| **UNITED STATES**
**SECURITIES AND EXCHANGECOMMISSION**
**Washington, D.C. 20549** 
**FORM 10-Q**  
Mark One
  
[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 
THE SECURITIES EXCHANGE ACT OF 1934
  

For the quarterly period ended July 31,2008 
OR
[   ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to________ 
Commission file number 0-17263 
**CHAMPIONS BIOTECHNOLOGY,INC.**
(Exact name of registrant as specified in itscharter)

Delaware 
52-1401755
(State or other jurisdiction of 
(I.R.S. Employer
organization) 
Identification No.)

1400 N. 14th Street, Arlington,VA
22209
(Address of principal executiveoffices)
(Zip code)

(410) 630-1313
(Registrant’s telephone number, including areacode)

2200 Wilson Blvd., Suite 102-316, Arlington, VA22201
(Former address) 
       Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the Registrant was required to file suchreports), and (2) has been subject to such filing requirements for the past 90days.   Yes  X  No  __
 
       Indicate by checkmark whether the registrant is a large accelerated filer, an acceleratedfiler, a non-accelerated filer, or a smaller reporting company.  See thedefinitions of “large accelerated filer,” “acceleratedfiler” and “smaller reporting company” in Rule 12b-2 of theExchange Act.
 
Large acceleratedfiler  [   ]
 
Accelerated filer  [   ]
   
Non-acceleratedfiler   [   ]

(Do not check if a smaller reportingcompany)
Smaller reporting company  [X]

Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act

Yes        No  X 
 
As of September 15, 2008, the Registrant had a total of33,272,718 shares of common stock outstanding.

 

**CHAMPIONS BIOTECHNOLOGY, INC.**
**FORM 10-Q** 
INDEX
PART I.

Financial Information
      
Item 1.

Financial Statements
      
 

Condensed Consolidated Balance Sheets as of July 31, 2008(Unaudited) and April 30, 2008 (Audited)

3
     
 

Condensed Consolidated Statements of Operations

  
 
 

for the Three months ended July 31, 2008 and 2007(Unaudited)

4
     
 

Condensed Consolidated Statements of Cash Flows forthe

  
 
 

Three months ended July 31, 2008 and 2007 (Unaudited)

5
     
 

Notes to Condensed Consolidated Financial Statements(Unaudited)

6-8
     
Item 2.

Management’s Discussion and Analysis of Financial Conditionand Results of Operations

9-11
    
Item 3.

Quantitative and Qualitative Disclosures About MarketRisk

11
     
Item 4.

Controls and procedures

11
        
PART II.

Other Information
      
Item 1.

Legal Proceedings.

12
 
Item 2.

Unregistered Sales of Equity Securities and Use ofProceeds.

12
 
Item 3.

Defaults Upon Senior Securities.

12
 
Item 4.

Submission of Matters to a Vote of Security Holders.

12
 
Item 5.

Other Information

12
 
Item 6.

Exhibits
  
Signatures   

13

2 

**PART I**
**Item 1.**

**Financial Statements**

**CHAMPIONS BIOTECHNOLOGY, INC.**
**AND****SUBSIDIARIES**
**CONDENSED CONSOLIDATED BALANCESHEETS**  
July 31, 2008 
April 30, 2008  
**(Unaudited)** 
**(Audited)**
**ASSETS**
         
**CURRENT ASSETS**
    
     Cash and cashequivalents

$
3,494,872 
$
3,709,136 
     Accounts receivable
 
6,173  
  - 
     Prepaid expenses
 
71,483  
52,873 
     Prepaid contractexpenses
 
95,795 
 
- 

**       Total Current Assets**

3,668,323  
3,762,009 
   Intangibles assets
 
241,836  
227,465 
   Goodwill
 
661,909 
 
661,909 

**TOTAL ASSETS**

$
4,572,068 

$
4,651,383 
    
**LIABILITIES AND STOCKHOLDERS’ EQUITY**
       
**CURRENT LIABILITIES**

     Accounts payable

$
189,006 
$
147,971 
     Deferred revenue

806,937  
504,622 
       Other accruedexpenses
 
- 
 
361,275 

**       Total currentliabilities**
 
995,943 
 
1,013,868 
  
 
 
