique oncology software solutions and computational-based discovery platforms.

Utilizing its TumorGraft Technology Platform ("The Platform"), a comprehensive bank of unique, well characterized models, the Company provides select services to pharmaceutical and biotechnology companies seeking personalized approaches to drug development.

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

The Company’s Software as a Service business is centered around a proprietary software platform and data tool, Lumin Bioinformatics ("Lumin”), which contains comprehensive information derived from our research services and clinical studies.

Lumin leverages Champions’ large datacenter coupled with analytics and artificial intelligence to provide a robust tool for computational cancer research.

Insights developed using Lumin can provide the basis for biomarker hypotheses, reveal potential mechanisms of therapeutic resistance, and guide the direction of additional preclinical evaluations.

The Company’s drug discovery and development business leverages the computational and experimental capabilities within its platforms.

Their discovery strategy utilizes our rich and unique datacenter, coupled with artificial intelligence and other advanced computational analytics, to identify novel therapeutic targets.

The use of its proprietary experimental platforms is then deployed to rapidly validate these targets for further drug development efforts.

Champions Oncology, Inc is a technology-enabled research organization engaged in creating transformative technology solutions to be utilized in drug discovery and development.

The Company's research center operates in both regulatory and non-regulatory environments and consists of a comprehensive set of computational and experimental research platforms.

Its pharmacology, biomarker, and data platforms are designed to facilitate drug discovery and development at lower costs and increased speeds.

The Company has three operating subsidiaries:

Champions Oncology (Israel), Limited, Champions Biotechnology U.K., Limited, and Champions Oncology, S.R.L.

For the three and nine months ended January 31, 2022 and 2021, there were no revenues earned by these subsidiaries.

For the three months ended July 31, 2022 and 2021, there were no revenues earned by these subsidiaries.

The Company’s foreign subsidiaries functional currency is the U.S.

12 unchanged sentences

The Company considers only those investments which are highly liquid, readily convertible to cash, and with original maturities of three months or less to be cash equivalents.

As of January 31, 2022 and April 30, 2021 the Company had no cash equivalents.

The Company's 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.

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

For the nine months ended January 31, 2022, the Company had net income of approximately $ 892,000 and cash provided by operations of $ 5.7 million.

As of January 31, 2022, the Company had an accumulated deficit of approximately $ 71.6 million, working capital of $ 2.3 million and cash of $ 8.7 million.

The Company believes that cash on hand, together with expected net positive cash provided by operations for fiscal year 2022, are adequate to fund operations through at least 12 months from the filing of this 10-Q.

However, should revenue expectations not materialize, the Company has cost reduction strategies that could be implemented without disrupting the business or restructuring the Company.

As of July 31, 2022 and April 30, 2022 the Company had no cash equivalents.

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.

Recently, we have met these cash requirements through our cash on hand, working capital management, and sales of products and services.

In the past, we have also received proceeds from certain private placements and public offerings of our securities.

For the three months ended July 31, 2022, the Company had a net loss of approximately $ 319,000 and cash used in operations of $ 195,000 .

As of July 31, 2022, the Company had an accumulated deficit of approximately $ 72.3 million, working capital of $ 1.8 million and cash of $ 8.1 million.

We believe that our cash on hand, together with expected net positive cash provided by operations for fiscal year 2023, are adequate to fund operations through at least 12 months from the filing of this 10-Q.

However, should our revenue expectations not materialize, we believe we have cost reduction strategies that could be implemented without disrupting the business or restructuring the Company.

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.

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

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

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, if applicable, 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 the lease commencement date in determining the present value of lease payments.

Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use ("ROU") asset is amortized over the lease term.

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

Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term.

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.

Earnings Per Share

Basic net income or loss per share is computed by dividing the net income or loss for the period by the weighted-average number of shares of common stock outstanding during the period.

Diluted net income per share is computed by dividing the net income or loss for the period by the weighted-average number of shares of common stock plus dilutive potential common stock considered outstanding during the period.

Such dilutive shares consist of incremental shares that would be issued upon exercise of the Company’s common stock purchase warrants and stock options.

