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

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

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.

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).

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 ~~May 13,~~August 11, 2020 was ~~57,237,672.~~57,612,672.

	March 31,			September 30,			June 30,			September 30,
	2020			2019			2020			2019
	(Unaudited)						(Unaudited)
Assets									��

Current assets:
Cash	$	89,971		$	323,739		$	126,862		$	323,739
Accounts receivable, net		275,591			179,256			171,126			179,256
Other current assets		48,621			74,620			122,694			74,620
Inventory		37,900			-			37,900			-
Deposits		25,647			51,704			25,647			51,704
Total current assets		477,730			629,319			484,229			629,319

Goodwill from affiliate		592,621			-			592,621			-
Right-of-use asset		241,820			-			193,094			-
Fixed assets, net		1,097,358			726,614			988,444			726,614

Total Assets	$	2,409,529		$	1,355,933		$	2,258,388		$	1,355,933

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	242,928		$	136,612		$	369,675		$	136,612
Accrued expenses		145,130			134,881			138,328			134,881
Short term advances		20,000			-			20,000			-
Current portion of operating lease liabilities		200,578			-			195,739			-
Current portion of finance lease liabilities		27,611			-			28,901			-
Current maturities of note payable, equipment financing		52,781			-
Convertible notes payable, net of discounts of $24,874 and $-0- at March 31, 2020 and September 30, 2019, respectively		1,225,126			200,000
Current maturities of notes payable								53,544			-
Convertible notes payable, net of discounts of $16,643 and $-0- at June 30, 2020 and September 30, 2019, respectively								683,357			200,000
Total current liabilities		1,914,154			471,493			1,489,544			471,493

Operating lease liabilities		43,200			-
Finance lease liabilities		36,195			-			28,468			-
Note payable, equipment financing		226,421			-
Convertible notes payable, net of discounts of $-0- and $41,426 at March 31, 2020 and September 30, 2019, respectively		-			458,574
Notes payable								432,779			-
Convertible notes payable, net of discounts of $-0- and $41,426 at June 30, 2020 and September 30, 2019, respectively								550,000			458,574

Total Liabilities		2,219,970			930,067			2,500,791			930,067

Stockholders’ Equity:

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			1,326			1,326
Common stock, $0.001 par value, 250,000,000 shares authorized; 56,737,672 and 48,361,433 shares issued and outstanding at March 31, 2020 and September 30, 2019, respectively		56,738			48,361
Common stock, $0.001 par value, 250,000,000 shares authorized; 57,612,672 and 48,361,433 shares issued and outstanding at June 30, 2020 and September 30, 2019, respectively								57,613			48,361
Additional paid-in capital		15,879,225			15,331,839			16,004,575			15,331,839
Subscriptions payable, consisting of 500,000 shares of common stock at March 31, 2020		37,500			-
Accumulated (deficit)		(15,785,230	)		(14,955,660	)		(16,305,917	)		(14,955,660	)

Total Stockholders’ Equity		189,559			425,866			(242,403	)		425,866

Total Liabilities and Stockholders’ Equity	$	2,409,529		$	1,355,933		$	2,258,388		$	1,355,933

	For the Three Months Ended						For the Six Months Ended						For the Three Months Ended						For the Nine Months Ended
	March 31,						March 31,						June 30,						June 30,
	2020			2019			2020			2019			2020			2019			2020			2019

Revenues	$	754,982		$	651,555		$	1,563,912		$	1,293,670		$	407,229		$	652,920		$	1,971,141		$	1,946,590
Cost of sales		497,029			427,830			902,510			910,150			347,724			424,067			1,250,234			1,334,217
Gross profit		257,953			223,725			661,402			383,520			59,505			228,853			720,907			612,373

Operating expenses:
General and administrative		406,919			418,505			795,351			808,976			328,128			431,636			1,123,479			1,240,612
Professional fees		327,434			235,667			511,067			482,247			177,835			195,052			688,902			677,299
Bad debts expense		117,870			25,265			161,120			49,830			25,420			93,340			186,540			143,170
Total operating expenses		852,223			679,437			1,467,538			1,341,053			531,383			720,028			1,998,921			2,061,081

Operating loss		(594,270	)		(455,712	)		(806,136	)		(957,533	)		(471,878	)		(491,175	)		(1,278,014	)		(1,448,708	)

Other income (expense):
Other income		21,000			22,250			42,000			72,650			21,000			19,750			63,000			92,400
Loss on disposal of fixed assets														(28,238	)		-			(28,238	)		-
Interest expense		(35,873	)		(18,003	)		(65,434	)		(28,756	)		(41,571	)		(18,203	)		(107,005	)		(46,959	)
Total other income (expense)		(14,873	)		4,247			(23,434	)		43,894			(48,809	)		1,547			(72,243	)		45,441

Net loss	$	(609,143	)	$	(451,465	)	$	(829,570	)	$	(913,639	)	$	(520,687	)	$	(489,628	)	$	(1,350,257	)	$	(1,403,267	)

Weighted average number of common shares outstanding - basic and fully diluted		50,586,842			45,919,662			49,473,671			44,296,508			57,225,309			47,934,212			52,048,121			45,509,076

Net loss per share - basic and fully diluted	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.02	)	$	(0.01	)	$	(0.01	)	$	(0.03	)	$	(0.03	)

	For the Six Months Ended March 31, 2020																		For the Nine Months Ended June 30, 2020
	Series A Convertible								Additional							Total			Series A Convertible								Additional							Total
	Preferred Stock				Common Stock				Paid-in		Subscriptions		Accumulated			Stockholders’			Preferred Stock				Common Stock				Paid-in		Subscriptions		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Payable		(Deficit)			Equity			Shares		Amount		Shares		Amount		Capital		Payable		(Deficit)			Equity

Balance, September 30, 2019		1,325,942	$	1,326		48,361,433	$	48,361	$	15,331,839	$	-	$	(14,955,660	)	$	425,866			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			-		-		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			-		-		6,500,000		6,500		367,250		-		-			373,750

Common stock issued for services		-		-		1,169,989		1,171		16,042		37,500		-			54,713			-		-		2,044,989		2,046		113,360		-		-			115,406

Common stock options issued for services		-		-		-		-		38,288		-		-			38,288			-		-		-		-		66,320		-		-			66,320

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

Net loss for the six months ended March 31, 2020		-		-		-		-		-		-		(829,570	)		(829,570	)
Net loss for the nine months ended June 30, 2020																				-		-		-		-		-		-		(1,350,257	)		(1,350,257	)

Balance, March 31, 2020		1,325,942	$	1,326		56,737,672	$	56,738	$	15,879,225	$	37,500	$	(15,785,230	)	$	189,559
Balance, June 30, 2020																				1,325,942	$	1,326		57,612,672	$	57,613	$	16,004,575	$	-	$	(16,305,917	)	$	(242,403	)

	For the Six Months Ended						For the Nine Months Ended
	March 31,						June 30,
	2020			2019			2020			2019
Cash flows from operating activities
Net loss	$	(829,570	)	$	(913,639	)	$	(1,350,257	)	$	(1,403,267	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in allowance for doubtful accounts		43,250			49,830			186,540			143,170
Depreciation and amortization expense		156,171			128,771			242,207			194,588
Loss on disposal of fixed assets								28,238			-
Stock issued for services		54,713			210,615			115,406			276,015
Options and warrants granted for services		108,300			88,794			136,332			137,412
Amortization of debt discounts		16,552			12,986			24,783			21,217
Decrease (increase) in assets:
Accounts receivable		(138,000	)		(72,546	)		(176,825	)		(66,265	)
Other current assets		31,258			(51,541	)		(42,815	)		(25,648	)
Inventory		(37,900	)		-			(37,900	)		-
Deposits		26,057			-			26,057			-
Right-of-use assets		95,423			-			144,149			-
Increase (decrease) in liabilities:
Accounts payable		103,736			(149,242	)		230,483			(163,947	)
Accrued expenses		6,971			5,363			169			(2,151	)
Lease liabilities		(93,465	)		-			(141,504	)		-
Deferred revenues		-			(25	)		-			(525	)
Net cash used in operating activities		(456,504	)		(690,634	)		(614,937	)		(889,401	)

