UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~[X]~~☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended ~~December 31, 2017~~June 30, 2021

~~[ ]~~ ☐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 000-54239

Digipath, Inc.

(Exact name of registrant issuer as specified in its charter)

Nevada

27-3601979

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)


6450 Cameron StSuite 113Las Vegas, NV		89118
(Address of principal executive offices)		(zip code)

(702)527-2060

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
		N/A		N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

~~Yes~~

~~[X]~~

~~[ ]~~

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

~~Yes~~

~~[X]~~

~~[ ]~~

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	~~[ ]~~☐	Accelerated filer	~~[ ]~~☐
Non-accelerated filer ~~(Do not check if a smaller reporting company)~~	~~[ ]~~☒	Smaller reporting company	~~[ ]~~☒
		Emerging growth company	~~[X]~~☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~[ ]~~☐

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

~~Yes~~

~~[ ]~~

~~[X]~~

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

The number of shares of registrant’s common stock outstanding as of ~~February 9, 2018~~August 13, 2021 was ~~39,268,133.~~71,230,153.

TABLE OF CONTENTS

			Page
			No.
PART I - FINANCIAL INFORMATION		3
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	23
	Condensed Consolidated Balance Sheets as of ~~December 31, 2017~~June 30, 2021 (Unaudited) and September 30, ~~2017~~2020	23
	Condensed Consolidated Statements of Operations ~~and Comprehensive Loss~~ for the Three and Nine Months Ended ~~December 31, 2017~~June 30, 2021 and ~~2016~~2020 (Unaudited)	34
	Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Nine Months Ended June 30, 2021 and 2020 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~December 31, 2017~~June 30, 2021 and ~~2016~~2020 (Unaudited)	46
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	57
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1221
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	1626
ITEM 4.	CONTROLS AND PROCEDURES	1627
PART II - OTHER INFORMATION		28
ITEM 1.	Legal Proceedings	1728
ITEM 1A.	RISK FACTORS	1728
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	1728
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	1728
ITEM 4.	MINE SAFETY DISCLOSURES	1728
ITEM 5.	OTHER INFORMATION	1728
ITEM 6.	EXHIBITS	1828
	SIGNATURES	1930

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

DIGIPATH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

							June 30,			September 30,
	December 31,			September 30,			2021			2020
	2017			2017			(Unaudited)
Assets		(Unaudited)

Current assets:
Cash	$	360,827		$	178,177		$	72,809		$	82,749
Accounts receivable		454,471			266,613
Prepaid expenses		52,975			73,750
Accounts receivable, net								193,810			242,145
Other current assets								68,950			53,673
Deposits		25,647			25,647			73,675			18,675
Total current assets		893,920			544,187			409,244			397,242

Right-of-use asset								437,298			505,706
Fixed assets, net		1,100,472			1,027,049			650,721			885,405

Total Assets	$	1,994,392		$	1,571,236		$	1,497,263		$	1,788,353

Liabilities and Stockholders’ Equity
Liabilities and Stockholders’ Equity (Deficit)

Current liabilities:
Accounts payable	$	105,810		$	121,994		$	340,492		$	387,946
Accrued expenses		70,914			42,004			194,944			163,152
Short term advances								115,112			50,112
Current portion of operating lease liabilities								91,311			84,731
Current portion of finance lease liabilities								28,468			32,532
Current maturities of notes payable								56,705			54,317
Total current liabilities		176,724			163,998			827,032			772,790

Non-current liabilities:
Operating lease liabilities								354,701			423,752
Finance lease liabilities								-			20,379
Notes payable								335,960			418,907
Convertible notes payable, net of discounts of $-0- and $8,322 at June 30, 2021 and September 30, 2020, respectively								1,160,000			1,241,678
Total non-current liabilities								1,850,661			2,104,716

Total Liabilities		176,724			163,998			2,677,693			2,877,506

Stockholders’ Equity:
Series A convertible preferred stock, $0.001 par value, 10,000,000 shares authorized; 1,747,942 and 1,897,942 shares issued and outstanding at December 31, 2017 and September 30, 2017, respectively		1,748			1,898
Common stock, $0.001 par value, 90,000,000 shares authorized; 37,285,676 and 35,027,118 shares issued and outstanding at December 31, 2017 and September 30, 2017, respectively		37,286			35,027
Stockholders’ Equity (Deficit):
Series A convertible preferred stock, $0.001 par value, 10,000,000 shares authorized; 1,325,942 shares issued and outstanding								1,326			1,326
Common stock, $0.001 par value, 250,000,000 shares authorized; 69,730,153 and 58,270,567 shares issued and outstanding at June 30, 2021 and September 30, 2020, respectively								69,730			58,271
Additional paid-in capital		13,454,322			12,866,984			16,563,314			16,116,400
Accumulated (deficit)		(11,675,688	)		(11,496,671	)		(17,814,800	)		(17,265,150	)

Total Stockholders’ Equity		1,817,668			1,407,238
Total Stockholders’ Equity (Deficit)								(1,180,430	)		(1,089,153	)

Total Liabilities and Stockholders’ Equity	$	1,994,392		$	1,571,236
Total Liabilities and Stockholders’ Equity (Deficit)							$	1,497,263		$	1,788,353

See accompanying notes to financial statements.

DIGIPATH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ~~AND COMPREHENSIVE LOSS~~

(Unaudited)

							2021			2020			2021			2020
	For the Three Months Ended						For the Three Months Ended						For the Nine Months Ended
	December 31,						June 30,						June 30,
	2017			2016			2021			2020			2021			2020

Revenues	$	1,118,785		$	409,751		$	764,015		$	407,229		$	1,897,560		$	1,971,141
Cost of sales		376,772			204,132			551,976			347,724			1,389,776			1,250,234
Gross profit		742,013			205,619			212,039			59,505			507,784			720,907

Operating expenses:
General and administrative		399,114			279,686			278,082			328,128			715,093			1,123,479
Professional fees		486,676			191,643			91,001			177,835			313,364			688,902
Bad debts expense		55,940			14,450
Change in allowance for doubtful accounts								(10,960	)		25,420			(28,945	)		186,540
Total operating expenses		941,730			485,779			358,123			531,383			999,512			1,998,921

Operating loss		(199,717	)		(280,160	)		(146,084	)		(471,878	)		(491,728	)		(1,278,014	)

Other income:
Other income (expense):
Other income		20,700			154,000			-			21,000			47,918			63,000
Total other income		20,700			154,000
Loss on disposal of fixed assets								-			(28,238	)		-			(28,238	)
Interest expense								(31,130	)		(41,571	)		(105,840	)		(107,005	)
Total other income (expense)								(31,130	)		(48,809	)		(57,922	)		(72,243	)

Net loss	$	(179,017	)	$	(126,160	)	$	(177,214	)	$	(520,687	)	$	(549,650	)	$	(1,350,257	)
Other comprehensive loss
Available-for-sale investments:
Change in net unrealized loss (net of tax effect)		-			6,800

Comprehensive loss	$	(179,017	)	$	(119,360	)

Weighted average number of common shares outstanding - basic and fully diluted		35,413,602			23,947,563			68,479,201			57,225,309			64,081,692			52,048,121

Net (loss) per share - basic and fully diluted	$	(0.01	)	$	(0.01	)
Net loss per share - basic and fully diluted							$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.03	)

See accompanying notes to financial statements.

DIGIPATH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

	Shares		Amount		Shares		Amount		Capital		Payable			(Deficit)			(Deficit)
	For the Three Months Ended June 30, 2020
	Series A Convertible								Additional								Total Stockholders’
	Preferred Stock				Common Stock				Paid-in		Subscriptions			Accumulated			Equity
	Shares		Amount		Shares		Amount		Capital		Payable			(Deficit)			(Deficit)

Balance, March 31, 2020		1,325,942	$	1,326		56,737,672	$	56,738	$	15,879,225	$	37,500		$	(15,785,230	)	$	189,559

Common stock sold for cash
Common stock sold for cash, shares
Common stock issued for acquisition of VSSL Enterprises, Ltd.
Common stock issued for acquisition of VSSL Enterprises, Ltd., shares
Common stock issued for debt conversions
Common stock issued for debt conversions, shares
Common stock issued for services		-		-		875,000		875		97,318		(37,500	)		-			60,693
Common stock issued for services, related parties
Common stock issued for services, related parties, shares

Common stock options issued for services		-		-		-		-		28,032		-			-			28,032
Common stock warrants issued for services

Net loss for the three months ended June 30, 2020		-		-		-		-		-		-			(520,687	)		(520,687	)

Balance, June 30, 2020		1,325,942	$	1,326		57,612,672	$	57,613	$	16,004,575	$	-		$	(16,305,917	)	$	(242,403	)

	For the Three Months Ended June 30, 2021
	Series A Convertible								Additional							Total Stockholders’
	Preferred Stock				Common Stock				Paid-in		Subscriptions		Accumulated			Equity
	Shares		Amount		Shares		Amount		Capital		Payable		(Deficit)			(Deficit)

Balance, March 31, 2021		1,325,942	$	1,326		68,181,820	$	68,182	$	16,457,720	$	-	$	(17,637,586	)	$	(1,110,358	)

Common stock issued for services		-		-		83,333		83		4,917		-		-			5,000

Common stock issued for services, related parties		-		-		1,465,000		1,465		78,035		-		-			79,500

Common stock options issued for services		-		-		-		-		22,642		-		-			22,642

Net income for the three months ended June 30, 2021		-		-		-		-		-		-		(177,214	)		(177,214	)

Balance, June 30, 2021		1,325,942	$	1,326		69,730,153	$	69,730	$	16,563,314	$	-	$	(17,814,800	)	$	(1,180,430	)

	For the Nine Months Ended June 30, 2020
	Series A Convertible								Additional							Total Stockholders’
	Preferred Stock				Common Stock				Paid-in		Subscriptions		Accumulated			Equity
	Shares		Amount		Shares		Amount		Capital		Payable		(Deficit)			(Deficit)

Balance, September 30, 2019		1,325,942	$	1,326		48,361,433	$	48,361	$	15,331,839	$	-	$	(14,955,660	)	$	425,866

Common stock sold for cash		-		-		706,250		706		55,794		-		-			56,500

Common stock issued for acquisition of VSSL Enterprises, Ltd.		-		-		6,500,000		6,500		367,250		-		-			373,750

Common stock issued for services		-		-		2,044,989		2,046		113,360		-		-			115,406

