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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 January 31, 2011
 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)
 Yes þ No o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ
 Yes o No 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, 2011 (unaudited) and April 30, 2010
    
    
    3Condensed Consolidated Statements of Operations for the three and nine months ended January 31, 2011 and 2010 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the nine months ended January 31, 2011 and 2010 (unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 4. Controls and Procedures
    
    
    18PART II. Other InformationItem 1. Legal Proceedings
    
    
    19Item 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3. Defaults Upon Senior Securities
    
    
    19Item 5. Other Information
    
    
    19Item 6. Exhibits
    
    
    19SignaturesExhibit 31.1Exhibit 32.1Exhibit 99.1
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PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 CHAMPIONS BIOTECHNOLOGY, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 January 31,
    
    
    April 30,2011
    
    
    2010(unaudited)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    2,941,000
    
    
    $
    2,572,000Accounts receivable
    
    
    366,000
    
    
    
    46,000Grant receivable
    
    
    367,000
    
    
    
    Prepaid expenses, deposits, and other
    
    
    420,000
    
    
    
    540,000Total current assets
    
    
    4,094,000
    
    
    
    3,158,000Property and equipment, net
    
    
    121,000
    
    
    
    105,000Goodwill
    
    
    669,000
    
    
    
    669,000TOTAL ASSETS
    
    $
    4,884,000
    
    
    $
    3,932,000LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    2,082,000
    
    
    $
    944,000Accrued liabilities
    
    
    246,000
    
    
    
    236,000Deferred revenue
    
    
    361,000
    
    
    
    910,000Total current liabilities
    
    
    2,689,000
    
    
    
    2,090,000Other liabilities
    
    
    
    
    
    
    77,000TOTAL LIABILITIES
    
    
    2,689,000
    
    
    
    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;
36,853,000 and 36,844,000 issued at
January 31, 2011 and April 30, 2010,
respectively, and 35,617,000 and
35,780,000 shares outstanding as of
January 31, 2011 and April 30, 2010,
respectively
    
    
    37,000
    
    
    
    37,000Treasury stock, at cost, 1,236,000
and 1,064,000 shares at January 31,
2011 and April 30, 2010,
respectively
    
    
    (292,000
    )
    
    
    (219,000
    )Stock subscription receivable
    
    
    (750,000
    )
    
    
    (750,000
    )Additional paid-in capital
    
    
    16,958,000
    
    
    
    15,193,000Accumulated deficit
    
    
    (13,740,000
    )
    
    
    (12,680,000
    )Accumulated other comprehensive loss
    
    
    (18,000
    )
    
    
    (4,000
    )Total stockholders equity
    
    
    2,195,000
    
    
    
    1,577,000TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    4,884,000
    
    
    $
    3,932,000
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CHAMPIONS BIOTECHNOLOGY, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedJanuary 31,
    
    
    January 31,2011
    
    
    2010
    
    
    2011
    
    
    2010OPERATING REVENUEPersonalized oncology solutions
    
    $
    1,419,000
    
    
    $
    325,000
    
    
    $
    2,816,000
    
    
    $
    1,813,000Translational oncology solutions(1)
    
    
    1,386,000
    
    
    
    417,000
    
    
    
    2,522,000
    
    
    
    1,180,000Total operating revenue
    
    
    2,805,000
    
    
    
    742,000
    
    
    
    5,338,000
    
    
    
    2,993,000COSTS AND OPERATING EXPENSESCost of personalized oncology solutions
    
    
    751,000
    
    
    
    162,000
    
    
    
    1,234,000
    
    
    
    783,000Cost of translational oncology solutions(1)
    
    
    584,000
    
    
    
    202,000
    
    
    
    1,094,000
    
    
    
    586,000Research and development
    
    
    400,000
    
    
    
    566,000
    
    
    
    2,044,000
    
    
    
    1,707,000General and administrative
    
    
    1,856,000
    
    
    
    596,000
    
    
    
    3,370,000
    
    
    
    2,293,000Total costs and operating expenses
    
    
    3,591,000
    
    
    
    1,526,000
    
    
    
    7,742,000
    
    
    
    5,369,000OPERATING LOSS
    
    
    (786,000
    )
    
    
    (784,000
    )
    
    
    (2,404,000
    )
    
    
    (2,376,000
    )Interest and other income
    
    
    371,000
    
    
    
    
    
    
    
    1,344,000
    
    
    