Cash flows from investing activities
Cash acquired from affiliate in acquisition of VSSL		143			-			143			-
Cash paid for purchase of VSSL Enterprises, Ltd.		(200,000	)		-			(200,000	)		-
Purchase of fixed assets		(135,791	)		(1,375	)		(141,151	)		(30,261	)
Advance of note receivable		-			(95,000	)		-			(95,000	)
Net cash used in investing activities		(335,648	)		(96,375	)		(341,008	)		(125,261	)

Cash flows from financing activities
Proceeds from short term advances		25,000			-			25,000			-
Repayments of short term advances		(25,000	)		-			(25,000	)		-
Principal payments on finance lease		(35,387	)		-			(41,824	)		-
Principal payments on note payable, equipment financing		(12,729	)		-			(25,642	)		-
Proceeds from notes payable								220,034			-
Proceeds from convertible notes		550,000			500,000			550,000			500,000
Proceeds from sale of common stock		56,500			625,000			56,500			625,000
Net cash provided by financing activities		558,384			1,125,000			759,068			1,125,000

Net increase (decrease) in cash		(233,768	)		337,991			(196,877	)		110,338
Cash - beginning		323,739			176,027			323,739			176,027
Cash - ending	$	89,971		$	514,018		$	126,862		$	286,365

Supplemental disclosures:
Interest paid	$	16,601		$	4,066		$	35,869		$	4,066
Income taxes paid	$	-		$	-		$	-		$	-

Non-cash investing and financing activities:
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		$	-
Fair value of net assets acquired in business combination from affiliate							$	18,871		$	-
Fair value of common stock paid in business combination from affiliate							$	373,750		$	-
Fixed assets acquired with capitalized finance lease	$	99,193		$	-		$	99,193		$	-
Fixed assets acquired with note payable, equipment financing	$	291,931		$	-		$	291,931		$	-
Value of preferred stock converted to common stock	$	-		$	100,000		$	-		$	100,000
Beneficial conversion feature of convertible notes payable	$	-		$	70,964		$	-		$	70,964

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

Digipath, Inc. was incorporated in Nevada on October 5, 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, andsupports the cannabis industry’s best practices for reliable testing, cannabis education and ~~training~~.training. Our business units are described below.

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, 2019. 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.

The accompanying consolidated financial statements include the accounts of the following entities, all of which were under common control and ownership at ~~March 31,~~June 30, 2020:

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.

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 Companyoperates as a single segment and will evaluate additional segment disclosure requirements as it expands its ~~operations~~.operations.

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 nature of the ~~instruments~~.instruments.

The Company recognizes revenue in accordance with ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the sale of lab testing services through our 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 Nevadaon a determinable fixed fee per test, or panel of tests ~~basis~~.basis. Revenue from the performance of those services is recognized upon completion of the tests, at which time test results are delivered to the customer, provided collectability of the fee is reasonably assured.We We typically require payment within thirty days of the delivery of results. Management estimates an allowance for doubtful accounts based on the aging of its receivables.

Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable ~~value~~.value. Our products consist of handheld devices used to test cannabis for THC, CBD and CBG levels under our GroSciences, Inc. subsidiary. We have not yet commenced sales of this product.

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 2018-07 (ASC 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.

Adoption of New Accounting Standards and Recently Issued Accounting Pronouncements

In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07,Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The new guidance is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted.There was no impact on the Company’s financial statements as a result of adopting this ASU for the ~~six-month~~nine-month period ending ~~March 31,~~June 30, 2020 or the year ended September 30, ~~2019~~.2019.

In February 2016, the FASB established Topic 842,Leases, by issuing ASU No. 2016-02, which requires lessees to recognize the rights and obligations created by leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-11,Targeted Improvements, ASU No. 2018-10,Codification Improvements to Topic 842, and ASU No. 2018-01,Land Easement Practical Expedient for Transition to Topic 842. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations.

The new standard became effective for fiscal years beginning after December 15, 2019, with early adoption permitted. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company adopted the new standard on October 1, 2019 using the modified retrospective transition approach as of the effective date of the initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before October 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients”, which permits entities not to reassess under the new lease standard prior conclusions about lease identification, lease classification and initial direct costs. The Company does not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements.

The most significant effects of the adoption of the new standard relate to the recognition of new ROU assets and lease labilities on our balance sheet for office operating leases and providing significant new disclosures about our leasing activities.

The new standard also provides practical expedients for an entity’s ongoing accounting. The Company has also elected the short-term leases recognition exemption for all leases that qualify. This means that the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets and lease liabilities, for existing short-term leases of those assets in transition. The Company also currently expects to elect the practical expedient to not separate lease and non-lease components for its leases. The new standard did not have a material impact.

There are no other recently issued accounting pronouncements that the Company has yet to adopt that are expected to have a material effect on its financial position, results of operations, or cash flows.

As shown in the accompanying condensed consolidated financial statements, the Company has incurred recurring losses from operations resulting in an accumulated deficit of ~~$15,785,230,~~$16,305,917, negative working capital of $1,005,315, and as of ~~March 31,~~June 30, 2020, the Company’s cash on hand may 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.

On March 9, 2020, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with VSSL Enterprises Ltd (“VSSL”), Kyle Joseph Remenda (“Remenda”), Philippe Olivier Henry, PhD (“Henry”), Audim Ventures Ltd. (“Audim”), and Britt Ash Enterprises Ltd. (“Britt Ash” and, together with Remenda, Henry and Audim, the “VSSL Stockholders”), pursuant to which the Company acquired all of VSSL’s outstanding shares of capital stock from the VSSL Stockholders for consideration consisting of 6,500,000 shares of Digipath’s common stock and a cash payment of $200,000. The closing of the acquisition occurred on March 11, 2020.The aggregate fair value of the common stock was $373,750 based on the closing price of the Company’s common stock on the date of closing.

Mr. Remenda, who held 45% of the VSSL’s shares prior to its acquisition by the Company, is the CEO of VSSL and was appointed as Digipath’s Chief Executive Officer in September 2019 in connection with the execution of the binding letter of intent with respect to the Company’s acquisition of VSSL. In addition, Mr. Henry, who also held 45% of VSSL’s shares prior to its acquisition by the Company, was engaged as a consultant by Digipath in September 2019.

This acquisition was accounted for as a business combination under the purchase method of accounting. The purchase resulted in the recognition of $592,621 of goodwill reflected on the Company’s balance sheet. According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows:

⁽¹⁾The consideration paid in excess of the net fair value of assets acquired and liabilities assumed has been recognized as goodwill.

The following table sets forth the unaudited pro forma results of the Company as if the acquisition of the VSSL was effective on the first day of each of the three and nine month periods presented. These combined results are not necessarily indicative of the results that may have been achieved had the companies always been combined.

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.

The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of ~~March 31,~~June 30, 2020 and September 30, 2019, respectively:

	Fair Value Measurements at March 31, 2020								Fair Value Measurements at June 30, 2020
	Level 1		Level 2			Level 3				Level 1		Level 2			Level 3
Assets
Cash	$	89,971	$	-		$	-		$	126,862	$	-		$	-
Goodwill		-		-			592,621			-		-			592,621
Total assets		89,971		-			592,621			126,862		-			592,621
Liabilities
Short term advances		-		20,000			-			-		20,000			-
Lease liabilities		-		-			307,584			-		-			253,108
Note payable, equipment financing		-		279,202			-
Convertible notes payable, net of discounts of $24,874		-		-			1,225,126
Notes payable										-		486,323			-
Convertible notes payable, net of discounts of $16,643										-		-			1,233,357
Total liabilities		-		299,202			1,532,710			-		506,323			1,486,465
	$	89,971	$	(299,202	)	$	(1,532,710	)	$	126,862	$	(506,323	)	$	(893,844	)

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 a total of $1,250,000 of convertible debentures, net of discounts of ~~$24,874~~$16,643 and $41,426 as of ~~March 31,~~June 30, 2020 and September 30, 2019, respectively.

There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 or the year ended September 30, 2019.

