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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, 2024

 

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

 

 

Hypha Labs, 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.)

     
5940 S. Rainbow Boulevard Las Vegas, NV   89118
(Address of principal executive offices)   (zip code)

 

(702) 527-2060

(Registrant’s telephone number, including area code)

 

Former Name: Digipath, Inc.; Former Address: 6450 Cameron St, Suite 113 Las Vegas, NV 89118

(Former name, former address and former fiscal year, if changed since last report)

 

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 20, 2024 was 105,280,155.

 

 

 

 
 

 

TABLE OF CONTENTS

 

    Page
    No.
PART I - FINANCIAL INFORMATION   3
ITEM 1. FINANCIAL STATEMENTS (Unaudited)   3
  Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and September 30, 2023   3
  Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2024 and 2023 (Unaudited)   4
  Consolidated Statements of Stockholders’ Deficit for the Three and Six Months Ended March 31, 2024 and 2023 (Unaudited)   5
  Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2024 and 2023 (Unaudited)   6
  Notes to the Consolidated Financial Statements (Unaudited)   7
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   22
ITEM 4. CONTROLS AND PROCEDURES   22
PART II - OTHER INFORMATION   23
ITEM 1. Legal Proceedings   23
ITEM 1A. RISK FACTORS   23
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   23
ITEM 3. DEFAULTS UPON SENIOR SECURITIES   23
ITEM 4. MINE SAFETY DISCLOSURES   23
ITEM 5. OTHER INFORMATION   23
ITEM 6. EXHIBITS   23
  SIGNATURES   25

 

2
 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

HYPHA LABS, INC. (FORMERLY DIGIPATH, INC.) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

   March 31, 2024   September 30, 2023 
   (Unaudited)     
Assets          
           
Current assets:          
Cash  $1,063,401   $271,006 
Note receivable, net of allowance of $625,000   -    - 
Other current assets   321,943    8,570 
Assets held for sale - current   -    486,222 
Total current assets   1,385,344    765,798 
           
Assets held for sale – long term   -    643,666 
Total non-current assets   -    643,666 
           
Total Assets  $1,385,344   $1,409,464 
           
Liabilities and Stockholders’ Deficit          
           
Current liabilities:          
Accounts payable  $102,140   $122,094 
Accrued expenses   323,030    328,491 
Accrued expenses – related party   20,000    12,390 
Current maturities of notes payable   -    565,000 
Current maturities of convertible notes payable, net of discounts   1,078,235    1,385,932 
Current maturities of convertible notes payable related parties, net of discounts   -    339,252 
Liabilities held for sale - current   -    368,655 
Total current liabilities   1,523,405    3,121,814 
           
Non-current liabilities:          
Liabilities held for sale – long term   -    159,156 
Total non-current liabilities   -    159,156 
           
Total Liabilities   1,523,405    3,280,970 
           
Series B convertible preferred stock, $0.001 par value, 1,500,000 shares authorized; 333,600 shares issued and outstanding as of March 31, 2024 and September 30, 2023   333,600    333,600 
           
Commitments and contingencies   -    - 
           
Stockholders’ Deficit:          
Series A convertible preferred stock, $0.001 par value, 6,000,000 shares authorized; 1,047,942 shares issued and outstanding as of March 31, 2024 and September 30, 2023   1,048    1,048 
Series C convertible preferred stock, $0.001 par value, 1,000 shares authorized; 0 shares issued and outstanding as of March 31, 2024 and September 30, 2023, respectively   -    - 
Common stock, $0.001 par value, 250,000,000 shares authorized; 105,280,155 and 87,096,820 shares issued and outstanding at March 31, 2024 and September 30, 2023, respectively   105,280    87,097 
Additional paid-in capital   18,796,541    17,468,746 
Accumulated deficit   (19,374,530)   (19,761,997)
           
Total Stockholders’ Deficit   (471,661)   (2,205,106)
           
Total Liabilities and Stockholders’ Deficit  $1,385,344   $1,409,464 

 

See accompanying notes to unaudited consolidated financial statements.

 

3
 

 

HYPHA LABS, INC. (FORMERLY DIGIPATH, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   2024   2023   2024   2023 revised 
   For the Three Months Ended   For the Six Months Ended 
   March 31,   March 31, 
   2024   2023   2024   2023 
                 
Revenues  $-   $-   $-   $- 
Cost of sales   -    -    -    - 
Gross profit   -    -    -    - 
                     
Operating expenses:                    
General and administrative   182,504    45,674    197,247    85,198 
Professional fees   391,543    128,440    447,364    175,637 
Total operating expenses   574,047    174,114    644,611    260,835 
                     
Operating loss   (574,047)   (174,114)   (644,611)   (260,835)
                     
Other income (expense):                    
Other Expense   -    -    -    (55,000)
Gain on sale of subsidiary assets   1,596,505    -    1,596,505    - 
Recovery of previously written off receivables   -    135,000    -    135,000 
Other income   -    -    13,896    - 
Loss on debt extinguishment   (956,494)   -    (956,494)   - 
Interest expense   (73,958)   (82,707)   (158,271)   (179,859)
Total other income (expense)   566,053    52,293    495,636    (99,859)
                     
Net loss from continuing operations before income taxes   (7,994)   (121,821)   (148,975)   (360,694)
Provision for income taxes   48,714    -    48,714    - 
Net loss from continuing operations   (56,708)   (121,821)   (197,689)   (360,694)
Net income from discontinued operations, net of taxes   292,529    54,323    585,156    52,866 
Net income (loss)  $235,821   $(67,498)  $387,467   $(307,828)
                     
Weighted average number of common shares outstanding – basic   92,083,084    82,296,820    89,576,328    82,257,534 
Weighted average number of common shares outstanding – fully diluted   92,083,084    82,296,820    89,576,328    82,257,534 
                     
Net loss per share from continuing operations – basic  $(0.00)  $(0.00)  $(0.00)  $(0.00)
Net income (loss) per share from discontinued operations – basic  $0.00   $0.00   $0.01   $0.00 
Net income (loss) per share – basic  $0.00   $(0.00)  $0.00   $(0.00)
                     
Net loss per share from continuing operations – diluted  $(0.00)  $(0.00)  $(0.00)  $(0.00)
Net income (loss) per share from discontinued operations – diluted  $0.00   $0.00   $0.01   $0.00 
Net income (loss) per share – diluted  $0.00   $(0.00)  $0.00   $(0.00)

 

See accompanying notes to unaudited consolidated financial statements.

 

4
 

 

HYPHA LABS, INC. (FORMERLY DIGIPATH, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

 

   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Payable   Capital   Deficit   Deficit 
   Series B
Convertible
Preferred Stock		   Series A
Convertible
Preferred Stock		   Series C
Preferred Stock		   Common Stock   Stock   Additional
Paid-in		   Accumulated   Total
Stockholders’		 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Payable   Capital   Deficit   Deficit 
                                                 
Balance, September 30, 2023   333,600   $333,600    1,047,942   $1,048    -   $   -    87,096,820   $87,097   $   -   $17,468,746   $(19,761,997)  $(2,205,106)
                                                             
Stock-based compensation   -    -    -    -    -    -    -    -    -    1,153    -    1,153 
                                                             
Net income   -    -    -    -    -    -    -    -    -    -    151,646    151,646 
                                                             
Balance, December 31, 2023   333,600    333,600    1,047,942    1,048    -    -    87,096,820    87,097    -    17,469,899    (19,610,351)   (2,052,307)
                                                             
Shares issued for conversion of notes payable   -    -    -    -    -    -    4,000,000    4,000    -    36,000    -    40,000 
                                                             
Stock-based compensation   -    -    -    -    -    -    14,183,335    14,183    -    334,148    -    348,331 
                                                             
Modification of conversion price in debt extinguishment   -    -    -    -    -    -    -    -    -    956,494    -    956,494 
                                                             
Net income   -    -    -    -    -    -    -    -    -    -    235,821    235,821 
                                                             
Balance, March 31, 2024   333,600   $333,600    1,047,942   $1,048    -   $-    105,280,155   $105,280    -   $18,796,541   $(19,374,530)  $(471,661)

 

   Series B
Convertible
Preferred Stock		   Series A
Convertible
Preferred Stock		   Series C
Preferred Stock		   Common Stock   Stock   Additional
Paid-in		   Accumulated   Total
Stockholders’		 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Payable   Capital   Deficit   Deficit 
                                                 
Balance, September 30, 2022   333,600   $333,600    1,047,942   $1,048    1,000   $    1    75,146,820   $75,147   $71,745   $17,117,958   $(20,008,771)  $(2,742,872)
                                                             
Issuance of common shares to settle stock payable   -    -    -    -    -    -    7,150,000    7,150    (71,745)   64,595    -    - 
                                                             
Warrants issued as debt financing costs   -    -    -    -    -    -    -    -    -    93,938    -    93,938 
                                                             
Stock-based compensation   -    -    -    -    -    -    -    -    -    8,306    -    8,306 
                                                             
Net loss   -    -    -    -    -    -    -    -    -    -    (240,330)   (240,330)
                                                             
Balance, December 31, 2022   333,600    333,600    1,047,942    1,048    1,000    1    82,296,820    82,297    -    17,284,797    (20,249,101)   (2,880,958)
                                                             
Repurchased of preferred C stock   -    -    -    -    (1,000)   (1)   0    0    0    (99)   -    (100)
                                                             
Common shares to be issued for compensation   -    -    -    -    -    -    -    -    32,120    -    -    32,120 
                                                             
Stock-based compensation   -    -    -    -    -    -    -    -    -    9,204    -    9,204 
                                                             
Net loss   -    -    -    -    -    -    -    -    -    -    (67,498)   (67,498)
                                                             
Balance, March 31, 2023   333,600   $333,600    1,047,942   $1,048    -   $-    82,296,820   $82,297   $32,120   $17,293,902   $(20,316,599)  $(2,907,232)

 

See accompanying notes to unaudited consolidated financial statements.

 

5
 

 

HYPHA LABS, INC. (FORMERLY DIGIPATH, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   2024   2023 
   For the Six Months Ended 
   March 31, 
   2024   2023 
Cash flows from operating activities          
Net loss from continuing operations  $(197,689)  $(360,694)
Adjustments to reconcile net loss to net cash used in operating activities:          
Recovery of previously written off receivables   -    (135,000)
Gain on sale of subsidiary net assets   (1,596,505)   - 
Loss on debt extinguishment   956,494    - 
Stock-based compensation   349,484    49,630 
Amortization of debt discounts   43,050    77,616 
Impairment of fixed assets   -    55,000 
Decrease (increase) in assets:          
Other current assets   (3,030)   1,289 
Increase (decrease) in liabilities:          
Accounts payable   (14,530)   33,384 
Accrued expenses   20,080    (16,253)
Accrued expenses – related parties   7,610    12,000 
Net cash used in operating activities from continuing operations   (435,036)   (283,028)
Net cash provided by operating activities from discontinued operations   373,913    141,538 
Net cash used in operating activities   (61,123)   (141,490)
           
Cash flows from investing activities          
Cash received from sale of subsidiary net assets   2,126,934    - 
Proceeds from sale of collateralized assets   -    235,000 
Net cash provided by investing activities from continuing operations   2,126,934    235,000 
Net cash used in investing activities from discontinued operations   (11,667)   (3,687)
Net cash provided by investing activities   2,115,267    231,313 
           
Cash flows from financing activities          
Repayments of notes payable   (595,965)   - 
Repayments of convertible notes payable   (650,000)   - 
Repurchase of Preferred C stock   -    (100)
Net cash used in financing activities from continuing operations   (1,245,965)   (100)
Net cash used in financing activities from discontinued operations   (15,784)   (30,023)
Net cash used in financing activities   (1,261,749)   (30,123)
           
Net increase in cash   792,395    59,700 
Cash – beginning   271,006    56,168 
Cash – ending  $1,063,401   $115,868 
           
Supplemental disclosures:          
Interest paid  $126,533   $151,927 
Income taxes paid  $-   $- 
           
Non-cash investing and financing activities:          
Common stock issued for settlement of stock payable  $-   $71,745 
Warrants issued for debt financing  $-   $93,938 
Accounts payable and accrued interest added to note principal balance  $30,965   $- 
Common stock issued for conversion of note payable  $40,000   $- 

 

See accompanying notes to unaudited consolidated financial statements.

 

6
 

 

HYPHA LABS, INC. (FORMERLY DIGIPATH, INC.) AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

 

Note 1 – Nature of Business and Significant Accounting Policies

 

Nature of Business

 

Hypha Labs, Inc. (formerly Digipath, Inc.) was incorporated in Nevada on October 5, 2010. Until February 20, 2024, Hypha Labs, Inc. and its subsidiaries (“Hypha,” the “Company,” “we,” “our” or “us”) was a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, and supported the cannabis industry’s best practices for reliable testing, cannabis education and training. Our mission was to provide pharmaceutical-grade analysis and testing to the cannabis industry, under ISO-17025:2017 guidelines, to ensure consumers and patients knew exactly what was in the cannabis they ingest and to help maximize the quality of our clients’ products through research, development, and standardization. Hypha Labs had been operating a cannabis-testing lab in Nevada since 2015.

 

On February 20, 2024, we completed the sale of the net assets of our subsidiary Digipath Labs, Inc. (“Digipath Labs”). As of that date we were no longer in the business as a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, which supported the cannabis industry’s best practices for reliable testing, cannabis education and training.

 

Effective March 12, 2024, the Company amended Article 1 of its Articles of Incorporation to change its name from Digipath, Inc. to Hypha Labs, Inc. Hypha Products, Inc., a wholly owned subsidiary of the Company, was formed on April 18, 2024.

 

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, 2023. 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, 2024:

 

    Jurisdiction of      
Name of Entity   Incorporation    Relationship 
Hypha Labs, Inc.(formerly Digipath, Inc.)(1)   Nevada    Parent 
Digipath Labs, Inc.   Nevada    Subsidiary 
Digipath Labs CA, Inc. (2)   California    Subsidiary 
Digipath Labs S.A.S.(3)   Colombia    Subsidiary 
VSSL Enterprises, Ltd.(4)   Canada    Subsidiary 

 

(1) Holding company, which owns each of the wholly-owned subsidiaries. All subsidiaries shown above are wholly-owned by Hypha Labs, Inc., the parent company.
(2) Formed during the second fiscal quarter of 2021, but has not yet commenced significant operations.
(3) Formed during the first fiscal quarter of 2019, but has not yet commenced significant operations.
(4) Acquired on March 11, 2020.

 

7
 

 

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”, “Hypha” or “DIGP”. The Company’s headquarters are located in Las Vegas, Nevada and substantially all of its customers were 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.

 

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.

 

Our revenue was primarily generated through our subsidiary, Digipath Labs which recognized 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 was 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.

 

For the three and six months ended March 31, 2024 and 2023, all revenues are classified as part of Net income from discontinued operations in the accompanying consolidated statement of operations

 

Discontinued Operations

 

On April 20, 2023, the Company and Digipath Labs entered into an Asset Purchase Agreement (the “Purchase Agreement”) with DPL NV, LLC (“Buyer”), pursuant to which Digipath Labs agreed to sell substantially all of its assets to Buyer for a cash purchase price of $2,300,000 (the “Purchase Price”). The business of an entity that is in the process of disposing its assets by sale, or that intends to cease operations, is reported as discontinued operations if the transaction represents a strategic shift that will have a major effect on an entity’s operations and financial results. As such, the Company’s lab testing business is now reported as discontinued operations.

 

Assets and liabilities of the discontinued operations are aggregated and reported separately as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of September 30, 2023. On February 20, 2024, we completed the sale of the net assets of our subsidiary Digipath Labs and as such no longer have assets or liabilities that are reported separately in the Consolidated Balance Sheet as of March 31, 2024. The results of discontinued operations are aggregated and presented separately in the Consolidated Statements of Operations as net income from discontinued operations for the periods ended March 31, 2024 and 2023. The cash flows of the discontinued operations are reflected as cash flows of discontinued operations within the Company’s Consolidated Statements of Cash Flows for the periods ended March 31, 2024 and 2023.

 

Amounts presented in discontinued operations have been derived from our consolidated financial statements and accounting records using the historical basis of assets, liabilities, results of operations, and cash flows of Digipath Labs. The discontinued operations exclude general corporate allocations.

 

Basic and Diluted Loss Per Share

 

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities.