    5,000NET LOSS
    
    $
    (415,000
    )
    
    $
    (784,000
    )
    
    $
    (1,060,000
    )
    
    $
    (2,371,000
    )NET LOSS PER SHARE  BASIC AND DILUTED
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    (0.03
    )
    
    $
    (0.07
    )WEIGHTED AVERAGE SHARES OUTSTANDING  BASIC AND DILUTED
    
    
    35,664,000
    
    
    
    34,052,000
    
    
    
    35,693,000
    
    
    
    33,175,000
 (1)
    
    Previously referred to as Preclinical eValuation services.
   - 4 -




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CHAMPIONS BIOTECHNOLOGY, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Nine Months EndedJanuary 31,2011
    
    
    2010OPERATING ACTIVITIESNet loss
    
    $
    (1,060,000
    )
    
    $
    (2,371,000
    )Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:Stock-based compensation
    
    
    1,578,000
    
    
    
    343,000Depreciation
    
    
    30,000
    
    
    
    24,000Common stock issued for patent
    
    
    
    
    
    
    175,000Changes in operating assets and liabilities:Accounts receivable
    
    
    (319,000
    )
    
    
    (414,000
    )Grant receivable
    
    
    (367,000
    )
    
    
    Prepaid expenses, deposits and other receivables
    
    
    120,000
    
    
    
    363,000Accounts payable
    
    
    1,139,000
    
    
    
    (528,000
    )Accrued liabilities and other
    
    
    (67,000
    )
    
    
    215,000Deferred revenue
    
    
    (550,000
    )
    
    
    (915,000
    )Net cash provided by (used in) operating activities
    
    
    504,000
    
    
    
    (3,108,000
    )INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (47,000
    )
    
    
    (40,000
    )Proceeds from certificate of deposit
    
    
    
    
    
    
    1,017,000Net cash (used in) provided by investing activities
    
    
    (47,000
    )
    
    
    977,000FINANCING ACTIVITIESPurchase of treasury stock
    
    
    (73,000
    )
    
    
    (188,000
    )Proceeds from exercise of warrants
    
    
    2,000
    
    
    
    3,000Net proceeds from private placement of common stock
    
    
    
    
    
    
    2,075,000Net cash (used in) provided by financing activities
    
    
    (71,000
    )
    
    
    1,890,000Exchange rate effect on cash and cash equivalents
    
    
    (17,000
    )
    
    
    (8,000
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    369,000
    
    
    
    (249,000
    )CASH AND CASH EQUIVALENTS  BEGINNING OF PERIOD
    
    
    2,572,000
    
    
    
    1,728,000CASH AND CASH EQUIVALENTS  END OF PERIOD
    
    $
    2,941,000
    
    
    $
    1,479,000
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CHAMPIONS BIOTECHNOLOGY, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Organization, Use of Estimates and Basis of Presentation
   Note 2. Summary of Significant Accounting Policies
 Interim Financial Information
  Principles of Consolidation
    - 6 -




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Segment Reporting
  Use of Estimates
  Cash and Cash Equivalents
  Fair Value of Financial Instruments
  Goodwill
  Deferred Revenue
  Revenue Recognition
   - 7 -




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Cost of Personalized Oncology Solutions
  Cost of Translational Oncology Solutions
  Research and Development
  Recent Accounting Pronouncements
 Multiple-Deliverable Revenue Arrangements
 Note 3. Basic and Dilutive Loss Per Common Share
    - 8 -




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Note 4. Property and Equipment
  January 31,
    
    
    April 30,2011
    
    
    2010Furniture and fixtures
    
    $
    6,000
    
    
    $
    6,000Computer equipment and software
    
    
    121,000
    
    
    
    42,000Laboratory equipment
    
    
    47,000
    
    
    
    37,000Software in-progress
    
    
    
    
    
    
    43,000Total property and equipment
    
    
    174,000
    
    
    
    128,000Less accumulated depreciation
    
    
    (53,000
    )
    
    
    (23,000
    )Property and equipment, net
    
    $
    121,000
    
    
    $
    105,000
  Note 5. Licensing Agreements
 Bithionol License Agreement
   TAR1 License Agreement
   Benzoylyphenylerea License Agreement
   - 9 -




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Liposome Option Agreement
  Note 6. Stock-Based Compensation
     Three Months Ended
    
