Digipath Announces Results for Second Fiscal Quarter 2020, Revenues Grow 16% and 21% on a Year to Date Basis

As an Essential Business, Digipath Remains Open to Serve Customers

LAS VEGAS, NV, May 18, 2020 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE – Digipath, Inc. (OTCQB: DIGP) (“DIGP” or the “Company”), a service-oriented independent analytical testing laboratory, data analytics and technology firm focused on the cannabis and hemp markets, today announced results for the three and six month periods ending March 31, 2020, which includes a 16% increase in revenue to $754,982 for the second quarter of 2020, compared to $651,555 in the second quarter of 2019; and gross profit of $661,402, or 42%, for the six month period ending March 31, 2020.

Second Fiscal Quarter 2020 Company Highlights

• During these unprecedented times we’ve been fortunate to be deemed an essential business that has been able to continue to serve the community
• We also completed the acquisition of VSSL Enterprises, Ltd. (“VSSL”) on March 11, 2020
• Second quarter revenues increased by $103,427, or 16%, on a year-over-year basis
• Gross margins of 34% were consistent with the prior year’s second fiscal quarter
• Adjusted EBITDA improved by $157,257 on a year over year basis, as the first six months of 2020 was ($309,280), compared to Adjusted EBITDA of ($466,537) for the comparative six-month period ending March 31, 2019
• Net loss decreased to $829,570, compared to $913,639 for the comparative six months ending March 31, 2019, an improvement of $84,069, or 9%

The full quarterly filing can be found on our website: Digipath SEC Filings

Management Comment

Kyle Remenda, Digipath’s President and CEO, commented, “Prior to the COVID-19 pandemic we were on pace to have our best year ever. While that will be more difficult now due to declining tourism, we’ve been very fortunate to temper the widespread business disruption as an ‘essential business’ and aren’t just looking to survive, but really to thrive. We believe the laboratory business presents extremely favorable opportunities in that regard.

“Additionally, we’re exploring some exciting opportunities in Canada through VSSL. I’m very proud of the company that I helped build over the years and am looking forward to helping Digipath carry it to its fullest potential.”

The table below shows the interim results and key metrics:

	Quarterly Data				Quarterly Data
	FYE September 30, 2020				FYE September 30, 2019
	Q2 2020		Q1 2020		Q2 2019		Q1 2019
Revenues (Thousands)	$         755		$         809		$         652		$         642
Revenue Growth (%YOY)	15.9%		26.0%		11.7%		-42.6%
Gross Profit Margins (%)	34.2%		49.9%		34.3%		24.9%
Quick Ratio (%)	19.1%		27.6%		292.6%		158.0%
Adjusted EBITDA Return on Assets (%)	-10.9%		-2.5%		-12.0%		-16.4%

Adjusted EBITDA

We define Adjusted EBITDA as net earnings (loss) before (i) other income (expense), (ii) interest expense, (iii) bad debts, (iv) depreciation and amortization, (v) non-cash expenses relating to share-based payments recognized under ASC Topic 718, and (vi) amortization of debt discounts. We believe the use of this non-GAAP financial measure provides useful information to investors regarding our current financial performance; however, Adjusted EBITDA does not represent, and should not be considered an alternative to GAAP measurements. Specifically, we believe Adjusted EBITDA results provide useful information to both management and investors by excluding certain income and expenses that our management believes are not indicative of our core operating results, we believe that non-GAAP financial measures have limitations and do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that Adjusted EBITDA should only be used to evaluate our results of operations in conjunction with the corresponding GAAP financial measures. A reconciliation of Adjusted EBITDA to net loss is included below:

DIGIPATH, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA TO NET LOSS
(Unaudited)
	For the Three Months Ended				For the Six Months Ended
	March 31,				March 31,
	2020		2019		2020		2019
Net loss	$       (609,143)		$       (451,465)		$       (829,570)		$       (913,639)
Add back:
Other income	(21,000)		(22,250)		(42,000)		(72,650)
Interest expense	35,873		18,003		65,434		28,756
Bad debts expense	117,870		25,265		161,120		49,830
Depreciation and amortization	85,297		64,390		156,171		128,771
Stock based compensation	120,586		143,574		163,013		299,409
Amortization of debt discounts	8,231		8,140		16,552		12,986
Adjusted EBITDA	$       (262,286)		$       (214,343)		$       (309,280)		$       (466,537)

About Digipath, Inc. (OTCQB: DIGP)

Digipath, Inc., supports the cannabis industry’s best practices for reliable testing, data acquisition, formulations, and new canna-tech to the cannabis industry.

Digipath Labs provides pharmaceutical-grade analysis and testing to the cannabis industry to ensure producers, consumers, and patients know exactly what is in the cannabis they ingest and to help maximize the quality of its client’s products through analysis, research, development, and standardization.

Information about Forward-Looking Statements

This press release contains “forward-looking statements” that include information relating to future events. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or management's good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in, or suggested by, the forward-looking statements. Important factors that could cause these differences include, but are not limited to: the Company's need for additional funding, the demand for the Company's products, governmental regulation of the cannabis industry, the Company's ability to maintain customer and strategic business relationships, the impact of competitive products and pricing, growth in targeted markets, the adequacy of the Company's liquidity and financial strength to support its growth, and other risks that may be detailed from time-to-time in the Company's filings with the United States Securities and Exchange Commission. For a more detailed description of the risk factors and uncertainties affecting Digipath, please refer to the Company's recent Securities and Exchange Commission filings, which are available at www.sec.gov. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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