 
    
 

**COMMITMENTS AND CONTINGENCIES**
 
**STOCKHOLDERS’ EQUITY**

     Preferred stock, $10 par value;56,075 shares authorized;
   
       0 shares issued andoutstanding

 
 
 

     Common stock, $.001 par value;50,000,000 shares authorized;
   
     33,272,718 shares issued andoutstanding

33,273  
33,248 
     Additional paid-incapital

11,580,064  
11,715,182 
     Accumulated deficit
 
(7,236,029)
 
(7,068,547)
 
4,377,308  
4,679,883 
     Prepaid consulting
 
(801,183)
 
(1,042,368)

     Total stockholders’equity
 
3,576,125 
 
3,637,515 
    
**TOTAL LIABILITIES AND STOCKHOLDERS’EQUITY**

$
4,572,068 

$
4,651,383 

The accompanying notes are an integral part of these condensedconsolidated financial statements.

3 

**CHAMPIONS BIOTECHNOLOGY, INC.**
**AND SUBSIDIARIES**
**CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS**
**FOR THE THREE MONTHS ENDED JULY 31, 2008 AND 2007(UNAUDITED)**  
**2008** 
**2007**    
**REVENUES**
   
     Personalized oncology andpreclinical contract revenue 

$
673,117 

$
250,000 
   
**         Totalrevenues**
 
673,117 
 
250,000 
    
**OPERATING EXPENSES**
        
     Research and development
 
217,163  
75,000       Cost of personalized oncology and preclinical contract revenue	 
259,600  
80,562 
     General andadministrative
 
384,552 
 
91,229 
   
**         Totaloperating expenses**
 
861,315 
 
246,791 
    
**OPERATING (LOSS) INCOME**
 
(188,198)
 
3,209 
    
**OTHER INCOME**

   
       Interestincome
 
20,716 
 
5,359 
        
**(LOSS) INCOME BEFORE TAXES**

(167,482) 
8,568 
     Provision for incometaxes
 
- 
 
-     
    
**NET (LOSS) INCOME**

$
(167,482)

$
8,568 
    
**(Loss) earnings per common share:**
    
**       Basic**

$
 (0.01)
$
0.00 
**       Diluted**

$
(0.01)
$
0.00 
**Shares used in calculating (loss) earnings per commonshare:**
   
**       Basic**

33,268,914  
30,842,049 
**       Diluted**
 
33,268,914  
31,080,085 

The accompanying notes are an integral part of these condensedconsolidated financial statements.

4 

**CHAMPIONS BIOTECHNOLOGY, INC.**
**AND SUBSIDIARIES**
**CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS**
**FOR THE THREE MONTHS ENDED JULY 31, 2008 AND 2007(UNAUDITED)**  
**2008** 
**2007**     
**CASH FLOWS FROM OPERATING ACTIVITIES**
         
     Net (loss) income from operatingactivities

$
(167,482)

$
8,568 

     Adjustments to reconcile net (loss)income to net cash (used in) provided by operating **activities:**
    
     Share based compensation
    
     Excess tax benefits from share based paymentarrangements  
 
(4,767) 
- 
       Stock compensationexpense
 
13,619  
- 
     Amortization of prepaid consultingservices
 
84,973  
26,838 
Changes in:
    
     (Increase) in accountsreceivable
 
(6,173) 
- 
     (Increase) in prepaidexpenses
 
 (18,609) 
- 
     (Increase) in prepaid contractexpenses
 
(95,795) 
-    
- 
     Increase in accountspayable
 
41,035  
12,689 
     Increase in deferredrevenue
 
302,315  
- 
     (Decrease) increase in otheraccrued expenses
 
(361,275)
 
