10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended March 31, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 000-54239

Digipath, Inc.

(Exact name of registrant issuer as specified in its charter)

Nevada	27-3601979
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6450 Cameron St Suite 113 Las Vegas, NV	89118
(Address of principal executive offices)	(zip code)

(702) 527-2060

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

The number of shares of registrant’s common stock outstanding as of May 16, 2022 was 75,146,820.

TABLE OF CONTENTS

		Page
		No.
PART I - FINANCIAL INFORMATION		3
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, 2022 (Unaudited) and September 30, 2021	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2022 and 2021 (Unaudited)	4
	Condensed Consolidated Statements of Stockholders’ Deficit for the Three and Six Months Ended March 31, 2022 and 2021 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2022 and 2021 (Unaudited)	6
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	23
ITEM 4.	CONTROLS AND PROCEDURES	23
PART II – OTHER INFORMATION		24
ITEM 1.	Legal Proceedings	24
ITEM 1A.	RISK FACTORS	24
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	24
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	24
ITEM 4.	MINE SAFETY DISCLOSURES	24
ITEM 5.	OTHER INFORMATION	24
ITEM 6.	EXHIBITS	25
	SIGNATURES	26

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

DIGIPATH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			September 30,
	2022			2021
	(Unaudited)
Assets
Current assets:
Cash	$	82,769		$	295,932
Accounts receivable, net		259,268			214,900
Note receivable		1,029,227			230,959
Other current assets		27,241			24,751
Deposits		71,093			60,353
Total current assets		1,469,598			826,865
Right-of-use asset		366,089			413,884
Fixed assets, net		534,435			647,252
Total non-current assets		900,524			1,061,136
Total Assets	$	2,370,122		$	1,888,001
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	419,500		$	370,977
Accrued expenses		359,274			220,002
Current portion of operating lease liabilities		98,281			93,601
Current portion of finance lease liabilities		3,822			20,379
Current maturities of convertible notes payable		1,700,650			1,050,000
Current maturities of notes payable		486,458			259,425
Total current liabilities		3,067,985			2,014,384
Non-current liabilities:
Operating lease liabilities		279,981			330,151
Notes payable		474,166			339,516
Convertible notes payable, net of discounts of $-0- and $8,322 at March 31, 2022 and September 30, 2021, respectively		-			257,282
Total non-current liabilities		754,147			926,949
Total Liabilities		3,822,132			2,941,333
Series B convertible preferred stock, $0.001 par value, 1,500,000 shares authorized; 333,600 and zero shares issued and outstanding as of March 31, 2022 and September 30, 2021 respectively		333,600			-
Stockholders’ Equity (Deficit):
Series A convertible preferred stock, $0.001 par value, 6,000,000 shares authorized; 1,047,942 and 1,325,942 shares issued and outstanding as of March 31, 2022 and September 30, 2021, respectively		1,048			1,326
Common stock, $0.001 par value, 250,000,000 shares authorized; 75,146,820 and 71,230,153 shares issued and outstanding at March 31, 2022 and September 30 2021, respectively		75,147			71,230
Additional paid-in capital		16,753,769			16,825,765
Accumulated deficit		(18,615,574	)		(17,951,653	)
Total Stockholders’ Deficit		(1,785,610	)		(1,053,332	)
Total Liabilities and Stockholders’ Deficit	$	2,370,122		$	1,888,001

See accompanying notes to financial statements.

3

DIGIPATH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	March 31,						March 31,
	2022			2021			2022			2021
Revenues	$	604,735		$	633,160		$	1,304,320		$	1,133,545
Cost of sales		396,032			416,915			818,633			837,800
Gross profit		208,703			216,245			485,687			295,745
Operating expenses:
General and administrative		235,470			211,961			476,434			437,011
Professional fees		286,390			107,819			554,861			222,363
Change in allowance for doubtful accounts		16			(106,155	)		(2,123	)		(17,985	)
Total operating expenses		521,876			213,625			1,029,172			641,389
Operating loss		(313,173	)		2,620			(543,485	)		(345,644	)
Other income (expense):
Interest income		15,295			47,918			24,675			47,918
Interest expense		(75,718	)		(32,337	)		(145,111	)		(74,710	)
Total other income (expense)		(60,423	)		15,581			(120,436	)		(26,792	)
Net income (loss)	$	(373,596	)	$	18,201		$	(663,921	)	$	(372,436	)
Weighted average number of common shares outstanding – basic		74,019,042			65,418,890			73,194,439			61,882,937
Weighted average number of common shares outstanding – fully diluted		74,019,042			114,702,490			73,194,439			61,882,937
Net loss per share – basic	$	(0.00	)	$	0.00		$	(0.01	)	$	(0.01	)
Net loss per share – diluted	$	(0.00	)	$	0.00		$	(0.01	)	$	(0.01	)

See accompanying notes to financial statements.

4

DIGIPATH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

	Series B				Series A
	Convertible				Convertible										Additional						Total
	Preferred Stock				Preferred Stock						Common Stock				Paid-in			Accumulated			Stockholders’
	Shares		Amount		Shares			Amount			Shares		Amount		Capital			(Deficit)			Deficit
Balance, September 30, 2021		-	$	-		1,325,942		$	1,326			71,230,153	$	71,230	$	16,825,765		$	(17,951,653	)	$	(1,053,332	)
Purchase of Series B Preferred shares		55,600		55,600		-			-			-		-		-			-			-
Conversion of Series A Preferred into Series B Preferred		278,000		278,000		(278,000	)		(278	)		-		-		(277,722	)		-			(278,000	)
Stock-based compensation		-		-		-			-			1,500,000		1,500		97,179			-			98,679
Net loss		-		-		-			-			-		-		-			(290,325	)		(290,325	)
Balance, December 31, 2021		333,600		333,600		1,047,942			1,048			72,730,153		72,730		16,645,222			(18,241,978	)		(1,522,978	)
Common Shares issued for settlement of AP		-		-		-			-			250,000		250		7,250			-			7,500
Stock-based compensation		-		-		-			-			2,166,667		2,167		101,297			-			103,464
Net loss		-		-		-			-			-		-		-			(373,596	)		(373,596	)
Balance, March 31, 2022		333,600	$	333,600		1,047,942		$	1,048			75,146,820	$	75,147	$	16,753,769		$	(18,615,574	)	$	(1,785,610	)

	Series B Convertible				Series A Convertible								Additional					Total
	Preferred Stock				Preferred Stock				Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		(Deficit)			Deficit
Balance, September 30, 2020		-	$	-		1,325,942	$	1,326		58,270,567	$	58,271	$	16,116,400	$	(17,265,150	)	$	(1,089,153	)
Common stock sold for cash		-		-		-		-		900,000		900		19,350		-			20,250
Common stock issued for debt conversion		-		-		-		-		3,666,668		3,666		106,334		-			110,000
Stock-based compensation		-		-		-		-		1,228,155		1,228		42,832		-			44,060
Net loss		-		-		-		-		-		-		-		(390,637	)		(390,637	)
Balance, December 31, 2020		-		-		1,325,942		1,326		64,065,390		64,065		16,284,916		(17,655,787	)		(1,305,480	)
Common stock issued for debt conversion		-		-		-		-		3,000,000		3,000		87,000		-			90,000
Stock-based compensation - related parties		-		-		-		-		866,430		867		56,157		-			57,024
Stock-based compensation		-		-		-		-		250,000		250		29,647		-			29,897
Net income		-		-		-		-		-		-		-		18,201			18,201
Balance, March 31, 2021		-	$	-		1,325,942	$	1,326		68,181,820	$	68,182	$	16,457,720	$	(17,637,586	)	$	(1,110,358	)

5

DIGIPATH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months Ended
	March 31,
	2022			2021
Cash flows from operating activities
Net loss	$	(663,921	)	$	(372,436	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in allowance for doubtful accounts		(2,123	)		(17,985	)
Depreciation and amortization expense		117,063			159,209
Loss on disposal of fixed assets		-			2,227
Gain on early extinguishment of debt		-			(40,338	)
Stock-based compensation		202,143			130,981
Amortization of debt discounts		39,103			8,322
Decrease (increase) in assets:
Accounts receivable		(42,245	)		49,400
Other current assets		(35,416	)		12,677
Deposits		(2,490	)		-
Right-of-use assets		47,795			45,308
Increase (decrease) in liabilities:
Accounts payable		56,023			(58,639	)
Accrued expenses		139,272			27,814
Lease liabilities		(45,490	)		(41,143	)
Net cash (used) in operating activities		(190,286	)		(94,603	)
Cash flows from investing activities
Purchase of fixed assets		(4,246	)		(1,206	)
Advance of note receivable		(773,622	)		-
Net cash (used) in investing activities		(777,868	)		(1,206	)
Cash flows from financing activities
Principal payments on finance lease		(16,557	)		(16,715	)
Principal payments on note payable, equipment financing		(28,317	)		(26,769	)
Proceeds from short term advances		-			40,000
Proceeds from notes payable		390,000			-
Proceeds from convertible notes		394,265			110,000
Payments on convertible notes		(40,000	)
Proceeds from sale of common stock		-			20,250
Proceeds from sale of preferred stock		55,600			-
Net cash provided by financing activities		754,991			126,766
Net increase (decrease) in cash		(213,163	)		30,957
Cash - beginning		295,932			82,749
Cash - ending	$	82,769		$	113,706
Supplemental disclosures:
Interest paid	$	42,809		$	32,294
Income taxes paid		-			-
Non-cash investing and financing activities:
Common stock issued for debt conversion	$	-		$	110,000
Fixed assets acquired with note payable, equipment financing	$	-		$	200,000
Common stock issued for settlement of accounts payables	$	7,500		$	-
Conversion of Series A preferred into Series B preferred	$	278,000		$	-

6

DIGIPATH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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”) is a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, and supports the cannabis industry’s best practices for reliable testing, cannabis education and training. Our mission is to provide pharmaceutical-grade analysis and testing to the cannabis industry, under ISO-17025:2017 guidelines, to ensure consumers and patients know exactly what is in the cannabis they ingest and to help maximize the quality of our clients’ products through research, development, and standardization. Digipath has been operating a cannabis-testing lab in Nevada since 2015 and hopes to open labs in other states that have legalized the sale of cannabis, beginning with California or Arizona.

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, 2021. 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, 2022:

	Jurisdiction of
Name of Entity(1)	Incorporation	Relationship
Digipath, Inc.(2)	Nevada	Parent
Digipath Labs, Inc.	Nevada	Subsidiary
Digipath Labs CA, Inc.(3)	California	Subsidiary
Digipath Labs S.A.S.(4)	Colombia	Subsidiary
VSSL Enterprises, Ltd.(5)	Canada	Subsidiary
TNM News Corp.(6)	Nevada	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⁾ Formed during the second fiscal quarter of 2021, but has not yet commenced significant operations.

⁽⁴⁾ Formed during the first fiscal quarter of 2019, but has not yet commenced significant operations.

⁽⁵⁾ Acquired on March 11, 2020.

⁽⁶⁾ Minimal activity, dissolved on July 28, 2021.

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.

7

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 recognizes revenue in accordance with ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

Revenue is primarily generated through our subsidiary, Digipath Labs, Inc., which recognizes revenue from the analytical testing of cannabis products for licensed producers and cultivators within the state of Nevada on a determinable fixed fee per test, or panel of tests basis. Revenue from the performance of those services is recognized upon completion of the tests, at which time test results are delivered to the customer, provided collectability of the fee is reasonably assured. We typically require payment within thirty days of the delivery of results. Management estimates an allowance for doubtful accounts based on the aging of its receivables.

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 2018-07 (ASC 2018-07). 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.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity). ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock, which results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Additionally, ASU 2020-06 affects the diluted earnings per share calculation for instruments that may be settled in cash or shares and for convertible instruments and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity's own equity. ASU 2020-06 allows entities to use a modified or full retrospective transition method and is effective for smaller reporting companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is evaluating the impact that this ASU may have on its consolidated financial statements.

Note 2 – Going Concern

As shown in the accompanying condensed consolidated financial statements, as of March 31, 2022, the Company had negative working capital of $1,598,387, accumulated recurring losses of $18,615,574, and only $82,769 of cash on hand, which is not 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 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.

Note 3 – Fair Value of Financial Instruments

The Company discloses the fair value of certain assets and liabilities in accordance with ASC 820 – Fair Value Measurement (“ASC 820”). 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.

8

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, 2022 and September 30, 2021, respectively:

	Fair Value Measurements at March 31, 2022
	Level 1		Level 2		Level 3
Assets
Cash	$	82,769	$	-	$	-
Liabilities
Lease liabilities		-		-		382,084
Notes payable		-		960,624		-
Convertible notes payable		-		-		1,700,650

	Fair Value Measurements at September 30, 2021
	Level 1		Level 2		Level 3
Assets
Cash	$	295,932	$	-	$	-
Liabilities
Lease liabilities		-		-		444,131
Notes payable		-		598,941		-
Convertible notes payable, net of discounts of $98,188		-		-		1,307,282

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, 2022 or the year ended September 30, 2021.

Note 4 – Note Receivable

On various dates between December 28, 2018 and June 13, 2019, we loaned Northwest Analytical Labs, Inc. a total of $95,000. The loans bear interest at an annual rate of 10%, are evidenced by secured demand notes, and are secured by a lien on the borrower’s assets. An allowance for doubtful accounts for the full value of the notes has been recorded due to the uncertainty of collectability.

On various dates between August 23, 2021 and March 31, 2022, we loaned C3 Labs, Inc. (“C3 Labs”) a total of $1,003,622. The loans bear interest at an annual rate of 8%. These loans are evidenced by secured demand notes, and are secured by a lien on the borrower’s assets and have a maturity date of August 23, 2022. The Company has recorded interest income of $15,120 during the six months ended March 31, 2022 with total accrued interest of $25,605 as of March 31, 2022.

The loans were made in connection with a potential acquisition of a controlling interest in C3 Labs. On March 11, 2022, the Company notified C3 Labs of its termination of the letter of intent. The Company is currently in possession of equipment of C3 Labs, which it is in the process of liquidating. The Company anticipates that the proceeds of such liquidation will be sufficient to repay the Company in full all amounts owed to it by C3 Labs under the secured loans.

9

Note 5 – Fixed Assets

Fixed assets consist of the following at March 31, 2022 and September 30, 2021:

	March 31,			September 30,
	2022			2021
Software	$	125,903		$	125,903
Office equipment		71,601			71,601
Furniture and fixtures		29,879			29,879
Lab equipment		1,455,479			1,453,716
Leasehold improvements		496,600			494,117
Lab equipment held under capital leases		99,193			99,193
		2,278,655			2,274,409
Less: accumulated depreciation		(1,744,220	)		(1,627,157	)
Total	$	534,435		$	647,252

Depreciation and amortization expense totalled $117,063 and $159,209 for the six months ended March 31, 2022 and 2021, respectively.

