Digipath, Inc. Announces Third Fiscal Quarter 2017 Results

LAS VEGAS, Aug. 16, 2017 /PRNewswire/ -- Digipath, Inc. (OTCQB: DIGP) ("DIGP" or the "Company"), a service oriented independent testing laboratory and media firm focused on the developing cannabis market, today announced financial and operating results for the fiscal third quarter and nine months ended June 30, 2017.

Fiscal Third Quarter 2017 Company Highlights

• Ended quarter debt free with $201,759 of working capital, including $113,963 of cash on hand
• Nine months sales were $1,296,115, an increase of 155% on a year-over-year basis
• Third quarter sales of $389,315 declined by 22% as a leveling off followed record sales in our second fiscal quarter ended June 30, 2017, as customers accelerated testing in order to complete sales prior to a sales tax increase, which caused revenues to cluster in the second fiscal quarter
• Reduced our net loss by 63% and 77% for the three and nine months, respectively, over the comparative periods in 2016
• Adjusted EBITDA for the quarter was $(142,146), compared to Adjusted EBITDA of $(58,428) for the previous fiscal quarter
• Adjusted EBITDA for the nine months ended June 30, 2017 was $(287,211), compared to Adjusted EBITDA of $(785,039) for the comparative nine months ended June 30, 2016, an improvement of approximately 63% on a year-over-year basis

The table below shows the preliminary results and key metrics (revenue data pertains to our Nevada lab operations only):

Management Comment

Todd Denkin, Digipath's President & COO, commented, "Our results for the third fiscal quarter of 2017 show continued strong growth on a year-over-year basis, as our cannabis testing operations in Las Vegas continue to increase. Despite a decline in fiscal third quarter revenues, the roll out of recreational cannabis that became effective in Nevada on July 1, 2017 is expected to dramatically increase consumer demand. With over 40 million annual visitors to Nevada, increased consumer demand for legal cannabis is expected to drive more growers to meet this demand, resulting in a significant increase in cannabis lab testing services. We expect that our superior customer service and ability to provide a quick 48-hour turn-around time for results will enable us to maintain the market share advantage we've enjoyed to date."

Adjusted EBITDA

We define Adjusted EBITDA as net earnings (loss) before (i) other income (expense), (ii) interest income, (iii) interest expense, (iv) bad debts, (v) depreciation and amortization, (vi) impairment of development costs, (vii) non-cash expenses relating to share based payments recognized under ASC Topic 718, (viii) gain on early extinguishment of debt, and (ix) equity in losses of unconsolidated entity. 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:

About Digipath, Inc. (OTCQB: DIGP)

Digipath, Inc., supports the cannabis industry's best practices for reliable cannabis testing, education and data acquisition, and brings unbiased cannabis news coverage to the cannabis industry.

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.

Contact
Harrison Phillips
Viridian Capital Advisors, LLC
(212) 209-3086
hphillips@viridianca.com

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SOURCE DigiPath, Inc.