What changed in this filing

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Item 1. Financial Statements

2022-12-13 compared with 2022-09-12 · 98 added, 70 removed, 351 unchanged (32% of the section changed)

28 unchanged sentences

200,000,000 shares authorized;

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

13,558,650 shares issued and outstanding as of October 31, 2022 and April 30, 2022, respectively

Additional paid-in capital 81,475 81,064

7 unchanged sentences

Three Months Ended

October 31, Six Months Ended

2022 2021 2022 2021

Oncology services revenue $ 14,281 $ 11,786 $ 28,026 $ 23,039

5 unchanged sentences

Total costs and operating expenses 14,274 11,523 28,303 22,951

Loss from operations ( 284 ) ( 175 )

Income (loss) from operations 7 263 ( 277 ) 88

Other income (loss) ( 9 ) 26 ( 27 ) 43

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

Income (loss) before provision for income taxes ( 2 ) 289 ( 304 ) 131

Provision for income taxes 14 12 31 26

Net loss $ ( 319 ) $ ( 172 )

Net loss per common share outstanding

Net income (loss) $ ( 16 ) $ 277 $ ( 335 ) $ 105

Net (income) loss per common share outstanding

basic $ ( 0.00 ) $ 0.02 $ ( 0.02 ) $ 0.01

16 unchanged sentences

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

Stock-based compensation — — 119 — 119

Issuance of common stock on exercise of stock options 36,209 — 86 — 86

Net loss — — — ( 16 ) ( 16 )

Balance October 31, 2022 13,558,650 $ 14 $ 81,475 $ ( 72,317 ) $ 9,172

Common Stock Additional

8 unchanged sentences

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

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

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

2 unchanged sentences

(Dollars in Thousands)

Three Months Ended

Six Months Ended

Operating activities:

Net loss $ ( 319 ) $ ( 172 )

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

Net income (loss) $ ( 335 ) $ 105

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

Stock-based compensation 325 414

6 unchanged sentences

Prepaid expenses and other current assets 310 226

Other long term assets — ( 70 )

Accounts payable 1,737 1,506

4 unchanged sentences

Deferred revenue 114 ( 124 )

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

Net cash provided by operating activities 3,091 1,444

Investing activities:

4 unchanged sentences

Net cash provided by financing activities 86 123

Decrease in cash ( 949 ) ( 689 )

Increase in cash 1,819 94

Cash at beginning of period 9,007 4,687

4 unchanged sentences

Organization, Use of Estimates and Basis of Presentation

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

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.

2 unchanged sentences

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

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

For the three and six months ended October 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 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.

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

Recently, the Company has met these cash requirements through cash on hand, working capital management, and sales of products and services.

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

For the six months ended October 31, 2022, the Company had a net loss of approximately $ 335,000 and cash provided by operations of $ 3.1 million.

As of October 31, 2022, the Company had an accumulated deficit of approximately $ 72.3 million, working capital of $ 1.9 million and cash on hand of $ 10.8 million.

The Company believes that 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 the Company's revenue expectations not materialize, the Company believes it has 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 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.

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 ("ROU") 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.

5 unchanged sentences

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:

As of October 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 October 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 1,675,447 1,634,928

5 unchanged sentences

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

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.

As of October 31, 2022 and April 30, 2022, the Company provided a valuation allowance for all net deferred tax assets as it is more likely than not that the assets will not be recovered 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 July 31, 2022 and April 30, 2022.

The Company recorded $ 181,000 of liabilities related to uncertain tax positions relative to one of its foreign operations as of October 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 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 did no t recognize interest or penalties on its consolidated statements of operations during the three or six-month periods ended October 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 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.

The provision for income taxes for the three months ended October 31, 2022 and 2021 was $ 14,000 and $ 12,000 , respectively.

The provision for income taxes for the six months ended October 31, 2022 and 2021 was $ 31,000 and $ 26,000 , respectively.

The provision is attributable to taxable income earned in Israel and/or Italy relating to transfer pricing.

Revenue Recognition

20 unchanged sentences

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

At contract inception, the Company assesses the services promised in the contracts with customers to identify the performance obligations in the arrangement.