27,488 
     
**     Net cash (used in) provided byoperating activities**
 
(212,159)
 
75,583 
     
**CASH FLOWS FROM INVESTING ACTIVITIES**
    
**     **(Increase) in intangibleassets
 
(14,372)
 
- 
     
     **Net cash (used in) investingactivities**
 
(14,372)
 
- 
     
**CASH FLOWS FROM FINANCING ACTIVITIES**
         
     Payment of officers loanpayable
 
-  
(43,693)
     Proceeds from exercise ofoptions
 
7,500  
- 
       Excess tax benefitsfrom share based payment arrangements
 
4,767 
 
- 
     
**       Net cash provided by(used in) financing activities**
 
12,267 
 
(43,693)
     
** Net (decrease) increase in cash and cashequivalents**
 
(214,264) 
31,890      
**CASH AND CASH EQUIVALENTS  BEGINNING OFPERIOD**
 
3,709,136 
 
475,135 
     
**CASH AND CASH EQUIVALENTS - END OF PERIOD**

$
3,494,872 

$
507,025 
     
**SUPPLEMENTAL DISCLOSURE OF CASH FLOWINFORMATION:**
    
     Cash paid during the yearfor:
    
          Interestpaid

$
- 
$
- 
          IncomeTax Paid

$
- 
$
-      
**SUPPLEMENTAL SCHEDULE OF NON-CASH FLOW INVESTING AND FINANCINGACTIVITIES:**
       
In May 2007, the Company issued 525,000 stock options for prepaidconsulting valued at $157,473.
  
In May 2007, the Company issued 4,000,000 shares for 100% of theshares of Biomerk, Inc.
  

The accompanying notes are an integral part of these condensedconsolidated financial statements.

5 

**CHAMPIONS BIOTECHNOLOGY, INC.**
**AND SUBSIDIARIES**
**NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS**
**JULY 31, 2008 AND 2007(UNAUDITED)**

