Digipath, Inc. Announces Results for the Fiscal First Quarter 2019

LAS VEGAS, Feb. 14, 2019 /PRNewswire/ -- Digipath, Inc. (OTCQB: DIGP) ("DIGP" or the "Company"), a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, today announced financial and operating results for the three months ended December 31, 2018.

First Fiscal Quarter 2019 Company Highlights

• First quarter sales of $642,116 increased by $25,830, or 4%, on a quarter-over-quarter basis, from the fourth quarter's sales of $616,286, but decreased by $476,670 on a year-over-year basis. Revenue for the comparative first fiscal quarter ending December 31, 2017 was skewed due to a spike in revenues as a result of the temporary suspension by regulators of two of Digipath's competitors during that period.
• For the first quarter of 2019, operating activities used $366,237 of cash, and investing activities used $50,000 of cash, while financing activities provided $500,000 of cash.
• Adjusted EBITDA for the first quarter was ($252,194), compared to Adjusted EBITDA of $371,753 for the previous fiscal quarter ending December 31, 2017, a decline of $623,947 on a year over year basis, which was impacted by costs for implementing ISO-17025:2017 standards, and the increased competition from the labs that were no longer serving suspensions.
• Gross margin decreased to 24.9%, from 66.3% for the prior year, as a result of the additional costs noted above.
• Net loss increased to $462,174, compared to $179,017 for the comparative quarter ending December 31, 2017, an increase of $283,157, or 158%.
• Working capital of $320,359 for the first quarter, which included $259,790 of cash, increased by $262,888 over the previous quarter.

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

Management Comment

Todd Denkin, Digipath's President & CEO, commented, "Our first fiscal quarter of 2019 continued to show solid quarterly growth from our Nevada operations. We are now actively working to streamline operations, while aggressively working on our expansion initiatives. With much of the original costs to perfect our testing model and make it more efficient now behind us, we believe now is the ideal time to bring our talents to the California and international markets."

The table below shows the preliminary results and key metrics:

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:

About Digipath, Inc. (OTCQB: DIGP)

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

Digipath Investor Relations & Financial Media
info@integrityir.com
Toll Free: (888) 216-3595
www.IntegrityIR.com

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SOURCE Digipath, Inc.