    
    Nine Months EndedJanuary 31,
    
    
    January 31,2011
    
    
    2010
    
    
    2011
    
    
    2010Cost of personalized oncology solutions
    
    $
    
    
    
    $
    4,000
    
    
    $
    
    
    
    $
    15,000Research and development
    
    
    27,000
    
    
    
    38,000
    
    
    
    76,000
    
    
    
    70,000General and administrative
    
    
    1,184,000
    
    
    
    117,000
    
    
    
    1,502,000
    
    
    
    258,000Total stock-based compensation expense
    
    $
    1,211,000
    
    
    $
    159,000
    
    
    $
    1,578,000
    
    
    $
    343,000
  Three Months Ended
    
    
    Nine Months EndedJanuary 31,
    
    
    January 31,2011
    
    2010
    
    
    2011
    
    2010Expected term in years
    
    6.0
    
    
    
    
    
    6.0
    
    6.0Risk-free interest rates
    
    1.5%  2.5%
    
    
    
    
    
    1.5%  2.5%
    
    2.8%  3.1%Volatility
    
    105%  107%
    
    
    
    
    
    104%  107%
    
    94%Dividend yield
    
    0%
    
    
    
    
    
    0%
    
    0%
   - 10 -




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Stock Option Grants
      Warrants
   Note 7. Related Party Transactions
   Stock Repurchase Agreement
   - 11 -




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Note 8. Exit Costs
  TotalEstimatedExpenseRecordedin theFourth
    

    
    Liability
    
    
    Payments
    
    
    Liability asQuarter of
    

    
    as of April 30,
    
    
    during
    
    
    of January 31,2010
    

    
    2010
    
    
    fiscal 2011
    
    
    2011Severance payments
    
    $
    11,000
    

    
    $
    6,000
    
    
    $
    6,000
    
    
    $
    Future lease
payments, net of
sublease rental
    
    
    18,000
    

    
    
    17,000
    
    
    
    10,000
    
    
    
    7,000Moving costs and other
    
    
    7,000
    

    
    
    2,000
    
    
    
    2,000
    
    
    
    Disposal of assets
    
    
    22,000
    

    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    58,000
    

    
    $
    25,000
    
    
    $
    18,000
    
    
    $
    7,000
  Note 9. Research and Development Materials Purchase Agreement
  2011
    
    $
    99,0002012
    
    
    132,000Total payments
    
    $
    231,000
  - 12 -




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Note 10. Other Income
  Note 11. Subsequent Event
    - 13 -




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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
    - 14 -




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Results of Operations
 Three Months Ended January 31, 2011 and 2010
 Operating Revenues.
  Costs and Operating Expenses.
       - 15 -




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Interest and Other Income.
  Net Loss.
  Nine Months Ended January 31, 2011 and 2010
 Operating Revenues.
  Costs and Operating Expenses.
      Interest and Other Income.
   - 16 -




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Net Loss.
  Liquidity and Capital Resources
 Sources of Liquidity.
   Cash Flows.
  Nine Months EndedJanuary 31,2011
    
    
    2010Cash provided by (used in):Operating activities
    
    $
    504,000
    
    
    $
    (3,108,000
    )Investing activities
    
    
    (47,000
    )
    
    
    977,000Financing activities
    
    
    (71,000
    )
    
    
    1,890,000Effect of exchange rates
    
    
    (17,000
    )
    
    
    (8,000
    )Net increase (decrease) in cash and cash equivalents
    
    $
    369,000
    
    
    $
    (249,000
    )
 Nine Months Ended January 31, 2011
    Nine Months Ended January 31, 2010
     - 17 -




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Commitments and Contractual Obligations
  Ability to Continue As a Going Concern
   Off Balance Sheet Arrangements
  
 ITEM 4.
    
    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 1A.
    
    RISK FACTORS
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 5.
    
    OTHER INFORMATION
  
 ITEM 6.
    
    EXHIBITS
 Exhibit 31.1
    
    Certification by the Principal Executive Officer and Acting
Principal Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002Exhibit 32.1
    
    Certification by the Principal Executive Officer and Acting
Principal Financial Officer Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002Exhibit 99.1
    
    Press Release dated March 7, 2011
  - 19 -




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SIGNATURES
  CHAMPIONS BIOTECHNOLOGY, INC.
(Registrant)Date:  March 7, 2011
    By:
    /s/ Joel AckermanJoel AckermanChief Executive Officer and
Acting Chief Financial Officer  - 20 -