**(1) ORGANIZATION AND BASIS OF PRESENTATION**
The accompanying condensed consolidated financial statements ofChampions Biotechnology, Inc. ("Champions" or the "Company") as of  and for thethree months ended July 31, 2008 and 2007 are unaudited. The accompanyingunaudited condensed consolidated balance sheets, statements of operations andstatements of cash flows have been prepared in accordance with U.S. generallyaccepted accounting principles (GAAP) for interim financial information and inconjunction with the rules and regulations of the Securities and ExchangeCommission (SEC). Accordingly, they do not include all of the disclosuresrequired by Generally Accepted Accounting Principles (“GAAP”) forcomplete financial statements. The financial statements reflect all adjustments,consisting only of normal, recurring adjustments, which are in the opinion ofmanagement, necessary for a fair presentation for the interim periods.Management of the Company has made a number of estimates and assumptionsrelating to the reporting of assets and liabilities and related revenue andexpense accounts and the disclosure of contingent assets and liabilities toprepare these condensed consolidated financial statements in conformity withGAAP. Actual results could differ materially from those estimates. Thesefinancial statements should be read in conjunction with the audited consolidatedfinancial statements and notes thereto included in the Company’s AnnualReport on Form 10-K for the fiscal year ended April 30, 2008. The resultsfor the three months ended July 31, 2008 may not be indicative of the resultsfor the entire year.
**Impact of Recent AccountingPronouncements**
The Company adopted Statement of Financial Accounting Standards("SFAS") No. 157, "Fair Value Measurement" ("SFAS No. 157") on May 1, 2008.SFAS 157 defines fair value as the price that would be received to sell anasset or paid to transfer a liability in an orderly transaction between marketparticipants at the measurement date (an exit price). The standard outlines avaluation framework and creates a fair value hierarchy in order to increase theconsistency and comparability of fair value measurements and the relateddisclosures. Under GAAP, certain assets and liabilities must be measured at fairvalue, and SFAS 157 details the disclosures that are required for itemsmeasured at fair value. In February 2008, the Financial Accounting StandardsBoard issued Staff Position No. 157-2 (FSP 157-2), which delays theeffective date of SFAS 157 for one year for all nonfinancial assets andliabilities, except those that are recognized or disclosed at fair value in thefinancial statements on a recurring basis. The Company does not havenonfinancial assets and nonfinancial liabilities that are required to bemeasured at fair value on a recurring basis. Based on this guidance, the Companyexpects to adopt the provisions of SFAS 157 as related to nonfinancialassets and nonfinancial liabilities, effective January 1, 2009 and thisadoption is not expected to have a material impact on the Company’sfinancial statements.
The Company did not elect the fair value measurement option underSFAS No. 159, "The Fair Value Option for Financial Assets and Liabilities”and presently, the Company does not have any financial assets and liabilitiesthat would need to be measured under the fair measurement option under SFAS159.
In December 2007, the FASB issued SFAS No. 160,"Non-controlling Interests in Consolidated Financial Statements: an amendment ofARB No. 51" ("SFAS No. 160"). SFAS No. 160 replaces the termminority interests with the newly-defined term of non-controlling interests andestablishes this line item as an element of stockholders’ equity, separatefrom the parent’s equity. SFAS No. 160 also includes expandeddisclosure requirements regarding the interests of the parent and itsnon-controlling interest. The Company is continuing to review the provisions ofSFAS No. 160, which is effective the first quarter of fiscal 2010, andcurrently does not expect this new accounting standard to have a significantimpact on the Consolidated Financial Statements. 
In March 2008, the FASB issued SFAS No. 161, "Disclosuresabout Derivative Instruments and Hedging Activities: an amendment of FASBStatement No. 133" ("SFAS No. 161"). SFAS No. 161 changes thedisclosure requirements for derivative instruments and hedging activities. TheCompany is reviewing the provisions of SFAS No. 161, which is effective thefirst quarter of fiscal 2010, and currently does not anticipate that this newaccounting standard will have a significant impact on the Consolidated FinancialStatements. 
In May 2008, the FASB issued SFAS No. 162, "The Hierarchy ofGenerally Accepted Accounting Principles" (SFAS No. 162). SFAS No. 162identifies the sources of accounting principles and the framework for selectingprinciples used in the preparation of financial statements.  SFAS No.162 is effective 60 days following the SEC’s approval of the PublicCompany Accounting Oversight Board amendments to AU Section 411, "The Meaning ofPresent Fairly in Conformity with Generally Accepted Accounting Principles". Theimplementation of this standard will not have a material impact on ConsolidatedFinancial Statements.
6 

**Reclassifications**
The Company has reclassified certain amounts for the three monthsended July 31, 2007 to conform to the presentation of the July 31, 2008 amounts.The reclassifications have no effect on the net loss for the period ended July31, 2008
**(2) NET (LOSS) INCOME PER SHARE**
Basic earnings per common share (EPS) is computed by dividing netincome by the weighted-average number of common shares outstanding during theperiod. Diluted EPS is computed by dividing net income by the weighted-averagenumber of common shares outstanding during the period increased to include alladditional common shares that would have been outstanding assuming potentiallydilutive common share equivalents had been issued. Dilutive common shareequivalents include (1) the dilutive effect of in-the-money shares relatedto stock options, which is calculated based on the average share price for eachperiod using the treasury stock method.  Under the treasury stock method, theexercise price of an option, the average amount of compensation cost, if any,for future service that the Company has not yet recognized, and the amount oftax benefits that would be recorded in additional paid-in capital, if any, whenthe option is exercised, are assumed to be used to repurchase shares in thecurrent period. For the three months ended July 31, 2008 and 2007, therewere an aggregate of 35,523,530 and 31,080,685 respectively, potential commonshares related to share-based instruments, excluded from the diluted EPScomputation because their inclusion would have had an anti-dilutive effect.
The following is a reconciliation of the computation for basicand diluted EPS:

