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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 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 October 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 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)
 (410) 369-0365  (Registrants telephone number, including area code)
 Inapplicable  (Former name, former address, and former fiscal year, if changed from last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-Accelerated Filer o
    
    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 October 31, 2010
(unaudited) and April 30, 2010
    
    
    3Condensed Consolidated Statements of Operations

for the three and six months ended October 31, 2010 and 2009 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows 
for the
six months ended October 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
    
    
    13Item 4. Controls and Procedures
    
    
    17PART II. Other InformationItem 1. Legal Proceedings
    
    
    18Item 1A. Risk Factors
    
    
    18Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3. Defaults Upon Senior Securities
    
    
    18Item 5. Other Information
    
    
    18Item 6. Exhibits
    
    
    19Signatures
    
    
    20Exhibit 31.1Exhibit 31.2Exhibit 32.1
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PART I. FINANCIAL INFORMATION
 
 ITEM 1.
 CHAMPIONS BIOTECHNOLOGY, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 October 31,
    
    
    April 30,2010
    
    
    2010(unaudited)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    1,263,000
    
    
    $
    2,572,000Accounts receivable
    
    
    335,000
    
    
    
    46,000Grant receivable
    
    
    960,000
    
    
    
    Prepaid expenses, deposits, and other
    
    
    298,000
    
    
    
    540,000Total
current assets
    
    
    2,856,000
    
    
    
    3,158,000Property and equipment, net
    
    
    109,000
    
    
    
    105,000Goodwill
    
    
    669,000
    
    
    
    669,000TOTAL ASSETS
    
    $
    3,634,000
    
    
    $
    3,932,000LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    1,382,000
    
    
    $
    944,000Accrued liabilities
    
    
    244,000
    
    
    
    236,000Deferred revenue
    
    
    574,000
    
    
    
    910,000Total
current liabilities
    
    
    2,200,000
    
    
    
    2,090,000Other liabilities
    
    
    47,000
    
    
    
    77,000TOTAL LIABILITIES
    
    
    2,247,000
    
    
    
    2,167,000COMMITMENTS AND CONTINGENCIESAccrued stock purchase
    
    
    
    
    
    
    188,000STOCKHOLDERS EQUITYPreferred stock, $10 par value; 56,075 shares authorized;
0 shares issued and outstanding
    
    
    
    
    
    
    Common stock, $.001 par value; 50,000,000 shares
authorized; 36,844,000 and 36,844,000 issued at October
31, 2010 and April 30, 2010, respectively, and
35,608,000 and 35,780,000 shares outstanding as of
October 31, 2010 and April 30, 2010, respectively
    
    
    37,000
    
    
    
    37,000Treasury stock, at cost, 1,236,000 and 1,064,000 shares
at October 31, 2010 and April 30, 2010, respectively
    
    
    (292,000
    )
    
    
    (219,000
    )Stock subscription receivable
    
    
    (750,000
    )
    
    
    (750,000
    )Additional paid-in capital
    
    
    15,747,000
    
    
    
    15,193,000Accumulated deficit
    
    
    (13,325,000
    )
    
    
    (12,680,000
    )Accumulated other comprehensive income
    
    
    (30,000
    )
    
    
    (4,000
    )Total stockholders equity
    
    
    1,387,000
    
    
    
    1,577,000TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,634,000
    
    
    $
    3,932,000
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CHAMPIONS BIOTECHNOLOGY, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedOctober 31,
    
    
    October 31,2010
    
    
    2009
    
    
    2010
    
    
    2009OPERATING REVENUEPersonalized oncology services
    
    $
    288,000
    
    
    $
    589,000
    
    
    $
    1,397,000
    
    
    $
    1,488,000Preclinical eValuation services
    
    
    645,000
    
    
    
    700,000
    
    
    
    1,136,000
    
    
    
    763,000Total operating revenue
    
    
    933,000
    
    
    
    1,289,000
    
    
    
    2,533,000
    
    
    
    2,251,000COSTS AND OPERATING EXPENSESCost of Personalized oncology services
    
    
    159,000
    
    
    
    (13,000
    )
    
    
    483,000
    
    
    
    621,000Cost of Preclinical eValuation services
    
    
    288,000
    
    
    
    350,000
    
    
    
    510,000
    
    
    
    384,000Research and development
    
    
    725,000
    
    
    
    645,000
    
    
    
    1,644,000
    
    
    
    1,141,000General and administrative
    
    
    776,000
    
    
    
    891,000
    
    
    
    1,514,000
    
    
    
    1,697,000Total costs and operating expenses
    
    
    1,948,000
    
    
    
    1,873,000
    
    
    
    4,151,000
    
    
    
    3,843,000LOSS BEFORE INTEREST and OTHER INCOME
    
    
    (1,015,000
    )
    