At contract inception, the Company assesses the services promised in the contracts with customers to identify

the performance obligations in the arrangement.

The Company's fixed-fee arrangements for oncology services are considered a single performance obligation because the Company provides a highly-integrated service.

27 unchanged sentences

The new model is applicable to all financial instruments that are not accounted for at fair value through net income.

The standard is effective for fiscal years beginning after December 15, 2022 for public entities qualifying as small reporting companies.

Early adoption is permitted.

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

The standard is effective for the fiscal year beginning May 1, 2023 for the Company.

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

Accounts Receivable, Unbilled Services and Deferred Revenue

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

July 31, 2022 April 30, 2022

October 31, 2022 April 30, 2022

Accounts receivable $ 5,392 $ 6,037

4 unchanged sentences

Deferred revenue was as follows (in thousands):

July 31, 2022 April 30, 2022

October 31, 2022 April 30, 2022

Deferred revenue $ 11,185 $ 11,071

2 unchanged sentences

Oncology Services Revenue

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

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

Three Months Ended

October 31, Six Months Ended October 31,

2022 2021 2022 2021

Pharmacology services $ 13,480 $ 11,143 $ 26,236 $ 21,846

2 unchanged sentences

Total oncology services revenue $ 14,281 $ 11,786 $ 28,026 $ 23,039

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").

Other TOS revenue represents additional services provided to the Company's pharmaceutical and biotechnology customers, specifically flow cytometry services and software-as-a-service ("SaaS") provided via our Lumin Bioinformatics software ("Lumin").

Contract Balances

1 unchanged sentence

These amounts may not exceed their net realizable value.

Contract assets are classified as current.

Contract liabilities consist of customer payments received in advance of performance and billings in excess of revenue recognized, net of revenue recognized from the balance at the beginning of the period.

Contract assets are classified as current and included in accounts receivable.

Contract assets and liabilities are presented on the balance sheet on a net contract-by-contract basis at the end of each reporting period.

11 unchanged sentences

Total property and equipment 14,373 12,711

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

Accumulated depreciation and amortization ( 6,665 ) ( 5,577 )

Property and equipment, net $ 7,708 $ 7,134

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.

Depreciation and amortization expense was $ 560,000 and $ 346,000 for the three months ended October 31, 2022 and 2021, respectively.

Depreciation and amortization expense, excluding expense recorded under finance leases, was $ 525,000 and $ 346,000 for the three months ended October 31, 2022 and 2021, respectively.

Depreciation and amortization expense was $ 1.1 million and $ 663,000 for the six months ended October 31, 2022 and 2021, respectively.

Depreciation and amortization expense, excluding expense recorded under finance leases, was $ 1.0 million and $ 663,000 for the six months ended October 31, 2022 and 2021, respectively.

As of October 31, 2022 and April 30, 2022, property, plant and equipment included gross assets held under finance leases of $ 1.1 million and $ 713,000 , respectively.

Related depreciation expense was approximately $ 35,000 and $ 0 for the three months ended October 31, 2022 and 2021, respectively, and approximately $ 64,000 and $ 0 for the six months ended October 31, 2022 and 2021, respectively.

Capitalized software development costs under a hosting arrangement

7 unchanged sentences

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.

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

6 unchanged sentences

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.

As of October 31, 2022, the carrying value of the asset net of accumulated amortization was $ 1.1 million.

Amortization expense related to this asset was $ 157,000 and $ 40,000 for the three months ended October 31, 2022 and 2021, respectively, and, $ 314,000 and $ 81,000 for the six months ended October 31, 2022 and 2021, respectively.

Finance Lease

3 unchanged sentences

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.

Depreciation and amortization expense related to this finance lease was $ 18,000 and zero for the three months ended October 31, 2022 and 2021, respectively, and $ 36,000 and zero for the six months ended October 31, 2022 and 2021, respectively.

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

2 unchanged sentences

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.

Depreciation and amortization expense related to this finance lease was $ 17,000 and zero for the three months ended October 31, 2022 and 2021, respectively, and $ 28,000 and zero for the six months ended October 31, 2022 and 2021, respectively.