 

8
 

 

The following table presents the effect of potential dilutive issuances for the three and six months ended March 31, 2024 and 2023:

 

   March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023 
   Three Months Ended   Six Months Ended 
   March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023 
                 
Net income (loss) attributable to common stockholders  $(56,708)  $(121,821)  $(197,689)  $(360,694)
Interest expense associated with convertible debt   -    -    -    - 
Net income (loss) for dilutive calculation  $(56,708)  $(121,821)   (197,689)   (360,694)
                     
Weighted average shares outstanding   92,083,084    82,296,820    89,576,328    82,257,534 
Dilutive effect of preferred stock   -    -    -    - 
Dilutive effect of convertible debt   -    -    -    - 
Dilutive effect of common stock warrants   -    -    -    - 
Weighted average shares outstanding for diluted net income (loss) per share   92,083,084    82,296,820    89,576,328    82,257,534 

 

For the three and six months ended March 31, 2024, potential dilutive securities of 104,490,131 shares issuable upon conversion of convertible notes payable, 8,120,000 shares issuable upon exercise of options, 15,387,050 shares issuable upon exercise of warrants, and 13,579,710 shares issuable upon conversion of our Preferred A and Preferred B shares, respectively, had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

 

For the three and six months ended March 31, 2023, potential dilutive securities of 83,125,488 shares issuable upon conversion of convertible notes payable, 6,020,000, shares issuable upon exercise of options, 15,387,050 shares issuable upon exercise of warrants, and 13,579,710 shares issuable upon conversion of our Preferred A and Preferred B shares, respectively, had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

 

Reclassifications

 

Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.

 

Recently Issued Accounting Pronouncements

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. The Company is currently evaluating the effect of this pronouncement on its disclosures.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.

 

Note 2 – Going Concern

 

As shown in the accompanying consolidated financial statements, as of March 31, 2024, the Company had negative working capital of $138,061, and accumulated recurring losses of $19,374,530, and $1,063,401 of cash on hand, which may not be sufficient to sustain operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The consolidated financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. These financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

9
 

 

Note 3 – Fair Value of Financial Instruments

 

Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

 

The Company has certain financial instruments that must be measured under the new fair value standard. The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of March 31, 2024 and September 30, 2023, respectively:

 

   Level 1   Level 2   Level 3 
   Fair Value Measurements at March 31, 2024 
   Level 1   Level 2   Level 3 
Assets               
Cash  $1,063,401   $-   $- 
                
Liabilities               
Convertible notes payable, net of discounts of $0   -    -    1,078,235 

 

   Level 1   Level 2   Level 3 
   Fair Value Measurements at September 30, 2023 
   Level 1   Level 2   Level 3 
Assets               
Cash  $271,006   $-   $- 
                
Liabilities               
Notes payable   -    565,000    - 
Convertible notes payable, net of discounts of $43,051   -    -    1,725,184 

 

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, 2024.

 

Note 4 – Related Party Transactions

 

During the six months ended March 31, 2024 the Company incurred compensation expense of $30,000 for services provided by its CFO. As of March 31, 2024, no amounts were owed to the CFO for services provided.

 

During the six months ended March 31, 2024 the Company accrued fees of $10,000 for services provided by its directors. As of March 31, 2024, the Company has accrued a total of $20,000 in fees for services provided by its directors.

 

Note 5 – 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 September 30, 2022, we loaned C3 Labs, Inc. (“C3 Labs”) a total of $1,056,570. The loans bore interest at an annual rate of 8%. These loans were evidenced by secured demand notes, and were secured by a lien on the borrower’s assets and had a maturity date of August 23, 2022. The Company had recorded total accrued interest of $64,017 as of September 30, 2022. As of September 30, 2022, the Company recorded a full allowance against the loans and related accrued interest.

 

The loans were made in connection with a potential acquisition of a controlling interest in C3 Labs pursuant to a letter of intent. On March 11, 2022, the Company notified the current owners of C3 Labs of its termination of the letter of intent and took possession of the equipment of C3 Labs (“C3 Equipment”).

 

On December 8, 2022, the Company entered into an Asset Purchase Agreement with Invictus Wealth Group (“Invictus”), whereby the Company agreed to sell the C3 Equipment to Invictus for a total purchase price of $900,000. The purchase price consisted of an upfront payment of $275,000, and a note receivable (“Invictus Note”) in the amount of $625,000. The Invictus Note has a maturity date of December 31, 2023, accrues interest at a rate of 10% per annum, and provides for principal payments of $100,000 each due on June 30, 2023 and September 30, 2023, with the final payment of $425,000 due on December 31, 2023. As of June 30, 2023 the Company received the full down payment of $275,000. In April 2023, the Invictus Note was amended and restated to extend the maturity date to March 31, 2024, with principal payments of $100,000 each due on September 30, 2023 and December 31, 2023, with the final payment of $425,000 due on March 31, 2024. On January 3, 2024, the Company amended the Invictus Note for a second time to extend the maturity date to December 31, 2025, with principal payments of $50,000 each due on June 30, 2024, September 30, 2024 and December 31, 2024, $100,000 due on March 31, 2025 and June 30, 2025, $125,000 due on September 30, 2025 with the final payment of $216,780 due on December 31, 2025.

 

10
 

 

The Company recorded a full allowance against the Invictus Note, as of the transaction date, as collectability was not reasonably assured at of the transaction date.

 

Note 6 –Notes Payable

 

Notes payable consists of the following at March 31, 2024 and September 30, 2023, respectively:

 

   March 31, 2024   September 30, 2023 
         
On September 10, 2021, the Company issued a Secured Promissory note in the principal amount of $675,000 to US Canna Lab I, LLC (the “Canna Lab Note”). The 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. In addition, the Company was advanced an additional $115,000 of funds during the year ended September 30, 2022 under the same terms as the original note. During the years ended September 30, 2023 and 2022, the Company repaid $100,000 and $125,000, respectively of the principal balance on the Canna Lab Note. However, as a result of the Company not meeting the monthly payment obligations, the Canna Lab Note is in technical default, however, no default notice has been provided by Canna Lab as of the date of this filing. There are no additional obligations of the Company under default with the exception of being due on demand. During the three months ended December 31, 2023, $35,965 of accrued interest and outstanding payables were transferred to the principal balance of the Canna Lab Note. On February 27, 2024, the Company repaid the note and related accrued interest in full.  $         -   $565,000 
           
Total notes payable   -    565,000 
Less: current maturities   -    (565,000)
Notes payable  $-   $- 
           
The Company recorded interest expense pursuant to the stated interest rate and closing costs on the notes payable in the amount of $36,614 and $24,000 during the six months ended March 31, 2024 and 2023.
           
Notes payable – discontinued operations          
           
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. Pursuant to the asset purchase agreement with Buyer as discussed in Note 1, the equipment loan was transferred to the Buyer and is no longer the financial responsibility of the Company.  $-   $80,428 

 

Note 7 – Convertible Notes Payable

 

Related party convertible notes payable consist of the following at March 31, 2024 and September 30, 2023, respectively:

 

   March 31, 2024   September 30, 2023 
         
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 matured 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. On August 8, 2022, the note holder agreed to extend the maturity date of the note to February 11, 2024. In exchange for the extension, the Company agreed to issue 4,550,000 common shares, which were recorded as debt discount with a relative fair value of $43,788. As a result of the shares issued upon the extension agreement, the lender now holds more the 5% of the total outstanding common shares, and is therefore considered a related party. On February 27, 2024, the Company repaid the note and related accrued interest in full.  $      -   $350,000 
           
Total related party convertible notes payable   -    350,000 
Less: unamortized debt discounts   -    (10,748)
Total convertible debt   -    339,252 
Less: current maturities   -    (339,252)
Related party convertible notes payable  $-   $- 

 

11
 

 

Convertible notes payable consist of the following at March 31, 2024 and September 30, 2023, respectively:

 

   March 31, 2024   September 30, 2023 
         
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 matured on August 11, 2022, as amended, 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. On August 8, 2022, the note holder agreed to extend the maturity date of the note to February 11, 2024. In exchange for the extension, the Company agreed to issue 650,000 common shares, which were recorded as debt discount, with a relative fair value of $6,989.  $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 matured on August 11, 2022, as amended, 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. On August 8, 2022, the note holder agreed to extend the maturity date of the note to February 11, 2024. In exchange for the extension, the Company agreed to issue 1,950,000 common shares, which were recorded as debt discount, with a relative fair value of $20,968. On February 27, 2024, the Company repaid the note and related accrued interest in full.   -    150,000 
           
On September 23, 2019, the Company received proceeds of $200,000 on a senior secured convertible note that carries an 8% interest rate, which matured 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 the outstanding short term notes and accrued interest into the principal balance, making the outstanding balance $355,469, 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. On October 1, 2022, the Company further extended the maturity date to February 11, 2024. In connection with the modification, the Company issued warrants to purchase 4,621,105 shares of common stock, with a fair value of $32,166, which was recorded as a debt discount. On January 22, 2024 the Company further amended the note to extend the maturity date to February 11, 2025 and reduced the conversion price to $0.01. As a result of the modification of the conversion price, the Company recorded a loss on debt extinguishment of $481,955.   355,469    355,469 
           
On November 8, 2018, the Company received proceeds of $350,000 on a senior secured convertible note that carries an 8% interest rate, which matured 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. On October 1, 2022, the Company further extended the maturity date to February 11, 2024. In connection with the modification, the Company issued warrants to purchase 4,550,000 shares of common stock, with a fair value of $31,671, which was recorded as a debt discount. On January 29, 2024 the holder converted $40,000 of this note into common shares. On January 22, 2024 the Company further amended the note to extend the maturity date to February 11, 2025 and reduced the conversion price to $0.01. As a result of the modification of the conversion price, the Company recorded a loss on debt extinguishment of $474,539.   310,000    350,000 
           
On October 1, 2022, the Company entered into a senior secured convertible note that carries an 8% interest rate, which matures on February 11, 2024. The Note documented the advances made during the year ended September 30, 2022 in the amount of $362,765. The principal and interest on the Note are convertible into common shares at a conversion price of $0.01. In connection with the note, the Company issued warrants to purchase 4,715,945 shares of common stock, with a fair value of $30,102, which was recorded as a debt discount.   362,765    362,765 
           
On November 5, 2018, the Company received proceeds of $150,000 on a senior secured convertible note that carries an 8% interest rate, which matured 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. On February 27, 2024, the Company repaid the note and related accrued interest in full.   -    150,000 
           
Total convertible notes payable   1,078,235    1,418,234 
Less: unamortized debt discounts   -    (32,302)
Total convertible debt   1,078,235    1,385,932 
Less: current maturities   (1,078,235)   (1,385,932)
Convertible notes payable  $-   $- 

 

12
 

 

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 $93,938 during the year ended September 30, 2023. The discount is amortized on a straight-line basis from the dates of issuance until the earlier of the stated redemption date of the debt, as noted above, or the actual settlement date. The Company recorded debt amortization expense attributed to the aforementioned debt discount in the amounts of $43,050 and $77,616, during the six months ended March 31, 2024 and 2023, respectively. Unamortized discount as of March 31, 2024 is $0.

 

All of the convertible notes (except the related party convertible note) 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 $77,808 and $72,473 for the three months ended December 31, 2023 and 2022, respectively.

 

The Company recognized interest expense for the six months ended March 31, 2024 and 2023, respectively, as follows:

 

   March 31, 2024   March 31, 2023 
         
Interest on notes payable   36,614    29,770 
Amortization of beneficial conversion features   43,050    77,616 
Interest on convertible notes   

78,607

    72,473 
Total interest expense  $158,271   $179,859 

 

Note 8 – Stockholders’ Equity

 

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 shares have been designated as Series A Convertible Preferred Stock (“Series A Preferred”), 1,500,000 shares have been designated as Series B Convertible Preferred Stock (“Series B Preferred”), and 1,000 shares have been designated as Series C Preferred Stock (“Series C Preferred”) with the remaining 2,499,000 shares available for designation from time to time by the Board as set forth below. As of March 31, 2024, there were 1,047,942 shares of Series A Preferred issued and outstanding, 333,600 shares of Series B Preferred issued and outstanding and no shares of Series C Preferred issued and outstanding. The Board of Directors is authorized to determine the 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.

 

13
 

 

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, 2024 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 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, voting separately as a class, 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 various 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.

 

Series C

 

The shares of Series C Preferred were designated on July 20, 2022 and each share has a Stated Value of $1. The principal feature of the Series C Preferred Stock is that it provides each holder thereof, so long as he or she is an executive officer of the Company, with the ability to vote with the holders of the Company’s common stock on all matters presented to the holders of common stock, whether at a special or annual meeting, by written action in lieu of a meeting or otherwise, on the basis of 200,000 votes for each share of Series C Preferred Stock. The shares of Series C Preferred Stock are not convertible into common stock, are not entitled to dividends, are not subject to redemption, and have a stated value of $0.10 per share payable on any liquidation of the Company in preference to any payment payable to the holders of common stock. As of March 31, 2024, there we no shares of Series C Preferred outstanding.

 

14
 

 

Additional terms of the Series C Preferred include the following:

 

● The shares of Series C Preferred are not entitled to dividends.
   
● 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 C Preferred are entitled to receive, prior to any distribution to the holders of common stock, 100% of the stated value per share of Series C Preferred.
   
● The shares of Series C Preferred have no conversion rights.

 

Common Stock

 

The Company has 250,000,000 shares of common stock, par value $0.001 per share, authorized of which 105,280,155 shares were issued and outstanding as of March 31, 2024.

 

During the six months ended March 31, 2024, the Company issued 4,000,000 shares of common stock for the conversion of $40,000 in principal of convertible note payables

 

During the six months ended March 31, 2024, the Company issued 14,183,335 shares of common stock, of which 6,000,000 were to the directors of the Company, for compensation. The shares were valued at the closing price on the date of issuance for aggregate value of $348,331, of which $112,200 was related to the shares issued to the directors.

 

Note 9 – Mezzanine Equity

 

Series B

 

The shares of 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, 2024 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 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 of shares of common stock into 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 and Series A Preferred, 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 shares of 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.

 

15
 

 

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 terminated on March 5, 2022. As amended, the 2012 Plan provided 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.

 

Amortization of Stock-Based Compensation

 

A total of $1,153 and $17,510 of stock-based compensation expense was recognized during the six months ended March 31, 2024 and 2023, respectively, as a result of the vesting of common stock options issued in prior periods. As of March 31, 2024 no additional amounts of unamortized expense remains to be amortized over the vesting period.

 

The following is a summary of information about the stock options outstanding at March 31, 2024.

 

Shares Underlying Options Outstanding   Shares Underlying 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 
$0.0056– $0.13    8,120,000   4.53 years  $0.052    8,120,000   $0.052 

 

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

 

       Weighted 
       Average 
   Number   Exercise 
   of Shares   Price 
Balance, September 30, 2023   8,120,000   $0.052 
Options issued   -    - 
Options forfeited   -    - 
           
Balance, March 31, 2024   8,120,000   $0.052 
           
Exercisable, March 31, 2024   8,120,000   $0.052 

 

As of March 31, 2024, these options in the aggregate had $33,600 of intrinsic value for the outstanding and exercisable options, based on the per share market price of $0.022 of the Company’s common stock as of such date.

 

Note 11 – Common Stock Warrants

 

Warrants to purchase a total of 15,387,050 shares of common stock were outstanding as of March 31, 2024.

 

The following is a summary of information about our warrants to purchase common stock outstanding at March 31, 2024 (including those issued to both investors and service providers).

 

Shares Underlying Warrants Outstanding   Shares Underlying 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 
 $0.0074 -0.10    15,387,050   8.26 years  $0.016    15,387,050   $0.016 

 

16
 

 

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

 

       Weighted 
       Average 
   Number   Exercise 
   of Shares   Price 
Balance, September 30, 2023   15,387,050   $0.016 
Warrants granted   -    - 
Warrants expired   -    - 
           
Balance, March 31, 2024   15,387,050   $0.016 
           
Exercisable, March 31, 2024   15,387,050   $0.016 

 

As of March 31, 2024, these warrants in the aggregate had $197,196 of intrinsic value as the per share market price of $0.02 of the Company’s common stock as of such date was greater than the exercise price of certain warrants.

 

Note 12 – Discontinued Operations

 

On April 20, 2023, the Company and Digipath Labs entered into the Purchase Agreement with DPL NV, LLC (“Buyer”), pursuant to which Digipath Labs has agreed to sell substantially all of its assets to Buyer for a cash purchase price of $2,300,000 (the “Purchase Price”) as described in Note 1 above. The Purchase Price is subject to adjustments at closing based on, among other things, the amount by which the working capital of Digipath Labs at the closing is greater or less than $150,000.

