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

Thank you, everyone, for waiting. We had a few technical difficulties. They are now straightened out. We now have Ted Karkus on the line. Ted, could we do a video and audio check. There you are. I see you. I hope you hear me.

Waiting for your sign.

We are ready to start this webinar, let me do this. Hello, everyone. This is Craig with RedChip Companies. Thank you for joining today's event with ProPhase Labs, which trades under the ticker PRPH. With us today, we have Ted Karkus, Chairman and CEO of ProPhase Labs. We will begin with Ted's brief presentation in a moment, and then we will answer your questions. Users may submit a question at any time click the Q&A button at the bottom of your Zoom window. 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 facts should also be considered forward-looking statements. Of course, forward-looking statements involve risks and uncertainties. Ted, if you're ready, please go ahead.

Sure. Craig, first of all, people cannot see my screen, so they cannot see the investor presentation. Correct? Do you want to set that up? How would you like to do it?

That is correct. Right now, they're not seeing it. So could you go to the bottom of your Zoom window and find share.

Let me see we have more. It's here. There we go. It's there. Okay. Probably everyone is able to see it?

Yes. Seeing it. Seeing it. Excellent. And in the bottom right -- yes, right there, your cursor -- no, that's my cursor. Bottom right hand corner, you're very close. Going down to presentation mode, you're close.

Okay. So do you want me to click on something?

Yes. In the bottom right-hand corner of your window, you will see the presentation mode. It's over there.

Okay. Tell me where do you want me to click on. One of these?

Yes. The next one to the right.

Right there.

You got it.

Okay. That's already in presentation mode, I think, here we go. Okay. Can I adjust because we're in the wrong one.

Yes, we would rather not see you though.

As long as we have to go to settings.

Correct. Yes.

Okay. How is that?

Perfect. That's right.

We're ready to kick this off?

Please go ahead. Thank you.