Three Months Ended

January 31, Nine Months Ended January 31,

2022 2021 2022 2021

Basic and diluted net income per share computation (dollars in thousands):

Net income attributable to common stockholders $ 787 $ 959 $ 892 $ 1,035

Weighted Average common shares – basic 13,500,444 13,371,613 13,170,880 12,974,470

Basic net income per share $ 0.06 $ 0.07 $ 0.07 $ 0.08

Diluted income per share computation:

Net income attributable to common stockholders $ 787 $ 959 $ 892 $ 1,035

Net income available to common stockholders $ 787 $ 959 $ 892 $ 1,035

Weighted Average common shares 13,500,444 13,371,613 13,170,880 12,974,470

Incremental shares from assumed exercise of stock options 886,565 1,135,542 1,007,202 1,535,810

Adjusted weighted average share – diluted 14,387,009 14,507,155 14,178,082 14,510,280

Diluted net income per share $ 0.05 $ 0.07 $ 0.06 $ 0.07

The following table reflects the total potential share-based instruments outstanding at January 31, 2022 and 2021 that could have an effect on the future computation of dilution per common share, had their effect not been anti-dilutive:

Diluted net income per share is computed by dividing the net income for the period by the weighted-average number of shares of common stock plus dilutive potential common stock considered outstanding during the period.

Such dilutive shares consist of incremental shares that would be issued upon exercise of the Company’s common stock options.

As of July 31, 2022 and 2021, all of the Company's potential common stock is considered anti-dilutive.

The following table reflects the total potential share-based instruments outstanding at July 31, 2022 and 2021 that could have an effect on the future computation of dilution per common share, had their effect not been anti-dilutive:

Total common stock equivalents 1,722,155 1,734,428

Deferred income taxes have been provided to show the effect of temporary differences between the recognition of expenses for financial and income tax reporting purposes and between the tax basis of assets and liabilities, and their reported amounts in the consolidated financial statements.

In assessing the realizability of deferred tax assets, the Company assesses the likelihood that deferred tax assets will be recovered through tax planning strategies or from future taxable income, and to the extent that recovery is not likely or there is insufficient earnings history, a valuation allowance is established.

The Company's ability to utilize net operating loss (“NOL”) carryforwards to offset future taxable income would be limited if the Company had undergone or were to undergo an “ownership change” within the meaning of Section 382 of the Internal Revenue Code (the “IRC”).

In assessing the realizability of deferred tax assets, the Company assesses the

likelihood that deferred tax assets will be recovered through tax planning strategies or from future taxable income, and to the extent that recovery is not likely or there is insufficient earnings history, a valuation allowance is established.

The Company's ability to utilize net operating losses (“NOL”) carryforwards to offset future taxable income would be limited if the Company had undergone or were to undergo an “ownership change” within the meaning of Section 382 of the Internal Revenue Code (the “IRC”).

The Company adjusts the valuation allowance in the period management determines it is more likely than not that deferred tax assets will or will not be realized.

Changes in valuation allowances from period to period are included in the tax provision in the period of change.

As of January 31, 2022 and April 30, 2021, 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.

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.

Tax positions include, but are not limited to, the following:

• An allocation or shift of income between taxing jurisdictions;

• The characterization of income or a decision to exclude reportable taxable income in a tax return;

• A decision to classify a transaction, entity or other position in a tax return as tax exempt.

As of July 31, 2022 and April 30, 2022, 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.

The Company reflects tax benefits only if it is more likely than not that the Company will be able to sustain the tax position, based on its technical merits.

If a tax benefit meets this criterion, it is measured and recognized based on the largest amount of benefit that is cumulatively greater than 50% likely to be realized.

The Company recorded $ 181,000 of liabilities related to uncertain tax positions relative to one of its foreign operations as of January 31, 2022 and April 30, 2021.

The Company recorded $ 181,000 of liabilities related to uncertain tax positions relative to one of its foreign operations as of July 31, 2022 and April 30, 2022.

The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

The Company accrued $ 3,000 for interest and penalties on its consolidated balance sheets as of January 31, 2022 and April 30, 2021.