 

The Purchase Agreement includes a number of representations, warrantees, covenants and conditions to closing customary for this type of transaction. In addition, the closing of the transaction was subject to the approval of the Nevada Cannabis Compliance Board (the “CCB”). On January 18, 2024, the Company received approval from the CCB to transfer the assets pursuant to the Purchase Agreement.

 

Pursuant to the Purchase Agreement, the Buyer deposited $230,000 into an escrow account upon the execution of the Purchase Agreement, and such amount will continue to be held in escrow for a 12-month period following closing to satisfy any indemnification claims Buyer may have against Digipath Labs.

 

In connection with the transactions contemplated by the Purchase Agreement, Digipath, Digipath Labs and Buyer entered into a Management Services Agreement (the “Management Services Agreement”), dated as of April 30, 2023, pursuant to which Buyer was engaged to manage the operation of Digipath Labs’ cannabis testing laboratory (the “Lab”). The effectiveness of the Management Services Agreement was subject to the approval of the CCB, which was obtained on October 17, 2023. Pursuant to the Management Services Agreement, after the payment of expenses to third parties and a payment of 15% of cash collections to Digipath (but not less than $15,000) in each month, Buyer was entitled to a management fee of $10,000 per month. Any remaining cash generated from the operation of the Lab in any month was payable 45% to the Buyer and 55% to the Company.

 

On February 20, 2024, we completed the sale of the net assets of our subsidiary Digipath Labs to Buyer. As a result of the closing, the Company recognized a gain on the sale of the net assets in the amount of $1,596,505 which includes the excess value of the purchase price above the net assets as well as the working capital adjustment.

 

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The balance sheets of Digipath Labs are summarized below:

 

   March 31, 2024   September 30, 2023 
Current assets:          
Accounts receivable, net  $      -   $447,410 
Deposits   -    18,675 
Other current assets   -    20,137 
Total current assets   -    486,222 
           
Right-of-use asset   -    274,985 
Fixed assets, net   -    368,681 
Total long term assets   -    643,666 
Total Assets  $-   $1,129,888 
           
Current liabilities:          
Accounts payable  $-   $158,869 
Accrued expenses   -    61,512 
Current portion of operating lease liabilities   -    83,757 
Current maturities of notes payable   -    64,517 
Total current liabilities   -    368,655 
           
Operating lease liabilities   -    143,245 
Notes payable   -    15,911 
Total long term liabilities   -    159,156 
Total Liabilities  $-   $527,811 

 

The statements of operations of Digipath Labs combined are summarized below:

 

   2024   2023   2024   2023 
   For the Three Months Ended   For the Six Months Ended 
   March 31,   March 31 
   2024   2023   2024   2023 
                 
Revenues  $712,145   $760,710   $1,635,299   $1,487,465 
Cost of sales   229,013    459,608    650,524    882,443 
Gross profit   483,132    301,102    984,775    605,022 
                     
Operating expenses:                    
General and administrative   189,983    224,346    393,168    504,990 
Professional fees   -    20,688    4,750    43,460 
Total operating expenses   189,983    245,034    397,918    548,450 
                     
Operating income(loss)   293,149    56,068    586,857    56,572 
                     
Other income (expense):                    
Interest expense   (620)   (1,745)   (1,701)   (3,706)
Total other income (expense)   (620)   (1,745)   (1,701)   (3,706)
                     
Net income (loss)  $292,529   $54,323   $585,156   $52,866 

 

Note 13 – 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.

 

Note 14 – Subsequent Events

 

Management has evaluated events through May 20, 2024, the date these financial statements were available for issuance, and noted no events requiring disclosures.

 

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

 

The information contained in this Quarterly Report on Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended September 30, 2023 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 Report.

 

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 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, 2023 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

 

Hypha Labs, Inc. (formerly Digipath, Inc.) was incorporated in Nevada on October 5, 2010. Until February 20, 2024, the Company was a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, and supported the cannabis industry’s best practices for reliable testing, cannabis education and training. Our mission was to provide pharmaceutical-grade analysis and testing to the cannabis industry, under ISO-17025:2017 guidelines, to ensure consumers and patients knew exactly what is in the cannabis they ingest and to help maximize the quality of our clients’ products through research, development, and standardization. Hypha Labs had been operating a cannabis-testing lab in Nevada since 2015.

 

On February 20, 2024, we completed the sale of the net assets of our subsidiary Digipath Labs. As of that date we were no longer in the business as a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, which supported the cannabis industry’s best practices for reliable testing, cannabis education and training.

 

Effective March 12, 2024, the Company amended Article 1 of its Articles of Incorporation to change its name from Digipath, Inc. to Hypha Labs, Inc. Hypha Products, Inc. a wholly owned subsidiary of the Company, was formed on April 18, 2024.

 

Results of Operations for the Three Months Ended March 31, 2024 and 2023:

 

General and Administrative Expenses

 

General and administrative expenses for the three months ended March 31, 2024 were $182,504, compared to $45,674 during the three months ended March 31, 2023, an increase of $136,830, or 300%. The expenses consisted primarily of salaries and wages and included $127,228 and $30,991 of non-cash stock-based compensation, respectively. General and administrative expenses increased primarily due to increased corporate overhead activities from the sale of the net assets of Digipath Labs and increased stock based compensation.

 

Professional Fees

 

Professional fees for the three months ended March 31, 2024 were $391,543, compared to $128,440 during the three months ended March 31, 2023, an increase of $263,103, or 205%. Professional fees included non-cash, stock-based compensation of $222,257 and $10,333 during the three months ended March 31, 2024 and 2023, respectively. Professional fees increased primarily due to increased consulting and accounting fees related to the sale of the net assets of Digipath Labs and increased stock-based compensation.

 

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Operating Loss

 

Our operating loss for the three months ended March 31, 2024 was $574,047, compared to an operating loss of $174,114 during the three months ended March 31, 2023, an increase of $399,933, or 230%. Our operating loss increased primarily due to our increased general and administrative expenses.

 

Other Income (Expense)

 

Other income, on a net basis, for the three months ended March 31, 2024 was $566,053, compared to other income, on a net basis, of $52,293 during the three months ended March 31, 2023. Other income consisted of interest expense of $73,958, loss on extinguishment of debt of $956,494 and the gain on the sale of the net assets of Digipath Labs of $1,596,505 for the three months ended March 31, 2024.

 

Results of Operations for the Six Months Ended March 31, 2024 and 2023:

 

General and Administrative Expenses

 

General and administrative expenses for the six months ended March 31, 2024 were $197,247, compared to $85,198 during the six months ended March 31, 2023, an increase of $112,049, or 132%. The expenses consisted primarily of salaries and wages and included $127,228 and $37,162 of non-cash stock-based compensation, respectively. General and administrative expenses increased primarily due to increased corporate overhead activities from the sale of the net assets of Digipath Labs and increased stock-based compensation.

 

Professional Fees

 

Professional fees for the six months ended March 31, 2024 were $447,364, compared to $175,637 during the six months ended March 31, 2023, an increase of $271,727, or 155%. Professional fees included non-cash, stock-based compensation of $222,257 and $12,468 during the six months ended March 31, 2024 and 2023, respectively. Professional fees increased primarily due to increased consulting and accounting fees related to the sale of the net assets of Digipath Labs and increased stock-based compensation.

 

Operating Loss

 

Our operating loss for the six months ended March 31, 2024 was $644,611, compared to an operating loss of $260,835 during the six months ended March 31, 2023, an increase of $383,776, or 147%. Our operating loss increased primarily due to our increased general and administrative expenses.

 

Other Income (Expense)

 

Other income, on a net basis, for the six months ended March 31, 2024 was $495,636, compared to other expense, on a net basis, of $99,859 during the six months ended March 31, 2023. Other income consisted of interest expense of $158,271, loss on extinguishment of debt of $956,494, the receipt from an insurance claim, and the gain on the sale of the net assets of Digipath Labs of $1,596,505 for the six months ended March 31, 2024.

 

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 months ended March 31, 2024 and 2023:

 

   2024   2023 
Operating Activities  $(61,123)  $(141,490)
Investing Activities   2,115,267    231,313 
Financing Activities   (1,261,749)   (30,123)
Net increase in Cash  $792,395   $59,700 

 

20
 

 

Net Cash Used in Operating Activities

 

During the six months ended March 31, 2024, net cash used in operating activities was $61,123, compared to net cash used in operating activities of $141,490 for the same period ended March 31, 2023, including cash provided by operating activities from discontinued operations of $373,913 for the six months ended March 31, 2024 compared to cash provided by operating activities from discontinued operations of $141,538 for the six months ended March 31, 2023. The decrease in cash used in operating activities was primarily attributable to our increase in cash provided by discontinued operations.

 

Net Cash Provided by Investing Activities

 

During the six months ended March 31, 2024, net cash provided by investing activities was $2,115,267, compared to $231,313 provided by investing activities for the same period ended March 31, 2023, including cash used in investing activities from discontinued operations of $11,667 for the six months ended March 31, 2024 compared to cash used in investing activities from discontinued operations of $3,687 for the six months ended March 31, 2023. The cash provided by investing activities in the current period was a result of the cash received from the sale of the net assets of Digipath Labs. The cash provided by investing activities in the previous period was a result of the sale of the collateralized assets from the note receivable.

 

Net Cash Used in Financing Activities

 

During the six months ended March 31, 2024, net cash used in financing activities was $1,261,749, compared to net cash used in financing activities of $30,123 for the same period ended March 31, 2023, including cash used in financing activities from discontinued operations of $15,784 for the three months ended March 31, 2024 compared to cash used in financing activities from discontinued operations of $30,023 for the six months ended March 31, 2023. The cash used in financing activities in the current period related to the repayment of notes payable in the amount of $595,965 and convertible notes payable of $650,000.

 

Ability to Continue as a Going Concern

 

As of March 31, 2024, our balance of cash on hand was $1,063,401, and we had negative working capital of $138,061 and an accumulated deficit of $19,374,530 resulting from recurring losses. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Until the agreement to sell the net assets of the Digipath Lab’s testing business, management was actively pursuing new customers to increase revenues. In addition, the Company was seeking additional sources of capital to fund short-term operations. The Company is currently evaluating future investments into potential acquisition targets. 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.

 

21
 

 

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 recognized revenue from the sale of lab testing services through our subsidiary Digipath Labs

 

Revenue was primarily generated through our subsidiary, Digipath Labs, which recognized 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 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 and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2024. 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, 2024, our Chief Executive and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level.

 

22
 

 

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.

 

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.

 

During the three months ended March 31, 2024, the Company issued 4,000,000 shares of common stock for the conversion of $40,000 in principal of convertible note payables. Such issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities Act.

 

During the three months ended March 31, 2024, the Company issued 14,183,335 shares of common stock, of which 6,000,000 were to the directors of the Company for compensation. The shares were valued at the closing price on the date of issuance for aggregate value of $348,331, of which $112,200 was related to the shares issued to the directors. Such issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities Act.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

 

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 Current 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 Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission by Digipath, Inc. on August 13, 2019)

 

23
 

 

3.7   Certificate of Designation of the Series B Preferred Stock of Digipath, Inc., filed December 29, 2021 (incorporated by reference to Exhibit 3.1 of the Report on 8-K filed with the Securities and Exchange Commission by Digipath, Inc on January 6, 2022)
3.8   Certificate of Designation of the Series C Preferred Stock of Digipath, Inc., filed with the Secretary of State of the State of Nevada on July 20, 2022 (incorporated by reference to Exhibit 3.1 of the Report on 8-K filed with the Securities and Exchange Commission by Digipath, Inc on July 26, 2022)
3.9*   Certificate of Amendment to Articles of Incorporation of Digipath, Inc., filed with the Secretary of Nevada on March 12, 2024
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 Quarterly 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 Quarterly 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 Quarterly 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)
4.7   Description of Securities (incorporated by reference to Exhibit 4.7 of the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission by the Company on February 14, 2024)
10.1   Asset Purchase Agreement between Digipath, Inc., Digipath Labs, Inc. and IHE Holdings, LLC, dated April 20, 2023 (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 May 2, 2023)
10.2   Management Services Agreement between Digipath, Inc., Digipath Labs, Inc. and IHE Holdings, LLC, dated April 20, 2023(incorporated by reference to Exhibit 10.1 of the Report on Form 8-K filed with the Securities and Exchange Commission by Digipath, Inc. on May 2, 2023)
10.3*   Second Amended and Restated Secured Promissory Note in the principal amount of $625,000, dated January 3, 2024, made by Invictus Wealth Group, LLC in favor of Digipath, Inc. (incorporated by reference to Exhibit 10.7 of the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission by the Company on February 14, 2024)
31.1*   Section 302 Certification of Principal Executive and Principal Financial Officer
32.1*   Section 906 Certification of Principal Executive and Principal Financial Officer
101.INS*   Inline XBRL Instance Document
101.SCH*   Inline XBRL Schema Document
101.CAL*   Inline XBRL Calculation Linkbase Document
101.DEF*   Inline XBRL Definition Linkbase Document
101.LAB*   Inline XBRL Labels Linkbase Document
101.PRE*   Inline XBRL Presentation Linkbase Document
104   Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit)

 

* Filed herewith.

 

24
 

 

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 20, 2024

 

HYPHA LABS, INC.  
   
By: /s/ A. Stone Douglass  
Name: A. Stone Douglass  
Title:

Chairman, President, Chief Executive Officer, Chief Financial Officer and Secretary

(Principal Executive Officer and

Principal Financial/Accounting Officer)

  

 

25

 

 

Exhibit 3.9

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 

 

 

EXHIBIT 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND 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, 2024 of Hypha Labs, Inc. (formerly 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 20, 2024

 

  /s/ A. Stone Douglass
  A. Stone Douglass, Chief Executive Officer
 

Chairman, President, Chief Executive Officer, Chief Financial Officer and Secretary

(Principal Executive Officer and

Principal Financial/Accounting Officer)

 

 

 

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 Hypha Labs, Inc. (formerly Digipath, Inc.) (the “Company”) on Form 10-Q for the period ending March 31, 2024 (the “Report”) I, A. Stone Douglass, 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 20, 2024

 

/s/ A. Stone Douglass  

A. Stone Douglass, Chairman, President, Chief Executive Officer, Chief Financial Officer and Secretary

(Principal Executive Officer and

Principal Financial/Accounting 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.