Thank you all for joining today. Craig already read the forward-looking statement, so I can skip that, but I will assume that you've all read it anyway. This presentation, by the way, is available on our website at prophaselabs.com. I'm sure most of you have this information already. But in case you don't, and let's see. Craig, this at the top here, is that blocking the tie? There you go much better. Thank you. Okay. So look, we have several assets here with incredible underlying value. We have the Crown Medical Collections, where we have suggested that we're going to net $50 million in accounts receivable. We have our ProPhase Biopharma, which is basically our BE-Smart esophageal cancer test that I'm going to talk about. We have DNA Completed Nebula Genomics, which is a business that's thriving with almost no marketing dollars, and we have ProPhase Supplements, which we are not particularly focused on at the moment, but it's got enormous potential when we have the working capital to focus on it. So those are our principal assets of the company. I'm not going to go through the history. Look, I've had success for 40 years. Last year has been ugly. Really, it's been the worst year of my life in terms of execution and also emotionally and psychologically. But we are towards the tail end of restructuring. I restructured other companies before. This has basically become a restructuring. Again, I will go through everything. I will just highlight this one slide here in the beginning of 2025. We sold the manufacturing facility for $23 million, knocked down a lot of debt. We shut down the genomics laboratory, knocking down a lot of overhead. These things, quite frankly, that laboratory cost us an enormous amount of money. It loaded up an enormous amount of debt. It was with the expectation that the genomics business was going to grow the way the COVID business didn't. It didn't grow in lockstep. And at the same time, the COVID testing revenues that were supposed to be coming in from our testing did not come in to fund the lab. So we had to shut down the lab. We significantly reduced headcount. We've restructured the company now. So we're a leaner company. The biggest issue is we still have debt that we have to service. But beyond that, we're really a clean company. If we have a liquidity event, we clean up the debt, we're going to look like a dramatically different company in the coming year than we did in the past year. Okay. So here we go. Yes, we still have the slide up here. I believe that there are some questions. I'm not going to go into a lot of detail on the LOI for the proposed reverse merger. Yes, it is still a possibility even as OTC. We may still do this. It's an option for us. We do not have to do this. It's a nonbinding LOI. But in my mind, we have to clean up our company, finish the restructuring, see what our capital structure looks like, see what happens to our COVID Crown Medical receivables, what those collections look like, see what the capital structure looks like before we make a decision on this. All right. Crown Medical, let's just get into it. So what I want to say about Crown, there are a number of things, and I just came out with an update recently about Crown. The most important things, and I've done a lot of work, and I did a lot of work very recently on this. What's different about Crown, and I've talked to financing companies, the financing companies that are actually interested in financing our Crown Medical Collections. And that forced me to do an even deeper dive myself as they ask their due diligence questions. So first of all, what's critically different about Crown versus some of the other initiatives with insurance companies and other types of litigation. First of all, we're going after approximately 1,000 insurance companies. So it's not like we're looking and by the way, Crown has actually estimated, we've been conservative in our published information. Crown is actually looking for more money than what's in our published numbers. So I have to be careful in terms of what I say. But let's suppose, hypothetically, Crown is looking to net $70 million or $80 million to Crown. They take out their contingency fees. They're 100% on contingency. They don't get a penny if they don't collect. They have dozens of attorneys working for them on this. In our case, in particular, just on our lab, they have like 7 attorneys working around the clock. They've reached out to hundreds and hundreds of insurance companies already. So what makes us different, first of all, is more than 60% of what we are going after is on underpaid claims. Why that's critically important is the insurance company can't state it's a bad claim because they already reimbursed it. But what they did is they under reimbursed. When you under reimburse a claim, what you also have to understand is there were legal precedents set by the government that said, you have to reimburse. And there are guidelines on what you had to reimburse. And so there -- because of the law at that time and because of the dynamics at that time, insurance companies just didn't get to say, "Oh, we're not going to reimburse you. We don't like the doctor or whatever." Somebody wanted to get tested, they were allowed to get tested. And so we have underpaid claims that represent more than 60% of what we're going after. So all we collected on was the underpaid claims, what Crown is finding is they -- and I was just talking to them the other day, they haven't come across a single insurance company that isn't discussing settlement with them on underpaid claims. So talking to potential funders who might fund us with what's called debtor and possession financing or other types of financing that's linked strictly to the Crown collections. And they were concerned, well, don't insurance companies dig in their heels. They don't dig in their heels in general when it comes to underpaid claims. So the numbers on that alone, first of all, we're talking about well over $50 million that Crown thinks that we -- ProPhase Labs is going to net after their contingency fees and more than 60% of that is just on underpaid claims. So we're talking about tens of millions of dollars to our company over the next 12 to 18 months. And notably, I see this is the only slide I have in this. Notably, they were already appointed special counsel. And again, the way this worked, and I'll say this very quickly, we're going to run out of time very quickly. Basically, we bankrupted or the lab subsidiaries were bankrupt in bankruptcy court, right? Not the parent company, not ProPhase Labs, owing to the subsidiaries. In bankruptcy court, you have expedited trials. The idea, the goal is to get the laboratories or the subsidiaries out of bankruptcy quickly. That's why in bankruptcy court, you don't spend a lot of time in pleadings and pretrial. And so basically, Crown went to the insurance companies, you do meet and confers. If they don't want to sell it, you go straight to litigation. Crown has this fine-tune to a science in terms of their AI programs, and they'll drop 200 pages of discovery and the CEO of the largest insurance companies. They don't want to litigate. So I am very optimistic that we're going to have collections coming. It's going to be significant. It's going to significantly change our company. And to bridge the gap until we have the liquidity event of those settlements coming into our company, we may finance. If I bring in a significant finance here, that will completely change the outlook of our company. It will take the overhang over potential dilution and all these things that shareholders are worried about. So let's move on. I can go on to more about Crown in our Q&A. All right. And I want to make sure I'm going to have to move quickly here. Our BE-Smart initiative, we came out with a press release saying we're looking to sell a strategic partner. The bottom line is this is, we believe, one of the best, if not the best, esophageal cancer diagnostic to come out on the market going forward. It basically -- it complements the endoscopy. If you're at risk of esophageal cancer and you get an endoscopy, this will make the diagnosis more accurate, particularly with people not at risk. If you're not at risk, and we report with almost 100% accuracy that you're not at risk, you don't have to get regular endoscopies. Right now, insurance companies are reimbursing billions and billions of dollars on unnecessary endoscopies. At the same time, you have patients walking around worried, am I going to get esophageal cancer? Am I going to die? At the same time, if you test positive, you know you're definitely positive. If you test positive with our test, go get what's called an ablation that destroys the precancer cells and saves your life. So in all the people that test positive, it will save their lives, saving billions of dollars in insurance costs as a person, which is obviously an awful situation. But either way, you test negative, you test positive, you save billions of dollars and you save lives and you get patients who are not at risk, peace of mind. It's really a great test. We believe it's ready to be commercialized. We think the best way -- smartest way for a company to do this is to partner, either joint venture it and leverage somebody else's distribution or potentially sell it and get a royalty, get a big block of money upfront in royalty. It's a potentially very large liquidity event that could occur for us in the coming months, okay? That's our BE-Smart esophageal cancer. These are numbers you can go through all of this on the website. And finally, I mean, we have so much information on this. It's not funny. It's really a great test. Our Nebula Genomics business, I'm not going to go into too much detail, except that it was completely restructured. We shut down the lab with almost no marketing dollars at all. It's generating really nice revenues. And quite frankly, on a stand-alone basis, it's probably profitable. Certainly on a pro forma basis, it is because we also have a new subscription that people are renewing and it's a 1 year instead of a lifetime. And so we get subscription renewals going forward, which is going to add profitability to the business. It's a very attractive business. We think we can grow this significantly if we have the working capital to do so. So those are the 3 businesses. I could go into a lot more detail on each. That's our management team, investment highlights. And again, we sold the manufacturing facility. We shut down the Nebula Genomics laboratory, significantly reduced overhead this past year, where all systems go. And let me just address a couple of things that are not on this slide, which is we went through a $3.8 million convertible debt that was converted. Most of it was converted literally the day before we did the reverse stock split. It was a really unfortunate situation. The bottom line is more than 20 million shares of stock, I believe, were converted in 1 day in just a couple of hours. It was really an atrocious situation for us. And so when we did the reverse stock split, then people got worried that we were going to be delisted from NASDAQ. So people started selling, pushing out the overhang of all the stock that was primarily sold into algorithms. So it created a very ugly situation. And basically, we have a stock where our company has roughly $3.8 million less debt. So if you think about it, our capital structure actually improved, our shareholders' equity actually improved by $3.8 million that day, all other things being equal, and yet our stock is down 90% or whatever it is. So it's really an unfortunate short-term supply-demand situation as opposed to an underlying fundamental situation. Once we have a liquidity event, all of this changes. So I'm sure I'm running over time here, Craig. I thank you all very much. Why don't we go to the Q&A. And in the Q&A, I'm sure we're going to address all the things that I've gone through very quickly here.

