Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jun. 30, 2016 | Aug. 12, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | DigiPath,Inc. | |
Entity Central Index Key | 1,502,966 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 22,071,041 | |
Trading Symbol | DIGP | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2016 | Sep. 30, 2015 |
Current assets: | ||
Cash | $ 73,498 | $ 481,095 |
Accounts receivable, net | 103,179 | 6,146 |
Inventory | 192,561 | |
Prepaid expenses | 34,323 | 60,447 |
Deposits | 39,850 | 44,949 |
Total current assets | 250,850 | 785,198 |
Available-for-sale securities | 13,640 | 14,000 |
Investment in DigiPath, Corp. | ||
Fixed assets, net | 1,198,369 | 1,373,691 |
Total Assets | 1,462,859 | 2,172,889 |
Current liabilities: | ||
Accounts payable | 105,862 | 62,383 |
Accrued expenses | 21,671 | |
Deferred revenues | 73,121 | |
Total current liabilities | 105,862 | 157,175 |
Total Liabilities | 105,862 | 157,175 |
Stockholders’ Equity: | ||
Series A convertible preferred stock, $0.001 par value, 10,000,000 shares authorized; 3,621,442 and 4,351,442 shares issued and outstanding at June 30, 2016 and September 30, 2015, respectively | 3,621 | 4,351 |
Common stock, $0.001 par value, 90,000,000 shares authorized; 20,986,041 and 13,762,705 shares issued and outstanding at June 30, 2016 and September 30, 2015, respectively | 20,986 | 13,763 |
Additional paid-in capital | 11,376,328 | 10,224,551 |
Accumulated other comprehensive loss | (36,360) | (36,000) |
Accumulated deficit | (10,007,578) | (7,847,418) |
Total Digipath, Inc. Stockholders' Equity | 1,356,997 | 2,359,247 |
Noncontrolling interest | (343,533) | |
Total Stockholders’ Equity | 1,356,997 | 2,015,714 |
Total Liabilities and Stockholders’ Equity | $ 1,462,859 | $ 2,172,889 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2016 | Sep. 30, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 3,621,442 | 4,351,442 |
Preferred stock, shares outstanding | 3,621,442 | 4,351,442 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 20,986,041 | 13,762,705 |
Common stock, shares outstanding | 20,986,041 | 13,762,705 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||||
Revenues | $ 264,178 | $ 6,915 | $ 507,430 | $ 317,125 |
Cost of sales | 102,724 | 19,304 | 258,083 | 227,973 |
Gross profit | 161,454 | (12,389) | 249,347 | 89,152 |
Operating expenses: | ||||
General and administrative | 241,221 | 589,522 | 726,684 | 1,719,054 |
Professional fees | 1,004,225 | 170,940 | 1,414,913 | 1,554,230 |
Bad debts expense (recoveries) | (30,646) | 272,375 | 5,799 | |
Depreciation and amortization | 61,162 | 10,774 | 183,392 | 16,134 |
Total operating expenses | 1,275,962 | 771,236 | 2,597,364 | 3,295,217 |
Operating loss | (1,114,508) | (783,625) | (2,348,017) | (3,206,065) |
Other income (expense): | ||||
Other income | 16,000 | 12,000 | 46,000 | 24,000 |
Interest income | 2,500 | 95 | 7,500 | 295 |
Interest expense | (916) | |||
Gain on early extinguishment of debt | 12,133 | |||
Equity in losses of unconsolidated entity | (992,682) | |||
Total other income (expense) | 18,500 | 12,095 | (927,049) | 23,379 |
Net loss | $ (1,096,008) | $ (771,530) | $ (3,275,066) | $ (3,182,686) |
Weighted average number of common shares outstanding - basic and fully diluted | 20,342,817 | 10,984,239 | 17,225,893 | 9,015,005 |
Net loss per share - basic and fully diluted | $ (0.05) | $ (0.07) | $ (0.19) | $ (0.35) |
Net loss attributable to DigiPath, Inc. | $ (1,096,008) | $ (771,530) | $ (3,275,066) | $ (3,182,686) |
Available-for-sale investments: | ||||
Change in net unrealized loss (net of tax effect) | 5,760 | (72,000) | (360) | (30,000) |
Comprehensive loss | $ (1,090,248) | $ (843,530) | $ (3,275,426) | $ (3,212,686) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities | ||
Net loss | $ (3,275,066) | $ (3,182,686) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Bad debts | 272,375 | 5,799 |
Depreciation and amortization expense | 183,392 | 16,135 |
Impairment of development costs | 28,336 | |
Stock issued for services | 88,720 | 868,603 |
Options and warrants granted for services | 1,018,491 | |
Gain on early extinguishment of debt | (12,133) | |
Equity in losses of unconsolidated entity | 992,682 | |
Decrease (increase) in assets: | ||
Accounts receivable | (106,283) | 32,256 |
Inventory | 79,116 | |
Prepaid expenses | (11,056) | 32,786 |
Deposits | (675) | (310,745) |
Increase (decrease) in liabilities: | ||
Accounts payable | 76,862 | (48,133) |
Accrued expenses | (21,671) | 8,292 |
Deferred revenues | (4,167) | 135,785 |
Net cash used in operating activities | (798,529) | (2,334,456) |
Cash flows from investing activities | ||
Cash disposed in divestiture of unconsolidated entity | (57,876) | |
Investment in available-for-sale securities | (50,000) | |
Purchase of fixed assets | (11,192) | (1,439,691) |
Net cash used in investing activities | (69,068) | (1,489,691) |
Cash flows from financing activities | ||
Proceeds from exercised options | 9,506 | |
Proceeds from sale of common stock | 460,000 | |
Net cash provided by financing activities | 460,000 | 9,506 |
Net decrease in cash | (407,597) | (3,814,641) |
Cash - beginning | 481,095 | 5,102,620 |
Cash - ending | 73,498 | 1,287,979 |
Supplemental disclosures: | ||
Interest paid | 916 | |
Income taxes paid | ||
Non-cash investing and financing activities: | ||
Value of preferred stock converted to common stock | $ 730,000 | $ 1,223,989 |
Organization, Basis of Presenta
Organization, Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Basis of Presentation and Significant Accounting Policies | Note 1 Organization, Basis of Presentation and Significant Accounting Policies Organization DigiPath, Inc. was incorporated in Nevada on October 5, 2010. DigiPath, Inc. and its subsidiaries (DigiPath, the Company, we, our or us) supports the cannabis industrys best practices for reliable testing, cannabis education and training, and brings unbiased cannabis news coverage to the cannabis industry. Our business units are described below. ● DigiPath Labs, Inc. plans to set the industry standard for testing all forms of cannabis-based products using FDA-compliant laboratory equipment and processes to report product safety and efficacy. In May of 2015, we opened our first testing lab in Nevada and have plans to open labs in other legal states. Our customers were not fully operational when we opened our lab. As a result, we had minimal revenues for the first four months of operations and our customers have subsequently been steadily opening their businesses. ● TNM News Corp. provides a balanced and unbiased approach to cannabis news with a news/talk radio show and national marijuana news website focusing on the political, economic, medicinal, scientific, and cultural dimensions of the rapidly evolvingand profoundly controversialmedicinal and recreational marijuana industry. ● DigiPath Corp. develops digital pathology systems to create, store, manage, analyze and correlate data collected through virtual microscopy for plant and cell based industries. We divested two-thirds of this entity on October 1, 2015, and now own a minority interest of approximately 33.34%. Stock Split All share and per share amounts herein have been given retroactive effect to the 1-for-10 reverse stock split of the Companys common stock effected May 27, 2015 (See Note 10). Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Intercompany accounts and transactions have been eliminated. The unaudited condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included. Such adjustments are of a normal, recurring nature. The Condensed Consolidated Financial Statements, and the accompanying notes, are prepared in accordance with generally accepted accounting principles in the United States (GAAP) and do not contain certain information included in the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2015. The interim Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the following entities, all of which were under common control and ownership at June 30, 2016: State 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 (1) (2) (3) 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 Companys 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. Equity Method Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an Investee depends on an evaluation of several factors including, among others, representation on the Investee companys board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the Investee company. Under the equity method of accounting, an Investee companys accounts are not reflected within the Companys Consolidated Balance Sheets and Statements of Operations; however, the Companys share of the earnings or losses of the Investee company is reflected in the caption Equity in losses of unconsolidated entity in the Consolidated Statements of Operations. The Companys carrying value in an equity method Investee company is reflected in the caption Investment in DigiPath Corp. in the Companys Consolidated Balance Sheets. U.S. GAAP considers a change in reporting entity to include changing specific subsidiaries that make up the group of entities for which consolidated financial statements are presented. Circumstances may arise where a parents controlling financial interest (e.g., generally an ownership interest in excess of 50 percent of the outstanding voting stock) is reduced to a noncontrolling investment that still enables it to exercise significant influence over the operating and financial policies of the investee. A change that results from changed facts and circumstances (such as a partial sale of a subsidiary), where there was only one acceptable method of accounting prior to the change in circumstances (consolidation) and only one acceptable method of accounting after the change (equity method accounting), is not a change in reporting entity and is not be accounted for retrospectively. Accordingly, a change from a controlling interest to a noncontrolling investment accounted for under the equity method is accounted for prospectively from the date of change in control. When the Companys carrying value in an equity method Investee company is reduced to zero, no further losses are recorded in the Companys consolidated financial statements unless the Company guaranteed obligations of the Investee company or has committed additional funding. When the Investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings, financial position or cash flows. Segment Reporting Under FASB ASC 280-10-50, the Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations. Fair Value of Financial Instruments Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Companys 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. In addition, the Company had debt instruments that required fair value measurement on a recurring basis. Revenue Recognition The Company recognizes revenue in accordance with ASC 605, Revenue Recognition. ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery of product has met the criteria established in the arrangement or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. This occurs when the products or services are completed in accordance with the contracts we have with clients. In connection with our products and services arrangements, when we are paid in advance, these amounts are classified as deferred revenue and amortized over the term of the agreement. With respect to our cannabis lab testing revenues, we sell our services on a determinable fixed fee per test, or panel of tests basis, and offer a discounted price for customers that agree to enter into exclusive, long term contracts. We typically require payment prior to the delivery of results. As such, revenues are recognized upon the delivery of results, which coincide with the completion of the tests. Stock-Based Compensation The Company accounts for equity instruments issued to employees as compensation in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and equity-based payments as compensation 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 counterpartys performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance. Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718) . In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842): Balance Sheet Classification of Deferred Taxes In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities . In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis In January 2015, the FASB issued ASU No. 2015-01, Simplifying Income StatementPresentation by Eliminating the Concept of Extraordinary Items In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360:)Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity 1. The component of an entity or group of components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. 2. The component of an entity or group of components of an entity is disposed of by sale. 3. The component of an entity or group of components of an entity is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spinoff). ASU 2014-08 is effective for all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company adopted ASU 2014-08 for the fiscal year ended September 30, 2015. 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. |
Going Concern
Going Concern | 9 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 2 Going Concern As shown in the accompanying condensed consolidated financial statements, the Company has incurred recurring losses from operations resulting in an accumulated deficit of ($10,007,578), and as of June 30, 2016, the Companys cash on hand may not be sufficient to sustain operations. These factors raise substantial doubt about the Companys 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 Companys 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. |
Investment, Equity Method
Investment, Equity Method | 9 Months Ended |
Jun. 30, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment, Equity Method | Note 3 Investment, Equity Method On October 1, 2015, as more fully described in Note 4 below, we divested two-thirds of DigiPath Corp. when warrant holders in DigiPath Corp. acquired one-third interest through the exercise of warrants held by Steven D. Barbee, our former Director, and the other warrant holder acquired another one-third interest through the sale of new issuances, commensurate with the cancellation of previously issued warrants. We now own a minority interest of approximately 33.34%. As a result, the comparative statement of operations for the nine months ended June 30, 2015, which included the accounts of the digital pathology business segment, on a consolidated basis, has been restated to reflect adjustments of line items for revenue and costs applicable to the digital pathology business segment and to reflect the losses of this business on the equity basis of accounting. The original investment was adjusted to fair value on October 1, 2015, resulting in a carrying value of $106,675 and an Equity in losses of unconsolidated entity of $992,682 was recognized during the nine months ended June 30, 2016, consisting of an impairment of $893,325 on the adjustment to from the carrying value to the fair value and $99,357 of the Companys pro-rata share of the net loss. As of March 31, 2016, DigiPath Corps losses have exceeded our investment and we are no longer recognizing any loss on our investment. Our pro rata share of subsequent gains will be recognized when they have exceeded our pro rata share of unrecognized losses. The operating results of the Digital Corp. pathology business are summarized below. Condensed Statements of Operations Information (Unaudited): For the Three Months Ended For the Nine Months Ended June 30, June 30, 2016 2015 2016 2015 Revenues $ 42,824 $ 5,293 $ 79,809 $ 299,754 Cost of sales 27,689 5,399 45,761 214,068 Gross profit 15,135 (106 ) 34,048 85,686 Expenses: General and administrative 111,417 146,788 229,114 513,033 Total operating expenses 111,417 146,788 229,114 513,033 Operating loss (96,282 ) (146,894 ) (195,066 ) (427,347 ) Other income (expense) (2,490 ) 95 (8,191 ) 295 Net loss $ (98,772 ) $ (146,799 ) $ (203,257 ) $ (427,052 ) |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 4 Related Party Transactions Appointment of Joseph J. Bianco as Chief Executive Officer On June 21, 2016, the Board appointed Joseph J. Bianco, one of our directors, to serve as the Companys Chief Executive Officer. As described further below, Todd Denkin, the Companys Chief Executive Officer prior to such appointment, now serves as the Companys President and Chief Operating Officer, and as the President of DigiPaths wholly-owned subsidiaries, DigiPath Labs, Inc. and TNM News Corp. In connection with his appointment as Chief Executive Officer, Mr. Bianco entered into an Employment Agreement with the Company dated June 21, 2016 for a