 

 

v3.24.1.1.u2
Cover - shares
 6 Months Ended
Mar. 31, 2024
May 20, 2024
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Mar. 31, 2024  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2024  
Current Fiscal Year End Date --09-30  
Entity File Number 000-54239  
Entity Registrant Name Hypha Labs, Inc.  
Entity Central Index Key 0001502966  
Entity Tax Identification Number 27-3601979  
Entity Incorporation, State or Country Code NV  
Entity Address, Address Line One 5940 S. Rainbow Boulevard  
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   105,280,155
v3.24.1.1.u2
Consolidated Balance Sheets - USD ($)
Mar. 31, 2024
Sep. 30, 2023
Current assets:    
Cash $ 1,063,401 $ 271,006
Note receivable, net of allowance of $625,000
Other current assets 321,943 8,570
Assets held for sale - current 486,222
Total current assets 1,385,344 765,798
Assets held for sale – long term 643,666
Total non-current assets 643,666
Total Assets 1,385,344 1,409,464
Current liabilities:    
Accounts payable 102,140 122,094
Current maturities of notes payable 565,000
Liabilities held for sale - current 368,655
Total current liabilities 1,523,405 3,121,814
Non-current liabilities:    
Liabilities held for sale – long term 159,156
Total non-current liabilities 159,156
Total Liabilities 1,523,405 3,280,970
Series B convertible preferred stock, $0.001 par value, 1,500,000 shares authorized; 333,600 shares issued and outstanding as of March 31, 2024 and September 30, 2023 333,600 333,600
Commitments and contingencies
Stockholders’ Deficit:    
Common stock, $0.001 par value, 250,000,000 shares authorized; 105,280,155 and 87,096,820 shares issued and outstanding at March 31, 2024 and September 30, 2023, respectively 105,280 87,097
Additional paid-in capital 18,796,541 17,468,746
Accumulated deficit (19,374,530) (19,761,997)
Total Stockholders’ Deficit (471,661) (2,205,106)
Total Liabilities and Stockholders’ Deficit 1,385,344 1,409,464
Series A Convertible Preferred Stock [Member]    
Stockholders’ Deficit:    
Preferred stock, value 1,048 1,048
Series C Convertible Preferred Stock [Member]    
Stockholders’ Deficit:    
Preferred stock, value
Nonrelated Party [Member]    
Current liabilities:    
Accrued expenses – related party 323,030 328,491
Current maturities of convertible notes payable related parties, net of discounts 1,078,235 1,385,932
Related Party [Member]    
Current liabilities:    
Accrued expenses – related party 20,000 12,390
Current maturities of convertible notes payable related parties, net of discounts $ 339,252
v3.24.1.1.u2
Consolidated Balance Sheets (Parenthetical) - USD ($)
Mar. 31, 2024
Sep. 30, 2023
Allowance for note receivable $ 625,000 $ 625,000
Preferred stock, par value $ 0.001  
Preferred stock, shares authorized 10,000,000  
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 250,000,000 250,000,000
Common stock, shares issued 105,280,155 87,096,820
Common stock, shares outstanding 105,280,155 87,096,820
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 333,600 333,600
Temporary equity, shares outstanding 333,600 333,600
Series A Convertible Preferred Stock [Member]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 6,000,000 6,000,000
Preferred stock, shares issued 1,047,942 1,047,942
Preferred stock, shares outstanding 1,047,942 1,047,942
Series C Convertible Preferred Stock [Member]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 1,000 1,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
v3.24.1.1.u2
Consolidated Statements of Operations (Unaudited) - USD ($)
 3 Months Ended 6 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
Income Statement [Abstract]        
Revenues
Cost of sales
Gross profit
Operating expenses:        
General and administrative 182,504 45,674 197,247 85,198
Professional fees 391,543 128,440 447,364 175,637
Total operating expenses 574,047 174,114 644,611 260,835
Operating loss (574,047) (174,114) (644,611) (260,835)
Other income (expense):        
Other Expense (55,000)
Gain on sale of subsidiary assets 1,596,505 1,596,505
Recovery of previously written off receivables 135,000 135,000
Other income 13,896
Loss on debt extinguishment (956,494) (956,494)
Interest expense (73,958) (82,707) (158,271) (179,859)
Total other income (expense) 566,053 52,293 495,636 (99,859)
Net loss from continuing operations before income taxes (7,994) (121,821) (148,975) (360,694)
Provision for income taxes 48,714 48,714
Net loss from continuing operations (56,708) (121,821) (197,689) (360,694)
Net income from discontinued operations, net of taxes 292,529 54,323 585,156 52,866
Net income (loss) $ 235,821 $ (67,498) $ 387,467 $ (307,828)
Weighted average number of common shares outstanding – basic 92,083,084 82,296,820 89,576,328 82,257,534
Weighted average number of common shares outstanding – fully diluted 92,083,084 82,296,820 89,576,328 82,257,534
Net loss per share from continuing operations – basic $ (0.00) $ (0.00) $ (0.00) $ (0.00)
Net income (loss) per share from discontinued operations – basic 0.00 0.00 0.01 0.00
Net income (loss) per share – basic 0.00 (0.00) 0.00 (0.00)
Net loss per share from continuing operations – diluted (0.00) (0.00) (0.00) (0.00)
Net income (loss) per share from discontinued operations – diluted 0.00 0.00 0.01 0.00
Net income (loss) per share – diluted $ 0.00 $ (0.00) $ 0.00 $ (0.00)
v3.24.1.1.u2
Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($)
Preferred Stock [Member]
Series A Convertible Preferred Stock [Member]
Preferred Stock [Member]
Series C Convertible Preferred Stock [Member]
Preferred Stock [Member]
Series B Convertible Preferred Stock [Member]
Common Stock [Member]
Stock Payable [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Series B Convertible Preferred Stock [Member]
Balance at Sep. 30, 2022 $ 1,048 $ 1   $ 75,147 $ 71,745 $ 17,117,958 $ (20,008,771) $ (2,742,872)  
Balance, shares at Sep. 30, 2022     333,600            
Balance at Sep. 30, 2022     $ 333,600            
Balance, shares at Sep. 30, 2022 1,047,942 1,000   75,146,820          
Stock-based compensation   8,306 8,306  
Stock-based compensation, shares                
Net income (loss)   (240,330) (240,330)  
Issuance of common shares to settle stock payable   $ 7,150 (71,745) 64,595  
Issuance of common shares to settle stock payable, shares       7,150,000          
Warrants issued as debt financing costs   93,938 93,938  
Balance at Dec. 31, 2022 $ 1,048 $ 1   $ 82,297 17,284,797 (20,249,101) (2,880,958)  
Balance, shares at Dec. 31, 2022     333,600            
Balance at Dec. 31, 2022     $ 333,600            
Balance, shares at Dec. 31, 2022 1,047,942 1,000   82,296,820          
Balance at Sep. 30, 2022 $ 1,048 $ 1   $ 75,147 71,745 17,117,958 (20,008,771) (2,742,872)  
Balance, shares at Sep. 30, 2022     333,600            
Balance at Sep. 30, 2022     $ 333,600            
Balance, shares at Sep. 30, 2022 1,047,942 1,000   75,146,820          
Net income (loss)               (307,828)  
Balance at Mar. 31, 2023 $ 1,048   $ 82,297 32,120 17,293,902 (20,316,599) (2,907,232)  
Balance, shares at Mar. 31, 2023     333,600            
Balance at Mar. 31, 2023     $ 333,600            
Balance, shares at Mar. 31, 2023 1,047,942   82,296,820          
Balance at Dec. 31, 2022 $ 1,048 $ 1   $ 82,297 17,284,797 (20,249,101) (2,880,958)  
Balance, shares at Dec. 31, 2022     333,600            
Balance at Dec. 31, 2022     $ 333,600            
Balance, shares at Dec. 31, 2022 1,047,942 1,000   82,296,820          
Stock-based compensation   9,204 9,204  
Stock-based compensation, shares                
Net income (loss)   (67,498) (67,498)  
Repurchased of preferred C stock $ (1)   $ 0 0 (99) (100)  
Repurchased of preferred C stock, shares   (1,000)   0          
Common shares to be issued for compensation   32,120 32,120  
Balance at Mar. 31, 2023 $ 1,048   $ 82,297 32,120 17,293,902 (20,316,599) (2,907,232)  
Balance, shares at Mar. 31, 2023     333,600            
Balance at Mar. 31, 2023     $ 333,600            
Balance, shares at Mar. 31, 2023 1,047,942   82,296,820          
Balance at Sep. 30, 2023 $ 1,048   $ 87,097 17,468,746 (19,761,997) (2,205,106)  
Balance, shares at Sep. 30, 2023     333,600           333,600
Balance at Sep. 30, 2023     $ 333,600         333,600  
Balance, shares at Sep. 30, 2023 1,047,942   87,096,820          
Stock-based compensation   1,153 1,153  
Stock-based compensation, shares                
Net income (loss)   151,646 151,646  
Balance at Dec. 31, 2023 $ 1,048   $ 87,097 17,469,899 (19,610,351) (2,052,307)  
Balance, shares at Dec. 31, 2023     333,600            
Balance at Dec. 31, 2023     $ 333,600            
Balance, shares at Dec. 31, 2023 1,047,942   87,096,820          
Balance at Sep. 30, 2023 $ 1,048   $ 87,097 17,468,746 (19,761,997) (2,205,106)  
Balance, shares at Sep. 30, 2023     333,600           333,600
Balance at Sep. 30, 2023     $ 333,600         333,600  
Balance, shares at Sep. 30, 2023 1,047,942   87,096,820          
Stock-based compensation, shares       14,183,335          
Net income (loss)               387,467  
Issuance of common shares to settle stock payable       $ 40,000          
Issuance of common shares to settle stock payable, shares       4,000,000          
Balance at Mar. 31, 2024 $ 1,048   $ 105,280 18,796,541 (19,374,530) (471,661)  
Balance, shares at Mar. 31, 2024   0 333,600           333,600
Balance at Mar. 31, 2024     $ 333,600         333,600  
Balance, shares at Mar. 31, 2024 1,047,942   105,280,155          
Balance at Dec. 31, 2023 $ 1,048   $ 87,097 17,469,899 (19,610,351) (2,052,307)  
Balance, shares at Dec. 31, 2023     333,600            
Balance at Dec. 31, 2023     $ 333,600            
Balance, shares at Dec. 31, 2023 1,047,942   87,096,820          
Stock-based compensation   $ 14,183 334,148 348,331  
Stock-based compensation, shares       14,183,335          
Net income (loss)   235,821 235,821  
Shares issued for conversion of notes payable   $ 4,000 36,000 40,000  
Balance, shares       4,000,000          
Modification of conversion price in debt extinguishment   956,494 956,494  
Balance at Mar. 31, 2024 $ 1,048   $ 105,280 $ 18,796,541 $ (19,374,530) (471,661)  
Balance, shares at Mar. 31, 2024   0 333,600           333,600
Balance at Mar. 31, 2024     $ 333,600         $ 333,600  
Balance, shares at Mar. 31, 2024 1,047,942   105,280,155          
v3.24.1.1.u2
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
 3 Months Ended 6 Months Ended 12 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
Sep. 30, 2023
Cash flows from operating activities          
Net loss from continuing operations     $ (197,689) $ (360,694)  
Adjustments to reconcile net loss to net cash used in operating activities:          
Recovery of previously written off receivables $ (135,000) (135,000)  
Gain on sale of subsidiary net assets (1,596,505) (1,596,505)  
Loss on debt extinguishment 956,494 956,494  
Stock-based compensation     349,484 49,630  
Amortization of debt discounts     43,050 77,616  
Impairment of fixed assets     55,000  
Decrease (increase) in assets:          
Other current assets     (3,030) 1,289  
Increase (decrease) in liabilities:          
Accounts payable     (14,530) 33,384  
Accrued expenses     20,080 (16,253)  
Accrued expenses – related parties     7,610 12,000  
Net cash used in operating activities from continuing operations     (435,036) (283,028)  
Net cash provided by operating activities from discontinued operations     373,913 141,538  
Net cash used in operating activities     (61,123) (141,490)  
Cash flows from investing activities          
Cash received from sale of subsidiary net assets     2,126,934  
Proceeds from sale of collateralized assets     235,000  
Net cash provided by investing activities from continuing operations     2,126,934 235,000  
Net cash used in investing activities from discontinued operations     (11,667) (3,687)  
Net cash provided by investing activities     2,115,267 231,313  
Cash flows from financing activities          
Repayments of notes payable     (595,965)  
Repayments of convertible notes payable     (650,000)  
Repurchase of Preferred C stock     (100)  
Net cash used in financing activities from continuing operations     (1,245,965) (100)  
Net cash used in financing activities from discontinued operations     (15,784) (30,023)  
Net cash used in financing activities     (1,261,749) (30,123)  
Net increase in cash     792,395 59,700  
Cash – beginning     271,006 56,168 $ 56,168
Cash – ending $ 1,063,401 $ 115,868 1,063,401 115,868 $ 271,006
Supplemental disclosures:          
Interest paid     126,533 151,927  
Income taxes paid      
Non-cash investing and financing activities:          
Common stock issued for settlement of stock payable     71,745  
Warrants issued for debt financing     93,938  
Accounts payable and accrued interest added to note principal balance     30,965  
Common stock issued for conversion of note payable     $ 40,000  
v3.24.1.1.u2
Nature of Business and Significant Accounting Policies
 6 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Nature of Business and Significant Accounting Policies

Note 1 – Nature of Business and Significant Accounting Policies

 

Nature of Business

 

Hypha Labs, Inc. (formerly Digipath, Inc.) was incorporated in Nevada on October 5, 2010. Until February 20, 2024, Hypha Labs, Inc. and its subsidiaries (“Hypha,” the “Company,” “we,” “our” or “us”) was a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, and supported the cannabis industry’s best practices for reliable testing, cannabis education and training. Our mission was to provide pharmaceutical-grade analysis and testing to the cannabis industry, under ISO-17025:2017 guidelines, to ensure consumers and patients knew exactly what was in the cannabis they ingest and to help maximize the quality of our clients’ products through research, development, and standardization. Hypha Labs had been operating a cannabis-testing lab in Nevada since 2015.

 

On February 20, 2024, we completed the sale of the net assets of our subsidiary Digipath Labs, Inc. (“Digipath Labs”). As of that date we were no longer in the business as a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, which supported the cannabis industry’s best practices for reliable testing, cannabis education and training.

 

Effective March 12, 2024, the Company amended Article 1 of its Articles of Incorporation to change its name from Digipath, Inc. to Hypha Labs, Inc. Hypha Products, Inc., a wholly owned subsidiary of the Company, was formed on April 18, 2024.

 

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, 2023. 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, 2024:

 

    Jurisdiction of      
Name of Entity   Incorporation    Relationship 
Hypha Labs, Inc.(formerly Digipath, Inc.)(1)   Nevada    Parent 
Digipath Labs, Inc.   Nevada    Subsidiary 
Digipath Labs CA, Inc. (2)   California    Subsidiary 
Digipath Labs S.A.S.(3)   Colombia    Subsidiary 
VSSL Enterprises, Ltd.(4)   Canada    Subsidiary 

 

(1) Holding company, which owns each of the wholly-owned subsidiaries. All subsidiaries shown above are wholly-owned by Hypha Labs, Inc., the parent company.
(2) Formed during the second fiscal quarter of 2021, but has not yet commenced significant operations.
(3) Formed during the first fiscal quarter of 2019, but has not yet commenced significant operations.
(4) Acquired on March 11, 2020.

 

 

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”, “Hypha” or “DIGP”. The Company’s headquarters are located in Las Vegas, Nevada and substantially all of its customers were 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.

 

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.

 

Our revenue was primarily generated through our subsidiary, Digipath Labs which recognized 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 was 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.

 

For the three and six months ended March 31, 2024 and 2023, all revenues are classified as part of Net income from discontinued operations in the accompanying consolidated statement of operations

 

Discontinued Operations

 

On April 20, 2023, the Company and Digipath Labs entered into an Asset Purchase Agreement (the “Purchase Agreement”) with DPL NV, LLC (“Buyer”), pursuant to which Digipath Labs agreed to sell substantially all of its assets to Buyer for a cash purchase price of $2,300,000 (the “Purchase Price”). The business of an entity that is in the process of disposing its assets by sale, or that intends to cease operations, is reported as discontinued operations if the transaction represents a strategic shift that will have a major effect on an entity’s operations and financial results. As such, the Company’s lab testing business is now reported as discontinued operations.

 

Assets and liabilities of the discontinued operations are aggregated and reported separately as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of September 30, 2023. On February 20, 2024, we completed the sale of the net assets of our subsidiary Digipath Labs and as such no longer have assets or liabilities that are reported separately in the Consolidated Balance Sheet as of March 31, 2024. The results of discontinued operations are aggregated and presented separately in the Consolidated Statements of Operations as net income from discontinued operations for the periods ended March 31, 2024 and 2023. The cash flows of the discontinued operations are reflected as cash flows of discontinued operations within the Company’s Consolidated Statements of Cash Flows for the periods ended March 31, 2024 and 2023.

 

Amounts presented in discontinued operations have been derived from our consolidated financial statements and accounting records using the historical basis of assets, liabilities, results of operations, and cash flows of Digipath Labs. The discontinued operations exclude general corporate allocations.

 

Basic and Diluted Loss Per Share

 

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities.

 

 

The following table presents the effect of potential dilutive issuances for the three and six months ended March 31, 2024 and 2023:

 

   March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023 
   Three Months Ended   Six Months Ended 
   March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023 
                 
Net income (loss) attributable to common stockholders  $(56,708)  $(121,821)  $(197,689)  $(360,694)
Interest expense associated with convertible debt   -    -    -    - 
Net income (loss) for dilutive calculation  $(56,708)  $(121,821)   (197,689)   (360,694)
                     
Weighted average shares outstanding   92,083,084    82,296,820    89,576,328    82,257,534 
Dilutive effect of preferred stock   -    -    -    - 
Dilutive effect of convertible debt   -    -    -    - 
Dilutive effect of common stock warrants   -    -    -    - 
Weighted average shares outstanding for diluted net income (loss) per share   92,083,084    82,296,820    89,576,328    82,257,534 

 

For the three and six months ended March 31, 2024, potential dilutive securities of 104,490,131 shares issuable upon conversion of convertible notes payable, 8,120,000 shares issuable upon exercise of options, 15,387,050 shares issuable upon exercise of warrants, and 13,579,710 shares issuable upon conversion of our Preferred A and Preferred B shares, respectively, had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

 

For the three and six months ended March 31, 2023, potential dilutive securities of 83,125,488 shares issuable upon conversion of convertible notes payable, 6,020,000, shares issuable upon exercise of options, 15,387,050 shares issuable upon exercise of warrants, and 13,579,710 shares issuable upon conversion of our Preferred A and Preferred B shares, respectively, had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

 

Reclassifications

 

Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.