Accounts receivable was ~~$275,591~~$171,126 and $179,256 at ~~March 31,~~June 30, 2020 and September 30, 2019, respectively, net of allowance for uncollectible accounts of ~~$214,311~~$239,731 and $50,540 at ~~March 31,~~June 30, 2020 and September 30, 2019, respectively.

Fixed assets consist of the following at ~~March 31,~~June 30, 2020 and September 30, 2019:

	March 31,			September 30,			June 30,			September 30,
	2020			2019				2020			2019
Software	$	124,697		$	123,492		$	124,697		$	123,492
Office equipment		70,181			55,061			74,777			55,061
Furniture and fixtures		29,115			29,115			29,879			29,115
Lab equipment		1,530,339			1,118,942			1,428,667			1,118,942
Leasehold improvements		494,117			494,117			494,117			494,117
Lab equipment held under capital leases		99,193			-			99,193			-
		2,347,642			1,820,727			2,251,331			1,820,727
Less: accumulated depreciation		(1,250,284	)		(1,094,113	)		(1,262,887	)		(1,094,113	)
Total	$	1,097,358		$	726,614		$	988,444		$	726,614

During the three-months ended June 30, 2020, the Company disposed of lab equipment no longer in service. No proceeds were received on the disposal of the equipment, resulting in a loss on disposal of fixed assets of $28,238, which represented the net book value at the time of disposal.

Depreciation and amortization expense totaled ~~$156,171~~$242,207 and ~~$128,771~~$194,588 for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019, respectively.

The Company’s leases its operating and office facilities, and sub-leases one of the units, under non-cancelable real property lease agreements that expire on May 31, 2021 and June 30, 2021. 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 operating and office facility leases contain provisions requiring payment of property taxes, utilities, insurance, maintenance and 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.

	For the Six			For the Nine
	Months Ended			Months Ended
	March 31,			June 30,
	2020				2020
Operating lease cost	$	104,004		$	156,008
Finance lease cost:
Amortization of assets		9,919			15,767
Interest on lease liabilities		6,131			8,970
Sublease income		(42,000	)		(63,000	)
Total net lease cost	$	78,054		$	117,745

	March 31,			June 30,
	2020				2020
Operating leases:
Operating lease assets	$	241,820		$	193,094

Current portion of operating lease liabilities	$	200,578		$	195,739
Noncurrent operating lease liabilities		43,200			-
Total operating lease liabilities	$	243,778		$	195,739
Finance lease:
Equipment, at cost	$	99,193		$	99,193
Accumulated amortization		(9,920	)		(14,879	)
Equipment, net	$	89,273		$	84,314

Current portion of finance lease liability	$	27,611		$	28,901
Noncurrent finance lease liability		36,195			28,468
Total finance lease liability	$	63,806		$	57,369

Weighted average remaining lease term:
Operating leases		1.25 years			1.00 year
Finance leases		2.05 years			1.80 years

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

	For the Six		For the Nine
	Months Ended		Months Ended
	March 31,		June 30,
	2020			2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows provided by sublet operating leases	$	42,000	$	63,000
Operating cash flows used for operating leases	$	93,465	$	141,504
Financing cash flows used for finance leases	$	35,387	$	41,824

Leased assets obtained in exchange for lease liabilities:
Total operating lease liabilities	$	-	$	-
Total finance lease liabilities	$	99,193	$	99,193

Future minimum annual lease commitments under non-cancelable operating leases are as follows at ~~March 31,~~June 30, 2020:

Fiscal Year Ending	Minimum Lease		Sublease		Net Lease		Minimum Lease		Sublease		Net Lease
September 30,	Commitments		Income		Commitments			Commitments		Income		Commitments
2020*	$	104,009	$	21,000	$	83,009	$	52,693	$	-	$	52,693
2021		148,957		-		148,957		148,957		-		148,957
	$	252,966	$	21,000	$	231,966	$	201,650	$	-	$	201,650

* Liability pertains to the remaining ~~six~~three month period from ~~April~~July 1, 2020 through September 30, 2020.

Future minimum annual lease payments required under the finance lease and the present value of the net minimum lease payments are as follows at ~~March 31,~~June 30, 2020:

	Finance		Finance
	Leases			Leases

2020*	$	18,552	$	9,276
2021		37,105		37,105
2022		21,644		21,644
Total minimum lease payments		77,301		68,025
Less interest		13,495		10,656
Present value of lease liabilities		63,806		57,369
Less current portion		27,611		28,901
Long-term lease liabilities	$	36,195	$	28,468

* Liability pertains to the remaining ~~six~~three month period from ~~April~~July 1, 2020 through September 30, 2020.

On December 26, 2019, a total of $25,000 was received as a short-term loan from one of our convertible noteholders. The advance was subsequently repaid on February 6, 2020. No interest expense was recognized.

~~Note payable consists~~Short term advances consist of the following at ~~March 31,~~June 30, 2020 and September 30, 2019, respectively:

~~The Company recorded interest expense pursuant to the stated interest rate and closing costs on the equipment loan in the amount of $7,955 during the six months ended March 31, 2020.~~

Notes payable consists of the following at June 30, 2020 and September 30, 2019, respectively:

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

Convertible notes payable consists of the following at ~~March 31,~~June 30, 2020 and September 30, 2019, respectively:

	March 31,			September 30,			June 30,			September 30,
	2020			2019			2020			2019

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 is convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. 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.	$	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 is convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. 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.		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 is convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. 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.		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 September 23, 2020. The principal and interest are convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.11 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.		200,000			200,000			200,000			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 December 31, 2020. The principal and interest are convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.14 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 six months ended June 30, 2019.		350,000			350,000
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 December 31, 2020. The principal and interest are convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.14 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 nine months ended June 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 December 31, 2020. The principal and interest are convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.14 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			150,000			150,000

Total convertible notes payable		1,250,000			700,000			1,250,000			700,000
Less: unamortized debt discounts		(24,874	)		(41,426	)		(16,643	)		(41,426	)
		1,225,126			658,574			1,233,357			658,574
Less: current maturities		(1,225,126	)		(200,000	)		(683,357	)		(200,000	)
Convertible notes payable	$	-		$	458,574		$	550,000		$	458,574

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 during the six months ended March 31, 2019.~~$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 ~~$16,552~~$24,783 and ~~$12,986~~$21,217 during the ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019, 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 ~~$34,796~~$61,099 and ~~$15,770~~$25,742 for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019, respectively.

The Company recognized interest expense for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019, respectively, as follows:

	March 31,		March 31,		June 30,		June 30,
	2020		2019		2020		2019

Interest on capital leases	$	6,131	$	-	$	8,970	$	-
Interest on notes payable		7,955		-		12,153		-
Amortization of beneficial conversion features		16,552		12,986		24,783		21,217
Interest on convertible notes		34,796		15,770		61,099		25,742
Total interest expense	$	65,434	$	28,756	$	107,005	$	46,959

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $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 ~~March 31,~~June 30, 2020, there were 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.Each share of Series A Preferred is currently convertible into five shares of common 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 1,325,942 shares of Series A Preferred outstanding at ~~March 31,~~June 30, 2020 are convertible into 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% 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.

Common stock consists of $0.001 par value, 250,000,000 shares authorized, of which ~~57,237,672~~57,612,672 shares were issued and outstanding as of ~~May 11,~~August 14, 2020.

On February 10, 2020, the Company sold 81,250 shares of its common stock in exchange for proceeds of $6,500.

On January 16, 2020, the Company sold a total of 625,000 shares of its common stock in exchange for proceeds of $50,000.

On March 11, 2020, the Company acquired all of VSSL’s outstanding shares of capital stock from the VSSL’s stockholders for consideration consisting of 6,500,000 shares of the Company’s common stock and a cash payment of $200,000.The aggregate fair value of the Company’s common stock was $373,750 based on the closing price of the Company’s common stock on the closing date.

On June 25, 2020, the Company issued 375,000 shares of common stock to its 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, 2020, the Company issued 248,756 shares of common stock to its 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, 2020, the Company issued 750,000 shares of common stock to a consultant for investor relations services to be performed from March 25, 2020 through August 25, 2020. The fair value of the common stock was $45,300 based on the closing price of the Company’s common stock on the date of grant, and is being expensed over the requisite service period.