Absolutely, Ted. Press the Q&A button and type in your question. The Q&A button is at the bottom of your Zoom window. We can only take your written questions today. So please do not use the raise hand button. But by all means, use the Q&A button. We already have several questions, Ted. How many settlement dollars -- yes, how many settlement dollars have been collected in total since the Crown initiative started?

Sure. And let me just say the reason we're just doing written questions is we have so many written questions coming in. There's no way to get to all of those plus the other questions. I can't believe the number we're inundated with questions. We will do the best we can to answer as many of these questions as possible. So in terms of Crown's settlement, understand this has been a long-term process this past year in working with Crown. But the critical component of it was when we decided that the lab, the subsidiaries were going to be bankrupted, we had a whole procedure for several months in bankruptcy court for them to be accepted into bankruptcy. Once they were accepted into bankruptcy, then Crown Medical had to be appointed special counsel. That just happened roughly 6 to 8 weeks ago. So once that happened, Crown Medical then reached out -- started reaching out to some of the insurance companies. That number has grown and grown and grown. They have approximately 1,000 insurance companies to actually go after. So several hundred were approached quite some time ago, and that number keeps increasing. The number of settlements are companies that are in settlement negotiations is increasing. We last reported it was over 50. That number is growing. Once we have substantial settlements, it will be reported to the shareholders. It's a sort of premature to expect a lot right now, but I would expect or I would anticipate or I should say Crown anticipates significant settlements starting to come in, in roughly 6 to 8 to 10 weeks. So the exact timing is hard to say. But in talking to Crown literally just earlier today, they said there's virtually not a single insurance company in which they're discussing the underpaid in which they are not open to discussing settlement. And the reason is they don't want to be labeled as having fraudulent behavior. And the reason that might come about is because Crown is representing dozens of laboratories. So when they go to the insurance company, there might be 3 or 4 other laboratories in 3 or 4 other states that they're representing at the same time. And they're basically going to Mr. Insurance company and they're saying, "Hey, you have 5 labs in 5 different states, you underpaid all 5. That's a systematic pattern of fraudulent behavior. Insurance companies don't want any part of being labeled that way, not to mention, you can end up with trouble damages. So they're all looking to settle. That's all in the process right now. I wish it would go faster, but I believe we're now at the late stages where settlements are going to start happening soon. And that's why now I'm getting significant interest from financiers who actually want to finance in a significant way. If we get in a large block of money directly tied only to Crown Medical settlements, that would be nondilutive to our company. That would be huge. We clean up a lot of debt. We could grow Nebula Genomics. There are so many things we could do. We'd be a completely different company. And of course, we're talking about numbers that are multiples potentially -- we're talking about numbers and settlement that could be 10x the entire market cap of the company. Thank you for the question. What's the next one, Craig?