three year term, and providing for an initial base salary of $96,000 per annum and a car allowance of $1,250 per month. Pursuant to this Employment Agreement, Mr. Bianco was awarded a stock option to purchase 4,750,000 shares of the Companys common stock at an exercise price of $0.20 per share. The option vests immediately as to one-half of the shares, one year from the grant date as to one-quarter of the shares, and two years following the grant date as to the remaining one-quarter of the shares. The Employment Agreement also terminated the letter agreement between Mr. Biancos affiliate and the Company pursuant to which Mr. Bianco had provided consulting services to the Company. Todd Denkin Amended and Restated Employment Agreement In connection with Mr. Biancos appointment as the Companys Chief Executive Officer, on June 21, 2016, the Company entered into an Amended and Restated Employment Agreement with Todd Denkin, pursuant to which Mr. Denkin continues to serve as the Companys President, and in addition as its Chief Operating Officer, and as the President of DigiPaths wholly-owned subsidiaries, DigiPath Labs, Inc. and TNM News Corp. In addition, the term of Mr. Denkins employment has been extended for a period of three years from June 21, 2016, and he will continue to be paid a base salary of $192,000 per annum, and receives a car allowance of $750 per month. Pursuant to the Amended and Restated Employment Agreement, Mr. Denkin was awarded a stock option to purchase 2,500,000 shares of the Companys common stock at an exercise price of $0.20 per share. The option vests immediately as to one-half of the shares, one year from the grant date as to one-quarter of the shares, and two years following the grant date as to the remaining one-quarter of the shares. Divestiture of Wholly-Owned Subsidiary, DigiPath Corp. On October 1, 2015, DigiPath, Inc., entered into an Omnibus Agreement and Amendment (the Agreement) with DigiPath Corp., and our former Director, Steven D. Barbee. Pursuant to the Agreement, among other things: ● The exercise price of the warrant held by Mr. Barbee to purchase 3,000,000 shares of common stock of DigiPath Corp. (the Barbee Warrant) was reduced from $0.10 per share to $0.0333333 per share, and Mr. Barbee subsequently exercised the warrant. ● Mr. Barbee resigned as a director of the Company. ● The Consulting, Confidentiality and Proprietary Rights Agreement, dated as of May 30, 2014, between the Company and Mr. Barbee, as amended, was terminated. ● Indebtedness of approximately $18,201 owed by the Company to DigiPath Corp. was cancelled. ● DigiPath Corp. was provided with the right to require the Company to change its name so as not to include the name DigiPath in the event of the sale of all or substantially all of the assets or capital stock of DigiPath Corp., or a merger of DigiPath Corp. following which the Company ceases to be a shareholder of DigiPath Corp., in each case, that occurs within 12 months following the date of the Agreement. ● The Company, as a shareholder of DigiPath Corp, was provided with (i) rights of first-refusal and co-sale rights with respect to sales of common stock of DigiPath Corp by Barbee, and (ii) pre-emptive rights with respect to issuances of common stock by DigiPath Corp. Concurrently with the execution of the Agreement, DigiPath Corp. agreed to issue 3,000,000 shares of its common stock to a third party for an aggregate purchase price of $100,000, and an affiliate of such party agreed to surrender 60,000 shares of Series A Preferred of the Company for cancellation, and terminate a previously held warrant to purchase 3,000,000 shares of common stock of DigiPath Corp. As a result of such issuance of shares of DigiPath Corp common stock, and after giving effect to the exercise of the Barbee Warrant, the Company continued to hold approximately 33.34% of the outstanding shares of common stock of DigiPath Corp. Following the execution of the Agreement, Mr. Barbee continued to serve as the President and sole director of DigiPath Corp. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Note 5 Fair Value of Financial Instruments 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 Companys 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 June 30, 2016 and September 30, 2015, respectively: Fair Value Measurements at June 30, 2016 Level 1 Level 2 Level 3 Assets Cash $ 73,498 $ - $ - Available-for-sale securities 13,640 - - Note receivable - - - Investment in DigiPath Corp. - - - Total assets 87,138 - - Liabilities Total liabilities - - - $ 87,138 $ - $ - Fair Value Measurements at September 30, 2015 Level 1 Level 2 Level 3 Assets Cash $ 481,095 $ - $ - Note receivable - - - Available-for-sale securities 14,000 - - Total assets 495,095 - - Liabilities Total liabilities - - - $ 495,095 $ - $ - 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. There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the nine months ended June 30, 2016 or the year ended September 30, 2015. We recognized total impairment losses of $893,325 on our ownership interest in DigiPath Corp. during the nine months ended June 30, 2016, and impairment losses of $328,336 on our intellectual properties during the year ended September 30, 2015. |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Jun. 30, 2016 | |
Receivables [Abstract] | |
Accounts Receivable | Note 6 Accounts Receivable Accounts receivable was $103,179 and $6,146 at June 30, 2016 and September 30, 2015, respectively, net of allowance for doubtful accounts of $1,750 and $36,715 at June 30, 2016 and September 30, 2015, respectively. |
Note Receivable
Note Receivable | 9 Months Ended |
Jun. 30, 2016 | |
Receivables [Abstract] | |
Note Receivable | Note 7 Note Receivable On December 17, 2014, DigiPath, Inc. made an unsecured $250,000 loan to DigiPath Corp., a wholly-owned subsidiary at the time, bearing interest at 6% and maturing on December 17, 2015. On October 1, 2015, we amended the note to extend the maturity date to September 30, 2016. Commensurate with the change in ownership of DigiPath Corp. from 100% to approximately 33.34%, we evaluated the asset for collectability and recognized an allowance for uncollectible accounts for the full amount of the asset. The balance of the allowance for uncollectible accounts, including interest of $20,625, was $270,625 at June 30, 2016. |
Available-for-Sale Securities
Available-for-Sale Securities | 9 Months Ended |
Jun. 30, 2016 | |
Schedule of Investments [Abstract] | |
Available-for-Sale Securities | Note 8 Available-for-Sale Securities Available-for-sale securities consist of the following at June 30, 2016 and September 30, 2015: For the Nine Months Ended June 30, 2016 Gains in Losses in Accumulated Accumulated Other Other Estimated Amortized Comprehensive Comprehensive Fair Cost Income Income Value Common stock $ 50,000 - $ (36,360 ) $ 13,640 Total available-for-sale securities $ 50,000 - $ (36,360 ) $ 13,640 For the Year Ended September 30, 2015 Gains in Losses in Accumulated Accumulated Other Other Estimated Amortized Comprehensive Comprehensive Fair Cost Income Income Value Common stock $ 50,000 - $ (36,000 ) $ 14,000 Total available-for-sale securities $ 50,000 - $ (36,000 ) $ 14,000 Common stock consisted of a purchase of 400,000 shares of common stock acquired in March of 2015, in the amount of $50,000 in Blue Line Protection Group, Inc., a Nevada corporation. |
Fixed Assets
Fixed Assets | 9 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets | Note 9 Fixed Assets Fixed assets consist of the following at June 30, 2016 and September 30, 2015: June 30, 2016 September 30, 2015 Software $ 121,617 $ 131,636 Office equipment 36,080 35,467 Furniture and fixtures 2,357 14,607 Lab equipment 809,056 835,006 Leasehold improvements 487,066 487,066 1,456,176 1,503,782 Less: accumulated depreciation (257,807 ) (130,091 ) Total $ 1,198,369 $ 1,373,691 As a result of the deconsolidation of DigiPath Corp. on October 1, 2015, we were deemed to have disposed of furniture and fixtures and software with a net book value of $3,122, consisting of a historical cost basis of $58,798 and accumulated depreciation and amortization of $55,676. No gain or loss was recognized on the disposal. Depreciation and amortization expense totaled $183,392 and $16,134 for the nine months ended June 30, 2016 and 2015, respectively. |
Changes in Stockholders' Equity
