Hypha Labs (FUNI) 10-Q 15 May 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Mar. 31, 2018	May 14, 2018
Document And Entity Information
Entity Registrant Name	DigiPath,Inc.
Entity Central Index Key	1,502,966
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		40,437,042
Trading Symbol	DIGP
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,018

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2018	Sep. 30, 2017
Current assets:
Cash	$ 236,362	$ 178,177
Accounts receivable	240,044	266,613
Prepaid expenses	69,264	73,750
Deposits	25,647	25,647
Total current assets	571,317	544,187
Fixed assets, net	1,071,723	1,027,049
Total Assets	1,643,040	1,571,236
Current liabilities:
Accounts payable	278,105	121,994
Accrued expenses	53,887	42,004
Deferred revenues	1,800
Total current liabilities	333,792	163,998
Total Liabilities	333,792	163,998
Stockholders’ Equity:
Series A convertible preferred stock, $0.001 par value, 10,000,000 shares authorized; 1,425,942 and 1,897,942 shares issued and outstanding at March 31, 2018 and September 30, 2017, respectively	1,426	1,898
Common stock, $0.001 par value, 90,000,000 shares authorized; 39,739,264 and 35,027,118 shares issued and outstanding at March 31, 2018 and September 30, 2017, respectively	39,739	35,027
Additional paid-in capital	13,644,167	12,866,984
Accumulated (deficit)	(12,376,084)	(11,496,671)
Total Stockholders’ Equity	1,309,248	1,407,238
Total Liabilities and Stockholders’ Equity	$ 1,643,040	$ 1,571,236

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2018	Sep. 30, 2017
Statement of Financial Position [Abstract]
Series A convertible preferred stock, par value	$ 0.001	$ 0.001
Series A convertible preferred stock, shares authorized	10,000,000	10,000,000
Series A convertible preferred stock, shares issued	1,425,942	1,897,942
Series A convertible preferred stock, shares outstanding	1,425,942	1,897,942
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	39,739,264	35,027,118
Common stock, shares outstanding	39,739,264	35,027,118

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Income Statement [Abstract]
Revenues	$ 583,073	$ 497,049	$ 1,701,858	$ 906,800
Cost of sales	665,858	221,010	1,042,630	425,142
Gross profit (loss)	(82,785)	276,039	659,228	481,658
Operating expenses:
General and administrative	348,399	327,384	747,513	607,070
Professional fees	249,111	273,951	735,787	465,594
Bad debts expense	42,301	4,304	98,241	18,754
Total operating expenses	639,811	605,639	1,581,541	1,091,418
Operating loss	(722,596)	(329,600)	(922,313)	(609,760)
Other income:
Other income	22,200	106,000	42,900	260,000
Total other income	22,200	106,000	42,900	260,000
Net loss	(700,396)	(223,600)	(879,413)	(349,760)
Available-for-sale investments:
Change in net unrealized loss (net of tax effect)		(280)		6,520
Comprehensive loss	$ (700,396)	$ (223,880)	$ (879,413)	$ (343,240)
Weighted average number of common shares outstanding - basic and fully diluted	38,964,125	28,063,050	37,169,355	25,982,694
Net (loss) per share - basic and fully diluted	$ (0.02)	$ (0.01)	$ (0.02)	$ (0.01)

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities
Net loss	$ (879,413)	$ (349,760)
Adjustments to reconcile net loss to net cash provided by operating activities:
Bad debts expense	98,241	18,754
Depreciation and amortization expense	141,696	123,073
Stock issued for services	289,704	123,028
Options and warrants granted for services	348,711	199,840
Decrease (increase) in assets:
Accounts receivable	(71,672)	(92,277)
Prepaid expenses	4,486	(19,938)
Deposits		14,203
Increase (decrease) in liabilities:
Accounts payable	156,111	(104,444)
Accrued expenses	11,883	(22,539)
Deferred revenues	1,800
Net cash provided by (used in) operating activities	101,547	(105,060)
Cash flows from investing activities
Purchase of fixed assets	(186,370)	(2,770)
Net cash used in investing activities	(186,370)	(2,770)
Cash flows from financing activities
Proceeds from sale of common stock	143,008	250,000
Net cash provided by financing activities	143,008	250,000
Net increase in cash	58,185	142,170
Cash - beginning	178,177	135,390
Cash - ending	236,362	277,560
Supplemental disclosures:
Interest paid
Income taxes paid
Non-cash investing and financing activities:
Net change in unrealized gain (loss) on available-for-sale securities		6,520
Value of preferred stock converted to common stock	$ 472,000	$ 1,230,000