 

Recently Issued Accounting Pronouncements

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. The Company is currently evaluating the effect of this pronouncement on its disclosures.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.

 
v3.24.1.1.u2
Going Concern
 6 Months Ended
Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern

Note 2 – Going Concern

 

As shown in the accompanying consolidated financial statements, as of March 31, 2024, the Company had negative working capital of $138,061, and accumulated recurring losses of $19,374,530, and $1,063,401 of cash on hand, which may not be sufficient to sustain operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The consolidated financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. These financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 
v3.24.1.1.u2
Fair Value of Financial Instruments
 6 Months Ended
Mar. 31, 2024
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

Note 3 – Fair Value of Financial Instruments

 

Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

 

The Company has certain financial instruments that must be measured under the new fair value standard. The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of March 31, 2024 and September 30, 2023, respectively:

 

   Level 1   Level 2   Level 3 
   Fair Value Measurements at March 31, 2024 
   Level 1   Level 2   Level 3 
Assets               
Cash  $1,063,401   $-   $- 
                
Liabilities               
Convertible notes payable, net of discounts of $0   -    -    1,078,235 

 

   Level 1   Level 2   Level 3 
   Fair Value Measurements at September 30, 2023 
   Level 1   Level 2   Level 3 
Assets               
Cash  $271,006   $-   $- 
                
Liabilities               
Notes payable   -    565,000    - 
Convertible notes payable, net of discounts of $43,051   -    -    1,725,184 

 

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, 2024.

 
v3.24.1.1.u2
Related Party Transactions
 6 Months Ended
Mar. 31, 2024
Related Party Transactions [Abstract]  
Related Party Transactions

Note 4 – Related Party Transactions

 

During the six months ended March 31, 2024 the Company incurred compensation expense of $30,000 for services provided by its CFO. As of March 31, 2024, no amounts were owed to the CFO for services provided.

 

During the six months ended March 31, 2024 the Company accrued fees of $10,000 for services provided by its directors. As of March 31, 2024, the Company has accrued a total of $20,000 in fees for services provided by its directors.

 
v3.24.1.1.u2
Note Receivable
 6 Months Ended
Mar. 31, 2024
Receivables [Abstract]  
Note Receivable

Note 5 – 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 September 30, 2022, we loaned C3 Labs, Inc. (“C3 Labs”) a total of $1,056,570. The loans bore interest at an annual rate of 8%. These loans were evidenced by secured demand notes, and were secured by a lien on the borrower’s assets and had a maturity date of August 23, 2022. The Company had recorded total accrued interest of $64,017 as of September 30, 2022. As of September 30, 2022, the Company recorded a full allowance against the loans and related accrued interest.

 

The loans were made in connection with a potential acquisition of a controlling interest in C3 Labs pursuant to a letter of intent. On March 11, 2022, the Company notified the current owners of C3 Labs of its termination of the letter of intent and took possession of the equipment of C3 Labs (“C3 Equipment”).

 

On December 8, 2022, the Company entered into an Asset Purchase Agreement with Invictus Wealth Group (“Invictus”), whereby the Company agreed to sell the C3 Equipment to Invictus for a total purchase price of $900,000. The purchase price consisted of an upfront payment of $275,000, and a note receivable (“Invictus Note”) in the amount of $625,000. The Invictus Note has a maturity date of December 31, 2023, accrues interest at a rate of 10% per annum, and provides for principal payments of $100,000 each due on June 30, 2023 and September 30, 2023, with the final payment of $425,000 due on December 31, 2023. As of June 30, 2023 the Company received the full down payment of $275,000. In April 2023, the Invictus Note was amended and restated to extend the maturity date to March 31, 2024, with principal payments of $100,000 each due on September 30, 2023 and December 31, 2023, with the final payment of $425,000 due on March 31, 2024. On January 3, 2024, the Company amended the Invictus Note for a second time to extend the maturity date to December 31, 2025, with principal payments of $50,000 each due on June 30, 2024, September 30, 2024 and December 31, 2024, $100,000 due on March 31, 2025 and June 30, 2025, $125,000 due on September 30, 2025 with the final payment of $216,780 due on December 31, 2025.

 

 

The Company recorded a full allowance against the Invictus Note, as of the transaction date, as collectability was not reasonably assured at of the transaction date.

 
v3.24.1.1.u2
Notes Payable
 6 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
Notes Payable

Note 6 –Notes Payable

 

Notes payable consists of the following at March 31, 2024 and September 30, 2023, respectively:

 

   March 31, 2024   September 30, 2023 
         
On September 10, 2021, the Company issued a Secured Promissory note in the principal amount of $675,000 to US Canna Lab I, LLC (the “Canna Lab Note”). The 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. In addition, the Company was advanced an additional $115,000 of funds during the year ended September 30, 2022 under the same terms as the original note. During the years ended September 30, 2023 and 2022, the Company repaid $100,000 and $125,000, respectively of the principal balance on the Canna Lab Note. However, as a result of the Company not meeting the monthly payment obligations, the Canna Lab Note is in technical default, however, no default notice has been provided by Canna Lab as of the date of this filing. There are no additional obligations of the Company under default with the exception of being due on demand. During the three months ended December 31, 2023, $35,965 of accrued interest and outstanding payables were transferred to the principal balance of the Canna Lab Note. On February 27, 2024, the Company repaid the note and related accrued interest in full.  $         -   $565,000 
           
Total notes payable   -    565,000 
Less: current maturities   -    (565,000)
Notes payable  $-   $- 
           
The Company recorded interest expense pursuant to the stated interest rate and closing costs on the notes payable in the amount of $36,614 and $24,000 during the six months ended March 31, 2024 and 2023.
           
Notes payable – discontinued operations          
           
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. Pursuant to the asset purchase agreement with Buyer as discussed in Note 1, the equipment loan was transferred to the Buyer and is no longer the financial responsibility of the Company.  $-   $80,428 

 
v3.24.1.1.u2
Convertible Notes Payable
 6 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
Convertible Notes Payable

Note 7 – Convertible Notes Payable

 

Related party convertible notes payable consist of the following at March 31, 2024 and September 30, 2023, respectively:

 

   March 31, 2024   September 30, 2023 
         
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 matured 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. On August 8, 2022, the note holder agreed to extend the maturity date of the note to February 11, 2024. In exchange for the extension, the Company agreed to issue 4,550,000 common shares, which were recorded as debt discount with a relative fair value of $43,788. As a result of the shares issued upon the extension agreement, the lender now holds more the 5% of the total outstanding common shares, and is therefore considered a related party. On February 27, 2024, the Company repaid the note and related accrued interest in full.  $      -   $350,000 
           
Total related party convertible notes payable   -    350,000 
Less: unamortized debt discounts   -    (10,748)
Total convertible debt   -    339,252 
Less: current maturities   -    (339,252)
Related party convertible notes payable  $-   $- 

 

 

Convertible notes payable consist of the following at March 31, 2024 and September 30, 2023, respectively:

 

   March 31, 2024   September 30, 2023 
         
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 matured on August 11, 2022, as amended, 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. On August 8, 2022, the note holder agreed to extend the maturity date of the note to February 11, 2024. In exchange for the extension, the Company agreed to issue 650,000 common shares, which were recorded as debt discount, with a relative fair value of $6,989.  $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 matured on August 11, 2022, as amended, 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. On August 8, 2022, the note holder agreed to extend the maturity date of the note to February 11, 2024. In exchange for the extension, the Company agreed to issue 1,950,000 common shares, which were recorded as debt discount, with a relative fair value of $20,968. On February 27, 2024, the Company repaid the note and related accrued interest in full.   -    150,000 
           
On September 23, 2019, the Company received proceeds of $200,000 on a senior secured convertible note that carries an 8% interest rate, which matured 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 the outstanding short term notes and accrued interest into the principal balance, making the outstanding balance $355,469, 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. On October 1, 2022, the Company further extended the maturity date to February 11, 2024. In connection with the modification, the Company issued warrants to purchase 4,621,105 shares of common stock, with a fair value of $32,166, which was recorded as a debt discount. On January 22, 2024 the Company further amended the note to extend the maturity date to February 11, 2025 and reduced the conversion price to $0.01. As a result of the modification of the conversion price, the Company recorded a loss on debt extinguishment of $481,955.   355,469    355,469 
           
On November 8, 2018, the Company received proceeds of $350,000 on a senior secured convertible note that carries an 8% interest rate, which matured 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. On October 1, 2022, the Company further extended the maturity date to February 11, 2024. In connection with the modification, the Company issued warrants to purchase 4,550,000 shares of common stock, with a fair value of $31,671, which was recorded as a debt discount. On January 29, 2024 the holder converted $40,000 of this note into common shares. On January 22, 2024 the Company further amended the note to extend the maturity date to February 11, 2025 and reduced the conversion price to $0.01. As a result of the modification of the conversion price, the Company recorded a loss on debt extinguishment of $474,539.   310,000    350,000 
           
On October 1, 2022, the Company entered into a senior secured convertible note that carries an 8% interest rate, which matures on February 11, 2024. The Note documented the advances made during the year ended September 30, 2022 in the amount of $362,765. The principal and interest on the Note are convertible into common shares at a conversion price of $0.01. In connection with the note, the Company issued warrants to purchase 4,715,945 shares of common stock, with a fair value of $30,102, which was recorded as a debt discount.   362,765    362,765 
           
On November 5, 2018, the Company received proceeds of $150,000 on a senior secured convertible note that carries an 8% interest rate, which matured 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. On February 27, 2024, the Company repaid the note and related accrued interest in full.   -    150,000 
           
Total convertible notes payable   1,078,235    1,418,234 
Less: unamortized debt discounts   -    (32,302)
Total convertible debt   1,078,235    1,385,932 
Less: current maturities   (1,078,235)   (1,385,932)
Convertible notes payable  $-   $- 

 

 

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 $93,938 during the year ended September 30, 2023. The discount is amortized on a straight-line basis from the dates of issuance until the earlier of the stated redemption date of the debt, as noted above, or the actual settlement date. The Company recorded debt amortization expense attributed to the aforementioned debt discount in the amounts of $43,050 and $77,616, during the six months ended March 31, 2024 and 2023, respectively. Unamortized discount as of March 31, 2024 is $0.

 

All of the convertible notes (except the related party convertible note) 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 $77,808 and $72,473 for the three months ended December 31, 2023 and 2022, respectively.

 

The Company recognized interest expense for the six months ended March 31, 2024 and 2023, respectively, as follows:

 

   March 31, 2024   March 31, 2023 
         
Interest on notes payable   36,614    29,770 
Amortization of beneficial conversion features   43,050    77,616 
Interest on convertible notes   

78,607

    72,473 
Total interest expense  $158,271   $179,859 

 
v3.24.1.1.u2
Stockholders’ Equity
 6 Months Ended
Mar. 31, 2024
Equity [Abstract]  
Stockholders’ Equity

Note 8 – Stockholders’ Equity

 

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 shares have been designated as Series A Convertible Preferred Stock (“Series A Preferred”), 1,500,000 shares have been designated as Series B Convertible Preferred Stock (“Series B Preferred”), and 1,000 shares have been designated as Series C Preferred Stock (“Series C Preferred”) with the remaining 2,499,000 shares available for designation from time to time by the Board as set forth below. As of March 31, 2024, there were 1,047,942 shares of Series A Preferred issued and outstanding, 333,600 shares of Series B Preferred issued and outstanding and no shares of Series C Preferred issued and outstanding. The Board of Directors is authorized to determine the 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, 2024 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 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, voting separately as a class, 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 various 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.

 

Series C

 

The shares of Series C Preferred were designated on July 20, 2022 and each share has a Stated Value of $1. The principal feature of the Series C Preferred Stock is that it provides each holder thereof, so long as he or she is an executive officer of the Company, with the ability to vote with the holders of the Company’s common stock on all matters presented to the holders of common stock, whether at a special or annual meeting, by written action in lieu of a meeting or otherwise, on the basis of 200,000 votes for each share of Series C Preferred Stock. The shares of Series C Preferred Stock are not convertible into common stock, are not entitled to dividends, are not subject to redemption, and have a stated value of $0.10 per share payable on any liquidation of the Company in preference to any payment payable to the holders of common stock. As of March 31, 2024, there we no shares of Series C Preferred outstanding.

 

 

Additional terms of the Series C Preferred include the following:

 

● The shares of Series C Preferred are not entitled to dividends.
   
● 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 C Preferred are entitled to receive, prior to any distribution to the holders of common stock, 100% of the stated value per share of Series C Preferred.
   
● The shares of Series C Preferred have no conversion rights.

 

Common Stock

 

The Company has 250,000,000 shares of common stock, par value $0.001 per share, authorized of which 105,280,155 shares were issued and outstanding as of March 31, 2024.

 

During the six months ended March 31, 2024, the Company issued 4,000,000 shares of common stock for the conversion of $40,000 in principal of convertible note payables

 

During the six months ended March 31, 2024, the Company issued 14,183,335 shares of common stock, of which 6,000,000 were to the directors of the Company, for compensation. The shares were valued at the closing price on the date of issuance for aggregate value of $348,331, of which $112,200 was related to the shares issued to the directors.

 
v3.24.1.1.u2
Mezzanine Equity
 6 Months Ended
Mar. 31, 2024
Mezzanine Equity  
Mezzanine Equity

Note 9 – Mezzanine Equity

 

Series B

 

The shares of 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, 2024 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 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 of shares of common stock into 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 and Series A Preferred, 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 shares of 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.

 

 
v3.24.1.1.u2
Common Stock Options
 6 Months Ended
Mar. 31, 2024
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 terminated on March 5, 2022. As amended, the 2012 Plan provided 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.

 

Amortization of Stock-Based Compensation

 

A total of $1,153 and $17,510 of stock-based compensation expense was recognized during the six months ended March 31, 2024 and 2023, respectively, as a result of the vesting of common stock options issued in prior periods. As of March 31, 2024 no additional amounts of unamortized expense remains to be amortized over the vesting period.

 

The following is a summary of information about the stock options outstanding at March 31, 2024.

 

Shares Underlying Options Outstanding   Shares Underlying 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 
$0.0056– $0.13    8,120,000   4.53 years  $0.052    8,120,000   $0.052 

 

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

 

       Weighted 
       Average 
   Number   Exercise 
   of Shares   Price 
Balance, September 30, 2023   8,120,000   $0.052 
Options issued   -    - 
Options forfeited   -    - 
           
Balance, March 31, 2024   8,120,000   $0.052 
           
Exercisable, March 31, 2024   8,120,000   $0.052 

 

As of March 31, 2024, these options in the aggregate had $33,600 of intrinsic value for the outstanding and exercisable options, based on the per share market price of $0.022 of the Company’s common stock as of such date.

 
v3.24.1.1.u2
Common Stock Warrants
 6 Months Ended
Mar. 31, 2024
Common Stock Warrants  
Common Stock Warrants

Note 11 – Common Stock Warrants

 

Warrants to purchase a total of 15,387,050 shares of common stock were outstanding as of March 31, 2024.

 

The following is a summary of information about our warrants to purchase common stock outstanding at March 31, 2024 (including those issued to both investors and service providers).

 

Shares Underlying Warrants Outstanding   Shares Underlying 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 
 $0.0074 -0.10    15,387,050   8.26 years  $0.016    15,387,050   $0.016 

 

 

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

 

       Weighted 
       Average 
   Number   Exercise 
   of Shares   Price 
Balance, September 30, 2023   15,387,050   $0.016 
Warrants granted   -    - 
Warrants expired   -    - 
           
Balance, March 31, 2024   15,387,050   $0.016 
           
Exercisable, March 31, 2024   15,387,050   $0.016 

 

As of March 31, 2024, these warrants in the aggregate had $197,196 of intrinsic value as the per share market price of $0.02 of the Company’s common stock as of such date was greater than the exercise price of certain warrants.

 
v3.24.1.1.u2
Discontinued Operations
 6 Months Ended
Mar. 31, 2024
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

Note 12 – Discontinued Operations

 

On April 20, 2023, the Company and Digipath Labs entered into the Purchase Agreement with DPL NV, LLC (“Buyer”), pursuant to which Digipath Labs has agreed to sell substantially all of its assets to Buyer for a cash purchase price of $2,300,000 (the “Purchase Price”) as described in Note 1 above. The Purchase Price is subject to adjustments at closing based on, among other things, the amount by which the working capital of Digipath Labs at the closing is greater or less than $150,000.