On January 27, 2020, the Company issued 500,000 shares of common stock to a consultant for investor relations services to be performed from February 1, 2020 through July 31, 2020. The fair value of the common stock was $37,500 based on the closing price of the Company’s common stock on the date of grant, and is being expensed over the requisite service period. The shares were subsequently issued on April 6, 2020.

On December 25, 2019, the Company issued 171,233 shares of common stock to its 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.

A total of ~~$1,776~~$28,719 of stock-based compensation expense was recognized during the ~~six~~nine months ended ~~March 31,~~June 30, 2020 as a result of the issuance of 750,000 shares of common stock to a consultant on March 25, 2020, as amortized over the requisite service period. A total of ~~$43,524~~$16,581 of unamortized expenses are to be expensed during the remaining requisite service period.

A total of ~~$13,187~~$31,937 of stock-based compensation expense was recognized during the ~~six~~nine months ended ~~March 31,~~June 30, 2020 as a result of the issuance of 500,000 shares of common stock to a consultant on January 27, 2020, as amortized over the requisite service period. A total of ~~$24,313~~$5,563 of unamortized expenses are to be expensed during the remaining requisite service period.

A total of $9,750 of stock-based compensation expense was recognized during the ~~six~~nine months ended ~~March 31,~~June 30, 2020 as a result of the issuance of 300,000 shares of common stock to a consultant on June 25, 2019, as amortized over the requisite service period. No further unamortized expenses are to be expensed during the remaining requisite service period.

A total of ~~$108,300~~$128,304 of stock-based compensation expense was recognized from the amortization of options and warrants over their vesting period during the ~~six~~nine months ended ~~March 31,~~June 30, 2020.

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.

On March 25, 2020, we granted options to purchase 500,000 shares of common stock as compensation for services to our former Chief Financial Officer. The options vested immediately as to 166,667 shares and the remaining shares vest in equal monthly amounts over the next 24 months following the grant date, and are exercisable for a ten-year period at an exercise price of $0.10 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 110% and a call option value of $0.0468, was $23,425. The options are being expensed over the vesting period, resulting in ~~$193~~$3,113 of stock-based compensation expense during the ~~six~~nine months ended ~~March 31,~~June 30, 2020. As of ~~March 31,~~June 30, 2020, a total of ~~$23,232~~$20,312 of unamortized expenses are expected to be expensed over the vesting period.

On March 9, 2020, we granted options to purchase 750,000 shares of common stock as compensation for services to our Chief Executive Officer. The options vestedimmediately as to 250,000 shares and the remaining shares vest in equal monthly amounts over the next 24 months following the grant date,and are exercisable for a ten-year period at an exercise price of $0.10 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 110% and a call option value of $0.0499, was $37,420. The options are being expensed over the vesting period, resulting in ~~$1,128~~$5,793 of stock-based compensation expense during the ~~six~~nine months ended ~~March 31,~~June 30, 2020. As of ~~March 31,~~June 30, 2020, a total of ~~$36,292~~$31,627 of unamortized expenses are expected to be expensed over the vesting period.

On March 9, 2020, we granted options to purchase 750,000 shares of common stock as compensation for services to our Chief Operating Officer. The options vestedimmediately as to 250,000 shares and the remaining shares vest in equal monthly amounts over the next 24 months following the grant date,and are exercisable for a ten-year period at an exercise price of $0.10 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 110% and a call option value of $0.0499, was $37,420. The options are being expensed over the vesting period, resulting in ~~$1,128~~$5,793 of stock-based compensation expense during the ~~six~~nine months ended ~~March 31,~~June 30, 2020. As of ~~March 31,~~June 30, 2020, a total of ~~$36,292~~$31,627 of unamortized expenses are expected to be expensed over the vesting period.

On March 9, 2020, we granted options to purchase 1,000,000 shares of common stock as compensation for services to our Chairman of the Board of Directors. The options vestedimmediately as to 333,333 shares and the remaining shares vest in equal monthly amounts over the next 24 months following the grant date,and are exercisable for a ten-year period at an exercise price of $0.10 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 110% and a call option value of $0.0499, was $49,894. The options are being expensed over the vesting period, resulting in ~~$1,504~~$7,724 of stock-based compensation expense during the ~~six~~nine months ended ~~March 31,~~June 30, 2020. As of ~~March 31,~~June 30, 2020, a total of ~~$48,390~~$42,170 of unamortized expenses are expected to be expensed over the vesting period.

On February 18, 2020, wegranted options to purchase 100,000 shares of common stock as compensation for services to a consultant. The options vestedimmediately,and are exercisable for a five-year period at an exercise price of $0.10 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 108% and a call option value of $0.0403, was $4,031.

On February 18, 2020, wegranted options to purchase 100,000 shares of common stock as compensation for services to another consultant. The options vestedimmediately,and are exercisable for a five-year period at an exercise price of $0.10 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 108% and a call option value of $0.0403, was $4,031.

On January 31, 2020, we granted options to purchase 250,000 shares of common stock as compensation for Director services to Dennis Hartmann. The options vestedimmediately as to 62,500 shares and as to an additional 62,500 shares on each of January 31, 2021, January 31, 2022, and January 31, 2023,and are exercisable for a ten-year period at an exercise price of $0.10 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 238% and a call option value of $0.0683, was $17,078. The options are being expensed over the vesting period, resulting in ~~$935~~$2,353 of stock-based compensation expense during the ~~six~~nine months ended ~~March 31,~~June 30, 2020. As of ~~March 31,~~June 30, 2020, a total of ~~$16,143~~$14,725 of unamortized expenses are expected to be expensed over the vesting period.

On January 29, 2020, Edmond A. DeFrank was appointed to the Company’s Board of Directors, filling the vacancy resulting from the resignation of Dr. Cindy Orser on January 20, 2020.On January 31, 2020, we granted Mr. DeFrank options to purchase 250,000 shares of common stock as compensation for Director services. The options vestedimmediately as to 62,500 shares and as to an additional 62,500 shares on each of January 31, 2021, January 31, 2022, and January 31, 2023,and are exercisable for a ten-year period at an exercise price of $0.10 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 238% and a call option value of $0.0683, was $17,078. The options are being expensed over the vesting period, resulting in ~~$935~~$2,353 of stock-based compensation expense during the ~~six~~nine months ended ~~March 31,~~June 30, 2020. As of ~~March 31,~~June 30, 2020, a total of ~~$16,143~~$14,725 of unamortized expenses are expected to be expensed over the vesting period.

A total of ~~2,541,644~~5,625,000 options were outstanding as of ~~March 31,~~June 30, 2020. During the ~~six~~nine months ended ~~March 31,~~June 30, 2020, options to purchase an aggregate total of ~~3,075,000~~4,160,000 shares of common stock at a weighted average exercise price of ~~$0.13~~$0.14 per share expired.

Warrants to purchase a total of 4,274,269 shares of common stock were outstanding as of ~~March 31,~~June 30, 2020.

On March 9, 2020, wegranted a ten-year warrant to purchase 1,500,000 shares of common stock at a price of $0.10 per share to a consultant as compensation for services. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 110% and a call option value of $0.0467, was $70,012.

On February 21, 2020, warrants to purchase 642,857 shares of common stock at $0.26 per share expired.

Other income (expense) for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019 consisted of the following:

	March 31,						June 30,
	2020			2019			2020			2019
Interest income	$	-		$	1,250
Settlement income on note receivable		-			30,000		$	-		$	30,000
Rental income on subleases		42,000			41,400			63,000			62,400
Loss on disposal of fixed assets								(28,238	)		-
Interest expense		(65,434	)		(28,756	)		(107,005	)		(46,959	)
	$	(23,434	)	$	43,894		$	(72,243	)	$	45,441

On December 1, 2018, we received $30,000 as full settlement of a Note dated December 17, 2014, consisting of $250,000 of principal and approximately $58,125 of unpaid interest that was previously written off as uncollectible.

