ProPhase Labs, Inc. (PRPH) Earnings Call Transcript & Summary

Welcome, everyone. This is the ProPhase Labs Webinar. We'll be getting started in 3 minutes at a quarter after the hour. This is the ProPhase Labs Webinar with RedChip. We'll be started.

Ted Karkus here, CEO of ProPhase Labs. How is that?

Thank you very much. Let us get started. Hi. This is Craig with RedChip Companies. Thank you for joining today's event with ProPhase Labs, which trades on the NASDAQ under the ticker PRPH. With us today, we have Ted Karkus, the Chairman and CEO of ProPhase. We will begin with a brief presentation in a moment, and then we will answer your questions. [Operator Instructions] Before we begin, please allow me to read the safe harbor statement. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to future financial and/or operating results along with other statements about the future expectations, beliefs, goals, plans or prospects expressed by management constitute forward-looking statements. Any statements that are not historical fact should also be considered forward-looking statements. Of course, forward-looking statements involve risks and uncertainties. I now turn this webinar over to Ted. Please go ahead.

Great. Thank you, Craig, and thank you all for joining. I am going to assume that most of you are new to the story of ProPhase Labs and to me, that's the approach I'm going. I do other presentations throughout the year usually monthly, where it's mostly for shareholders that know the company well. But the approach I'm going to take today is going to be a fast presentation. Craig told me I only have about 15 minutes for the presentation, then we get into the Q&A. This presentation, obviously, I don't have time to go into detail on it, but you can go to prophaselabs.com, and you can go through the presentation yourself. It's obviously on our website. Craig read the forward-looking statement. Just very quickly, just a quick little overview here. The key focus of the company, number one, is our Crown Medical Collections. That's the first thing I'm going to go into where we're going up to $50 million. I mean we have a market cap of around $10 million, and we anticipate collecting over $50 million in COVID accounts receivable. I'm going to go into that. ProPhase Biopharma, that has our BE-Smart esophageal cancer test. It's unlike any other esophageal cancer test in the world. It's desperately needed, has multibillion-dollar potential. It's ready to be commercialized. And then finally, DNA-completed Nebula Genomics. That's our genomics business that does whole genome sequencing. Think ancestry test on steroids. That's what a whole genome sequencing test is. And it's a neat business. We cleaned it up, and it's growing now and has tremendous potential. Finally, historically, we've had ProPhase supplements. That's a business we could build out if we have the capital, but I don't want to dilute our efforts right now. So that's a business that we can build based on our capital availability, et cetera. So this gives you a brief overview. I'm going to go into each of these subsidiaries. Just very quick background on me, graduated top of my class from Tufts University, graduated at the top of my class from Columbia University Business School, where I got an MBA, worked on Wall Street, have been an activist shareholder, have consulted to and helped microcap companies basically for 40 years between Wall Street, working with these companies, becoming an investor, my friends investing with me, turning around companies, et cetera, et cetera. I've had friends get involved in companies with me for literally 20, 30 years. I've never asked anybody for penny. It sounds hokey. I like helping people. One of the ways I help people is to try and help them make money. Historically, I have done that. Even in our company, I've done that. This past year has not been fun. I will get into that. But before I do, just a quick background. I was a shareholder in our company. And then the prior management did some things that weren't too friendly for shareholders. I launched a proxy contest, won control of the company. When I won control, I found that most of the businesses in it were worthless. There was a chance the whole company was going to go bankrupt. In 2012, the stock price bottomed at $0.65. I turned the company around. And it's like a Deja vu. I only discussed this because we have a penny stock again. But now the underlying value in our company is so many multiples more than when I turned it around last time in 2012. So I went on to turn around and build the COLD-EEZE Cold Remedy brand, solder for $50 million. In the ensuing years, I paid out to our shareholders $2.40 in cash in special dividends. I'm a shareholder-friendly CEO. I like to do what's best for shareholders. I am a large shareholder myself, and I've owned these shares for many, many years. And now I'm looking to build the company again. So on a $0.65 stock, we paid out $2.40 in special dividends. We went on, we expanded into doing COVID testing. This is myself and my son, Jason. We built a business from scratch that hundreds of millions of dollars. We then acquired Nebula Genomics. We then acquired our BE-Smart esophageal cancer test. And then the issue was we built out our genomics business with a world-class lab, took the same approach we did with COVID testing where we built out a world-class lab. The only difference is we did it with debt because I thought that the COVID testing receivables was still going to come into the company. All of a sudden, the government runs out of money. So we have debt and the company is not getting any money from the government. We're not getting reimbursed for testing and we went in a downward spiral for the past year. It has not been fun. In million years, I never anticipated anything like this nor obviously planned for it, but now we're coming out the other end, and it's a perfect time for you all to be looking at our company. So with that, let's talk Crown Medical first. Alright, so, again, the approach I want to take and present it all this to you is we have this ridiculously small market cap that doesn't make any sense to me. And at the same time, we have 3 assets basically, each one of which are worth multiples more that the whole market cap of the company. The first one is our Crown Medical Collections everybody is focused on it. The bottom line is we did several hundred million dollars worth of COVID testing. We did not collect on approximately $150 million. So, Crown Medical Collection is just a group of attorneys. This is all they do and they were completely on contingency. We have not paid them a penny. They're representing 40 labs in a similar situation to us that did not collect on the testing that they should have collected on. They said that our data set was amongst the best of all 40 labs. I don't want to say that they said it was the best, but I believe actually it was the best. We have very strong data. They then took our $150 million of data. They whittled it down to the collections that they thought they were most highly likely to collect on. And this is with insurance companies. What I didn't realize at the time when we were doing the testing, not only did the government have a program called HRSA, which was funding the laboratories, HRSA was also funding the insurance companies. So HRSA ran out of money to fund us and to fund the insurance companies at the same time. At the same time, insurance companies were reimbursing us. But if we hypothetically were supposed to be reimbursed, let's say, $125, they might pay us $85 or $75, even though legally, they were required to pay the higher amount. I'm only -- those aren't the exact numbers. I'm only using these as examples. The point being they would pay for the claim, but they would underpay what they were legally supposed to pay. These are the prime initial targets of Crown Medical because these are insurance companies that don't have a defense because they already reimbursed the claim. So they already acknowledge that it's a legitimate claim, a legitimate patient, a legitimate doctor's requisition order, but they just underpaid it. Now let's suppose hypothetically, they did this with 4 or 5 different labs in 4 or 5 different states. So here we have a case where Crown is representing 40 labs, they may bring a lawsuit or threat any lawsuit against an insurance company and say, hey, we're going to bring 5 lawsuits against you in 5 states or you can just settle with us now, we will give you a discount to settle. So they calculated as $150 million, those claims that they think they are going to collect that quickly and easily. They took what they estimated will be the discount that they have to provide to the insurance companies, and they subtracted out their contingency fees. And when you subtract that all out net to ProPhase Labs, they believe they're going to collect over $50 million for us. Now timing is important. All the shareholders want to know when is this money going to start to flow in. I would have liked to have started