Common stock options issued for services		-		-		-		-		66,320		-		-			66,320

Common stock warrants issued for services		-		-		-		-		70,012		-		-			70,012

Net loss for the nine months ended June 30, 2020		-		-		-		-		-		-		(1,350,257	)		(1,350,257	)

Balance, June 30, 2020		1,325,942	$	1,326		57,612,672	$	57,613	$	16,004,575	$	-	$	(16,305,917	)	$	(242,403	)

	For the Nine Months Ended June 30, 2021
	Series A Convertible								Additional							Total Stockholders’
	Preferred Stock				Common Stock				Paid-in		Subscriptions		Accumulated			Equity
	Shares		Amount		Shares		Amount		Capital		Payable		(Deficit)			(Deficit)

Balance, September 30, 2020		1,325,942	$	1,326		58,270,567	$	58,271	$	16,116,400	$	-	$	(17,265,150	)	$	(1,089,153	)

Common stock sold for cash		-		-		900,000		900		19,350		-		-			20,250

Common stock issued for debt conversions		-		-		6,666,668		6,666		193,334		-		-			200,000

Common stock issued for services		-		-		833,333		833		30,242		-		-			31,075

Common stock issued for services, related parties		-		-		3,059,585		3,060		140,220		-		-			143,280

Common stock options issued for services		-		-		-		-		63,768		-		-			63,768

Net loss for the nine months ended June 30, 2021		-		-		-		-		-		-		(549,650	)		(549,650	)
Net income (loss)		-		-		-		-		-		-		(549,650	)		(549,650	)

Balance, June 30, 2021		1,325,942	$	1,326		69,730,153	$	69,730	$	16,563,314	$	-	$	(17,814,800	)	$	(1,180,430	)

See accompanying notes to financial statements.

DIGIPATH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

							2021			2020
	For the Three Months Ended						For the Nine Months Ended
	December 31,						June 30,
	2017			2016			2021			2020
Cash flows from operating activities
Net loss	$	(179,017	)	$	(126,160	)	$	(549,650	)	$	(1,350,257	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Bad debts expense		55,940			14,450
Adjustments to reconcile net loss to net cash used in operating activities:
Change in allowance for doubtful accounts								(28,945	)		186,540
Depreciation and amortization expense		69,091			61,653			233,663			242,207
Loss on disposal of fixed assets								2,227			28,238
Gain on early extinguishment of debt								(40,338	)		-
Stock issued for services		187,704			17,500			174,355			115,406
Options and warrants granted for services		258,735			99,920			63,768			136,332
Amortization of debt discounts								8,322			24,783
Decrease (increase) in assets:
Accounts receivable		(243,798	)		(23,343	)		77,280			(176,825	)
Prepaid expenses		20,775			8,357
Other current assets								(15,277	)		(42,815	)
Inventory								-			(37,900	)
Deposits								(55,000	)		26,057
Right-of-use assets								68,408			144,149
Increase (decrease) in liabilities:
Accounts payable		(16,184	)		(13,139	)		(47,454	)		230,483
Accrued expenses		28,910			(9,201	)		32,016			169
Net cash provided by operating activities		182,156			30,037
Lease liabilities								(62,471	)		(141,504	)
Net cash used in operating activities								(139,096	)		(614,937	)

Cash flows from investing activities
Cash acquired from affiliate in acquisition of VSSL								-			143
Cash paid for purchase of VSSL Enterprises, Ltd.								-			(200,000	)
Purchase of fixed assets		(142,514	)		(2,089	)		(1,206	)		(141,151	)
Net cash used in investing activities		(142,514	)		(2,089	)		(1,206	)		(341,008	)

Cash flows from financing activities
Proceeds from short term advances								65,000			25,000
Repayments of short term advances								-			(25,000	)
Principal payments on finance lease								(24,443	)		(41,824	)
Principal payments on note payable, equipment financing								(40,445	)		(25,642	)
Proceeds from notes payable								-			220,034
Proceeds from convertible notes								110,000			550,000
Proceeds from sale of common stock		143,008			-			20,250			56,500
Net cash provided by financing activities		143,008			-			130,362			759,068

Net increase in cash		182,650			27,948
Net decrease in cash								(9,940	)		(196,877	)
Cash - beginning		178,177			135,390			82,749			323,739
Cash - ending	$	360,827		$	163,338		$	72,809		$	126,862

Supplemental disclosures:
Interest paid	$	-		$	-		$	49,508		$	35,869
Income taxes paid	$	-		$	-		$	-		$	-

Non-cash investing and financing activities:
Value of preferred stock converted to common stock	$	150,000		$	500,000
Fair value of net assets acquired from affiliate in business combination							$	-		$	18,871
Fair value of common stock paid to affiliate in business combination							$	-		$	373,750
Fixed assets acquired with capitalized finance lease							$	-		$	99,193
Fixed assets acquired with note payable, equipment financing							$	-		$	291,931
Fair value of common shares issued for conversion of debt								200,000			-

See accompanying notes to financial statements.

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 – Organization, Basis of Presentation and Significant Accounting Policies

Organization

Digipath, Inc. was incorporated in Nevada on October 5, ~~2010.~~2010. Digipath, Inc. and its subsidiaries (“Digipath,” the “Company,” “we,” “our” or “us”) is a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, and supports the cannabis industry’s best practices for reliable testing, cannabis education and ~~training,~~training. Our mission is to provide pharmaceutical-grade analysis and ~~brings unbiased cannabis news coverage~~testing to the cannabis ~~industry. Our business units are described below.~~industry, under ISO-17025:2017 guidelines, to ensure consumers and patients know exactly what is in the cannabis they ingest and to help maximize the quality of our clients’ products through research, development, and standardization. Digipath has been operating a cannabis-testing lab in Nevada since 2015 and hopes to open labs in other states that have legalized the sale of cannabis, beginning with California or Arizona.

	●	~~Digipath Labs, Inc~~. Digipath Labs’ mission is to provide pharmaceutical-grade analysis and testing to the cannabis industry to ensure consumers and patients know exactly what is in the cannabis they ingest and to help maximize the quality of our clients’ products through research, development, and standardization. We have been operating a cannabis testing lab in Nevada since 2015 and have plans to open labs in other states that have legalized the sale of cannabis, beginning with California.

	●	~~The National Marijuana News Corp~~. provides a balanced and unbiased approach to cannabis news, interviews and education with a news/talk radio show, app, national marijuana news website and social media presence focusing on the political, economic, medicinal, scientific, and cultural dimensions of the rapidly evolving—and profoundly controversial—medicinal and recreational marijuana industry.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Intercompany accounts and transactions have been eliminated.

The unaudited condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included. Such adjustments are of a normal, recurring nature. The Condensed Consolidated Financial Statements, and the accompanying notes, are prepared in accordance with GAAP and do not contain certain information included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~2020. The interim Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the following entities, all of which were under common control and ownership at ~~September~~June 30, ~~2017:~~2021:

Schedule of Entities Under Common Control and Ownership

	~~State~~Jurisdiction of
Name of Entity⁽¹⁾	Incorporation	Relationship	~~Relationship~~
Digipath, Inc.⁽²⁾	Nevada	Parent	~~Parent~~
Digipath Labs, Inc.	Nevada	Subsidiary	~~Subsidiary~~
Digipath Labs CA, Inc.⁽³⁾	California	Subsidiary
Digipath Labs S.A.S.⁽⁴⁾	Colombia	Subsidiary
VSSL Enterprises, Ltd.⁽⁵⁾	Canada	Subsidiary
TNM News ~~Inc.~~Corp.⁽⁶⁾	Nevada	Subsidiary	~~Subsidiary~~
~~GroSciences, Inc.~~⁽³⁾	~~Colorado~~		~~Subsidiary~~

⁽¹⁾

All entities are in the form of a corporation.

⁽²⁾

Holding company, which owns each of the wholly-owned subsidiaries. All subsidiaries shown above are wholly-owned by Digipath, Inc., the parent company.

⁽³⁾

Formed during the second fiscal quarter of 2021, but has not yet commenced significant operations.

⁽⁴⁾

Formed during the first fiscal quarter of 2019, but has not yet commenced significant operations.

⁽⁵⁾

Acquired on March 11, 2020.

⁽⁶⁾

Minimal activity, dissolved on July 28, 2021.

⁽¹⁾~~All entities are in the form of a corporation.~~

⁽²⁾~~Holding company, which owns each of the wholly-owned subsidiaries. All subsidiaries shown above are wholly-owned by Digipath, Inc., the parent company.~~

⁽³⁾~~Entity formed for prospective purposes, but has not incurred any income or expenses to date.~~

The consolidated financial statements herein contain the operations of the wholly-owned subsidiaries listed above. All significant inter-company transactions have been eliminated in the preparation of these financial statements. The parent company and subsidiaries will be collectively referred to herein as the “Company”, “Digipath” or “DIGP”. The Company’s headquarters are located in Las Vegas, Nevada and substantially all of its customers are within the United States.

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.

~~Reclassifications~~

Prior period interest income in the amount of $2,500 has been reclassified to net against the related $2,500 of bad debt expense to conform to the current period presentation, along with the reclassification of $37,877 of equipment service contract expenses and $61,653 of depreciation expense from operating expenses to cost of sales. These reclassifications had no impact on net earnings, financial position or cash flows.

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Segment Reporting

ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its ~~operations.~~operations.

Fair Value of Financial Instruments

Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate fair value primarily due to the ~~short term~~short-term nature of the ~~instruments.~~instruments.

Revenue Recognition

The ~~Company adoptedAccounting Standards Update No. 2014-09,~~~~Revenue from Contracts with Customers (Topic 606)~~ ~~on October 1, 2017. This update~~provides guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue from contracts with customers to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new update does not affect how the Company recognizes revenue in accordance with ASC ~~605,~~606 — Revenue ~~Recognition.~~from Contracts with Customers. Under ASC ~~605 requires that four basic criteria must be met before~~606, the Company recognizes revenue ~~can be recognized: (1) persuasive evidence~~from the sale of an arrangement exists; (2) delivery of product has met the criteria established in the arrangement or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. With respect to our cannabis lab testing ~~revenues, we sell~~services through our ~~services~~ subsidiary Digipath Labs, Inc.