Note 6 – Leases

The Company leases its operating and office facility under a non-cancellable real property lease agreement that expires on August 31, 2025. The Company also has a financing lease for lab equipment subject to the recently adopted ASU 2016-02. In the locations in which it is economically feasible to continue to operate, management expects to enter into a new lease upon expiration. The real property lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s leases do not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

The components of lease expense were as follows:

	For the Six		For the Six
	Months Ended		Months Ended
	March 31,		March 31,
	2022		2021
Operating lease cost	$	59,436	$	21,644
Finance lease cost:
Amortization of assets		17,329		45,308
Interest on lease liabilities		1,223		14,129
Total net lease cost	$	18,552	$	59,437

Supplemental balance sheet information related to leases was as follows:

	March 31,			September 30,
	2022			2021
Operating leases:
Operating lease assets	$	366,089		$	413,884
Current portion of operating lease liabilities		98,281		$	93,601
Noncurrent operating lease liabilities		279,981			330,151
Total operating lease liabilities	$	378,262		$	423,752
Finance lease:
Equipment, at cost	$	99,193		$	99,193
Accumulated amortization		(49,596	)		(36,677	)
Equipment, net	$	49,597		$	74,395
Current portion of finance lease liabilities	$	3,822		$	20,379
Noncurrent finance lease liabilities		-			-
Total finance lease liabilities	$	3,822		$	20,379
Weighted average remaining lease term:
Operating leases		3.42 years			3.92 years
Finance leases		0.05 years			1.55 years
Weighted average discount rate:
Operating leases		5.75	%		5.75	%
Finance lease		18.41	%		18.41	%

10

Supplemental cash flow and other information related to leases was as follows:

	For the Six		For the Six
	Months Ended		Months Ended
	March 31,		March 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	45,490	$	41,143
Financing cash flows used for finance leases	$	16,557	$	16,715
Leased assets obtained in exchange for lease liabilities:
Total operating lease liabilities	$	-	$	528,616
Total finance lease liabilities	$	-	$	99,193

The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities on a fiscal year basis, including common area maintenance fees, under non-cancellable operating leases as of March 31, 2022:

Fiscal Year Ending	Minimum Lease
September 30,	Commitments
2022 (for the six months remaining)	$	58,419
2023		119,468
2024		123,543
2025		116,892
2026		-
Total future undiscounted lease payments		418,322
Less interest		40,060
Present value of lease payments		378,262
Less current portion		98,281
Long-term operating lease liabilities	$	279,981

Future minimum annual lease payments required under the finance lease and the present value of the net minimum lease payments are as follows at March 31, 2022:

	Finance
	Leases
2022	$	3,865
2023		-
Total minimum lease payments		3,865
Less interest		43
Present value of lease liabilities		3,822
Less current portion		3,822
Long-term finance lease liabilities	$	-

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Note 7 –Notes Payable

Notes payable consists of the following at March 31, 2022 and September 30, 2021, respectively:

	March 31,			September 30,
	2022			2021
On September 10, 2021, the Company, entered into a Secured Promissory note for $675,000 from US Canna Lab I, LLC, (the “Company Canna Lab Note”). The Company Canna Lab Note carries interest at 12% per annum, and is due on September 10, 2024 with monthly principal and interest payments of $22,419.66 beginning on October 1, 2021. As of March 31, 2022, a total $675,000 of the funds have been advanced to the Company. In addition, the Company was advanced an additional $115,000 of funds under the same terms as the original note.	$	790,000		$	400,000
On December 26, 2019, the Company financed the purchase of $377,124 of lab equipment, in part, with the proceeds of a bank loan in the amount of $291,931. The loan bears interest at the rate of 5.75% per annum and requires monthly payments of $5,622 over the five-year term of the loan ending on December 26, 2024. The Company’s obligations under this loan are secured by a lien on the purchased equipment.		170,624			198,941
Total notes payable		960,624			598,941
Less: current maturities		(486,458	)		(259,425	)
Notes payable	$	474,166		$	339,516

The Company recorded interest expense pursuant to the stated interest rate and closing costs on the notes payable in the amount of $41,277 and $7,970 during the six months ended March 31, 2022 and 2021, respectively.

12

Note 8 – Convertible Notes Payable

Convertible notes payable consists of the following at March 31, 2022 and September 30, 2021, respectively:

	March 31,			September 30,
	2022			2021
On February 11, 2020, the Company completed the sale to an accredited investor of a 9% Secured Convertible Promissory Note in the principal amount of $50,000. The Note matures on August 11, 2022, bears interest at a rate of 9% per annum, and was convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. On December 28, 2020, the conversion price was amended to $0.03 per share in exchange for an additional $10,000 of proceeds and the promissory note was increased to $60,000. The Company’s obligations under the Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc., pursuant to a Security Agreement between the Company, Digipath Labs, Inc. and the investor. On December 29, 2020, the note holder converted $10,000 of principal into 333,334 shares of common stock at a conversion price of $0.03 per share.	$	50,000		$	50,000
On February 11, 2020, the Company completed the sale to an accredited investor of a 9% Secured Subordinated Convertible Promissory Note in the principal amount of $150,000. The Note matures on August 11, 2022, bears interest at a rate of 9% per annum, and was convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. On December 28, 2020, the conversion price was amended to $0.03 per share in exchange for an additional $50,000 of proceeds and the promissory note was increased to $200,000. The Company’s obligations under the Note are secured by subordinated lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc., pursuant to a Security Agreement between the Company, Digipath Labs, Inc. and the investor. On December 29, 2020, the note holder converted $50,000 of principal into 1,666,667 shares of common stock at a conversion price of $0.03 per share.		150,000			150,000
On February 10, 2020, the Company completed the sale to an accredited investor of a 9% Secured Convertible Promissory Note in the principal amount of $350,000. The Note matures on August 10, 2022, bears interest at a rate of 9% per annum, and was convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. On December 28, 2020, the conversion price was amended to $0.03 per share in exchange for an additional $50,000 of proceeds and the promissory note was increased to $400,000. The Company’s obligations under the Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc., pursuant to a Security Agreement between the Company, Digipath Labs, Inc. and the investor. On December 29, 2020, the note holder converted $50,000 of principal into 1,666,667 shares of common stock at a conversion price of $0.03 per share.		350,000			350,000
On September 23, 2019, the Company received proceeds of $200,000 on a senior secured convertible note that carries an 8% interest rate, which matures on August 10, 2022, as amended. The principal and interest were convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.11 per share. On September 30, 2020, the maturity date was extended to August 10, 2022 and the conversion price was amended to $0.03 per share. The Company’s obligations under this Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc. On February 22, 2021, the noteholder converted $90,000 of principal into 3,000,000 shares of common stock at a conversion price of $0.03 per share. On September 30, 2021 the note was amended to add outstanding short term notes and accrued interest into the principal balance, making the outstanding balance 355,470, as amended. As a result of the modification, the Company recorded an additional debt discount of $98,188 as a result of the beneficial conversion feature of the additional principal. During the six months ended March 31, 2022, the Company repaid $40,000 of the balance of this note. In addition, during the six months ended March 31, 2022, the Company was advanced additional loans of $394,265 from the lender under the same terms.		709,735			355,470
On November 8, 2018, the Company received proceeds of $350,000 on a senior secured convertible note that carries an 8% interest rate, which matures on August 10, 2022, as amended. The principal and interest were convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.14 per share. On September 30, 2020, the maturity date was extended to August 10, 2022 and the conversion price was amended to $0.03 per share. The Company’s obligations under this Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc.		350,000			350,000
On November 5, 2018, the Company received proceeds of $150,000 on a senior secured convertible note that carries an 8% interest rate, which matures on August 10, 2022, as amended. The principal and interest were convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.14 per share. On September 30, 2020, the maturity date was extended to August 10, 2022 and the conversion price was amended to $0.03 per share. The Company’s obligations under this Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc.		150,000			150,000
Total convertible notes payable		1,759,735			1,407,470
Less: unamortized debt discounts		(59,085	)		(98,188	)
		1,700,650			1,307,282
Less: current maturities		1,700,650			1,050,000
Convertible notes payable	$	-		$	257,282

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In addition, the Company recognized and measured the embedded beneficial conversion feature present in the convertible notes by allocating a portion of the proceeds equal to the intrinsic value of the feature to additional paid-in-capital. The intrinsic value of the feature was calculated on the commitment date using the effective conversion price of the convertible notes. This intrinsic value is limited to the portion of the proceeds allocated to the convertible debt.

The aforementioned accounting treatment resulted in a total debt discount equal to $98,188. The discount is amortized on a straight-line basis from the dates of issuance until the earlier of the stated redemption date of the debts, as noted above or the actual settlement date. The Company recorded debt amortization expense on the aforementioned debt discount in the amount of $39,103 for the six months ended March 31, 2022. Unamortized discount as of March 31, 2022 is $59,085.

All of the convertible notes limit the maximum number of shares that can be owned by each note holder as a result of the conversions to common stock to 4.99% of the Company’s issued and outstanding shares.

The Company recorded interest expense pursuant to the stated interest rates on the convertible notes in the amount of $46,380 and $51,802 for the six months ended March 31, 2022 and 2021, respectively.

The Company recognized interest expense for the six months ended March 31, 2022 and 2021, respectively, as follows:

	March 31,		March 31,
	2022		2021
Interest on short term loans	$	-	$	1,687
Interest on capital leases		6,603		4,929
Interest on notes payable		41,277		7,970
Amortization of beneficial conversion features		39,103		8,322
Interest on convertible notes		58,128		51,802
Total interest expense	$	145,111	$	74,710

Note 9 - 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”) and 1,500,000 have been designated as Series B Convertible Preferred Stock (“Series B Preferred”), with the remaining 2,500,000 shares available for designation from time to time by the Board as set forth below. As of March 31, 2022, there were 1,047,942 shares of Series A Preferred issued and outstanding and 333,600 shares of Series B 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. Each share of Series A Preferred is currently convertible into five shares of common stock and each share of Series B Preferred is currently convertible into twenty-five shares of common stock.

Series A

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 1,047,942 shares of Series A Preferred outstanding at March 31, 2022 are convertible into 5,239,710 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.

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Additional terms of the Series A Preferred and include the following:

● The shares of Series A Preferred are entitled to dividends when, as and if declared by the Board as to the shares of the common stock of the Company into which such Series A Preferred may then be converted, subject to the 4.99% beneficial ownership limitation described above.

● Upon the liquidation or dissolution of the Company, or any merger or sale of all or substantially all of the assets, the shares of Series A Preferred are entitled to receive, prior to any distribution to the holders of common stock, 100% of the purchase price per share of Series A Preferred plus all accrued but unpaid dividends.

● The Series A Preferred plus all declared but unpaid dividends thereon automatically will be converted into common stock, at the then applicable conversion rate, upon the affirmative vote of the holders of a majority of the outstanding shares of Series A Preferred.

● Each share of Series A Preferred will carry a number of votes equal to the number of shares of common stock into which such Series A Preferred may then be converted, subject to the 4.99% beneficial ownership limitation described above. The Series A Preferred generally will vote together with the common stock and not as a separate class, except as provided below.

● Consent of the holders of the outstanding Series A Preferred is required in order for the Company to: (i) amend or change the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of, the Series A Preferred; (ii) authorize, create or issue shares of any class of stock having rights, preferences, privileges or powers superior to the Series A Preferred; (iii) reclassify any outstanding shares into shares having rights, preferences, privileges or powers superior to the Series A Preferred; or (iv) amend the Company’s Articles of Incorporation or Bylaws in a manner that adversely affects the rights of the Series A Preferred.

● Pursuant to the Securities Purchase Agreements, holders of Series A Preferred are entitled to unlimited “piggyback” registration rights on registrations by the Company, subject to pro rata cutback at any underwriter’s discretion.

During the six months ended March 31, 2022, the Company offered the Series A Preferred shareholders the ability to convert their Preferred A shares into Preferred B shares for an additional investment of 20% of their initial Series A investment. One Series A shareholder agreed to invest additional cash proceeds of $55,600 for 55,600 Series B shares and converted 278,000 of their Series A into Series B.

Series B

The Series B Preferred were designated on December 29, 2021. Each share of Series B Preferred has a Stated Value of $1.00 and is currently convertible into common stock at a conversion price equal to $0.04. The conversion price of the Series B Preferred is subject to equitable adjustment in the event of a stock split, stock dividend or similar event with respect to the common stock, and in the event of the issuance of common stock by the Company below the conversion price, subject to customary exceptions. At the current conversion price, the 333,600 shares of Series B Preferred outstanding at March 31, 2022 are convertible into 8,340,000 shares of the common stock of the Company. No holder is permitted to convert its shares of Series B 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.

Additional terms of the Series B Preferred and include the following:

● The shares of Series B Preferred are not entitled to dividends, provided that if dividends are paid on the shares of common stock of the Company, the Series B Preferred will be entitled to dividends based on the number shares of common stock which the Series B Preferred may then be converted.

● Upon the liquidation or dissolution of the Company, or any merger or sale of all or substantially all of the assets, or upon a change in control whereby a stockholder gains control of 50% or more of the outstanding shares of common stock, the shares of Series B Preferred are entitled to receive, prior to any distribution to the holders of common stock, 100% of the purchase price per share of Series B Preferred plus all accrued but unpaid dividends.

● Each share of Series B Preferred carries a number of votes equal to the number of shares of common stock into which such Series B Preferred may then be converted.

Due to the change in control provision of the Series B Preferred, the Series B Preferred is classified as temporary equity on the balance sheet.

On December 30, 2021, the Company entered into an Exchange Agreement with one of the Company’s institutional investors (the “Investor”), pursuant to which the Investor exchanged 278,000 shares of the Series A Preferred for 278,000 shares of the Series B Preferred. In addition, on December 30, 2021, the Investor purchased 55,600 shares of Series B Preferred Stock at a price of $1.00 per share, resulting in gross proceeds to the Company of $55,600.

15

Common Stock

Common stock consists of $0.001 par value, 250,000,000 shares authorized, of which 75,146,820 shares were issued and outstanding as of March 31, 2022.

During the six months ended March 31, 2022, the Company issued 1,500,000 shares of its common stock in exchange for services rendered to the Company, by the chairman of the board of directors, with a total fair value $98,679 based on the closing price of the Company’s common stock on the dates of grant.

During the six months ended March 31, 2022, the Company issued 2,166,667 shares of its common stock in exchange for services rendered to the Company by third party consultants, with a total fair value $103,464 based on the closing price of the Company’s common stock on the dates of grant.

During the six months ended March 31, 2022, the Company issued 250,000 shares of its common stock to settle outstanding payables in the amount of $7,500.

Note 10 – 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 to purchase a total of 6,020,000 shares of common stock were outstanding as of March 31, 2022.

During the six months ended March 31, 2022, the Company issued to an unrelated third party, options to purchase 1,000,000 shares of its common stock in exchange for services rendered to the Company with a total fair value $33,716. The Company estimated the fair value using the Black-Scholes Pricing Model, based on a volatility rate of 186% and call option values of $0.0337 and exercise prices of $0.035.

Amortization of Stock-Based Compensation

A total of $53,739 and $41,126 of stock-based compensation expense was recognized during the six months ended March 31, 2022 and 2021, respectively, as a result of the vesting of common stock options issued. As of March 31, 2022 a total of $31,798 of unamortized expense remains to amortized over the vesting period.

The following is a summary of information about the stock options outstanding at March 31, 2022.