Does the increased visibility shared in today's press release adjust downward the $50 million number in expected collections?

No. Actually, just the opposite. What I'm talking to Crown Medical about is the internal numbers at Crown are actually greater than what I have reported. I just don't want to get so aggressive. Does it really matter when we have -- I don't know when we have a $2 million or $3 million market cap. Does it really matter whether we collect -- ultimately collect $40 million or $50 million or $60 million? We're talking about a stock price that will probably go up 10x, 20x from where it is right now, just on that alone. So I don't need to get that specific. But what I can tell you is just on the dollar amount that we anticipate collecting on the underpaid, it's many tens of millions of dollars. It's over $30 million. So -- and that, to me, is very high probability of collection just on that alone. And they also expect to collect on the rest, but they believe that some of that will take longer. Not that they won't collect on it, but it will take longer because insurance companies on some of these will drag their feet a little bit more. Next question, please.

If BE-Smart had to be sold immediately in a distressed or fire sale scenario, what valuation range might it command?

That's a great question. I wish I knew the answer. And I don't want to put numbers out there because we are now approaching and we've lined up roughly 70 targets, actually more than 70 targets that we are going to reach out to. And I don't want to put numbers out there, but I can tell you that transactions for similar types of diagnostic tests has been in the tens of millions of dollars. I think we have something really unique here. I don't want to put numbers out there. But whatever it is, if we were to sell this and collect a royalty, we're talking about any valuation could be 10x or 20x the current value of the company. So I'm putting it out there also because, look, everybody knows we're tight on capital. We've been tight on capital for the last year. It's one of the reasons I entered the convertible debt in the first place. It's just unfortunate that it was convertible so quickly and at such poor timing. But in any event, if we have a liquidity event, then instead of taking on debt, we can clean up debt, instead of potentially taking on dilutive equity, we can actually buy back stock and reduce the number of shares outstanding. There's a lot you can do once we have a liquidity event. And I certainly know how to do that. I have a history of having liquidity events in the past. For instance, when I sold the Cold-EEZE brand, for instance, when we first ramped up the COVID testing, in both instances, I was buying back stock. I was paying out cash dividends to shareholders. I would love the opportunity to be in such a position again.

This person has a follow-up. Under the same scenario, Ted, what valuation range might Nebula Genomics command?

Sure. So that's a good question. I really like this business. I am just going to highlight to you that the people running it right now who I won't name, but they have done a phenomenal job in restructuring the business and making it into a profitable business that can grow and have legs. And I think it has a very bright future. So when we sell it, yes, if the right buyer comes along, it's possible. We actually have a banker who's dying to work on selling it and is sort of informally exploring that. But at the same time, I also think it's a great business. If we have a liquidity event and we clean up the company and we clean up the cap structure, then actually, that's a business I'd like to keep and grow into something that could be very large and very successful.

Hello. Thank you for hosting this update as a significant long-term shareholder. I appreciate the transparency regarding the company's recent restructuring. I have a few specific questions regarding the protection of shareholder value on cash distributions regarding that $50 million in insurance claims through Crown Medical. If the company recovers a significant portion, such as $10 million to $25 million, will you commit to the special cash dividend for current shareholders as previously discussed?

Clearly, that's a question from somebody who has enjoyed cash distributions in the past. Look, I'm not in a -- clearly, the company is not in a situation. I mean, this is such a hypothetical situation. I'd rather not talk about it. Let the money come in. Let's see how much debt we have. Let's see what our overhead is. Let's see what our expenses are. Let's see how we're going to grow the Nebula business, et cetera, before we start talking about cash dividends. But as I alluded to, I am shareholder-friendly. I always have been. It's unfortunate. We went through this dramatic dilution phase. It's really disappointing to me. And I understand I believe I was the largest shareholder in the company, and it literally destroyed my equity. So for all of those of you that are hurting out there, just remember, I heard more than all of you. And what's interesting is most of the shareholders have actually I'm shocked, have been very kind to me. I have one long-term shareholder who turned on me, which is really disappointing. I won't get into it. And the reasons they gave, I've never understood. There's no reality to it. But when the stock price goes down and people lose money, they drum up excuses. What's interesting is I've invested in other companies where when the stock price grabs, I got really upset with management and jumped to all sorts of conclusions. And unfortunately, when people do that towards me, I'm the largest shareholder of the company. All I wanted was what was best for the shareholders. It's really disappointing how this has turned out. But I have a history of restructuring and turnaround companies. I believe I'm going to turn around this company. We're at the tail end of turning it around. I have to get through a little more financing here. And then I anticipate significant liquidity events in the coming months, if not, potentially even in the coming weeks.