Revenue is primarily generated through our subsidiary, Digipath Labs, Inc., which recognizes revenue from the analytical testing of cannabis products for licensed producers and cultivators within the state of Nevada on a determinable fixed fee per test, or panel of tests basis ~~and offer a discounted price for customers that agree~~. Revenue from the performance of those services is recognized upon completion of the tests, at which time test results are delivered to ~~exclusive or predetermined quantities~~the customer, provided collectability of ~~tests. We~~the fee is reasonably assured. We typically require payment within thirty days of the delivery of results. ~~Revenues are recognized upon~~Management estimates an allowance for doubtful accounts based on the ~~substantial completion~~aging of ~~the tests when collectability is reasonably assured, which is usually upon delivery of results to the customer.~~its receivables.

Stock-Based Compensation

The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and Equity-Based Payments to Non-employees pursuant to ASC ~~505-50~~2018-07 (ASC ~~505-50)~~2018-07). All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance.

~~Recent~~Adoption of New Accounting Standards and Recently Issued Accounting Pronouncements

~~In May 2017,~~From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

In August 2020, the FASB issued Accounting ~~Standards~~Standard Update (“ASU”) ~~2017-09,~~No. 2020-06, ~~Compensation-Stock Compensation (Topic 718)~~Debt–Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging–Contracts in Entity’s Own Equity (Subtopic 815-40): ~~Scope of Modification~~ Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which ~~clarifies when a change~~simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the ~~terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the fair value, vesting condition or the classification~~use of the ~~award is not the same immediately before and after a change to the terms and conditions of the award.~~ if converted method. The new guidance is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, ~~2017,~~2021, with early adoption permitted. The ~~Company does not expect the~~ adoption of ~~this~~ ASU 2020-06 is not expected to have a material impact on ~~its consolidated~~the Company’s financial statements ~~and does not plan to early adopt the ASU.~~or related disclosures.

In ~~May 2014~~November 2019, the FASB issued ASU ~~No. 2014-09,~~2019~~Revenue~~-12 – Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 are part of an initiative to reduce complexity in accounting standards and simplify the accounting for income taxes by removing certain exceptions from ~~Contracts with Customers~~Topic 740 and making minor improvements to the codification. ASU 2019-12 and its related amendments are effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. ~~Since ASU 2014-09 was issued, several additional ASUs have been issued to clarify various elements~~The provisions of the guidance. These standards provide guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted the new standard to be effective with our first interim reporting period for the three months ended December 31, 2017. We use the modified retrospective method of adoption. We have completed an initial evaluation of the potential impact from adopting the new standard, including a detailed review of performance obligations for all material revenue streams. Based on this ~~initial evaluation, adoption does~~update did not have a material impact on ~~our~~the Company’s financial position or results of ~~operations, or cash flows. Related disclosures have been expanded in line with the requirements of the standard.~~operations.

~~There are no~~No other ~~recently issued~~new accounting pronouncements, ~~that~~issued or effective during the ~~Company has yet to adopt that~~period ended June 30, 2021, have had or are expected to have a ~~material effect~~significant impact on ~~its~~the Company’s financial ~~position, results of operations, or cash flows.~~statements.

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 2 – Going Concern

As shown in the accompanying condensed consolidated financial statements, as of June 30, 2021, the Company ~~has incurred~~had negative working capital of $417,788, accumulated recurring losses ~~from operations resulting in an accumulated deficit~~ of ~~($11,675,688)~~$17,814,800, and asonly $72,809 of ~~December 31, 2017, the Company’s~~ cash on hand, ~~may~~which is not be sufficient to sustain operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is actively pursuing new customers to increase revenues. In addition, the Company is currently seeking additional sources of capital to fund short term operations. Management believes these factors will contribute toward achieving profitability. ~~The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.~~

The consolidated financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. These financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 3 – Related Party Transactions

Board of Directors Compensation

On March 25, 2021, the Board of Directors approved changes to the compensation arrangements for each of Edmond A. DeFrank and Dennis Hartmann for serving as directors of the Company, as follows:

●

Effective April 1, 2021, annual compensation is increased from $18,000 to $30,000, payable in quarterly installments of $7,500 each; and

●

Such compensation may now be paid in shares of common stock of the Company instead of cash, at the discretion of the Company.

In connection with the foregoing, the Board of Directors of the Company also approved changes to the compensation arrangements for Bruce Raben for serving as the Company’s Chairman of the Board, as follows:

●

Effective April 1, 2021, annual compensation has been increased from $30,000 to $60,000, payable in quarterly installments of $15,000 each; and

●

Such compensation may now be paid in shares of common stock of the Company instead of cash, at the discretion of the Company.

Common Stock ~~Based Compensation~~Sold for Cash

On December 30, 2020, the Company sold 900,000 shares of its common stock to its Chairman of the Board in exchange for proceeds of $20,250.

Common Stock Issued for Services

On ~~December 22, 2017,~~June 25, 2021, the Company issued ~~300,000~~250,000 shares of common stock to its former CFO ~~as a bonus~~ for services ~~rendered.~~rendered pursuant to his employment agreement. The ~~aggregate~~ fair value of the common stock was ~~$78,828~~$15,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed ~~in full.~~over the requisite service period.

On ~~December 22, 2017,~~June 25, 2021, the ~~Company issued 100,000~~Board approved the issuance of 250,000 shares of common stock to ~~Dr. Alfredo Axtmayer~~Bruce Raben for ~~his service on our Board of Directors.~~services rendered. The ~~aggregate~~ fair value of the common stock was ~~$26,276~~$15,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed ~~in full.~~over the requisite service period.

On ~~December 22, 2017, we granted fully vested options~~June 25, 2021, the Board approved the issuance of 125,000 shares of common stock to ~~purchase 500,000~~Dennis Hartmann for services rendered. The fair value of the common stock was $7,500 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period.

On June 25, 2021, the Board approved the issuance of 83,333 shares of common stock to Edmond A. DeFrank for services rendered. The fair value of the common stock was $5,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period.

On June 2, 2021, the Board approved the issuance of 840,000 shares of common stock to Bruce Raben for services rendered. The fair value of the common stock was $42,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period.

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On March 25, 2021, the Company issued 266,430 shares of common stock to its former CFO for services rendered pursuant to his employment agreement. The aggregate fair value of the common stock was $15,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period.

On March 25, 2021, the Board also approved the issuance of 200,000 shares of common stock as ~~compensation for services~~a bonus to ~~our President~~each of Edmond A. DeFrank, Dennis Hartmann and ~~COO.~~Bruce Raben, or 600,000 shares in the aggregate. The ~~options are exercisable over a ten year period at an exercise~~aggregate fair value of the common stock was $33,780 based on the closing price of ~~$0.27 per share. The estimated value using~~ the ~~Black-Scholes Pricing Model, based~~Company’s common stock on ~~a volatility rate~~the date of ~~112%~~grant, and ~~a call option value of $0.2094,~~ was ~~$104,698. The options were~~ expensed over the ~~vesting period, resulting in $104,698~~requisite service period.

On December 25, 2020, the Company issued 728,155 shares of common stock to its former CFO for services rendered pursuant to his employment agreement. The aggregate fair value of the common stock was $15,000based ~~compensation expense during~~on the ~~three months ended December 31, 2017.~~closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period.

Note 4 – Fair Value of Financial Instruments

The Company discloses the fair value of certain assets and liabilities in accordance with ASC 820 – Fair Value Measurement (“ASC 820”). Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

The Company has certain financial instruments that must be measured under the new fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

710

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, respectively:

Summary of Financial Instruments at Fair Value on Recurring Basis

							Level 1		Level 2			Level 3
	Fair Value Measurements at December 31, 2017						Fair Value Measurements at June 30, 2021
	Level 1		Level 2		Level 3		Level 1		Level 2			Level 3
Assets
Cash	$	360,827	$	-	$	-	$	72,809	$	-		$	-
Total assets		360,827		-		-		72,809		-			-
Liabilities
Short term advances								-		115,112			-
Lease liabilities								-		-			474,480
Notes payable								-		392,665			-
Convertible notes payable								-		-			1,160,000
Total liabilities		-		-		-		-		507,777			1,634,480
	$	360,827	$	-	$	-
Total							$	72,809	$	(507,777	)	$	(1,634,480	)

							Level 1		Level 2			Level 3
	Fair Value Measurements at September 30, 2017						Fair Value Measurements at September 30, 2020
	Level 1		Level 2		Level 3		Level 1		Level 2			Level 3
Assets
Cash	$	178,177	$	-	$	-	$	82,749	$	-		$	-
Total assets		178,177		-		-		82,749		-			-
Liabilities
Short term advances								-		50,112			-
Lease liabilities								-		-			561,394
Notes payable								-		473,224			-
Convertible notes payable, net of discounts of $8,322								-		-			1,241,678
Convertible notes payable								-		-			1,241,678
Total liabilities		-		-		-		-		523,336			1,803,072
	$	178,177	$	-	$	-
Total							$	82,749	$	(523,336	)	$	(1,803,072	)

The fair value of our intellectual properties are deemed to approximate book value, and are considered Level 3 inputs as defined by ASC Topic 820-10-35.

Level 3 liabilities consist of lease liabilities and a total of $1,160,000 of convertible debentures and $1,250,000 of convertible debentures, net of discounts of $-0- and $8,322, as of June 30, 2021 and September 30, 2020, respectively.

There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 or the year ended September 30, ~~2017.~~2020.

Note 5 – Accounts Receivable

Accounts receivable was ~~$454,471~~$193,810 and ~~$266,613~~$242,145 at ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, respectively, net of allowance for ~~doubtful~~uncollectible accounts of ~~$88,120~~$96,282 and ~~$32,180~~$128,944 at ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, respectively.

Note 6 – Other Current Assets

Other current assets consist of the following:

Schedule of Other Current Assets

	June 30,		September 30,
	2021		2020
Prepaid expenses	$	63,470	$	48,151
Other receivable		5,480		5,522
Total other current assets	$	68,950	$	53,673

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 7 – Fixed Assets

Fixed assets consist of the following at ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017:~~2020:

Schedule of Fixed Assets

	December 31,			September 30,			June 30,			September 30,
	2017			2017			2021			2020
Software	$	123,492		$	121,617		$	125,903		$	124,697
Office equipment		41,603			36,080			71,601			74,777
Furniture and fixtures		14,285			14,285			29,879			29,879
Lab equipment		1,073,566			938,450			1,398,716			1,398,716
Leasehold improvements		489,147			489,147			494,117			494,117
		1,742,093			1,599,579
Lab equipment held under capital leases								99,193			99,193
Fixed assets, gross								2,219,409			2,221,379
Less: accumulated depreciation		(641,621	)		(572,530	)		(1,568,688	)		(1,335,974	)
Total	$	1,100,472		$	1,027,049		$	650,721		$	885,405

On March 31, 2021, we distributed fixed assets with an aggregate net book value of $2,227 to our former CEO in satisfaction of accrued payroll that was owed. The fixed assets consisted of office equipment with a historical cost basis of $3,176 and accumulated depreciation of $949, resulting in a loss of $2,227 that was settled against the amount of unpaid compensation that was owed.