							Shares Underlying
Shares Underlying Options Outstanding							Options Exercisable
				Weighted
		Shares		Average	Weighted		Shares		Weighted
Range of		Underlying		Remaining	Average		Underlying		Average
Exercise		Options		Contractual	Exercise		Options		Exercise
Prices		Outstanding		Life	Price		Exercisable		Price
$	0.05 – $0.13		6,020,000	6.51 years	$	0.07		5,359,285	$	0.07

The following is a summary of activity of outstanding common stock options:

				Weighted
				Average
	Number			Exercise
	of Shares			Price
Balance, September 30, 2021		5,620,000		$	0.08
Options issued		1,000,000		$	0.04
Options forfeited		(600,000	)	$	0.11
Balance, March 31, 2022		6,020,000		$	0.07
Exercisable, March 31, 2022		5,359,285		$	0.07

As of March 31, 2022, these options in the aggregate had no intrinsic value as the per share market price of $0.023 of the Company’s common stock as of such date was less than the weighted-average exercise price of these options of $0.07.

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Note 11 – Common Stock Warrants

Warrants to purchase a total of 2,535,001 shares of common stock were outstanding as of March 31, 2022.

The following is a summary of information about our warrants to purchase common stock outstanding at March 31, 2022.

							Shares Underlying
Shares Underlying Warrants Outstanding							Warrants Exercisable
				Weighted
		Shares		Average	Weighted		Shares		Weighted
Range of		Underlying		Remaining	Average		Underlying		Average
Exercise		Warrants		Contractual	Exercise		Warrants		Exercise
Prices		Outstanding		Life	Price		Exercisable		Price
$	0.10 - 0.26		2,535,001	4.84 years	$	0.17		2,535,001	$	0.17

The following is a summary of activity of outstanding common stock warrants:

			Weighted
			Average
	Number		Exercise
	of Shares		Price
Balance, September 30, 2021		2,535,001	$	0.17
Warrants granted		-		-
Warrants expired		-		-
Balance, March 31, 2022		2,535,001	$	0.17
Exercisable, March 31, 2022		2,535,001	$	0.17

As of March 31, 2022, these warrants in the aggregate had no intrinsic value as the per share market price of $0.023 of the Company’s common stock as of such date was less than the weighted-average exercise price of these warrants of $0.17.

Note 12 – Commitments and Contingencies

Legal Contingencies

There are no material pending legal proceedings to which we are a party or to which any of our property is subject, nor are there any such proceedings known to be contemplated by governmental authorities. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The information contained in this Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended September 30, 2021 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.

The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Annual Report on Form 10-K for the year ended September 30, 2021 in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report.

Overview

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. Our mission is to provide pharmaceutical-grade analysis and testing to the cannabis industry, under ISO-17025:2017 guidelines, to ensure consumers and patients know exactly what is in the cannabis they ingest and to help maximize the quality of our clients’ products through research, development, and standardization. Digipath has been operating a cannabis-testing lab in Nevada since 2015 and has plans to open labs in other states that have legalized the sale of cannabis, beginning with California.

Results of Operations for the Three Months Ended March 31, 2022 and 2021:

The following table summarizes selected items from the statement of operations for the three months ended March 31, 2022 and 2021.

	Three Months Ended March 31,						Increase /
	2022			2021			(Decrease)
Revenues	$	604,735		$	633,160		$	(28,425	)
Cost of sales		396,032			416,915			(20,883	)
Gross profit		208,703			216,245			(7,542	)
Operating expenses:
General and administrative		235,470			211,961			23,509
Professional fees		286,390			107,819			178,571
Change in allowance for doubtful accounts		16			(106,155	)		106,171
Total operating expenses:		521,876			213,625			308,251
Operating income (loss)		(313,173	)		2,620			(315,793	)
Total other income (expense)		(60,423	)		15,581			(76,004	)
Net loss	$	(373,596	)	$	18,201		$	(391,797	)

Revenues

Aggregate revenues for the three months ended March 31, 2022 were $604,735, compared to revenues of $633,160 during the three months ended March 31, 2021, a decrease of $28,425 or 4%. The decrease in revenue was due to a slight decrease in tourism in Nevada during the current period as opposed to the same period in 2021.

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Cost of Sales

Cost of sales for the three months ended March 31, 2022 were $396,032, compared to $416,915 during the three months ended March 31, 2021, a decrease of $20,883, or 5%. Cost of sales consists primarily of labor, depreciation, maintenance on lab equipment, and supplies consumed in our testing operations. The decreased cost of sales in the current period was primarily due to our sales decrease of 4% as well as reducing our outsourced testing fees incurred during the current period. Our gross margins were approximately 35% during the three months ended March 31, 2022, compared to 34% during the three months ended March 31, 2021, which translated to $20,883 of decreased gross profit from our $28,425 of decreased revenues received in the current period.

General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2022 were $235,470 compared to $211,961 during the three months ended March 31, 2021, an increase of $23,509, or 11%. The expenses consisted primarily of marketing, rent, salaries and wages, and travel expenses. General and administrative expenses included non-cash, stock-based compensation of $0 and $16,952 during the three months ended March 31, 2022 and 2021, respectively. General and administrative expenses decreased primarily due to decreased corporate overhead activities.

Professional Fees

Professional fees for the three months ended March 31, 2022 were $286,390, compared to $107,819 during the three months ended March 31, 2021, an increase of $178,571, or 166%. Professional fees included non-cash, stock-based compensation of $103,464 and $44,147 during the three months ended March 31, 2022 and 2021, respectively. Professional fees increased primarily due to increased corporate consulting services during the current period as we focused primarily on the lab operations during the current period.

Change in Allowance for Doubtful Accounts

Our change in allowance for doubtful accounts for the three months ended March 31, 2022 resulted in $16 of income, compared to $106,155 of expense during the three months ended March 31, 2021, an improvement of $106,171, or 100%. Our change in allowance for doubtful accounts improved during the current period as the Nevada tourism market began to open up again and our customers’ cash flows improved.

Operating Loss

Our operating loss for the three months ended March 31, 2022 was $313,173, compared to operating income of $2,620 during the three months ended March 31, 2021, a decrease of $315,793, or 12,053%. Our operating loss increased primarily due to our decreased gross profit and not having a reversal of our allowance for doubtful accounts.

Other Income (Expense)

Other expense, on a net basis, for the three months ended March 31, 2022 was $60,423, compared to other income, on a net basis, of $15,581 during the three months ended March 31, 2021, a net decrease of $76,004. Other expense consisted of interest expense of $75,718 for the three months ended March 31, 2022. partially offset by other income, consisting of $15,295 of interest income.

Net Loss

Net loss for the three months ended March 31, 2022 was $373,596, compared to net income of $18,201 during the three months ended March 31, 2021, a decrease of $391,797, or 2,153%. The net loss was primarily due to our decreased revenues, increase interest expense, and not having a reversal in our doubtful accounts from the March 31, 2021 period.

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Results of Operations for the Six Months Ended March 31, 2022 and 2021:

The following table summarizes selected items from the statement of operations for the six months ended March 31, 2022 and 2021.

	Six Months Ended March 31,						Increase /
	2022			2021			(Decrease)
Revenues	$	1,304,320		$	1,133,545		$	170,775
Cost of sales		818,633			837,800			(19,167	)
Gross profit		485,687			295,745			189,942
Operating expenses:
General and administrative		476,434			437,011			39,423
Professional fees		554,861			222,363			332,498
Change in allowance for doubtful accounts		(2,123	)		(17,985	)		15,862
Total operating expenses:		1,029,172			641,389			387,783
Operating loss		(543,485	)		(345,644	)		(197,841	)
Total other income (expense)		(120,436	)		(26,792	)		(93,644	)
Net loss	$	(663,921	)	$	(372,436	)	$	(291,485	)

Revenues

Aggregate revenues for the six months ended March 31, 2022 were $1,304,320, compared to revenues of $1,133,545 during the six months ended March 31, 2021, an increase of $170,775, or 15%. The increase in revenue was due to the Nevada tourism market beginning to open up again and our customers’ cash flows improved during the current period.

Cost of Sales

Cost of sales for the six months ended March 31, 2022 were $818,633, compared to $837,800 during the six months ended March 31, 2021, a decrease of $19,167, or 2%. Cost of sales consists primarily of labor, depreciation, maintenance on lab equipment, and supplies consumed in our testing operations. The decreased cost of sales in the current period was primarily due to our decrease in outsourcing to other labs. Our gross margins of approximately 37% and 26% during the six months ended March 31, 2022 and 2021, respectively, translated to $189,942 of increased gross profit in the current period.

General and Administrative Expenses

General and administrative expenses for the six months ended March 31, 2022 were $476,434, compared to $437,011 during the six months ended March 31, 2021, an increase of $39,423, or 9%. The expenses consisted primarily of marketing, rent, salaries and wages, and travel expenses. General and administrative expenses included non-cash, stock-based compensation of $0 and $33,904 during the six months ended March 31, 2022 and 2021, respectively. General and administrative expenses increased due primarily to increased corporate overhead activities offset by the discontinuation of rents on warehouse space that we were previously subleasing.

Professional Fees

Professional fees for the six months ended March 31, 2022 were $554,861, compared to $222,363 during the six months ended March 31, 2021, an increase of $332,498, or 150%. Professional fees included non-cash, stock-based compensation of $202,143 and $97,077 during the six months ended March 31, 2022 and March 31, 2021, respectively. Professional fees increased primarily due to increased use of corporate consulting services during the current period.

Change in Allowance for Doubtful Accounts

Our change in allowance for doubtful accounts resulted in $2,123 of income for the six months ended March 31, 2022, compared to $17,985 during the six months ended March 31, 2021, a decrease of $15,862, or 88%. Our change in allowance for doubtful accounts improved during the current period primarily as our allowance for doubtful accounts decreased from $96,285 to $88,711 during the period, as the Nevada tourism market began to open up again and our customers’ cash flows improved.

20

Operating Loss

Our operating loss for the six months ended March 31, 2022 was $543,485, compared to $345,644 during the six months ended March 31, 2021, an increase of $197,841, or 57%. Our operating loss increased primarily due to a large increase in professional fees.

Other Expense

Other expense, on a net basis, for the six months ended March 31, 2022 was $120,436, compared to other expense, on a net basis, of $26,792 during the six months ended March 31, 2021, a net increase of $93,644. Other expense consisted of $145,111 of interest expense, as offset by interest income of $15,295, compared to $65,434 of interest expense, as offset by a gain on early extinguishment of debt in the amount of $40,338 and a gain on the distribution of $7,580 of previously impaired inventory to our former CEO, during the six months ended March 31, 2021.

Net Loss

Net loss for the six months ended March 31, 2022 was $663,921, compared to $372,436 during the six months ended March 31, 2021, an increase of $291,485, or 78%. The increased net loss was due primarily to larger professional fees and an increase in other expenses.

Liquidity and Capital Resources

The following is a summary of the Company’s cash flows provided by (used in) operating, investing, and financing activities for the six-month periods ended March 31, 2022 and 2021:

	2022			2021
Operating Activities	$	(190,286	)	$	(94,603	)
Investing Activities		(777,868	)		(1,206	)
Financing Activities		754,991			126,766
Net Decrease in Cash	$	(213,163	)	$	30,957

Net Cash Used in Operating Activities

During the six months ended March 31, 2022, net cash used in operating activities was $190,286, compared to net cash used in operating activities of $94,603 for the same period ended March 31, 2021. The increase in cash used in operating activities was primarily attributable to our increased net loss.

Net Cash Used in Investing Activities

During the six months ended March 31, 2022, net cash used in investing activities was $777,868, compared to $1,206 for the same period ended March 31, 2022. The increase in cash used in investing was a result of secured loans we made to C3 Labs, Inc. in connection with a potential acquisition. On March 11, 2022, the Company notified C3 Labs of its termination of the letter of intent. The Company is currently in possession of equipment of C3 Labs, which it is in the process of liquidating. The Company anticipates that the proceeds of such liquidation will be sufficient to repay the Company in full all amounts owed to it by C3 Labs under the secured loans.

Net Cash Provided by Financing Activities

During the six months ended March 31, 2022, net cash provided by financing activities was $754,991, compared to net cash provided by financing activities of $126,766 for the same period ended March 31, 2021. The current period consisted primarily of $390,000 of proceeds received on debt financing, $407,243 proceeds from convertible debt financing, proceeds of $55,600 from the sale of preferred stock, as offset by $28,317 of principal payments on an equipment lease and $16,557 of principal payments on an equipment loan, compared to $110,000 of net proceeds received on convertible debt financing, $40,000 of proceeds from short term advances and proceeds of $20,250 from the sale of stock, as offset by $26,769 of principal payments on an equipment lease and $16,715 of principal payments on an equipment loan in the comparative period.

21

Ability to Continue as a Going Concern

As of March 31, 2022, our balance of cash on hand was $82,769, and we had negative working capital of $1,598,387 and an accumulated deficit of $18,615,574 resulting from recurring losses. We currently may not have sufficient funds to sustain our operations for the next twelve months and we may need to raise additional cash to fund our operations and expand our lab testing business. As we continue to develop our lab testing business and attempt to expand operational activities, we expect to experience net negative cash flows from operations in amounts not now determinable, and will be required to obtain additional financing to fund operations through common stock offerings to the extent necessary to provide working capital. We have and expect to continue to have substantial capital expenditure and working capital needs.

The Company has incurred recurring losses from operations resulting in an accumulated deficit, and, as set forth above, the Company’s cash on hand is not 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. In the event sales do not materialize at the expected rates, management would seek additional financing or would attempt to conserve cash by further reducing expenses. There can be no assurance that we will be successful in achieving these objectives, becoming profitable or continuing our business without either a temporary interruption or a permanent cessation. In addition, additional financing may result in substantial dilution to existing stockholders.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The unaudited consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Off-Balance Sheet Arrangements

We have no outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations and require management’s subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.

While our significant accounting policies are more fully described in notes to our consolidated financial statements appearing elsewhere in this Form 10-Q, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we used in the preparation of our financial statements.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

Revenue is primarily generated through our subsidiary, Digipath Labs, Inc., which recognizes revenue from the analytical testing of cannabis products for licensed producers and cultivators within the state of Nevada on a determinable fixed fee per test, or panel of tests basis. Revenue from the performance of those services is recognized upon completion of the tests, at which time test results are delivered to the customer, provided collectability of the fee is reasonably assured. We typically require payment within thirty days of the delivery of results. Management estimates an allowance for doubtful accounts based on the aging of its receivables.

22

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 2018-07 (ASC 2018-07). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2022, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that occurred during the period of our evaluation or subsequent to the date we carried out our evaluation which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any system of controls and procedures will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

23

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are not a party to any legal or administrative proceedings that we believe, individually or in the aggregate, would be likely to have a material adverse effect on our financial condition or results of operations.

ITEM 1A. RISK FACTORS.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following issuances of equity securities by the Company were exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) of the Securities Act of 1933 during the six-month period ended March 31, 2022:

Common Stock Issued for Services

On February 11, 2022, the Company issued 2,166,667 shares of its common stock in exchange for services rendered to the Company by third party consultants, with a total fair value $65,000 based on the closing price of the Company’s common stock on the dates of grant.

On February 11, 2022, the Company issued 250,000 shares of its common stock to settle outstanding payables in the amount of $7,500.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

24

ITEM 6. EXHIBITS.