The Company did no t recognize interest or penalties on its consolidated statements of operations during the three or nine-

month periods ended January 31, 2022 and 2021.

The Company did no t recognize interest or penalties on its consolidated statements of operations during the three-month periods ended July 31, 2022 and 2021.

The Company does no t anticipate unrecognized tax benefits will be recorded during the next 12 months.

The provision for income taxes for the three months ended January 31, 2022 and 2021 was $ 11,000 and $ 15,000 , respectively, and for the nine months ended January 31, 2022 and 2021 was $ 37,000 and $ 43,000 , respectively, mainly attributable to taxable income earned in Israel relating to transfer pricing.

The provision for income taxes for the three months ended July 31, 2022 and 2021 was $ 17,000 and $ 14,000 , respectively, mainly attributable to taxable income earned in Israel and/or Italy relating to transfer pricing.

Revenue Recognition

8 unchanged sentences

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.

The majority of the Company's revenue arrangements are service contracts that are completed within a year or less.

There are a few contracts that range in duration between 1 and 3 years.

Substantially all of the Company's performance obligations, and associated revenue, are transferred to the customer over time.

Most of the Company's contracts can be terminated by the customer without cause.

In the event of termination, the Company's contracts provide that the customer pay the Company for services rendered through the termination date.

The Company generally receives compensation based on a predetermined invoicing schedule relating to specific milestones for that contract.

Amendments to contracts are common.

The Company evaluates each amendment which meets the criteria of a contract modification under ASC 606.

Each modification is further evaluated to determine whether the contract modification should be accounted for as a separate contract or as a continuation of the original agreement.

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

Pharmacology Study and Other Services

19 unchanged sentences

Neither the Company nor its customers view such upfront payments and contracted payment schedules as a means of financing.

Unbilled services primarily arise from the timing of payment terms and when an input method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer.

Unbilled services primarily arise when the revenue recognized exceeds the amount billed to the customer.

Such situations occur due to divergences between revenue recognition and the invoicing milestones which are based on predetermined payment terms.

Deferred revenue consists of unearned payments received in excess of revenue recognized.

2 unchanged sentences

Accounting Pronouncements Being Evaluated

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

In June 2016, the FASB issued Accounting Standards Update ("ASU") No.

2016-13, "Financial Instruments - Credit Losses".

5 unchanged sentences

The Company is currently assessing the impact of this update on our consolidated financial statements and do not anticipate a significant impact.

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes.

The ASU enhances and simplifies various aspects of the income tax accounting guidance in ASC Topic 740 and removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods.

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.

The Company adopted this ASU on May 1, 2021 and it did not have an impact on the Company's consolidated financial statements.

Accounts Receivable, Unbilled Services and Deferred Revenue

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

January 31, 2022 April 30, 2021

July 31, 2022 April 30, 2022

Accounts receivable $ 5,619 $ 6,037

4 unchanged sentences

Deferred revenue was as follows (in thousands):

January 31, 2022 April 30, 2021

July 31, 2022 April 30, 2022

Deferred revenue $ 10,885 $ 11,071

2 unchanged sentences

Oncology Services Revenue

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

The majority of the Company's revenue arrangements are service contracts that are complete within a year or less.

There are a few contracts that range in duration between 1 and 3 years.

Substantially all of the Company's performance obligations, and associated revenue, are transferred to the customer over time.

Most of the Company's contracts can be terminated by the

customer without cause.

In the event of termination, the Company's contracts provide that the customer pay the Company for services rendered through the termination date.

The Company generally receives compensation based on a predetermined invoicing schedule relating to specific milestones for that contract.

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.

This variable consideration is generally awarded upon achievement of certain performance metrics.

For the purposes of revenue recognition, variable consideration is assessed on a contract-by-contract basis and the amount to be recorded is estimated based on the assessment of the Company's anticipated performance and consideration of all information that is reasonably available.

Variable consideration is recognized as revenue if and when it is deemed probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved in the future.

Amendments to contracts are common.

The Company evaluates each amendment which meets the criteria of a contract modification under ASC 606.

Each modification is further evaluated to determine whether the contract modification should be accounted for as a separate contract or as a continuation of the original agreement.