Organization, Basis of Presenta

Organization, Basis of Presentation and Significant Accounting Policies	6 Months Ended
	Mar. 31, 2018
Accounting Policies [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 industry’s 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 ● The National Marijuana News Corp Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Intercompany accounts and transactions have been eliminated. The unaudited condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included. Such adjustments are of a normal, recurring nature. The Condensed Consolidated Financial Statements, and the accompanying notes, are prepared in accordance with GAAP and do not contain certain information included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017. 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 March 31, 2018: 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) All entities are in the form of a corporation. (2) Holding company, which owns each of the wholly-owned subsidiaries. All subsidiaries shown above are wholly-owned by Digipath, Inc., the parent company. (3) Entity formed for prospective purposes, but has not incurred any income or expenses to date. The consolidated financial statements herein contain the operations of the wholly-owned subsidiaries listed above. All significant inter-company transactions have been eliminated in the preparation of these financial statements. The parent company and subsidiaries will be collectively referred to herein as the “Company”, “Digipath” or “DIGP”. The Company’s headquarters are located in Las Vegas, Nevada and substantially all of its customers are within the United States. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein. Reclassifications Prior period interest income in the amount of $5,000 has been reclassified to net against the related $5,000 of bad debt expense to conform to the current period presentation. These reclassifications had no impact on net earnings, financial position or cash flows. Segment Reporting ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations. Fair Value of Financial Instruments Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate fair value primarily due to the short term nature of the instruments. Revenue Recognition The Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) Stock-Based Compensation The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and Equity-Based Payments to Non-employees pursuant to ASC 505-50 (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. Recent Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting In May 2014 the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers 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	6 Months Ended
	Mar. 31, 2018
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 ($12,376,084), and as of March 31, 2018, 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.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Mar. 31, 2018
Related Party Transactions [Abstract]
Related Party Transactions	Note 3 – Related Party Transactions Stock Based Compensation for Services On March 26, 2018, the Company issued 207,852 shares of common stock to its CEO for services rendered pursuant to his employment agreement. The aggregate fair value of the common stock was $45,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period that ended on March 31, 2018. On March 26, 2018, the Company issued 55,427 shares of common stock to its COO for services rendered pursuant to his employment agreement. The aggregate fair value of the common stock was $12,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period that ended on March 31, 2018. On March 26, 2018, the Company issued 138,568 shares of common stock to its CFO for services rendered pursuant to his employment agreement. The aggregate fair value of the common stock was $30,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period that ended on March 31, 2018. On December 22, 2017, the Company issued 300,000 shares of common stock to its CFO as a bonus for services rendered. The aggregate fair value of the common stock was $78,828 based on the closing price of the Company’s common stock on the date of grant, and was expensed in full. On December 22, 2017, the Company issued 100,000 shares of common stock to Dr. Alfredo Axtmayer for his service on our Board of Directors. The aggregate fair value of the common stock was $26,276 based on the closing price of the Company’s common stock on the date of grant, and was expensed in full. On December 22, 2017, we granted fully vested options to purchase 500,000 shares of common stock as compensation for services to our President and COO. The options are exercisable over a ten year period at an exercise price of $0.27 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 112% and a call option value of $0.2094, was $104,698. The options were expensed over the vesting period, resulting in $104,698 of stock based compensation expense during the six months ended March 31, 2018.

Fair Value of Financial Instrum

Fair Value of Financial Instruments	6 Months Ended
	Mar. 31, 2018
Fair Value Disclosures [Abstract]
Fair Value of Financial Instruments	Note 4 – 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 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, 2018 and September 30, 2017, respectively: Fair Value Measurements at March 31, 2018 Level 1 Level 2 Level 3 Assets Cash $ 236,362 $ - $ - Total assets 236,362 - - Liabilities Total liabilities - - - $ 236,362 $ - $ - Fair Value Measurements at September 30, 2017 Level 1 Level 2 Level 3 Assets Cash $ 178,177 $ - $ - Total assets 178,177 - - Liabilities Total liabilities - - - $ 178,177 $ - $ - 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 six months ended March 31, 2018 or the year ended September 30, 2017.