to flowing already, a gating issue was we bankrupted the lab subsidiaries. These were lab subsidiaries that doing much now anyway. We bankrupt them in court -- in bankruptcy court. We just accomplished a few weeks ago. And then the next critical step was the bankruptcy court, the bankruptcy judge and the trustee appointed Crown Medical to be special counsel, which then gives them the right to go approach aggressively the insurance companies would litigate. Now the last piece of this, and then I'll move on because we don't have a lot of time. In bankruptcy court, it is considered expedited litigation. What's meant by that there aren't [indiscernible] because the theory is if you're a bankrupt company, you want to come out of bankruptcy and be operating again, you want to get out of litigation as quickly as possible. So in that scenario, the bankruptcy court does away with pleadings and all these months of other things going on and goes straight to what's called meet and confers, so the -- so Crown Medical is meeting with hundreds of insurance companies on these meet and confers where they're already talking about settlements. So we're already at that stage. Either they settle or Crown is going to bring documents this thick of discovery that they can serve on everybody at each of the insurance companies all the way up to the CEO. The insurance companies don't want to deal with this. They also don't want to deal with if the publicity, the negative publicity if they underpay 5 labs in 5 states. So this is the point in time that is critically important where now we believe Crown believes in the next 8 to 12 weeks, settlements, a lot of settlements are going to start to happen. Once that happens, I can't tell you the exact timing on you go from settlement to writing up the settlement documents to actually sending the checks in, they go into the bankruptcy court and then they get released to us. So all that's happening. But several months from now, an enormous amount of money we believe is going to start flowing into the company, ultimately significantly more, multiples more than the entire market cap of the company. That's the future of the financing of our company. All right. ProPhase Biopharma, and I just want to look on. All right. Okay. BE-Smart esophageal cancer diagnostic test. We are ready for commercialization. This is a test that does not require FDA approval. It's called a laboratory developed test, or LDT. What makes this unique is that roughly 80% of people diagnosed with esophageal cancer will die of esophageal cancer. It's an awful one of the deadliest diseases right up there with pancreatic cancer. The reason so many people die is because they are diagnosed too late. The reason they're diagnosed too late is there's no great diagnosis test out there, diagnostic test. Right now, the standard of care is to get an endoscopy from your GI. Our test makes the endoscopy significantly more accurate, that's [indiscernible] we know we are -- our scientist discovered the 8 proteins that can express when your developing esophageal cancer, so what happens is in endoscopy, they remove 7 or 8 tissue specimens from your esophagus, and pathologist studies under microscope and then gives you the diagnosis. The problem as I said is two pathologists can look at the same specimen in same microscope, one will tell you have esophageal cancer, one will tell you, you don't. Where we come and just take one of those specimens, send it to our lab, there our lab -- our partner lab, it runs through a [indiscernible] machine with all the AI and the bells and whistles, it looks for the proteins [indiscernible] to be expressed and then based on that, we can give you a diagnosis, not only whether or not you have esophageal cancer, but whether you're at high risk or low risk. The reason why that's so important is if you're at high risk, you can go get a procedure called an ablation and saves your life. If you're low risk, you don't have to get endoscopies every year, every other year. Right now, there's 67 million endoscopies in the United States alone, and this is a global problem, by the way. Just for people at high risk of esophageal cancer, there's 7 million endoscopies per year. They're being reimbursed $3,000 to $4,000 in endoscopy. That's up to that's $21 billion to $28 billion in reimbursed endoscopies. With our test, we will save lives and we will save money. If you're at low risk, you don't have to get endoscopies as often, it will save billions of dollars. Obviously, if we save lives, that also saves billions of dollars to the insurance companies. So our test, we believe every single one of these 7 million endoscopies should include our test to make it a more accurate test. If we get reimbursed $1,000 to $2,000, that's a $7 billion to $14 billion addressable market that we're going after where we believe we have virtually no competition. By the way, there is a test out there. If you test positive, they then tell you to go get an endoscopy, which actually will build their business. So we're not even competition with them. So this is a phenomenal test. We're ready to commercialize it. I'm looking forward to when the Crown Medical Collections start to come in, which will fund the developed commercialization of this test. The other thing I'll tell you, I'm not interested in spending a lot of money on anything. I mean I want to be very careful about this. This is such an incredible tests with so much upside potential that there should be a very large cancer testing company that want to partner with us. Now I can probably partner on this test today, but the question is why I want to partner it today and get a block of money and a small royalty or do I want to partner it in 9 to 12 months and get 10x the block of money upfront and double the royalty that I'll get today. So this -- these are the types of decisions that we're making everyday. The test has phenomenal upside potential. It has no value in our market cap today, and we're ready to commercialize it. And we have some world-class key opinion leaders that are working with us on it. We got Mayo Clinic right by our side. They work -- they did a lot of the clinical testing and work with us. They supplied the specimens. One of the scientists there is really excited to work on this with us. We also got published in a major journal, which gives us the authority, the credibility that the GIs, the physicians are looking for so that now we can work on commercialization, all right? And then finally, I don't have time to go into this more. And then finally, I'll just tell you Nebula Genomics, founded by George Church, world renowned in the field of genomics over the last 20 years, Professor up at Harvard. The bottom line, whole genome sequencing. It's like a steroid -- I apologize, it's like an ancestry test on steroids. And what I mean by that is an ancestry test studies a very little bit of your DNA, less than 1%. Whole genome studies your entire DNA. So if you want ancestry information, go get ancestry test. It's relatively cheap. But for a couple of hundred bucks more, if you get a whole genome sequencing test that studies your whole DNA, you're going to get dramatically more information about your health. Everybody is basically based on their genetic makeup is predisposed to various diseases. Everybody has genetic mutations. And so if you learn about those genetic mutations, it tells you -- we can tell you which disease you're potentially at high risk and low risk. This is primarily a direct-to-consumer business. It's got phenomenal potential. We built it. We acquired it 3 or 4 years ago. It was being built for 3 or 4 years before that. The SEO search engine optimization on this is incredible with us doing no advertising at all. We're doing several million dollars a year business. With a little marketing dollars, we can grow this business dramatically. Also, Jason Karkus took over, cleaned up the business. We shut down the expense of lab and all the overhead. So going forward, it's actually a breakeven business that's profitable on a pro forma basis. And with a few marketing dollars, we can grow this business dramatically. It will be very valuable. We were thinking about selling it a few months ago, but we decided if we just grow this for 6 or 9 or 12 months, we believe we can sell it for a lot more than the entire market cap of the company. So those are the key assets of the company to pay attention to. I don't have more time to go into this now. I think we're about to go into questions. We have our management team, investment highlights. Again, you can look at that on the website. Last thing I'll tell you, a lot of people were asking about the ATM. We do not have an ATM. We have set up for one at investment bank. It is not currently active, and we have not used an ATM in the entire year. So just be aware of that. I know there were a lot of questions about that. And with that, why don't I turn it over to questions? I've been feeling some of the things that I haven't covered yet, I will cover in the Q&A. Craig, over to you, please.

