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SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended January 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For transition period from _______ to __________
 Commission file number 0-17263
 CHAMPIONS BIOTECHNOLOGY, INC.
  Delaware
    
    52-1401755(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)855 N. Wolfe Street, Suite 619, Baltimore, MD
    
    21205(Address of principal executive offices)
    
    (zip code)
 
  
  þ o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ
 o þ




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CHAMPIONS BIOTECHNOLOGY, INC.
FORM 10-Q
 INDEX
 PART I.
    
    Financial InformationItem 1.
    
    Financial StatementsCondensed Consolidated Balance Sheets as of January 31, 2010 (unaudited)
and April 30, 2009
    
    
    3Condensed Consolidated Statements of Operations
for the three and nine months ended January 31, 2010 and 2009 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the
nine months ended January 31, 2010 and 2009 (unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    17Item 4T.
    
    Controls and Procedures
    
    
    18PART II.
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    19Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3.
    
    Defaults Upon Senior Securities
    
    
    19Item 4.
    
    Other Information
    
    
    19Item 5.
    
    Exhibits
    
    
    19SignaturesExhibit 31.1Exhibit 32.1
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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 CHAMPIONS BIOTECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 January 31, 2010
    
    
    April 30, 2009(unaudited)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    1,479,000
    
    
    $
    1,728,000Short term investments
    
    
    
    
    
    
    1,017,000Accounts receivable
    
    
    414,000
    
    
    
    Prepaid expenses, deposits, and other receivables
    
    
    762,000
    
    
    
    1,125,000Total current assets
    
    
    2,655,000
    
    
    
    3,870,000Property and equipment, net
    
    
    97,000
    
    
    
    81,000Goodwill
    
    
    669,000
    
    
    
    669,000TOTAL ASSETS
    
    $
    3,421,000
    
    
    $
    4,620,000LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    886,000
    
    
    $
    1,414,000Accrued liabilities
    
    
    205,000
    
    
    
    67,000Deferred revenue
    
    
    308,000
    
    
    
    1,223,000Total current liabilities
    
    
    1,399,000
    
    
    
    2,704,000Other
    
    
    77,000
    
    
    
    Total liabilities
    
    
    1,476,000
    
    
    
    2,704,000COMMITMENTS AND CONTINGENCIESAccrued stock repurchase
    
    
    219,000
    
    
    
    STOCKHOLDERS EQUITYPreferred stock, $10 par value; 56,075 shares
authorized; 0 shares issued and outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 50,000,000 shares
authorized; 36,644,000 and 33,579,000 issued at
January
31, 2010 and April 30, 2009, respectively,
and 35,665,000 and 32,989,000 shares outstanding at
January 31, 2010 and April 30, 2009, respectively
    
    
    37,000
    
    
    
    34,000Treasury stock, at cost, 979,000 and 590,000 shares at
January 31, 2010 and April 30, 2009, respectively
    
    
    (188,000
    )
    
    
    (1,000
    )Additional paid-in capital
    
    
    14,013,000
    
    
    
    11,640,000Accumulated deficit
    
    
    (12,128,000
    )
    
    
    (9,757,000
    )Accumulated other comprehensive income
    
    
    (8,000
    )
    
    
    Total stockholders equity
    
    
    1,726,000
    
    
    
    1,916,000TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,421,000
    
    
    $
    4,620,000
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CHAMPIONS BIOTECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedJanuary 31,
    
    
    January 31,2010
    
    
    2009
    
    
    2010
    
    
    2009OPERATING REVENUEPersonalized oncology services
    
    $
    325,000
    
    
    $
    901,000
    
    
    $
    1,813,000
    
    
    $
    2,381,000Preclinical eValuation services
    
    
    417,000
    
    
    
    83,000
    
    
    
    1,180,000
    
    
    
    320,000Total operating revenue
    
    
    742,000
    
    
    
    984,000
    
    
    
    2,993,000
    
    
    
