What changed in this filing

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Item 1. Financial Statements

2023-09-13 compared with 2023-03-16 · 118 added, 161 removed, 317 unchanged (47% of the section changed)

5 unchanged sentences

Current assets:

Cash $ 11,645 $ 9,007

Cash and cash equivalents $ 4,869 $ 10,118

Accounts receivable, net 8,948 8,011

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200,000,000 shares authorized;

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

13,599,548 and 13,558,650 shares issued;

and 13,484,110 and 13,544,228 outstanding as of July 31, 2023 and April 30, 2023, respectively

Treasury stock, at cost ( 676 ) ( 74 )

Additional paid-in capital 82,448 82,013

7 unchanged sentences

Three Months Ended

January 31, Nine Months Ended

2023 2022 2023 2022

Oncology services revenue $ 12,561 $ 13,745

5 unchanged sentences

Total costs and operating expenses 15,113 14,029

Income (loss) from operations ( 2,458 ) 830 ( 2,735 ) 918

Loss from operations ( 2,552 ) ( 284 )

Other income (loss) 14 ( 18 )

Income (loss) before provision for income taxes ( 2,422 ) 798 ( 2,726 ) 929

Loss before provision for income taxes ( 2,538 ) ( 302 )

Provision for income taxes 28 17

Net income (loss) $ ( 2,439 ) $ 787 $ ( 2,774 ) $ 892

Net income (loss) per common share outstanding

Net loss $ ( 2,566 ) $ ( 319 )

Net loss per common share outstanding

basic $ ( 0.19 ) $ ( 0.02 )

7 unchanged sentences

(Dollars in Thousands)

Common Stock Additional

Common Stock Treasury Stock Additional

Capital Accumulated

1 unchanged sentence

Stockholders'

Shares Amount

Shares Amount Shares Amount

Balance April 30, 2023 13,544,228 $ 14 14,422 $ ( 74 ) $ 82,013 $ ( 77,317 ) $ 4,636

Stock-based compensation — — — — 423 — 423

Net loss — — — ( 319 ) ( 319 )

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 40,897 — — — 12 — 12

Net loss — — — ( 16 ) ( 16 )

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

Stock-based compensation — — 331 — 331

Repurchase of common stock ( 101,015 ) — 101,015 ( 602 ) ( 602 )

Net loss — — — — — ( 2,566 ) ( 2,566 )

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

Common Stock Additional

Balance July 31, 2023 13,484,110 $ 14 115,437 $ ( 676 ) $ 82,448 $ ( 79,883 ) $ 1,903

Common Stock Treasury Stock Additional

Capital Accumulated

1 unchanged sentence

Stockholders'

Shares Amount

Shares Amount Shares Amount

Balance April 30, 2022 13,522,441 $ 14 — $ — $ 81,064 $ ( 71,982 ) $ 9,096

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

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 (loss) $ ( 2,774 ) $ 892

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

Net loss $ ( 2,566 ) $ ( 319 )

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation 423 206

Depreciation and amortization expense 445 528

Net gain on disposal of equipment — ( 4 )

Operating lease right-of use assets 270 269

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Prepaid expenses and other current assets 223 186

Other long term assets ( 169 ) —

Accounts payable 424 ( 331 )

Accrued liabilities ( 178 ) ( 456 )

Other current liabilities — 15

Other non-current liabilities — 50

Operating lease liabilities ( 292 ) ( 250 )

Deferred revenue ( 1,634 ) ( 186 )

Net cash provided by operating activities 4,664 5,701

Net cash used in operating activities ( 3,991 ) ( 195 )

Investing activities:

2 unchanged sentences

Financing activities:

Repurchases of common stock ( 602 ) —

Proceeds from exercise of options 12 —

Net cash provided by financing activities 86 191

Increase in cash 2,638 4,014

Net cash used in financing activities ( 590 ) —

Decrease in cash ( 5,249 ) ( 949 )

Cash at beginning of period 10,118 9,007

8 unchanged sentences

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:

The Company has four 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, 2023 and 2022, there were no revenues earned by these subsidiaries.

(Italy), and Corellia A.I..

For the three months ended July 31, 2023 and 2022, there were no revenues earned by these subsidiaries.

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

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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, 2023 and April 30, 2022 the Company had no cash equivalents.

As of July 31, 2023 the Company had cash equivalents of $ 4.1 million and, as of April 30, 2023, 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.

As of July 31, 2023 and April 30, 2023, the Company had $ 4.7 million and $ 8.7 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.

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

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.

For the three months ended July 31, 2023, the Company had a net loss of approximately $ 2.6 million and cash used in operations of approximately $ 4.0 million.

As of July 31, 2023, the Company had an accumulated deficit of approximately $ 79.9 million and cash on hand of approximately $ 4.9 million.

The Company believes that cash on hand, together with expected cash provided from operations for the remainder of fiscal year 2024, 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 ("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.

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.