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

Other TOS (Translational Oncology Solutions) 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.

Revenues from one pharmaceutical services and Other TOS revenue customer represent approximately 11 % and 10 % of the company’s total consolidated revenues for the three months ended January 31, 2022 and 2021, respectively, and 14 % and 10 % of the company's total consolidated revenue for the nine months ended January 31, 2022 and 2021, respectively.

The following tables represents disaggregated revenue for the three and nine months ended January 31, 2022 and 2021:

The following tables represents disaggregated revenue for the three months ended July 31, 2022 and 2021:

Three Months Ended

January 31, Nine Months Ended January 31,

2022 2021 2022 2021

Pharmacology services $ 12,756 $ 10,703

2 unchanged sentences

Total oncology services revenue $ 13,745 $ 11,253

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 ("Lumin").

Contract Balances

5 unchanged sentences

Property and Equipment

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

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

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 .

8 unchanged sentences

Total property and equipment 13,803 12,711

Accumulated depreciation and amortization ( 5,008 ) ( 3,956 )

Accumulated depreciation ( 6,105 ) ( 5,577 )

Property and equipment, net $ 7,698 $ 7,134

Depreciation and amortization expense was $ 396,000 and $ 279,000 for the three months ended January 31, 2022 and 2021, respectively.

Depreciation and amortization expense, excluding expense recorded under the finance lease, was $ 1.1 million and $ 757,000 for the nine months ended January 31, 2022 and 2021, respectively.

As of January 31, 2022 and April 30, 2021, property, plant and equipment included gross assets held under finance leases of $ 343,000 .

Related depreciation expense was approximately $ 0 and $ 18,000 for the three months ended January 31, 2022 and 2021, respectively, and approximately $ 0 and $ 124,000 for the nine months ended January 31, 2022 and 2021, respectively.

Depreciation and amortization expense was $ 528,000 and $ 317,000 for the three months ended July 31, 2022 and 2021, respectively.

Depreciation and amortization expense, excluding expense recorded under finances leases, was $ 499,000 and $ 317,000 for the three months ended July 31, 2022 and 2021, respectively.

As of July 31, 2022 and April 30, 2022, property, plant and equipment included gross assets held under finance leases of $ 1,081,000 and $ 713,000 , respectively.

Related depreciation expense was approximately $ 29,000 and $ 0 for the three months ended July 31, 2022 and 2021, respectively.

Capitalized software development costs under a hosting arrangement

6 unchanged sentences

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

The Company capitalizes development and implementation costs, in accordance with ASC-350, for its Lumin platform.

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

The Company has capitalized development and implementation costs in accordance with accounting guidance for its Lumin platform.

Lumin is the Company's oncology data-driven software program and data tool which operates as Software as a Service.

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.

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.

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

During the second quarter of fiscal 2021 and through the third quarter of fiscal 2022, the Company continued to develop increased functionality, expand product design and usability, and add enhancements and significant upgrades to the Lumin platform.

Capitalized costs are classified as assets in progress during the development process until development is complete and the asset is available for sale.

The initial version of the Lumin platform was launched during fiscal year 2021, at which time initial capitalization ceased and amortization commenced.

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.

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

During the development period, capitalized costs were placed into assets in progress.

During the third quarter of fiscal 2022, these capitalized costs were placed into service as the enhanced version was launched and made available for sale.

The total cost of the enhanced Lumin asset placed into service during the three months ended January 31, 2022 was $ 1.4 million, bringing the total capitalized gross asset investment to $ 1.9 million.

Amortization expense related to this asset was $ 79,000 and $ 40,000 for the three months ended January 31, 2022 and 2021, respectively, and $ 160,000 and $ 93,000 for the nine months ended January 31, 2022 and 2021, respectively.

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

During the third quarter of fiscal year 2022, these capitalized costs were placed into service as the enhanced version was launched and made available for sale.

The total cost of the Lumin asset placed into service and available for sale was $ 1.9 million.

As of July 31, 2022, the carrying value of the asset net of accumulated amortization was $ 1.3 million.