Accounts Receivable

Accounts Receivable	6 Months Ended
	Mar. 31, 2018
Receivables [Abstract]
Accounts Receivable	Note 5 – Accounts Receivable Accounts receivable was $240,044 and $266,613 at March 31, 2018 and September 30, 2017, respectively, net of allowance for doubtful accounts of $130,421 and $32,180 at March 31, 2018 and September 30, 2017, respectively.

Fixed Assets

Fixed Assets	6 Months Ended
	Mar. 31, 2018
Property, Plant and Equipment [Abstract]
Fixed Assets	Note 6 – Fixed Assets Fixed assets consist of the following at March 31, 2018 and September 30, 2017: March 31, September 30, 2018 2017 Software $ 123,492 $ 121,617 Office equipment 49,296 36,080 Furniture and fixtures 28,486 14,285 Lab equipment 1,095,528 938,450 Leasehold improvements 489,147 489,147 1,785,949 1,599,579 Less: accumulated depreciation (714,226 ) (572,530 ) Total $ 1,071,723 $ 1,027,049 Depreciation and amortization expense totaled $141,696 and $123,073 for the six months ended March 31, 2018 and 2017, respectively.

Changes in Stockholders' Equity

Changes in Stockholders' Equity	6 Months Ended
	Mar. 31, 2018
Equity [Abstract]
Changes in Stockholders' Equity	Note 7 - Changes in Stockholders’ Equity Convertible Preferred Stock The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.001 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, 2018, there were 1,425,942 shares of Series A Preferred issued and outstanding. The Board of Directors is authorized to determine any number of series into which the undesignated shares of preferred stock may be divided and to determine the rights, preferences, privileges and restrictions granted to any series of the preferred stock. Shares 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 Company’s capitalization, and in the event of certain negative actions undertaken by the Company. At the current conversion price, the 1,425,942 shares of Series A Preferred outstanding at March 31, 2018 are convertible into 7,129,710 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. Preferred Stock Conversions During the three months ended March 31, 2018, a total of 322,000 Series A Preferred shares were converted into 1,610,000 shares of common stock. The stock was converted in accordance with the conversion terms; therefore no gain or loss has been recognized. During the three months ended December 31, 2017, a total of 150,000 Series A Preferred shares were converted 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. Common Stock Common stock consists of $0.001 par value, 90,000,000 shares authorized, of which 39,739,264 shares were issued and outstanding as of March 31, 2018. Common Stock Sales On December 20, 2017, the Company sold 10 units, consisting of 100,000 shares of its common stock and warrants to purchase 50,000 shares of common stock, exercisable at $0.26 per share over a thirty six month period, in exchange for total proceeds of $18,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On December 14, 2017, the Company sold 13.89 units, consisting of 138,889 shares of its common stock and warrants to purchase 69,445 shares of common stock, exercisable at $0.26 per share over a thirty six month period, in exchange for total proceeds of $25,000. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On December 14, 2017, the Company sold 55.56 units, consisting of 555,600 shares of its common stock and warrants to purchase 277,800 shares of common stock, exercisable at $0.26 per share over a thirty six month period, in exchange for total proceeds of $100,008. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. Exercise of Options On January 3, 2018, two option holders exercised options to purchase a total of 500,000 shares of common stock at $0.181 per share on a cashless basis, resulting in the issuance of 317,172 shares of common stock. On January 2, 2018, an option holder exercised options to purchase 37,500 shares of common stock at $0.22 per share on a cashless basis, resulting in the issuance of 21,000 shares of common stock. Exercise of Warrants On January 3, 2018, a warrant holder exercised warrants to purchase 71,428 shares of common stock at $0.26 per share on a cashless basis, resulting in the issuance of 34,285 shares of common stock. Common Stock Issued for Services On March 26, 2018, the Company issued 207,852 shares of common stock to its CEO for services rendered pursuant to his employment agreement. The aggregate fair value of the common stock was $45,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period that ended on March 31, 2018. On March 26, 2018, the Company issued 55,427 shares of common stock to its COO for services rendered pursuant to his employment agreement. The aggregate fair value of the common stock was $12,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period that ended on March 31, 2018. On March 26, 2018, the Company issued 138,568 shares of common stock to its CFO for services rendered pursuant to his employment agreement. The aggregate fair value of the common stock was $30,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period that ended on March 31, 2018. On March 26, 2018, the Company issued 69,284 shares of common stock to a consultant for business development services. The fair value of the common stock was $15,000 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period that ended on March 31, 2018. On December 22, 2017, the Company issued 300,000 shares of common stock to its CFO as a bonus for services rendered. The aggregate fair value of the common stock was $78,828 based on the closing price of the Company’s common stock on the date of grant, and was expensed in full. On December 22, 2017, the Company issued 100,000 shares of common stock to Dr. Alfredo Axtmayer for his service on our Board of Directors. The aggregate fair value of the common stock was $26,276 based on the closing price of the Company’s common stock on the date of grant, and was expensed in full. On November 29, 2017, a total of 314,069 shares of common stock were issued to three consultants that were engaged to assist the Company with acquisition activities. The aggregate fair value of the common stock was $82,600 based on the closing price of the Company’s common stock on the date of grant, and was expensed over the requisite service period that ended on December 31, 2017. Amortization of Stock Options A total of $348,711 of stock-based compensation expense was recognized from the amortization of options over their vesting period during the six months ended March 31, 2018.