Exhibit	Description
2.1	Stock Purchase Agreement between Digipath, Inc., VSSL Enterprises Ltd., Kyle Joseph Remenda, Philippe Olivier Henry, PhD, Audim Ventures Ltd. and Britt Ash Enterprises Ltd., dated March 9, 2020 (incorporated by reference to Exhibit 2.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on March 16, 2020)
3.1	Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Form 10 filed with the Securities and Exchange Commission by Digipath, Inc. on July 15, 2011)
3.2	Bylaws (incorporated by reference to Exhibit 3.2 of the Form 10 filed with the Securities and Exchange Commission by Digipath, Inc. on July 15, 2011)
3.3	Certificate of Amendment to Articles of Incorporation dated April 4, 2014 (incorporated by reference to Exhibit 3.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on April 10, 2014)
3.4	Certificate of Designations, Preferences, Limitations, Restrictions and Relative Rights of Series A Convertible Preferred Stock dated April 9, 2014 (incorporated by reference to Exhibit 3.2 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on April 10, 2014)
3.5	Certificate of Amendment to Articles of Incorporation dated May 22, 2015 (incorporated by reference to Exhibit 3.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on May 26, 2015)
3.6	Certificate of Amendment to Articles of Incorporation dated May 14, 2019 (incorporated by reference to Exhibit 3.6 of the Current Report on Form 10-Q filed with the Securities and Exchange Commission by Digipath, Inc. on August 13, 2019)
3.7	Certificate of Designations of the Series B Preferred Stock dated December 29, 2021 (incorporated by reference to Exhibit 3.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on January 6, 2022)
4.1	Form of 8% Senior Secured Convertible Notes due December 31, 2020 (incorporated by reference to Exhibit 4.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on November 21, 2018)
4.2	Form of 8% Senior Secured Convertible Notes due September 23, 2020 (incorporated by reference to Exhibit 4.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on September 26, 2019)
4.3	9% Secured Convertible Note, between Digipath, Inc. and holder, due August 10, 2022 (incorporated by reference to Exhibit 4.3 of the Current Report on Form 10-Q filed with the Securities and Exchange Commission by Digipath, Inc. on February 14, 2020)
4.4	9% Secured Subordinated Convertible Note, between Digipath, Inc. and holder, due August 11, 2022 (incorporated by reference to Exhibit 4.4 of the Current Report on Form 10-Q filed with the Securities and Exchange Commission by Digipath, Inc. on February 14, 2020)
4.5	9% Secured Subordinated Convertible Note, between Digipath, Inc. and holder, due August 11, 2022 (incorporated by reference to Exhibit 4.5 of the Current Report on Form 10-Q filed with the Securities and Exchange Commission by Digipath, Inc. on May 15, 2020)
4.6	Form of Amendment to 9% Secured Convertible Note, between Digipath, Inc. and holder, due August 10, 2022 (incorporated by reference to Exhibit 4.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on January 6, 2021)
31.1*	Section 302 Certification of Principal Executive Officer
31.2*	Section 302 Certification of Principal Financial Officer
32.1*	Section 906 Certification of Principal Executive Officer
32.2*	Section 906 Certification of Principal Financial Officer
101.INS*	XBRL Instance Document
101.SCH*	XBRL Schema Document
101.CAL*	XBRL Calculation Linkbase Document
101.DEF*	XBRL Definition Linkbase Document
101.LAB*	XBRL Labels Linkbase Document
101.PRE*	XBRL Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

25

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 16, 2022

DIGIPATH, INC.
By:	/s/ Todd Denkin
Name:	Todd Denkin
Title:	Chief Executive Officer
By:	/s/ A. Stone Douglass
Name:	A. Stone Douglass
Title:	Chief Financial Officer

26

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Todd Denkin, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2022 of Digipath, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Dated: May 16, 2022

/s/ Todd Denkin

Todd Denkin, Principal Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, A. Stone Douglass, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2022 of Digipath, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: May 16, 2022

/s/ A. Stone Douglass

A. Stone Douglass, Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Digipath, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2022 (the “Report”) I, Todd Denkin, Principal Executive Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 16, 2022

/s/ Todd Denkin

Todd Denkin, Principal Executive Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Digipath, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2022 (the “Report”) I, A. Stone Douglass, Chief Financial Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 16, 2022

/s/ A. Stone Douglass

A. Stone Douglass, Chief Financial Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

XML

Cover - shares	6 Months Ended
	Mar. 31, 2022	May 16, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2022
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--09-30
Entity File Number	000-54239
Entity Registrant Name	Digipath, Inc.
Entity Central Index Key	0001502966
Entity Tax Identification Number	27-3601979
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	6450 Cameron St
Entity Address, Address Line Two	Suite 113
Entity Address, City or Town	Las Vegas
Entity Address, State or Province	NV
Entity Address, Postal Zip Code	89118
City Area Code	(702)
Local Phone Number	527-2060
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		75,146,820

XML

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2022	Sep. 30, 2021
Current assets:
Cash	$ 82,769	$ 295,932
Accounts receivable, net	259,268	214,900
Note receivable	1,029,227	230,959
Other current assets	27,241	24,751
Deposits	71,093	60,353
Total current assets	1,469,598	826,865
Right-of-use asset	366,089	413,884
Fixed assets, net	534,435	647,252
Total non-current assets	900,524	1,061,136
Total Assets	2,370,122	1,888,001
Current liabilities:
Accounts payable	419,500	370,977
Accrued expenses	359,274	220,002
Current portion of operating lease liabilities	98,281	93,601
Current portion of finance lease liabilities	3,822	20,379
Current maturities of convertible notes payable	1,700,650	1,050,000
Current maturities of notes payable	486,458	259,425
Total current liabilities	3,067,985	2,014,384
Non-current liabilities:
Operating lease liabilities	279,981	330,151
Notes payable	474,166	339,516
Convertible notes payable, net of discounts of $-0- and $8,322 at March 31, 2022 and September 30, 2021, respectively		257,282
Total non-current liabilities	754,147	926,949
Total Liabilities	3,822,132	2,941,333
Series B convertible preferred stock, $0.001 par value, 1,500,000 shares authorized; 333,600 and zero shares issued and outstanding as of March 31, 2022 and September 30, 2021 respectively	333,600
Stockholders’ Equity (Deficit):
Series A convertible preferred stock, $0.001 par value, 6,000,000 shares authorized; 1,047,942 and 1,325,942 shares issued and outstanding as of March 31, 2022 and September 30, 2021, respectively	1,048	1,326
Common stock, $0.001 par value, 250,000,000 shares authorized; 75,146,820 and 71,230,153 shares issued and outstanding at March 31, 2022 and September 30 2021, respectively	75,147	71,230
Additional paid-in capital	16,753,769	16,825,765
Accumulated deficit	(18,615,574)	(17,951,653)
Total Stockholders’ Deficit	(1,785,610)	(1,053,332)
Total Liabilities and Stockholders’ Deficit	$ 2,370,122	$ 1,888,001

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2022	Sep. 30, 2021
Debt instrument, unamortized discount, noncurrent	$ 0	$ 8,322
Series A convertible preferred stock, par value	$ 0.001	$ 0.001
Series A convertible preferred stock, shares authorized	6,000,000	6,000,000
Series A convertible preferred stock, shares issued	1,047,942	1,325,942
Series A convertible preferred stock, shares outstanding	1,047,942	1,325,942
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	75,146,820	71,230,153
Common stock, shares outstanding	75,146,820	71,230,153
Series B Convertible Preferred Stock [Member]
Temporary equity, par value	$ 0.001	$ 0.001
Temporary equity, shares authorized	1,500,000	1,500,000
Temporary equity, shares issued	333,600	0
Temporary equity, shares outstanding	333,600	0

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Income Statement [Abstract]
Revenues	$ 604,735	$ 633,160	$ 1,304,320	$ 1,133,545
Cost of sales	396,032	416,915	818,633	837,800
Gross profit	208,703	216,245	485,687	295,745
Operating expenses:
General and administrative	235,470	211,961	476,434	437,011
Professional fees	286,390	107,819	554,861	222,363
Change in allowance for doubtful accounts	16	(106,155)	(2,123)	(17,985)
Total operating expenses	521,876	213,625	1,029,172	641,389
Operating loss	(313,173)	2,620	(543,485)	(345,644)
Other income (expense):
Interest income	15,295	47,918	24,675	47,918
Interest expense	(75,718)	(32,337)	(145,111)	(74,710)
Total other income (expense)	(60,423)	15,581	(120,436)	(26,792)
Net income (loss)	$ (373,596)	$ 18,201	$ (663,921)	$ (372,436)
Weighted average number of common shares outstanding – basic	74,019,042	65,418,890	73,194,439	61,882,937
Weighted average number of common shares outstanding – fully diluted	74,019,042	114,702,490	73,194,439	61,882,937
Net loss per share – basic	$ (0.00)	$ 0.00	$ (0.01)	$ (0.01)

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Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($)	Series B Convertible Preferred Stock [Member]	Series A Convertible Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Sep. 30, 2020		$ 1,326	$ 58,271	$ 16,116,400	$ (17,265,150)	$ (1,089,153)
Beginning balance, shares at Sep. 30, 2020		1,325,942	58,270,567
Stock-based compensation			$ 1,228	42,832		44,060
Stock-based compensation, shares			1,228,155
Net income (loss)					(390,637)	(390,637)
Common stock sold for cash			$ 900	19,350		20,250
Common stock sold for cash, shares			900,000
Common stock issued for debt conversion			$ 3,666	106,334		110,000
Common stock issued for debt conversion, shares			3,666,668
Ending balance, value at Dec. 31, 2020		$ 1,326	$ 64,065	16,284,916	(17,655,787)	(1,305,480)
Ending balance, shares at Dec. 31, 2020		1,325,942	64,065,390
Beginning balance, value at Sep. 30, 2020		$ 1,326	$ 58,271	16,116,400	(17,265,150)	(1,089,153)
Beginning balance, shares at Sep. 30, 2020		1,325,942	58,270,567
Net income (loss)						(372,436)
Ending balance, value at Mar. 31, 2021		$ 1,326	$ 68,182	16,457,720	(17,637,586)	(1,110,358)
Ending balance, shares at Mar. 31, 2021		1,325,942	68,181,820
Beginning balance, value at Dec. 31, 2020		$ 1,326	$ 64,065	16,284,916	(17,655,787)	(1,305,480)
Beginning balance, shares at Dec. 31, 2020		1,325,942	64,065,390
Stock-based compensation			$ 250	29,647		29,897
Stock-based compensation, shares			250,000
Net income (loss)					18,201	18,201
Common stock issued for debt conversion			$ 3,000	87,000		90,000
Common stock issued for debt conversion, shares			3,000,000
Stock-based compensation - related parties			$ 867	56,157		57,024
Stock-based compensationrelated party, shares			866,430
Ending balance, value at Mar. 31, 2021		$ 1,326	$ 68,182	16,457,720	(17,637,586)	(1,110,358)
Ending balance, shares at Mar. 31, 2021		1,325,942	68,181,820
Beginning balance, value at Sep. 30, 2021		$ 1,326	$ 71,230	16,825,765	(17,951,653)	(1,053,332)
Beginning balance, shares at Sep. 30, 2021		1,325,942	71,230,153
Purchase of Series B Preferred shares	$ 55,600
Purchase of series B preferred shares, shares	55,600
Conversion of Series A Preferred into Series B Preferred	$ 278,000	$ (278)		(277,722)		(278,000)
Conversion of Series A Preferred into Series B Preferred, shares	278,000	(278,000)
Stock-based compensation			$ 1,500	97,179		98,679
Stock-based compensation, shares			1,500,000
Net income (loss)					(290,325)	(290,325)
Ending balance, value at Dec. 31, 2021	$ 333,600	$ 1,048	$ 72,730	16,645,222	(18,241,978)	(1,522,978)
Ending balance, shares at Dec. 31, 2021	333,600	1,047,942	72,730,153
Beginning balance, value at Sep. 30, 2021		$ 1,326	$ 71,230	16,825,765	(17,951,653)	(1,053,332)
Beginning balance, shares at Sep. 30, 2021		1,325,942	71,230,153
Purchase of Series B Preferred shares						$ 7,500
Purchase of series B preferred shares, shares						250,000
Net income (loss)						$ (663,921)
Ending balance, value at Mar. 31, 2022	$ 333,600	$ 1,048	$ 75,147	16,753,769	(18,615,574)	(1,785,610)
Ending balance, shares at Mar. 31, 2022	333,600	1,047,942	75,146,820
Beginning balance, value at Dec. 31, 2021	$ 333,600	$ 1,048	$ 72,730	16,645,222	(18,241,978)	(1,522,978)
Beginning balance, shares at Dec. 31, 2021	333,600	1,047,942	72,730,153
Stock-based compensation			$ 2,167	101,297		103,464
Stock-based compensation, shares			2,166,667
Net income (loss)					(373,596)	(373,596)
Common Shares issued for settlement of AP			$ 250	7,250		7,500
Common Shares issued for settlement of AP, shares			250,000
Ending balance, value at Mar. 31, 2022	$ 333,600	$ 1,048	$ 75,147	$ 16,753,769	$ (18,615,574)	$ (1,785,610)
Ending balance, shares at Mar. 31, 2022	333,600	1,047,942	75,146,820

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities
Net loss	$ (663,921)	$ (372,436)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in allowance for doubtful accounts	(2,123)	(17,985)
Depreciation and amortization expense	117,063	159,209
Loss on disposal of fixed assets		2,227
Gain on early extinguishment of debt		(40,338)
Stock-based compensation	202,143	130,981
Amortization of debt discounts	39,103	8,322
Decrease (increase) in assets:
Accounts receivable	(42,245)	49,400
Other current assets	(35,416)	12,677
Deposits	(2,490)
Right-of-use assets	47,795	45,308
Increase (decrease) in liabilities:
Accounts payable	56,023	(58,639)
Accrued expenses	139,272	27,814
Lease liabilities	(45,490)	(41,143)
Net cash (used) in operating activities	(190,286)	(94,603)
Cash flows from investing activities
Purchase of fixed assets	(4,246)	(1,206)
Advance of note receivable	(773,622)
Net cash (used) in investing activities	(777,868)	(1,206)
Cash flows from financing activities
Principal payments on finance lease	(16,557)	(16,715)
Principal payments on note payable, equipment financing	(28,317)	(26,769)
Proceeds from short term advances		40,000
Proceeds from notes payable	390,000
Proceeds from convertible notes	394,265	110,000
Payments on convertible notes	(40,000)
Proceeds from sale of common stock		20,250
Proceeds from sale of preferred stock	55,600
Net cash provided by financing activities	754,991	126,766
Net increase (decrease) in cash	(213,163)	30,957
Cash - beginning	295,932	82,749
Cash - ending	82,769	113,706
Supplemental disclosures:
Interest paid	42,809	32,294
Income taxes paid
Non-cash investing and financing activities:
Common stock issued for debt conversion		110,000
Fixed assets acquired with note payable, equipment financing		200,000
Common stock issued for settlement of accounts payables	7,500
Conversion of Series A preferred into Series B preferred	$ 278,000

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Organization, Basis of Presentation and Significant Accounting Policies

6 Months Ended

Mar. 31, 2022

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”) is a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, and supports the cannabis industry’s best practices for reliable testing, cannabis education and training. Our mission is to provide pharmaceutical-grade analysis and testing to the cannabis industry, under ISO-17025:2017 guidelines, to ensure consumers and patients know exactly what is in the cannabis they ingest and to help maximize the quality of our clients’ products through research, development, and standardization. Digipath has been operating a cannabis-testing lab in Nevada since 2015 and hopes to open labs in other states that have legalized the sale of cannabis, beginning with California or Arizona.