 

 

 

 

**July 31,** 
**July 31,**
 

 

 

 

**2008** 
**2007**
 

 

 

 
   
Net income (loss)

 

 

 $
(167,482)
 $
8,568 
 

 

 

 
 
 
 
Weighted-average common shares

 
 
 
 
outstanding (basic)

 

 
33,268,914 
 
30,842,049 
 

 

 

 
 
 
 
Weighted-average common stock

 
 
 
  Equivalents	
 

 
 
 
 
       Stockoptions

 

 
-
 
238,636 
       

 

  
 
 
 

 

 

 
 
 
 
Weighted-average common shares

 
 
 
 
outstanding (diluted)

 

 
33,268,914 
 
31,080,085 

**(3) COMMITMENTS AND CONTINGENCIES**
**Operating leases**
The Company leases, as tenant, space under an operating lease,which expires September 30, 2008. The Company also leases, as tenant, spaceunder an operating lease which expires February 28, 2009.
Rental expense during the three months ended July 31, 2008 and2007 was $19,280 and $0, respectively.
**(4) SHARE BASED COMPENSATION**
The total employee share based compensation cost that has beenrecognized in results of operations was $13,619 for the three months ended July31, 2008.  As of July 31, 2008, there was $155,611 unrecognized compensationcost related to employee share based compensation arrangements.  The cost isexpected to be recognized over a weighted average period of 2.69years.
The total nonemployee consulting share based compensation costthat has been recognized in the results of operations was $84,973 for the threemonths ended July 31, 2008.  As of July 31, 2008 there was $801,183 unrecognizedcompensation related to nonemployee consulting share based compensationarrangements. The cost is expected to be recognized over a weighted averageperiod of 2.21 years.
7 

**(5) PROVISION FOR INCOME TAXES**
Deferred income taxes are determined using the liability methodfor the temporary differences between the financial reporting basis and incometax basis of the Company’s assets and liabilities. Deferred income taxesare measured based on the tax rates expected to be in effect when the temporarydifferences are included in the Company’s consolidated tax return.Deferred tax assets and liabilities are recognized based on anticipated futuretax consequences attributable to differences between financial statementcarrying amounts of assets and liabilities and their respective taxbases.
At July 31, 2008 and 2007, deferred tax assets consist of thefollowing:  

   

 

2008 
2007
Deferred tax asset 

$
2,532,610 
$
2,483,487  Less:  valuation allowance	 
(2,532,610)
  
(2,483,487) 
Net deferred tax asset

$
-0-  
$
-0-  

At July 31, 2008 and 2007, the Company had federal net operatingloss carryforwards in the approximate amounts of $7,236,029 and $7,095,677available to offset future taxable income subject to Section 382 analysislimitations.  The Company established valuation allowances equal to the fullamount of the deferred tax assets due to the uncertainty of the utilization ofthe operating losses in future periods. 
**(6) RELATED PARTY TRANSACTIONS**
The Chairman of the Company participates in conducting andproviding the Company’s Personalized Oncology services.  During the threemonths ended July 31, 2008, the Company paid compensation to the Chairman forthese services which are provided in the ordinary course of business.  TheCompany believes the compensation is on the same basis as if the same serviceswere provided by unrelated parties.   The Chairman of the Company is a directorof ImClone Systems, Incorporated and Alfacell Corporation, companies which haveentered into contracts for the Company to perform services.  During the threemonths ended July 31, 2008, the Company recorded revenue of $12,345 fromAlfacell Corporation  and had deferred revenue of $198,450 from ImClone Systems,Incorporated.  All services provided under these contracts are in the ordinarycourse of business at prices and on terms and conditions that the Companybelieves are the same as those that would result from arm’s lengthnegotiations between unrelated parties.
8 