A recent press release stated that around 50 of the 250 engaged insurers by Crown Medical Collections were in "advanced settlement posture." Does this mean they have essentially agreed to pay ProPhase Labs with only the final dollar amount remaining under negotiation?

That's a great question and it's so fine-tuning it. First of all, the number is now greater than 50. That number was reported to me a couple of weeks ago, then we put it in the press. That number is growing every day. But I understand it's a very dynamic situation. And so when you say the only thing left is the dollar amount, basically, for the underpaid claims, Crown believes virtually all of them are going to settle. And all of them are going to settle at a high percentage. Interestingly, somebody asked me, and I understand I have financiers that are studying this all very, very closely. And they were asking, well, isn't it possible a lot of insurance companies dig their heels in, and the answer is absolutely, but not the ones on the underpaid claims because the claim was already paid. It means it's a legitimate claim. They can't now say it's not a legitimate claim and should be paid. And then you have the government with laws out there saying you have to pay and you have to pay the full amount. So they have nowhere to turn. So it's really an interesting situation. They're not digging their heels in at all from what I understand in terms of what's being reported. In terms of when you're at the point, they're in late-stage settlement negotiations to say, well, did they just not settle on the amount? These things all take time, and that's the frustrating part. But by time, we're not talking about weeks by weeks, it could be a month or 2, but we're not talking about 6 months before there's settlements. We're talking about 6 weeks, 3 weeks before they start. So we'll see. I don't know the exact time frame. I really don't, but I'm excited. But by the same token, that's why I'm working with financiers, potentially get a large block of money now against that. I don't care if they get a return from the Crown Medical Collections. It means nondilutive equity to our company, and it will be a very, very different company if that happens. That could happen in weeks. Will it? I don't know, but that's what I'm working on, among other things.

Following the uplist to the OTC ID tier, OTC Markets updated shares outstanding to approximately 9.5 million. Since the January 5, 2026 update, there has been significant selling pressure. Do you have insight into the source of this pressure? And what is the current shares outstanding figure?

Okay. So the number is going to be a little larger. So a couple of things. First of all, when the $3.8 million is converted, didn't all convert once, and it was less than that, maybe it was $3.4 million and then more converted after that. Each time there was conversion, that's more shares coming on the market. Number two, because most of those shares were sold into algorithms, those algorithms that have to then resell. That's just a computer buying and selling stock. So then the computerized program on behalf of whoever owns the computerized program, whoever they're managing money for, has to turn around and sell that stock at some point. They can't all sell it once there are no buyers for it. So that feeds out over time. That's what was creating the pressure. That's number one. Number two, the convertible debt didn't all convert. They were still a little left. That's what I reported. I think I reported last month, there was still, I don't know, $400,000 or $500,000 left. As of maybe a couple of weeks ago, there was only $100,000 left. And now I'm not positive. It may be down to virtually nothing. But that's been the selling pressure. Now on top of that, I came out with very positive news about a week ago about Crown. But then at the same time, I think we filed on registering an ELOC, that's an Equity Line of Credit we're Generating Alpha. To be clear, however, we don't have access to that. So first of all, we don't have an ATM anymore because we went to OTC. And we don't have an ELOC right now. So we're not selling any stock on the ELOC. And we would have to do an S-1 registration, which could take quite some time before we use the ELOC if we use the ELOC. And to be clear, it's not clear that we're ever going to use ELOC. But I think it's important every company should have an ATM or an ELOC. Preferably an ATM, but because we're on OTC, we can't have an ATM. Legally, you can do it if the brokerage firm will take responsibility for it, but most brokerage firms were. So at a minimum, I did want to set up the ELOC with the ELOC, there were commitment shares involved, although they are restricted, so I don't believe that they are on the market. So -- but you just have -- you also had pressure from investors who can't hold OTC stocks. There are certain brokerage firms that can't hold OTC stock. So all that's been filtered into the marketplace. That's all getting cleaned up now. I hope that answers your question. I'll have more to say about this in the coming weeks. But I think that gave everybody a pretty good indication. But to be clear, this is all a disconnect between stock price listing OTC versus NASDAQ versus underlying value of the company. The underlying value of the company didn't change, except -- and that -- and so if you think about it, the market cap should not have changed. So if you have twice as many shares outstanding, then the stock price should have dropped in half or 3x as many shares, as they dropped by 2/3. But the market cap should have remained roughly the same. In fact, potentially, it should have increased by $3.8 million since we have $3.8 million less debt. Of course, it didn't happen really I have a background in all of this. I understand exactly what happened. It's really disappointing, but now it's time to work out.