Common Stock Options

Common Stock Options	6 Months Ended
	Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Common Stock Options	Note 8 – Common Stock Options Stock Incentive Plan On June 21, 2016, we amended and restated our 2012 Stock Incentive Plan (the “2012 Plan”), which was originally adopted on March 5, 2012 and previously amended on May 20, 2014. As amended, the 2012 Plan provides for the issuance of up to 11,500,000 shares of common stock pursuant to the grant of options or other awards, including stock grants, to employees, officers or directors of, and consultants to, the Company and its subsidiaries. Options granted under the 2012 Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options, and are exercisable over periods not exceeding ten years from date of grant. A total of 8,392,500 options were outstanding as of March 31, 2018. During the three months ended March 31, 2018, options to purchase an aggregate total of 55,000 shares of common stock at a weighted average exercise price of $0.24 per share expired, and during the three months ended December 31, 2017, options to purchase an aggregate total of 1,110,000 shares of common stock at a weighted average exercise price of $0.40 per share expired. On January 3, 2018, two option holders exercised options to purchase a total of 500,000 shares of common stock at $0.181 per share on a cashless basis, resulting in the issuance of 317,172 shares of common stock. On January 2, 2018, an option holder exercised options to purchase 37,500 shares of common stock at $0.22 per share on a cashless basis, resulting in the issuance of 21,000 shares of common stock. On December 22, 2017, we granted fully vested options to purchase 500,000 shares of common stock as compensation for services to our President and COO. The options are exercisable over a ten year period at an exercise price of $0.27 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 112% and a call option value of $0.2094, was $104,698. The options were expensed over the vesting period, resulting in $104,698 of stock based compensation expense during the six months ended March 31, 2018. On November 29, 2017, we granted fully vested options to purchase 100,000 shares of common stock as compensation for services to our Chief Scientist. The options are exercisable over a ten year period at an exercise price of $0.27 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 112% and a call option value of $0.21, was $21,004. The options were expensed over the vesting period, resulting in $21,004 of stock based compensation expense during the six months ended March 31, 2018. On November 29, 2017, we granted fully vested options to purchase 205,000 shares of common stock as compensation for services to a total of ten of our employees. The options are exercisable over a ten year period at an exercise price of $0.27 per share. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 112% and a call option value of $0.21, was $43,057. The options were expensed over the vesting period, resulting in $43,057 of stock based compensation expense during the six months ended March 31, 2018.

Common Stock Warrants

Common Stock Warrants	6 Months Ended
	Mar. 31, 2018
Equity [Abstract]
Common Stock Warrants	Note 9 – Common Stock Warrants Warrants to purchase a total of 5,768,239 shares of common stock were outstanding as of March 31, 2018. On January 3, 2018, a warrant holder exercised warrants to purchase 71,428 shares of common stock at $0.26 per share on a cashless basis, resulting in the issuance of 34,285 shares of common stock. On December 31, 2017, warrants to purchase 200,000 shares of common stock at $0.30 per share expired, and on December 30, 2017, warrants to purchase 300,000 shares of common stock at $0.45 per share also expired. Warrants to purchase 50,000 shares of common stock at $0.26 per share over a 36 month period were issued on December 20, 2017 pursuant to a unit offering for the sale of 100,000 shares of common stock in exchange for proceeds of $18,000, and warrants to purchase a total of 347,245 shares of common stock at $0.26 per share over a 36 month period were issued on December 14, 2017 pursuant to two unit offerings for the sale of an aggregate 694,489 shares of common stock in exchange for total proceeds of $125,008.