Depreciation and amortization expense totaled ~~$69,091~~$233,663 and ~~$61,653~~$242,207 for the ~~three~~nine months ended ~~December~~June 30, 2021 and 2020, respectively.

Note 8 – Leases

The Company leases its operating and office facility under a non-cancelable real property lease agreement that expires on August 31, ~~2017~~2025. The Company also has a financing lease for lab equipment subject to the recently adopted ASU 2016-02. In the locations in which it is economically feasible to continue to operate, management expects to enter into a new lease upon expiration. The real property lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and ~~2016, respectively.~~other occupancy costs applicable to the leased premise. As the Company’s leases do not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

The components of lease expense were as follows:

Schedule of Components of Lease Expense

	For the Nine
	Months Ended
	June 30,
	2021
Finance lease cost	$	6,477
Operating lease cost:
Amortization of assets		68,408
Interest on lease liabilities		20,747
Total lease cost	$	95,632

812

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Supplemental balance sheet information related to leases was as follows:

Schedule of Supplemental Balance Sheet Information

	June 30,
	2021
Operating leases:
Operating lease assets	$	437,298

Current portion of operating lease liabilities	$	91,311
Noncurrent operating lease liabilities		354,701
Total operating lease liabilities	$	446,012
Finance lease:
Equipment, at cost	$	99,193
Accumulated amortization		(34,718	)
Equipment, net	$	64,475

Current portion of finance lease liability	$	28,468
Noncurrent finance lease liability		-
Total finance lease liability	$	28,468

Weighted average remaining lease term:
Operating leases		4.17 years
Finance leases		0.8 years

Weighted average discount rate:
Operating leases		5.75	%
Finance lease		18.41	%

Supplemental cash flow and other information related to leases was as follows:

Schedule of Supplemental Cash Flow and Other Information

	For the Nine
	Months Ended
	June 30,
	2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	62,471
Financing cash flows used for finance leases	$	24,443

Future minimum lease commitments on a fiscal year basis, including common area maintenance fees, under non-cancelable operating leases are as follows as of June 30, 2021:

Schedule of Future Minimum Annual Lease Commitments Under Operating Leases

Fiscal Year Ending	Minimum Lease
September 30,	Commitments
2021 (for the three months remaining)	$	28,566
2022		115,550
2023		119,468
2024		123,543
2025		116,891
Total minimum lease payments		504,018
Less interest		58,006
Present value of lease liabilities		446,012
Less current portion		91,311
Long-term lease liabilities	$	354,701

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Future minimum annual lease payments required under the finance lease and the present value of the net minimum lease payments are as follows at June 30, 2021:

Schedule of Future Minimum Annual Lease Payments Under Finance Lease

	Finance
	Leases

2021 (for the three months remaining)	$	9,276
2022		21,644
Total minimum lease payments		30,920
Less interest		2,452
Present value of lease liabilities		28,468
Less current portion		28,468
Long-term lease liabilities	$	-

Note 79 – Short Term Advances

Short term advances consist of the following at June 30, 2021 and September 30, 2020, respectively:

Schedule of Short Term Advances

	June 30,		September 30,
	2021		2020

On April 29, 2021, we received $25,000 as a short-term loan from one of our convertible noteholders. The loan bears interest at the rate of 8% per annum.	$	25,000	$	-

On March 23, 2021, we received $40,000 as a short-term loan from one of our convertible noteholders. The loan bears interest at the rate of 8% per annum.		40,000		-

On July 20, 2020, we received $30,112 as a short-term loan from one of our convertible noteholders. The loan bears interest at the rate of 8% per annum.		30,112		30,112

On January 21, 2020, we received $20,000 as a short-term loan from one of our convertible noteholders. NaN interest expense was recognized.		20,000		20,000

Total short term advances	$	115,112	$	50,112

The Company recorded interest expense pursuant to the stated interest rates on the short term loans in the amount of $3,123 for the nine months ended June 30, 2021.

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 10 –Notes Payable

Notes payable consists of the following at June 30, 2021 and September 30, 2020, respectively:

Schedule of Notes Payable

	June 30,			September 30,
	2021			2020

On June 22, 2020, the Company, borrowed $40,114 from Cross River Bank, pursuant to a Promissory Note issued by the Company to Cross River Bank (the “Company PPP Note”). The loan was made pursuant to the Payroll Protection Program established as part of the Coronavirus Aid, Relief, and Economic Security Act (the “Payroll Protection Program”). The Company PPP Note carried interest at 1.00% per annum, payable monthly beginning December 22, 2020, and was due on June 22, 2025. On January 12, 2021, the PPP Note and interest was forgiven, resulting in a gain on early extinguishment of debt in the amount of $40,338.	$	-		$	40,114

On May 13, 2020, the Company, through its wholly-owned subsidiary Digipath Labs, Inc. (“Labs”), borrowed $179,920 from WebBank Corp, pursuant to a Promissory Note issued by Labs to WebBank Corp (the “Labs PPP Note”). The loan was made pursuant to the Payroll Protection Program. The Labs PPP Note bears interest at 1.00% per annum, payable monthly beginning December 13, 2020, and is due on May 13, 2022. The Labs PPP Note may be repaid at any time without penalty. Under the Payroll Protection Program, Labs will be eligible for loan forgiveness up to the full amount of the Labs PPP Note and any accrued interest. The forgiveness amount will be equal to the amount that Labs spends during the 8-week period beginning May 13, 2020 on payroll costs, payment of rent on any leases in force prior to February 15, 2020 and payment on any utility for which service began before February 15, 2020. The maximum amount of loan forgiveness for non-payroll expenses is 25% of the amount of the Labs PPP Note. On July 20, 2021, the PPP Note and interest was forgiven, resulting in a gain on early extinguishment of debt in the amount of $182,054.		179,920			179,920

On December 26, 2019, the Company financed the purchase of $377,124 of lab equipment, in part, with the proceeds of a bank loan in the amount of $291,931. The loan bears interest at the rate of 5.75% per annum and requires monthly payments of $5,622 over the five-year term of the loan ending on December 26, 2024. The Company’s obligations under this loan are secured by a lien on the purchased equipment.		212,745			253,190

Total notes payable		392,665			473,224
Less: current maturities		(56,705	)		(54,317	)
Notes payable	$	335,960		$	418,907

The Company recorded interest expense pursuant to the stated interest rate and closing costs on the notes payable in the amount of $11,609 and $12,153 during the nine months ended June 30, 2021 and 2020, respectively.

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 11 – Convertible Notes Payable

Convertible notes payable consists of the following at June 30, 2021 and September 30, 2020, respectively:

Schedule of Convertible Notes Payable

	June 30,		September 30,
	2021		2020

On February 11, 2020, the Company completed the sale to an accredited investor of a 9% Secured Convertible Promissory Note in the principal amount of $50,000. The Note matures on August 11, 2022, bears interest at a rate of 9% per annum, and was convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. On December 28, 2020, the conversion price was amended to $0.03 per share in exchange for an additional $10,000 of proceeds and the promissory note was increased to $60,000. The Company’s obligations under the Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc., pursuant to a Security Agreement between the Company, Digipath Labs, Inc. and the investor. On December 29, 2020, the note holder converted $10,000 of principal into 333,334 shares of common stock at a conversion price of $0.03 per share.	$	50,000	$	50,000

On February 11, 2020, the Company completed the sale to an accredited investor of a 9% Secured Subordinated Convertible Promissory Note in the principal amount of $150,000. The Note matures on August 11, 2022, bears interest at a rate of 9% per annum, and was convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. On December 28, 2020, the conversion price was amended to $0.03 per share in exchange for an additional $50,000 of proceeds and the promissory note was increased to $200,000. The Company’s obligations under the Note are secured by subordinated lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc., pursuant to a Security Agreement between the Company, Digipath Labs, Inc. and the investor. On December 29, 2020, the note holder converted $50,000 of principal into 1,666,667 shares of common stock at a conversion price of $0.03 per share.		150,000		150,000

On February 10, 2020, the Company completed the sale to an accredited investor of a 9% Secured Convertible Promissory Note in the principal amount of $350,000. The Note matures on August 10, 2022, bears interest at a rate of 9% per annum, and was convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. On December 28, 2020, the conversion price was amended to $0.03 per share in exchange for an additional $50,000 of proceeds that were received on January 4, 2021, and the promissory note was increased to $400,000. The Company’s obligations under the Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc., pursuant to a Security Agreement between the Company, Digipath Labs, Inc. and the investor. On December 29, 2020, the note holder converted $50,000 of principal into 1,666,667 shares of common stock at a conversion price of $0.03 per share.		350,000		350,000

On September 23, 2019, the Company received proceeds of $200,000 on a senior secured convertible note that carries an 8% interest rate, which matures on August 10, 2022, as amended. The principal and interest were convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.11 per share. On September 30, 2020, the maturity date was extended to August 10, 2022 and the conversion price was amended to $0.03 per share. The Company’s obligations under this Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc. On February 22, 2021, the noteholder converted $90,000 of principal into 3,000,000 shares of common stock at a conversion price of $0.03 per share.		110,000		200,000

On November 8, 2018, the Company received proceeds of $350,000 on a senior secured convertible note that carries an 8% interest rate, which matures on August 10, 2022, as amended. The principal and interest were convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.14 per share. On September 30, 2020, the maturity date was extended to August 10, 2022 and the conversion price was amended to $0.03 per share. The Company’s obligations under this Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc. A total of $4,066 of interest was repaid during the year ended September 30, 2019.		350,000		350,000

On November 5, 2018, the Company received proceeds of $150,000 on a senior secured convertible note that carries an 8% interest rate, which matures on August 10, 2022, as amended. The principal and interest were convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.14 per share. On September 30, 2020, the maturity date was extended to August 10, 2022 and the conversion price was amended to $0.03 per share. The Company’s obligations under this Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc.		150,000		150,000

Total convertible notes payable		1,160,000		1,250,000
Less: unamortized debt discounts		-		(8,322	)
		1,160,000		1,241,678
Less: current maturities		-		-
Convertible notes payable	$	1,160,000	$	1,241,678

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

In addition, the Company recognized and measured the embedded beneficial conversion feature present in the convertible notes by allocating a portion of the proceeds equal to the intrinsic value of the feature to additional paid-in-capital. The intrinsic value of the feature was calculated on the commitment date using the effective conversion price of the convertible notes. This intrinsic value is limited to the portion of the proceeds allocated to the convertible debt.