Changes in Stockholders' Equity | 9 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Changes in Stockholders' Equity | Note 10 - Changes in Stockholders Equity Reverse Stock Split Effective May 27, 2015, the Company effected the 1 for 10 Reverse Stock Split. No fractional shares were issued, and no cash or other consideration was paid in connection with the Reverse Stock Split. Instead, the Company issued one whole share of the post-Reverse Stock Split common stock to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split. The Company was authorized to issue 900,000,000 shares of common stock prior to the Reverse Stock Split. As a result of the Reverse Stock Split, the Companys authorized shares decreased ratably to 90,000,000 shares of common stock. The Reverse Stock Split did not have any effect on the stated par value of the common stock, or the Companys authorized preferred stock. Unless otherwise stated, all share and per share information in this Quarterly Report on Form 10-Q has been retroactively adjusted to reflect the Reverse Stock Split. Convertible Preferred Stock 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). The Board of Directors is authorized to determine any number of series into which shares of preferred stock may be divided and to determine the rights, preferences, privileges and restrictions granted to any series of the preferred stock. Effective as of April 4, 2014, the designations, rights and preferences of the preferred shares changed to blank check preferred. As of June 30, 2016, there were 3,621,442 shares of Series A Preferred issued and outstanding. Shares of Series A Preferred are convertible into common stock at a fixed conversion rate of $0.20 per share. The conversion price is adjustable in the event of stock splits and other adjustments in the Companys capitalization, and in the event of certain negative actions undertaken by the Company. At the current conversion price, the 3,520,442 shares of Series A Preferred outstanding at June 30, 2016 are convertible into 17,602,210 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. Preferred Stock Conversions On June 13, 2016, a shareholder converted 100,000 shares of Series A Preferred into 500,000 shares of common stock. The stock was converted in accordance with the conversion terms; therefore no gain or loss has been recognized. On April 18, 2016, a shareholder converted 100,000 shares of Series A Preferred into 500,000 shares of common stock. The stock was converted in accordance with the conversion terms; therefore no gain or loss has been recognized. On April 1, 2016, a shareholder converted 150,000 shares of Series A Preferred into 750,000 shares of common stock. The stock was converted in accordance with the conversion terms; therefore no gain or loss has been recognized. On February 26, 2016, a shareholder converted 100,000 shares of Series A Preferred into 500,000 shares of common stock. The stock was converted in accordance with the conversion terms; therefore no gain or loss has been recognized. On October 29, 2015, a shareholder converted 100,000 shares of Series A Preferred into 500,000 shares of common stock. The stock was converted in accordance with the conversion terms; therefore no gain or loss has been recognized. On October 8, 2015, a shareholder converted 120,000 shares of Series A Preferred into 600,000 shares of common stock. The stock was converted in accordance with the conversion terms; therefore no gain or loss has been recognized. Preferred Stock Cancellation On October 1, 2015, a shareholder cancelled 60,000 shares of Series A Preferred as part of the divestiture of DigiPath Corp. Common Stock Common stock consists of $0.001 par value, 90,000,000 shares authorized, of which 20,986,041 shares were issued and outstanding as of June 30, 2016. Common Stock Sales On May 2, 2016, the Company sold 100,000 units, consisting of 100,000 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $15,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On April 29, 2016, the Company sold 166,667 units, consisting of 166,667 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $25,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On April 14, 2016, the Company sold 166,667 units, consisting of 166,667 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $25,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On April 12, 2016, the Company sold 83,334 units, consisting of 83,334 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $12,500. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On April 7, 2016, the Company sold 166,667 units, consisting of 166,667 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $25,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On March 15, 2016, the Company sold 1,666,667 units, consisting of 1,666,667 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $250,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On February 17, 2016, the Company sold 83,333 units, consisting of 83,333 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $12,500. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On January 19, 2016, the Company sold 333,334 units, consisting of 333,334 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $50,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On December 21, 2015, the Company sold 166,667 units, consisting of 166,667 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $25,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On November 23, 2015, the Company sold 100,000 units, consisting of 100,000 shares of its common stock and an equal number of warrants, exercisable at $0.40 per share over a thirty six month period, in exchange for total proceeds of $20,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. Common Stock Issued for Services On February 1, 2016, a total of 300,000 shares of common stock were awarded to three consultants that were engaged to assist with acquisition activities over for a three month period. The aggregate fair value of the common stock was $45,720 based on the closing price of the Companys common stock on the date of grant, and is being expensed over the three month requisite service period, resulting in $30,480 of stock based compensation during the period. On January 1, 2016, the Company issued 40,000 shares of restricted common stock for investor relations services provided. The total fair value of the common stock was $8,000 based on the closing price of the Companys common stock on the date of grant and was expensed in full. On January 1, 2016, an affiliate of Mr. Bianco, a director of the Company, became entitled to receive 500,000 shares of common stock for consulting services to be performed during 2016, subject to a ratable claw back provision the event of an early termination of the consulting agreement. The total fair value of the common stock was $70,000 based on the closing price of the Companys common stock on the date of grant, and is being expensed over the twelve month requisite service period, resulting in $17,500 of stock based compensation during the period. Amortization of Stock Options A total of $779,168 of stock-based compensation expense was recognized from the amortization of options over their vesting period during the nine months ended June 30, 2016. |
Common Stock Options