Other Income

Other Income	6 Months Ended
	Mar. 31, 2018
Other Income and Expenses [Abstract]
Other Income	Note 10 – Other Income Other income for the six months ended March 31, 2018 and 2017 consisted of the following: March 31, 2018 2017 Settlement income on license agreement $ - $ 250,000 Rental income on subleases 38,400 1,500 Restitution income 4,500 8,500 $ 42,900 $ 260,000

Income Tax

Income Tax	6 Months Ended
	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Income Tax	Note 11 - 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 six months ended March 31, 2018 and the year ended September 30, 2017, 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, 2018, the Company had approximately $7,467,000 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, 2018 and September 30, 2017, 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	6 Months Ended
	Mar. 31, 2018
Subsequent Events [Abstract]
Subsequent Events	Note 12 – Subsequent Events Common Stock Sales On April 13, 2018, the Company sold 14 units, consisting of 140,000 shares of its common stock and warrants to purchase 70,000 shares of common stock, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $25,200. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On April 12, 2018, the Company sold 28 units, consisting of 280,000 shares of its common stock and warrants to purchase 140,000 shares of common stock, exercisable at $0.30 per share over a thirty six month period, in exchange for total proceeds of $50,400. The proceeds received were allocated between the common stock and warrants on a relative fair value basis. On April 10, 2018, the Company sold 27.78 units, consisting of 277,778 shares of its common stock and warrants to purchase 138,889 shares of common stock, 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.

Organization, Basis of Presen18

Organization, Basis of Presentation and Significant Accounting Policies (Policies)	6 Months Ended
	Mar. 31, 2018
Accounting Policies [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 industry’s 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 ● The National Marijuana News Corp
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 GAAP and do not contain certain information included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017. 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 March 31, 2018: 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) All entities are in the form of a corporation. (2) Holding company, which owns each of the wholly-owned subsidiaries. All subsidiaries shown above are wholly-owned by Digipath, Inc., the parent company. (3) Entity formed for prospective purposes, but has not incurred any income or expenses to date. The consolidated financial statements herein contain the operations of the wholly-owned subsidiaries listed above. All significant inter-company transactions have been eliminated in the preparation of these financial statements. The parent company and subsidiaries will be collectively referred to herein as the “Company”, “Digipath” or “DIGP”. The Company’s headquarters are located in Las Vegas, Nevada and substantially all of its customers are within the United States. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.
Reclassifications	Reclassifications Prior period interest income in the amount of $5,000 has been reclassified to net against the related $5,000 of bad debt expense to conform to the current period presentation. These reclassifications had no impact on net earnings, financial position or cash flows.
Segment Reporting	Segment Reporting ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.
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 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.
Revenue Recognition	Revenue Recognition The Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606)
Stock-Based Compensation	Stock-Based Compensation The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and Equity-Based Payments to Non-employees pursuant to ASC 505-50 (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.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting In May 2014 the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers 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 Presen19

Organization, Basis of Presentation and Significant Accounting Policies (Tables)	6 Months Ended
	Mar. 31, 2018
Accounting Policies [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 March 31, 2018: 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) All entities are in the form of a corporation. (2) Holding company, which owns each of the wholly-owned subsidiaries. All subsidiaries shown above are wholly-owned by Digipath, Inc., the parent company. (3) Entity formed for prospective purposes, but has not incurred any income or expenses to date.