Thank you very much, Ted. Yes, we are going to be taking only your written in questions today. [Operator Instructions].

And Craig? While you're waiting to read -- those questions are coming in, I would just like to cover one thing in our investment highlights the top paragraph. We have completely transformed the company from a year ago. We downsized significantly. We sold our Pharmaloz Manufacturing facility, which cleaned up a lot of debt in the company. We shut down our Nebula Genomics laboratory, which had tremendous overhead. I would have loved to have kept it. Unfortunately, the overhead was too great and the Crown Medical Collections did not come in, et cetera. It just made a lot of business sense. And so everything I'm doing right now, we dramatically reduced the overhead in the company, the headcount, the IT. And so we are a much cleaner company now. The operating overhead is significantly less even right now today from even just a few months ago. So I just thought I'd share that with you. So we're set as this Crown Medical collection comes in, we're going to be a dramatically different company in 3 and 6 months from now. All right, Craig, over to you. I'm assuming some good questions are coming in.

Yes, they sure are. Thank you. What is a reasonable time frame to expect the initial collection of cash from Crown Medical? He follows up with the company appears to be increasingly reliant on short-term debt and borrowings until Crown Medical cash arrives. When is a reasonable time frame for cash to actually come into the company given we are now near the end of 2025, and it's been nearly a year. Okay.