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, 2021. 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, 2022:

	Jurisdiction of
Name of Entity(1)	Incorporation	Relationship
Digipath, Inc.(2)	Nevada	Parent
Digipath Labs, Inc.	Nevada	Subsidiary
Digipath Labs CA, Inc.(3)	California	Subsidiary
Digipath Labs S.A.S.(4)	Colombia	Subsidiary
VSSL Enterprises, Ltd.(5)	Canada	Subsidiary
TNM News Corp.(6)	Nevada	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⁾ Formed during the second fiscal quarter of 2021, but has not yet commenced significant operations.

⁽⁴⁾ Formed during the first fiscal quarter of 2019, but has not yet commenced significant operations.

⁽⁵⁾ Acquired on March 11, 2020.

⁽⁶⁾ Minimal activity, dissolved on July 28, 2021.

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.

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 recognizes revenue in accordance with ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

Revenue is primarily generated through our subsidiary, Digipath Labs, Inc., which recognizes revenue from the analytical testing of cannabis products for licensed producers and cultivators within the state of Nevada on a determinable fixed fee per test, or panel of tests basis. Revenue from the performance of those services is recognized upon completion of the tests, at which time test results are delivered to the customer, provided collectability of the fee is reasonably assured. We typically require payment within thirty days of the delivery of results. Management estimates an allowance for doubtful accounts based on the aging of its receivables.

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 2018-07 (ASC 2018-07). 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.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity). ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock, which results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Additionally, ASU 2020-06 affects the diluted earnings per share calculation for instruments that may be settled in cash or shares and for convertible instruments and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity's own equity. ASU 2020-06 allows entities to use a modified or full retrospective transition method and is effective for smaller reporting companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is evaluating the impact that this ASU may have on its consolidated financial statements.

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Going Concern

6 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Going Concern

Note 2 – Going Concern

As shown in the accompanying condensed consolidated financial statements, as of March 31, 2022, the Company had negative working capital of $1,598,387, accumulated recurring losses of $18,615,574, and only $82,769 of cash on hand, which is not 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 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.

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Fair Value of Financial Instruments

6 Months Ended

Mar. 31, 2022

Investments, All Other Investments [Abstract]

Fair Value of Financial Instruments

Note 3 – Fair Value of Financial Instruments

The Company discloses the fair value of certain assets and liabilities in accordance with ASC 820 – Fair Value Measurement (“ASC 820”). 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, 2022 and September 30, 2021, respectively:

	Fair Value Measurements at March 31, 2022
	Level 1		Level 2		Level 3
Assets
Cash	$	82,769	$	-	$	-
Liabilities
Lease liabilities		-		-		382,084
Notes payable		-		960,624		-
Convertible notes payable		-		-		1,700,650

	Fair Value Measurements at September 30, 2021
	Level 1		Level 2		Level 3
Assets
Cash	$	295,932	$	-	$	-
Liabilities
Lease liabilities		-		-		444,131
Notes payable		-		598,941		-
Convertible notes payable, net of discounts of $98,188		-		-		1,307,282

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, 2022 or the year ended September 30, 2021.

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Note Receivable

6 Months Ended

Mar. 31, 2022

Receivables [Abstract]

Note Receivable

Note 4 – Note Receivable

On various dates between December 28, 2018 and June 13, 2019, we loaned Northwest Analytical Labs, Inc. a total of $95,000. The loans bear interest at an annual rate of 10%, are evidenced by secured demand notes, and are secured by a lien on the borrower’s assets. An allowance for doubtful accounts for the full value of the notes has been recorded due to the uncertainty of collectability.

On various dates between August 23, 2021 and March 31, 2022, we loaned C3 Labs, Inc. (“C3 Labs”) a total of $1,003,622. The loans bear interest at an annual rate of 8%. These loans are evidenced by secured demand notes, and are secured by a lien on the borrower’s assets and have a maturity date of August 23, 2022. The Company has recorded interest income of $15,120 during the six months ended March 31, 2022 with total accrued interest of $25,605 as of March 31, 2022.

The loans were made in connection with a potential acquisition of a controlling interest in C3 Labs. On March 11, 2022, the Company notified C3 Labs of its termination of the letter of intent. The Company is currently in possession of equipment of C3 Labs, which it is in the process of liquidating. The Company anticipates that the proceeds of such liquidation will be sufficient to repay the Company in full all amounts owed to it by C3 Labs under the secured loans.

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Fixed Assets

6 Months Ended

Mar. 31, 2022

Property, Plant and Equipment [Abstract]

Fixed Assets

Note 5 – Fixed Assets

Fixed assets consist of the following at March 31, 2022 and September 30, 2021:

	March 31,			September 30,
	2022			2021
Software	$	125,903		$	125,903
Office equipment		71,601			71,601
Furniture and fixtures		29,879			29,879
Lab equipment		1,455,479			1,453,716
Leasehold improvements		496,600			494,117
Lab equipment held under capital leases		99,193			99,193
		2,278,655			2,274,409
Less: accumulated depreciation		(1,744,220	)		(1,627,157	)
Total	$	534,435		$	647,252

Depreciation and amortization expense totalled $117,063 and $159,209 for the six months ended March 31, 2022 and 2021, respectively.

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Leases

6 Months Ended

Mar. 31, 2022

Leases

Leases

Note 6 – Leases

The Company leases its operating and office facility under a non-cancellable real property lease agreement that expires on August 31, 2025. The Company also has a financing lease for lab equipment subject to the recently adopted ASU 2016-02. In the locations in which it is economically feasible to continue to operate, management expects to enter into a new lease upon expiration. The real property lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s leases do not provide implicit discount rates, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

The components of lease expense were as follows:

	For the Six		For the Six
	Months Ended		Months Ended
	March 31,		March 31,
	2022		2021
Operating lease cost	$	59,436	$	21,644
Finance lease cost:
Amortization of assets		17,329		45,308
Interest on lease liabilities		1,223		14,129
Total net lease cost	$	18,552	$	59,437

Supplemental balance sheet information related to leases was as follows:

	March 31,			September 30,
	2022			2021
Operating leases:
Operating lease assets	$	366,089		$	413,884
Current portion of operating lease liabilities		98,281		$	93,601
Noncurrent operating lease liabilities		279,981			330,151
Total operating lease liabilities	$	378,262		$	423,752
Finance lease:
Equipment, at cost	$	99,193		$	99,193
Accumulated amortization		(49,596	)		(36,677	)
Equipment, net	$	49,597		$	74,395
Current portion of finance lease liabilities	$	3,822		$	20,379
Noncurrent finance lease liabilities		-			-
Total finance lease liabilities	$	3,822		$	20,379
Weighted average remaining lease term:
Operating leases		3.42 years			3.92 years
Finance leases		0.05 years			1.55 years
Weighted average discount rate:
Operating leases		5.75	%		5.75	%
Finance lease		18.41	%		18.41	%

Supplemental cash flow and other information related to leases was as follows:

	For the Six		For the Six
	Months Ended		Months Ended
	March 31,		March 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	45,490	$	41,143
Financing cash flows used for finance leases	$	16,557	$	16,715
Leased assets obtained in exchange for lease liabilities:
Total operating lease liabilities	$	-	$	528,616
Total finance lease liabilities	$	-	$	99,193

The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities on a fiscal year basis, including common area maintenance fees, under non-cancellable operating leases as of March 31, 2022:

Fiscal Year Ending	Minimum Lease
September 30,	Commitments
2022 (for the six months remaining)	$	58,419
2023		119,468
2024		123,543
2025		116,892
2026		-
Total future undiscounted lease payments		418,322
Less interest		40,060
Present value of lease payments		378,262
Less current portion		98,281
Long-term operating lease liabilities	$	279,981

Future minimum annual lease payments required under the finance lease and the present value of the net minimum lease payments are as follows at March 31, 2022:

	Finance
	Leases
2022	$	3,865
2023		-
Total minimum lease payments		3,865
Less interest		43
Present value of lease liabilities		3,822
Less current portion		3,822
Long-term finance lease liabilities	$	-

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Notes Payable

6 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Notes Payable

Note 7 –Notes Payable

Notes payable consists of the following at March 31, 2022 and September 30, 2021, respectively:

	March 31,			September 30,
	2022			2021
On September 10, 2021, the Company, entered into a Secured Promissory note for $675,000 from US Canna Lab I, LLC, (the “Company Canna Lab Note”). The Company Canna Lab Note carries interest at 12% per annum, and is due on September 10, 2024 with monthly principal and interest payments of $22,419.66 beginning on October 1, 2021. As of March 31, 2022, a total $675,000 of the funds have been advanced to the Company. In addition, the Company was advanced an additional $115,000 of funds under the same terms as the original note.	$	790,000		$	400,000
On December 26, 2019, the Company financed the purchase of $377,124 of lab equipment, in part, with the proceeds of a bank loan in the amount of $291,931. The loan bears interest at the rate of 5.75% per annum and requires monthly payments of $5,622 over the five-year term of the loan ending on December 26, 2024. The Company’s obligations under this loan are secured by a lien on the purchased equipment.		170,624			198,941
Total notes payable		960,624			598,941
Less: current maturities		(486,458	)		(259,425	)
Notes payable	$	474,166		$	339,516

The Company recorded interest expense pursuant to the stated interest rate and closing costs on the notes payable in the amount of $41,277 and $7,970 during the six months ended March 31, 2022 and 2021, respectively.

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Convertible Notes Payable

6 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Convertible Notes Payable

Note 8 – Convertible Notes Payable

Convertible notes payable consists of the following at March 31, 2022 and September 30, 2021, respectively:

	March 31,			September 30,
	2022			2021
On February 11, 2020, the Company completed the sale to an accredited investor of a 9% Secured Convertible Promissory Note in the principal amount of $50,000. The Note matures on August 11, 2022, bears interest at a rate of 9% per annum, and was convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. On December 28, 2020, the conversion price was amended to $0.03 per share in exchange for an additional $10,000 of proceeds and the promissory note was increased to $60,000. The Company’s obligations under the Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc., pursuant to a Security Agreement between the Company, Digipath Labs, Inc. and the investor. On December 29, 2020, the note holder converted $10,000 of principal into 333,334 shares of common stock at a conversion price of $0.03 per share.	$	50,000		$	50,000
On February 11, 2020, the Company completed the sale to an accredited investor of a 9% Secured Subordinated Convertible Promissory Note in the principal amount of $150,000. The Note matures on August 11, 2022, bears interest at a rate of 9% per annum, and was convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. On December 28, 2020, the conversion price was amended to $0.03 per share in exchange for an additional $50,000 of proceeds and the promissory note was increased to $200,000. The Company’s obligations under the Note are secured by subordinated lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc., pursuant to a Security Agreement between the Company, Digipath Labs, Inc. and the investor. On December 29, 2020, the note holder converted $50,000 of principal into 1,666,667 shares of common stock at a conversion price of $0.03 per share.		150,000			150,000
On February 10, 2020, the Company completed the sale to an accredited investor of a 9% Secured Convertible Promissory Note in the principal amount of $350,000. The Note matures on August 10, 2022, bears interest at a rate of 9% per annum, and was convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. On December 28, 2020, the conversion price was amended to $0.03 per share in exchange for an additional $50,000 of proceeds and the promissory note was increased to $400,000. The Company’s obligations under the Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc., pursuant to a Security Agreement between the Company, Digipath Labs, Inc. and the investor. On December 29, 2020, the note holder converted $50,000 of principal into 1,666,667 shares of common stock at a conversion price of $0.03 per share.		350,000			350,000
On September 23, 2019, the Company received proceeds of $200,000 on a senior secured convertible note that carries an 8% interest rate, which matures on August 10, 2022, as amended. The principal and interest were convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.11 per share. On September 30, 2020, the maturity date was extended to August 10, 2022 and the conversion price was amended to $0.03 per share. The Company’s obligations under this Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc. On February 22, 2021, the noteholder converted $90,000 of principal into 3,000,000 shares of common stock at a conversion price of $0.03 per share. On September 30, 2021 the note was amended to add outstanding short term notes and accrued interest into the principal balance, making the outstanding balance 355,470, as amended. As a result of the modification, the Company recorded an additional debt discount of $98,188 as a result of the beneficial conversion feature of the additional principal. During the six months ended March 31, 2022, the Company repaid $40,000 of the balance of this note. In addition, during the six months ended March 31, 2022, the Company was advanced additional loans of $394,265 from the lender under the same terms.		709,735			355,470
On November 8, 2018, the Company received proceeds of $350,000 on a senior secured convertible note that carries an 8% interest rate, which matures on August 10, 2022, as amended. The principal and interest were convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.14 per share. On September 30, 2020, the maturity date was extended to August 10, 2022 and the conversion price was amended to $0.03 per share. The Company’s obligations under this Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc.		350,000			350,000
On November 5, 2018, the Company received proceeds of $150,000 on a senior secured convertible note that carries an 8% interest rate, which matures on August 10, 2022, as amended. The principal and interest were convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.14 per share. On September 30, 2020, the maturity date was extended to August 10, 2022 and the conversion price was amended to $0.03 per share. The Company’s obligations under this Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc.		150,000			150,000
Total convertible notes payable		1,759,735			1,407,470
Less: unamortized debt discounts		(59,085	)		(98,188	)
		1,700,650			1,307,282
Less: current maturities		1,700,650			1,050,000
Convertible notes payable	$	-		$	257,282

In addition, the Company recognized and measured the embedded beneficial conversion feature present in the convertible notes by allocating a portion of the proceeds equal to the intrinsic value of the feature to additional paid-in-capital. The intrinsic value of the feature was calculated on the commitment date using the effective conversion price of the convertible notes. This intrinsic value is limited to the portion of the proceeds allocated to the convertible debt.

The aforementioned accounting treatment resulted in a total debt discount equal to $98,188. The discount is amortized on a straight-line basis from the dates of issuance until the earlier of the stated redemption date of the debts, as noted above or the actual settlement date. The Company recorded debt amortization expense on the aforementioned debt discount in the amount of $39,103 for the six months ended March 31, 2022. Unamortized discount as of March 31, 2022 is $59,085.

All of the convertible notes limit the maximum number of shares that can be owned by each note holder as a result of the conversions to common stock to 4.99% of the Company’s issued and outstanding shares.

The Company recorded interest expense pursuant to the stated interest rates on the convertible notes in the amount of $46,380 and $51,802 for the six months ended March 31, 2022 and 2021, respectively.