Common Stock Options | 9 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Common Stock Options | Note 11 Common Stock Options Stock Incentive Plan On June 21, 2016, we amended and restated our 2012 Stock Incentive Plan (the 2012 Plan), which was originally adopted on March 5, 2012 and previously amended on May 20, 2014. As amended, the 2012 Plan provides for the issuance of up to 11,500,000 shares of common stock pursuant to the grant of options or other awards, including stock grants, to employees, officers or directors of, and consultants to, the Company and its subsidiaries. Options granted under the 2012 Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options, and are exercisable over periods not exceeding ten years from date of grant. Options Granted On June 21, 2016, the Company granted 4,750,000 common stock options as compensation for services to our CEO, Mr. Bianco. The options are exercisable over a ten year period at an exercise price of $0.20 per share, and 50% vest immediately, with 25% vesting each year thereafter. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 230% and a call option value of $0.1986, was $943,193. On June 21, 2016, the Company granted 2,500,000 common stock options as compensation for services to our President and COO, Mr. Denkin. The options are exercisable over a ten year period at an exercise price of $0.20 per share, and 50% vest immediately, with 25% vesting each year thereafter. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 230% and a call option value of $0.1986, was $496,417. On April 7, 2016, the Company granted a total of 130,000 fully vested common stock options as compensation for services to five employees. The options are exercisable over a ten year period at an exercise price of $0.22 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 238% and a call option value of $0.2183, was $28,382. On November 20, 2015, the Company granted 500,000 fully vested common stock options as compensation for services to a consultant. The options are exercisable over a three year period at an exercise price of $0.181 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 234% and a call option value of $0.1734, was $86,708. Options Expired No options expired during the nine months ended June 30, 2016. Options Exercised No options were exercised during the nine months ended June 30, 2016. |
Common Stock Warrants
Common Stock Warrants | 9 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Common Stock Warrants | Note 12 Common Stock Warrants Warrants Granted On June 6, 2016, the Company granted 659,800 fully vested common stock warrants as compensation for services to a consulting firm. The options are exercisable over a five year period at an exercise price of $0.1901 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 231% and a call option value of $0.1883, was $124,233, and was expensed in full on June 6, 2016. On May 2, 2016, the Company sold 100,000 units, consisting of 100,000 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $15,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On April 29, 2016, the Company sold 166,667 units, consisting of 166,667 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $25,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On April 14, 2016, the Company sold 166,667 units, consisting of 166,667 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $25,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On April 12, 2016, the Company sold 83,334 units, consisting of 83,334 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $12,500. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On April 7, 2016, the Company sold 166,667 units, consisting of 166,667 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $25,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On March 15, 2016, the Company sold 1,666,667 units, consisting of 1,666,667 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $250,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On February 17, 2016, the Company sold 83,333 units, consisting of 83,333 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $12,500. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On January 19, 2016, the Company sold 333,334 units, consisting of 333,334 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $50,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On December 21, 2015, the Company sold 166,667 units, consisting of 166,667 shares of its common stock and an equal number of warrants, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $25,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On November 23, 2015, the Company sold 100,000 units, consisting of 100,000 shares of its common stock and an equal number of warrants, exercisable at $0.40 per share over a thirty six month period, in exchange for total proceeds of $20,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. Warrants Expired No warrants expired during the nine months ended June 30, 2016. Warrants Exercised No warrants were exercised during the nine months ended June 30, 2016. |
Other Income
Other Income | 9 Months Ended |
Jun. 30, 2016 | |
Other Income and Expenses [Abstract] | |
Other Income | Note 13 Other Income Other income consists of rental income of $30,000 and $24,000 for the nine months ended June 30, 2016 and 2015, respectively, for office space subleased to GB Sciences, Inc. at a monthly fee of $6,000. The tenant vacated the premises on February 1, 2016. In addition, we recognized $16,000 and $-0- of other income for the nine months ended June 30, 2016 and 2015, respectively, related to restitution payments received from a former employee. |
Gain on Debt Settlements
Gain on Debt Settlements | 9 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Gain on Debt Settlements | Note 14 Gain on Debt Settlements On October 1, 2015, as part of the divestiture of DigiPath Corp., a total of $18,201 of intercompany debt owed from DigiPath, Inc. to DigiPath Corp. was forgiven by DigiPath Corp. As a related party, one third of the debt was eliminated and the remaining $12,133 was recognized as a gain on early extinguishment of debt. The Company evaluated the classification of this gain and determined that the gain does not meet the criteria for classification as an extraordinary item. As a result, the gain has been included as Gain on early extinguishment of debt: under Other income (expense) within income from continuing operations in the accompanying Consolidated Statement of Operations for the nine months ended June 30, 2016. |
Income Tax
Income Tax | 9 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Tax | Note 15 - Income Tax The Company accounts for income taxes under FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. For the nine months ended June 30, 2016 and the year ended September 30, 2015, 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 June 30, 2016, the Company had approximately $6,697,000 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 Companys 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 June 30, 2016 and September 30, 2015, respectively. In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16 Subsequent Events Preferred Stock Conversions On July 5, 2016, a shareholder converted 101,000 shares of Series A Preferred into 505,000 shares of common stock. The stock was converted in accordance with the conversion terms; therefore no gain or loss has been recognized. Common Stock Issued for Services On July 1, 2016, a total of 580,000 shares of common stock were issued to six consultants that were engaged to assist the Company with acquisition activities over for a three month period. The aggregate fair value of the common stock was $104,980 based on the closing price of the Companys common stock on the date of grant, and is being expensed over the three month requisite service period. |
Organization, Basis of Presen22
Organization, Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization DigiPath, Inc. was incorporated in Nevada on October 5, 2010. DigiPath, Inc. and its subsidiaries (DigiPath, the Company, we, our or us) supports the cannabis industrys best practices for reliable testing, cannabis education and training, and brings unbiased cannabis news coverage to the cannabis industry. Our business units are described below. ● DigiPath Labs, Inc. plans to set the industry standard for testing all forms of cannabis-based products using FDA-compliant laboratory equipment and processes to report product safety and efficacy. In May of 2015, we opened our first testing lab in Nevada and have plans to open labs in other legal states. Our customers were not fully operational when we opened our lab. As a result, we had minimal revenues for the first four months of operations and our customers have subsequently been steadily opening their businesses. ● TNM News Corp. provides a balanced and unbiased approach to cannabis news with a news/talk radio show and national marijuana news website focusing on the political, economic, medicinal, scientific, and cultural dimensions of the rapidly evolvingand profoundly controversialmedicinal and recreational marijuana industry. ● DigiPath Corp. develops digital pathology systems to create, store, manage, analyze and correlate data collected through virtual microscopy for plant and cell based industries. We divested two-thirds of this entity on October 1, 2015, and now own a minority interest of approximately 33.34%. |