Ted, follow-up here about the exercisable warrants. How many of them remain outstanding? And what is the average exercise price?

I think we're talking about -- we're not talking about warrants. There are no warrants that are in the money. You're talking about the convertible debt. I think the convertible debt is virtually all done. There may be -- and I'm just -- I don't want to guess, but maybe there's $50,000 or something like that, right, which may or may not have been converted. I don't need to get that specific. It's -- really, it's a rounding error. So the problem is $50,000 with where our stock is trading. You could be talking about a few hundred thousand shares of stock. So all of a sudden, somebody -- you look and you see 50,000 shares of stock for sale. And people say, "Oh, but you got a share we're not talking about a large dollar amount at all." Any sponsorship that comes into our stock, all of this gets cleaned up, the stock could go up 5x and still be significantly undervalued. I know I'm talking about stock price probably more than I should as a CEO, but that's just my perspective. Having said that, we are tight on capital. It's a very frustrating situation to have an undervalued stock price on OTC with a small market cap and needing capital. It's a messy position to be in. But I also anticipate that's going to dramatically change literally potentially within weeks, whether -- I mean, we have so many potential different liquidity events. So we just have to see. Nothing is guaranteed, nothing is 100%, but we have multiple liquidity events, any one of which will dramatically change the value of our company and in all likelihood, the stock price as well.

With most of the convertible debt now issued, is some of the stock decline attributable to the potential 76% dilution in the merger with ABL how certain is the 76% dilution figure and the $10 million special dividend, can those figures change in the final agreement?

Sure. So nothing related to the ABL deal has anything to do with shares outstanding or dilution or any such numbers. That's simply a nonbinding LOI. It's a deal we may or may not even do, but we have not been issuing shares for it. So there is nothing going on with a potential ABL merger that I think has anything to do with the current stock price or with dilution or shares outstanding. Craig, what's the next question?

How much of the money -- how much of this money will ultimately be reserved for shareholders versus being allocated toward operating expenses? Will the $10 million credit line from Generating Alpha be used for operations instead?

Sure. So again, Generating Alpha, think of that as an ELOC, an Equity Line of Credit. What that basically is it's in our control. If we ever use it, we may never use it. If we use it, we simply write an e-mail or a call Generating Alpha and I say, "Hey, we need $50,000 today. So here's $50,000 worth of stock, send us $50,000 and they will." That's how an ELOC works. And it works based on you can sell up to whatever the calculated formula is. It's based on the last several days of trading, the volume-weighted average price and how much you can sell. So that's if we use it. But again, we can't even use that until we do an S-1 registration, which we have not done. So what's interesting is I filed an 8-K on the ELOC, the stock price dropped dramatically, but we're not even using it. So it was all psychological and it's unfortunate. And I'm even questioning maybe I shouldn't have even filed or entered the agreement from the point of view that it just scared shareholders and it's probably cut the stock price in half, which is unfortunate. So -- but having said that, we are not currently using the ELOC. We cannot use ELOC even if we wanted to. We will not be able to until we file an S-1. We will likely file an S-1 at some point in the coming weeks. But even when we do, it doesn't mean we're going to use it. I think it's important that every company, every public company should either have an ATM or an ELOC for no other reason, just to use opportunistically. If our stock goes up 10x on big volume, and I can pick up a quick million dollars, maybe I will, if we need the money if it helps us. But having said that, we're not using it now. There's no dilution from it now other than we did issue commitment shares, but even the commitment shares are restricted stock. And so really, it was a knee-jerk reaction to a filing as opposed to anybody actually selling stock because we were using the ELOC.

Rather long one here, Ted.

Try to make it shorter or go on to the next one because I think we're going to be out of time soon.

If you're willing, Ted, we could go to 5:05 p.m. Eastern, can give us 10 more minutes.

I would love to get through as many questions as I can. I'll answer the questions because I really want to help out to shareholders, if I can.