The Company recognized interest expense for the six months ended March 31, 2022 and 2021, respectively, as follows:

	March 31,		March 31,
	2022		2021
Interest on short term loans	$	-	$	1,687
Interest on capital leases		6,603		4,929
Interest on notes payable		41,277		7,970
Amortization of beneficial conversion features		39,103		8,322
Interest on convertible notes		58,128		51,802
Total interest expense	$	145,111	$	74,710

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Changes in Stockholders’ Equity

6 Months Ended

Mar. 31, 2022

Equity [Abstract]

Changes in Stockholders’ Equity

Note 9 - 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”) and 1,500,000 have been designated as Series B Convertible Preferred Stock (“Series B Preferred”), with the remaining 2,500,000 shares available for designation from time to time by the Board as set forth below. As of March 31, 2022, there were 1,047,942 shares of Series A Preferred issued and outstanding and 333,600 shares of Series B 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. Each share of Series A Preferred is currently convertible into five shares of common stock and each share of Series B Preferred is currently convertible into twenty-five shares of common stock.

Series A

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 1,047,942 shares of Series A Preferred outstanding at March 31, 2022 are convertible into 5,239,710 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.

Additional terms of the Series A Preferred and include the following:

● The shares of Series A Preferred are entitled to dividends when, as and if declared by the Board as to the shares of the common stock of the Company into which such Series A Preferred may then be converted, subject to the 4.99% beneficial ownership limitation described above.

● Upon the liquidation or dissolution of the Company, or any merger or sale of all or substantially all of the assets, the shares of Series A Preferred are entitled to receive, prior to any distribution to the holders of common stock, 100% of the purchase price per share of Series A Preferred plus all accrued but unpaid dividends.

● The Series A Preferred plus all declared but unpaid dividends thereon automatically will be converted into common stock, at the then applicable conversion rate, upon the affirmative vote of the holders of a majority of the outstanding shares of Series A Preferred.

● Each share of Series A Preferred will carry a number of votes equal to the number of shares of common stock into which such Series A Preferred may then be converted, subject to the 4.99% beneficial ownership limitation described above. The Series A Preferred generally will vote together with the common stock and not as a separate class, except as provided below.

● Consent of the holders of the outstanding Series A Preferred is required in order for the Company to: (i) amend or change the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of, the Series A Preferred; (ii) authorize, create or issue shares of any class of stock having rights, preferences, privileges or powers superior to the Series A Preferred; (iii) reclassify any outstanding shares into shares having rights, preferences, privileges or powers superior to the Series A Preferred; or (iv) amend the Company’s Articles of Incorporation or Bylaws in a manner that adversely affects the rights of the Series A Preferred.

● Pursuant to the Securities Purchase Agreements, holders of Series A Preferred are entitled to unlimited “piggyback” registration rights on registrations by the Company, subject to pro rata cutback at any underwriter’s discretion.

During the six months ended March 31, 2022, the Company offered the Series A Preferred shareholders the ability to convert their Preferred A shares into Preferred B shares for an additional investment of 20% of their initial Series A investment. One Series A shareholder agreed to invest additional cash proceeds of $55,600 for 55,600 Series B shares and converted 278,000 of their Series A into Series B.

Series B

The Series B Preferred were designated on December 29, 2021. Each share of Series B Preferred has a Stated Value of $1.00 and is currently convertible into common stock at a conversion price equal to $0.04. The conversion price of the Series B Preferred is subject to equitable adjustment in the event of a stock split, stock dividend or similar event with respect to the common stock, and in the event of the issuance of common stock by the Company below the conversion price, subject to customary exceptions. At the current conversion price, the 333,600 shares of Series B Preferred outstanding at March 31, 2022 are convertible into 8,340,000 shares of the common stock of the Company. No holder is permitted to convert its shares of Series B 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.

Additional terms of the Series B Preferred and include the following:

● The shares of Series B Preferred are not entitled to dividends, provided that if dividends are paid on the shares of common stock of the Company, the Series B Preferred will be entitled to dividends based on the number shares of common stock which the Series B Preferred may then be converted.

● Upon the liquidation or dissolution of the Company, or any merger or sale of all or substantially all of the assets, or upon a change in control whereby a stockholder gains control of 50% or more of the outstanding shares of common stock, the shares of Series B Preferred are entitled to receive, prior to any distribution to the holders of common stock, 100% of the purchase price per share of Series B Preferred plus all accrued but unpaid dividends.

● Each share of Series B Preferred carries a number of votes equal to the number of shares of common stock into which such Series B Preferred may then be converted.

Due to the change in control provision of the Series B Preferred, the Series B Preferred is classified as temporary equity on the balance sheet.

On December 30, 2021, the Company entered into an Exchange Agreement with one of the Company’s institutional investors (the “Investor”), pursuant to which the Investor exchanged 278,000 shares of the Series A Preferred for 278,000 shares of the Series B Preferred. In addition, on December 30, 2021, the Investor purchased 55,600 shares of Series B Preferred Stock at a price of $1.00 per share, resulting in gross proceeds to the Company of $55,600.

Common Stock

Common stock consists of $0.001 par value, 250,000,000 shares authorized, of which 75,146,820 shares were issued and outstanding as of March 31, 2022.

During the six months ended March 31, 2022, the Company issued 1,500,000 shares of its common stock in exchange for services rendered to the Company, by the chairman of the board of directors, with a total fair value $98,679 based on the closing price of the Company’s common stock on the dates of grant.

During the six months ended March 31, 2022, the Company issued 2,166,667 shares of its common stock in exchange for services rendered to the Company by third party consultants, with a total fair value $103,464 based on the closing price of the Company’s common stock on the dates of grant.

During the six months ended March 31, 2022, the Company issued 250,000 shares of its common stock to settle outstanding payables in the amount of $7,500.

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Common Stock Options

6 Months Ended

Mar. 31, 2022

Share-Based Payment Arrangement [Abstract]

Common Stock Options

Note 10 – 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 to purchase a total of 6,020,000 shares of common stock were outstanding as of March 31, 2022.

During the six months ended March 31, 2022, the Company issued to an unrelated third party, options to purchase 1,000,000 shares of its common stock in exchange for services rendered to the Company with a total fair value $33,716. The Company estimated the fair value using the Black-Scholes Pricing Model, based on a volatility rate of 186% and call option values of $0.0337 and exercise prices of $0.035.

Amortization of Stock-Based Compensation

A total of $53,739 and $41,126 of stock-based compensation expense was recognized during the six months ended March 31, 2022 and 2021, respectively, as a result of the vesting of common stock options issued. As of March 31, 2022 a total of $31,798 of unamortized expense remains to amortized over the vesting period.

The following is a summary of information about the stock options outstanding at March 31, 2022.

							Shares Underlying
Shares Underlying Options Outstanding							Options Exercisable
				Weighted
		Shares		Average	Weighted		Shares		Weighted
Range of		Underlying		Remaining	Average		Underlying		Average
Exercise		Options		Contractual	Exercise		Options		Exercise
Prices		Outstanding		Life	Price		Exercisable		Price
$	0.05 – $0.13		6,020,000	6.51 years	$	0.07		5,359,285	$	0.07

The following is a summary of activity of outstanding common stock options:

				Weighted
				Average
	Number			Exercise
	of Shares			Price
Balance, September 30, 2021		5,620,000		$	0.08
Options issued		1,000,000		$	0.04
Options forfeited		(600,000	)	$	0.11
Balance, March 31, 2022		6,020,000		$	0.07
Exercisable, March 31, 2022		5,359,285		$	0.07

As of March 31, 2022, these options in the aggregate had no intrinsic value as the per share market price of $0.023 of the Company’s common stock as of such date was less than the weighted-average exercise price of these options of $0.07.

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Common Stock Warrants

6 Months Ended

Mar. 31, 2022

Common Stock Warrants

Common Stock Warrants

Note 11 – Common Stock Warrants

Warrants to purchase a total of 2,535,001 shares of common stock were outstanding as of March 31, 2022.

The following is a summary of information about our warrants to purchase common stock outstanding at March 31, 2022.

							Shares Underlying
Shares Underlying Warrants Outstanding							Warrants Exercisable
				Weighted
		Shares		Average	Weighted		Shares		Weighted
Range of		Underlying		Remaining	Average		Underlying		Average
Exercise		Warrants		Contractual	Exercise		Warrants		Exercise
Prices		Outstanding		Life	Price		Exercisable		Price
$	0.10 - 0.26		2,535,001	4.84 years	$	0.17		2,535,001	$	0.17

The following is a summary of activity of outstanding common stock warrants:

			Weighted
			Average
	Number		Exercise
	of Shares		Price
Balance, September 30, 2021		2,535,001	$	0.17
Warrants granted		-		-
Warrants expired		-		-
Balance, March 31, 2022		2,535,001	$	0.17
Exercisable, March 31, 2022		2,535,001	$	0.17

As of March 31, 2022, these warrants in the aggregate had no intrinsic value as the per share market price of $0.023 of the Company’s common stock as of such date was less than the weighted-average exercise price of these warrants of $0.17.

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Commitments and Contingencies

6 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 12 – Commitments and Contingencies

Legal Contingencies

There are no material pending legal proceedings to which we are a party or to which any of our property is subject, nor are there any such proceedings known to be contemplated by governmental authorities. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

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Organization, Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Mar. 31, 2022

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”) is a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, and supports the cannabis industry’s best practices for reliable testing, cannabis education and training. Our mission is to provide pharmaceutical-grade analysis and testing to the cannabis industry, under ISO-17025:2017 guidelines, to ensure consumers and patients know exactly what is in the cannabis they ingest and to help maximize the quality of our clients’ products through research, development, and standardization. Digipath has been operating a cannabis-testing lab in Nevada since 2015 and hopes to open labs in other states that have legalized the sale of cannabis, beginning with California or Arizona.

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, 2021. 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, 2022:

	Jurisdiction of
Name of Entity(1)	Incorporation	Relationship
Digipath, Inc.(2)	Nevada	Parent
Digipath Labs, Inc.	Nevada	Subsidiary
Digipath Labs CA, Inc.(3)	California	Subsidiary
Digipath Labs S.A.S.(4)	Colombia	Subsidiary
VSSL Enterprises, Ltd.(5)	Canada	Subsidiary
TNM News Corp.(6)	Nevada	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⁾ Formed during the second fiscal quarter of 2021, but has not yet commenced significant operations.

⁽⁴⁾ Formed during the first fiscal quarter of 2019, but has not yet commenced significant operations.

⁽⁵⁾ Acquired on March 11, 2020.

⁽⁶⁾ Minimal activity, dissolved on July 28, 2021.

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.

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 recognizes revenue in accordance with ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

Revenue is primarily generated through our subsidiary, Digipath Labs, Inc., which recognizes revenue from the analytical testing of cannabis products for licensed producers and cultivators within the state of Nevada on a determinable fixed fee per test, or panel of tests basis. Revenue from the performance of those services is recognized upon completion of the tests, at which time test results are delivered to the customer, provided collectability of the fee is reasonably assured. We typically require payment within thirty days of the delivery of results. Management estimates an allowance for doubtful accounts based on the aging of its receivables.

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 2018-07 (ASC 2018-07). 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.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity). ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock, which results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Additionally, ASU 2020-06 affects the diluted earnings per share calculation for instruments that may be settled in cash or shares and for convertible instruments and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity's own equity. ASU 2020-06 allows entities to use a modified or full retrospective transition method and is effective for smaller reporting companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is evaluating the impact that this ASU may have on its consolidated financial statements.

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Organization, Basis of Presentation and Significant Accounting Policies (Tables)

6 Months Ended

Mar. 31, 2022

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, 2022:

	Jurisdiction of
Name of Entity(1)	Incorporation	Relationship
Digipath, Inc.(2)	Nevada	Parent
Digipath Labs, Inc.	Nevada	Subsidiary
Digipath Labs CA, Inc.(3)	California	Subsidiary
Digipath Labs S.A.S.(4)	Colombia	Subsidiary
VSSL Enterprises, Ltd.(5)	Canada	Subsidiary
TNM News Corp.(6)	Nevada	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⁾ Formed during the second fiscal quarter of 2021, but has not yet commenced significant operations.

⁽⁴⁾ Formed during the first fiscal quarter of 2019, but has not yet commenced significant operations.

⁽⁵⁾ Acquired on March 11, 2020.

⁽⁶⁾ Minimal activity, dissolved on July 28, 2021.

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Mar. 31, 2022

Investments, All Other Investments [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, 2022 and September 30, 2021, respectively:

	Fair Value Measurements at March 31, 2022
	Level 1		Level 2		Level 3
Assets
Cash	$	82,769	$	-	$	-
Liabilities
Lease liabilities		-		-		382,084
Notes payable		-		960,624		-
Convertible notes payable		-		-		1,700,650

	Fair Value Measurements at September 30, 2021
	Level 1		Level 2		Level 3
Assets
Cash	$	295,932	$	-	$	-
Liabilities
Lease liabilities		-		-		444,131
Notes payable		-		598,941		-
Convertible notes payable, net of discounts of $98,188		-		-		1,307,282

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Fixed Assets (Tables)

6 Months Ended

Mar. 31, 2022

Property, Plant and Equipment [Abstract]

Schedule of Fixed Assets

Fixed assets consist of the following at March 31, 2022 and September 30, 2021:

	March 31,			September 30,
	2022			2021
Software	$	125,903		$	125,903
Office equipment		71,601			71,601
Furniture and fixtures		29,879			29,879
Lab equipment		1,455,479			1,453,716
Leasehold improvements		496,600			494,117
Lab equipment held under capital leases		99,193			99,193
		2,278,655			2,274,409
Less: accumulated depreciation		(1,744,220	)		(1,627,157	)
Total	$	534,435		$	647,252

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Leases (Tables)

6 Months Ended

Mar. 31, 2022

Leases

Schedule of Components of Lease Expense

The components of lease expense were as follows:

	For the Six		For the Six
	Months Ended		Months Ended
	March 31,		March 31,
	2022		2021
Operating lease cost	$	59,436	$	21,644
Finance lease cost:
Amortization of assets		17,329		45,308
Interest on lease liabilities		1,223		14,129
Total net lease cost	$	18,552	$	59,437

Schedule of Supplemental Balance Sheet Information

Supplemental balance sheet information related to leases was as follows:

	March 31,			September 30,
	2022			2021
Operating leases:
Operating lease assets	$	366,089		$	413,884
Current portion of operating lease liabilities		98,281		$	93,601
Noncurrent operating lease liabilities		279,981			330,151
Total operating lease liabilities	$	378,262		$	423,752
Finance lease:
Equipment, at cost	$	99,193		$	99,193
Accumulated amortization		(49,596	)		(36,677	)
Equipment, net	$	49,597		$	74,395
Current portion of finance lease liabilities	$	3,822		$	20,379
Noncurrent finance lease liabilities		-			-
Total finance lease liabilities	$	3,822		$	20,379
Weighted average remaining lease term:
Operating leases		3.42 years			3.92 years
Finance leases		0.05 years			1.55 years
Weighted average discount rate:
Operating leases		5.75	%		5.75	%
Finance lease		18.41	%		18.41	%

Schedule of Supplemental Cash Flow and Other Information

Supplemental cash flow and other information related to leases was as follows:

	For the Six		For the Six
	Months Ended		Months Ended
	March 31,		March 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	45,490	$	41,143
Financing cash flows used for finance leases	$	16,557	$	16,715
Leased assets obtained in exchange for lease liabilities:
Total operating lease liabilities	$	-	$	528,616
Total finance lease liabilities	$	-	$	99,193