Stock Split | Stock Split All share and per share amounts herein have been given retroactive effect to the 1-for-10 reverse stock split of the Companys common stock effected May 27, 2015 (See Note 10). |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Intercompany accounts and transactions have been eliminated. The unaudited condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included. Such adjustments are of a normal, recurring nature. The Condensed Consolidated Financial Statements, and the accompanying notes, are prepared in accordance with generally accepted accounting principles in the United States (GAAP) and do not contain certain information included in the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2015. The interim Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the following entities, all of which were under common control and ownership at June 30, 2016: State 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 (1) (2) (3) 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 Companys 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. |
Equity Method | Equity Method Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an Investee depends on an evaluation of several factors including, among others, representation on the Investee companys board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the Investee company. Under the equity method of accounting, an Investee companys accounts are not reflected within the Companys Consolidated Balance Sheets and Statements of Operations; however, the Companys share of the earnings or losses of the Investee company is reflected in the caption Equity in losses of unconsolidated entity in the Consolidated Statements of Operations. The Companys carrying value in an equity method Investee company is reflected in the caption Investment in DigiPath Corp. in the Companys Consolidated Balance Sheets. U.S. GAAP considers a change in reporting entity to include changing specific subsidiaries that make up the group of entities for which consolidated financial statements are presented. Circumstances may arise where a parents controlling financial interest (e.g., generally an ownership interest in excess of 50 percent of the outstanding voting stock) is reduced to a noncontrolling investment that still enables it to exercise significant influence over the operating and financial policies of the investee. A change that results from changed facts and circumstances (such as a partial sale of a subsidiary), where there was only one acceptable method of accounting prior to the change in circumstances (consolidation) and only one acceptable method of accounting after the change (equity method accounting), is not a change in reporting entity and is not be accounted for retrospectively. Accordingly, a change from a controlling interest to a noncontrolling investment accounted for under the equity method is accounted for prospectively from the date of change in control. When the Companys carrying value in an equity method Investee company is reduced to zero, no further losses are recorded in the Companys consolidated financial statements unless the Company guaranteed obligations of the Investee company or has committed additional funding. When the Investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings, financial position or cash flows. |
Segment Reporting | Segment Reporting Under FASB ASC 280-10-50, the Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Companys 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. In addition, the Company had debt instruments that required fair value measurement on a recurring basis. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 605, Revenue Recognition. ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery of product has met the criteria established in the arrangement or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. This occurs when the products or services are completed in accordance with the contracts we have with clients. In connection with our products and services arrangements, when we are paid in advance, these amounts are classified as deferred revenue and amortized over the term of the agreement. With respect to our cannabis lab testing revenues, we sell our services on a determinable fixed fee per test, or panel of tests basis, and offer a discounted price for customers that agree to enter into exclusive, long term contracts. We typically require payment prior to the delivery of results. As such, revenues are recognized upon the delivery of results, which coincide with the completion of the tests. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for equity instruments issued to employees as compensation in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and equity-based payments as compensation 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 counterpartys performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718) . In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842): Balance Sheet Classification of Deferred Taxes In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities . In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis In January 2015, the FASB issued ASU No. 2015-01, Simplifying Income StatementPresentation by Eliminating the Concept of Extraordinary Items In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360:)Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity 1. The component of an entity or group of components of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. 2. The component of an entity or group of components of an entity is disposed of by sale. 3. The component of an entity or group of components of an entity is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spinoff). ASU 2014-08 is effective for all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company adopted ASU 2014-08 for the fiscal year ended September 30, 2015. 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. |
Organization, Basis of Presen23
Organization, Basis of Presentation and Significant Accounting Policies (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Entities Under Common Control and Ownership | The accompanying consolidated financial statements include the accounts of the following entities, all of which were under common control and ownership at June 30, 2016: State 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 (1) (2) (3) |
Investment, Equity Method (Tabl
Investment, Equity Method (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Statements of Operations of Unconsolidated Entity | Condensed Statements of Operations Information (Unaudited): For the Three Months Ended For the Nine Months Ended June 30, June 30, 2016 2015 2016 2015 Revenues $ 42,824 $ 5,293 $ 79,809 $ 299,754 Cost of sales 27,689 5,399 45,761 214,068 Gross profit 15,135 (106 ) 34,048 85,686 Expenses: General and administrative 111,417 146,788 229,114 513,033 Total operating expenses 111,417 146,788 229,114 513,033 Operating loss (96,282 ) (146,894 ) (195,066 ) (427,347 ) Other income (expense) (2,490 ) 95 (8,191 ) 295 Net loss $ (98,772 ) $ (146,799 ) $ (203,257 ) $ (427,052 ) |
Fair Value of Financial Instr25
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Instruments at Fair Value on Recurring Basis | The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of June 30, 2016 and September 30, 2015, respectively: Fair Value Measurements at June 30, 2016 Level 1 Level 2 Level 3 Assets Cash $ 73,498 $ - $ - Available-for-sale securities 13,640 - - Note receivable - - - Investment in DigiPath Corp. - - - Total assets 87,138 - - Liabilities Total liabilities - - - $ 87,138 $ - $ - Fair Value Measurements at September 30, 2015 Level 1 Level 2 Level 3 Assets Cash $ 481,095 $ - $ - Note receivable - - - Available-for-sale securities 14,000 - - Total assets 495,095 - - Liabilities Total liabilities - - - $ 495,095 $ - $ - |
Available-for-Sale Securities (
Available-for-Sale Securities (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Schedule of Investments [Abstract] | |
Schedule of Available-for-Sale Securities | Available-for-sale securities consist of the following at June 30, 2016 and September 30, 2015: For the Nine Months Ended June 30, 2016 Gains in Losses in Accumulated Accumulated Other Other Estimated Amortized Comprehensive Comprehensive Fair Cost Income Income Value Common stock $ 50,000 - $ (36,360 ) $ 13,640 Total available-for-sale securities $ 50,000 - $ (36,360 ) $ 13,640 For the Year Ended September 30, 2015 Gains in Losses in Accumulated Accumulated Other Other Estimated Amortized Comprehensive Comprehensive Fair Cost Income Income Value Common stock $ 50,000 - $ (36,000 ) $ 14,000 Total available-for-sale securities $ 50,000 - $ (36,000 ) $ 14,000 |