**Item 2.     Management’s Discussion and Analysis ofFinancial Condition and Results of Operations.**
       As used in thisQuarterly Report 10-Q, "Champions Biotechnology," "Champions," "we," "ours," and"us" refer to Champions Biotechnology, Inc., except where the context otherwiserequires or as otherwise indicated.
DISCLOSURE REGARDING FORWARD-LOOKINGSTATEMENTS

       This document contains"forward-looking statements" within the meaning of Section 27A of the SecuritiesAct of 1933 ("Securities Act") and Section 21E of the Securities Exchange Act of1934 ("Exchanges Act") that inherently involve risk and uncertainties.  TheCompany generally uses words such as "believe," "may," "could," "will,""intend," "estimate," "expect," "anticipate," "plan," "likely," "promise" andsimilar expressions to identify forward-looking statements.  One should notplace undue reliance on these forward-looking statements.  The Company’sactual results could differ materially from those anticipated in theforward-looking statements for many unforeseen factors, which may include, butare not limited to, changes in general economic conditions, the ongoing threatof terrorism, ability to have access to financing sources on reasonable termsand other risks. Those risks include, but are not limited to, the risksidentified in our periodic reports filed with the Securities and ExchangeCommission, including our most recent Annual Report on form 10-KSB.  Althoughthe Company believes the expectations reflected in the forward-lookingstatements are reasonable, they relate only to events as of the date on whichthe statements are made, and the Company’s future results, levels ofactivity, performance or achievements may not meet these expectations.  TheCompany does not intend to update any of the forward-looking statements afterthe date of this document to conform these statements to actual results or tochanges in the Company’s expectations, except as required bylaw.
*Overview*
       The Company is engagedin the development of advanced preclinical platforms and predictive tumorspecific data to enhance and accelerate the value of oncology drugs.  TheCompany’s Preclinical Platform is a novel approach based upon theimplantation of primary human tumors in immune deficient mice followed bypropagation of the resulting xenografts (Biomerk TumorgraftsTM) in a mannerthat preserves the biological characteristics of the original human tumor. The Company believes that Biomerk Tumorgrafts closely reflect human cancerbiology and their response to drugs is more predictive of clinical outcomes incancer patients.  The Company is building its Biomerk Tumorgraft platformthrough the procurement, development and characterization of numerousTumorgrafts within each of several cancer types.  Tumorgrafts are procuredthrough agreements with institutions in the United States and Europe anddeveloped and tested through agreement with a U.S. based preclinicalfacility.  
       We intend to leverageour preclinical platform to evaluate oncology drug candidates and to develop aportfolio of novel drug candidates through pre-clinical trials.  As drugsprogress through this early stage of development, the Company plans to sell,partner or license them to pharmaceutical and/or biotechnology companies, asappropriate.  We believe this strategy will enable the Company to leveragethe competencies of these partners or licensees to maximize the Company’sreturn on investment in a time frame that is shorter than for traditional drugdevelopment.  The Company believes that this model is unlike that of manynew biotechnology companies that look to bring the process of drug developmentthrough all phases of discovery, development, regulatory approvals, andmarketing, which requires a very large financial commitment and a longdevelopment period, typically more than a decade, to commercialize.  Thusfar we have acquired two oncology drug candidates and we have begun preclinicaldevelopment of the most promising candidate, SG410, through the use of contractfacilities.  We have secured preclinical supply of SG410 and it is ourintention to develop a soluble form of the compound and evaluate its efficacy inBiomerk Tumorgrafts from several cancer types.  If results are promising itis our intention to continue preclinical development and then sell, partner orlicense SG410 for its remaining clinical development.  
       The Company also offersits Biomerk Tumorgraft predictive preclinical platform and tumor specific datato physicians to provide information that may enhance personalized patient careoptions and to companies for evaluation of oncology drugs in a platform thatintegrates predictive testing with biomarker discovery.  We providePersonalized Oncology services to physicians in the field of oncology byestablishing and administering expert medical information panels for theirpatients to analyze medical records and test results, to assist in understandingconventional and research options and to identify and arrange for testing,analysis and study of cancer tissues, as appropriate.  In FY08 the Companygenerated all its revenue from its growing Personalized Oncology services whilewe continued development of our Biomerk Tumorgraft platform.  
       In late fiscal year2008, as we expanded our number of Biomerk Tumorgraft models, we began to offerleading pharmaceutical and biotechnology companies the benefits of our BiomerkTumorgrafts for their preclinical evaluation programs.  We providePreclinical eValuation services that we believe are more predictive of clinicaloutcomes and that might provide for a faster and less expensive path for drugapproval.  These services utilize Biomerk Tumorgrafts to evaluate tumorsensitivity/resistance to various single and combination standard and novelchemotherapy agents.  The Preclinical eValuation services we offer alsoinclude biomarker discovery and the identification of novel drugcombinations.   In the fourth quarter of fiscal year 2008 the Companyestablished an agreement with ImClone Systems Incorporated for the preclinicalevaluation of certain therapeutic antibodies in ImClone’s clinicaldevelopment pipeline. As part of the agreement, ImClone will utilize our BiomerkTumorgrafts in the initial preclinical evaluation.
9 