Fair Value of Financial Instr20

Fair Value of Financial Instruments (Tables)	6 Months Ended
	Mar. 31, 2018
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 March 31, 2018 and September 30, 2017, respectively: Fair Value Measurements at March 31, 2018 Level 1 Level 2 Level 3 Assets Cash $ 236,362 $ - $ - Total assets 236,362 - - Liabilities Total liabilities - - - $ 236,362 $ - $ - Fair Value Measurements at September 30, 2017 Level 1 Level 2 Level 3 Assets Cash $ 178,177 $ - $ - Total assets 178,177 - - Liabilities Total liabilities - - - $ 178,177 $ - $ -

Fixed Assets (Tables)

Fixed Assets (Tables)	6 Months Ended
	Mar. 31, 2018
Property, Plant and Equipment [Abstract]
Schedule of Fixed Assets	Fixed assets consist of the following at March 31, 2018 and September 30, 2017: March 31, September 30, 2018 2017 Software $ 123,492 $ 121,617 Office equipment 49,296 36,080 Furniture and fixtures 28,486 14,285 Lab equipment 1,095,528 938,450 Leasehold improvements 489,147 489,147 1,785,949 1,599,579 Less: accumulated depreciation (714,226 ) (572,530 ) Total $ 1,071,723 $ 1,027,049

Other Income (Tables)

Other Income (Tables)	6 Months Ended
	Mar. 31, 2018
Other Income and Expenses [Abstract]
Schedule of Other Income	Other income for the six months ended March 31, 2018 and 2017 consisted of the following: March 31, 2018 2017 Settlement income on license agreement $ - $ 250,000 Rental income on subleases 38,400 1,500 Restitution income 4,500 8,500 $ 42,900 $ 260,000

Organization, Basis of Presen23

Organization, Basis of Presentation and Significant Accounting Policies (Details Narrative)	6 Months Ended
	Mar. 31, 2018USD ($)Segment
Number of reportable segment | Segment	1
Bad Debt [Member]
Prior period reclassification net value	$ 5,000
Interest Income [Member]
Prior period reclassification net value	$ 5,000

Schedule of Entities Under Comm

Schedule of Entities Under Common Control and Ownership (Details) - Entities Under Common Control and Ownership [Member]	6 Months Ended
	Mar. 31, 2018
Name of Entity	Digipath, Inc.	[1],[2]
State of Incorporation	Nevada	[2]
Relationship	Parent	[2]
Name of Entity	Digipath Labs, Inc.	[1]
State of Incorporation	Nevada
Relationship	Subsidiary
Name of Entity	TNM News, Inc.	[1]
State of Incorporation	Nevada
Relationship	Subsidiary
Name of Entity	GroSciences, Inc.	[1],[3]
State of Incorporation	Colorado	[3]
Relationship	Subsidiary	[3]
[1]	All entities are in the form of a corporation.
[2]	Holding company, which owns each of the wholly-owned subsidiaries. All subsidiaries shown above are wholly-owned by Digipath, Inc., the parent company.
[3]	Entity formed for prospective purposes, but has not incurred any income or expenses to date.

Going Concern (Details Narrativ

Going Concern (Details Narrative) - USD ($)	Mar. 31, 2018	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accumulated deficit	$ (12,376,084)	$ (11,496,671)

Related Party Transactions (Det

Related Party Transactions (Details Narrative) - USD ($)	Mar. 26, 2018	Dec. 22, 2017	Mar. 31, 2018
Number of common stock issued for services			1,010,000
Fair value measurements, volatility rate			0.00%
Chief Executive Officer [Member]
Number of common stock issued for services	207,852
Stock option value	$ 45,000
Chief Operating Officer [Member]
Number of common stock issued for services	55,427
Stock option value	$ 12,000
Chief Financial Officer [Member]
Number of common stock issued for services	138,568	300,000
Stock option value	$ 30,000	$ 78,828
Dr. Alfredo Axtmayer [Member]
Number of common stock issued for services		100,000
Stock option value		$ 26,276
President and COO [Member]
Number of common stock issued for services		500,000
Stock option value		$ 104,698	$ 104,698
Number of common stock shares compensation issued for services		500,000
Options exercisable description		The options are exercisable over a ten year period
Common stock exercise price		$ 0.27
Fair value measurements, volatility rate		112.00%
Call option value		$ 0.2094

Fair Value of Financial Instr27

Fair Value of Financial Instruments - Summary of Financial Instruments at Fair Value on Recurring Basis (Details) - USD ($)	Mar. 31, 2018	Sep. 30, 2017
Level 1 [Member]
Cash	$ 236,362	$ 178,177
Total assets	236,362	178,177
Total liabilities
Total	236,362	178,177
Level 2 [Member]
Cash
Total assets
Total liabilities
Total
Level 3 [Member]
Cash
Total assets
Total liabilities
Total