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 ~~six~~nine months ended ~~March 31,~~June 30, 2020 and the year ended September 30, 2019, 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 ~~March 31,~~June 30, 2020, the Company had approximately ~~$13,400,000~~$13,800,000 of federal net operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in 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 ~~March 31,~~June 30, 2020 and September 30, 2019, respectively.

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

The Company evaluates events that have occurred after the balance sheet date through the date these financial statements were issued. There were no subsequent events to report.

On May 13, 2020, the Company, through its wholly-owned subsidiary Digipath Labs, Inc., borrowed $179,920 from WebBank Corp (“Lender”), pursuant to a Promissory Note issued by Digipath Labs to Lender (the “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 “CARES Act”). The PPP Note bears interest at 1.00% per annum, payable monthly beginning December 13, 2020, and is due on May 13, 2022. The PPP Note may be repaid at any time without penalty.

Under the Payroll Protection Program, the Company will be eligible for loan forgiveness up to the full amount of the PPP Note and any accrued interest. The forgiveness amount will be equal to the amount that the Company 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 PPP Note. No assurance is provided that the Company will obtain forgiveness under the PPP Note in whole or in part.

The PPP Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result in a claim for the immediate repayment of all amounts outstanding under the PPP Note.

On April 6, 2020 we issued 500,000 shares on subscriptions payable pursuant to an award dated, January 27, 2020, whereby the Company awarded 500,000 shares of common stock to a consultant for investor relations services to be performed from February 1, 2020 through July 31, 2020.

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, 2019 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, 2019 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.

Digipath, Inc. was incorporated in Nevada on October 5, 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, andsupports the cannabis industry’s best practices for reliable testing, cannabis education and training. Our business units as of ~~March 31,~~June 30, 2020 are described below.

The Company’s financial performance was ~~not~~ negatively impacted by the COVID-19 coronavirus pandemic during the three and ~~six~~nine month periods ended ~~March 31, 2020, the Company’s cannabis testing operations have significantly declined following the end of the most recent quarter.~~June 30, 2020. This is due to the decline in the Nevada cannabis markets resulting in turn from the substantial decline in Nevada tourism resulting from COVID-19. ~~Management~~While the Company’s testing operations have recently begun to increase, management is unable to predict when testing operations will revert to historical levels.

Results of Operations for the Three Months Ended ~~March 31,~~June 30, 2020 and 2019:

The following table summarizes selected items from the statement of operations for the three months ended ~~March 31,~~June 30, 2020 and 2019.

	Three Months Ended March 31,						Increase /			Three Months Ended June 30,						Increase /
	2020			2019			(Decrease)			2020			2019			(Decrease)
Revenues	$	754,982		$	651,555		$	103,427		$	407,229		$	652,920		$	(245,691	)
Cost of sales		497,029			427,830			69,199			347,724			424,067			(76,343	)
Gross profit (loss)		257,953			223,725			34,228			59,505			228,853			(169,348	)

Operating expenses:
General and administrative		406,919			418,505			(11,586	)		328,128			431,636			(103,508	)
Professional fees		327,434			235,667			91,767			177,835			195,052			(17,217	)
Bad debts expense		117,870			25,265			92,605			25,420			93,340			(67,920	)
Total operating expenses:		852,223			679,437			172,786			531,383			720,028			(188,645	)

Operating loss		(594,270	)		(455,712	)		138,558			(471,878	)		(491,175	)		(19,297	)

Total other income (expense)		(14,873	)		4,247			(19,120	)		(48,809	)		1,547			(50,356	)

Net loss	$	(609,143	)	$	(451,465	)	$	(157,678	)	$	(520,687	)	$	(489,628	)	$	31,059

Aggregate revenues for the three months ended ~~March 31,~~June 30, 2020 were ~~$754,982,~~$407,229, compared to revenues of ~~$651,555~~$652,920 during the three months ended ~~March 31,~~June 30, 2019, ~~an increase~~a decrease of ~~$103,427,~~$245,691, or ~~16%~~38%. The ~~increase~~decrease in revenue was due to the effects the COVID-19 coronavirus pandemic had on the tourism industry ~~growth and increased market share attained~~in Nevada during the current period.

Cost of sales for the three months ended ~~March 31,~~June 30, 2020 were ~~$497,029,~~$347,724, compared to ~~$427,830~~$424,067 during the three months ended ~~March 31,~~June 30, 2019, ~~an increase~~a decrease of ~~$69,199,~~$76,343, or ~~16%~~18%. Cost of sales consists primarily of labor, depreciation, maintenance on lab equipment, and supplies consumed in our testing operations. The ~~increased~~decreased cost of sales in the current period ~~was~~were primarily due to ~~increased~~decreased labor and reduced consumption of lab supplies related to ~~turnover and competition for employees within~~ the ~~industry.~~effects of the COVID-19 pandemic. Our gross margins of approximately ~~34%~~15% and 35% during the three months ended both ~~March 31,~~June 30, 2020 and 2019, respectively, translated to ~~$34,228~~$169,348 of ~~increased~~decreased gross profit in the current period. ~~We intend~~Our margins were significantly affected by the decline in revenues, given our inability to ~~continue to automate processes through equipment enhancements to improve~~cut fixed costs, including rent, depreciation and maintenance contracts on our ~~margins, and implemented a new~~ lab ~~management system, and purchased a new triple quad machine on December 26, 2019 that we expect will help increase our testing capacity and decrease our variable costs.~~equipment.

General and administrative expenses for the three months ended ~~March 31,~~June 30, 2020 were ~~$406,919,~~$328,128, compared to ~~$418,505~~$431,636 during the three months ended ~~March 31,~~June 30, 2019, a decrease of ~~$11,586,~~$103,508, or 3%24%. The expenses consisted primarily of marketing, rent, salaries and wages, and travel expenses.General and administrative expenses included non-cash, stock-based compensation of ~~$19,684~~$33,976 and ~~$21,000~~$28,370 during the three months ended ~~March 31,~~June 30, 2020 and 2019, respectively.

Professional fees for the three months ended ~~March 31,~~June 30, 2020 were ~~$327,434,~~$177,835, compared to ~~$235,667~~$195,052 during the three months ended ~~March 31,~~June 30, 2019, ~~an increase~~a decrease of ~~$91,767,~~$17,217, or ~~39%~~9%. Professional fees included non-cash, stock-based compensation of ~~$100,902~~$54,749 and ~~$122,574~~$85,648 during the three months ended ~~March 31,~~June 30, 2020 and ~~March 31,~~June 30, 2019, respectively. Professional fees ~~increased~~decreased primarily due to ~~increased legal fees associated with our acquisition of VSSL~~decreased stock-based compensation during the current period.

Bad debts expense for the three months ended ~~March 31,~~June 30, 2020 was ~~$117,870,~~$25,420, compared to ~~$25,265~~$93,340 during the three months ended ~~March 31,~~June 30, 2019, ~~an increase~~a decrease of ~~$92,605,~~$67,920, or ~~367%~~73%. Bad debts expense ~~increased~~decreased during the current period as our allowance for doubtful accounts increased slightly, from $214,311 to ~~$214,311~~$239,731 during the ~~quarter due to the effects of COVID-19.~~quarter.

Our operating loss for the three months ended ~~March 31,~~June 30, 2020 was ~~$594,270,~~$471,878, compared to ~~$455,712~~$491,175 during the three months ended ~~March 31,~~June 30, 2019, ~~an increase~~a decrease of ~~$138,558,~~$19,297, or ~~30%~~4%. Our operating loss ~~increased~~decreased primarily due to ~~increased legal~~improvements in collection efforts and reductions in corporate overhead and professional fees ~~and bad debts expense~~that offset our decreased gross profits due to the effects of Covid-19 during the three months ended ~~March 31,~~June 30, 2020, compared to the three months ended ~~March 31,~~June 30, 2019.