Amortization expense related to this asset was $ 157,000 and $ 40,000 for the three months ended July 31, 2022 and 2021, respectively.

Finance Lease

In December 2019, the Company entered into a finance lease for laboratory equipment.

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

The lease term expired December 2020.

Depreciation and amortization expense related to this finance lease was zero and $ 53,000 for the three months ended January 31, 2022 and 2021, respectively, and zero and $ 106,000 for the nine-months ended January 31, 2022 and 2021, respectively.

As of January 31, 2022 the asset has been fully depreciated and book value is nil .

During fiscal year 2022, the Company recognized a finance lease for laboratory equipment.

This equipment was obtained as the result of a laboratory supplies purchase commitment with costs of approximately $ 370,000 at inception through December 2025.

Cash payments for this lease are in the form of consideration for purchasing lab supplies under a purchase commitment agreement.

At the commencement of the commitment, the present value of the minimum future obligations of $ 370,000 was calculated based on an interest rate of 3.25 %.

Depreciation and amortization expense related to this finance lease was $ 18,000 and zero for the three months ended July 31, 2022 and 2021, respectively.

During the first quarter of fiscal year 2023, the Company recognized a finance lease for laboratory equipment.

This equipment was obtained as the result of a laboratory supplies purchase commitment with costs of approximately $ 368,000 at inception through June 2027.

Cash payments for this lease are in the form of consideration for purchasing lab supplies under a purchase commitment agreement.

The present value of the minimum future obligations of $ 368,000 was calculated based on an interest rate of 3.5 %.

Depreciation and amortization expense related to this finance lease was $ 11,250 and zero for the three months ended July 31, 2022 and 2021, respectively.

Share-Based Payments

The Company has in place a 2021 Equity Incentive Plan, 2010 Equity Incentive Plan and 2008 Equity Incentive Plan.

In general, these plans provide for stock-based compensation in the form of (i) Non-statutory Stock Options;

(ii) Restricted Stock Awards;

and (iii) Stock Appreciation Rights to the Company’s employees, directors and non-employees.

The plans also provide for limits on the aggregate number of shares that may be granted, the term of grants and the strike price of option awards.

Stock-based compensation expense was recognized as follows (table in thousands):

Three Months Ended

January 31, Nine Months Ended

2022 2021 2022 2021

General and administrative $ 123 $ 171

3 unchanged sentences

Total stock-based compensation expense $ 206 $ 280

The Company has in place a 2021 Equity Incentive Plan and 2010 Equity Incentive Plan ("the Plans").

In general, these plans provide for stock-based compensation to the Company’s employees, directors and non-employees.

The plans also provide for limits on the aggregate number of shares that may be granted, the term of grants and the strike price of option awards.

2021 Equity Incentive Plan

As part of the 2021 Annual Shareholders Meeting, shareholders approved the adoption of the 2021 Equity Incentive Plan (“2021 Equity Plan”).

The purpose of the 2021 Equity Plan is to grant (i) Non-statutory Stock Options;

(ii) Incentive Stock Options;

(iii) Restricted Stock Awards;

and/or (iv) Stock Appreciation Rights (collectively, stock-based compensation) to its employees, directors and non-employees.

Total stock awards under the 2021 Equity Plan shall not exceed 2 million shares of common stock.

Options and Stock Appreciation Rights expire no later than ten years from the date of grant and the awards vest as determined by the Board of Directors.

Options and Stock Appreciation Rights have a strike price not less than 100 % of the fair market value of the common stock subject to the option or right at the date of grant.

As of July 31, 2022, approximately 1.7 million shares were left to issue under this plan.

2010 Equity Incentive Plan

On February 18, 2011, shareholders owning a majority of the issued and outstanding shares of the Company executed a written consent approving the 2010 Equity Incentive Plan (“2010 Equity Plan”).

The purpose of the 2010 Equity Plan is to grant (i) Non-statutory Stock Options;

(ii) Restricted Stock Awards;

and (iii) Stock Appreciation Rights (collectively, stock-based compensation) to its employees, directors and non-employees.

Total stock awards under the 2010 Equity Plan shall not exceed 30 million shares of common stock.