Accounts Receivable (Details Na

Accounts Receivable (Details Narrative) - USD ($)	Mar. 31, 2018	Sep. 30, 2017
Receivables [Abstract]
Accounts receivable	$ 240,044	$ 266,613
Allowance for doubtful accounts	$ 130,421	$ 32,180

Fixed Assets (Details Narrative

Fixed Assets (Details Narrative) - USD ($)	6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 141,696	$ 123,073

Fixed Assets - Schedule of Fixe

Fixed Assets - Schedule of Fixed Assets (Details) - USD ($)	Mar. 31, 2018	Sep. 30, 2017
Property, Plant and Equipment [Abstract]
Software	$ 123,492	$ 121,617
Office equipment	49,296	36,080
Furniture and fixtures	28,486	14,285
Lab equipment	1,095,528	938,450
Leasehold improvements	489,147	489,147
Fixed Assets, Gross	1,785,949	1,599,579
Less: accumulated depreciation	(714,226)	(572,530)
Total	$ 1,071,723	$ 1,027,049

Changes in Stockholders' Equi31

Changes in Stockholders' Equity (Details Narrative) - USD ($)	Mar. 26, 2018	Jan. 03, 2018	Jan. 02, 2018	Dec. 22, 2017	Dec. 20, 2017	Dec. 14, 2017	Nov. 29, 2017	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Sep. 30, 2017
Preferred stock, shares authorized								10,000,000		10,000,000		10,000,000
Preferred stock, par value								$ 0.001		$ 0.001		$ 0.001
Preferred stock, shares issued								1,425,942		1,425,942		1,897,942
Preferred stock, shares outstanding								1,425,942		1,425,942		1,897,942
Common stock par value								$ 0.001		$ 0.001		$ 0.001
Common stock authorized								90,000,000		90,000,000		90,000,000
Common stock, shares issued								39,739,264		39,739,264		35,027,118
Common Stock, shares outstanding								39,739,264		39,739,264		35,027,118
Number of common stock sold					10	13.89
Proceeds from issuance of common stock										$ 143,008	$ 250,000
Share issued in exercise stock option			37,500						1,110,000	55,000
Stock option exercise price per share			$ 0.22						$ 0.40	$ 0.24
Common stock shares issued		34,285	21,000
Warrants purchased		71,428
Warrants exercise price per share		$ 0.26
Number of common stock issued for services										1,010,000
Stock-based compensation expense										$ 348,711
Three Consultants [Member]
Number of common stock issued for services							314,069
Common stock issued for services							$ 82,600
Chief Executive Officer [Member]
Stock option value	$ 45,000
Number of common stock issued for services	207,852
Chief Operating Officer [Member]
Stock option value	$ 12,000
Number of common stock issued for services	55,427
Chief Financial Officer [Member]
Stock option value	$ 30,000			$ 78,828
Number of common stock issued for services	138,568			300,000
Consultant [Member]
Stock option value	$ 15,000
Number of common stock issued for services	69,284
Dr. Alfredo Axtmayer [Member]
Stock option value				$ 26,276
Number of common stock issued for services				100,000
Series A Convertible Preferred Stock [Member]
Preferred stock, shares designated								6,000,000		6,000,000
Preferred stock, shares designated remaining								4,000,000		4,000,000
Series A Preferred Stock [Member]
Preferred stock, shares issued								1,425,942		1,425,942
Preferred stock, shares outstanding								1,425,942		1,425,942
Preferred stock convertible into common stock at fixed conversion price per share								$ 0.20		$ 0.20
Preferred stock convertible into common stock shares								7,129,710		7,129,710
Percentage of equity beneficial ownership								4.99%		4.99%
Stock conversion, shares converted								322,000	150,000
Stock conversion, shares issued								1,610,000	750,000
Common Stock [Member]
Number of common stock sold					100,000	138,889
Number of warrant shares					50,000	69,445
Sale of stock price per share					$ 0.26	$ 0.26
Proceeds from issuance of common stock					$ 18,000	$ 25,000
Common Stock Unit [Member]
Number of common stock sold						55.56
Common Stock One [Member]
Number of common stock sold						555,600
Number of warrant shares						277,800
Sale of stock price per share						$ 0.26
Proceeds from issuance of common stock						$ 100,008
Warrants purchased									200,000
Warrants exercise price per share									$ 0.30
Two Option Holder [Member]
Share issued in exercise stock option		500,000	37,500
Stock option exercise price per share		$ 0.181	$ 0.22
Common stock shares issued		317,172	21,000