Great. That was a long but very good question. All right. So the answer is we anticipate -- and don't quote me on this, but given that Crown has now been appointed as special counsel. See, the bank -- going into bankruptcy court was the most important thing. That was the gaining part that took so much longer than anybody anticipated. But the key is that once you're in bankruptcy court, we can approach 1,000 insurance companies from the same court, the same one judge, the same expedited discovery, et cetera. So we're now in a place where they can efficiently -- we're talking about dozens of attorneys. They've already reached out to hundreds of insurance companies. So we anticipate in the next 8 to 12 weeks, settlements. Then you have to deal with the timing of the actual cash coming into our bank account. That might be another 4 weeks to 8 weeks after that. It could be sooner. But once those settlements start to happen, it will be very easy to finance the settlements anyway. If you know, all of a sudden, we have $10 million in settlements on the horizon that are coming in 4 to 8 weeks, anybody will lend me the money for the 4 to 8 weeks if we need it. Having said that, there are institutional investors out there, where this is all they do. We are talking to a very large respected institutional investor that may finance our Crown Medical Collections. If they do that, we're home free with financings for the company forever. I think our stock price will -- well, I don't want to talk about our stock price, but things will be very different if that happens. That could happen soon. I can't guarantee it, but it's one approach I am taking amongst others to figure out the best way to finance the company. I'm doing everything I can to avoid equity -- to do debt over equity. At the same time, one tricky part about this is we take on debt, you pay back the debt. Whey you pay back the debt, you end up with more debt because you paid it back and paid interest on it. So you [indiscernible] original debt plus interest on it. It's not a fun way to operate your business. So I'm juggling between debt, equity, financing Crown Medical Collections, partnering et cetera. There is one other thing I didn't even go into on this call [indiscernible] miss for now, doing that and I apologize because it's not in our presentation. We talked about a crypto treasury strategy. Since that time, obviously, the crypto is crashed. You know, over the last couple of months, it's still a possibility, but we have something much higher, and by the way a proxy test everything, we have something much higher on the list. Then, our crypto strategy, it's an M&A strategy that would value our company at dramatically more than the current market cap. Stay tuned. I don't want to talk more about it now, but I anticipate updating shareholders in the near future. I believe I said that on the quarterly conference call. So I don't think that that's anything new than I'm saying that right now. But I'm really looking forward to updating shareholders who could be in for a very positive surprise in the near future, right? So I will leave it at that for now. Great question. Next one, please, Craig.

Again, Ted, tell us, what do you think the disconnect is between how you value the business and the market cap of the company?

Honestly, it's very simple. Any company that didn't go through our financial issues of this past year that has the assets that we have would have a market cap of 10 or 15 or 20x our market cap right now. Our esophageal cancer test alone should have a market cap by itself. If it was in a clean company with no debt and had a little capital, it could have a market cap of $50 million today right now. Once it develops 3 years, would have -- it could have a market cap of $150 million. 2 or 3 years, it could have a market cap of $300 million to $500 million. It ultimately has multibillion-dollar potential. We have a test that's dramatically better than tests that are out there in these small companies that have market caps of $150 million to $450 million, and our test is significantly better than their test. And I can go into it on a separate call or with our scientists or whatever. The point is there's 0 value. There's nothing but upside in our BE-Smart esophageal cancer test. And then I already went through our Crown Medical speaks for itself. They said that our data was amongst the best data of any lab that they are working with. They're working with 40 labs. And we're in bankruptcy court, and they're already approaching the insurance companies. And there's no question there. I want to quote them. I can tell you that Crown Medical has written paragraphs for our press releases where they specifically said they are confident they're going to collect more than $50 million in -- from the COVID accounts receivable. So if we potentially have $50 million, that might be over 12 months. But if we even have $25 million of cash coming over the 12 months, forget about $50 million. If we have $25 million of net cash coming in, we got a $10 million market cap and a potential multibillion-dollar esophageal cancer test and a world-class genomics business that we can grow into something that could be very valuable. By the way, our genomics business has data that we've collected over 8 years, 130 countries of whole genome sequencing data. A whole genome sequencing test has a 1000 to 5000 times more data than an ancestry test. So the database that we have, the genomics database we have, which is so valuable [indiscernible] is the equivalent of like 150 million ancestry tests. It's just incredible database. We could not [indiscernible] by itself for a political and legal reasons, but somebody potentially could acquire all of Nebula Genomics and we get that database included in it. So we have so much underlying value of the company and that's why there is a disconnected to only because we tied on cash and people are scared because we are tied on cash and that's not always going to be the case and as I said, we may do a financing against our COVID -- Crown receivables. If we do that [ we're home free ]. So I'm working with different financing opportunities right now and we'll what comes from it. Thank you for that question.

Tons of great questions just flowing in. Thank you, everyone, for your great interest. We're going to try to get as many answered as possible. How is the company going to overcome the risk of delisting?

Well, thankfully, the -- first of all, I was hoping that we didn't even need to do a reverse stock split. It looks like we probably will have to do a reverse stock split. Thankfully, the shareholders voted for it overwhelmingly in favor of it. And I've used -- I've said this before, a large investor who is involved in another company actually pointed it out to me. I don't know if I should be quoting other stock symbols. I think it was OESX, but he said he was working on that company, they did a reverse stock split. The stock went up afterwards. So what's interesting here is we filed the proxy, everyone gets scared, the stock sells off the combination of end of year tax selling and the prospects of a reverse stock split, everybody is scared, they run for the hills. The stock sells off. I mean I'd like to think it's more than fully discounted in the price of the stock. We have like a $10 million market cap. So we do a reverse stock split, understand your shares on a ratio basis, we will still have the same market cap. Your shares will still represent the same percentage of the company. So in round terms, if we did a 1 for 10, so you have 1/10 the number of shares, we'll also have 1/10 the number of shares outstanding in the company. So nothing's changed. But now the threat or fear of a reverse stock split has gone, the threat or fear of being delisted is gone. And then we go into either I do a financing against Crown Medical and/or at some point, Crown Medical Collections actually starts to come in. And then we're home free. And then all of a sudden, we get a market cap 5 or 10x what it is today. I hope that answers the question.