Options and Stock Appreciation Rights expire no later than ten years from the date of grant and the awards vest as determined by the Board of Directors.

Options and Stock Appreciation Rights have a strike price not less than 100 % of the fair market value of the common stock subject to the option or right at the date of grant.

After February 2021, no more shares were available to be issued from this plan.

Stock Option Grants

Black-Scholes assumptions used to calculate the fair value of options granted during the three and nine months ended January 31, 2022 and 2021 were as follows:

Black-Scholes assumptions used to calculate the fair value of options granted during the three months ended July 31, 2022 and 2021 were as follows:

Three Months Ended

January 31, Nine Months Ended

2022 2021 2022 2021

Expected term in years 6

Risk-free interest rates 2.87 %

0.82 %- 1.20 %

0.12 %- 0.39 %

Volatility 62.58 %

65.94 % - 66.21 %

72.64 %- 74.98 %

Dividend yield — % — %

The weighted average fair value of stock options granted during the three months ended January 31, 2022 and 2021 was $ 5.80 , respectively, and, $ 5.56 and $ 5.08 for the nine months ended January 31, 2022 and 2021, respectively.

The Company’s stock options activity for the nine months ended January 31, 2022 was a s follows:

The weighted average fair value of stock options granted during the three months ended July 31, 2022 and 2021 was $ 4.50 and $ 5.33 , respectively.

The Company’s stock options activity for the three months ended July 31, 2022 was a s follows:

Employees Non-

4 unchanged sentences

Granted 78,000 — 78,000 7.57 9.90

Exercised ( 103,875 ) — ( 103,875 ) 2.24

Forfeited ( 7,625 ) — ( 7,625 ) 7.73

1 unchanged sentence

Expired ( 4,584 ) — ( 4,584 ) 5.40

Outstanding, January 31, 2022 1,640,533 40,915 1,681,448 4.54 5.22 $ 6,611,000

Vested and expected to vest as of January 31, 2022 1,640,533 40,915 1,681,448 4.54 5.22 $ 6,611,000

Exercisable as of January 31, 2022 1,288,349 4,584 1,292,933 3.77 4.31 $ 6,057,000

Outstanding, July 31, 2022 1,683,115 39,040 1,722,155 4.64 4.9 $ 7,462,000

Vested and expected to vest as of July 31, 2022 1,683,115 39,040 1,722,155 4.64 4.9 $ 7,462,000

Exercisable as of July 31, 2022 1,380,775 — 1,380,775 4.06 4.1 $ 6,846,000

Operating Leases

1 unchanged sentence

Rent expense for operating leases is recognized on a straight-line basis over the lease term from the lease commencement date through the scheduled expiration date.

Rent expenses totaled $ 469,000 and $ 314,000 for the three months ended January 31, 2022 and 2021, respectively and $ 1.4 million and $ 942,000 for the nine months ended January 31, 2022 and 2021, respectively.

Rent expense totaled $ 467,000 and $ 452,000 for the three months ended July 31, 2022 and 2021, respectively.

The Company considers its facilities adequate for its current operational needs.

1 unchanged sentence

• One University Plaza, Suite 307, Hackensack, New Jersey 07601, which, since November 2011, serves as the Company’s corporate headquarters.

The current lease expires in November 2026.

The Company recognized $ 24,000 of rental costs relative to this lease for three months ended January 31, 2022 and 2021, and $ 70,000 and $ 67,000 the nine months ended January 31, 2022 and 2021, respectively.

The lease was renewed during fiscal year 2022 and expires in November 2026.

The Company recognized $ 21,000 and $ 24,000 of rent expense relative to this lease for the three months ended July 31, 2022 and 2021, respectively.

• 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.

5 unchanged sentences

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

◦ 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.

◦ In accordance with ASC 842, "Leases", 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.

◦ 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 $ 292,000 and $ 290,000 of rental expense for the three months ended January 31, 2022 and 2021, respectively, and $ 881,000 and $ 832,000 for the nine months ended January 31, 2022 and 2021, 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") to add on Suite 201.