    2,701,000COSTS AND OPERATING EXPENSESCost of Personalized oncology services
    
    
    162,000
    
    
    
    464,000
    
    
    
    783,000
    
    
    
    1,059,000Cost of Preclinical eValuation services
    
    
    202,000
    
    
    
    206,000
    
    
    
    586,000
    
    
    
    329,000Research and development
    
    
    566,000
    
    
    
    435,000
    
    
    
    1,707,000
    
    
    
    1,072,000General and administrative
    
    
    596,000
    
    
    
    463,000
    
    
    
    2,293,000
    
    
    
    1,163,000Total costs and operating expenses
    
    
    1,526,000
    
    
    
    1,568,000
    
    
    
    5,369,000
    
    
    
    3,623,000LOSS BEFORE OTHER INCOME
    
    
    (784,000
    )
    
    
    (584,000
    )
    
    
    (2,376,000
    )
    
    
    (922,000
    )Interest income
    
    
    
    
    
    
    21,000
    
    
    
    5,000
    
    
    
    67,000LOSS BEFORE PROVISION FOR INCOME TAXES
    
    
    (784,000
    )
    
    
    (563,000
    )
    
    
    (2,371,000
    )
    
    
    (855,000
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET LOSS
    
    $
    (784,000
    )
    
    $
    (563,000
    )
    
    $
    (2,371,000
    )
    
    $
    (855,000
    )NET LOSS PER SHARE  BASIC AND DILUTED
    
    $
    (0.02
    )
    
    $
    (0.02
    )
    
    $
    (0.07
    )
    
    $
    (0.03
    )WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED
    
    
    34,052,000
    
    
    
    33,273,000
    
    
    
    33,175,000
    
    
    
    33,271,000
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CHAMPIONS BIOTECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine Months EndedJanuary 31,2010
    
    
    2009OPERATING ACTIVITIESNet loss
    
    $
    (2,371,000
    )
    
    $
    (855,000
    )Adjustments to reconcile net loss to net cash
used in operating activities:Common stock issued for patent
    
    
    175,000
    
    
    
    Stock-based compensation
    
    
    343,000
    
    
    
    324,000Depreciation
    
    
    24,000
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (414,000
    )
    
    
    Prepaid expenses, deposits, and other receivables
    
    
    363,000
    
    
    
    (628,000
    )Accounts payable
    
    
    (528,000
    )
    
    
    547,000Accrued liabilities and other
    
    
    215,000
    
    
    
    (361,000
    )Deferred revenue
    
    
    (915,000
    )
    
    
    925,000Net cash used in operating activities
    
    
    (3,108,000
    )
    
    
    (48,000
    )INVESTING ACTIVITIESProceeds from certificate of deposit
    
    
    1,017,000
    
    
    
    Purchase of certificate of deposit
    
    
    
    
    
    
    (1,005,000
    )Purchase of property and equipment
    
    
    (40,000
    )
    
    
    (38,000
    )Net cash provided by (used in) investing activities
    
    
    977,000
    
    
    
    (1,043,000
    )FINANCING ACTIVITIESNet proceeds from private placement of common stock
    
    
    2,075,000
    
    
    
    Purchase of treasury stock
    
    
    (188,000
    )
    
    
    Proceeds from exercise of options and warrants
    
    
    3,000
    
    
    
    7,000Net cash provided by financing activities
    
    
    1,890,000
    
    
    
    7,000Exchange rate effect on cash and cash equivalents
    
    
    (8,000
    )
    
    
    NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (249,000
    )
    
    
    (1,084,000
    )CASH AND CASH EQUIVALENTS 
BEGINNING OF PERIOD
    
    
    1,728,000
    
    
    
    3,709,000CASH AND CASH EQUIVALENTS  END OF PERIOD
    
    $
    1,479,000
    
    
    $
    2,625,000
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CHAMPIONS BIOTECHNOLOGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Organization, Use of Estimates and Basis of Presentation
      Note 2. Summary of Significant Accounting Policies
 Unaudited Interim Financial Information
  Principles of Consolidation
   -6-




