What changed in this filing

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Item 1. Financial Statements

2023-03-16 compared with 2022-12-13 · 102 added, 73 removed, 376 unchanged (32% of the section changed)

28 unchanged sentences

200,000,000 shares authorized;

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

13,558,650 shares issued and outstanding as of January 31, 2023 and April 30, 2022, respectively

Additional paid-in capital 81,806 81,064

7 unchanged sentences

Three Months Ended

October 31, Six Months Ended

January 31, Nine Months Ended

2023 2022 2023 2022

34 unchanged sentences

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

Stock-based compensation — — 331 — 331

Net loss — — — ( 2,439 ) ( 2,439 )

Balance January 31, 2023 13,558,650 $ 14 $ 81,806 $ ( 74,756 ) $ 7,064

Common Stock Additional

12 unchanged sentences

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

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

2 unchanged sentences

(Dollars in Thousands)

Six Months Ended

Nine Months Ended

Operating activities:

35 unchanged sentences

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

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

For the three and nine months ended January 31, 2023 and 2022, 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 October 31, 2022 and April 30, 2022 the Company had no cash equivalents.

As of January 31, 2023 and April 30, 2022 the Company had no cash equivalents.

The Company is subject to a concentration of credit risk in the form of its cash deposits held at multiple banking institutions.

Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000.

As of January 31, 2023 and April 30, 2022, the Company had $ 10.9 million and $ 8.3 million in excess of the FDIC insured limit, respectively.

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.

1 unchanged sentence

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.

For the nine months ended January 31, 2023, the Company had a net loss of approximately $ 2.8 million and cash provided by operations of $ 4.7 million.

As of January 31, 2023, the Company had an accumulated deficit of approximately $ 74.8 million and cash on hand of $ 11.6 million.

The Company believes that cash on hand, together with expected cash provided from 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.

9 unchanged sentences

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

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:

Three Months Ended

January 31, Nine Months Ended January 31,

(Dollars in Thousands) 2023 2022 2023 2022

Basic net income (loss) per share computation:

Net income (loss) attributable to common stockholders $ ( 2,439 ) $ 787 $ ( 2,774 ) $ 892

Weighted Average common shares – basic 13,558,642 13,500,444 13,532,990 13,170,880

Basic net income (loss) per share $ ( 0.18 ) $ 0.06 $ ( 0.20 ) $ 0.07

Diluted net income (loss) per share computation:

Net income (loss) attributable to common stockholders $ ( 2,439 ) $ 787 $ ( 2,774 ) $ 892

Weighted Average common shares 13,558,642 13,500,444 13,532,990 13,170,880

Incremental shares from assumed exercise of stock options — 886,565 — 1,007,202

Adjusted weighted average share – diluted 13,558,642 14,387,009 13,532,990 14,178,082

Diluted net income (loss) per share $ ( 0.18 ) $ 0.05 $ ( 0.20 ) $ 0.06

The following table reflects the total potential share-based instruments outstanding at January 31, 2023 and 2022 including those 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 1,779,167 1,681,448

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.

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”).

1 unchanged sentence

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

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.

As of January 31, 2023 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 October 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 January 31, 2023 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 or six-month periods ended October 31, 2022 and 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, 2023 and 2022.

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 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 for income taxes for the three months ended January 31, 2023 and 2022 was $ 17,000 and $ 11,000 , respectively.

The provision for income taxes for the nine months ended January 31, 2023 and 2022 was $ 48,000 and $ 37,000 , respectively.

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

21 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.

26 unchanged sentences

Under the prior model, losses were recognized only as they were incurred.

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

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

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

2 unchanged sentences

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

October 31, 2022 April 30, 2022

January 31, 2023 April 30, 2022

Accounts receivable $ 5,051 $ 6,037

4 unchanged sentences

Deferred revenue was as follows (in thousands):

October 31, 2022 April 30, 2022

January 31, 2023 April 30, 2022

Deferred revenue $ 13,158 $ 11,071

2 unchanged sentences

Oncology Services Revenue

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

The following tables represents disaggregated revenue for the three and nine months ended January 31, 2023 and 2022:

Three Months Ended

October 31, Six Months Ended October 31,

January 31, Nine Months Ended January 31,

2023 2022 2023 2022

3 unchanged sentences

Total oncology services revenue $ 12,773 $ 13,193 $ 40,799 $ 36,232

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").