Thanks, Ted. Yes, it surely does. Are you going to wait for Bitcoin to recover before announcing that strategy? What are the main considerations to decide to do the crypto strategy?

Sure. So look, it's very simple. At the end of the day, I want to do what's best for shareholders. I want to do the best deal for shareholders. So we have opportunities here. We may have an M&A strategy that values just a portion of our company, not even the whole thing, just a portion of our company. And I don't want to go too much into this at multiples of the current market cap. That's something I'm working on right now. That is not related to the crypto strategy. Is it possible? Yes, we could do a crypto strategy, but I'm not going to do that unless it adds -- it's accretive and adds value to the company today. At the same time, what's interesting is the Crown Medical when those collections start to come in, we may have so much cash coming in, and we don't know what to do with it. At that point, we might be able to do a crypto treasury strategy without diluting shareholders by doing a capital raise. A lot of these companies do reverse crypto treasury strategies, and then they go out and raise tons of money diluting the shareholders to buy the crypto. So imagine we have the cash that comes into the company to buy the crypto. And then we have these world-class crypto asset managers who could manage it and actually generate a return. So you hold the Bitcoin. Bitcoin is going to go up over the next 1, 2, 3, 5 years, 10 years. And forget about 1 year. Over the next 2, 5, 10 years, it has to go up. I strongly believe that. All the -- there are so many governments around the world that are now looking into that. And I mean, including the United States, there's no question there is a place for Bitcoin. And -- but we'll see. That is something. It could happen. I'm not in a rush to do it. We'll see how this all plays out. We have opportunities. So for the Bitcoin strategy, we'll see. That's not front and center right now. What is this M&A strategy that would bring enormous value, enormous capital to the company, enormous value to the company. The shareholders would love that deal and the Crown Medical Collections kicking in. Those are enormous opportunities, either one of which our shareholders will make a lot of money and be very happy. And then the other thing I'm working on, as I said, is potentially an upfront financing of a portion of the Crown Medical Collections. So we have all these things going in our favor.

Going to conflate various writers having similar ideas here. Would the company be open to strategic M&A opportunities for a complementary genomic test once the Crown Cash comes in? Are there partnerships on the horizon for the DNA testing? It seems like a great product, but also a product that will only take off through marketing or falling into a niche.

Sure. So we have tremendous SEO for our Nebula Genomics business. We've cleaned it up. So that's basically the way we built it, and I have to give Jason Karkus all the credit for this. He's built it now so that we took what used to be a lifetime subscription, and we found if we sell a 1-year subscription, we're getting the same conversion rates. It costs with the same amount of advertising and selling at the same price. We can sell just as much product with one year instead of life time. So with the one year, most of the consumers watch renew of the following year. They pay a subscription price to renew. That's almost all profit. So it's incredible business. This has been transformed into a business that could be highly profitable, that could have lights and really go places. Everybody more and more wants to know about their health and how their genetic makeup plays a role in your health. So for example, if you're at high risk of breast cancer, it might motivate you to get more checkups more often or if you're risk of esophageal cancer test, you know, esophageal cancer, it might motivate you to get more endoscopies or more checkups or colonoscopies. If you're high risk of colon cancer, you know, the insurance companies tell you get your first colonoscopy at age 50. But if you're at high risk, why would you wait until 50 and listen to the insurance company. You probably want to get one at 40 or 35. So there are all these different ways. If you know that you're at high risk of a very deadly disease or cancer knowing that there are healthy options that you pass that you can take to help avoid those very deadly diseases and cancers. So this -- you get a wealth of information. We have literally one of the best tests, one of the best reporting systems in the world as well as one of the largest databases. So it's really a valuable business. So yes, with a few dollars, we could ramp this business up in a big way, and we're looking forward to do that once the Crown Medical Collection starts to come in or even if I get this deal done for financing the Crown Medical Collections or if we do an M&A strategy for the whole company. But so to sell Nebula Genomics now, could we -- yes, we could probably sell it now. In fact, I just met with a banker who thinks he could bring a buyer in very quickly. I'm just not excited to sell it for a little bit of money if in 9 or 12 months, we can sell it for 5x as much. So it's all a matter of what's best for the shareholders over the next 12, 24 months, not what's best over the next 3 or 4 weeks.

Ted, what other strategic initiatives are you pursuing apart from a reverse stock split to reassure shareholders that this is not the only option being considered to meet compliance by December 2025?