Share-Based Payments

1 unchanged sentence

Three Months Ended

October 31, Six Months Ended

2022 2021 2022 2021

General and administrative $ 23 $ 48 $ 146 $ 219

15 unchanged sentences

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.

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

2010 Equity Incentive Plan

5 unchanged sentences

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.

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 months ended July 31, 2022 and 2021 were as follows:

Three Months Ended

There were no options granted during the three months ended October 31, 2022 and 2021.

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

Six Months Ended

Expected term in years 6

3 unchanged sentences

Dividend yield — % — %

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:

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

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

Employees Non-

4 unchanged sentences

Granted 80,500 — 80,500 7.57 9.7

Exercised ( 36,209 ) — ( 36,209 ) 3.21

Forfeited ( 9,125 ) — ( 9,125 ) 7.94

1 unchanged sentence

Expired — ( 4,584 ) ( 4,584 ) 5.40

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

Outstanding, October 31, 2022 1,639,116 36,331 1,675,447 4.67 4.8 $ 4,989,000

Vested and expected to vest as of October 31, 2022 1,639,116 36,331 1,675,447 4.67 4.8 $ 4,989,000

Exercisable as of October 31, 2022 1,363,447 — 1,363,447 4.18 4.1 $ 4,788,000

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

Rent expense totaled $ 466,000 and $ 467,000 for the three months

ended October 31, 2022 and 2021, respectively, and $ 934,000 and $ 932,000 for the six months ended October 31, 2022 and 2021, respectively.

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

2 unchanged sentences

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.

The Company recognized $ 21,000 and $ 24,000 of rent expense relative to this lease for the three months ended October 31, 2022 and 2021, respectively, and $ 42,000 and $ 47,000 for the six months ended October 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.

11 unchanged sentences

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.

◦ For the leases related to the premises at Piccard Drive, the Company recognized $ 422,000 in rent expense for the three months ended October 31, 2022 and 2021, respectively, and $ 844,000 and $ 850,000 in rent expense for the six months ended October 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.

1 unchanged sentence

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 executed a lease for its office space on October 1, 2021.

This lease was set to expire 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 rent expense associated with these leases of $ 23,000 and zero for the three months ended July 31, 2022 and 2021, respectively.

◦ The Company recognized rent expense associated with these leases of $ 23,000 and $ 21,000 for the three months ended October 31, 2022 and 2021, respectively, and $ 48,000 and $ 34,000 for the six months ended October 31, 2022 and 2021, respectively.

◦ The Company executed a new lease for office and laboratory space in November 2022.

This new agreement has an effective date of November 1, 2022 and is set to expire October 31, 2028.

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

July 31, 2022 April 30, 2022

October 31, 2022 April 30, 2022

Operating lease right-of-use assets, net

2 unchanged sentences

Non-current portion of operating lease liabilities 7,832 8,412

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.

As of October 31, 2022, the weighted average remaining operating lease term and the weighted average discount rate were 6.18 years and 5.73 %, respectively.

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

9 unchanged sentences

Consulting Services

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.

During the three months ended October 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 six months ended October 31, 2022 and 2021, the Company paid the same affiliate of a board member $ 18,000 and $ 18,000 , respectively, for consulting services unrelated to his duty as a board member.

During the three months ended October 31, 2022 and 2021, the Company paid an affiliate of another board member $ 0 and $ 2,150 , respectively, for consulting services unrelated to their duties as a board member.

During the six months ended October 31, 2022 and 2021, the Company paid the same affiliate of a board member $ 0 and $ 5,000 respectively, for consulting services unrelated to their duties as a board member.

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

Commitments and Contingencies

11 unchanged sentences

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 20 % of the contract price after recouping certain initiation costs.

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

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.

Some of these arrangements also set forth an annual minimum royalty due regardless of tumor models

used for sale.

For the three months ended October 31, 2022 and 2021, we have recognized approximately $ 32,000 and $ 147,000 , respectively, in expense related to these royalty arrangements.

For the six months ended October 31, 2022 and 2021, we have recognized approximately $ 108,000 and $ 199,000 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