The aforementioned accounting treatment resulted in a total debt discount equal to $70,964. The discount is amortized on a straight-line basis from the dates of issuance until the earlier of the stated redemption date of the debts, as noted above or the actual settlement date. The Company recorded debt amortization expense on the aforementioned debt discount in the amount of $8,322 and $24,783 during the nine months ended June 30, 2021 and 2020, respectively.

All of the convertible notes limit the maximum number of shares that can be owned by each note holder as a result of the conversions to common stock to 4.99% of the Company’s issued and outstanding shares.

The Company recorded interest expense pursuant to the stated interest rates on the convertible notes in the amount of $76,309 and $61,099 for the nine months ended June 30, 2021 and 2020, respectively.

The Company recognized interest expense for the nine months ended June 30, 2021 and 2020, respectively, as follows:

Schedule of Interest Expense

	June 30,		June 30,
	2021		2020

Interest on short term loans	$	3,123	$	-
Interest on capital leases		6,477		8,970
Interest on notes payable		11,609		12,153
Amortization of beneficial conversion features		8,322		24,783
Interest on convertible notes		76,309		61,099
Total interest expense	$	105,840	$	107,005

Note 12 - Changes in Stockholders’ Equity

Convertible Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of ~~$0.001~~$0.001 per share, of which 6,000,000 have been designated as Series A Convertible Preferred Stock (“Series A Preferred”), with the remaining 4,000,000 shares available for designation from time to time by the Board as set forth below. As of ~~December 31, 2017,~~June 30, 2021, there were ~~1,747,942~~1,325,942 shares of Series A Preferred issued and outstanding. The Board of Directors is authorized to determine any number of series into which the undesignated shares of preferred stock may be divided and to determine the rights, preferences, privileges and restrictions granted to any series of the preferred stock. ~~Shares~~Each share of Series A Preferred ~~are~~is currently convertible into five shares of common ~~stock at a fixed conversion rate of $0.20 per share.~~stock.

The conversion price is adjustable in the event of stock splits and other adjustments in the Company’s capitalization, and in the event of certain negative actions undertaken by the Company. At the current conversion price, the ~~1,747,942~~1,325,942 shares of Series A Preferred outstanding at ~~December 31, 2017~~June 30, 2021 are convertible into ~~8,739,710~~ 6,629,710 shares of the common stock of the Company. No holder is permitted to convert its shares of Series A Preferred if such conversion would cause the holder to beneficially own more than ~~4.99%~~4.99% of the issued and outstanding common stock of the Company immediately after such conversion, unless waived by such holder by providing at least sixty-five days’ notice.

~~Preferred~~Common Stock ~~Conversions~~

~~During the three months ended December 31, 2017, a total~~Common stock consists of ~~150,000 Series A Preferred~~$0.001 par value, 250,000,000 shares authorized, of which 69,730,153 shares were ~~converted into 750,000~~issued and outstanding as of June 30, 2021.

Common Stock Sales

On December 30, 2020, the Company sold 900,000 shares of its common ~~stock.~~stock to its Chairman of the Board in exchange for proceeds of $20,250.

Debt Conversions

On February 22, 2021, a convertible noteholder converted $90,000 of principal into 3,000,000 shares at a conversion price of $0.03 per share. The ~~stock~~note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

~~Common Stock~~

~~Common stock consists of $0.001 par value, 90,000,000 shares authorized, of which 37,285,676 shares were issued and outstanding as of December 31, 2017.~~

~~Common Stock Sales~~

On December ~~20, 2017,~~ 29, 2020, the ~~Company sold 10 units, consisting~~three holders of ~~100,000~~the Company’s 9% Secured Convertible Notes converted debt in the aggregate original principal amount of $110,000 into an aggregate of 3,666,668 shares at a conversion price of ~~its common stock and warrants to purchase 50,000 shares of common stock, exercisable at $0.26~~$0.03 per ~~share over a thirty six month period,~~share. The note was converted in ~~exchange for total proceeds of $18,000. The proceeds received were allocated between~~accordance with the ~~common stock and warrants on a relative fair value basis.~~conversion terms; therefore, no gain or loss has been recognized.

On December 14, 2017, the Company sold 13.89 units, consisting of 138,889 shares of its common stock and warrants to purchase 69,445 shares of common stock, exercisable at $0.26 per share over a thirty six month period, in exchange for total proceeds of $25,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

On December 14, 2017, the Company sold 55.56 units, consisting of 555,600 shares of its common stock and warrants to purchase 277,800 shares of common stock, exercisable at $0.26 per share over a thirty six month period, in exchange for total proceeds of $100,008. The proceeds received were allocated between the common stock and warrants on a relative fair value basis.

Common Stock Issued for Services, Related Parties

On ~~December 22, 2017,~~June 25, 2021, the Company issued ~~300,000~~250,000 shares of common stock to its former CFO ~~as a bonus~~ for services ~~rendered.~~rendered pursuant to his employment agreement. The ~~aggregate~~ fair value of the common stock was ~~$78,828 based on the closing price of the Company’s common stock on the date of grant, and was expensed in full.~~

On December 22, 2017, the Company issued 100,000 shares of common stock to Dr. Alfredo Axtmayer for his service on our Board of Directors. The aggregate fair value of the common stock was $26,276 based on the closing price of the Company’s common stock on the date of grant, and was expensed in full.

On November 29, 2017, a total of 314,069 shares of common stock were issued to three consultants that were engaged to assist the Company with acquisition activities. The aggregate fair value of the common stock was $82,600$15,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service ~~period that ended~~period.

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On June 25, 2021, the Board approved the issuance of 250,000 shares of common stock to Bruce Raben for services rendered. The fair value of the common stock was $15,000 based on ~~December 31, 2017.~~the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period.

~~Amortization~~On June 25, 2021, the Board approved the issuance of ~~Stock Options~~125,000 shares of common stock to Dennis Hartmann for services rendered. The fair value of the common stock was $7,500 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period.

On March 25, 2021, the Company issued 266,430 shares of common stock to its former CFO for services rendered pursuant to his employment agreement. The fair value of the common stock was $15,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period.

On March 25, 2021, the Board approved the issuance of 200,000 shares of common stock as a bonus to each of Edmond A. DeFrank, Dennis Hartmann and Bruce Raben, or 600,000 shares in the aggregate. The aggregate fair value of the common stock was $33,780 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period.

On December 25, 2020, the Company issued 728,155 shares of common stock to its former CFO for services rendered pursuant to his employment agreement. The fair value of the common stock was $15,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period.

Common Stock Issued for Services

On March 25, 2021, the Company issued 250,000 shares of common stock to a consultant as a bonus for services rendered. The aggregate fair value of the common stock was $14,075 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period.

On December 28, 2020, the Company issued 500,000 shares of common stock to a consultant for services rendered pursuant to his consulting agreement. The aggregate fair value of the common stock was $12,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period.

Amortization of Stock-Based Compensation

A total of ~~$258,735~~$63,768 of stock-based compensation expense was recognized from the amortization of options and warrants over their vesting period during the ~~three~~nine months ended ~~December 31, 2017.~~June 30, 2021.

~~DIGIPATH, INC. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Note 813 – Common Stock Options

Stock Incentive Plan

On June 21, 2016, we amended and restated our 2012 Stock Incentive Plan (the “2012 Plan”), which was originally adopted on March 5, 2012 and previously amended on May 20, 2014. As amended, the 2012 Plan provides for the issuance of up to 11,500,000 shares of common stock pursuant to the grant of options or other awards, including stock grants, to employees, officers or directors of, and consultants to, the Company and its subsidiaries. Options granted under the 2012 Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options, and are exercisable over periods not exceeding ten years from date of grant.

A total of ~~8,985,000~~4,120,000 options were outstanding as of ~~December 31, 2017. On December 31, 2017,~~June 30, 2021. During the nine months ended June 30, 2021, options to purchase aan aggregate total of ~~1,010,000~~750,000 shares of common stock at ~~$0.40~~a weighted average exercise price of $0.10 per share ~~expired,~~expired.

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Options Granted

On June 2, 2021, we granted to A. Stone Douglass, a consultant of ours at the time of grant, and ~~on November 7, 2017,~~currently our Chief Financial Officer, options to purchase ~~100,000~~1,000,000 shares of the Company’s common stock, ~~at $0.85 per share expired.~~

On December 22, 2017, we granted fully vested options to purchase 500,000 shares of common stock as compensation for services to our President and COO. The options are exercisable over a ten year period athaving an exercise price of ~~$0.27~~$0.06 per ~~share.~~share, exercisable over a ten-year term. The options vest as to one quarter on July 1, 2021, and quarterly over the next seven quarters as to the remaining shares, beginning on October 1, 2021. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of ~~112%~~170% and a call option value of ~~$0.2094,~~$0.0576, was ~~$104,698. The options were expensed over the vesting period,~~$57,592, resulting in ~~$104,698~~$14,398 of ~~stock based~~stock-based compensation expense during the ~~three~~nine months ended ~~December 31, 2017.~~June 30, 2021.

On ~~November 29, 2017,~~March 25, 2021, we granted ~~fully vested~~ options to an individual to purchase ~~100,000~~300,000 shares of the Company’s common stock, ~~as compensation for services to our Chief Scientist. The options are exercisable over a ten year period at~~having an exercise price of ~~$0.27~~$0.06 per ~~share.~~share, exercisable over a ten-year term. The options are fully vested. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of ~~112%~~167% and a call option value of ~~$0.21,~~$0.0527, was ~~$21,004. The options were expensed over the vesting period,~~$15,822, resulting in ~~$21,004~~$15,822 of ~~stock based~~stock-based compensation expense during the ~~three~~nine months ended June 30, 2021.

Options Forfeited

On December ~~31, 2017.~~

~~On November 29, 2017, we granted fully vested options to purchase 205,000 shares of common stock as compensation for services to~~30, 2020, a total of ~~ten of our employees. The~~750,000 options ~~are exercisable over~~with a ~~ten year period at an~~weighted average exercise price of ~~$0.27 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 112% and a call option value of $0.21, was $43,057. The options~~$0.10 were ~~expensed over the vesting period, resulting in $43,057 of stock based compensation expense during the three months ended December 31, 2017.~~forfeited.