       Once we enter into anagreement with a pharmaceutical or biotechnology company to perform Biomerktesting services it takes several months to propagate the Tumorgrafts prior tobeginning the drug testing.  In the first quarter of fiscal 2009 we began theinitial testing under one of our contracts.  We are currently providing servicesor in discussions to provide services to a number of other companies.
*Results of Operations*
**Three Months Ended July 30, 2008 and 2007**
       **Revenues.** For the three months ended July 31, 2008, the Company’s operatingrevenue was $673,117. For the three months ended July 31, 2007, the operatingrevenue was $250,000.  The Company primarily derived its revenue from itsPersonalized Oncology business which provides services to assist physicians byproviding information that may enhance personalized treatment options for theircancer patients through access to expert medical information panels and tumorspecific data.  Revenues are also derived from the Company’s PreclinicaleValuation business which offers the benefits of its Preclinical Platform topharmaceutical and biotechnology companies using Biomerk Tumorgraft studieswhich have been shown to be predictive of how drugs perform in clinicalsettings.  The Company began to generate revenue from its Preclinical eValuationbusiness in the first quarter of fiscal 2009 as it completed a small portion ofone study for one of its contractual customers during the quarter; that studyand others continue and are in progress.  Expectations for growth in the futureare from continued Personalized Oncology services and expected increased use ofour Preclinical eValuation services. The Company’s revenue is described asPersonalized Oncology and Preclinical Contract  revenue in the CondensedConsolidated Statements of Operations.
       At July 31, 2008, theCompany had deferred revenue of $806,937 which represents payments in advance onfuture operations which will be recognized as earned when operations areperformed.  At July 31, 2007, the Company had no deferred revenue.
       **Expenses.**For the three months ended July 31, 2008, the operating expenses for the Companywere $861,315 compared to $246,791 for the three months ended July 31, 2007.
       Research anddevelopment expenses
       For the three monthsended July 31, 2008, research and development expenses were $217,163 and $75,000for the three months ended July 31, 2007.  The increase of $142,163 wasprimarily a result of the increase in Tumorgrafts acquired and theirpropogation, characterization and development for future utilization inpreclinical studies.  Increases also resulted from preclinical developmentexpenses for the Company’s lead oncology drug candidate, SG410.
       Cost of personalizedoncology and preclinical contract services
       For the three monthsended July 31, 2008, the costs of personalized oncology and preclinical contractservices were $259,600 and $80,562 for the three months ended July 31, 2007.These costs were primarily for conducting the Company’s personalizedoncology services, including medical information panels and personalizedtumorgrafts, but also include costs related to preclinical evaluation studies inprogress under contract.
       General andadministrative expenses
       For the three monthsended July 31, 2008, general and administrative expenses were $384,552, comparedto $91,229 at July 31, 2007.  The Company experienced increasing expenses as itsactivities increased and as it built and  grew its infrastructure including theaddition of personnel, consultants, offices and other resources to facilitatecurrent and future growth.
       Expenses are expectedto increase in the future, commensurate with the Company’s increasedlevels of activity and growth.
       **NetIncome.** For the three months ended July 31, 2008, the Company’snet loss was $167,482 and the net income for the three months ended July 31,2007 was $8,568.  In the quarter ended July 31, 2008, the Company increasedinvestments to grow its preclinical platform, increase revenues from itsPersonalized Oncology and Preclinical eValuation businesses and beginpreclinical development of its oncology drug candidate, SG410.  The Companybegan its operations as a biotechnology company in the quarter ended July 31,2007 after it acquired Biomerk, Inc. in May 2007.
*Liquidity and Capital Resources*
       The Company’scash position on July 31, 2008, was $3,494,872 compared to $507,025 on July 31,2007. For the three months ended July 31, 2008, the net cash used by operatingactivities was $212,159. For the three months ended July 31, 2007, the net cashprovided by operating activities was $75,583.
10 