Yes. So look, we're in December right now. We're running out of time. I could do an M&A strategy, which I discussed. The reverse stocks split, the one thing I have to tell you, though, sincerely, where is the market cap going after the reverse? Is there -- based on everything I described today, is the market -- because we do reverse, we're really going to go down. That would be silly. If Crown Medical comes in, the $15 million of the $50 million comes in from Crown Medical, and we have a $10 million mark cap. I'm like, "I'd want to buy back every single share in the company." Literally, buyback 80% of the shares in the company. It's silly if the stock was there. It doesn't make logical sense. So you have to put that in some kind of perspective. It's one thing if we had a 150 million market cap, because we have billions of shares outstanding right now. Then, could you say, "Oh, maybe the stock is going to go down after the reverse." But we have a $10 million market cap, $50 million or more in accounts receivable that we expect to collect, a multibillion-dollar potential esophageal cancer test and a world-class genomics business. Like I don't know what other company out there has a smaller market cap as we do and that much potential. Thank you. Next question, please, Craig.

Love this turnaround story here he writes. So if no ATM, would you consider a share rollback in the near future?

That's interesting. I worked on Wall Street starting 40 years ago, I don't even know what you mean by a share rollback. When, not now, look, right now, we have to raise capital. You only have 2 choices: debt, equity, combination of debt and equity, okay? I'm looking at all ATM, working with a couple of different financiers, one who really wants to partner with us has deep pockets, who might -- who wants to do a deal with us and then somebody else who wants to finance our Crown Medical Collections. So I have all these different opportunities that we have to weigh and we have to figure it out. And the same -- so having said that if you mean by share rollback, if you mean buy back stock, I don't believe I allowed to state until we actually do, whether or not going to buy back stock. But I can tell you historically, when we sold the COLD-EEZE Cold Remedy brand for $50 million, and we had an undervalued stock. I bought back stock. I did two, what are called Dutch auctions where we bought back stock from everybody that wanted to sell. I'm a big believer if we have an undervalued stock, buyback stock, okay? So let's see what happens. That's not a question for today, but let's see what happens when the Crown Medical Collection starts to come in. And in the meantime, again, there are players out there that are recognizing how much underlying value in our company. They're not waiting for Crown Medical Collections to come in. So -- and like I said, I have an M&A opportunity in hand right now that we're negotiating right now. So I can't make any promises what's going to happen. But as I said, I expect to update shareholders at least to let them know where we are in the process in a few more details, which could be quite interesting in the not-too-distant future.

Keeping with that theme, assuming the company is as deeply undervalued as you say, why have we not seen any insider buying over the last 12 months?

Well, look, honestly, I'm really the only insider. And to be honest with you, I am very tight on cash at the same time that the company is. And having said that, a part of me is saying, I want to go buy stock anyway. I actually, for most of this year, I deferred 2/3 of my salary for most of this year. I didn't even get a benefit for doing that. I did that to help the shareholders. And my son, Jason did the same thing. He's sort of second in command. He's running Nebula Genomics. And the bottom line is we want to do what was best for the shareholders. So I'm deferring taking in money. The other part of this is really complicated. [indiscernible] says, I really want to buy a block of stock. Just to tell everybody, this is silly. The only problem is I can't buy stock. There are only windows I can buy stock like right after we report earnings, but not if I'm in the middle of an M&A transaction. If I announce an M&A transaction, the stock doubles or triples, I can't buy stock just before, then I'll get sued. So there's so many issues involved with me buying stock right now, but I'm doing everything I can to be supportive of the company. I made a loan to the company and then separate from making a loan to the company. And by the way, I borrowed money to make a loan to the company just to help out the company. I did that -- that's kind of complicated. I'm not going to go into that, but we have secured debt out there that is senior to my loan to the company. I did that to help the company. I deferred my salary to help the company, all right? So -- and frankly, my hands are tied. I can't buy stock even if I want to right now. It's not even a possibility. With all the things that I just described, it's not even a possibility. It may be in the future, if there's a window that opens up and the stock is trading around these prices, then absolutely, I could be interested in it. Not even a question.

Why should long-term shareholders believe this management team can successfully pivot the company during one of the most complex periods ProPhase has ever faced.

That's a great question because I've done it for 40 years, and I just did it with this very same company a dozen years ago. It was in virtually the exact same shape a dozen years ago. We are going to work out of this over the next few months. The second, you see that we are working out of our current situation, which is what, stock price is magically going to go up. Well, I'm not -- I don't think I'm supposed to talk stock price. But like we're close to the finish line and turning around the company. We already cut out all the overhead. That you can go back and look at one of the very first slides, and you'll see, we already cut out all the overhead. In fact, you can also see here at the top of this slide, sold the manufacturing facility, shut down the genomics laboratory, reduced the headcount. All these things we did over the course of this year. We're now a much cleaner company. The biggest issue we have is that we have some debt on the books. So we just have to get through the next few months to Crown Medical comes in. Two key ways of doing that, do a financing against the Crown Medical, do a separate financing in the company, do an M&A strategic deal. Any of those things and we're home free. And I think you'll see the stock trading quite differently than it does today.

How many employees does the company have?

I don't know that number off the top of my head, but we went from hundreds to -- and it also depends in the main company. I don't want to speak out of turn. It's not a lot of employees. We've really, really whittled down, like less than 2 dozen, maybe a lot less. I honestly don't recall off the top of my head the exact number, but it's not a lot. In fact, actually, it might -- I don't want to be misquoted and I don't have the number off the top of my head. So I apologize. I can certainly get back to you with that number. But off the top of my head, key employees is maybe it's a dozen -- less and that includes the whole finance department.