Note 914 – Common Stock Warrants

Warrants to purchase a total of ~~5,839,667~~2,868,335 shares of common stock were outstanding as of ~~December 31, 2017. No warrants were exercised during~~June 30, 2021.

During the ~~three~~nine months ended ~~December 31, 2017. On December 31, 2017,~~June 30, 2021, warrants to purchase ~~200,000~~an aggregate total of 1,405,934 shares of common stock at ~~$0.30~~a weighted average exercise price of $0.24 per share ~~expired, and on December 30, 2017, warrants to purchase 300,000 shares of common stock at $0.45 per share~~ expired.

~~Warrants to purchase 50,000 shares of common stock at $0.26 per share over a 36 month period were issued on December 20, 2017 pursuant to a unit offering~~Note 15 – Other Income (Expense)

Other income (expense) for the sale of 100,000 shares of common stock in exchange for proceeds of $18,000, and warrants to purchase a total of 347,245 shares of common stock at $0.26 per share over a 36 month period were issued on December 14, 2017 pursuant to two unit offerings for the sale of an aggregate 694,489 shares of common stock in exchange for total proceeds of $125,008.

~~Note 10 – Other Income~~

~~Other income for the three~~nine months ended ~~December 31, 2017~~June 30, 2021 and ~~2016~~2020 consisted of the following:

Schedule of Other Income (Expense)

December 31,
2017 2016
Settlement income on license agreement $ - $ 150,000
Rental income on subleases 19,200 -
Restitution income 1,500 4,000
$ 20,700 $ 154,000

	2021			2020
	June 30,
	2021			2020
Gain on early extinguishment of debt	$	40,338		$	-
Settlement of accrued wages owed to former CEO with distribution of assets		7,580			-
Rental income on subleases		-			63,000
Loss on disposal of fixed assets		-			(28,238	)
Interest expense		(105,840	)		(107,005	)
Total other income (expense)	$	(57,922	)	$	(72,243	)

1019

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1116 - Income Tax

The Company accounts for income taxes under FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.

For the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2021 and the year ended September 30, ~~2017,~~2020, the Company incurred a net operating loss and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At ~~December 31, 2017,~~June 30, 2021, the Company had approximately ~~$7,025,500~~$13,143,000 of federal net operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in ~~2031.~~2031.

Based on the available objective evidence, including the Company’s history of its loss, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at ~~December 31, 2017~~June 30, 2021 and September 30, ~~2017,~~2020, respectively.

In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions.

Note 1217 – Subsequent Events

~~Preferred Stock Conversions~~Termination of Equipment Purchase Agreement

On ~~January~~July 22, ~~2018, a shareholder converted 50,000 shares~~2021, the Company elected to terminate its asset purchase agreement with PharmaLabs San Diego. In addition to the $55,000 non-refundable deposit that was paid on April 30, 2021 in exchange for lab equipment that has not yet been delivered to us, we paid an additional $27,000 of ~~Series A Preferred into 250,000 shares of common stock. The stock was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.~~extension and termination fees.

Common Stock Issued for Services

On ~~January 17, 2018, a shareholder converted 272,000 shares of Series A Preferred into 1,360,000 shares of common stock. The stock was converted in accordance with~~July 1, 2021, the ~~conversion terms; therefore no gain or loss has been recognized.~~

~~Exercise of Options~~

~~On January 3, 2018, two option holders exercised options to purchase a total of 500,000~~Company issued 1,500,000 shares of common stock ~~at $0.181 per share on a cashless basis, resulting~~to Todd Denkin in conjunction with his appointment as the ~~issuance~~Company’s President. The aggregate fair value of ~~317,172 shares of common stock.~~

~~On January 2, 2018, an option holder exercised options to purchase 37,500 shares of~~the common stock ~~at $0.22 per share~~was $81,900 based on ~~a cashless basis, resulting in~~ the ~~issuance~~closing price of ~~21,000 shares of common stock.~~

~~Exercise of Warrants~~

~~On January 3, 2018, a warrant holder exercised warrants to purchase 71,428 shares of~~the Company’s common stock ~~at $0.26 per share~~ on ~~a cashless basis, resulting in~~ the ~~issuance~~date of ~~34,285 shares~~grant, and was expensed on the date of ~~common stock.~~grant.

1120

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The information contained in this Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended September 30, ~~2017~~2020 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.

The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Annual Report on Form 10-K for the year ended September 30, ~~2017~~2020 in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report.

Overview

Digipath, Inc. was incorporated in Nevada on October 5, 2010. Digipath, Inc. and its subsidiaries (“Digipath,” the “Company,” “we,” “our” or “us”) supports the cannabis industry’s best practices for reliable testing, cannabis education and ~~training,~~training. Our mission is to provide pharmaceutical-grade analysis and ~~brings unbiased cannabis news coverage~~testing to the cannabis ~~industry. Our business units as~~industry, under ISO-17025:2017 guidelines, to ensure consumers and patients know exactly what is in the cannabis they ingest and to help maximize the quality of ~~December 31, 2017 are described below.~~our clients’ products through research, development, and standardization. Digipath has been operating a cannabis-testing lab in Nevada since 2015 and has plans to open labs in other states that have legalized the sale of cannabis, beginning with California.

	●	~~Digipath Labs, Inc~~. Digipath Labs’ mission is to provide pharmaceutical-grade analysis and testing to the cannabis industry to ensure consumers and patients know exactly what is in the cannabis they ingest and to help maximize the quality of our clients’ products through research, development, and standardization. We have been operating a cannabis testing lab in Nevada since 2015 and have plans to open labs in other states that have legalized the sale of cannabis, beginning with California.

	●	~~The National Marijuana News Corp~~. provides a balanced and unbiased approach to cannabis news, interviews and education with a news/talk radio show, app, national marijuana news website and social media presence focusing on the political, economic, medicinal, scientific, and cultural dimensions of the rapidly evolving—and profoundly controversial—medicinal and recreational marijuana industry.

Our cannabis testing and business licenses were briefly suspended by Nevada regulators for an eight business day period subsequent to the end of the quarter ended December 31, 2017, commencing at the end of business on Friday, January 19, 2018 and reinstated on January 31, 2018. This had no impact on our financial results for the periods presented in this report, but will be reflected in our results for our quarter ending March 31, 2018.

Results of Operations for the Three Months Ended ~~December 31, 2017~~June 30, 2021 and ~~2016:~~2020:

The following table summarizes selected items from the statement of operations for the three months ended ~~December 31, 2017~~June 30, 2021 and ~~2016.~~2020.

	Three Months Ended June 30,						Increase /
	2021			2020			(Decrease)
Revenues	$	764,015		$	407,229		$	356,786
Cost of sales		551,976			347,724			204,252
Gross profit		212,039			59,505			152,534

Operating expenses:
General and administrative		278,082			328,128			(50,046	)
Professional fees		91,001			177,835			(86,834	)
Change in allowance for doubtful accounts		(10,960	)		25,420			(36,380	)
Total operating expenses:		358,123			531,383			(173,260	)

Operating income (loss)		(146,084	)		(471,878	)		(325,794	)

Total other income (expense)		(31,130	)		(48,809	)		(17,679	)

Net loss	$	(177,214	)	$	(520,687	)	$	(343,473	)

Three Months Ended December 31, Increase /
2017 2016 (Decrease)
Revenues $ 1,118,785 $ 409,751 $ 709,034
Cost of sales 376,772
204,132

172,640

Gross profit 742,013
205,619
536,394

Operating expenses:
General and administrative 399,114
279,686

119,428

Professional fees 486,676 191,643 295,033
Bad debts expense 55,940 14,450 41,490
Total operating expenses: 941,730
485,779

455,951

Operating loss (199,717 ) (280,160 ) (80,443 )

Total other income 20,700 154,000 (133,300 )

Net loss $ (179,017 ) $ (126,160 ) $ 52,857

Revenues

~~Revenues~~

~~Revenues were generated by our cannabis testing lab and to a de minimis extent, from advertising on TNM News’ media outlets.~~ Aggregate revenues for the three months ended ~~December 31, 2017~~June 30, 2021 were ~~$1,118,785,~~$764,015, compared to revenues of ~~$409,751~~$407,229 during the three months ended ~~December 31, 2016,~~June 30, 2020, an increase of ~~$709,034,~~$356,786, or ~~173%~~88%. The increase in revenue was due to the ~~continued growth of our testing lab operations~~increase in tourism in Nevada ~~as our customer base, consisting of production and cultivation facilities, increased their operations, particularly following~~during the ~~implementation~~current period, in comparison to the prior year period in which Nevada tourism was significantly depressed because of the ~~Nevada law permitting the recreational use of marijuana, which went into effect on July 1, 2017.~~COVID-19 coronavirus pandemic.

Cost of Sales

Cost of sales for the three months ended ~~December 31, 2017~~June 30, 2021 were ~~$376,772,~~$551,976, compared to ~~$204,132~~$347,724 during the three months ended ~~December 31, 2016,~~June 30, 2020, an increase of ~~$172,640,~~$204,252, or ~~85%~~59%. Cost of sales consists primarily of labor, depreciation, maintenance on lab equipment, and supplies consumed in our testing operations. The increased cost of sales in the current period was primarily due to our increased labor and outsourced testing fees incurred during the ~~increase in revenues over the comparative~~current period. Our gross margins ofwere approximately ~~66%, increased~~28% during the three months ended ~~December 31, 2017,~~June 30, 2021, compared to ~~gross margins of approximately 50%~~15% during the three months ended ~~December 31, 2016, as we realized efficiencies and economies~~June 30, 2020, which translated to $152,534 of ~~scale~~increased gross profit from our $356,786 of increased ~~revenues. We expect cost of sales~~revenues received in the current period. Our margins increased in the current period due to the increase in revenues, which increased at a greater rate than our labor costs and gross margins to decrease as we implement ISO/IEC 17025 standards for the competence of testing and calibration laboratories, which is now being required by the State of Nevada for all licensed cannabis laboratories.equipment servicing costs.