    
    (584,000
    )
    
    
    (1,618,000
    )
    
    
    (1,592,000
    )Interest and other income
    
    
    961,000
    
    
    
    
    
    
    
    973,000
    
    
    
    5,000LOSS BEFORE PROVISION FOR INCOME TAXES
    
    
    (54,000
    )
    
    
    (584,000
    )
    
    
    (645,000
    )
    
    
    (1,587,000
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET LOSS
    
    $
    (54,000
    )
    
    $
    (584,000
    )
    
    $
    (645,000
    )
    
    $
    (1,587,000
    )NET LOSS PER SHARE  BASIC AND DILUTED
    
    $
    (0.00
    )
    
    $
    (0.02
    )
    
    $
    (0.02
    )
    
    $
    (0.05
    )WEIGHTED AVERAGE SHARES OUTSTANDING 
BASIC AND DILUTED
    
    
    35,677,000
    
    
    
    32,713,000
    
    
    
    35,707,000
    
    
    
    32,736,000
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CHAMPIONS BIOTECHNOLOGY, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended October 31,2010
    
    
    2009OPERATING ACTIVITIESNet loss
    
    $
    (645,000
    )
    
    $
    (1,587,000
    )Adjustments to reconcile net loss to net cash
used in operating activities:Stock-based compensation
    
    
    367,000
    
    
    
    184,000Depreciation
    
    
    20,000
    
    
    
    16,000Common stock issued for patent
    
    
    
    
    
    
    175,000Changes in operating assets and liabilities:Accounts receivable
    
    
    (289,000
    )
    
    
    Grant receivable
    
    
    (960,000
    )
    
    
    Prepaid expenses, deposits and other receivables
    
    
    242,000
    
    
    
    362,000Accounts payable
    
    
    438,000
    
    
    
    (229,000
    )Accrued liabilities
    
    
    (23,000
    )
    
    
    39,000Deferred revenue
    
    
    (336,000
    )
    
    
    (1,092,000
    )Net cash used in operating activities
    
    
    (1,186,000
    )
    
    
    (2,132,000
    )INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (25,000
    )
    
    
    (32,000
    )Proceeds from certificate of deposit
    
    
    
    
    
    
    1,017,000Net cash (used in) provided by investing activities
    
    
    (25,000
    )
    
    
    985,000FINANCING ACTIVITIESPurchase of treasury stock
    
    
    (73,000
    )
    
    
    (188,000
    )Proceeds from exercise of options and warrants
    
    
    
    
    
    
    3,000Net cash used in financing activities
    
    
    (73,000
    )
    
    
    (185,000
    )Exchange rate effect on cash and cash equivalents
    
    
    (25,000
    )
    
    
    (2,000
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (1,309,000
    )
    
    
    (1,334,000
    )CASH AND CASH EQUIVALENTS  BEGINNING OF PERIOD
    
    
    2,572,000
    
    
    
    1,728,000CASH AND CASH EQUIVALENTS  END OF PERIOD
    
    $
    1,263,000
    
    
    $
    394,000
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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
   Segment Reporting
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Use of Estimates
  Cash and Cash Equivalents
  Fair Value of Financial Instruments
  Goodwill
  Deferred Revenue
  Revenue Recognition
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Cost of Personalized Oncology Services
  Cost of Preclinical eValuation Services
  Research and Development
  Recent Accounting Pronouncements
 Multiple-Deliverable Revenue Arrangements
 Note 3. Basic and Dilutive Loss Per Common Share
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Note 4. Property and Equipment
  October 31,
    
    
    April 30,2010
    
    
    2010Furniture and fixtures
    
    $
    6,000
    
    
    $
    6,000Computer equipment and software
    
    
    98,000
    
    
    
    42,000Laboratory equipment
    
    
    47,000
    
    
    
    37,000Software in-progress
    
    
    
    
    
    
    43,000Total property and equipment
    
    
    151,000
    
    
    
    128,000Less accumulated depreciation
    
    
    (42,000
    )
    
    
    (23,000
    )Property and equipment, net
    
    $
    109,000
    
    
    $
    105,000
  Note 5. Licensing Agreements
 Bithionol License Agreement
   TAR1 License Agreement
   Benzoylyphenylerea License Agreement
  Liposome Option Agreement
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Note 6. Stock-Based Compensation
     Three Months Ended
    
    
    Six Months EndedOctober 31,
    
    
    October 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Cost of personalized oncology services
    
    $
    
    
    
    $
    4,000
    
    
    $
    
    
    
    $
    11,000Research and development
    
    
    27,000
    
    
    
    44,000
    
    
    
    49,000
    
    
    
    32,000General and administrative
    
    
    170,000
    
    
    