Thanks, Ted. Good time to tell everyone, write us at [email protected]. We will forward your e-mail to Ted, you'll get your answer. Ted, a personal question for you. What is the most valuable lesson you have learned during this process? And he doesn't say what process, but...

It's a great question. I have been severely humbled over the last year. Frankly, I didn't have an ego before. It doesn't make it any easier. I'm shocked that the company got into the position it got into. It's funny. I watched how other companies went through and there were these hot stocks 5 years ago and they crashed and they go to 0. There are companies that want to do deals with us, and I just watched and their stocks went to 0 and the companies went out of business. And they just took the money for granted. They took what they were doing for granted. I never took anything for granted. Back when we built out the genomics lab, we acquired Nebula Genomics, built out the lab. All of that combined was tens of millions of dollars. In a million years, I wouldn't have done that. If I didn't think more than tens of millions of dollars was going to continue to flow into the company. All of a sudden, it got cut out. All of a sudden, the government just ran out of money even though they guaranteed the testing. We had this debt, we had this overhead. It put me in an incredibly difficult position, but I never took anything for granted. And that's the disappointing part is I ended up in the same position with our company as other CEOs who manage their companies poorly do. So I did the opposite. I've now completely restructured the company, cleaned it up. I've turned it around before. I turned around other companies. There's a company called ID Biomedical, biotech company up in Vancouver, Canada, ended up flying up there a couple of times, forced out the CEO, fought with the Board to promote the 2 guys underneath, did 2 financings for them. I primarily did that because I was a large shareholder and my friends were large shareholders. And I forced a restructuring of a company that was head in the same direction for bankruptcy and they turned around. Ultimately, they were sold to GlaxoSmithKline for $1.4 billion. I don't take credit for the sale. I was long gone a couple of years before that. But instead of my friends and I losing our investment, we probably made a triple or quadruple. So then take our company, which originally was called the Quigley Corporation, stock was $0.65. Again, -- by the time I took control of the company, we had to write off most of the assets company looked like it was going out of business. It had one asset, COLD-EEZE Cold Remedy, that had declining sales for 4 or 5 years. All the retailers wanted to kick it off the shelves. So it looked like we had a business literally was going out of business. So I immediately cut from 27 people in the headquarters to 4. We built it up ultimately went about 7 people in the headquarters, turned around the brand sold for $50 million, turned around the company, bought back stock, went into COVID testing, built out a whole new business. So I've done this multiple times before. So to be honest with you, if I wasn't the CEO, the first thing I would tell you is hire me as the CEO to turn around this company. And that's what we're doing.

Will the reverse split limit how many shares we can sell within the stock when this is going on?

I don't think there's any issue. There's a certain date. People are so focused on the reverse stock split. That's -- I'm just being honest with you because a lot of people ask me that question in recent months. You have to understand the market value compared to the underlying value doesn't change. The ratio, however many shares you own, you own the same percentage of the company before after reverse stock split. So if you own 10 shares of stock at $0.20 or 1 share of stock at $2, you own the same amount of value in the company, all right? The difference is no one will be scared of a reverse stock split anymore. Also, there are companies that don't like to finance and/or can't buy penny stocks. So if we do a reverse stock split, there are new institutional investors who actually really like our company, really like our story, they're not allowed to buy it in their portfolios. So believe it or not, this could be a good thing. The stock could actually go up and not down after we do the reverse. Don't quote me on this, but there's no reason for the market cap to go any lower. There's no reason for the market cap to be here. I feel like it's already fully discounted in the price of the stock. Plus we already just went through tax loss selling for the year. So to be honest with you, this is the time to be looking for low-priced stocks that have sold off for value investors. Here, you get a situation where we have tremendous potential growth, tremendous value and growth. And we've just gone through the tax law selling. So the reverse stock split itself by itself is not something to be scared of. 5% or 10%, I don't know the exact number, don't quote me, of companies who do reverse stock splits, the stocks actually go up afterwards. Ours should be perfectly positioned just based on all the good things going on with our company. And again, stay tuned. I don't want to hype anybody, but I told you that I'm going to be following up with you on an important initiative. I am going to be following up with you on an important initiative. I can't say more than that sitting here today, and it's up to you whether you want to listen to what I'm saying right now. But I wish you the best of luck.

Thanks, Ted. We are over time, but -- if it's all right with you, Ted, we can go a few more minutes and...

You have a really good question. Otherwise, we are way over time, but go ahead. I leave it to your discretion.

Yes. I can easily forward you all of today's questions. But I think there are some good ones. The question of the stock split is on everyone's minds if today's questions are any indication. Can I give you a few more on that? Okay. When would you have to perform the reverse stock split in order to maintain NASDAQ compliance? And what if the stock goes below $1 after the split?