General and Administrative Expenses

General and administrative expenses for the three months ended ~~December 31, 2017~~June 30, 2021 were ~~$399,114,~~$278,082, compared to ~~$279,686~~$328,128 during the three months ended ~~December 31, 2016, an increase~~June 30, 2020, a decrease of ~~$119,428,~~$50,046, or ~~43%~~15%. The expenses consisted primarily of marketing, rent, salaries and wages, and travel expenses.General and administrative expenses included non-cash, stock-based compensation of $16,952 and $33,976 during the three months ended June 30, 2021 and 2020, respectively. General and administrative expenses decreased primarily due to decreased corporate overhead activities and the discontinuation of rents on warehouse space that we were previously subleasing.

Professional Fees

Professional fees for the three months ended ~~December 31, 2017~~June 30, 2021 were ~~$486,676,~~$91,001, compared to ~~$191,643~~$177,835 during the three months ended ~~December 31, 2016, an increase~~June 30, 2020, a decrease of ~~$295,033,~~$86,834, or ~~154%~~49%. Professional fees ~~increased~~included non-cash, stock-based compensation of $90,190 and $54,749 during the three months ended June 30, 2021 and 2020, respectively. Professional fees decreased primarily due to ~~increased stock-based compensation paid to employees and consultants~~decreased corporate consulting services during the current period as we focused primarily on the lab operations during the current period.

Change in Allowance for Doubtful Accounts

~~Bad Debts Expense~~

~~Bad debts expense~~Our change in allowance for doubtful accounts for the three months ended ~~December 31, 2017 was $55,940,~~June 30, 2021 resulted in $10,960 of income, compared to ~~$14,450~~$25,420 of expense during the three months ended ~~December 31, 2016,~~June 30, 2020, an ~~increase~~improvement of ~~$41,490,~~$36,380, or ~~287%~~143%. ~~Bad debts expense increased~~Our change in allowance for doubtful accounts improved during the current period primarily as our allowance for doubtful accounts ~~increased with~~decreased from $110,147 to $96,282 during the ~~growth in sales~~quarter, as the Nevada tourism market began to open up again and ~~accounts receivables.~~our customers’ cash flows improved.

Operating Loss

Our operating loss for the three months ended ~~December 31, 2017~~June 30, 2021 was ~~$199,717~~$146,084, compared to ~~$280,160~~an operating loss of $471,878 during the three months ended ~~December 31, 2016,~~June 30, 2020, a decrease of ~~$80,443,~~$325,794, or ~~29%~~69%. Our operating loss decreased primarily due to our increased ~~revenues, offset~~gross profit, as tourism returned in ~~part by increased operating expenses, including stock-based compensation,~~Nevada after we navigated through the height of the effects of the COVID-19 coronavirus pandemic during the comparative period, as we continued to pare our general and administrative and professional fee costs, and decreased our allowance for doubtful accounts and overhead cost saving measures we implemented in response to Covid-19 that we initiated in the three months ended June 30, 2020.

Other Income (Expense)

Other expense, on a net basis, for the three months ended June 30, 2021 was $31,130, compared to other expense, on a net basis, of $48,809 during the three months ended ~~December 31, 2017, compared to~~June 30, 2020, a net decrease of $17,679. Other expense consisted of interest expense of $31,130 for the three months ended ~~December 31, 2016.~~

June 30, 2021. Other ~~Income~~

~~Other~~expense consisted of $41,571 of interest expense and a loss of $28,238 on the disposal of fixed assets, as partially offset by other income, consisting of $21,000 of subleased rental income for the three months ended December 31, 2017 was $20,700, compared to other income of $154,000 during the three months ended December 31, 2016, a decrease of $133,300. Other income consisted of $19,200 of subleased storage space and $1,500 related to restitution payments received from a former employee for the three months ended December 31, 2017. Other income during the three months ended December 31, 2016 consisted of $150,000 received pursuant to the settlement under a license agreement with GB Sciences, Inc. and $4,000 of restitution payments received from a former employee.June 30, 2020.

Net Loss

Net loss for the three months ended ~~December 31, 2017~~June 30, 2021 was ~~$179,017,~~$177,214, compared to ~~$126,160~~a net loss of $520,687 during the three months ended ~~December 31, 2016,~~June 30, 2020, a decrease of $343,473, or 66%. The decreased net loss was primarily due to our increased revenues, as the returning tourism in Nevada improved, compared to the prior period when we navigated through the height of the effects of the COVID-19 coronavirus pandemic.

Results of Operations for the Nine Months Ended June 30, 2021 and 2020:

The following table summarizes selected items from the statement of operations for the nine months ended June 30, 2021 and 2020.

	Nine Months Ended June 30,						Increase /
	2021			2020			(Decrease)
Revenues	$	1,897,560		$	1,971,141		$	(73,581	)
Cost of sales		1,389,776			1,250,234			139,542
Gross profit		507,784			720,907			(213,123	)

Operating expenses:
General and administrative		715,093			1,123,479			(408,386	)
Professional fees		313,364			688,902			(375,538	)
Change in allowance for doubtful accounts		(28,945	)		186,540			(215,485	)
Total operating expenses:		999,512			1,998,921			(999,409	)

Operating loss		(491,728	)		(1,278,014	)		(786,286	)

Total other income (expense)		(57,922	)		(72,243	)		(14,321	)

Net loss	$	(549,650	)	$	(1,350,257	)	$	(800,607	)

Revenues

Aggregate revenues for the nine months ended June 30, 2021 were $1,897,560, compared to revenues of $1,971,141 during the nine months ended June 30, 2020, a decrease of $73,581, or 4%. The decrease in revenue was due to the impact the COVID-19 coronavirus pandemic had on the tourism industry in Nevada during the current period.

Cost of Sales

Cost of sales for the nine months ended June 30, 2021 were $1,389,776, compared to $1,250,234 during the nine months ended June 30, 2020, an increase of ~~$52,857,~~$139,542, or ~~42%~~11%. Cost of sales consist primarily of labor, depreciation, maintenance on lab equipment, and supplies consumed in our testing operations. The increased cost of sales in the current period was primarily due to our increased labor and outsourced testing fees incurred during the current period. Our gross margins of approximately 27% and 37% during the nine months ended June 30, 2021 and 2020, respectively, translated to $213,123 of decreased gross profit in the current period. Our margins in the nine months ended June 30, 2021 were significantly affected by the decline in revenues, and our inability to reduce labor costs and decrease our equipment servicing costs, in addition to having to outsource a portion of our testing services.

General and Administrative Expenses

General and administrative expenses for the nine months ended June 30, 2021 were $715,093, compared to $1,123,479 during the nine months ended June 30, 2020, a decrease of $408,386, or 36%. The ~~increased~~expenses consisted primarily of marketing, rent, salaries and wages, and travel expenses. General and administrative expenses included non-cash, stock-based compensation of $50,856 and $72,060 during the nine months ended June 30, 2021 and 2020, respectively. General and administrative expenses decreased due primarily to decreased corporate overhead activities and the discontinuation of rents on warehouse space that we were previously subleasing.

Professional Fees

Professional fees for the nine months ended June 30, 2021 were $313,364, compared to $688,902 during the nine months ended June 30, 2020, a decrease of $375,538, or 55%. Professional fees included non-cash, stock-based compensation of $187,267 and $179,678 during the nine months ended June 30, 2021 and 2020, respectively. Professional fees decreased primarily due to decreased corporate consulting and legal services during the current period as we focused primarily on the lab operations during the current period.

Change in Allowance for Doubtful Accounts

Our change in allowance for doubtful accounts resulted in $28,945 of income for the nine months ended June 30, 2021, compared to $186,540 of expense during the nine months ended June 30, 2020, an improvement of $215,485, or 116%. Our change in allowance for doubtful accounts improved during the current period primarily as our allowance for doubtful accounts decreased from $128,132 to $96,282 during the period, as the Nevada tourism market began to open up again and our customers’ cash flows improved.

Operating Loss

Our operating loss for the nine months ended June 30, 2021 was $491,728, compared to $1,278,014 during the nine months ended June 30, 2020, a decrease of $999,409, or 50%. Our operating loss decreased primarily due to our decreased general and administrative expenses and professional fees, which in part reflect overhead cost saving measures we implemented in response to Covid-19, and improvements in the collection of our accounts receivable that reduced our change in allowance for doubtful accounts by $215,485, that were not reflected in the nine months ended June 30, 2021, compared to the nine months ended June 30, 2020.

Other Income (Expense)

Other expense, on a net basis, for the nine months ended June 30, 2021 was $57,922, compared to other expense, on a net basis, of $72,243 during the nine months ended June 30, 2020, a net decrease of $14,321. Other expense consisted of $105,840 of interest expense, as offset by a gain on early extinguishment of debt in the amount of $40,338 and a gain on the distribution of $7,580 of previously impaired inventory to our former CEO, compared to $107,005 of interest expense and a loss of $28,238 on the disposal of fixed assets, as offset by $63,000 of sublet rental income, during the nine months ended June 30, 2020.

Net Loss

Net loss for the nine months ended June 30, 2021 was $549,650, compared to $1,350,257 during the nine months ended June 30, 2020, an improvement of $800,607, or 59%. The decreased net loss was due primarily to ~~increased non-cash, stock-based compensation~~overhead cost savings, as offset in part by reduced sales and diminished profit margins, as we focused all of ~~$329,019 over~~our efforts on operating the ~~comparative three month period.~~lab due to the effects of Covid-19, as described above, during the nine months ended June 30, 2021, compared to the nine months ended June 30, 2020.

Liquidity and Capital Resources

The following is a summary of the Company’s cash flows provided by (used in) operating, investing, and financing activities for the ~~three month~~nine-month periods ended ~~December 31, 2017~~June 30, 2021 and ~~2016:~~2020:

	2017			2016			2021			2020
Operating Activities	$	182,156		$	30,037		$	(139,096	)	$	(614,937	)
Investing Activities		(142,514	)		(2,089	)		(1,206	)		(341,008	)
Financing Activities		143,008			-			130,362			759,068
Net Increase in Cash	$	182,650		$	27,948
Net Decrease in Cash							$	(9,940	)	$	(196,877	)

Net Cash ~~Provided~~Used in Operating Activities

During the ~~three~~nine months ended ~~December 31, 2017,~~June 30, 2021, net cash ~~provided~~used in operating activities was ~~$182,156,~~$139,096, compared to net cash ~~provided~~used in operating activities of ~~$30,037~~$614,937 for the same period ended ~~December 31, 2016.~~June 30, 2020. The ~~increase~~decrease in cash ~~provided by~~used in operating activities iswas primarily attributable to our ~~$498,517, or 205% increase in gross profit as we continued to develop our cannabis testing lab operations.~~decreased net loss.

