From the Office of the CEO

Fellow DigiPath Shareholders:

This is a very exciting time to be involved in the digital pathology and cannabis industries, and as investors in DigiPath, Inc., you and I are stakeholders in both. As co-founder, and now CEO, of DigiPath, Inc., I am always looking to improve things—including how we communicate. I believe healthy relationships are built on frequent and direct communication. As such, I will send these types of updates to you going forward, to keep you abreast of our successes and the progress we are making across all of our operational fronts.

Market Growth

We are involved in high-growth industries. According to a recent research report published by MarketsandMarkets, the digital global pathology market was estimated to have reached $250.2 million in 2013, and forecasters estimate it to reach $437 million by 2018. This represents a compound annual growth rate of 11.8 percent.

The cannabis market is growing faster than the smartphone market. An estimated $1.43 billion worth of legal marijuana was sold in 2013, and $2.34 billion is expected to be sold in 2014. That’s growth of 64 percent—and we’re just getting started. Expansion of cannabis laws in states across the country is fueling additional market growth.

DigiPath Labs Cannabis Testing Laboratories

Leveraging our expertise in digital pathology, we expanded our services into cannabis testing this year. Chief Science Officer, Dr. Cindy Orser, helped secure a cannabis testing laboratory special use permit in Clark County, Nevada, in June 2014, and last week we received the green light from the State of Nevada. We expect to open the Clark County lab in the first quarter of 2015.

While this is great news, this is really just the beginning, as we are actively pursuing additional permits in other legal cannabis states.

The National Marijuana News (

This year we also launched a successful cannabis media company, The National Marijuana News (, to help educate and raise awareness of the full spectrum of cannabis-related issues. Since our launch six months ago, our Internet news and radio program has amassed more than 100,000 listeners who turn to us for news coverage of major policies and events, and to listen to the perspectives of our often-provocative interview guests.

DigiPath Corp.

Our digital pathology business, which enables the collection and analysis of digital slides, continues to generate a steady revenue base. During our fiscal year ending September 30, 2014, DigiPath Corp. generated $486K in sales revenue compared to $567K for the year ended September 30, 2013. The decrease in revenue was attributable to the decrease in operating capital in the beginning of the year. This issue resolved by our capital raise of approximately $8.2 million during the second calendar quarter of 2014, which allowed us to support our digital pathology business as well as expand into the cannabis industry. Accordingly, sales revenue during the last fiscal quarter of 2014 rose sharply from $63K to $163K. Sales are not the only thing on the rise. Product awareness is also increasing through initiatives, like our participation in Penn State’s Learning Factory program.

DigiPath University

We are developing weekend seminars, interactive online courses, and instructor-led programs, arm students with a comprehensive understanding of the many facets of medical marijuana and the critical skills needed in the cannabis industry. We plan to launch this new education and training division in the second quarter of 2015.

Capital Raise

Our financial statements as included in the Form 10K filed with the Securities and Exchange Commission report revenues of $486K for the year ended September 30, 2014, and a net loss of $2.8 million, compared with revenues of $567K and a net loss of $330K for the year ended September 30, 2013. During this time, we expensed over $1 million of cannabis testing labs and radio show start-up and development expenses for the year ending September 30, 2014. Other increases in expenses consisted primarily of non-cash stock compensation expenses, wages, and professional services expenses primarily related to development of our cannabis testing, media, and educational businesses.

We continue to support the aforementioned initiatives, and others in various stages of development, through a previous capital raise of $8.2 million. As of September 30, 2014, we have $5.1 million in cash and total liabilities of $191K. We view this as a strong financial position, particularly given our modest market capitalization.


The stars seem to be aligned for the well-prepared in our industries. This year, we recruited top talent and restructured the company to capitalize on rapidly growing markets. We are moving forward on our carefully-crafted plan—which is not only designed for our success, but is also unveiling new opportunities which are now under review. I wish to personally thank you and all of DigiPath’s other stakeholders—of which there are thousands—for accompanying me on this journey.


Todd Denkin

Chief Executive Officer