It goes -- it doesn't make any fundamental sense for it to go below $1 after the split. But once you do the split, as long as it stays above $1, look, if we do a 1 for 10 reverse stock split right now, our stock is going to be trading around $2 okay? So -- and it will be around $10 million. What's it going to do? It's going to go to $5 million market cap. I mean this is silly. One wealthy guy could buy up the whole market cap of the company. This is silly, right? So people that are asking these questions don't quite understand. So if we do the reverse, we would do it relatively soon in order to stay NASDAQ compliant. Once it's above $1 for 10 days, it doesn't matter. We're set. Even if it goes below $1, it doesn't matter, you have another year before it's an issued. And in the meantime, we have all these things that are happening in the next few months, not in the next year. The Crown Medical is happening soon. And God forbid, if we didn't do the reverse and we got delisted from NASDAQ, we'd just be over the counter. Once some of this $50 million comes in from Crown Medical, we will go right back above anyway, right? So I don't think that would be an issue at all. I'll buy back stock to get us back over, and we'll go right back on NASDAQ again. So even if we went off NASDAQ, we could go right back on it again. That, to me, is not a big deal. But to be honest, I hate having a penny stock anyway. And so -- and we want to make sure we stay on NASDAQ, and we don't want it to be at risk. So the reverse stock split is something we would do relatively soon. But again, I think the fear is already in the stock. It's already discounted. We do reverse stock might actually go up on it. Plus, as I said, we may have some other very important updates, which would dramatically outweigh any concerns for a reverse stock split.

And final question, Ted. Are you at all concerned about facing a scalability issue regarding BE-Smart if you do not receive the ground collections, how will ProPhase support and scale BE-Smart in a way that would be beneficial to the shareholder?

Right. So first of all, I don't see a scenario where we don't collect anything on the Crown Medical. It doesn't even make sense to me. We have dozens of attorneys that have worked on our company for literally 6 to 9 months to get to this point right now. We have insurance companies that reimbursed for our patients that came to us for testing and underpaid that are legally liable for that payment. We have Crown Medical, whose whole focus is on collecting that we're not paying a penny. They're doing it completely on contingency. We expect an enormous amount of money, not just some, an enormous amount of money to come in. We have somebody who short term may finance and give us a big block of money. If we do that, we're home free. I'm working on that literally today right now. Having said all that, with the BE-Smart esophageal cancer, I will go out and partner it sooner rather than later. What's interesting is when we got published recently, that was about 2 weeks ago, in a major journal, we now have other companies reaching out to us saying, "Hey, this is really interesting. They also see our market cap." They're like, "Hey, maybe we should do a deal with you right now." The other thing I'll tell you is I have no interest in doing a grassroots, build out from scratch, build out 20 or 30 salesmen. That would be very expensive. It would take a lot of time. What we really want to do is we want to get a consortium of hospitals, of physician groups. And you got to understand our scientists and our advisers, they all have relationships with these groups, get them to sign on and just start using our test as a cash-based test, not to make money, but just to gather momentum. We do that and then we partner, we might get 5 or 10x the offer that we would get today. So couldn't we partner today? Yes. My personal choice is, as long as we have money coming in and we get financed is to wait a year, not spend a lot of money, get the momentum going and they get a big company who already has the reach to all the physician companies, all the physicians and all the hospital networks around the country. And it would be a no-brainer to do some sort of a partnership. They give us a big block of money upfront plus they give us a royalty. The royalty could be more than we can generate ourselves owning 100% of the test. So we have tremendous potential with the test. I'm not bankrupting the company over the test. I don't want to spend any money on this test other than enough to get the momentum going. Like our initial budget on it for the next 12 months is like $2 million. So we think we have $50 million coming in. I want to spend $2 million of it to develop esophageal cancer. Maybe it would go to $4 million. I want to pay off all the debt in the company, all right? I'd want to spend $1 million on marketing for our Nebula Genomics business. What am I going to do with the other $10 million, $20 million, $30 million of cash? Well, if our stock price is anywhere near these prices, guess what I'm likely to do. All I have to do is look at my history of what I've done in the past between paying out cash dividends, buying back stock, things of that nature. Those are fun things to do. But we'll see. That's in the future. First, the money has to come in, but there are several ways it can come in, including a financing short term. And separately, we also have some M&A activity that I'd like to share with shareholders in the not-too-distant future as well. So a lot going on with our company.

Absolutely, Ted. Thank you very much for going over time, Ted, and thanks to everyone for your many, many questions. I have already forwarded to Ted the ones that we have not been able to use today. For more information on ProPhase, reach us at 1-800-REDCHIP or e-mail us at [email protected]. Please visit the information page created by RedChip for ProPhase Labs. It's prphinfo.com. There, you can view and download the investor presentation and fact sheet and sign up for news alerts on ProPhase. Watch Small Stocks Big Money, RedChip's program featuring exciting small-cap companies every Saturday night at 7:00 p.m. Eastern on Bloomberg U.S.A. And finally, please join RedChip's next webinar with Jackpot Digital on Wednesday, December 3, at 4:15 p.m. U.S. Eastern register for all RedChip webinars at redchip.com/events. Thanks again to our many participants today, and thank you, Ted.

You're quite welcome, Craig, and thanks, everybody, for joining. I actually really enjoyed the presentation. The Q&A was first class, and it just shows that there really wasn't a lot of interest. So I thank RedChip. You did a great job of generating that interest today. I'm very impressed. I'm looking forward to doing more presentations in the future. And I wish you all good luck. Investing in microcaps is not an easy business. All I can tell you is we have an enormous amount of underlying value, an incredibly microcap valuation and short term, a lot of potential positives ahead of us. So I appreciate all your interest, and I look forward to the questions that you've been asking. If you become large shareholders in the company, I'm happy, I'm shareholder-friendly. I'm happy to begin a conversation with you in the future. And Craig, thank you. I'm looking forward to the next presentation.