The Company expanded its IP portfolio, filing three provisional patent applications in the quarter

Second quarter revenues increased by $68,482 , or 12%, on a year-over-year basis

, or 12%, on a year-over-year basis Adjusted EBITDA was $(213,343) , compared to Adjusted EBITDA of $(415,714) for the comparative three months ended March 31, 2018 , an improvement of approximately $201,371

, compared to Adjusted EBITDA of for the comparative three months ended , an improvement of approximately Gross margins increased to 34.3%, from negative 14% in the prior year's second fiscal quarter, as the Company sourced better pricing on consumable lab supplies and improved processes to become more efficient

Net loss decreased to $451,465 for the second quarter of 2019, from a net loss of $462,174 in the first quarter ended December 31, 2018 . Net loss for the second quarter was impacted by non-cash expenses of $237,122 , consisting primarily of bad debts expense, depreciation, stock-based compensation and the amortization of debt discounts.

for the second quarter of 2019, from a net loss of in the first quarter ended . Net loss for the second quarter was impacted by non-cash expenses of , consisting primarily of bad debts expense, depreciation, stock-based compensation and the amortization of debt discounts. Ended the period with $708,623 of working capital, including $514,018 of cash

Management Comment

Todd Denkin, Digipath's President and CEO, commented, "We continued to realize revenue growth in our second fiscal quarter of 2019, and were able to successfully improve our gross margins. We also made progress in our efforts to become a leading 'canna-tech' company with diversified service offerings within a number of cannabis-related verticals following the launch of GroSciences in our first quarter to help cannabis producers with terpene formulations and R&D. We have also taken steps to protect our intellectual property by filing provisional patent applications related to terpene science for beer, pesticides and genetic identifiers. We look forward to further growth as we continue our expansion initiatives in both hemp and cannabis testing labs."

The table below shows the interim results and key metrics:



Quarterly Data

Quarterly Data

FYE September 30, 2019

FYE September 30, 2018

Q2 2019

Q1 2019

Q2 2018

Q1 2018















Revenues (Thousands) $ 652

$ 642

$ 583

$ 1,119 Revenue Growth (%YOY) 11.7%

-42.6%

17.0%

173.0% Gross Profit Margins (%) 34.3%

24.9%

-14.2%

66.3% Quick Ratio (%) 292.6%

158.0%

171.2%

461.3% Adjusted EBITDA Return on Assets (%) -12.0%

-16.4%

-25.3%

18.6%

Adjusted EBITDA

We define Adjusted EBITDA as net earnings (loss) before (i) other income (expense), (ii) interest expense, (iii) bad debts, (iv) depreciation and amortization, (v) non-cash expenses relating to share-based payments recognized under ASC Topic 718, and (vi) amortization of debt discounts. We believe the use of this non-GAAP financial measure provides useful information to investors regarding our current financial performance; however, Adjusted EBITDA does not represent, and should not be considered an alternative to GAAP measurements. Specifically, we believe Adjusted EBITDA results provide useful information to both management and investors by excluding certain income and expenses that our management believes are not indicative of our core operating results, we believe that non-GAAP financial measures have limitations and do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that Adjusted EBITDA should only be used to evaluate our results of operations in conjunction with the corresponding GAAP financial measures. A reconciliation of Adjusted EBITDA to net loss is included below:

DIGIPATH, INC. AND SUBSIDIARIES RECONCILIATION OF ADJUSTED EBITDA TO NET LOSS (Unaudited)

















For the Three Months Ended

For the Six Months Ended

March 31,

March 31,

2019

2018

2019

2018















Net loss $ (451,465)

$ (700,396)

$ (913,639)

$ (879,413) Add back:













Other income (22,250)

(22,200)

(72,650)

(42,900) Interest expense 18,003

-

28,756

- Bad debts expense 25,265

42,301

49,830

98,241 Depreciation and amortization 64,390

72,605

128,771

141,696 Stock based compensation 143,574

191,976

299,409

638,415 Amortization of debt discounts 8,140

-

12,986

- Adjusted EBITDA $ (214,343)

$ (415,714)

$ (466,537)

$ (43,961)

About Digipath, Inc. (OTCQB: DIGP) and Digipath Labs, Inc.

Digipath, Inc., supports the cannabis industry's best practices for reliable testing, data acquisition, cannabis education and training, and brings unbiased cannabis news coverage to the cannabis industry.

Digipath Labs provides pharmaceutical-grade analysis and testing to the cannabis industry to ensure producers, consumers and patients know exactly what is in the cannabis they ingest and to help maximize the quality of its client's products through analysis, research, development, and standardization.

Information about Forward-Looking Statements

This press release contains "forward-looking statements" that include information relating to future events. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or management's good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in, or suggested by, the forward-looking statements. Important factors that could cause these differences include, but are not limited to: the Company's need for additional funding, the demand for the Company's products, governmental regulation of the cannabis industry, the Company's ability to maintain customer and strategic business relationships, the impact of competitive products and pricing, growth in targeted markets, the adequacy of the Company's liquidity and financial strength to support its growth, and other risks that may be detailed from time-to-time in the Company's filings with the United States Securities and Exchange Commission. For a more detailed description of the risk factors and uncertainties affecting Digipath, please refer to the Company's recent Securities and Exchange Commission filings, which are available at www.sec.gov. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Digipath Investor Relations & Financial Media

[email protected]

Toll Free: (888) 216-3595

www.IntegrityIR.com

SOURCE Digipath, Inc.

Related Links

https://digipath.com/