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Segment Reporting
  Reclassifications
  Cash and Cash Equivalents
  Fair Value of Financial Instruments
  Goodwill
  Revenue Recognition
    -7-




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Research and Development
  Recent Accounting Pronouncements
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Note 3. Basic and Dilutive Loss Per Common Share
  Three Months Ended
    
    
    Nine Months EndedJanuary 31,
    
    
    January 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Stock options
    
    
    506,000
    
    
    
    343,000
    
    
    
    472,000
    
    
    
    355,000Warrants
    
    
    447,000
    
    
    
    441,000
    
    
    
    449,000
    
    
    
    459,000Restricted stock
    
    
    9,000
    
    
    
    
    
    
    
    5,000
    
    
    
    Total common stock
equivalents
    
    
    962,000
    
    
    
    784,000
    
    
    
    926,000
    
    
    
    814,000
 Note 4. Property and Equipment
  January 31,
    
    
    April 30,2010
    
    
    2009Laboratory equipment
    
    $
    36,000
    
    
    $
    4,000Furniture and fixtures
    
    
    32,000
    
    
    
    26,000Computer hardware and software
    
    
    55,000
    
    
    
    55,000Leasehold improvements
    
    
    2,000
    
    
    
    Total property and equipment
    
    $
    125,000
    
    
    $
    85,000Less accumulated depreciation
    
    
    (28,000
    )
    
    
    (4,000
    )Property and equipment, net
    
    $
    97,000
    
    
    $
    81,000
  Note 5. Licensing Agreements
 Bithionol license agreement
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TAR1 license agreement
   Benzoylyphenylerea license agreement
  Note 6. Stock-Based Compensation
    Three Months Ended
    
    
    Nine Months EndedJanuary 31,
    
    
    January 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Cost of personalized oncology services
    
    $
    4,000
    
    
    $
    
    
    
    $
    15,000
    
    
    $
    Research and development
    
    
    38,000
    
    
    
    87,000
    
    
    
    70,000
    
    
    
    99,000General and administrative
    
    
    117,000
    
    
    
    135,000
    
    
    
    258,000
    
    
    
    225,000Total stock-based compensation expense
    
    $
    159,000
    
    
    $
    222,000
    
    
    $
    343,000
    
    
    $
    324,000
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Nine Months EndedJanuary 31,2010
    
    
    2009Expected term in years
    
    
    6.0
    
    
    
    3.4  6.0Risk free interest rates
    
    
    2.8% - 3.1
    %
    
    
    2.1% - 2.4
    %Volatility
    
    
    94
    %
    
    
    69% - 102
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
 Stock options and restricted stock
    Warrants
   Stock option plans
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Note 7. Related Party Transactions
        Note 8. Stockholders Equity
   -12-




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Note 9. Subsequent Events
 Liposome option agreement
   Service
agreement
 
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 The following discussion of our historical results of operations and our liquidity and capital
resources should be read in conjunction with the financial statements and related notes that appear
elsewhere in this report.
 Forward-Looking Statements
 Managements Discussion and Analysis of
Financial Condition and Results of Operations
   Overview
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Results of Operations
 Three Months Ended January 31, 2010 and 2009
 Revenues
    Operating Expenses
      -15-




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Interest Income
  Net Loss
  Nine Months Ended January 31, 2010 and 2009
 Revenues
    Operating Expenses
      -16-




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Interest Income
  Net Loss
  Liquidity and Capital Resources
  
 Commitments and Contractual Obligations
  Ability to Continue As a Going Concern
  Off Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   -17-




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Item 4T. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
    -18-




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Other Information
  
 Item 5. Exhibits
 Exhibit 31.1+
    
    Certification by the Acting Principal Executive Officer and
Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002Exhibit 32.1+
    
    Certification by the Acting Principal Executive Officer and
the Chief Financial Officer Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
  -19-