Okay. I'll read this fast. You've mentioned before that you could either sell the Nebula Genomics business or scale it yourselves. I agree that the database is valuable and it's worth can be debated. But I have a question on the scalability. To be blunt, there was a Reddit thread dedicated to Nebula Genomics customers, and a lot of them seem to have issues with getting their DNA kits results and getting refunds. Is this accurate? And could you provide some clarity as to why this might be?

This is always true with all companies in the business. It has to do with lab sequencing. It has to do with issues with the specimen itself. What happens is these are kits that are sent to people's homes. They then have to collect the specimen themselves. They then have to send it in. A lot of times, it's not a great specimen. It then takes time. We have to send it to a lab. The lab has to sequence it. Sometimes the lab says, it's a faulty specimen. Sometimes it says, let us sequence it again, that can add more weeks to it. Then after the second time says, this just isn't a good enough specimen, we'll have to get a new one. All that can take a long period of time. We're selling thousands and thousands of tests. So there's always going to be people complaining that they haven't gotten their results or what's going on here. Those are the ones you hear about. You don't hear about the people that said, "Oh my God, what a great service, what a great product, the results, not -- the database that we then use to build the 325 health reports and growing." I mean we have a phenomenal reporting service. Does it from time to time take time to get your results? Absolutely. But once you get your results, we have this phenomenal health reporting system where you learn all about diseases that you're predisposed to based on your genetic makeup. This is incredibly popular. In the old days, people just wanted an ancestry test. We provide that as well. But now we provide the most in-depth health-related information. We believe we will have one of the best, if not the best platforms in the world for providing the health reports. So that's always going to be an issue, but it's one you have to live with.

Follow-up. Are the entities currently in bankruptcy proceedings, the same entities providing these testing services?

No. They have nothing to do with each other whatsoever. Our genomics business, we built a laboratory for it. And then we shut down that lab and we now send out our sequencing to some very sophisticated labs that we're just doing great with. Our COVID testing business was a completely separate lab. At one time, it was in the same location, meaning it was the same physical address, one of them was anyway. We had 2 COVID testing labs. One was in Garden City, New York, where our genomic testing was being conducted. Currently, our genomic testing is being conducted by another lab. And our COVID testing, we're not currently doing COVID testing anyway, but the COVID lab subsidiaries were called ProPhase Dx New York, ProPhase Dx New Jersey had nothing to do with Nebula Genomics and DNA Complete.

And a final follow-up, is there a laboratory backlog contributing to these reported...

There's always going to be some backlog from time to time. And that's just the nature of the business. I think I already answered that question. Thank you.

Has ProPhase Labs moved out of 711 Stewart Avenue?

Yes, that was done many months ago. It saves us an enormous amount of money. And when we restructured the business and when we shut down the genomics lab, there was no reason to have 30,000 square feet of space. I would think the shareholders would be incredibly happy that we restructured and cut that overhead out of the company.

What are the names of the genomics labs you're currently using?

That's proprietary information. I would never provide that.

Have you made any progress with appealing to the NASDAQ for relisting? What is a reasonable time frame you would be relisted?

Sure. So our approach would be, first, we need to have a liquidity event, which will improve our market cap, which will improve our balance sheet and financial structure. And then we have to decide maybe we go to NYSE first or we just have to see. So this will be in steps. I'm looking forward to that, but it's not anything that's happening in the next couple of months because with our stock price trading where it is, NASDAQ is not going to.

Given that the BE-Smart esophageal cancer test demonstrated a 100% sensitivity, but only a 39% specificity, what do you think is the likelihood?

Did I lose you? I was still answering the last question.

I'm sorry. Sorry, please go ahead.

Yes. I don't understand what happened. Unless I had an Internet connection. You really confused me just now, Craig. What was the last question that was in the middle of answering?

Last question was appealing the NASDAQ relisting, what's the reasonable time frame?

Yes. Yes. No. So I think I pretty much answered that. Very simply, the only reason we were delisted was stock price. We performed on every other category or compliance issue related to NASDAQ. That's what makes all of this so frustrating as it was just stock price, all right? And it was the combination of the timing of the reverse stock split with the exercise and conversion of the convertible debt. It was just very complicated, all right? All right. Now we can go to the next question about our esophageal cancer test.

Sure.

Actually, would you mind skipping that one and go to the next question after that one?

Absolutely.

Only because it's a complicated scientific question, and it's not for this call.

Yes. Can the company authorize the transfer agent to provide updated shares outstanding figures directly to shareholders?

