CHAMPIONS ONCOLOGY INC

Previous wording

Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. The following conditions raised substantial doubt about our ability to continue as a going concern: a history of net losses, working capital deficits, accumulated deficit and declining cash position. Going concern matters are more fully discussed in Notes to the Consolidated Financial Statements, Note 2, Summary of Significant Accounting Policies. No adjustments have been made to the financials statements as a result this uncertainty.

Current wording

Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. The following conditions raised substantial doubt about our ability to continue as a going concern: a history of net losses, working capital deficits, accumulated deficit and declining cash position. Going concern matters are more fully discussed in Notes to the Consolidated Financial Statements, Note 2, Summary of Significant Accounting Policies. No adjustments have been made to the financial statements as a result this uncertainty.

Previous wording

Our 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. Most recently, we have met these cash requirements through cash on hand, working capital management, and sales of products and services. In the past, we have also received proceeds from certain private placements and public offerings of our securities. For the three months ended July 31, 2024, the Company had net income of approximately $1.3 million and cash provided by operations of approximately $311,000. As of July 31, 2024, the Company had an accumulated deficit of approximately $83.3 million and cash on hand of approximately $2.9 million. While we believe we have strategies to increase our revenues and reduce our costs which can be implemented without disrupting the business or completely restructuring the Company, there can be no assurances. In order to continue to fund our operations we may need to raise additional equity or debt capital in the near term and cannot provide any assurance that we will be successful in doing so, and if we can, on whether the terms will be acceptable to us. If we are unable to obtain additional financing in the near future, we may be required to pursue a reorganization proceeding, including under applicable bankruptcy or insolvency laws.

Current wording

Our 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. Most recently, we have met these cash requirements through cash on hand, working capital management, and sales of products and services. In the past, we have also received proceeds from certain private placements and public offerings of our securities. For the six months ended October 31, 2024, the Company had net income of approximately $2.0 million and cash provided by operations of approximately $28,000. As of October 31, 2024, the Company had an accumulated deficit of approximately $82.6 million and cash on hand of approximately $2.8 million. While we believe we have strategies to increase our revenues and reduce our costs which can be implemented without disrupting the business or completely restructuring the Company, there can be no assurances. In order to continue to fund our operations we may need to raise additional equity or debt capital in the near term and cannot provide any assurance that we will be successful in doing so, and if we can, on whether the terms will be acceptable to us. If we are unable to obtain additional financing in the near future, we may be required to pursue a reorganization proceeding, including under applicable bankruptcy or insolvency laws.

Previous wording

Research and development expense for the three months ended July 31, 2024 and 2023 were $1.5 million and $2.8 million, respectively, a decrease of approximately $1.3 million or 47.9%. The decrease in the three month period was primarily due to a reduction in investment in our developmental programs including target discovery.

Current wording

Research and development expense for the three months ended October 31, 2024 and 2023 were $1.7 million and $2.5 million, respectively, a decrease of approximately $826,000 or 32.8%. Research and development expense for the six months ended October 31, 2024 and 2023 were $3.1 million and $5.3 million, respectively, a decrease of approximately $2.2 million or 40.8%. The decreases in both the three and six month periods were primarily due to a reduction in investment in our developmental programs including target discovery. The declines were primarily from a reduction in salary expense and research agreements.

Previous wording

Sales and marketing expenses for the three months ended July 31, 2024 and 2023 were $1.7 million, with a slight decrease of $17,000 or 1.0%. Sales and marketing expenses are primarily comprised of compensation expenses to support business development.

Current wording

Sales and marketing expenses for the three months ended October 31, 2024 and 2023 were $1.8 million, with a slight decrease of $44,000 or 2.5%. Sales and marketing expenses for the six months ended October 31, 2024 and 2023 were $3.4 million and $3.5 million, with a slight decrease of $61,000 or 1.7%. Sales and marketing expenses are primarily comprised of compensation expenses to support business development.

Previous wording

General and administrative expenses for the three months ended July 31, 2024 and 2023 were $2.5 million and $2.9 million, respectively, a decrease of $413,000, or 14.0%. General and administrative expenses are primarily comprised of compensation, insurance, professional fees, IT and depreciation and amortization expenses. The decrease for the three months ended July 31, 2024 was primarily from a decrease in compensation and employee recruitment expenses.

Current wording

General and administrative expenses for the three months ended October 31, 2024 and 2023 were $1.9 million and $2.6 million, respectively, a decrease of $711,000, or 27.3%. General and administrative expenses for the six months ended October 31, 2024 and 2023 were $4.4 million and $5.5 million, respectively, a decrease of $1,124,000, or 20.3%. General and administrative expenses are primarily comprised of compensation, insurance, professional fees, IT and depreciation and amortization expenses. The decrease for the three and six month periods ended October 31, 2024 was primarily from a decrease in compensation and employee recruitment expenses and an adjustment to our credit loss reserve.

Previous wording

For the three months ended July 31, 2024, net cash provided by operating activities was $311,000. The cash provided by operating activities was primarily due to income from operations offset by changes in our working capital accounts in the ordinary course of business.

Current wording

For the six months ended October 31, 2024, net cash provided by operating activities was $28,000. The cash provided by operating activities was primarily due to income from operations offset by changes in our working capital accounts, including but not limited to, an increase in accounts receivable and a reduction in accounts payable in the ordinary course of business. For the six months ended October 31, 2023, net cash used in operating activities was $3.4 million. The cash used in operating activities was primarily due to the net operating loss during the period.

Previous wording

Net cash used in investing activities was $0 and $668,000 for the three months ended July 31, 2024 and 2023, respectively. The cash used in investing activities for the prior year period was for the investment in additional lab and computer equipment.

Current wording

Net cash used in investing activities was $94,000 and $747,000 for the six months ended October 31, 2024 and 2023, respectively. The cash used in investing activities for the current and prior year period was for the investment in additional lab and computer equipment.

Previous wording

Net cash used in financing activities was $37,000 for the three months ended July 31, 2024 and $590,000 for the three months ended July 31, 2023. The cash used in the current year was for financing lease payments. The cash used in the prior year period was for the Company's stock repurchase program offset slightly by cash received from stock option exercises.

Current wording

Net cash provided by financing activities was $202,000 for the six months ended October 31, 2024 . For the six months ended October 31, 2024, the cash provided was from cash received from stock options exercises slightly offset by financing lease payments. Net cash used in financing activities was $456,000 for the six months ended October 31, 2023. The cash used was due to the Company's' stock repurchase program offset by cash received from stock option exercises.

Previous wording

Our results of operations may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the effects of the resurgence of COVID-19 and/or its variants or the emergence of new viruses, and geopolitical instability, such as the military conflicts in Ukraine and the Middle East. We cannot at this time fully predict the likelihood of one or more of the above events, their duration, or magnitude or the extent to which they may negatively impact our business.

Current wording

Our results of operations may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the effects of a resurgence or emergence of pandemic-like viruses, and geopolitical instability, such as the military conflicts in Ukraine and the Middle East. We cannot at this time fully predict the likelihood of one or more of the above events, their duration, or magnitude or the extent to which they may negatively impact our business.