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Digipath, Inc. (OTCQB:DIGP) (“DIGP” or the “Company”), a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, today announced results for the three and six months ended March 31, 2019, which include a 12% increase in revenue to $651,555 for the second quarter of 2019 from $583,073 in the second quarter of 2018, and gross profit of $223,725, which rose approximately 9.5% over the previous quarter. The full quarterly filing can be found on our website: Digipath SEC Filings

Second Fiscal Quarter 2019 Company Highlights

— 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

— 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

— 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.

— 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 2018Revenues (Thousands)                 $        652  $          642  $       583  $      1,119Revenue 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 SUBSIDIARIESRECONCILIATION OF ADJUSTED EBITDA TO NET LOSS(Unaudited)                               For the Three Months Ended            For the Six Months Ended                               March 31,                             March 31,                               2019               2018               2019               2018Net 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             98,241Depreciation and amortization  64,390             72,605             128,771            141,696Stock based compensation       143,574            191,976            299,409            638,415Amortization 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 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 Mediainfo@integrityir.comToll Free: (888)

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SOURCE Digipath, Inc.

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