I follow whatever compliance suggests, whatever rules you file with compliance. We've had some issues because we have one reporting service that's getting their data from some really old numbers. It's still providing numbers prior to when the convertible debt was converted. You should assume -- and as I said, we issued commitment shares on the ELOC even though they're restricted. So you should -- and please don't quote me on this number, but I will give you a higher number than what you've heard before. Use a number around 11 million shares outstanding. It might be a little bit more. I don't know what the exact number is. That's an approximate -- please don't quote me on that number. The only reason I'm saying that number is when somebody tells me they're reading 5 million or 6 million shares outstanding, that's before all the convertible debt converted and other things. And it's just not an accurate number. And I don't want anybody to be misled. That's not to say that 11 million is the exact number.

Ted, I know you covered this earlier, but a lot of people are independently writing in about it. They want to know about the number of shares out and how many you own.

Yes. So I owned -- I don't know what the number was before. It was a -- off the top of my head. It was in the high 3 million. It's close to 4 million shares of stock. At one time, that stock was worth $20 million or more. Now it's worth a few hundred thousand dollars. So just imagine sitting in my chair having gone through that. So you could say, why am I even doing this right now, all the pressure. I'm under pressure for 24/7 working on the company. But this is what I do. What's interesting is when I took over control of the company through a proxy contest in 2009, 2010, I had to go through the same thing. I had almost no money. It was all locked up in the company. I went through a proxy contest. I suffered through 2 federal lawsuits, a couple of million dollars of potential legal fees, which I wouldn't have been able to pay. And I said to myself, why am I doing this? I'm doing this because it's the right thing to do. Well, that's what I'm doing right now. I'm 100% focused on the company to turn it around. It is a very, very difficult position on that. It's unfortunate that one of my largest long-term shareholders turned on me. It's disgraceful. But even without the support of long-term shareholders, I'm turning around the company because it's the right thing to do. If you're a shareholder now and you're a shareholder before, you can add to your position right now, you can buy 10x as much stock for the same price. And if I'm even modestly successful this time around, you can still make a lot of money and you can be thanking me a year from now. Having said that, there are no guarantees in life. There never have been, but I've been successful in turning around restructuring companies for 40 years. And I know this company incredibly well. We have significant underlying assets in the company. We might have $50 million or $100 million in underlying assets in the company. The problem is when you have a $2 million or $3 million market cap, your OTC and you have debt, it's very difficult to raise debt. And in order to raise equity, it's very difficult to raise equity because you don't have a market cap to raise equity and you don't have liquidity. So I'm caught sort of between a rock and a hard place. On the other hand, we have potential very large liquidity events they're right around the corner. So I'm going to do everything I can to bridge where I am now to where we're going to be when we have a liquidity event. And those liquidity events could be sued. If a financing comes in and says here's $5 million or $10 million against your Crown Medical, it's not debt really to us. It's only paid back by Crown Medical Collections. And it's not dilutive equity, we're home free. So it could happen from a financier coming in. It could come in from actual collections, although that's a couple of months away, so it's not going to help me shorter term. So we have those 2. There's the sale of the BE-Smart esophageal cancer test or I could do a new convertible debt deal. But this time around, if I do a convertible debt deal, understand it's not convertible for 6 months, and we have liquidity events in -- whether it's in 1 month or 2 months or 3 months, it will be around there. We'll just pay off the convertible debt. So that's also a path. As I said, we filed on an ELOC, but we can't use that until we file an S-1, and that's not our game plan anyway. So we're still looking at other opportunities. We could file a prospectus against our S-3, which we might to pick up some money here and there. So I'm looking at all avenues. I'm working around the clock. I will be successful. And I hope that for those of you that have been with me long term, you might want to consider buying stock, average down your position. And when we turn the company around, I think you'll be very happy. Thank you, Craig. I think we're probably over time now, but I appreciate you letting me stay over. I answered as many questions as I could. Go ahead, Craig. I hand it back over to you.

Well, that is just a fabulous place to end. And yes, we've gone over time for our many participants today, and we thank them all. For more information on ProPhase Labs, 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 today's 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, including occasionally ProPhase Labs every Saturday night at 7:00 p.m. Eastern on Bloomberg USA. And finally, tomorrow at 9:30 a.m U.S. Eastern don't miss RedChip's special webinar, Fintech and digital asset treasuries from modern payments to strategic digital asset management. Again, that webinar will take place tomorrow from 9:30 a.m. to 4:00 p.m. register for that event and for all RedChip webinars at redchip.com/events. Thanks again to our many participants today, and thanks, as always, Ted.

Thank you, Craig. Thanks for hosting. RedChip, you're doing a great job. I really appreciate this opportunity. Thank you, all shareholders. I appreciate your support.