The carrying value of cash, accounts receivable, prepaid expenses, and other current assets, accounts payable, and accrued liabilities approximate their fair value based on the liquidity or the short-term maturities of these instruments.

The fair value hierarchy promulgated by GAAP consists of three levels:

•Level one — Quoted market prices in active markets for identical assets or liabilities;

•Level two — Inputs other than level one inputs that are either directly or indirectly observable;

•Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

Determining which category an asset or liability falls within the hierarchy requires significant judgment.

The Company evaluates its hierarchy disclosures each quarter.

As of July 31, 2023 the Company had assets measured at fair value on a recurring and/or non-recurring basis of as follows:

(in 000s) July 31, 2023

Level 1 Level 2 Level 3

Cash Equivalents:

Certificate of deposit $ 3,500 $ — $ —

Money market fund 580 — —

Total $ 4,080 $ — $ —

As of July 31, 2023 the Company had no liabilities measured at fair value on a recurring and/or non-recurring basis.

As of April 30, 2023, the Company had no assets or liabilities measured at fair value on a recurring and/or non-recurring basis.

Earnings Per Share

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

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:

As of July 31, 2023 and 2022, 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, 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 1,766,752 1,722,155

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

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.

As of July 31, 2023 and April 30, 2023, 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 January 31, 2023 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 July 31, 2023 and April 30, 2023.

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 nine-month periods ended January 31, 2023 and 2022.

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

The provision for income taxes for the three months ended July 31, 2023 and 2022 was $ 28,000 and $ 17,000 , respectively, mainly attributable to taxable income earned in Israel and/or Italy relating to transfer pricing.

Revenue Recognition

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

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

The Company recognizes revenue in accordance with Accounting Standards Codification 606 ("ASC 606"), Revenue from Contracts with Customers.

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

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The Company determines revenue recognition utilizing the following five steps:

(1) identification of the contract with a customer, (2) identification of the performance obligations in the contract (promised goods or services that are distinct), (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations, and (5) recognition of revenue when, or as, the Company transfers control of the product or service for each performance obligation.

obligations, and (5) recognition of revenue when, or as, the Company transfers control of the product or service for each performance obligation.

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.

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

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

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

revenue recognized during the period.

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

Accounting Pronouncements Being Evaluated

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

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

This update requires immediate recognition of management’s estimates of current expected credit losses ("CECL").

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, including accounts receivable.

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.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update ("ASU") 2016-13, “Financial Instruments—Credit Losses” (Topic 326).

This ASU represents a significant change in the current accounting model by requiring immediate recognition of management’s estimates of current expected credit losses.

Under the prior model, losses were recognized only as they were incurred, which delayed recognition of expected losses that might not yet have met the threshold of being probable.

The Company adopted ASU 2016-03 on April 1, 2023 and the adoption did not have any material effect on our condensed consolidated financial statements and related disclosures.

Accounts Receivable, Unbilled Services and Deferred Revenue

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

January 31, 2023 April 30, 2022

July 31, 2023 April 30, 2023

Accounts receivable $ 5,705 $ 3,843

1 unchanged sentence

Total accounts receivable and unbilled services 9,934 8,836

Less allowance for doubtful accounts ( 713 ) ( 630 )

Less allowances ( 986 ) ( 825 )

Total accounts receivable, net $ 8,948 $ 8,011

Deferred revenue was as follows (in thousands):

January 31, 2023 April 30, 2022

July 31, 2023 April 30, 2023

Deferred revenue $ 11,142 $ 12,776

Deferred revenue is shown as a current liability on the Company's condensed consolidated balance sheets.

As of May 1, 2023 and 2022, respectively, the consolidated balance of net accounts receivable was $ 8.0 million and $ 9.5 million, respectively, and deferred revenue was $ 12.8 million and $ 11.1 million, respectively.

Revenue from Contracts with Customers

Oncology Services Revenue

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

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

Three Months Ended

January 31, Nine Months Ended January 31,

2023 2022 2023 2022

Pharmacology services $ 11,860 $ 12,756

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Property and equipment, net $ 7,373 $ 7,186

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.

Depreciation and amortization expense was $ 445,000 and $ 528,000 for the three months ended July 31, 2023 and 2022, respectively.

Depreciation and amortization expense, excluding expense recorded under finance leases, was $ 409,000 and $ 499,000 for the three months ended July 31, 2023 and 2022, respectively.

As of July 31, 2023 and April 30, 2023, property, plant and equipment included gross assets held under finance leases of $ 1.0 million, respectively.

Related depreciation expense was approximately $ 36,000 and $ 29,000 for the three months ended July 31, 2023 and 2022, respectively.

Capitalized software development costs under a hosting arrangement

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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.

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 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 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.

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

There are no capitalized software development costs classified as assets in progress as of July 31, 2023 or April 30, 2023.

Total capitalized gross asset costs for the Lumin platform that was launched and placed into service were $ 1.9 million.