Fixed Assets (Tables)
Fixed Assets (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Fixed Assets | Fixed assets consist of the following at June 30, 2016 and September 30, 2015: June 30, 2016 September 30, 2015 Software $ 121,617 $ 131,636 Office equipment 36,080 35,467 Furniture and fixtures 2,357 14,607 Lab equipment 809,056 835,006 Leasehold improvements 487,066 487,066 1,456,176 1,503,782 Less: accumulated depreciation (257,807 ) (130,091 ) Total $ 1,198,369 $ 1,373,691 |
Organization, Basis of Presen28
Organization, Basis of Presentation and Significant Accounting Policies (Details Narrative) | May 27, 2015 | Jun. 30, 2016 |
Percentage in non-controlling interest | 33.34% | |
Reverse stock split description | 1-for-10 reverse stock split | |
Percentage of equity method interest | 100.00% | |
Minimum [Member] | ||
Percentage of equity method interest | 20.00% | |
Maximum [Member] | ||
Percentage of equity method interest | 50.00% |
Organization, Basis of Presen29
Organization, Basis of Presentation and Significant Accounting Policies - Schedule of Entities Under Common Control and Ownership (Details) - Entities Under Common Control and Ownership [Member] | 9 Months Ended | |
Jun. 30, 2016 | ||
Name of Entity | DigiPath, Inc. | [1] |
State of Incorporation | Nevada | |
Relationship | Parent | |
Name of Entity | DigiPath Labs, Inc. | |
State of Incorporation | Nevada | |
Relationship | Subsidiary | |
Name of Entity | TNM News, Inc. | |
State of Incorporation | Nevada | |
Relationship | Subsidiary | |
Name of Entity | GroSciences, Inc. | [2] |
State of Incorporation | Colorado | |
Relationship | Subsidiary | |
[1] | Holding company, which owns each of the wholly-owned subsidiaries. As of March 31, 2016, all subsidiaries shown above were wholly-owned by DigiPath, Inc., the parent company | |
[2] | Entity formed for prospective purposes, but has not incurred any income or expenses to date. |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | Jun. 30, 2016 | Sep. 30, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ (10,007,578) | $ (7,847,418) |
Investment, Equity Method (Deta
Investment, Equity Method (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Oct. 02, 2015 | |
Equity Method Investments and Joint Ventures [Abstract] | |||||
Percentage in non-controlling interest | 33.34% | 33.34% | |||
Equity method investment fair value | $ 106,675 | ||||
Equity in losses of unconsolidated entity | $ 992,682 | ||||
Impairment adjustment form the carrying value to fair value | 893,325 | ||||
Pro-rate share of quarterly loss | $ 99,357 |
Investment, Equity Method - Sch
Investment, Equity Method - Schedule of Statements of Operations of Unconsolidated Entity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Equity Method Investments and Joint Ventures [Abstract] | ||||
Revenues | $ 42,824 | $ 5,293 | $ 79,809 | $ 299,754 |
Cost of sales | 27,689 | 5,399 | 45,761 | 214,068 |
Gross profit | 15,135 | (106) | 34,048 | 85,686 |
General and administrative | 111,417 | 146,788 | 229,114 | 513,033 |
Total operating expenses | 111,417 | 146,788 | 229,114 | 513,033 |
Net operating loss | (96,282) | (146,894) | (195,066) | (427,347) |
Other income (expense) | (2,490) | 95 | (8,191) | 295 |
Net loss | $ (98,772) | $ (146,799) | $ (203,257) | $ (427,052) |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Jun. 21, 2016 | Oct. 02, 2015 | Jun. 30, 2016 | May 02, 2016 | Apr. 29, 2016 | Apr. 14, 2016 | Apr. 12, 2016 | Apr. 07, 2016 | Mar. 15, 2016 | Feb. 17, 2016 | Jan. 19, 2016 | Dec. 21, 2015 | Nov. 23, 2015 |
Warrants exercise price per shares | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.40 | |||
Chief Executive Officer [Member] | Employment Agreement [Member] | |||||||||||||
Number of common stock shares issued | 4,750,000 | ||||||||||||
Initial base salary per annum | $ 96,000 | ||||||||||||
Car allowance per month | $ 1,250 | ||||||||||||
Common stock exercise price | $ 0.20 | ||||||||||||
Mr. Denkin [Member] | Restated Employment Agreement [Member] | |||||||||||||
Number of common stock shares issued | 2,500,000 | ||||||||||||
Initial base salary per annum | $ 192,000 | ||||||||||||
Car allowance per month | $ 750 | ||||||||||||
Common stock exercise price | $ 0.20 | ||||||||||||
DigiPath Corp [Member] | |||||||||||||
Number of warrants to purchase of common stock shares | 3,000,000 | ||||||||||||
Indebtedness owed | $ 18,201 | ||||||||||||
Number of common stock shares issued | 3,000,000 | ||||||||||||
Number of common stock share value | $ 100,000 | ||||||||||||
Percentage of outstanding shares of common stock | 33.34% | ||||||||||||
DigiPath Corp [Member] | Series A Preferred Stock [Member] | |||||||||||||
Number of preferred stock shares and surrender and cancellation during the period | 60,000 | ||||||||||||
DigiPath Corp [Member] | Steven D. Barbee [Member] | |||||||||||||
Number of warrants to purchase of common stock shares | 3,000,000 | ||||||||||||
DigiPath Corp [Member] | Steven D. Barbee [Member] | Maximum [Member] | |||||||||||||
Warrants exercise price per shares | $ 0.10 | ||||||||||||
DigiPath Corp [Member] | Steven D. Barbee [Member] | Minimum [Member] | |||||||||||||
Warrants exercise price per shares | $ 0.0333333 |
Fair Value of Financial Instr34
Fair Value of Financial Instruments (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | ||
Loss on impairment of ownership interests in Investee company | $ 893,325 | |
Impairment losses on intellectual properties | $ 328,336 |
Fair Value of Financial Instr35
Fair Value of Financial Instruments - Summary of Financial Instruments at Fair Value on Recurring Basis (Details) - USD ($) | Jun. 30, 2016 | Oct. 02, 2015 | Sep. 30, 2015 |
Investment in DigiPath Corp. | $ 106,675 | ||
Level 1 [Member] | |||
Cash | $ 73,498 | $ 481,095 | |
Available-for-sale securities | 13,640 | 14,000 | |
Note receivable | |||
Investment in DigiPath Corp. | |||
Assets | 87,138 | 495,095 | |
Total liabilities | |||
Total | 87,138 | 495,095 | |
Level 2 [Member] | |||
Cash | |||
Available-for-sale securities | |||
Note receivable | |||
Investment in DigiPath Corp. | |||
Assets | |||
Total liabilities | |||
Total | |||
Level 3 [Member] | |||
Cash | |||
Available-for-sale securities | |||
Note receivable | |||
Investment in DigiPath Corp. | |||
Assets | |||
Total liabilities | |||
Total |
Accounts Receivable (Details Na
Accounts Receivable (Details Narrative) - USD ($) | Jun. 30, 2016 | Sep. 30, 2015 |
Receivables [Abstract] | ||
Accounts receivable | $ 103,179 | $ 6,146 |
Allowance for uncollectible accounts, net | $ 1,750 | $ 36,715 |
Note Receivable (Details Narrat
Note Receivable (Details Narrative) - USD ($) | Oct. 02, 2015 | Dec. 17, 2015 | Jun. 30, 2016 | Dec. 17, 2014 |
Percentage of ownership interest | 100.00% | |||
Percentage of change in ownership interest | 33.34% | |||
Accrued interest | $ 20,625 | |||
Allowance for uncollectible accounts receivable | $ 270,625 | |||
DigiPath Corp [Member] | ||||
Unsecured loan | $ 250,000 | |||
Unsecured loan bearing interest rate | 6.00% | |||
Unsecured loan maturity date | Dec. 17, 2015 | |||
Unsecured loan extend maturity date | Sep. 30, 2016 |
Available-for-Sale Securities38
Available-for-Sale Securities (Details Narrative) - Blue Line Protection Group, Inc [Member] | 1 Months Ended |
Mar. 31, 2015USD ($)shares | |
Number of common stock shares acquire during the period | shares | 400,000 |
Number of ommon stock share value acquired during the period | $ | $ 50,000 |
Available-for-Sale Securities -
Available-for-Sale Securities - Schedule of Available-for-Sale Securities (Details) - USD ($) | Jun. 30, 2016 | Sep. 30, 2015 |
Common stock | $ 13,640 | $ 14,000 |
Total available-for-sale securities | 13,640 | 14,000 |
Amortized Cost [Member] | ||
Common stock | 50,000 | 50,000 |
Total available-for-sale securities | 50,000 | 50,000 |
Gains In Accumulated Other Comprehensive Income [Member] | ||
Common stock | ||
Total available-for-sale securities | ||
Losses In Accumulated Other Comprehensive Income [Member] | ||
Common stock | (36,360) | (36,000) |
Total available-for-sale securities | $ (36,360) | $ (36,000) |
Fixed Assets (Details Narrative