       The Company’sworking capital as of July 31, 2008 was $2,672,380 compared to $92,432 at July31, 2007. The increased working capital was due to the receipt of proceeds of$2,500,000 from private investment financing in March 2008 and the receipt ofpayments in advance on future operations as deferred revenue. 
       The Company hassufficient resources to provide for the next twelve months of operations basedon its current level of expenditure, its anticipated level of future expenditureand revenue growth and its ability to curtail expenditures if needed.
*Critical Accounting Policies*
       In the notes to thecondensed consolidated financial statements for the three months ended July 31,2008 included in the Company’s Form 10-Q, the Company discussed thoseaccounting policies that are considered to be significant in determining theresults of operations and our financial position.  We believe that theaccounting principles utilized by us conform to accounting principles generallyaccepted in the United States of America.
**Item 3.**     **Quantitative andQualitative Disclosures About Market Risk**
       None.
**Item 4.**     **Controls andProcedures**
       We maintain a system ofdisclosure controls and procedures that is designed to provide reasonableassurance that information, which is required to be disclosed by us in thereports that we file or submit under the Securities and Exchange Act of 1934, asamended, is recorded, processed, summarized and reported within the time periodsspecified in the rules and forms of the Securities and Exchange Commission, andis accumulated and communicated to management in a timely manner.  Our PrincipalExecutive Officer and Acting Chief Financial Officer have evaluated this systemof disclosure controls and procedures as of the end of the period covered bythis quarterly report, and believe that the system is not effective.  There havebeen no changes in our internal control over financial reporting during the mostrecent fiscal quarter that have materially affected, or are reasonably likely tomaterially affect, our internal control over financialreporting.
11 

**PART II-OTHER****INFORMATION**

**Item 1.**     **Legal Proceedings.**
None
**Item 2.**     **Unregistered Sales of EquitySecurities and Use of Proceeds.**
None
**Item 3.**** Defaults Upon SeniorSecurities.**
None
**Item 4.**     **Submission of Matters to a Vote ofSecurity Holders.**
None
**Item 5.**     **Other Information**
None
**Item 6**.     **Exhibits**
Exhibit No.

31.1

Rule 13a-14(a)/15d-14(a) Certification of Chief ExecutiveOfficer

31.2

Rule 13a-14(a)/15d-14(a) Certification of Chief FinancialOfficer

32.1

Section 1350 Certifications

12 

**SIGNATURES**        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.	 
CHAMPIONS BIOTECHNOLOGY, INC.
 
(Registrant)
      
Date: September 15, 2008

By:

/s/ Douglas D. Burkett
 
  

Douglas D. Burkett
 
  

Principal Executive Officer
       
By:

/s/ Durwood C. Settles
 
  

Durwood C. Settles
 
  

Acting Chief Financial Officer

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