Other expense, on a net basis, for the three months ended ~~March 31,~~June 30, 2020 was ~~$14,873,~~$48,809, compared to other income, on a net basis, of ~~$4,247~~$1,547 during the three months ended ~~March 31,~~June 30, 2019, a net decrease of ~~$19,120.~~$50,356. Other expense consisted of ~~$35,873~~$41,571 of interest expense and a loss on disposal of fixed assets of $28,238, as partially offset by other income, consisting of $21,000 of subleased rental income for the three months ended ~~March 31,~~June 30, 2020. Other income during the three months ended ~~March 31,~~June 30, 2019 consisted of ~~$21,000~~$19,750 of subleased rents ~~and interest income of $1,250~~, as offset by ~~$18,003~~$18,203 of interest expense.

Net loss for the three months ended ~~March 31,~~June 30, 2020 was ~~$609,143,~~$520,687, compared to ~~$451,465~~$489,628 during the three months ended ~~March 31,~~June 30, 2019, an increase of ~~$157,678,~~$31,059, or ~~35%~~6%. The increased net loss was due primarily to ~~increased legal fees and~~reductions in gross profits due to Covid-19, as offset by improved collection efforts that reduced bad debts expense and reductions in corporate expenses as described above, in addition to increased interest on debt financing.

Results of Operations for the ~~Six~~Nine Months Ended ~~March 31,~~June 30, 2020 and 2019:

The following table summarizes selected items from the statement of operations for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019.

	Six Months Ended March 31,						Increase /			Nine Months Ended June 30,						Increase /
	2020			2019			(Decrease)			2020			2019			(Decrease)
Revenues	$	1,563,912		$	1,293,670		$	270,242		$	1,971,141		$	1,946,590		$	24,551
Cost of sales		902,510			910,150			(7,640	)		1,250,234			1,334,217			(83,983	)
Gross profit (loss)		661,402			383,520			277,882			720,907			612,373			108,534

Operating expenses:
General and administrative		795,351			808,976			(13,625	)		1,123,479			1,240,612			(117,133	)
Professional fees		511,067			482,247			28,820			688,902			677,299			11,603
Bad debts expense		161,120			49,830			111,290			186,540			143,170			43,370
Total operating expenses:		1,467,538			1,341,053			126,485			1,998,921			2,061,081			(62,160	)

Operating loss		(806,136	)		(957,533	)		(151,397	)		(1,278,014	)		(1,448,708	)		(170,694	)

Total other income (expense)		(23,434	)		43,894			(67,328	)		(72,243	)		45,441			(117,684	)

Net loss	$	(829,570	)	$	(913,639	)	$	(84,069	)	$	(1,350,257	)	$	(1,403,267	)	$	(53,010	)

Aggregate revenues for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 were ~~$1,563,912,~~$1,971,141, compared to revenues of ~~$1,293,670~~$1,946,590 during the ~~six~~nine months ended ~~March 31,~~June 30, 2019, an increase of ~~$270,242,~~$24,551, or ~~21%~~1%. The increase in revenue was due to a strong first fiscal quarter, as offset by the negative effects the COVID-19 coronavirus pandemic had on the tourism industry ~~growth and increased market share attained~~in Nevada during the current period.

Cost of sales for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 were ~~$902,510,~~$1,250,234, compared to ~~$910,150~~$1,334,217 during the ~~six~~nine months ended ~~March 31,~~June 30, 2019, a decrease of ~~$7,640,~~$83,983, or 1%6%. Cost of sales consists primarily of labor, depreciation, maintenance on lab equipment, and supplies consumed in our testing operations.Our gross margins of approximately ~~42%~~37%, increased during the ~~six~~nine months ended ~~March 31,~~June 30, 2020, compared to gross margins of approximately ~~30%~~31% during the ~~six~~nine months ended ~~March 31,~~June 30, 2019, due primarily to increased revenues of ~~$270,242~~$24,551 and ~~$76,40~~$83,983 of decreased cost of sales in the current period. We intend to continue to automate processes through equipment enhancements to improve our margins, and implemented a new lab management system, ~~and~~ purchased a new triple quad machine ~~on December 26, 2019~~and are experimenting with a new microbiology testing system that we expect will help increase our testing capacity and decrease our variable costs.

General and administrative expenses for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 were ~~$795,351,~~$1,123,479, compared to ~~$808,976~~$1,240,612 during the ~~six~~nine months ended ~~March 31,~~June 30, 2019, a decrease of ~~$13,625,~~$117,133, or 2%9%. The expenses consisted primarily of marketing, rent, salaries and wages, and travel expenses.General and administrative expenses included non-cash, stock-based compensation of ~~$38,084~~$72,060 and ~~$42,000~~$85,110 during the ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2019, respectively. General and administrative expenses decreased primarily due to decreased corporate overhead as we responded to the effects of Covid-19 during the current period.

Professional fees for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 were ~~$511,067,~~$688,902, compared to ~~$482,247~~$677,299 during the ~~six~~nine months ended ~~March 31,~~June 30, 2019, an increase of ~~$28,820,~~$11,603, or 6%2%. Professional fees included non-cash, stock-based compensation of ~~$124,929~~$179,678 and ~~$257,409~~$328,317 during the ~~six~~nine months ended ~~March 31,~~June 30, 2020 and ~~March 31,~~June 30, 2019, respectively. Professional fees increased primarily due to increased legal fees associated with our acquisition of VSSL during the current period.

Bad debts expense for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 ~~was $161,120,~~were $186,540, compared to ~~$49,830~~$143,170 during the ~~six~~nine months ended ~~March 31,~~June 30, 2019, an increase of ~~$111,290,~~$43,370, or ~~223%~~30%. Bad debts expense increased during the current period as our allowance for doubtful accounts increased to ~~$214,311~~$239,731 during the period due to the effects of COVID-19.

Our operating loss for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 was ~~$806,136,~~$1,278,014, compared to ~~$957,533~~$1,448,708 during the ~~six~~nine months ended ~~March 31,~~June 30, 2019, a decrease of ~~$151,397,~~$170,694, or ~~16%~~12%. Our operating loss decreased primarily due to increased ~~sales,~~gross profits and reductions in corporate overhead as ~~partially offset by increased bad debts expense~~we responded to the effects of Covid-19 during the ~~six~~nine months ended ~~March 31,~~June 30, 2020, compared to the ~~six~~nine months ended ~~March 31,~~June 30, 2019.

Other expense, on a net basis, for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 was ~~$23,434,~~$72,243, compared to other income, on a net basis, of ~~$43,894~~$45,441 during the ~~six~~nine months ended ~~March 31,~~June 30, 2019, a net decrease of ~~$67,328.~~$117,684. Other expense consisted of ~~$65,434~~$107,005 of interest expense and a loss on disposal of fixed assets of $28,238, as partially offset by other income, consisting of ~~$42,000~~$63,000 of subleased rental income for the ~~six~~nine months ended ~~March 31,~~June 30, 2020. Other income during the ~~six~~nine months ended ~~March 31,~~June 30, 2019 consisted of ~~$41,400~~$62,400 of ~~subleased~~sublease rents ~~interest income of $1,250,~~ anda $30,000 gain on settlement of a previously written off note receivable, as offset by ~~$28,756~~$46,959 of interest expense.

Net loss for the ~~six~~nine months ended ~~March 31,~~June 30, 2020 was ~~$829,570,~~$1,350,257, compared to ~~$913,639~~$1,403,267 during the ~~six~~nine months ended ~~March 31,~~June 30, 2019, a decrease of ~~$84,069,~~$53,010, or 9%4%. The decreased net loss was due primarily to increased ~~sales,~~gross profits, as partially offset by increased legal fees and bad debts expense as described above, in addition to a loss on disposal of fixed assets and increased interest on debt financing.

The following is a summary of the Company’s cash flows provided by (used in) operating, investing, and financing activities for the ~~six-month~~nine-month periods ended ~~March 31,~~June 30, 2020 and 2019:

	2020			2019			2020			2019
Operating Activities	$	(456,504	)	$	(690,634	)	$	(614,937	)	$	(889,401	)
Investing Activities		(335,648	)		(96,375	)		(341,008	)		(125,261	)
Financing Activities		558,384			1,125,000			759,068			1,125,000
Net Increase (Decrease) in Cash	$	(233,768	)	$	337,991		$	(196,877	)	$	110,338

During the ~~six~~nine months ended ~~March 31,~~June 30, 2020, net cash used in operating activities was ~~$456,504,~~$614,937, compared to net cash used in operating activities of ~~$690,634~~$889,401 for the same period ended ~~March 31,~~June 30, 2019. The decrease in cash used in operating activities was primarily attributable to our decreased net loss.