Fixed Assets (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Depreciation and amortization expense | $ 61,162 | $ 10,774 | $ 183,392 | $ 16,134 |
Furniture, Fixtures And Software [Member] | ||||
Fixed assets book value | 3,122 | 3,122 | ||
Fixed assets historical cost basis | 58,798 | 58,798 | ||
Fixed assets accumulated depreciation and amortization | $ 55,676 | $ 55,676 |
Fixed Assets - Schedule of Fixe
Fixed Assets - Schedule of Fixed Assets (Details) - USD ($) | Jun. 30, 2016 | Sep. 30, 2015 |
Property, Plant and Equipment [Abstract] | ||
Software | $ 121,617 | $ 131,636 |
Office equipment | 36,080 | 35,467 |
Furniture and fixtures | 2,357 | 14,607 |
Lab equipment | 809,056 | 835,006 |
Leasehold improvements | 487,066 | 487,066 |
Fixed Assets, Gross | 1,456,176 | 1,503,782 |
Less: accumulated depreciation | (257,807) | (130,091) |
Total | $ 1,198,369 | $ 1,373,691 |
Changes in Stockholders' Equi42
Changes in Stockholders' Equity (Details Narrative) - USD ($) | Oct. 01, 2016 | Jun. 13, 2016 | May 02, 2016 | Apr. 29, 2016 | Apr. 18, 2016 | Apr. 14, 2016 | Apr. 12, 2016 | Apr. 07, 2016 | Apr. 02, 2016 | Mar. 15, 2016 | Feb. 26, 2016 | Feb. 17, 2016 | Feb. 02, 2016 | Jan. 19, 2016 | Jan. 02, 2016 | Dec. 21, 2015 | Nov. 23, 2015 | Oct. 29, 2015 | Oct. 08, 2015 | May 27, 2015 | Jun. 30, 2016 | Sep. 30, 2015 |
Reverse stock split | 1-for-10 reverse stock split | |||||||||||||||||||||
Common stock, shares authorized | 90,000,000 | 90,000,000 | ||||||||||||||||||||
Number of reverse stock split authorized shares decreased ratably shares of common stock | 90,000,000 | |||||||||||||||||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||||||||||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||||||||||||||||||||
Preferred stock, shares issued | 3,621,442 | 4,351,442 | ||||||||||||||||||||
Preferred stock, shares outstanding | 3,621,442 | 4,351,442 | ||||||||||||||||||||
Percentage of equity beneficial ownership | 100.00% | |||||||||||||||||||||
Common stock par value | $ 0.001 | $ 0.001 | ||||||||||||||||||||
Common stock authorized | 90,000,000 | 90,000,000 | ||||||||||||||||||||
Common stock, shares issued | 20,986,041 | 13,762,705 | ||||||||||||||||||||
Common Stock, shares outstanding | 20,986,041 | 13,762,705 | ||||||||||||||||||||
Number of common stock purchased through issuance of warrants | 100,000 | 166,667 | 166,667 | 83,334 | 166,667 | 1,666,667 | 83,333 | 333,334 | 166,667 | 100,000 | ||||||||||||
Warrants exercise price per share | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.40 | ||||||||||||
Warrants period | 36 years | 36 years | 36 years | 36 years | 36 years | 36 months | 36 months | 36 months | 36 months | 36 months | ||||||||||||
Proceeds from warrants exercisable | $ 15,000 | $ 25,000 | $ 25,000 | $ 12,500 | $ 25,000 | $ 250,000 | $ 12,500 | $ 50,000 | $ 25,000 | $ 20,000 | ||||||||||||
Stock-based compensation expense | $ 779,168 | |||||||||||||||||||||
Series A Preferred Stock [Member] | ||||||||||||||||||||||
Number of preferred stock shares cancellation during the period | 60,000 | |||||||||||||||||||||
Consultants [Member] | ||||||||||||||||||||||
Stock issued for services | 300,000 | 500,000 | ||||||||||||||||||||
Stock issued for services, value | $ 45,720 | $ 70,000 | ||||||||||||||||||||
Stock-based compensation expense | $ 30,480 | $ 17,500 | ||||||||||||||||||||
Investor [Member] | ||||||||||||||||||||||
Stock issued for services | 40,000 | |||||||||||||||||||||
Stock issued for services, value | $ 8,000 | |||||||||||||||||||||
Series A Convertible Preferred Stock [Member] | ||||||||||||||||||||||
Preferred stock, shares designated | 6,000,000 | |||||||||||||||||||||
Series A Preferred Stock [Member] | ||||||||||||||||||||||
Preferred stock, shares issued | 3,520,442 | |||||||||||||||||||||
Preferred stock, shares outstanding | 3,520,442 | |||||||||||||||||||||
Preferred stock convertible into common stock at fixed conversion price per share | $ 0.20 | |||||||||||||||||||||
Preferred stock convertible into common stock shares | 17,602,210 | |||||||||||||||||||||
Percentage of equity beneficial ownership | 4.99% | |||||||||||||||||||||
Series A Preferred Stock [Member] | Shareholder [Member] | ||||||||||||||||||||||
Stock conversion, shares converted | 100,000 | 100,000 | 150,000 | 100,000 | 100,000 | 120,000 | ||||||||||||||||
Stock conversion, shares issued | 500,000 | 500,000 | 750,000 | 500,000 | 500,000 | 600,000 |
Common Stock Options (Details N
Common Stock Options (Details Narrative) - USD ($) | Jun. 21, 2016 | Apr. 07, 2016 | Nov. 20, 2015 | May 20, 2014 | Jun. 21, 2012 |
Stock options exercisable period | 3 years | ||||
Stock option exercise price per share | $ 0.181 | ||||
Volatility rate | 234.00% | ||||
Value of call option per share | $ 0.1734 | ||||
Value of option | $ 86,708 | ||||
Consultant [Member] | |||||
Number of shares granted fully vested common stock option | 500,000 | ||||
Mr.Bianco [Member] | |||||
Stock options exercisable period | 10 years | ||||
Stock option exercise price per share | $ 0.20 | ||||
Volatility rate | 230.00% | ||||
Value of call option per share | $ 0.1986 | ||||
Value of option | $ 943,193 | ||||
Stock issued for services | $ 4,750,000 | ||||
common stock, vest | 50.00% | ||||
common stock, vesting thereafter | 25.00% | ||||
Mr. Denkin [Member] | |||||
Stock options exercisable period | 10 years | ||||
Stock option exercise price per share | $ 0.20 | ||||
Volatility rate | 230.00% | ||||
Value of call option per share | $ 0.1986 | ||||
Value of option | $ 496,417 | ||||
Stock issued for services | $ 2,500,000 | ||||
common stock, vest | 50.00% | ||||
common stock, vesting thereafter | 25.00% | ||||
Five Employees [Member] | |||||
Number of shares granted fully vested common stock option | 130,000 | ||||
Stock option exercise price per share | $ 0.22 | ||||
Volatility rate | 238.00% | ||||
Value of call option per share | $ 0.2183 | ||||
Value of option | $ 28,382 | ||||
2012 Stock Incentive Plan [Member] | |||||
Number of shares issued under stock plan | 11,500,000 | ||||
Change in number if shares issued under stock plan | 3,000,000 |
Common Stock Warrants (Details
Common Stock Warrants (Details Narrative) - USD ($) | Jun. 06, 2016 | May 02, 2016 | Apr. 29, 2016 | Apr. 14, 2016 | Apr. 12, 2016 | Apr. 07, 2016 | Mar. 15, 2016 | Feb. 17, 2016 | Jan. 19, 2016 | Dec. 21, 2015 | Nov. 23, 2015 | Jun. 30, 2016 | Jun. 30, 2015 |
Number of common stock purchased through issuance of warrants | 100,000 | 166,667 | 166,667 | 83,334 | 166,667 | 1,666,667 | 83,333 | 333,334 | 166,667 | 100,000 | |||
Warrants exercise price per share | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.40 | |||
Warrants period | 36 years | 36 years | 36 years | 36 years | 36 years | 36 months | 36 months | 36 months | 36 months | 36 months | |||
Proceeds from warrants exercisable | $ 15,000 | $ 25,000 | $ 25,000 | $ 12,500 | $ 25,000 | $ 250,000 | $ 12,500 | $ 50,000 | $ 25,000 | $ 20,000 | |||
Common stock warrants issued for services | $ 1,018,491 | ||||||||||||
Consulting Firm [Member] | |||||||||||||
Warrants exercise price per share | $ 0.1901 | ||||||||||||
Warrants period | 5 years | ||||||||||||
Common stock warrants issued for services | $ 659,800 | ||||||||||||
Value of call option per share | $ 0.1883 | ||||||||||||
Value of option | $ 124,233 | ||||||||||||
Warrant volatility rate | 231.00% |
Other Income (Details Narrative
Other Income (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Other income | $ 16,000 | $ 12,000 | $ 46,000 | $ 24,000 |
GB Sciences, Inc [Member] | ||||
Monthly rent payable | 6,000 | |||
Rent income | $ 30,000 | $ 24,000 |
Gain on Debt Settlements (Detai
Gain on Debt Settlements (Details Narrative) - USD ($) | Oct. 02, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 |
Gain on early extinguishment of debt | $ 12,133 | ||||
DigiPath Corp [Member] | |||||
Forgiveness of debt owed | $ 18,201 |
Income Tax (Details Narrative)
Income Tax (Details Narrative) | 9 Months Ended |
Jun. 30, 2016USD ($) | |
Income Tax Disclosure [Abstract] | |
Net operating loss carry forwards | $ 6,697,000 |
Operating loss expiration year | 2,031 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) | Jul. 05, 2016 | Jul. 02, 2016 |
Six Consultant [Member] | ||
Common stock issued for services | 580,000 | |
Common stock issued for services, value | $ 104,980 | |
Series A Preferred Stock [Member] | ||
Stock conversion, shares converted | 101,000 | |
Stock conversion, shares issued | 505,000 |