Other Translational Oncology Solutions ("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

18 unchanged sentences

Property and equipment, net $ 7,852 $ 7,134

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.

Depreciation and amortization expense was $ 575,000 and $ 396,000 for the three months ended January 31, 2023 and 2022, respectively.

Depreciation and amortization expense, excluding expense recorded under finance leases, was $ 540,000 and $ 396,000 for the three months ended January 31, 2023 and 2022, respectively.

Depreciation and amortization expense was $ 1.7 million and $ 1.1 million for the nine months ended January 31, 2023 and 2022, respectively.

Depreciation and amortization expense, excluding expense recorded under finance leases, was $ 1.6 million and $ 1.1 million for the nine months ended January 31, 2023 and 2022, respectively.

As of January 31, 2023 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 January 31, 2023 and 2022, respectively, and approximately $ 99,000 and $ 0 for the nine months ended January 31, 2023 and 2022, respectively.

Capitalized software development costs under a hosting arrangement

16 unchanged sentences

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

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.

As of January 31, 2023, the carrying value of the asset net of accumulated amortization was $ 965,000 .

Amortization expense related to this asset was $ 157,000 and $ 79,000 for the three months ended January 31, 2023 and 2022, respectively, and $ 471,000 and $ 160,000 for the nine months ended January 31, 2023 and 2022, respectively.

Finance Lease

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 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 $ 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.

Depreciation and amortization expense related to this finance lease was $ 17,100 and zero for the three months ended January 31, 2023 and 2022, respectively, and $ 45,100 and zero for the nine months ended January 31, 2023 and 2022, respectively.

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 January 31, 2023 and 2022, respectively, and $ 54,000 and zero for the nine months ended January 31, 2023 and 2022, respectively.

Share-Based Payments

1 unchanged sentence

Three Months Ended

October 31, Six Months Ended

January 31, Nine Months Ended

2023 2022 2023 2022

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

As of January 31, 2023, 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

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

Black-Scholes assumptions used to calculate the fair value of options granted during the three and nine months ended January 31, 2023 and 2022 were as follows:

Three Months Ended

January 31, Nine Months Ended

2023 2022 2023 2022

Expected term in years 6

Risk-free interest rates 3.70 %

1.11 % - 1.20 %

2.87 % - 3.70 %

0.82 % - 1.20 %

Volatility 61.88 %

64.37 % - 64.62 %

61.88 % - 62.58 %

64.37 %- 66.21 %

Dividend yield — % — % — % — %

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:

The weighted average fair value of stock options granted during the three months ended January 31, 2023 and 2022 was $ 4.20 and $ 5.80 , respectively, and the nine months ended January 31, 2023 and 2022 was $ 4.33 and $ 5.56 , respectively.

The Company’s stock options activity for the nine months ended January 31, 2023 was a s follows:

Employees Non-

8 unchanged sentences

Expired — ( 4,584 ) ( 4,584 ) 5.40

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

Outstanding, January 31, 2023 1,742,836 36,331 1,779,167 4.81 4.8 $ 1,896,000

Vested and expected to vest as of January 31, 2023 1,742,836 36,331 1,779,167 4.81 4.8 $ 1,896,000

Exercisable as of January 31, 2023 1,389,002 1,875 1,390,877 4.24 3.9 $ 1,896,000

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 $ 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.

Rent expense totaled $ 475,000 and $ 469,000 for the three months ended January 31, 2023 and 2022, respectively, and $ 1.4 million for both the nine months ended January 31, 2023 and 2022.