 

The Purchase Agreement includes a number of representations, warrantees, covenants and conditions to closing customary for this type of transaction. In addition, the closing of the transaction was subject to the approval of the Nevada Cannabis Compliance Board (the “CCB”). On January 18, 2024, the Company received approval from the CCB to transfer the assets pursuant to the Purchase Agreement.

 

Pursuant to the Purchase Agreement, the Buyer deposited $230,000 into an escrow account upon the execution of the Purchase Agreement, and such amount will continue to be held in escrow for a 12-month period following closing to satisfy any indemnification claims Buyer may have against Digipath Labs.

 

In connection with the transactions contemplated by the Purchase Agreement, Digipath, Digipath Labs and Buyer entered into a Management Services Agreement (the “Management Services Agreement”), dated as of April 30, 2023, pursuant to which Buyer was engaged to manage the operation of Digipath Labs’ cannabis testing laboratory (the “Lab”). The effectiveness of the Management Services Agreement was subject to the approval of the CCB, which was obtained on October 17, 2023. Pursuant to the Management Services Agreement, after the payment of expenses to third parties and a payment of 15% of cash collections to Digipath (but not less than $15,000) in each month, Buyer was entitled to a management fee of $10,000 per month. Any remaining cash generated from the operation of the Lab in any month was payable 45% to the Buyer and 55% to the Company.

 

On February 20, 2024, we completed the sale of the net assets of our subsidiary Digipath Labs to Buyer. As a result of the closing, the Company recognized a gain on the sale of the net assets in the amount of $1,596,505 which includes the excess value of the purchase price above the net assets as well as the working capital adjustment.

 

 

The balance sheets of Digipath Labs are summarized below:

 

   March 31, 2024   September 30, 2023 
Current assets:          
Accounts receivable, net  $      -   $447,410 
Deposits   -    18,675 
Other current assets   -    20,137 
Total current assets   -    486,222 
           
Right-of-use asset   -    274,985 
Fixed assets, net   -    368,681 
Total long term assets   -    643,666 
Total Assets  $-   $1,129,888 
           
Current liabilities:          
Accounts payable  $-   $158,869 
Accrued expenses   -    61,512 
Current portion of operating lease liabilities   -    83,757 
Current maturities of notes payable   -    64,517 
Total current liabilities   -    368,655 
           
Operating lease liabilities   -    143,245 
Notes payable   -    15,911 
Total long term liabilities   -    159,156 
Total Liabilities  $-   $527,811 

 

The statements of operations of Digipath Labs combined are summarized below:

 

   2024   2023   2024   2023 
   For the Three Months Ended   For the Six Months Ended 
   March 31,   March 31 
   2024   2023   2024   2023 
                 
Revenues  $712,145   $760,710   $1,635,299   $1,487,465 
Cost of sales   229,013    459,608    650,524    882,443 
Gross profit   483,132    301,102    984,775    605,022 
                     
Operating expenses:                    
General and administrative   189,983    224,346    393,168    504,990 
Professional fees   -    20,688    4,750    43,460 
Total operating expenses   189,983    245,034    397,918    548,450 
                     
Operating income(loss)   293,149    56,068    586,857    56,572 
                     
Other income (expense):                    
Interest expense   (620)   (1,745)   (1,701)   (3,706)
Total other income (expense)   (620)   (1,745)   (1,701)   (3,706)
                     
Net income (loss)  $292,529   $54,323   $585,156   $52,866 

 
v3.24.1.1.u2
Commitments and Contingencies
 6 Months Ended
Mar. 31, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 13 – 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.

 
v3.24.1.1.u2
Subsequent Events
 6 Months Ended
Mar. 31, 2024
Subsequent Events [Abstract]  
Subsequent Events

Note 14 – Subsequent Events

 

Management has evaluated events through May 20, 2024, the date these financial statements were available for issuance, and noted no events requiring disclosures.
v3.24.1.1.u2
Nature of Business and Significant Accounting Policies (Policies)
 6 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Nature of Business

Nature of Business

 

Hypha Labs, Inc. (formerly Digipath, Inc.) was incorporated in Nevada on October 5, 2010. Until February 20, 2024, Hypha Labs, Inc. and its subsidiaries (“Hypha,” the “Company,” “we,” “our” or “us”) was a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, and supported the cannabis industry’s best practices for reliable testing, cannabis education and training. Our mission was to provide pharmaceutical-grade analysis and testing to the cannabis industry, under ISO-17025:2017 guidelines, to ensure consumers and patients knew exactly what was in the cannabis they ingest and to help maximize the quality of our clients’ products through research, development, and standardization. Hypha Labs had been operating a cannabis-testing lab in Nevada since 2015.

 

On February 20, 2024, we completed the sale of the net assets of our subsidiary Digipath Labs, Inc. (“Digipath Labs”). As of that date we were no longer in the business as a service-oriented independent testing laboratory, data analytics and media firm focused on the developing cannabis and hemp markets, which supported the cannabis industry’s best practices for reliable testing, cannabis education and training.

 

Effective March 12, 2024, the Company amended Article 1 of its Articles of Incorporation to change its name from Digipath, Inc. to Hypha Labs, Inc. Hypha Products, Inc., a wholly owned subsidiary of the Company, was formed on April 18, 2024.

 
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, 2023. 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, 2024:

 

    Jurisdiction of      
Name of Entity   Incorporation    Relationship 
Hypha Labs, Inc.(formerly Digipath, Inc.)(1)   Nevada    Parent 
Digipath Labs, Inc.   Nevada    Subsidiary 
Digipath Labs CA, Inc. (2)   California    Subsidiary 
Digipath Labs S.A.S.(3)   Colombia    Subsidiary 
VSSL Enterprises, Ltd.(4)   Canada    Subsidiary 

 

(1) Holding company, which owns each of the wholly-owned subsidiaries. All subsidiaries shown above are wholly-owned by Hypha Labs, Inc., the parent company.
(2) Formed during the second fiscal quarter of 2021, but has not yet commenced significant operations.
(3) Formed during the first fiscal quarter of 2019, but has not yet commenced significant operations.
(4) Acquired on March 11, 2020.

 

 

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”, “Hypha” or “DIGP”. The Company’s headquarters are located in Las Vegas, Nevada and substantially all of its customers were 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.

 
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.

 

Our revenue was primarily generated through our subsidiary, Digipath Labs which recognized 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 was 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.

 

For the three and six months ended March 31, 2024 and 2023, all revenues are classified as part of Net income from discontinued operations in the accompanying consolidated statement of operations

 
Discontinued Operations

Discontinued Operations

 

On April 20, 2023, the Company and Digipath Labs entered into an Asset Purchase Agreement (the “Purchase Agreement”) with DPL NV, LLC (“Buyer”), pursuant to which Digipath Labs agreed to sell substantially all of its assets to Buyer for a cash purchase price of $2,300,000 (the “Purchase Price”). The business of an entity that is in the process of disposing its assets by sale, or that intends to cease operations, is reported as discontinued operations if the transaction represents a strategic shift that will have a major effect on an entity’s operations and financial results. As such, the Company’s lab testing business is now reported as discontinued operations.

 

Assets and liabilities of the discontinued operations are aggregated and reported separately as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of September 30, 2023. On February 20, 2024, we completed the sale of the net assets of our subsidiary Digipath Labs and as such no longer have assets or liabilities that are reported separately in the Consolidated Balance Sheet as of March 31, 2024. The results of discontinued operations are aggregated and presented separately in the Consolidated Statements of Operations as net income from discontinued operations for the periods ended March 31, 2024 and 2023. The cash flows of the discontinued operations are reflected as cash flows of discontinued operations within the Company’s Consolidated Statements of Cash Flows for the periods ended March 31, 2024 and 2023.

 

Amounts presented in discontinued operations have been derived from our consolidated financial statements and accounting records using the historical basis of assets, liabilities, results of operations, and cash flows of Digipath Labs. The discontinued operations exclude general corporate allocations.

 
Basic and Diluted Loss Per Share

Basic and Diluted Loss Per Share

 

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities.

 

 

The following table presents the effect of potential dilutive issuances for the three and six months ended March 31, 2024 and 2023:

 

   March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023 
   Three Months Ended   Six Months Ended 
   March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023 
                 
Net income (loss) attributable to common stockholders  $(56,708)  $(121,821)  $(197,689)  $(360,694)
Interest expense associated with convertible debt   -    -    -    - 
Net income (loss) for dilutive calculation  $(56,708)  $(121,821)   (197,689)   (360,694)
                     
Weighted average shares outstanding   92,083,084    82,296,820    89,576,328    82,257,534 
Dilutive effect of preferred stock   -    -    -    - 
Dilutive effect of convertible debt   -    -    -    - 
Dilutive effect of common stock warrants   -    -    -    - 
Weighted average shares outstanding for diluted net income (loss) per share   92,083,084    82,296,820    89,576,328    82,257,534 

 

For the three and six months ended March 31, 2024, potential dilutive securities of 104,490,131 shares issuable upon conversion of convertible notes payable, 8,120,000 shares issuable upon exercise of options, 15,387,050 shares issuable upon exercise of warrants, and 13,579,710 shares issuable upon conversion of our Preferred A and Preferred B shares, respectively, had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

 

For the three and six months ended March 31, 2023, potential dilutive securities of 83,125,488 shares issuable upon conversion of convertible notes payable, 6,020,000, shares issuable upon exercise of options, 15,387,050 shares issuable upon exercise of warrants, and 13,579,710 shares issuable upon conversion of our Preferred A and Preferred B shares, respectively, had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

 
Reclassifications

Reclassifications

 

Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.

 
Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. The Company is currently evaluating the effect of this pronouncement on its disclosures.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.
v3.24.1.1.u2
Nature of Business and Significant Accounting Policies (Tables)
 6 Months Ended
Mar. 31, 2024
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, 2024:

 

    Jurisdiction of      
Name of Entity   Incorporation    Relationship 
Hypha Labs, Inc.(formerly Digipath, Inc.)(1)   Nevada    Parent 
Digipath Labs, Inc.   Nevada    Subsidiary 
Digipath Labs CA, Inc. (2)   California    Subsidiary 
Digipath Labs S.A.S.(3)   Colombia    Subsidiary 
VSSL Enterprises, Ltd.(4)   Canada    Subsidiary 

 

(1) Holding company, which owns each of the wholly-owned subsidiaries. All subsidiaries shown above are wholly-owned by Hypha Labs, Inc., the parent company.
(2) Formed during the second fiscal quarter of 2021, but has not yet commenced significant operations.
(3) Formed during the first fiscal quarter of 2019, but has not yet commenced significant operations.
(4) Acquired on March 11, 2020.
Schedule of Effect of Potential Dilutive Issuances

The following table presents the effect of potential dilutive issuances for the three and six months ended March 31, 2024 and 2023:

 

   March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023 
   Three Months Ended   Six Months Ended 
   March 31, 2024   March 31, 2023   March 31, 2024   March 31, 2023 
                 
Net income (loss) attributable to common stockholders  $(56,708)  $(121,821)  $(197,689)  $(360,694)
Interest expense associated with convertible debt   -    -    -    - 
Net income (loss) for dilutive calculation  $(56,708)  $(121,821)   (197,689)   (360,694)
                     
Weighted average shares outstanding   92,083,084    82,296,820    89,576,328    82,257,534 
Dilutive effect of preferred stock   -    -    -    - 
Dilutive effect of convertible debt   -    -    -    - 
Dilutive effect of common stock warrants   -    -    -    - 
Weighted average shares outstanding for diluted net income (loss) per share   92,083,084    82,296,820    89,576,328    82,257,534 
v3.24.1.1.u2
Fair Value of Financial Instruments (Tables)
 6 Months Ended
Mar. 31, 2024
Fair Value Disclosures [Abstract]  
Summary of Financial Instruments at Fair Value on Recurring Basis

The Company has certain financial instruments that must be measured under the new fair value standard. The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of March 31, 2024 and September 30, 2023, respectively:

 

   Level 1   Level 2   Level 3 
   Fair Value Measurements at March 31, 2024 
   Level 1   Level 2   Level 3 
Assets               
Cash  $1,063,401   $-   $- 
                
Liabilities               
Convertible notes payable, net of discounts of $0   -    -    1,078,235 

 

   Level 1   Level 2   Level 3 
   Fair Value Measurements at September 30, 2023 
   Level 1   Level 2   Level 3 
Assets               
Cash  $271,006   $-   $- 
                
Liabilities               
Notes payable   -    565,000    - 
Convertible notes payable, net of discounts of $43,051   -    -    1,725,184 
v3.24.1.1.u2
Notes Payable (Tables)
 6 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
Schedule of Notes Payable

Notes payable consists of the following at March 31, 2024 and September 30, 2023, respectively:

 

   March 31, 2024   September 30, 2023 
         
On September 10, 2021, the Company issued a Secured Promissory note in the principal amount of $675,000 to US Canna Lab I, LLC (the “Canna Lab Note”). The 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. In addition, the Company was advanced an additional $115,000 of funds during the year ended September 30, 2022 under the same terms as the original note. During the years ended September 30, 2023 and 2022, the Company repaid $100,000 and $125,000, respectively of the principal balance on the Canna Lab Note. However, as a result of the Company not meeting the monthly payment obligations, the Canna Lab Note is in technical default, however, no default notice has been provided by Canna Lab as of the date of this filing. There are no additional obligations of the Company under default with the exception of being due on demand. During the three months ended December 31, 2023, $35,965 of accrued interest and outstanding payables were transferred to the principal balance of the Canna Lab Note. On February 27, 2024, the Company repaid the note and related accrued interest in full.  $         -   $565,000 
           
Total notes payable   -    565,000 
Less: current maturities   -    (565,000)
Notes payable  $-   $- 
           
The Company recorded interest expense pursuant to the stated interest rate and closing costs on the notes payable in the amount of $36,614 and $24,000 during the six months ended March 31, 2024 and 2023.
           
Notes payable – discontinued operations          
           
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. Pursuant to the asset purchase agreement with Buyer as discussed in Note 1, the equipment loan was transferred to the Buyer and is no longer the financial responsibility of the Company.  $-   $80,428 
v3.24.1.1.u2
Convertible Notes Payable (Tables)
 6 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
Schedule of Related Party Convertible Notes Payable

Related party convertible notes payable consist of the following at March 31, 2024 and September 30, 2023, respectively:

 

   March 31, 2024   September 30, 2023 
         
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 matured 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. On August 8, 2022, the note holder agreed to extend the maturity date of the note to February 11, 2024. In exchange for the extension, the Company agreed to issue 4,550,000 common shares, which were recorded as debt discount with a relative fair value of $43,788. As a result of the shares issued upon the extension agreement, the lender now holds more the 5% of the total outstanding common shares, and is therefore considered a related party. On February 27, 2024, the Company repaid the note and related accrued interest in full.  $      -   $350,000 
           
Total related party convertible notes payable   -    350,000 
Less: unamortized debt discounts   -    (10,748)
Total convertible debt   -    339,252 
Less: current maturities   -    (339,252)
Related party convertible notes payable  $-   $- 
Schedule of Convertible Notes Payable

Convertible notes payable consist of the following at March 31, 2024 and September 30, 2023, respectively:

 

   March 31, 2024   September 30, 2023 
         
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 matured on August 11, 2022, as amended, 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. On August 8, 2022, the note holder agreed to extend the maturity date of the note to February 11, 2024. In exchange for the extension, the Company agreed to issue 650,000 common shares, which were recorded as debt discount, with a relative fair value of $6,989.  $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 matured on August 11, 2022, as amended, 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. On August 8, 2022, the note holder agreed to extend the maturity date of the note to February 11, 2024. In exchange for the extension, the Company agreed to issue 1,950,000 common shares, which were recorded as debt discount, with a relative fair value of $20,968. On February 27, 2024, the Company repaid the note and related accrued interest in full.   -    150,000 
           
On September 23, 2019, the Company received proceeds of $200,000 on a senior secured convertible note that carries an 8% interest rate, which matured 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 the outstanding short term notes and accrued interest into the principal balance, making the outstanding balance $355,469, 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. On October 1, 2022, the Company further extended the maturity date to February 11, 2024. In connection with the modification, the Company issued warrants to purchase 4,621,105 shares of common stock, with a fair value of $32,166, which was recorded as a debt discount. On January 22, 2024 the Company further amended the note to extend the maturity date to February 11, 2025 and reduced the conversion price to $0.01. As a result of the modification of the conversion price, the Company recorded a loss on debt extinguishment of $481,955.   355,469    355,469 
           
On November 8, 2018, the Company received proceeds of $350,000 on a senior secured convertible note that carries an 8% interest rate, which matured 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. On October 1, 2022, the Company further extended the maturity date to February 11, 2024. In connection with the modification, the Company issued warrants to purchase 4,550,000 shares of common stock, with a fair value of $31,671, which was recorded as a debt discount. On January 29, 2024 the holder converted $40,000 of this note into common shares. On January 22, 2024 the Company further amended the note to extend the maturity date to February 11, 2025 and reduced the conversion price to $0.01. As a result of the modification of the conversion price, the Company recorded a loss on debt extinguishment of $474,539.   310,000    350,000 
           
On October 1, 2022, the Company entered into a senior secured convertible note that carries an 8% interest rate, which matures on February 11, 2024. The Note documented the advances made during the year ended September 30, 2022 in the amount of $362,765. The principal and interest on the Note are convertible into common shares at a conversion price of $0.01. In connection with the note, the Company issued warrants to purchase 4,715,945 shares of common stock, with a fair value of $30,102, which was recorded as a debt discount.   362,765    362,765 
           
On November 5, 2018, the Company received proceeds of $150,000 on a senior secured convertible note that carries an 8% interest rate, which matured 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. On February 27, 2024, the Company repaid the note and related accrued interest in full.   -    150,000 
           
Total convertible notes payable   1,078,235    1,418,234 
Less: unamortized debt discounts   -    (32,302)
Total convertible debt   1,078,235    1,385,932 
Less: current maturities   (1,078,235)   (1,385,932)
Convertible notes payable  $-   $- 
Schedule of Interest Expense

The Company recognized interest expense for the six months ended March 31, 2024 and 2023, respectively, as follows:

 

   March 31, 2024   March 31, 2023 
         
Interest on notes payable   36,614    29,770 
Amortization of beneficial conversion features   43,050    77,616 
Interest on convertible notes   

78,607

    72,473 
Total interest expense  $158,271   $179,859 
v3.24.1.1.u2
Common Stock Options (Tables)
 6 Months Ended
Mar. 31, 2024
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, 2024.