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

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

◦ The Company recognized $ 130,000 and zero of rental expense for the three months ended January 31, 2022 and 2021, respectively, and $ 390,000 and zero of rental expense for the nine months ended January 31, 2022 and 2021, respectively, for the Additional Expansion Premises.

• 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 $ 75,000 .

For the three month period ended January 31, 2022 and 2021 there was zero rent expense.

The Company recognized zero and $ 43,000 of rental expense for the nine months ended January 31, 2022 and 2021, respectively.

• VIA LEONE XIII, 14, Milan, Italy, which consists of laboratory and office space where the Company has begun to conduct operations related to its flow cytometry service offerings.

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.

◦ For the leases related to the premises at Piccard Drive, the Company recognized $ 422,000 for the three months ended July 31, 2022 and 2021, respectively.

• VIA LEONE XIII, 14, Milan, Italy, which consists of laboratory and office space where the Company conducts operations related to its flow cytometry service offerings.

The Company executed the lease for its laboratory space in June 2021, and commenced occupancy during the three months ended October 31, 2021.

This lease expires May 2023.

The Company executed the lease for its office space on October 1, 2021.

This lease expires September 2027.

◦ The Company recognized an operating ROU asset and related operating lease liability for the lab and office space of $ 205,000 each, respectively.

◦ The Company recognized rental costs associated with these leases of $ 23,000 and zero for the three months ended January 31, 2022 and 2021, respectively, and $ 58,000 and zero for the nine months ended January 31, 2022 and 2021, respectively.

◦ The Company recognized rent expense associated with these leases of $ 23,000 and zero for the three months ended July 31, 2022 and 2021, respectively.

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

January 31, 2022 April 30, 2021

July 31, 2022 April 30, 2022

Operating lease right-of-use assets, net

2 unchanged sentences

Non-current portion of operating lease liabilities 8,127 8,412

As of January 31, 2022, the weighted average remaining operating lease term and the weighted average discount rate were 6.91 years and 5.73 %, respectively.

As of July 31, 2022, the weighted average remaining operating lease term and the weighted average discount rate were 6.42 years and 5.73 %, respectively.

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

1 unchanged sentence

Thereafter 5,164

Total $ 19,997

Total undiscounted liabilities 18,641

Imputed interest ( 9,415 )

Present value of minimum lease payments $ 9,226

Refer to Note 5, Property and Equipment, for information on financing leases.

3 unchanged sentences

Consulting Services

During the three months ended January 31, 2022 and 2021, the Company paid an affiliate of a board member $ 9,000 and $ 12,000 , respectively, for consulting services unrelated to his duty as a board member.

During the nine months ended January 31, 2022 and 2021, the Company paid this same affiliate $ 27,000 and $ 45,000 , respectively, for consulting services unrelated to his duty as a board member.

During the three months ended January 31, 2022 and 2021, the Company paid an affiliate of another board member $ 341 and $ 3,900 , respectively, for consulting services unrelated to their duties as a board member.

During the nine months ended January 31, 2022 and 2021, the Company paid this same affiliate $ 5,460 and $ 13,400 , respectively, for consulting services unrelated to his duty as a board member.

As of January 31, 2022, $ 3,000 was due to these related parties.

During the three months ended July 31, 2022 and 2021, the Company paid an affiliate of a board member $ 9,000 and $ 9,000 , respectively, for consulting services unrelated to his duty as a board member.

During the three months ended July 31, 2022 and 2021, the Company paid an affiliate of another board member $ 0 and $ 3,000 , respectively, for consulting services unrelated to their duties as a board member.

As of July 31, 2022, $ 0 was due to these related parties.

Commitments and Contingencies

12 unchanged sentences

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

For the nine months ended January 31, 2022 and the year ended April 30, 2021, we have paid or accrued approximately $ 286,000 and $ 127,000 related to these royalty arrangements, respectively.

For the three months ended January 31, 2022, and 2021, we have paid or accrued approximately $ 87,000 and $ 32,000 , respectively, related to these royalty arrangements.

For the quarter ended July 31, 2022 and 2021, we have recognized approximately $ 76,000 and $ 44,000 in expense related to these royalty arrangements, respectively.

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-Q

Item 1. Financial Statements