Common Stock Options (Details N

Common Stock Options (Details Narrative) - USD ($)	Jan. 03, 2018	Jan. 02, 2018	Dec. 22, 2017	Nov. 29, 2017	Jun. 21, 2016	Dec. 31, 2017	Mar. 31, 2018
Number of options outstanding							8,392,500
Share issued in exercise stock option		37,500				1,110,000	55,000
Stock option exercise price per share		$ 0.22				$ 0.40	$ 0.24
Common stock shares issued	34,285	21,000
Option to purchase shares of common stock for services							1,010,000
Number of shares granted fully vested common stock option
Volatility rate							0.00%
Ten Employees [Member]
Stock option exercise price per share				$ 0.27
Stock options exercisable period				10 years
Number of shares granted fully vested common stock option				205,000
Volatility rate				112.00%
Value of call option per share				$ 0.21
Value of option				$ 43,057
Stock based compensation expense							$ 43,057
President and COO [Member]
Stock option exercise price per share			$ 0.27
Option to purchase shares of common stock for services			500,000
Stock options exercisable period			10 years
Volatility rate			112.00%
Value of call option per share			$ 0.2094
Value of option			$ 104,698
Stock based compensation expense							104,698
Chief Scientist [Member]
Stock option exercise price per share				$ 0.27
Stock options exercisable period				10 years
Number of shares granted fully vested common stock option				100,000
Volatility rate				112.00%
Value of call option per share				$ 0.21
Value of option				$ 21,004
Stock based compensation expense							$ 21,004
Two Option Holder [Member]
Share issued in exercise stock option	500,000	37,500
Stock option exercise price per share	$ 0.181	$ 0.22
Common stock shares issued	317,172	21,000
2012 Stock Incentive Plan [Member]
Number of shares issued under stock plan					11,500,000

Common Stock Warrants (Details

Common Stock Warrants (Details Narrative) - USD ($)	Jan. 03, 2018	Jan. 02, 2018	Dec. 20, 2017	Dec. 14, 2017	Mar. 31, 2018	Dec. 31, 2017
Number of warrants outstanding	71,428
Warrants exercise price per share	$ 0.26
Number issuance of common stock, shares	34,285	21,000
Common Stock Warrant [Member]
Number of warrants outstanding			50,000	347,245	5,768,239
Warrants exercise price per share			$ 0.26	$ 0.26
Warrant term			36 months	36 months
Number of warrant for sale			100,000	694,489
Proceeds from issuance of warrant			$ 18,000	$ 125,008
Common Stock One [Member]
Number of warrants outstanding						200,000
Warrants exercise price per share						$ 0.30
Number of warrant for sale				277,800
Common Stock Two [Member]
Number of warrants outstanding						300,000
Warrants exercise price per share						$ 0.45

Other Income - Schedule of Othe

Other Income - Schedule of Other Income (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Other Income and Expenses [Abstract]
Settlement income on license agreement				$ 250,000
Rental income on subleases			38,400	1,500
Restitution income			4,500	8,500
Other income	$ 22,200	$ 106,000	$ 42,900	$ 260,000

Income Tax (Details Narrative)

Income Tax (Details Narrative)	6 Months Ended
	Mar. 31, 2018USD ($)
Income Tax Disclosure [Abstract]
Net operating loss carry forwards	$ 7,467,000
Operating loss expiration year	2,031

Subsequent Events (Details Narr

Subsequent Events (Details Narrative) - USD ($)	Apr. 13, 2018	Apr. 12, 2018	Apr. 10, 2018	Jan. 03, 2018	Jan. 02, 2018	Dec. 20, 2017	Dec. 14, 2017
Number of units sold						10	13.89
Common stock shares issued				34,285	21,000
Warrants exercise price per share				$ 0.26
Subsequent Event [Member]
Number of units sold	14	28	27.78
Common stock shares issued	140,000	280,000	277,778
Number of warrants outstanding	70,000	140,000	138,889
Warrants exercise price per share	$ 0.30	$ 0.30	$ 0.30
Warrant term	36 months	36 months	36 months
Proceeds from issuance of warrant	$ 25,200	$ 50,400	$ 50,000