 

Shares Underlying Options Outstanding   Shares Underlying 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 
$0.0056– $0.13    8,120,000   4.53 years  $0.052    8,120,000   $0.052 
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, 2023   8,120,000   $0.052 
Options issued   -    - 
Options forfeited   -    - 
           
Balance, March 31, 2024   8,120,000   $0.052 
           
Exercisable, March 31, 2024   8,120,000   $0.052 
v3.24.1.1.u2
Common Stock Warrants (Tables)
 6 Months Ended
Mar. 31, 2024
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, 2024 (including those issued to both investors and service providers).

 

Shares Underlying Warrants Outstanding   Shares Underlying 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 
 $0.0074 -0.10    15,387,050   8.26 years  $0.016    15,387,050   $0.016 
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, 2023   15,387,050   $0.016 
Warrants granted   -    - 
Warrants expired   -    - 
           
Balance, March 31, 2024   15,387,050   $0.016 
           
Exercisable, March 31, 2024   15,387,050   $0.016 
v3.24.1.1.u2
Discontinued Operations (Tables)
 6 Months Ended
Mar. 31, 2024
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of Discontinued Operations of Income Statement and Balance Sheet Disclosures

The balance sheets of Digipath Labs are summarized below:

 

   March 31, 2024   September 30, 2023 
Current assets:          
Accounts receivable, net  $      -   $447,410 
Deposits   -    18,675 
Other current assets   -    20,137 
Total current assets   -    486,222 
           
Right-of-use asset   -    274,985 
Fixed assets, net   -    368,681 
Total long term assets   -    643,666 
Total Assets  $-   $1,129,888 
           
Current liabilities:          
Accounts payable  $-   $158,869 
Accrued expenses   -    61,512 
Current portion of operating lease liabilities   -    83,757 
Current maturities of notes payable   -    64,517 
Total current liabilities   -    368,655 
           
Operating lease liabilities   -    143,245 
Notes payable   -    15,911 
Total long term liabilities   -    159,156 
Total Liabilities  $-   $527,811 

 

The statements of operations of Digipath Labs combined are summarized below:

 

   2024   2023   2024   2023 
   For the Three Months Ended   For the Six Months Ended 
   March 31,   March 31 
   2024   2023   2024   2023 
                 
Revenues  $712,145   $760,710   $1,635,299   $1,487,465 
Cost of sales   229,013    459,608    650,524    882,443 
Gross profit   483,132    301,102    984,775    605,022 
                     
Operating expenses:                    
General and administrative   189,983    224,346    393,168    504,990 
Professional fees   -    20,688    4,750    43,460 
Total operating expenses   189,983    245,034    397,918    548,450 
                     
Operating income(loss)   293,149    56,068    586,857    56,572 
                     
Other income (expense):                    
Interest expense   (620)   (1,745)   (1,701)   (3,706)
Total other income (expense)   (620)   (1,745)   (1,701)   (3,706)
                     