During the fourth quarter of fiscal year 2023, an impairment loss was recognized equal to the amount by which the carrying amount exceeded the future net revenues, or, its net book value at April 30, 2023 of $ 807,000 .

Amortization expense related to this asset was $ 0 and $ 157,000 for the three months ended July 31, 2023 and 2022, respectively.

Finance Lease

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

During 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.

1 unchanged sentence

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 $ 17,100 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.

Depreciation and amortization expense related to this finance lease was $ 17,400 and $ 11,200 for the three months ended July 31, 2023 and 2022, respectively.

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

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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.

Depreciation and amortization expense related to this finance lease was $ 18,400 and $ 18,000 for the three months ended July 31, 2023 and 2022, respectively.

The liabilities related to these finance leases are classified under other current liability and other non-current liabilities on the Company's balance sheet.

The weighted average remaining lease term of these leases is 3.3 years.

Refer to Note 7, Leases, for information on operating leases.

Share-Based Payments

1 unchanged sentence

Three Months Ended

January 31, Nine Months Ended

2023 2022 2023 2022

General and administrative $ 184 $ 123

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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 January 31, 2023, approximately 1.7 million shares were left to issue under this plan.

As of July 31, 2023, approximately 1.6 million shares were left to issue under this plan.

2010 Equity Incentive Plan

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Stock Option Grants

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:

Black-Scholes assumptions used to calculate the fair value of options granted during the three months ended July 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 3.95 %

1.11 % - 1.20 %

2.87 % - 3.70 %

0.82 % - 1.20 %

Volatility 62.83 %

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 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:

The weighted average fair value of stock options granted during the three months ended July 31, 2023 and 2022 was $ 3.72 and $ 4.50 , respectively.

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

Employees Non-

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Expired — — —

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

Outstanding, July 31, 2023 1,730,421 36,331 1,766,752 4.91 4.6 $ 4,254,000

Vested and expected to vest as of July 31, 2023 1,730,421 36,331 1,766,752 4.91 4.6 $ 4,254,000

Exercisable as of July 31, 2023 1,491,784 1,875 1,493,659 4.62 4.0 $ 4,103,000

Share Repurchase Program

On March 29, 2023, the Board of Directors approved a share repurchase program authorizing the Company to purchase up to an aggregate of $ 5.0 million of the Company’s common stock.

The share repurchase program is designed in accordance with Rule 10b-18 of the Securities Exchange Act.

The shares may be purchased from time to time in the open market, as permitted under applicable rules and regulations, at prevailing market prices.

The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements and other factors.

The program does not obligate the Company to acquire a minimum number of shares.

As of July 31, 2023, the Company had purchased approximately 115,000 shares of its common stock, at an average price of $ 5.62 per share, totaling approximately $ 676,000 and leaving an available balance of approximately $ 4.3 million authorized by the Board for use in the program as of that date.

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

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.

Operating Leases

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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 $ 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.

Rent expense totaled $ 453,000 and $ 467,000 for the three months ended July 31, 2023 and 2022, respectively.

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

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

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

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.

The lease expires in November 2026.

The Company recognized $ 19,000 and $ 21,000 of rent expense relative to this lease for the three months ended July 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.

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

The Company executed the original lease in January 2017.

The lease was amended to expand the premises and extend the expiration date in March 2020 and again in December 2020.

The operating commencement date was August 11, 2017.

This lease was originally set to expire in August 2028.

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

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

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

◦ 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.

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 related to fiscal year 2021.

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

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

The Additional Expansion Premises operating lease commencement date 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 January 31, 2023 and 2022, respectively, and $ 1.3 million in rent expense for both the nine months ended January 31, 2023 and 2022.

This lease expires in February 2029.

The Company recognized $ 423,000 and $ 422,000 of rent expense relative to this lease for the three months ended July 31, 2023 and 2022, 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 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.

◦ 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.

The Company executed separate leases for its laboratory space and office space during fiscal 2022.

During fiscal 2023, the Company executed a new lease to consolidate its office and laboratory space at a new nearby location in Italy.

The lease expires October 31, 2028 and it replaces the previous two leases, which were terminated during fiscal year 2023.

The Company recognized $ 13,000 and $ 23,000 of rent expense relative to these leases for the three months ended July 31, 2023 and 2022, respectively.

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

January 31, 2023 April 30, 2022

July 31, 2023 April 30, 2023

Operating lease right-of-use assets, net

2 unchanged sentences

Non-current portion of operating lease liabilities 7,107 7,391

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.

As of July 31, 2023, the weighted average remaining operating lease term and the weighted average discount rate were 5.47 years and 5.87 %, respectively.

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

Remainder of 2023 $ 689

2024 remaining $ 2,144

Thereafter 2,392

7 unchanged sentences

Consulting Services

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.

During the three months ended July 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.

As of July 31, 2023, $ 0 was due to this related party.

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 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.

For the three months ended July 31, 2023 and 2022, we have recognized approximately $ 73,000 and $ 76,000 , respectively, in expense related to these royalty arrangements.

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