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 October 31, 2022 and 2021, respectively, and $ 42,000 and $ 47,000 for the six months ended October 31, 2022 and 2021, respectively.

The Company recognized $ 20,000 and $ 24,000 of rent expense relative to this lease for the three months ended January 31, 2023 and 2022, respectively, and $ 62,000 and $ 70,000 for the nine months ended January 31, 2023 and 2022, 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.

8 unchanged sentences

◦ 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.

◦ 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 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 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.

◦ For the leases related to the premises at Piccard Drive, the Company recognized $ 422,000 in rent expense for the three months ended January 31, 2023 and 2022, respectively, and $ 1.3 million in rent expense for both the nine months ended January 31, 2023 and 2022.

• 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.

This lease was set to expire May 2023.

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 $ 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.

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

◦ On November 1, 2022, the Company executed a new lease to consolidate its office and laboratory space at a new nearby location in Italy.

The new lease is set to expire October 31, 2028 and it replaces the previous two leases.

▪ Upon lease execution, the Company recognized an operating ROU asset and related operating lease liability for the lab and office space of $ 231,000 each, respectively.

▪ The original office space lease, which was set to expire September 2027, was terminated with an effective date of November 30, 2022.

Upon lease termination, the Company recognized a decrease in the related net operating ROU asset and operating lease liability of approximately $ 40,700 and $ 41,500 , respectively, as well as a gain on lease termination of less than $ 1,000 .

▪ The original laboratory lease, which was set to expire May 2023, was terminated in the third quarter of fiscal year 2023 with an effective date of February 2023.

In accordance with ASC 842, the company performed an evaluation on the existing least to determine the impact of this termination, if any.

As a result, the company recorded a reduction to both the operating ROU asset and related operating lease liability of approximately $ 20,000 , respectively, during the three months ended January 31, 2023.

◦ The Company recognized rent expense associated with these leases of $ 34,000 and $ 23,000 for the three months ended January 31, 2023 and 2022, respectively, and $ 81,000 and $ 58,000 for the nine months ended January 31, 2023 and 2022, respectively.

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

October 31, 2022 April 30, 2022

January 31, 2023 April 30, 2022

Operating lease right-of-use assets, net

2 unchanged sentences

Non-current portion of operating lease liabilities 7,702 8,412

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.

As of January 31, 2023, the weighted average remaining operating lease term and the weighted average discount rate were 5.96 years and 5.82 %, respectively.

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

9 unchanged sentences

Consulting Services

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.

During the three months ended January 31, 2023 and 2022, 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 nine months ended January 31, 2023 and 2022, the Company paid the same affiliate of a board member $ 27,000 and $ 27,000 , respectively, for consulting services unrelated to his duty as a board member.

During the three months ended January 31, 2023 and 2022, the Company paid an affiliate of another board member $ 0 and $ 341 , respectively, for consulting services unrelated to their duties as a board member.

During the nine months ended January 31, 2023 and 2022, the Company paid the same affiliate of a board member $ 0 and $ 5,460 respectively, for consulting services unrelated to their duties as a board member.

As of January 31, 2023, $ 0 was due to these related parties.

Commitments and Contingencies

7 unchanged sentences

The Company has not accrued any liquidated damages associated with the Amended and Restated Registration Right Agreement as the Company has filed the required registration statement and anticipates continued compliance with the agreement.

The Company contracts with third-party vendors to license tumor samples for development into PDX models and use in our TOS business.

The Company contracts with third-party vendors to license tumor samples for development into Patient Derived Xenograft (PDX) models and use in our pharmacology TOS business.

These types of arrangements have an upfront fee ranging from nil to $ 30,000 per tumor sample depending on the successful growth of the tumor model and ability to develop them into a sellable product.

1 unchanged sentence

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 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.

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

For the three months ended January 31, 2023 and 2022, we have recognized approximately $ 21,000 and $ 87,000 , respectively, in expense related to these royalty arrangements.

For the nine months ended January 31, 2023 and 2022, we have recognized approximately $ 129,000 and $ 286,000 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