During the ~~six~~nine months ended ~~March 31,~~June 30, 2020, net cash used in investing activities was ~~$335,648,~~$341,008, compared to ~~$96,375~~$125,261 for the same period ended ~~March 31,~~June 30, 2019. The increase is attributable to investments made for cannabis testing equipment and the purchase of VSSL Enterprises, Ltd. in the current period.

During the ~~six~~nine months ended ~~March 31,~~June 30, 2020, net cash provided by financing activities was ~~$558,384,~~$759,068, compared to net cash provided by financing activities of $1,125,000 for the same period ended ~~March 31,~~June 30, 2019. The current period consisted primarily of $550,000 of proceeds received on convertible note financing, proceeds of $220,034 received on PPP notes payable and proceeds of $56,500 from the sale of stock, as offset by ~~$35,387~~$41,824 of principal payments on an equipment lease and ~~$12,729~~$25,642 of principal payments on an equipment loan, compared to $500,000 of proceeds received on convertible debt financing and $625,000 received from the sale of stock in the comparative period.

As of ~~March 31,~~June 30, 2020, our balance of cash on hand was ~~$89,971.~~$126,862. 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. 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.

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.

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.

Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue was recognized when the following criteria had been met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.

Our 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 Nevadaon a determinable fixed fee per test, or panel of tests basis. Revenue from the performance of those services is recognized upon completion of the tests, at which time test results are delivered to the customer, provided collectability of the fee is reasonably assured.We typically require payment within thirty days of the delivery of results. Management estimates an allowance for doubtful accounts based on the aging of its receivables.

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 (ASC 505-50). 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.

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

Our management, with the participation of our ~~Chief Executive Officer~~Interim President and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~March 31,~~June 30, 2020. 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 ~~March 31,~~June 30, 2020, our ~~Chief Executive Officer~~Interim President and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

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.

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.

We have identified the following risk factor in addition to those included in Part I, Item 1A of our Form 10-K for the fiscal year ended September 30, 2019. Additional risks not presently known to us or other factors not perceived by us to present significant risks to our business at this time also may impair our business, financial condition and results of operations.

The outbreak of the COVID-19 coronavirus has negatively impacted and could continue to negatively impact our business and the global economy. In addition, the COVID-19 pandemic could negatively impact our ability to obtain financing when required.

The recent outbreak of the COVID-19 coronavirus has spread across the globe and is impacting worldwide economic activity. A pandemic, including COVID-19 or other public health epidemic, poses the risk that we or our employees, customers, and other commercial partners may be prevented from conducting business activities for an indefinite period of time, including due to the spread of the disease or shutdowns requested or mandated by governmental authorities. While it is not possible at this time to estimate the full impact that COVID-19 will have on our business, following the end of our most recent quarter ended ~~March 31,~~June 30, 2020, the Company’s cannabis testing operations significantly declined due to the decline in the Nevada cannabis markets resulting in turn from the substantial decline in Nevada tourism resulting from COVID-19. COVID-19 has also had an adverse impact on global economic conditions, which could impair our ability to raise capital when needed.

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 period ended ~~March 31,~~June 30, 2020:

~~On February 10, 2020, we sold 81,250 shares of common stock, restricted in accordance with Rule 144, in exchange for proceeds of $6,500.~~

~~On January 16, 2020, we sold a total of 625,000 shares of common stock, restricted in accordance with Rule 144, to two investors, in exchange for proceeds of $50,000.~~

On ~~March~~June 25, 2020, we issued ~~248,756~~375,000 shares of common stock, restricted in accordance with Rule 144, to our CFO for services rendered pursuant to his employment agreement.

On ~~March 25,~~April 6, 2020, we issued ~~750,000~~500,000 shares of common stock, restricted in accordance with Rule 144, to a consultant for investor relations services to be performed from ~~March 25,~~January 27, 2020 through ~~August 25,~~July 27, 2020.

~~On March 11, 2020, we issued an aggregate of 6,500,000 shares of common stock, restricted in accordance with Rule 144, to VSSL’s shareholders in partial consideration for the acquisition of VSSL~~.

On ~~May 13,~~August 12, 2020, the Company ~~through its wholly-owned subsidiary Digipath Labs, Inc.,~~appointed one of our Directors, Dennis Hartman as the Interim President of the Company. Mr. Hartmann was previously appointed to our Board of Directors on September 25, 2019. Mr. Hartmann, age 63, had been an attorney engaged in private practice in the State of California for over 35 years. Mr. Hartmann holds a B.S. from the University of Alabama and a J.D. from the University of Texas School of Law. Mr. Hartmann is not a party to an employment agreement with the Company and is not being compensated for his service as Interim President.

On June 22, 2020, the Company, borrowed ~~$179,920~~$40,114 from ~~WebBank Corp (“Lender”),~~Cross River Bank, pursuant to a Promissory Note issued by ~~Digipath Labs~~the Company to ~~Lender~~Cross River Bank (the ~~“PPP~~“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 ~~“CARES Act”~~“Payroll Protection Program”). The Company PPP Note bears interest at 1.00% per annum, payable monthly beginning December ~~13,~~22, 2020, and is due on ~~May 13, 2022.~~June 22, 2025. The PPP Note may be repaid at any time without penalty.

Under the Payroll Protection Program, the Company will be eligible for loan forgiveness up to the full amount of the Company PPP Note and any accrued interest. The forgiveness amount will be equal to the amount that the Company spends during the ~~8-week~~24-week period beginning ~~May 13,~~June 22, 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%~~40% of the amount of the Company PPP Note. No assurance is provided that the Company will obtain forgiveness under the Company PPP Note in whole or in part.

The Company PPP Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result in a claim for the immediate repayment of all amounts outstanding under the Company PPP Note.

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.

Nevada		27-3601979
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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

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

		Page
		~~Page~~ No.
PART I - FINANCIAL INFORMATION			3
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)		3
	Condensed Consolidated Balance Sheets as of ~~March 31,~~June 30, 2020 (Unaudited) and September 30, 2019		3
	Condensed Consolidated Statements of Operations for the Three and ~~Six~~Nine Months Ended ~~March 31,~~June 30, 2020 and 2019 (Unaudited)		4
	Consolidated Statements of Stockholders’ Equity for the Three and ~~Six~~Nine Months Ended ~~March 31,~~June 30, 2020 and 2019 (Unaudited)		5
	Condensed Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~March 31,~~June 30, 2020 and 2019 (Unaudited)		7
	Notes to the Condensed Consolidated Financial Statements (Unaudited)		8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		2122
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		2728
ITEM 4.	CONTROLS AND PROCEDURES		2728
PART II - OTHER INFORMATION			28
ITEM 1.	Legal Proceedings		2829
ITEM 1A.	RISK FACTORS		2829
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		2829
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		2829
ITEM 4.	MINE SAFETY DISCLOSURES		2829
ITEM 5.	OTHER INFORMATION		2829
ITEM 6.	EXHIBITS		2930
	SIGNATURES		3031

	Ø	Digipath Labs, Inc. Digipath Labs’ mission is to provide pharmaceutical-grade analysis and testing to the cannabis 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 has plans to open labs in other states and countries that have legalized the sale of cannabis, beginning with California.

	Ø	GroSciences, Inc. Launched during the first fiscal quarter of 2019 to capitalize on the extensive data we have collected from cannabis through the testing process. GroSciences plans to develop and license specific formulations to other producers and product makers in the industry, and to market and sell its “Tru-Hemp ID” Kit which distinguishes industrial hemp from drug-type cannabis.

	Ø	VSSL Enterprises, Ltd. Acquired in March 2020, and based in British Colombia, Canada, VSSL is a cannabis genomics, plant sciences and consulting firm that builds predictive tools for the cannabis industry, and uses molecular and bioinformatics tools to deliver unique solutions suited to its customers’ business models.