Schedule of Future Minimum Annual Lease Commitments Under Operating Leases

The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities on a fiscal year basis, including common area maintenance fees, under non-cancellable operating leases as of March 31, 2022:

Fiscal Year Ending	Minimum Lease
September 30,	Commitments
2022 (for the six months remaining)	$	58,419
2023		119,468
2024		123,543
2025		116,892
2026		-
Total future undiscounted lease payments		418,322
Less interest		40,060
Present value of lease payments		378,262
Less current portion		98,281
Long-term operating lease liabilities	$	279,981

Schedule of Future Minimum Annual Lease Payments Under Finance Lease

Future minimum annual lease payments required under the finance lease and the present value of the net minimum lease payments are as follows at March 31, 2022:

	Finance
	Leases
2022	$	3,865
2023		-
Total minimum lease payments		3,865
Less interest		43
Present value of lease liabilities		3,822
Less current portion		3,822
Long-term finance lease liabilities	$	-

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Notes Payable (Tables)

6 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Schedule of Notes Payable

Notes payable consists of the following at March 31, 2022 and September 30, 2021, respectively:

	March 31,			September 30,
	2022			2021
On September 10, 2021, the Company, entered into a Secured Promissory note for $675,000 from US Canna Lab I, LLC, (the “Company Canna Lab Note”). The Company Canna Lab Note carries interest at 12% per annum, and is due on September 10, 2024 with monthly principal and interest payments of $22,419.66 beginning on October 1, 2021. As of March 31, 2022, a total $675,000 of the funds have been advanced to the Company. In addition, the Company was advanced an additional $115,000 of funds under the same terms as the original note.	$	790,000		$	400,000
On December 26, 2019, the Company financed the purchase of $377,124 of lab equipment, in part, with the proceeds of a bank loan in the amount of $291,931. The loan bears interest at the rate of 5.75% per annum and requires monthly payments of $5,622 over the five-year term of the loan ending on December 26, 2024. The Company’s obligations under this loan are secured by a lien on the purchased equipment.		170,624			198,941
Total notes payable		960,624			598,941
Less: current maturities		(486,458	)		(259,425	)
Notes payable	$	474,166		$	339,516

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Convertible Notes Payable (Tables)

6 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Schedule of Convertible Notes Payable

Convertible notes payable consists of the following at March 31, 2022 and September 30, 2021, respectively:

	March 31,			September 30,
	2022			2021
On February 11, 2020, the Company completed the sale to an accredited investor of a 9% Secured Convertible Promissory Note in the principal amount of $50,000. The Note matures on August 11, 2022, bears interest at a rate of 9% per annum, and was convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. On December 28, 2020, the conversion price was amended to $0.03 per share in exchange for an additional $10,000 of proceeds and the promissory note was increased to $60,000. The Company’s obligations under the Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc., pursuant to a Security Agreement between the Company, Digipath Labs, Inc. and the investor. On December 29, 2020, the note holder converted $10,000 of principal into 333,334 shares of common stock at a conversion price of $0.03 per share.	$	50,000		$	50,000
On February 11, 2020, the Company completed the sale to an accredited investor of a 9% Secured Subordinated Convertible Promissory Note in the principal amount of $150,000. The Note matures on August 11, 2022, bears interest at a rate of 9% per annum, and was convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. On December 28, 2020, the conversion price was amended to $0.03 per share in exchange for an additional $50,000 of proceeds and the promissory note was increased to $200,000. The Company’s obligations under the Note are secured by subordinated lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc., pursuant to a Security Agreement between the Company, Digipath Labs, Inc. and the investor. On December 29, 2020, the note holder converted $50,000 of principal into 1,666,667 shares of common stock at a conversion price of $0.03 per share.		150,000			150,000
On February 10, 2020, the Company completed the sale to an accredited investor of a 9% Secured Convertible Promissory Note in the principal amount of $350,000. The Note matures on August 10, 2022, bears interest at a rate of 9% per annum, and was convertible into shares of the Company’s common stock at a conversion price of $0.15 per share. On December 28, 2020, the conversion price was amended to $0.03 per share in exchange for an additional $50,000 of proceeds and the promissory note was increased to $400,000. The Company’s obligations under the Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc., pursuant to a Security Agreement between the Company, Digipath Labs, Inc. and the investor. On December 29, 2020, the note holder converted $50,000 of principal into 1,666,667 shares of common stock at a conversion price of $0.03 per share.		350,000			350,000
On September 23, 2019, the Company received proceeds of $200,000 on a senior secured convertible note that carries an 8% interest rate, which matures on August 10, 2022, as amended. The principal and interest were convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.11 per share. On September 30, 2020, the maturity date was extended to August 10, 2022 and the conversion price was amended to $0.03 per share. The Company’s obligations under this Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc. On February 22, 2021, the noteholder converted $90,000 of principal into 3,000,000 shares of common stock at a conversion price of $0.03 per share. On September 30, 2021 the note was amended to add outstanding short term notes and accrued interest into the principal balance, making the outstanding balance 355,470, as amended. As a result of the modification, the Company recorded an additional debt discount of $98,188 as a result of the beneficial conversion feature of the additional principal. During the six months ended March 31, 2022, the Company repaid $40,000 of the balance of this note. In addition, during the six months ended March 31, 2022, the Company was advanced additional loans of $394,265 from the lender under the same terms.		709,735			355,470
On November 8, 2018, the Company received proceeds of $350,000 on a senior secured convertible note that carries an 8% interest rate, which matures on August 10, 2022, as amended. The principal and interest were convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.14 per share. On September 30, 2020, the maturity date was extended to August 10, 2022 and the conversion price was amended to $0.03 per share. The Company’s obligations under this Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc.		350,000			350,000
On November 5, 2018, the Company received proceeds of $150,000 on a senior secured convertible note that carries an 8% interest rate, which matures on August 10, 2022, as amended. The principal and interest were convertible into shares of common stock at the discretion of the note holder at a fixed conversion price of $0.14 per share. On September 30, 2020, the maturity date was extended to August 10, 2022 and the conversion price was amended to $0.03 per share. The Company’s obligations under this Note are secured by a lien on the assets of the Company and its wholly-owned subsidiary Digipath Labs, Inc.		150,000			150,000
Total convertible notes payable		1,759,735			1,407,470
Less: unamortized debt discounts		(59,085	)		(98,188	)
		1,700,650			1,307,282
Less: current maturities		1,700,650			1,050,000
Convertible notes payable	$	-		$	257,282

Schedule of Interest Expense

The Company recognized interest expense for the six months ended March 31, 2022 and 2021, respectively, as follows:

	March 31,		March 31,
	2022		2021
Interest on short term loans	$	-	$	1,687
Interest on capital leases		6,603		4,929
Interest on notes payable		41,277		7,970
Amortization of beneficial conversion features		39,103		8,322
Interest on convertible notes		58,128		51,802
Total interest expense	$	145,111	$	74,710

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Common Stock Options (Tables)

6 Months Ended

Mar. 31, 2022

Share-Based Payment Arrangement [Abstract]

Summary of Common Stock Options Outstanding

The following is a summary of information about the stock options outstanding at March 31, 2022.

							Shares Underlying
Shares Underlying Options Outstanding							Options Exercisable
				Weighted
		Shares		Average	Weighted		Shares		Weighted
Range of		Underlying		Remaining	Average		Underlying		Average
Exercise		Options		Contractual	Exercise		Options		Exercise
Prices		Outstanding		Life	Price		Exercisable		Price
$	0.05 – $0.13		6,020,000	6.51 years	$	0.07		5,359,285	$	0.07

Schedule of Activity of Outstanding Common Stock Options

The following is a summary of activity of outstanding common stock options:

				Weighted
				Average
	Number			Exercise
	of Shares			Price
Balance, September 30, 2021		5,620,000		$	0.08
Options issued		1,000,000		$	0.04
Options forfeited		(600,000	)	$	0.11
Balance, March 31, 2022		6,020,000		$	0.07
Exercisable, March 31, 2022		5,359,285		$	0.07

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Common Stock Warrants (Tables)

6 Months Ended

Mar. 31, 2022

Common Stock Warrants

Summary of Common Stock Warrants Outstanding

The following is a summary of information about our warrants to purchase common stock outstanding at March 31, 2022.

							Shares Underlying
Shares Underlying Warrants Outstanding							Warrants Exercisable
				Weighted
		Shares		Average	Weighted		Shares		Weighted
Range of		Underlying		Remaining	Average		Underlying		Average
Exercise		Warrants		Contractual	Exercise		Warrants		Exercise
Prices		Outstanding		Life	Price		Exercisable		Price
$	0.10 - 0.26		2,535,001	4.84 years	$	0.17		2,535,001	$	0.17

Schedule of Outstanding Common Stock Warrants Activity

The following is a summary of activity of outstanding common stock warrants:

			Weighted
			Average
	Number		Exercise
	of Shares		Price
Balance, September 30, 2021		2,535,001	$	0.17
Warrants granted		-		-
Warrants expired		-		-
Balance, March 31, 2022		2,535,001	$	0.17
Exercisable, March 31, 2022		2,535,001	$	0.17

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Schedule of Entities Under Common Control and Ownership (Details)	6 Months Ended
	Mar. 31, 2022
Entities Under Common Control and Ownership One [Member]
Name of Entity	Digipath, Inc	[1],[2]
Jurisdiction of Incorporation	Nevada
Relationship	Parent
Entities Under Common Control and Ownership Two [Member]
Name of Entity	Digipath Labs, Inc	[1]
Jurisdiction of Incorporation	Nevada
Relationship	Subsidiary
Entities Under Common Control and Ownership Three [Member]
Name of Entity	Digipath Labs CA, Inc	[1],[3]
Jurisdiction of Incorporation	California
Relationship	Subsidiary
Entities Under Common Control and Ownership Four [Member]
Name of Entity	Digipath Labs S.A.S	[1],[4]
Jurisdiction of Incorporation	Colombia
Relationship	Subsidiary
Entities Under Common Control and Ownership Five [Member]
Name of Entity	VSSL Enterprises, Ltd	[1],[4],[5]
Jurisdiction of Incorporation	Canada	[5]
Relationship	Subsidiary	[5]
Entities Under Common Control and Ownership Six [Member]
Name of Entity	TNM News Corp	[1],[4],[6]
Jurisdiction of Incorporation	Nevada	[6]
Relationship	Subsidiary	[6]

[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] Formed during the second fiscal quarter of 2021, but has not yet commenced significant operations.

[4] Formed during the first fiscal quarter of 2019, but has not yet commenced significant operations.

[5] Acquired on March 11, 2020.

[6] Minimal activity, dissolved on July 28, 2021.

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Going Concern (Details Narrative) - USD ($)	Mar. 31, 2022	Sep. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
[custom:WorkingCapital-0]	$ 1,598,387
Accumulated recurrring losses	18,615,574
Cash and Cash Equivalents, at Carrying Value	$ 82,769	$ 295,932

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Summary of Financial Instruments at Fair Value on Recurring Basis (Details) - USD ($)	Mar. 31, 2022	Sep. 30, 2021
Defined Benefit Plan Disclosure [Line Items]
Convertible notes discounts	$ 59,085	$ 98,188
Convertible Notes Payable [Member]
Defined Benefit Plan Disclosure [Line Items]
Convertible notes discounts	59,085	98,188
Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Cash	82,769	295,932
Lease liabilities
Note payable
Convertible notes payable, net of discounts
Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Cash
Lease liabilities
Note payable	960,624	598,941
Convertible notes payable, net of discounts
Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Cash
Lease liabilities	382,084	444,131
Note payable
Convertible notes payable, net of discounts	$ 1,700,650	$ 1,307,282

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Note Receivable (Details Narrative) - USD ($)	6 Months Ended	7 Months Ended
	Mar. 31, 2022	Mar. 31, 2022	Jun. 13, 2019
Defined Benefit Plan Disclosure [Line Items]
Interest income	$ 15,120
Accured interest	25,605	$ 25,605
Northwest Analytical Labs, Inc. [Member]
Defined Benefit Plan Disclosure [Line Items]
Notes receivable related parties			$ 95,000
Loans interest			10.00%
C3 Labs, Inc., [Member]
Defined Benefit Plan Disclosure [Line Items]
Notes receivable related parties	$ 1,003,622	$ 1,003,622
Loans interest	8.00%	8.00%
Debt instrument, maturity date		Aug. 23, 2022

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Schedule of Fixed Assets (Details) - USD ($)	Mar. 31, 2022	Sep. 30, 2021
Property, Plant and Equipment [Abstract]
Software	$ 125,903	$ 125,903
Office equipment	71,601	71,601
Furniture and fixtures	29,879	29,879
Lab equipment	1,455,479	1,453,716
Leasehold improvements	496,600	494,117
Lab equipment held under capital leases	99,193	99,193
Fixed assets,gross	2,278,655	2,274,409
Less: accumulated depreciation	(1,744,220)	(1,627,157)
Total	$ 534,435	$ 647,252

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Fixed Assets (Details Narrative) - USD ($)	6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Property, Plant and Equipment [Abstract]
Depreciation, Depletion and Amortization	$ 117,063	$ 159,209

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Schedule of Components of Lease Expense (Details) - USD ($)	6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Leases
Operating lease cost	$ 59,436	$ 21,644
Amortization of assets	17,329	45,308
Interest on lease liabilities	1,223	14,129
Total net lease cost	$ 18,552	$ 59,437

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Schedule of Supplemental Balance Sheet Information (Details) - USD ($)	Mar. 31, 2022	Sep. 30, 2021
Leases
Operating lease assets	$ 366,089	$ 413,884
Current portion of operating lease liabilities	98,281	93,601
Noncurrent operating lease liabilities	279,981	330,151
Total operating lease liabilities	378,262	423,752
Equipment, at cost	99,193	99,193
Accumulated amortization	(49,596)	(36,677)
Equipment, net	49,597	74,395
Current portion of finance lease liabilities	3,822	20,379
Noncurrent finance lease liabilities
Total finance lease liabilities	$ 3,822	$ 20,379
Weighted average remaining lease term operating leases	3 years 5 months 1 day	3 years 11 months 1 day
Weighted average remaining lease term Finance leases	18 days	1 year 6 months 18 days
Weighted average discount rate operating leases	5.75%	5.75%
Weighted average discount rate finance lease	18.41%	18.41%

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Schedule of Supplemental Cash Flow and Other Information (Details) - USD ($)	6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Leases
Operating cash flows used for operating leases	$ 45,490	$ 41,143
Financing cash flows used for finance leases	16,557	16,715
Total operating lease liabilities		528,616
Total finance lease liabilities		$ 99,193

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Schedule of Future Minimum Annual Lease Commitments Under Operating Leases (Details) - USD ($)	Mar. 31, 2022	Sep. 30, 2021
Leases
2022 (for the six months remaining)	$ 58,419
2023	119,468
2024	123,543
2025	116,892
2026
Total future undiscounted lease payments	418,322
Less interest	40,060
Present value of lease payments	378,262	$ 423,752
Less current portion	98,281	93,601
Long-term operating lease liabilities	$ 279,981	$ 330,151