    86,000
    
    
    
    318,000
    
    
    
    141,000Total
stock-based compensation expense
    
    $
    197,000
    
    
    $
    134,000
    
    
    $
    367,000
    
    
    $
    184,000
  Three Months Ended October 31,
    
    
    Six Months Ended October 31,2010
    
    2009
    
    
    2010
    
    2009Expected term in years
    
    6.0
    
    
    6.0
    
    
    6.0
    
    6.0Risk-free interest rates
    
    1.6%  1.7%
    
    
    2.8%
    
    
    1.6%  2.0%
    
    2.8%  3.1%Volatility
    
    105%
    
    
    94%
    
    
    104%  105%
    
    94%Dividend yield
    
    0%
    
    
    0%
    
    
    0%
    
    0%
  Stock Option Grants
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Warrants
   Note 7. Related Party Transactions
   Stock Repurchase Agreement
    - 11 -




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Note 8. Exit Costs
  TotalEstimatedExpenseRecorded inthe Fourth
    
    
    Liability as
    
    
    Payments
    
    
    Liability as ofQuarter of
    
    
    of April 30,
    
    
    during fiscal
    
    
    October 31,2010
    
    
    2010
    
    
    2011
    
    
    2010Severance payments
    
    $
    11,000
    
    
    $
    6,000
    
    
    $
    6,000
    
    
    $
    Future lease
payments, net of
sublease rental
    
    
    18,000
    
    
    
    17,000
    
    
    
    5,000
    
    
    
    12,000Moving costs and other
    
    
    7,000
    
    
    
    2,000
    
    
    
    2,000
    
    
    
    Disposal of assets
    
    
    22,000
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    58,000
    
    
    $
    25,000
    
    
    $
    13,000
    
    
    $
    12,000
  Note 9. Research and Development Materials Purchase Agreement
  2011
    
    $
    198,0002012
    
    
    132,000Total payments
    
    $
    330,000
 Note 10. Other Income
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ITEM 2.
 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
    - 13 -




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Results of Operations
 Three Months Ended October 31, 2010 and 2009
 Operating Revenues.
  Costs and Operating Expenses.
      - 14 -




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Interest and Other Income.
  Net Loss.
  Six Months Ended October 31, 2010 and 2009
 Operating Revenues.
  Costs and Operating Expenses.
      Interest and Other Income.
   - 15 -




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Net Loss.
  Liquidity and Capital Resources
 Sources of Liquidity.
  Cash Flows.
  Six Months Ended October 31,2010
    
    
    2009Cash (used in) provided by:Operating activities
    
    $
    (1,186,000
    )
    
    $
    (2,132,000
    )Investing activities
    
    
    (25,000
    )
    
    
    985,000Financing activities
    
    
    (73,000
    )
    
    
    (185,000
    )Effect of exchange rates
    
    
    (25,000
    )
    
    
    (2,000
    )Net decrease in cash and cash equivalents
    
    $
    (1,309,000
    )
    
    $
    (1,334,000
    )
     Commitments and Contractual Obligations
  Ability to Continue As a Going Concern
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Off Balance Sheet Arrangements
  
 ITEM 4.
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
   - 17 -




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PART II  OTHER INFORMATION
 
 ITEM 1.
  
 ITEM 1A.
  
 ITEM 2.
  Total Number ofShares Purchased
    
    
    Maximum NumberTotal
    
    
    Average
    
    
    as Part of
    
    
    of Shares that MayNumber of
    
    
    Price
    
    
    Publicly
    
    
    Yet Be PurchasedShares
    
    
    Paid per
    
    
    Announced Plans
    
    
    Under the Plans orPeriod
    
    Purchased
    
    
    Share
    
    
    or Programs
    
    
    ProgramsAugust 2010
    
    
    93,921
    
    
    $
    0.44
    
    
    
    93,921
    
    
    
    1,603,831September 2010
    
    
    
    
    
    $
    0.00
    
    
    
    
    
    
    
    1,603,831October 2010
    
    
    
    
    
    $
    0.00
    
    
    
    
    
    
    
    1,603,831Total
    
    
    93,921
    
    
    $
    0.44
    
    
    
    93,921
    
    
    
    1,603,831
    
 ITEM 3.
  
 ITEM 5.
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ITEM 6.
 Exhibit 31.1
    
    Certification by the Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 31.2
    
    Certification by the Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 32.1
    
    Certification by the Principal Executive Officer and
Principal Financial Officer Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
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SIGNATURES
  CHAMPIONS BIOTECHNOLOGY, INC.
(Registrant)Date: December 13, 2010
    By:
    /s/ Joel AckermanJoel AckermanChief Executive OfficerBy:
    /s/ Mark R. SchonauMark R. SchonauChief Financial Officer  - 20 -