Net Cash Used in Investing Activities

During the ~~three~~nine months ended ~~December 31, 2017,~~June 30, 2021, net cash used in investing activities was ~~$142,514,~~$1,206, compared to ~~$2,089~~$341,008 for the same period ended ~~December 31, 2016.~~June 30, 2020. The ~~increase~~decrease is attributable to ~~greater~~fewer investments made for cannabis testing equipment in the current period, ~~than was necessary~~and the $200,000 purchase of VSSL Enterprises, Ltd. in the ~~comparative~~prior period.

Net Cash Provided by Financing Activities

During the ~~three~~nine months ended ~~December 31, 2017,~~June 30, 2021, net cash provided by financing activities was ~~$143,008,~~$130,362, compared to ~~$-0-~~net cash provided by financing activities of $759,068 for the same period ended ~~December 31, 2016.~~June 30, 2020. The current period consisted primarily of $175,000 of proceeds received on debt financing, proceeds of $20,250 from the sale of stock, as offset by $24,443 of principal payments on an equipment lease and $40,445 of principal payments on an equipment loan, compared to $770,034 of net proceeds received on debt financing and proceeds of $56,500 from the sale of stock, as offset by $41,824 of principal payments on an equipment lease and $25,642 of principal payments on an equipment loan in the comparative period.

Ability to Continue as a Going Concern

As of ~~December 31, 2017,~~June 30, 2021, our balance of cash on hand was ~~$360,827.~~$72,809, and we had negative working capital of $417,788 and an accumulated recurring losses of $17,814,800. We currently may not have sufficient funds to sustain our operations for the next twelve months and we may need to raise additional cash to fund our operations and expand our lab testing business. As we continue to develop our lab testing business and attempt to expand operational activities, we expect to experience net negative cash flows from operations in amounts not now determinable, and will be required to obtain additional financing to fund operations through common stock offerings to the extent necessary to provide working capital. We have and expect to continue to have substantial capital expenditure and working capital needs.

The Company has incurred recurring losses from operations resulting in an accumulated deficit, and, as set forth above, the Company’s cash on hand is not sufficient to sustain operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is actively pursuing new customers to increase revenues. In addition, the Company is currently seeking additional sources of capital to fund short term operations. In the event sales do not materialize at the expected rates, management would seek additional financing or would attempt to conserve cash by further reducing expenses. There can be no assurance that we will be successful in achieving these objectives, becoming profitable or continuing our business without either a temporary interruption or a permanent ~~cessation.~~cessation. In addition, additional financing may result in substantial dilution to existing stockholders.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The unaudited consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Off-Balance Sheet Arrangements

We have no outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations and require management’s subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.

While our significant accounting policies are more fully described in notes to our consolidated financial statements appearing elsewhere in this Form 10-Q, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we used in the preparation of our financial statements.

Revenue Recognition

Stock-Based Compensation

The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and Equity-Based Payments to Non-employees pursuant to ASC ~~505-50~~2018-07 (ASC ~~505-50)~~2018-07). All transactions in which the consideration provided in exchange for the purchase of goods or services ~~are the consideration received for~~consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Our management, with the participation of our ~~Chief Executive Officer~~President and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~December 31, 2017.~~June 30, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of ~~December 31, 2017,~~June 30, 2021, our ~~Chief Executive Officer~~President and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that occurred during the period of our evaluation or subsequent to the date we carried out our evaluation which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any system of controls and procedures will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

1627

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are not a party to any legal or administrative proceedings that we believe, individually or in the aggregate, would be likely to have a material adverse effect on our financial condition or results of operations.

ITEM 1A. RISK FACTORS.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this ~~Item.~~Item

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following issuances of equity securities by the Company were exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) of the Securities Act of 1933 during the ~~three month~~three-month period ended ~~December 31, 2017:~~June 30, 2021:

Common Stock Issued for Services

On ~~December 22, 2017,~~June 25, 2021, we issued ~~300,000~~an aggregate 375,000 shares of common stock, restricted in accordance with Rule 144, to ~~Todd Peterson~~two of our directors as ~~a bonus~~payment in lieu of cash for ~~his~~ services ~~rendered as our CFO.~~rendered.

On ~~December 22, 2017,~~June 25, 2021, we issued ~~100,000~~83,333 shares of common stock, restricted in accordance with Rule 144, to ~~Dr. Alfredo Axtmayer~~a former director as payment in lieu of cash for ~~his~~ services ~~on our Board of Directors.~~rendered.

~~The following~~On June 25, 2021, we issued 250,000 shares of common stock, ~~and warrants are~~ restricted ~~securities as defined~~ in accordance with Rule 144, ~~promulgated under the Securities Act of 1933 during the three month period ended December 31, 2017. The issuances were exempt from the registration requirements of the Securities Act of 1933~~to our former CFO for services rendered pursuant to ~~Section 4(a)(2) thereof and/or Rule 506 of Regulation D promulgated thereunder. The purchasers were accredited investors, familiar with our operations, and there was no general solicitation.~~his employment agreement.

On ~~December 20, 2017,~~June 2, 2021, we ~~sold 10 units, consisting of 100,000 shares of its common stock and warrants to purchase 50,000~~issued 840,000 shares of common stock, ~~exercisable at $0.26 per share over a thirty six month period,~~restricted in ~~exchange~~accordance with Rule 144, to one of our directors as payment in lieu of cash for ~~total proceeds~~settlement of ~~$18,000.~~services rendered.

On December 14, 2017, we sold 13.89 units, consisting of 138,889 shares of its common stock and warrants to purchase 69,445 shares of common stock, exercisable at $0.26 per share over a thirty six month period, in exchange for total proceeds of $25,000.

On December 14, 2017, we sold 55.56 units, consisting of 555,600 shares of its common stock and 277,800 warrants to purchase 277,800 shares of common stock, exercisable at $0.26 per share over a thirty six month period, in exchange for total proceeds of $100,008.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

1728

~~ITEM 6. EXHIBITS~~.

Exhibit		Description
~~3.1~~2.1		Stock Purchase Agreement between Digipath, Inc., VSSL Enterprises Ltd., Kyle Joseph Remenda, Philippe Olivier Henry, PhD, Audim Ventures Ltd. and Britt Ash Enterprises Ltd., dated March 9, 2020 (incorporated by reference to Exhibit 2.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on March 16, 2020)
3.1		Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Form 10 filed with the Securities and Exchange Commission by Digipath, Inc. on July 15, 2011)
3.2		Bylaws (incorporated by reference to Exhibit 3.2 of the Form 10 filed with the Securities and Exchange Commission by Digipath, Inc. on July 15, 2011)
3.3		Certificate of Amendment to Articles of Incorporation dated April 4, 2014 (incorporated by reference to Exhibit 3.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on April 10, 2014)
3.4		Certificate of Designations, Preferences, Limitations, Restrictions and Relative Rights of Series A Convertible Preferred Stock dated April 9, 2014 (incorporated by reference to Exhibit 3.2 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on April 10, 2014)
3.5		Certificate of Amendment to Articles of Incorporation dated May 22, 2015 (incorporated by reference to Exhibit 3.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on May 26, 2015)
31.1*3.6		Certificate of Amendment to Articles of Incorporation dated May 14, 2019 (incorporated by reference to Exhibit 3.6 of the Current Report on Form 10-Q filed with the Securities and Exchange Commission by Digipath, Inc. on August 13, 2019)
4.1		Form of 8% Senior Secured Convertible Notes due December 31, 2020 (incorporated by reference to Exhibit 4.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on November 21, 2018)
4.2		Form of 8% Senior Secured Convertible Notes due September 23, 2020 (incorporated by reference to Exhibit 4.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on September 26, 2019)
4.3		9% Secured Convertible Note, between Digipath, Inc. and holder, due August 10, 2022 (incorporated by reference to Exhibit 4.3 of the Current Report on Form 10-Q filed with the Securities and Exchange Commission by Digipath, Inc. on February 14, 2020)
4.4		9% Secured Subordinated Convertible Note, between Digipath, Inc. and holder, due August 11, 2022 (incorporated by reference to Exhibit 4.4 of the Current Report on Form 10-Q filed with the Securities and Exchange Commission by Digipath, Inc. on February 14, 2020)
4.5		9% Secured Subordinated Convertible Note, between Digipath, Inc. and holder, due August 11, 2022 (incorporated by reference to Exhibit 4.5 of the Current Report on Form 10-Q filed with the Securities and Exchange Commission by Digipath, Inc. on May 15, 2020)
4.6		Form of Amendment to 9% Secured Convertible Note, between Digipath, Inc. and holder, due August 10, 2022 (incorporated by reference to Exhibit 4.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on January 6, 2021)
31.1*		Section 302 Certification of ~~Chief~~Principal Executive Officer
31.2*		Section 302 Certification of ~~Chief~~Principal Financial Officer
32.1*		Section 906 Certification of ~~Chief~~Principal Executive Officer
32.2*		Section 906 Certification of ~~Chief~~Principal Financial Officer
101.INS*		XBRL Instance Document
101.SCH*		XBRL Schema Document
101.CAL*		XBRL Calculation Linkbase Document
101.DEF*		XBRL Definition Linkbase Document
101.LAB*		XBRL Labels Linkbase Document
101.PRE*		XBRL Presentation Linkbase Document

* Filed herewith.

1829

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.

Date: ~~February 12, 2018~~August 16, 2021

DIGIPATH, INC.

By:	~~/s/ Joseph J. Bianco~~
~~Name:~~	~~Joseph J. Bianco~~
~~Title:~~	~~Chief Executive Officer and Director~~

~~By:~~	/s/ Todd ~~Peterson~~Denkin
Name:	Todd ~~Peterson~~Denkin
Title:	President

By:	/s/ A. Stone Douglass
Name:	A. Stone Douglass
Title:	Chief Financial Officer ~~and Secretary~~

1930

	Three Months Ended December 31,						Increase /
	2017			2016			(Decrease)
Revenues	$	1,118,785		$	409,751		$	709,034
Cost of sales		376,772			204,132			172,640
Gross profit		742,013			205,619			536,394

Operating expenses:
General and administrative		399,114			279,686			119,428
Professional fees		486,676			191,643			295,033
Bad debts expense		55,940			14,450			41,490
Total operating expenses:		941,730			485,779			455,951

Operating loss		(199,717	)		(280,160	)		(80,443	)

Total other income		20,700			154,000			(133,300	)

Net loss	$	(179,017	)	$	(126,160	)	$	52,857