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Schedule of Future Minimum Annual Lease Payments Under Finance Lease (Details) - USD ($)	Mar. 31, 2022	Sep. 30, 2021
Leases
2022	$ 3,865
2023
Total minimum lease payments	3,865
Less interest	43
Present value of lease liabilities	3,822	$ 20,379
Less current portion	3,822	20,379
Long-term finance lease liabilities

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Leases (Details Narrative)	6 Months Ended
	Mar. 31, 2022
Leases
Lease Expiration Date	Aug. 31, 2025

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Schedule of Notes Payable (Details) - USD ($)	Mar. 31, 2022	Sep. 30, 2021
Short-Term Debt [Line Items]
Total notes payable	$ 960,624	$ 598,941
Less: current maturities	(486,458)	(259,425)
Notes payable	474,166	339,516
Notes Payable One [Member]
Short-Term Debt [Line Items]
Total notes payable	790,000	400,000
Notes Payable Two [Member]
Short-Term Debt [Line Items]
Total notes payable	$ 170,624	$ 198,941

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Schedule of Notes Payable (Details) (Parenthetical) - USD ($)			6 Months Ended
	Sep. 10, 2021	Dec. 26, 2019	Mar. 31, 2022	Sep. 30, 2021
Short-Term Debt [Line Items]
Notes payable			$ 960,624	$ 598,941
Canna Lab Note [Member]
Short-Term Debt [Line Items]
Principal amount	$ 675,000
Debt instrument interest percentage	12.00%
Debt instrument maturity date	Sep. 10, 2024
Debt instrument periodic payment	$ 22,419.66
Notes payable			675,000
Secured Promissory Note [Member]
Short-Term Debt [Line Items]
Original debt amount			$ 115,000
Note Payable [Member]
Short-Term Debt [Line Items]
Debt instrument interest percentage		5.75%
Debt instrument maturity date		Dec. 26, 2024
Debt instrument periodic payment		$ 5,622
Payments for lab equipment		377,124
Proceeds from bank loan		$ 291,931
Debt instrument term description		five-year term

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Schedule of Convertible Notes Payable (Details) - USD ($)	Mar. 31, 2022	Sep. 30, 2021	Dec. 29, 2020	Dec. 28, 2020	Feb. 10, 2020
Debt Instrument [Line Items]
Total convertible notes payable	$ 1,759,735	$ 1,407,470
Less: unamortized debt discounts	(59,085)	(98,188)
Total convertible debt	1,700,650	1,307,282
Less: current maturities	1,700,650	1,050,000
Convertible notes payable		257,282
9% Secured Convertible Promissory Note [Member] | Accredited Investors [Member]
Debt Instrument [Line Items]
Debt principal amount			$ 50,000	$ 400,000	$ 350,000
Convertible Notes Payable One [Member]
Debt Instrument [Line Items]
Total convertible notes payable	50,000	50,000
Convertible Notes Payable Two [Member]
Debt Instrument [Line Items]
Total convertible notes payable	150,000	150,000
Convertible Notes Payable Three [Member]
Debt Instrument [Line Items]
Total convertible notes payable	350,000	350,000
Convertible Notes Payable Four [Member]
Debt Instrument [Line Items]
Total convertible notes payable	709,735	355,470
Convertible Notes Payable Five [Member]
Debt Instrument [Line Items]
Total convertible notes payable	350,000	350,000
Convertible Notes Payable Six [Member]
Debt Instrument [Line Items]
Total convertible notes payable	$ 150,000	$ 150,000

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Schedule of Convertible Notes Payable (Details) (Parenthetical) - USD ($)											6 Months Ended
	Sep. 30, 2021	Feb. 22, 2021	Dec. 29, 2020	Dec. 28, 2020	Sep. 30, 2020	Feb. 11, 2020	Feb. 10, 2020	Sep. 23, 2019	Nov. 08, 2018	Nov. 05, 2018	Mar. 31, 2022	Mar. 31, 2021
Short-Term Debt [Line Items]
Convertible debt											$ 394,265	$ 110,000
Amortization of debt discount premium											39,103	$ 8,322
Secured Convertible Promissory Note [Member] | Accredited Investors [Member]
Short-Term Debt [Line Items]
Debt instrument interest percentage						9.00%
Debt principal amount			$ 10,000	$ 60,000		$ 50,000
Debt maturity date						Aug. 11, 2022
Conversion price per share			$ 0.03	$ 0.03		$ 0.15
Convertible debt				$ 10,000
Shares of common stock converted			333,334
Secured Subordinated Convertible Promissory Note [Member] | Accredited Investors [Member]
Short-Term Debt [Line Items]
Debt instrument interest percentage						9.00%
Debt principal amount			$ 50,000	$ 200,000		$ 150,000
Debt maturity date						Aug. 11, 2022
Conversion price per share			$ 0.03	$ 0.03		$ 0.15
Convertible debt				$ 50,000
Shares of common stock converted			1,666,667
9% Secured Convertible Promissory Note [Member] | Accredited Investors [Member]
Short-Term Debt [Line Items]
Debt instrument interest percentage							9.00%
Debt principal amount			$ 50,000	$ 400,000			$ 350,000
Debt maturity date							Aug. 10, 2022
Conversion price per share			$ 0.03	$ 0.03			$ 0.15
Convertible debt				$ 50,000
Shares of common stock converted			1,666,667
Senior Secured Convertible Note [Member]
Short-Term Debt [Line Items]
Debt instrument interest percentage								8.00%
Debt principal amount		$ 90,000						$ 200,000
Debt maturity date					Aug. 10, 2022			Aug. 10, 2022
Conversion price per share		$ 0.03			$ 0.03			$ 0.11
Convertible debt											394,265
Shares of common stock converted		3,000,000
Debt instrument maturity date description					On September 30, 2020, the maturity date was extended to August 10, 2022 and the conversion price was amended to $0.03 per share
Debt instrument periodic payment	$ 355,470
Amortization of debt discount premium	$ 98,188										$ 40,000
Senior Secured Convertible Note One [Member]
Short-Term Debt [Line Items]
Debt instrument interest percentage									8.00%
Debt principal amount									$ 350,000
Debt maturity date									Aug. 10, 2022
Conversion price per share					$ 0.03				$ 0.14
Senior Secured Convertible Note Two [Member]
Short-Term Debt [Line Items]
Debt instrument interest percentage										8.00%
Debt principal amount										$ 150,000
Debt maturity date										Aug. 10, 2022
Conversion price per share					$ 0.03					$ 0.14

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Notes Payable (Details Narrative) - USD ($)	6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Note Payable [Member]
Short-Term Debt [Line Items]
Interest expense	$ 41,277	$ 7,970

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Schedule of Interest Expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Debt Disclosure [Abstract]
Interest on short term loans				$ 1,687
Interest on capital leases			6,603	4,929
Interest on notes payable			41,277	7,970
Amortization of beneficial conversion features			39,103	8,322
Interest on convertible notes			58,128	51,802
Total interest expense	$ 75,718	$ 32,337	$ 145,111	$ 74,710

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Convertible Notes Payable (Details Narrative) - USD ($)	6 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Sep. 30, 2021
Debt Instrument [Line Items]
Convertible notes discounts	$ 0		$ 8,322
Amortization of debt discounts	39,103	$ 8,322
Unamortized discounts	$ 59,085		98,188
Maximum Share Amount [Member]
Debt Instrument [Line Items]
Maximum amount owned percentage of issued and outstanding common shares	4.99%
Convertible Notes Payable [Member]
Debt Instrument [Line Items]
Convertible notes discounts	$ 98,188
Amortization of debt discounts	39,103
Unamortized discounts	59,085		$ 98,188
Convertible notes interest expense	$ 46,380	$ 51,802

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Changes in Stockholders’ Equity (Details Narrative) - USD ($)	3 Months Ended				6 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2022	Mar. 31, 2021	Sep. 30, 2021
Class of Stock [Line Items]
Preferred stock, shares authorized	6,000,000				6,000,000		6,000,000
Preferred stock, par value	$ 0.001				$ 0.001		$ 0.001
Preferred stock, shares issued	1,047,942				1,047,942		1,325,942
Preferred stock, shares outstanding	1,047,942				1,047,942		1,325,942
Purchase Price	100.00%				100.00%
Proceeds from issuance of preference stock					$ 55,600
Issuance of shares					250,000
Conversion of stock shares issued					8,340,000
Issued and outstanding common stock	4.99%				4.99%
Gross proceeds	$ 103,464	$ 98,679	$ 29,897	$ 44,060
Common stock par value	$ 0.001				$ 0.001		$ 0.001
Common stock authorized	250,000,000				250,000,000		250,000,000
Common stock, shares issued	75,146,820				75,146,820		71,230,153
Common stock, shares outstanding	75,146,820				75,146,820		71,230,153
Issuance of shares					$ 7,500
Common Stock [Member]
Class of Stock [Line Items]
Gross proceeds	$ 2,167	1,500	$ 250	$ 1,228
Issuance of shares
Series B Preferred Stock [Member]
Class of Stock [Line Items]
Issuance of shares					55,600
Board Of Directors [Member] | Common Stock [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Issued for Services					1,500,000
Stock Issued During Period, Value, Issued for Services					$ 98,679
Third Party Consultants [Member] | Common Stock [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, Issued for Services					2,166,667
Stock Issued During Period, Value, Issued for Services					$ 103,464
Series A Convertible Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized	10,000,000				10,000,000
Preferred stock, par value	$ 0.001				$ 0.001
Preferred stock, shares designated	6,000,000				6,000,000
Series B Convertible Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares designated	1,500,000				1,500,000
Preferred stock, shares designated remaining	2,500,000				2,500,000
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares issued	1,047,942				1,047,942
Preferred stock, shares outstanding	1,047,942				1,047,942
Conversion of stock shares converted					1,047,942
Preferred stock convertible into common stock shares	5,239,710				5,239,710
Percentage of equity beneficial ownership	4.99%				4.99%
Conversion of stock description					the Company offered the Series A Preferred shareholders the ability to convert their Preferred A shares into Preferred B shares for an additional investment of 20% of their initial Series A investment
Proceeds from issuance of preference stock					$ 55,600
Series A Preferred Stock [Member] | Exchange Agreement [Member]
Class of Stock [Line Items]
Conversion of stock shares converted					278,000
Series B Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, par value	$ 1.00				$ 1.00
Preferred stock, shares issued	333,600				333,600
Preferred stock, shares outstanding	333,600				333,600
Conversion of stock shares converted					333,600
Conversion of stock description					Upon the liquidation or dissolution of the Company, or any merger or sale of all or substantially all of the assets, or upon a change in control whereby a stockholder gains control of 50% or more of the outstanding shares of common stock, the shares of Series B Preferred are entitled to receive, prior to any distribution to the holders of common stock, 100% of the purchase price per share of Series B Preferred plus all accrued but unpaid dividends
Conversion price	$ 0.04				$ 0.04
Shares, purchased					55,600
Share weighted average price of shares purchased	$ 1.00				$ 1.00
Gross proceeds					$ 55,600
Series B Preferred Stock [Member] | Exchange Agreement [Member]
Class of Stock [Line Items]
Conversion of stock shares converted					278,000
Series A into Series B Preferred Stock [Member]
Class of Stock [Line Items]
Conversion of stock shares converted					278,000

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Summary of Common Stock Options Outstanding (Details)	6 Months Ended
	Mar. 31, 2022 $ / shares shares
Share-Based Payment Arrangement [Abstract]
Range of Exercise Price, Minimum	$ 0.05
Range of Exercise Price, Maximum	$ 0.13
Number of Options Outstanding | shares	6,020,000
Weighted Average Remaining Contractual Life	6 years 6 months 3 days
Weighted Average Exercise Price	$ 0.07
Number of Shares Exercisable | shares	5,359,285
Weighted Average Exercise Price Exercisable	$ 0.07

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Schedule of Activity of Outstanding Common Stock Options (Details)	6 Months Ended
	Mar. 31, 2022 $ / shares shares
Share-Based Payment Arrangement [Abstract]
Number of Shares Outstanding, Beginning balance | shares	5,620,000
Weighted Average Exercise Price, Beginning Balance | $ / shares	$ 0.08
Number of Shares Options Issued | shares	1,000,000
Weighted Average Exercise Price, Options Issued | $ / shares	$ 0.04
Number of Shares Options Forfeited | shares	(600,000)
Weighted Average Exercise Price, Options Forfeited | $ / shares	$ 0.11
Number of Shares Outstanding, Ending balance | shares	6,020,000
Weighted Average Exercise Price, Outstanding Ending | $ / shares	$ 0.07
Number of Shares Exercisable | shares	5,359,285
Weighted Average Exercise Price, Exercisable | $ / shares	$ 0.07

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Common Stock Options (Details Narrative) - USD ($)		6 Months Ended
	Jun. 21, 2016	Mar. 31, 2022	Mar. 31, 2021	Sep. 30, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options outstanding		6,020,000		5,620,000
Number of options granted to purchase shares of common stock		1,000,000
Weighted average exercise price, options issued		$ 0.04
Intrinsic value, market price per share		0.023
Intrinsic value weighted-average exercise price per share		$ 0.07
Amortization of Stock Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Amortization of stock options		$ 53,739	$ 41,126
Unamortized expenses expected to be expensed		31,798
Equity Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock issued during period, value, issued for services		$ 33,716
Stock option, volatility rate		186.00%
Call option values		$ 0.0337
Weighted average exercise price, options issued		$ 0.035
Equity Option [Member] | Common Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options granted to purchase shares of common stock		1,000,000
2012 Stock Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options outstanding		6,020,000
2012 Stock Incentive Plan [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares issued under stock plan	11,500,000

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Summary of Common Stock Warrants Outstanding (Details)	6 Months Ended
	Mar. 31, 2022 $ / shares shares
Common Stock Warrants
Range of Exercise Price, Minimum	$ 0.10
Range of Exercise Price, Maximum	$ 0.26
Number of Warrants Outstanding | shares	2,535,001
Weighted Average Remaining Contractual Life	4 years 10 months 2 days
Weighted Average Exercise Price	$ 0.17
Number of Warrants Exercisable | shares	2,535,001
Weighted Average Exercise Price, Exercisable	$ 0.17

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Schedule of Outstanding Common Stock Warrants Activity (Details)	6 Months Ended
	Mar. 31, 2022 $ / shares shares
Common Stock Warrants
Number of Shares, Balance beginning | shares	2,535,001
Weighted Average Exercise Price, Balance beginning | $ / shares	$ 0.17
Number of Shares, Warrants granted | shares
Weighted Average Exercise Price, Warrants granted | $ / shares
Number of Shares, Warrants expired | shares
Weighted Average Exercise Price, Warrants expired | $ / shares
Number of Shares, Balance ending | shares	2,535,001
Weighted Average Exercise Price, Balance, ending | $ / shares	$ 0.17
Number of Shares, Exercisable | shares	2,535,001
Weighted Average Exercise Price, Exercisable | $ / shares	$ 0.17

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Common Stock Warrants (Details Narrative)	6 Months Ended
	Mar. 31, 2022 $ / shares shares
Number of warrant to purchase of common stock shares | shares	2,535,001
Intrinsic value, market price per share	$ 0.023
Intrinsic value weighted-average exercise price per share	0.07
Warrant [Member]
Intrinsic value weighted-average exercise price per share	$ 0.17