Net income (loss)  $292,529   $54,323   $585,156   $52,866 
v3.24.1.1.u2
Schedule of Entities Under Common Control and Ownership (Details)
 6 Months Ended
Mar. 31, 2024
Entities Under Common Control and Ownership One [Member]  
Name of Entity Hypha Labs, Inc.(formerly Digipath, Inc.) [1]
Jurisdiction of Incorporation Nevada [1]
Relationship Parent [1]
Entities Under Common Control and Ownership Two [Member]  
Name of Entity Digipath Labs, Inc.
Jurisdiction of Incorporation Nevada
Relationship Subsidiary
Entities Under Common Control and Ownership Three [Member]  
Name of Entity Digipath Labs CA, Inc. [2]
Jurisdiction of Incorporation California [2]
Relationship Subsidiary [2]
Entities Under Common Control and Ownership Four [Member]  
Name of Entity Digipath Labs S.A.S. [3]
Jurisdiction of Incorporation Colombia [3]
Relationship Subsidiary [3]
Entities Under Common Control and Ownership Five [Member]  
Name of Entity VSSL Enterprises, Ltd. [4]
Jurisdiction of Incorporation Canada [4]
Relationship Subsidiary [4]
[1] Holding company, which owns each of the wholly-owned subsidiaries. All subsidiaries shown above are wholly-owned by Hypha Labs, Inc., the parent company.
[2] Formed during the second fiscal quarter of 2021, but has not yet commenced significant operations.
[3] Formed during the first fiscal quarter of 2019, but has not yet commenced significant operations.
[4] Acquired on March 11, 2020.
v3.24.1.1.u2
Schedule of Effect of Potential Dilutive Issuances (Details) - USD ($)
 3 Months Ended 6 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
Accounting Policies [Abstract]        
Net income (loss) attributable to common stockholders $ (56,708) $ (121,821) $ (197,689) $ (360,694)
Interest expense associated with convertible debt
Net income (loss) for dilutive calculation $ (56,708) $ (121,821) $ (197,689) $ (360,694)
Weighted average shares outstanding 92,083,084 82,296,820 89,576,328 82,257,534
Dilutive effect of preferred stock
Dilutive effect of convertible debt
Dilutive effect of common stock warrants
Weighted average shares outstanding for diluted net income (loss) per share 92,083,084 82,296,820 89,576,328 82,257,534
v3.24.1.1.u2
Nature of Business and Significant Accounting Policies (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended
Apr. 20, 2023
Mar. 31, 2024
Mar. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
Schedule of Equity Method Investments [Line Items]          
Cash purchase price       $ 235,000
Conversion of Stock, Shares Issued       8,340,000  
Series A Convertible Preferred Stock [Member]          
Schedule of Equity Method Investments [Line Items]          
Conversion of Stock, Shares Issued   13,579,710 13,579,710 13,579,710 13,579,710
Series B Convertible Preferred Stock [Member]          
Schedule of Equity Method Investments [Line Items]          
Conversion of Stock, Shares Issued   13,579,710 13,579,710 13,579,710 13,579,710
Convertible Debt Securities [Member]          
Schedule of Equity Method Investments [Line Items]          
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount   104,490,131 83,125,488 104,490,131 83,125,488
Share-Based Payment Arrangement, Option [Member]          
Schedule of Equity Method Investments [Line Items]          
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount   8,120,000 6,020,000 8,120,000 6,020,000
Warrant [Member]          
Schedule of Equity Method Investments [Line Items]          
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount   15,387,050 15,387,050 15,387,050 15,387,050
Discontinued Operations, Held-for-Sale [Member] | Purchase Agreement [Member]          
Schedule of Equity Method Investments [Line Items]          
Cash purchase price $ 2,300,000        
v3.24.1.1.u2
Going Concern (Details Narrative) - USD ($)
Mar. 31, 2024
Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Working Capital $ 138,061  
Accumulated deficit 19,374,530 $ 19,761,997
Cash $ 1,063,401 $ 271,006
v3.24.1.1.u2
Summary of Financial Instruments at Fair Value on Recurring Basis (Details) - USD ($)
Mar. 31, 2024
Sep. 30, 2023
Fair Value, Inputs, Level 1 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash $ 1,063,401 $ 271,006
Convertible notes payable, net of discounts of $43,051
Notes payable  
Fair Value, Inputs, Level 2 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash
Convertible notes payable, net of discounts of $43,051
Notes payable   565,000
Fair Value, Inputs, Level 3 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Cash
Convertible notes payable, net of discounts of $43,051 $ 1,078,235 1,725,184
Notes payable  
v3.24.1.1.u2
Summary of Financial Instruments at Fair Value on Recurring Basis (Details) (Parenthetical) - USD ($)
Mar. 31, 2024
Sep. 30, 2023
Convertible Debt [Member]    
Short-Term Debt [Line Items]    
Convertible notes discounts $ 0 $ 43,051
v3.24.1.1.u2
Related Party Transactions (Details Narrative)
 6 Months Ended
Mar. 31, 2024
USD ($)
Chief Financial Officer [Member]  
Related Party Transaction [Line Items]  
Service for incurred fees $ 30,000
Board of Directors [Member]  
Related Party Transaction [Line Items]  
Service for incurred fees 10,000
Due to related party $ 20,000
v3.24.1.1.u2
Note Receivable (Details Narrative) - USD ($)
Dec. 31, 2025
Sep. 30, 2025
Jun. 30, 2025
Mar. 31, 2025
Dec. 31, 2024
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Dec. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Dec. 08, 2022
Sep. 30, 2022
Jun. 13, 2019
Financing Receivable, Modified [Line Items]                            
Purchase price note receivable                        
Asset Purchase Agreement [Member] | Invictus Wealth Group [Member]                            
Financing Receivable, Modified [Line Items]                            
Debt instrument stated percentage                       10.00%    
Purchase price note receivable                       $ 900,000    
Upfront payment                       275,000    
Purchase price note receivable                       $ 625,000    
Debt instrument maturity date                       Dec. 31, 2023    
Debt final payment                 $ 425,000 100,000 $ 100,000      
Received portion of upfront payment                     $ 275,000      
Asset Purchase Agreement [Member] | Invictus Wealth Group [Member] | Extended Maturity [Member]                            
Financing Receivable, Modified [Line Items]                            
Debt final payment         $ 50,000 $ 50,000 $ 50,000 $ 425,000 $ 100,000 $ 100,000        
Asset Purchase Agreement [Member] | Invictus Wealth Group [Member] | Extended Maturity [Member] | Forecast [Member]                            
Financing Receivable, Modified [Line Items]                            
Debt final payment $ 216,780 $ 125,000 $ 100,000 $ 100,000                    
Northwest Analytical Labs, Inc. [Member]                            
Financing Receivable, Modified [Line Items]                            
Notes receivable                           $ 95,000
Debt instrument stated percentage                           10.00%
C3 Labs, Inc., [Member]                            
Financing Receivable, Modified [Line Items]                            
Notes receivable                         $ 1,056,570  
Debt instrument stated percentage                         8.00%  
Interest receivable                         $ 64,017  
v3.24.1.1.u2
Schedule of Notes Payable (Details) - USD ($)
Mar. 31, 2024
Sep. 30, 2023
Short-Term Debt [Line Items]    
Total notes payable $ 565,000
Less: current maturities (565,000)
Notes payable
Notes Payable [Member]    
Short-Term Debt [Line Items]    
Total notes payable 565,000
Notes Payable [Member] | Discontinued Operations [Member]    
Short-Term Debt [Line Items]    
Total notes payable $ 80,428
v3.24.1.1.u2
Schedule of Notes Payable (Details) (Parenthetical) - USD ($)
 3 Months Ended 6 Months Ended 12 Months Ended
Sep. 10, 2021
Dec. 26, 2019
Dec. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
Sep. 30, 2023
Sep. 30, 2022
Short-Term Debt [Line Items]              
Repayments of notes payable       $ 595,965    
Canna Lab Note [Member]              
Short-Term Debt [Line Items]              
Additional debt amount $ 675,000            
Debt instrument stated percentage 12.00%            
Debt instrument, maturity date Sep. 10, 2024            
Debt instrument periodic payment $ 22,419.66            
Secured Promissory Note [Member]              
Short-Term Debt [Line Items]              
Additional debt amount             $ 115,000
Repayments of notes payable           $ 100,000 $ 125,000
Accrued interest     $ 35,965        
Note Payable [Member]              
Short-Term Debt [Line Items]              
Interest expense       $ 36,614 $ 24,000    
Note Payable [Member] | Discontinued Operations [Member]              
Short-Term Debt [Line Items]              
Debt instrument stated 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   5 years          
v3.24.1.1.u2
Schedule of Related Party Convertible Notes Payable (Details) - USD ($)
Mar. 31, 2024
Sep. 30, 2023
Short-Term Debt [Line Items]    
Total related party convertible notes payable $ 1,078,235 $ 1,418,234
Total convertible debt 1,078,235 1,385,932
Less: current maturities (1,078,235) (1,385,932)
Related Party [Member]    
Short-Term Debt [Line Items]    
Total related party convertible notes payable 350,000
Less: unamortized debt discounts (10,748)
Total convertible debt 339,252
Less: current maturities (339,252)
Related party convertible notes payable
Convertible Notes Payable [Member]    
Short-Term Debt [Line Items]    
Less: unamortized debt discounts 0  
Convertible Notes Payable [Member] | Related Party [Member]    
Short-Term Debt [Line Items]    
Total related party convertible notes payable $ 350,000
v3.24.1.1.u2
Schedule of Related Party Convertible Notes Payable (Details) (Parenthetical) - Secured Subordinated Convertible Promissory Note [Member] - Accredited Investors [Member] - USD ($)
Aug. 08, 2022
Dec. 29, 2020
Dec. 28, 2020
Feb. 10, 2020
Short-Term Debt [Line Items]        
Principal amount   $ 50,000 $ 400,000 $ 350,000
Maturity date Feb. 11, 2024     Aug. 10, 2022
Debt instrument interest percentage       9.00%
Conversion price   $ 0.03 $ 0.03 $ 0.15
Proceeds from convertible debt     $ 50,000  
Debt converted principal value, shares   1,666,667    
Shares of common stock issued 4,550,000      
Debt instrument fair value $ 43,788      
Debt instrument agreement As a result of the shares issued upon the extension agreement, the lender now holds more the 5% of the total outstanding common shares, and is therefore considered a related party      
v3.24.1.1.u2
Schedule of Convertible Notes Payable (Details) - USD ($)
Mar. 31, 2024
Sep. 30, 2023
Short-Term Debt [Line Items]    
Total convertible notes payable $ 1,078,235 $ 1,418,234
Less: unamortized debt discounts (32,302)
Total convertible debt 1,078,235 1,385,932
Less: current maturities (1,078,235) (1,385,932)
Nonrelated Party [Member]    
Short-Term Debt [Line Items]    
Convertible notes payable
Convertible Notes Payable One [Member]    
Short-Term Debt [Line Items]    
Total convertible notes payable 50,000 50,000
Convertible Notes Payable Two [Member]    
Short-Term Debt [Line Items]    
Total convertible notes payable 150,000
Convertible Notes Payable Three [Member]    
Short-Term Debt [Line Items]    
Total convertible notes payable 355,469 355,469
Convertible Notes Payable Four [Member]    
Short-Term Debt [Line Items]    
Total convertible notes payable 310,000 350,000
Convertible Notes Payable Five [Member]    
Short-Term Debt [Line Items]    
Total convertible notes payable 362,765 362,765
Convertible Notes Payable Six [Member]    
Short-Term Debt [Line Items]    
Total convertible notes payable $ 150,000
v3.24.1.1.u2
Schedule of Convertible Notes Payable (Details) (Parenthetical) - USD ($)
 3 Months Ended 6 Months Ended 12 Months Ended
Jan. 29, 2024
Jan. 22, 2024
Oct. 02, 2022
Aug. 08, 2022
Sep. 30, 2021
Feb. 22, 2021
Dec. 29, 2020
Dec. 28, 2020
Sep. 30, 2020
Aug. 08, 2020
Feb. 11, 2020
Sep. 23, 2019
Nov. 08, 2018
Nov. 05, 2018
Mar. 31, 2024
Mar. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
Sep. 30, 2022
Short-Term Debt [Line Items]                                      
Amortization of debt discount premium                                 $ 43,050 $ 77,616  
Debt instrument purchase of warrant                             15,387,050   15,387,050    
Loss on debt extinguishment                             $ (956,494) $ (956,494)  
9% Secured Convertible Promissory Note [Member] | Accredited Investors [Member]                                      
Short-Term Debt [Line Items]                                      
Principal amount             $ 10,000 $ 60,000     $ 50,000                
Maturity date       Feb. 11, 2024             Aug. 11, 2022                
Debt instrument interest percentage                     9.00%                
Conversion price             $ 0.03 $ 0.03     $ 0.15                
Proceeds from convertible debt               $ 10,000                      
Debt converted principal value, shares             333,334                        
Shares issued in exchange of extension       650,000                              
Debt instrument fair value       $ 6,989                              
9% Secured Subordinated Convertible Promissory Note [Member] | Accredited Investors [Member]                                      
Short-Term Debt [Line Items]                                      
Principal amount               $ 200,000     $ 150,000                
Maturity date       Feb. 11, 2024             Aug. 11, 2022                
Debt instrument interest percentage                     9.00%                
Conversion price             $ 0.03 $ 0.03     $ 0.15                
Proceeds from convertible debt               $ 50,000                      
Debt converted principal value, shares             1,666,667                        
Debt converted principal amount             $ 50,000                        
9% Secured Subordinated Convertible Promissory Note [Member] | Accredited Investors One [Member]                                      
Short-Term Debt [Line Items]                                      
Shares issued in exchange of extension                   1,950,000                  
Debt instrument fair value       $ 20,968                              
Senior Secured Convertible Note [Member]                                      
Short-Term Debt [Line Items]                                      
Maturity date   Feb. 11, 2025 Feb. 11, 2024           Aug. 10, 2022     Aug. 10, 2022              
Debt instrument interest percentage                       8.00%              
Conversion price   $ 0.01       $ 0.03     $ 0.03     $ 0.11              
Proceeds from convertible debt                       $ 200,000              
Debt converted principal value, shares           3,000,000                          
Debt converted principal amount           $ 90,000                          
Debt instrument periodic payment         $ 355,469                            
Amortization of debt discount premium         $ 98,188                            
Debt instrument purchase of warrant     4,621,105                                
Debt instrument fair value of warrant     $ 32,166                                
Loss on debt extinguishment   $ 481,955                                  
Senior Secured Convertible Note One [Member]                                      
Short-Term Debt [Line Items]                                      
Maturity date   Feb. 11, 2025 Feb. 11, 2024           Aug. 10, 2022       Aug. 10, 2022            
Debt instrument interest percentage                         8.00%            
Conversion price   $ 0.01             $ 0.03       $ 0.14            
Proceeds from convertible debt                         $ 350,000            
Debt instrument purchase of warrant     4,550,000                                
Debt instrument fair value of warrant     $ 31,671                                
Loss on debt extinguishment   $ 474,539                                  
Conversion of notes payable into common stock value $ 40,000                                    
Senior Secured Convertible Note Two [Member]                                      
Short-Term Debt [Line Items]                                      
Maturity date     Feb. 11, 2024                                
Debt instrument interest percentage     8.00%                                
Conversion price     $ 0.01                                
Debt instrument purchase of warrant     4,715,945                                
Debt instrument fair value of warrant     $ 30,102                                
Debt conversion original debt amount                                     $ 362,765
Senior Secured Convertible Note Three [Member]                                      
Short-Term Debt [Line Items]                                      
Maturity date                 Aug. 10, 2022         Aug. 10, 2022          
Debt instrument interest percentage                           8.00%          
Conversion price                 $ 0.03         $ 0.14          
Proceeds from convertible debt                           $ 150,000          
v3.24.1.1.u2
Schedule of Interest Expense (Details) - USD ($)
 6 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Debt Disclosure [Abstract]    
Interest on notes payable $ 36,614 $ 29,770
Amortization of beneficial conversion features 43,050 77,616
Interest on convertible notes 78,607 72,473
Total interest expense $ 158,271 $ 179,859
v3.24.1.1.u2
Convertible Notes Payable (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended 12 Months Ended
Dec. 31, 2023
Dec. 31, 2022
Mar. 31, 2024
Mar. 31, 2023
Sep. 30, 2023
Short-Term Debt [Line Items]          
Amortization of debt discounts     $ 43,050 $ 77,616  
Maximum Share Amount [Member]          
Short-Term Debt [Line Items]          
Maximum amount owned percentage of issued and outstanding common shares     4.99%    
Convertible Notes Payable [Member]          
Short-Term Debt [Line Items]          
Debt discount conversion feature of convertible debt         $ 93,938
Amortization of debt discounts     $ 43,050 $ 77,616  
Unamortized discounts     $ 0    
Convertible notes interest expense $ 77,808 $ 72,473      
v3.24.1.1.u2
Stockholders’ Equity (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Mar. 31, 2023
Dec. 31, 2022
Mar. 31, 2024
Sep. 30, 2023
Sep. 30, 2022
Jul. 20, 2022
Class of Stock [Line Items]                
Preferred stock, shares authorized 10,000,000       10,000,000      
Preferred stock, par or stated value per share $ 0.001       $ 0.001      
Common stock, shares authorized 250,000,000       250,000,000 250,000,000    
Common stock, par value $ 0.001       $ 0.001 $ 0.001    
Common stock, shares issued 105,280,155       105,280,155 87,096,820    
Common stock, shares outstanding 105,280,155       105,280,155 87,096,820    
Conversion of convertible note payables into common stock value              
Common Stock [Member]                
Class of Stock [Line Items]                
Conversion of convertible note payables into common shares       7,150,000 4,000,000      
Conversion of convertible note payables into common stock value       $ 7,150 $ 40,000      
Shares of stock-based compensation 14,183,335 14,183,335      
Stock issuance for aggregate value         $ 348,331      
Common Stock [Member] | Director [Member]                
Class of Stock [Line Items]                
Shares of stock-based compensation         6,000,000      
Stock issued value related to directors         $ 112,200      
Series A Convertible Preferred Stock [Member]                
Class of Stock [Line Items]                
Preferred stock, shares authorized 6,000,000       6,000,000 6,000,000    
Preferred stock, par or stated value per share $ 0.001       $ 0.001 $ 0.001    
Preferred stock, shares outstanding 1,047,942       1,047,942 1,047,942    
Preferred stock, shares outstanding 1,047,942       1,047,942 1,047,942    
Series A Convertible Preferred Stock [Member] | Preferred Stock [Member]                
Class of Stock [Line Items]                
Preferred stock, shares outstanding 1,047,942       1,047,942      
Preferred stock, shares outstanding 1,047,942       1,047,942      
Conversion of convertible note payables into common stock value              
Series B Convertible Preferred Stock [Member]                
Class of Stock [Line Items]                
Temporary equity, shares authorized 1,500,000       1,500,000 1,500,000    
Temporary equity, shares issued 333,600       333,600 333,600    
Temporary equity, shares outstanding 333,600       333,600 333,600    
Series B Convertible Preferred Stock [Member] | Preferred Stock [Member]                
Class of Stock [Line Items]                
Temporary equity, shares issued 333,600       333,600      
Temporary equity, shares outstanding 333,600 333,600 333,600 333,600 333,600 333,600 333,600  
Series C Preferred Stock [Member]                
Class of Stock [Line Items]                
Preferred stock, shares authorized 1,000       1,000      
Preferred stock, par or stated value per share               $ 1
Preferred stock, shares designated remaining 2,499,000       2,499,000      
Preferred stock voting rights         the Company’s common stock on all matters presented to the holders of common stock, whether at a special or annual meeting, by written action in lieu of a meeting or otherwise, on the basis of 200,000 votes for each share of Series C Preferred Stock      
Preferred stock voting rights $ 0.10       $ 0.10      
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 C Preferred are entitled to receive, prior to any distribution to the holders of common stock, 100% of the stated value per share of Series C Preferred.      
Series C Convertible Preferred Stock [Member]                
Class of Stock [Line Items]                
Preferred stock, shares authorized 1,000       1,000 1,000    
Preferred stock, par or stated value per share $ 0.001       $ 0.001 $ 0.001    
Preferred stock, shares outstanding 0       0 0    
Preferred stock, shares outstanding 0       0 0    
Series C Convertible Preferred Stock [Member] | Preferred Stock [Member]                
Class of Stock [Line Items]                
Temporary equity, shares issued 0       0      
Temporary equity, shares outstanding 0       0      
Conversion of convertible note payables into common stock value              
Series A Preferred Stock [Member]                
Class of Stock [Line Items]                
Conversion of stock, shares converted         1,047,942      
Convertible shares 5,239,710       5,239,710      
Common stock, terms of conversion         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.      
Percentage of distribution on purchase price 100.00%       100.00%      
Series A Preferred Stock [Member] | Noteholders [Member]                
Class of Stock [Line Items]                
Percentage of equity beneficial ownership 4.99%       4.99%      
v3.24.1.1.u2
Mezzanine Equity (Details Narrative)
 6 Months Ended
Mar. 31, 2024
$ / shares
shares
Preferred stock, par value $ 0.001
Conversion of stock shares issued | shares 8,340,000
Series B Preferred Stock [Member]  
Preferred stock, par value $ 1.00
Conversion price $ 0.04
Conversion shares converted | shares 333,600
Common stock, terms of conversion 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
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 and Series A Preferred, 100% of the purchase price per share of Series B Preferred plus all accrued but unpaid dividends
v3.24.1.1.u2
Summary of Common Stock Options Outstanding (Details)
 6 Months Ended
Mar. 31, 2024
$ / shares
shares
Share-Based Payment Arrangement [Abstract]  
Range of Exercise Price, Minimum $ 0.0056
Range of Exercise Price, Maximum $ 0.13
Number of Options Outstanding | shares 8,120,000
Weighted Average Remaining Contractual Life 4 years 6 months 10 days
Weighted Average Exercise Price $ 0.052
Number of Shares Exercisable | shares 8,120,000
Weighted Average Exercise Price Exercisable $ 0.052
v3.24.1.1.u2
Schedule of Activity of Outstanding Common Stock Options (Details)
 6 Months Ended
Mar. 31, 2024
$ / shares
shares
Share-Based Payment Arrangement [Abstract]  
Number of Shares Outstanding, Beginning balance | shares 8,120,000
Weighted Average Exercise Price, Outstanding, Beginning | $ / shares $ 0.052
Number of Shares Options issued | shares
Weighted Average Exercise Price, Options issued | $ / shares
Number of Shares Options forfeited | shares
Weighted Average Exercise Price, Options forfeited | $ / shares
Number of Shares Outstanding, Ending balance | shares 8,120,000
Weighted Average Exercise Price, Outstanding, Ending | $ / shares $ 0.052
Number of Shares Exercisable, Ending | shares 8,120,000
Weighted Average Exercise Price, Exercisable, Ending | $ / shares $ 0.052
v3.24.1.1.u2
Common Stock Options (Details Narrative) - USD ($)
 6 Months Ended
Jun. 21, 2016
Mar. 31, 2024
Mar. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Intrinsic value, outstanding   $ 33,600  
Market price, per share   $ 0.022  
Amortization of Stock Option [Member]      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Stock-based compensation expenses   $ 1,153 $ 17,510
Unamortized expenses expected to be expensed   $ 0  
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    
v3.24.1.1.u2
Summary of Common Stock Warrants Outstanding (Details)
 6 Months Ended
Mar. 31, 2024
$ / shares
shares
Common Stock Warrants  
Exercise Price Range Lower Range $ 0.0074
Exercise Price Range Upper Range $ 0.10
Number of Warrants Outstanding | shares 15,387,050
Weighted Average Remaining Contractual Life 8 years 3 months 3 days
Weighted Average Exercise Price $ 0.016
Number of Warrants Exercisable | shares 15,387,050
Weighted Average Exercise Price, Exercisable $ 0.016
v3.24.1.1.u2
Schedule of Outstanding Common Stock Warrants Activity (Details)
 6 Months Ended
Mar. 31, 2024
$ / shares
shares
Common Stock Warrants  
Number of Shares, Balance beginning | shares 15,387,050
Weighted Average Exercise Price, Balance beginning $ 0.016
Number of Shares, Warrants granted | shares
Weighted Average Exercise Price, Warrants granted
Number of Shares, Warrants expired | shares
Weighted Average Exercise Price, Warrants expired
Number of Shares, Balance ending | shares 15,387,050
Weighted Average Exercise Price, Balance, ending $ 0.016
Number of Shares, Exercisable 15,387,050
Weighted Average Exercise Price, Exercisable $ 0.016
v3.24.1.1.u2
Common Stock Warrants (Details Narrative)
 6 Months Ended
Mar. 31, 2024
USD ($)
$ / shares
shares
Number of warrant to purchase of common stock shares | shares 15,387,050
Warrant [Member]  
Warrants, intrinic value | $ $ 197,196
Intrinsic value, market price per share | $ / shares $ 0.02
v3.24.1.1.u2
Schedule of Discontinued Operations of Income Statement and Balance Sheet Disclosures (Details) - USD ($)
 3 Months Ended 6 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
Sep. 30, 2023
Current assets:          
Accounts receivable, net     $ 447,410
Deposits     18,675
Other current assets     20,137
Total current assets     486,222
Right-of-use asset     274,985
Fixed assets, net     368,681
Total long term assets     643,666
Total Assets     1,129,888
Current liabilities:          
Accounts payable     158,869
Accrued expenses     61,512
Current portion of operating lease liabilities     83,757
Current maturities of notes payable     64,517
Total current liabilities     368,655
Operating lease liabilities     143,245
Notes payable     15,911
Total long term liabilities     159,156
Total Liabilities     $ 527,811
Revenues 712,145 $ 760,710 1,635,299 $ 1,487,465  
Cost of sales 229,013 459,608 650,524 882,443  
Gross profit 483,132 301,102 984,775 605,022  
Operating expenses:          
General and administrative 189,983 224,346 393,168 504,990  
Professional fees 20,688 4,750 43,460  
Total operating expenses 189,983 245,034 397,918 548,450  
Operating income(loss) 293,149 56,068 586,857 56,572  
Other income (expense):          
Interest expense (620) (1,745) (1,701) (3,706)  
Total other income (expense) (620) (1,745) (1,701) (3,706)  
Net income (loss) $ 292,529 $ 54,323 $ 585,156 $ 52,866  
v3.24.1.1.u2
Discontinued Operations (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended
Feb. 20, 2024
Apr. 30, 2023
Apr. 20, 2023
Mar. 31, 2024
Mar. 31, 2023
Mar. 31, 2024
Mar. 31, 2023
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]              
Cash purchase price           $ 235,000
Working capital       $ (138,061)   (138,061)  
Gain on sale of subsidiary net assets $ 1,596,505     $ 1,596,505 $ 1,596,505
Purchase Agreement [Member]              
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]              
Working capital     $ 150,000        
Escrow deposits     230,000        
Management Services Agreement [Member]              
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]              
Description of collaborative arrangement   The effectiveness of the Management Services Agreement was subject to the approval of the CCB, which was obtained on October 17, 2023. Pursuant to the Management Services Agreement, after the payment of expenses to third parties and a payment of 15% of cash collections to Digipath (but not less than $15,000) in each month, Buyer was entitled to a management fee of $10,000 per month. Any remaining cash generated from the operation of the Lab in any month was payable 45% to the Buyer and 55% to the Company.          
Discontinued Operations, Held-for-Sale [Member] | Purchase Agreement [Member]              
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]              
Cash purchase price     $ 2,300,000        
Digipath (PK) (USOTC:DIGP)
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