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

Large accelerated filer	[ ]		Accelerated filer	[ ]
Non-accelerated filer	[X]		Smaller reporting company	[X]
		Emerging growth company	[X]

	For the Three Months Ended March 31, 2019
	Series A Convertible								Additional								Total
	Preferred Stock				Common Stock				Paid-in			Subscriptions		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital			Payable		(Deficit)			Equity

Balance, December 31, 2018		1,325,942	$	1,326		43,757,277	$	43,757	$	14,346,623		$	-	$	(13,612,502	)	$	779,204

Common stock sold for cash		-		-		3,125,000		3,125		621,875			-		-			625,000

Common stock issued for services		-		-		252,439		253		61,086			-		-			61,339

Common stock issued in exchange for termination of options		-		-		475,000		475		(475	)		-		-			-

Common stock options issued for services		-		-		-		-		82,235			-		-			82,235

Net loss for the three months ended March 31, 2019		-		-		-		-		-			-		(451,465	)		(451,465	)

Balance, March 31, 2019		1,325,942	$	1,326		47,609,716	$	47,610	$	15,111,344		$	-	$	(14,063,967	)	$	1,096,313

	For the Three Months Ended June 30, 2019
	Series A Convertible								Additional							Total
	Preferred Stock				Common Stock				Paid-in		Subscriptions		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Payable		(Deficit)			Equity

Balance, March 31, 2019		1,325,942	$	1,326		47,609,716	$	47,610	$	15,111,344	$	-	$	(14,063,967	)	$	1,096,313

Common stock issued for services		-		-		545,834		546		64,854		-		-			65,400

Common stock options issued for services		-		-		-		-		48,618		-		-			48,618

Net loss for the three months ended June 30, 2019		-		-		-		-		-		-		(489,628	)		(489,628	)

Balance, June 30, 2019		1,325,942	$	1,326		48,155,550	$	48,156	$	15,224,816	$	-	$	(14,553,595	)	$	720,703

	For the Three Months Ended March 31, 2020
	Series A Convertible								Additional								Total
	Preferred Stock				Common Stock				Paid-in			Subscriptions		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital			Payable		(Deficit)			Equity

Balance, December 31, 2019		1,325,942	$	1,326		48,532,666	$	48,533	$	15,374,094		$	-	$	(15,176,087	)	$	247,866

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		-		-		998,756		999		(8,536	)		37,500		-			29,963

Common stock options issued for services		-		-		-		-		20,611			-		-			20,611

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

Net loss for the three months ended March 31, 2020		-		-		-		-		-			-		(609,143	)		(609,143	)

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

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

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 issued for services		-		-		875,000		875		97,318		(37,500	)		-			60,693

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

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 Nine Months Ended June 30, 2019
	Series A Convertible										Additional								Total
	Preferred Stock						Common Stock				Paid-in			Subscriptions		Accumulated			Stockholders’
	Shares			Amount			Shares		Amount		Capital			Payable		(Deficit)			Equity

Balance, September 30, 2018		1,425,942		$	1,426			42,245,364	$	42,245	$	14,121,236		$	-	$	(13,150,328	)	$	1,014,579

Common stock sold for cash		-			-			3,125,000		3,125		621,875			-		-			625,000

Common stock issued for services		-			-			1,810,186		1,811		274,204			-		-			276,015

Common stock issued in exchange for termination of options		-			-			475,000		475		(475	)		-		-			-

Common stock options issued for services		-			-			-		-		137,412			-		-			137,412

Conversion of preferred stock to common stock		(100,000	)		(100	)		500,000		500		(400	)		-		-			-

Beneficial conversion feature of convertible debts		-			-			-		-		70,964			-		-			70,964

Net loss for the nine months ended June 30, 2019		-			-			-		-		-			-		(1,403,267	)		(1,403,267	)

Balance, June 30, 2019		1,325,942		$	1,326			48,155,550	$	48,156	$	15,224,816		$	-	$	(14,553,595	)	$	720,703

	For the Six Months Ended March 31, 2019
	Series A Convertible										Additional								Total
	Preferred Stock						Common Stock				Paid-in			Subscriptions		Accumulated			Stockholders’
	Shares			Amount			Shares		Amount		Capital			Payable		(Deficit)			Equity

Balance, September 30, 2018		1,425,942		$	1,426			42,245,364	$	42,245	$	14,121,236		$	-	$	(13,150,328	)	$	1,014,579

Common stock sold for cash		-			-			3,125,000		3,125		621,875			-		-			625,000

Common stock issued for services		-			-			1,264,352		1,265		209,350			-		-			210,615

Common stock issued in exchange for termination of options		-			-			475,000		475		(475	)		-		-			-

Common stock options issued for services		-			-			-		-		88,794			-		-			88,794

Conversion of preferred stock to common stock		(100,000	)		(100	)		500,000		500		(400	)		-		-			-

Beneficial conversion feature of convertible debts		-			-			-		-		70,964			-		-			70,964

Net loss for the six months ended March 31, 2019		-			-			-		-		-			-		(913,639	)		(913,639	)

Balance, March 31, 2019		1,325,942		$	1,326			47,609,716	$	47,610	$	15,111,344		$	-	$	(14,063,967	)	$	1,096,313

⁽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⁾	Commenced operations during the first fiscal quarter of 2019, but has not incurred income to date.
⁽⁴⁾	Formed during the first fiscal quarter of 2019, but has not yet commenced significant operations.
⁽⁵⁾	Acquired on March 11, 2020.

	March 11,
	2020
Consideration:
Cash	$	200,000
Fair value of 6,500,000 shares of common stock		373,750
Liabilities assumed		20,600
Total consideration	$	594,350

Fair value of identifiable assets acquired assumed:
Cash	$	143
Accounts receivable		1,585
Total fair value of assets assumed		1,729
Consideration paid in excess of fair value (Goodwill)⁽¹⁾	$	592,621

	Fair Value Measurements at September 30, 2019
		Level 1		Level 2		Level 3
Assets
Cash	$	323,739	$	-	$	-
Total assets		323,739		-		-
Liabilities
Convertible notes payable, net of discounts of $41,426		-		-		658,574
Total liabilities		-		-		658,574
	$	323,739	$	-	$	(658,574	)

Exhibit		Description
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 Current Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on May 26, 2015)
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 Current 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*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)
10.1		Security Agreement, between Digipath, Inc., Digipath Labs, Inc., and holder of the 9% Senior Secured Convertible Note due August 10, 2022 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 10-Q filed with the Securities and Exchange Commission by Digipath, Inc. on February 14, 2020)
10.2		Security Agreement, between Digipath, Inc., Digipath Labs, Inc., and holder of the 9% Senior Secured Convertible Note due August 11, 2022 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 10-Q filed with the Securities and Exchange Commission by Digipath, Inc. on February 14, 2020)
10.3*10.3		Security Agreement, between Digipath, Inc., Digipath Labs, Inc., and holder of the 9% Senior Secured Convertible Note due August 11, 2022 (incorporated by reference to Exhibit 10.3 of the Current Report on Form 10-Q filed with the Securities and Exchange Commission by Digipath, Inc. on May 15, 2020)
10.4*		Paycheck Protection Program Loan Note between Digipath Labs, Inc. and WebBank, holder of the 1% Promissory Note due May 13, 2025
10.5*		Paycheck Protection Program Loan Note between Digipath, Inc. and Cross River Bank, holder of the 1% Promissory Note due June 22, 2025
31.1*		Section 302 Certification of ~~Chief Executive Officer~~Interim President
31.2*		Section 302 Certification of Chief Financial Officer
32.1*		Section 906 Certification of ~~Chief Executive Officer~~Interim President
32.2*		Section 906 Certification of Chief 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

DIGIPATH, INC.

By:	/s/ ~~Kyle Remenda~~Dennis Hartmann
Name:	~~Kyle Remenda~~Dennis Hartmann
Title:	~~Chief Executive Officer~~Interim President and Director

By:	/s/ Todd Peterson
Name:	Todd Peterson
Title:	Chief Financial Officer and Secretary